Thursday, June 11, 2026
Are Labour going to cross another red line?
The Times reports that she has warned that the government will have to consider further tax rises to help fund defence in future because “borrowing can’t be the only answer”, thus raising the prospect of further tax rises in the autumn budget.
The paper says that the chancellor told an investor conference that, The money has to come from somewhere. Everyone can see the challenges. We are spending 2.6 per cent of GDP [on defence] from next April and the pressures are only going in one direction.”:
Sir Keir Starmer is expected to announce a £13.5 billion increase in defence spending despite warnings from the defence secretary that it is not enough and risks undermining Britain’s credibility in Nato. The prime minister is preparing to unveil the long-delayed package as soon as this Friday after a series of cabinet clashes over the spending plans.
The State of It, the political podcast from The Times and The Sunday Times, has been told that John Healey, the defence secretary, has significant concerns about the settlement and discussions are going down to the wire.
Defence chiefs had originally asked for £28 billion over four years but ministers have concluded it is unaffordable.
The Treasury is also said to be pushing for a “planning assumption” that Britain will only meet its target of spending 3 per cent of GDP on defence — up from current levels of 2.3 per cent — in 2034/35. Healey is concerned that this is not soon enough, given the scale of the threat Britain faces, and has so far refused to sign it off.
The internal government rows mean there is a risk that the publication of the full defence investment plan will be further delayed and could even slip into next month.
The government is now expected to commit to £13.5 billion worth of additional spending over the next four years, having previously considered £18 billion.
No 10 has asked all departments to make savings of at least 1 per cent in their capital spending plans, which fund investment in infrastructure projects, over the next four years.
The savings are expected to include cuts to net-zero projects such as carbon capture and storage, prompting a further rift with Ed Miliband, the energy secretary.
Lord Robertson of Port Ellen, the former Nato secretary-general who was the lead author of the government’s defence review, told the Commons Scottish affairs committee: “The country has to be defended. The threat to our liberty, our freedom, our way of life is no longer theoretical.
“We see vividly every day in reality what is happening in the streets of Ukraine. We are under-prepared, we are under-insured, we are under attack and our country is not safe. If we’re going to be safe and we want to have the war-fighting readiness that alone will stop anyone from attacking us, then we need to move and we need to move fast.
“There is a degree of complacency with all of this. Hopefully now at this stage we are going to move forward, both with the defence investment plan and the national conversation.”
It is right that defence spending needs to be a priority, but so should other measures to get the economy up and running, including investment in social housing, transport infrastructure, education and training. The important thing is that if this needs to be paid for by tax rises then let's get it right this time.
Increasing NIC contributions was regressive and has hit charities, part time and low paid workers badly as well as suppressing economic growth. Any tax rises must be progressive. And it would help if at the same time we could grow the economy by rejoining the single market.
