There are two scare stories surrounding the budget. The first is that government spending is out of control and Rachel Reeves has no ‘fiscal headroom’, meaning cuts are inevitable. The second is that Britain is under military threat and a sharp increase in arms spending is essential. Both scares are bogus.
‘Fiscal headroom’ is not an objective measurement. The government has imposed rules on itself that income and outgoings must be balanced day-to-day and that public debt must be falling by the end of this parliament. What is more, the Bank of England has artificially cranked up Britain’s debt by selling government bonds at below the price they paid for them, which raises interests rates, making debt more expensive.
Trailed cuts to various services are therefore unnecessary. Even less so if the chancellor (and I am not holding my breath) were to use the budget to tackle the almost unimaginable inequality in this country, second only to the US amongst developed countries. The top 10% in Britain now own over 50% of the wealth. The size of the absolute wealth gap between the richest and poorest 10% shot up by 54% between 2011 and 2021, from £7.5 trillion to £11.5 trillion.
Nor should we listen to the ‘taxing the rich doesn’t deliver’ brigade. One comprehensive survey of expert advice by the Wealth Tax Commission suggested that a radical wealth tax could raise a stonking £260bn per year. A redistributive budget would be able to free up money to do the things people are crying out for: refurbish our schools, start a massive programme of council house building, revive the ailing NHS, reform social care and ramp up the green transition. Such an ambitious programme of government investment would have the advantage of creating jobs and the growth Starmer and Reeves are finding so elusive.
It is surely no accident that hysteria about military threats seem to be peaking in the run up to the budget. On Wednesday the Daily Telegraph ran two security scare stories on its front page. One was headlined ‘Britain not ready to defend invasion’, the other ‘Chinese threat has risen, warns speaker after fresh M15 alert’. In case the message wasn’t clear the features section led with a piece titled ‘How to survive a Russian invasion (in your garage).’
This followed news that Russian warships had been ‘close’ to British waters, and the report of an inquiry by the Commons defence committee calling for more military spending. In this, one ‘expert’ claimed that without a massive increase in arms spending “we’re not going to stop missiles coming and hitting you. A set of you are going to die, hospitals are going to go under, and you will be without food, water and electricity”.
The idea that Russia is a military threat to Britain is a complete fantasy. Russia’s military power has been stretched to the limit fighting in Ukraine across its border and it has only made slow and limited gains in the horrific war there. Claims we are in danger of an attack from China are even more absurd. War fever is being generated to bolster Britain’s attack capability as the US pressures Europe to rearm and take more of the burden of fighting for the West’s interests abroad.
Britain is already the sixth biggest military spender in the world, behind only the US and Germany in NATO. We spend £60 billion a year on ‘defence’, The government has committed to increasing this to 3.5% of GDP by 2035 an increase equivalent to £36 billion, or £500 per person, a year in current terms.
The bulk of this money is not really spent on defence. Over the last few decades, much of Britain’s military resources have been used in disastrous US-led foreign wars, in the former Yugoslavia, in Afghanistan, Iraq, Libya and elsewhere. A significant proportion of recent increases have gone to fund Ukraine’s war effort. Meanwhile, nearly one third of the current budget is spent on nuclear weapons systems, effectively under the control of the US. This is money that risks making us a target.
Any genuinely progressive government would be resisting Trump’s pressure to increase our attack capacity and looking to cut arms spending. It is a national scandal that we spend over twenty times more on the military than we do on the affordable housing programme, currently allocated just £2.6 billion, and twice as much as we spend on social care, which gets just £29.4 billion.
At a time when services are in a state of collapse and millions are struggling to make ends meet, we need to ignore establishment scare stories and fight for real security for working people. We can only do this by tackling inequality and breaking our slavish support for US foreign policy priorities.