The Tories Want to Increase Military Spending During a Cost of Living Crisis

And Labour is doing nothing to challenge them.

by James Meadway

11 March 2022

Boris Johnson UK government army military
Number 10/Flickr

Russia’s invasion of Ukraine is already having a knock-on effect on living standards across the globe. It’s added to the disruption in supplies of essential raw materials. Oil and natural gas have hit record highs, as has nickel. With Russia and Ukraine supplying nearly two-fifths of the global wheat market, the price of the grain has shot up 40% in the last week. Economic sanctions are also hitting the Russian economy hard, compounding these global disruptions.

The conflict has also sparked demands for remilitarisation across Europe, including in the UK. While Boris Johnson’s government had already planned a 7.5% increase in military spending over the next three years even before the Russian invasion, now former Tory ministers are demanding a 25% increase in military spending. James Forsyth, the political editor of the Spectator, a “close friend” of chancellor Rishi Sunak and the husband of former No. 10 spokesperson Allegra Stratton, has already rushed to spell out the implications. “A bigger defence budget raises the question of how it should be paid for […] there will need to be spending restraint elsewhere.” This will likely mean squeezing health or education or, most appealing to Tories, cutting welfare spending.

Given that the UK is already in the midst of a cost of living crisis, the implications here are huge. Between rapidly rising food and fuel prices and a potentially renewed squeeze on non-military government spending, the average Briton is going to see their living standards significantly worsen over the course of this year – and potentially beyond. Indeed, the Resolution Foundation estimates that the average household will see their earnings fall by the equivalent of £1,000 over this year as a result.

In this context, it is more important than ever that we reject the narrative that the costs of the crises we now face – including the war – should be shouldered by ordinary people. Tory commentators and outriders for the government like Forsyth are already perpetuating this myth – a trend that even centrists like Martin Lewis, best known as TV’s “money saving expert”, are expressing concern about.

Despite this, the Labour party has offered no such challenge, with leader Keir Starmer instead telling parliament: “We will face economic pain as we free Europe from dependence on Russian gas and oil and clean our institutions of money stolen from the Russian people, but the British public have always been willing to make sacrifices to defend democracy on our continent, and we will again.”

The problem with Starmer’s use of phrases like “economic pain” and “sacrifice” is that he does not make it clear who is going to be making these sacrifices. This, however, is the most important economic question we now face: with the world falling apart – from Covid-19 to extreme weather to, now, war – who is going to pay for it?

While I don’t doubt the British public’s willingness to make “sacrifices” to protect democracy in Europe, there isn’t the slightest hint that such sacrifices will be equally distributed either now or in the future. Starmer should therefore be loudly and clearly telling the Tories that workers in Britain should not be carrying the economic burden of this war after two years of Covid, a decade of austerity and rapidly falling living standards. 

What’s more, there’s absolutely no reason they should have to. Britain is still the sixth richest country on the planet. The rich have only got richer during the pandemic; profits for the largest companies hit record levels last year, with Shell and BP between them making £40bn in profits last year. Corporations in Britain have their own “war chest” of nearly £900bn sitting in their bank accounts. During Covid, the richest 250 people in the country saw their wealth grow by 20%.

If Starmer wants to channel the spirit of World War Two, which he seemed to be invoking in his speech to parliament, this is where he should be looking when it comes to making “sacrifices”. Inequality rates actually fell thanks to the efforts of the Labour government during that time; it pushed the top rate of income tax up to 99.25%, and, when the war ended, increased inheritance tax for the wealthiest in society up to 80% to help pay for the costs of rebuilding the country. 

Of course, the irony is that Starmer doesn’t need to go anywhere as far as that to ensure ordinary people are protected; something as limited as a 1.7% tax on millionaires’ wealth would raise £250bn. Starmer and his party should be putting pressure on the government to take measures like freezing gas prices – and nationalising smaller gas suppliers if necessary, as the government has already done with Bulb Energy. Labour should also be fighting for planned increases in national insurance contributions and council tax to be stopped, given that they will squash living standards even further. 

What money workers lose as a result of rising prices, company owners, who are responsible for those hikes, will try and take as profits. The idea that profits can’t be touched to protect people’s living standards is ideological nonsense: there is no reason at all why giant oil companies should be allowed to profiteer from rising prices whilst ordinary people suffer. 

What’s more, Labour and the trade unions should be insisting on pay rises for workers across the board. If inflation is now at 5.5%, workers as a minimum should expect and demand a 5.5% pay increase. The minimum wage, which is still below £10 an hour, needs to rise far quicker than this to protect the lowest paid.

Currently, this is where we are headed: real wages will fall sharply, whilst rising military spending starts to put pressure on domestic public services – and all while the top 0.1% continue to add to their riches. 

Already those taking action against the squeeze, like London’s train drivers, are being smeared, accused of somehow supporting Putin’s invasionIt is essential that Labour and the wider left pushes back on this: strikes in defence of living standards against inflation should be supported; planned price rises for energy; planned tax increases for workers should be halted. Just as they did in World War Two, the very richest should be made to carry the burden of these economic costs. 

James Meadway is an economist.

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