Rachel Reeves should boost the UK’s defence sector with a complete rearmament programme to build a more resilient and prosperous economy and better prepare Britain for future conflict, a new report says. This would allow the UK to “fill the defence gaps” of European allies while growing the UK’s skills base.
As the Chancellor prepares for next week’s Spring Statement, she should take lessons from Labour icon Clement Attlee who, as PM in 1950, launched a massive rearmament programme even while the UK was still reeling economically from a costly world war. This decision resulted in both the volume of UK defence exports and economic growth “skyrocket”, with Britain experiencing an average annual growth rate of 3.2% – the second-fastest period of growth for post-war Britain behind the 3.4% of the 1960s. Such was its success that the volume of UK defence exports alone in the 1950s was more than 300% of what it is today.
“Informed by their experience of the failure of deterrence in the 1930s, the key figures within the Attlee government were determined to prioritise defence,“ says the Council on Geostrategy report.
“They did so while fully aware that their progressive reforms – such as the creation of the National Health Service – would crumble without adequately deterring and constraining the Soviet Union.”
Today the UK and its allies face military and hybrid threats from both Russia and China while paying the price of the decisions of previous governments to allow Britain’s armed forces to atrophy during a period of relative peace.
To compound the problem, the US – which has long maintained a sizeable military presence in Europe, including many of NATO’s key enablers – has made it clear it wants to shift its attention away from Europe and prioritise the Western Pacific.
While giving credit to PM Sir Keir Starmer for his commitment to boost UK defence sending to 2.5% of GDP over the next two years, the report states a much more comprehensive approach is needed.
“What is clear is that Britain must rearm, and devote considerably more resources to the armed forces, the defence industry, the research base and the infrastructure underpinning them,” says the report
The solution, says the report, is a completely new Defence Industrial Strategy (DIS) which focuses on “securonomics”.
“Clement Attlee was fully aware that progressive reforms – such as the creation of the National Health Service – would crumble without adequately deterring and constraining the Soviet Union,” the Council on Geostrategy report said.
This would include prioritising the build-up of Britain’s industrial capacity, creating allied partnerships and working with industry to develop a Defence Technology Institute.
Priorities would include devising a 10-year Defence Industrial Strategy (DIS2025) to grow the UK defence industrial base and help design new capabilities; supporting UK defence firms in the markets and championing British components for use in allied supply chains; ensuring that there can be no skills gap by a continuous low-rate production inbuilt into procurement contracts; boosting further education and Science, Technology, Engineering and Mathematics initiatives in schools and establishing a long-term investment for a defence fund.
“Many allies are increasing defence spending but lack the expertise or capacity to build up their capabilities- this presents a prime opportunity for UK defence exports to help fill the gap, “says the report.
But key obstacles remain.
These include an unwillingness by the Treasury to commit long-term funding, economy, wide capacity constraints on skills and infrastructure and risk aversion in the global financial systems.
“Britain’s defence industry has atrophied for too long and three decades of cashing in on the ‘peace dividend’ has weakened capacity. Yet the current situation represents an opportunity as much as a challenge,” said the report’s authors William Freer and Paul Mason.
“Global defence spending is on the rise and many of Britain’s allies are desperate for military material, whether finished products or access to key components for their own equipment. Britain has found itself in a tense geopolitical environment before, securing its interests and protecting its security even in the most trying of times.”
They added: “Victories in the First World War, the Second World War, and the Cold War are testament to the fact that decisions made at those times to rearm were the right ones, and the same is true of the 2020s. In the next iteration of DIS, there needs to be an executable plan with clear success metrics and reporting lines.
“Investing in Britain’s defence industrial strength will not only bolster deterrence, it will also help to kick-start growth in the economy.”