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Andy Burnham rejected Kemi Badenoch’s proposal to take £4bn out of housing benefit to help pay for defence, telling MPs at Prime Minister’s Questions yesterday that national security “cannot come at the expense of social security”.
The prime minister restated the government’s commitment to spend 3.5 per cent of GDP on defence by 2035 and said a target date for reaching 3 per cent would be set out in the spending review.
“I say to the right hon. Lady that, yes, we do everything to support our national security, but it cannot come at the expense of social security,” Burnham said. “Having strong national security also depends on resilience in our communities.”
On the Conservative leader’s plan, he said: “I do not think that taking £4 billion out of housing benefit is going to get the right consensus around this issue.”
Badenoch told MPs the chancellor, John Healey, had resigned as defence secretary because the government would not increase defence spending to 3 per cent by 2030. Burnham, who appointed Healey as chancellor in July, said he had done so “because of his strong commitment to the defence of this nation”. Downing Street declined to commit to 3 per cent by 2030 after that appointment, Business Matters reported.
“We need to fund our defence, not spend all our money on welfare,” Badenoch said. She told MPs “the benefits bill is set to rise by £32 billion under him” and asked why they should believe he would reach 3.5 per cent by 2035 if he could not get to 3 per cent by 2030.
Burnham said the government would cut the welfare bill through “the biggest council house building programme this country has seen in a generation” and support for young people not in education, employment or training.
“That is the Labour way to get the welfare bill down, and I say to the right hon. Lady that that is the right way to fund defence,” he said.
The Defence Investment Plan, published by the Ministry of Defence and HM Treasury on 30 June, commits £298bn over four years. Its funding explainer says the plan will provide “long-term certainty over government procurement and innovation priorities, backing British business, and crowding in private investment”.
Luke Pollard, the minister for defence readiness and industry, told a Mansion House defence and security event yesterday that public investment would “remain central”, and spoke of using the City of London “to bring more private capital into defence, creating more good jobs and more deterrence”. He said the plan had announced a Defence Investment Unit because “investors need a clearer interface with defence”.
Matt Croker, partner, corporate finance at Heligan Group, which advises business owners and investors, said the prime minister’s position “states the order of priorities explicitly”.
“Welfare is the immovable object, and defence spending is expected to find its path around it,” he said.
Croker said “this is not a government saying defence won’t be funded”, but that private capital was being asked “to close the gap between what the Strategic Defence Review set out to achieve and what HM Treasury was willing to put on the balance sheet”.
“The SDR cannot and will not be fully delivered from the public purse alone,” he said.
Croker said private capital “doesn’t need much of an excuse to sit on its hands”. “If the Government is asking private investors to help deliver its defence ambitions, they will need confidence that defence is a long-term government priority, particularly when they are being asked to commit capital to an industry where returns may depend heavily on government procurement and spending decisions,” he said.
He put the remark down to “a political blunder”. “The statement may be the Government’s true belief, but the manner in which it was delivered was a hiccup,” he said. “The defence sector desperately needs more support but if private capital is expected to play a role in delivering the UK’s defence ambitions, the Government needs to be equally clear about the priority it is placing on defence investment.”
