Rachel Reeves: We can’t boost the UK’s defence spending without making cuts elsewhere_Nhy
Raising defence spending will mean squeezing other parts of government, Rachel Reeves has warned.
In an exclusive interview with the Daily Mail yesterday, the Chancellor also revealed she will launch the biggest audit of government spending in almost two decades in a drive to slash waste and drive up efficiency.
The review, which will not be completed until June, will involve a ‘line-by-line’ examination of every item of Whitehall spending, with whole projects set to be axed to focus cash on Labour’s priorities.
It will also set out a timetable for achieving the party’s ambition of raising defence spending to 2.5 per cent of GDP, which could cost an extra £20 billion a year by 2030.
But Ms Reeves warned that any extra cash for the military would have to come out of the same ‘spending envelope’ as other priorities, such as schools, hospitals and the police.
She declined to say whether the defence target, which is viewed by military experts as the bare minimum required to keep Britain safe, would even be hit by the end of this decade.
The Chancellor did, however, tell the Ministry of Defence it had to ‘get a proper grip’ of its existing budget – and acknowledged that its record on major procurement projects was ‘a disaster zone’.
Asked whether defence spending would get special treatment because of the fragile global situation, she said: ‘There is not some magic pot for any area of government spending – it has to come out of this (spending) envelope.
Rachel Reeves has said that any increase in defence spending would have to come out of the same ‘spending envelope’ as other priorities
The Chancellor presenting her tax rising Budget in October, which also outlined £70 billion in extra public spending
‘We’re doing the defence review at the moment, being led by George Robertson, former head of Nato, and that will be reporting next year. And then we’ll set out the trajectory for defence spending alongside that.’
Ms Reeves declined to say whether the 2.5 per cent target will be hit by 2030, adding: ‘It’s not just about money. It’s also about making sure we’re getting value from what’s spent and those projects are properly delivered.’
The Mail’s Don’t Leave Britain Defenceless campaign has called for significant increases in Armed Forces investment, to meet the growing threat.
The Chancellor defended her record on the military, saying she raised defence spending by £3 billion in the Budget and found an extra £2.3 billion for Ukraine by using profits from frozen Russian assets.
But she warned that other areas of government would have to be squeezed to fund the commitment, saying: ‘If you spend money on one thing, you can’t spend it elsewhere. There’s not a magic money tree.’
Her comments suggest Defence Secretary John Healey faces a major Whitehall battle to hold Labour to its pre-election spending commitment.
At the Budget, Ms Reeves set a one-year spending review to cover departmental funding next year.
The new review will cover three years, effectively nailing down Labour’s priorities for the rest of the parliament.
It will be the first ‘zero-based’ exercise since 2007 – starting from scratch with every expense to be justified. It is a gap Ms Reeves described as ‘shocking’.
‘It’s a good process, because we’ll go through line by line, every spending item of every department, and then we will also use outside people to challenge that and look at that,’ she said.
Ms Reeves with Daily Mail political editor Jason Groves. She warned that there is no ‘magic money tree’, with spending in one department potentially costing another
The Chancellor’s comments suggest Defence Secretary John Healey faces a major battle to hold Labour to its pre-election spending commitment
Ms Reeves signed off an eye-watering £70 billion in extra public spending at the Budget, but much of this is front-loaded for the next two years.
Economic think-tanks have warned she will have to raise taxes again in the second half of the parliament to avoid spending cuts. She denied this, saying departments have to learn to ‘live within their means’.
A 2 per cent efficiency target imposed on the NHS by the last government will be extended to all government departments. Public sector unions have also been warned that they cannot expect another round of inflation-busting pay rises unless they sign up to productivity reforms designed to save money.
‘This spending review is going to be tough,’ she said. ‘We’ve set the spending envelope, it is tight. I’ve said that we’re not going to be coming back with more borrowing or more taxes, and obviously there’s not going to be another Budget before the spending review. We’re going to have to be ruthlessly prioritising and targeted.’
