Defence Secretary Ben Wallace could resign if Jeremy Hunt scraps defence spending boost
The UK’s new chancellor has raised the possibility of ditching a key pledge by Liz Truss to boost defence spending – a move that would likely be a resigning matter for her defence secretary, Ben Wallace.
Jeremy Hunt on Saturday refused to commit to lifting the amount of money spent on the armed forces to 3% of national income by 2030, as promised by the prime minister.
He also said the Ministry of Defence, like all other departments, would have to make additional savings.
Mr Wallace, one of the most experienced and well-regarded members of the embattled prime minister’s cabinet, has fought hard over the past three years to secure much-needed increases in defence spending at a time of growing security threats.
Asked whether any backtracking on defence spending goals would be a resigning issue, a defence source said Mr Wallace would hold the prime minister to the pledges made.
This includes a commitment to increase defence spending to 2.5% of gross domestic product (GDP) by 2026 from around 2% at present and then to 3% of GDP by 2030 in what would equate to around an extra £157billion over eight years.
But speaking about tough times ahead, Mr Hunt told Sky News: “I’m going to ask all departments to find more efficiencies than they were planning to find.”
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Hunt: There were mistakes
He repeated this on Radio 4’s Today programme and was asked specifically if a “difficult tough decision” would be taken over the defence budget.
Mr Hunt replied: “We do need to increase defence spending, but I can’t make a promise to you here and now about the timings of that.”
He continued: “The long-term ability to fund an increase in defence spending will depend on stability in the economic situation and a healthily growing economy.”
Pressed on how he was leaving open the possibility of the 3% defence spending pledge not being delivered by 2030, Mr Hunt said: “I am leaving open all possibilities this morning. I wish I could give you more detail, but I will be presenting to parliament in a fortnight on Monday exactly what is going to happen and the answer to all those questions.”
He was referring to 31 October when the chancellor is due to issue a fiscal statement.
Liz Truss and Ben Wallace around the cabinet table
As well as a failure to commit to defence spending, Mr Hunt also made a flawed assessment that long-term defence spending can only be secured if there is economic stability.
In reality, there can be no economic stability without security.
The energy price rise – as the prime minister keeps saying – is caused by Vladimir Putin using energy as a weapon, reducing the flow of Russian oil and gas to pressure Western nations to stop their crucial support to Ukraine, which has helped thwart his invasion so far.
Had the Conservatives – and Labour before them – genuinely demonstrated the mantra that national security is their first priority the UK would not have seen successive governments slash defence spending and military capability over the past three decades.
NATO allies less likely to invest in defence if UK doesn’t
Hollowed out defences – and this is a simplification of a time that also included the disastrous Iraq and Afghanistan wars – have left the UK and fellow European NATO allies less able to deter the existential threats posed by authoritarian regimes like Russia’s.
So, it makes no sense to use the economic crisis, triggered in part by Russia’s war in Ukraine, as a reason to backtrack on a vital need to rebuild the UK’s armed forces.
Russia’s Vladimir Putin, Xi Jinping of China, North Korea’s Kim Jong-un and all other leaders who prefer authoritarian rule over the values of democratic governments – human rights, rule of law and other freedoms – will be laughing.
Britain is one of the strongest voices in NATO, urging increased defence spending among all 30 allies – it is a live debate right now, with hopes to lift a minimal expenditure target to 2.5% of GDP from 2%.
If the UK were to lead by example and reduce ambitions to grow defence spending, it would make it far less likely other European allies will feel under pressure to boost their budgets.
Read more:
China remains biggest long-term security threat
Jeremy Hunt arguably more powerful than Liz Truss
The MoD has a largely poor track record of procurement, with programmes to build warships, aircraft and tanks too often running billions of pounds over budget and delivered late or not at all. That is inexcusable and also needs to change.
But ordering more efficiencies is going to make a bad situation even worse.
Many people have tried and failed to make the MoD and the armed forces more efficient.
The thing is, the UK’s military, security and intelligence services are too vital to fail and too important not to fund adequately, especially at a time of war in Europe, and the very real threat of escalation with Russia and China.
The last blast furnaces left operating in Britain could see their fate sealed within days, after their Chinese owners took the decision to cut off the crucial supply of ingredients keeping them running.
Jingye, the owner of British Steel in Scunthorpe, has, according to union representatives, cancelled future orders for the iron ore, coal and other raw materials needed to keep the furnaces running.
The upshot is that they may have to close next month – even sooner than the earliest date suggested for its closure.
Read more: Thousands of jobs at risk as British Steel consults unions over closure
The fate of the blast furnaces – the last two domestic sources of virgin steel, made from iron ore rather than recycled – is likely to be determined in a matter of days, with the Department for Business and Trade now actively pondering nationalisation.
The upshot is that even as Britain contends with a trade war across the Atlantic, it is now working against the clock to secure the future of steelmaking at Scunthorpe.
The talks between the government and Jingye broke down last week after the Chinese company, which bought British Steel out of receivership in 2020, rejected a £500m offer of public money to replace the existing furnaces with electric arc furnaces.
The sum is the same one it offered to Tata Steel, which has shut down the other remaining UK blast furnaces in Port Talbot and is planning to build electric furnaces – which have far lower carbon emissions.
These steel workers could soon be out of work
However, the owners argue that the amount is too little to justify extra investment at Scunthorpe, and said last week they were now consulting on the date of shutting both the blast furnaces and the attached steelworks.
Since British Steel is the main provider of steel rails to Network Rail – as well as other construction steels available from only a few sites in the world – the closure would leave the UK more reliant on imports for critical infrastructure sites.
However, since the site belongs to its Chinese owners, a decision to nationalise the site would involve radical steps government officials are wary of taking.
They also fear leaving taxpayers exposed to a potentially loss-making business for the long run.
The dilemma has been heightened by the sharp turn in geopolitical sentiment following Donald Trump’s return to the White House.
The incipient trade war and threatened cut in American support to Europe have sparked fresh calls for countries to act urgently to secure their own supplies of critical materials, especially those used for defence and infrastructure.
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Gareth Stace, head of UK Steel, the industry lobby group, said: “Talks seem to have broken down between government and British Steel.
“My advice to government is: please, Jonathan Reynolds, Business Secretary, get back round that negotiating table, thrash out a deal, and if a deal can’t be found in the next few days, then I fear for the very future of the sector, but also here for Scunthorpe steelworks.”
British Steel declined to comment.
UK
Prince Andrew’s Pitch@Palace branded ‘crude attempt to enrich himself’ as Chinese spy documents set to be released
Prince Andrew’s efforts to make money from his Pitch@Palace project have been branded as a “crude attempt to enrich himself” at the expense of “unsuspecting tech founders”, as new documents may shed more light on what he and his team have been attempting to sell.
Today is the deadline for documents to be released relating to Prince Andrew‘s former senior adviser Dominic Hampshire and his interactions with the alleged Chinese spy Yang Tengbo.
In February, an immigration tribunal heard how the intelligence services had contacted Mr Hampshire about Mr Yang back in 2022. Mr Yang helped set up Pitch@Palace China, a branch of the duke’s scheme to help young entrepreneurs.
The alleged Chinese spy, Yang Tengbo, has links with Prince Andrew
Yang Tengbo. Pic: Pitch@Palace
Judges banned Mr Yang from the UK, saying his association with a senior royal had made Prince Andrew “vulnerable” and posed a threat to national security. Mr Yang challenged that decision at the Special Immigration Appeals Commission (SIAC).
Since that hearing, media organisations have applied for certain documents relating to the case and Mr Hampshire’s support for Mr Yang to be made public. SIAC agreed to release some information of public interest. It is hoped they may include more details on deals that he was trying to do on behalf of Prince Andrew.
So what do we know about potential deals for Pitch@Palace so far?
In February, Sky News confirmed that palace officials had a meeting last summer with tech funding company StartupBootcamp to discuss a potential tie-up between them and Prince Andrew relating to his Pitch@Palace project.
The palace wasn’t involved in the fine details of a deal but wanted guarantees to make sure it wouldn’t impact the Royal Family in the future. Sky News understands from one source that the price being discussed for Pitch was around £750,000 – there are, however, reports that a deal may have stalled.
Photos we found on the Chinese Chamber of Commerce website show an event held in Asia between StartupBootcamp and Innovate Global, believed to be an offshoot of Pitch.
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Who is alleged Chinese spy, Yang Tengbo?
Documents, released in relation to the investigations into Mr Tengbo, have also shown how much the duke has always seen Pitch as a way of potentially making money. One document from 21 August 2021 clearly states “the duke needed money at the time, and saw the relationships with China through Pitch as one possible source of funding”.
But Prince Andrew’s apparent intention to use Pitch to make money has led to concerns about whether he is unfairly using the contacts and information he gained when he was a working royal.
Norman Baker, former MP and author of books on royal finances, believes it is “a crude attempt to enrich himself” and goes against what the tech entrepreneurs thought they were signing up for.
Read more:
Who is Yang Tenbo?
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He told Sky News: “The data given by these business people was given on the basis it was an official operation and not something for Prince Andrew, and so in my view, Prince Andrew had no right legally or morally to take the data which has been collected, a huge amount of data, and sell it…
“And quite clearly if you’re going to sell it off to StartupBootcamp, that is not what people had in mind. The entrepreneurs who joined Pitch@Palace did not do so to enrich Prince Andrew,” he said.
Rich Wilson was one tech entrepreneur who was approached at the start of Pitch@Palace to sign up, but he stepped away when he spotted a clause in the contract saying they’d be entitled to 2% equity in any funding he secured.
He feels Prince Andrew is continuing to use those he made a show of supporting.
He said: “It makes me feel sick. I think it’s terrible – that he is continuing to exploit unsuspecting tech founders in this way. A lot of them, I’m quite grey and old in the tooth now, I saw it coming, but clearly most didn’t. And a lot of them were quite young.
“It’ll be their first venture and you’re learning on the trot, so to speak. So to take advantage of people in such a major way – that’s an awful, sickening thing to do.”
We approached StartupBootcamp who said they had no comment to make, and the Duke of York’s office did not respond.
With reports that a deal may have stalled, it could be a big setback for the duke – especially with questions still about how he’ll continue to pay for his home on the Windsor estate now that the King no longer gives him financial support.
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