Welfare versus warfare: Sir Keir Starmer’s unresolved question – and why the PM’s pinned his hopes on economic growth
Welfare versus warfare: for decades, it’s a question to which successive prime ministers have responded with one answer.
After the end of the Cold War, leaders across the West banked the so-called “peace dividend” that came with the end of this conflict between Washington and Moscow.
Instead of funding their armies, they invested in the welfare state and public services instead.
But now the tussle over this question is something that the current prime minister is grappling with, and it is shaping up to be one of the biggest challenges for Sir Keir Starmer since he got the job last year.
As Clement Attlee became the Labour prime minister credited with creating the welfare state after the end of the Second World War, so it now falls on the shoulders of the current Labour leader to create the warfare state as Europe rearms.
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Be it Donald Tusk, the Polish prime minister, arguing last year that Europe had moved from the post-war era to the pre-war era; or European Commission chief Ursula von der Leyen calling on the EU to urgently rearm Ukraine so it is a “steel porcupine” against Russian invaders; there is a consensus that the UK and Europe are on – to quote Sir Keir – a “war footing” and must spend more on defence.
To that end the prime minister has committed to increase UK defence spending to 2.5% of GDP by 2027, raiding the overseas development aid budget to do so, and has also committed, alongside other NATO allies, to spend 5% of GDP on defence by 2035.
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What is NATO’s 5% defence spending goal?
That is a huge leap in funding and a profound shift from what have been the priorities for government spending – the NHS, welfare and education – in recent decades.
The Institute for Fiscal Studies’ Carl Emmerson said the increase, in today’s terms, would be like adding approximately £30bn to the 2027 target of spending around £75bn on core defence.
Sir Keir has been clear-eyed about the decision, arguing that the first duty of any prime minister is to keep his people safe.
But the pledge has raised the obvious questions about how those choices are funded, and whether other public services will face cuts at a time when the UK’s economic growth is sluggish and public finances are under pressure.
This, then, is one of his biggest challenges: can he make sure Britain looks after itself in a fragile world, while also sticking to his promises to deliver for the country?
It is on this that the prime minister has come unstuck over the summer, as he was forced to back down over proposed welfare cuts to the tune of £5bn at the end of this term, in the face of a huge backbench rebellion. Many of his MPs want warfare and welfare.
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“There’s been a real collision in recent weeks between those two policy worlds,” explains Jim Murphy, who served both as a welfare minister under Tony Blair and shadow defence secretary under Ed Miliband.
“In welfare, how do you provide for the people who genuinely need support and who, without the state’s support, couldn’t survive? What’s the interplay between that and the unconditional strategic need to invest more in defence?
“For the government, they either get economic growth or they have a series of eye-watering choices in which there can be no compromise with the defence of the state and everything else faces very serious financial pressures.”
He added: “No Labour politician comes into politics to cut welfare, schools or other budgets. But on the basis that defence is non-negotiable, everything else, unfortunately, may face those cuts.”
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‘There are lines I will not cross’
While the PM sees this clearly, ask around the cabinet table and ministers will admit that the tough choices society will need to take if they genuinely want to respond to the growing threat from Russia, compounded by the unpredictability of Donald Trump, is yet to fully sink in.
There are generations of British citizens that have only ever lived in peace, that do not, like I do, remember the Cold War or The Troubles.
There are also millions of Britons struggling with the cost of living and and public satisfaction with key public services is at historic lows. That is why Labour campaigned in the election on the promise of change, to raise living standards and cut NHS waiting lists.
Ask the public, and 49% of people recognise defence spending needs to increase. But 53% don’t want it to come from other areas of public spending, while 55% are opposed to paying more tax to fund that defence increase.
There is also significant political resistance from the Labour Party.
Sir Keir’s attempts to make savings in the welfare budget have been roundly rejected by his MPs. Instead, his backbenchers are talking about more tax rises to fund public services, or even a broader rethink of Rachel Reeves’s fiscal rules.
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Rachel Reeves’s fiscal dilemma
Anneliese Dodds, who quit as development minister over cuts to the overseas aid budget, wrote in her resignation letter that she had “expected [cabinet] would collectively discuss our fiscal rules and approach to taxation, as other nations are doing”, as part of a wider discussion about the changing threats.
In an interview for our Electoral Dysfunction podcast, which will be released later this summer, she expanded on this idea.
She said: “I think it’s really important to take a step back and think about what’s going to be necessary, looking 10, 20 years ahead. It looks like the world is not going to become safer, unfortunately, during that period. It’s really important that we increase defence spending.
“I think that does mean we’ve got to really carefully consider those issues about our fiscal rules and about taxation. That isn’t easy… nonetheless, I think we will have to face up to some really big issues.
“Now is the time when we need to look at what other countries are doing. We need to consider whether we have the right system in place.”
Anneliese Dodds quit the government over cuts to the overseas aid budget. Pic: PA
For the Labour MP, that means potentially reassessing the fiscal rules and how the fiscal watchdog assesses government spending to perhaps give the government more leeway. She also believes that the government should look again at tax rises.
She added: “We do, I believe, need to think about taxation.
“Now again, there’s no magic wand. There will be implications from any change that would be made. As I said before, we are quite highly taxing working people now, but I think there are ways in which we can look at taxation, not without implications.
“But in a world of difficult trade-offs, we’ve got to take the least worst trade-off for the long term. And that’s what I think is gonna be really important.”
Those trade-offs are going to be discussed more and more into the autumn, ahead of what is looking like an extremely difficult budget for the PM and Ms Reeves.
Chancellor Rachel Reeves and Prime Minister Sir Keir Starmer are facing difficult choices. Pic: PA
Not only is the chancellor now dealing with a £5bn shortfall in her accounts from the welfare reform reversal, but she is also dealing with higher-than-expected borrowing costs, fuelled by surging debt costs.
Plus, government borrowing was £3.5bn more than forecast last month, with June’s borrowing coming in at £20.7bn – the second-highest figure since records began in 1993.
Some economists are now predicting that the chancellor will have to raise taxes or cut spending by around £20bn in the budget to fill the growing black hole.
Former chancellor Jeremy Hunt says Labour’s U-turn on cuts to welfare risk trapping Britain in a ‘doom loop’
Jeremy Hunt, former Conservative chancellor and now backbencher, tells me he was “massively disappointed” that Labour blinked on welfare reform.
He said: “First of all, it’s terrible for people who are currently trapped on welfare, but secondly, because the risk is that the consequence of that, is that we get trapped in a doom loop of very higher taxes and lower growth.”
‘This group of politicians have everything harder ‘
Mr Murphy says he has sympathy for the predicament of this Labour government and the task they face.
He explained: “We were fortunate [back in the early 2000s] in that the economy was still relatively okay, and we were able to reform welfare and do really difficult reforms. This is another world.
“This group of politicians have everything harder than we had. They’ve got an economy that has been contracting, public services post-COVID in trouble, a restless public, a digital media, an American president who is at best unreliable, a Russian president.
“Back then [in the 2000s] it was inconceivable that we would fight a war with Russia. On every measure, this group of politicians have everything harder than we ever had.”
Over the summer and into the autumn, the drumbeat of tax rises will only get louder, particularly amongst a parliamentary party seemingly unwilling to back spending cuts.
But that just delays a problem unresolved, which is how a government begins to spend billions more on defence whilst also trying to maintain a welfare state and rebuild public services.
This is why the government is pinning so much hope onto economic growth as it’s escape route out of its intractable problem. Because without real economic growth to help pay for public services, the government will have to make a choice – and warfare will win out.
What is still very unclear is how Sir Keir manages to take his party and the people with him.
“I’m incredibly patriotic,” says Ross, “I love our flag.”
He’s pulling a trailer loaded with England flags, otherwise known as the flag of St George, and Union flags, while his friends carry a ladder.
They’re heading out to fly flags from lamp posts in his hometown, Lichfield.
The group carried flags to raise around Lichfield
We’re here to spend an evening with them – keen to understand why flags are appearing on streets across England and what people make of it.
As the flags go up, several passing drivers beep and shout their support.
But it isn’t long before a man and woman walk past, visibly annoyed.
“Shameful behaviour,” the woman tells the group.
One of Ross’s group calls back: “Why can’t you be proud?”
“I am proud, but we’re absolutely tripping over from patriotism to an overt display of nationalism,” the man replies.
“There have been many occasions throughout history where the British flag has been adopted by groups that I don’t agree with”.
It’s a tense moment.
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Octavia raises a flag in Lichfield
I ask Ross, 27, if the flying of the flags is timed to coincide with concerns about immigration.
“Yes,” he replies. “My personal stance on it is, yes, this is us saying ‘you’re in our country’, right?
“This is what we stand for, you bow to this flag how we do, right, and you shouldn’t be doing illegal things, and for example, raping the women and committing crimes, which we don’t agree with.”
Ross says there’s nothing wrong with being patriotic
He tells me some of the handful of people he’s with went to the same school as him. But Octavia, the only woman in their group, only met them recently.
“She bumped into us the other day, and now she’s a full-fledged flagger,” Ross says.
Octavia, 27, lifts her jumper to reveal she’s wearing an England flag dress.
“I saw him putting up the flags and I genuinely wondered why,” she says.
“He kind of explained to me, like, we’re protecting people of Britain, we are spreading awareness, that is literally all, and I was really happy to get involved”.
Octavia says she was happy to get involved
As the next flag is being put up, a man walks past and breaks into song.
“No surrender, no surrender, no surrender to the boats coming over,” he sings.
Ross, filming him, thanks him for his “performance”.
Many opinions but few solutions for debate that crosses dividing lines
Over the course of an evening in Lichfield, we struggled to find anyone who didn’t have an opinion on the flags appearing around the town.
Yet we did find people who were reticent to speak on camera, particularly those opposed to the flags being there.
This is a town where around 93% of residents were born in England, according to the census in 2021.
Unlike many British towns and cities, there is little visible evidence of the mass migration this country has experienced in recent decades.
Octavia, the newest recruit to the group of “flaggers” we met, grew up in Leicester, where just under 58% of people were born in England.
After meeting people opposed to the flags in Lichfield, she told me “they’re wealthy, they live in a nice area, they don’t actually have to go through the struggles that everybody else does”.
She then revealed her opposition to migrant hotels is in part because she was once at risk of homelessness and didn’t get state support.
But from what we saw, it would be wrong to conclude that there are obvious dividing lines in this debate.
On both sides, there were people from a range of different backgrounds, young and old.
Some see a display of pure patriotism. To others, it’s blatant nationalism that has to stop.
But in these uneasy times, the removal of any flags has been seized on as a political act that has sparked anger in communities.
A woman sees it all happen and tells us her husband has written to the council to ask for the flags to be removed.
She’s unhappy about how it may make the town feel for some people.
But she doesn’t want to go on camera – or even have her words recorded.
Bob says the number of flags going up has become ‘extreme’
I ask Ross about his political views.
He says he doesn’t belong to any party, but he tells me he supports Tommy Robinson – and had been with him the previous evening.
He got the flags they’re putting up from him.
Further down the street, we meet Bob. He’s just out for dinner. We get talking about the flags.
“It’s not a racist thing just to be wanting to look after your people,” Ross tells him.
Bob agrees, but is concerned about why flags are going up now.
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“It’s become quite extreme,” he says. I ask if he thinks the flag is being used as a racist symbol. “100% yeah, I do,” he says.
But an elderly couple over the road completely disagrees with him. “Of course, we support St George’s flag, we’re British,” the woman says.
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“There’s nothing wrong with showing the English flag,” her husband agrees.
It’s hard to find anyone who doesn’t have a view on the flags appearing around the town. We leave Lichfield with a sense that they’re provoking strong feelings on both sides of a very live national debate.
Sir Keir Starmer has defended welcoming the Israeli president to Downing Street as MPs raised concerns about allowing him into the UK.
Sir Keir started Prime Minister’s Questions (PMQs) by saying “however difficult, the UK must not walk away from a diplomatic solution” to the war in Gaza.
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“We will negotiate and we will strain every sinew, because that is the only way to get the hostages out, to get aid in and to stop the killing,” he told MPs.
The PM said he will be “absolutely clear that we condemn Israel’s action” in bombing Hamas leaders in Qatar, during his meeting with Israeli President Isaac Herzog on Wednesday afternoon.
His visit comes just a day after Israel carried out the strike in Qatar.
The PM added that it would be the “politics of students” not to meet Mr Herzog after the SNP’s Westminster leader Stephen Flynn gave an impassioned speech against the Israeli president’s visit.
Mr Flynn said: “Would he invite Vladimir Putin into No 10? Would he invite Benjamin Netanyahu into No 10?
“What does it say of this prime minister that he will harbour this man whilst children starve?”
Isaac Herzog is in the UK. File pic
Following Mr Herzog’s visit to Number 10, the Israeli president said: “Britain and Israel are friends, but among friends there are sometimes disagreements.”
He said he “made clear” the UK’s intention to recognise a Palestinian state would “in no way help bring the hostages home, help the Palestinians, or help bring an end to the conflict” – but would instead “embolden extremists”.
The president also told Sir Keir it was “dangerous” to “echo Hamas’s propaganda campaign of starvation in Gaza”.
MPs question Herzog visit
Dozens of MPs from all parties, including Labour, questioned the legal standing of Sir Keir welcoming Mr Herzog.
The Israeli president previously said there are “no innocent civilians in Gaza” and “it is an entire nation that is responsible”.
He was also pictured signing an artillery shell before it was fired towards Gaza in December.
The prime minister’s spokesman said the attack in Qatar is a “clearly unacceptable act” and said it “of course” would be one of the subjects raised with Mr Herzog.
He added Sir Keir will be “clear” with Mr Herzog about the risk of Israel escalating its actions.
Handcuffs not handshakes
New Green Party leader Zack Polanski called for “handcuffs not handshakes” as he said Scotland Yard’s war crimes unit should be waiting inside Number 10 to handcuff Mr Herzog “and take him away for questioning”.
Mr Polanski, who won the Greens leadership election last week and is Jewish, accused Mr Herzog of being “complicit while the Israeli government has engaged in committing genocide in Gaza”.
Zack Polanski. Pic: PA
Israel has continually denied it is carrying out a genocide in Gaza, but last week, the world’s leading association of genocide scholars declared it is. Earlier this week, the UK government concluded Israel is not committing genocide in Gaza.
Herzog is a conduit
The Liberal Democrats tabled an urgent question following PMQs, calling on the foreign secretary to make a statement on the implications of Israel’s strike in Qatar.
Foreign Office minister Hamish Falconer took to the despatch box to defend Mr Herzog’s visit, saying: “President Herzog is on a private visit to the UK.
“He is not a functional part of the government; he is an important conduit to raise these concerns.”
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In full: Wednesday’s PMQs
Mr Falconer said the UK is supporting a motion for an emergency meeting of the UN Security Council on Wednesday evening and revealed Foreign Secretary Yvette Cooper is speaking to the E3 (UK, France and Germany) and G7 allies, including the US about Israel’s attack on Qatar.
He added that Ms Cooper met Mr Herzog in the morning and “amongst other things” asked him to ensure greater support from the Israeli government to get children with injuries and students out of Gaza.
As PMQs was taking place, union members at the Trades Union Congress (TUC) conference unanimously passed a motion to oppose Mr Herzog’s visit.
On Tuesday evening, 60 cross-party MPs and Lords gathered outside parliament to condemn Mr Herzog’s visit after they sent a letter to Sir Keir asking what legal advice the government has received about Mr Herzog’s visit and whether his entry to the UK “is compatible with our obligations under the Genocide Convention”.
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