Welfare versus warfare: Sir Keir Starmer’s unresolved question – and why the PM’s pinned his hopes on economic growth

Published

4 months ago

July 24, 2025

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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.

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.

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.

“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.”

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.

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.”

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.

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.

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.

Politics

How record-breaking Reform UK donor Christopher Harborne made his millions

Published

7 hours ago

December 4, 2025

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How record-breaking Reform UK donor Christopher Harborne made his millions

Who is the man behind the record-breaking multi-million pound donation to Reform UK?

Christopher Harborne gave Nigel Farage‘s party £9m in August, according to new data published by the Electoral Commission. The contribution ranks as the largest ever single donation from a living person in UK political history.

Born in Britain, Mr Harborne is a businessman who owns several companies, employing more than 600 people worldwide, according to a court filing dated last year.

Yet he’s not resident in the UK, and is also a citizen of Thailand, where he is known as Chakrit Sakunkrit, and has lived and worked there for 20 years.

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Nonetheless, he has a long history of political donations to British parties.

Electoral Commission data shows he has previously donated to the Conservatives, gifting them £10,000 in May 2001, and continuing to support them with close to £2m in donations by October 2022.

But there was been some overlap with his backing of Reform, which first received a donation from him in April 2019, for £200,000.

He’s also donated to Mr Farage personally, giving £27,616.76 in January so the Reform leader could attend the second inauguration of Donald Trump.

He paid another £32,836 for the Reform and a member of staff to fly to the US following the attempted assassination of Trump in July last year.

And he gave one of the biggest donations ever made to an individual UK politician when he backed Boris Johnson to the tune of £1m in 2022.

He served as an advisor to Mr Johnson during the former PM’s trip to Kyiv in 2023.

His latest cash injection to Reform UK breaks the previous record for a donation from a living person, which was £8m from supermarket tycoon Lord David Sainsbury to the Liberal Democrats in 2019.

The largest ever single donation to a UK political party was from his cousin, Lord John Sainsbury, who left more than £10.2m to the Conservatives in 2022 in his will.

Electoral Commission records show Mr Harborne has made at least £24.5m in UK political donations since 2001.

But where is his money from?

Several of his businesses come under the banner of AML Global, including one registered in the UK, which has a London address listed with Companies House.

AML Global is described in a court filing as an international jet fuel broker that works with oil companies, and which has been awarded $39m (£29m) worth of contracts by the US Department of Defense.

Harborne was also an early investor in Bitcoin and other cryptocurrencies.

On his LinkedIn page, the businessman further describes himself as chair of Sherriff Global Group.

His profile shows he was educated at INSEAD business school, Cambridge University, and Westminster School.

Figures from the Electoral Commission released this week show Reform UK reported the most donations of any party in the third quarter of 2025, a total of £10,526,846.

By contrast, the Conservatives reported £7,038,861 in the same period, Labour £2,564,786, and the Liberal Democrats £2,174,712.

Politics

Reeves between a rook and a hard place after claims she ‘made up’ chess championship

Published

7 hours ago

December 4, 2025

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Reeves between a rook and a hard place after claims she 'made up' chess championship

As an opening gambit at PMQs, Kemi Badenoch attacked Labour’s knight, the prime minister, over his Treasury queen, Rachel Reeves.

“We now know the black hole was fake, the chancellor’s book was fake, her CV was fake – even her chess claims are made up,” said the Tory leader.

Politics Live: Labour MP who voted against inheritance tax suspended

“She doesn’t belong in the Treasury; she belongs in la-la land.”

Chess claims made up? Where did that attacking move from Kemi come from? Hasn’t the chancellor told us for years that she was a national chess champion in 1993?

Indeed she has. “I am – I was – a geek. I played chess. I was the British girls’ under-14 champion,” she declared proudly in a 2023 interview with The Guardian.

She posted a video showing her playing chess in parliament and before last week’s budget posed for photos with a chessboard.

But her chess champion claim has been disputed by a former junior champion, Alex Edmans, who has accused her of misrepresenting her credentials.

“Her claim was quite specific,” Edmans, now a professor of finance at the London Business School, told Ali Fortescue on the Politics Hub on Sky News.

“She said she was the British girls’ under-14 champion. There was one event that can go on that title, which is the British Championship. And in the year that she claimed, it was Emily Howard who won that title instead.

“She did indeed win a quite different title. There was a British Women’s Chess Association championship, but that’s a more minor title. I’ve won titles like the British squad title, but that’s not the same.

“Just like running a marathon in London is not the same as the London Marathon, there was one event which is very prestigious, which is the British Championship.

“So the dispute is not whether she was a good or bad chess player. That shouldn’t be the criterion for a chancellor. But if you weren’t the British champion, you shouldn’t make that statement.”

Oh dear! So now, along with allegations of plagiarism, a dodgy CV and “lying” – according to Ms Badenoch – about the nation’s finances, the chancellor is between a rook and a hard place.

Or is she? “This story is absolute nonsense,” a Treasury mate told Sky News. No word from the No.10 knight, Sir Keir Starmer, or his Downing Street ranks, however.

Emily Howard, as it happens, is now an accomplished composer, having graduated from the chessboard to the keyboard.

The chancellor’s opponents, meanwhile, claim her budget blunders means the Treasury queen has now become a pawn, there for the taking.

But since Rachel Reeves did indeed win a chess title, just not the one she claimed, her supporters insist she can justifiably claim to have been a champion.

So it’s too soon for Kemi Badenoch and the Conservatives to claim checkmate. The dispute remains a stalemate. For now.

Politics

Reform UK gets record £9m donation from ex-Tory donor

Published

7 hours ago

December 4, 2025

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Reform UK gets record £9m donation from ex-Tory donor

Nigel Farage’s Reform UK have received its largest ever donation, with former Conservative donor Christopher Harborne handing the party £9m.

The donation – one of the largest in British political history – was made in August this year, according to filings from the Electoral Commission.

Mr Harborne, a British businessman based in Thailand, previously donated millions to Reform in 2019, when it was known as the Brexit Party, and has continued to give the party and Mr Farage cash.

Politics latest: Reform gets its largest ever donation

Between 2001 and 2022, he donated close to £2m to the Conservatives, according to Companies House.

The £9m handed to Reform UK on 1 August this year is the largest political donation on record from a living person, after Lord Sainsbury left £10m to the Conservatives in his will in 2023.

Educated in the UK, Mr Harbone is now based in Thailand, where he chairs the investment company Sherriff Global Group.

He also paid around £28,000 for Mr Farage to travel to the US for Donald Trump’s inauguration this year, and roughly £33,000 for the Reform leader to visit the president after the failed assassination attempt in the run-up to the election.

Responding to a question at a news conference from Sky News deputy political editor Sam Coates, Mr Farage said Mr Harborne has business interests all around the world, but his “natural home” was the UK.

He says the donation is “nothing out of the blue”, pointing to Mr Harbone donating significant sums to the Brexit Party.

“I think what he wants to do, really, is to try and help us get onto a level playing field with the trade union funded Labour Party, and a Conservative Party where there seems to be a remarkable correlation, I can’t think why, between donations and membership of the House of Lords,” Mr Farage said.

He added that “hand on heart” he has not promised anything to Mr Harborne in exchange for the money, adding that speaks to the Bangkok-based businessman “maybe once a month, maybe once every six weeks”.

Professor Justin Fisher of Brunel University, an expert in political donations, told Sky News: “It exposes the fact that this is a person who is a British citizen but is able to influence British politics without being subject to the laws that any Reform government might bring in, any tax arrangements that a Reform might bring in.

“This is foreign money by any other name.”

The professor pointed to the fact that in the 2022 Election Act under the Conservatives, the law was changed so that British citizens could live abroad their whole lives and stay on the electoral roll, allowing them to donate.

Previously, the cap had been set at 15 years of living overseas.

He added that it was not surprising to see a person with an interest in a particular policy area – like cryptocurrencies – give money to a political advocating for this cause.

According to the Electoral Commission, political parties raised £24m in the third quarter of this year – up from £10m over the same time period last year, and £11m last quarter.

With the local and national assembly elections coming up in May next year, parties are building their war chests for the campaign.

Reform reported taking a total of £10,526,846, more than the Tories (£7,038,861), Labour (£2,564,786), and the Lib Dems (£2,174,712).

This means Mr Farage’s party raised almost as much as the three main parties combined (£11,778,359).

While the Green Party has reported an increase in donations since Zack Polanski became leader, these figures mostly cover the time before he took office, with the party only accepting £371,753.

Professor Jonathan Hopkin of the London School of Economics told Sky News the donation “shows the power of money in politics if one individual can make such a big difference to the resources available to a political party”.

He added that big donors giving to Reform who also have links to the Tories could separately “pressurise the Conservatives to step aside their candidates in seats that Reform are better placed to win”.

The fact that Reform has received large volumes of cash from a former Tory donor will do nothing to extinguish reports that the two parties are considering an electoral pact in time for the next general election.

The Financial Times reported that such an agreement was spoken about by Mr Farage in a discussion with party donors.

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Both the Conservatives and Reform have denied they will do a deal.

Reform currently lead voting intention polls, with the Conservatives and Labour together in joint second place, followed by the Greens.

A spokesperson for the Reform Party said: “This quarter’s figures show the incredible progress Reform UK is making. This is further evidence that we have all the momentum in British politics.”