Public services prepare for up to 11% cuts – as defence secretary says ‘we must rearm’

Strained Public Finances and the Push for Fiscal Discipline

The UK government is grappling with significant fiscal pressures as it seeks to balance its budget while addressing growing demands for increased defense spending. According to reports, certain government departments have been asked to model spending cuts of up to 11% in real terms, as part of a broader effort to reduce public expenditure. These cuts would apply to departments that do not have protected budgets, such as local government, justice, environment, and culture. However, protected departments, including the NHS, childcare, schools, defense, and overseas aid, will be shielded from such reductions. The Treasury is expected to finalize these spending decisions in June as part of its three-year spending review.

The fiscal squeeze comes amid calls to bolster defense spending, particularly in response to warnings from the Trump administration for European nations to take greater responsibility for their own security. The UK is also under pressure to contribute more to Ukraine’s defense and peacekeeping efforts. Sir Keir Starmer, the opposition leader, has pledged to raise defense spending to 2.5% of GDP, though he has not specified a timeline for achieving this target. Meanwhile, the government has emphasized that no final decisions on departmental budgets will be made until the spending review is complete.

The Challenge of Unprotected Departments

Unprotected departments are bracing for potential cuts that could have far-reaching consequences for public services. Local government, which is responsible for social care, faces significant reductions, as do the justice system, including courts and prisons, and the environment and culture sectors. These cuts could exacerbate existing strains on public services, particularly in areas like social care, which is already struggling to meet demand. The Home Office is also likely to be impacted, raising concerns about its ability to maintain public safety and security.

The scale of the cuts being considered—up to 11% in real terms—reflects the severity of the fiscal constraints facing the government. Adjusted for inflation, even a "flat" spending scenario would amount to a real-terms reduction, putting further pressure on already stretched budgets. The difficulties faced by unprotected departments are compounded by the fact that many have seen their budgets eroded over the past decade, with some still operating with less funding than they had in 2010.

The Push for Higher Defense Spending

Against this backdrop of fiscal austerity, there is growing pressure to increase defense spending. The UK government is under pressure from allies, particularly the United States, to step up its contributions to European security and Ukraine’s defense. The Trump administration has warned European nations to take greater responsibility for their own security, a message that has been reinforced by recent developments in Ukraine. Sir Keir Starmer has pledged to raise defense spending to 2.5% of GDP, a target that would require an additional £6 billion annually by the end of the current parliament.

However, the path to achieving this target remains uncertain. The government has signaled that it will publish a defense review later this year, which will set out a "roadmap" for increasing defense spending. Defense Secretary John Healey has emphasized the need for the UK to "rearm" and focus on "war readiness and deterrence," particularly in light of the ongoing conflict in Ukraine. Healey has suggested that the decisions made in the coming weeks will have far-reaching implications for global security, but he has not provided a timeline for achieving the 2.5% target.

A New Era of Defense Strategy

The UK’s defense strategy is undergoing a significant shake-up, with a renewed focus on modernization and readiness. Defense Secretary John Healey has called for a shift in priorities, emphasizing the need to rearm Britain and prepare for emerging threats. He has framed the current moment as a critical juncture, with decisions made now shaping the security landscape for a generation. Healey’s remarks reflect a broader recognition that the UK must step up its contributions to European security, particularly in light of Russia’s ongoing aggression in Ukraine.

Healey has also highlighted the importance of international cooperation, noting that recent conversations with US Defense Secretary Pete Hegseth have reinforced the need for European nations to do more to support Ukraine and strengthen their own defenses. While the UK has already increased its support for Ukraine, including the supply of military equipment and training, there is a growing recognition that more needs to be done. The defense review, set to be published this spring, is expected to outline a more detailed plan for modernizing the UK’s armed forces and addressing emerging security challenges.

The Fiscal Reality of Defense Spending

The fiscal implications of increasing defense spending to 2.5% of GDP are significant. According to Paul Johnson, director of the Institute for Fiscal Studies, achieving this target would require an additional £6 billion annually by the end of the parliament. While this sum may not seem enormous in the context of the overall budget, the current fiscal environment makes it a challenging goal to achieve. Johnson has noted that the government is already operating in a tight fiscal landscape, with many departments still grappling with the legacy of austerity measures introduced in the aftermath of the 2008 financial crisis.

The Ministry of Justice, for example, has less funding now than it did in 2010, highlighting the difficult trade-offs that the government must make. Even if departments are asked to deliver 5% savings through greater efficiency, finding an additional £6 billion for defense will require difficult choices. Johnson has warned that further cuts or even flat spending could be challenging for many departments, particularly those that are already operating with reduced budgets.

The Government’s Fiscal Strategy and the Path Ahead

The Treasury has sought to frame the current spending review as an opportunity to root out waste and deliver better value for taxpayers. A spokesperson emphasized that every pound of government spending is under scrutiny, with departments being asked to deliver savings and efficiencies of 5% of their current budgets. This approach reflects the government’s broader strategy of combining fiscal discipline with targeted investments in priority areas, such as national security and defense.

The government has already taken steps to increase defense spending, with an almost £3 billion boost in recent years, alongside the highest pay rise for the armed forces in over 20 years. However, the path to achieving the 2.5% GDP target remains uncertain, with officials refusing to provide a "running commentary" on the ongoing strategic defense review. The review is expected to set out a clearer roadmap for future spending, but for now, the government is focused on balancing its competing fiscal priorities.

In conclusion, the UK government is navigating a complex fiscal landscape, with significant pressures on public spending and growing demands for increased defense investment. While the path ahead is fraught with challenges, the decisions made in the coming months will have far-reaching implications for the UK’s security, its public services, and its place on the global stage.