Rachel Reeves’s Treasury is accused of presiding over the fastest increase in taxes of an advanced economy while failing to fund the armed forces, at a time of global turmoil. Britons are braced for pain, with surges in the cost of living triggered by the war in Iran. And if they feel more of their wages are disappearing in tax, they are right.
Britain’s tax burden as a share of GDP is expected to soar by 4.5 percentage points between 2024 – the year Labour came to power – and 2031. A Telegraph examination of the latest IMF figures found this contrasts with rises of just 1.7% in France and 1.2% in Germany.
Britain is shedding its reputation as a low tax economy at the same time the country’s ability to defend itself is in doubt. Taxpayers could perhaps understand if they were asked to pay more to rearm in a national emergency – but they will be angry if their cash is being siphoned away and the armed forces are left to crumble.
There is a reported £28billion funding gap at the Ministry of Defence over the next four years. This week Lord Robertson, a former Labour defence secretary and ex-NATO boss, broke cover to warn that Britain is “in peril” and “non-military experts in the Treasury” are guilty of “vandalism”.
Ms Reeves’s department is widely blamed for the failure to agree a “defence investment plan” to fund the urgently needed transformation of the military identified in Lord Robertson’s strategic defence review. The Treasury also faces claims it has reneged on a deal to use central funds to pay for a peacekeeping force in Ukraine.
And former Army Major Andrew Fox warned that if Britain cannot keep “vital sea lanes open” – such as the Strait of Hormuz – then citizens will face higher prices at the filling station and the supermarket checkout.
Britain’s ability to defend its interests abroad is in grave doubt and there are intense worries about direct threats to the UK. Is the nation ready to repel drone swarms and missile strikes? Are our undersea communications cables just waiting to be severed by hostile forces? Is the UK so dependent on imported energy and food that we face the risk of supply lines being cut off in wartime?
Chancellor Rachel Reeves has sought to shore up support on the Left by describing President Trump’s “folly” at attacking Iran without a clear exit strategy.
Such lines will win applause but do little to stop an angry Mr Trump wanting to pull out of the NATO alliance. With the local elections looming, the Labour leadership is in a day-to-day battle for survival but the country will confront a much more serious crisis if our long-term security collapses.
Sir Keir Starmer is routinely attacked as a prime minister who is too weak to force his backbenchers to support cuts to Britain’s gargantuan benefits bill to fund investment in our defences.
Britain cannot continue like this. Health Secretary Wes Streeting – a potential successor – has signalled he would support diverting funds from the welfare budget to fund defence, saying the money “has got to come from somewhere”.
Millions of Britons have been flummoxed by the priorities of this government ever since it raided pensioners’ winter fuel support and hiked inheritance tax on farmers. If voters decide the defence of the realm is not a top objective for Labour then the looming local elections could prove a moment of electoral annihilation.