Healey refuses to rule out tax rises to pay for defence spending

Telegraph

4 days ago

The Defence Secretary has refused to rule out tax rises to pay for the Government's increase in defence spending.
John Healey said ministers would 'set out how we will pay for future increases in the future' when asked how he would fund the plans set out in the Strategic Defence Review.
His comments came after Paul Johnson, the director of the Institute for Fiscal Studies, said Sir Keir Starmer would need 'really quite chunky tax increases' to pay for the uplift.
The Prime Minister unveiled the Strategic Defence Review, which sets out the Government's spending plans for the military for the next decade and beyond, on Monday.
Sir Keir recommitted to increasing defence spending to 2.5 per cent of GDP by 2027 and reiterated his 'ambition' to reach three per cent by 2034.
The push to 2.5 per cent has been funded by cutting the foreign aid budget, but it is unclear how the Government will fund the move to three per cent.
Asked whether he believed tax rises would be an acceptable way of paying for the increase, Mr Healey told Times Radio: 'We'll set out how, just as we've done with our 2.5 per cent commitment where we have made that tough decision to switch money out of overseas development aid into defence, because that's the priority to meet the threats that we face as a country, that's the priority for building up our Armed Forces.
'We will set out how we will pay for future increases in the future. The key to this, of course, is a growing economy and defence can be part of growing the economy for the future, an investment in British jobs, British skills, new technology and new British businesses.'
Uncertainty over how the Government will pay for the proposed increase in defence spending has reignited speculation about potential future tax rises.
Mr Johnson said increases were likely to be the 'only choice that is available' to the Prime Minister, telling Times Radio: 'It looks like the Government wants to reinstate the winter fuel payment. It's thinking about the two-child limit for benefits.
'We've got a spending review next week. And if we're really going to spend another £10-15 billion a year on defence, whilst inevitably we're going to spend more and more on health and pensions and so on, you really do have to ask that question – what are the choices that you're going to make?
'And I mean, bluntly, it really does seem to me that the only choice that is available, if we're going to go through all of those things, is some really quite chunky tax increases to pay for it. But of course that's not something the Prime Minister or the Chancellor is willing actually to say.'
The Strategic Defence Review called for a £63 billion spending spree that includes upgraded nuclear warheads, stealth fighters and a fleet of submarines.
It also said the Army must increase troop numbers to 100,000 to combat the growing threat from countries such as Russia.
Mr Healey said the Government was 'committed to spending what we need to deliver this review', but failed to guarantee that the three per cent target would be hit.
He added: 'This review sets out the vision for the next 10 years and beyond. We can deliver it, we will deliver it. Just look at our record.'