Starmer will need to axe the triple lock to put Britain on a war footing

Telegraph

26-02-2025

Foreign aid is a system under which poor people in rich countries are taxed to subsidise rich people in poor countries. So wrote the great Peter Bauer, a pioneering LSE economist who first exposed the aid-industrial-complex as a callous, immoral scam.
He would have been stunned to discover that it was Keir Starmer – my unlikely new hero for one day only – who finally saw the light, taking a break from his Left-wing radicalism to outflank the Tories from the Right.
Starmer's decision to slash foreign aid to bolster military spending, a trade-off long advocated by Nigel Farage, is inspired, despite having been taken out of fear of travelling empty-handed to Washington, rather than as a result of any ideological conversion. The PM is an accidental populist on this issue, buffeted by forces unleashed by Elon Musk's anti-waste DOGE and bounced into Middle England's dream policy combo by Donald Trump, but for once none of that matters. He should own his own policy, and ignore his Leftist base's inane, illogical bleatings.
Lord Bauer's Equality, the Third World, and Economic Delusion revealed how government assistance can fuel corruption, kleptocratic despots and dependency, ruining the prospects of the ordinary people it purports to help.
Development aid has more recently turned into a vehicle for Left-wing propaganda, woke imperialism, foreign interference, bogus green projects and job-creation schemes for sock puppet NGOs.
UK taxpayers are spending thousands to study shrimp health in Bangladesh, £37,168 on a shark-diving code of conduct in the Maldives, £9.5 million supporting 'accountability and inclusion' in the Congo, £101 million on 'climate and ocean adaptation and sustainable transition' in Indonesia, Philippines, Vietnam and Mozambique, according to contracts uncovered by The Procurement Files, an X account.
Far from projecting soft power, we are seen as mugs with more money than sense, ripe for the taking with ever more absurd rackets such as paying billions to hand over Chagos or for colonial reparations.
The drastic reduction in poverty across the world represents humanity's greatest triumph. It was almost entirely caused by poor nations' embrace of private property, free markets, open trade, domestic reforms, microfinance, foreign direct investment and voluntary assistance through remittances.
Foreign aid from overseas governments made almost no impact, and was often counter-productive, with Andrei Schleifer of Harvard and William Easterly of New York University confirming Bauer's thesis. Aid has been useless at reducing climate change or meaningfully denting global migration volumes.
Official assistance is of course welcome in extreme crises, such as earthquakes, wars or famines. There has been some success with government-funded public health, even if philanthropy has blazed the way.
Starmer should focus his downsized budget on priorities outlined by Bjorn Lomborg's Copenhagen Consensus, including childhood immunisation.
But the dismantling of Lord Cameron's legacy, cutting spending from 0.7 per cent of national income to 0.5 per cent (temporarily) under Boris Johnson and 0.3 per cent (permanently) under Starmer is a rare triumph for free-marketeers and anyone who values evidence above virtue-signalling. In fact, only 0.15 per cent or so of national income remains for genuine overseas aid once the cost of dealing with refugees in the UK is deducted.
Yet using the proceeds to boost defence to 2.5 per cent of GDP by 2027 was the easy bit: we will need to spend a lot more if we are to shoulder, with some European allies, the principal burden of defending the continent from Russia and other vile aggressors, while continuing to operate in the Pacific and Atlantic.
Labour is refusing to answer whether spending on the Chagos betrayal (an obscenity Trump will hopefully kill) will be included in new totals. It envisages a 0.6 per cent of GDP rise in defence over this Parliament and the next, a derisory sum.
Starmer's 3 per cent of GDP target (including 0.1 per cent reclassified from the intelligence agencies) by 2028-2032 will need to be sped up, and increased further, perhaps to 3.5 per cent. Even that may not be enough to rebuild our nuclear deterrent to Cold War levels, invest in new technologies, increase the size of the military and accumulate munition stockpiles. Where will Starmer find the money, given his non-negotiable spending schemes on Chagos, net zero, HS2, the NHS?
Rachel Reeves is already facing a crisis next month: her Spring Statement will require more fiscal tightening in a vain attempt to remain in the OBR's good books. Further tax rises would be a self-defeating catastrophe: we are on the wrong side of the Laffer curve and at or close to the economy's taxable limit. Growth is near zero, spending is rising and revenues undershooting. Even before any extra cash for defence, Reeves was gearing up for spending cuts. Their scale will need to be greater than any politician's worst nightmare.
Cameron's obsession with foreign aid epitomised post-Blairite decadence. The 'centrist dad' ruling class took growth for granted, despite the financial crisis, and focused on redistributing wealth rather than creating it. They lost interest in the state's core nightwatchman functions – defence, policing, the courts and prisons, all of which were cut – and positioned themselves as managers of an inexorably expanding middle class welfare state centred around the cult of 'our NHS'. It was a calamitous error.
The peace dividend, always a chimera, has now turned into a war levy. Tens of billions more will need to be found. Every Left-wing luxury – free museums, lavish subsidies to the arts – will need to be axed as the state pivots back to core functions.
Some truly sacred cows will also need to be slayed for the numbers to add up. The two greatest areas of spiraling spending are working-age benefits and expenditure on pensioners, including the state pension, pensioner benefits, social care and the NHS. The first category is rocketing, with millions who should be in work deciding that they wish to be paid to do nothing. Labour's reforms are too soft.
But pensioners too will regrettably need to take a hit. The triple-lock in particular will become unaffordable, and will need to be axed. Free bus passes may need to be means-tested. It will anger pensioners who spent all their life doing the right thing, but Britain has neglected our external and internal defences for too long. As Labour's – yes, Labour's – decision to slash foreign aid demonstrates, our long holiday from history is over.