A rise in defence spending will kick-start the industrial future

Times

13 hours ago

The decision at the Nato summit this week to increase defence spending to 5 per cent of GDP by 2035 is a seismic shift for all of us and will have massive implications for the budgets of every government department over the next decade.
When we consider in the high levels of debt and tax, this raises fundamental questions for government in allocating resources at a time when the growth of tax receipts is constrained by the paucity of economic growth.
Right across western Europe the challenge caused by the financial crisis of 2008 led to a step change in the long-term trajectory of financial growth. Put simply we have come up short.
The challenge for us is how we strengthen the economy in the midst of the challenges we face?
A failure to move the needle on this will result in living standards continuing to be squeezed and the impossibility of funding the growth of defence spending, resulting in painful cuts elsewhere.
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Events have conspired to leverage massive costs on to the public purse: Covid, the cost of living crisis, largely as a knock-on effect of the Ukrainian conflict, have led to levels of fiscal debt typically only seen at times of war.
Time of war is an apt phrase as politicians and wider society have a growing realisation that times have changed.
Global instability and the threat of war is very real.
Though in these islands we have excellence in many aspects of our armed forces, to a large extent our military capability has been hollowed out. The need to enhance defence capability and at pace is stark.
There is now a race to invest and if we take last year's defence spending of £53.9 billion as our base, we are going to have to find by 2035 an extra £60 billion plus a year to invest in defence.
Where is this to come from?
Starmer's government are for now, silent on the source of the majority of this funding. Difficult choices are going to have to be made.
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Short of a sustained increase in economic growth there is going to be a squeeze elsewhere on spending.
Austerity will be a price to be paid as a consequence of having to invest in our national security.
Investment in defence, though, can be a lever and transformative in itself in generating economic growth.
With the increase in defence spending requiring £60 billion-plus, it is beyond doubt that we need to make sure that Scotland gets its fair share, and I know the Scottish government will be standing up for Scotland's interest in making it happen.
There is a long history of the SNP doing just that. From Nicola Sturgeon making the case for shipbuilding jobs at Govan and numerous MPs making the case for defence spending in Scotland, most notably Angus Robertson and Stewart MacDonald, who championed the industry and in particular defended Scotland's historic regiments — a campaign led by Annabelle Ewing.
It is therefore of no surprise — and consistent with the long-term position of the SNP — to read John Swinney being quoted in The Times this week that he had no objections if a company came to Scotland to set up a munitions factory, while making the point that the Russian threat is very real.
We speak of our support for Ukraine. We speak of their right to defend their sovereignty. There is a need to replenish munitions in support of the defence of Ukraine. In doing this, though, there are red lines and that means munitions supplied in the needs of strategic defence interests and never in situations such as Gaza where civilians are targeted.
Indeed, the SNP website makes the point that 'defence manufacturing infrastructure in Scotland is fundamental to our national engineering and manufacturing sector'.
Today in Scotland we have excellence in aerospace, defence, security and space. The challenge is leveraging in investment and accelerating economic growth that is critical to our financial security as a consequence of the need to invest in our national security.
ADS, the umbrella body for the industry, points out that the sector today employs 33,500 workers and delivers a value added of £3.2 billion, with an output per worker of £95,000.
These figures make it self-evident that there is an economic prize in attracting defence investment into Scotland.
We all want high growth, high wage, high productivity Scotland. A society that drives investment in skills and innovation.
Think for a minute of our industrial past and leading-edge electrical engineering businesses such as Ferranti, (now Leonardo). Scotland is at the forefront of innovation in both defence and in civil applications.
We need to re-engineer to capture that pioneering spirit, not just for defence capabilities but to use that opportunity as a lever through defence diversification to create a broader and deeper industrial and advanced manufacturing base.
John Swinney is right to demonstrate that Scotland is open for investment.
An increase in defence spending is coming. We should seize the opportunities out of this to kick-start investment in advanced manufacturing through, among other things, utilising our world-class academic base to develop the technologies and businesses for the future.
Investment in defence, will kick-start the delivery of an industrial future for Scotland.
​Ian Blackford was the SNP leader in the House of Commons from 2017 to 2022, and an MP for Ross, Skye and Lochaber from 2015 to 2024.