Higher defence spending can power more jobs and economic growth, says new report

Greater investment in the defence sector is not only crucial for national security in these turbulent times, but it can also be a powerful engine for economic growth, revitalising local communities and securing skilled, well-paid jobs, says a new report.

Published for the Alex Ferry Foundation, ‘Defending the Nation, Growing the Economy’ has been written by Dr Tim Page, director of Industrial Paradigm, an economic and research consultancy.

Among the report’s recommendations are:

• The Government should set out a timeline for an increase in defence spending to 3.5 per cent of GDP by 2035, considering all plausible ways of funding this increase, and adjusting its fiscal rules if necessary, to achieve this outcome.
• The industrial strategy must dovetail with the steel strategy. The UK steel industry should be represented on the Defence Suppliers Forum and the Ministry of Defence should sign the UK steel charter.
• The Government should recalibrate its spending plans in order that a larger share of investment goes to ensuring that workers have the skills and capabilities to deliver on its announced projects. A ‘people’ rather than ‘projects’ approach to future government investment should be adopted.
• The Government should establish a body, the Defence Commission, to map out future defence spending in the UK. This should be an advisory non-departmental public body, sponsored by the Ministry of Defence, similar in design to the Low Pay Commission.

The full 70-page report with its analysis of the defence industry and its economic contribution; UK defence policy; recommendations and case studies, can be seen here.

Bob King, Prospect National Secretary for Defence, said:

“It has never been more important to turn the nation’s focus to defence and to do so whilst reminding everyone of the importance of having a sovereign capability, and a UK workforce producing that capability.

“From the MOD, defence primes and SMEs, it is vital we grow a skilled workforce in defence to face the very real threat that is present now, and invest in a workforce for the future. This report by Dr Tim Page highlights our failures and successes and sets the scene for how we can succeed.”

The report’s author, Dr Tim Page, told Prospect:

“The Government has committed to increase defence spending and wishes to ensure that this extra money will help to create good industrial jobs across the UK. That’s a very important aim but achieving it is easier said than done. ‘Defending the Nation, Growing the Economy‘ puts forward a suite of recommendations to ensure that increased defence spending can, indeed, benefit UK workers. It is based on evidence from top economists, a former Cabinet Minister, companies producing defence equipment large and small, and union representatives.

“The report calls for a Defence Commission, bringing together companies and trade unions, as well as economists, defence experts and spatial planners, to ensure that our industrial capacity, including having the right skills among the workforce, grows in lockstep with this extra spending.

“It calls for defence to integrate with the wider industrial strategy, including steel, and for action to raise the productivity of the ‘everyday economy’ where most people live and work. And if necessary, the government must adjust its fiscal rules, as has happened in Germany. Changing the fiscal rules in order to strengthen the underlying capacity of the economy is not the same as doing so for everyday consumption. This would allow the government to meet the dangerous moment in which we live.”

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