Sir Keir Starmer told MPs on Tuesday that Britain was confronting a “world where everything has changed”, as he shredded the country’s overseas aid budget to fund a rearmament programme not seen since the cold war.
There was a sense in a sombre House of Commons that what Starmer called the “great postwar order” was being redrawn, as Britain and the rest of Europe adjust to the detonative impact of Donald Trump.
The pace is accelerating. On Wednesday UK chancellor Rachel Reeves will meet EU finance ministers at a G20 meeting in Cape Town to discuss a new funding mechanism to rebuild Europe’s enfeebled defences.
On Thursday Starmer meets Trump at the White House to plead with him to maintain the US security guarantee in Europe, while the UK premier will on Sunday host a new round of defence talks with European leaders.
Amid the flurry of activity, Britain’s foreign policy posture has shifted overnight. A country that once prided itself as an “aid superpower” that spent 0.7 per cent of its national income on foreign assistance is now going to be far less generous.
“It’s not an announcement I’m happy to make,” said Starmer, as he revealed that the aid budget, already cut to 0.5 per cent by former Conservative chancellor Rishi Sunak during the pandemic, would shrink to just 0.3 per cent in 2027.
Like the UK’s increase in defence outlay itself, the decision to slash the aid budget is likely to win the approval of Trump, whose administration has begun dismantling America’s own development programme, USAID.
It was a startling moment: the Conservatives’ “austerity chancellor” George Osborne maintained the 0.7 per cent aid target throughout his budget-slashing years at the Treasury in the aftermath of the financial crash. Now a Labour prime minister was taking an axe to it.
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Starmer insisted he had to make resources available to achieve “peace through strength”, casting himself as a defender of a transatlantic postwar settlement partly driven by Labour statesmen Clement Attlee and Ernest Bevin.
He said it was a “proud legacy” but added that the task of preserving it was “not as light as it once was” — without mentioning Trump by name.
Analysts confirmed Starmer’s claim that the increase in defence spending from 2.3 per cent of GDP to 2.5 per cent — and possibly on to 3 per cent in the next parliament — amounted to the biggest planned increase in UK defence spending since the end of the second world war.
Malcolm Chalmers, deputy director-general of the Royal United Services Institute think-tank, said “the dual commitment — to 2.5 per cent by 2027 and 3.0 per cent by 2034 — would be the most sustained growth in defence spending since 1945” and would hand the Ministry of Defence “the ability to make long term plans and commitments”.
He added that “now the spotlight will be on Germany and France to see if they can also rise to this shared challenge” of taking over responsibility for the defence of the continent.
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Starmer’s move was welcomed by senior figures in military and defence circles, who said it was overdue, but would grant more manoeuvre room to Lord George Robertson, the former Nato secretary-general who is leading the prime minister’s strategic defence and security review, which will report this spring.
Lord Peter Ricketts, former national security adviser, said the spending increase was “indispensable if Starmer is going to lead, with [French President Emmanuel] Macron, the European response to Trump and the upheaval of European security that he’s produced”.
He added that the most important priority was to re-equip the British army, which is a “decade behind in investment” and was last overhauled for deployment in Iraq and Afghanistan, to become “credible for use in Europe”.
Later on Tuesday, Starmer said he wanted the £6bn of extra military spending to “rebuild Britain’s industrial base”.
Earlier in the day, Tory leader Kemi Badenoch called on the government to “repurpose” the aid budget to fund a rise in defence expenditure — “at least in the short term” — and suggested that some welfare spending could also be redirected.
In a speech at the London-based Policy Exchange think-tank, she would back Starmer in “taking difficult decisions” to increase defence spending.
The current aid target of 0.5 per cent of gross national income has been viewed as vulnerable to further cuts as senior diplomats and ex-mandarins have raised concerns that the Foreign Office’s budget was likely to be squeezed in the upcoming spending review.
The move has sparked outrage from campaigners, who are already critical that more than a quarter of the UK aid budget is being spent on supporting asylum seekers and refugees in Britain. Starmer said the aim was to reduce the asylum bill.
Romilly Greenhill, chief executive of Bond, the UK network for NGOs, lashed out at the “short-sighted and appalling move by both the PM and Treasury”, which she said “will have devastating consequences for millions of marginalised people worldwide” and will “weaken our own national security interests”.
However, some British diplomats privately backed Starmer’s move. “It’s highly questionable whether keeping aid to an arbitrary number is the best way forward,” said one.
