PM faces pressure on potential tax rises for WWII-level defence hike

PM faces pressure on potential tax rises for WWII-level defence hike Prime Minister Keir Starmer failed to rule out tax hikes to fund the Government’s long-delayed defence investment plan - but economic experts warn there are bigger problems to come Keir Starmer is under pressure to level with the public over possible tax rises needed to fund a decade-long uplift of defence spending. The Prime Minister today twice failed to rule out tax hikes to fund the Government’s long-delayed defence investment plan (DIP). Defence chiefs had originally asked for a four-year £28billion injection to fund military equipment like submarines and drones but this is now rumoured to have dropped to £13.5bn. The Treasury and Ministry of Defence are locked in discussions over the figure. Rachel Reeves on Tuesday admitted the “money has to come from somewhere”. Tax rises, spending cuts or increasing borrowing are the Chancellor's main options. No10 has reportedly asked all departments to make capital savings of at least 1% over the next four years. At PMQs on Wednesday, Mr Starmer dodged questions on tax rises and pointed to the Conservatives’ record in office, accusing them of causing “damage to the armed forces”. But economic experts warned Labour has bigger problems than the DIP and questioned how it would fund a NATO commitment to hit 3.5% of GDP on core defence by 2035. Max Warner, a senior researcher at the respected Institute for Fiscal Studies, said this hike was on a “much larger scale”, highlighting that if the DIP is exposing funding gaps, there needs to be a “national conversation” on how to fund the 3.5% uplift. He told The Mirror that voters would have to pay £500 per person in taxes if the Government chose the tax hike option to fund the £30-40billion a year increase. “The UK, really since the end of the Second World War, has tended to decrease defence spending as a share of GDP," Mr Warner said. “Turning that around and starting to increase it, while we still have growing health spending, welfare spending, all those things, is really a big change. “Ultimately, if you want to spend a lot more on defence - that's of course a valid political decision - but you have to ask some really big questions about the size and the mix of the state. “You essentially either need to accept the state is going to get bigger and so taxes need to increase because we want to spend more on defence, or you don't want to increase the size of a state and therefore you need to make some really big difficult cuts elsewhere in order to be able to increase defence spending so much. So I really think this is a big kind of societal question.” Mr Starmer has promised to publish the DIP before the Nato summit on July 7, but has not given an exact date. It was originally slated for publication last autumn. On Wednesday night, Defence Secretary John Healey appeared to extinguish rumours that it would be published on Friday. He told a press conference: “When we publish really significant reports from defence, like the defence investment plan, we respect parliament." It comes after Speaker Lindsay Hoyle warned ministers not to publish it on Friday as it must be presented to parliament, which will not be sitting then. During PMQs, Mr Starmer was asked by Tory leader Kemi Badenoch to rule out tax rises to fund the plan. The Prime Minister responded by criticising the Conservative record, telling the chamber: “When they left office, 47 out of 49 major defence contracts were delayed or over budget. “That is what we are fixing. You can’t just scrub away and forget. I know they want to forget the last 14 years in power, so do the British public. That’s why they’re sitting over there.”Mr Starmer continued: “We’ve increased defence spending, we are going to publish the defence investment plan, and that will be done before the Nato summit coming up in just a few weeks’ time.”Mrs Badenoch replied: “I asked him if he would rule out tax rises. He did not rule out raising taxes, so tax rises are coming.”