Infrastructure cuts to pay for defence will cost UK 10,000 jobs, analysis shows

Keir Starmer’s decision to cut billions of pounds of infrastructure spending to pay for more defence equipment will end up costing the UK 10,000 jobs, according to an analysis of the government’s own figures.

The prime minister announced this week he was putting an extra £15bn into defence investment to revamp the country’s armed forces and boost British manufacturing.

The long-awaited defence investment plan (Dip) was designed to cement Starmer’s legacy in foreign policy and security as he prepares to depart Downing Street. But it also raised questions about where the funding would come from, given £6.8bn is being raised by unidentified cuts to departmental investment programmes and another £4.7bn is entirely unaccounted for.

The analysis, by researchers at the Transition Security Project, shows that while the extra defence investment will generate about 10,000 jobs by 2029-30, taking the money away from other sectors will cost nearly double that.

The findings cast doubt on claims by Starmer and his chancellor, Rachel Reeves, that they are boosting British jobs by reallocating large chunks of government spending to the Ministry of Defence (MoD).

Khem Rogaly, the co-author of the report, said: “The idea that military spending can provide a defence dividend is misleading: job losses will result from this latest funding settlement while the opportunity cost of military spending is sharp.

“Far more jobs are created when investing in public needs like health, education and addressing the climate crisis. This latest data suggests that the turn towards autonomous weapons and AI could also mean that military spending creates even fewer jobs per pound than before.”

Andrea Egan, the general secretary of Unison, the country’s largest trade union, said: “This timely analysis highlights how making cuts to government departments to bankroll more military spending will result in job losses. This costly and wasteful plan means extra cash for war and overseas interventions, but less for schools and hospitals.”

A government spokesperson said: “Defence is an engine for growth – supporting 272,000 jobs and over 25,000 MoD apprenticeships. The plan will back British workers, businesses and innovation, generate economic growth, create nearly 60,000 new jobs and increase defence exports.

“But we are in a new era of threat, which demands a new era of defence, and crucially our defence investment plan will energise the transformation of our armed forces to rebuild war-fighting readiness and target our resources, ensuring we are ready to face future threats.”

Starmer unveiled the Dip on Tuesday after nearly a year of internal arguments over how much extra money the military needed and where it would come from. The disagreements ended up with the resignation of the defence secretary, John Healey, just as the plan was due to be announced.

Starmer and Reeves ended up granting the MoD an additional £15bn over four years, although £4.7bn of that is due to be allocated at the next budget.

The funding gap will have to be solved by Starmer’s successor as prime minister, most likely to be Andy Burnham. The new MP for Makerfield ⁠said on ​Thursday ‌he ‌was committed to ensuring ⁠defence spending ​commitments were ​properly ​financed if he ​became ‌prime ​minister.

“I will take my responsibility to fully fund the defence spending plan seriously,” he told Andrew Marr on LBC radio, while also confirming he had not been made aware of the shortfall before Starmer’s announcement.

The government has said the biggest cuts will come from the energy and transport departments, both of which have high levels of capital spending. Two road improvement projects have already been stopped, while energy officials are looking at reductions to schemes such as home insulation and carbon capture and storage.

Part of the reason for boosting the defence budget, even at the expense of other departments, according to Reeves and Starmer, was to create new British jobs. The prime minister said on Tuesday: “Every pound in this plan will work twice, delivering economic growth and opportunity for the British people, and supporting more than half a million jobs by the end of the decade, as well as reinforcing our national security.”

However, the research by the Transition Security Project, which was spun out of Common Wealth, a thinktank with close links to Burnham, shows that putting money into defence creates far fewer jobs than other sectors.

According to the government’s own calculations, increasing the defence budget by £25.2bn over a six-year period will create an additional 60,000 jobs. By that calculation, every extra million pounds worth of government investment will create 2.4 direct and indirect UK jobs

Other sectors generate far more jobs per pound spent. Figures from the Office for National Statistics show every million pounds spent on transport generates 11.5 jobs, while every million pounds spent on energy and net zero creates 10 jobs.

This disparity means that taking away £2bn from other departments in 2029-30, as the government plans, will cost a total of nearly 20,000 jobs – double those generated in the defence sector.

Researchers believe the different job creation numbers may reflect the fact that defence supply chains are highly international, suggesting the government is spending billions of pounds creating jobs in other countries.

The government is spending more than £2bn, for example, on new fighter jets to carry nuclear bombs which are mainly made in the US. They also say the figures show the increasingly automated nature of high-end defence manufacturing.

David Edgerton, professor in the history of science and technology at King’s College London, said: “I would expect the import content of a road to be lower than that of military equipment, some of which will be fully imported. It may well also be the case that, even if fully made in the UK, military equipment requires fewer workers than the equivalent expenditure on roads.

“There is no reason whatever to expect military expenditure to generate more jobs than any other kind of expenditure, and we should expect it to be far less productive than investment in, say, railways or factories.

“The defence dividend is broadly speaking a con.”