Why the 2% defence pledge could be even smarter than it seems

Left: Liz Kendall (Labour/Flickr). Top-right: former Vickers tank plant in Scotswood, 

Tyneside, bought by contractor Reece Group after BAE closed it in 2012 citing 

too few orders (Allan Clark/Flickr). Bottom-right: RAF Typhoons on exercise in Lithuania,

 2014 (MOD/Flickr)

In my last post, I outlined why I’ll be backing Liz Kendall for the Labour leadership this summer. In essence, I think her fresh face, passion for an empowering community-focused politics and radical instincts are what Labour needs if it is to have any real prospect of reconnecting with the country and winning in 2020. Her fantastic speech on Friday at De Montfort University on early years education, including a call to establish a non-party ‘Inspiring the Future’ initiative to put community leaders in state schools while Labour is still in opposition, is a must-read if you haven’t caught it already.

However, I also said that as a new candidate, she was still developing her pitch and could sharpen it in places. The daring foray she made onto what is sometimes claimed to be Tory political ground by promising the Press Gallery she would meet the NATO obligation to spend 2% of UK GDP on defence, and to hold David Cameron to account if he fails to live up to it, was one such example.

The pledge was certainly savvy in the sense that it helped established her as a strong centre-left voice in the mind of an often-hostile press. It expands on the work Labour Friends of the Forces have put in and it feeds into the patriotic One Nation tone the party needs to entrench if it is to reconnect with England. And further, as a new face previously known mainly for her social care brief in the shadow cabinet, Kendall’s early willingness to address Britain’s national security and place in the world helped elevate her range beyond the domestic, granting her the statesmanlike bearing a prospective prime minister needs.

However, reporters understandably asked how such an ambitious pledge will be funded, in light of Kendall's rightful commitment to fiscal responsibility. I also noted a blog by Chris Dillow, arguing that to emulate Tony Blair, Labour needs to go beyond merely ‘parking tanks on the Tory lawn’ and instead rediscover his skill of triangulation, amalgamating instincts from left and right to ground policies credibly in the progressive centre (“making work pay”, “tough on crime, tough on the causes of crime”, and so on). And some criticise NATO’s required commitment anyway, claiming it represents an arbitrary percentage that measures financial inputs rather than substantive outputs.

There is an answer to all of these, though. The security argument Kendall laid out is intrinsic. We live in a time where a belligerent Russia has no respect for the territorial sovereignty of its former satellite states and the Iraqi government struggles to prevent ISIS building a safe haven for terrorists, to name just two hotspots, and yet David Cameron has cut our armed forces to the bone (over 30,000 servicepeople have been laid off) and failed to meet a core obligation to NATO at a time when Vladimir Putin threatens to test the alliance. What is less obvious is that if articulated in the right way, there could be an economic aspect to meeting the NATO target too, one that will provide additional reasons for the traditional left to support it and make the pledge at least partly self-funding.

If we look at the US, the dogged insistence of politicians in both parties that its bloated defence spending should never be cut can appear baffling to the outside world. Until perhaps 2014, America routinely spent more on defence than the next 10 highest-spending countries combined, but it’s hard to take seriously the claims that the US homeland will be imperilled if 9 nations (including the UK and other allies) collectively pip the US by a few billion. Part of the explanation here though is that US defence spending isn’t really just about defence. As journalist Joe Klein explained from the perspective of a Midwestern Democrat on the Senate Armed Services Committee in his novel The Running Mate, the Pentagon is one of FDR’s hidden legacies – “the last New Deal-style jobs programme”. In a neoliberal age where a large public sector role is often swiftly condemned as a dangerous ‘70s left-wing throwback, the association of defence spending with the right offers politicians of all stripes political cover to back what can effectively serve as Keynesian stimulus spending.

So essentially, in addition to its basic aim, Kendall’s stance could also be articulated as part of an industrial or employment policy, one that will appeal to the left and to the trade unions (favourable to Andy Burnham, despite Kendall herself being a trade unionist who pledges to defend and empower the movement). As a bonus, it will also appeal to UKIP-sympathetic “left behind” voters in Labour’s old industrial heartlands, who Kendall has correctly identified as needing reassurance amid globalisation, and who often feel their country "doesn't make things anymore".

It may allow Labour to pledge to keep bases open and protect the jobs of thousands of squaddies, affording more people the dignity of work in our country’s most venerated profession. But in addition to those defence spending employs on the public payroll, it is also an excellent example of how government intervention can stimulate the private sector. At a very local level, base closures in forces towns can be a hammer blow to their communities too, because civilian small businesses grow up around such bases. But perhaps even more importantly, spending boosts Britain’s private defence, aerospace and tech industries through procurement. This could keep factories and shipyards in Britain open, providing more of the skilled labour jobs Britain has lost in droves over the decades as we have morphed into an “hourglass” economy dominated by services industries. And in turn, all of this provides part of the response to probing questions about how a 2% pledge is affordable – boosting employment and industry increases the tax take, so the policy may pay its way to some degree.

One issue to grapple with on procurement will be EU law, of course. The patriotic pro-business, pro-worker narrative above would be somewhat neutered if a Labour government stumbled into another fiasco of the kind the coalition suffered with Bombardier in 2011, finding itself stimulating industry and creating jobs abroad rather than at home. But various people have done work on how Britain could be sharper in its interpretation of these rules - it’s known that some of our continental neighbours are better at finding ways to protect their industries within the letter of the law that we are, leaving us at a disadvantage. Hamish Sandison of the Labour Finance & Industry Group (LFIG) published a report in March on EU procurement rules, and the think-tank Civitas have also looked at it.

So on defence spending, this could be the argument Chris Dillow was asking Labour to search for. Yes, it would signify that the Labour Party she leads will give no quarter in securing Britain’s place in the world and won’t let the Tories “own” any issue, but equally, it could also make clear her desire to put people back to work and revitalise British industry in Labour's traditional heartlands. Elizabeth Delano Kendall at your service, Britain.