No Easy Decisions: Foreign and Defence Policy Under the UK’s New Government

Down to business: Labour leader and incoming Prime Minister Sir Keir Starmer pictured on 18 June. Image: ZUMA Press / Alamy

The UK’s new Labour government takes power at a time of multiplying foreign and defence policy challenges. Can it steer a course through these choppy waters?

Foreign and defence policy issues barely figured in the UK's election campaign. Labour’s position on core issues – NATO, nuclear weapons, defence spending, Ukraine – was hard to distinguish from that of the Conservatives. In contrast to the 2019 election, its credibility as a patriotic party could not seriously be called into question. Labour was therefore able to capitalise on the widespread public mood that, after 14 years of Tory rule, it was time for change.

But, from day one, the new government will face multiple new foreign and defence policy challenges. Next week, the new prime minister, Sir Keir Starmer, will travel to Washington DC for the NATO summit. At that summit, and in coming months, the wars raging in the Middle East and Ukraine will demand his continuing attention and leadership.

Most immediately, it is now probable that the Gaza war will soon escalate into a wider regional conflict. The volume of cross-border fire has already made large parts of northern Israel uninhabitable. In response, Israel is readying itself to launch a massive offensive, both with air and ground forces, against Hezbollah forces in Lebanon. If it does so, the resulting loss of human life in Lebanon is likely to be comparable to that suffered by the people of Gaza.

Such a chain of events could be one of the earliest tests of the government’s ability to navigate a fast-moving crisis. As a permanent member of the UN Security Council, with military forces deployed in the region and strong regional partnerships, the UK would be expected to play a significant role in efforts to broker a peace settlement, and to help prevent further escalation into a wider regional war.

Whether or not the situation in the Middle East deteriorates further, the top foreign policy priority of the new government should be helping Ukraine to survive and prevail. Over the next four months, the presidents of both the US and France will be focused on their own political survival, with their ability to shape world events correspondingly reduced. The UK, in contrast, has the most stable government of all the major Western democracies. It therefore has the opportunity, and responsibility, to help steady the ship of Western unity at a time of exceptional political fluidity.

Large parts of the UK’s armed forces lack the critical enablers, munitions and maintenance capabilities that they need to be match-fit for NATO’s frontline against Russia

Ukraine’s success in holding off Russian aggression for more than two years, inflicting massive damage on Russia’s forces in doing so, has preserved hope that the war can be concluded on terms favourable to its interests. Four years from now, if Ukraine can emerge from this conflict as a free country allied closely to the West, both the UK and Europe would be significantly more secure. But failure is also possible, with massive consequences for the credibility of the NATO alliance.

Labour has committed itself to building stronger security partnerships with Europe, through a new security pact with the EU, a bilateral security agreement with Germany and a ‘NATO test’ for major defence programmes. Working together to help Ukraine will be vital to all three commitments. But they also need to involve a wider commitment to building credible European forces that, together, can play a central role in deterring Russian aggression. Whoever is in the White House next year will face inexorable pressure to shift more military resources to Asia to meet the challenge from China. Europe, and the UK, need to be ready.

The Strategic Defence Review

This is the backdrop to the Strategic Defence Review (SDR), which Defence Secretary John Healey is expected to launch shortly. There is much to do. Many difficult decisions have been deferred in the run-up to the election. The financing gap between plans and resources has worsened. Large parts of the UK’s armed forces lack the critical enablers, munitions and maintenance capabilities that they need to be match-fit for NATO’s frontline against Russia.

Other European countries have made very large increases in their defence budgets in recent years. Germany’s 2024 defence budget, for example, is now set at $98 billion – the first time since NATO’s foundation that it has spent more than the UK (projected to spend $82 billion this year). In contrast, spending on the UK’s own conventional forces has not risen in real terms since 2022.

The political debate on the defence budget has focused on the percentage of GDP that is being spent. Labour is committed to spending 2.5% of GDP on defence, albeit without a timescale or a funding plan. But what the Ministry of Defence (MoD) really needs is a guarantee of steady and substantial real-terms growth each year for a decade or more. That one step – if agreed as part of the SDR – would do more than any other single measure to promote cost-effectiveness in UK defence planning and procurement. It would mean that the MoD would receive no extra money even if the economy does better than projected, as Labour’s election campaign promised. But it would also mean that, in contrast to the decade after the 2008 financial crisis, the government would be committed to protecting the defence budget even if GDP were to fall.

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The acute nature of the military threat from Russia means that the SDR should give a high priority to capability improvements that can be fielded before 2030. Historically, and especially in the decade after 2010, there has been an assumption that the UK could count on several years’ notice of a major conflict. As a result, the armed services accepted a ‘hollowing out’ of key capabilities in return for the preservation of major long-term programmes. The priority today is very different. The best way to avoid major war in Europe is to demonstrate to Russia that it could not gain from such a conflict. That means that the UK and its NATO allies need to demonstrate that they are fighting fit for whatever form of aggression Russia might contemplate.

There should still be a place in the forward programme for investments whose full fruits will not be realised until well after 2030. But the top priority should be building stocks of existing and available munitions, along with the supply chains needed for sustained production. New ministers should also encourage an acceleration of programmes, across the armed forces, that take advantage of impressive advances in uncrewed and autonomous capabilities to rebuild critical affordable mass in key areas. The opportunities for such advances are being demonstrated every day in Ukraine and other conflicts. In order to make such a transformation possible, the MoD will need to be prepared to sweep away regulatory barriers designed for a different era, and to bring forward the retirement of legacy equipment that is no longer economical to operate.

The SDR is an opportunity for transforming the offer to defence personnel, too often the poor relation in recent defence reviews. An early test will come with the annual pay round, and whether the government is prepared to finance the recommendations of the Armed Forces Pay Review body without cuts elsewhere in the budget.

No conceivable budget settlement will allow the SDR to avoid hard choices. Even if it can ensure that large parts of the UK's armed forces are more credible than they are at present, there will be areas in which it makes sense for other allies to take the lead. Detailed discussions with NATO and with key allies will therefore be a key element of the SDR in coming months. Labour has already made clear that it will give a high priority to defence cooperation with Germany. But the net should be cast wider, including Joint Expeditionary Force allies in northern Europe. Strong defence partnerships with Australia, Japan and other global partners also hold considerable potential.

The new government will need to set a clearer course on the biggest geopolitical challenge of our time: how to manage the West’s relationship with China

As one of only two nuclear-armed powers in NATO-Europe, one of the main areas of UK specialisation will be its submarine and nuclear forces. One of the mistakes made in the 2010 defence review was to delay the deterrent modernisation programme. As a result, the Royal Navy has come perilously close to failing in its objective of keeping one nuclear-armed boat on patrol. Despite massive increases in the nuclear budget, there is still no room for complacency on this front, which deserves consistent ministerial attention over the coming years.

Wider Foreign Policy

Because of the strength of its electoral mandate, the new government has an opportunity to set clear objectives on key global issues – such as climate security and international development – which require a longer time horizon but are nonetheless important as a result. Past Labour governments gave a high priority to these global objectives. The elevation of climate security to being one of Labour’s five ‘missions’ suggests that the Starmer administration will follow its predecessors in this regard.

The new government will also need to set a clearer course on the biggest geopolitical challenge of our time: how to manage the West’s relationship with China. If recent trends are extrapolated, we are now in the foothills of a new Cold War between the US and China. But the rules and limits of this competition remain in flux. Many countries – especially in the so-called Global South – are strongly resisting being drawn into either camp.

It would be foolish to rule out the possibility of a US–China war over Taiwan during the next five years. But the biggest near-term risk from deepening rivalry between China and the US is the threat which it poses to the global trading system. The US, UK and EU are all seeking to distinguish the benefits of ‘de-risking’ the relationship with China from the considerable costs that would be involved in a wider ‘decoupling’. But this distinction is hard to maintain, as current efforts to diversify away from China in relation to electric cars make clear. The massive fiscal costs of the Covid-19 pandemic and the Ukraine war did much to derail the ambitious plans set out by Boris Johnson after the 2019 general election. A new trade war could present a comparable risk to the economic hopes of the UK’s new Labour government.

The views expressed in this Commentary are the author’s, and do not represent those of RUSI or any other institution.

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Malcolm Chalmers

Deputy Director General

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