The UK chooses defence ahead of climate

Newly appointed PM Andy Burnham arrived at No. 10 as the “King of the North,” the longstanding devolution advocate who had built his brand arguing that power should be transferred away from Westminster towards Britain’s regions, making the City nervous in the process. His first appointments were a careful exercise in reassurance. To the markets: the Treasury is in orthodox hands. To the defence establishment: one of your own now holds the purse strings.

But the most revealing choice was not who got the great offices of state but who was kept from the one that counts. Burnham gave the Treasury not to Ed Miliband — architect of the 2008 Climate Change Act and the face of net zero in Britain — but to John Healey, the former defence secretary who resigned in June because military spending was too low. Miliband, who had reportedly wanted the chancellorship, was promoted instead to the Foreign Office. It is a great office of state, but not the one that sets budgets. The climate champion kept a seat at the table, but lost the opportunity to hold the purse.

That distinction matters because the Treasury is where the trade-offs are made. And the trade-off the appointment represents could hardly be starker. Among European defence ministers, Healey was considered one of the strongest backers of Ukraine and NATO. He is also widely regarded as a safe pair of hands among bankers. He will now decide how every other UK spending priority — climate included — is weighed against it.

Healey’s pro-NATO and pro-Ukraine stance isn’t an idiosyncratic personal crusade — it’s the settled consensus position of essentially the entire UK political mainstream, Labour and Conservative alike, as his voting record shows near-total alignment with his party.

Penny wise, pound foolish

Unfortunately, extreme weather is not determined by political consensus. The pick for exchequer coincided with the the end of Britain’s third record-breaking heatwave in as many months. Researchers from Imperial College London, the Met Office and the London School of Hygiene & Tropical Medicine estimate that more than 2,700 people died from heat-related causes during the May and June heatwaves in England and Wales, and roughly 42% of them attributable to the extra heat driven by human-induced warming.

But it was short-term anxiety about the expanding government deficits, not the rising toll of extreme weather that appeared to carry the day.

Britain’s borrowing costs remain under intense scrutiny. Earlier this month, the Office for Budget Responsibility’s (OBR) latest Fiscal Risks and Sustainability report warned that the national debt is on an “unsustainable and ever-rising path.”  If left unchecked, it could triple as a share of GDP by the 2070s.

Yet the fear is misplaced. Set against Britain’s other commitments, the £257bn the OBR expects the state to spend on the net zero transition is a bargain. It is front-loaded, averaging under £13bn a year over the next 15 years, before disappearing entirely by 2050. 

Defence spending, by contrast, is open-ended. By 2035 the UK will spend 3.5% of GDP, compared to 0.5% for the net zero transition. And if the City is really worried about dodgy government spending, it should look no further than the Dreadnought submarine programme, which alone is projected to cost up to £41bn — roughly a sixth of the entire net zero bill.

And here the deficit hawk’s logic turns on itself. Abandoning net zero is not a saving; it is a liability as the cost of flood and fire damage, health costs and buckling infrastructure rise with each tick up in global warming. 

The OBR’s own work finds that the long-run fiscal damage of unchecked warming dwarfs the cost of the transition. Clean-energy investment, meanwhile, lowers long-run energy costs and drives industrial growth. 

Wasted opportunity 

Pitting fiscal responsibility against climate action has always been a favourite canard of climate sceptics. And Burnham had the opportunity to say so from the outset. Yes, Britain’s debt trajectory is dangerous. Yes, spending must be weighed carefully. But the books cannot be balanced by ignoring the forces already battering the economy, its infrastructure and people’s lives.

Instead, the Treasury went to a figure seen as reassuring to markets, rather than the climate advocate whose critics said would likely unsettle them. To Burnham’s credit, he cut VAT on energy bills to zero on the same day — so this is not a government abandoning climate. But by keeping its most vociferous champion away from the Treasury while handing it to a man who wants to supercharge defence spending, Burnham has made it clear where his priorities lie.   

For a leader whose reputation rests on authenticity, it was a revealing, but questionable first move — and people noticed.

 

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