The central claim underpinning the Starmer government’s Defence Investment Plan — that redirecting billions of pounds towards the Ministry of Defence will generate jobs and drive economic growth — does not survive contact with the data. An analysis of the government’s own figures, conducted by researchers at the Transition Security Project, suggests that the reallocation will destroy roughly twice as many jobs as it creates, exposing the so-called “defence dividend” as a fiscal sleight of hand rather than a credible industrial strategy.
The plan, unveiled this week after months of internal disagreement that culminated in the resignation of Defence Secretary John Healey, commits an additional £15bn to defence over four years. Of that sum, £6.8bn will be raised through cuts to departmental investment programmes — with the energy and transport departments bearing the heaviest reductions — while a further £4.7bn remains entirely unaccounted for, deferred to a future Budget and, in practice, to Starmer’s successor. The prime minister declared on Tuesday that “every pound in this plan will work twice, delivering economic growth and opportunity for the British people.” The arithmetic, however, tells a different story.
What the Numbers Actually Show
According to the government’s own projections, increasing the defence budget by £25.2bn over six years will create approximately 60,000 additional jobs — implying a rate of 2.4 direct and indirect UK jobs per million pounds of investment. That figure, taken in isolation, sounds respectable enough. Set against comparable data from the Office for National Statistics, it looks considerably less impressive: every million pounds spent on transport generates 11.5 jobs, while the equivalent outlay on energy and net zero creates 10. The Transition Security Project’s analysis concludes that diverting £2bn away from other departments in 2029–30 alone will eliminate nearly 20,000 jobs, against the roughly 10,000 generated within the defence sector over the same period.
The reasons for this disparity are not difficult to identify. Defence supply chains are notably international in character, meaning that a substantial share of procurement spending flows overseas rather than circulating through the domestic economy. The government is committing more than £2bn to new fighter jets capable of carrying nuclear weapons, aircraft manufactured predominantly in the United States. David Edgerton, Professor in the History of Science and Technology at King’s College London, makes the point plainly: “I would expect the import content of a road to be lower than that of military equipment, some of which will be fully imported.” He adds that even domestically produced military hardware tends to be more capital-intensive and less labour-intensive than equivalent civilian infrastructure expenditure. His conclusion is unsparing: “The defence dividend is broadly speaking a con.”
The Opportunity Cost of Rearmament
There is a legitimate and serious case for increasing defence spending. The strategic environment has deteriorated markedly, and NATO commitments carry real obligations that a responsible government cannot indefinitely defer. The question is not whether to spend more on defence, but whether the specific mechanism chosen — raiding capital budgets in transport and energy — represents a coherent allocation of scarce public resources, and whether the job-creation rationale advanced to justify it holds up to scrutiny.
On the latter point, the evidence is damaging. Khem Rogaly, co-author of the Transition Security Project report, notes that the shift towards autonomous weapons systems and artificial intelligence in high-end defence procurement is likely to compress the employment intensity of military spending still further, meaning the 2.4 jobs-per-million figure may itself be optimistic as a forward projection. The two road improvement projects already cancelled, and the prospective reductions to home insulation and carbon capture schemes, represent the tangible cost of this reallocation — foregone employment in sectors with demonstrably higher domestic multipliers.
The government’s response — that defence “supports 272,000 jobs and over 25,000 MoD apprenticeships” and will “create nearly 60,000 new jobs” — conflates the stock of employment associated with the existing defence establishment with the marginal effect of new investment, a distinction that matters enormously in this context. The relevant comparison is not between defence employment in aggregate and some abstract alternative, but between the jobs generated at the margin by an additional pound spent on defence versus an additional pound spent on transport or energy infrastructure. On that comparison, the government’s own data yields an uncomfortable answer.
A Funding Gap That Demands Honesty
The political arithmetic compounds the analytical problem. With £4.7bn of the plan unfinanced and deferred to a future Budget, the burden falls on whoever succeeds Starmer in Downing Street — most likely Andy Burnham, who has already indicated he was not informed of the shortfall before the announcement and who has since committed to “fully fund the defence spending plan.” That is a significant undertaking for a leadership candidate to make before taking office, and it speaks to the degree to which the fiscal architecture of the plan remains unresolved.
None of this is an argument against defence investment per se. A country that cannot credibly defend itself or honour its alliance commitments has deeper problems than a suboptimal employment multiplier. But governments that choose to fund rearmament by cutting domestic infrastructure should do so honestly, acknowledging the trade-offs rather than dressing fiscal constraint as economic opportunity. The claim that redirecting money from roads and insulation to fighter jets and autonomous weapons systems will generate a net employment dividend is not supported by the evidence — and policymakers, financiers, and the public deserve to know it.