Insight Type: Insight

Yesterday’s Strategic Defence Review (SDR) had been a long time coming. Commissioned nearly a year ago as a “root and branch review” of the UK’s armed forces, the announcement underscores Keir Starmer’s ambition to overhaul the State’s delivery capacity. Emphasising that the review was intended to ensure the transition to “war-fighting readiness” in a time of global uncertainty, the Prime Minister has thrown his support behind large-scale reform and investment aimed at modernizing the UK’s military capabilities, while reinforcing our international commitments to NATO. While there is widespread support for the tone and aims of the announcement, it was not without its critics over a perceived absence of funding details and lack of clarity on some targets.

The review, presented by an independent panel including Lord Robertson, Dr Fiona Hill, and General Richard Barrons, contains 62 recommendations, all of which Starmer has accepted. These span a wide range of issues, from new munitions factories and submarines to cyber resilience and military housing. Taken together, they signal that, for the first time in at least twenty years, there is a new permissive environment for defence procurement in the UK.

The caveat, of course, is that while there were significant promises on funding and on shortening timelines, details on these were decidedly murky.

Many of the SDR’s announcements had been trailed for weeks, if not months; the Government revealed in February that spending in the sector would rise to 2.5% of GDP by April 2027. However, pressure still remains over the date at which the holy grail of 3% will be reached – something Defence Secretary John Healey MP has said will happen “no doubt” before 2034.

The Prime Minister and his team are well aware of the economic and electoral traps they will walk into if they promise to reach this figure at a specific date, but appearing to make unfunded promises is also a risk in itself. Seeming to ‘kick the can down the road’ on funding is at odds with the well-founded urgency which set the tone for the Prime Minister’s speech, while targets such as ‘up to 12’ new attack submarines could uncharitably be interpreted as being likely to end up at the lower end of that scale.

Speaking at BAE Systems’ shipyard in Govan, Glasgow, Starmer also championed the so called “defence dividend,” the economic boost expected from increased defence spending. Citing the 10,000 jobs six new munitions factories and a £15bn boost in the UK’s Sovereign Warhead Programme would create, Starmer clearly sees the sector as vital part of his mission towards growth and increased industrial capacity. Framing the spending boost as “military Keynesianism”, he’s also keen to ward off those to his left who have complained ahead of next week’s spending review that he and the Chancellor are not being bold enough on spending.

Starmer framed yesterday’s review as positioning the UK as the fastest military innovator in the world. Recognising that changing threats – particularly in cyber and from Russia – had warped traditional notions of national security he added that “the front line, if you like, is here”. To this end, he focused less on traditional ‘boots on the ground’ and instead promised the creation of a cyber command to lead offensive cyber operations as well as a re-established Home Guard to protect critical infrastructure. Alongside new money, the Prime Minister has endorsed the most radical shake-up of defence governance in a generation, abolishing the Levene reforms, cutting procurement timelines, and establishing a Military Strategic HQ with direct authority over service chiefs.

Internationally, the review marks a clear reaffirmation of the UK’s commitment to NATO and multilateral defence cooperation. In an era where scepticism toward international institutions is gaining traction, particularly on the political right, Starmer has doubled down on alliance-based security. His embrace of NATO, reinforced by recent moves toward deeper European defence integration, draws a sharp contrast with the isolationist rhetoric of figures like Nigel Farage. Yet this alignment comes with diplomatic nuance: while strengthening ties with European allies, the Prime Minister must also navigate the sensitivities of the transatlantic relationship, ensuring that Britain’s strategic pivot doesn’t unsettle Washington.

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In the latest in a string of international ‘wins’ for the Government, the UK and the EU have agreed to the most substantial reset in relations since Brexit. The Prime Minister hailed the deal as a pragmatic “new chapter,” designed to reduce trade friction, deepen defence cooperation, and stabilise Europe’s economic and security future.

On the issue of EU/UK relationships, the Government was always going to face criticism. Be seen to cosy-up too close to European leaders and those on one side of the Brexit argument label you a coward, don’t cosy-up close enough and many from the Prime Minister’s own party label him something worse. But what today’s announcement shows is the Prime Minister’s focus on the economic reality we find ourselves in, and his steadfast pursuit of economic growth as the only tonic.

Today’s Summit came as no shock, and neither really did the content of the agreement. This reset was part of Labour’s manifesto and Starmer has been clear for a while that the UK will accept some EU oversight on standards in exchange for economic benefit – a move he’s presenting as “pragmatic delivery”. Critics may well view this as a creeping return to EU regulatory orbit, but for Starmer, this is about delivery and about high-level negotiations in which compromise must be made – similar to those compromises made during the recent negotiations with both India and the United States.

By securing better market access while staying outside the single market, Starmer treads a fine line – one that could attract accusations of “cherry-picking” from Brussels and betrayal from domestic Brexiteers. Yet, the EU’s willingness to engage on narrow technical terms signals a potential softening of its stance, likely influenced by wider geopolitical pressures and the need for Western unity. Ursula Von der Leyen even attempted to shield Starmer from criticism by asserting that the deal “shows the sovereignty of the UK” – because it chose to make it.

What has emerged today is a vision of pragmatic sovereignty, in which ideological purity has been set aside, to be replaced by economic stability and global cooperation. Labour is likely hoping this approach will drown out the familiar cries of betrayal from figures like Nigel Farage, focusing instead on the tangible benefits to business, security, and consumers. Whether this narrative lands successfully remains to be seen, and opposition figures have already pointed out that the key strands of today’s agreement – a youth mobility scheme, defence cooperation and easier cross-border travel – only help the so called ‘elite’, while punishing everyday (fishing) communities. No10 will be doing all they can to shake off this notion and have already framed the deal as improving “jobs, bills and the border”.

Yesterday, the Government published its much-anticipated Immigration White Paper, outlining plans to impose tougher regulations, making it harder for people to secure settlement and citizenship in the UK, and hoping that by “taking back control of our borders” it can counter the rising threat posed by Reform UK and tackle the long-standing political dilemma of record immigration levels.

The Prime Minister delivered a speech setting out the new measures, pledging to drive down net migration by the end of this Parliament but, perhaps wisely, refusing to commit to targets. Starmer asserted that his government will reshape the UK’s immigration system to prioritise those who contribute to economic growth, with restrictions across all forms of visas, to end the “squalid chapter” of immigration under the Conservatives.

A major focus of this new approach is to boost domestic training, including for key sectors such as care workers. As a result, requirements will be introduced to ensure employers support UK citizens into work rather than relying on international recruitment. Universities meanwhile will be encouraged to end what the Prime Minister suggested was an over-reliance on foreign students.

The Government says it is going further to ensure that almost only those applying for graduate-level roles will be able to come to the UK, with targeted routes for the “brightest and best global talent.” This includes creating faster routes for recruiting people with the right skills for industries such as engineering and AI.

Domestically this week looked set to be tough for the Prime Minister with his party losing 187 council seats and a humiliating by-election in Runcorn and Helsby to Reform UK last Thursday. While yesterday’s news of a new trade deal with the US will have offered him some, albeit limited, respite, his poor fortunes only continued when media attention interrupted the joint announcement with the President to cut to the Vatican and white smoke emerging from the Sistine Chapel.

The Prime Minister and his wider team have been upfront in their desire to reverse or at least mitigate the impact of Trump’s blanket 10% tariffs. With the US remaining the UK’s biggest trading partner, responsible for purchasing upwards of £200bn worth of British goods, Starmer and the Chancellor Rachel Reeves have been acutely aware of the importance of achieving this deal for the economy and their credibility.

Despite growing internal clamour to reverse policies such as the winter fuel payment cut and the rises to national insurance, Starmer can put his government’s work abroad down as a win. Indeed, while announcing the deal, Trump and his team were keen to heap praise on the UK saying he had an “external and internal bond” with the Prime Minister.

Building on the news earlier this week that he had achieved a new trade deal projected to be worth £4.8bn p.a. with India – something his Conservative predecessors failed to achieve – Starmer has ensured Britain has become the first country to break the US President’s protectionist front. Within Labour circles getting this deal over the line will go some way to keeping the wolves at bay and act as proof that the Government can deliver on their central mission, to achieve widespread economic growth.

Despite the initial positive discourse around achieving the deal, the devil, as always, ultimately lies in the detail. Going into these negotiations the UK was clear its priority lay in reducing Trump’s bumper tariff on steel, car and aluminium exports, while not giving up too much ground on agricultural standards, tech regulation and pharmaceuticals.

On the surface therefore, this initial framework looks to be a success. Starmer has negotiated down the 27.5% rate on cars to 10% (for the first 100,000 units) and abolished the 25% rate altogether on steel and aluminium, a move which will no doubt be welcomed by the 750,000 people employed in the automotive industry.

Cliched though it may be, the rolling results coming from the local elections demonstrate that the fundamental make-up of British politics has changed. Though the full picture is unlikely to be known until after 7pm this evening, the overnight dribs and drabs from the Mayoral elections and the Runcorn and Helsby by-election paint a difficult picture for all of the main parties.

They say a week is a long time in politics, so 4 years feels like an eternity. Turning back the clock to these sets of elections in 2021, the Conservatives unexpectedly outdid expectations, Reform UK was in its infancy and in the face of a humiliating by-election defeat in Hartlepool, Keir Starmer prepared to, but was talked out of, resigning. Now, it is clearer more than ever that both Labour and Conservatives face a new challenge that isn’t just each other.

Overnight, Labour narrowly held onto the Doncaster and North Tyneside Mayoralties, respectively, whilst Reform gained their first Mayor in former Conservative MP Andrea Jenkyns in Greater Lincolnshire. They have also taken control of Durham, Lincolnshire and Staffordshire county councils. Meanwhile, in the Runcorn and Helsby by-election – caused by the resignation of former MP Mike Amesbury over his assault conviction – Sarah Pochin became the first female Reform MP, winning by just six votes – the smallest by-election victory since 1945.

These results might be remarkable, but they are not unexpected. For months, No.10 has recognised the challenge Reform poses to their vote. In the week leading up to the by-election, the No.10 communications grid was filled with carefully-curated announcements to try and shore up their vote – on NHS waiting lists, talking tough on asylum seekers and fly-tipping. Yet there will now be disquiet about this lack of cut through and No.10 Chief of Staff Morgan McSweeney and the Chancellor Rachel Reeves are likely to be blamed for the losses.

Lodestone’s Kate Troiano on what the Tory leadership hopefuls could learn from the Democratic National Convention and the Harris Camp

This morning, King Charles III delivered the King’s Speech at the State Opening of Parliament, marking the beginning
of the new parliamentary session and setting out a Labour government’s legislative agenda for the first time in over
fourteen years. The Speech included the announcement of 40 new Bills – almost twice as many as the number
introduced by Boris Johnson following his 2019 General Election victory.

Amidst a backdrop of (slightly) reassuring economic analysis published this morning, King Charles delivered a speech
which focused on the Government’s commitment to economic growth and “creating wealth for people up and down
the country”.

The Speech was the latest opportunity for the Prime Minister to present his approach to governing as a return to
“stability, fiscal rules, security, fairness and opportunity for all.” There were no real surprises in its content, with
legislation on planning reform, English devolution, the establishment of GB Energy, Skills England and Great British
Railways, comprising the highlights – all of which formed the core of Labour’s election campaign promises.

Change was the agenda that Labour promised to the electorate during the campaign, and change was on the agenda
today. The far-reaching and ambitious scale of the legislation announced this morning shows the level to which the
Labour Government wants to deliver for the UK, and deliver quickly, ensuring the electorate feel the benefit of this
‘change’ well ahead of going back to the polls.

But whilst there were no surprises amongst the priorities announced, it is perhaps the legislation that didn’t make
the cut which has the potential to derail Sir Keir’s relatively smooth first two weeks in office. No mention of the
Government’s intention to scrap the two-child benefit cap could spark the first discipline-based crisis for the Prime
Minister, with many of his MPs – newly elected and otherwise – deeply uncomfortable with the message this position
sends to the Electorate.

Amidst the pomp and the fanfare, this morning provided us with an insight on the scale of ambition of our new
government. But it also marks the end of the grace period enjoyed by the Prime Minister and his Cabinet – delivery
starts today and so too does the – inevitable – scrutiny that has forever been twinned with power.

For a full list of the legislation announced earlier today, please see below.

One last heave…

The final full week of election campaigning is again remarkable for the lack of any real jeopardy to the seemingly
inevitable Labour victory. Rishi just can’t seem to move the dial. Starmer is now seemingly possessed with that
great quality in a General, good luck. For those with a karmic bent, the worry now is that he will have used up all
his luck before he becomes Prime Minister. The betting scandal – or Gamblegate as it will inevitably become known
– has now run the clock down even further on Sunak’s time in office. Labour strategists are now fretting about
the turnout and how that could limit the scale of victory, and maybe hamper the new regime with a lack of public
legitimacy. This is, in itself, a remarkable moment in Labour electoral history and shows how close to power they
now feel they are.

Political betting in the Westminster village is completely endemic and not in any way unusual. Of course, it might
look bad if someone gets a real edge on the bookies but that surely is in the nature of the game the bookies
themselves play? This is another one of those scandals that can flash across the media and consume seemingly
random individuals but not others. There will be plenty of political punters hoping that this storm will pass on
quickly like the end of a heatwave when the lightning flashes, but hopefully striking somewhere else.

To coin an overly-used footballing phrase, tonight’s debate – the last before polling day next week – was a game of two halves.

Going into this evening’s fixture was a clear favourite to be victorious come the end of the political tournament we’ve all been witness to over the past 5 weeks. Sir Keir’s CHANGED Labour Party, are on paper, the bookies’ favourite – poised to knock one of the democratic World’s most successful political parties off their long-held top spot.

In the other dugout, a deflated – and at times this evening, rattled – Prime Minister whose tenure overseeing the undisputed champions of British politics looks destined to end in a dismissal of resounding mutual consent amongst the electorate. There has been much off the pitch distraction for Sunak during this campaign, from poorly positioned photos, high-profile defections and disastrous D-Day gaffes, to the almost farcical extent to which his party is being investigated by the Gambling Commission – unwanted ‘outside noise’ which has left little bandwidth to focus on the Prime Minister’s policy platform.