By Duncan Simpson, research director
The terrible war in Ukraine that’s unfolding on our TV screens - courtesy of the evil, cruel Vladimir Putin - will impact British taxpayers in many ways. Energy prices are likely to rise, adding pressure to families already struggling with tax hikes. Sanctions and other measures may impact growth. Brits will be sick with worry for their Ukrainian friends and trading partners.
But is there anything taxpayers can do in response? Perhaps the government should increase defence spending. Any doubt about a military escalation evaporated as soon as Putin's thugs crossed the border and began shelling Ukrainian forces and civilians. Inevitably, attention has turned to whether NATO has the capabilities to defend itself and our allies. After years of pressure, Germany pledged to raise its share of GDP spent on defence from the current level of 1.5 per cent to over 2 per cent (the NATO requirement).
The TaxPayers’ Alliance wouldn’t be opposed to increasing defence spending. To many of us, resilience and security are the foundations of our belief in freedom and prosperity. We don’t pretend to know what level of spending is right for our defence needs, but the TPA can propose a roadmap to raising spending if needed.
In simple terms, it can be made possible by a serious consideration of spending priorities rather than simply lumbering the economy with an even heavier tax burden. The west ultimately won the cold war through a more competitive, more productive economy and that is what must underpin any response to a resurgence in tensions. A weak economy eventually means an enfeebled military. So raising the tax burden at a time when it is at a record high (and already causing serious problems with productivity and growth) would be the last thing Britain should do.
Instead, a range of wasteful projects and programmes should be reconsidered alongside a platform of pro-growth policies aimed at freeing up funds for an expansion of defence. The 'productivity dirty dozen' of 12 policy failures outlined in 2018 maps out how to accelerate growth. Targeted tax and spending cuts, of course, but also allowing more homes and business premises to be built, tackling transport congestion, removing barriers to trade and minimising unnecessary regulation are also required. Our recent Save to Spend paper also outlines where billions of pounds could be found for priority spending causes, including abolishing unnecessary quangos, restricting handouts like free bus passes and cutting subsidies.
If the country is about to decide that we need to move more of the economy into supplying defence, we must remember the lessons of the cold war: that a pro-growth, sound money agenda is the best tool we have to support a strong defence. Taxpayers will be ready. Like the brutal dictators we’ve faced down before, freedom and prosperity can help us defeat Putin.