Among the slew of private messages released by the UK government from ministers before Lord Mandelson’s appointment as US ambassador, one stands out.
It’s not because it's the most fawning – there are plenty of those. Neither is it the most personally critical of Labour colleagues – again, they are numerous. Nor is it the direct absence of Prime Minister Keir Starmer from the exchanges.
It’s from Pat McFadden, with the cabinet minister telling Mandelson: “Every meeting I have is: 'Who can we tax in order to pay benefits to others?' They’re asking the wrong questions.” McFadden is no slouch. He is widely admired by his fellow ministers, cited as a smart strategist and intellect.
Here he is, though, being openly critical of colleagues and their hidebound ideology and inability to think differently. At the time, McFadden was the senior minister in the Cabinet Office. He made headlines again this week for a different reason.
Asked on TV when the UK will publish its long-awaited Defence Investment Plan, or DIP, McFadden, now the Work and Pensions Secretary, said the government needed more time “to get this right and do it properly”. He did say it should be ready in the coming weeks when a Nato summit is expected to focus the Whitehall machine on resolving the issue. When it lands, the DIP is expected to commit to an additional £18 billion for defence over the next four years.
That is in response to pressure from US President Donald Trump for Nato members to boost their military spending. Starmer has pledged to raise the UK contribution to 3.5 per cent of GDP by 2035. It would mean an extra £35 billion to £40 billion, so the £18 billion is still far short. The DIP has been held back due to indecision and rows between the Ministry of Defence and the Treasury on the size of the package and how the money is to be found.
The procrastination has seen UK defence companies closing or moving abroad. Nearly three quarters – 73 per cent – of defence tech companies polled in a new survey say they have suffered a contract suspension or cancellation in the past six months, while 87 per cent have experienced funding delays or reductions. The trade association techUK surveyed 45 technology firms that either have contracts with the Ministry of Defence or have had such contracts.
Nearly half – 47 per cent – said they are still awaiting a contract extension from the financial year ending March 2026, with several saying this puts the delivery and maintenance of current projects at risk. The trade body said almost all respondents – 93 per cent – are having to reassess investment or recruitment decisions. Asked why they were experiencing such problems, the same causes were repeatedly given, with 62 per cent of firms citing the delay to the DIP. The latest to sound the alarm is Chemring. One of its unexpected cost blowouts was down to keeping expensive systems and staff in place while waiting for the pipeline of government orders to flow faster.
The FTSE250 defence group that specialises in countermeasures against missiles reports a dip in its sensors division, blaming delays to UK government orders.
Given the Iran and Ukraine conflicts have only served to underline the need for such protection, the DIP’s lag is even more pertinent. The slowness has added relevance because the UK is experiencing a workforce crisis in which around one million young people are not in employment or training to get a job.
Last week, a thumping, well-researched and considered report was published that painted a grim picture of the employment prospects for the country’s 16 to 24-year-olds. Former Labour minister Alan Milburn warned of a “catastrophic system failure” affecting those one million young people.
In his 217-page review into the extent and causes of the problem, Milburn pointed to a “record of failure” that, without action, was bound to get worse. He also recommended solutions led by a “whole system reset” to the “working state” if the UK was to avoid a “lost generation”.
A major factor in what was widely hailed by politicians from all sides as a crisis is the onset of AI. The new technology is displacing jobs at an alarming rate. Somehow, the UK and other nations similarly affected need to find ways of replacing those closed openings and wrecked career paths. One route, as Milburn made clear, is to increase apprenticeships and job development programmes in areas not so directly impacted by AI. That has led to calls for the UK to revitalise its industrial manufacturing base, to rebuild and open factories, to renew its engineering capability.
That’s easier said than done in a globalised world in which consumer appliances and products can often be made elsewhere for less. But it’s also an environment where protectionism and national security are increasingly to the fore. Central to that is aerospace, which is a substantial employer, capable of generating large numbers of skilled jobs, providing training schemes and calling on the latest scientific and tech advances.
It’s essential, too, that this new source of work is not concentrated on London and the South-East. Again, defence is the ticket. The nation’s existing defence-makers are located around the country, away from the capital, in the old manufacturing and engineering heartlands of the North and the Midlands.
They are precisely in the places where job opportunities are few and the need is great. In another exchange with McFadden, Mandelson described No 10 as “beleaguered and bereft” and said that Starmer “lacks verve”.
For the sake of Britain’s future, for its military capability and its youth, he must drop this trait and urgently step up.
