Guns, Wealth and Welfare – Who Carries the Burden for Defence?

The argument for democratic reform on defence, taxation and the social contract.

Britain is in the middle of a debate about defence spending. On the surface, it looks like a straightforward question of national security; how much should the country spend, and how quickly? But scratch beneath that surface and a far more uncomfortable set of questions emerges: who actually benefits from military power, who is being asked to pay for it, and what does the answer reveal about the kind of society Britain truly is?

The answers are not flattering.

The welfare-for-weapons trade-off

In early 2025, Chancellor Rachel Reeves stood in front of an armoured vehicle factory and announced that Britain would become a “defence industrial superpower.” To fund it, her Spring Statement cut universal credit health benefit (claimed largely by disabled people) by fifty percent, frozen for new claimants until 2030. The Office for Budget Responsibility assessed that approximately 3.2 million people would lose out financially, with an average annual loss of £1,720. Around 250,000 people, including 50,000 children, were projected to be pushed into relative poverty as a direct result.

This was not a bolt from the blue. Former Labour and Conservative defence secretaries had already argued publicly that welfare cuts should fund the defence increase. Both main parties converged on the same conclusion: that the people least able to absorb cuts should bear the cost of a spending programme whose primary beneficiaries are anything but vulnerable.

The logic, on a close examination, is extraordinary: disabled people must have their incomes slashed so that BAE Systems can expand its order books.

Military power – cui bono?

The standard answer to “what is defence for?” is protection of citizens and territory from external threats. That is a legitimate function of any state, and few serious people dispute that some military capacity is necessary.

But the honest historical answer is more complex. British military power was for centuries explicitly the instrument of empire; protecting trade routes, suppressing colonial populations, enforcing the interests of merchant and landowning classes. The Royal Navy’s primary function for much of its history was the protection of commerce. The East India Company even had its own army.

This is not ancient history. The economic interests that military power underwrites remain concentrated at the top of the wealth distribution:

• Global supply chains require stable sea lanes, enforced by naval power, whose primary beneficiaries are multinational corporations
• Energy companies depend on geopolitical influence in resource-rich regions
• The financial sector operates within a rules-based international order that military power ultimately enforces
• Property and land values (concentrated among the wealthiest) depend on domestic and international stability, that armed forces underwrite

The people whose wealth is most deeply intertwined with the security the state provides are, systematically, the people least asked to fund it.

The allegiance problem

There is a constitutional dimension to this that rarely receives the attention it deserves, in my view. Members of the British armed forces swear an oath of allegiance to the monarch and their heirs, not to the country, not to its citizens, and not to its constitution or Parliament. This reflects the historical origins of the British military as the Crown’s forces rather than the nation’s.

The contrast with other democracies is on the face of it, quite stark. US military personnel swear to defend the Constitution. The German Bundeswehr swears to serve the German people. In Britain, the formal loyalty of the armed forces runs upward to the Crown – an institution that is itself the symbolic apex of the property-and-privilege order the state was built to protect.

This is not to impugn the sincerity of individual service men and women, the overwhelming majority of whom serve out of genuine commitment to their country and communities. It is rather obviously to state that the institutional architecture of British defence reflects a set of priorities that has never been democratically reassigned.

The tax elephant in the room: where the money actually sits

The long-term political framing of the welfare-versus-defence debate on all sides implies a simple scarcity: there is not enough money, and hard choices must be made. This is, at best, a half-truth, and the easiest option to promote.

The UK loses tens of billions of pounds annually to tax avoidance and evasion. The figures vary by methodology, but Tax Justice Network and related organisations consistently place the scale of the problem in the range of £70–100 billion per year. Meanwhile:

• Non-domicile tax status has for decades allowed the super-rich to shelter vast wealth from UK taxation
• Corporation tax has been reduced repeatedly by both Labour and Conservative governments since the 1980s
• Private equity firms benefit from carried interest arrangements that tax their earnings at far lower effective rates than ordinary workers
• Crown Dependencies – Jersey, Guernsey, the Isle of Man, and Overseas Territories including the Cayman Islands and British Virgin Islands function as offshore shelters for wealth that often originates in, and profits from, the UK economy

The political reluctance to close these gaps while cutting disability benefits is not an economic necessity. It is a political choice. The money exists. The will to collect it, from those with the power to resist collection, does not.

The revolving door between government, the financial sector, and the arms industry further entrenches this dynamic. Former ministers become defence industry lobbyists. Senior civil servants move to private equity and banking. The architecture of influence ensures that those who benefit most from the state’s protective functions are precisely those with the most access to the politicians who set the terms of contribution.

What a civilised society actually looks like

The post-war settlement was built on a specific and powerful idea: that the measure of a civilised society is how it treats its most vulnerable members.

The NHS, social security, public housing, legal aid – these were not charitable concessions from the powerful to the weak. They were the product of generations that had experienced collective sacrifice and concluded that collective and effective support must follow.

That settlement is being systematically eroded. The language of national security is being used (as it has historically always been used) to justify the redistribution of burden downward rather than upward. The crisis is real; the conclusion that the poorest must pay for it is a political choice dressed up as an inevitability.

What we are watching is the systematic inversion of that post-war principle. The sacrifices are being demanded of the same people, the poor, the sick, the disabled, while those who accumulate most from the stability the state provides are shielded from contributing proportionately.

What can be done to change direction – policy proposals

The following reforms would begin to address the structural problems this debate has exposed. They are not radical in the sense of being utopian and most have precedents in other democracies or in earlier periods of British policy. They are radical only in the sense that they challenge entrenched interests that currently enjoy significant political protection.

1. Democratic reform of the Armed Forces Oath

Reframe the military oath of allegiance so that service personnel swear primary loyalty to the people of the United Kingdom and to the democratic institutions of the state, rather than exclusively to the Crown and its heirs.

Model the revised oath on comparable democratic nations (including Germany and the United States) where the armed forces are constitutionally anchored to the citizenry and its rights.

Initiate a cross-party constitutional review of the relationship between the Crown, Parliament and the armed forces, with the explicit goal of ensuring the military’s ultimate accountability runs to the democratic public.

Require the Ministry of Defence to publish an annual statement of how defence priorities serve citizen interests – not merely strategic or commercial ones.

2. Abolition of Non-Domicile tax status

• Abolish non-domicile tax status in full, with no partial replacement arrangements that preserve the substantive benefit under a different name
• Require all UK residents to pay UK tax on their worldwide income and assets, consistent with the arrangements in place for the overwhelming majority of citizens
• Implement a transparent register of all individuals who have historically benefited from non-dom status, with a clear transition period and enforcement framework
• Redirect revenue raised to a ringfenced social protection fund, demonstrating directly that closing elite tax privileges funds public services

3. Closing the Crown Dependency and offshore loopholes

• End the use of UK Crown Dependencies and Overseas Territories as offshore tax shelters by requiring full financial transparency and information sharing with HMRC
• Introduce a requirement that any individual or corporation benefiting from UK government contracts (particularly including defence procurement) must be domiciled for tax purposes in a jurisdiction that meets OECD transparency standards
• Support and actively pursue multilateral agreements, including the OECD Global Minimum Tax, with genuine enforcement mechanisms rather than the current ineffective, symbolic participation
• Legislate a public register of beneficial ownership for all trusts and shell companies registered in Crown Dependencies, matching the standards now applied to UK-registered companies
• Prevent any organisation operating in the UK and any of its Crown Dependencies being owned by trusts and shell companies in unregulated states
• Conduct a full parliamentary review of the constitutional arrangements governing Crown Dependencies, with the aim of ending their use as mechanisms to extract value from the UK economy while avoiding UK tax obligations

4. Substantially increased investment in tax enforcement

• Double HMRC’s budget for tackling avoidance and evasion by wealthy individuals and corporations over the next parliamentary term, with performance targets tied specifically to high-net-worth and corporate compliance (as it was prior to 2005)
• Recruit a minimum of 5,000 additional HMRC investigators with specialist training in complex financial arrangements, offshore structures, and corporate tax planning
• Establish a dedicated High Wealth Unit within HMRC with enhanced powers, ring-fenced funding, and a statutory obligation to publish annual enforcement data by wealth bracket
• Introduce a legal requirement for all firms providing tax planning services to register schemes with HMRC in advance of implementation, with substantially increased penalties for non-compliance
• Remove the current cap on civil penalties for deliberate tax evasion by high-net-worth individuals, and introduce mandatory minimum penalties for professional advisers who facilitate unlawful avoidance
• Establish a cross-departmental task force – combining HMRC, the Serious Fraud Office, the National Crime Agency and the Financial Conduct Authority, specifically targeting the intersection of tax evasion, money laundering and offshore wealth concealment

5. Principles for a just settlement on defence funding 

• No defence spending increase should be funded through cuts to welfare, disability benefits, or public services used predominantly by low and middle-income households
• Any increase in the defence budget above current levels should be accompanied by a published distributional impact assessment, showing how the cost is borne across income tiers
• Defence procurement contracts above £100 million should require the contracting company to demonstrate UK tax compliance, full beneficial ownership transparency, and fair employment standards
• A Citizens’ Defence Assembly (drawn at random from the general public) should be convened to advise Parliament on the strategic priorities and social trade-offs of any major increase in military spending
• The arms export licensing regime should be reformed so that weapons sales cannot be justified on purely commercial grounds, making explicit that security and commercial interests are not the same thing
• That no arms licences can be issued where any purchasing state is involved in genocide or other crimes against humanity, or is in breach of international law

No more talk of cutting welfare support for the most vulnerable to fund defence. 

The question of how Britain pays for its defence is ultimately a question about what kind of country Britain is, and who it is for. The current answer – cut the incomes of disabled people, protect the tax arrangements of the wealthy, and call it a strategic necessity is not an answer that a genuinely progressive or civilised society should accept.

The money needed to fund collective security exists. It sits in offshore accounts, in non-dom arrangements, in carried interest loopholes, in the gap between what large corporations owe and what HMRC has the resources to collect.

 The political will to retrieve it is what is lacking – because the people who hold that wealth are also, in too many cases, the people who fund political parties, own newspapers, and walk the corridors of power.

Reforming the oath of the armed forces, closing the offshore loopholes, and properly resourcing tax enforcement are not peripheral technical matters. They are questions about democratic accountability, about the relationship between the state and the citizen, and about whether the institutions of collective security serve the many or the few.

Britain’s post-war generation answered that question one way. The present political consensus is answering it in the opposite direction.

The choice of which answer to accept remains, for now, with the public.