Britain's former defence secretary quit over a funding gap so large that allies claim the Treasury blocked a plan to join a new international bank that could have helped bridge it. The Defence, Security and Resilience Bank (DSRB), spearheaded by Canada, is an idea being pushed by former defence secretary John Healey and a group of Labour MPs as a way to raise more money for defence without cutting other public services. But Chancellor Rachel Reeves has so far been unwilling to pay the upfront cost, and Healey resigned on 10 June 2026 saying the government's Defence Investment Plan fell "well short" of what was needed.
The DSRB is an international investment bank that aims to help member countries fund defence projects at low costs. It is expected to be officially launched at a Nato summit next month. Membership for the UK and other G7 countries would come with an upfront investment cost of around £870m spread over three years. Supporters argue that this sum should be viewed as an investment, not a cost, because it would allow the UK to access cheaper financing for military projects and could also support British businesses in the defence sector.
“The DSRB is a proposed international bank to fund defence projects; the UK debate over joining it is explained.”
The idea came to prominence after Healey, who had been privately pushing for the UK to join, resigned as defence secretary. In his resignation letter, he said there were "credible ways" to fund extra defence spending, including "working multi-nationally". Allies of Healey claim the Treasury tried to shut down negotiations for the UK to join the DSRB. Treasury sources, however, counter that Healey never submitted an official funding request related to membership. The row deepened when Wes Streeting, the former health secretary who plans to challenge Keir Starmer for the Labour leadership, blamed "poor leadership, poor judgement and bad politics" from No 10 for the resignations. He also rejected the idea of a binary choice between spending on defence and spending on public services, floating alternative proposals such as inheritance tax-free defence bonds.
For UK readers, the debate over the DSRB matters because it reflects a wider struggle over how to pay for increased defence spending at a time when the government is under pressure to invest more in the military. Sir Keir Starmer said in February that Britain "needs to go faster" on defence spending, but has only offered an extra £2bn (0.08% of GDP) by 2030. Military chiefs have reportedly asked for around £28bn more, while Healey said Number 10 and the Treasury were prepared to give around £10bn. The new defence secretary, Dan Jarvis, has been given until the Nato summit in Ankara in a fortnight to produce an alternative plan with more investment. Meanwhile, culture secretary Lisa Nandy has said her department is among those being asked to look for cuts to fund defence—though she ruled out cuts to the BBC due to the need for national resilience against disinformation.
The DSRB is not the only idea on the table. A government spokesperson said they were exploring setting up a "multilateral defence mechanism" with Finland, the Netherlands and others to improve value for money in defence procurement. Some MPs have suggested funding DSRB membership through the National Wealth Fund, a Treasury-owned investment vehicle. But the central question remains: will the Treasury agree to borrow or reallocate money to join the bank, or will the UK go it alone?
Q: What is the DSRB? The Defence, Security and Resilience Bank (DSRB) is a proposed international investment bank that would allow member countries to fund defence projects at lower interest rates. It was spearheaded by Canada and is expected to launch at a Nato summit next month. The UK would need to pay around £870m over three years for membership.
Q: Why did John Healey resign? John Healey resigned as defence secretary on 10 June 2026 because he said the government's Defence Investment Plan fell "well short" of what is needed. He believed the DSRB could help bridge the funding gap, but the Treasury was unwilling to pay the upfront cost. Allies claim the Treasury tried to shut down negotiations.
Q: How will the UK fund increased defence spending? The government is exploring several options, including asking other departments to find cuts, setting up a separate multilateral defence mechanism with Finland and the Netherlands, and potentially borrowing more—though Chancellor Reeves has indicated she is not in favour of borrowing. The new defence secretary, Dan Jarvis, must present an alternative plan before the Nato summit in Ankara in a fortnight.
What happens next depends on whether Dan Jarvis can convince the Treasury and No 10 to commit more money. The Nato summit in July is the next key deadline, and the Defence Investment Plan has yet to be announced. Healey's resignation, followed by that of armed forces minister Al Carns, has put immense pressure on Starmer, who has called the decisions "hard-edged". The Labour leadership challenge from Wes Streeting adds further uncertainty. For now, the DSRB remains on the table, but its chances of UK membership look slim without a change of heart from the chancellor.