John Healey was privately pushing for the UK to join an international investment bank to raise more money for defence spending, BBC News has been told — a plan that allies of the former defence secretary claim the Treasury tried to shut down.
The idea, spearheaded by Canada, would see the UK become a member of the Defence, Security and Resilience Bank (DSRB), which aims to help member countries fund defence projects at low costs. The bank is expected to be officially launched at a Nato summit next month.
“John Healey privately pushed for UK to join global defence bank, but Treasury tried to shut it down.”
Membership for the UK and other G7 countries would come with an upfront investment cost of around £870m spread over three years. Canadian prime minister Mark Carney is said to be keen for the UK to join the project. Ministers have been mulling it for months, but the chancellor is thought to have been unwilling to pay.
In his resignation letter, Healey said there were “credible ways” to fund extra defence spending, including “working multi-nationally”. He resigned on Wednesday, saying the amount of money attached to the government’s upcoming Defence Investment Plan fell “well short” of what was needed.
Sir Keir Starmer told the BBC on Friday he had made “hard-edged” choices on defence spending, including asking government departments to make cuts to help pay for it. The Defence Investment Plan has yet to be announced. Healey said Number 10 and the Treasury were prepared to give around £10bn in additional money in this plan, around £18bn less than what military chiefs have reportedly asked for.
Treasury sources claimed Healey never submitted an official request for funding related to the UK’s membership of the DSRB. However, one advocate of the UK joining the bank said it was likely that the up-front cost would have to be paid for by borrowing. Earlier this week Chancellor Rachel Reeves indicated she was not in favour of borrowing more money to increase defence spending. Other DSRB supporters say the money should instead be viewed by ministers as an investment. One idea being pushed by some MPs is for membership to be funded through the National Wealth Fund, a Treasury-owned investment vehicle.
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 with allies.
Healey’s resignation comes amid the most dangerous period in decades. In a recent interview with the New Statesman, republished after his resignation, he described the situation as “the most dangerous and uncertain times we’ve faced for decades”. He had been averaging fewer than five hours of sleep a night since the war in Iran began, rising at 3am on 2 March, shortly after the drone strike on RAF Akrotiri, to give the go-ahead for family members and non-essential personnel to be moved away from the British military base in Cyprus. “There’ll be no repeat of the Iraq mistakes,” he said forcefully. “And that’s really why I went out of my way to set out the principles on which our current decisions in the Middle East are founded.”
A group of defence-focused Labour MPs have been lobbying ministers to look more closely at the DSRB for months. Liam Byrne, the Labour MP who chairs the Business and Trade Select Committee, has written on the subject. MPs on the committee visited Canada last week to discuss the DSRB.