John Healey was privately pushing for the UK to join an international defence investment bank before he resigned as defence secretary, BBC News has been told — a plan allies claim the Treasury tried to shut down.
The former defence secretary wanted Britain to become a member of the Defence, Security and Resilience Bank (DSRB), an idea spearheaded by Canada that 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.
“Healey privately pushed for UK to join global defence bank, allies say, before resigning over funding shortfall.”
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. Ministers have been mulling it for months but the chancellor is thought to have been unwilling to pay.
In his resignation letter on Wednesday, Healey said there were “credible ways” to fund extra defence spending, including “working multi-nationally”. He resigned saying the amount of money attached to the government’s upcoming Defence Investment Plan fell “well short” of what was needed. He added that Number 10 and the Treasury were prepared to give around £10bn in additional money — around £18bn less than military chiefs have reportedly asked for.
Treasury sources claimed Healey never submitted an official request for funding related to UK membership of the DSRB. Allies of the former defence secretary, however, say the Treasury tried to shut down negotiations entirely. The government said it was exploring setting up a “multilateral defence mechanism” with Finland, the Netherlands and others “to improve value for money” in defence procurement.
The resignations of Healey and armed forces minister Al Carns — who quit in protest at the Defence Investment Plan — have triggered a fierce backlash from within Labour. Wes Streeting, who resigned as health secretary in May and is planning to challenge Keir Starmer for the Labour leadership, blamed “poor leadership, poor judgement and bad politics” from No 10.
In an exclusive interview with the New Statesman, Streeting said the row “underscores the case for change and change quickly because we can’t go through any more of this inertia.” He attacked “juvenile” government briefings against Healey, saying they “debased his critics”. Streeting warned: “Unless that changes, we will give this country to Nigel Farage and he will walk into Downing Street at the next general election.”
Streeting rejected the idea of a binary choice between spending on defence and public services, setting out alternative proposals for rearmament funding. He said Healey and Carns had been treated badly by No 10 and the Treasury, adding: “This is not a government that is open to ideas, this is not a government that is willing to draw on expertise.”
Sir Keir Starmer defended the Defence Investment Plan as a “hard-edged decision”, telling the BBC he had asked government departments to make cuts to help pay for it. The plan has yet to be announced.
One idea being pushed by some MPs is for membership of the DSRB to be funded through the National Wealth Fund, a Treasury-owned investment vehicle. MPs on Parliament’s Business and Trade Select Committee visited Canada last week to discuss the bank. With the Nato summit approaching and the UK’s position still unclear, the question of how to bridge the defence funding gap remains unresolved.