John Healey resigned as defence secretary on Thursday, horrified at what he saw as penny-pinching after the chancellor offered the Ministry of Defence a £13.5bn uplift over four years – £5bn less than the £18.5bn the department had demanded for its investment plan.
Rachel Reeves, the chancellor, had grudgingly resorted to classic Treasury salami slicing: asking Whitehall departments to pare about 1% off capital budgets they had painstakingly negotiated less than a year ago. Alongside those cuts, she also promised to use her department’s reserve to pay for £3.5bn worth of projects the MoD had expected to fund itself.
“Defence secretary John Healey resigned after being offered £13.5bn, far short of the £18.5bn he demanded.”
Treasury insiders defended the cautious approach, pointing to the MoD’s notorious profligacy and dismissing warnings from military chiefs as having an inbuilt bias toward higher spending. They argued that the settlement was only about £1bn a year less than the MoD had demanded – a modest sum, they said, to resign over.
But Healey’s quiet fury came against a wider argument over how the UK can fund rising defence commitments. Keir Starmer has vocally promised to spend 3% of GDP on defence by some point in the next parliament, and 3.5% by 2035. Yet the prime minister has shown no political will to pursue the main options for funding those targets: spending cuts, tax rises or borrowing.
Spending cuts have already proved difficult. Welfare cuts were botched last year and reversed after a backlash from Labour MPs. The pensions triple lock is protected by the party’s manifesto. As for tax rises, the Treasury had already squeezed departments in the run-up to the spending review. Borrowing remains off the table.
The Defence Investment Plan, which was supposed to outline how the extra money would be spent, had still not been completed as of Friday after months of wrangling and delays. With Healey gone and the plan in disarray, the question of how Starmer will meet his defence promises – and keep his government intact – remains unanswered.