John Healey resigned as defence secretary on Thursday, incensed by what he saw as Treasury penny-pinching after the chancellor offered a £13.5bn uplift over four years – £5bn less than the Ministry of Defence had demanded for its investment plan.
Healey’s resignation came after Rachel Reeves, asked to find an additional £18.5bn, grudgingly resorted to classic Treasury salami slicing: asking Whitehall departments to pare about 1% off capital budgets they painstakingly negotiated less than a year ago. In another well-worn manoeuvre, Reeves also promised to use her department’s reserve to pay for £3.5bn worth of projects the MoD had expected to have to fund.
“John Healey resigned as defence secretary after Reeves offered £13.5bn, far short of the £18.5bn MoD demanded.”
The move sits uneasily with the government’s promises on public services – repairing crumbling hospitals and overcrowded schools – and the chancellor’s hopes of using investment in green energy to kickstart economic growth.
It was the second time Keir Starmer has struggled to fund a defence spending pledge. When he wanted to promise Donald Trump that the UK would increase defence spending, he slashed the aid budget – losing cabinet minister Anneliese Dodds in the process. This time, there was no such lever to hand.
Treasury insiders defend the cautious approach, pointing to the MoD’s notorious profligacy and the inbuilt bias of military chiefs towards higher spending. They reject the idea that the settlement fell well short of what was needed, arguing that £13.5bn over four years is about £1bn a year less than the MoD demanded – a modest sum to resign over.
Yet Healey’s quiet fury came in the context of a wider argument about how the UK can fund rising commitments, including Starmer’s vocal promise to spend 3% of GDP on defence by some point in the next parliament, and 3.5% by 2035. Here there are essentially three options: spending cuts, tax rises or borrowing – and Starmer has shown no political will to pursue any of them.
Spending cuts are fraught: welfare cuts were botched last year and reversed after a backlash from Labour MPs, while the pensions triple lock is ruled out for this parliament by the party’s manifesto. The Treasury had already squeezed departments in the run-up to the last spending review. Tax rises of £18.5bn remain politically painful. And the Defence Investment Plan has still not been completed after months of wrangling and delays, it was confirmed on Friday.
Starmer now clings on as defence spending plans lie in disarray, with the prime minister showing no appetite for the big choices needed to bridge the gap.