John Healey, the former defence secretary who resigned on Wednesday, was privately pushing for the UK to join an international investment bank to raise more money for defence – until the Treasury tried to shut down the negotiations, BBC News has been told.
The bank, known as the Defence, Security and Resilience Bank (DSRB), was spearheaded by Canada and is expected to be officially launched at a Nato summit next month. Countries wishing to join will be asked to contribute an upfront investment of around £870m. Canadian prime minister Mark Carney is said to be keen for the UK to join the project.
“John Healey resigned as defence secretary, accusing the Treasury of blocking UK entry to a global defence bank.”
Allies of Healey claim the Treasury blocked talks over the DSRB. In his resignation letter, Healey said there were “credible ways” to fund extra defence spending, including “working multi-nationally”. Treasury sources indicated to the BBC that the chancellor had been looking at ways to fund defence with countries aside from the Canadian suggestion, including discussions with Poland about a “Multi-Lateral Defence Mechanism”. The chancellor, Rachel Reeves, earlier this week indicated she was not in favour of borrowing more money to increase defence spending.
Healey’s resignation has exposed a wider row over spending. He said the amount of money attached to the government’s upcoming Defence Investment Plan fell “well short” of what was needed. He revealed that Starmer had only offered to increase defence spending to 2.68% of GDP by 2030, about £25bn below the Nato target of 3.5% by 2035. Downing Street and the Treasury offered to plug £13.5bn of an £18bn deficit in spending on defence projects.
“These are the most dangerous and uncertain times we’ve faced for decades,” Healey told the New Statesman in an interview republished after his resignation. In his letter replying to Healey’s resignation, the prime minister wrote: “The world today is more dangerous and uncertain than at any point in our lifetimes.”
Starmer admitted on Friday that he has to “turn things around” after Healey quit, and promised to fight any leadership challenge. But he argued that anyone who replaced him would face the same difficult tradeoffs. “I would just gently say this: that whoever is prime minister is going to face the same prevailing winds as I am facing. None of that is going to change,” Starmer said.
The row has left the government at odds with its allies and within its own ranks as the need to spend more on defence grows ever more pressing.