John Healey resigned as defence secretary on Thursday, hours after the chancellor, Rachel Reeves, offered only £13.5bn of the £18.5bn his department said it needed over four years. The resignation laid bare a deepening crisis at the heart of Keir Starmer's government over how to fund rising security commitments.
Healey's Ministry of Defence had demanded the full sum to sustain the defence investment plan. Instead, Reeves grudgingly resorted to classic Treasury salami slicing: asking Whitehall departments to pare about 1% off capital budgets they had negotiated less than a year ago. 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 Reeves offered only £13.5bn of £18.5bn demanded”
When Healey saw the end result – a £13.5bn uplift – he was horrified at what he saw as penny-pinching. Treasury insiders, however, pointed to the MoD's notorious profligacy and shrugged at dire warnings from military chiefs, who they said have an inbuilt bias towards higher spending. They rejected the idea that the settlement fell well short, noting that the gap was around £1bn a year – a modest sum to resign over.
Yet Healey's quiet fury came against a wider argument about how the UK can fund rising defence commitments. Starmer has vocally promised to spend 3% of GDP on defence by some point in the next parliament, and 3.5% by 2035. There are essentially three options: spending cuts, tax rises or borrowing. Starmer has shown no political will to pursue any of them.
Spending cuts are constrained: the Treasury had already squeezed departments before the spending review, welfare cuts were reversed after a Labour backlash, and costly commitments such as the pensions triple lock are ruled out by the manifesto. Tax rises would need to be significant, and borrowing would add to debt. No lever was to hand this time, unlike when Starmer wanted to promise Donald Trump a defence increase and funded it by slashing the aid budget – losing cabinet minister Anneliese Dodds in the process.
On Friday, it was confirmed that the Defence Investment Plan had still not been completed after months of wrangling and delays. With Healey gone and the plan in limbo, Starmer clings on, facing the same unpalatable choices he has so far refused to make.