Keir Starmer has handed his successor Andy Burnham a £4.7bn headache, with the outgoing prime minister’s Defence Investment Plan (DIP) containing only two-thirds of the cash needed to fund it.
The plan, published before next week’s NATO summit in Ankara, commits £15bn of extra spending over four years – but chancellor Rachel Reeves confirmed in a written statement to parliament that just £10.3bn has been identified. The remaining £4.7bn will be “confirmed at Budget 2026”.
“Starmer's defence plan leaves Burnham with a £4.7bn funding gap and no route to NATO's 3.5% target.”
With Burnham all but certain to become prime minister on 20 July, the bill will land on his desk within weeks. Sources close to Burnham told Yahoo News the announcement of the funding gap had “come as a surprise” to him and his team.
The numbers buried in the plan point to deeper strains. The Treasury assumes the Ministry of Defence can find £10.7bn in “defence efficiencies” by 2030 – with little detail on how – and the UK is set to hit just 2.7% of GDP on defence next year, with no pathway to the NATO target of 3.5% by 2035.
“As many other European allies rapidly accelerate towards meeting our new NATO target several years early, the UK is on the go-slow,” said Andrew Kinniburgh, director-general of Make UK Defence.
Starmer’s plan follows months of bitter wrangling and the resignation of two defence ministers. John Healey quit earlier this month, with his allies claiming “Treasury trickery” had inflated the headline figures. His successor, Dan Jarvis, secured an extra £1.5bn from the Treasury – enough to bring the total uplift to £15bn – but in the Commons acknowledged “we need to do more”.
The cost is already being felt elsewhere. The Department for Transport is considering cancelling the A38 Derby Junctions and A46 Newark Bypass schemes to meet £700m of cuts. Hamish Falconer, a serving minister whose constituency includes the A46, went public about his frustration at the uncertainty. The Department for Energy Security and Net Zero is expected to find £2bn through efficiency savings and delays.
Starmer described the plan as “a platform on which I know my successor will build”. In a reflective tone, he told reporters: “There will always be those who say, whatever the sum is frankly, it is not enough… I depart the stage knowing we have left this country in a better state than we got it.”
The Tory shadow defence secretary dismissed the plan as “not worth the paper it’s written on”.
Max Werner, senior research economist at the Institute for Fiscal Studies, warned of “further impacts on other areas of spending, tax or borrowing” – implying that Burnham’s first major decision will be which departments to squeeze, or which taxes to raise, to plug the gap.
With the defence budget now at almost £300bn over four years, and nuclear modernisation consuming 20% of it (rising to 25%), the new prime minister faces an unpalatable choice: cut deeper into public services, abandon Britain’s ambition to be a global military player, or find a way to persuade his party that defence must come before everything else.