The UK's armed forces face the prospect of having to "dial back" operations and training because the Treasury isn't providing enough day-to-day funding, the country's most senior military officer has warned. Air Chief Marshal Sir Richard Knighton, the chief of the defence staff, told a Lords committee that without more money for what he called "resource departmental expenditure limit" – the budget that pays for fuel, exercises and other running costs – the military would have to reduce its activity. His warning came days after former defence secretary John Healey resigned, saying the government's proposed spending plan fell "well short of what is required". The row exposes a deeper debate about how Britain pays for its defence at a time of rising global threats.
At the heart of the dispute is the government's Defence Investment Plan (DIP), a 10-year blueprint that was due to be published but has been delayed following Healey's exit. The government has committed to increasing defence spending to 3.5% of national income by 2035, in line with Nato targets. Healey argues the UK needs to reach 3% of GDP by 2030 – a goal the current plan does not set a date for. Instead, the offer on the table from Prime Minister Sir Keir Starmer and Chancellor Rachel Reeves is an increase to 2.68% of GDP by 2030. Military chiefs have reportedly asked for around £28bn in extra funding, but the government was prepared to give only about £10bn, according to Healey.
“UK defence funding crisis explained: why Healey resigned and what it means for military readiness.”
Part of the problem is that while capital spending on new equipment has risen sharply, the money for day-to-day activities has not kept up. Sir Richard Knighton explained that 20 years ago the split between resource spending (day-to-day) and capital spending was about 80/20. Today it is roughly 60/40, and on current projections by 2030 it will be 50/50. That means less money for training exercises, operational deployments and maintaining readiness. The UK has offered to lead a peacekeeping mission in the Strait of Hormuz and is considering a possible mission in Ukraine if Russia halts its invasion – all while trying to maintain existing commitments in Europe and the Middle East.
Another flashpoint is the Defence, Security and Resilience Bank (DSRB), an idea spearheaded by Canada that would allow member countries to fund defence projects at low costs. Healey was privately pushing for the UK to join, but allies claim the Treasury tried to shut down negotiations. The upfront cost for G7 countries is around £870m spread over three years. Supporters argue it could help bridge the funding gap and support British defence businesses, but the chancellor has indicated she is not in favour of borrowing more to increase defence spending. A government spokesperson said they are exploring a "multilateral defence mechanism" with Finland, the Netherlands and others to improve value for money.
For UK readers, this matters because the readiness of the armed forces affects national security and the country's ability to respond to crises. If training and operations are cut, it could mean fewer troops available for rapid deployment, less practice for complex missions, and increased risk to personnel on active operations. The UK is also a key Nato ally, and falling behind on spending commitments – well over half of Nato members are expected to spend 3% or more by 2030 – could weaken Britain's influence within the alliance.
Q: Why did John Healey resign as defence secretary? He resigned because the government's proposed defence spending plan did not include enough money to meet the threats facing the UK. He said there was no date for reaching 3% of GDP on defence by 2030, and that the plan fell "well short of what is required".
Q: What did the chief of the defence staff say about military operations? Sir Richard Knighton warned that the UK would have to "dial back" operational activity, exercises and training unless day-to-day funding increases. He said he was most concerned about the budgets that pay for fuel, exercises and other running costs, which have not kept pace with capital spending on equipment.
Q: What is the Defence, Security and Resilience Bank (DSRB)? The DSRB is an international investment bank, spearheaded by Canada, that aims to help member countries fund defence projects at low cost. The UK was considering joining, with an upfront investment of around £870m over three years, but the Treasury was reportedly unwilling to pay. Healey believed it could help bridge the funding gap and support British defence firms.
What happens next? New defence secretary Dan Jarvis is reviewing how the money from the Defence Investment Plan will be spent, but there has been no suggestion from Number 10 that extra cash will be found. The DSRB is expected to be officially launched at a Nato summit next month, but it is unclear if the UK will join. Meanwhile, the military is operating under the threat of reduced activity unless more resource funding is allocated.