UK defence funding crisis has been a long time coming

John Healey’s complaint is that Starmer sat on this problem for months before making a derisory offer

John Healey’s resignation as defence secretary on Thursday was a long time brewing, though in the end the denouement was swift. It leaves an already weak Keir Starmer without a defence strategy less than a month before a Nato summit and an unresolved row about spending as Donald Trump threatens to restart the bombing of Iran.

On Monday, No 10 finally told Healey how much more money it was prepared to give the Ministry of Defence to fund major projects as part of the defence investment plan (Dip). Its programmes include the £41bn Dreadnought submarine replacement for Trident – and a mooted investment in drones, ready for a future Ukraine-style war.

The plan was also a vital element of the UK’s progress towards meeting a Nato target agreed by Starmer a year earlier to lift defence spending from 2.6% of GDP in 2027 to 3.5% by 2035, nearly £30bn in real terms. Some of its projects are diplomatically significant too: including the Aukus nuclear-powered submarine development programme with Australia and the US.

There had been months of wrangling behind the scenes between the MoD and the Treasury, but in the final analysis Healey was to be disappointed. Though Starmer said in February that Britain “needs to go faster” on defence spending, all he was prepared to offer Healey was an extra £2bn or 0.08% of GDP by 2030.

To Healey it appeared to be a trivial amount, despite a string of defence promises made by Starmer to Nato, to Trump and to key allies. On Sunday, the UK, France and Germany all said again they would “stand firmly” with Ukraine after Starmer hugged President Volodymyr Zelenskyy on a visit to Downing Street .

The prime minister has also promised the UK would, alongside France, lead a deployment of international peacekeepers to Ukraine, if there is a durable ceasefire. Both countries have also offered to lead a multinational force to secure the strait of Hormuz – if the Iran war ends – even though it had taken three weeks for the UK to send a single destroyer, HMS Dragon, to Cyprus in March.

Defence sources said that Starmer was not even willing to put a target date on when spending would reach 3% of GDP, though it would be after an election. Even though Starmer had promised Trump and other Nato allies the UK would eventually reach 3.5% in 2035, the Treasury wanted the MoD to plan for 3%, they added.

“Your Dip financial settlement,” Healey wrote in his resignation letter to Starmer with heavy emphasis, “falls well short of what is required for defence and the country”. Healey also told Starmer it would have breached the commitment made by the PM to Nato a year ago, because it would have left no time to meet the target.

Downing St had tried to bounce Healey – normally a cooperative minister, eager to tell journalists in private about the importance of getting on with the job – into releasing the investment plan on Thursday, but he refused. Meanwhile, reporters pressing for timings on when the plan would be published, struggled to confirm when it would be coming out, despite an expectation this week that its release was imminent.

It was not the only chaotic moment. Australian journalists had been invited to visit Portsmouth naval base on Thursday. There were told they would be met by Healey and Australia’s deputy prime minister, Richard Marles, to discuss the progress of Aukus, at a time when the UK’s ability to deliver its part of the programme is being heavily questioned in Australia.

Only a few hours earlier, former Australian foreign affairs minister Gareth Evans had told an independent public inquiry: “Every report coming out of the UK indicates that its defence-industrial base is presently under extraordinary stress.” Meeting project timelines, on which thousands of British jobs in Barrow, Portsmouth and Derby depended, required “heroic levels of optimism”, he said.

As the press pack traveled for the afternoon press point they learned first of Healey’s resignation, then that the entire media event had been cancelled. It was not the moment for a senior Australian politician to comment on a UK political crisis, but the British resignation that caused it was not the most helpful message to send a longstanding ally.

Instead, Healey came into the MoD main building for one last time on Thursday morning, writing his resignation letter and putting it out shortly after noon. Few in the MoD had seen it coming, and Healey himself even wrote that “this is a letter I never expected to write” after nearly two years in the job.

John Foreman, a former UK defence attache to Moscow, argued the timing of Healey’s resignation could not have been worse. He said: “It’s less than a month before the Nato summit in Ankara, and the UK can’t decide how it is going to meet its defence commitments. What is Starmer going to say to Trump?”

There may also be more immediate pressures. On Sunday, Japan’s prime minister, Sanae Takaichi, is due to visit the UK and meet Starmer. Japan is a one-third partner in the GCap next-generation fighter jet programme with the UK and Italy – a critical future development on which jobs at BAE sites in Lancashire depend – and Starmer will have to reassure his counterpart that Britain remains a reliable partner.

But it is a crisis that has been a long time coming. The MoD has failed to produce a properly costed defence equipment plan since 2022. At that time, costs exceeded the budget – the so-called black hole – by £16.9bn. Since then the geopolitical environment has become more uncertain; the argument for defence spending clearer.

However, Labour chose to publish a general defence review last year, before finally turning to the proper accounting exercise in its aftermath. That revealed, at the turn of the year, that the funding gap was £28bn. The deficit was later reduced to £18bn, of which the Treasury was only willing to find £13.5bn – and there was no political interest in tax increases or a significant shift in spending programmes to make up the difference.

Healey’s complaint is that Starmer sat on this problem for months, before finally making a derisory offer. Now, the prime minister, with Andy Burnham’s Makerfield byelection just days away and a Nato summit in early July, has to decide whether to force a new defence secretary to accept the financial settlement rejected by Healey – or revisit the already tortured defence spending process again.