A £4.7bn defence shortfall prompts John Healey to tell departments to make 1% cuts to fund defence

Cuts sought for defence plan

Healey has told all government departments to find 1% reductions in their capital budgets to address a £4.7bn gap in the Defence Investment Plan. The plan has increased defence spending, but the departments have not yet decided which projects or budgets will be cut.

In his Budget, Healey said meeting the 2030 target would mean examining public spending. He also said he wanted to pursue innovative financing involving the private sector and international allies.

Targets and political criticism

Healey told the House of Commons that he would set out details at next year’s spending review for meeting a NATO commitment to spend 3.5% of GDP on defence by 2035, with a 3% target in 2030. The Office for Budget Responsibility estimates the 2035 target will cost £35bn.

Conservative leader Kemi Badenoch criticised Healey for not explaining in the Budget how he would increase defence funding to 3%. The Conservatives have previously called for defence spending to be funded through welfare cuts. Labour MP Tan Dhesi, chair of the Commons defence committee, said key decisions had been delayed until next year’s review.

Proposed funding routes

The government is beginning treaty negotiations with Finland, Poland and the Netherlands on a multilateral defence mechanism for sharing resources. Healey also proposed boosting private investment through public-private partnerships.

He said the National Wealth Fund and British Business Bank would be directed to invest £5bn in defence, dual-use technology and sovereign capability. Earlier this year, Healey resigned as defence secretary, accusing then-Prime Minister Sir Keir Starmer of failing to provide enough money to keep the UK safe.

Support for Ukraine announced

Healey announced £10bn in economic and military support for Ukraine through loans and export guarantees. A further £3bn will be available through loans facilitated by UK Export Finance. The additional support is on top of the UK’s pledge to provide Ukraine with £3bn in military assistance until at least 2030-31. Healey said President Volodymyr Zelensky responded to the news by telling him, “You’ve made my day.”