Chancellor John Healey is under immediate pressure to address the United Kingdom's defense spending, a portfolio he departed from as defense secretary due to disagreements over military budgets. Healey resigned last month after being offered an increase of only £13.5 billion for the defense budget, which he deemed insufficient to meet rising threats. Sources close to him indicated that the actual increase was closer to £10 billion due to what they described as "Treasury trickery."
In his resignation letter, Healey expressed frustration with the government's lack of a clear timeline to achieve its commitment to increase defense spending to 3% of GDP, a goal he aimed to reach by 2030, aligning with NATO's readiness targets. Under Prime Minister Sir Keir, this pledge had remained vague, targeted for sometime within the next parliamentary term. A further NATO commitment to raise defense spending to 3.5% of GDP by 2035 appeared even more distant.
Now serving as chancellor, Healey is tasked with allocating resources across various government departments. The significant spending increase he advocated for as defense secretary, calculated by the Office for Budget Responsibility (OBR), would require an additional £17.3 billion annually by 2029-30. This would raise the overall defense budget from over £63 billion to approximately £90 billion by 2030.
Any substantial increase in defense expenditure is likely to create pressure for tax rises. However, Healey has previously suggested exploring "creative funding options," potentially indicating alternative methods for financing the Ministry of Defence. The Liberal Democrats have proposed defense bonds, a suggestion that Sir Keir reportedly dismissed as another form of borrowing.
Healey has consistently maintained that without adequate funding, Britain's armed forces will be ill-equipped to counter escalating threats. A revised Defense Integrated Review (DIP) published after his resignation still indicated a £5 billion shortfall. Critical modernization plans, including the integration of drones, uncrewed warships, and aircraft, remain underfunded. Defense officials have emphasized the importance of incorporating lessons learned from the conflict in Ukraine, yet plans for new air defense systems and long-range weaponry continue to face funding challenges.
As chancellor, Healey now has the opportunity to implement a strategy for increasing defense spending to the 3% of GDP target. Such a move would signal positive developments for his successor in the defense secretary role.