Treasury's Stance on Defence Spending
The Treasury has declined to regard defence expenditure as a catalyst for economic growth, according to former defence secretary John Healey in an interview with the BBC.
Healey resigned from his cabinet position following disputes over a long-delayed military spending plan, a conflict that contributed to the challenges faced by Sir Keir Starmer's leadership.
Last week, a slightly increased Defence Investment Plan (DIP) amounting to £15bn was announced; however, £4.7bn of this sum still requires allocation in the upcoming budget.
During a discussion on Nick Robinson's Political Thinking podcast, Healey attributed the Treasury's refusal to permit increased defence funding to a denial of the UK's obligations to NATO.
At the NATO summit held in The Hague in June 2025, the UK and other member states pledged to allocate 5% of GDP to defence and security, with 3.5% dedicated to NATO-qualifying "core defence" by 2035.
The original DIP committed to core defence spending of 2.68% by 2030, a figure that prompted Healey's resignation as he advocated for a 3% commitment by 2030.
Although the latest DIP iteration added an additional 0.02% of GDP, it still projects government spending at 2.7% by 2030, which remains below Healey's recommended target.
Healey on Treasury's Role and Defence as Economic Driver
When questioned whether the issue stemmed from political reluctance or Treasury opposition, Healey stated:
"The Treasury said no in the end.
The Treasury's a paradox: you have some of the very best and brightest officials in the Treasury, but you have, too often, a Treasury orthodoxy that's a dead hand on dynamic government."
Healey, who previously served as a Treasury minister under former Prime Minister Gordon Brown, expressed his view of the defence sector as a driver for economic growth and reindustrialisation, especially within defence technology.
He further added:
"The Treasury with defence really was in denial about the commitment that the UK has rightly made to Nato and to our people: it is still planning, was still planning on 3%, but not until 2034-35.
The Treasury still often sees defence as a drain on public spending and not the driver of economic growth that we've demonstrated in two years."
Political Reactions and Future Challenges
The Prime Minister has frequently asserted that the government is investing £270bn in defence throughout this parliamentary term, describing it as "the biggest sustained increase in defence spending since the 1980s," with Sir Keir noting the DIP adds "a further £15bn."
At Prime Minister's Questions last week, Conservative leader Kemi Badenoch criticised a purported £5bn shortfall in the DIP, accusing outgoing PM Sir Keir of leaving a complicated situation for his successor, widely anticipated to be Andy Burnham.
When asked if Burnham would prioritise defence spending, Healey expressed surprise at the inclusion of £5bn in unfunded pledges within the DIP but acknowledged that defence investment aligns with Burnham's reindustrialisation goals.
He commented:
"This means that it will be something for Andy Burnham as a short-term challenge.
I welcome the fact that he's committed to fully funding that.
I know he's strong on defence - I've sat in Gordon Brown's cabinet alongside him and no one doubts his commitment to national security."
Upcoming NATO Summit and UK’s Defence Commitments
On Tuesday, Sir Keir is scheduled to attend the NATO summit, marking one of his final appearances as prime minister on the international stage. This follows calls from US Defence Secretary Pete Hegseth urging all NATO countries to present credible plans to achieve the 3.5% defence spending target.
Healey noted that by 2030, more than half of NATO member nations will have reached or surpassed 3% defence spending, emphasizing the UK's need for a credible plan to maintain its leadership role reinstated by the Labour government.
He stated:
"It's important to Nato, it's important to Britain that we...demonstrate the sort of leadership that's required from within the European Nato as the US starts to scale back its contribution.
Anything that puts that at risk will, in the long run, count against us."
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