Chancellor John Healey has announced a new defence financing taskforce and more than £5bn of investment funding, but deferred detail on how the government will meet its 3% and 3.5% of GDP defence spending targets until next year's spending review.
Chancellor John Healey has launched a new Innovative Defence Financing Taskforce and earmarked more than £5bn for defence investment through the British Business Bank and National Wealth Fund, in a Budget that avoided concrete public sector defence spending commitments.
The measures, announced in his maiden Budget on Wednesday, are intended to crowd in private capital for the defence industry. Healey told MPs he was "determined to use more innovative financing, alongside the private sector and our international allies". The government will also open treaty talks with Finland, Poland and the Netherlands aimed at a joint procurement pact between Nato allies.
The Chancellor stopped short of setting out how the government will reach its pledges to spend 3% of GDP on defence by 2030 and 3.5% by 2035. He said: "At the spending review next year, I confirm that I will set out the details of how we will meet our Nato commitment to spend 3.5 per cent of GDP on defence by 2035, with a target date for three per cent in 2030."
Healey, along with defence secretary Wes Streeting and Andy Burnham, is under pressure to lay out a concrete plan to manage the national security threats posed by Iran and Russia. He resigned as Keir Starmer's defence secretary in June when the government chose not to say how it would reach the 2030 target as part of the Defence Investment Plan.
The defence push comes just days after discussions over the UK joining the Canada-led Defence, Security and Resilience Bank broke down. In a joint statement on Sunday, the two countries said they would develop distinct institutions, with Britain stopping short of joining the initiative wholesale.
Nato secretary general Mark Rutte welcomed the announcements, saying they underlined a "strong commitment on defence". Conservative leader Kemi Badenoch called for Healey to resign, saying: "Let me remind him what he wrote in that resignation letter in June. He said, 'I am certain that a date for three per cent of GDP on defence in 2030 is what Britain must set.' […] Today is the day that we should have got the plan."
Analysis
Why This Matters
- Britain's defence spending trajectory stays unresolved, with the Chancellor deferring a concrete plan to the spring spending review.
- The new taskforce and £5bn investment pot signal a shift toward private capital in funding rearmament.
- Failed talks with Canada and new negotiations with Finland, Poland and the Netherlands shape the UK's approach to Nato joint procurement.
Background
The UK government has pledged to spend 3% of GDP on defence by 2030 and 3.5% by 2035. Healey resigned as defence secretary in June when the government's Defence Investment Plan did not set out how it would reach the 2030 target. Now Chancellor, he says details will come at next year's spending review.
Key Perspectives
John Healey (Chancellor): says he is "determined to use more innovative financing, alongside the private sector and our international allies" and will set out how the government will meet its Nato spending commitments at the spending review.
Mark Rutte (Nato secretary general): welcomed the announcements, saying they underlined a "strong commitment on defence".
Kemi Badenoch (Conservative leader): called for Healey to resign, reminding him that he wrote in his June resignation letter that "a date for three per cent of GDP on defence in 2030 is what Britain must set", and said "Today is the day that we should have got the plan."
What to Watch
- The spring spending review, when Healey says he will set out how the 3% and 3.5% targets will be met.
- Whether treaty talks with Finland, Poland and the Netherlands produce a joint Nato procurement pact.
- How the new defence financing taskforce and the £5bn investment pot are structured after the collapse of talks on joining the Canada-led Defence, Security and Resilience Bank.
Checked
12 claims in this story checked against 1 source: 11 supported.
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- Partly supportedThe headline presents the taskforce as having a £5bn pot.City AM: “Ministers will also launch treaty talks with Finland, Poland and the Netherlands as part of the push and ring-fence some £5bn for taxpayer cash for investing in funds and companies in the UK defence industry.”
- SupportedHealey deferred details of how the government will meet its defence spending targets until next year's spending review.City AM: “But the Chancellor told MPs on Wednesday he would not lay out how to reach the staggered targets until the spending review expected in the spring.”
- SupportedThe Budget avoided concrete public-sector defence spending pledges.City AM: “John Healey swerved any concrete public sector defence pledges at his maiden Budget, promising to provide detail on how the government will meet its pledges at next year’s spending review.”
- SupportedBadenoch called for Healey to resign.City AM: “Conservative leader Kemi Badenoch called for Healey to resign for failing to make the changes he called for when he quit Starmer’s government.”
- SupportedHealey told MPs he was “determined to use more innovative financing, alongside the private sector and our international allies”.City AM: “Healey told MPs he was “determined to use more innovative financing, alongside the private sector and our international allies” amid the government’s drive to boost its defence capabilities.”
- SupportedHealey said the spending review next year would set out how the government would meet its 3.5% commitment by 2035, with a target date for 3% in 2030.City AM: ““At the spending review next year, I confirm that I will set out the details of how we will meet our Nato commitment to spend 3.5 per cent of GDP on defence by 2035, with a target date for three per cent in 2030,” he said.”
- SupportedBadenoch said: “Let me remind him what he wrote in that resignation letter in June. He said, ‘I am certain that a date for three per cent of GDP on defence in 2030 is what Britain must set.’ […] Today is the day that we should have got the plan.”City AM: “She said : “Let me remind him what he wrote in that resignation letter in June. He said, ‘I am certain that a date for three per cent of GDP on defence in 2030 is what Britain must set.’ […] Today is the day that we should have got the plan.””
- SupportedThe government earmarked more than £5bn for defence investment through the British Business Bank and National Wealth Fund.City AM: “Healey also earmarked more than £5bn of funding for a new defence focus within both the British Business Bank and National Wealth Fund”
- SupportedThe measures were intended to crowd in private capital for the defence industry.City AM: “Distributed over the next four years the pot will aim to crowd in private capital and get “the maximum amount of private investment into defence”, he said.”
- SupportedThe government will hold treaty talks with Finland, Poland and the Netherlands aimed at paving the way for a joint procurement pact between Nato allies.City AM: “The Chancellor said the talks would help pave the way for a joint procurement pact between Nato allies.”
- SupportedHealey resigned as Starmer’s defence secretary in June after the government chose not to say how it would reach the 2030 target in the Defence Investment Plan.City AM: “Healey resigned as Keir Starmer’s defence secretary when the government chose not to say how it will reach its 2030 spending target as part of the Defence Investment Plan published in June.”
- SupportedDiscussions over the UK joining the Canada-led Defence, Security and Resilience Bank broke down, and the countries said they would develop distinct institutions.City AM: “The negotiations come just days after similar discussions over whether the UK would join the Canada-led Defence, Security and Resilience Bank broke down. In a joint statement on Sunday, the two countries said they would develop distinct institutions”