Healey to unveil billions in defence spending as Tories demand resignation

Shadow chancellor calls for fully funded plan to reach 3% GDP target by 2030 or resignation

By LineZotpaper AI staff

Published25 October 2026

Read Time3 min

Chancellor John Healey is expected to announce billions of pounds in new defence investment in Wednesday's Budget, as the Conservative Party demands he resign unless he commits to spending three per cent of GDP on the military by 2030.

The investment is set to be channelled through the National Wealth Fund and British Business Bank, backing British defence manufacturers and military technology firms, including drone and artificial intelligence companies. The funding will be financed through long-term borrowing rather than spending cuts, according to the Sunday Times, allowing the Treasury to increase defence investment without breaching its fiscal rules. It would also count towards Nato's defence spending targets.

The announcement comes four months after Healey resigned as defence secretary under former prime minister Keir Starmer, arguing that the government had failed to commit sufficient funding to the armed forces. He had demanded a timetable to increase defence spending to three per cent of GDP by 2030, ahead of Nato's wider target of 3.5 per cent by 2035. However, the chancellor has since said that a full timetable for reaching the target will not be published until next year's spending review.

Shadow chancellor Andrew Griffith has called on Healey to resign unless Wednesday's Budget sets out a fully funded plan to reach the three per cent target. "By the end of his Budget statement, John Healey must have fully funded three per cent defence spending, or resign," Griffith said. "We are living in an era of extraordinary threats, and yet the Chancellor is dithering over finding the money to pay the country's insurance premium."

The Office for Budget Responsibility has estimated that reaching three per cent of GDP would require an additional 17.3 billion pounds in 2029 to 2030.

Conservative shadow defence secretary James Cartlidge welcomed the proposed investment but accused Labour of adopting a policy previously put forward by his party. "I welcome Labour copying our idea, particularly if that means getting more cash to UK start-ups and defence tech businesses," he said. However, Cartlidge warned that investment in emerging technologies would not remove the need for additional funding for military training, equipment and ammunition.

Defence secretary Wes Streeting rejected the criticism, accusing the Conservatives of leaving the armed forces underfunded. "Kemi Badenoch's Conservatives shrunk the British Army to its smallest size since the Napoleonic era and left a 17 billion pound hole in the equipment plan," he said. "Their fantasy economics won't keep Britain safe, just as their reckless hollowing out of our armed forces didn't when they were in power."

The row follows a warning from Streeting that Britain must be prepared for the possibility of conflict by 2030 as Russia expands its military capabilities. Writing in The Telegraph, he said the UK had "a little over 1,000 days" to ensure it could defend itself alongside Nato allies. "To prevent the worst, we have to prepare for it," he said.

The Treasury is reportedly preparing to provide 20.4 billion pounds in additional support to the National Wealth Fund and British Business Bank from 2028-29, although the amount ultimately directed towards defence has not been confirmed.

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Analysis

Why This Matters

The Budget decision will determine the pace of UK defence modernisation amid warnings of possible conflict with Russia by 2030.
The row over the 3% target highlights a cross-party split on how to fund military commitments while managing public finances.
The outcome affects UK defence manufacturers, tech startups and broader Nato burden-sharing.

Background

The UK has faced sustained pressure to increase defence spending following years of cuts under previous Conservative governments. Nato members agreed in 2024 to raise their target for military spending, and Britain is expected to set out a path toward that goal. John Healey, who resigned as defence secretary in June 2026 over the previous government's funding levels, now controls the Budget as chancellor. The Treasury is using public financial institutions to boost defence investment without breaching fiscal rules.

Key Perspectives

Andrew Griffith (shadow chancellor): Healey must fully fund the 3% target by 2030 or resign, calling defence spending "the country's insurance premium."

James Cartlidge (shadow defence secretary): Welcomed the investment but said Labour is copying Conservative policy and warned that emerging technologies do not replace the need for conventional equipment and training.

Wes Streeting (defence secretary): Rejected Tory criticism, accusing the Conservatives of hollowing out the armed forces and leaving a 17 billion pound hole in equipment plans.

What to Watch

Wednesday's Budget: whether Healey commits to a specific timetable for reaching 3% of GDP or leaves it to the 2027 spending review.
The Treasury's allocation of the 20.4 billion pounds in extra support to the National Wealth Fund and British Business Bank, and how much goes to defence.
Nato allies' reaction to the UK's defence spending trajectory, particularly with Russia's military build-up.

Sources

Healey to unveil billions in defence spending as Tories demand he resign · City AM

Checked

12 claims in this story checked against 1 source: 12 supported.

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SupportedThe headline says Healey will unveil billions in defence spending as Tories demand his resignation.City AM: “Healey to unveil billions in defence spending as Tories demand he resign. John Healey is set to announce billions of pounds in new defence investment in Wednesday’s Budget as the Conservatives demand he resign unless he commits to spending three per cent of GDP on the military by 2030.”
SupportedThe summary says Andrew Griffith called for a fully funded plan to reach the 3% GDP target by 2030 or Healey’s resignation.City AM: “Shadow chancellor Andrew Griffith has called on Healey to resign unless Wednesday’s Budget sets out a fully funded plan to reach the three per cent target.”
SupportedHealey is expected to announce billions of pounds in new defence investment in Wednesday’s Budget.City AM: “John Healey is set to announce billions of pounds in new defence investment in Wednesday’s Budget”
SupportedGriffith said, “By the end of his Budget statement, John Healey must have fully funded three per cent defence spending, or resign”.City AM: ““By the end of his Budget statement, John Healey must have fully funded three per cent defence spending, or resign”, Griffith said.”
SupportedGriffith said, “We are living in an era of extraordinary threats, and yet the Chancellor is dithering over finding the money to pay the country's insurance premium.”City AM: ““We are living in an era of extraordinary threats, and yet the Chancellor is dithering over finding the money to pay the country’s insurance premium”.”
SupportedCartlidge said, “I welcome Labour copying our idea, particularly if that means getting more cash to UK start-ups and defence tech businesses”.City AM: ““I welcome Labour copying our idea, particularly if that means getting more cash to UK start-ups and defence tech businesses”, he said.”
SupportedStreeting said the Conservatives shrank the British Army to its smallest size since the Napoleonic era and left a £17 billion hole in the equipment plan.City AM: ““Kemi Badenoch’s Conservatives shrunk the British Army to its smallest size since the Napoleonic era and left a £17 billion hole in the equipment plan”, he said.”
SupportedStreeting said, “Their fantasy economics won't keep Britain safe, just as their reckless hollowing out of our armed forces didn't when they were in power.”City AM: ““Their fantasy economics won’t keep Britain safe, just as their reckless hollowing out of our armed forces didn’t when they were in power”.”
SupportedStreeting said the UK had “a little over 1,000 days” to ensure it could defend itself alongside Nato allies.City AM: “Writing in The Telegraph on Saturday, he said the UK had “a little over 1,000 days” to ensure it could defend itself alongside Nato allies.”
SupportedStreeting said, “To prevent the worst, we have to prepare for it”.City AM: ““To prevent the worst, we have to prepare for it”, he said.”
SupportedThe OBR estimated that reaching 3% of GDP would require an additional £17.3 billion in 2029 to 2030.City AM: “The Office for Budget Responsibility (OBR) has estimated that reaching three per cent of GDP would require an additional £17.3bn in 2029 to 2030.”
SupportedThe Treasury is reportedly preparing £20.4 billion in additional support for the National Wealth Fund and British Business Bank from 2028–29, though the amount directed to defence is unconfirmed.City AM: “The Treasury is reportedly preparing to provide £20.4bn in additional support to the National Wealth Fund and British Business Bank from 2028-29, although the amount ultimately directed towards defence has not been confirmed.”