Chancellor John Healey's departure from the UK government has left a critical question hanging in the air: How will the country ensure its armed forces are adequately funded to face emerging threats? The answer lies in the hands of his successor, who must now navigate the complex task of increasing defence spending while balancing competing demands.
Healey's resignation was a stark reminder of the challenges facing the UK's defence budget. Despite his efforts, he was only offered an extra £13.5 billion, a mere 0.08% increase in the defence budget. This paltry sum, as some close to him suggested, was largely a result of 'Treasury Trickery', with the actual offer being a meagre £10 billion. The lack of a clear timetable to meet the 3% GDP defence spending target by 2030 further exacerbated the situation, leaving the armed forces underfunded and unprepared for the rising threats they face.
Healey's successor as defence secretary will now be under immense pressure to deliver. The reality is that reaching the 3% threshold will require an additional £17.3 billion per year by 2029-30, according to the Office for Budget Responsibility (OBR). This means the overall defence budget will need to rise from over £63 billion annually to closer to £90 billion by 2030. Any increase in defence spending will inevitably put pressure on the government to raise taxes, although Healey has previously advocated for 'creative funding options'.
One such option, defence bonds, has been proposed by the Liberal Democrats. However, Sir Keir Starmer has dismissed this idea, arguing that it is merely another way of borrowing money. Without additional funding, Healey has been clear that Britain's armed forces will not be ready to meet the growing threats. A revised Defence Industrial Strategy (DIP) published after his resignation still revealed a £5 billion black hole, highlighting the urgent need for increased investment.
Key plans to transform the military with drones, uncrewed warships, and aircraft are currently underfunded. Defence chiefs have been emphasising the importance of learning from the war in Ukraine, but plans for new air defence systems and long-range weapons remain in the doldrums. The question now is whether Healey's successor will be able to deliver on his promises and ensure the UK's armed forces are adequately funded to face the challenges of the future.
In my opinion, the pressure on the new chancellor is immense. He must now demonstrate that he is willing to put his money where his mouth is and deliver on the 3% defence spending target. This will not only ensure the safety of the country but also send a strong message to the world about the UK's commitment to its defence. However, the challenge is not just about increasing the defence budget; it is about finding creative and sustainable ways to fund the military while balancing competing demands. The success of the new chancellor will depend on his ability to navigate this complex landscape and deliver on his promises.
