12/06/2026
This piece, by Labour Friends of NATO supporter Paul Mason, may be of interest:
Labour: Stop outsourcing Defence decisions to the Treasury
Paul Mason
John Healey resigned as Labour’s Defence Secretary because, as he put it in his letter to Keir Starmer, he was being “forced to make decisions that would reduce the readiness of our Forces and increase the risk to personnel on operations, and could make the country less safe”.
This morning, his replacement, Dan Jarvis, will face the same challenge. So I want to outline how we got here, and what the choices are – because there is a lot of tendentious commentary including from people on the right who want to make this about cutting welfare, and people on the left who want to disarm our country in the face of severe threats.
1. What is the Defence Investment Plan?
It’s supposed to be a 10 year plan for equipment spending. It exists because the Tories discontinued the practice of writing 10 Year Equipment Plans, because they could never make the sums add up, due to their own spending cuts.
Healey took office determined to end the fiction around MOD spending, which was leading to a constant, strategic mismatch between plans and budgets. The DIP is the result.
It's designed to meet the demands of the Strategic Defence Review, an independent survey of what kind of military force we need to match the threats we face. Keir Starmer accepted the SDR in full, and the DIP was designed to deliver it.
2. Why couldn’t they finalise it?
Labour delivered the biggest uplift in Defence spending since the Cold War, partly in response to Trump’s threat to walk away from the conventional defence of Europe, by raiding ODA. Since then, numerous other crises have piled on top of that problem: Trump stopped funding Ukraine; Trump threatened to annex Greenland; Trump and Netanyahu attacked Iran. Meanwhile global demand for defence goods has worsened defence inflation, and Europe has consolidated its own defence spending, creating a strong demand signal that our firms and our forces have to adapt to.
Amid all that, the DIP had to meet the SDR, and then scale to the 3.5% commitment by the mid-2030s.
3. Is that all?
No. There’s a technological revolution under way that leaves old, expensive stuff like warships looking vulnerable to new, cheaper stuff like drones made out of jet-skis. The Tory solution to that was to retire the old stuff early, invest in the new and leave a “capability gap” in the mid-decade: that’s why all six attack submarines are in dock and why we struggled to find a working destroyer to send to Cyprus.
Healey was determined to deliver new capabilities in the short term, while meeting the tech challenge rationally, and staying in big multinational programmes to produce future aircraft and submarines, through an industrial strategy that allowed for “spiral development” (ie getting stuff out early and improving it later).
4. What has Labour pledged to spend?
This is the most frustrating point. In response to Trump’s initial demand for European NATO members to spend more on Defence, Starmer committed to 3% of GDP by 2030.
But the Treasury never agreed a path to that. Instead it offered to raise next year’s 2.6% to 2.68% by 2030 – a 0.08%/GDP rise - way short of Starmer’s pledge and totally inadequate even to deliver £18bn over 4 years (which is what National Security Adviser Jonathan Powell says is the minimum needed).
But at the Hague Summit last year Starmer – together with every NATO leader except Spain’s – also pledged to meet 3.5% by 2035, and 1.5% spent on security related infrastructure.
Yet there is outright refusal at the Treasury to spell out how we achieve either figure.
5. Why should we aim for 3.5%
It’s the minimum we need to stay in the game of deterring Russia and exerting influence in Europe.
Even if we reach 3.5% in 2035, others – in particular Germany – will be ahead of us in absolute money spent, while most states in Eastern Europe will be spending higher percentage wise. As a result, the UK is in danger of losing its status as “leading ally” in Europe.
And maybe that doesn’t matter to you, but it’s an article of faith for the Labour Party, going back to 1948, that we must strive for that position. Without it, especially having left the EU, we lose the ability to shape the geopolitics of the European continent.
So there is a clear mismatch between two commitments – 3% by 2030, 3.5% by 2035 – and what the Treasury would deliver.
Starmer sided with the Treasury, despite putting a lot of time and effort into trying to persuade them, and trying to make the DIP work.
He now has to go to Ankara and explain to Trump, and to his fellow NATO leaders, how Britain intends to reach its 3.5/1.5 commitment.
6. Where could the money come from?
Rachel Reeves has painted the government into a corner: she ruled out tax rises on incomes, or VAT; she set fiscal rules that call for debt to be falling as a % of GDP three years into the future; she gave the OBR – a body that does not agree with her economic strategy – the effective power to veto borrowing to invest.
Yet every rearmament programme in history was paid for by borrowing. An influential
report
from the Kiel Institute demonstrates that. Their headline says it all: "First debt then higher taxes". That's economic orthodoxy... everywhere except the Treasury.
Some think tanks have called for a specific Defence Bond, as in the 1930s, but the Treasury has rejected that.
The Kiel report also shows that, throughout history, few countries have tried to rearm by raiding their welfare systems. Borrowing is the only economically sensible method - and then you tax the proceeds of growth that flow from rearmament.
7. Couldn’t we pool the borrowing with other states?
Yes. That’s’ what the EU is doing. But we are shut out of the European SAFE mechanism because France insisted on such a high joining fee that it was not worth it.
Part of the problem, alluded to in Healey’s letter, is the Treasury then vetoed the attempt to join a multilateral defence bank, led by Canada, called the DSRB.
Though the DSRB doesn’t solve the problem of the money we need to spend now, signalling that some of the borrowing will be done multilaterally, at cheaper interest rates than we currently pay on UK gilts, is an important move. The point about multilateral borrowing is it says to the bond market today: we are not going to do this on our own.
Healey, despite Treasury opposition, ensured the UK sent observers to the DSRB meetings in Canada. So the route remains open for the UK to join – but if we don’t, our defence companies get shut out of a programme involving 16 other countries, just as we are from the European SAFE programme.
8. How much extra money are we talking about?
It depends what you think UK GDP will be in 2030 but based on IMF projections 3% would look like £108 bn a year.
9. Shouldn’t we be demanding more value for money from the MOD?
Yes and Healey spent two years enacting a wide-ranging reform of the MOD to achieve just that. He streamlined the Defence Industrial Strategy to demand much shorter lead times, removed needless competition, brough SMEs (and trade unions) into the joint industrial council to challenge the big hitters, and merged 47 innovation bodies into one.
That process, called Defence Reform, had to start from scratch because the Tories had sat on the problem for 14 years. Healey brought in a private sector CEO to oversee and unify the process of buying kit – called the National Armaments Director – and reversed Tory reforms that let individual services specify their own equipment priorities.
That reform process still has a long way to go, because as Al Carns said in his resignation letter, everything in government moves too slowly.
10. Where do we go from here?
It’s very simple. Either Starmer spells out a route to 3% by 2030, or 3.5% by 2035, or Britain loses face and influence within NATO, and our deterrence against Russia is weakened.
The logical solution would be to stop trying to raid other budgets and specifically exempt Defence from the fiscal rule that demands debt be falling every three years.
You could set a 10 year debt-falling target, as
suggested
by Louise Haigh MP, or even go back to the five year rule, and say that only Defence and Resilience spending is exempt from the debt-falling rule. And you join the DSRB. You could also repurpose Premium Bonds as Defence Bonds, so that people could voluntarily lend their savings to the state at lower interest rates.
11. Should we spend on “resilience” instead of Defence
There are massive vulnerabilities in our national infrastructure, once you consider the risk of cyber attacks, the cables and pipelines we rely on, and the vulnerability of offshore wind. But the Hague commitment of 1.5% of GDP on infrastructure is completely missing from our public debate on Defence.
We are talking here about hardening some railway lines, making food and water distribution systems more secure, improving the comms of the emergency services, enhancing energy and food security - and, as in other countries, giving some public buildings deep basements. Spending 1.5% on this would – like Defence itself – be a massive growth opportunity.
But any idea that “resilience” is an alternative to Defence spending is a non-starter. The people pushing it – like the think tank Common Wealth – are explicit that they are against Britain being a significant military power on principle. They want to “redirect productive capacity and skills from the military industry towards the development of green manufacturing” – and that’s from a report written two years into the Ukraine war, so work out the motivation for yourself. At best it's a deluded "swords into ploughshares" at the wrong time; at worst it's just another argument for disarming in the face of Russian and Chinese aggression, and will never wash in the Labour Party.
12. When will the Defence Investment Plan be published?
Your guess is as good as mine. If it stays as it is, the MOD will have to do a massive re-planning exercise – cutting £28bn of plans down to £10bn. If the service chiefs believe, as Healey intimates, that is going to cause unacceptable risks for the armed forces and the country, they are likely to say so.
The DIP is said to be "scalable" - if we can find enough to money to meet the SDR pledges now, it can scale up to 3.5% later. But doing that is now a matter of political will for the government.
13. How serious is this row?
I'm on record as wanting Starmer to stay as PM, and for there to be no leadership challenges.
But Healey’s resignation should be a wakeup call not just to the PLP and the government, but to the British people. Some have likened it to Heseltine quitting Thatcher's government over Westland.
But the better real parallel is with the resignation of Anthony Duff Cooper from the Cabinet in 1938 after Munich. The issue then was appeasement; the issue now is not appeasement – Starmer is rock solid in support of Ukraine, and wants to face down Russia.
The issue is whether we’re going to match our tough stance on the world stage with tough decisions at home.
When Duff Cooper resigned, it rocked the Chamberlain government so hard that a fellow MP said it was "the first step on the road back to national sanity". I hope this has the same effect.
To see one of the most effective, loyal ministers, Labour to his core, with deep roots in the movement as well as the party, forced to resign on a point of principle dramatizes the problem we have as a country.
We, too, need a road back to national sanity on Defence – and indeed cross party unity on the sacrifices and trade-offs needed. But there’s a point of principle and Starmer should heed it.
No serious nation on earth outsources its national security policy to its finance ministry.
Paul Mason is a member of Vauxhall and Camberwell Green CLP and Aneurin Bevan associate fellow at the Council on Geostrategy.
