UK defence funding crisis has been a long time coming

Downing St had tried to bounce Healey – normally a cooperative minister, eager to tell journalists in private about the importance of getting on with the job – into releasing the investment plan on Thursday, but he refused. Meanwhile, reporters pressing for timings on when the plan would be published, struggled to confirm when it would be coming out, despite an expectation this week that its release was imminent.

It was not the only chaotic moment. Australian journalists had been invited to visit Portsmouth naval base on Thursday. There were told they would be met by Healey and Australia’s deputy prime minister, Richard Marles, to discuss the progress of Aukus, at a time when the UK’s ability to deliver its part of the programme is being heavily questioned in Australia.

Only a few hours earlier, former Australian foreign affairs minister Gareth Evans had told an independent public inquiry: “Every report coming out of the UK indicates that its defence-industrial base is presently under extraordinary stress.” Meeting project timelines, on which thousands of British jobs in Barrow, Portsmouth and Derby depended, required “heroic levels of optimism”, he said.

As the press pack traveled for the afternoon press point they learned first of Healey’s resignation, then that the entire media event had been cancelled. It was not the moment for a senior Australian politician to comment on a UK political crisis, but the British resignation that caused it was not the most helpful message to send a longstanding ally.

Instead, Healey came into the MoD main building for one last time on Thursday morning, writing his resignation letter and putting it out shortly after noon. Few in the MoD had seen it coming, and Healey himself even wrote that “this is a letter I never expected to write” after nearly two years in the job.

John Foreman, a former UK defence attache to Moscow, argued the timing of Healey’s resignation could not have been worse. He said: “It’s less than a month before the Nato summit in Ankara, and the UK can’t decide how it is going to meet its defence commitments. What is Starmer going to say to Trump?”

There may also be more immediate pressures. On Sunday, Japan’s prime minister, Sanae Takaichi, is due to visit the UK and meet Starmer. Japan is a one-third partner in the GCap next-generation fighter jet programme with the UK and Italy – a critical future development on which jobs at BAE sites in Lancashire depend – and Starmer will have to reassure his counterpart that Britain remains a reliable partner.

But it is a crisis that has been a long time coming. The MoD has failed to produce a properly costed defence equipment plan since 2022. At that time, costs exceeded the budget – the so-called black hole – by £16.9bn. Since then the geopolitical environment has become more uncertain; the argument for defence spending clearer.

However, Labour chose to publish a general defence review last year, before finally turning to the proper accounting exercise in its aftermath. That revealed, at the turn of the year, that the funding gap was £28bn. The deficit was later reduced to £18bn, of which the Treasury was only willing to find £13.5bn – and there was no political interest in tax increases or a significant shift in spending programmes to make up the difference.

Healey’s complaint is that Starmer sat on this problem for months, before finally making a derisory offer. Now, the prime minister, with Andy Burnham’s Makerfield byelection just days away and a Nato summit in early July, has to decide whether to force a new defence secretary to accept the financial settlement rejected by Healey – or revisit the already tortured defence spending process again.