UK Chancellor Healey orders 1% capital spending cuts to fund defence plan

Chancellor John Healey told every government department to identify 1% reductions in their capital budgets to fill a £4.7 billion gap in the Defence Investment Plan. The cuts add to earlier 1% reductions that funded the initial £10.3 billion of the plan’s £15 billion cost.

Healey said the additional savings are needed to meet the United Kingdom’s commitment to spend 3% of national income on defence by 2030 and 3.5% by 2035, and that details will be set out at next year’s spending review. He added that the government will also explore “more innovative financing alongside the private sector and our international allies,” including public-private partnerships, a multilateral defence mechanism with Finland, Poland and the Netherlands, and directing £5 billion from the National Wealth Fund and British Business Bank to defence-related projects.

Conservative leadership member Kemi Badenoch criticised the approach, accusing Healey of offering only “a plan to have a plan” and suggesting the measures would not sufficiently boost defence spending. Labour’s Tan Dhesi, chair of the Commons defence committee, warned that key decisions on defence funding have been delayed until the next spending review, noting the cost of inaction.

NATO Secretary-General Mark Rutte said the United Kingdom is on a “credible path” toward meeting the alliance’s defence-investment commitments. Former NATO secretary-general Lord Robertson described the budget as “pretty good news for defence generally” but cautioned that “battles ahead with the spending departments” remain.

Healey also announced £10 billion of economic and military support for Ukraine, comprising loans and export guarantees, and said the funding would send “a clear message to Moscow.”