Sir Keir Starmer has left his likely successor, Andy Burnham, facing a £4.7 billion funding gap after unveiling a £298 billion defence investment plan without identifying all of the money needed to pay for defending the country against a possible Russian attack in 2030, if you're gullible enough to believe NATO.
The outgoing Prime Minister insisted the package would modernise Britain's armed forces and strengthen national security, but Treasury officials confirmed that almost £5 billion will still have to be found in the next Budget.
Sources close to Burnham said he would not seek to renegotiate the plan despite privately acknowledging the financial challenge it creates.
A Burnham ally described the missing funding as:
Burnham ally: "An unexploded bomb."
A defence source was equally critical of the way the spending package had been prepared.
Defence insider: "Madness after all that wrangling to have left a £4.7bn black hole for someone else to fix."
The Conservatives accused Starmer of deliberately creating problems for the incoming administration.
Conservative Party: "A delayed-action poison pill."
Modernising Britain's military
Starmer defended the package, arguing it would reverse years of underinvestment and prepare Britain for future threats.
Sir Keir Starmer: "It focuses our resources squarely on the readiness of our armed forces."
Sir Keir Starmer: "Reversing the cuts of recent years... rebuilding ammunition stockpiles... ensuring we are ready to fight and defend our nation."
The investment plan includes:
- £47bn for Britain's next generation of nuclear submarines.
- £13bn for a new nuclear warhead.
- £8.6bn for the GCAP sixth-generation fighter programme with Japan and Italy.
- £5bn for military drones operating across land, sea and air.
- Continued investment in Typhoon aircraft and nuclear capabilities.
Defence spending is expected to rise to 2.7% of GDP by 2030, with Starmer saying Britain remains "on a trajectory" towards spending 3% during the following Parliament.
Where will the money come from?
Part of the package will be funded through:
- Civil service reductions within the Ministry of Defence.
- Lower consultancy spending.
- Cuts to road and energy projects.
- Sales of government assets.
However, the Treasury confirmed that £4.7 billion remains unfunded, meaning Burnham's first Budget will almost certainly have to identify new savings, higher borrowing or additional revenue.
Some of Burnham's allies believe the full scale of the funding gap was not disclosed during briefings.
Borrowing warning
Starmer cautioned against proposals to issue "defence bonds" to help finance the additional spending.
Sir Keir Starmer: "Defence bonds are just borrowing by another name."
Sir Keir Starmer: "Doing this through borrowing will push interest rates higher."
Treasury officials argued that the next government could instead make use of existing fiscal headroom, although economists have warned additional borrowing could unsettle financial markets.
Critics say the plans still fall short
Despite the huge spending package, some defence figures argued Britain is still not investing enough.
Former Defence Secretary John Healey, who resigned during negotiations over the plan, said:
John Healey: "Britain will still be spending just 2.7% of GDP in 2030."
John Healey: "A clear target date to hit 3% is necessary."
Labour Defence Committee chairman Tan Dhesi welcomed the investment but questioned whether enough detail had been provided.
Tan Dhesi: "Good we now have a funded and scalable defence investment plan."
Tan Dhesi: "But it's lacking in detail and doesn't outline operational risks for areas being cut."
With Burnham expected to become Prime Minister within weeks, one of his first major tests could now be finding billions of pounds to fund a defence programme he did not design, while balancing Labour's commitment to sound public finances.
