Treasury sees defence as a drain not a driver for growth, says Healey

The Treasury has refused to see defence spending as an engine for growth, former defence secretary John Healey has told the BBC.

Healey quit his cabinet role after a battle over a long-delayed military spending plan, which proved to be one of the final blows for Sir Keir Starmer’s leadership.

A slightly-increased Defence Investment Plan (DIP) of £15bn was unveiled last week – but £4.7bn will need to be found in the next budget.

Speaking to Nick Robinson’s Political Thinking podcast, Healey blamed the Treasury for refusing to allow higher defence spending, adding he believed it was in denial about the UK’s commitments to Nato.

At a Nato summit in the Hague in June 2025, the UK and other members committed to spend 5% of GDP on defence and security – with 3.5% going to Nato-qualifying “core defence” by 2035.

The original DIP committed to core defence spending of 2.68% by 2030, which led to Healey’s resignation, because he said the government should be committing to 3% by 2030.

Although the latest version of the DIP added an extra 0.02% of GDP, the document suggests the government is still expecting to spend 2.7% by 2030 – still short of the figure Healey says is needed.

Asked whether it was a lack of political will or the Treasury blocking spending, Healey said: “The Treasury said no in the end.

“The Treasury’s a paradox: you have some of the very best and brightest officials in the Treasury, but you have, too often, a Treasury orthodoxy that’s a dead hand on dynamic government.”

Healey, who was a Treasury minister in former Prime Minister Gordon Brown’s Cabinet, said he saw the defence sector as an engine for growth and reindustrialisation, particularly in the defence technology sector.

He added: “The Treasury with defence really was in denial about the commitment that the UK has rightly made to Nato and to our people: it is still planning, was still planning on 3%, but not until 2034-35.

“The Treasury still often sees defence as a drain on public spending and not the driver of economic growth that we’ve demonstrated in two years.”