Keir Starmer has warned his successor not to borrow more money to fund defence, after he redirected funds from energy, transport, and housing projects to fill a military spending gap with an extra £15 billion over the next four years.
The prime minister unveiled his long-awaited Defence Investment Plan (Dip) on Tuesday, following an 11-month government dispute that cost him a defence secretary and likely contributed to his downfall.
Starmer said the government found the £15 billion for the plan by cutting money from road and energy projects. A £9 billion scheme to upgrade military housing over the next decade has been adjusted so that costs fall after 2030.
This was a £1.5 billion improvement secured by new defence secretary Dan Jarvis, who is fighting to keep his job after Starmer leaves, compared to the £13.5 billion offered to John Healey, who resigned in protest over the amount he was given.
In his introduction to the investment plan, Jarvis said the extra money was needed because Labour had “inherited a defence programme that was underfunded, overcommitted, and not well-suited to the threats we now face. 47 out of 49 programmes were delayed or over budget.”
Overall defence spending will rise slightly from 2.6% of GDP in 2027 to 2.7%, or nearly £80 billion, by 2030. Starmer said this would put the UK “on a path” to reach 3% in the next parliament.
As the plan was released, Healey said the budgets were too small. “Britain will still be spending just 2.7% of GDP in 2030, the date when Nato has warned we could face a Russian attack,” he said. He added that a clear target date to hit 3% was necessary.
Starmer urged his successor, likely to be Labour MP Andy Burnham, to find more money for defence at the next spending review, though he warned against borrowing more to pay for it.
The outgoing prime minister said defence “must be the number one priority at the next spending review.” The Nato target, agreed by Starmer, is to reach 3.5% by 2035.
The Guardian revealed last week that some of the prime minister’s allies would use the transition period to suggest Burnham revive the idea of “defence bonds,” which was previously rejected by the Treasury.
“Defence bonds are just borrowing by another name,” he told an audience at a drone-making company in Berkshire. “We’ve looked at this very carefully, but the fact is doing this through borrowing will push interest rates higher at a time when £1 in every £10 already goes on paying their interest.
“This government has fought hard to bring the public finances under control, and it has paid off by helping to bring inflation and mortgage rates down. We should not sacrifice that.”
The prime minister’s plan means the government will now spend an extra £15 billion on defence over the four years between 2026-27 and 2029-30, on top of the £283 billion it had already set aside.
This comes at a time when, according to the full 80-page plan released in the afternoon, “demands on defence are rising.” It warns that Russian “aggression is growing around our shores,” that the Iran war has reinforced the need to boost air and missile defence, and that “the US is rightly demanding that Europe steps up.”
Key programmes that will be funded over the four years include: £47 billion on new nuclear submarines, including the Dreadnought replacement for the Trident submarines and the new Aukus attack submarine project, being developed with Australia and the US. £13 billion on a new nuclear warhead and £1.7 billion on nuclear fuels, plus an unspecified commitment – estimated at £1 billion – on 12 new Lockheed Martin F-35A jets capable of carrying nuclear bombs that will enter service in the 2030s. £8.6 billion on the development of…The development of the GCAP next-generation fighter jet is moving forward as a joint project with Italy and Japan, along with an extra £1.1 billion to keep existing Typhoon jets in service until the 2040s. A total of £5 billion more is being spent on drones—£1 billion more than what was announced in last year’s strategic spending review. This includes investments in air, land, sea, and underwater drones that will work alongside soldiers, warships, and fighter jets.
Specifically, £600 million was found for drone spending after Jarvis, the new defence secretary, agreed to cut other parts of his budget. He also secured an additional £500 million for day-to-day needs and £400 million more for the Treasury-backed multilateral defence funding scheme.
This will be funded by £10.7 billion in efficiency savings, including cutting civil servants by 10% and reducing spending on consultants by £1 billion. Some military capabilities will be retired early, such as 34 Wildcat helicopters used by the army, and investment in Storm Shadow missiles will be redirected toward the Stratus replacement.
The prime minister did not deny reports on Tuesday that the money came from a plan to delay upgrades to military housing—something Jarvis’s predecessor, Healey, had prioritised. Healey announced £9 billion last year to help fix more than 40,000 military homes.
However, Starmer did admit that much of the additional £15 billion is coming from other departments’ capital budgets, meaning some infrastructure projects may have to be delayed, scaled back, or scrapped.
“Some capital projects, for example, on roads and energy, which are important but not immediately vital, will no longer go ahead as planned,” he said. “But this is about making the necessary choices, the right choices to protect our nation.”
When asked about reported cuts to the military housing programme, the prime minister added: “We have put a lot of money into military housing, and I’m proud of that… Of course, I have to balance that against investment in the military capability we need.”
Despite the sacrifices imposed on the Ministry of Defence (MoD) and other departments, military chiefs have complained that the additional funding is not enough. The MoD asked last year for £28 billion beyond what had been allocated as part of the spending and defence reviews, with Healey arguing to raise defence spending to 3% of GDP by 2030. This plan provides just over half of what was requested.
Starmer wanted to announce the plan before travelling to the Nato summit in Ankara in July and before stepping down as prime minister.
Burnham, whose most likely rivals have announced they will not run against him, is expected to become party leader on 17 July and prime minister on 20 July.
Starmer said he was confident his successor would not try to undo the agreement he made and would prioritise defence investment in the next spending review.
“[The plan] is something any Labour prime minister would want to stand by, because the first duty of any prime minister is the defence and security of the country,” he said.
Frequently Asked Questions
Here is a list of FAQs based on the situation you described covering the key points in a clear and simple way
General Background Questions
Q What is the main thing that happened
A The Prime Minister Keir Starmer announced a big new plan to spend 15 billion on defence At the same time he directly told the Mayor of Manchester Andy Burnham that he cannot borrow money to pay for local defence or security projects
Q Why did Starmer single out Burnham
A Andy Burnham has previously suggested that local areas should be able to borrow money to fund things like policing or local security Starmer was making it clear that this is not allowed under the new national defence plan
Q Is this 15 billion for the military or for local police
A The 15 billion is specifically for national defence The warning to Burnham is about local spending making sure it doesnt come from borrowed money
Money Borrowing Questions
Q Why cant Burnham just borrow the money
A The government says that borrowing for daytoday spending is financially irresponsible They want defence and security spending to be paid for from existing taxes or cuts elsewhere not by adding to the national debt
Q What does borrowing money mean in this context
A It means taking out a loan to pay for something now with the promise to pay it back later with interest Starmer is saying this is not a safe way to pay for defence
Q Does this mean local areas cant spend any money on security
A No They can spend money but they have to use the money they already have from local taxes and central government grants They just cant take out new loans specifically for this purpose
Practical Impact Questions
Q What is the 15 billion plan actually for
A The plan is to boost the UKs military capabilities modernise equipment and strengthen national security Its a longterm investment in the armed forces
Q If Burnham cant borrow where will the money for local defence come from
