Chancellor John Healey is reportedly preparing to shelve the 2030 deadline he previously championed for raising UK defence spending to 3% of GDP, as Treasury pressures force the Government to prioritise an existing multi-billion-pound hole in its military investment plans.
The Financial Times reports that Healey's first Budget as Chancellor will focus on finding the money needed to fully fund the Defence Investment Plan, while a decision on exactly when Britain should reach 3% will be pushed back to the next Spending Review.
The development is politically striking because Healey resigned as defence secretary in June after arguing that the previous government was not moving quickly enough on military spending. At the time, he insisted Britain needed a firm “headmark” of 3% of GDP by 2030.
The Government has not formally announced that the 2030 milestone has been abandoned. Its official position remains that defence spending will reach 3% in the next Parliament, with the precise timetable and funding plan to be set out at the next Spending Review.
Healey reportedly shelves his own 2030 target
According to the Financial Times, Healey will no longer pursue his previous objective of reaching 3% of GDP on defence by 2030 when he presents his first Budget in October.
Government insiders told the newspaper that the immediate priority is instead to fund the Defence Investment Plan already announced by the previous administration.
A government figure said the next Spending Review would establish a clear path towards the UK's longer-term NATO commitment of spending 3.5% of GDP on core defence by 2035 and would also set the target date for reaching 3%.
Because no new 3% date has yet been formally announced by the Treasury, the safest description is that the 2030 milestone is reportedly being shelved rather than definitively cancelled.
Healey demanded 3% by 2030 before becoming Chancellor
The apparent change is particularly sensitive because Healey was one of the strongest advocates inside Labour for a firm 2030 deadline.
After resigning as defence secretary in June, he told Parliament that Britain “must set the headmark” of spending 3% of GDP on defence in 2030 and establish a clear path towards 3.5% by 2035.
Healey linked the timetable to warnings about the growing threat from Russia and argued that incremental increases were no longer sufficient.
In his resignation letter to then-prime minister Keir Starmer, he said he was certain that a 2030 headmark for 3% was what Britain needed to set.
£4.7bn still has to be found at the Budget
The financial pressure facing Healey at the Treasury is confirmed in the Government's own Defence Investment Plan funding documents.
The plan provides an additional £15 billion for defence between 2026-27 and 2029-30, but only £10.3 billion of the funding package was identified when it was published.
A further £4.7 billion over four years is explicitly listed as “to be funded at Budget 2026”.
The gap comprises £1.8 billion in 2026-27, £1.1 billion in 2027-28, £1 billion in 2028-29 and £900 million in 2029-30.
The Financial Times reports that dealing with this existing commitment will be Healey's immediate defence priority at the October Budget.
Defence spending currently set at 2.7%
Under the existing Defence Investment Plan, core NATO defence spending is due to reach 2.7% of GDP from 2027-28 and remain at that level through 2029-30.
The Government says the Ministry of Defence budget will reach £79.1 billion in 2029-30, with almost £298 billion of investment across the four-year plan.
The official funding explainer states that the UK will move to 3% in the next Parliament, but does not currently attach a specific year to that commitment.
That leaves a potentially substantial increase to be funded after 2029-30 if Britain is to continue towards the 3.5% NATO target by 2035.
3% by 2030 could cost another £10bn a year
The scale of the challenge is significant.
Bee Boileau of the Institute for Fiscal Studies told the Financial Times that raising defence expenditure to 3% of GDP in 2030 would require roughly an additional £10 billion a year in today's terms compared with existing plans.
Moving to 3.5% would require around £25 billion more annually compared with current levels, according to the same estimate.
Those figures help explain why the Treasury is reluctant to lock in a 2030 deadline before the next Spending Review determines how the Government intends to pay for the larger increase.
Burnham has refused to commit to 2030 deadline
Prime Minister Andy Burnham has so far declined to commit his Government to reaching 3% specifically by 2030.
The Government instead continues to use the formulation that Britain will reach 3% during the next Parliament.
Defence Secretary Wes Streeting has also stopped short of endorsing a specific 2030 date while insisting that the Ministry of Defence has support within the Treasury.
The position preserves the commitment to higher defence expenditure while giving ministers considerably more flexibility over the speed of the increase.
Healey stresses ‘fiscal discipline’
Healey has made clear that his priorities have changed with his move from the Ministry of Defence to the Treasury.
In an interview with Sky News broadcast on Friday, the Chancellor said fiscal discipline was the first priority of any Chancellor and argued that the Burnham Government could not solve Britain's problems by simply increasing borrowing.
He acknowledged that maintaining fiscal discipline was difficult against a backdrop of global conflict and increasing security threats.
His comments underline the tension now facing the former defence secretary: the case for substantially higher military spending that he made from the Ministry of Defence must now compete with the wider demands on the public finances that he oversees as Chancellor.
3.5% NATO commitment remains intact
The reported retreat from the 2030 milestone does not mean Britain has abandoned its longer-term NATO commitment.
The Government remains committed to spending 3.5% of GDP on core defence by 2035, alongside the wider NATO security and resilience commitment.
Its official position is that the next Spending Review will set out the pathway to 3.5% and determine the target date on that journey for reaching 3%.
The key change is therefore not the ultimate NATO objective, but the apparent abandonment of Healey's insistence that 3% must be achieved specifically in 2030.
Awkward reversal for the Chancellor
The episode leaves Healey vulnerable to accusations that the fiscal realities of the Treasury have forced him to retreat from the position he advocated while responsible for the Armed Forces.
As defence secretary he argued that a clear 2030 deadline was necessary because of the deteriorating international security environment. As Chancellor, he must now find £4.7 billion simply to complete the funding package behind the existing Defence Investment Plan before considering the much larger sums required for 3%.
The Government can point out that its formal commitment to reach 3% in the next Parliament has not changed and that no final date has yet been set under Burnham.
But if the October Budget arrives without Healey's former 2030 headmark, the contrast between the Chancellor's position in June and his approach at the Treasury will be difficult for ministers to avoid.