From Defence Secretary to Chancellor: What John Healey Means for UK Defence Spending

In the major Cabinet shake-up following yet another change of Prime Minister, John Healey, the longstanding Labour MP and ex-Secretary of State for Defence, has been placed in what is widely regarded as the second-highest office in the land; Chancellor of the Exchequer. So, with Healey in charge, will the former Defence Secretary, who resigned from the position in June in protest of the Starmer government's Defence Investment Plan, use his new powers as Chancellor to bring about a new era of British defence spending? 

To answer that, it helps to know what being the Chancellor means, and who Healey actually is. 

The Chancellor of the Exchequer is, simply put, one of two people who can bend government machinery to their will. This is because the Chancellor has executive power over the Treasury, and the Treasury controls the government’s money. The Department for Transport wants £1.5 billion for a new initiative to improve traffic lights. Ask the Treasury. The Ministry of Defence wants another £300 million to fund new pathways into the Armed Forces? Ask the Treasury. Most of the time, the answer will be “to stick to current spending limits.” Or more simply put: no.

The Chancellor and the Treasury are often quoted as the person and institution responsible for fury amongst the Ministers and Secretaries of State. Their independence and immense power is often resented, and their budget allocation decisions are rarely welcomed. 

Healey is well-acquainted with the Treasury, having cut his teeth there under the Blair and Brown governments well before his appointment to Secretary of State for Defence from 2024 onwards. He has always been very vocal in his support of the UK Armed Forces - as Defence Secretary, he pledged that Britain would be the ‘leading European nation’ in defence spending, and supported the government's 2024 ‘root and branch’ review into defence, hoping it would lead to massive improvement. When that review landed, he was blunt. Healy surmised that Britain's defence position was ‘worse than we thought’, and was harsh in his calls for further funding.

The final straw for Healey was his stance on the government's 2026 Defence Investment Plan. He cited that the £13.5bn the Treasury had committed to defence fell well short of the £28bn he wanted, and after his protests were swatted down by the Treasury, he resigned as Secretary of State for Defence, lambasting the Starmer government as he did so. 

So, here we are. Healey, with a long track record working as both Shadow Secretary and Secretary of State for Defence, is now heading the very department which very recently and very publicly short-changed the Ministry he resigned from. What does this mean for future spending? 

Well, Healey's appointment as Chancellor is no accident, and whilst his criticism of the Starmer government would certainly have won him favour with the group that supported new Prime Minister Andy Burnham's rise to power, his appointment as Chancellor is viewed by some as a clear sign of further commitment from Burnham to meeting the government's target of spending 3.5% of GDP on defence by 2035. Burnham immediately appointing the man who has been loudly campaigning for more defence spending since 2020, the man who resigned over a lack of commitment from Rachel Reeves and the Treasury to defence, is bound to make the Ministry of Defence feel quietly optimistic. However, politics is rarely that simple. 

One main problem lies in the harsh truth of how the Treasury operates. It is a beast that is fed risky decisions, which it chews, reshapes, and spits out as safe commitments. Healey is not new to this - he was both Economic and Financial Secretary to the Treasury under the Blair government in 2002 and 2005 - so he is likely to understand that whilst he has a vocal past in defence, he now has a new responsibility; to dish out the same tough love as every previous Chancellor of the Exchequer, saying ‘no’ where it matters, while making calls that simply do not satisfy the needs of today. Healey's new appointment, and his new access to the secretive operations of the Treasury, may well even shift his attention away from defence as he battles to find money to fund sweeping new policies. For a time, at least, it is possible that Healey frankly might not have the time to focus on, less completely overhaul, government defence spending. 

That being said, the markets have already hedged their bets. Healey was appointed Chancellor on Monday, July 20th, and on the opening of the stock markets on the 21st, shares in two of the largest British defence contractors, Babcock International and BAE Systems, jumped by 7.3% and 3.3%, respectively. Healey may have swapped one uphill battle for another as he takes on this Great Office of State, but this time, he is the one holding the chequebook.

Image: Wikimedia Commons/Number 10

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