The refusal of the Treasury to increase defence spending shouldn’t come as a surprise. This is exactly what HM Treasury is supposed to do: stop spending that it sees as unaffordable, unless the necessary trade-offs are made to unblock it. The point of cabinet government is for Secretaries of State to make their case for resources, HM Treasury to argue how this fits with other commitments and for the Prime Minister to choose.
It is for this reason that John Healey’s criticism that the Prime Minister is unwilling to fund defence is more valid than his criticism that the Treasury is unable to do so. The Treasury’s own documents show the money is available without more debt or tax, and from more politically palatable sources. Where the Prime Minister should be more exercised with his Treasury is over the disingenuous way it has refused his defence request, and the price he has paid in Ministerial resignations.
The Prime Minister as first Lord of the Treasury does not need the Chancellor or Chief Secretary’s consent
The following changes to just four of the Government’s 81 major projects could fund more than the £4.5 billion gap his former Defence Secretary was reported to have resigned over, and would enable the Prime Minister to offer a major victory for his new Defence Secretary as an ally within Cabinet.
This isn’t a question of whether the traded-off projects are important, but whether they should take precedence over defence spending in the current heightened risk environment, and the wider political message such changes would communicate about the Prime Minister to his own MPs.
Firstly, in March 2026 the Treasury signed off the outline business case for a four year build for the Cabinet Office’s Manchester Digital Campus. Work is due to begin this year with the main construction in 2027/28 and 2028/29. Construction is estimated to cost around £310 million. Delaying construction for a few years would enable this £310m to go directly to cyber security. It could be targeted on the North West Cyber Corridor and the National Cyber Force in Lancashire, which would be popular with a number of the North West Labour MPs who benefit far less from Andy Burnham’s focus on central Manchester.
Secondly, how many constituents on the doorsteps of Makerfield even knew about the Boiler Upgrade Scheme? Yet, the annual grant to extend this programme even further has set aside £400m in 2026/27, £600m in 2027/28, £683m in 2028/29 and £709m in 2029/30 – or £2.392bn over four years. Just reducing this programme’s roll-out of heat pumps by half over the next four years unlocks £1,196m. The Prime Minister may be reluctant to signal a jettisoning of combating climate change as a whole, but the National Audit Office provides justification for rolling out DESNZ department programmes more slowly – as the 98% failure rate reporting on the Energy Efficiency programme last year illustrates. Politically, the jobs this unlocks in defence would resonate more with MPs than anything the programme is offering.
Third, between 2025/26 and 2029/30 the Government currently expects to spend £4,555m on its cycling and walking investment strategy. Of this, £1,107m is to Active Travel England and £3,448m is funding streams through DfT and other government departments. Assuming this is equally weighted it means there is £911m a year allocated, so halving this for the remaining four years of the strategy could free up £1,822m. I recall as a Cabinet Minister going to speak in a constituency where the Conservative councillor’s core local election commitment was to scrap the Active Travel Scheme that the Conservative government at the time was funding. It illustrates the limited voter appeal this significant funding offers.
Fourthly, the Drive 35 programme has committed to an average of £400m a year by 2030 to support the transition to zero-emission vehicle manufacturing, as well as further funding for research and development over a longer period. Would many of those in Makerfield really mind if it was delayed a few years? To put this in context, we could fund doubling our military reserve – which is currently far too low – for around £200m a year. A commitment to double our military reserve certainly looks better on a constituency leaflet, and offers military scale when you need it most.
The Prime Minister as first Lord of the Treasury does not need the Chancellor or Chief Secretary’s consent. He can simply instruct that specific lines are removed from the Treasury plans and the commitment is made elsewhere. Programmes which have not started, or not been expanded, are much easier to delay than stopping existing spend.
It is not too late for the Prime Minister to instruct this funding be moved within the Treasury stack. In doing so, he will help his new Defence Secretary, strengthen his international standing and give himself more ammunition when phoning his backbenchers over the coming days. Above all, it would suggest he is responding to the real concerns voiced by so many of our most respected military commanders.
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