Key facts
- Senior Downing Street aides intend to lobby Andy Burnham to increase defence spending.
- The lobbying effort will focus on exceeding the £13.5bn allocated in the Defence Investment Plan (Dip).
- Aides are considering reviving the idea of 'war bonds' to fund increased military expenditure.
- The Treasury has previously blocked 'war bonds' due to concerns over increased borrowing.
- The head of the armed forces emphasized the necessity of robust military capabilities to counter adversaries like Russia.
Senior Downing Street aides are preparing to lobby Andy Burnham, who is expected to become prime minister, to increase defence spending beyond the £13.5bn allocated for the Defence Investment Plan (Dip).
The aides intend to revive the concept of 'war bonds' as a means to finance higher military expenditure, a proposal that has been previously resisted by the Treasury due to concerns over increased borrowing.
Discussions are also underway regarding the Defence Security and Resilience Bank initiative, which aims to provide lending to small defence companies. Proponents suggest a UK subscription of £900 million could grant access to a bank with €100 billion (£86 billion) in lending capability.
Chancellor Rachel Reeves has indicated discussions with Canada about the bank and is also developing a separate multilateral defence mechanism with Finland and the Netherlands.
Air Chief Marshal Sir Richard Knighton, head of the armed forces, emphasized the critical need for Britain to fund capable armed forces that can rival Russia, stating that deterrence failure would lead to a more costly conflict. He highlighted historical defence spending levels during wartime to underscore the potential scale of investment required.
While Keir Starmer has confirmed the Dip will be announced before the upcoming Nato summit, some Labour MPs have criticized proceeding with such a significant policy before a new leader takes over. Burnham's allies have stated that if the defence spending row is resolved by the time he assumes office, he may not revisit it. However, they reserve the right to re-examine the Dip if outstanding issues, such as mismanagement of programs like tank investment, remain unaddressed.