Healey pulls screeching defence U-turn 78 days after Starmer coup over deal

Chancellor John Healey has been slammed for pulling a screeching defence spending u-turn less than three months after knifing Sir Keir Starmer in the back and launching the coup which got the former PM ousted. New Prime Minister Andy Burnham‘s Chancellor was instrumental in getting Starmer the sack as Labour party leader after Sir Keir refused to commit to a 3% GDP defence spending plan.

Mr Healey resigned as Defence Secretary on June 11, writing a letter to Starmer saying: “I am certain that a headmark date for 3 per cent of GDP on defence in 2030 is what Britain must set.” But without he added in the absence of the pledge, “I am being forced to make decisions that would reduce the readiness of our forces and increase the risk to personnel on operations, and could make the country less safe”.

Despite leading the coup over the ‘bad deal’ Starmer was offering, Mr Healey has reportedly now pulled a screeching u-turn over the defence spending plans, attracting the ire of Shadow Chancellor Mel Stride.

The Tory MP wrote on X on Friday: “Healey resigned as Defence Secretary to make a stand about spending 3% of GDP on defence, and to remove Starmer as PM. Now he has shelved the defence spending target, and says that this is a ‘continuity’ government. You could have saved us all a lot of hassle, John.”

But Healey has put his plans on hold in the upcoming Budget, to be delivered on 28 October, according to reports by the FT.

Sources told the FT that decisions on any defence uplift will instead be delayed until a Treasury spending review next year.

Defence spending is set to reach 2.7% of GDP by 2030 on its current trajectory, but calls for an increase have become louder from both Labour and Tory MPs in recent months following the worsening global tensions and demands from US President Donald Trump for European allies to spend more on defence.

But Mr Healey is facing a fiscal squeeze ahead of his inaugural Budget as official figures showed government borrowing unexpectedly rose to £1.8 billion last month.

The Office for National Statistics (ONS) said government borrowing stood at £1.8 billion in July, £700 million or 68.7% higher than a year ago and confounding expectations.

Most economists had forecast zero borrowing last month while the independent fiscal forecaster, the Office for Budget Responsibility (OBR), had predicted a £500 million surplus.

The borrowing hike came despite a record July for income tax receipts.

In the first four months of the financial year so far, borrowing was also more than the OBR forecast, at £56.7 billion, though this was £6 billion or 9.6% billion lower than a year earlier, thanks also to a £2.7 billion downward revision to data for the first three months.

It has left total UK debt just shy of the £3 trillion key milestone, at a mammoth £2.985 trillion, or 94.1% of gross domestic product (GDP).

The data shows the fiscal headache facing Mr Healey as he prepares his first Budget on October 28.

Mr Healey said: “Fiscal discipline is the bedrock of our UK economic stability and national security, which is why we are committed to meeting our fiscal rules, with a buffer against global uncertainties.

“We are cutting the deficit faster than any other G7 economy while giving people a bit of breathing space with cost-of-living pressures and focusing support to get young people into work.”