Andy Burnham, the incoming Labour leader, finds himself in a financial predicament as he grapples with the substantial £4.7 billion funding gap for Keir Starmer's ambitious defence investment plan. This plan, unveiled by Starmer, promises a substantial increase in defence spending, reaching nearly £80 billion by 2030, with a long-term goal of 3% of GDP. However, the challenge lies in the lack of clarity on how this substantial funding will be sourced.
The plan's unveiling at a drone manufacturer in Berkshire by Starmer, who is set to step down as prime minister, has left Burnham in a delicate position. Burnham's allies describe the funding gap as an "unexploded bomb," indicating the potential for significant financial and political fallout. The plan's focus on drones, fighter jets, and nuclear weapons, along with the proposed cuts and efficiency savings, has sparked both resistance and criticism.
One of the key areas of contention is the proposed cuts to capital projects, including road and energy initiatives. The Foreign Office minister, Hamish Falconer, has voiced concerns about the potential cancellation of the Newark bypass project, highlighting the real-world impact of these decisions. The energy department, for instance, is yet to determine which projects will be affected by the £2 billion in savings.
The funding gap of £4.7 billion, nearly a third of the plan's total cost, has raised eyebrows. The Treasury acknowledges that this amount will need to be allocated at the next budget, with £1.8 billion due in the next financial year. This has led to speculation about the possibility of Burnham and his chancellor borrowing more to bridge the gap, despite the potential risks of driving up government borrowing costs.
There are whispers that Starmer's allies may have deliberately withheld details of the missing £4.7 billion during their briefings with Burnham. This has created a sense of uncertainty and tension within the Labour Party. Starmer himself has urged his successor to support the plan and find additional funding at the next spending review, cautioning against the use of "defence bonds," which he equates to borrowing by another name.
Despite the challenges, some Labour MPs express concern that the spending commitments fall short of what is needed. John Healey, who resigned as defence secretary in protest, argues that Britain's defence spending will still be below the Nato target of 3.5% by 2035, leaving the country vulnerable to potential Russian attacks. Tan Dhesi, the Labour chair of the Commons defence committee, acknowledges the plan's positive aspects but criticizes its lack of detail and operational risk assessment for areas being cut.
In conclusion, the defence investment plan, while ambitious, has left Burnham with a significant financial challenge. The lack of clarity on funding sources and the potential for political fallout from proposed cuts underscore the complexity of the task ahead. As Burnham navigates this intricate landscape, the fate of the plan and the nation's defence strategy hang in the balance.
