Healey to put £20.4bn into state investment funds in Budget in defence 'down payment'

Chancellor John Healey will unveil billions of pounds of new defence spending in Wednesday’s Budget, The Times reports, in what the paper describes as a “down payment” on his ambition to raise defence spending to 3 per cent of GDP.

Healey will put £20.4bn into the National Wealth Fund and British Business Bank, two government investment funds, over the next decade, The Times reports. Some of that funding will then be invested in UK defence companies, including drone manufacturers and military technology companies, generating British jobs. The i Paper, as reported by BriefTea, puts the same £20.4bn figure on the two funds and says Healey will plug a £4.7bn gap in the defence investment plan.

The defence investment will be funded by long-term borrowing rather than spending cuts, The Times reports. Spending in this way does not affect the Treasury’s fiscal rules in theory, because the investments are expected to bring returns, and such investments count towards Nato’s official defence spending target.

Healey has been under pressure over defence funding since he quit as Sir Keir Starmer’s defence secretary in June, after calling for defence spending to rise to 3 per cent of GDP by 2030, up from 2.7 per cent at present, The Times reports. The paper says a firm commitment to 3 per cent is set to be delayed, with details for future defence budgets set out next year in the spending review. The UK has signed up to the new Nato target of 3.5 per cent of GDP by 2035.

Shadow chancellor Andrew Griffith called on Saturday for Healey to resign if he did not raise defence spending to 3 per cent, The Times reports. The Budget, Healey’s first, is due on Wednesday 28 October.

Sources: https://www.thetimes.com/uk/politics/article/jon-healey-autumn-budget-2026-defence-spending-zp6d8sr0l | https://brieftea.com/a/healey-to-borrow-billions-for-defence-in-budget-Lwn6lE0OxzzkfflPWtuD | https://www.thetimes.com/uk/politics/article/pensioners-set-to-be-shielded-from-income-tax-in-budget-zdh9sjslc