Andy Burnham has confirmed he was fully aware of John Healey’s demands for significantly higher defence spending when he appointed him as Chancellor.
The new Prime Minister told the BBC that ensuring Sir Keir Starmer’s Defence Investment Plan, known as the Dip, was “fully funded” would be his “first challenge” in office.
However, Burnham stopped short of committing to immediate increases when pressed on Healey’s call for defence spending to reach three per cent of GDP by 2030.
“I appointed my new Chancellor [while] very aware of what he had said about the critical importance of defence spending,” Burnham said in the interview.
He added: “I am absolutely committed to what we’ve promised our NATO partners, and that is my commitment.”
Healey had previously resigned from Sir Keir Starmer’s government after failing to secure further funding for the Dip, criticising both Starmer and former Chancellor Rachel Reeves for being “unwilling” and “unable” to deliver a substantial cash injection for the military.
Healey specifically attacked the government for not committing to three per cent of GDP on defence by 2030, a target that would require an additional £9bn spent annually on national security.
Burnham has already made a series of sweeping pledges, including cuts to energy prices and ending rough sleeping, while also inheriting a £4.7bn shortfall in Dip funding over four years and the cost of a doctors’ pay settlement.
The volume of commitments is expected to make Healey’s forthcoming Budget considerably more difficult, with public finances already under pressure from rising bond yields and slowing UK economic growth driven by an energy price shock.
Further announcements around devolution and social care are expected in the coming days, adding further complexity to an already strained fiscal picture.
Reports suggest mayors could be offered a share of income tax revenues to spend on local investment, though this falls short of broader devolved tax powers beyond the overnight stay levies already announced.
Oxford Economics researchers suggested that allowing mayors to retain tax receipts was a more likely model than granting full levy-raising powers to local authorities.
An Oxford Economics report warned that redistributing spending “may even reduce” growth, as productive cities could generate higher returns if they retained their own revenues rather than receiving redistributed funds.
Economists at the consultancy added: “Extensive fiscal devolution, granting significant revenue-raising powers through taxation or debt issuance, potentially offers the most meaningful option for raising long-term growth. It gives local policymakers both the ability and incentive to pursue growth-enhancing reforms.”
Burnham is also expected to announce policies targeting young people not in education, employment or training, alongside a potential move to make social care free at the point of use, a reform estimated to cost as much as £18.5bn per year.
In the same BBC interview, set to air in full on Monday night, Burnham firmly ruled out calling a snap general election to strengthen his political mandate.
“There’s no early general election. I don’t think people want it,” he said.