Budget 2026: Healey leans on private sector for defence investment drive

In the 2026 Budget, Chancellor Healey emphasized the need to involve the private sector in Britain's rearmament efforts. He announced a new 'Innovative Defence Financing Taskforce' and unveiled fresh funding to stimulate investment in the arms industry. Healey did not offer any specific public sector pledges during his first Budget and instead promised to detail future funding plans in the next year's spending review.

The Yorkshire MP highlighted three main measures: the taskforce, treaty talks with Finland, Poland, and the Netherlands, and a £5bn taxpayer-funded investment in the UK defence industry. These talks aim to establish a joint procurement pact with NATO allies. Following similar talks on the Canada-led Defence, Security, and Resilience Bank, Healey's announcements were welcomed by NATO Secretary General Mark Rutte, who praised the government's "strong commitment on defence."

However, the Chancellor avoided giving a firm timeline for meeting the long-standing pledge to spend 3.5% of GDP on defence by 2035 and 3% by 2030. Healey, along with Defence Secretary Wes Streeting and Labour's Andy Burnham, is facing pressure to lay out a concrete plan to increase defence spending in response to threats from Iran and Russia.

Healey plans to reveal how to meet the NATO commitment until the spending review in the spring. Conservative leader Kemi Badenoch criticized Healey for failing to deliver on his June resignation letter, where he called for a specific target for three per cent of GDP on defence in 2030.