John Healey wanted UK to join global investment bank to raise defence funds

Former Defence Secretary John Healey privately pushed for Britain to participate in a new international investment institution designed to provide low-cost financing for defence projects, according to individuals familiar with the discussions.

Supporters of Healey say the proposal was intended to help address growing pressures on military budgets and provide additional support for Britain's defence sector at a time when governments across Europe are seeking to increase security spending.

The initiative centers on the proposed Defence, Security and Resilience Bank (DSRB), an idea championed by Canada and expected to be formally launched during a NATO summit next month.

Healey viewed multinational cooperation as a way to expand defence resources

In his resignation letter earlier this week, Healey argued that there were "credible ways" to finance higher defence spending, including closer international cooperation.

People close to the former defence secretary say he believed membership in the DSRB could provide Britain with access to lower-cost financing while helping narrow the gap between available resources and the funding sought by military leaders.

According to allies, Healey viewed the institution not only as a source of capital but also as a mechanism capable of supporting British defence companies through guarantees and lending arrangements.

His supporters maintain that the approach would have strengthened the country's industrial base while improving long-term procurement capabilities.

Allies claim the Treasury resisted the proposal

Individuals familiar with the matter claim that the Treasury attempted to halt negotiations regarding British participation in the bank.

However, Treasury sources disputed those accounts, arguing that Healey never formally submitted a funding request linked to membership in the proposed institution.

The disagreement highlights broader tensions inside government over how Britain should finance rising defence commitments.

Chancellor Rachel Reeves has repeatedly emphasized fiscal discipline and has signaled reluctance to rely on additional borrowing to increase military spending.

Supporters of the DSRB argue that the upfront contribution required for membership should be viewed as an investment rather than an expense.

The Defence, Security and Resilience Bank is backed by Canada

The DSRB initiative has been spearheaded by Canadian Prime Minister Mark Carney, who has promoted the concept internationally.

The institution is designed to provide member governments with access to low-cost financing for defence-related projects and to encourage lending to private companies operating in the defence sector.

Supporters hope the bank will also offer credit guarantees to commercial lenders, helping smaller companies secure funding for advanced technologies and manufacturing capabilities.

Membership for Britain and other G7 nations is expected to require an initial commitment estimated at around £870 million spread over three years.

Officials and advocates believe that collective financing arrangements could improve defence procurement and strengthen cooperation among allied nations.

Carney is reportedly keen for the United Kingdom to become one of the founding participants.

Healey resigned amid concerns over defence funding levels

Healey stepped down as defence secretary on Wednesday, citing concerns that the financial resources allocated under the government's forthcoming Defence Investment Plan were insufficient.

According to reports, he believed that the additional funding being considered by Number 10 and the Treasury amounted to approximately £10 billion, significantly below the roughly £28 billion reportedly requested by military chiefs.

The difference highlighted the growing debate over Britain's defence priorities at a time of heightened geopolitical tensions and increasing NATO commitments.

Prime Minister Sir Keir Starmer acknowledged that difficult choices had been required to support higher defence spending, saying government departments had been asked to make savings elsewhere.

The full details of the Defence Investment Plan have yet to be announced.

Labour MPs have been lobbying for closer examination of the bank

A number of Labour lawmakers with an interest in defence policy have spent months encouraging ministers to examine the DSRB more closely.

Among the ideas being discussed is the possibility of financing British participation through the National Wealth Fund, a Treasury-owned investment vehicle established to support long-term economic development.

Advocates believe such an approach could reduce pressure on day-to-day government spending while allowing Britain to participate in the international initiative.

Members of Parliament's Business and Trade Select Committee visited Canada last week to discuss the proposal with officials and stakeholders.

Labour MP Liam Byrne, who chairs the committee, has since written to the prime minister urging him to reconsider the proposal following Healey's resignation.

Gordon Brown and Mark Carney have reportedly discussed the proposal

According to reports, former Prime Minister Gordon Brown, who currently advises the government on international finance matters, has held direct conversations with Mark Carney regarding the DSRB.

Supporters see the involvement of two prominent figures in global economic policy as evidence that the initiative is being taken seriously at senior levels.

Proponents argue that access to low-cost capital will become increasingly important as NATO members seek to modernize armed forces and strengthen industrial capabilities.

Many Western governments face growing fiscal pressures while simultaneously confronting demands for greater defence readiness.

The DSRB is viewed by supporters as a way of leveraging collective financial strength to address those challenges.

Questions remain over who would benefit most

Not everyone in Whitehall is convinced that membership would provide substantial advantages for Britain.

Some officials reportedly believe that countries with lower credit ratings and smaller economies might derive greater benefits from the proposed model.

Because the United Kingdom already enjoys relatively strong access to capital markets, critics question whether the costs of joining would justify the returns.

Others have raised concerns about governance structures and the precise mechanisms through which loans and guarantees would be distributed.

Those questions are likely to become increasingly important as allied governments prepare for the official launch of the institution.

Debate over defence financing is expected to continue

Healey's resignation has intensified the broader discussion over how Britain should fund rising defence expenditures in an era marked by geopolitical instability and growing security challenges.

European nations are facing increasing pressure to raise military budgets while modernizing weapons systems, supporting domestic industries and meeting NATO commitments.

Advocates of the DSRB believe multinational financing mechanisms could help address those demands without placing excessive strain on national budgets.

Critics, meanwhile, argue that traditional borrowing and existing institutions already provide sufficient financing options.

As the NATO summit approaches and details of Britain's Defence Investment Plan emerge, the debate surrounding the proposed bank and the future of defence funding is expected to remain a major issue within government and Parliament.