Healey wanted UK to join global defence bank, BBC told

Former defence secretary John Healey was privately pushing for the UK to join an international investment bank designed to help countries raise money for defence spending, according to people familiar with the discussions. The idea centres on the Defence, Security and Resilience Bank, or DSRB, which is being promoted as a way to lower borrowing costs for defence projects. Allies of Healey say the Treasury tried to shut down negotiations over UK participation.

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Healey resigned as defence secretary on Wednesday, saying the money attached to the government's upcoming Defence Investment Plan fell "well short" of what was needed. In his resignation letter, he said there were "credible ways" to fund extra defence spending, including "working multi-nationally". Treasury sources have indicated the chancellor had been looking at other ways to fund defence, including discussions with Poland about a separate "Multi-Lateral Defence Mechanism".

The DSRB is expected to be officially launched at a Nato summit next month. Countries that want to join are expected to be asked for an upfront investment of around £870m. Canadian prime minister Mark Carney has been pushing the idea internationally and is said to be keen for the UK to join the project.

Ministers have been considering the proposal for months, but the chancellor is thought to have been unwilling to pay the entry cost. The row comes as the government faces pressure over how to fund higher defence spending without adding to borrowing. Sir Keir Starmer said on Friday he had made "hard-edged" choices on defence spending, including asking government departments to make cuts to help pay for it.

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Healey has said Number 10 and the Treasury were prepared to give around £10bn in additional money in the plan, which he said was about £18bn less than what military chiefs had reportedly asked for. The proposal has also drawn interest from Labour MPs focused on defence, who have been lobbying ministers to look more closely at the bank for months. Supporters argue that joining could help bridge a funding gap and support British businesses in the defence sector.

One advocate said the up-front cost would likely have to be met through borrowing, while Rachel Reeves has recently signalled she is not in favour of borrowing more to increase defence spending. What remains unclear is whether the UK will revisit the DSRB proposal before the Nato summit, or whether ministers will stick with other funding options. It is also not clear how far talks with Poland on the alternative mechanism have progressed.

The key question now is whether the government can settle its defence funding plan without reopening a wider argument over borrowing, spending cuts and the scale of the UK's military commitments.

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