UK’s Reeves spooks MPs with hunt for defense cash

LONDON — Rachel Reeves has reopened discussions about cuts to sensitive areas of government spending as she tries to find more money for the Ministry of Defense against a backdrop of global volatility.

Further cuts to the aid budget were floated during intense talks between No. 10 and the Treasury about how to unlock the much-delayed Defense Investment Plan (DIP), three people briefed on the matter told POLITICO.

Spending on overseas aid has already been slashed from 0.5 percent to 0.3 percent of GDP to pay for future rises in defense funding, but Reeves is under pressure to find billions for key defense capabilities including the U.K.’s nuclear deterrent and new high-tech weapons.

A senior Whitehall official acknowledged further aid cuts had been raised, but said they are now being ruled out.

David Taylor, a Labour MP on the international development committee, said any such cuts would have “gone against Labour values,” and said “the Treasury need to put serious efforts into innovative forms of finance for both development and defense.”

Several Labour MPs who did not want to be named because they are still hoping to influence internal debates about spending said they were not wholly reassured, with one saying any move to cut aid further would be “completely unjustified.”

The same senior Whitehall official declined to rule out changes to the welfare budget.

A separate U.K. government official described the claims as “speculation.”

One Labour MP close to the talks, granted anonymity to discuss sensitive matters, said the Treasury is now mulling changes to social security, which is forecast to make up 24 percent of public spending between 2025 and 2026. 

However, it is not clear which element of the welfare budget might be singled out. Keir Starmer’s government was forced into a major climbdown last year after facing a revolt over plans to reduce the cost of disability benefits, and is currently attempting to draw up alternative reforms.

The investment plan is now effectively “on hold” until the Treasury finds new sources of revenue, two people working on the DIP said.

No. 10 Downing Street and the U.K. Treasury declined to comment.

The defense industry has been warning for months of the damage caused to businesses by the failure to publish the DIP, which was originally scheduled for last fall. Asked about it Monday, Defence Secretary John Healey failed to give assurances that the document would be published before the pre-election “purdah” period, meaning it would not come until May.

Separately, Starmer has stressed that the U.K. needs to go “faster” on overall defense spending, raising the expectation that Reeves will need to hunt for additional billions during this parliament.

John Bew, an academic and former adviser to several prime ministers including Starmer, wrote last week: “There is currently no route to higher defence spending — which is inevitable unless the nation is content to continue on a path towards greater insecurity and irrelevance — without major cuts elsewhere in the public spending stack.”

The PM and chancellor have both spoken of a wish to collaborate more closely with the EU on defense funding after the collapse of talks on British entry into the SAFE loan program, but details remain scant.