Andy Burnham could inherit a £4.7 billion defence funding gap after Sir Keir Starmer announced an additional £15 billion for the military over the next four years. The Defence Investment Plan, published on Tuesday, is intended to upgrade the armed forces, but the source says full details of how all the spending will be funded have not yet been set out.
Defence Secretary Responds to Funding Questions
Defence Secretary Dan Jarvis has faced questions over whether Burnham knew about the shortfall before the plan was released.
Jarvis told broadcasters that it is routine for major funding commitments to be completed through a future budget or spending review. According to the source, Burnham was believed to have been aware of much of the defence plan through discussions with the civil service, but the nearly £5 billion funding gap was not discussed.
What the Funding Gap Means
A funding “black hole” refers to a shortfall between spending commitments and the money currently available to meet them. In this case, the government has committed to a major defence uplift, but £4.7 billion of the planned funding has not yet been secured.
The term has become politically familiar under Labour, following repeated references to a £22 billion shortfall the government says was left by the previous Conservative administration.
How the Defence Plan Is Being Funded
Starmer’s announcement adds £15 billion to military spending over four years, taking the Ministry of Defence budget to around £289 billion, according to the source. However, not all of the money has been identified.
The secured funding is expected to come from reductions in other departments’ spending, the sale of government assets, and more efficient procurement.
The government has said departments have been asked to contribute 1p from every £1 of capital spending from this year. Starmer also said some projects in areas such as roads and energy would not proceed as originally planned so the defence target could be met.
Transport and Energy Budgets Face Pressure
The Department for Transport and the Department for Energy Security and Net Zero have been asked to make larger contributions because of their bigger budgets.
The source says the Department for Transport must find savings of up to £700 million from roads funding, while the energy department faces £2 billion in savings while continuing work on renewable energy and net zero.
The changes have already drawn criticism. Foreign Office minister Hamish Falconer said he was disappointed by uncertainty surrounding the A46 Newark bypass-widening scheme. Newark MP Robert Jenrick also criticised the situation, saying an important local project had been thrown into uncertainty.
Why It Matters for Burnham
The unresolved defence funding gap could become an early budget challenge for Burnham if he becomes prime minister.
Jarvis said he had assurance that Burnham would maintain investment in defence. However, the source says Burnham has previously indicated he would keep Rachel Reeves’ fiscal rules, meaning he would not borrow to fill the gap.
That leaves difficult choices: further departmental cuts, possible tax rises, or savings from other major areas of government spending.
Wider Political Context
Burnham had reportedly pushed for the Defence Investment Plan to be delayed so he could handle the issue himself. Starmer moved ahead with the announcement, framing the plan as a major upgrade in defence spending and part of his legacy.
The source says Burnham and his future cabinet would need to consider how to continue the defence commitment while preparing a first budget or spending review.
Speculation also remains over who could become chancellor. Ed Miliband is described in the source as a rumoured front runner, though this is not confirmed. If appointed, he may face questions over whether further savings should come from the energy department, which he currently leads.
Welfare Spending Could Also Come Under Scrutiny
Another possible area for savings is welfare. The source says current forecasts show welfare spending at £333.7 billion for the 2025–2026 financial year, up from £314.9 billion the previous year.
Burnham has previously said he wants to invest in helping people return to work as a way to reduce the welfare bill. However, the source suggests deeper welfare cuts could create political difficulty with the left of the Labour Party.
Conclusion
The Defence Investment Plan gives Labour a major military spending commitment, but the unresolved £4.7 billion gap means the next prime minister may have to make difficult fiscal decisions quickly. Whether the money comes from further cuts, tax rises, or another budget adjustment, the funding question is likely to remain a central issue for Burnham’s first budget if he takes office.
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