The Chancellor has set up a new defence financing taskforce and unveiled fresh funding for investment in the arms industry amid a concerted effort to lean on the private sector to drive Britain’s rearmament push.

John Healey swerved any concrete public sector defence pledges at his maiden Budget, promising to provide detail on how the government will meet its pledges at next year’s spending review.

Instead, the Yorkshire MP unveiled a flurry of measures to help boost investment in the UK’s defence industry, which would be spearheaded by a new ‘Innovative Defence Financing Taskforce’, he said.

Healey told MPs he was “determined to use more innovative financing, alongside the private sector and our international allies” amid the government’s drive to boost its defence capabilities.

Ministers will also launch treaty talks with Finland, Poland and the Netherlands as part of the push and ring-fence some £5bn for taxpayer cash for investing in funds and companies in the UK defence industry.

The Chancellor said the talks would help pave the way for a joint procurement pact between Nato allies. The negotiations come just days after similar discussions over whether the UK would join the Canada-led Defence, Security and Resilience Bank broke down. In a joint statement on Sunday, the two countries said they would develop distinct institutions to support each other on investment opportunities, but Britain stopped short of joining the initiative wholesale.

Healey swerves defence spending pledge

Healey also earmarked more than £5bn of funding for a new defence focus within both the British Business Bank and National Wealth Fund, which both received major fresh funding at Healey’s first Budget. Distributed over the next four years the pot will aim to crowd in private capital and get “the maximum amount of private investment into defence”, he said.

Nato secretary general Mark Rutte welcomed the announcements, saying they underlined a “strong commitment on defence”.

But the Chancellor stopped short of laying out any firm indication on how the government intends to reach its long-held pledge to spend 3.5 per cent of GDP on defence by 2035 and three per cent by 2030.

Along with defence secretary Wes Streeting and Andy Burnham, Healey is under pressure to lay out a concrete plan on how they will increase defence spending to manage the confluence of national security threats posed by Iran and Russia.

Healey resigned as Keir Starmer’s defence secretary when the government chose not to say how it will reach its 2030 spending target as part of the Defence Investment Plan published in June.

But the Chancellor told MPs on Wednesday he would not lay out how to reach the staggered targets until the spending review expected in the spring. “At the spending review next year, I confirm that I will set out the details of how we will meet our Nato commitment to spend 3.5 per cent of GDP on defence by 2035, with a target date for three per cent in 2030,” he said.

Conservative leader Kemi Badenoch called for Healey to resign for failing to make the changes he called for when he quit Starmer’s government. She said: “Let me remind him what he wrote in that resignation letter in June. He said, ‘I am certain that a date for three per cent of GDP on defence in 2030 is what Britain must set.’ […] Today is the day that we should have got the plan.”