Andy Burnham has been left facing a £4.7billion shortfall in defence funding after Sir Keir Starmer unveiled spending plans that leave the incoming prime minister to fill the gap.
The announcement caught Mr Burnham and his team off guard, according to sources close to the PM-in-waiting, who confirmed the funding hole had “come as a surprise” to them.
A Conservative spokesman branded the move “a delayed-action poison pill” that would prove “a headache for Burnham and his new chancellor at the end of the spending period.”
Former Tory defence secretary Sir Liam Fox similarly described the situation as a “poisoned chalice” for Burnham, who is expected to take office on July 20, reports The i Paper.
The Defence Investment Plan, published on Tuesday following a year-long delay, committed an additional £15billion to military spending over four years on top of the existing £298billion budget.
However, Chancellor Rachel Reeves revealed in a written parliamentary statement that just two-thirds of this sum had actually been secured.
The Treasury confirmed £10.3billion of the uplift, with the outstanding £4.7billion to be “confirmed at Budget 2026, in a fair and balanced way”.
Much of the identified funding came from scrapping or postponing projects across energy, infrastructure and military housing.
Andy Burnham kicked off his quest to replace Sir Keir Starmer in May | GETTY
The £15billion increase represents £1.5billion more than former defence secretary John Healey had managed to secure before his resignation from cabinet.
Mr Burnham received a briefing on the Defence Investment Plan ahead of its publication, yet it is understood he was not informed that his first Budget would need to address an additional funding requirement.
Defence minister Luke Pollard indicated the incoming prime minister only discovered the £4.7billion gap when Treasury figures were released on Tuesday.
Speaking to Sky News, Mr Pollard said: “Downing Street have a close dialogue with Andy’s team I understand they’ve been keeping him close to the process, and told him yesterday when the Treasury published the statement and the breakdown of the financial costs.”
Dan Jarvis rejected suggestions the funding gap amounted to a hand grenade for the incoming PM
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PARLIAMENT TVWhen pressed further by the BBC about precisely when Mr Burnham learned of the financial details, Mr Pollard declined to elaborate, stating he was “not involved with those conversations.”
Defence Secretary Dan Jarvis rejected suggestions the funding gap amounted to a hand grenade for Mr Burnham and his incoming chancellor, insisting it was “absolutely the opposite.”
During a visit to missile manufacturer Cambridge Aerospace on Wednesday, Mr Jarvis expressed confidence that the next prime minister would deliver for the armed forces.
He told reporters he had received “assurance that, as prime minister, Andy Burnham will make sure that we’ve got the investment coming into defence.”
Andy Burnham has returned to Westminster | GETTY
Nevertheless, Mr Jarvis conceded that “conversations” with Mr Burnham would be necessary, pledging to “fight hard for defence.”
The Defence Secretary defended deferring some funding decisions until the Budget, arguing it was “not unreasonable” for such commitments to be finalised during “a major fiscal event.”
When questioned about where the additional money would originate, Mr Jarvis directed responsibility to the Treasury, stating: “My job is about securing more money for defence.”
The funding shortfall presents Mr Burnham with difficult choices in his inaugural Budget.
Sir Keir Starmer will leave Downing Street
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POOLMax Werner, senior research economist at the Institute for Fiscal Studies, warned the situation would create “further impacts on other areas of spending, tax or borrowing on top of those set out in today’s announcements, implying one key early decision for the next prime minister.”
Transport and energy departments face steeper reductions than other areas of government, though Downing Street has not specified which projects will be axed or scaled back.
The Prime Minister’s official spokesman said details would be provided “by the autumn.”
The Defence Investment Plan also failed to outline how the government intends to reach its target of spending 3.5 per cent of national income on defence by 2035.