Defence secretary’s resignation exposes a Chancellor guilty of chronic indecision and catastrophic misjudgment
Daily Telegraph 11/06/26
She has already presided over a huge surge in unemployment, a collapse in business confidence, and a jump in the amount the Government has to pay for borrowing.
No one, even in the Labour Party, would claim that Rachel Reeves has a great record as Chancellor. But now she is accused of something far more serious. As the devastating resignation letter from John Healey, defence secretary, made clear, she has left the country defenceless – and the Prime Minister surely now has no choice but to sack her.
Everyone agrees that Britain urgently needs to increase its defence spending. With a war raging in Ukraine and another one in The Gulf, and with the United States losing interest in Europe, we need more kit and manpower to protect the country. And yet one point emerges with total clarity from Healey’s letter: the Chancellor is refusing to make the money available.
There is a series of options, all of which have bounced around Whitehall over the past few weeks. Reeves could raise taxes. She could cut spending from other departments. Or she could sell a new form of “defence bonds”, possibly exempt from inheritance tax as an incentive for buyers.
Sure, each one has its own drawbacks. Raising extra cash is never easy. But each one would at least secure the money the Armed Forces need.
The trouble is Reeves has ruled them out one by one. War bonds, apparently, just add to the debt pile. Raising taxes would break the manifesto. And cutting net zero or welfare budgets won’t be acceptable to the backbenchers. The result? The cash can’t be found.
There is only one way out of the mess: the removal of Reeves.
There are two reasons for that. First, she is largely responsible for the failure to address defence spending seriously.
It was her decision on taking office two years ago to massively increase spending on welfare, including on public sector salaries, the health service, and personal vanity projects such as the National Wealth Fund.
If she had set aside £10bn for defence from the huge tax and borrowing splurge in her first Budget, the Government would not be in such a difficult position now. She deserves to pay the price for that misjudgement.
Next, a new chancellor would have the authority to increase spending. He or she could argue that other departments sacrifice some money to free up the budget. And they could impose a one-off tax rise, such as a 1pc rise in VAT, arguing that it was vital to pay for the defence of the country.
Reeves has too much baggage, and she has always been hopelessly indecisive. But her replacement could start making some tough decisions, and could sell them to the public.
Sir Keir Starmer does not have much authority left.
His days in office may already be numbered. But even in the twilight of his premiership he can still reassert his authority, and depart with some dignity. He should fire Reeves and appoint a new chancellor – perhaps even Healey – who can provide the Armed Forces with the money they need.
He is out of options.
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