Rachel Reeves has been warned national security and defence is “not an accountant’s job” after John Healey quit as defence secretary over an intensifying military funding row. Labour stalwart Mr Healey accused the Chancellor and Prime Minister of failing to properly fund Defence Investment Plan (DIP) in a scathing resignation letter.

The much-delayed document, originally due to be published in the autumn, has put a widespread freeze on procurement and plunged Britain’s domestic defence industry into what has been described as “paralysis”. Kevin Craven, CEO of ADS, the UK trade body for the aerospace, defence, security and space sectors, said Mr Healey’s resignation is a “truly damning reflection on the current state of affairs”. In a pointed warning to the Treasury, he said: “The consequences for the UK, and indeed our allies, of getting our Defence Investment Plan wrong — as now seems certain — are of a magnitude far beyond our worst fears.

“National security and defence of the realm is not an accountant’s job.

“It is imperative that an adequately funded Defence Investment Plan is published as soon as possible.

“It should not take the resignation of an honourable man for that realisation to sink in.”

In his letter to Sir Keir Starmer, Mr Healey said the PM had been “unable, and the Treasury has been unwilling, to commit the resources that the nation needs to defend the country at this time of rising threats”.

The publication of the DIP, first outlined more than a year ago, has been repeatedly delayed due to an investment dispute between the Ministry of Defence (MoD) and the Treasury.

Mr Healey said the DIP financial settlement — which he received in full for the first time on Monday afternoon — “falls well short of what is required”, with extra support coming after 2030 when the “imperative to speed up readiness to fight is in the first two years”.

He said: “After explaining to you that I would not be able to accept a DIP settlement that does not give our forces the resources they need, I am now left with no other option than to submit my resignation as your defence secretary.”

Mr Craven said Mr Healey’s resignation has “sent us reeling” and is “something to lament”.

“Over the years that I have known him, he has consistently shown himself to be an intelligent, supportive and highly principled man, who has the best interests of UK defence as top of mind in everything that he does.”

“On a personal level, I thank John for his service and tireless recognition of the vital importance of industry as a strategic enabler to all of UK security,” he added.

Ed Arnold, senior associate at the defence and security think tank RUSI, said Mr Healey’s stepping down is “a seismic moment” for the government and MoD.

“For the MoD, it is a very rare case of a senior minister taking a principled stand against the hollowing out of the UK armed forces, rather than complaining about it with hindsight when out of office,” he said.

Conservative MP and former Army officer Ben Obese-Jecty said Mr Healey had made a “hugely principled decision”.

"This resignation tells us that the Prime Minister and the Chancellor are not prepared to take defence seriously,” he added. “Keir Starmer’s position is completely untenable.”

Sources said the Government had wanted to finally publish the DIP on Thursday, but with a £13.5 billion uplift that military chiefs said would not be enough to fund the transformation the armed forces needed.

Some reports suggest the amount was actually only £10 billion in real cash.

While the Government has committed to spending 3.5% of GDP on defence by 2035, Mr Healey said the plan he was presented with earlier this week moved too slowly, with defence spending rising to just 2.68% in 2030 after hitting 2.6% next year.

He added that without a DIP that “meets the moment” he was “forced to make decisions that would reduce the readiness of our forces and increase the risk to personnel on operations, and could make our country less safe”.

Sources said the deal offered by the Treasury did not put a date on increasing spending to 3%, and had tried to force the MoD to plan to only reach that figure in 2034/35.

Mr Healey is the fourth Cabinet minister to leave Sir Keir’s government since it entered Downing Street in July 2024.

He is the second to resign over policy differences after Wes Streeting quit as health secretary last month amid the fallout from Labour’s local election losses.