Gordon Brown, USA News (London): Gordon Brown left Downing Street more than 16 years ago, but his authority and influence in Labour circles remain strong. Brown maintains a persistent presence in government business, sending late-night emails in block capitals to the Chancellor, John Healey, with his policy thoughts. Earlier this month, Andy Burnham opened a major speech on his vision for the country by declaring “Gordon is right,” echoing a phrase he said he used every week when he worked as an adviser in his Cabinet. Healey also served under Brown and sees him as a political mentor.
His interventions since Labour’s general election victory in 2024 have already helped shape government policy, having campaigned for the abolition of the two-child benefit limit and pressed for higher gambling taxes. Now, he has turned his attention to how Britain finances the defence of the nation. According to a source familiar with the discussions, Brown persuaded Burnham and Healey to abandon the prospect of joining a Canadian-led defence bank in favour of a Treasury-backed alternative. The insider told The i Paper that the decision had risked damaging relations with one of Britain’s closest allies.
The Defence, Security and Resilience Bank (DSRB), championed by Mark Carney, the Canadian Prime Minister and former Bank of England governor, was established to help countries finance defence and security spending. Its founding charter is scheduled to be signed by nine countries in Luxembourg on 30 November, but the UK will not be among them. Instead, the Treasury is pursuing its own plans to help fund a major increase in defence spending without adding to government borrowing. Healey is in advanced talks with at least three other Nato members about setting up an international bank that would finance a significant proportion of additional spending without counting as new borrowing.
The move is intended to help the Chancellor meet his Budget commitment to increase defence spending to 3 per cent of GDP by 2030, at an estimated cost of £11bn a year, without imposing fresh tax rises or harsh spending cuts. The Treasury is also exploring a mechanism allowing private companies to provide upfront funding for equipment like fast-jet training aircraft and refuelling aircraft, leased back to the Ministry of Defence for an annual charge. The scheme is modelled on the private finance initiative (PFI) used by the Blair-Brown government to fund upfront costs for hospital and school-building programmes.
Source and Policy Reversals
The Canadian-backed scheme would have delivered precisely this kind of investment, but sources blamed Brown for steering Burnham and Healey away from it. Treasury sources maintain the final decision was taken by the Chancellor alone. Brown was brought back into government in May as Keir Starmer’s special envoy on global finance and co-operation, an unpaid, part-time role reporting directly to the prime minister. His brief was to develop international finance partnerships to support defence and security investment, with a particular focus on relations with Europe, and he has stayed in post under Burnham.
Healey’s change of course is striking because, as defence secretary, he had been one of the strongest advocates for keeping Britain involved in the Canadian-led bank. In January, he told MPs that the government was certainly interested in the initiative and sent a Ministry of Defence observer to the bank’s charter negotiations after the Treasury declined to participate. In his resignation letter to Starmer in June, Healey argued there were credible ways of meeting defence funding pressures by working multinationally, referring to the DSRB. Wes Streeting also backed it, telling MPs last month he could see its enormous benefits. Yet as Chancellor, Healey has committed Britain to a different course.
The Multilateral Defence Mechanism
The Treasury is pressing ahead with the Multilateral Defence Mechanism (MDM), a scheme developed with the Netherlands, Finland, and Poland to finance joint arms purchases across Europe. In Wednesday’s Budget, Healey announced that treaty negotiations would soon begin. The decision followed weeks of negotiations aimed at finding a way for the British and Canadian initiatives to work together, though a source noted it was impossible to find a middle ground.
The Canadian-led bank is intended to make financing more accessible to governments and defence companies, including smaller businesses struggling to secure commercial lending. The MDM, by contrast, is designed to bring countries together to coordinate demand and finance joint arms purchases, giving governments greater influence over what participating countries can buy. The Treasury and Canada’s finance department said they had mutually concluded that two separate institutions working in partnership offered the best way forward, though insiders noted the breakdown had caused rancour and sent a bad signal to Moscow.
