Keir Starmer and Rachel Reeves lobbed a political hand grenade at incoming Andy Burnham today, leaving it to the de-facto leader and his new team to find almost £5billion to help defend Britain after taking power.

The Prime Minister and Chancellor unveiled the long-awaited and much-delayed Defence Investment Plan (DIP) this morning, sparking criticism that the £15billion uplift falls far short of what is needed to secure the nation.

But the announcement, made weeks before they are set to be booted out of Downing Street by Mr Burnham and his new finance chief – potentially Ed Miliband – contained a further sting in the tale for the incoming administration.

Treasury documents released alongside the plan set out how just £10.3billion of the cash had been found via savings across Government departments.

The papers said the remaining £4.7billion ‘will be confirmed at Budget 2026, in a fair and balanced way’, creating a huge black hole in the new Chancellor’s first fiscal showpiece later this year.

It could pave the way for new tax rises or spending cuts as they try to fill the gap, or mean even less money for the military if they decide not to proceed. 

Sir Keir and Mr Burnham are said to have discussed the DIP before it was published on Tuesday. But Mr Burnham is reported to have not been told that he would have to find £4.7billion to fund it in his first Budget as PM.

Defence Secretary Dan Jarvis denied Mr Burnham and whoever he picks as his Chancellor were being handed a hand grenade by the outgoing Sir Keir and Ms Reeves.

‘Absolutely the opposite. I know a bit about hand grenades. It’s not one of those. It’s the opposite of those,’ the former British Army officer told Sky News.

Mr Jarvis added: ‘I think it’s not unreasonable that, given the massive expenditure that will be required, those kind of decisions are done in the context of a spending review.’

Today’s announcement of the DIP at a drone factory in Maidenhead this morning saw Sir Keir and Ms Reeves in an astonishing self-congratulatory mood.

The PM insisted the proposals were the ‘right choice for the country’, but admitted they would mean some road and energy projects being scrapped – something that immediately triggered objections from one minister whose constituency could be affected.

The premier took thinly-concealed swipes at his likely successor by dismissing the idea of ‘defence bonds’ to underwrite funding, as well as efforts to curb the Treasury’s power.  

Ms Reeves delivered her own valedictory statement, referring to the little-understood ‘Secur-o-nomics’ conceit from her ‘two years as Chancellor’.

The pair appear to have put mounting tensions behind them as the end of their terms in office loom, with Ms Reeves introducing the premier as ‘my friend, our PM, Keir Starmer’. They did not mention John Healey, the former defence secretary who was only offered around £13.5billion. 

But Mr Healey, who quit the Cabinet earlier this month after bitter wrangling with the Treasury, insisted the £15billion package over four years would not keep the country safe from rising threats. 

This afternoon he told MPs ‘more needs to be done in the months ahead’ and added: ‘Threats are still growing, demands on defence are still rising in this dangerous world, and today’s step means that we will be spending, as a nation, 2.7 per cent of GDP on defence in 2030. 

‘The date that Nato now warns we could face a Russian attack.’

Labour‘s Defence Committee chair Tan Dhesi said it was ‘disappointing’ there was no timetable for pushing spending to 3 per cent of GDP, let alone the 3.5 per cent Donald Trump is demanding. 

In one awkward moment suggesting his mind is on the World Cup, Sir Keir called a question from ‘Sky Sports’ instead of ‘Sky News‘. 

He is still facing a bruising showdown with Donald Trump at the Nato summit next week.

Critics say the £15billion extra funding over the next four years is ‘too little too late’, predicting it will include massaged figures and repackaged promises. 

Sir Keir said annual defence spending will increase from £54billion to £80billion by 2029, claiming that would reverse the ‘corrosive hollowing out’ of the armed forces.

He heaped praise on Mr Jarvis, without mentioning his predecessor, and said Ms Reeves had put the finances ‘on a solid footing’.  

‘I want to thank the Defence Secretary, the CDS (chief of the defence staff) here and the Chancellor for their work to sharpen and strengthen the plan in recent weeks, so that we can set out today how we will transform our armed services whilst also giving industry the certainty that they need to invest, and giving our allies clarity on our intent ahead of the Nato summit next week,’ the PM said.

‘This plan represents our best judgment of what the country needs to meet this moment and it is a platform on which I know my successor will build.’

Sir Keir swiped at a plan backed by some Burnham allies to issue ‘defence bonds’, dismissing them as ‘borrowing by another name’.

‘We’ve looked at this very carefully, but the fact is doing this through borrowing would push interest rates higher at a time when one pound in every 10 already goes on paying debt interest,’ he said.

Sir Keir also said he would not cut day-to-day spending to fund defence.

He said: ‘Slash funding to our public services in favour of defence, and we would be fundamentally weaker as a nation, more fractured as a society, less able to defend ourselves when our enemies prey on social division.

‘So the hard truth is there are no easy answers, but the settlement I’m setting out today is the right choice for the country.

‘It delivers the decisive action we need on defence in a way that is within our fiscal rules and that will not take resources away from day-to-day spending on frontline services like health and education.

‘Instead, it is funded by reallocating spending from across Government departments, reallocating capital budgets by one penny in every pound, while still maintaining public investment at the highest sustained levels since the 1970s.’

He added: ‘Therefore, some capital projects, for example on roads and energy, which are important but not immediately vital, will no longer go ahead as planned.’

Sir Keir was asked about his previous warning that Russia could attack the UK by 2030. 

Challenged whether he could say the DIP was enough deter or fight Moscow’s forces by then, the premier insisted: ‘Yes I can, and that’s because of the increase in defence spending that we put in place last year, announced last year, already in place, which was the single-biggest increase, sustained increase, since the 1980s, and the fact that this defence investment plan builds on that.

‘And it’s not just the amount of money, it’s also the capabilities.

‘We’ve learned a lot from Ukraine, actually also from Iran as well, about the capability that is needed in order to confront countries like Russia.

‘That is exactly what is going on in Ukraine, so I am confident in that.’

The apparent reference to Iran’s effectiveness in responding to US attacks could cause friction with Mr Trump. 

Insisting his own time in power had not been wasted, Sir Keir said: ‘I think a test of any prime minister is whether they leave the country in a better state than they found it, and if you look at our country that is undoubtedly the case of the economy, undoubtedly the case of public services – in particular the NHS – but also undoubtedly the case on defence and security, and international leadership.

‘We are in a much better state now than we were when we took over two years ago.’

Sir Keir said he was ‘proud’ of Ms Reeves for putting the economy ‘on a stable footing’ – and seemed to level another barb at Mr Burnham over his suggestion the Treasury’s power must be curbed.

‘To have stabilised our economy in two short years after what we picked up means that I can depart the stage – because it’s the end of my journey, it’s not the end of anybody else’s – but I depart knowing that we have left this country in a better state than we got it,’ the premier said.

‘Are there wranglings between departments and the Treasury? Yes, of course there are, always have been, always will be.

‘Because at the end of the day, the Prime Minister and the Chancellor have to look at the overall judgments for the Government, the overall affordability and prioritise between different things.

‘Departments of course will put forward, in good faith, the commitments they think we should make, (I) understand that, but what we have to do is judge them against what we can afford, what the priorities of the country are.’

Posting on social media, Mr Healey said the DIP ‘builds on the record defence investment Labour in government has already made’.

‘But Britain will still be spending just 2.7 per cent of GDP in 2030, the date when Nato has warned we could face a Russian attack,’ he wrote.

‘European security is at stake. The PM has said today that 3 per cent must be the number 1 priority for the next spending review.

‘We need a target date for 3 per cent and a clear, credible funding plan to meet our Nato commitment for 3.5 per cent on defence by 2035.’

Mr Healey’s former deputy Al Carns, who also resigned, could also make a highly damaging intervention in the Commons later. 

Former Conservative Defence Secretary Ben Wallace said: ‘This is half measures. The government has ignored senior officers and intelligence chiefs’ warnings. They have chosen to put benefits before bullets.’

According to Downing Street the additional funding will strengthen military readiness and accelerate drone transformation, boosting future fighter jets and strengthening the UK’s nuclear deterrent. The DIP is also intended to create nearly 60,000 additional UK jobs by 2030.

While by 2030 the proportion of UK GDP spent on defence will be higher than any time over the last 30 years, it is still considered too low by senior officers and MPs.

Another noticeable failure of the DIP, according to critics, is its failure to set out a timetable for the UK to further increase defence expenditure to meet the threat posed by Russia.

According to the DIP the UK will reach 3 per cent of GDP sometime ‘in the next parliament’.

The DIP will pivot towards autonomy across the Services with uncrewed vessels, aircraft and vehicles being phased in as crewed platforms are phased out.

The DIP also includes: £1.5billion of additional funding on the ‘hybrid Navy’ with state-of-the-art crewed ships networking with uncrewed and undersea craft, £3.2billion for space capabilities, £2.5billion for cyber warfare and £790million in new homeland Integrated Air and Missile Defence systems.

A 12 per cent funding increase in the Special Forces budget was also announced though for security reasons no details were provided about what additional equipment or resources units such as the Special Air Service (SAS) will receive.

The DIP will also include a £64billion upgrade to Britain’s nuclear deterrent including Dreadnought submarines, a new sovereign warhead and 12 F-35A jets capable of carrying nuclear weapons. Those aircraft will join NATO’s nuclear mission.

Overall, the UK will spend £298billion on defence over the next four years, or 2.7 per cent of GDP by 2030.

By contrast, the UK’s allies are investing much more. Germany expects to reach the NATO target of 3.5 per cent of GDP by 2030.

Poland and Baltic states are spending more than 4 per cent on core defence capabilities, not including security infrastructure projects.

It was unclear from the DIP today what programmes are expected to be cut. 

Prior to today’s announcement there was speculation the UK could seek to withdraw its commitment to the £8billion GCAP sixth-generation stealth jet project, or to axe the troubled £6 billion Ajax armoured vehicle, the Challenger 3 tank or the New Medium Helicopter. 

Instead the Ministry of Defence will continue to support those projects.

The new Dreadnought submarines will see four boats replace the current Vanguard class from the 2030s. There will also be a decade-long £26billion overhaul of naval bases at Faslane, Portsmouth and Devonport dubbed ‘Project Royal Oak’

The PM’s last big moment on the world stage could be extremely tricky despite the marginally higher funding. 

Sir Keir is due to attend the Nato summit in Turkiye alongside Mr Trump, who has been highly critical over the lack of military investment.

The member states have committed to spending 3.5 per cent of GDP on defence, with an extra 1.5 per cent on ‘resilience’ measures. 

A White House official sent another shot across the bows of the UK and other allies last night, saying: ‘President Trump expects Nato allies to abide by their 5 per cent defence spending pledge.’ 

Sir Keir is on track to be out of Downing Street on July 20, with Mr Burnham closing in on a ‘coronation’.

His allies had pushed to delay the DIP until after he had taken charge. 

It is far from clear what the former Greater Manchester Mayor will do on defence, after he gave his first big speech yesterday but refused to answer any questions.

Service chiefs had insisted a cash injection of £28billion over four years is needed to make the UK secure.

Tory defence spokesman James Cartlidge said: ‘This is too little too late. Too little because it is barely more than John Healey and Al Carns resigned over, and too late because the plan is almost a year overdue. It is only being rushed through because Keir Starmer is desperate for a legacy.’