John Healey's first Budget will fail to set defence target despite resigning from Cabinet amid row with Keir Starmer

The move puts Mr Healey in the position of overseeing the Treasury after previously accusing it of being "unwilling" to provide the resources needed to protect Britain.

He quit as Defence Secretary in June after demanding that the Government commit to spending three per cent of GDP on defence by the end of the decade.

At the time, Mr Healey warned that Labour's existing trajectory towards spending just 2.7 per cent by 2030 would leave Britain exposed.

He accused Sir Keir Starmer of being "unable" and the Treasury of being "unwilling" to allocate the money necessary for national security.

Mr Healey's dramatic resignation helped seal Sir Keir's fate as Prime Minister and paved the way for Andy Burnham to enter Downing Street.

But after returning to the Cabinet as Chancellor, Mr Healey will now use his first Budget to prioritise funding the Government's existing defence investment plan rather than setting a deadline for reaching three per cent.

Government sources told the Financial Times that plugging the funding gap in the investment plan inherited from Sir Keir would be Mr Healey's "immediate priority".

Mr Healey will now use his first Budget to prioritise funding the Government's existing defence investment plan

PA

A Government spokesman said: "The first duty of Government is to keep its citizens safe. The Prime Minister and Chancellor are committed to fully funding the defence investment plan."

Ministers are expected to set out a pathway towards higher military spending at the 2027 spending review.

That will include a roadmap towards Britain's Nato commitment to spend 3.5 per cent of GDP on defence by 2035.

However, the Treasury has declined to say whether 2030 will ultimately be chosen as the deadline for reaching three per cent.

The decision comes amid heightened concern over Britain's security after Russia renewed threats against British military assets.

Mr Healey previously accused the Treasury of being 'unwilling' to allocate the money necessary for national security

PA

Speaking to Sky News on Friday, Mr Healey defended his approach by stressing the importance of keeping control of the public finances.

He said: "Fiscal discipline has been the bedrock of the Government that I was part of for the first couple of years."

The change in direction also prompted falls in British defence stocks, with military companies listed on the FTSE 100 and FTSE 250 shedding around £1.7billion in value.

One defence industry executive described the Government's position as "disappointing but entirely predictable."

They told The Telegraph: "When the Government turns a blind eye to direct threats from the Russian state against British infrastructure, factories and, in some cases, individuals, but talks about defence as a percentage point of GDP or a job creation scheme, we shouldn't expect anything better.

"The longer we mess around with reaching defence spending targets, the more we will see direct threats to our country escalate, and we will only have ourselves to blame."

Shadow Defence Secretary James Cartlidge also accused the Chancellor of backtracking on the issue which contributed to the downfall of Sir Keir's premiership.

He said: "Given he is now the Chancellor, it is extraordinary that he is backtracking on the very pledge which sealed the fate of the last PM and opened the door of No 10 to Andy Burnham.

"Russia doesn't work to Treasury timetables."

Reform UK's Treasury spokesman Robert Jenrick branded Mr Burnham's premiership "continuity Labour with a new face."

Rory Wells, a director at Second Front Systems, meanwhile warned that simply increasing expenditure would not necessarily make Britain safer without wider procurement reform.

He said: "Three per cent of GDP will not make the UK any safer if more money simply moves through the same processes at the same speed."