The money raised from the war bonds would reportedly be ringfenced for national security.
Chancellor Rachel Reeves is under growing pressure to give more money to defence (Image: Getty)
Rachel Reeves is weighing up issuing war bonds to provide a boost to Britain’s defence pursestrings, according to reports. The Chancellor is under mounting pressure to inject more cash into the military after an ex-Labour defence secretary and NATO chief accused Sir Keir Starmer’s Government of “corrosive complacency” towards defence.
It comes amid a repeated holdup in the publication of the Government’s 10-year plan to invest in new capabilities and equipment. The impasse has caused what sources have described as “paralysis” in the UK defence industry. Members of the public and financial institutions would reportedly both be able to buy the war bonds under Ms Reeves’ new plans to fund defence spending hikes.
There are widespread calls for greater investment in the British military (Image: Getty)
The money raised would be ringfenced for national security, according to The Telegraph who broke the story.
Defence Secretary John Healey is believed to be interested in the idea following recent private discussions.
War bonds were issued in both world wars and they effectively see the Government loan money to fund defence iniatives, with the money repaid with interest akin to standard Government bonds.
The Liberal Democrats previously called on the Government to begin selling war bonds to accelerate defence spending.
They are seen as a less controversial solution than slashing the welfare budget to provide an uplift in defence.
Lord Robertson, ex-military chiefs and the Conservatives have been among those calling for Labour to cut divert funds away from welfare to defence.
Lord Robertson, who co-authored the Government’s Strategic Defence Review, warned earlier this week that the UK is underprepared for war due to the “ever-expanding welfare budget”.
He also accused “non-military experts in the Treasury” of “vandalism”.
Health Secretary Wes Streeting has backed cutting the welfare budget to provide an uplift in defence spending.
This would almost certainly prove deeply unpopular with Labour backbenchers, with senior party figures already warning the Treasury against making cuts.
The department hopes war bonds would raise money more cheaply than usual gifts as it would tap into patriotism and major market demand for defence investments, The Telegraph reported.
A Government spokesman said: “We are delivering the largest sustained Defence spending increase since the Cold War — 2.6 per cent of GDP from 2027 — with an additional £5 billion for defence this financial year alone, and £270 billion investment across this parliament, ensuring no return to the hollowed out Armed Forces of the past.
“The Government keeps the introduction of new debt instruments under constant review but would need to be satisfied that any new instrument would meet value-for-money criteria, enjoy strong and sustained demand in the long term, and be consistent with wider fiscal objectives.”
