Dan Jarvis, the newly appointed defence secretary, is set to revisit a controversial plan for funding the armed forces and may return to demand more cash from the Treasury, allies have indicated.
Multiple government sources said Jarvis would look to "reprioritise" aspects of the defence investment plan (Dip), which was delayed until July after the resignation of John Healey following a disagreement over its funding.
An ally of Jarvis said he would have a strong hand in future negotiations with Prime Minister Keir Starmer, who is facing a possible leadership challenge from Andy Burnham. "They can't sack him [Jarvis] or let him resign," the ally said.
The prime minister will meet world leaders at the G7 summit in France on Monday afternoon, with the defence row casting a shadow over the meeting, where leaders are expected to discuss threats from both Russia and Iran.
Healey resigned as defence secretary on Thursday, stating he would not accept a Dip settlement that did not "give our forces the resources they need." He accused the Treasury of being unwilling to provide the funds "to defend the country at this time of rising threats."
Speaking to the BBC on Sunday, Culture Secretary Lisa Nandy said discussions about the Dip were "ongoing" and that her department was among those still in conversation with the Treasury about finding further sums to fund defence.
However, other senior sources said there were likely to be tweaks "within the Dip" rather than offers of extra cash, suggesting that Jarvis might be able to free up money by axing projects Healey had been unwilling to cut.
Sources close to Healey suggested tweaks to the Dip would miss the point – and that the major concern should be the lack of a plan for spending to reach 3% of GDP by 2030.
Despite Nandy's comment, cabinet ministers told the Guardian they would be reluctant to reopen their departments' spending settlements yet again, with some saying there were "red lines" on investments in capital projects that they would not be prepared to cut.
Overnight, the Royal Marines seized a Russia-linked shadow fleet oil tanker in the Channel. Though the Ministry of Defence (MoD) said the operation was months in the planning, the seizure was accompanied by combative rhetoric from Starmer.
"Another bad day to be Vladimir Putin," the prime minister said, as he posted a video of the capture on social media.
Multiple sources in No 10, the Treasury and the MoD said there were qualms about the Dip in its current form before Healey's resignation. Chancellor Rachel Reeves and Keir Starmer are understood to have asked Healey, when he was in post, to look again at the balance of funding, particularly to increase spending on autonomous ships and drones.
Others said there was widespread frustration across the government about the black hole in the department's finances, which had existed when Healey took office and was not addressed adequately in the spending review. "That is all on John," one minister said.
Healey said he resigned after Downing Street would only offer £13.5bn to plug an £18bn gap in the funding of major defence projects, partly funded by cutting other departments' capital budgets by 1%.
Healey was also concerned that Starmer did not appear to be embracing a Nato target of spending 3.5% of GDP by 2035. Though Starmer said in February that Britain "needs to go faster" on defence spending, he was prepared to offer Healey just an extra £2bn, taking spending to 2.68% by 2030.
A source close to Healey suggested that a reopening of the Dip would lose sight of the bigger picture, the plan to reach 3% by 2030 and to be on a clear and credible path to 3.5%.
Starmer spoke to US President Donald Trump and Nato Secretary General Mark Rutte on Saturday in the aftermath of the shock resignation. Downing Street said he had told Rutte the UK would spend 3% of GDP on defence during the next parliament, by the end of 2034.
On Sunday, Japan's Prime Minister Sanae Takaichi visited Downing Street for a bilateral meeting and lunch ahead of next week's G7 summit. Japan is a partner of the UK, with Italy, on the development of the Gcap next-generation fighter jet.
Japanese sources indicated they wanted the UK to sign an international contract committing to the continuation of the project by the end of the month. Prior to the meeting, the UK had said it expected the two leaders would confirm their shared commitment to the flagship programme.
Jarvis, the former security minister, has been given until the Nato summit in Ankara in early July to offer up an alternative plan that would bring more investment. "Dan will need something to come away with, there is no question," one senior source said.
A source close to Jarvis confirmed "new conversations" with the Treasury and No 10 were continuing – though stopped short of saying they were about demands for more funding.
Starmer is said to have personally phoned cabinet ministers to unpick parts of their spending settlements in order to fund increases in defence during the course of the Dip – and is reluctant to ask restive ministers to look again at their budgets.
Asked why Healey had resigned if the conversations were not finished, Nandy said: "I can only tell you, from my point of view as somebody who is actively involved in these discussions, that these discussions are happening in real time."
The stakes are high for Starmer, who on Monday could be attending one of his final global meetings – depending on Burnham's moves after the outcome of Thursday's Makerfield byelection.
The prime minister will travel to Évian in France for the G7 summit on Monday afternoon and will tell fellow world leaders that the world is "more dangerous today than it has ever been in our lifetime" with wars on two fronts, the rapid acceleration of technology and the deterioration of global order.
Starmer will call for further sanctions on Russia alongside military and energy support for Ukraine. "If Russia won't agree to a ceasefire and engage in meaningful negotiations, Ukraine will continue their fight, and we will back them all the way on that," said a Downing Street spokesperson.
