Former defence minister Healey named as new UK finance minister

LONDON, July 20 (Reuters) - John Healey, the former British defence minister who helped to trigger the departure of Keir Starmer by accusing him of failing to spend enough money on keeping the country safe, has been named as finance minister by new Prime Minister Andy Burnham.

Widely liked by colleagues, Healey, 66, will now have to find more money to spend on defence while also investing in other key areas such as health and welfare.

Healey had not been seen as a likely candidate for the key finance role, but he worked as a junior minister in the Treasury department from 2002 to 2007.

He served in government under the three most recent Labour prime ministers, starting with Tony Blair, and in opposition under two other leaders. From 2002 to 2007 he worked as a junior minister in the Treasury department under Gordon Brown.

People familiar with the decision said that Healey and Burnham had similar outlooks on the need to maintain economic stability and the need to drive growth by devolving power across the country, helping people with the cost of living, and building up Britain's industrial base.

As defence minister, Healey spent months lobbying Starmer and the finance ministry to lay out a pathway to spend 3% of GDP on defence by 2030, rather than the 2.68% that the government eventually had budgeted for.

The unexpected resignation by Healey, who was a loyal ally of Starmer and one of the government's most experienced ministers, was a significant blow to the then prime minister, who announced his resignation less than two weeks later.

Healey said Starmer had been "unable" and the Treasury "unwilling" to find the money to keep the country safe.

There was little major market reaction to the news of his appointment and the initial reaction among analysts was positive.

"Healey brings Treasury experience and is a sign that Burnham will respect the bond markets as a check on his radicalism, rather than plough ahead with significant changes that could unsettle the fiscal position," said Richard Carter, head of fixed interest research at Quilter Cheviot.