Ministers are facing cuts to major projects including hospitals, train lines and housing as Sir Keir Starmer tries to find money to fund defence.

Discussions inside Cabinet on how to pay for the Defence Investment Plan (DIP) are still ongoing, despite reports that the blueprint could be published this week.

Senior defence insiders have been calling for the Prime Minister to cut the welfare bill, one of the government’s biggest spending commitments, to fund the DIP, which could cost between £15bn and £18bn.

But The Sunday Times reported that Starmer and the Chancellor, Rachel Reeves, are eyeing up £6bn of cuts from Whitehall capital spending – which does not cover welfare – to help fund the uplift.

David Lammy, the Deputy Prime Minister and Justice Secretary, suggested he would be prepared to see cuts in his department to help fund the DIP.