by Rachel Reeves’ plan to cut almost £2 billion from the foreign aid budget has prompted a Cabinet backlash, the Telegraph can reveal.
The Foreign Secretary, David Lammy, is among the ministers demanding she announce more money for the aid budget and warning of the damage the cuts will cause.
However, the chancellor is preparing to allow aid spending to fall to 0.5 per cent of gross national income (GNI) after two years when it was boosted above that level by former Tory chancellor Jeremy Hunt.
Aid organisations, including the UK arm of the charity run by David Miliband, have warned that Ms Reeves’ plans will see the aid budget fall to a 17-year low and are lobbying ministers over the issue. .
This series is just one of a series of proxies for the Budget and Cabinet ministers to tackle the spending efficiencies claimed by the Exchequer before 30 October.
The health and education departments have been ordered to get savings of at least £1 billion each, despite their secretaries of state not voting back on austerity.
Cabinet ministers are taking their complaints directly to Darren Jones, the Chief Secretary to the Treasury, this week in one-to-one meetings.
‘Iron grip’ on wear
Multiple government insiders told The Telegraph that ministerial tensions over spending cuts demanded by Ms Reeves are far greater than the supposed No 10 rifts to make headlines.
“She is keeping an iron grip on spending”, said one Whitehall source.
The negotiations are a backdrop to what Sir Keir Starmer and Ms Reeves have warned the public that it will be a “painful” Budget, with tough decisions on spending, taxation and welfare.
The Exchequer is expected to launch a tax raid to generate additional revenue, but Mr Reeves is also calling for savings in departmental budgets.
She has told ministers she wants £3 billion of efficiencies found, even as she looks to raise overall public spending to avoid real-terms cuts to government departments.
The fight over foreign aid comes after Rishi Sunak abandoned Lord Cameron’s pledge to spend 0.7 per cent of GNI on overseas development aid during Covid, spending 0.5 per cent instead.
Labor has stuck to the same position, promising to return to 0.7 per cent once the public finances are stabilised. No date has been added to that promise.
In recent years of the Tory government, however, Andrew Mitchell and Jeremy Hunt – the foreign minister and chancellor respectively, and both supporters of overseas aid – have increased the aid budget.
They agreed an extra £2.5 billion for overseas aid in 2022 over the next two years, but that further increase in spending will end this financial year.
As a result, foreign aid spending is expected to fall from £15.3 billion, or 0.58 per cent of GNI, in 2023 to £13.6 billion, or 0.50 per cent of GNI, in 2024. That’s a drop of £1.7 billion. The exact figure depends on the size of the economy this year.
This fall is exacerbated by the fact that more than a quarter of the aid budget has been spent in recent years on looking after asylum seekers who have arrived in the UK, including spiraling hotel bills.
The spending officially counts as foreign aid, according to the definition of the Organization for Economic Co-operation and Development, but critics say it violates the spirit of the commitment.
It is understood that Mr Lammy and Anneliese Dodds, the development minister, are pushing the Exchequer for more aid money.
Spokesmen on behalf of the Foreign Affairs Office and the Treasury did not dispute that there was an advanced position on aid spending. No comment was issued by either department, citing live Budget negotiations.
The International Rescue Committee UK, the British arm of the refugee charity run by Mr Miliband – the former foreign secretary who once led the Labor leadership – signed a private letter protesting the cuts last month .
Mr Mitchell, who has long supported higher aid spending, called on the Treasury to allow more money, warning of the impact on poor children if nothing changed.
He told the Telegraph: “The huge cost of first-year asylum seekers falls within the definition of the international development budget, but it is a huge amount of money.
“That is why Jeremy Hunt as Chancellor and the Exchequer were persuaded to give us an extra £2.5 billion over the last two years.
“Since then, the costs have risen even more. The Tories must help with this.
“If Rachel Reeves does not provide additional funds, the result will be that thousands of children in the developing world will suffer greatly.”
Romilly Greenhill, chief executive of Bond, the UK network of organizations working in international development, said the country had a “moral duty” to help those suffering abroad.
The organization produced analysis last month which showed that if spending on asylum seekers in the UK was removed, the foreign aid budget would fall to its lowest level since 2007.
Ms Greenhill said: “We are concerned that the UK’s aid budget will fall to its lowest level in 17 years if the Government does not act in the Autumn Budget.
“With global crises such as climate change, conflict and food insecurity worsening, the Government must stop diverting UK aid to fund the UK’s failing asylum system.
“We need dedicated dedicated funding to support these marginalized groups in the UK. The UK has a moral duty to ensure that millions around the world can still access the vital services and support they need to stay safe in their own countries.”
