Foreign aid budget cut to 0.5 per cent of GDP with no end date set

Around £4bn will be slashed from overseas aid next year, the Chancellor has announced – as he refused to set a date for restoring the lost funding.

As expected, Rishi Sunak cut spending to 0.5 per cent of national income, breaking the Conservative election manifesto pledge of 0.7 per cent of GDP.

The move triggered shouts of “shame” and “terrible” from Opposition MPs in the Commons, but the Chancellor insisted he had to make the “tough choice” – and claimed public backing for it.

And he insisted the cut – opposed by four living former prime ministers – would still leave the UK as the second biggest aid donor among the G7 biggest economies.

But Sarah Champion, chair of the Commons International Development Committee, said: “This is devastating news for the poorest people in the world.

“For months, numerous ministers have repeatedly confirmed their manifesto commitment to 0.7 per cent.”

And Romilly Greenhill, director of the ONE Campaign, tackling poverty in the developing world. said: “This move doesn’t just hurt the world’s poorest people, it has a real impact on people here in the UK as well.

“It’s bad economics that will end up costing more than it saves, and bad foreign policy that reduces Britain's influence around the world.”

The announcement paves the way for a big Commons battle as the government attempts to pass legislation to deliver the aid cut - with some prominent Tory MPs opposed.

Ministers had planned to use an exemption within the 2002 International Development Act to make a “temporary” reduction – but are thought to fear it could be defeated by a judicial review.

Delivering his spending settlement for next year, Mr Sunak said the aid budget would be slashed to 0.5 per cent in 2021 – and failed to set a date for when it might return to 0.7 per cent.

“During a domestic fiscal emergency, when we need to prioritise our limited resources on jobs and public services, sticking rigidly to spending 0.7 per cent of our national income on overseas aid is difficult to justify to the British people - especially when we're seeing the highest peacetime levels of borrowing on record,” he told MPs.

“I have listened with great respect to those who have argued passionately to retain this target. But at a time of unprecedented crisis, government must make tough choices.”

Arguing aid spending would still be £10bn in 2021-22, the Chancellor said only: “Our intention is to return to 0.7 per cent when the fiscal situation allows.”

The statement will spark alarm among aid organisations, given Mr Sunak said the economy would not return to its pre-pandemic level until the end of 2022 – and would still be 3 per cent smaller than expected in 2025.

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