Hunt to keep foreign aid budget capped despite election pledge

£4 billion Amount the Treasury would save if current freeze on foreign aid budget is extended by two years

BRITAIN’S foreign aid budget will remain capped at this year’s Autumn Statement and not return to the level pledged by the Conservatives at the last election, The Sunday Telegraph understands.

Sources familiar with preparations for the November 17 statement by Jeremy Hunt, the Chancellor, said it was unlikely that he would increase the budget from its current level of 0.5 per cent of national income (GNI). The Government is required by law to spend 0.7 per cent of GNI on aid, but the budget was temporarily reduced by Rishi Sunak in November 2020 in an attempt to claw back spending during the Covid-19 pandemic.

Last July, he said the budget would not return to its previous level until the Government spending watchdog says that “on a sustainable basis” the country is not borrowing for day-to-day spending and the ratio of underlying debt to GDP is falling.

Officials at the Foreign, Commonwealth and Development Office (FCDO) are now expecting the statement to leave the budget unchanged, as Mr Hunt looks for around £50 billion of savings and revenue.

It is possible the current freeze will be extended by two years, saving the Treasury around £4 billion.

Ahead of the statement, Andrew Mitchell, the minister in charge of aid at the FCDO, is understood to have argued for Britain to give more money to international institutions. In particular, Mr Mitchell believes the UK should contribute to the Global Fund, an international development organisation that funds projects to end HIV/Aids, tuberculosis and malaria.

Despite becoming the third-largest donor to the Global Fund since it was launched in 2002, Britain has yet to make a contribution this year and has been asked to provide £1.82 billion, a 30 per cent increase from the level contributed in 2019.

The UK’s reduced aid programme is also under pressure from the Ukrainian refugee scheme and domestic projects to house asylum seekers, which are both funded from the same budget.

Officials are concerned about the spiralling cost of the Home Office’s handling of the crisis at the Manston centre in Kent, which has been forced to decant asylum seekers into hotels and other accommodation at a cost of £7 million per day.

Under current rules, the cost of hosting refugees and asylum seekers can be met with the aid budget for a year after each person’s arrival in the UK, but development sources told The Sunday Telegraph that aid projects will have to be scrapped to pay for the cost of the refugee schemes if that policy continues.