UK Treasury blocks ‘non-essential’ overseas aid payments

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Britain’s overseas aid programme has been thrown into confusion after the Treasury blocked “non-essential” new payments for the rest of the summer over concerns that the cost of relief work in Ukraine will breach a spending cap.

Last year Boris Johnson’s government cut Britain’s overseas aid budget after the Covid pandemic, “temporarily” ditching a manifesto commitment to spend 0.7 per cent of GDP and replacing it with a new 0.5 per cent limit.

Treasury chief secretary Simon Clarke last week told the Foreign Office and other departments to suspend “non-essential aid spending” until Johnson’s replacement as prime minister was in post because the new lower limit was about to be breached.

Andrew Mitchell, a former Tory international development secretary, said the move would “undoubtedly cost lives” in some of the world’s poorest countries. Labour said the suspension of aid payments was “extraordinary”.

The move stunned officials working on development projects, who claimed programmes would be halted, dealing another blow to Britain’s claim to be an “aid superpower”.

One British aid official said: “The vast majority of UK development programmes will simply stop. This is truly awful. It will breach contracts, and goes against everything the UK claims to stand for.”

Clarke feared that the cost of providing aid to people fleeing Ukraine and the cost of resettling refugees from Afghanistan could see total aid spending exceed the new 0.5 per cent ceiling.

The ban on payments will present an early dilemma for a new prime minister on how to manage the stretched aid budget. Nadhim Zahawi, the chancellor, has insisted that controversial spending decisions be put on hold until a replacement for Johnson is found.

About 160,000 Conservative members will begin voting in early August to choose their next leader, who as head of the ruling party becomes the UK’s next prime minister. The outcome of the contest between foreign secretary Liz Truss and the former chancellor Rishi Sunak will be announced on September 5.

Departments have been told they can continue with aid spending they regard as “essential” over the summer, but must start prioritising projects with a view to limiting the impact on some of the world’s poorest people.

“Clearly the government has to live within budgets agreed by parliament, but to withhold spending on life-saving projects in this way will undoubtedly cost lives and further impair the UK’s reputation,” Mitchell said.

David Lammy, shadow foreign secretary, said: “At a time of chronic global food shortages, drought, rising prices and conflict in so many parts of the world, it’s extraordinary that UK developmental aid appears to have been suspended. Lives literally appear to be dependent on the Conservative party leadership elections. This is a travesty and further undermines our standing in the world.”

Sam Nadel, head of government relations at Oxfam, said: “The government’s welcome support to the Ukrainian people cannot come at the expense of responding to other emergencies around the world such as in east Africa and Yemen.”

The government said ministers were “prioritising overseas aid funding such as providing humanitarian support to the people of Ukraine” and that the UK had a long history of helping others in their hour of need.

“We remain committed to spending 0.5 per cent of our gross national income on overseas aid and will return to 0.7 per cent when the fiscal situation allows.”

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