Latest news with #aidbudget
The Guardian
6 hours ago
- Business
- The Guardian
Spending plans for British Council may force it to close in 60 countries, sources say
Ministers have asked the British Council to draw up spending plans that would force it to close in as many as 60 countries, sources have told the Guardian, in the latest sign of the impact of Keir Starmer's decision to slash the aid budget. The council has been asked to draw up two sets of spending plans as part of Wednesday's spending review: one in which its funding would remain the same in cash terms and one in which it would be cut by 2% in cash terms each year. The scenarios are the same as those that have been demanded of the BBC World Service, and would mean the council having to shut completely in large parts of the world. The plans are likely to add to warnings that the government's cuts to overseas aid are at risk of damaging its soft power just as Russia and China are putting more resources into strengthening theirs. Scott McDonald, the council's chief executive, would not comment on the Treasury's demands, but said: 'The British Council plays a vital role in delivering UK soft power around the globe. 'Investment in soft power is imperative to any nation that wishes to be instrumental on the world stage. Over the last three years we have taken £180m of costs out of the organisation through a substantial transformation plan, but the amount of funding we receive from the UK government will have an impact on country closures.' McDonald has previously warned that financial pressures on the council could make it 'disappear' within a decade. The council receives £1bn in revenue each year, but 85% of that comes from selling its English-language services around the world. In 2024-25, it received £163m in a government grant, most of which came from the international aid budget. Earlier this year, the prime minister announced he would slash the aid budget from 0.5% of gross domestic product to 0.3%, freeing up about £6bn in extra spending for defence. The reductions to the aid budget are now being felt in Whitehall, with the chancellor, Rachel Reeves, having imposed what insiders say are swingeing cuts on the Foreign Office. As a result, institutions such as the British Council and BBC World Service are being asked to model major spending reductions. Sign up to First Edition Our morning email breaks down the key stories of the day, telling you what's happening and why it matters after newsletter promotion Those close to the negotiations with the government say the council had asked for an additional £20m in funding per year, not least to help repay a £197m loan to keep it running during the pandemic. That loan, which was made on commercial terms, has now been rolled over for another 18 months, but insiders say the repayments are costing it £14m a year. If it receives no extra cash in the next few years, those close to the talks say, it will have to close in 40 countries. Cuts of 2% in cash terms would require 60 closures. Both of these would be on top of the 20 office closures that it announced in 2021, when it was told to reduce its budget by £185m over five years. The council's financial crisis is causing alarm among politicians and military chiefs, who say its activities boost Britain's national security. Dozens of high-profile figures recently wrote to the prime minister urging him not to cut the council's funding. They included the former home secretary James Cleverly, the former defence secretaries Grant Shapps, Ben Wallace and Michael Fallon, the former foreign secretary David Miliband, and the former military chiefs Richard Dannatt and David Richards. The letter warned: 'As we compete harder for global influence, the need for the British Council's unique contribution to our security is greater than ever. We call upon you to invest in this great national asset and force-multiplier, before it is too late.' Peter Ricketts, the former national security adviser who organised the letter, told the Guardian: 'A lot of defence people will tell you that a small investment in soft power such as the British Council is worth a lot of money on the military side.' A Foreign Office spokesperson said: 'Despite the tough fiscal situation, we continue to back the British Council with over £160m in 2025-26.' The spokesperson added that no decisions had yet been taken over its funding for the next few years.
The Guardian
17-05-2025
- Business
- The Guardian
Diminished UK aid budget is ‘new normal', says development minister
The UK's drastically diminished aid budget is the 'new normal,' the development minister, Jenny Chapman, has said, as she claimed Labour's approach would help repair voters' faith in overseas aid. Lady Chapman took up her post in February, after Anneliese Dodds resigned in protest at Keir Starmer's decision to slash overseas aid spending to 0.3% of gross national income from 0.5%, to pay for increased defence spending. Chapman said as she and her team go through the aid budget line by line, seeking deep cuts, they were not treating the belt-tightening as temporary. 'I'm not making my choices, thinking, 'Oh, we've got to get through the next 18 months, two years and then we'll be back to where we were'. I'm making decisions thinking that this is the new normal and we have to make this work,' she said, repeatedly referring to what she called a '0.3 world'. Chapman was the MP for Darlington from 2010 until 2019, when she lost her seat in Boris Johnson's landslide general election victory. She was ennobled by Starmer in 2021. Speaking in her spacious room in the Foreign Office, she acknowledged the dismay among many longtime supporters of development over the scale of Labour's cuts, but claimed the sector needed to work differently to win back wavering public support. 'I think the aid sector does amazing work and there are incredible people who've spent their lives working to make the world a better place,' she said. 'At the same time, the truth is that the confidence that the public once had in this agenda has faded, and we need to be honest with ourselves about that. And I will work with them to improve that situation.' 'I'm not going to shy away from tough messages when I think they need to be made.' Before the 20-year anniversary of the Gleneagles G8 summit, at which the UK secured significant progress on aid and debt relief, Chapman claimed Labour can still lead on these issues. 'I'm very proud that the last Labour government led thinking around development. We have to do the same now and we have to shape what development looks like for the next 20 years. That is the job.' Chapman attracted criticism earlier in the week for suggesting in an appearance at the cross-party international development committee that the UK had for too long been viewed as a 'global charity'. But speaking after her grilling by the committee, she insisted that even without the necessity of making cuts, the way the government works with developing countries needed significant reform. 'African governments are saying they want partnership, not paternalism. So they want more control over what happens in their country,' she said. Chapman suggested the UK's new approach, within straitened resources, would involve sharing UK expertise and encouraging private sector investment. 'This morning I was in the City with our new investment taskforce,' she said, citing 'lots of enthusiasm, lots of possibilities.' Sign up to Headlines UK Get the day's headlines and highlights emailed direct to you every morning after newsletter promotion She also underlined the urgency of cutting the cost of supporting asylum seekers in the UK, which accounted for 20% of the overseas aid budget in 2024. Chapman is part of a joint working group with the Home Office aiming to reduce the budget in this area. 'They need to move further and faster because that's not good use of that money. They would agree with that,' she said. Asked where the cuts will fall, Chapman refused to make any specific budget commitments, but said the UK would prioritise humanitarian aid. She also hinted at other areas the government might focus on, including the World Bank's International Development Association (IDA) arm, which gives grants and loans to low-income countries, and the Global Alliance for Vaccines and Immunisation (Gavi). 'Money that's spent by the World Bank, you get £10 invested for every £1 that we put in. That's a good use of money. The IDA fund performs very well, it's got proven evidence based of having an impact,' she said. 'We are one of the biggest, if not the biggest donors to Gavi; it works, it's saved hundreds of thousands, millions of lives.' The UK committed £1.98bn over three years to IDA at the end of 2024, before the budget cuts were announced, but it has since been suggested that promise is 'under review'. Gavi has a pledging conference at which the UK will be expected to set out its contribution. Chapman also praised the BBC World Service, amid reports that the government is demanding budget cuts. 'We don't know what the exact allocations are going to be yet. We're working through those numbers, but what I would say is that the World Service do tremendous work that nobody else can do,' she said, calling it 'an absolute gold standard resource'.
