Minister resigns over cut to international aid budget

Published

8 months ago

February 28, 2025

admin

Anneliese Dodds has quit as international development minister over Sir Keir Starmer’s decision to slash the overseas aid budget to pay for an increase in defence spending.

Ms Dodds, who is also women and equalities minister and attends cabinet, said she was resigning from both posts “with great sadness” but would continue to support the government from the backbenches.

Politics Live: Starmer back in Downing Street after Washington trip

In her resignation letter to the prime minister, she acknowledged there was “no easy path” to fund the boost to defence but claimed there had been a “tactical decision” for the Overseas Development Aid (ODA) budget to “absorb the entire burden”.

She said: “You have maintained that you want to continue support for Gaza, Sudan and Ukraine; for vaccination; for climate; and for rules-based systems.

“Yet it will be impossible to maintain these priorities given the depth of the cut; the effect will be far greater than presented, even if assumptions made about reducing asylum costs hold true.”

Ms Dodds said the cut will likely lead the UK to pull-out from numerous African, Caribbean and Western Balkan nations, as well as a withdrawal of commitments to international banks and a reduced voice in the G7 and G20.

“Ultimately, these cuts will remove food and healthcare from desperate people – deeply harming the UK’s reputation,” she added.

“I know you have been clear that you are not ideologically opposed to international development. But the reality is that this decision is already being portrayed as following in President Trump’s slipstream of cuts to USAID.”

Around £6bn per year will be taken out of the aid budget and transferred over to pay for defence.

That amounts to a reduction in aid spending from 0.5% of GDP to 0.3%.

In a letter responding to Ms Dodd’s resignation, Sir Keir said the decision to cut foreign aid “was a difficult and painful decision and not one I take lightly”.

“However, protecting our national security must always be the first duty of any government and I will always act in the best interests of the British people,” he said.

The resignation comes after a key meeting between Sir Keir and Mr Trump on Thursday, during which the US leader praised the defence sending decision and also touted the prospect of a tariff-free trade deal.

Ms Dodds marks the loss of a fourth minister from the new Labour government, after Louise Haigh and Tulip Siddiq resigned and Andrew Gwynne was sacked.

Conservative MP Andrew Mitchell, who was the international development minister under Rishi Sunak, said Ms Dodds had “done the right thing”.

He posted on X: “Labour’s disgraceful and cynical actions demean the Labour Party’s reputation as they balance the books on the backs of the poorest people in the world. Shame on them and kudos to a politician of decency and principle.”

Resignation of Dodds shows Starmer’s ruthless side

Liz Bates

Political correspondent

@wizbates

She was one of his closest allies, but today Anneliese Dodds has quit Keir Starmer’s government with a stark warning about the direction of travel.

It’s been quite a journey since she got the top job in his opposition cabinet.

When he took over as Labour leader, she was appointed shadow chancellor and seen as a key player in his team.

Since that time, Starmer has shown himself to be a pragmatic, sometimes ruthless, operator when it comes to both policy and political friendships.

This resignation once again shows that side.

Not only is he pushing through deep cuts to foreign aid – a move he previously condemned – but in doing so, he has also cast aside one of his most loyal and long-standing colleagues.

Former Tory defence minister Tobias Ellwood also praised the decision as “courageous and principled”, saying that national security is “not just about hard power” but tackling threats like disease and extremism.

However, Conservative leader Kemi Badenoch backed Sir Keir’s decision.

She said: “I disagree with the PM on many things BUT on reducing the foreign aid budget to fund UK defence? He’s absolutely right.

“He may not be able to convince the ministers in his own cabinet, but on this subject, I will back him.

“National interest always comes first.”

Sir Keir announced the decision to cut the aid budget on Tuesday, saying it would fund and increase defence spending from 2.3% of GDP to 2.5% in 2027. Labour’s manifesto had pledged to reach this target but it was not clear when that would be achieved or how it would be funded.

The prime minister admitted the inauguration of Mr Trump – who has made clear he no longer wants to bankroll NATO’s defence- “accelerated” his decision but said it had been three years in the making, after Russia’s invasion of Ukraine.

He said the reduction in foreign aid is “not a renouncement I’m happy to make”.

Asked about it during the Convention of the North conference, deputy prime minister Angela Rayner said: “I’m sorry to hear she’s resigned, it was a really difficult decision that was made.”

However, she said it was “absolutely right” that the cabinet endorse the prime minister’s actions to spend more money on defence.

Politics

Thiel-backed Erebor wins US approval as Silicon Valley Bank rival emerges

Published

2 hours ago

October 15, 2025

admin

Thiel-backed Erebor wins US approval as Silicon Valley Bank rival emerges

Erebor’s green light from US regulators is among the most significant bank charter approvals tied to digital assets since the 2023 regional banking crisis.

Politics

China Merchants Bank tokenizes $3.8B fund on BNB Chain in Hong Kong

Published

8 hours ago

October 15, 2025

admin

China Merchants Bank tokenizes .8B fund on BNB Chain in Hong Kong

CMBI’s tokenization initiative with BNB Chain builds on its previous work with Singapore-based DigiFT, which tokenized its fund on Solana in August.

Politics

Chancellor admits tax rises and spending cuts considered for budget

Published

13 hours ago

October 15, 2025

admin

Chancellor admits tax rises and spending cuts considered for budget

Rachel Reeves has told Sky News she is looking at both tax rises and spending cuts in the budget, in her first interview since being briefed on the scale of the fiscal black hole she faces.

“Of course, we’re looking at tax and spending as well,” the chancellor said when asked how she would deal with the country’s economic challenges in her 26 November statement.

Politics Hub: Follow latest updates

Ms Reeves was shown the first draft of the Office for Budget Responsibility’s (OBR) report, revealing the size of the black hole she must fill next month, on Friday 3 October.

She has never previously publicly confirmed tax rises are on the cards in the budget, going out of her way to avoid mentioning tax in interviews two weeks ago.

Cabinet ministers had previously indicated they did not expect future spending cuts would be used to ensure the chancellor met her fiscal rules.

Ms Reeves also responded to questions about whether the economy was in a “doom loop” of annual tax rises to fill annual black holes. She appeared to concede she is trapped in such a loop.

Asked if she could promise she won’t allow the economy to get stuck in a doom loop cycle, Ms Reeves replied: “Nobody wants that cycle to end more than I do.”

She said that is why she is trying to grow the economy, and only when pushed a third time did she suggest she “would not use those (doom loop) words” because the UK had the strongest growing economy in the G7 in the first half of this year.

What’s facing Reeves?

Ms Reeves is expected to have to find up to £30bn at the budget to balance the books, after a U-turn on winter fuel and welfare reforms and a big productivity downgrade by the OBR, which means Britain is expected to earn less in future than previously predicted.

Yesterday, the IMF upgraded UK growth projections by 0.1 percentage points to 1.3% of GDP this year – but also trimmed its forecast by 0.1% next year, also putting it at 1.3%.

The UK growth prospects are 0.4 percentage points worse off than the IMF’s projects last autumn. The 1.3% GDP growth would be the second-fastest in the G7, behind the US.

Last night, the chancellor arrived in Washington for the annual IMF and World Bank conference.

‘I won’t duck challenges’

In her Sky News interview, Ms Reeves said multiple challenges meant there was a fresh need to balance the books.

“I was really clear during the general election campaign – and we discussed this many times – that I would always make sure the numbers add up,” she said.

“Challenges are being thrown our way – whether that is the geopolitical uncertainties, the conflicts around the world, the increased tariffs and barriers to trade. And now this (OBR) review is looking at how productive our economy has been in the past and then projecting that forward.”

She was clear that relaxing the fiscal rules (the main one being that from 2029-30, the government’s day-to-day spending needs to rely on taxation alone, not borrowing) was not an option, making tax rises all but inevitable.

“I won’t duck those challenges,” she said.

“Of course, we’re looking at tax and spending as well, but the numbers will always add up with me as chancellor because we saw just three years ago what happens when a government, where the Conservatives, lost control of the public finances: inflation and interest rates went through the roof.”

Blame it on the B word?

Ms Reeves also lay responsibility for the scale of the black hole she’s facing at Brexit, along with austerity and the mini-budget.

This could risk a confrontation with the party’s own voters – one in five (19%) Leave voters backed Labour at the last election, playing a big role in assuring the party’s landslide victory.

The chancellor said: “Austerity, Brexit, and the ongoing impact of Liz Truss’s mini-budget, all of those things have weighed heavily on the UK economy.

“Already, people thought that the UK economy would be 4% smaller because of Brexit.

“Now, of course, we are undoing some of that damage by the deal that we did with the EU earlier this year on food and farming, goods moving between us and the continent, on energy and electricity trading, on an ambitious youth mobility scheme, but there is no doubting that the impact of Brexit is severe and long-lasting.”