The government’s decision to slash foreign aid will lead to unrest, further crises and threaten UK security, a group of cross-party MPs has warned.

A report by the International Development Committee found the decision in February to reduce aid to 0.3% of gross national income (GNI) by 2027/28 – coupled with the US cutting its aid budget – is having a severe impact.

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The foreign aid budget was cut to invest in defence from 0.5% of GNI, which was meant to be an interim reduction from 0.7% to cope with economic challenges caused by the pandemic.

Total aid spending is set to reduce from £14.1bn in 2024 to £9.4bn by 2028/29.

The committee, chaired by Labour MP Sarah Champion, said spending is being prioritised on humanitarian aid over development, which “builds long-term resilience and should lead to reducing the need for humanitarian aid”.

They said the international development minister, Baroness Chapman, has made it clear “the UK will remain a leading humanitarian actor”.

But the committee said while they are glad those in “desperate need of aid will be prioritised, particularly in the regions of Ukraine, Gaza, and Sudan”, they are concerned about the long-term effect of pulling development aid.

“We are concerned that slashing development aid will continue to lead to unrest and further crises in the future, presenting a threat to UK security,” the MPs said.

Risk to UK’s national security

They said a reduction in foreign aid will have “devastating consequences across the world”.

The committee said it recognises an increase in defence spending is needed, but “to do this at the expense of the world’s most vulnerable undermines not only the UK’s soft power, but also its national security”.

They said the government must make “every effort” to return to spending 0.5% of GNI on foreign aid “at a minimum, as soon as possible”.

The committee also found long-term funding for development is “essential” to ensure value for money is achieved.

However, they accused the government of seeing value for money only in terms of the taxpayer, saying that downplays “equity and the importance of poverty reduction” and causes tension.

They agreed accountability to the taxpayer is “key to reducing poverty globally, and maximising the impact of each pound to do so, must remain the Foreign, Commonwealth and Development Office’s central tenet for official development assistance spending”.

Spending on migrant hotels

Spending on migrant hotels in the UK was also criticised by the MPs, who said while international aid rules mean they can cover refugee hosting for the first 12 months in the UK, given the recent cuts, that is “incompatible with the spirit” of the UN’s OECD Development Assistance Committee rules.

“Excessive spend on hotel costs is not an effective use of development budget,” they said.

The committee recommended costs of housing refugees should be capped “at a fixed percentage” of total foreign aid spending “to protect a rapidly diminishing envelope of funding”.

Read more: Govt struggles to slash aid spent on asylum hotels

‘Short-sighted’

Reacting to the report, Timothy Ingram, head of UK advocacy at WaterAid, said: “The UK government’s decision to cut the aid budget was one that defied both logic and humanity. Aid when delivered effectively in partnership with local communities is not charity – it’s an investment in a safer and more prosperous world.

“Undermining it, especially vital finance for water, weakens the world’s resilience to climate shocks, pandemics, and conflict – impacting the one in 10 people without access to clean water, and ultimately making us all less safe.

“This is a short-sighted political decision with long-term consequences for the UK’s stability, economy and global standing. We join with MPs in urging the government, once again, to urgently reconsider.”

Lack of transparency over private contractors’ spending

In the report, MPs said it is worried the Foreign Office has not reviewed aid spending on multilateral organisations, which allows the UK less direct influence over spending, such as the World Bank or vaccine organisation Gavi since 2016, despite spending nearly £3bn on them in 2024.

They said the use of private contractors does not offer inherently poor value for money, but a lack of transparency and data can mean under-delivering and a loss of “in-house” expertise.

‘Tragic error’

Sarah Champion, chair of the International Development Committee, said: “Ensuring aid delivers genuine value for money has never been more important. As major donors tighten their belts, we have to ensure that every penny we spend goes to the people most in need.

“The former Department for International Development was rightly seen as a world leader in value for money; the FCDO is broadly hanging on to that reputation. But it must make some urgent improvements.

“Reducing poverty must be the central aim of the development budget. While accountability to the taxpayer is an important consideration, the FCDO’s current definition of value for money risks diverting focus away from improving the lives of the most vulnerable – the very reason the aid budget exists at all.

“The savage aid cuts announced this year are already proving to be a tragic error that will cost lives and livelihoods, undermine our international standing and ultimately threaten our national security. They must be reversed.

“Value for money is critical to making the most of a shrinking aid budget. While this report finds some positives, the government must take urgent action to wipe out waste and ensure the money we are still spending makes a genuine difference.”

Rachel Reeves has said she is determined to “defy” forecasts that suggest she will face a multibillion-pound black hole in next month’s budget.

Writing in The Guardian, the chancellor argued the “foundations of Britain’s economy remain strong” – and rejected claims the country is in a permanent state of decline.

Reports have suggested the Office for Budget Responsibility is expected to downgrade its productivity growth forecast by about 0.3 percentage points.

That means the Treasury will take in less tax than expected over the coming years – and this could leave a gap of up to £40bn in the country’s finances.

Ms Reeves wrote she would not “pre-empt” these forecasts, and her job “is not to relitigate the past or let past mistakes determine our future”.

“I am determined that we don’t simply accept the forecasts, but we defy them, as we already have this year. To do so means taking necessary choices today, including at the budget next month,” the chancellor added.

She also pointed to five interest rate cuts, three trade deals with major economies and wages outpacing inflation as evidence Labour has made progress since the election.

Speculation is growing that Ms Reeves may break a key manifesto pledge by raising income tax or national insurance during the budget on 26 November.

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Although her article didn’t address this, she admitted “our country and our economy continue to face challenges”.

Her opinion piece said: “The decisions I will take at the budget don’t come for free, and they are not easy – but they are the right, fair and necessary choices.”

Yesterday, Sky’s deputy political editor Sam Coates reported that Ms Reeves is unlikely to raise the basic rates of income tax or national insurance, to avoid breaking a promise to protect “working people” in the budget.

Sky News has also obtained an internal definition of “working people” used by the Treasury, which relates to Britons who earn less than £45,000 a year.

This, in theory, means those on higher salaries could be the ones to face a squeeze in the budget – with the Treasury stating that it does not comment on tax measures.

Read more: The taxes Reeves could raise

In other developments, some top economists have warned Ms Reeves that increasing income tax or reducing public spending is her only option for balancing the books.

Experts from the Institute for Fiscal Studies have cautioned the chancellor against opting to hike alternative taxes instead, telling The Independent this would “cause unnecessary amounts of economic damage”.

Although such an approach would help the chancellor avoid breaking Labour’s manifesto pledge, it is feared a series of smaller changes would make the tax system “ever more complicated and less efficient”.

Sky News has exclusively challenged Lord Peter Mandelson over his relationship with Jeffrey Epstein.

It is the first time the Labour peer has been seen in the UK since he was fired as the ambassador to the US in September.

Lord Mandelson was sacked due to his links to the late sex offender.

It emerged over a series of days that the so-called “Prince of Darkness” had maintained his relationship with the disgraced financier following his first conviction, and had told him to fight it in the courts.

It led Sir Keir Starmer to dismiss him, just one day after he had publicly backed the peer in the House of Commons at Prime Minister’s Questions.

Sir Keir said new information had come to light, which showed Lord Mandelson’s relationship with Epstein was “materially different” to what he had told the government.

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The peer took a number of days to return to the UK, reportedly because his dog was unwell.

However, he was spotted on Monday evening by Sky News at a train station – but declined to answer any questions.