International development secretary says she wants DfID to become more a fundraising than a spending department

Penny Mordaunt criticised over call for aid to come from private sector

Penny Mordaunt has been criticised by charities and MPs for suggesting the government’s international development spending should become more reliant on private sector investment and philanthropy.

The international development secretary told cabinet ministers she would aim for her department to become a fundraising department rather than a spending department, telling them it was unsustainable to continue to meet the spending target with taxpayer cash.

Mordaunt, likely to be a candidate in any upcoming Conservative party leadership race, has said there should be a national conversation about how more private funding could be part of the target to spend 0.7% of gross national income on aid.

The cabinet minister has begun a series of meetings with charities and investors about how £14.1bn of aid spending could become less reliant on public funds.

In a presentation ahead of the spending review later this year, Mordaunt also repeated that she wanted DfID’s spending to be more aligned with the UK national security strategy, essentially meaning closer alignment between defence and counter-terrorism spending and international aid, a Whitehall source said.

The OECD’s development assistance committee sets strict guidelines for how aid money can be spent.

Mordaunt has also suggested that rules should be reformed to include millions of pounds spent through DfID’s profit-making investment arm, CDC Group.

Currently, the profits made by CDC do not count towards the 0.7% target if they are re-invested domestically, and are subtracted from the total if they are withdrawn. Mordaunt plans to lobby for reform of those rules to allow those profits to be spent domestically, such as on the NHS, and still count towards the target.

DfID sources characterised the proposals as simply a new way of thinking about funding, rather than threatening the target.

Downing Street said it remained committed to the target. “The commitment which we have to foreign aid is set down in statute,” a No 10 spokesman said.

“It remains unchanged, there are no plans to change it. The secretary of state has discussed publicly that she is looking at the aid process and making sure the money from taxpayers is being used in the most efficient way and gets the greatest contribution.”

Dan Carden, the shadow international development secretary, said it was a cynical attempt to undermine the target. “Suggesting that poverty be turned in to a profitable business opportunity will do nothing to tackle the root causes of poverty or inequality,” he said.

“It will simply enable the rich to get richer and exacerbate inequalities. Under a Labour government the UK’s overseas development programme will focus on tackling the root causes of both poverty and inequality.”

Tory MP Anna Soubry tweeted her disapproval. “First Brexit now foreign aid. Not so slowly the Conservative party moves to the right,” she said.

Christian Aid said Mordaunt’s comments would cause “further uncertainty for the world’s poorest”, and said the UK should celebrate its commitment to aid.

Christine Allen, Christian Aid’s policy director, said: “Far from being unsustainable, the world urgently needs greater aid and investment to end poverty, build peace and tackle climate change. Asking others to foot the bill is backtracking and would be a betrayal.”

The subject was also raised in the Lords on Wednesday by Labour’s international development spokesman Ray Collins, the party’s former general secretary.

The government’s spokesman Michael Bates said the aid budget was “fully funded and we have firm plans in place to continue to meet that important commitment”.