Michael Portillo, Chief Secretary to the Treasury, is expected to tell ministers that about pounds 10bn will have to be cut from spending bids when the Cabinet endorses the pounds 253.6bn spending ceiling for next year. Cabinet ministers are divided over how much should come from increases in taxation or spending cuts.
Douglas Hurd, the Foreign Secretary, strongly defended his budget against the cut, which would amount to pounds 61m, when he told the Commons Select Committee on Foreign Affairs yesterday that the sharply reduced military threat, which had led to savings on the defence budget, had increased demands on the Foreign Office.
But a senior Tory source said: 'The Treasury has asked for cuts of 5 per cent in departmental budgets. Normally this is routine, but the Treasury has said it is serious. The Foreign Office is going to be sacrificed.'
It could mean further cuts in diplomatic staff in embassies, although Mr Hurd acknowledged there is already a wind of change blowing through the diplomatic service. The committee heard that the staffing numbers in Washington have been reduced but increased in New York to match increased demands at the United Nations. Embassy strengths, which could also change, include 47 in the Paris embassy, 46 in Moscow, 42 in India, 39 in Tokyo and 49 in Peking.
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