Brown denies cuts in anti-terror spending

Operations to tackle terrorism in Pakistan and narcotics in Afghanistan were among the programmes identified on Wednesday by Minister Baroness Kinnock as being under pressure because of a 110m budget shortfall caused by currency fluctuations.

Tories accused Mr Brown of being "indifferent to the point of negligence" about the UK's global interests, while Liberal Democrats said it was "outrageous" the shortfall should be revealed on the same day the Prime Minister described the Pakistan/Afghanistan border as a "crucible of terrorism".

But the Prime Minister insisted: "Counter-terrorism expenditure in Pakistan and generally is increasing this year and will increase next year."

Meanwhile, Defence Secretary Bob Ainsworth acknowledged the exchange rate was causing "difficulties" for both his Department and the Foreign Office, which spend much of their budgets overseas.

He said he was being forced to take "hard decisions" to ensure the plunge in the pound's value did not hinder Britain's military mission in Afghanistan.

"It doesn't take a genius to know that if the pound exchange rate changes then that gives us issues, it gives us difficulties and we have to deal with those difficulties," said Mr Ainsworth.

Tory spokesman David Lidington said the leaked memo showed an internal FCO meeting in December agreed that officials should work up plans for substantial cuts.

The shortfall in the FCO budget was a direct result of the Treasury's decision in 2007 to remove a pricing mechanism which had protected it from currency fluctuations, he said.