Britain’s newly retired intelligence supremo has questioned whether the country spends too much money trying to alleviate poverty in the Third World and not enough on its own defence.

Sir Richard Mottram, who was chairman of the Joint Intelligence Committee and the Government’s security and intelligence co-ordinator until his retirement last month, has revealed his concern that the current “squeeze” on the defence budget could have repercussions for the fight against international terrorism.

In his first public address since leaving the posts, Sir Richard questioned whether the Treasury had given sufficient funds to the MoD and the Foreign and Commonwealth Office to play a proper role in tackling the threat from al-Qaeda.

He pointedly referred to the significant extra resources that have been given to the Department for International Development to help to fight global proverty.

Giving the annual Demos security lecture, Sir Richard said: “It would perhaps not be revealing a great secret to add that the rest of Whitehall, particularly in the international sphere, has looked on enviously as extra resources have been allocated to DfID in successive spending reviews and wondered if this represented the best use of scarce resources.”

Sir Richard, a former Permanent Secretary at the MoD, added: “As the administrative and broader budgets of MoD and the FCO come under pressure, there is a risk that their contributions to wider Government effort on security issues and intelligence will be squeezed at the same time as Government is investing more elsewhere in related fields.” Under this year’s Comprehensive Spending Review, the MoD’s budget is to rise by 1.5 per cent in real terms in each of the next three years, lifting expenditure from £33.4 billion to £36.9 billion. The Foreign Office budget will rise by only £100 million over the next three years, from £1.6 billion to £1.7 billion. But the DfID’s budget is rising by 11 per cent each year over the same period, increasing from £5.4 billion to £7.9 billion in 2010.

Sir Richard said: “Provision for international development has grown and is planned to grow very rapidly, reflecting the Government’s commitment to poverty alleviation.”

However, life for the defence budget was “likely to remain difficult”, he added.

And in a clear warning to the Government, Sir Richard underlined the importance of making sure that DfID’s resources were used “to maximum effect while fulfilling its poverty objective”.

Sir Richard backed the Government’s decision to increase resources for the work of the intelligence agencies and also for improving “community engagement”, part of the programme to prevent radicalisation of young Muslims.

However, Sir Richard said that the counter-terrorism strategy, which was conceived with four aims — “to prevent, pursue, protect and prepare” — had “relatively little to say about the contribution of our defence effort and the link between the international dimension of weakening and if possible eliminating al-Qaeda core and denying it safe space elsewhere, and the more direct threat to the UK”.

“This ‘home-grown’ terrorist threat with links to al-Qaeda poses a very difficult and growing challenge, capable of highly damaging attacks against people and infrastructure,” he said.

Sir Richard made the point that the defence contribution was “an important part of the [counter-terrorism] narrative which may have been underplayed because of the desire not to give too ‘kinetic’ a flavour to the strategy as a whole and perhaps because of the difficulty in this context in handling the impact of the Iraq campaign on the counterterrorist threat”.

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