A division is emerging in the Cabinet over a forthcoming government decision on awarding a fighter jet contract to BAE Systems, according to the FT.

The prime minister and the chancellor are said to believe that the British based BAE bid is too expensive, costing tax payers £1 billion more than necessary.

However an alliance including the deputy prime minister, foreign, trade and defence secretaries are thought to be lobbying hard to keep the deal to supply 30 Hawk training jets in the country.