RISHI Sunak has confirmed foreign aid will be slashed to 0.5 per cent of GDP next year to help pay for the Covid crisis – but has promised it will rise again in future.
The Chancellor said he had listened with “great respect” to people who have argued against the cut – including 5 former PMs – but said the “tough choices” need to be done.
The Chancellor said today: “I want to reassure the house that we will continue to protect the world’s poorest, spending the equivalent of 0.5 per cent our national income in 2021 – allocating £10billion at this spending review.
“Our intention is to return to 0.7 per cent when the fiscal situation allows.”
He said Britain would remain the second highest spender on overseas aid after the US.
Mr Sunak is pressure to gain control of the public finances after a year of dishing out huge amounts of cash to keep the country afloat during the coronavirus crisis.
And he warned today Britain was facing an “economic emergency” as debt was forecast to mount to £400billion by the end of the year.
In a gloomy statement he told MPs and the nation:
- The Government is on track to dish out a huge £280bn to get our country through coronavirus this year alone – and £18billion is planned for next year
- The nation’s debt is forecast to continue rising in every year, reaching 97.5 per cent of GDP in 2025-26
- The economy will shrink by 11 per cent this year – the largest fall for more than 300 years
- Unemployment will rise to a peak of 7.4 per cent – 2.6million people – by the second quarter next year
- NHS staff to get pay RISE but millions of public sector workers face pay freeze
- 2million will get a National living wage hike to £8.91 an hour
- Foreign aid will be cut to 0.5 per cent of GDP next year – but he hopes to raise it back again afterwards
- A £4billion ‘levelling up’ fund to help areas in the North hit hardest by the pandemic
- Day to day public spending is up overall in real terms by 3.8 per cent, or £14bn more
- Manifesto promises kept on schools, hospitals and police funding
The Chancellor told MPs: “Sticking rigidly to spending 0.7% of our national income on overseas aid, is difficult to justify to the British people, especially when we’re seeing the highest peacetime levels of borrowing on record.
“I have listened with great respect to those who have argued passionately to retain this target.
“But at a time of unprecedented crisis government must make tough choices.”
And as the Chancellor looks down the barrel of a bleak winter of local coronavirus restrictions, even more money will be needed to fund it.
The slashed spending would work out to save £4billion from spending based on last year’s figures.
But that would break the Tory manifesto promise to spend 0.7 per cent a year on aid.
It has been reported that Mr Sunak may propose to change the law behind the foreign aid promise.
The move will likely be supported by many Conservative supporters.
However, Theresa May, David Cameron, Gordon Brown, Tony Blair and Sir John Major have all now demanded Mr Sunak and Mr Johnson scrap the plans.
And Malala Yousafzai, the Oxford educated Pakistani activist, called on Downing Street to keep to its election promise.
Malala wrote on Twitter last night: “130 million girls were already out of school before #COVID19. Now 20 million more might not return.
“@BorisJohnson – a generation of girls is counting on our support.
“Now is not the time to back out of commitments to education.”
In the fierce backlash to the plan, Tory ex-PM Sir John told The Times the plan was morally wrong and politically disastrous.
He said: “Cutting our overseas aid is morally wrong and politically unwise.
“It breaks our word and damages our soft power.
“Above all, it will hurt many of the poorest people in the world. I cannot and do not support it.”
Mrs May is also reported to have expressed her displeasure at the plan to her colleagues.
Both Mr Cameron and Mr Blair made a joint intervention against the cuts to foreign aid last week, branding it a strategic blunder.
What to expect in today’s spending review
– Rishi Sunak will reveal a multi-billion pound jobs package to try and get Brits back into work who have lost their jobs because of Covid
– He is expected to announce Britain will cut foreign aid this year to pay back some of the Covid debts
– A public sector pay freeze is on the cards for millions of workers to try and save money
– The Chancellor will reveal a gloomy financial outlook for years to come as the virus continues to ravage the economy
– But GDP is set for a strong bounce back next year as the vaccine is rolled out and it’s hoped Britain can get back to normal
– Brits may face a pensions cut as he mulls a change to the way they are worked out to try and claw back extra cash
– The Chancellor may announce whether the £1000 Universal Credit uplift will remain in place beyond April
Mr Brown has also said it risks destroying Britain’s reputation on the world stage.