RISHI Sunak last night took an axe to the bloated Foreign Aid budget and handed £4billion of it to the left- behind parts of Britain.
The Chancellor’s levelling-up surprise delighted Red Wall Tories — yet enraged former PMs, the Church and charities who accused him of abandoning the world’s needy.
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But a poll for The Sun shows he has massive support from the public.
Mr Sunak announced the funds to be spent on projects including upgrading roads and rail in an otherwise gloomy Spending Review as he began to grapple with the worst economic hit in three centuries.
Warning the Covid pain had only just begun, he revealed this year’s virus bill has hit £280billion and a sluggish U-shaped recovery will take another four years.
He earmarked another £55billion for the Covid battle next year, with lockdown and job support set to last until April. And he deferred punishing tax rises until next year.
But in a stark update to MPs, he revealed public debt hit a peacetime record as borrowing topped £394billion this year.
Mr Sunak faces a huge struggle to balance the books after an 11.3 per cent hit to GDP in 2020.
The Chancellor said: “Our health emergency is not yet over. And our economic emergency has only just begun. This situation is clearly unsustainable over the medium term.”
And he began cutting the cloth by freezing the pay of 1.3 million public sector workers for next year.
Furlough scheme will save 300k jobs – but 800k to lose them in April
By Matt Dathan
RISHI Sunak’s extension of the furlough scheme until March will save 300,000 jobs, according to the Government’s budget watchdog.
But the end of the year-long wage support scheme will trigger 800,000 job losses in April, according to the Office for Budget Responsibility’s latest economic forecasts.
This will lead to unemployment peaking at 2.6 million by next summer – a rate of 7.5 per cent and up from 4.8 per cent now.
That is based on the assumption of a mass roll-out of vaccines by the middle of next year, with Covid restrictions in place until then.
But it could spiral to 11 per cent under a worst case scenario, which models what happens to the economy if stringent Covid measures have to stay in place throughout next year.
Unemployment is forecast to fall each following year – reaching 4.4 per cent by the end of 2024.
Despite the gloomy news, Mr Sunak said the UK’s unemployment rate is lower than Italy, France, Spain, Canada and the US.
And he pledged a package worth over £4 billion to help find jobs for the long-term unemployed, classed as those who have been out of work for more than 12 months.
Nurses, doctors and other NHS workers will be exempt from the freeze.
And 2.1million public sector workers who earn below the average wage of £24,000 will get a guaranteed £250 pay rise next year.
But it was Mr Sunak’s decision to slash the overseas aid budget by billions of pounds that prompted a massive row last night.
The cut sees the Government tearing up a legal pledge and manifesto promise to spend 0.7 per cent of national income on overseas projects.
Mr Sunak told MPs: “Sticking rigidly to spending 0.7 per cent 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.”
Instead of the existing target, 0.5 per cent — about £10billion — would be spent in 2021.
But one minister walked out of the Government in protest and ex-PM David Cameron lashed out publicly at the decision to lower the 0.7 target, which was a flagship policy of his.
He tweeted: “We share this planet with millions who are starving, with mothers who die needlessly in childbirth and with children who die of preventable diseases and with countries that are broken by conflict, corruption and poverty.
“The questions are: do we care, do we act and do we lead? The promise of 0.7 meant that we — Global Britain — answered ‘yes’ to all three. And that’s a promise worth keeping.”
Archbishop of Canterbury Justin Welby called the decision “shameful and wrong”.
Where will cash go next year?
- £15 billion for Test and Trace
- £3 billion to support the NHS to recover from the impacts of Covid-19 including around £1 billion to begin tackling the elective backlog; around £500 million for mental health services and workforce investment; and £1.5 billion to help ease existing pressures in the NHS caused by Covid-19
- In 21-22 an additional £733 million for the purchase of successful Covid-19 vaccines
- £128 million to support vaccines R&D, including clinical trials, and UK manufacturing capacity
- £2.14 billion to purchase and distribute PPE, sufficient funding to meet expected demand and maintain a 4-month stockpile across 2021-22
- £163 million for Covid-19 medicines
- A new Restart programme to provide intensive and tailored support to over 1 million unemployed people and help them find work in England and Wales, with approximately £400million investment in 2021-22
- Investing £1.4billion to build on the Plan for Jobs commitment to increase capacity in Job Centre Plus and double the number of work coaches in Great Britain.
- Next year, the core health budget will grow by £6.6bn
- £2.2bn more for schools next year
- Funding for the criminal justice system will increase by over £1bn
- £100bn for capital investment by 2022
And Foreign Office minister Baroness Sugg quit the Government, telling PM Boris Johnson it was “fundamentally wrong” to go back on the manifesto pledge.
But Mr Sunak insisted that “at a time of unprecedented crisis, the Government must make tough choices”.
As the Chancellor outlined the temporary reduction to the aid promise, 57 per cent of voters backed him compared with just one in seven opposed.
And there is support in every age group, social grade, region, and political party, according to a poll by JL Partners for The Sun.
James Johnson, co-founder of JL Partners and former pollster at No10, said: “This poll is a wake-up call for Westminster.
“Voters are overwhelmingly supportive of a temporary cut in foreign aid: almost six in ten voters support it, with 15 per cent opposed.
“More than that, it has the backing of every age group, region, social class and political party in Britain — including Labour voters and the most affluent.”
The £4billion recovery fund to “level up” the UK will be unleashed across the Red Wall region so pivotal to the Conservatives’ 2019 election success.
Tory MPs in the Northern Research Group welcomed the cash, saying in a statement: “In building back better, we cannot just hope our way out of this crisis, and we cannot just hope for a better economic future, we need to plan for one.
“The Chancellor has shown that he, the Prime Minister and the Government is committed to levelling up the North and delivering on the compelling vision of prosperity as set out at the General Election last year.”
The JL Partners poll also revealed strong support for the announced ban on the sale of new petrol and diesel cars by 2030 — plus the increase in defence spending worth £16.5billion over four years.
The Sun says
THE economic figures now laid bare by Rishi Sunak are the bleakest in our lifetimes. It is depressing how many MPs still cannot grasp their severity.
How else to explain their griping over the two decisions the Chancellor took to SAVE money: Cutting foreign aid and temporarily freezing some public sector pay? It is as if our monstrous Covid debts and their consequences are too mind-boggling for some MPs to process.
Our economy will shrink 11.3 per cent this year, the worst drop in 300 years. Our annual national overdraft will hit nearly £400billion — far, far worse than even Gordon Brown ran up.
That’s terrifying enough as a one-off. Except we are likely to borrow £100billion a year for at least four more years. The austerity decade from 2010, which painfully whittled the deficit down from exactly such heights, has been negated within ten months.
And while the Chancellor’s furlough has saved 300,000 jobs, unemployment will still rocket by more than one million to 2.6million by next summer. The Sun has repeatedly warned of the apocalyptic damage lockdowns do. Here it is.
Yet, even in the face of this cataclysm, what really matters to Labour is their voters among non-NHS public sector staff not getting a pay rise.
The tsunami of redundancies among private sector workers, and the wage CUT they have suffered, trouble the Left far less.
And what really enrages certain Tories is finally reducing the scandalously wasteful aid budget to focus on projects abroad that truly matter — and spending those billions instead on “levelling up” long-neglected regions here. The fact we will remain the G7’s second largest aid donor cuts no ice with them.
There was a little good news: A predicted rapid recovery in growth once the vaccines kick in — and interest rates on our vast borrowings at record lows.
Great . . . until they rise. What then?
Our debts must one day be paid. From yesterday’s performative outrage, some MPs intend to oppose every single sensible saving we will need to make.
What planet are they on?