Rishi Sunak ‘plans to axe £15bn foreign aid budget pledge’ to help fill huge black hole in government finances – amid warnings tax rises should be delayed for YEARS to prop up economy
- Claims Rishi Sunak considering axing government’s foreign aid spending pledge
- Legally 0.7 per cent of national income – up to £15bn – must go on aid every year
- Government is scrambling to find ways of filling hole in finances after lockdown
Rishi Sunak is planning to axe the £15billion aid budget to help fill the huge hole in the public finances after coronavirus, it was claimed today.
The Chancellor could drop the legal commitment to spend 0.7 per cent of national income on foreign development as part of desperate efforts to balance the books.
Instead the move – which would delight many Tory MPs – would see cash diverted to Foreign Office and Ministry of Defence projects, according to The Sun.
Rumours have been swirling about the fate of the aid budget, as the government struggles to manage spiralling debt from recession and huge coronavirus bailouts.
Mr Sunak’s options could also be narrowed by a Tory outcry over the idea of tax rises, with experts warning that the recovery could be derailed by any hikes over the next couple of years.
As PM, David Cameron enshrined the international goal, first agreed by Tony Blair, in domestic law.
However, some believe the spending should be given the scale of the hit from the pandemic.
Chancellor Rishi Sunak (pictured in Scotland earlier this month) could drop the legal commitment to spend 0.7 per cent of national income on foreign development as part of desperate efforts to balance the books
The Chancellor reportedly wants to use the Budget in November to announce he intends to abolish the lock.
Mr Sunak is said to believe he has the backing of Boris Johnson and Foreign Secretary Dominic Raab – who is now in charge of the aid budget after DfID was scrapped.
Primary legislation would be needed to remove the existing commitment.
The signals come amid claims Mr Sunak is plotting a huge tax raid in to shore up the finances.
Fuel duty, capital gains tax, corporation tax, the pension triple lock and pension tax relief are all said to be in the firing line.
The Treasury insists no decisions have yet been taken by ministers about how to deal with a deficit expected to top £300billion this year.
But the IFS think-tank warned this morning that there should not be any tax hikes for years, as the economy reels from the blow of lockdown.
Director Paul Johnson told BBC Radio 4’s Today programme that ‘at some point’ the Chancellor will need to raise more revenue.
He said the government’s focus should be on supporting the economy for a ‘couple of years’ rather than dealing with the deficit.
One Cabinet minister said the Chancellor would face a revolt if he pressed ahead with the tax grab.
‘Tax rises of this sort would be the worst possible economic policy to adopt right now,’ the minister said.
‘It would guarantee a much deeper recession. Large parts of the economy are still fragile – we need to nurture it, not throttle it.’
Mr Sunak is said to believe he has the backing of Boris Johnson and Foreign Secretary Dominic Raab (pictured) – who is now in charge of the aid budget after DfID was scrapped
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