Rishi Sunak Spending Review: Foreign aid CUT as Boris ignores Cameron, Blair, Major & May

The Chancellor also vowed to make job creation his "number one priority" as he delivered his first Spending Review, with the nation still reeling from the impact of the ongoing pandemic. He also confirmed Britain would borrow almost £400 billion in the current financial year to pay for the massive coronavirus hit to its economy, taking the budget deficit to its highest since World War Two. However, fiscal hawks have issued a warning about the need to balance the books - with Tory MP John Redwood stressing the importance of balancing the books, and others cautioned against tax increases.

In his Commons statement on Wednesday, the Chancellor said spending 0.7 percent of GDP on foreign aid was "difficult to justify".

He said: "At a time of unprecredented crisis the House must take tough choices."

As a result, he indicated foreign aid spending would be slashed to 0.5 percent, as he allocated a budget of £10billion.

Plans to cut foreign aid will not impress Boris Johnson's five predecessors at Prime Minister.

Theresa May, David Cameron, Gordon Brown, Tony Blair and John Major had all urged the current occupant of Number 10 to resist the temptation to cut the budget.

Meanwhile, speaking in the Commons, Shadow Chancellor Anneliese Dodds accused Mr Sunak of "turning his back on the world's poor", while Archbishop of Canterbury Justin Welby said the decision was "shameful and wrong". 

Mr Sunak also announced the launch of a three-year Restart programme, worth £2.9billion, aimed at helping more than a million unemployed people get back into work.

Ahead of his statement, the Chancellor has insisted he is not planning a return to "austerity" and would continue to support the economy as it sought to recover from the fall-out from the pandemic.

However, he warned unemployment is predicted to rise to a peak of 7.5 percent - or 2.6 million people - in the second quarter of 2021.

He added: "Unemployment is then forecast to fall in every year, reaching 4.4 percent by the end of 2024."

As well as the Restart programme, with tailored help for those out of work for more than 12 months, there will be £1.4billion promised to increase the capacity of Jobcentre Plus and a £375million skills package.

Mr Sunak told the Commons: "The economic damage of coronanvirus is likely to be long-lasting.

"The economic impact of coronavirus means significant increase in borrowing and debt."

The Government had borrowed £394billion this year, representing 19 percent of GDP, while by 2025 the British economy would be three percent smaller than predicted in March.

Mr Sunak added: "Our health emergency is not yet over. And our economic emergency has only just begun. So, our immediate priority is to protect people's lives and livelihoods.

"But today's Spending Review also delivers stronger public services. Paying for more hospitals, better schools and safer streets. And it delivers a once-in-a-generation investment in infrastructure."

Explaining widespread pay rises across the public sector could not be justified, he nevertheless confirmed increases for one million NHS staff.

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He also confirmed an additional £29million for a Brexit festival putting the emphasis on the best of British, the latest instalment in a series of payments towards the Festival UK 2022 announced by former Prime Minister Theresa May in 2018.

The event, which will cost a total of £120million, will be a "series of show-stopping events to showcase the best of British art, culture and tech", officials have said, and has been dubbed the Festival of Brexit.

Prior to the statement, Mr Sunak had said: "My number one priority is to protect jobs and livelihoods across the UK.

"This Spending Review will ensure hundreds of thousands of jobs are supported and protected in the acute phase of this crisis and beyond with a multibillion package of investment to ensure that no-one is left without hope or opportunity."

As well as the £2.9billion Restart programme other commitments are likely to include £3billion more to support the NHS, including £1billion towards tackling treatment backlogs built up as a result of battling COVID-19.

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There will also be measures aimed at supporting Prime Minister Boris Johnson's "levelling-up" agenda with the publication of the Government's National Infrastructure Strategy and investment across the UK's regions and nations - including £1.6billion for road repairs.

Mr Redwood tweeted: "Today we need a big stimulus to get us out of the big recession. We also need measures to get value for all the money being spent.

"Growth is the priority to get the deficit down. It is important not to waste the stimulus money."

In a separate tweet he added: "Good job the Bank of England has created an extra £450billion of money to cut the cost of state debt. The Bank buys the state debt and the state owns the Bank.

"We now need a plan for economic recovery to cut the deficit as this should be a one off for the lockdowns."

Robert Oulds, director of the Bruges Group think tank, said: "Growth comes through having a competitive economy where people can keep more of what they earn, where people have incentives to try had and be successful.

"If people are allowed to keep more of their money that will drive them to create the growth that we need and give them the spending power to support themselves and their families and drive the economy and get it moving again.

"What we need is to be focusing on growth and the best way to deliver growth is to have lower taxes and have a tax regime which is simple, clear, fair and straightforward.

"Putting up taxes will damage economic growth, impoverish this country and strangle any chance of there being a recovery."

Speaking ahead of the statement, John O’Connell, chief executive of the TaxPayers' Alliance, warned: "Tens of billions of pounds are still squandered each year, and if we eradicate waste it leaves the room for lower, simpler taxes, promoting economic growth and funding better public services.

"The Chancellor must stop writing blank cheques using taxpayers' money – and wasteful bureaucrats must end the absurd claims that there are simply no more savings to be found."

Prior to Mr Sunak's statement Ms Dodds said the country was facing a "jobs crisis" as a result of the Conservatives' "irresponsible choices" and economic mismanagement.

"They clapped for key workers - but now they're freezing their pay, and looking to scrap planned minimum wage increases for the private sector.

"That will hit people's pockets and pull spending out of our small businesses and high streets when many are already on their knees.

"We need a relentless focus on jobs and growth to get the economy back on its feet."

The Chancellor has been forced to borrow heavily since the start of the year to mitigate the impact of the pandemic.

A treasury official told Politico: "No one thinks we can sustain borrowing on this level indefinitely but now is not the time to address this.