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Chancellor Rishi Sunak defends foreign aid budget cuts and public sector pay freeze

Chancellor Rishi Sunak joined today’s Good Morning Britain, where he defended his Spending Review.Speaking to hosts Susanna Reid and Ben Shephard, he was asked what hope there is for people in the hospitality industry as we head towards Christmas.

Sunak said: “Jobs have been my number one priority throughout this crisis, sadly three quarters of a million people have already lost their job but that is forecast to rise in the coming months which is why I talked about some of the hardship that lies ahead but we are relentlessly focussed on trying to protect and support as many jobs as possible with the various interventions that we have put in place.”

He continued: “To those in the hospitality sector, they have been the most impacted by what is going on, that is why we have tried to put in place lots of support for that industry with initiatives over the summer - business rates holidays, VAT cuts and now cash grants every month that they are facing restrictions and the ability to furlough their employees. I know it is difficult and I appreciate and applaud everything these businesses are doing to get through a difficult time.”

Asked if he is in arguments with the Health Secretary over the tier system, he said: “You are right, these restrictions do have an impact on businesses, particularly in hospitality, which is why we have extended the furlough scheme all the way through winter… and they also receive a cash grant every month that they are in these areas…I think those payments will make a big difference to helping them get through but it is going to be difficult and I appreciate that. We are doing everything we can to suppress the virus whilst allowing as much economic activity to happen as possible.”

Challenged about why he is cutting foreign aid, he said: “I wouldn’t describe it as an easy hit. It was a very diffIcult decision, it was one the tough choices I had to make in order to make sure that I could keep investing in the priorities that the British people have - stronger public services, more money for the NHS, for schools, for safer communities and more police and to deliver the step change in infrastructure investment that will transform our country... You talked about the context we are in with record levels of borrowing and debt, the economic emergency, and in that context, I didn’t think we can justify sticking rigidly to the 0.7 percent target, but we will still spend 10 billion pounds on foreign aid next year, that is roughly equivalent to 0.5 percent…[that] makes us still one of the most generous large countries in the world.”

He continued: “We are currently leading in getting vaccines out to some of the world’s poorest countries, that is probably one of the most important things we could do right now. As you said, children and those living in poverty elsewhere, we want to make sure that they all have access to a coronavirus vaccine.”

On freezing public sector pay and whether that marks a return to austerity, he said: “This is another one of the difficult decisions we had to make. Coming into this crisis, there was already a disparity between public sector and private sector wages… that disparity has been exacerbated over the past six months where we have seen private sector wages fall by about a percent and we have seen public sector wages rise by about four percent. People in the private sector have lost their jobs… they have been furloughed, their hours have been cut, their wages have been cut. In order to ensure fairness and in order to protect jobs in the public sector, I couldn’t justify an across-the-board pay increase in public sector pay. We have taken a more targeted approach, which means those working in the NHS, nurses, will receive a pay rise next year. For everyone else, pay rises will be paused, but we want to make sure we try and do what we can for those on lower incomes. If you are in the public sector and earn less than £24,000, which is the UK median basic salary, you will receive a pay increase, £250, which taken together means that a majority of people in the public sector will see their wages increase next year and I think that is a reasonable, fair and proportionate approach, given the situation.”On the 2.9 million people who cannot use the various schemes, he said: “I don’t think that 3 million people is right… that number includes 1.5 million people who do not quality for [the scheme] because they are not majority self-employed, they make the majority of their income from other forms being employed and therefore they would qualify for being furloughed… That income, just so that we are clear, the average amount of self-employment income they make is £2000 or £3000. At that level...Universal Credit would still be there for them, they would still be able to benefit from things like a mortgage holiday… if they need help paying their rent, something called Local Housing Allowance, we have increased that by almost a billion pounds this year.”

Asked if he will agree to meet representatives from Excluded or from Forgotten Limited, he said: “We have already spoken a lot to their team and have been back and forth.”

On Universal Credit and whether that increase will be maintained beyond spring next year, he said: “We don’t need to make a decision on it now. Given the economic uncertainty, it wouldn’t be right to make a decision on it now. It is better to see where we are when we get through the winter period. Let’s see where we are with the economy, our recovery, where we are with restrictions, and decide what then what the best way to support people is.

He concluded: “As we have done throughout this crisis, and I think we have demonstrated that, we are always making sure that we can protect the most vulnerable in our society and try and help them most crucially into work and good work. That is the best way for people to build a sustainable future for themselves. That is top of my mind and what we will focus on.”

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