Tax blow for middle Britain

David Cameron announced an extra £650million for school projects in Pakistan during a visit to Islamabad yesterday.

But the pledge provoked fury at home, given the growing financial pressure on middle-income families. The squeeze will tighten today for millions of households when a National Insurance hike and other tax and benefit changes come into force with the start of the new tax year.

Today is being branded “Worse Off Wednesday” with the tax burden set to rise by a crippling £500million a year. And it is families in Middle Britain who will be punished the most.

Critics last night hit out at Mr Cameron’s decision to boost the aid budget to Pakistan over the next four years. Charlotte Linacre, campaign manager at the TaxPayers’ Alliance said: “It defies belief that Cameron admits money is tight at home and he’s hitting Brits with higher taxes, yet in the same breath he’s pledging huge handouts on our behalf.

“Pakistan needs to take more responsibility for its own education system and not keep expecting handouts and subsidies from UK taxpayers while wasting money elsewhere.

“Pakistan already gets millions from the UK. It’s ludicrous that our PM acknowledges that so much of that is squandered while promising more.”

And Euro MP Paul Nuttall, deputy leader of the UK Independence Party, said: “There are two Whitehall budgets that seem to buck the trend when it comes to cuts – the EU and overseas aid. Both are designed to make Cameron look good abroad. When is he going to do something for people at home?”

Mr Cameron conceded that the extra aid for Pakistan would be questioned by British taxpayers.

In a speech at the Islamabad Institute of Information Technology, he said: “Back in the UK, we are taking some incredibly tough economic decisions. We are cutting some public spending and increasing some taxes.

“Understandably, the British people want to know every penny we spend is going to the right places. I need to convince them that it is. But my job is made more difficult when people in Britain look at Pakistan, a country that receives millions of our aid money, and see weaknesses in terms of government capacity and waste.”

The cash will come on top of Britain’s existing annual aid commitment to the country, which is already more than £140million.

It means Britain will be sending around £350million a year over the next four years. Just two months ago, the Government announced an extra £1billion for India over the same period.

Mr Cameron insisted the expenditure would be closely monitored and halted if there were evidence of waste or corruption. He also urged the Pakistani government to overhaul its tax system to improve the country’s investment in its public services.

The aid is earmarked to train 90,000 teachers, build or refurbish 8,000 schools and provide six million textbooks.

At a news conference with Pakistani premier Yusuf Raza Gilani, Mr Cameron faced a string of hostile questions from local reporters. One branded his comments in India last year as “obnoxious” while others raised concerns about controls on student visas.

Mr Cameron and Mr Gilani signed a co-operation deal including a pledge to increase trade to £2.5billion by 2015.