Chancellor Alistair Darling is accused of blocking plans for a tax on worldwide currency transactions that could raise up to £30bn for developing countries.
But the plan which is being pushed by the German and French governments at a meeting of G20 leaders in Pittsburgh this week, has the sympathetic ear of the Foreign Secretary, David Miliband.
The need for a lifeboat for poor nations was given added urgency last night when research by Oxfam revealed that sub-Saharan African countries face a £30bn deficit this year – on top of £12bn debts from last year, leaving a total black hole of £43bn – because of the economic crisis.
African governments are increasingly unable to protect their citizens from falling trade, investment and remittances, and from hunger and the impact of climate change, Oxfam said.
The charity and other anti-poverty campaigners have joined some EU governments in pushing for a 0.005 per cent tax on currency transactions – which it is calculated would raise between £18bn and £30bn.
The German Chancellor, Angela Merkel, is expected to lobby US and British governments on the currency transaction tax (CTT) proposal – known as the "Tobin tax" – at the G20 meeting this Thursday.
A day earlier Britain will attempt to push forward a separate scheme at the UN General Assembly in New York to boost funding for health in Africa and other developing regions. Gordon Brown will lead an international drive to provide free healthcare for the world's poorest people, focusing on women and children. But campaigners said there was a growing momentum for the CTT to be raised at the summit.
Lord Turner, chairman of the Financial Services Authority, has backed the idea of a Tobin tax, describing it as a "nice, sensible revenue source for funding global public goods".
But the Treasury is blocking the move, arguing that it would be "unworkable" to get all markets around the world to agree to the levy. Instead governments should give set amounts of aid to Africa and the developing world, Mr Darling believes. Britain has a target of 0.7 per cent of GDP for international aid. The US is also likely to block the idea.
However, Mr Miliband has agreed with his French counterpart, Bernard Kouchner, that a Tobin tax should be on the table in next month's ministerial talks in Paris. A source close to the Foreign Secretary said he had not agreed to the CTT, but told Mr Kouchner it "should not be excluded" from the discussions.
Campaigners said one billion people across the planet are now hungry and a promised £30bn bailout for poor countries at the G20 London meeting in April has not been fully delivered, according to the European Network on Debt and Development. Schools and health clinics are also at risk, they say.
The World Bank has warned that 50 million more people will be pushed into extreme poverty this year as a result of the financial crisis, and could reach 90 million by the end of 2010.
Writing in today's IoS, Phil Bloomer, campaigns and policy director at Oxfam, says: "At a time of anger against the banks, this could be a rare example of a popular tax.
"Unfortunately the understandable push to cap bankers' bonuses is in danger of obscuring the needs of the poor. Surely if anyone is deserving of a bonus it is those in Bolivia, Bangladesh and Burundi who are suffering as a result of greed on Wall Street and in the City of London."
Ms Merkel said last week that the levy had support from Mr Brown and French President Nicolas Sarkozy. But Downing Street poured cold water on the plans and Treasury sources said: "This is not something we are actively pursuing at the G20. If you are looking at a way to fund development, it should come from government funds. We would be concerned that this [Tobin tax] is unworkable because you would have to have it for all markets around the world."
The G-Class: Who's Who
G3: A 1995 free-trade agreement between Colombia, Mexico and Venezuela. Looking for a new member after Hugo Chavez withdrew Venezuela in 2006.
G4: Comprising Brazil, Germany, India and Japan to support each other's bids for permanent seats on the UN Security Council.
G6: Formed in 1975, an informal gathering between the finance ministers of the US, West Germany, France, the UK, Italy and Japan.
G7: Appeared a year later when Canada joined the G6.
G8: An informal group of the heads of state and government of the G7 countries plus Russia. It meets annually to find solutions to global problems.
G20: Established in 1999 to bring together industrialised and developing economies to discuss key issues in the global economy. It comprises the finance ministers and central bank governors of the G8, 11 other key countries (including China and India) and the European Union presidency.
G77: A coalition of developing nations at the UN established in 1964.
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