Chancellor calls for £34bn fund to reduce poverty

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Gordon Brown will today call on the industrialised world to establish a $50bn a year (£34bn) fund to eradicate poverty as part of a 21st-century Marshall Plan to help secure victory in the war against international terrorism.

In a speech in Washington, the Chancellor of the Exchequer will appeal for a programme, similar to the American programme that provided aid to Europe after the Second World War, to meet international targets for improving education and cutting poverty by 2015.

As part of his Comprehensive Spending Review, Mr Brown has agreed to increases in the amount of national income that Britain spends on overseas aid to help fund the aid project.

He is urging other Western states and large private benefactors to build an international trust fund to pay for the aid programme, which would represent a doubling of current Western expenditure on Third World development.

The trust fund will be on the agenda when Mr Brown meets Paul O'Neill, the United States Treasury Secretary, for talks later today.

But in a speech to the Washington Press Club, Mr Brown will insist that Western countries should not move away from increasing globalisation, and he will insist instead that increased international trade and commerce will provide future prosperity and security.

He will link the aid programme with the fight against international terrorism, saying: "As today's alliance for peace is transformed into tomorrow's global alliance for prosperity, so as this month we work together to win the war against terrorism, we must also together seize this moment of opportunity to win the peace."

Mr Brown will call for a scheme similar to the Marshall Aid programme, which channelled 1 per cent of America's gross domestic product – $75bn (£52bn) at today's prices – into post-war reconstruction in Europe.

The money will meet the funding needed to achieve United Nations targets to halve world poverty, provide universal education and cut infant mortality by two-thirds by 2015.

Mr Brown will say that such a scheme "should be our aspiration in the post-cold war world, not just for the reconstruction of Afghanistan, but for the entire developing world."

He will say: "Our plan is this: developing countries must pursue corruption for the purpose of stability, for opening up trade and creating a favourable climate for investment. In return we should be able to increase by $50bn a year the vitally needed funds until 2015, in the spirit of Marshall."