Britain bails out scandal-hit Turks and Caicos Islands

The Government is dipping into its aid budget to provide a £10m bailout to the scandal-hit Turks and Caicos Islands, the Caribbean paradise where it imposed direct rule last year. The International Development Secretary, Andrew Mitchell, said it would extend a short-term loan so that the British governor in the islands would be able to pay the salaries of teachers, police and health workers.

The Independent reported in May that local politicians and legal officers were pleading for economic assistance, arguing that the takeover by the Foreign Office last August meant Britain had a moral responsibility to help.

The Foreign Office suspended the Turks and Caicos Islands' (TCI) constitution after a group of visiting MPs uncovered evidence of widespread corruption in the territory, one of 14 colonial outposts for which the UK still has responsibility.

The previous government refused to offer loans or loan guarantees to the islands, insisting that there should be no UK taxpayer bailout for problems caused by the TCI's own politicians and business leaders.

The cash crisis in the islands was threatening to undermine support for the anti-corruption investigation into members of the ousted government, including the former prime minister, Michael Misick, and their business supporters. The expensive investigation, which has not yet led to prosecutions, was draining funds from other government services.

Full details of the package have yet to be confirmed, but Mr Mitchell said the cost to the UK would be "at or near zero... over the medium-term". The Government is to try to quickly replace the package with commercial loans from private banks.