As the UK faces the challenges of the modern world, effective international development is seen as an important tool for pursuing the country's national interest. But the political debate has persistently revolved around whether Britain should retain the 0.7 per cent aid target it committed to law in 2015.
While the TaxPayers’ Alliance has long opposed the target, in the meantime fresh thinking is required to tackle the orthodoxy that has developed around aid policy. Every pound must be spent as effectively as possible to protect taxpayers' interests.
This paper examines the structures and rules that govern how the aid budget is spent, to identify what potential reforms could be implemented, ensuring that the 0.7 per cent target can be made more relevant and justifiable to British taxpayers.
Key Findings
- The government has met the 0.7 per cent target since 2013, however the legislation is actually very flexible. This means that the government could reform international aid without needing to amend the International Development Act of 2015.
- Linking the 0.7 per cent target to the calendar year has impacted aid planning and leads to higher contributions to multilateral institutions, like the World Bank. Meeting the target instead in the financial year would make the aid budget easier to manage allowing for greater value for money and effectiveness.
- Britain has led efforts to reform international aid rules, achieving some notable successes. There are, however, many more ways that the rules can be changed to better reflect the British national interest, such as on piracy, counter-narcotics and private sector investment.
- The pace of reform is slow and ill-suited to react to immediate events. When pursuing future reforms, the government should not be afraid to practice them unilaterally whilst negotiating rule changes through the OECD, especially when these are reactive changes to ongoing crises.
- International aid rules make it easier for countries to appear to be spending more if they contribute to multilateral agencies, rather than managing their aid projects bilaterally. The relationship with multilaterals must be re-geared and the proportion of aid they receive reduced.
- These same rules are biased in favour of giant international NGOs at the expense of smaller charities. To level the playing field, the approved organisation list should be made more accessible to smaller charities from the UK, or individual countries should be able to create their own equivalent lists of trusted NGOs.
- When the aid budget is spent by departments other than DfID, it is often spent in ways that are neither contributing to poverty reduction or the national interest. Instead, the aid secretary should sign off and be accountable for every item of non-DfID spend.
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Research assistance for this paper was provided by Mark Tovey.