Now is the time to reassess overseas aid

By Jeremy Hutton, Policy Analyst

The full resources of the state are being marshalled so that Britain can emerge from the dark clouds of this 21st century coronavirus plague as soon as possible. At the TaxPayers’ Alliance, we have been clear that we broadly understand the need for these  extraordinary measures. But, given the enormous burden that will fall on taxpayers when it comes to repaying the debts being accrued, the entirety of government must do whatever it can to reduce the future burden that will fall on taxpayers. There are myriad savings individual departments might make, even incidentally, as a result of the virus. Many Whitehall departments are having to rethink their activities, tighten their belts and ask how they can best contribute resources to the national effort of fighting it. There is, however, one area of government better positioned than most to ask these questions - the Department for International Development. 

The UK is one of a handful of countries to commit to spending 0.7 per cent of Gross National Income (GNI) on foreign aid, worth £14.6 billion in 2018. This is a substantial pot of money, the bulk of which  should now be diverted towards responding to the coronavirus crisis, both overseas and at home. The aid budget is so excessive and wasteful that Britain could temporarily halve it and still spend more (as a proportion of GNI) than the United States, Australia, Japan, Italy and New Zealand did in 2016, the most recent year for which the World Bank has data. This would also still see the UK disperse more aid in GNI terms than the average member of the OECD’s Development Assistance Committee does.

Remarkably, given the overwhelming support of the British public for aid money being spent at home, aid spending is the only area of government spending that legislation specifically dictates has to be spent on overseas causes. This status seems evermore peculiar given the self-induced recession Britain is now entering. Thankfully, it would still be perfectly legal to reallocate the aid budget to the present pressing needs. When drafting the 2015 legislation which mandated the target, Members of Parliament had the foresight to include a few caveats. Specifically, the legislation includes a range of events considered appropriate reasons for government to temporarily lift the restrictions of  the 0.7 per cent target:

  1. Any substantial change in GNI as a result of economic circumstances.
  2. A change in fiscal circumstances impacting tax take, public spending and public borrowing.
  3. Circumstances arising outside the United Kingdom.

In the case of the coronavirus, all of those boxes are ticked. The only requirement incumbent on the government is to subsequently explain the circumstances to parliament. In reality, the government can miss the target whenever it likes without substantial penalty, but the coronavirus response provides particular impetus to shelve the target for now.

This is why one of our major policy recommendations for how to alleviate the current crisis is to redirect the present aid budget to the coronavirus response, other than that part directly given to humanitarian programmes. This would mean prioritising the poorest countries and British Overseas Territories, and only reacting to other life threatening humanitarian emergencies (like, for example, the locust-induced famine currently endangering East Africa). 

It also means halting the funding of pointless pet projects. Select recent examples which would have to be halted include training imams to preach against smoking in Pakistan; dance and juggling lessons in Tanzania; conserving eels in the Philippines and salt reduction projects in China. It is striking that DFID’s refusal to prioritise funding for actually useful projects has meant that so much of the budget has been wasted on these sorts of programmes.

Even during periods of economic prosperity the UK has struggled to genuinely meet the 0.7 per cent target as was intended, and that is despite spending billions on the sorts of unnecessary pet projects outlined above. In 2013 and 2015, for instance, the government had to resort to making massive payments to the World Bank to hit the aid target without any clear view of how that money would ultimately be spent. To repeat that exercise now would be nothing short of scandalous. So would simply spending money without staff in-country via direct cash transfer, as has been speculated on recently. Without adequate oversight (that simply may not be possible at the moment) this could be little more than pouring money down the drain as corruption rears its ugly head, as it often does in aid projects. 

On a purely practical basis, cutting funding to non-essential programmes now makes sense. Across the world development organisations are having to drastically curtail their activities in response to events. The sector is overwhelmingly dependent on global travel , but such travel is now little short of impossible in most cases. Some organisations, like the Peace Corps, have completely evacuated aid workers from all around the world. What better reason to refocus aid spending on vulnerable people who really need it at home, if overseas travel restrictions prevent it being spent properly. 

The government should ensure the retained aid budget is spent as effectively as possible by following the other government departments and aligning aid spending according to the financial year, not the calendar year. This would bring it into line with the rest of the coronavirus response. Ministers could also put money towards converting a commercial vessel into a hospital ship. This could be deployed to help British subjects at home and abroad as well as poorer countries all around the world (at the time of writing, the previously converted hospital ship RFA Argus is sailing for the Caribbean for just this purpose). Current development secretary Anne Marie Trevelyan is said to be exploring the proposal, whilst predecessor Penny Mordaunt has also backed the idea. This would work hand in glove with current government efforts to expand hospital capacity. 

In a national emergency like this, it is only right that the foreign aid budget is used responsibly rather than continuing to be spent to appease the arbitrary 0.7 per cent target. Furthermore, given the enormous if necessary cost to taxpayers of the coronavirus response measures, it would be great for fiscal discipline for some of the money were to come from other departmental budgets rather than borrowing yet more. What better way to prove DFID was doing its bit? 

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