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It’s right to question aid, but better to focus on effectiveness, rather than the 0.7%

May 26, 2016

A version of this post is on Huffington Post and International Alert‘s website.

In the UK, a parliamentary debate can be initiated by popular petition. On 13th June, Parliament will debate the proposition that the government’s approach to foreign aid is flawed. This is based on a petition, initiated by the Mail on Sunday newspaper and signed by over 230,000 people, as follows:

Despite spending cuts at home the Government is committed to hand over 0.7% of national income in overseas aid, regardless of need. The Mail on Sunday believes voters do not want this and instead, we should provide money only for truly deserving causes, on a case-by-case basis. A bill passed in 2015 required the Government to spend a fixed 0.7% of gross national income on foreign aid. UK handouts will rise from current £12bn to £16bn by 2020. This is by far the highest rate of any G20 nation and is leading to huge waste and corruption. We believe this is the wrong approach because it fuels waste by focussing on targets, not outcomes. Foreign aid should provide money for the job, not jobs for the money.

Essentially the petition reiterates the perfectly rational idea that creating a budget before agreeing a task is back-to-front, and risks creating perverse incentives due to the need to spend a certain amount of money annually; whereas building a budget based on a set of agreed goals and tasks would be a better approach. On top of that, the petition implies this is unfair on UK taxpayers because most other countries contribute less money and/or less as a proportion of national income.

One can question whether the fact 230,000 people – less than four for every 100,000 people – have signed up really represents significant support for the point being made. After all, more than four times as many people signed a recent petition to reinstate a controversial TV presenter. Nevertheless, it is not difficult to agree with both the argument and the implied sentiment of the petition as they are articulated, so no wonder people have signed it. I’ve worked for overseas charities since 1985, and I completely respect the point of view of those who question aid. In fact, I’d go further and say that I welcome the attention this petition and the parliamentary debate brings. The role of civil society and especially the media is surely to cast a sceptical eye on all government policy, and why should overseas aid be exempt?

0.7%, need and allocation
It is right to question whether the 0.7% target undermines effective policies and actions. After all, it is a more or less arbitrary figure based on a calculation made decades ago of the assumed “investment gap” in poor countries, reckoned as a percentage of national income in wealthy donor countries. It was based on the idea that wealthy countries should transfer the investment funds for a period of years until the economies were more equalised. Not only have the data changed hugely in the intervening years, but the simplistic notion of an “investment gap” is no longer thought useful, if it ever was.

But by its rhetorical use of the expressions hand over, regardless of need, and truly deserving causes on a case by case basis, the petition does its own argument a disservice. It assumes the government simply ‘hands over’ the money, but in fact, funds are programmed for specific purposes. It also assumes that a wholesale commitment to 0.7% (£12 bn this year) removes the link between the volume of aid and the size of the need.

Would that it were so. If there are roughly 700 million people living below the poverty line today, as the World Bank estimates, the UK’s budget works out at £17  per person. And that only includes those living on less than $1.9 per day – hardly a king’s ransom.  So without getting into the complex economic jargon which is used to explain aid flows, and accepting that the UK does not and should not try to reach every poor person on the planet, it is quite easy to see that 0.7% is completely inadequate when set against the level of need.

As for the idea that aid should be targeted towards ‘truly deserving causes on a case by case basis’, this is quite right. Fortunately, the UK Aid strategy clearly sets out four causes towards which aid is directed:
• Strengthening global peace, security and governance.
• Strengthen resilience and response to crises.
• Promoting global prosperity.
• Tackling extreme poverty and helping the world’s most vulnerable.

As sceptical as one may be about aid, it would be hard to argue that these are not all truly deserving causes. Not only that, but they benefit the UK too: the first three quite directly, and the fourth indirectly.

And the petition is also right that even within these overall categories, allocations should be made on a case by case basis. I have worked in the aid sector since 1985, and although no donor organisation or NGO is perfect, I can attest that UK aid money is already allocated based on an assessment of whether or not it will make a specific difference in respect of specific needs and contexts. Even when the funds are provided to other organisations – UN agencies, NGOs, etc. – they are required to spend them (and report) based on an assessment of whether they make a difference. It is true that not all aid programmes work as well as intended, but that’s another story which I will come to in a moment. They certainly are designed to do so, and on a case by case basis.

Disproportionality and Aid effectiveness
On the question of proportionality I think the petition has a point: why should we spend 0.7% if other rich nations don’t? The petition is right to draw attention to the risks of a budget-driven approach. Its conclusion is that the debate should be about the 0.7% commitment. But the 0.7% commitment is already enshrined in law, and there is no parliamentary time available to overturn the law. This would take many months of valuable parliamentary time, and would be unlikely to succeed anyway, given the views of a majority of MPs including party leaders and their whips. I therefore suggest a different conclusion to the petition’s concerns, and a different debate on 13th June.

On the question of disproportionality: because we have already enacted the legislation and are unlikely to change it, I’d suggest that the debate should be about how to encourage other wealthy nations to match our commitment. After all, arbitrary spending levels like the 0.7% figure only really make sense as a way to prevent free riders – as with NATO members’ commitment to spend 2% on their military capacity.

But most importantly I would suggest the debate should focus on be how to ensure that UK aid is spent most effectively in pursuit of the four goals listed above, so that taxpayers can have confidence that their money is well spent. Because none of the four aid goals will be easy to achieve. If they were, we would have achieved them long ago. And all public policy is contestable – that’s why we have a parliament and a proactive civil society and media. One has only to look at the UK’s education, justice, health or energy sectors to see that.

Nor do any “policy solutions” seem to last long. A decade ago, Finland’s education sector was the envy of the world, and Whitehall was examining Finnish policies for clues as to what we should do here. Now, Finland – with the same policies in place – has slid down the international education league tables and is looking for new solutions.

If international aid policy is not unique in being imperfect, it is perhaps unique in being multi-dimensional, operating as it does in diverse and changing local contexts, and covering a wide range of needs and sectors. This means all the more need for a healthy and regular debate about what works best. My suggestion is therefore that any parliamentary debate about the aid budget and aid policies should focus on how to ensure that our aid is spent as effectively as possible, and how parliamentarians can hold the government and its partners to account for how well they contributes to the goals which have been set.

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