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Should the UK government cut overseas aid now?

November 24, 2020

I have never been a great fan of legally fixing the floor of the UK’s overseas aid budget by law, at an arbitrary 0.7% of GNI, as was done by parliament through the International Development Target Act in 2015. While I support overseas aid enthusiastically, I always felt that establishing the figure in law was anti-democratic. I also though it likely to have perverse consequences both for the quality of some aid, and for the future of overseas aid itself, because it would create a negative pushback.

For these reasons, and based on sober political debate, I would therefore be happy to see the 2015 Act repealed, and aid budgets subject to normal democratic scrutiny in annual budgets and multi-annual spending plans. But I don’t agree with the government’s suggestion that it should cut aid back from 0.7% to 0.5% of GNI in response to COVID’s fiscal impact. There are three reasons why not.

First, this is leading to a somewhat hysterical, generalised debate, rather than a rational discussion about the merits of particular aid spending versus the particular domestic spending to which the funds would be diverted. The debate is about generalities, lacking in substance. That is not the right basis for such an important decision.

Second, such a decision would reduce our borrowing requirement by an amount that would not be hugely material in terms of its long-term comparative impacts on interest and capital repayment. It would also negatively impact the UK’s reputation at a time when we’ve damaged it enough already. And more importantly, it would inevitably cause harms to poorer people, poorer communities and poorer nations, just a time when they can least absorb it.

Third, because it will be virtually impossible to target such a huge cut effectively, in terms of its impact on poor people’s lives. Let’s look at the possible figures.

The government has already predicted that aid expenditure will probably decrease next year by about £2.9 billion, because of the fall in GNI. (To put this in context, aid expenditure was £15.2 bn in 2019). It’s not easy to find the precise figures – newspaper, MPs’ and NGO comments on both sides of the discussion are light on actual figures, perhaps reinforcing my earlier point about the lack of precision in debate. But if we assume that the original aid budget was 15.4 bn, then the already mooted £2.9 bn cut must have assumed an 18% reduction in GNI due to COVID. If that’s the case, then 0.5% of this reduced GNI would be something like £9.35 bn. If that’s anywhere near right, it represents a staggering 39% or £6 bn reduction on an assumed, original pre-COVID budget of £15.4 bn.

Now, it may be true that the perverse incentive created by establishing an aid budget floor by law, combined with the genuine difficulties in achieving and measuring success in aid programmes has led to some poor programming. Surely it has. But even most aid sceptics would probably not argue that this represents 39% of the budget. And even if it did, the way to address this would surely be to examine aid programmes and make a considered, technical judgement about which ones to keep, and which to cut.  Given the complexity of aid, there is no way this could be done within the timeframe of the proposed cuts. Therefore, they are wrong and will inevitably damage good programmes helping people in need.

By all means, review and repeal the International Development Target Act, as part of a rigorous debate about how best to continue supporting poorer communities and nations over the long term. But don’t cut aid now, as a knee jerk response to a short term crisis.

2 Comments leave one →
  1. November 30, 2020 10:18 pm

    Nice analysis Phil.

    It would be good to expand this into a reflection on what sort of international development and aid system we should have.

    Less about level and more about effort and intention. Offering help to improve things for people who want this and who make efforts to make things better would put the emphasis more on enabling change rather than seeking to drive it.

    Don’t cut aid. Make it better.

    • November 30, 2020 10:19 pm

      Thx Stuart – look forward to seeing you write that expanded reflection!

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