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The truth behind UK aid spending and how to make it more effective

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THE CURRENT OUTRAGE about reducing the UK’s international aid budget is yet another example of self-righteous virtue signalling using other people’s money. Cutting the aid budget so that it accounts for 0.5 per cent rather than 0.7 per cent of Gross National Income (GNI) need not in fact diminish its effectiveness, nor British influence in the world. It all depends how the budget cuts are made – and MPs like former development minister Andrew Mitchell should know this better than anyone. 

It is a little-known fact that the majority of British aid spending is actually handed out to multilateral organisations over which we have little control and cannot hold accountable. In 2019 an amazing £8bn of our £15.1bn aid budget a massive 52.5 per cent – was diverted into the budgets of largely unaccountable international bureaucracies such as EU Aid, the World Bank and various United Nations agencies. 

There is no doubt that doling out all this cash makes the ministers and officials involved very popular with international bureaucrats, who have showered praise on British development spending for many years now. The person with the open chequebook is always the most popular in the room.  

“We work very closely with Dfid and Dfid has continued to grow in stature and reach, and their support has been critical both to us and the countries on which they impact,” World Bank President Jim Yong Kim said in 2014, after his organisation got a handy £1.9bn from the UK in 2013.  

Likewise, when a virtue-signalling British cheque for £20m was handed to an entirely superfluous new UN organisation, UN Women, its head, Michelle Bachelet praised the UK as being “a true champion of gender equality”. 

It is no surprise that multilateral bureaucrats view the British aid budget as a “giant cash machine in the sky”, to use the Prime Minister’s own words. Over the years that is what it has become, as various House of Commons committees have heard in taking evidence – not least the problems that DfID, the then UK department responsible for aid spending, had in trying to spend the full budget allocation that would meet the target of 0.7 per cent GNI. Like councils laying tarmac before the end of the financial year there was always a mad dash to spend, spend, spend. 

With aid spending across departments back of £15.1bn in 2019, how should we get it down to the £10bn in 2021 that Rishi Sunak announced last year?  

Firstly cuts of £2.9bn were already made tin 2020 year to account for lower GNI as Covid took hold. Because these cuts were said in July by the Foreign Secretary “to include underspends, delaying activity and stopping some spend”, let’s assume that just £1.5bn of those will carry through to the following year and we still need to find another £3.5bn of savings. 

The first point is that, thankfully, we will no longer have to pay money into the EU’s appallingly inefficient aid programmes. These consumed just under £1.9bn in 2019 with 43 per cent being spent in upper-middle income countries, of which Turkey is the largest recipient, and much of the rest going to French-speaking countries of strategic interest to France, not Britain. You can read here my detailed report on why EU Aid was a bad investment for delivering aid and why ending that commitment could allow us to provide more targeted and effective support while reducing the burden on British Taxpayers. 

As for that “burden”, I should at this point remind readers that the UK has a national debt of some £2.1 Trillion, and a current annual deficit of  £63.3bn (2020/21 figures). The money we allocate to international aid is a generous commitment by the UK but it is not the government’s first responsibility to its people. At a time of such financial difficulty as now there is literally no money of our own – it has to be borrowed, and the repayment of the capital and interest will be made by future generations who have not been consulted. It is generational theft on a grand scale, a form of virtue signalling at our grandchildren’s expense. 

In addition to that 2019 EU Aid payment Britain gave over £2bn in the same year to assorted UN agencies noted for their incompetence. This figure does not include the £423m of core contributions they aalready received from us through general UN support. Extraordinarily slow and bureaucratic, these patronage-oriented UN bodies are primarily motivated by a desire to feather their own nests and much influenced by political interference, as the WHO has ably demonstrated during the Covid pandemic. Only lavishing an additional £500m on these bureaucracies would save a further £1.5bn.  

Likewise the World Bank was given an extra £500m in 2019, let’s pare that back to only an extra £100m. Already we’ve reached £3.8bn of savings – more than we need. 

Indeed, it would be easy enough to cut more from the money given to multilaterals. Do we really need to give an extra £66m to the Asian Development Bank and an extra £14m to the African Development Bank, for example? Halving multilateral spending should be easy to do, while leaving money for particularly worthwhile multilateral initiatives.  

I am not saying there are not times when collective international action makes most sense. There are, for example in 2019 we gave £200m to the Global Alliance for Vaccines & Immunisation as well as £199m to the International Finance Facility for Immunisation, which issues Vaccine Bonds on the capital markets. These enable the development of new vaccines and their rapid roll-out in developing countries. We also gave £370m to the Global Fund Global Fund to Fight AIDS, Tuberculosis and Malaria.

It’s better to concentrate our efforts on such new initiatives than dump money into the budgets of the old inefficient bureaucracies such as UN or EU agencies and the World Bank.

I worked in development aid-funded projects in Africa and Asia and witnessed much waste – as well as some highly laudable achievements – but believe a tighter, more accountable spending plan is better for the recipients and the British taxpayers who need to be convinced it is worthwhile. But don’t take my word for it, aid specialist Professor William Easterly of New York University found that “Bilaterals have lower overhead costs than multilaterals, who in turn have lower cost ratios than UN agencies.” The most extreme among the latter are UNDP and UNFPA, who actually spend more on administrative costs than aid disbursements (129 per cent and 125 per cent, respectively). UNDP’s salary / aid ratio of 100 per cent also ranks as the highest across all agencies.

An effective aid programme should support a range of targeted multilateral initiatives but concentrate on direct UK-controlled programmes, designed in Britain and implemented by our own departments and agencies, accountable through parliament. That way the British public will take ownership of the purpose and outcomes of aid and support what works.

We have a high-quality organisation in the Foreign, Commonwealth & Development Office, staffed by very capable diplomats and aid officials. Let’s use them to do a better job for both Britain and the developing world than the multilaterals we have little control over.

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Photo of a Kenyan lad whose education was supported as a recipient of UK Aid (from the author’s collection of project work).

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