Cuts to UK aid: Where will the axe fall?

by 26th Jun 2020
A South Sudanese refugee collects water at a camp in Uganda A South Sudanese refugee collects water at a camp in Uganda

Britain can be proud to be one of the countries that meets the UN target to give 0.7% of GNI (gross national income) to reduce poverty in poorer countries. That’s just 70p in every £100.  This is the result of a 15-year cross-party consensus since 2005 when 9 million British people asked the government to Make Poverty History.

As a result of the economic damage done by the COVID-19 pandemic, the British government has told Parliament “the level of ODA [aid] spend is likely to decrease this year.” . It has not said by how much. But the OBR (Office for Budget Responsibility) has suggested GNI will fall around 15% in 2020/21. BuzzFeed @AlbertoNardelli has reported that the Treasury have asked all aid spending ministries (there are nine, not just DFID and the Foreign Office) to cut aid by 30% in the rest of 2020, which if they mean for the second half of the year, is the same as 15% over the year. If this is correct, this would equate to reducing the aid budget by about £3bn for the next six months.

There are strong arguments to say that this is the worst possible time to cut aid, when every poor country in the world is facing the multiple impacts of the COVID-19 pandemic on health, poverty, the economy and human rights. The ONS (Office for National Statistics) estimates that the government is going to borrow £300bn this year, to increase spending to address the pandemic. But it looks like it is still going to cut aid by £3bn. It could have said, we won’t cut aid in the middle of the pandemic. We will cut aid later, to achieve the 0.7% target over the medium term. This would have allowed officials to focus on saving lives during the pandemic rather than finding savings. But if the government does go ahead with immediate cuts, it must try to limit the damage as much as possible

The life and death question is: where will these £3bn cuts to aid fall?

The government has two options. It could put saving lives and reducing poverty first. It could make the UK aid budget even more effective, better value for money, better for women and disabled people, and more transparent.

Or, it could cut aid for poor countries and poor people, in Africa, such as Tanzania and Zambia, and in Asia and the Middle East. And it could move aid towards strategic allies in Eastern Europe, as the Prime Minister suggested he wanted to, in his statement to Parliament.

Which will it be? The answer will tell us everything about the long-term future for UK aid.

Save lives

First and foremost, the UK government should protect aid which is saving lives. This does not appear in the five Treasury criteria shared by Alberto Nardelli. The criteria do start with COVID-19 – and the government absolutely should reallocate aid towards helping countries reduce deaths caused either directly or indirectly through COVID-19. This includes deaths from other health problems and from loss of livelihoods which, in poor countries, can also kill people.

But COVID-19 is not the only killer. War, conflict, hunger and disasters are still killing people. The government should protect all of its current humanitarian aid spending from any cuts. This is entirely possible. Only 10% of UK aid is spent on humanitarian aid.

In particular it must not cut aid which was programmed for the world’s largest humanitarian emergencies. UNOCHA (UN Office for the Coordination of Humanitarian Affairs) says the biggest humanitarian needs today are in Yemen, DRC, Syria, Afghanistan, Sudan, Ethiopia, Nigeria, South Sudan, Zimbabwe, Venezuela (and N Korea, which is a special case).

Reduce poverty 

This is number 4 out of 5 in the Treasury criteria for the cuts. But it should be an absolute requirement. It is also a legal requirement. The International Development Act says that aid can only be provided if it “is likely to contribute to a reduction in poverty”. Therefore, aid must be focused on reducing poverty, and most of it should be focused on those countries where poverty is greatest.

Parliament’s International Development Committee’s newest report shows that the share of UK aid for the poorest countries has been falling, as more and more aid is spent by eight other government ministries instead of DFID.

IDC aid by country income table 2020 800px

Any aid cuts, if they must happen, should start at the top of this bar chart. Don’t cut equally from everywhere. Cut from the countries that can most afford it. The government could cut 15% off the aid budget and almost all of it would only need to be cut from upper middle income countries, like China, which are between four and 40 times richer than low income countries, like Tanzania.

This would increase the share of aid for the poorest countries to about 65%, similar to what it was in 2014, not so long ago.

But if the government does not protect the poorest countries, then on a pro-rata basis, over half of the aid cuts will fall on the poorest countries. This would be totally wrong.

Include the most vulnerable people 

Even in the poorest countries, some people are even more vulnerable than others. Not all women are, but many are. And many disabled people also are. The International Development Act says that aid should be likely to contribute to reducing gender inequality. The think tank Development Initiatives has shown that 65% of DFID aid does this; while only 24% of FCO aid projects reported a gender objective. So the government should protect those aid programmes which do contribute to reducing gender inequality and only cut those which do not. This alone would increase the overall share of DFID and FCO aid which contributes to reducing gender inequality from 50% to 60% taking it closer to the 100% target in law. 

There is even less data on whether the aid managed by the seven other government ministries contributes to reducing gender inequality, and so that should also be cut first, not last.

The Treasury puts girls’ education at #2 in its cuts criteria. This is good. But gender equality is about other things too.

An even smaller share of UK aid has disability inclusion as an objective. Development Initiatives calculates that 36% of DFID aid has a disability inclusion focus. The FCO don’t know. So taken together, 26% of DFID and FCO aid has a disability inclusion focus. The government should definitely protect this from any cuts. If overall aid spending is cut by 15% for the year as a whole, the 26% of all aid which currently includes disability inclusion as an objective would then go up to 31%

Make aid more effective

Everyone wants UK aid to be as effective as possible. The Independent Commission for Aid Impact (ICAI), which was created by the Conservative led coalition government in 2011, rates all of the aid programmes which it reviews with a traffic light system.

ICAI traffic light scheme 2020 800px

The government should cut programmes first which received Amber/Red or Red ratings and protect those aid programmes which received Green or Amber/Green ratings.

Make aid more transparent

In the new 2020 Aid Transparency Index, DFID was the second highest ranked government ministry in the world for transparency and was rated as Very Good. The FCO was ranked 38 out of 47 aid organisations and rated only as Fair.  

chart transparency index 800px

The Government should require all ministries spending aid money immediately to achieve a Very Good rating for aid transparency. There’s no excuse for less. 

A final word

I realise that overlaying these different criteria for aid cuts will require some choices. Some aid programmes might be priorities to cut against some criteria and not for others. Broadly speaking, I think those choices should start at the top of my list of criteria. I also think that the government should have some sensible discretion in making any borderline decisions. But only full transparency and accountability to Parliament for those decisions will give people trust in that discretion.

Laurie Lee

I joined CARE in August 2014, because I believe strongly in our focus on economic development, gender equality and people holding governments accountable. My focus at CARE is on ensuring we have the best people to do the job we do, to support our teams on the ground in over 70 developing countries, and to ensure we continuously improve our ability to monitor the impact of our work, and learn how to do it even better.  

Prior to CARE I worked for the Bill & Melinda Gates Foundation for seven years, advising them on development policy issues in Europe and Africa. Before that I worked for the British government. I managed British development programmes in South Africa and Afghanistan. He worked in 10 Downing Street to prepare the G8 Gleneagles Summit on Africa in 2005. And I ran the DFID Trade Policy Unit until 2008.

One good thing I've read

One of CARE’s goals is to help the 2 billion people – including 1.1 billion women – without access to financial services, to get them. This great and easy book, Portfolios of the poor: How the world's poor live on $2 a day, by Daryl Collins, Jonathan Morduch, Stuart Rutherford and Orlanda Ruthven, explains why there’s no such thing as living 'hand to mouth'. The poorer you are, the more you need financial management tools.

Email: Lee@careinternational.org

Twitter: @lauriejlee