Government sticks to development commitments
One element of the budget that didn’t actually make the Chancellor’s speech, but which is nonetheless important is that the Government chose to make clear that it was maintaining its commitment to meet its target for overseas aid. The TUC lobbied for that, like many others, and we welcome the decision.
Labour committed itself to meet the 0.7% of GNP UN target for overseas aid in its 2005 election manifesto. Aid spending in the UK has been increasing since 1997 – but it had fallen in the early 1990s under the Conservatives during the last recession. And everyone in the aid community has been dreading the reaction of UK politicians to a new recession. The Irish Government, for instance, cut overseas aid spending earlier this year, over the protest of aid charities and trade unions.
There are two reasons for maintaining commitments on overseas aid during a recession. First, overseas aid is a good thing in itself. It is not the only solution to global poverty, nor even the most sustainable (economic growth and trade, for example, are longer-term solutions, although overseas aid can assist with both). There is a moral imperative at work here.
But, secondly, overseas aid is one of the best ways of combating a global recession, especially if directed at social spending – schools, hospitals, water and sanitation, for example. For the same reason that fiscal stimuli in developed countries are important components of restoring domestic demand and stimulating growth, overseas aid produces an increase in demand in developing countries. The IMF has suggested that overseas aid has a greater effect than domestic fiscal stimuli.
So, the Government has resisted the immediate temptation to cut overseas development aid as part of its response to the recession for all the right reasons. Meeting the 0.7% of GNP target established by the United Nations, and so far met by very few governments, is morally right and economically effective.