Overseas aid: when is a cut just a failure to raise?
I’ll comment tomorrow on today’s DFID decision to move aid spending from one group of countries to another, and one set of international institutions to another set. But the one thing most people are sure of is that the Government is as committed to spend as much money as Labour had planned, and that the Conservatives have, as they promised in the election, ring-fenced the aid budget. Well, not quite. As Harriet Harman repeated today, between now and 2013, when the Government plans to meet the UN target of spending 0.7% of Gross National Income (GNI) on overseas aid, a Labour Government would have spent £2.2bn more on overseas aid than the current Government plans to.
Most people in the aid community are familiar with this but haven’t complained much about, probably for fear of drawing attention to the one last ring-fenced area of Government spending.
The sleight of hand is based on how you get from the current overseas aid budget (0.56% of GNI) to the 0.7% target in 2013. You can increase spending year on year, as the previous Government planned, or you can peg aid at its current 0.56% until the final year and then slap it up all in one go, which is what the Government is planning (actually over the last few years of the previous administration, aid increases sometimes increased faster, sometimes slower than a simple year on year increase at the same rate, but broadly speaking, these are the options).
So, in 2011, Labour would have spent about 0.6% of GNI on overseas aid (£9.3bn instead of £8.4bn) and in 2012, the previous administration would have spent 0.65% of GNI on overseas aid (£10.5bn instead of £9.2bn – GNI is forecast to increase, so even a pegged proportion of it increases in money terms). Then in 2013, the Government plans to increase overseas aid spending by £2.8bn in a single year to reach the same £12bn figure that Labour planned to reach. So, £2.2bn less spent on aid over the next two years, but the same eventual target reached.
Just how the Government plans to implement that 30% increase in the aid budget in a single year is not immediately apparent (experts are getting worried about the impact on the bodies such a huge increase will be channelled through), and the serious risk is that at that point, the pledge will be abandoned because it is just too staggeringly large for a then impoverished British electorate to take. A nightmare scenario for the development community and the world’s poor all in one go – but then cutting the aid budget by stealth by over £1 billion a year in the next two years is bad enough.