Foreign aid: how and where is the UK’s budget spent?


The government has resisted pressure to cut the UK’s international aid budget despite growing anger about how UK money is spent abroad.

Setting out government spending for the coming year, Chancellor Sajid Javid ruled out making cuts in three departments: health, education and international development, where the overseas aid funding is set at 0.7% of gross domestic product (GDP) each year.

How much does the UK pay in overseas aid?

For decades the UN has encouraged donor countries to contribute 0.7% of their GDP on foreign aid.

Enshrined into law by the coalition government in 2015, foreign aid spending has, like the NHS, long been ringfenced from years of austerity cuts. Last year the government hit its 0.7% spending target, contributing a total of £14.5bn to the international aid budget.

The £487m year-on-year rise reflected a 3.5% growth in the UK economy, with the total ­budget equal to more than £10 a week for every household.

How does UK foreign aid compare to other countries?

In 2017, Britain was the only member of the G7 to meet the 0.7% target, according to figures published by the Organisation for Economic Co-operation and Development (OECD).

“The only donors more generous than Britain by proportion of their economies are Sweden (1.01%), Luxembourg (1%), Norway (0.99%) and Denmark (0.72%),” The Times reports. The non-western countries that exceeded the UN target were the United Arab Emirates and Turkey, it adds.

The UK’s donation is frequently the second largest in the world in terms of volume. The top spot goes to the US, which contributes the equivalent of around £25bn, although this makes up only 0.18% of the country’s national income. President Donald Trump has repeatedly vowed to slash spending by more than one third and threatened to link foreign assistance to support for the US, although he has recently backed down after “outcry” from Congress, reports Reuters.

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Conservative MP Andrew Bridgen has argued that “one of the justifications of adopting the 0.7% target for foreign aid was to encourage other countries to also achieve that target, but unfortunately that appears not to have happened.”

The failure of other developed nations to spend 0.7% of GDP on foreign aid “casts questions over the sustainability and desirability of the target”, he told The Daily Telegraph.

Where does our foreign aid go?

Around a third of the UK’s aid budget goes to multilateral organisations such as the UN, while the remainder, classed as “bilateral aid”, is sent directly to developing countries.

Africa is the largest recipient of bilateral aid, with increases in East African countries, such as Somalia, affected by drought.

Over the past few years aid to Asia has fallen, reflecting a drop in spending on countries affected by the Syrian refugee crisis, particularly in Jordan, where the UK had already made its full contribution to the World Bank’s Global Concessional Financing Facility in 2016. The graph below shows how bilateral foreign aid changed from 2016 to 2017.

Why does Britain give foreign aid?

The government says the money helps to build “a safer, healthier, more prosperous world for people in developing countries and in the UK”.

British aid goes towards vaccinating children from preventable diseases, enabling them to go to school and helping people work their way out of poverty, as well as providing food, nutrition and medical care.

It also acts as a means of soft power. Microsoft founder and philanthropist Bill Gates has said that, as well as saving millions of lives worldwide, commitment to international aid was “visible proof of the UK’s goodwill and humanity”, adding that by “creating stability to avoid war and migration” in other countries, Britain was “getting something back” and “avoiding problems for the UK”.

Martin Wolf in the Financial Times argues that with Brexit looming, “continuing Britain’s aid pledge will maintain its position as a world leader and show that leaving the EU does not mean isolationism”.

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So why is spending so controversial?

Cutting the foreign aid budget has long been a favourite clarion call of the right-wing press, as well as a sizeable number of MPs.

As spending across government has been cut or stagnated over the past decade, the foreign aid budget has more than doubled. In April, The Sun expressed outrage at the fact the current annual aid budget outstrips the £13bn given to police in England and Wales in 2018 and is nearing the £14.7bn a year spent on Scotland.

While many argue that in a time of deep economic uncertainty, money spent abroad could better be used to help ease a health and social care funding crisis at home, some critics take issue with how and what the UK spends its foreign aid budget on.

With a large proportion of the foreign aid budget going directly to multilateral organisations, the Department for International Development (DfID) has little say over how that money is distributed.

Yet this has not stopped a steady stream of stories about how British taxpayer’s money is being misspent. The Daily Telegraph recently published a “critical” report by the Independent Commission for Aid Impact (ICAI) which concluded the UK’s £14bn foreign aid budget is being spent in too many wealthy countries with not enough going to the poorest nations.

The ICAI found that allocating the aid budget to other departments beyond DfID has led to money increasingly being spent on middle-income countries. The Telegraph says this makes a mockery of the pledge by the Conservatives not to send any more British cash to nations that can support themselves, including India and China, “where money is still funding projects” and means “that the foreign aid focus has moved away from poverty reduction and is now more about security, climate change or economic goals”, says the Telegraph.

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In a recent high-profile example, The Sun reported that “red tape is stopping aid for the Bahamas coming from the UK’s bloated £14billion foreign aid budget”.

Foreign aid can go only to countries where gross national income is up to £11,000 per person. In the Bahamas this stands at £24,000, meaning the islands are deemed too rich to qualify under international rules so the UK’s £1.5m Hurricane Dorian package has to come from other funding pots.

“But aid cash has previously been earmarked for projects such as the Ethiopian Spice Girls”, claims the Sun, as well as on research on jazz in South Africa and a study of Roman orator Cicero.

Stories such as these have drawn consternation, with Tory MP Peter Bone calling the situation “absurd”, and James Roberts, of the TaxPayers’ Alliance, saying: “It’s barmy. If we insist on spending taxpayers’ cash on international development, emergency aid after a hurricane is a good place to start.”

So will it be cut?

Last year, the then-international development secretary Penny Mordaunt “vowed in effect to privatise a portion of the UK’s £14 billion aid budget”, says The Times, “redefining the rules on what could be counted towards the aid target”.

She proposed profits from development projects be included in the 0.7% commitment, thus reducing the amount taken from taxpayers.

International rules dictate that this re-investment does not count towards the target, explains the BBC’s political correspondent Chris Mason, and changing the rules “won’t be straightforward”.

While questions will continue to be asked about how aid money is spent, the new government has reaffirmed its commitment to maintain spending at 0.7%, with the new International Development Secretary Alok Sharma saying UK aid can be used to open up new markets for UK businesses.



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