Foreign aid: how and where is the UK’s budget spent?
UK is the only major western economy to meet UN target to donate 0.7% of GDP to overseas aid
The amount of foreign aid paid for by UK taxpayers could be slashed by hundreds of millions of pounds under proposals put together by International Development Secretary Penny Mordaunt. So how much does the government currently spend and what are her plans?
How much does the UK pay in overseas aid?
For decades the UN has encouraged donor countries to contribute 0.7% of their gross domestic product (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 £13.9bn to the international aid budget.
How does UK foreign aid compare to other countries?
Britain was the only member of the G7 to meet the 0.7% target last year, 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 to slash spending by more than one third and threatened to link foreign assistance to support for the US.
Conservative MP Andrew Bridgen
said “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.” This
“casts questions over the sustainability and desirability of the target”, he told
The Daily Telegraph.
Where does our foreign aid go?
Last year, 38% of the UK’s aid budget went to multilateral organisations such as the UN, while the remainder, classed as
“bilateral aid”, went directly to developing countries.
Africa was the largest recipient of bilateral aid, with increases in East African countries, such as Somalia, affected by drought. Aid to Asia fell last year, 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.
Microsoft founder and philanthropist
Bill Gates previously joined the president of the World Bank and various international aid groups in urging Theresa May
to maintain the UK’s commitment to international aid. As well as saving millions of lives worldwide, he said 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”.
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.
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. It is important to note that with a large proportion of the foreign aid budget going directly to multilateral organisations, 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. For example,
The Daily Telegraph published a report by the Independent Commission for Aid Impact which detailed how UK money was being used to
“keep Indian houses cool during the summer and cutting smoking rates among migrant workers in China”.
Stories such as this drew
yet more consternation when it was revealed that British overseas territories in the Caribbean, devastated by Hurricane Irma, were not eligible to receive any of the UK’s £14bn aid budget because they were classed as
“too wealthy”.
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”.
So will it be cut?
Mordaunt has “
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 wants profits from development projects 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”. Labour has also accused her of trying to water down the target.
“This is an outrageous distortion of the country's overseas development programme,” said Kate Osamor, shadow international development secretary.
“The Tories’ plans to rewrite the international rules on aid and slash billions of pounds of public money will do nothing to end global poverty or reduce inequality.”
Foreign aid: how and where is the UK’s budget spent? | The ... Oct 10 2018.
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