Government approach to aid could block efforts to tackle poverty, watchdog warns

The government's approach to aid spending risks undermining efforts to tackle poverty, a report from an official watchdog has warned.

Ministers' new focus on spending aid in ways that will deliver trade and investment benefits for the UK means attempts to alleviate poverty could be "diluted", according to the Independent Commission for Aid Impact (ICAI), a government body responsible for scrutinising developing spending.

The "mutual prosperity" approach adopted by ministers in recent years says that efforts to help people in developing countries should, where possible, also be used to help the UK.

In practice, this means focusing more on economic development and boosting trade than on efforts to reduce poverty abroad.

The government is also trying to convince international bodies to count the profits of its development finance arm, CDC, as aid, in a move that experts have warned could cut the total amount of aid spending.

In a report on the "mutual prosperity" approach, the ICAI warned: "There are risks that the poverty focus of UK aid may be diluted."

It continued: "There is a risk that if those responsible for spending aid are under pressure to identify ‘win-win’ opportunities, they may not choose the most effective development interventions. Faced with a trade-off, they may choose to maximise secondary benefits to the UK at the expense of poverty reduction."

The watchdog said the new approach would "create pressures to spend aid in the developing countries that are most likely to be important trading partners", adding: "There are risks that this could lead to the global allocation of UK aid becoming less pro-poor, and less focused on the most marginalised."

It warned that advice issued by the Department for International Development (DfiD) on how officials should choose where to invest money "leaves open the possibility that staff might prioritise interventions with a relatively lower poverty reduction benefit in order to secure benefits to the UK".

The ICAI said there had been a marked shift in aid priorities since the Tories came to power, with a move away from reducing poverty and towards economic development.

The report said: "During the first decade of the 21st Century, UK aid had a strong focus on poverty reduction and promoting basic services such as health, education and clean water. This was in keeping with the development agenda set out in the UN Millennium Development Goals. Since the 2010 election, there has been a rebalancing of UK aid back towards economic development."

Responding to the report, Alex Norris, Labour's shadow international development minister, said: “The Tories clearly can’t be trusted to use the country’s aid budget in the way it should be.

“They are using aid to support post-Brexit trade and investment deals which help their privileged friends in big business, rather than tackling poverty and helping the world’s poorest people.”

A DfiD spokesperson said: “The UK is leading the way to help countries become economically self-sustaining.

“As the ICAI report highlights, we are building partnerships that go beyond aid and help build trade and business relationships, which can deliver quality investments, drive growth and create millions of jobs for developing countries. This is lifting people out of poverty and create our trading partners of the future.”