Counting vaccine donations as foreign aid will allow UK to cut £140m from budget

The UK may have cut up to £140m of its foreign aid spending because of a controversial decision to count its donations of surplus Covid-19 vaccines towards that fund, a joint investigation with The Independent can reveal.

The decision comes after contentious new guidance that allows 30 rich nations to report last year’s donations of excess vaccines – doses they bought but did not need – as foreign aid, funds reserved for the economic development or welfare of lower-income countries. These guidelines may even allow some countries to claim back substantially more money than they actually paid.

The guidance, revealed by The Bureau of Investigative Journalism and The Independent, suggests counting donations at £5.12 per vaccine, a much higher price than rich nations paid for AstraZeneca doses originally. So countries who predominantly donated AstraZeneca shots – such as the UK – could financially benefit.

Governments can count vaccine donations as aid even if the jabs were never actually administered. They can also claim for expenses including syringes and transport, even though the £5.12 guideline price was based on an average cost that included these extras. In theory this could add several billion to the collective money supposedly spent on foreign aid in 2021 – though some countries have already pledged not to report donated vaccines as foreign aid.

The OECD said that the recommended price of £5.12 is “to provide a simple and robust method, aligned with [the global vaccine-sharing initiative] Covax, while ensuring transparency and comparability in members’ reporting.”

Critics say rich countries are profiting from hoarding vaccines. One person with knowledge of discussions around the guidelines said: “Our countries collectively cornered the market, bought multiple doses per person – and now that behaviour is being rewarded.”

A UK spokesperson said that the UK is still considering the OECD’s guidance on valuing Covid-19 vaccines. They added that the UK has “donated 30 million doses to countries in need already” and is managing the supply so that vaccines are used as quickly as possible in its domestic programme or shared internationally.

Oxfam has called the guidance an “​​insult to the world’s poorest countries”, and said that the “unacceptably high” guideline price “leaves the door wide open to rich countries falsely inflating the true cost of donated doses”.

The OECD said that its guidance is a “package of a recommended price and safeguards, including that members should not report in ODA more than what they actually spent on vaccines.” It said that this information “has been conveyed clearly to DAC Members through the discussions.”

However, this isn’t explicitly stated in the safeguards, listed in paragraph five of the guidance cited.

Because of the structure of the UK’s budget, any vaccine donations reported as foreign aid would equate to money that cannot be spent to help other countries.

The estimated £144m that the UK could claim for roughly 28.6 million vaccine donations is close to what it slashed from its aid budget to Yemen last year. The UN has warned that Yemen is on the brink of famine and has described aid cuts for the country as a “death sentence”.

The UK government did not tell say how much it had paid for AstraZeneca vaccines, but the BMJ reported in January 2021 that it expected to pay £2.29 per jab. Even if the UK reported donations at this low figure, it would account for roughly £65m – almost enough to restore the UK’s funding for Unitaid, a health agency that funds medicines and health tools for lower-income countries, to what was originally expected for 2021.

Portugal said it paid £1.48 per dose of AstraZeneca, and Slovakia £2.50 per dose. Most countries would not share that information, with several citing commercial confidentiality. OECD guidance says that if the price countries paid is commercially confidential, they can report £5.12 .

When asked how it would verify that no country had reported more than it had spent, the OECD said: “Countries’ reporting on ODA takes place in good faith and as such the Secretariat does not play a role of "policing" [committee] members.”

Jérôme Le Roy, an EU official who is chair of the group tasked with maintaining the quality of OECD foreign aid data, said that some countries might “gain a little bit” from the discrepancy in prices, but that it would “average out” because most vaccines, including Moderna and Pfizer, cost more than £5.12 . He said there would be “no substantive over-inflation” of aid reporting. “That’s the conclusion we are very much hoping [for],” he said.

Unlike the UK, some countries have already decided not to count surplus vaccines as foreign aid. The Netherlands said that donated vaccines were “purchased and financed for vaccinating our own population and not for development aid purposes” adding that “relabeling” them as foreign aid could reduce a country’s other development spending.

Luxembourg said that it will not report excess vaccine donations as foreign aid.

It’s understood that the same is true for the US, the largest donor in the group. When this was put to a State Department spokesperson, they did not confirm it but did say that US vaccine donations would come with “no political strings attached”.

The 29 countries and the EU, who are all members of the Organisation for Economic Co-operation and Development committee that agrees foreign aid criteria, could not reach a consensus on the rules for vaccine donations due to a lone objection by Hungary.

As a result, the OECD turned the proposals into non-binding guidance, meaning countries can forego reporting vaccine donations as aid or report them at a different price to £5.12 per dose if they can provide justification.

UK aid spending must by law reach 0.5 per cent of the country’s gross national income. The Foreign, Commonwealth and Development Office (FCDO) said that aid reporting for vaccine donations would be in addition to the 2021 aid budget, but that the budget would remain within the 0.5 per cent target because of the growth of national income forecasts.

“We already know that the UK will reduce other [foriegn aid allocations] to accommodate these donations given its rigidly interpreted target,” says Euan Ritchie, policy fellow at the nonprofit think tank Center for Global Development. “So the question is not whether some [funds] will be displaced, but how much.”

The Treasury has not yet decided whether the UK will count its surplus vaccines at £5.12 per dose. But any reduction in overall foreign aid spending would “make some people in the Treasury happy”, an insider said.

Whitehall sources said officials were aware of how it would look for the government to be seen making money off its abundant supplies after racing to secure doses ahead of poorer countries then refusing to share its surplus until Britain’s population was highly vaccinated.

According to one former member of the UK’s vaccine task force, there was a realisation early last year that the country would have an oversupply of vaccines that could be distributed among countries in need but the idea was met with “concrete” refusal from senior officials who feared jeopardising Britain’s rollout.

Now, it’s understood that further criticism of the UK’s limited efforts in tackling vaccine inequity is “being factored in” to the Treasury’s decision making regarding the OECD guidance.

The UK is also aware that if it decides to claim £5.12 per AstraZeneca dose, rather than the price it actually paid, it sets a "precedent" on the prices reported for future donations of vaccines which may cost more than that. (The UK is reported to have bought its Pfizer vaccine supply for an initial £15 per dose.)

When contacted for comment, the Treasury directed The Independent to the FCDO.

In a joint statement coordinated in February by the European Network on Debt and Development (Eurodad), 35 civil society organisations that jointly monitor foreign aid policy-making called on donor countries to “completely abandon” plans to count donations of surplus vaccines as foreign aid. (Eurodad receives funding from the Bill & Melinda Gates Foundation, which is a major funder of the Bureau’s global health team.)

“These intentions were unconscionable – these vaccine doses were never purchased in the interest of development partners and should not be counted as such,” they wrote. “Indeed, excess purchases of doses in a context of limited global supply were directly responsible for denying access to these life-saving tools in developing countries.”

Allana Kembabazi, programs manager at the Initiative for Social and Economic Rights, a nonprofit organisation based in Uganda, said the guidance was “rewarding bad behaviour”.

Uganda was unable to buy extra shots in the summer of 2021, when only one in 40 Ugandas were vaccinated, because rich countries had bought up supplies. Kembabazi recalled “traumatising” news of young Ugandans dying in hospital as the Delta variant surged.

“It felt like we didn’t count,” she said. “It just feels like you give us leftovers – and then you want to really get a lot of credit for giving us leftovers.”

Nerea Craviotto from Eurodad said that the guidance sends out the message that rich countries can over-order vital supplies knowing that any excess “can always be donated and reported as aid”.

Countries must send preliminary 2021 aid data to OECD in March for publication the next month. The OECD said: “When preliminary data are published in April 2022, vaccine spending will be clearly identified and each donor can be held accountable by the media and public.”