Why the overseas aid budget needs to be protected

As a veteran of the BBC’s Question Time, I became familiar with public debates on spending priorities. Often a member of the audience would interject with “charity begins at home” followed by a colourful account of aid money waste. Cue rapturous applause.

The chancellor, Rishi Sunak, will no doubt have that – currently silent – round of applause at the back of his mind tomorrow when he makes a parliamentary statement on this year’s foreshortened Comprehensive Spending Review.  

A demand to cut the aid budget from 0.7 per cent of GDP to 0.5 per cent (a difference of about £4.4 bn a year) has also been made by a substantial and influential group of Tory MPs. They enjoy strong support from some right-wing newspapers, who will say that even if we want to help – not that it seems they do particularly – the UK can’t afford it now we are burdened by the costs of the Covid-19 pandemic.

The aid budget was, in any event, facing a serious hit for simple, arithmetical, reasons. A target of 0.7 per cent of GDP delivers 10 per cent less aid when the GDP falls 10 per cent, as it is expected to do. The resurfacing of longstanding demands for a cut in the target itself has been fuelled by new demands for spending elsewhere. 

One such demand is for the deprived regions of the north of England whose representatives will claim that poverty at home must take precedence over poverty elsewhere. After all, as Marcus Rashford has powerfully communicated, you don’t need to go far to find hungry children.

The other pressing demand is for defence. I predicted two weeks ago, in this column, that one of the implications of a Joe Biden presidency would be a burst of defence spending, not just in the US but in countries like Britain anxious to ingratiate themselves with a Nato-friendly administration. I didn’t expect it would happen so quickly.

We are promised, over and above an already inflation-proofed defence budget, that there is to be a £16.5bn boost over four years. To buy high-tech weapons and systems and more boats to restore Horatio Nelson’s dominance of the world’s sea lanes (and create some jobs). By neat coincidence the extra spending is very close to the expected saving from cuts in aid. 

Previous governments have sought to smuggle bits of the defence budget, like peacekeeping troops, into the development aid target but what is now being proposed is a frontal assault on a hoard of cash the chancellor thinks is weakly defended.

But it may be more strongly defended than the raiders anticipate. I discount such figures as the Archbishop of Canterbury who, despite being a figure of great moral authority, has probably been written off as a closet “lefty”. I discount too the political authority of former prime ministers David Cameron and Tony Blair who belong to an earlier, pre-Brexit, geological epoch. And I discount also the, rather obviously self-interested, big development charities which have ceased to be such beacons of light following revelations of fat salaries and abusive behaviour in recipient countries.

But there are serious, senior, Tories like Andrew Mitchell who can argue back very effectively. I sat around the cabinet table with Mitchell and other Conservatives who, in an earlier period of austerity, were, to their considerable credit, willing to defend the aid target as not just right for the country but right for the Conservative Party, even as it was being lambasted in the Daily Mail and The Daily Telegraph.

I have no doubt that Dominic Raab’s Foreign Office is arguing very strongly that Britain’s overseas interests are not best served by a simplistic switch of money from its aid budget  – currently the larger part of what the Foreign Office actually does – to the Ministry of Defence and the order book of companies like BAE Systems. Behind the jargon about “soft power” there are some real challenges ahead, which the UK aid budget helps us to confront.

Among them is COP26, the Climate Summit which the UK will chair next year and which Boris Johnson is, rightly, desperate to make a success. A prerequisite is persuading large numbers of countries to take sustainable development seriously and to make expensive adjustments.  

It will require a lot of skill to exert global leadership against the competing pressures from China, which still insists on its right to burn a lot of coal, as does India, and the wrecking tactics of countries like Russia or Saudi Arabia who I believe want the conference to fail. The fact that the UK has one of the most professionally run, as well as generous, aid programmes gives our country considerable leverage.

We might be seen to be taking an even more effective approach to global poverty issues if we could lead on global tax rules, so that poorer countries can raise their own tax revenues; on stopping the Trumpist drift to protectionist trade policies; and on dealing in a more humane way with those who are trying to escape poverty by seeking refuge in safer and richer countries.

There may then be a legitimate case for questioning the sanctity of an arbitrary aid target set decades ago in a different world with a much clearer demarcation between “developed” and “developing” countries.  But now would be a truly terrible time to do scale back. 

The impact of coronavirus on poor communities in the UK is as nothing compared with the ravages of the pandemic on the economies of the low-income countries.  Many countries have been hit not just by the disease, with minimal public health protection to combat it, but by well-intentioned but ill-advised lockdowns which have done more damage to health than the disease itself.

India is one of the worst cases, with a fall of more than 10 per cent in its GDP this year, plunging tens of millions, hitherto working in precarious “informal” jobs, back into poverty. Uganda and Kenya have closed their schools for a year, setting back decades of progress in improving literacy levels.

Overall, low income countries have seen a decline in average per capita incomes of perhaps 3 per cent to 4 per cent which translates into placing an estimated 100m in “absolute poverty” – development jargon for total destitution and bare survival, reversing decades of progress. 

Our aid budget, administered directly or indirectly through the World Bank and similar bodies, facilitates vital imports and enables essential budget spending in countries which, unlike ours, do not have the luxury of borrowing at very low interest rates.

Sunak’s reputation as an economic miracle worker has barely survived the last few weeks of difficult decisions around a second lockdown. But he is probably still the favourite to succeed his accident-prone boss. 

He will be tempted to throw some political red meat to the tribunes of the populist right, whose support is important in a leadership election and who want more swords and fewer ploughshares. But if he does this by cutting help, above cuts already planned, to poorer countries in desperate straits, it will be a sign of serious political weakness, not strength.

Sir Vince Cable is the former leader of the Liberal Democrats and served as secretary of state for business, innovation and skills from 2010 to 2015