Government sticks to its promise on aid, kind of..
Yesterday the Chancellor of the Exchequer, George Osborne, delivered the annual ‘Autumn Statement’ to Parliament. His statement was set against a stark context. The Eurozone is in crisis, UK unemployment is at the highest level for years and is set to rise still further. Budget deficits are leading to the most severe public sector austerity measures in decades.
It is in this light that the Chancellor announced that the UK would be reducing our contributions in overseas development aid by approximately £1.2bn during this Parliament. That is a huge amount of money not to spend on aid.
So why is Aid being cut?
At the 1970 UN General Assembly rich governments agreed to spend at least 0.7% of their gross national product (GDP) per year from 1975. In the run up to the UK General Election in 2010 all of the major political parties in the UK re-committed to spending 0.7% of gross national income (generally a bit less than GDP) on development assistance by 2015. The UK Coalition Government has repeated time and again this promise and indeed have committed to enshrining this level of spending into legislation during this Parliament.
The Office for Budget Responsibility (OBR) is responsible for giving the country an independent analysis of the UK budget and forecasts the health of the budget for years to come. Yesterday their analysis and forecasts showed far slower growth than their previous forecasts. Their reduced predictions suggest that rather than UK growth of 1.7% this year, our GDP will only grow by 0.9%. Their prediction of 2.5% growth in 2012 growth has been reduced to 0.7% and likewise, 2.9% for 2013 has been cut to 2.1%. Those of you that studied compound interest in your school days will know that not only is that bad in each year but the culmination is even worse. By the end of those three years GDP itself will about 3.5% lower than the OBR was predicting as recently as March 2011.
The Government’s promise was to spend 0.7% of the GDP/GNI – whatever that amounted to. Unfortunately 0.7% of 96.5 is less than 0.7% of 100. When it comes to forecasts of development spending that difference is £1.2bn over 3 years. Even though we are effectively talking about small percentages of difference the absolute amounts of money concerned are enormous.
So what difference will this make to people living in poor countries and poor communities?
Well when I heard the news, this was my first question too. It’s yet to be seen where exactly the axe will fall and what the impact will be for people living in poor countries and communities.
Clearly £1.2billion is an enormous amount of money and so it will be essential for DFID to explain which programmes and areas of planned spending will be going ahead and which ones will not.
It will also be essential for DFID to continue to develop and finesse its work on understanding and improving the real impact of their work, to ensure that every pound of spending is making a difference to real people.
At the same time our political representatives, led by the Secretary of State for International Development Andrew Mitchell and the Prime Minister David Cameron, must continue with efforts to enshrine into law the principle of spending 0.7% of GNI on overseas assistance from 2013.
This drop in UK spending on development assistance makes it all the more important that the whole Government is contributing to overcoming global poverty. Every Government department has a role to play, whether it’s the Business department working to ensure UK business has a positive affect rather than a negative one when it invests abroad, the Foreign Office upholding principles of human rights in international diplomatic forums or the Department for Energy and Climate Change ensuring that we lower UK emissions and work with countries to adapt lifestyles to the changes in the world’s climate. The whole Government can, and should act.
The announcement yesterday recommitted the Government to reaching the 0.7% target by 2013. We welcome that ongoing commitment; a 41 year old promise will be realised in 2013 and the Government is taking a bold political step in maintaining their promise. At the same time the world’s poorest people need the UK to enshrine this principle into law, to focus on impact for real people, and to ensure the whole Government operates in a way which helps them prosper and take control of their own lives.