Where does UK foreign aid go?

MPs will be allowed to vote on government cuts to foreign aid this afternoon after Chancellor Rishi Sunak put forward a compromise option to reassure Tory colleagues that the move will not be permanent.

The decision to temporarily cut overseas aid from 0.7% of gross national income (GNI) to 0.5% due to Covid costs last November “galvanised opposition among Tory backbenchers like few others in this parliament”, says The Times.

High-profile backbenchers such as former prime minister Theresa May and former international development secretary Andrew Mitchell have warned that the reduction will cause hardship for millions across the world.

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Boris Johnson narrowly avoided an attempt from the rebels to hold a parliamentary vote on the matter last month, but the government has “bowed to the inevitable” and tabled a compromise motion for today, says The Times.

How much does the UK give in foreign aid?

Since 1970, the UN has set a target for donor countries to contribute 0.7% of their GNI to foreign aid.

The UK government has been signed up to the target since 1974, but reached it for the first time only in 2013.

In 2015, the necessity to hit 0.7% of GDP was enshrined in UK law. While the obligation can’t be enforced through the courts, ministers have to explain themselves to Parliament if the UK doesn’t meet the target.

Last year, the UK spent £14.5bn on aid and was one of only seven countries reporting to the Organisation for Economic Co-operation and Development to meet the target. Only Germany and the US spent more than the UK in absolute and proportional terms.

Next year, if the planned cuts go ahead, the UK will have an aid budget of £10bn.

Where does it go?

The latest figures from the Foreign Office show that around a third of the aid budget in 2019 was spent via multilateral organisations such as the UN, while the remainder, classed as “bilateral aid”, was sent directly to developing countries. The five biggest recipients of the UK’s bilateral aid were Pakistan, Ethiopia, Afghanistan, Yemen and Nigeria.

About 15% of the bilateral budget was spent on humanitarian aid, defined as “assistance designed to save lives, alleviate suffering, and maintain and protect dignity during and in the aftermath of emergencies”. Another 14% went on health, which includes medical research, family planning and infectious disease control. Millions of pounds also went to areas such as education, civilian peace-building, conflict prevention, and supporting media and the free flow of information.

What are the problems?

“When spent well, aid can transform lives and, in humanitarian crises, quite literally save lives,” says Aisha Dodwell in The Guardian. “But the full potential of aid spending has not always been realised.”

As an example, she points to research from the campaign group One, founded by U2 frontman Bono, which last year accused the government of misspending £1.6bn of aid on projects that were not helping the world’s poorest people.

It also emerged last year that the UK had sent £71m in aid to China in 2018, despite the country having an economy five times the size of the UK’s.

And a study by three economists published in February found that billions of pounds of aid allocated to the most in-need nations ends up in tax havens. The study, Elite Capture of Foreign Aid, tracked the flow of aid money to 22 nations, and found that as much as a sixth ended up in tax havens like Switzerland, reported The Times.

Nevertheless, Conservative backbenchers have argued that now is not the time for cuts.

During a House of Commons debate last month, Theresa May reminded the government that it had been elected on a manifesto that promised to “proudly” maintain the 0.7% commitment, while Andrew Mitchell warned that a new generation of young people are “watching this government break our promise to the world’s poorest”.

Foreign Secretary Dominic Raab has said the decision to cut aid was a “tough but necessary and temporary” one. Writing in the Financial Times, he said that, even with the cuts, UK government spending abroad would remain high in global and historic terms.

What is Sunak’s compromise?

The chancellor has proposed an independent “double lock” mechanism to determine when foreign aid will return to 0.7% of GNI, in a bid to assuage concerns from backbenchers that the cut might become permanent.

Aid spending will only increase when public sector net debt is falling as a percentage of GDP and the government is no longer borrowing to fund day-to-day spending. The Office for Budget Responsibility (OBR) will assess the lock annually, “effectively taking the politics out of the decision”, and once the threshold is reached, the 0.7% spending will become permanent again, says The Telegraph.

“If the Government loses the motion, aid spending will return to 0.7% from January,” explains the newspaper. However, Sunak has warned that this will mean “likely consequences for the fiscal situation, including for taxation and current public spending plans��.

Treasury sources speculate that it might take “a couple of years” to return to the target of 0.7% under the double lock system, but others in Westminster “think the tests could lock in the £4bn aid cut not just for the parliament but for many years to come”, says the BBC’s James Landale. “The question is whether MPs will accept this.”