UK accused of 'dumping' billions from foreign aid budget

The Times has published the latest in a series of exposes on Britain's foreign aid spending, piling pressure on ministers over apparently poor oversight of the £12bn annual budget.

Today the paper cites claims from a senior consultant, who says the government has "dumped" billions of pounds into World Bank trust funds just to meet spending targets.

"Dfid dumps large sums into trust funds and accounts for it as spent against a given year’s UK aid budget," said James Morton, who has "carried out numerous evaluations for both the World Bank and Dfid", the UK's Department for International Development.

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Morton has calculated that "at least £9bn has been channelled into 219 different funds" over the past five years. That's "more than any other country apart from the United States" – and Morton says some of this money "sits there for years".

The UK is one of only five countries to meet a commitment to spend 0.7 per cent of its economic output on foreign aid each year, equating to £12.2bn last year.

Of the total, around 40 per cent is spent via multilateral organisations such as the World Bank, received about £3.3bn last year.

The World Bank's own independent regulator criticised "ineffective" investment processes for these funds in a report in 2011.

One example of UK-backed World Bank trust funds given by the paper, but which falls outside of the figures above, is a project set up in 2004 to back small companies in Iraq.

The UK invested around £8m, but "more than a decade later half of the funds remain with the trust with no money having been paid out for at least five years". Dfid says that it received back the majority of its contribution in 2010 "after security in the country broke down".

Last week the Times revealed that consultancies were taking around £1bn a year of Britain's foreign aid budget – and it later reported that Dfid does "not hold information on how at least £274m of money given to the Strategic Climate Fund, a major World Bank trust fund, was spent".

International Development Secretary Priti Patel has written to foreign aid contractors to ask how money is being spent – and tenders for contract were suspended for two weeks.

Patel is set to face questions over transparency on foreign aid spending when she appears in front of a select committee of MPs later today.