Domestic issues have dominated in the two months or so since the general election. Much of the talk has been of holes in the public finances, the dire state of the NHS, and the early release of prisoners to prevent jails overflowing.
That’s not to say there has been no attention paid to foreign affairs. Labour has pledged continuing support for Ukraine and suspended 30 arms export licences to Israel. Keir Starmer has sought to burnish links with the US and to reset relations between Britain and the EU.
However, there is one area of foreign policy where the government has yet to show its hand: international development and, more especially, the UK’s aid budget.
This is in stark contrast with the approach after the 1997 election, when Tony Blair’s administration quickly signalled its intent by creating a Department for International Development, setting a target of spending 0.7% of national income on overseas assistance and lobbying hard for debt relief. Britain punched well above its weight on development issues. It was, as Blair said recently, an example of how the exercise of soft power can enhance a country’s global reputation.
That reputation has suffered badly in recent years. The Department for International Development is no more, having been subsumed into the Foreign Office. The 0.7% target has been abandoned, and large chunks of what remains of the aid budget have been snaffled by the Home Office to pay for the mounting cost of asylum seekers.
Bond – the umbrella organisation for UK development groups – has calculated that once spending on refugees is stripped out, the UK aid spending this year will be just 0.36% of national income, half the old 0.7% target and the lowest since 2007.
Assistance has been slashed since the target was cut to 0.5% in 2020. The UK’s bilateral spending – money it provides itself rather than through international organisations such as the World Bank – has been cut by 37% in education, by 39% in health, by 58% in water and sanitation and by 42% in humanitarian support.
Times have been tough in the UK since 2020, with first a pandemic, then higher energy bills and a cost of living crisis, so these were seemingly easy cuts for the last government to make. It said it would return to the 0.7% once the public finances were strong enough to allow it, but only when the government was not borrowing for day-to-day spending and when the national debt was falling. As Bond points out, these conditions have been met just once in the last 20 years.
The decision to cut the aid budget was an example of short-term expediency trumping long-term thinking. The reason rich western countries are experiencing higher levels of legal and illegal migration is because people living in poverty and facing the existential threat of the climate crisis see little prospect of a better life in their own countries. Slashing the aid budget and redirecting a large chunk of what’s left of it to paying the bill for asylum seekers is a classic case of tackling the symptom rather than the cause. Nor, judging by the massive defeat suffered by the Conservatives, did slashing the aid budget work politically either.
Labour has arrived in office and pledged to “rebuild Britain’s reputation on international development” and there is much to be done. Public support for poverty reduction in the world’s poorest countries has ebbed since its high tide two decades ago.
Faced with many competing claims on the public purse, it would be naive to expect Rachel Reeves to put a bigger aid budget at the top of her list of things to spend money on, but Bond says there are three things Labour should do.
It says aid spending should be maintained at its 2023 level of 0.58% of national income this year and next to reflect the large amount of money being spent on refugees in the UK. “Without this, we risk further cuts to ODA (Official Development Assistance), especially to critical ‘overseas’ programmes that provide essential support to groups of people who are most marginalised and in need of assistance”.
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It also wants reform of the methodology Labour has inherited from the Conservatives for reporting ODA spending on refugees. Finally, it is seeking “fair, transparent and achievable fiscal tests for a return to 0.7% of gross national income, and scale-up [of] ODA as progress is made towards meeting them.”
These are all sensible and reasonable suggestions, to which could be added three more. First, the Department for International Development should be recreated as a self-standing ministry. That would give it more clout in Whitehall and prevent the aid budget being seen as easy pickings by other departments.
Second, the government should go through with its manifesto commitment to make “tackling unsustainable debt” a priority. This will, as in the past, require an international coalition, but Labour could show its intent by passing a law that would prevent private bond holders from using the English courts to sue countries burdened with unpayable debts.
Finally, Britain should be pressing for the International Monetary Fund to issue a new tranche of special drawing rights. These rights are an international reserve asset that can be exchanged with hard currencies and are effectively a form of money creation that can be used to help poor countries.
Labour’s constant refrain since the election – that it has inherited a mess from the Tories – certainly applies to international development. Much damage has been done to Britain’s reputation and repairing that damage will not be quick or cost free. Pledges will be empty words unless they are backed up by action.
