DfID Pushing Wasteful, Discredited Aid Target, Report Shows

Alec van Gelder of International Policy Network said, “a legal commitment to spending 0.7 per cent of our national income on foreign aid before a comprehensive review of all our aid spending has delivered its verdict makes a mockery of this government’s promise to deliver value for taxpayers’ money.”

IPN’s report is especially embarrassing for a government department that has already come under fire for misallocations of development aid. Committing taxpayers’ money before considering what is needed has forced the current government to defend almost £300 million of aid being spent annually in India, even though India is one of the world’s fastest growing economies and Indians say an end to DFiD’s funding would “not be a concern”.

Key points of the report:

•    The 0.7% target was formulated as a lobbying tool in the late ‘60s.

•    The justification for the 0.7% “need” (so called “financing gap theory”) has lost all credibility.

•    Even if the justification were sound, the figures on which it relies are forty years out of date. Recalculating with up-to-date statistics shows the “capital need” in poor countries has fallen to below 0.05% of national income in rich countries – less than 10 per cent of the aid that is currently being spent under the previous Labour government and less than seven per cent of what Andrew Mitchell proposes we spend.

•    The UK’s development policy must adapt to changing circumstances. Tying spending to a discredited 40-year old target dreamt up by lobbyists makes no sense.

•    Decreeing any aid spending target is backwards. Development aid should be focused on outcomes, not inputs.

Andrew Mitchell is quoted in the New Statesman saying that a legally-binding 0.7% target “takes development out of party politics”. Alec van Gelder responds, “it also takes control of development policy away from taxpayers, which will lead to more embarrassing waste”.

ENDS

NOTES:

*Ghost of 0.7%, by Michael Clemens and Todd Moss, with a foreword by Alec van Gelder, is a Center for Global Development report republished in a British edition by International Policy Network: http://www.policynetwork.net/development/publication/ghost-07-origins-and-relevance-international-aid-target

Bronwen Maddox, “Our Foreign Aid Target is Absurd”, The Times, 22 April, 2010, http://www.policynetwork.net/development/media/our-foreign-aid-target-absurd

Alec van Gelder, “The truth about foreign aid our politicians won’t admit”, Telegraph, http://www.telegraph.co.uk/comment/personal-view/7643605/General-Election-2010-The-truth-about-foreign-aid-that-politicians-wont-admit.html

Sreelantha Menon, “Cut in DFID air not a concern for India”, Business Standard (India), 16 July, http://www.business-standard.com/india/news/cut-in-dfid-aid-notconcern-for-india/401580/

Mitchell defends the funding pledge in today’s New Statesman: "My ¬argument is that charity does indeed start at home, but it doesn't stop there," he says. As well as reducing adminstration [sic] costs by a third, the new UK Aid Transparency Guarantee, he points out, will ensure independent assessment of development spending: "The ring-fencing imposes on all of us a double duty to make sure that for every pound that is spent on the development budget from hard-pressed taxpayers, we really get 100 pence of value."

Given the obligation, he points to the "moral" case for increased aid

He even adds, unprompted, that what Gordon Brown said at the AU summit in Kampala recently, about smart aid and IT investment, "was extremely sensible". However, he notes that the UN-endorsed pledge to spend 0.7 per cent of GDP enjoys cross-party support, which "takes development out of party politics".

http://www.newstatesman.com/international-politics/2010/08/mitchell-development-aid