The Department for International Development (Dfid) has just published figures showing the UK’s international aid budget continues to grow exponentially. While some unprotected government departments face significant spending cuts, the international aid budget grew by over £500 million in 2015, taking the collective budget to £12.2 billion. There is particular controversy over 2015's figures as there appears to have been an overspend of £172 million.
Prior to the election of 2015 the Government passed the International Development Act, which effectively enshrines the target of spending 0.7% of GDP on international aid into law. Although the Act is a token measure as there are no sanctions for missing the target, some members of the House of Lords warned that setting an arbitrary target could lead to problems. The National Audit Office (NAO) has previously highlighted the problem of “rushing” spending towards the end of a financial year to simply meet the target. Dfid had to “quickly add some activities to its 2013 plans but delay others set for 2014, making it more difficult to achieve value for money,” according to the NAO. This mistake of “rushing” spending appears to have taken place again in 2015.
There are many other issues arising from the imposition of a target on international aid spending. The House of Lords Economic Affairs Committee, for example, produced evidence that reaching the target would increase the risk that aid will have a corrosive effect on local political systems. Since the publication of this report, further evidence of corruption has emerged. It was reported last year that international aid money via the Private Infrastructure Development Group (PIDG) – which Dfid will contribute £900 million to by 2017 – could be ending up in the hands of criminals. The Public Accounts Committee found that funds were going to projects linked to fraudsters and that Dfid had failed to stop PIDG’s wasteful travel policies and financial management.
Then, of course, there are important fiscal implications of the policy. The Government’s current policy on international aid doesn’t merely ring-fence the budget, it requires the budget to grow in line with economic growth. Some argue that £12.2 billion is small compared to overall Government spending. However, it is not small compared to other departmental budgets – it is around a third of what is spent on defence.
The international aid target would appear difficult to justify. It is leading to ineffective use of public funds, and is difficult to defend at a time of public spending restraint. The Government should therefore reverse the ill-advised international aid target.