Overseas aid

by John Redwood

This post was originally posted at John Redwood’s Diary.

The Uk is a generous country. The government remains wedded to its pledge to spend 0.7% of our GNI on aid. Recently Mr Cameron has suggested that more of our aid spending should be used to stabilise countries in strife and assist law enforcement in troubled countries, so that more UK armed forces spending can count as overseas aid spending.

There are international rules on what does and does not count as aid spending. You can spend on teaching peacekeepers or police and that counts as aid, but spending directly on peacekeeping or policing yourself once invited to do so by the host country may not count as aid. Where our forces are helping a civilian population by assisting medically, or in other ways that usually qualifies for aid, it would make sense for that to be included in the totals.

More importantly, the government should look at the large transfers and payments made from this country to developing countries. Surely much of that money flowing to developing countries is doing exactly what aid budgets are doing – boosting incomes, offering financial assistance, providing cash for investment. Whilst UK charitable donations do not count as aid for these purposes, the tax relief granted to charities sending donations can count towards the total as this is state aid. Where the UK pays state benefits to people who then remit some of this money to families in developing countries, this is not counted as aid though it looks very like it.

France and Germany have typically included more of the loans advanced from their countries to developing countries as part of their totals of recognised aid. We need to recognise more of what we are already doing, at a time when public budgets are too stretched. To qualify as aid the state needs to be involved and there has to be a concessionary element to the loan.

Meanwhile the government is right to cut back overseas aid out of taxpayers pockets by removing aid to countries like China and India, as they are now doing. They are right to cut the budget back from the original plans owing to the lack of growth in the economy. It needs less spending to hit the 0.7% target if growth is reduced. How much aid would you spend?