Watch out for any budgetary backtracking on aid commitments

Supporters of international development should watch this week’s budget announcement very carefully. Overseas aid and the role of DFID are not usually at the forefront of a Chancellor’s mind when delivering a budget – personal taxation, welfare and big capital spending projects tend to get all the attention. But just because the budget is usually domestically focused doesn’t mean that Wednesday’s announcement won’t have a big impact on Britain’s progress towards tackling global economic injustice. As is so often the case, what is missing from the Chancellor’s announcement could tell us as much as what is included about where the Coalition’s priorities lie.

The first, and most obvious, signal of the government’s intention towards international development will be whether overseas aid (a sub-set of DFID’s budget) remains ring-fenced from spending cuts alongside areas like the NHS. To date Cameron and Osborne have held firm against backbenchers, donors and even (so it is said) their own DFID minister against slashing the relatively small proportion of UK GDP spent on aid. However, the Chancellor is clearly under pressure to appease a growing chorus of disapproval over the ring-fencing of specific budgets. Recently Cameron has ducked the opportunity to back a Labour proposal to enforce the commitment to spend 0.7% in law. Given that several of last year’s budget announcements were reversed soon after the omnishambles, nothing should be taken for granted. Even with the aid ring-fence in place it must not be forgotten that Labour’s previous commitment to bring to UK up to 0.7% – which we hope will be met in this budget – now represents a far smaller level of aid spending in absolute terms given the Coalition’s inability to restore economic growth after 3 years in office. Some of the world’s poorest people are now paying a price for the government’s economic policy.

There are other ways that UK’s international aid commitment could be watered down. The second area to watch out for is whether DIFD spending is stretched to cover peacekeeping activities normally covered by the MoD. Last month Cameron hinted that aid spending should be diverted into the ‘conflict pool’ – something the Labour Campaign for International Development has covered previously. Such diversion of aid spending obviously takes away funds from other projects and reduces the impact of DFID at a time when it has already come under heavy cuts that impact its effectiveness. Of equal concern is the fact that mixing up development and peace-keeping spending undermines Britain’s leading role on international development by militarising our overseas aid. Therefore whilst the ring-fencing commitment may be met in nominal terms there is the risk that there may be less to this than meets the eye.

Finally, it will be a missed opportunity if this budget does not at least hint at long-term vision for the UK’s geo-political and economic role. This is, after all, not only a year in which Britain will chair the G8 but also a year in which David Cameron will lead the effort to design the next generation of Millennium Development Goals (MDGs). Rather than just talking about Britain’s role on the world’s stage the Chancellor could set a real level of ambition about what the world economy could look like beyond 2015, when the current MDGs expire. A short-term re-hash of austerity economics from this budget, without a thought to Britain’s place in the world would represent a tragically missed opportunity.

It would be ungenerous to the Chancellor to assume the worst before he has delivered his budget statement. The government has at least kept up the commitment to 0.7% so far which is to be welcomed. However under a Labour government, the UK’s hard won reputation for leadership on international development involved not just a commitment from the DFID Secretary but also a firm basis in the UK’s economic policy, something that can only come from the Chancellor. With this in mind of us watching Wednesday’s budget who believe in development will be very careful to read between the lines.

Charlie Samuda is LCID’s Vice Chair, Communications and Campaigning

Left Foot Forward on Tory delays on passing 0.7% law

Left Foot Forward reports on the Tory-led government delay in enshrining the 0.7% target in law.

Reminding readers that, it’s not the first time that the Tories have broken this commitment;

As Left Foot Forward reported on June 4th 2010, just weeks after the election, it’s a promise the Tories failed to immediately deliver once they’d made it to power, omitting it from their first Queen’s Speech. Back then, there was criticism the legislation wouldn’t make the statute book by theSeptember 2010 New York Millennium Development Goals summit; it now looks like it won’t even be law by the May 2012 Cape Town MDG summit.

Tories break manifesto commitment to legislate on aid spending

Today’s Sun reveals that legislation to ensure Britain meets the UN goal of 0.7 per cent spending on international aid will be delayed despite a manifesto commitment from the Tories ahead of the 2010 election that they would;

legislate in the first session of a new Parliament to lock in this level of spending for every year from 2013.

And a further commitment in the Coalition agreement to;

We will honour our commitment to spend 0.7% of GNI on overseas aid from 2013, and to enshrine this commitment in law.

As Richard Darlington, former Special Advisor at DFID and now head of IPPR says over on the New Statesman blog;

This has been one of the longest ever Parliamentary sessions in history, running from May 2010 to May 2012. So what’s gone wrong?

There are still ten weeks left in this Parliamentary session and another three when MPs will be on holiday. DFID’s Bill is short with just a handful of clauses. It has already had pre-legislative scrutiny from the International Development Select Committee and there is cross-party consensus. There is no prospect of it being overturned in the Lords. It could probably be passed on a one line whip on a Thursday afternoon or Friday morning.

Are the government worried about the destabilising impact of another backbench rebellion so soon after their European troubles? Or are they worried that the next Parliamentary session does not have enough business? In a story in the Times today, Political Editor Roland Watson reports that the next Queen’s Speech will contain just 12 Bills because the Conservatives and Lib Dems are struggling to find enough common ground to agree a legislative programme.

Tax Havens, Conservatives and the Developing World

After the recent investigation by Channel 4 Dispatches programme that Conservative Ministers, Andrew Mitchell the International Development Secretary amongst them, store their wealth in off-shore bank accounts, the question of the harm done by these locations and their practices are now being asked.

The figure quoted in the Dispatches investigation is that for every £1 that goes into the developing world via aid and trade, £10 goes into off-shore tax havens. That is a staggering amount of money that is being re-directed away from where it could of use to world’s poorest. There has been a growing acceptance in the international community that more needs to be done to ensure that fair and accountable tax regimes become common practice. The G20 meeting in April 2009 set a clear set of targets to see these practices clamped down on, due in part to the damage they do to the developing world, stating that they aimed ‘to make it easier for developing countries to secure the benefits of a new cooperative tax environment.’

The OECD in late 2009 looked into the progress being made to achieve the aims set out by the G20 and found that 42 signatories had yet to implement the internationally agreed recommendations – one of these being the favoured tax haven of the now International Development Secretary, the British Virgin Islands (a British Overseas Territory).

Closer to home the House of Commons International Development Select Committee has stated that tax havens are a severe hindrance to the developing world. In its report in October 2009 ‘Aid under Pressure’ it had the following to say on tax havens;

“114. Tax evasion is a major problem faced by developing countries in attempting to raise tax revenue. Tax havens facilitate tax evasion by operating lax regulations; providing companies with anonymity through bank secrecy; and by failing to co-operate on tax matters with authorities from the country in which the funds originated.”

Given that the G20, the House of Commons and the OECD all agree that tax havens damage the developing world, its increasingly curious that the Development Secretary feels it is acceptable to benefit from using their services.

Furthermore, the question of fair taxation is not only a problem within developing nations, its also a problem within aid-giving states. If the money that wealthy UK citizens and companies stored overseas were repatriated to the UK not only would our GDP increase (and the amount of money that constitutes the target of 0.7% of GDP going into development would substantially increase) we would also have more taxable income that could be re-directed into DfID’s budget.

It is very simple economics, but economics that substantially harms the developing world. That the international community has already stated its clear aim of dealing with the problem of off-shore tax havens, it is therefore concerning that members of the UK government are indulging in these practices, particularly those whose remits are to tackle the very problems that tax havens are exacerbating.

The Secretary of State has said he has done nothing illegal, and that is true. But that does not exonerate him from the charge that he, and by extension his government, are unwilling or incapable of tackling the practices that are in part responsible for underdevelopment in many parts of the world. In fact, they are taking part in and enjoying the benefits of those practices. Whilst leaders in the developed world fail to understand why underdevelopment takes place, and whilst they are unwilling to seriously deal with these problems and lead by example, the depravity that those in the developing world face will continue to worsen.

Lee Butcher is a Parliamentary Researcher to a Labour MP – views expressed are done so in a personal capacity.

Serious questions raised about aid commitment as Clegg fails to confirm policy

Despite repeated questioning on the Andrew Marr show today (BBC 1, Sunday 19 September 2010) Nick Clegg failed to confirm whether the government would meet the 0.7% overseas aid target from 2013, despite having previously promised to do so, sending out worrying signals just days before he attends a critical UN summit on global poverty.

Nick Clegg twice refused to categorically commit to the 2013 deadline when questioned by Andrew Marr, merely saying ‘that’s what we’re aiming for’ – and attempting to divert the question.

Reacting, Shadow International Development Secretary, Douglas Alexander MP said:

“This was deeply worrying back-tracking from Nick Clegg, and will send all the wrong signals before the critical UN summit he is about to attend.

“Either his government are committed to meeting the 0.7% aid target from 2013, or they are not.

“Despite promises to make this target legally binding, the government have failed to introduce legislation to do so.

“With Nick Clegg’s failure this morning to categorically commit to the 2013 deadline, many will now suspect that the government secretly intends to backtrack on this commitment.

“Once again this shows just how Nick Clegg is acting as frontman for the Tories, instead of his own party policy.

“We hear that he apparently only intends to attend the UN summit for just one day. Perhaps this is because he fears he will have so little to say to the UN and other world leaders with one hand tied behind his back by the Tories.”

Cameron fails to fight for world’s poor as G8 drops $50bn aid pledge

First posted on Left Foot Forward.

When Harriet Harman asked David Cameron last week to give due credit to Gordon Brown for his work on development, he replied: “I’d be delighted to, if he could be bothered to turn up to this House.” Apart from being disrespectful to a former prime minister and Chancellor respected the world over for his achievements in the fight against global poverty, the real question many in the development community will rightly be asking following the G8 and G20 summits is: did Mr Cameron bother to turn up?

Shanty-townAt this year’s G8 summit, the historic 2005 Gleneagles agreements were dropped from the final communiqué. Save the Children describe it simply as “shameful”, while Oxfam said:

“The only promise that counts is the Gleneagles one to increase aid by $50 billion by 2010 and that is the one they have abandoned.”

The prime minister came to the summits “with a clear commitment to make sure these summits deliver for people. Too often, these international meetings fail to live up to the hype and the promises made” – yet according to The Guardian, Downing Street admitted that he had simply “not fought” for the commitments to be included during the negotiations.

The G8 did muster some action on maternal mortality and child health, urgently needed in a world where approximately 350,000 mothers die from complications during child birth and 8.8 million children die before their fifth birthday, but the results were utterly inadequate; “lower than our lowest expectations” is how Oxfam described the initiative.

Around 40 per cent of the promised aid increase made at Gleneagles has not been delivered. The 60 per cent that has been spent has made a huge difference, according to a recent DATA report – 200 million bednets to tackle malaria;vaccines and immunisation saving the lives of 5.4m children; 42m more children in school…

But that $20 billion (£13.2bn) shortfall is literally costing lives. True, the recession has meant that budgets are tightening across the whole of the G8, but the Gleneagles summit took place in difficult times too as the horrific events of 7/7 unfolded. Through the leadership of Tony Blair and Gordon Brown, and a campaign by millions of people around the world, it still achieved that $50bn agreement and debt relief.

In a speech to Labour Campaign for International Development (LCID) last week, shadow international development secretary Douglas Alexander said the prime minister’s  silence “has been deafening”.

He added:

“Britain should be both leading by example and putting in the hard graft… So can David Cameron tell us how many phone calls and meetings he actually held with other world leaders about maintaining the Gleneagles promises?

“Or did he just give up?”

He also criticised the Government for lacking a clear forward agenda ahead of the UN summit on the Millennium Development Goals in September. In the Commons debate on global poverty last Thursday Mr Alexander remarked:

“What concerns me most about this Government’s approach to global poverty, even in these earliest weeks, are the limitations of the vision, and, indeed, of ambition, that have so far been revealed…

“What is the clear forward agenda, beyond the re-packaging of existing policies? With just weeks to go, where are the Government’s clear and concrete proposals and red lines for the UN MDG summit?”

Or to put it more succinctly, will the UK Government ‘bother’ to turn up?

by David Taylor, Chair, Labour Campaign for International Development

Foreign Office “planning a raid on DfID’s cash and on its turf”

The Financial Times website today carries a disturbing story on the future of DfID funding. This comes just weeks after an election when the now-Government pledged to ringfence DfID funding and that principle’s affirmation in the Coalition Document.

According to Sue Cameron at the FT, the Foreign Office is “planning a raid on [DfID’s] cash and on its turf.” She says:

“They talk of a “bleed” of Difid money to teams that include FCO and Defence Ministry people – not least in places like Iraq and Afghanistan. “Nothing will be taken out of the Difid budget,” one diplomat assured me. “It’ll just be spent on things over which Difid has no control.” And it is hard to see what Difid can do about it.”

LCID has already warned of the dangers of diverting DfID money that would better be spent on Overseas Development Aid, in a letter printed in the Guardian. Yet, Sue Cameron states that Andrew Mitchell, Secretary of State for International Development, is only free to act in his role “within the strategy set by Hague.”

Every penny diverted from poverty alleviation causes harm. It is becoming ever-clearer that the pre-election promise to ringfence the development budget was a false one. As the new Government’s policies come into action, LCID will be scrutinising them, to hold the Government to account on its poverty alleviation promises.

The full article can be found on the FT website.

By Tim Nicholls

Lib Dems go AWOL on international development

First posted on Left Foot Forward

The Coalition’s Programme for Government saw the good, the bad, and the ugly of the Tory and Lib Dem manifesto pledges on international development.

The Coalition’s Programme for Government saw the good, the bad, and the ugly of the Tory and Lib Dem manifesto pledges on international development. First the good; the Coalition are to continue much of the good work achieved under Labour, keeping the Department for International Development (DfID) as an independent department with cabinet representation, pledging to continue our international leadership in this area, continue debt relief, and sustaining action on the MDGs, including a continued focus on womens’ rights and tackling maternal mortality.

The commitment to spend 0.7 per cent of Gross National Income on overseas aid from 2013 and to enshrine this commitment in law (as Labour had pledged to do) is welcome – although there are concerns around the detail of this, as discussed below.

Furthermore, there is a welcome pledge to make the UK Trade and Investment and the Export Credits Guarantee Department become champions for British companies that develop and export innovative green technologies around the world, instead of supporting investment in dirty fossil-fuel energy production, as campaigned for by People & Planet.

However, whilst these commitments are encouraging, the same question marks that hung over the Conservatives’ manifesto hang over this programme, whilst there is a worrying absence of some highly progressive Liberal Democrat policies. As Left Foot Forward has previously outlined, there are concerns in the NGO community toward the Tories’ proposals to give the British public a vote in how UK aid is spent. The details of how this would work need to be outlined – as any such scheme should certainly not be at the expense of ensuring people in poor countries are in charge of their own development.

On climate change, the lack of any mention of climate finance is deeply worrying. The Conservatives have still refused to guarantee that any aid to help developing impacted by climate change would not be taken from the existing aid budget – whilst the Lib Dems are silent on a clear commitment they made in their manifesto (page 63) to ensure that “adaptation and mitigation measures are financed by industrialised nations on top of existing aid commitments”.

On the Robin Hood tax, the promise to tax banks is welcome but is far from the blueprint championed by the Robin Hood Tax campaign or the Lib Dems’ own pledge (page 62) to “bring forward urgent proposals for a financial transaction tax.”

And then there is the ugly. As Left Foot Forward reported on Tuesday, there is a worry that the promise to spend 0.7 per cent of GNI on aid will watered down through creative accounting.

The pledge to “stick to the rules laid down by the OECD about what spending counts as aid” is disingenuous – many NGOs are critical of the OECD’s laws, with organisations such as Aid Watch arguing that many EU Governments count non-aid items as aid in order to inflate their official aid figures. Out of the €50bn (£42bn) officially provided in aid by EU governments, €5bn (£4.2bn) is debt cancellation, €2bn (£1.7bn) are student costs and almost €1bn (£845m) are refugee costs.

Under Labour, 88 per cent of UK aid was spent though DFID. The Labour Campaign for International Development have written to the Chief Secretary of the Treasury to seek his assurance that the Foreign Office, Ministry of Defence and Home Office are not currently being asked to scrutinise their budgets for items that could be classified as Overseas Development Aid; furthermore, the Conservative manifesto (page 117) specifically pledged to “legislate in the first session of a new Parliament” to enshrine 0.7% in law and yet it was missing from the Queen’s Speech.

On Tuesday, aid campaigner Bono had said:
“The UK’s bipartisan commitment to development, and near fulfilment of its promise, stand out as achievements in these hard times.”
He’s right, but we must be cautious. Much of what is good in this Coalition programme is a continuation of what the last Labour government had already established. The Lib Dems going missing in action is a missed opportunity for some genuinely progressive policies. Many of the new Tory proposals are questionable; and the biggest question of all is whether Britain will meet its promises to the poorest or pull an accountancy trick through rebranding money from other departments as aid.

The coalition in development: a bluer shade of green

First posted on Progress Online as part of Steve’s regular column.


The Lib Dems have not fought the corner of international development – they are absent from DfID and big ideas such as the Robin Hood Tax have been dropped

When analysing the influence of the coalition partners on their joint programme for international development, we don’t need The Guardian’s brilliant analysis of the coalition colour schemes. Whereas the overall pea-green agreement was deemed in this analysis to be more Liberal than Conservative (based on hue, not policy), the realm of global poverty seems to be true blue territory.

Blue doesn’t mean all bad, but nervousness abounds. Whilst the coalition agreement did promise to bind into law the commitment to provide 0.7 per cent of GNI in aid, and included positive commitments like support for an Arms Trade Treaty, such legislation was conspicious by its absence in yesterday’s Queen’s Speech. This is despite an explicit manifesto commitment from the Conservatives that they would do so in the first session.

DfID do claim they still plan to do this in future legislative sessions, but by falling short at the first hurdle questions are bound to be raised, not just at the Conservatives, but at the coalition’s self-styled ‘good cops’ too.

Lib Dems have long evangelised about development, but by failing to demand a ministerial post – an honour shared with only DEFRA, Culture, Media and Sport, and the Wales Office – it does mean that there is no coalition partner keeping an eye on how aid money is counted and how it is spent.

Worries exist that departments are looking for expenditure to be redefined so that it counts towards the aid budget. Items such as looking after (and even repatriation of) refugees or providing university scholarships to UK institutions are all permissible under loose OECD regulations defining what can count as aid, even if they bear little resemblance to what most people would understand by the term. Creative accounting would help the coalition keep its promise on paper, but it wouldn’t be of much use to poor communities on the ground.

The Lib Dems not only lack any ministerial post, they have also failed to include any of their distinctive policies that could have added a more progressive edge to the coalition agreement. No Robin Hood Tax to stabilise the banks and fund poverty reduction, no clear commitment to crack down on tax havens to tackle corruption and prevent capital flight, and no promise that the funds needed to help countries adapt to climate change will not be taken from the aid budget.

These are potentially big concessions. Climate change funding could dwarf the aid budget if not ringfenced, capital flight can be more debilitating than aid shortfalls, and the Robin Hood Tax could have added a genuinely radical and innovative solution to heal financial fissures at home and abroad.

And nor will the Lib Dems be in a position to ensure the UK’s position in trade deals are fair and progressive, nor demand the new National Security Council does not lead to development policy serving foreign policy aims rather than poverty reduction, nor press for the global leadership role played by successive prime ministers and secretaries of state over the last 13 years.

Which begs the question, why did they not fight a bit harder for the cause of global poverty, and what’s the point of a good cop if you’re not in the interrogation room when the important questions are being asked?

 Steve Cockburn is an anti-poverty campaigner and member of Labour Campaign for International Development