Foreign aid can be popular with taxpayers – but only with reform

The British foreign aid target is deeply unpopular. In poll after poll, people lament that such huge amounts of money are sent abroad every year while they see domestic services stretched. Many parliamentarians, of course, disagree and are adamant that such high expenditure is critical to Britain’s global standing. Indeed, in 2015, a law was passed to ringfence the commitment. As a result, in every calendar year, Britain must spend 0.7 per cent of gross national income (GNI) on foreign aid.

The political enthusiasm for foreign aid, however, has not spread to the electorate. But nor have many politicians been swayed by persistently negative public opinion. So it seems that the two sides are in deadlock and likely to remain so at least in the short term.

The purpose of the latest TaxPayers’ Alliance report, launched last week by former secretary of state Priti Patel, is to bridge the gap between these two distant positions. 

This does not mean calling for the target to be scrapped or reduced, it instead means respecting taxpayers’ concerns and working out how to get the most out of the budget.

As it turns out, Britain’s aid spending is constrained by a plethora of rules, both domestic and international. These rules prevent the aid budget from achieving maximum value and, in some instances, prevent it from being used to help those in need.

One such domestic constraint is the fact that the 0.7 per cent target must be met in the calendar year, rather than the financial year. As has been highlighted multiple times by government and parliamentary institutions, this unnecessary condition of the International Development Act 2015 impacts the effectiveness of planning. In 2013, for instance, this led to 40 per cent of the budget being spent in just the last two months of the year.

Another rule, this time at the international level, means that it is much easier to meet the aid target if donor countries just fund multilateral organisations and giant NGOs, such as the World Bank and UNESCO, directly. Despite the fact that this means taxpayers’ money can go towards the operating budgets of these unaccountable organisations instead of aid budgets.

Conversely, funding sent to any NGO operating on a budget of under £50 million – equating to 96 per cent of British development charities – has to be for a specific project. This overly favours the giants of the aid establishment and means smaller aid charities have to fight for their funding on an uneven playing field.

The most well-known example, however, of how international aid rules have collided with British interests occurred in the aftermath of Hurricane Irma. When British overseas territories in the Caribbean were ravaged by one of the strongest storms ever recorded, the aid budget remained locked away. Instead, assorted government departments had to pitch in to fund the recovery effort.

Because these territories were classified as high-income before the disaster struck, international rules meant that any money sent to help them would not be classified as foreign aid. One of the territories hit by the disaster saw 85 per cent of its buildings destroyed or damaged by the hurricane. It goes without saying that suffering such devastation harms economic growth, especially for a region dependent on tourism. 

But while the problems with foreign aid rules are serious and damaging, they are certainly far from terminal. By continuing to seek reform of international aid rules, the government can ensure foreign aid can finally become acceptable to taxpayers.

One way of doing this would be to expand the scope of foreign aid to include operations that facilitate international development, such as cracking down on organised crime in the developing world and counterpiracy. Changes achieved in 2015 already mean that some of the costs of peacekeeping operations can now be paid for by the foreign aid budget – but why stop there?

The trouble is, of course, that aid campaigners are often purists. They will accuse any reformer of hoping to water down the aid budget or simply “not understanding development“. However, if they want to secure the long-term viability of such high aid spending, they will have to build bridges with taxpayers, not just expect them to foot the bill.

Written by Jeremy Hutton

Jeremy Hutton is a Policy Analyst at the TaxPayers' Alliance. He graduated from the University of York in 2018 with an MA in International Relations and is passionate about British foreign policy issues pertaining to trade, development and defence.