Justine Greening, the International Development secretary, has announced that direct UK aid to South Africa – which is currently worth £19 million – will end in 2013. At a conference of African ministers and business leaders in London, she laid out her reasons: “South Africa has made enormous progress over the past two decades, to the extent that it is now the region’s economic powerhouse and Britain’s biggest trading partner in Africa,” she said. “I have agreed with my South African counterparts that South Africa is now in a position to fund its own development.”
On the surface, this seems good news. Given the woeful state of the British economy, giving money to “economic powerhouses” amounts to an abuse of the taxpayer; withdrawing it seems eminently sensible and long overdue.
The problem, however, is the ring-fence. The budget for foreign aid is protected, so money that is not spent in South Africa will simply be redistributed elsewhere. As my colleague David Blair has reported, while the police force (for instance) is absorbing cuts of a fifth by 2015, this year the foreign aid budget has increased by 31.9, the biggest boost to any government department in British peacetime history. The total budget now stands at £10.5 billion.
In some countries, a dynamic has developed whereby we pay for their healthcare and education while they spend money on luxuries and arms. Pakistan, a country where tax dodging is rife, will receive £450 million from DfID in 2014/15. Meanwhile, 54 per cent of its public spending goes on the army and debt repayments, while education receives only 1.9 per cent. Similarly, Mugabe spent $17.9 million (£11.8 million) on foreign travel last year and $850,000 (£560,000) on his palaces. Not a cent was spent on schools – by Zimbabwe, at least (we spend a fair bit on it).
I’m not, of course, arguing for an abolishment of foreign aid. It is a responsibility of a relatively wealthy democracy to ease the sufferings of the world’s poorest. But the consequence of having a ring-fence is that there is no incentive to provide value for money. While other government departments are under huge pressure, being asked to justify every pound of their expenditure and find cuts where none can be seen, the DfID budget has become a bloated carbuncle on the face of Britain. This is a point which Sir Michael Barber, DfID’s Special Representative on Education in Pakistan, made in these pages last month, when he wrote that “the budget needs the same rigour and radicalism as every other part of public spending”.
Friends who work in DfID tell me of a culture founded on the notion that money must be spent, so the challenge is to find projects to spend it on. (Lots is devoted to expensive external “consultants”.) Were the ring-fence to be lifted, suddenly the equation would be reversed; worthy recipients of aid would have to be rigorously assessed in order to receive funding, and either approved or rejected. DfID would have to continually make the argument for its existence by showing us clear examples of benefit against cost. It is not difficult to see how this would focus the mind and provide better value for money.
That’s not to underestimate the complexity of the issue. Pulling funding from Pakistan, say, would not necessarily force its rulers to shift part of their military budget to fill the humanitarian hole we left behind. There are difficult moral and ethical calculations to be made in every aspect of DfID’s work; the problem is that it is immune from budgetary pressure, and where there is no pressure there is no proper accountability.
According to the most recent poll, more than half of voters in Britain – the majority of whom are suffering financially themselves – believe that the foreign aid budget should be cut. By refusing even to open the debate, and locking it by maintaining the ring-fence, the Government is looking increasingly out of touch.