UK seeks re­forms on over­seas aid spend­ing

In­ter­na­tional de­vel­op­ment sec­re­tary wants to in­crease pri­vate sec­tor’s role

The Star (St. Lucia) - Business Week - - FRONT PAGE - BY HENRY MANCE, FT COR­RE­SPON­DENT IN LON­DON

The UK wants to change the in­ter­na­tional def­i­ni­tion of govern­ment aid spend­ing to in­clude prof­its from over­seas in­vest­ments, in the lat­est ef­fort to in­crease the role of the pri­vate sec­tor in de­vel­op­ment pro­grammes

The UK wants to change the in­ter­na­tional def­i­ni­tion of govern­ment aid spend­ing to in­clude prof­its from over­seas in­vest­ments, in the lat­est ef­fort to in­crease the role of the pri­vate sec­tor in de­vel­op­ment pro­grammes.

The move, an­nounced by Penny Mor­daunt, the in­ter­na­tional de­vel­op­ment sec­re­tary, would po­ten­tially al­low the UK to re­duce new aid fund­ing from the Trea­sury, while still meet­ing its com­mit­ment to spend 0.7 per cent of na­tional prod­uct on aid.

Labour de­nounced the pro­posal as “an out­ra­geous dis­tor­tion of the coun­try’s over­seas de­vel­op­ment pro­gramme”, which would “do noth­ing to end global poverty or re­duce in­equal­ity”.

The UK govern­ment’s pri­vate sec­tor in­vest­ment arm, CDC Group, has made prof­its af­ter tax of £1.15bn in the past five years. Un­der Ms Mor­daunt’s pro­posal, such prof­its in fu­ture years would be counted as part of the aid bud­get, which was £14bn last year.

The govern­ment has wanted to re­form aid spend­ing, which was cham­pi­oned by for­mer prime min­is­ters Gor­don Brown and David Cameron, but which has been at­tacked as waste­ful by rightwing MPs.

Scrap­ping the 0.7 per cent bench­mark would re­quire an act of par­lia­ment — and would con­tra­dict last year’s Con­ser­va­tive man­i­festo. The UK also wanted to use its aid bud­get to help the Car­ib­bean is­lands af­fected by Hur­ri­cane Irma last year, but was un­able to change OECD rules, which de­fined the ter­ri­to­ries as too wealthy to qual­ify as aid re­cip­i­ents.

Chang­ing the rules on what money qual­i­fied to be used for govern­ment aid spend­ing would re­quire the agree­ment of other mem­bers of the OECD, the Paris­based in­ter­na­tional or­gan­i­sa­tion.

Ms Mor­daunt, who took on of­fice in Novem­ber, has been look­ing at ways of co­or­di­nat­ing spend­ing with other govern­ment de­part­ments — to tackle is­sues such as wildlife smug­gling and ter­ror­ism.

In a speech on Tues­day, she also said the UK govern­ment would work with as­set man­agers to make it eas­ier for Bri­tish cit­i­zens to in­vest in poor coun­tries. “Why can’t Bri­tish peo­ple go to their bank and in­vest their sav­ings and pen­sions in prod­ucts that will in­vest in the Global Goals [For Sus­tain­able De­vel­op­ment]?” she said. Pri­vate in­vestors would need “ac­cu­rate in­for­ma­tion on how their money is used and the im­pact it de­liv­ers”.

Ms Mor­daunt — a Brex­iter who dur­ing the ref­er­en­dum cam­paign wrongly claimed that the UK would not be able to veto Turk­ish mem­ber­ship of the EU — used her speech to link aid spend­ing and the vote to leave the EU.

Brexit vot­ers were not “Lit­tle Eng­lan­ders”, but be­liev­ers in trade rather than govern­ment as­sis­tance, she in­sisted. “You’d be wrong to in­ter­pret Brexit as pro­tec­tion­ist, na­tion­al­ist or selfish — just as you’d be wrong to in­ter­pret the scep­ti­cism that some of the pub­lic have about as­pects of UK aid to a lack of love or logic on their part.”

Ms Mor­daunt re­fused to give whole­hearted back­ing to Mrs May’s Che­quers Brexit pro­posal. She said that Mrs May “can count on my sup­port”, but added that “we don’t know where this is go­ing”.

Penny Mor­daunt, in­ter­na­tional de­vel­op­ment sec­re­tary, hopes to re­duce new aid fund­ing from the Trea­sury while still meet­ing com­mit­ments on aid spend­ing © Tolga Ak­men/AFP

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