UK seeks reforms on overseas aid spending
International development secretary wants to increase private sector’s role
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