Discrepancies in aid spending failing world’s poorest
New Index reveals huge gulf in standards between Whitehall departments spending UK aid, undermining efforts to fight poverty and build public trust
Calls for no new aid to poorly-performing departments in Spending Review
Inconsistent and unfocused aid spending by parts of the British Government is failing the world’s poorest people, according to a new Index released today [04/02/19] by the ONE Campaign.
The ‘Real Aid Index’1 reveals that some Departments and cross-Whitehall funds are spending aid on projects that don’t focus on reducing poverty, don’t always deliver value for money and are opaque in reporting what they spend their aid on.
Others, however, are making a real impact by focusing their aid on reducing poverty, delivering it effectively and making it transparent so the public can track where their money goes.
Romilly Greenhill, UK Director of ONE, said: “This Index shows that while most UK aid does exactly what it’s meant to, some parts of Government need to up their game. If they’re spending aid which doesn’t bring real change for people in poverty, should it really be called aid at all?”
The Index measured the five Departments who spend more than £100 million in aid (DFID, FCO, BEIS, Home Office and DHSC)2, as well as the five biggest funds from each Department to assess their performance against three measures of poverty focus, effectiveness and transparency.
Some of the Index’s findings include:
- BEIS spends only 5% and the FCO 16% of their aid in the countries that need it most – the world’s least developed countries and fragile states.
- £1.5bn of aid is being spent with barely any transparency about where and how it is delivered.
- While UK aid is officially untied, at least £475m of aid comes with strings attached that is has to be spent through UK institutions3.
- £115m of FCO aid is being spent to subsidise relatively affluent students going to university in the UK.
- Three of the five largest (in cash terms) programmes within the Newton Fund4 are based in China and focus on nitrogen in farming and research on genotyping. These are specifically Chinese domestic priorities, not global poverty reduction which aid is meant for.
ONE’s analysis shows that while many departments and funds need to improve, the vast majority of UK aid does make a real change for the world’s poorest. For instance, UK aid to the Global Fund – which is funded by DFID and received top scores across the board – has saved 2.3 million lives.
DFID, who is responsible for the largest proportion of UK aid5, scored the highest in all areas. Other departments and funds also performed well. The Department of Health, who fund research on preventable diseases, and the International Climate Fund, a cross-governmental fund, spend their aid on projects which reduce poverty.
BEIS performed very well on transparency, with information about the aid they spend being made accessible and easy to monitor.
Greenhill continued: “The lion’s share of UK aid is poverty focused, effective and transparent – it’s real aid that we can be proud of. But some parts of Government don’t adhere to these principles – in short, they’re not delivering ‘real aid’.
“If their aid is going to richer countries or on programmes that don’t address poverty, then they’re not only failing the people it’s meant for, they’re letting down the UK Taxpayer.”
The Index was produced in response to the increasing share of aid being allocated to departments other than DFID. By 2020, around 30% of UK aid will be spent by other government departments.
2019 presents Government with an opportunity to address the concerning findings of the Index, with the Spending Review deciding on financial priorities for the next three to five years.
“As collaboration becomes the new normal for Government departments spending UK aid, every penny must be ‘real aid’.” Greenhill emphasised: “As the Treasury is deciding who gets what in this year’s Spending Review, they shouldn’t allocate any more aid to departments which don’t deliver ‘real aid’.”
The Index outlines the key recommendations that all Whitehall Departments and Funds should follow in order to be ‘real aid’. Specifically:
- All aid should have poverty eradication and inclusive economic development as its primary purpose, tackle the issues that have the greatest impact for poor people, with at least 50% of the aid focused on LDCs and fragile states.
- All aid should be spent effectively as possible, remaining untied both in policy and practice, with contracts open to companies of all countries. Aid must support the priorities of local governments and citizens, and should target the results that matter most to people in poverty.
- All aid should be open to the UK public, developing country governments and citizens. All the Departments should accelerate progress towards being ranked ‘very good’ or ‘good’ on the Aid Transparency Index.
Notes to Editors
- The Real Aid Index assesses each UK Department that spends more than £100 million of ODA each year against the principles in the Real Aid Charter, which calls for all UK aid to be focused on poverty eradication, spent effectively as possible and transparent to the public, developing country governments and beneficiaries. Using desk research based on information published by each Department, secondary official sources such as reports by ICAI, NAO, the IDC and others, and additional information provided by the Departments, we have given each Department a traffic light rating against each principle. We have also separately analysed the top 3-5 programmes in each Department, and this information is available in the online interactive tool available here. The methodology of how the findings of the Index were arrived at are here.
- Department for International Development (DFID), Foreign and Commonwealth Office (FCO), Business Energy Industry and Strategy (BEIS), Home Office and the Department of Health and Social Care (DHSC).
- Tying aid to the goods and services of the donor country is illegal in the UK. There is good reason for this: aid tying can increase the costs of development projects by 15 to 30 percent and limits opportunities for local procurement in developing countries. Research from Eurodad found that rich countries are still awarding more than half of their procurement spending contracts to companies from their own countries, in some cases because of procedural restrictions that give companies from the donor country an unfair advantage.
- The Newton Fund’s objective is to develop science and innovation partnerships that promote the economic development and social welfare of partner countries. However, given that of the countries they work with, only two are fragile states and none are LDCs, and that three of their largest projects are based in China, the fund achieved a low score for poverty focus in the Index.
- DFID spent 72.5% of all UK ODA in 2017