UK aid from 0.7% to 0.5%

There has been a UK government announcement about reducing aid from 0.7% to 0.5%.

The argument is that since the economy is struggling1, we ought to spend less on aid (“charity begins at home” and all that). But the idea of paying a percentage is that is goes down when the economy is suffering anyway. So reducing the percentage reduces the amount twice over. Also, since the economy has shrunk, reducing the %age spent on aid claws back less money than it first appears, it claws back 0.2% of less that it would have.

Of what is it 0.7% or 0.5%?
It is a %age of the Gross National Income (GNI). What is GNI? That is the new term for Gross National Product (GNP) which is in turn a slightly tweaked version of the Gross Domestic Product (GDP). The GNI is as near as damnit the same as GDP. The GDP is all the goods and services we make in the UK, so the aid budget is a proportion of that. GDP is about £500 billion, so the aid budget is about

In 2016, the UK spent £13.4 billion on overseas aid.
In 2019 the aid budget was about £15.2 billion.

Why 0.7%?
0.7% is the UN’s target for all developed countries and has been since 1970.
That was a commitment from nine members of the Organisation for Economic Co-operation and Development’s development assistance committee.
The UK government signed up to the target in 1974 but it only achieved it for the first time in 2013.
In 2015 it was put into UK law.

How much is it going down?
It is expected to go down by £2.9bn due to the decrease in the economy, to £12.3 billion and the reduction to 0.5% will bring it down to about £8.8 billion. An overall reduction of about 42%.

What has the government said?
The government announcement said that aid will be combined into diplomacy. That suggests it will not be spent on the items it was spent on. Instead it will go to:

  1. fund climate change related activity in developing countries;
  2. spending on Covid-19 measures in developing countries;
  3. education of girls;
  4. an umbrella of measures in health (is also item 2), education (is also item 3), resilience (is also item 5), low carbon tech (is also item 1), agriculture [probably what everyone thinks of as sustainable aid], economic development (is also item 7), conflict (is also item 6) and poverty [the other view of aid as unsustainable];
  5. democracy and governance;
  6. international collaboration;
  7. trade and investment opportunities.

That sounds like some aid will be diverted to climate change, some to the Covid-19 expenditure, some to supporting other governments, some to supporting large international charities and some to compensating for leaving the EU.

They also said there will be performance assessment. This has been called for in the past but it is not yet clear how performance will be measured.

In his speech he talks mostly about the money going on climate change, military peacekeeping, cybersecurity,Covid-19 and education.  So there won’t be anything like so much spent on what people consider as ‘aid’, and what there is will be mostly diverted toward national security measures.

There was no reference to the Conflict, Stability and Security Fund, nor to the Stabilisation Unit.

Useful info:
– Full Fact UK spending on foreign aid 15 February 2018 fullfact.org/economy/uk-spending-foreign-aid

1  “The UK is facing the worst economic contraction in almost 300 years, and a budget deficit of close to £400 billion – double that of the last financial crisis” https://www.gov.uk/government/speeches/official-development-assistance-foreign-secretarys-statement-november-2020