Matthew Sinclair is a Senior Consultant at Europe Economics.
Earlier this week, ConservativeHome published the results of a survey of its members which are interesting in the detail but not really surprising in the big picture. They revealed, in essence, that respondents strongly support humanitarian aid in responding to natural and man-made disasters.
They then grow steadily more sceptical as you move through less urgent – though not necessarily any less important – healthcare interventions and into activity which can broadly be described as “development”, even when it is framed in conservative terms.
The reason this should not surprise us is that Conservative voters are the same people who respond generously to appeals for donations when there is a disaster. People are simply putting their mouth where they have already put their money.
How, then, can we reconcile this with the scepticism frequently expressed towards foreign aid as a whole, particularly in polls which ask people to choose between different priorities for public spending? I don’t think the answer is some kind of false consciousness. I think that Conservative Party members are right in their priorities, and point the way to a foreign aid compromise which might help the Government with the serious fiscal challenges it is facing.
The vast majority of foreign aid is not spent on humanitarian assistance. Other chunks of it are spent on education (not necessarily on the best education available to the world’s poorest), other healthcare interventions (including some good ones) and in attempts at the broader nation-building – “development” – of which Conservatives are rightly much more sceptical.
People like humanitarian assistance. They value the immediate, visible results of feeding the starving or treating the sick to the longer-term and fundamentally more dubious project of development. Even though it might be less satisfying for those involved to treat the symptoms, not address the root causes of political dysfunction and economic stagnation, the taxpayers who bear the cost are humble about our ability to remake other countries in our own image.
I think sceptical experts share that opinion too. Angus Deaton – who recently won the Nobel Memorial Prize in Economics – expressed his scepticism at the effects of foreign aid while not diminishing its role in saving lives:
“Unfortunately, the world’s rich countries currently are making things worse. Foreign aid – transfers from rich countries to poor countries – has much to its credit, particularly in terms of health care, with many people alive today who would otherwise be dead. But foreign aid also undermines the development of local state capacity.
This is most obvious in countries – mostly in Africa – where the government receives aid directly and aid flows are large relative to fiscal expenditure (often more than half the total). Such governments need no contract with their citizens, no parliament, and no tax-collection system. If they are accountable to anyone, it is to the donors; but even this fails in practice”.
Concerns over the effects of aid flows on incentives and political institutions are naturally less relevant when you are talking about immediate matters of life and death. In a major disaster, even places like Louisiana which are – by international standards – amazingly rich, depend on external support. Western intervention can save lives much better (and with many fewer unintended consequences) than it can reform countries which lack the institutions to support healthy economic growth with large injections of money (if only because long-term programmes mean the venal have more time to elbow aside the needy).
None of this means we should not be cautious that we are spending humanitarian aid money wisely. Read Ian Birrell’s reports about Haiti (see here and here, for example). Listen to BBC File on 4 investigating where UK aid money is going in Syria. Every area of public spending needs a watchful eye, and humanitarian assistance is definitely no exception. Equally, it does not mean that all support for institutional or legal improvements in other economies is a bad idea. As a general principle though, saving people in desperate need will be better value than more ambitious attempts to remake poor countries.
I therefore think a foreign aid compromise is actually possible. The two sides are not as far apart as they often seem. A few years ago, I wrote for this website recommending a middle-ground that would represent a generous UK position but respect the pressure on other budgets at home.
The best middle ground would seem to be giving foreign aid the same kind of treatment that other undeniably important budgets like science have received: a cash freeze. That would save billions, and take the heat out of public frustration that international development is getting better treatment than budgets here at home. It would still leave plenty of money in the budget that we can use to take the best opportunities to help people.
Fraser Nelson recently described how something similar could be done to deal with the problem the Government is facing over tax credits:
“Coming after the strivers saves £3.5bn. Osborne plans to increase the foreign aid budget by £3.5bn over the course of this parliament. So let’s not pretend that this is needed to cut the deficit – it’s about the size of the surplus. And let’s not pretend that there is no other way: the foreign aid budget could be ‘protected’ – i.e frozen – at its current record high levels.”
The right reform seems clear. First, abandon the 0.7 per cent target and use the savings to address some of the most difficult parts of the domestic fiscal adjustment, but keep the budget at its current high level (while many unprotected budgets face cuts). Second, redirect the foreign aid budget toward humanitarian assistance, and vaccinations and the like, at the expense of development.
The Government can live up to its pledges to support those in the direst need, it can continue to advocate for reforms that will make it easier for people in poor countries to trade their way out of poverty and it can be proud of what it has achieved. If something has to give (there is no easy way out of the current mess) in order to restore the fiscal adjustment to health, make it reforms to current aid policy. Make it an aid policy which does less, but does what aid can do most effectively and what the taxpayers picking up the bill support: saves lives.