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How a UK aid budget cut will hollow out a world reeling from COVID-19

by Ian Goldin | @ian_goldin | Oxford University
Friday, 20 November 2020 12:15 GMT

FILE PHOTO: Internally displaced Syrian students walk together in Atmeh IDP camp, located near the border with Turkey, Syria March 4, 2020. REUTERS/Khalil Ashawi/File Photo

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* Any views expressed in this opinion piece are those of the author and not of Thomson Reuters Foundation.

The pandemic has caused the worst development disaster in our lifetimes. Here’s why Britain should increase - not slash – foreign aid and relieve debt crippling poor countries

Ian Goldin is Professor of Globalization and Development at Oxford University and co-author of Terra Incognita: 100 Maps to Survive the Next 100 Years and Development.

Britain is planning to slash billions from its overseas aid budget next year. There could not be a worse time to cut the UK aid budget from 0.7% to 0.5% of national income.

In practice this would mean cutting it by a third as the British economy is expected to contract by 11% in 2020 and aid is calculated as a share of national income.

The pandemic has caused the worst development disaster in our lifetimes, as trade, tourism, migrant remittances, investment and spending has collapsed, and along with it jobs and incomes, and only a massive increase in aid will stop a dramatic reversal in poverty and derailing of the universally agreed Sustainable Development Goals.

Already, the World Bank has estimated that over 100 million people are being pushed into extreme poverty this year, with poor people in poor countries worst affected.

The UK has had a proud record of being among the most effective donors, specifically targeting those in need as well as providing critical support to the achievement of global programmes, such as malaria eradication and the provision of affordable vaccinations.

At a time when aid has never been more needed cutting aid would be a devastating blow to the many who depend on it. It also would end Britain’s longstanding international leadership on aid and undermine its ability to build coalitions of donors to address critical challenges.

British ideas and financial leverage have contributed to many of the most successful development breakthroughs of recent decades, including on infectious diseases, malaria, girls’ education and poverty reduction.

At a time when the world is watching to see how Britain rises to the challenge of Brexit, and whether it will be able to contribute to resolving critical global challenges, it will be a sign of collapse in our moral commitment and operational ability, making a mockery of the Prime Minister’s claim that Brexit would allow for a resurgent Global Britain.

A cut in aid which is accompanied by the already promised equivalent rise in military spending would cement the view that we are reverting to an overreliance on hard power, further undermining our global standing among countries who care more about the humanitarian assistance and development support provided by Britain.

This cut would undermine the historic opportunity for UK leadership provided in 2021 by the G7 Presidency and the COP26 Climate Summit.

In the wake of the Covid-19 these could provide an opportunity to reset and reenergise global cooperation to create a more sustainable and inclusive world. This is essential to prevent future pandemics and address the other critical shared challenges, including those arising from climate change and from rising protectionism and nationalism, which particularly threaten poor people and poor countries.

The argument that money is needed at home does not stand. Over $12 trillion has been found by the rich countries for themselves, of which less than 1% is being allocated to development needs. In the UK borrowing is approaching £300 billion this year, which at record low interest rates makes sense. Even the IMF recommends more borrowing rather than austerity for the rich countries.

It would be a sorry reflection of the British government’s priorities if it makes the poorest of the world pay the price of an ideological decision to not raise further debt, or raise taxes on the rich, especially when they have seen unprecedented windfall gains from soaring stock markets, while it has found the funds to provide the biggest boost to the military since the Cold War.

Poor countries do not have any options as they are unable to borrow at anything near the scale of what is required to support their citizens without incurring an economic crisis.

Nor can they raise taxes on their moribund economies to raise the revenues they urgently require. They depend on reductions in their debt payments to free up finance to fund urgently required domestic needs, as well as for the international distribution of vaccines, all of which requires more aid.

Far from withdrawing, this is a time to step up the commitment to development. Britain should work with others, as it has in the past, to develop a multilateral debt reduction package to reduce the crippling debt which faces poor countries, as it should in overcoming vaccine nationalism and supporting the urgent humanitarian needs of developing countries.

Well directed aid is the difference between life and death for poor people. At a time where we have shown greater solidarity within our countries, we need to show more support for poor countries, not less.

The proposed £5bn cut in aid would have ripples which go well beyond the current time. It would demonstrate that despite the statements and manifesto commitments the Government is prepared to sacrifice its support for poor people in poor countries on the altar of austerity.

What is introduced as a temporary cut would become a permanent stain on the government, undermining its credibility, humanity and leadership at home and internationally.