Overseas Development Aid: Budget

Baroness Ritchie of Downpatrick Excerpts

Wednesday 27th October 2021 Lords Chamber

Asked by

[Baroness Ritchie of Downpatrick]

To ask Her Majesty’s Government what steps they will take to ensure the Overseas Development Aid budget is retained at 0.7 per cent of Gross National Income in (1) this financial year, and (2) future financial years.

[Baroness Ritchie of Downpatrick (Lab)]

My Lords, I thank the Minister, the noble Lord, Lord Collins, from the Labour Front Bench, the noble Lord, Lord Purvis, and other noble Lords who are here this evening for this very important debate. I, for one, having voted on the legislation in the other place back in 2014 and 2015, believe that the international development or overseas aid budget should be retained at 0.7% of GNI. I do note that today, the Chancellor committed to UK aid getting back to 0.7% of national income in 2024. However, I believe that that is simply kicking the can down the road, because there is absolutely no commitment with that given undertaking, and it is what matters now. What is the UK going to do today for the people and communities who have been worst affected by the Covid pandemic and climate change?

On the impact of the cuts on people and the planet, the FCDO’s annual report highlights the costs of dropping the commitment to 0.7% of GNI. Between the 2020-21 financial year and 2021-22, aid to Africa fell by 51%, and funding to the Middle East was cut by 74%, including 80%-plus cuts to Lebanon, Syria and Yemen. There were also cuts to Asia. The lowest-income countries were hit hardest, experiencing £1 billion in cuts, compared with £209 million in cuts to middle and upper-middle-income countries. The scale of the cuts was so deep that even funding for strategic priorities such as education, humanitarian responses and the FCDO’s climate funding were not immune.

We have to consider the impact of the cuts on the UK’s reputation. Aid is widely acknowledged as a central facet of how a country is perceived, and its influence around the world. Our international partners and allies are rightly concerned about this Government’s continued commitment to international development, but also to internationalism more generally. That point was made by the previous Minister, the noble Baroness, Lady Sugg, when there was a Department for International Development. It is worth noting that ICAI’s latest review of the UK’s pandemic response illustrates the damage done by the cuts to the UK’s response and therefore to the international response.

I remind your Lordships’ House that the 0.7% commitment is enshrined in law. I can well recall, when I was a Member in the other place back in 2014-15, that we implemented that Act. It came to this House, and the noble Lord, Lord Purvis, brought forward that piece of legislation in this House at that time. That Act placed a statutory legal duty to ensure that the United Kingdom hit the target of spending 0.7% of gross national income on official development assistance every year. If the 0.7% target were missed in any year, the Foreign Secretary was required retrospectively to explain why in a Statement to Parliament.

Until Parliament changes that law on the statutory duty to meet the 0.7% target, the Government must aim to hit it. They cannot deliberately aim to spend 0.5% and miss the target. The announcement in today’s Budget definitely does not explain it at all: it simply kicks the can down the road. The Government think that, by doing that, they will get off the hook. I am absolutely sure that those countries that rely on aid from the UK Government will not be letting them off the hook, and those many charitable organisations and aid agencies that do enormous work on our behalf in all the developing countries will not be letting us forget it. In fact, they have recently written to the Chancellor and the new Foreign Secretary to ask that the following are in addition to the 0.5% ODA budget.

The list includes rechannelled special drawing rights, excess vaccine donations and Sudan relief aid, because earlier this year, the International Monetary Fund agreed to a special issue of $650 billion in special drawing rights to help lower and middle-income countries respond to the coronavirus pandemic. The UK’s allocation of this is more than that of all low-income countries combined. Many rich countries, including the UK, are working out how to rechannel their SDR allocation to LMICs where they can do the most good. This is done at no cost to the donor, who simply lends their reserves. When the 0.5% budget was first announced one year ago, it was not known that the UK would receive this additional finance. Channelling SDRs carries minimal costs to the UK and supports the objective of promoting global economic recovery. Therefore, I believe it is critical that SDRs be channelled to support the poorest countries, and that that is additional to the 0.5% ODA budget. I would like the Minister to address that particular issue this evening.

It is welcome to see that the UK has committed to donate 100 million vaccine doses to the rest of the world, and that the Government promised that they would be additional to the financial year 2021-22 £10 billion aid budget. This recognises that vaccinating the world supports the UK’s ability to build back better from the pandemic and be protected from future variants. However, it is worth remembering that the UK and other wealthy countries have contributed to the global vaccine shortage by overordering and hoarding supplies. The UK has blocked a proposed TRIPS waiver at the World Trade Organization that would increase global vaccine production and address vaccine inequality faster. It is therefore critical that these vaccine doses are shared as quickly as possible to maximise their impact, and that any donated Covid-19 vaccine doses are additional to the 0.5% ODA budget in 2021-22 and in all future financial years.

Thirdly, Sudan has reached decision point under the Heavily Indebted Poor Countries initiative and received significant debt cancellation. While debt relief can be counted as ODA, it does not represent meaningful net benefit to Sudan and does not impose additional costs or effort on the UK. So it should have been written off years ago; its forgiveness comes at no real cost to the UK, so it is critical that debt relief for Sudan and other eligible countries be additional to the 0.5% ODA budget.

Finally, in the week before COP 26, it is important that the UK delivers on its wider international responsibilities by providing greater financial support to poorer countries already on the front line of climate breakdown. I urge the Minister to address these various aspects, whether climate change mitigation, debt relief for Sudan, excess vaccine donations or rechannelled special drawing rights. In this regard, I pay tribute to my noble friend Lord Collins on the Front Bench, who has led on this issue for the Opposition for several years. He has done a magnificent job in highlighting the plight of those who live in developing countries and pinpointing the need for the Government to do more and reinstate that budget to 0.7% of GNI.