Overseas Development Aid: Budget

Lord Collins of Highbury Excerpts

Wednesday 27th October 2021 Lords Chamber

[Lord Collins of Highbury (Lab)]

My Lords, I too thank my noble friend for initiating this very timely debate, certainly as the Chancellor has spoken today. I also reflect on the consensus that the noble Lord, Lord Purvis, referred to, because there has been consensus across this Chamber on this issue. I would also like to praise David Cameron because he set the framework for our development support—the SDGs and the 2030 agenda—which this Prime Minister has completely ignored. We should reflect on that.

Days before COP 26 and when aid is needed most to recover from the pandemic, the announcements today reveal that the world’s poorest and most vulnerable face at least three years of vast and deadly cuts to life-saving aid. As the right reverend Prelate said, today is also confirmation that the Government are knowingly and willingly continuing to break a Conservative manifesto promise and continue to ignore the UK’s legal aid spending obligation of 0.7% of GNI. As noble Lords have pointed out, maintaining 0.7% would have resulted in substantial cuts, but to impose 0.5% without any plan, impact assessment or clear objectives is reckless.

As my noble friend Lady Ritchie highlighted, even funding for the strategic priorities was not immune: education was cut by 58%, humanitarian responses by 49% and the FCDO’s climate funding by 35%.

In March, Rishi Sunak praised the new IMF special drawing rights allocation for giving additional financing to low-income countries to help their pandemic response and recovery. Many rich countries, including the UK, have been working out how to rechannel their SDR allocations to low to middle-income countries, where they can do the most good. As my noble friend Lady Ritchie said, this can be done at no cost to the donor, who simply lends their reserves. However, the Treasury has confirmed that it will score some of this to the ODA budget. We are the only major donor to do so. Such a move will not leave low-income countries better off, as it will be matched by cuts to other parts of the aid budget. The only impact of UK commitments to recycle SDRs will be to reduce spending on other priority areas, such as health, education, water and nutrition—areas that have already been heavily cut as a result of the shift from 0.7% to 0.5%. I ask the Minister what assessment has been made of the impact of such further cuts.

On climate change, we heard today that the Government have committed £6.6 billion for the next three financial years. Given that this comes out of the ODA and makes up about a sixth of the budget for each year, what other priorities will suffer? Whatever priorities Liz Truss espouses, she will be held back if she must cut her department’s activity every time a Treasury accounting exercise reduces the real ODA budget. It is in this context that we have to see today’s announcement that the ODA fiscal tests are forecast to be met in 2024-25, which will see potentially a return to 0.7%.

Today, what we have heard from the Chancellor is that he gives with one hand and takes with the other.