Overseas aid: an indefensible ringfence

Published in The Guardian (March 14th, 2013)

One of the first rules of opposition is to avoid rash promises that can come back to throttle you in government. It is a lesson Ed Miliband would do well to learn. Time and again political parties, driven by their desperation to underline policies to a largely uninterested electorate, stumble into elephant traps that yawn ahead of them in their path to power.

Look at the difficulties confronting the coalition as a tough budget looms, facing a pincer movement from left and right over public spending. The two wings have very different and obviously self-serving intentions. But when the unlikely lads of Vince Cable and Liam Fox are in alliance against ring-fencing cash spent on hospitals, old people and overseas development, something is most definitely up.

Pledges to protect pensioners, raise spending on health and ringfence the aid budget may have seemed sensible as part of the Tory strategy to detoxify a tainted brand. Three years into government, when it is proving hard to restrain spending under dark economic clouds, they make less sense. If two in every five pounds spent by the state are sacrosanct, the burden of savings falls on the unprotected areas – which, according to the Institute for Fiscal Studies, face cuts of one-third over the next five years as a result.

Welfare is the biggest area of government spending. For all the bold talk of slashing the benefits bill and focusing on the feckless, the bulk of this money ends up in the pockets of pensioners. So ministers are trapped in the absurd position of protecting perks such as free bus passes and television licences for rich old people while reducing benefits for poorer parents of disabled children with an extra room in their home. Such is the dislocating impact of ringfencing.

Unfortunately, this is unlikely to change before the general election. After watching his deputy’s embarrassing apology last year over the Liberal Democrat tuition fees fiasco, David Cameron jokingly told aides to shoot him if he ever suggested a U-turn on his key pledges to pensioners. Such resolve will have hardened since his party’s plummet in the polls, given high turnouts from older voters at elections.

The next biggest spend is health. Cameron is right to stand by his commitment to protect this spending since it makes both economic and political sense. The NHS is facing such intense pressures from our ageing society it must perform an extra 400,000 operations each year, so still faces a financial black hole that must drive greater efficiencies. And this issue remains his party’s achilles heel, something inflamed by mishandled health reforms and the more recent failure to remove a tainted chief executive.

But there is one ringfence that should be removed immediately: the aid budget’s. It is nonsensical to attack welfare dependency at home while encouraging it abroad, especially when even aid groups accept that huge handouts weaken the need for recipient nations to deliver democracy and decent public services. It is one more reason for Ukip’s rise when all three major parties back a profligate policy opposed by a majority of voters, who are becoming increasingly sceptical after seeing local services close while taxes are diverted overseas in pursuit of dubious, outdated policies.

The sums spent on aid will go up by 50%  over the course of the coalition, often more to the benefit of western charities and wealthy consultants than the impoverished and oppressed people they are meant to help. One study found that nearly two-thirds of the world’s 595,000 aid workers admit their projects fail – something I have seen for myself on three different continents. Little wonder there is growing and rightful resentment in the developing world against self-styled western saviours.

As a cross-party committee in the House of Lords argued last year, driving though such vast increases wrongly prioritises spending over results, inevitably reducing value for money and leading to waste. Even key Labour figures now admit it is odd to focus more on targets than on outcomes.

Prime ministers are never short of advice; much of the most vociferous comes from those with their own, often risible, leadership ambitions. Cameron can keep his promises to the global poor. But he should also show he is listening to the voices questioning the wisdom of ringfencing by restraining the ever swelling and increasingly controversial aid budget.

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