Trade, not poverty, could become focus of £1.3bn UK aid pot, watchdog warns

The Guardian
Ben Quinn

Britain’s prime minister Theresa May speaks with India’s prime minister Narendra Modi at the India-UK tech summit in New Delhi last year. Photograph: Prakash Singh/AFP/Getty Images

The UK’s aid watchdog has warned that a £1.3bn pot of UK aid money intended primarily to reduce global poverty could become focused on trade with wealthier economies such as China and Brazil.

The Independent Commission for Aid Impact (Icai) also cautioned that potential suppliers of services to the government’s prosperity fund had been providing advice – often at a UK embassy level – on the designs of programmes in “ways that are not sufficiently transparent”. Icai called on the fund to improve its levels of transparency overall, saying there was too little public information available about its work.

The scrutiny of the fund comes as NGOs and opposition MPs warn that changes to the way British aid is spent and a political and media onslaught could sideline the UK’s focus on helping the world’s poor.

The fund, which runs from 2016 to 2021, comes under the authority of the National Security Council. Its remit is to promote the economic reform and development needed for growth in developing countries, but it marks a new direction for the UK aid programme by increasing the funding available to different government departments and by focusing on middle-income countries. It is also the first major UK aid programme to make explicit provision for benefits to businesses, albeit as a secondary aim.

In Tuesday’s review, Icai said there should be more details of how the fund’s programmes are likely to reduce poverty, given that more than 97% of its resources come from official development assistance.

The review judged that the fund has made significant progress in the short time it has been in operation, describing it as “ambitious” and recognising that it is still being refined.

However, Icai called on the government to review current spending plans to ensure it matched the fund’s capacity to deliver results for people in developing countries, as well as for business.

Evidence reviewed by Icai provided limited detail on how its objectives would be achieved, according to the watchdog.

The bulk of the fund’s spending will be in the form of large (more than £50m) or medium-sized (£10m-£50m) multi-annual projects. While any government department can bid for resources, the lead has been taken by the Foreign Office.

Three prosperity fund programmes have been declared publicly to date. These are: £120m for the National Investment and Infrastructure Fund for India, announced during the prime minister’s visit to India last year, £39m for an Asian infrastructure investment bank announced in China, and £25m for multi-sector spending in Colombia.

Alison Evans, Icai’s chief commissioner, said: “The prosperity fund is a complex and ambitious initiative, and marks a new direction for UK aid.

“It has made significant progress in a short space of time, but to deliver on its aims it must continue to improve its systems and processes, particularly given the risks associated with its current speed of delivery.”

The NGO ActionAid said Icai’s review showed that the fund was failing to prioritise poverty eradication or gender equality.

“There is a risk that the fund could prioritise helping UK companies secure business deals over supporting development, resulting in a return to tied aid by the back door,” said its head of advocacy, Charlie Matthews.

Oxfam’s head of UK policy, Tim Livesey, said: “We are very concerned that the prosperity fund is failing to put poverty reduction [at the] front and centre of its work. The British public expects the UK’s aid budget to be spent reducing poverty, and the fund should work harder to achieve this goal.

“Channelling aid through departments which currently lack the expertise and capacity to fight poverty risks depriving the world’s poorest of desperately needed help.”

A UK government spokesman said: “Sustained economic growth is the only long-term solution to poverty, and the prosperity fund supports the vital economic development needed to help middle-income countries – where more than 60% of the world’s poorest live – to stand on their own two feet and become our trading partners of the future.

“As Icai acknowledges, the fund has made significant progress in a short time frame and we are already implementing the vast majority of Icai’s early recommendations, including on transparency.”