finance

Merger would damage UK’s development clout


There are a dwindling number of areas in which the UK has real influence, and does genuine good. International aid is one. The Department for International Development, spun out of the Foreign and Commonwealth Office in 1997, has its flaws. But it has both turned the UK into a global force in development and ringfenced aid from political scandals with which it was once entwined. Now, prime minister Boris Johnson plans to merge it back into the FCO, to better align the £13.4bn overseas aid budget with other policy objectives. Far from furthering his vision of “Global Britain”, however, he risks undermining it.

The UK has been in tangles in the past from using the aid budget to further foreign policy and commercial aims — mostly notoriously when Margaret Thatcher’s government in the late 1980s tied funding for Malaysia’s Pergau dam to a weapons deal. Such incidents ultimately led to a cross-party consensus a decade later to hive off development into its own department. The 2002 International Development Act cemented the transformation by making it illegal to use aid for purposes other than poverty reduction.

DfID has become a highly effective actor in development co-operation. It has provided a strong impetus for development in several countries in Africa, where the bulk of its aid goes. It has successfully used a revamped CDC, the UK’s development finance institution, to funnel public money into private-sector investments to build up local companies and jobs, though more could still be done to extend finance to British businesses investing in Africa.

There is scope to improve DfID’s operations, and co-ordination with the government’s foreign policy arm. A budget that dwarfs that of the FCO means DfID has in some places supplanted diplomatic missions as Britain’s highest-profile representative. Mr Johnson is right to raise concerns about the left arm not always knowing what the right is doing, and to say Britain should not throw development money at governments that abuse human rights. Trade and investment could be more effectively integrated with development policy.

These goals are better served, however, through closer cross-departmental co-operation than by subsuming development back into the FCO. Doing so would dilute the focus an independent development department provides, and deprive it of a separate voice in cabinet. Talented civil servants and field staff may leave. The FCO is not structured to be an executive department managing large sums in aid. While the government says it will stick to its legal commitment to spend 0.7 per cent of gross national income on aid, moreover, this will be more difficult to police if DfID is merged into another department.

Government officials insist the proposed merger will not mean a return to “tied” aid. Yet the dangers of development assistance becoming politicised are clear. Indeed, the plan smacks of a government worried that, since Brexit and the erosion of the multilateral order are weakening traditional levers of British influence, it must compensate by exploiting the foreign aid budget. There is danger that development money becomes a fund that can be used in pursuit of trade deals and other commercial and strategic goals.

The consequences could be not just that the UK loses the soft-power benefits of being a force in development, but that its reputation is actively harmed through a return to 1980s-style scandals. The best route to positive influence for Global Britain is to maintain its leading development role — by leaving it in an independent department.



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