‘We have written to David Cameron to applaud his decision to stick to the UK’s commitment to overseas aid to the developing world, despite the tough economic times,’ begins a letter to the Financial Times from the bosses of major companies from BP to Vodafone, with PR maestro Alan Parker of Brunswick at the top of the list. ‘It is both humanitarian and in the interests of this country.’
But that’s not the view of seven out of ten respondents in a recent ITV ComRes poll. They think too much — £6.7 billion this year — is spent on overseas aid; only 7 per cent of them believe the government should abide by its aspiration to bring the Department for International Development’s budget up to 0.7 per cent of GDP, the target set by the G8 at Gleneagles in 2005. Liam Fox is now leading the call to scrap the ringfencing of aid, while many other Tory backbenchers want to see spending switched from aid to defence — and Tony Blair has waded in with his own dossier of answers to ‘aid sceptics’ (perhaps not the intervention Cameron was praying for), including the glib factoid that ‘Aid from the UK alone has in the past two years helped over five million more children go to primary school.’
The CBI, meanwhile, has garnered less attention to its call for a £2.2 billion package to ‘build confidence among businesses and consumers’, chiefly by boosting the construction sector and mortgage guarantee schemes at the expense of ‘efficiencies’ in other areas of public spending — which might of course include aid cuts. But if George Osborne’s Budget speech next week does indeed promise to stick to existing aid commitments in full while offering no comfort to the defence lobby and failing to ease the pain of the wider business community, stand by for an unholy row.
The philosophy, mechanisms and results of UK state aid to Africa and elsewhere will come under fierce scrutiny, as will the motives of those who support it. Do Cameron and Osborne really believe in it as a matter of altruistic national duty, or as a matter of picking off wavering Lib Dem votes — as with gay marriage? Do those letter-writing corporate titans sincerely mean what they say (it seems odd that the chief executive of the Premier League and the ‘country retail manager’ for Ikea UK and Ireland have strong views on the matter) or has Mr Parker of Brunswick persuaded them this is a moment to polish their ‘responsible corporate citizen’ badges? Do any of their companies practise ‘tax-efficient supply chain management’ to minimise tax payments in the developing world by shifting profit into low-tax havens elsewhere? Research quoted in Richard Brooks’s new book The Great Tax Robbery indicates that poor nations lose at least $50 billion a year that way.
Aid starts at home
Don’t get me wrong: like most of the guilt-ridden privileged class, I’m not against aid in principle, though I believe it’s most effectively delivered by specialist charities to which citizens choose to donate. I also subscribe to the view that targeted aid, improving farm livelihoods and diminishing competition for resources, can reduce incidences of conflict and mass migration which have such expensive consequences for the West. I’m attracted by Jeffrey Sachs’s argument that if a single day’s Pentagon spending ($1.7 billion in 2008, when he wrote Common Wealth) were diverted to provide mosquito nets for the whole of Africa for a year, the health benefits would generate a significant uptick in economic stability.
But my eye is also caught by the second letter in Monday’s FT, below the heart-on-the-sleeve petition: it’s from the chief economist of the African Development Bank, Mthule Ncubi, who makes the point that, on a variety of development measures including falling disease rates and rising education levels, his continent can now be seen as an ‘aspiring global growth engine’. That doesn’t mean demand for aid will evaporate soon, but it does mean — as intrepid ‘emerging market’ investors know — that the balance of risk and opportunity is changing in Africa’s favour.
So what would I do with the UK aid budget? Stand by existing project commitments, but take on no new ones between now and 2015. Divert the funds released — and perhaps the DfID experts — into development projects for affordable housing, industrial start-ups and alternative farm enterprises in the most depressed parts of Britain. Deliver aid at home first, and we’ll be better placed to fulfil earnest promises abroad.
The missionary’s position
To the Latchmere pub-theatre in Battersea to see a play called Compliance. An unpromising name for an evening’s entertainment, you might think, especially if you work in the City, but it turns out to be a gripping parable by a former financial journalist, Lydia Adetunji, of the moral issues associated with manufacturing in the East of luxury goods for the West — in this case, handbags made in China for $50 to be sold in American department stores for $750. The factory manager is suspected of running illicit shifts for the counterfeit market, exploiting female workers and keeping false accounts. But it’s the high-minded British compliance officer, put there by an American importer to ensure the factory doesn’t ‘embarrass the brand’, who’s in the weakest position; everyone seems to be plotting against him. By the end, the manager may or may not have learned a lesson but the only worker brave enough to complain has moved on to a better–paid job recruiting migrant workers to another factory.
The message (almost echoing Martin Wolf in his 2004 book Why Globalisation Works) is that this harsh model of capitalism is also, for millions, a vital stepping-stone of economic progress, and is best tempered by consumer awareness rather than missionary moralising. And it’s far more effective in alleviating poverty, we might observe, than any debt-laden western government’s focus-group-pleasing token aid programme.
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