British aid cuts have been imposed in a totally chaotic and unethical way depriving the aid budget of any coherence, the former lead development policy adviser to then foreign secretaries Liz Truss and Dominic Raab has said.
Stefan Dercon, who also worked as the chief economist at the Department for International Development between 2011 and 2017, claims ministerial decisions to load more of the costs of asylum seekers in the UK on to the aid budget has “got out of hand”, and led to “dreadful moral choices”.
He predicts less than a third of the UK aid budget will be spent on bilateral overseas aid next year. He said it could no longer be regarded as a development budget, but “increasingly a budget to plug holes” in other Whitehall budgets, or a cashpoint for departments that cannot control their own costs.
He said decisions by ministers, starting with the former chancellor George Osborne, had amounted to a blank cheque for domestic departments, such as the Home Office, since they knew the first year cost of an asylum seeker could be loaded on to the aid budget without any accountability over spending efficiency.
Dercon, giving evidence to the international development select committee this week, also lambasted the way in which the aid budget was cut from 0.7% of GDP to 0.5%. He said: “One of the things I had to do under Dominic Raab, after I had been hired, was within a few weeks our budget was cut by £4bn when we moved to 0.5%.
“I have been staring at these spreadsheets for ever. There is no reasonable way of cutting billions off a budget. You are locked in with contracts. You cannot do it. You cannot necessarily optimise for value for money. You make some programmes unviable. It is just chaos – total chaos … the whole idea of having a coherent, consistent portfolio of development action has disappeared.”
He said the UK’s problem had been compounded by loading much of the cost of an asylum seeker on to an aid budget supposedly devoted to eradicating poverty overseas. Britain, despite opposition from the US, put fierce pressure on the development assistance committee of the Organisation for Economic Co-operation and Development (OECD), the body responsible for regulating official development assistance (ODA), to broaden its definitions, he revealed.
He said: “There were repeated attempts to put strong pressure on our representatives in the DAC to broaden the rules and make them broader and broader, so we can put more and more spending on it. Sometimes you could say that there is a reasonable case to be made. Other times, it got very out of hand.”
He added that the government’s public position that OECD rules required the government to fund all first-year asylum costs from the ODA budget was “actually untrue”. The rule had been imposed by the UK Treasury, he disclosed. He said: “We did not have to put these costs on the ODA budget. We do, and therefore we make an ethical choice to say that we allow the needs of this group to crowd out support for extreme situations in Africa or Asia.” The decision was not ethical, he said.
Figures given to the select committee show the cost for each asylum seeker to the aid budget has risen from £10,000 in 2016 to £27,000 in 2020, partly because ministers have loaded more of the costs, such as an asylum seekers’ health costs, on to the aid budget.
Dercon predicted asylum costs to the ODA budget would be between £3bn and £5bn next year, leaving only £3bn for UK bilateral spending and £4bn for multilateral spending.
Dercon, now a professor of economic policy at the Blavatnik School of Government, said the bilateral aid budget had been decimated. The loading of the growing asylum costs on to the aid budget had made it impossible to manage since many of the figures, for instance about the future health costs of an asylum seeker, were Treasury estimates, and the Foreign Office had “very little idea about what the costs are or how they were being managed”.
The development minister, Andrew Mitchell, was appointed partly to get a grip on the way in which the aid budget has been raided. But Dercon’s insider account underlines how hard Mitchell may find it to restore coherence let alone restore the UK to a development superpower.
The combination of an increasing number of asylum seekers from Ukraine and Afghanistan, more of the costs of each asylum seeker being loaded on to the aid budget and the aid budget being cut from 0.7% of GDP to 0.5% has proved a lethal combination.
