In this article Sam Bowman argues that the biggest mistake made by the government in the Comprehensive Spending Review is the announcement that the Department for International Development's (DfID) budget will be increased by 37 percent by 2015.
The Comprehensive Spending Review was a step in the right direction, but I agree with Philip Booth and others when they say that there should be far more cuts down the line. But the biggest mistake was the announcement that the Department for International Development’s (DfID) budget will be increased by 37 percent by 2015.
It undermines the narrative that the country will be suffering the cuts together and shows a tone-deafness in cutting spending at home while increasing it abroad. But worse, it exacerbates the problem that development aid does an immense amount of harm to the developing world, and this spending increase will only make things worse.
Over 95 percent of the money that the government gives in aid is goes to the governments of developing countries rather than to charities like Oxfam and the Red Cross. Many of the governments that we give aid to are corrupt dictatorships: for example, the top five recipients of DfID government-to-government aid in 2008/09 were Sudan, Burma, Ethiopia, Democratic Republic of Congo and Zimbabwe.
And aid money does not simply correlate with bad governance, it causes it. When governments are not reliant on their own citizens for revenue, they have no need to be accountable to them either.
According to Zambian economist Dambisa Moyo, over 70 percent of government revenues in sub-Saharan Africa come from overseas aid. These governments have no need to implement pro-growth policies that free markets and improve their countries. On the contrary – the poorer they are, the more money they get from the West – aid money incentivizes bad governance and rewards corruption.
But even to a relatively responsible government like India, which receives millions of pounds in aid from Britain, aid is a colossal waste of money. India has had year-on-year growth of over 8 percent so far in 2010, and has its own space and nuclear weapons programmes. It even has its own foreign aid programme. At a time when the future of Britain’s own nuclear programme is in question, how can the Chancellor justify increasing aid money to the Indian government?
By 2015, DfID’s budget will be over £11bn – this is one seventh of the entire amount saved by the Comprehensive Spending Review, and nearly double the amount spent on the police. Overseas aid worsens the situation in the developing world, and Britain cannot afford it. It should be abolished, for the good of the country’s finances and for the world’s poor.
Published in The Spectator here.