The Foreign & Commonwealth Office, which sponsors the British Council © Dreamstime

Ministers in cash-strapped departments are trying to use the ringfenced aid budget to mitigate cuts to their own expenditure, as George Osborne prepares to launch his landmark Spending Review on Wednesday.

People close to Spending Review discussions say that the share of Official development assistance (ODA) spent by the Department for International Development is set to fall to its lowest-ever level.

One Dfid official said ODA — worth about £12bn in 2014/15 and on which the government is legally bound to spend 0.7 per cent of gross national income — is being treated by other departments as a “slush fund”.

But others in Justine Greening’s department are more sanguine, arguing that it makes sense for development spending to go towards boosting trade and investment, as well as peacekeeping and other security measures.

The Foreign & Commonwealth Office, which unlike aid and defence spending offices is not ringfenced, has proposed several schemes for how ODA could be used to minimise its budget cuts and so help protect its diplomatic network.

One proposal is to expand the office’s “Prosperity Fund”, a dedicated slice of ODA money spent on promoting trade and investment in countries that include Brazil, China, India, Mexico, South Africa, South Korea and Turkey.

In 2014, the Foreign & Commonwealth Office spent £343m in ODA out of a total budget of £1.7bn, a figure that officials say will increase. It said it was confident that ways could be found to protect the diplomatic network.

The business department is pressing for more ODA money — up to £100m — to be allocated towards research and development in science that could help people in developing countries. Specifically, ministers hope they can set up a fund to pay for UK research towards developing and distributing vaccines, for example to help stem outbreaks of Ebola.

The proposal would be a form of aid but it would also help fund scientists in the UK — easing the pressure on the Department for Business Innovation & Skills at a time of steep cuts.

The model for the idea is the £375m “Newton Fund”, launched three years ago to support “science and innovation partnerships with researchers in developing countries”.

The Newton Fund was aimed primarily at economic development and saw the transfer of money from Dfid to the Department for Business Innovation & Skills. That cash counted towards the UK aid target but was also counted as part of the science budget.

Some Dfid officials are frustrated with the efforts by the FCO and other departments to push the boundaries of what can count as ODA, which is defined by the OECD, a think-tank.

But one senior Dfid figure pointed out that the UK was lobbying the OECD to change its definition of ODA so that it included more projects related to defence and security.

At present, for example, funding for a charity to remove landmines would count as ODA, but not if done by the Ministry of Defence.

Other departments, such as the department of energy and climate change, are also looking to count more of their functions as part of ODA.

The strategy behind Dfid — and the thinking behind development more broadly — has shifted since it was founded by the Labour government in 1997. In its early days FCO some officials dismissed Dfid as a “giant Whitehall NGO” because of the alleged influence of aid charities on spending decisions.

Today, however, Ms Greening speaks of moving “beyond aid”, where money is still spent on health and education in poor countries but the focus is increasingly on private-sector development, governance and security.

“We have no problem if the chancellor wants other departments to spend more of the aid budget, so long as they work with us”, said a Dfid aide.

The UK is the second-largest provider of ODA, after the US.

In 2014, 85.8 per cent of aid spending was accounted for by Dfid, down from 87.8 per cent in 2013, and set to fall further. The cash amount spent by Dfid may not fall, however, since ODA spending is linked to the performance of the UK economy; as national income rises so, too, does ODA funding.

The “beyond aid” shift partly reflects political pressure on the department at a time when other domestic-focused ministries are facing steep cuts.

But it also speaks to how unconditional aid is seen by many development experts as less important than it once was, with many economists stressing the need to tackle corruption and insecurity before aid can work well.

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