Ministers are making poor choices over how to spend British aid to overseas countries as they struggle to meet the UK’s targets on international development spending, a committee of MPs has found.
In a report published on Thursday that will fuel criticism of the burgeoning aid budget, the international development committee has highlighted a series of problems with how the government spends its aid money.
The report found that two-thirds of the Department for International Development’s annual budget last year was channelled through inefficient organisations such as the UN and World Bank, and that some was even being shuffled between years to hit annual targets.
It criticised the quality of research being carried out by the department, as well as the government’s “contradictory” policy on giving aid to middle-income countries.
Sir Malcolm Bruce, the committee chairman, said: “We are worried that pressure to meet targets to increase overseas development aid could lead to [Dfid] making poor spending decisions.”
Dfid will receive an extra £500m in 2013, taking its budget to £8.2bn, as ministers push to meet the internationally agreed target of spending 0.7 per cent of national income on aid.
This has triggered criticism as other departmental budgets are cut, although David Cameron has headed off the immediate prospect of a rebellion on defence spending by suggesting the Ministry of Defence will be protected in the next spending review.
Gerald Howarth, a Tory former defence minister, said: “The 0.7 per cent target has been plucked out of the air. It is not an accurate measure of what is required.”
It would be very difficult for the government to abandon the target, which Mr Cameron has publicly endorsed.
Malcolm Chalmers, of the Royal United Services Institute think-tank, said: “Having campaigned on this for so long, this would be a difficult moment in the parliament to abandon the 0.7 per cent commitment, just as it is about to be achieved. It would be a very big policy reversal.”
In a sign that concerns about aid spending have now crossed party lines, Sir Malcolm Bruce, a Liberal Democrat, said that Dfid “should be prepared to miss aid targets where there are delays or cancellations to its planned projects and it does not have good value alternatives”.
The report comes a day after Justine Greening, the development secretary, pledged that British aid to war-torn Syria would double to almost £140m.
The committee also attacked the quality of research Dfid carried out, spending on which has soared by 126 per cent in cash terms in the past six years, and is due to hit £320m by 2015-16.
The department has previously come under fire for handing millions of pounds to consultancies that advise ministers on how to spend aid money. Philip Davies, the Tory MP, has previously called the money being spent on consultancy “both beyond belief and beneath contempt”.
MPs criticised ministers for giving millions of pounds to UN agencies and the World Bank, which are difficult to monitor. That spending includes a £300m payment to the World Bank that was moved from 2012 to 2011 to meet the annual target.
Defenders of the department pointed out that it carried out a wide-ranging review of which multilateral agencies it used in 2011, which they say has been used as a model in other countries.
Another problem highlighted by the report is the government’s patchy policies on giving aid to middle-income countries.
The amount of money being spent in places such as Nigeria and Pakistan has risen as a proportion of the total budget, in part as a result of low-income countries getting richer. But the committee criticised the “contradictory” approach of continuing spending in certain countries while cutting the grant to India, which had become the focal point of MPs’ anger.
Dfid defended the way it uses its budget. It said: “We spend money where it is needed, and where it represents value for money.
“We agree with the committee that we must continue to assess multilaterals for efficiency which is why we are reviewing all our multilateral agencies’ performance this year.”
There are signs that some of these policies could yet be reviewed by Ms Greening, who is sceptical of some of the decisions taken by Andrew Mitchell, her predecessor.
One decision Ms Greening may soon take is to institute a “development bank”, which would be able to issue loans and have more freedom over how the aid budget was spent.
Mr Mitchell first drafted such a proposal while in office, and it receives the endorsement of the committee in its report.
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