Select committee says government should miss 0.7% target rather than make poor decisions in order to hit it
Britain is in danger of wasting hundreds of millions of pounds in inefficient aid spending as the government seeks to meet a UN target by the end of this year, a committee of MPs will warn. The government should be prepared to miss the UN target, which stipulates that 0.7% of gross national income (GNI) should be spent on aid by the end of this year, in order to avoid making poor decisions, according to the commons international development select committee.
In a report on the accounts of the department for international development (DFID), the committee warns that the government is increasing the funds it sends to multilateral organisations, such as the UN and the World Bank, which have higher administrative costs.
The report says that in 2011-12 around two-thirds of the department’s spending was channelled to multilateral organisations, while funding to individual governments has fallen. The department “rescheduled” payments of £450m planned for 2012, including a payment of £300m to the World Bank, in order to meet Britain’s Official Development Assistance target by the end of 2011.
Sir Malcolm Bruce, the Liberal Democrat chair of the select committee, said: “We are worried that pressure to meet targets to increase overseas development aid could lead to DFID making poor spending decisions…The department 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 deparment told the committee it was not channelling funds to multilateral organisations to ensure that it meets its spending targets. It said that it was reducing direct support to some countries where tax bases have risen.
The committee also questions the department’s decision to end direct aid to India from 2015 as its economy booms. Britain is switching expenditure from low- to middle-income countries because many with large numbers of poor people have been moved into this category.
The report said: “The department’s policy towards middle-income countries is contradictory: it is ending grant aid to India in 2015, but programmes in Nigeria and Pakistan are due to grow rapidly. The department explains that this is because both countries have a massive share of the remaining MDG burden, yet the same logic applies to India, where a different approach is being taken. As expenditure on middle-income countries increases, it is even more important that decision-making is rational and consistent; we recommend that the department establish and make public the criteria it will use to inform decisions of when and how it should cease to provide aid.”
The committee criticises the government’s decision to end its bilalateral aid programme to Burundi. It says: “We note that while DFID has increased expenditure in several middle-income countries, its bilateral programme in one of the world’s poorest countries, Burundi, has ended. We urge the new secretary of state to reinstate a bilateral programme in Burundi.”