2020 UK aid cuts ‘more drastic than needed,’ according to watchdog

Government ministers did not reexamine their “cut once, cut deep” approach to reducing the United Kingdom’s aid budget in 2020 after new economic forecasts became available, leading to “more drastic than needed” cuts which hit the most vulnerable countries hardest, according to the country’s development watchdog.

Bilateral development programming was cut by around £943 million in 2020, according to a just-released report by the Independent Commission for Aid Impact. The report quoted an official who said decisions were taken at a pace “like doing a handbrake turn with an oil tanker.”

The first round of aid budget cuts, which was announced in July 2020, occurred after the U.K. government adapted the aid budget — then still set at 0.7% of national income — to a lower value as the pandemic crippled the economy.

While less controversial than the cuts announced by Chancellor Rishi Sunak in November 2020,  which reduced the aid budget from 0.7% to 0.5% of national income, the government has refused to reveal how the first round of cuts was carried out what was affected. The government rejected a freedom of information request asking for more detail from NGO network Bond.

But the report from ICAI sheds some light on the process.

A strategy from officials from the former Department for International Development — now part of the Foreign, Commonwealth & Development Office — designed to protect bilateral programs was overruled by government ministers in favor of a “more pessimistic ‘cut once, cut deep’ approach,” according to the report.

Departments were given just five to seven working days to present proposals for budget cuts of up to 30%, which were reviewed, revised and approved by ministers over four virtual meetings totaling just seven hours, according to ICAI.

The “more pessimistic” strategy was based on an April 2020 economic forecast from the Office for Budget Responsibility, a public body. But the OBR released a more optimistic outlook on July 14, after ministers had approved the original cuts plan on July 9. But six days before receiving approval by Prime Minister Boris Johnson on July 20.

The decision was announced on July 22.

“Ministers decided not to reopen the reprioritisation decisions,” after the new economic information became available, according to the report. It added: “The cuts approved … were therefore more drastic than were needed based on the information available to HM Treasury at the time, even taking the most negative scenario into account.”

While major savings were made through rescheduling payments to multilateral organizations, adjusting the budget “had major implications for ongoing bilateral projects, including the cancellation of ongoing and planned programmes, prioritization of activities within programmes, and postponements,” said the report.

The “criteria used for reprioritisation were open to broad interpretation and inconsistently applied” according to the report.

The Commission also conducted an analysis which revealed aid spending to lower income countries classified by DFID as highly vulnerable to the impacts of COVID-19 was reduced six times more than aid to less vulnerable countries.

In an unpublished document named “Battleplan for Vulnerable Countries” written by DFID and the HM Treasury in April 2020, 40 countries were deemed most vulnerable to the pandemic. According to ICAI, the document “stated that they were to be prioritised for support and have their progress in responding to COVID-19 tracked”.

But ICAI’s analysis showed that in 24 of these 40 countries, where the UK had a development presence, 2020 spending fell by £753 million, or around a fifth of what was spent in 2019.

ICAI’s Chief Commissioner Tamsyn Barton acknowledged the government faced a difficult task adjusting spending during the pandemic but said that by basing its approach “on a particularly low forecast that was soon after revised upwards, the government reduced bilateral budgets more than was ultimately necessary.”

“More flexibility … could have enabled the cuts to be considered and rolled out over a longer period of time. With the ongoing pressures on public finances and the aid budget, value for money is more important than ever,” she added.  

Simon Starling, Director of Policy, Advocacy and Research at Bond said the report highlighted that the aid cuts were “not an economic necessity but a short-sighted political agenda which will cost lives and damage the U.K.’s global standing as hosts of the G-7 and COP 26.”

An FCDO spokesperson said: “In 2020, we managed the aid budget based on available forecasts and in the face of deeply uncertain and volatile economic conditions.”