Do Labour’s plans for UK aid stack up?

The Labour Party is on course to take power in the United Kingdom later this year, on a promise to restore the country’s reputation as an aid donor and to put local communities “in charge of their own destiny” in aid-receiving countries. But how much do we know about the party’s plans for development — and do those ideas measure up to the scale of the challenge ahead after four tumultuous years under the Conservative government? Devex brought together two experts — Romilly Greenhill, the chief executive officer of Bond, the network for U.K. aid organizations, and Ian Mitchell, who researches the effectiveness of government policies at the Center for Global Development think tank, to explain Labour’s thinking. The big picture The good news, our experts agree, is that Labour is being more open about its plans and is zeroing in on what they see as the correct overarching priority — the “goal of a world free from poverty on a liveable planet,” as Greenhill put it. Greenhill is encouraged that Lisa Nandy, the shadow international development minister, has picked out the global debt crisis, and programs for women and girls, as key challenges. “I think we're starting to really see the shape of Labour’s development offer,” she said. Mitchell, likewise, welcomed the focus on extreme poverty and also noted that the “liveable planet” phrase echoes the language used by the World Bank. “That's being used to signal that Labour would return the U.K. to playing a full role in the multilateral system,” he suggested. What about the cash? Labour is silent on when, or even if, it would return to spending 0.7% of national income on aid — after the 2021 cut to 0.5% — so how big a problem will that be in office? “We can't do this without money. We do need to be thinking in the long run about how we increase the ODA [official development assistance] budget. We're not there yet — we don't have very strong commitments,” Greenhill warned. Mitchell urged Labour to make a decisive break with the current Conservative government, which spent a staggering 29% of the 2022 aid budget within the U.K. by ensuring all that money was allocated to development — with domestic refugee costs funded from a separate reserve pot. “Labour should be putting clear daylight between itself and the Conservative Party on this,” Mitchell said, while adding: “It will cost money. There's no getting away from that.” Does Labour mean it on localization of aid? Nandy has pledged to “put people back in charge of their own destiny” and to tackle what she called “cultural” opposition at the Foreign, Commonwealth & Development Office. Mitchell suggested it would not be that easy, noting the potential clash between a new government with firm priorities and a mandate, and devolving control to organizations in recipient countries. The U.K. has been “among the worst in the world” for hoarding contracts — 85% of which go to U.K. companies, he said — adding: “It's great to see Labour saying they will focus on that, but you need to see the proof in the pudding. These are NGOs that are Labour-supporting.” Greenhill argued for a “radically different approach” to simplify grantmaking, and perhaps “reverse calls for proposals” that seek ideas from local organizations, rather than the traditional “we’ve got some money, who wants to take it” approach. Will Labour continue to rely on the UK’s development finance arm — and should it? British International Investment, or BII, will enjoy growing importance under Conservative plans, and Greenhill suspects at least “some people in Labour” want to see that continue. But, she argued, BII must first demonstrate it can make a real difference on the key priorities, asking: “What's the value added? What's the poverty focus? What's the climate impact?” Mitchell called BII “an extremely impressive organization,” but argued only multilateral development banks can mobilize private money in lower-income countries on the scale required. “That’s a better road, and I'd be wary [of relying on BII],” he advised. The Trump factor Both experts argued Labour must begin contemplating the impact of former U.S. President Donald Trump potentially returning to the White House, warning its plans could be derailed by dramatic policy shifts from the U.S. election this year. Mitchell said Labour could find itself suddenly out of step with the U.S. no longer interested in strengthening the international system, or reforming the World Bank, and making the big aid spending cuts Trump was unable to force through last time, adding: “That would be really concerning.” Greenhill said hopes for climate action and women’s rights could be dashed and warned the likes of Germany and France — which are making their own aid cuts — are unlikely to plug funding gaps. “There's a real question, if we do see that refocus on women's rights as we should do … what's that going to mean for budgets?” she questioned.