Former senior FCDO official offers insider view of the UK aid cuts

The decision by the United Kingdom to reduce the aid budget from 0.7% to 0.5% of gross national income, less than three months after the merger of the Department for International Development into the Foreign & Commonwealth Office, caused a £4.6 billion hole in the budget, rocked the country’s development sector, and caused bafflement around the world. Stefan Dercon, former policy adviser to previous Foreign Secretary Dominic Raab, described the process as “chaos” and “dramatic” in an interview with Devex. As a civil servant with the United Kingdom government, he helped oversee the aid cuts. Dercon’s interview with Devex is the first time anyone from the Foreign, Commonwealth & Development Office has openly spoken with the media about how the aid cuts happened from the inside. A development economist, Dercon worked as chief economist in DFID between 2011 and 2017, then returned to work as an academic before taking a position with FCDO when it formed. He left the department in May, having just published a book. In a wide-ranging conversation, Dercon revealed that DFID was “hated” by other officials in Whitehall, he believed the timing and speed of the aid cuts was the most harmful aspect of the policy, and that political decisions influenced how the cuts were made. The process caused “a thousand programs or more to be cut,” according to Dercon, but was mired in secrecy, with NGOs instructed not to speak about the harm caused to their work and Devex attempting to track the damage. The full effects are unknown — and may never be known — but the ONE Campaign, an anti-poverty organization, estimated the aid cuts will cause nearly 4 million girls to lose their education, put 11 million children under 5 and women at risk of malnutrition, and mean 3 million people will lose out on humanitarian aid, among other impacts. The merger A self-described “eternal optimist,” Dercon joined FCDO as a civil servant when it opened in September 2020, with the belief, he told Devex, that it is “the underlying objectives and commitment” of an organization that “actually make a difference” rather than its structure. DFID — formed in 1997 when the U.K. government separated it from the Foreign Office — had established deep relationships with the United Kingdom’s development sector over decades. WIth a reputation for development expertise, thought leadership, and transparency, it was popular not just with many organizations but with the officials within the department. But that positive view was not universal. “I remember as chief economist, people [in Whitehall] just talking to each other [about] how awful these DFID guys were,” said Dercon, noting that the department’s position had been difficult “for a very long time.” The fact that its focus was international, rather than on the taxpayers who were funding it, he added, contributed to its unpopularity among other officials. During the austerity years of the David Cameron government, DFID’s protected budget continued to climb, while other departments had to make painful cutbacks. “To put it bluntly, there were people in Whitehall that hated it,” and the department’s status became unsustainable, said Dercon. So while he knew the merger would be disruptive, Dercon said he also felt a “responsibility to make sure [the new department] becomes as good as it can” — and wrote about strategies to make that happen before he joined as policy adviser. But since then, the aid cuts and the war in Ukraine, have “totally [disrupted] everything,” he said. The aid cuts On Nov. 25, 2020, amid an economic crisis sparked by the COVID-19 pandemic, Chancellor Rishi Sunak announced the government’s plans to spend 0.5% of GNI on its aid budget the following year, despite a law committing it to a 0.7% aid budget. FCDO minister Elizabeth Sugg resigned in response, but other ministers defended the aid cuts policy. “There's no civil servant, there's no adviser that actually advised to do [the aid cuts] like this.” --— Stefan Dercon, former senior FCDO official The process was shrouded in secrecy and poor communication, but development organizations began receiving word in spring 2021 of what would happen to their budgets. A girls’ education program in Rwanda was the first publicly documented cut. The International Planned Parenthood Federation realized as early as March that an estimated 22,000 maternal deaths would be caused as a result. Dercon was firm that the government’s decision to cut the aid budget was legitimate. “I'm not an elected politician. I may have my private views, but … they have the right to do what they did. That’s not in doubt,” he said. This has been disputed by some development advocates and legal experts, who pointed out that a commitment to 0.7% has been enshrined in law — but legal challenges against the aid cuts have since failed. He's also clear that as a civil servant, the most he could do was provide advice while “ministers and the political advisers in the room will make the decisions.” Still, in retrospect, Dercon lamented not having enough time to manage the cuts. “This is not a tap [you can turn on and off] … programs are designed very carefully … [with] very long term relationships with delivery partners or governments.” And the timeline over which the cuts had to be made was relatively short: He estimates negotiations with other government departments lasted “well into January,” and the fiscal year began April 4, when budgets were due to be settled. Add to that a fevered political atmosphere: The aid cuts did not receive parliamentary approval until July 2021, and there were attempts by rebellious Conservative politicians, led by former DFID Secretary Andrew Mitchell, to have the policy overturned. “A huge part of the aid budget was, within the standards of the aid community, actually quite well spent. So that means if you then cut it, you will do harm, you will at some point have to make choices between lots of good things,” said Dercon. With more time — such as making the cuts over three years with advance warning — he believes FCDO “could have done it better” and included “proper dialogue” with development and other organizations. Before the cuts, FCDO had a multiyear portfolio of around £35 billion, Dercon estimated, and an “endless variety of modalities and contracts across endless areas” for which trade-offs needed to be decided. He blamed the complexity and the lack of time for what many saw as the random and chaotic nature of the cuts. Pressure from all sides Politics influenced the aid cuts process, according to Dercon. Parliamentary and media scrutiny, along with private lobbying from development organizations, meant FCDO was working in a highly politicized environment, he said. The U.K. was also hosting major international events, including the G-7 summit and the 26th United Nations Climate Change Conference, putting it in the international spotlight. “You get these kind of pressures from all sides. You get WhatsApp messages coming in from Parliament, from NGOs. It's political because you can't do this in a simple, transparent, open way,” said Dercon, who added that FCDO’s finance team tried to “stay away from these things” and be “objective.” Aid advocates also argued that more could have been done to reduce the severity of the cuts, for instance by delaying payments to multilateral organizations. But Dercon says spending on some contributions, like to the World Bank, was “quite locked in,” and that some payments were mandated by law. “Politically, nobody was going to go for anything that risked a vote” in Parliament, he said. He continued: “Other commitments that maybe only weeks before were made by the prime minister, you know, politically, you can't imagine that's that's going.” One such political “lock in” was the inability to touch the International Climate Fund on the year the U.K. was hosting COP 26 — though the aid cuts were still noticed by other attendees. This resulted in changes “over relatively small things” — which is why Dercon expected from “day one” to see between 40% to 60% cuts to programs — rather than 30%, roughly in line with the overall budget cut. “There's just a lump you can't touch, and that's that's dramatic because that's closures, that's all kinds of stuff.” This included deep cuts to programs working on government priorities, like girls’ education. ‘This feels tough’ A key complaint about the aid cuts from U.K. civil society groups was around lack of consultation with the government over the process. Some believed the policy’s harm could have been reduced if there had been more dialogue. “The best I can say is there's no civil servant, there's no adviser that actually advised to do it like this,” replied Dercon, adding that political advisers would have recommended keeping “control of the narrative.” Some cuts didn’t just risk years of careful work and investment but human lives. The humanitarian situation in Yemen was greatly deteriorating when the cuts happened, and famine is now also encroaching in Somalia, which saw a 41% fall in U.K. aid funding. Concerns about cases like these were escalated through the civil service in the normal way, according to Dercon. He said, “Even on the political side, this was not done in a cynical way … the foreign secretary, sometimes he said ‘actually this feels, this feels tough.’” But Dercon urged not to “oversensationalize” the cuts, saying that DFID historically has stepped in “when other countries were not providing humanitarian aid.” He added that if the reduced budget was compared to “seven or eight years ago, nothing would look very dramatic.” In 2014, the U.K. spent £11.8 billion on aid, compared to £11.5 billion in 2021. But inflation in the U.K. has averaged 1.6% a year since 2014, according to the Bank of England, making £11.8 billion in 2014 equivalent to £13.2 billion in 2021. It’s a similar sentiment to the response FCDO gave to Devex for this article. “The UK remains one of the largest global aid donors, spending more than £11 billion in aid in 2021,” said a government spokesperson. “The government remains committed to spending 0.7[%] of gross national income on ODA once the fiscal situation allows.” Dercon continued, “We're part of an international system and there's 150 billion of aid or more being given.” ODA hit a record $161.2 billion in 2020, according to the Development Assistance Committee of the Organisation for Economic Co-operation and Development, which monitors aid. He opined that France and Germany were able to increase their aid budgets in response to the COVID-19 pandemic because of their domestic political environment, and pointed out that philanthropies that stepped in to fill the gaps left by the U.K. aid cuts could have done so earlier. Still, the U.K. was unusual among big donors in squeezing the aid budget by charging it for Special Drawing Rights and excess COVID-19 vaccines — choices Dercon labeled “political decisions.” Tracking the cuts Since the aid cuts were implemented, NGOs and development organizations have been requesting an assessment of their impact. “The best I can say is that good luck trying to do it because it's messy. It's so many, a thousand programs or more,” said Dercon, who added that he hasn’t seen such an assessment. While he opined that such a project could be the responsibility of the watchdogs the National Audit Office — which did investigate the aid cuts — or the Independent Commission for Aid Impact, many in the U.K. development sector have been requesting one from FCDO itself. Devex revealed in November 2021 that FCDO wrote a short equalities assessment in March that year, which found that the aid cuts would harm girls' education, gender equality, and those “furthest behind.” Dercon said there was “no intention” in the department not to be transparent about the cuts, but because of the way they were implemented — which often involved “revisiting contracts, cutting parts and so on” it was “quite a nightmare at times to actually systematically follow it.” He added that FCDO computers — then still operating on legacy DFID and FCO systems — had been a challenge. “The merger has somewhat unintentionally obscured everything because actually FCO for its own reasons … was less transparent, maybe historically, around the ODA spending,” said Dercon. “Merging these systems is proving quite a job. Even if you were to do an FOI [freedom of information request] it would be quite a job to actually get all the details.”