It “should not come as a surprise” if the supposedly temporary cut to the United Kingdom’s aid budget “lasts for several years,” according to a new report by the Institute of Fiscal Studies.
The reduction to 0.5% of gross national income from the legally enshrined level of 0.7% does “little to alter [Britain’s] long-term fiscal outlook,” according to the document.
Chancellor Rishi Sunak justified the aid cut, announced in November 2020, as necessary in the face of economic damage wrought by COVID-19, which required the government to borrow billions to support jobs and businesses. He promised that the aid budget would return to 0.7% “when the fiscal situation allows” — a line ministers have since stuck to, though no criteria or specifics about what that means have been forthcoming.
“If the rationale underpinning the reduction in the aid budget is the size of the U.K.’s debt, then a temporary cut helps to achieve this a little, although in the context of the overall level of borrowing in this period, the impact is small,” the report said. “If it is an enduring budget deficit that the Chancellor is most concerned about, then a temporary cut will not impact the long-term fiscal outlook – a more permanent policy change would be needed.”
Why does it matter: More cuts could be on the way, as might new legislation on development. There’s also the transparency aspect: Britain’s government has been repeatedly criticized for its secrecy over the aid cuts, and this report will likely fuel further distrust with the sector.
The IFS’s director, Paul Johnson, wrote in the Times of London that he suspected the government's “intention is really to stick at the new lower level of spending,” calling on politicians to “be honest and tell us so.”