The post-COVID-19 landscape the new U.K. leadership headed by Liz Truss inherits today shows widening social and economic disparities along with deeper inequalities of opportunities at the global level. Continuing the trend of cuts to the U.K. aid budget and the current policy of “aid for trade” will not provide the newly formed government with the backdrop to address some of the world’s largest poverty reduction challenges.
U.K. leadership in the field of global aid and development was firmly established in 2013 when the country hit the Organisation for Economic Co-operation and Development’s target of giving 0.7% of gross national income as official development assistance. In 2021, after seven years of maintaining its 0.7% ODA contribution of GNI, the U.K. government lowered its commitment to 0.5% and cut its foreign aid budget by £4.6 billion, or $5.3 billion.
Yet today, the poorest half of the world’s population shares only 8.5% of total global income. The global gender gap has increased by a generation, while racial and ethnic origin is a factor in multidimensional poverty. Furthermore, climate change is expected to push up to 135 million more people into poverty by 2030.
The £4.6 billion cut seems small when compared to the over £10 billion known wastage in substandard personal protective equipment unfit for use at the peak of the pandemic in the United Kingdom. These cuts to the aid sector affect all four program areas identified as priority areas: health, education, climate, and humanitarian assistance.
Effects of UK aid cuts
According to ONE Campaign estimates, 7.1 million children will lose access to a “decent” education, of which 3.7 million are girls. These cuts will mean 5.3 million women and girls worldwide will miss out on modern family planning programs, while 11.6 million children, girls, and women lose out on nutrition support. In addition, 54 megawatts of clean energy will not be installed. Furthermore, the U.K. government’s humanitarian spending has been reduced by over $1 million, which is more than any OECD donor country spending cut in the sector.
The U.K. government’s shift to aid for trade from direct investment into poverty alleviation programs is set to divert funds to the private sector and strengthen unequal geopolitical power structures. The focus on more government-to-government spending, or bilateral aid, further distances the investment into development programs, with the donor country mostly framing the priorities.
The 2022 proposed U.K. aid budget shows bilateral aid to the lowest-income countries such as Ethiopia, Sudan, Bangladesh, the Democratic Republic of Congo, and Tanzania being cut by at least over 50%. Aid to countries experiencing extreme humanitarian crises such as Yemen, Syria, and Lebanon has also been severely cut. Yet the same budget has significant increases to middle-income countries such as China, India, Brazil, South Africa, and Mexico focusing on trade deals.
Below are the key areas the incoming U.K. government needs to focus on moving forward to leave no one behind and progress in achieving the global goals.
Investment in human capital
Targeting economic growth via aid for trade can only worsen inequalities in opportunities in health, gender, and education. But focusing on economic growth accompanied by substantial investment in human capital through mostly public expenditure can have positive outcomes, as seen in the success story of Vietnam. This entailed enabling education, access to health care, and expanding economic and social opportunities for all its citizens.
Inequalities resulting from an emphasis on economic growth alone have been proven time and again since the 1990s. As a result, the United Nations Development Programme embraced the human development approach leading to the framing of the Millennium Development Goals in 2000 and the Sustainable Development Goals in 2015. The SDGs draw attention to both the economic and the social sectors to empower all global citizens to be able to access and avail better opportunities.
The U.K. is a signatory to achieving these goals, but in recent years, the country’s progress to achieving the “leave no one behind” ambition of the SDGs has been disappointing. The country needs to not lose sight of the fact that addressing inequalities is key to unlocking the potential of all citizens and achieving a better society.
Countries such as Vietnam show that state-supported investment in social structures can usher in an inclusive and sustainable economic growth trajectory. Vietnam has the highest female labor force participation in Asia, outperforming several Western economies. Linkages between education and the labor market and investment in people are some of the key pillars of this success.
Appropriate labor skill mix
The new leadership in the U.K. must draw on this approach to reduce inequalities in education, health, and expanded opportunities for all to actively participate in the labor market.
By strengthening the labor skill mix appropriate for the 21st-century job terrain, a better employment platform can be created. It requires a targeted strategy for addressing challenges in upskilling youth and women, in particular, in lower-income countries where access to job market-relevant training programs, completion rates, quality of skills, and low literacy are some key obstacles to better-paid jobs.
A labor skill focus aligns with SDG 8 targets 8.5 and 8.6 that focus on decent work, equal pay for men and women, and youth employment. Investment in an infrastructure that allows more women to join the labor force and offers decent care for the elderly and health care for all will help citizens achieve what they value and create a flourishing society.
Aid and trade — not aid for trade
The U.K. government can strengthen its global leadership by embracing aid and trade — not aid for trade solely. This entails aid for the empowerment and upskilling of the most vulnerable communities and investing in inclusive trade infrastructure. Here the emphasis would be on enabling small businesses and those led by women and youth to become globally competitive.
Focusing on investment in the human capital of the most vulnerable groups globally would be a powerful framework for the newly appointed U.K. government to have a chance of contributing to achieving the SGDs and leaving no one behind.
Liz Truss has the chance today to redirect the focus of the U.K.’s development policy to support both economic growth and invest in creating a global inclusive social infrastructure to achieve sustainable economic growth and a better world for future generations. I hope the incoming prime minister seizes this opportunity to once again become a world leader in the field of aid and global development.
About the author
Meera Tiwari
Meera Tiwari is a reader, or an associate professor, in international development at the University of East London, and the author of the new book "Why Some Development Works: Understanding Success."
