UK plans to break with international aid rules

LONDON — The United Kingdom’s aid budget will be used to provide disaster relief to wealthier overseas territories despite them being ineligible under international aid rules, Secretary of State for International Development Penny Mordaunt has said.

Tensions over the issue have been running high since some of the U.K.’s overseas territories in the Caribbean were devastated by a series of hurricanes last year. As the islands have too high an income to be eligible for aid under the international rules set by the 30-member Development Assistance Committee, part of the Organisation for Economic Co-operation and Development, the government was forced to find relief money elsewhere. Its subsequent proposal for a rule change at the committee’s high-level meeting was withdrawn after failing to secure a consensus.

However, the development secretary has now indicated the government will go ahead with the move regardless.

“The public support the tremendous work our armed forces and U.K. aid do to help people in dire need, especially in countries which have a close connection to the U.K.,” she told The Telegraph newspaper.

"It is ridiculous that a country which had been flattened by natural disaster shouldn’t qualify for aid as the day before it was doing quite well. While we lobby to change those rules we will not let them deter what we consider to be the right thing to do. I believe that is what British taxpayers would wish.”

The current rules for official development assistance prohibit the use of ODA to support countries above a certain gross national income. Though there is no penalty for violating the OECD’s rules, the U.K. is committed by law to spending the recommended benchmark of 0.7 percent of gross national income on ODA, as determined by DAC.

The wider implications for the way donors spend aid could also be severe, Jeroen Kwakkenbos, policy and advocacy manager at Eurodad, the European network on debt and development, told Devex.

“The naked self-interest that the U.K. is qualifying as ‘developmental’ does a disservice to all we have worked for in the past 60 years as the concept has been developed and refined,” Kwakkenbos said. “Casually dismissing an internationally agreed, rules-based system for the sake of expediency is the height of political arrogance and malpractice.”

The U.K. is the only member of the G-7 to meet the United Nations-recommended benchmark of spending 0.7 percent of gross national income on ODA. Spending aid outside of ODA rules is allowed, but using the aid budget for non-ODA eligible activities could jeopardize the U.K.’s 0.7 commitment, if its ODA contributions were then to fall below the threshold.

“Final ODA levels for DAC member countries are published by the OECD at the end of each year, after the organization examines the preliminary ODA data submitted by each country in April and checks the data against the DAC rules on ODA,” an OECD spokesperson told Devex.

“If a country spends some of its aid budget on areas that do not come under the definition of ODA, then when the OECD comes to calculate ODA statistics for the year, it would simply adjust the ODA figure to subtract that part.”

Julie Seghers, OECD advocacy adviser at Oxfam International, told Devex that the international community needs “collective aid rules — of which the OECD-DAC has been a custodian for over 50 years — to ensure aid is being spent well, and is effectively stamping out poverty and inequality in developing countries.”

“Without a recognized agreement on what can count as aid, the 0.7 percent commitment is a meaningless promise. If individual donors start walking away from DAC rules, we worry this could lead to a chain reaction of countries self-defining their own aid rules,” she said.

The International Development (ODA Target) Act 2015 committed the U.K. to the 0.7 percent spending figure based on the total amount of multilateral and bilateral ODA.

Eurodad’s Kwakkenbos said the move could “set an incredibly bad precedent for the future of development finance. If we haphazardly discard this notion then anything goes and the concept becomes meaningless which would be a disaster for the poorest people in the world.”

“In the short term, this will diminish the credibility of the U.K. as a reliable development partner. In the long term, it potentially undermines the bedrock of development finance, as the U.K., despite its wishes, does not operate in a policy vacuum,” he added.

Although the U.K.’s proposal for the use of ODA to support wealthier but climate-vulnerable countries was withdrawn, the DAC is currently discussing changes to the rules which could provide a path for readmission for countries whose GNI falls back into the eligible range after a natural or humanitarian disaster, an OECD source told Devex.

Mordaunt’s comments suggest pre-empting those changes — however, it is not clear whether the U.K.’s overseas territories would be eligible even then.

Speaking to the International Development Committee in October 2017, Richard Montgomery, director of the Asia, Caribbean, and overseas territories division at the U.K. Department for International Development, said that even another hurricane would be unlikely to render the islands in question poor enough to meet the ODA threshold.

“I think given the size of the economy and the GDP estimates that we have, it's actually quite unlikely these hurricanes would shock them back to a level of GDP which is below the ODA threshold,” he said.

DFID declined to comment on the question.