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Mission at risk?

How cuts to the aid budget could undermine the prospects of the Foreign, Commonwealth and Development Office

The announcement of the merger of the UK Foreign and Commonwealth Office (FCO) and the Department for International Development (DFID) was quickly followed by £2.9bn of cuts to the 2020–21 international aid budget.

With the government committed by law to spend 0.7% of gross national income as aid, and given the economy’s dramatic contraction due to COVID-19, a smaller aid budget in cash terms was predictable – though not inevitable.

However, concerns have been raised about where the cuts will be made. And whether the funding priorities of the new Foreign, Commonwealth and Development Office (FCDO) will change the focus of UK’s aid portfolio.

Answers to these questions are now becoming worryingly clear. The UK government’s reporting to the International Aid Transparency Initiative (IATI) shows that overall, budget allocations for activities that were previously the responsibility of DFID have been reduced by £2.7bn, including a cut of more than £700m since July (see Table 1).

In this blog – part of our Future of British Aid series – I’ll show where those cuts fall. And make recommendations to avoid a disproportionate impact for children.

TABLE 1. THE £2.7 BILLION CUT TO OVERSEAS AID BUDGET: THIS FINANCIAL YEAR COMPARED WITH 2019–20

(£bn’s current prices)

2018–19

2019–20

2020–21 (July data)

2020–21 (August data)

DFID’s former portfolio of activities

10.6

10.3

8.3

7.6

FCOs former portfolio of activities

0.64

1

No data

No data

Source: iati.fcdo.gov.uk accessed through the IATI registry (July and August 2020 update)

Note: As Table 1 shows, activities formerly under the portfolio of the FCO continue not to be reported to the same standard as DFID’s former activities. While it's positive that the FCDO will continue to report to IATI, there's an urgent need to standardise all UK aid reporting to the global best practice standard that DFID has set.

So where are £2.7bn of cuts being made?

Focusing on DFID’s former portfolio of activities, most sectors are seeing cuts from 2019–20 to 2020–21 (see Figure 1). There are large cuts to education (22%), agriculture (42%), and water and sanitation (26%). Sectors that have seen increased allocations are focused on the COVID-19 pandemic (health, social protection, action on debt).

This shift in focus of funding to COVID-19 is shown particularly in relation to the health sector, where large increases in budgetary allocations have been made to infectious disease control and related funding to international bodies (eg, Global Fund, Gavi, International Finance Facility for Immunisation). However, other areas of health funding that are critical for children – such as basic nutrition, family planning and reproductive healthcare – have been cut (see Table 2), These cuts come on top of reductions in funding in previous years. Given the key role these areas play in child survival and in supporting infectious disease control,  the impact of these reductions in UK aid need to be urgently assessed.

TABLE 2. HEALTH SECTOR WINNERS AND LOSERS

(GBP, millions, current prices)

2019–20

2020–21

Basic nutrition

122

105

Family planning and health education

288

173

Reproductive health care

127

88

Infectious disease control

146

290

Global fund

370

477

COVID-19 research and policy support for Hygiene, Handwashing & Behaviour Change Coalition

0

38

International Finance Facility for Immunisation (IFFIm)

121

134

Pilot AMC for Pneumococcal Vaccines

25

40

Source: iati.fcdo.gov.uk accessed through the IATI registry (August 2020 update)

Given the scale of the budgetary cuts, it is perhaps no surprise to see allocations to countries fall, with almost all major recipients of UK aid set to see a significant reduction in 2020–21 (Figure 2). And as Figure 2 highlights, the UK predominantly targets aid at the world’s poorest countries and those middle-income countries where a significant proportion of the poorest people live (eg, Nigeria). This means that such large cuts to the UK aid budget cannot be made without impacting the poorest and most vulnerable people in the world.

Shifting priorities  

As we get closer to the 2021–22 fiscal year, the budgetary allocations to UK aid activities are taking shape. At present £6bn has already been earmarked to projects – with areas centred around economic activity, such as trade, banking, energy, industry, and mining – set to see increased allocations (see Figure 3). It’s a sign of a potential shift in emphasis for UK aid to align it with efforts to build post-Brexit global economic ties.

While activities have not been finalised for 2021–22, it is worrying to see social sectors like education and health set for large cuts in funding. For education this is a particular concern, coming on top of cuts in 2020–21. The UK government has a stated manifesto pledge to ensure 12 years of quality education for all children, especially girls. And within the health sector, areas such as basic nutrition are currently set for further cuts. Ahead of the 2021 Nutrition for Growth Summit, this is a cause for concern.

As the world rebuilds from COVID-19, building and supporting strong health and education systems is critical to alleviating poverty, promoting recovery and building back better. And as chair of next year’s G7, there is an opportunity for the UK to provide the leadership that it will need to galvanise support from donors, national governments and private sector partners to build back better in the pursuit of the global attainment of the SDGs. These allocations suggest that this is an opportunity that the UK risks missing.


3 STEPS TO COURSE CORRECT

As our analysis of the UK aid budget for this financial year and the next indicates, the picture is stark. Budget cuts will have a potentially devastating impact on many of the world’s poorest children, who have already been disproportionately affected during the protracted pandemic.

But so far these are only budget allocations, there’s still an opportunity for the UK government to shift its approach – in the following three ways.

  1. Don’t just treat the 2020–21 aid budget as a number –  apply a people-centred focus. The UK government clearly must look at its fiscal position in light of the pandemic and make budgetary cuts. However, the current in-year cuts of £2.7bn to the aid budget seem more of a spreadsheet exercise – designed to achieve a budget that meets but doesn’t exceed the 0.7% target – and come at the expense of the world's poorest children. Given this, there’s an urgent need to revisit the aid budget this year, particularly in social sectors like education. Given the impact of this unprecedented global crisis on the poorest children and communities, the UK government should adopt a people-centred approach this year to UK aid – even if that means exceeding 0.7% of gross national income.
  2. Continue to support the world’s poorest people through the COVID-19 crisis and in the recovery. With its focus on a post-Brexit ‘Global Britain’, the UK government is looking at potential ways overseas aid can support trade and economic development across the world in 2021–22, with an assumed reduction in poverty as a result. However, given that the COVID-19 crisis will clearly continue well into 2021, significant resources need to be invested in poorer countries across various sectors. The UK government therefore needs to reflect on its past achievements delivering for the world’s poorest people and look at how it can support them directly through this crisis and in the recovery.
  3. Take a holistic view for the long term. As the FCDO seeks to bring together its development and diplomacy expertise, it must recognise the way that poverty, privilege and access intersect. Working directly with countries to build strong and sustainable systems across social sectors like health, education and nutrition is critical to ensure stability and progress. The FCDO has already made encouraging moves in this direction, appointing a Special Envoy for Famine Prevention and Humanitarian Affairs and committing itself to lead global action to protect the poorest people from coronavirus and famine. This will involve aligning short-term humanitarian relief with a long-term response to the growing challenge of malnutrition.

If the FCDO is to make a true success of the merger it must apply the evidence-based, value-for-money expertise of DFID to the global reach and relationships of the FCO. Building stronger foundations for the children who need them most is both the right thing to do, and the key to a better future for us all.

Read more from our blog series on The Future of British Aid.

Mission at risk?