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The latest view of UK aid: death by a thousand cuts

In the 6 months since Rishi Sunak announced the UK government’s intention to cut aid spending by £4bn, there has been scant detail about what this would mean in practice. The move to spend 0.5% of gross national income instead of 0.7% in the 2021 financial year led to a reprioritisation process over the past few months, accompanied by many leaks about programme cuts as angry and disappointed FCDO staff made their frustrations known. It is now possible to get a holistic view of what the UK aid will look like this year, based on the Foreign, Commonwealth and Development Office’s (FCDO’s) latest data release to the international aid transparency initiative (IATI), combined with past written statements by Dominic Raab to Parliament.

In the 2021 financial year the UK government will spend around £10bn on international aid, £8bn of which was allocated to the FCDO. Using published information by FCDO we are now able to understand how almost 90% of their budget will be allocated by sector (see figure 1), and almost across the board there are substantial cuts. Key areas of relevance to children like education, humanitarian assistance and water and sanitation will be reduced by 36%, 45% and 47% respectively. These cuts would have been higher, had the FCDO not frontloaded almost £1bn of funding to the World Bank in the 2020 financial year to meet the 0.7% target (see multilateral funding in figure 1) rather than in 2021.

Dig deeper and it's clear children are bearing the brunt of the aid cuts this year

Beneath this sectoral level the areas targeted for some of the largest cuts are of central relevance to children. For example, although overall health funding is still being prioritised, it continues to be focused on the COVID-19 response. Areas critical for children like basic nutrition, family planning and reproductive healthcare are all set to see substantial cuts (Figure 2).

Source: FCDO submission to IATI, accessed June 2nd 2021. Notes: Percentage figures refer to the difference between the 2019-20 and 2021-22 financial year. 2021-22 budget figures will be revised over time, meaning areas like basic nutrition could be cut further by as much as 80%.

Education is another area where the youngest children bear the brunt of the cuts, with primary education funding at present set to be £210 million lower than the 2019 financial year. The scale of cuts in these areas, combined with wider cuts to other areas like humanitarian assistance and water and sanitation is set to impact millions of the world’s poorest children, particularly girls.

In addition, the Government is cutting support to public financial management (58%) and domestic revenue mobilisation (34%). Both are vital to support developing countries scale up and manage their own resources to aid their citizens through the crisis and in the recovery.

What about FCDO’s remaining £1bn budget?

The little over 10% of FCDO’s budget remaining seemingly offers some hope that the deep cuts to areas of significant relevance to children could be reversed. However, with COP26 around the corner and increased calls for the UK government to scale up support to vaccine financing this could be eaten up quickly.

In addition, it is also likely that some of FCDO’s aid budget will be re-allocated to other departments due to the prolonged pandemic. In 2020 the FCDO took the deepest cuts as other departments such as Health and the Home Office increased their aid spending. However, in 2021 these same departments were given reduced budgets along with FCDO, yet the possibility of donated surplus vaccine doses being counted as aid, along with continued higher costs for refugee hosting, will almost certainly lead to overspending.

Ways to course correct

The damage the cuts to UK aid in 2020 and 2021 has had on the world’s poorest children cannot be understated. The impact is only just being understood through testimonies of those affected and will only be fully understood over time. The UK government’s 2021 budget highlighted children as the most impacted by COVID-19 and allocated more funding to them domestically, yet internationally have done quite the opposite. Not only is this approach harming the children the UK was directly supporting through aid programmes, but sends the wrong signal internationally as it holds the G7 next week, where it seeks to catalyse additional funding from other countries to support the world’s poorest in their hour of greatest need. Whilst the cuts that have already happened can’t be undone, there are some critical ways where an urgent course correction could limit impacts.

Return to 0.7% - The most obvious course correction. Given the limited impact on the government’s fiscal position there is no feasible reason why a return to 0.7% couldn’t be achieved this year. The recent announcement of a vote in parliament offers a potential route back to 0.7% in 2022, but would not undo the damage done to the cuts budgeted for in 2021, which could only be reversed by abandoning the move to 0.5% this year.

Urgently review the impact of the cuts – The FCDO reprioritisation of ongoing aid projects over the last few months brought about a cut of £1.4bn in the 2021 financial year. In addition, projects in the pipeline have been cancelled and commitments to international aid agencies working within the world’s worst humanitarian crisis have been significantly reduced. Therefore, it is critical that these are reviewed as a whole, and further impact assessments made. If the government maintains its commitment to 0.5% this year, then it is essential the effects are understood, and a further round of reprioritisation is carried out to mitigate against the worst impacts.

Ensure pandemic response is not counted or is additional to UK aid commitments – There is now a significant body of evidence that the UK support to global vaccine financing will substantially boost the economy domestically. Whilst this could be counted as aid, the risk of it further crowding out other key areas of need are of key concern. Therefore, it is critical that this support is either not counted as aid or is additional to UK aid commitments, a position that could be key in influencing other G7 and G20 countries to follow suit.

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