For some of the world’s poorest and most vulnerable, Britain’s decision to leave the EU’s Customs Union and take back control of its aid funds from the grossly inefficient European Union could mean the difference between life and death. That sounds dramatic but it’s no exaggeration.
Early in her tenure as the new Secretary of State for International Development, Priti Patel affirmed her commitment to the Conservative Party’s manifesto pledge to spend 0.7% on aid to the world’s poorest. That means that aid funding which Britain currently channels through EU initiatives is likely to be redistributed through DFID itself when Britain leaves the EU.
Why does this matter? New research by Global Britain shows how the EU’s Customs Union erects a tariff wall that creates a cycle of dependency for developing nations. Penalised by duties, quotas and regulations they find their economic growth restricted, their markets subject to the dumping of EU over-production that leads to the need for aid.
While the right type of economic aid can help, it is trade that makes the difference in self-sufficiency – and the EU’s record on aid and trade is both poor. At present the EU is the largest single recipient of Britain’s aid budget. In 2013 £1.35bn was contributed to its projects, 30% of Britain’s multilateral spending and 12% of its total.
Unfortunately, EU aid initiatives spend up to three and a half times more on administration costs for their institutions than DFID. In the 2013-14 financial year, DFID spent 1.57% of its budget on administration but for the European Commission the costs were 5.4%, and for the European Development Fund, to which Britain has committed a further €4.5bn (£3.5bn) in the period to 2020, they amount to 5%.
These inefficiencies cost lives. Had the UK directed the funds spent through the EU it would have £137m available that instead goes on bureaucrats’ salaries, offices, and staff benefits.
Sign up for our FREE Reaction Weekend Email
Read the week's best-read articles on politics, business and geopolitics
Receive offers and exclusive invites
Plus uplifting cultural commentary
As concerning is how the money that does make it beyond Brussels is spent, with a quarter of EU development aid going on direct budget support, in other words propping up governments, and often very unsavoury ones at that.
Direct budget support gives international aid a bad name, it gives British taxpayers no control over how funding is spent, and no assurance that it will reach the most needy. In 2014 alone 84 countries were given over €11bn to spend however they pleased. The list of regimes supported includes those that stand accused of human rights abuses, slavery, torture and corruption such as Burkina Faso, the Central African Republic, Cote d’Ivoire, Guinea Bissau, Kyrgyzstan, Mauritania, Niger and Togo. By contrast the UK announced it was abolishing all direct budget support in 2015.
Condemned for its wastefulness both by the EU’s own Court of Auditors and Britain’s independent aid watchdog ICAI, the EU’s aid programme has also been criticised for “throwing its money down the toilet” by the European Parliament’s committee on budget controls with €11.5bn of projects delayed and missing targets.
There must be a better way, and thankfully there is. Unlike the EU, DFID does not dump its funds into the bank accounts of foreign governments; it builds targeted programmes to alleviate poverty and implements and monitors them for value for money. It spends less on administration so more money goes where it is needed. Unlike the EU it is answerable to Parliament and has a transparent reporting system that means its spending is visible and open to scrutiny.
At a time when the UK is giving a lot of thought to how it engages with the wider world, in DFID it has a department that is already a global standard bearer.
The sooner Britain allows DFID to take back control of the EU portion of our aid budget the better. Then, once we are outside the EU’s Customs Union that depresses international trade we can ensure new trade deals with these developing nations dovetail with the aid programmes we control to build sustainable market-led economies that spread the benefits of globalisation.
Collaboration in areas of overlapping interest is sensible, blindly throwing money away on excessive administration and opaque budget support programmes for despots is not. Let us lead by example and start planning immediately to reallocate aid funds so that they do their job. British taxpayers and the world’s poorest would be the winners.