The government must keep its promise to enshrine the aid budget into law

By Alex Bryan

Throughout the past 3 years, a popular lament from Conservatives has been that the Government is being prevented from enacting truly conservative policies by the presence of the Liberal Democrats alongside them in office. The complainants have been particularly vocal with regards to policy areas such as Europe, law and order and liberalisation of employment laws. These are areas where the parties simply disagree, and have managed to form policy around the small amount of common ground they have, occasionally sniping at each other in the media in order to placate grumbling party bases.

Strangely, there are also issues which both parties have previously committed to which have now become areas of disagreement and backbiting, one of which became clear with the Queen’s Speech this week. Despite it featuring in the 2010 Conservative manifesto and the Coalition agreement, no commitment to enshrine the current 0.7% foreign aid budget into law was mentioned by the Queen. Both parties have said that they want to retain the current levels of spending, and both extol the virtues of Britain’s international role. Yet three years down the line their commitment to codify this into law seems to have been forgotten.

Why? Consensus seems to be that Cameron is bowing to his less moderate backbenchers, for whom foreign aid has always been an expensive luxury not to be afforded in hard times. A nice idea perhaps, but not one to be given priority at a time when British people are hurting, and our 0.7% would be a welcome boost to the budgets of more important departments. It is not only Tory backbenchers and members who think this: 7 out of 10 people believe that the UK spends too much on foreign aid, with only 7% thinking that the aid budget should continue to rise and be protected from Whitehall cuts.

David Cameron, though a confessed believer in the power of foreign aid, has already given approval to channel some of the aid budget into peacekeeping funds for British soldiers in those roles around the world. This is not a huge departure from the function of the aid budget as it existed before; the money would not go on combat operations or equipment, and would help to stabilise and support peace in troubled states around the world. In terms of ensuring that the aid budget promotes the security and development of individuals to the highest degree per pound around the world, this reform (as long as it does not subsume the rest of the aid budget) is not a bad thing.

But the danger remains that with an unwilling public and an increasingly disgruntled and vocal party, David Cameron will succumb to demands to cut the budget. The chances of doing that in the current Parliament are small, but by refusing to encase the current levels of spending in law, Cameron leaves open the option to cut the budget.

It has been well publicised that the UK has given aid to a number of countries, such as India, Russia and China, which are wealthy enough to be able to look after their own citizens. But international aid, operating in the way the UK government does, is centred around the poverty of individuals or groups of individuals around the world, not on nation-states. Aid channelled through the right kind of non-corrupt organisations into wealthy countries can help lift individuals who receive no help from their own government out of extreme poverty. This remains as true in Russia and China as in Rwanda and Chile.

Unfortunately, the recent changes in where we send foreign aid have meant that some countries such as China and Russia – and also Vietnam, Cambodia and Serbia-  will no longer receive funds. The argument that aid is needed by the poorest people in the world, regardless of how rich their government is, has been lost. But we cannot allow this to become a precedent, the start of a drift into isolationist and realist approaches to the world.

Aid makes a difference. At its most fundamental level, it saves, transforms, enriches and preserves lives. As a developed nation, we do not only have an obligation towards our citizens and allies; we have a duty to attempt to lift the general standard of human existence. In addition to stressing the moral imperative involved in international aid, David Cameron has become increasingly keen on stressing that aid and development help to protect us from extremism. Such an argument seems to me unnecessary, but the premise which supports it is hugely important; that the fight against poverty, illiteracy and war is also a fight against hatred, bigotry and brutism. It is a fight for a better world.

David Cameron and Nick Clegg know this. They know the importance of British international aid across the world; after all, it was they who committed to enshrine the current level of spending into law in the first place. Whilst in office, the previous Labour government was a great champion of international aid, tripling the aid budget from 1997 to 2009. In the midst of an unprecedented financial meltdown, the pressures on the budget were bound to increase, especially given the difficulty of quantifying the effects of aid. The government must resist such pressure and legislate to ensure that aid spending remains at least at 0.7%. It may well be the most important thing they ever do.


Cable wrong to call for more spending

By Robert Hainault

David Cameron has yet again pledged to get the economy ‘back on track’ while ignoring Vince Cable’s calls to increase spending. He claims that to change tack now would plunge the economy ‘back into the abyss’. I think it’s probably time that we looked at some figures.

Eamonn Butler of the Adam Smith Institute pointed out in October of 2011 that despite general gnashing of teeth about cuts, the government had actually spent more than the previous year. The April-June quarter of 2011 was 1.3% higher than in the same quarter the year before when adjusted for inflation. In fact, despite Cameron pledging early on in his premiership to cut spending on beurocracy, Whitehall spending was 7.2% higher in August 2011 than it was a year earlier.

So, an inauspicious start.

Since then, not much has changed. In 2011 total government spending was £681 billion . Last year it  was about the same when adjusted for inflation. However, what is often overlooked is the interest on the new debt we have incurred. The government spent £90 billion more than it raised. It’s reaction was, as with all previous governments of recent years, to print more money, exacerbating inflation which is a further drain on our national economy and is, in effect, a stealth tax. A tax which leaves people with less money in their pocket, and thus less to spend in the economy.

In 2012 the government paid nearly £51 billion in interest on our national debt. That was twice what they spent on transport and even more than we spent on national defence.

And it’s not getting any better. At the current rate of ‘cuts’ our government will have managed to shrink its expenditure to £668 billion by the year 2014-15 (again, adjusted for inflation), a reduction of only 2.9%. Yet by 2014-15 the interest on our national debt will be £60 billion, and repayments will need to comprise 10% of the budget in order to keep the debt at the current level.

So not only will the national debt not have decreased by 2015, it will be considerably larger. Though the coalition have made some small progress in reducing the deficit, the debt is spiralling out of control, and with economic growth still on vacation there will be no more revenue in 2015 than there is now. In short, we will owe more and have less.

Unless, of course, we can see government spending drastically reduced between now and then, we will not only be unable to keep up with out debt repayments, but we will be unable to stop them growing larger and larger.

What we need, if we are to avert disaster, are sober and serious cuts to the public sector, which still makes up over half of our economy. It is a simple principle: public sector services cost money; private sector services generate money. Getting the economy ‘back on track’ requires only two things: that expenditure should go town and revenue should go up. In order to reduce expenditure public sector services need to be cut to allow the private sector to provide them. This, in turn, generates capital which means more taxable income for the government.

What we must not do is carry on as we are. Worse than that would be an increase government spending. The government is already spending too much on services and too little on debt management as it is. The more we spend on services, the less we have to pay off our debt without incurring yet more debt in order to do it. Though it might be unpopular, the only thing that will save our country from bankruptcy is to drop the secateurs and pick up a chainsaw.