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The Cragged

Break out of the echo chamber

The overseas aid debate – the arguments for and against cutting the UK’s aid budget

Is aid a moral obligation for a wealthy nation like the UK? Or are bleeding heart liberals sending crucial resources abroad when there are pressing investments needed domestically? Here’s what both sides have to say.

The Cragged
12–18 minutes

Contents

Overseas aid is the political football that politicians love to kick around. 

It currently takes up about 0.5% of the UK budget, which will work out at about £13 bn this financial year. This was lowered from the UN’s target of 0.7% in 2021 and will be lowered again to 0.3% by 2027 “to pay for increased defence and security spending.”123

Is it a moral obligation for a wealthy nation like the UK’s to support growing economies — one that supports its strategic interests? Or are bleeding heart liberals sending crucial resources abroad when there are pressing investments needed domestically?

The Context

Overview

Aid is the act of one country voluntarily giving resources or money to another to support its economic development and welfare. 

  • The UK is a member of the Development Assistance Committee (DAC), an international organisation of countries. Its members commit to certain aid targets (although generally don’t achieve them) and adhere to a common set of rules and a shared understanding of aid.
  • It’s officially called Overseas Development Assistance (ODA), a term which excludes certain items, such as military aid.
  • Financial aid is concessional – which means that loans are issued with a variable percentage being delivered as a grant or with preferential interest rates. 4

There are currently 133 recipient countries eligible for aid, a number which is decided by the OECD.5

Most of the UK’s aid money comes from the Foreign, Commonwealth and Development Office (FCDO) but other departments typically contribute roughly 25-35% of the total.

Origins

Aid has been around for a long time but in the 1960s there were efforts to formalise the administration and measurement of it by wealthier countries, which led to the birth of the Development Assistance Committee (DAC). 

The DAC defined ODA in 1969 and in 1970 the UN set a target for member countries to donate 0.7% of their Gross National Income (GNI). Most countries do not consistently hit this target.67

The UK is one of the largest DAC donors by volume and GNI.8

ODA on a grant equivalent measure by members of OECD Development Assistance Committee (DAC) as percent of gross national income (GNI). Data Source: OECD (2024)

Purpose

At a high level, it aims to reduce poverty and reduce gender inequality. The two overarching categories are: 

Humanitarian aid:
The delivery of food and medical assistance in the wake of a disaster or conflict.

Development aid:
To assist economic, social and environmental development.

The UK Government has four strategic goals in its latest policy (2022): 

1. Reliable investment to help UK partners grow sustainably and mobilise up to £8 billion of financing by 2025.

2. Empowering women and girls through education, reproductive health and ending violence to women.

3. Provide life-saving humanitarian assistance.

4. Climate change, biodiversity, and global health. This spans mitigating climate change outcomes and fighting diseases like AIDS.

However, these definitions are pretty loose. For example, the UK’s funds include £75m on broadcasting the BBC World Service, which isn’t the most obvious way to support economic development. In this sense, it’s often considered a strategic investment in foreign policy, with donor countries impressing their cultural and political weight on developing nations.9

The Arguments

For

The UK should prioritise domestic issues

Overseas aid diverts funds from urgent domestic priorities, especially given the UK’s current economic challenges. Taxes are increasing, debt is growing, and investment is urgently needed across the country.

The budget for the UK’s aid was all borrowed, putting an additional fiscal burden on British taxpayers who are already suffering. Until the UK can reliably fund its own healthcare, education, and social welfare, it should not be investing abroad.10

It’s not impactful and no-one’s accountable

Well-intentioned or not, aid is never going to be a magical a panacea that’ll fix the problems of developing countries. Africa receives roughly $50 billion of international assistance annually, yet millions of Africans went into extreme poverty last year alone. The UK has been sending OFA for decades – as a result, we know that aid often fails to reach its intended recipients due to corruption and inefficiency. A 2022 investigation revealed the FCDO is not reporting aid fraud and corruption, with as much as 5% of the budget being lost to fraud and inefficiency. Little, if anything, can be done to recoup those funds.111213

Meanwhile, a 2015 National Audit Office report revealed shortcomings such as a lack of reporting, transparency, accountability, and rushed spending decisions.14 There are many examples of aid projects that either went nowhere or led to more harm than good, no matter how well meaning, as Edward Luttwak pointed out: “including a steel plant in Ajaokuta, Nigeria, that does not produce steel and agricultural projects in Mali that decreased rather than increased the production of grain”.15

It fosters dependency rather than self-sufficiency

Long-term reliance on aid can hinder economic independence, creating a cycle of dependency rather than encouraging sustainable growth. Critics argue that aid should focus more on fostering self-sufficiency in recipient countries.16 In the aftermath of the devastating chemical explosion in Beirut in 2020, there was a lot of soul searching.The UN’s own reporting into aid’s efficacy has led them to state: 

For a subset of developing countries, a high degree of dependence on aid accentuates macro-economic vulnerabilities.17

Aid creates the wrong incentives for the donor

ODA budget is routinely diverted to house in-donor refugees – that’s refugees in the UK – at exorbitant cost and bad value for money. It also fuels an administrative cost that outweighs the benefits, with staffing, transaction costs and bureaucracy eating up the money.1819 The Taxpayers Aliliance has warned that an arbitrary target

It creates the wrong incentives for the recipient

Recipient countries can take the money with no accountability and no incentive to invest in good policy. French researchers looked into the potential role this played in the municipal failings behind the Beirut explosion in 2020 – an incident which generated over $300m in international, humanitarian aid funding. International donors were providing basic services and building infrastructure, replacing the role of the municipalities. Did they keep afloat an incompetent government, indirectly contributing to the failings behind the catastrophe?

Notably, donor countries placed much stricter controls on unlocking the humanitarian aid they granted after the explosion, given the failure in governance and investment displayed by the Lebanese government.2021

And the wrong incentives for aid agencies

We keep spending giving money to aid agencies – but how much closer are we to the goal of elinmiating poverty? Even advocates of aid have felt despair about the delivery of aid. Charles Lwanga-Ntale of Uganda’s Development Research and Training describes “almost unanimous pessimism among African civil society and academia about the unworkable nature of aid, given the way in which it is structured and delivered.”22

Recipient countries want to break the aid cycle

African leaders have shared severe warnings about aid. Rwandan president Paul Kagame wrote that:

Aid has left recipient populations unstable, distracted and more dependent.

He argues that the discussion should be when to end aid, not when to raise it back up to a higher amount.

In 2019, Ghana’s president Nana Akufo-Addo published a Beyond Aid strategy for his country, setting out a vision to transition to an independent economy and a more robust financing strategy, which, crucially, cuts the dependency on aid for core services such as health and education.

It can fuel corruption

Critics of aid argue that instead of improving the living conditions for the most poor, this aid makes the rich richer, and that there’s evidence that it can prop up war economies or be used to secure power by militants in conflict zones. Even aid workers and leaders have acknowledged this negative outcome in instances such as the Rwandan aid camps in 1996.23242526

The projects it funds are often ineffective

There are numerous cases of wasteful investments. Over £9 million was given to an Ethiopian pop group in the 2010s. It’s fine to invest in short term projects, but while individual success stories and case studies might be heart-warming, they’re not going to fix anything more than superficial issues and cannot achieve the lofty, ostensible goals of aid.

Empirical studies have shown that aid levels are more of a reaction to poverty levels and that foreign aid alone is unlikely to be an effective long-term solution to poverty.2728

It’s not a priority – despite the lofty words of politicians

The money does not deliver value for money – if it did, the Government would prioritise it. However, when the aid budget was reduced from 0.7% to 0.5%, the Government pointed to the economic challenges the UK currently faces.29 Besides, money allocated to the aid budget is regularly redirected to more important issues. For example, in 2022, over £4bn of the foreign aid budget was spent providing housing support for asylum seekers and refugees on British soil, rather than the overseas development goals it ostensibly claims to support.3031

UK taxpayers are supporting wealthy countries

Money is given to regions and countries with bigger economies than regions of the UK: in China, Shenzhen province received hundreds of thousands of pounds for ethnic heritage and research projects even though its GDP per capita is bigger than many parts of the UK.32

It’s a tool for rich countries to assert domination

Critics have argued that aid serves the interests of wealthy, Western countries and is a tool to promote their multinational corporations and appropriate overseas resources. Is it any wonder that Western countries are suspicious of China’s increasing role as a donor? They’re all too familiar with the political intentions behind such largesse.333435

Against

There’s a moral responsibility

The UK is one of the world’s richest economies and it has an ethical obligation to assist nations struggling with poverty and instability. The UK’s aid budget supports projects to tackle poverty and provide infrastructure, health and education to the world’s poorest people.

A significant portion of our ODA budget also goes towards humanitarian aid, which helps people in urgent need, such as those affected by earthquakes or floods, or women and children who’ve been displaced by war. Global leaders including Bill Gates have pointed to the importance of helping the world’s most vulnerable people, while philosophers like Peter Singer have pointed to the moral imperative to support people in worse circumstances.3637

Aid improves people’s lives substantially

UK ODA funding has gone to According to WaterAid, who claim that over 62 million have clean water thanks to aid programmes. UNICEF used UK funds to provide healthcare, sanitation and nutrition for people in Yemen, Sudan and Ethiopia in 2023.

One of the UK’s current ODA projects in Ethiopia, one of the world’s poorest countries, has provided tens of thousands of people with access to water, sanitation and hygiene services. Similar outcomes play out in many sectors, including agriculture, disaster relief, education, energy generation and supply, environment and health.

The UK should honour commitments to developing countries

When the Government cut the aid budget in 2022, all five living former Prime Ministers criticised the move, with fromer Prime Minister Theresa May arguing, “we made a promise to the poorest people in the world. The government has broken that promise.38”

Its in the UK’s strategic interests

Overseas aid enhances the UK’s international influence, helping it maintain a leading role on the geopolitical stage, improving its relationships and diplomatic platform.39 The UK Aid Network argues the commitment “gives the UK leadership and influence in the development sphere and beyond.”4041

Aid plays a key role in reducing poverty

Empirical studies of aid have shown that ODA has a positive impact on growth and development. The University of Copenhagen conducted a review of the evidence in 2013, which revealed that aid has had a positive causal impact on growth and that it’s no less effective than other means of economic growth in the long run at driving down poverty. 42

It provides economic opportunities for the UK

Investing in overseas economies can create future markets for British goods and services by laying the groundwork for future trade. A recent study on Japan’s ODA projects revealed that 17% of overseas infrastructure projects that Japanese firms secured were a result of the country’s ODA programme.

Indeed, the UK is increasingly focused on ‘secondary benefits’ of aid, including those in the national interest and in the 2010s, its strategy focused on how the global prosperity that aid can help foster should be utilised to support British trade and businesses.434445

Developing countries are telling us they still need the aid

Even ambitious leaders like Ghana’s Nana Akufo-Addo still accept aid for their countries, in order to ensure that there isn’t a cliff-edge moment that would undercut efforts to become more economically self-reliant. The reality is that for the foreseeable future, many countries will rely on aid to provide bridging financing and project-based support for key services, as Ghana’s Beyond Aid strategy vision acknowledges.4647

Overseas aid is more needed than ever

More people are slipping into poverty and hunger. Women’s lives, livelihoods and independence are increasingly vulnerable in many parts of the world. Hundreds of charities have warned that hundreds of thousands of lives are at risk. Over 700 million people still live in extreme poverty today.4849

Aid charges economic growth

Besides, a lot of the bad reputation ODA receives neglects to factor in the success stories. In the wake of the Korean war, South Korea borrowed from international aid grants to fund railways, roads, agricultural projects and education. This fueled its economic growth. By 1995 it stopped receiving ODA, and today it’s a wealthy country, a DAC member, and a donor to the international aid system. Of course there’s some waste in the system, but Korea’s story shows that aid investments lift people out of poverty and fuel economic growth where it’s most needed.50

The Government stated its intention to raise aid again

When the Government cut the UK’s aid budget, it did so under economic duress – not for any ideological reason. Indeed, the Government has tightened its strategy and has a plan to evaluate when aid funding can be revised back up to 0.7% – all evidence for how politically important this policy is politically.515253

In a 2021 House of Lords debate on the issue, members warned that a cut in aid damages the UK’s international standing, and also undercuts our efforts to ensure stability in an interconnected world.54

It provides crucial relief during disasters

Aid programmes are also vital during natural disasters. For example, after the devestating Turkey-Syria earthquakes in 2023, the UK Government gave £25 million in aid, to fund emergency relief, such as “tents and blankets for families made homeless in freezing conditions, and the ongoing deployment of world-class UK medical expertise through the joint MoD-FCDO Field Hospital established in Turkoglu…there will be a particular focus on protecting women and girls, including by helping with childbirth and midwifery and reducing the risk of gender-based violence for communities who have been displaced”.55

It’s an investment in international security and stability

Tackling issues like poverty, education and women’s rights can help our own security by fostering stability internationally.

For example, 10 years ago, Somali piracy in the Arabian Sea was skyrocketing, with huge consequences, threatening the safety and and extracting ransoming costs of up to $385m between 2005 and 2012. The pirates also blocked or stole aid cargo destined for Somalia, fuelling poverty and desperation in their country and creating the ideal chaotic environment to recruit more pirates.” UK Aid played a direct role in supporting the Somali state’s institutions, equipping them to tackle this problem and invest in economic solutions. By 2013, pirate attacks were down by 90 percent.5657

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External links

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Footnotes

  1. Statistics on International Development: Final UK Aid Spend 2022, Gov.uk, 2024 ↩︎
  2. James Landale, UK aid spend may hit 17-year low, charities warn, BBC, 2024 ↩︎
  3. Philip Loft, The aid budget and support for refugees in the UK, 2022 to 2025, House of Commons Library, 2025 ↩︎
  4. Official development assistance – definition and coverage, OECD ↩︎
  5. ODA recipients: countries, territories, and international organisations, OECD.org ↩︎
  6. Development Assistance Committee, Wikipedia, 2024 ↩︎
  7. House of Commons Library, 2024 ↩︎
  8. OECD Data Explorer, Official development assistance (ODA), 2024 ↩︎
  9. Committee launches new inquiry on the future funding of the BBC World Service, UK Parliament, Committees, 2024  ↩︎
  10. PM statement on Overseas Development Aid motion: 13 July 2021, Gov.uk ↩︎
  11. Tackling fraud in UK aid: country case studies, Independent Commission for Aid Impact (ICAI), 2024 ↩︎
  12. FCDO response to the Independent Commission for Aid Impact recommendations on ‘Tackling Fraud in UK Aid: Country Case Studies’, Gov.uk, March 2024 ↩︎
  13. FCDO ‘not proactive enough’ at tackling overseas aid fraud, Civil Service World,2024 ↩︎
  14. Managing the Official Development Assistance target – a report on progress, National Audit Office, 2017 ↩︎
  15. Edward Luttwak and Marian Tupy, The Aid Africa Can’t Afford, 2008  ↩︎
  16. Sebastián Edwards, How effective is foreign aid?, World Economic Forum, 2014 ↩︎
  17. United Nations Development Programme Bureau for Development Policy, Towards Human Resilience: Sustaining MDG Progress in an Age of Economic Uncertainty, Official Development Assistance (Chapter 5), 2011 ↩︎
  18. Sasha Alyson, Development Aid: A continuation of colonialism by other means, The Africa Report, 2022 ↩︎
  19. Gilles Carbonnier, “Official development assistance once more under fire from critics”, International Development Policy | Revue internationale de politique de développement [Online], 1 | 2010, Online since 11 March 2010, connection on 14 November 2024. ↩︎
  20. Gilles Carbonnier, “Official development assistance once more under fire from critics”, International Development Policy | Revue internationale de politique de développement [Online], 1 | 2010, Online since 11 March 2010, connection on 14 November 2024. ↩︎
  21. Valentina Finckenstein, How International Aid Can Do More Harm than Good: The Case of Lebanon, LSE IDEAS. 2021 ↩︎
  22. Sasha Alyson, Development Aid: A continuation of colonialism by other means, The Africa Report, 2022 ↩︎
  23. Dr. Dambisa Moyo: Dead Aid, Youtube, 2014 ↩︎
  24. The Trouble With Aid, BBC, 2012 ↩︎
  25. Edward Luttwak discusses foreign aid and corruption, Cato, 2008 ↩︎
  26. Beat Schweizer, Moral dilemmas for humanitarianism in the era of “humanitarian” military interventions, 2004 ↩︎
  27. Ben Riley-Smith, Ethiopian Spice Girls’ given £5m in British foreign aid despite previous outcry, The Telegraph, 2016 ↩︎
  28. Edmore Mahembe & Nicholas Mbaya Odhiambo | (2019) Foreign aid, poverty and economic growth in developing countries: A dynamic panel data causality analysis, Cogent Economics & Finance, 7:1, 1626321, DOI: 10.1080/23322039.2019.1626321 ↩︎
  29. Andrew Mitchell MP, Less money – but targeted at those who need it most, Chatham House, 2022 ↩︎
  30. James Landale, UK foreign aid being spent in Britain passes £4bn mark, experts say, BBC, 2022 ↩︎
  31. Tevye Markson, Home Office aid spending ‘wreaking havoc’ on FCDO’s development work, Civil Service World, 2024 ↩︎
  32. Mark Tovey, Robin Hood in Reverse: Foreign aid spending in regions that are richer than parts of the UK, Institute of Economic Affairs, 2024 ↩︎
  33. Development Finance International Development Association, AID CIRCUMVENTION: The Elusive Dream of Putting Countries in the Driver’s Seat, The World Bank, 2024 ↩︎
  34. Gilles Carbonnier, “Official development assistance once more under fire from critics”, International Development Policy | Revue internationale de politique de développement [Online], 1 | 2010, Online since 11 March 2010, connection on 14 November 2024. ↩︎
  35. Sarah Bermeo, Development, self-interest, and the countries left behind, Brookings, 2018 ↩︎
  36. BBC, Peter Singer: It’s our duty to give ↩︎
  37. James Landale, Bill Gates criticises Budget cut to overseas aid, 2024 ↩︎
  38. UK aid spending: Statistics and recent developments, House of Lords Library, 2022 ↩︎
  39. Philip Loft and Philip Brien, The 0.7% aid target, House of Commons Library, 2024 ↩︎
  40. Information note: The use of UK aid to enhance mutual prosperity, ICAI, 2019 ↩︎
  41. Sarah Champion MP, Cutting foreign aid shrinks our global influence, Chatham House, 2022 ↩︎
  42. Channing Arndt, Sam Jones, Finn Tarp, Assessing Foreign Aid’s Long-Run Contribution to Growth and Development, World Development, Volume 69, 2015, Pages 6-18, https://doi.org/10.1016/j.worlddev.2013.12.016. ↩︎
  43. Cross-Government Prosperity Fund: further information, 2020, Gov.uk ↩︎
  44. Brian Tomlinson, The Changing Faces of Development Aid and Cooperation: Encouraging Global Justice or Buttressing Inequalities?, IBON International ↩︎
  45. Shuhei Nishitateno, Does official development assistance benefit the donor economy? New evidence from Japanese overseas infrastructure projects, Int Tax Public Finance 31, 1037–1065 (2024). https://doi.org/10.1007/s10797-023-09788-8 ↩︎
  46. UK–Ghana development partnership summary, July 2023, Gov.uk, 2023 ↩︎
  47. Declining Aid, Rising Debt Thwarting World’s Ability to Fund Sustainable Development, Speakers Warn at General Assembly High-Level Dialogue, United Nations, 2019 ↩︎
  48. Poverty, Prosperity, and Planet Report, World Bank, 2024 ↩︎
  49. Lizzy Davies, Where UK aid cuts bite deepest – stories from the sharp end, The Guardian, 2021 ↩︎
  50. Manuela V. Ferro, and Nishio Akihiko, Nishio, From aid recipient to donor: Korea’s inspirational development path, 2021 ↩︎
  51. Hans Dembowski, Why ODA is better than its reputation in donor countries, D&C, 2024 ↩︎
  52. Andrew Mitchell MP, Less money – but targeted at those who need it most, Chatham House, 2022 ↩︎
  53. UK aid spending: Statistics and recent developments, House of Lords Library, 2022 ↩︎
  54. UK Foreign Aid Programme, House of Lords Debate, Hansard transcript, 2021 ↩︎
  55. UK commits major new aid package to Turkey-Syria earthquake response, Gov.uk, 2023 ↩︎
  56. UK aid in a conflict-affected country: Reducing conflict and fragility in Somalia, Independent Commission for Aid Impact, 2017 ↩︎
  57. Johnny Luk, The UK is still better than most when it comes to overseas aid, 2021 ↩︎

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