The slump in sterling has reduced the value of the UK's international aid budget by the equivalent of up to £334 million since Gordon Brown became Prime Minister, Conservatives said...
Yeah, right.
*sigh*
Apart from the point that this 'blog's motto is "trade not aid", as any fule kno, what our gummint laughingly refers to as aid payment are largely export subsidies to UK business and grants to various quangocracies. Ergo whatever happens to GBP, the value of goods and services that the donee countries receive is largely unaffected by currency fluctuations.
*/sigh*
Monday 22 December 2008
"Aid budget hit by sterling slump"
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9 comments:
Actually, the UK is one of the very few countries where aid donations *aren't* primarily in the form of export subsidies. We don't tie aid to the purchase of domestic goods at all, rather we insist on transparent tendering. If you speak to (non-British) people active in the field, they'll confirm that DfID are actually the most efficient benefit-giving lot in the business.
(see also CDC. Private Eye has a vendetta against them for operating commercially - but they work by using government aid money to provide private equity capital to fund projects and businesses in developing countries. I've worked with them, and they demand a serious, commercial rate of return - management are bonused primarily on returns, so this actually happens - and serious management discipline on the ground. As a result, they're doing real good, filling genuine liquidity gaps for viable businesses rather than dicking about with quangos and bribery...)
Oops, that's me told. It's (sort of) your department anyway.
Wait a minute! Are you now saying that our money is used to buy non-UK goods and services while other 1st World countries' aid money is generally restricted to the purchase of the donor countries' goods and services? In other words, and for instance, we are paying Nigeria to buy goods from France.
This may be economically efficient and I'm all for that in most cases. However, where alms are being handed to beggars, efficiency in the way the beggar uses those alms is not necessarily the most appropriate policy. This is especially so where not all the financial transactions involved are voluntary.
In the case of foreign aid the UK taxpayer is compelled to cough up the money. Under the rules which probably apply to French aid [1] the French taxpayer gives free French goods to Nigeria. Under our "efficient" rules, the UK taxpayer gives free French goods to Nigeria. Wonderful - for France. Furthermore, in the interest of its much vaunted "fairness" when it comes to other people's money, I'm confident our government will ensure that the UK taxpayer coughs up more money to make up for the fall in sterling so that the French - or whoever - can continue to benefit.
[1] and even if the rules say differently the French are canny - and dishonest - enough to see that the rules are bent sufficiently that it's French suppliers of goods and services who benefit from French aid (cf EU regulations without number)
JB, I think that our Aid Minister has overruled you there.
"where alms are being handed to beggars, efficiency in the way the beggar uses those alms is not necessarily the most appropriate policy"
No actually, it still is.
*If* we think it's appropriate to give aid to low-income foreign countries, we should do so in the way that most benefits low-income foreign countries.
*If* we think it's appropriate to give aid to British companies, we should do so in the way that most benefits British companies.
But pretending to do the former while actually doing the latter in a half-arsed fashion that maximises benefits for neither is just moronic.
I'd rather things carried on roughly as at present, but failing that, the Aid Minister's 'none at all' policy is more sensible than moving to a crooked French/US style system.
(altho' wonder if I can intercede to save CDC? Unlike most state-funded investments at present, they're generating a decent return for the public purse...)
I'm with Mr Wadsworth in that trade helps poor countries far more than aid. At the same time I'm against domestic economic distortion through regional assistance, development grants etc. So my default position is no alms to beggars whether they are the mercedocrats of the 3rd world or British companies (or their employees' unions). That said, if my cabinet colleagues insist they have to keep the Guardianista tendency happy then a second best solution is to see that aid expenditure is directed towards British companies so at least most of the moolah ends up in British hands.
Accordingly, by arranging matters in the French way (either honestly or by rule bending/ignoring) we get support for British industry through the aid budget. This keeps the bleeding hearts and British industry happy (and the taxpayers, more or less, quiet). This may not be economically efficient but it's politically efficient.
"(altho' wonder if I can intercede to save CDC? Unlike most state-funded investments at present, they're generating a decent return for the public purse...)"
Sorry I didn't answer that one. I know that present circumstances are . er . . challenging but, in normal circumstances, if an organisation is making commercial returns (as apparently CDC is) then there's no need for it to be supported by public money either as equity or loan. I suggest, therefore, that the management prepare a shelf flotation document for use when the world's stock markets return to normal (whenever that might be).
U, you have only been in the job for a couple of days, and I must say you are handling it most deftly!
MW
"I must say you are handling it most deftly!"
Thanks for the compliment. However modesty compels me to admit that the same could have been said of Lord Mandelson . . . . .
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