Written evidence submitted by Simon Maxwell,
Senior Research Associate, Overseas Development Institute
Is the basic idea sound?
1. International development is not just
about aid, but aid is an important instrument of international
development policy.
2. There is no mystique or economic logic
underlying the 0.7% target, but it has been in existence for 40 years,
and is an accepted benchmark of donor performance.
3. The advantage—and possible disadvantage—of
the Bill is that it takes the volume of aid out of the political
debate.
4. This is an advantage because:
— it provides predictability of aid flows;
and
— it reduces the risk of aid being cut
in a time of public expenditure constraints.
5. It could be a disadvantage because:
— political debate about public expenditure
levels is legitimate and necessary;
— fixing the size of the aid budget in
advance may make it more difficult to increase aid when needs
rise, for example in response to natural disaster or global economic
crisis;
— aid may fall below predicted levels if
GNI falls.
6. My personal view is that the advantages
of predictability and long-term guarantees outweigh the potential
disadvantages.
Is the Bill strong enough?
7. The Bill requires the Secretary of State
to report aid volume against GNI on a calendar year basis. This
could presumably be done by January each year, when Q4 estimates
of GDP become available from the ONS, though adjustments would
be needed to estimate GNI. There might have to be later adjustments
as GDP estimates are revised.
8. A stronger way of drafting the Bill would
be to say that the level of oda will be fixed automatically in
Comprehensive Spending Reviews and Budgets, based on the latest
estimates of GNI. Thus
— estimates of future GNI would be reported
three years ahead in the Comprehensive Spending Review, and oda
fixed accordingly;
— estimates would be updated in Pre-budget
reports, and again in the budget; and
— reporting would take place as above.
9. Whichever strategy is followed, there
will need to be fine-tuning of the aid budget—unless the
level is set far enough above the minimum threshold that small
changes in GNI do not affect the total.
10. It is important to make the point that
aid statistics are reported in terms of disbursements, not commitments.
This is why there are sometimes significant swings from year to
year, caused by lumpy payments to eg the IDA. One way round this
might be to work on the basis of a three-year moving average.
What other issues arise?
11. There may be a risk that Government
side-steps the intent of the Bill by loading onto the aid budget
items which are only marginally legitimate. In principle, protection
against this can be found in the 2002 International Development
Act and in the definition of oda by the Development Assistance
Committee of the OECD.[25]
The DAC also defines a list of eligible countries. The DAC briefing
note on "What is ODA?" is attached for ease of reference.[26]
12. There is, however, an active debate
about whether eg climate funding will be financed from existing
aid budgets or will be additional. The UK Government has stated
that 90% of climate funding should be additional (Gordon Brown
speech on the Road to Copenhagen in June 2009).[27]
13. There is also an ongoing discussion
in the DAC about the oda definition, especially about military
expenditure in or "for" poor countries. The conventional
wisdom is that it would be risky to open up the aid definition
in this way.
14. Internationally, there is concern about
the amount spent from aid budgets to support refugees in host
countries: $US2 billion in 2007, according to DAC statistics.[28]
February 2010
25 www.oecd.org/dac/stats/methodology Back
26
http://www.oecd.org/dataoecd/21/21/34086975.pdf Back
27
http://www.number10.gov.uk/Page19813 Back
28
http://www.oecd.org/department/0,3355,en_2649_34447_1_1_1_1_1,00.html Back
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