Cutting the aid budget and skipping meetings: is Cameron still a global leader?

It's worry that NGOs seem to have become far better at campaigning for new things than holding the Government to account for what they have already promised.

 

The Prime Minister is supposed to be in Bali today, but instead, he is giving a speech on immigration and welfare benefits. Being Prime Minister is a busy job, but when he was picked by Secretary General Ban Ki-Moon to co-chair the UN’s high-level panel on the post-2015 development agenda, the assumption was that he’d be going to the meetings.

The "high-level" panel is so high-level, that there are only 30 people on it, carefully balanced to represent all global interests and come up with the next set of global objectives, to replace the Millennium Development Goals . David Cameron is representing the G8 and the rest of the developed world, while the Presidents of Indonesia and Liberia represent the developing world, as his fellow co-chairs.

But Cameron isn’t there. He’s sent Development Secretary Justine Greening to represent him. Obama sends Cameron, Cameron sends Greening… But the NGOs aren’t up in arms. Engagement in the work of the high-level panel has thus far been the preserve of the academic development elite.

By contrast, Comic Relief and the IF campaign have been engaging the public in a far more accessible conversation. The IF campaign was highly visible last week, lobbying for the Chancellor to keep his pledge on a 0.7 per cent budget for overseas aid. And come Budget day, NGOs were falling over themselves to congratulate the UK on becoming the first G8 country to meet the 0.7 per cent pledge.

But in the detail of the Budget, it emerged that DFID had contributed to the record £10.9bn departmental under-spend to the tune of £500m (see page 70). From a total departmental budget of £8.8bn, an under-spend of £500m is a major event. But the NGOs have not been up in arms. They have become far better at campaigning  for new things, than holding the Government to account for what they previously promised.

Do under-spends really matter? One way of putting that DFID’s under-spend into context is to look at what a £500m under-spend could have funded. Next year DFID plans to spend a total of £500m combating malaria, but they could have done it last year, simply by using their under-spend.

Over the weekend, The Sun reported Tory MP Priti Patel’s criticism of DFID for spend £45m on ‘bonuses for pen pushers’. Patel says: “this money could have been much better spent on transforming people’s lives,” and The Sun’s report suggests that it “would pay for tetanus jabs for more than a BILION kids”. On that maths, DFID’s under-spend, with or without the ‘bonuses for pen pushers’, would pay for tetanus jabs for 10 billion kids.

Rightly, the week before the Budget, Britain was celebrating a record breaking fundraising effort during Comic Relief. A huge £75m was raised, £16m of which came from DFID match funding the generosity of the British public. But the following week, we discover that they could have matched it six times over, just by using their under-spend.

If the Government under-spend £500m when their aid budget it 0.56% (or £8.8bn), how much will they under-spend when it is 0.7 per cent (or £11.3bn)? I have written for Staggers before suggesting that the UK may never actually spend 0.7 per cent because the Government will continue to under-spend for the last two years of this Parliament, fail to fulfil their manifesto commitment to enshrine 0.7 per cent in law and then review the aid budget the other-side of the next election. I hope I’m wrong. But the lack of outcry from the development community when Cameron skips UN meetings and DFID under-spend so dramatically, doesn’t exactly fill you with confidence. 

Richard Darlington was Special Adviser at DFID 2008-2010 and is now Head of News at IPPR - follow him on twitter: @RDarlo

David Cameron with Justine Greening last year. Photograph: Getty Images

Richard Darlington is Head of News at IPPR. Follow him on Twitter @RDarlo.

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I was wrong about Help to Buy - but I'm still glad it's gone

As a mortgage journalist in 2013, I was deeply sceptical of the guarantee scheme. 

If you just read the headlines about Help to Buy, you could be under the impression that Theresa May has just axed an important scheme for first-time buyers. If you're on the left, you might conclude that she is on a mission to make life worse for ordinary working people. If you just enjoy blue-on-blue action, it's a swipe at the Chancellor she sacked, George Osborne.

Except it's none of those things. Help to Buy mortgage guarantee scheme is a policy that actually worked pretty well - despite the concerns of financial journalists including me - and has served its purpose.

When Osborne first announced Help to Buy in 2013, it was controversial. Mortgage journalists, such as I was at the time, were still mopping up news from the financial crisis. We were still writing up reports about the toxic loan books that had brought the banks crashing down. The idea of the Government promising to bail out mortgage borrowers seemed the height of recklessness.

But the Government always intended Help to Buy mortgage guarantee to act as a stimulus, not a long-term solution. From the beginning, it had an end date - 31 December 2016. The idea was to encourage big banks to start lending again.

So far, the record of Help to Buy has been pretty good. A first-time buyer in 2013 with a 5 per cent deposit had 56 mortgage products to choose from - not much when you consider some of those products would have been ridiculously expensive or would come with many strings attached. By 2016, according to Moneyfacts, first-time buyers had 271 products to choose from, nearly a five-fold increase

Over the same period, financial regulators have introduced much tougher mortgage affordability rules. First-time buyers can be expected to be interrogated about their income, their little luxuries and how they would cope if interest rates rose (contrary to our expectations in 2013, the Bank of England base rate has actually fallen). 

A criticism that still rings true, however, is that the mortgage guarantee scheme only helps boost demand for properties, while doing nothing about the lack of housing supply. Unlike its sister scheme, the Help to Buy equity loan scheme, there is no incentive for property companies to build more homes. According to FullFact, there were just 112,000 homes being built in England and Wales in 2010. By 2015, that had increased, but only to a mere 149,000.

This lack of supply helps to prop up house prices - one of the factors making it so difficult to get on the housing ladder in the first place. In July, the average house price in England was £233,000. This means a first-time buyer with a 5 per cent deposit of £11,650 would still need to be earning nearly £50,000 to meet most mortgage affordability criteria. In other words, the Help to Buy mortgage guarantee is targeted squarely at the middle class.

The Government plans to maintain the Help to Buy equity loan scheme, which is restricted to new builds, and the Help to Buy ISA, which rewards savers at a time of low interest rates. As for Help to Buy mortgage guarantee, the scheme may be dead, but so long as high street banks are offering 95 per cent mortgages, its effects are still with us.