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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Leader: The unresolved Eurozone crisis

The continent that once aspired to be a rival superpower to the US is now a byword for decline, and ethnic nationalism and right-wing populism are thriving.

The eurozone crisis was never resolved. It was merely conveniently forgotten. The vote for Brexit, the terrible war in Syria and Donald Trump’s election as US president all distracted from the single currency’s woes. Yet its contradictions endure, a permanent threat to continental European stability and the future cohesion of the European Union.

The resignation of the Italian prime minister Matteo Renzi, following defeat in a constitutional referendum on 4 December, was the moment at which some believed that Europe would be overwhelmed. Among the champions of the No campaign were the anti-euro Five Star Movement (which has led in some recent opinion polls) and the separatist Lega Nord. Opponents of the EU, such as Nigel Farage, hailed the result as a rejection of the single currency.

An Italian exit, if not unthinkable, is far from inevitable, however. The No campaign comprised not only Eurosceptics but pro-Europeans such as the former prime minister Mario Monti and members of Mr Renzi’s liberal-centrist Democratic Party. Few voters treated the referendum as a judgement on the monetary union.

To achieve withdrawal from the euro, the populist Five Star Movement would need first to form a government (no easy task under Italy’s complex multiparty system), then amend the constitution to allow a public vote on Italy’s membership of the currency. Opinion polls continue to show a majority opposed to the return of the lira.

But Europe faces far more immediate dangers. Italy’s fragile banking system has been imperilled by the referendum result and the accompanying fall in investor confidence. In the absence of state aid, the Banca Monte dei Paschi di Siena, the world’s oldest bank, could soon face ruin. Italy’s national debt stands at 132 per cent of GDP, severely limiting its firepower, and its financial sector has amassed $360bn of bad loans. The risk is of a new financial crisis that spreads across the eurozone.

EU leaders’ record to date does not encourage optimism. Seven years after the Greek crisis began, the German government is continuing to advocate the failed path of austerity. On 4 December, Germany’s finance minister, Wolfgang Schäuble, declared that Greece must choose between unpopular “structural reforms” (a euphemism for austerity) or withdrawal from the euro. He insisted that debt relief “would not help” the immiserated country.

Yet the argument that austerity is unsustainable is now heard far beyond the Syriza government. The International Monetary Fund is among those that have demanded “unconditional” debt relief. Under the current bailout terms, Greece’s interest payments on its debt (roughly €330bn) will continually rise, consuming 60 per cent of its budget by 2060. The IMF has rightly proposed an extended repayment period and a fixed interest rate of 1.5 per cent. Faced with German intransigence, it is refusing to provide further funding.

Ever since the European Central Bank president, Mario Draghi, declared in 2012 that he was prepared to do “whatever it takes” to preserve the single currency, EU member states have relied on monetary policy to contain the crisis. This complacent approach could unravel. From the euro’s inception, economists have warned of the dangers of a monetary union that is unmatched by fiscal and political union. The UK, partly for these reasons, wisely rejected membership, but other states have been condemned to stagnation. As Felix Martin writes on page 15, “Italy today is worse off than it was not just in 2007, but in 1997. National output per head has stagnated for 20 years – an astonishing . . . statistic.”

Germany’s refusal to support demand (having benefited from a fixed exchange rate) undermined the principles of European solidarity and shared prosperity. German unemployment has fallen to 4.1 per cent, the lowest level since 1981, but joblessness is at 23.4 per cent in Greece, 19 per cent in Spain and 11.6 per cent in Italy. The youngest have suffered most. Youth unemployment is 46.5 per cent in Greece, 42.6 per cent in Spain and 36.4 per cent in Italy. No social model should tolerate such waste.

“If the euro fails, then Europe fails,” the German chancellor, Angela Merkel, has often asserted. Yet it does not follow that Europe will succeed if the euro survives. The continent that once aspired to be a rival superpower to the US is now a byword for decline, and ethnic nationalism and right-wing populism are thriving. In these circumstances, the surprise has been not voters’ intemperance, but their patience.

This article first appeared in the 08 December 2016 issue of the New Statesman, Brexit to Trump