How Cameron can show leadership on aid at the G8 this summer

To emulate the Labour government's achievements at Gleneagles in 2005, the Prime Minister needs to make progress on transparency and tax.

Sometimes good news isn't boring. Since 2005, when hundreds of thousands of people marched on Edinburgh ahead of the G8 in support of the Make Poverty History campaign, child mortality in sub-Saharan Africa is down by 18 per cent and 21 million more children are in school. African leadership, with financial support from the G8 and other donors, has delivered a remarkable success story that far too few people know about.

The ONE campaign's new report Summit in Sight: The G8 and Africa from Gleneagles to Lough Erne shows that this progress has not happened by accident. African leadership has helped the region to grow by an average of 5 per cent GDP for the past eight years, increasing the resources that governments have to spend on health and education. It was also a deliberate decision by Tony Blair and Gordon Brown to put African development issues at the top of the agenda for the Gleneagles summit in 2005 and to give it the political attention necessary to deliver a strong agreement. Eight years later there is an extra £7bn in development aid going to sub-Saharan Africa every year from G8 countries, and the agreement on debt relief has wiped out £22bn. Like all ventures, some of this aid fails but the vast majority improves the lives of some of the world's poorest people, for example by paying for 5.4 million more people to access anti HIV/AIDS treatment.

In the UK, this commitment to extra funding has continued under the coalition government and in this month's Budget, George Osborne can make good on the UK's promise to assign 0.7 per cent of national income to the aid budget from 2013. It would be the wrong time to abandon this promise and it is to the government's credit that the UK is continuing to lead by example within the G8.

While significant progress has been made, that is no reason for complacency. Hunger in Africa has barely decreased since 2005 and despite increases in GDP, inequality remains a severe challenge. African governments and citizens will be the primary drivers of change and the G8 should support that by agreeing an ambitious package on transparency and tax at Lough Erne this summer. It should make progress on giving citizens the information they need to hold their leaders to account and hasten the day when aid is no longer necessary. It should also follow through on its 2012 promise to work with African governments to lift 50 million people out of poverty through investments in agriculture.

This requires the G8 to start by getting its own house in order. David Cameron should secure a commitment from all countries to lift the veil of secrecy on company ownership by putting the names of the ultimate beneficial owners into public registries. This would crack down on shell companies, lifting the veil of secrecy that shrouds illicit financial flows out of Africa. Cameron should also get agreement for all oil, gas and mining companies listed in G8 countries to report the payments they make to governments around the world, on a project-by-project basis. Finally, to ensure this progress in transparency translates into accountability, and ultimately improves the lives of people living in poverty, urgently needed support should be found for supreme audit institutions, revenue authorities and anti-corruption champions.

These are not simple wins for any leader - the reforms challenge vested interests and the systemic causes of poverty that have kept power out of the hands of the many for too long. Cameron must invest time and political capital if he is to emulate the Labour government's achievements at Gleneagles. His "golden thread" theory of development is potentially transformative if translated into real policy progress on hard issues in June. The galvanising effect of the 2005 G8 commitments has helped deliver an extraordinary eight years of progress. Now this government must show they are up to the task.

Joe Powell is senior policy and advocacy manager at the ONE campaign

David Cameron speaks while standing with Liberian President Ellen Johnson-Sirleaf at the United Nations. Photograph: Getty Images. P

Joe Powell is senior policy and advocacy manager at the ONE campaign

Photo: Getty Images
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There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR