Labour accuses Tories of reviving memories of apartheid with South Africa aid decision

Ivan Lewis says the move to end aid will leave a "bitter taste", comparing it to the Tories' decision to oppose sanctions on apartheid South Africa.

Did the UK announce the end of aid to South Africa without having the courtesy to inform the South African government first? The British government and Pretoria are offering very different accounts this morning. The South African international relations department said that "proper consultations" had not taken place and denounced the "unilateral" decision. Its statement read:

This is such a major decision with far reaching implications on the projects that are currently running and it is tantamount to redefining our relationship.

Ordinarily, the UK government should have informed the government of South Africa through official diplomatic channels of their intentions and allowed for proper consultations to take place, and the modalities of the announcement agreed on.

But on the Today programme this morning, William Hague insisted that the move "shouldn’t have been a surprise" since discussions had been going on "for some months". He added: "No doubt there is some confusion or bureaucratic confusion about that, perhaps, on the South African side. But I’m not going to fling accusations about that. "

International Development Secretary Justine Greening announced the decision to end direct aid, currently worth £19m a year, at a conference of African ministers and business leaders in London yesterday. "I have agreed with my South African counterparts that South Africa is now in a position to fund its own development," she said. 

"It is right that our relationship changes to one of mutual co-operation and trade, one that is focused on delivering benefits for the people of Britain and South Africa as well as for Africa as a whole."

In the context of an international development budget of £11bn, the decision to end £19m of aid to a country worth $408.2bn (GDP) might not seem particularly notable, but Labour has seized on the accusation of bad faith. The shadow international development secretary Ivan Lewis declared this morning that it would "reinforce some of the feelings about the apartheid years", later tweeting: "Tories opposed sanctions against apartheid S africa and now end aid to democratic S africa in shabby way. Leaves bitter taste". In a statement issued last night he said: 

Justine Greening has serious questions to answer – her claim that her decision was made with the agreement of her South African counterparts has been completely contradicted by the South African Government.
 
This looks like a serious breach of trust with one of our most important strategic partners. Justine Greening must explain why she is saying one thing about her conduct while the South African Government is saying another.
 
Behaving in what looks like a high-handed and patronising fashion towards South Africa is no way to treat one of the world’s key emerging nations and is not in Britain’s national interest.
But beyond the question of whether the South African government was properly consulted, there is a bigger argument here about whether the UK should continue to provide aid to so-called "middle income countries". Having previously ended aid to India, Greening has made her position clear, but as Lewis pointed out on Today this morning, 75 per cent of the world's poorest people now live in middle-income countries, not poor countries. "If we are going to withdraw from every middle-income country in terms of our aid programme, we are not going to be getting to many of the poorest people," he noted.
 
This argument has the benefit of moral consistency but it's not an easy one to make when the public are already so sceptical of aid spending. A recent ComRes poll showed that just 8 per cent believe the aid budget should be increased, while 77 per cent believe it should be cut. 
 
The figure of £19m may not appear economically significant but the Tories will use this as another example of why Labour would still be big spenders, not wise spenders.
South African president Jacob Zuma speaks with David Cameron on July 18, 2011 during a press conference in Pretoria. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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