Aid budget under increasing pressure to benefit UK business after Brexit referendum

Former international development secretary Penny Mordaunt and the current post holder Alok Sharma have pushed aid policies that increasingly seek secondary benefits for UK business. Pictures: PA - Credit: PA

Business benefit to the UK is increasingly being sought as a condition of the UK’s aid spending since the 2016 referendum, according to a new report.

Funds under the post-Brexit ‘global Britain’ agenda, such as the £1.2 billion Prosperity Fund started in 2016, are “explicitly tied” to mutual prosperity, with “new economic opportunities” as a secondary goal of the aid.

The report, by the Independent Commission for Aid Impact (ICAI), said government departments are under “growing pressure” to find UK business benefits for aid spending, and asked whether this is detracting from the government’s primary aid mission.

In 2018, international development secretary Penny Mordaunt introduced an aid pledge made alongside the Department for International Trade, calling it a “bold new Brexit-ready proposition to boost trade and investment with developing countries and promote sustainable economic development and job creation”.

In Boris Johnson’s government, the new minister Alok Sharma led his first overseas trip with the message: “UK aid is helping to generate trade and investment opportunities – both for African and British businesses.”

The report noted that there are circumstances in which aid programmes can “legitimately” deliver mutual benefits, and that this shift in emphasis is in line with other donor countries – and with some recipient countries’ own expectations.

Researchers also found no evidence of UK aid “being used exclusively to pursue short-term commercial opportunities or to help individual UK businesses at the expense of their competitors”.

But the ICAI expressed concern that this increased emphasis, the pressure to find “win-win” opportunities could come “at the expense of poverty reduction”.

ICAI commissioner Tamsyn Barton said: “Our research shows that the government is increasingly putting UK economic and business benefits at the heart of its aid agenda.

“Although this can generate legitimate opportunities for both sides – for example, by harnessing the expertise and innovation of the UK’s business and financial sectors – it also creates risks, particularly in aid being shifted away from the people and countries that need it most.

“We hope that by identifying some of the key issues relating to mutual prosperity, our information note will give government and parliament a clear overview of these risks and the areas that may need further scrutiny.”

The concept of mutual prosperity varies across different settings, and can cover everything from broad notions of global improvement, to strict quid pro qos that have in the past “marked a low point in the reputation of British aid”, noted the report.

At this stage, “Care must be taken to ensure the primary aim of poverty reduction isn’t diluted or lost,” said the report.

A DFID spokesperson said: “The UK is leading the way to help countries become economically self-sustaining.

“As the ICAI report highlights, we are building partnerships that go beyond aid and help build trade and business relationships, which can deliver quality investments, drive growth and create millions of jobs for developing countries. “This is lifting people out of poverty and create our trading partners of the future.”