Monday 23 September 2024

ODA: a test of Labour's moral compass


Way back in the 1960s a significant part of the way we “swung” was an enthusiastic campaign for the countries in the rich “Developed World” to allocate 1% of their National Incomes  for the reduction and eventual elimination  of poverty in what we then called the “Third World.”  This succeeded to the extent that by the end of the decade, the United Nations was sufficiently convinced to pass a resolution in which the governments of the rich countries agreed to devote 0.7% of their national incomes to Overseas Development Assistance (ODA).  The other 0.3% was expected to come from the private sector and charities.

Sadly, for the rest of the century (all of thirty years) only a handful of rich countries, primarily Sweden, the Netherlands, Norway and Denmark, actually hit the 0.7%  target.  The UK, even during  the virtuous Blair-Brown years (1997 to 2010) never quite made it, (though they did set up a separate government Department for International  Development - DfID) and it was not until the much maligned Coalition, of which we Liberals were part, and on this issue probably the driving influence, that the target was achieved.

The Conservative Leader and Prime Minister, David Cameron, still in his “Hug a hoody” mode, was sympathetic, and, in spite of the strains on the public purse caused by repairing the ravages of the 2008/9 financial crisis, proclaimed:

“The UK will not balance its books on the backs of the poorest.”  (27th may, 2011)  

A year later he resolved:

 “The argument of the heart is even when things are difficult at home we should fulfil our moral obligations to the poorest of the world. There are still more than a billion people living on a dollar a day,”

So, lo and behold, 43 years after having supported the UN Resolution, the British government actually reached the 0.7% target in 2013. 

The Coalition then cemented the  target into law in 2015.  Mr Cameron, now perhaps with a touch of the Borises, couldn’t help boasting about it and declared:

“If Britain can do it, others can.”

Sadly, his successor but one, was made of less stern stuff, and the Tory government of 2020 cut the ODA budget from 0.7% to 0.5%.

 

As a result, development projects in health, education, and infrastructure have been scaled back.

Worse was to come.

It has recently been revealed that a significant part of the  0.5% budget meant for ODA has been diverted to the Home Office  to finance accommodation for refugees and asylum seekers in this country.  The amount now spent in the poorest countries is  a mere 0.36% of GDP: only just over half the proportion Cameron boasted about.   This has led to cuts 37%  in education projects, 39% in health, 42% in humanitarian support and a massive 58% on water and sanitation.  (For the effects of this last one see posts on this blog on the 19th November, Word Toilet Day, in the past few years) .

The above percentages are taken from an article by Larry Elliot in the Guardian, 16th September, 2024.  https://www.theguardian.com/business/2024/sep/15/one-more-item-labour-to-do-list-repair-uk-aid-budget. The article concludes with the following suggestions for the Labour government to implement.

1.     1. At least maintain ODA at the 2003 level of 0.58% of GDP (before some of it was syphoned off to the Home Office).

2.    2. Give a more honest report on what , of the ODA budget, is actually devoted to ODA.

3.    3. Explain in detail what in fact are the  “circumstances” which will “permit” the 0.7% to be restored.

4.    4. Recreate the Department for International Development as an independent department with its own cabinet minister (the Tories merged it with the Foreign Office)

5.    5. Join an international campaign to tackle “unsustainable debt.” ( Some counties in the “Global South” are forced to spend more on debt servicing to hedge funds than they spend on education and health)

6.    6. Press the IMF to create more SDRs ( Jim Callaghan’s "paper gold”) to be shared among the poorest countries.

That’s a challenge for the Labour Government and a test of its moral compass.

 

(A heart-rending article in today's Guardian by Malawi's Minister of Health describes the crises the country is experiencing, not least outbreaks of cholera  and malaria, as a result of catastrophic flooding  and serious drought in recent years. See

 

PS ( *24th September) The Debt Justice group, of which I am a paid up supporter,  held this protest at the Labour Party conference.  I hope they were heard. 

https://mail.google.com/mail/u/0/#inbox/FMfcgzQXJQKRNdwWVrHQsKBkbsTlcWxC?compose=new

 

 

 

 

 

https://www.theguardian.com/global-development/2024/sep/23/malawi-climate-crisis-paying-with-our-lives-acc )

Tuesday 17 September 2024

Investment, investment, investment.

A letter* in Yesterday's (16th September 2024) Financial Times from Lord (Gus) O'Donnell, a former cabinet secretary, Oxford Professor (emeritus) Simon Wren Lewis and several other eminent economists  called upon the government to revise its "fiscal rules" to permit  massive public investment in order to repair our existing broken public realm and create a new and sustainable future energy supply.

They claim that:

"To follow through on [current]  plans would be to repeat the mistakes of the past, where investment cuts made in the name of fiscal prudence have damaged the foundations of the economy and undermined the UK’s long-term fiscal sustainability."

You have to feel sorry for the Labour government.  Where-ever you look you find vital services crying out for extra expenditure to make them minimally functional, never mind spanking new and worthy of the sixth richest economy in the world.. The most obvious currently in the news are:

The Health Services (see Lord Darzi's report, and top of most people's list)

The Care Services (don't really exist, despite Johnson's claim to have had an "oven-ready" plan)

The justice, prison and probation services (to deal with the rioters, and the 1 700 existing prisoners released early to make room for them)

The Universities( many about to go bankrupt)

 Just about all local government services.

Provision of social housing

Schools built of crumbling concrete, with teachers leaving in droves.

Potholed roads.

. . . .and plenty more .

The GO'D letter, with its suggestion of a revision of the fiscal rules, implies that we should finance the "decade of renewal" promised by Sir Keir Starmer by fixing all of the above through  government borrowing.

Fine.

But if that isn't acceptable, why not finance it out of taxation?

The latest statistics I can find show that, were the UK's national income shared equally between every man, woman and child, we should receive £33, 260 each per year.  In other words a family of four would receive £123,040 a year.

I give these figures not to suggest  that that's how the national income should be divided (talent, enterprise hard, long or unpleasant work should all be rewarded,) but to show that we really are very rich.  There is no shortage of resources.  We can afford it.

Nor does our government  already take too much of our incomes.  On average it is 33.5% of the National Income  The German and French governments take more.  They are not exceptions but typical.The governments of the EU's 14 largest and most developed economies take on average 39.9% of their nations' incomes - over  6% more than the UK.

 So there's plenty of room for an increase.

Unfortunately the Labour Party, desperate to win the election, boxed themselves into a corner by promising    not to raise the principal taxes, income tax, NICs or VAT.  But there are plenty more (as Gordon Brown discovered when he became chancellor in 1997 - some of which most of us have never heard of.)

Professor Richard Murray of Sheffield University has a list.  Let's hope Rachel Reeves is studying it ready for the 30th of next month

Either way, via revised rules or additional taxation, it is vital that the government finds ways of investing in the public realm now.  The alternative of waiting for "growth" to provide additional finance is a nonsense.  

If we don't invest the growth won't come.



 

* I tried to give a link but when I pressed he button instead of the URL all I got was this:

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https://www.ft.com/content/a8fcf263-8506-4b1c-aace-3d3d1743dc55

 
Hoity-toity.