Learning from UK’s 0,7% aid budget

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Learning from UK’s 0,7% aid budget

AWEPA Newsletter

London, United Kingdom – Following the recently approved budget cuts by the Austrian government for bilateral aid from €68 million in 2014 to €51 million in 2015, the Austrian AWEPA Section asked the Chair of our UK Section and Political Coordinator for the AWEPA Development Effectiveness programme Lord David Chidgey: why and how UK’s Official Development Assistance increased to 0.7%?

The Development Assistance Committee (DAC) maintains that, by far, the best known international target in the aid field is that of raising Official Development Assistance (ODA) to 0.7% of donors’ national income. The target grew out of a suggestion to transfer 1% of donor countries’ income to developing countries, defined and developed throughout the 1960s.

The late 1960s saw intense negotiations in the United Nations over development strategy, with aid volume being a key sticking point between developed and developing countries. The impasse was finally broken when, in October 1970, the UN General Assembly agreed that “Each economically advanced country will progressively increase its ODA to the developing countries and will exert its best efforts to reach a minimum amount of 0.7% of its gross national product at market prices by the middle of the decade.”

Throughout the 1970s, the target gained acceptance, with the exception of the United States and Switzerland. All other DAC members have accepted the target, at least as a long term objective. Sweden was the first country to meet the target, in 1974, quickly followed by the Netherlands and then Norway and Denmark. It was not until 1991 that they were joined, briefly, by Finland. In 1993, the System of National Accounts discontinued the term “gross national product” (GNP) and replaced it with “gross national income” (GNI). DAC members’ performance against the 0.7% target is therefore now shown in terms of ODA/GNI ratios.

Our generation post-2000 is the first in which the world is able to halve extreme poverty within the 0.7% envelope. The Millennium Development Goals (MDGs) for 2015 are utterly affordable. 0.7% of the rich world’s GNI can provide enough resources to meet the MDGs, but developed countries must follow through on commitments and begin increasing ODA volumes today. The UN Millennium Project’s costing show that to meet the MDGs would cost between $75 and $150 per person a year – less than half being financed by ODA.

At this time, the United Kingdom is the sole G20 country achieving the 0.7% target. Prior to the 2010 general election, the Liberal Democrats adopted this as their national policy in their document, “Accountability to the Poor”, enshrining it as a policy commitment in their election manifesto. Carrying through this commitment became a key feature in the agreement between the Conservatives and the Liberal Democrats to form a Coalition government for the first time in the UK for around 100 years. Since then, not only the Conservatives, but also the opposition Labour party have adopted 0.7% as party policy.

It appears from large scale ongoing research in the UK, that citizen’s perceptions are that whatever the amount spent on aid actually is, they still believe it to be too much. Nevertheless they support aid because the benefits are seen to outweigh the costs and is also seen as a moral duty. They see the UK as an “honest broker”, which having made commitments, should keep them. There is no doubt that the highly successful campaign throughout 2010 – 2011to “Make Poverty History”, has helped tremendously.

About the author
Lord Chidgey is the Vice Chair of the All Party Parliamentary Group on the Great Lakes region of Africa, Chairman of the International Advisory Board of the Commonwealth Policy Studies Unit, and a Liberal Democrat life Peer. In 2008, he was named the Chairman of the oversight committee for the Commonwealth Policy Studies Unit. At AWEPA, he is the Political Coordinator of the UK Section and Political Coordinator for the Development Effectiveness programme.