Opinion from Lord Digby Jones

Ringfencing - what does it all amount to?

Published Tuesday 13 July, 2010

Before the General Election (and some would say, and perish the thought, in order to get elected!) the Conservatives promised that amongst all the cuts in public spending that would have to be made, ring-fencing would apply to both the NHS and Overseas Aid.

Now everyone is getting more specific about where the axe will fall and the sheer enormity of what has to be done is finally waking people up to the mess we are in, this ring-fencing is being called into question. Complete rain forests will be sacrificed in the discussion of the pro's and cons concerning ring-fencing the NHS Budget but we hear little about the whole issue of Overseas Aid. Indeed, I even heard one commentator last week say "well, it's not very much is it? Only £1.7 billion". Not very much?! Tell that to the various parts of our society who will suffer in one way or another over the next few years for want of a few hundred or thousand pounds!

Andrew Mitchell, the International Development Secretary, has said: "We will not balance the books on the backs of the poorest people abroad". This statement begs three questions: How? What? Where?

Let's start with the Where?

The Blair Government gave annually (and the Coalition currently still does) £250m of your and my money to nuclear-armed India which is in the course of quadrupling its defence budget and has a Space Exploration Programme!

The last 13 years saw (and still sees) hundreds of millions of pounds of much needed UK taxpayers' money being given to oil and gas-rich Russia and to China, which has hundreds if not thousands of millions of dollars on deposit in New York!

And the What?

Andrew Mitchell has also said: "It is morally right to do so" with reference to continuing Overseas Aid at pre-Election levels. No-one can argue with that as a moral aim, but, the UK is flat broke! We are going to bring discomfort and hardship down on our own people with these cuts and, whilst such hardship is not in the same league as what we can see in parts of India or Africa, if we really want to develop universal engagement and buy-in to long-term overseas aid I suggest we first "fix it" at home and simultaneously give less but better-directed funds overseas. Parents who have just been told their children's school will not be repaired are not going to look on Overseas Aid in the way that is good for all of us ("dealing with the consequences of conflict, immigration and disease upstream at the cause rather than dealing with the much more expensive symptoms later on" as Mitchell has said) if they see UK aid going to corrupt regimes, to finance follies of a ruler's whim or providing much-needed relief in a country that, frankly, can afford to do it for itself if it only wanted to.

Finally the How?

In 1997 the incoming Labour Government untied our Overseas Aid at a stroke. The Leftwing loved Blair for that. I remember that at a Labour Party Conference in the early noughties (as CBI Director-General I went to all three Party Conferences every year for six years! Get a life I know!) they raised the roof with cheers when the Prime Minister observed what he had done on this issue and confirmed it would continue. So, unlike any other developed economy other than Denmark we give UK Taxpayers' money away without any conditions at all as to which countries' businesses will be retained to do the work for which the aid is used to pay.

So your taxes regularly keep the French, the Americans or the Germans or the Japanese economies in work by allowing their businesses to do the work with no reciprocity at all. The Americans are extremely generous with their aid programmes but American companies are used to do the work and American jobs and profits increase accordingly... quite often thanks to the beleaguered UK taxpayer. It is a socialist shibboleth that aid should not be used to interfere in the right of Sovereign nations to choose; very noble… but no-one else plays the game and the very aid that Blair blithely gave away and the Coalition continues to, comes from the wealth created out of a diminishing pool getting smaller due in part to the competition out there from countries in the developed world we are actually funding!

Quite apart from the urgent need to untie our Overseas Aid, we should at least be exercising considerable commercial diplomacy at Government-to-Government level so the natural question "what did we get for our money" is posed often and loudly in recipient nations. "UK jobs" is the desired answer but I would settle for "no corruption and directly helping the poorest people in countries that genuinely can't afford it" to coin a Mitchell phrase.

If the average voter knew all this (and it never gets the headlines the NHS does, but £1.7 billion would rebuild a lot of schools and recruit a lot of policemen) then I reckon he or she would not stand for it. But the last lot had a leftwing to keep sweet in the light of Iraq et al and this lot have a detoxification exercise to undergo.

So pay up those taxes in Birmingham! Suffer those cuts in Newcastle!  Some country needs a new bridge and  jobs from Tokyo to Seattle via Paris and Frankfurt will be created in providing it... and you're paying for them!