UKIP has called for foreign aid to be scaled back. Stefan Wermuth/PA ArchiveCutting the foreign aid budget to the same percentage of GNI [gross national income] as that contributed by America, [saves] up to another £11bn. Suzanne Evans, UKIP deputy chairman, at the party’s spring conference In a speech setting out some of the pillars of UKIP’s election manifesto, the party’s deputy chairman Suzanne Evans said that cutting foreign aid to US levels would make £11 billion in budget savings. But it seems unlikely that the actual savings if this were to happen would reach that figure. To check the statistic we assume that UKIP envisages the UK reducing its share of national income given in aid to the US level. Various sources can be used to assess the claim but it is reasonable to use data from the OECD-DAC as that provides the best comparative statistics on official aid from OECD donors. The latest available figures are for 2013. In the “compare your country” charts for 2013, the US provided a net total of US$30.88 billion in aid, equivalent to 0.18% of US Gross National Income (GNI). Volume matters The US is an interesting choice as it allocates a lower share of national income to aid than any other large donor – but would claim, in defence, that it has larger flows of “private aid” from philanthropic foundations, charities and NGOs than other donors. Still, the US allocates the largest volume (measured in $US) of aid of any donor. In 2013, the UK allocated a net total of US$17.92 billion (£11.68 billion), 0.71% of GNI in aid. If the UK allocated the US share (0.18% GNI) this would have been about US$4.54 billion in 2013. The saving of US$13.38 billion is equivalent to a reduction in the UK aid budget of about £8.7 billion (at an exchange rate of $US1 = £0.65). We are now in 2015 so relevant comparison data (the aid shares of GNI, the absolute amounts and the exchange rate) will have altered. An alternative simple calculation for the UKIP claim using current values is that spending by the Department for International Development (DFID) is reduced by 75%. Using the calculation that 25% of 0.72 is 0.18, reducing the UK level to the US share of GNI is a 75% reduction. The DFID Annual Report 2013-14 (the latest available) shows that total DFID expenditure was £10.1 billion in 2013-14. Total UK Official Development Assistance (or aid) was £11.4 billion in calendar year 2013. This differs from the OECD-DAC figure above because that was converted from $US and exchange rates vary. This includes spending by other departments as well as DFID, so ODA appears to be 1.13 times the DFID budget. Using the larger figure of £11.4 billion, the UKIP saving (from a 75% reduction) would be £8.6 billion for 2013. In the 2013 spending round the DFID budget for 2015-16 was £11.1 billion so potential aid spending in 2015 may be as high as £12.5 billion (applying the same ODA/DFID multiple of 1.13 as observed in 2013). This would yield the highest saving for the UKIP claim, at £9.4 billion in 2015. If the UK reduced aid to 0.19% of GNI it would be listed in donor tables alongside the US, but also with Greece, Italy and Spain, who gave 0.13 to 0.16% GNI in 2013, and just below Japan. In $US volume terms at the lower aid level, the UK would be just below Australia and Canada, and well below the Netherlands, Norway, Sweden, France, Japan, Germany and, of course, the US. Verdict The statement by UKIP’s Suzanne Evans that cutting foreign aid spending to US levels would save the UK £11 billion is not true. Using both data from the OECD and the UK government, the highest likely saving would be just over £9 billion. Cutting aid to US levels would also leave the UK below many other OECD countries in terms of volume in $US spent on overseas assistance. Review The analysis, evaluation and conclusions drawn are appropriate and tenable. I agree that the OECD-DAC provides the best source of data and statistics to answer questions of this sort. The latest available figures from this source are for 2013, so it makes sense to base the analysis on these figures. The assumed exchange rate between the UK pound and US dollar is also reasonable: according to IMF data, the average exchange rate in 2013 was £1=$1.56 or $1=£0.64, but this makes little difference to the conclusions. The report is also right to point out that if the UK did reduce aid to the same share of GNI as the US, it would rank below all the other main aid donors in the OECD, including Australia, Canada, France, Japan and Germany, which all give a larger share of GNI in foreign aid than the US. Oliver Morrissey has undertaken research funded by the Department for International Development in the past.
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