The use of UK aid to enhance mutual prosperity

Information note

This note highlights that the government is increasingly spending foreign aid in areas where it can deliver benefits to both the UK economy and countries eligible for aid – but care must be taken to ensure the primary aim of poverty reduction isn’t diluted or lost. We identified six issues that merit further investigation.

Findings

As departments continue to use the aid programme to promote mutual prosperity and the UK national interest, questions will continue to arise about how to ensure the best use of aid and how to maintain coherence across aid-spending departments. The mutual prosperity agenda also raises challenging questions around ODA eligibility and good development practice. These issues will no doubt merit scrutiny over the coming period by the International Development Committee and other interested stakeholders. While the pursuit of mutual prosperity is not necessarily in conflict with good development practice, the focus needs to remain on building long-term opportunities, rather than securing short-term advantage for the UK national interest. So far, the limited programming we examined as part of this note does not appear to pursue economic benefits to the UK at the expense of the primary purpose of poverty reduction. However, future inquiries may wish to examine the impact on the quality and value for money of UK aid as the mutual prosperity agenda evolves.

It will be important to establish a clear set of principles across government determining the appropriate use of aid in support of mutual prosperity, to ensure that risks to the integrity and quality of UK aid are minimised. This includes recognising that meeting the international ODA definition and the requirements of the International Development Act is only the legal minimum. The UK should aspire to the best use of its aid against the Act, which states it must be “likely to contribute to poverty reduction”, along with the four strategic objectives outlined in the 2015 UK aid strategy, while also meeting the international ODA definition.

Proposed lines of enquiry

We identified six lines of enquiry that merit further scrutiny:

• The UK’s shift towards mutual prosperity has moved it to the position of several other donors and is in line with some partner country expectations.
• There are potential benefits to the UK aid programme from enhanced partnerships with the private sector, such as use of innovative technologies and financial instruments.
• Departments are currently proceeding with caution in their use of aid to promote mutual prosperity; we did not find any examples of UK aid being used exclusively to pursue short-term commercial opportunities or to help individual UK businesses at the expense of their competitors.
• With departments under growing pressure to use aid in support of mutual prosperity, there is a need for greater clarity about the appropriate uses of aid.
• There are risks that the poverty focus of UK aid may be diluted, with the mutual prosperity agenda creating the risk of pressure to spend aid in developing countries that are most likely to be important trading partners.
• It is too soon to tell what the outcomes of the mutual prosperity agenda will be, as programming under this banner is nascent. As departments continue to use the aid programme to promote mutual prosperity and the UK national interest, questions will continue to arise about how to ensure the best use of aid and how to maintain coherence across aid-spending departments.