A deeply unpopular government agonises over whether to break its own rules or keep cutting budgets, writes Ros Taylor.
“I can’t promise to protect every good programme, I just can’t,” Baroness Chapman, the new international development minister, told the International Development Committee. Her predecessor had resigned when she was told that the UK aid budget would be cut to 0.3 percent of gross national income (GNI) by 2027.
Chapman did not think the aid budget would be cut any further. (Bond, the network of NGOs, disputes this and said the cut would have a ‘devastating’ impact.) But as she parried questions from MPs, it was clear that she either did not yet know, or did not want to say, where the axe would fall. She expected to spend less on ‘education and gender’ but tried to reassure the committee that, for the moment, humanitarian projects would be protected. Britain also wants to reform international financial institutions but does not yet know how: “This feels to me like the next place for us to go,” said Chapman.
In fact, the 0.3 percent figure is misleading. So was the previous aid target of 0.5 percent (until 2021, it was 0.7). For over a decade, funds have been diverted from the international development budget to pay for housing refugees and asylum seekers who have been in the UK for less than a year. With a huge backlog of undecided cases and more regularly arriving on small boats — 825 in just one day in late May — this accounts for a fifth of the total aid budget. That leaves less money to be spent abroad. And even if spending on refugees and asylum seekers does fall, the development budget will not benefit.
Tight budgets
The money cut from aid will go to defence. Under pressure from the US and in an effort to strengthen its defences against Russia in the face of Trump’s volatile administration, Britain has committed to increase defence spending to 2.5 percent of GNI. In different circumstances, that might have been funded by a tax rise — but Labour promised in its manifesto not to raise taxes on ‘working people’, which severely limits how much extra revenue it can raise. Last autumn it increased taxes on employers by making it more expensive to pay staff, especially part-timers. No one seriously doubts that ‘working people’ will lose out as a result. Yet the prime minister fears that if he goes further and breaks the pledge outright, the already low levels of political trust in Britain will fall further. The consequences of that promise are now really starting to bite.
With the chancellor determined not to break her fiscal rules by borrowing more, the government is constantly having to ‘rob Peter to pay Paul’ — finding savings from existing budgets to meet new or costlier commitments. The number of disability claims keeps rising, for reasons economists cannot agree on but which are probably linked to the miserly rate of unemployment benefit (£92 or €110 a week for over-25s, even less for the younger), a ‘COVID generation’ of young people whose mental health suffered during lockdowns, less stigma around mental illness and more awareness of the benefits available due to social media. To pay for these claims, ministers intend to cut Personal Independence Payments (PIPs), which fund some of the extra costs associated with having a disability.
The proposals have caused outrage among disability charities and some Labour MPs, who did not expect to see a Labour government taking money away from the disabled. Getting disabled people who can work into jobs and encouraging the long-term unemployed back into the workforce is a genuine problem, and one the government says it wants to tackle with a dedicated budget. But in some cases, PIPs allow the recipients to carry on working. Taking them away seems perverse.
‘Broken Britain’ is still broken
The pressures on the UK budget are huge, given Labour’s ambition to cut long waiting lists for hospital treatment and build new housing and renewable energy infrastructure. After ten years of spending cuts followed by the pandemic, Britons are dismayed to find that very little seems to be improving and that the government is offering them more of the same. The state of the public realm has visibly worsened since 2010. Homelessness and shoplifting have risen substantially. Councils have shut down libraries and sports facilities to pay for social care and the growing number of children with a diagnosis of special educational needs.
A decade and a half of austerity will take a lot more than ten months to fix, but the impatience is evident. The populist right party Reform now leads in opinion polls, sometimes with 30 percent of the vote.
Given all this, the cut to the aid budget was not mourned by most of the public, who paid little attention to how it was spent. As Mark Miller, a senior research associate at ODI, put it: “It is hard to have confidence in UK promises to ‘create a world free of poverty on a liveable planet’ when the government is finding it difficult enough to reduce waiting lists in British hospitals.”
Labour agonises
All this is happening as the Labour party grapples with fierce internal debates about why Reform is surging in the polls and whether the pledge not to increase taxes should be binding, given the state of the country. Poor local election results in early May prompted more agonised soul-searching. In recent weeks the liberal wing of the party has fumed at Starmer’s determination to cut immigration further and the language he has used to express it (“We risk becoming an island of strangers.”). For the Labour leadership, appalled by Trump’s victory, right-wing populism is an existential threat — and Reform voters say immigration is the thing that most troubles them.
For Starmerites, the aid, welfare and immigration cuts are part of ‘progressive realism’ — an acknowledgement that populist forces are on the rise, Russia is a genuine threat to western Europe and more Britons must return to work if the UK is not to become even more dependent on immigrants to do low-paid and arduous work.
Britain will spend less on aid and, the thinking goes, contribute more expertise. “They [poorer countries] want to learn how to train teachers, what a good curriculum can look like, what safeguarding is, all these things that we know how to do,” Chapman told the committee. Because the UK usually funds global organisations to fulfil its development goals rather than setting up its own (unlike, for example, Germany), these NGOs (such as the Vaccine Alliance GAVI, the Green Climate Fund and the World Bank) will inevitably see their allocations cut. It was bad timing that the cuts came so soon after Donald Trump cut off funds to USAID: “We have made our choice for very different ideological reasons,” Chapman said. But although the government wants these cuts to be seen as an effort to reduce dependency on aid and position Britain as an advisor rather than a benefactor, they are not ideological: rather, they are a trade-off based on Labour’s self-imposed rules, the threat to western European security and the public’s indifference to aid.
These trade-offs are very hard to sell to Labour’s supporters. Like the welfare cuts, they undermine the party’s sense of what it stands for and how it is using the very large parliamentary majority it won last July. ‘I didn’t leave the Labour party, the Labour party left me’ has become a familiar refrain from people who have turned to the Lib Dems and the Greens. Starmer hopes that hints of growth this spring will lead to more tax revenue and a sense that the UK is beginning to recover. In the meantime, his net unfavourability rating is at an all-time low.
The views and opinions in this article do not necessarily reflect those of the Heinrich-Böll-Stiftung European Union.
