Labour in Government: Why Slashing Aid is ‘a Strategic Error’

The prime minister’s decision to cut international development aid to pay for increased defence spending is not only short sighted, says WILLIAM BROWN, it trashes the party’s proud record.

With US President Donald Trump abandoning the transatlantic alliance, the need for the UK and other European countries to increase defence spending is probably inevitable. However, Keir Starmer’s decision to pay for this by slashing international development aid has been met with justified criticism from a wide range of political voices.

The move could see UK spending on development reduced to its lowest level, as a percentage of GDP, since the 1990s, and possibly since the 1960s. Although the announcement took many by surprise, Labour has been gradually eroding its commitments on development since Starmer became leader.

The party’s record on international development policy is long and generally progressive. Harold Wilson created the first overseas development ministry in 1964. During the 1960s and ’70s it helped shift development spending from a colonial concern to focus on supporting the newly independent Commonwealth states, although it was later subsumed within the Foreign and Commonwealth Office as the Overseas Development Administration.

By the time Labour came back into power in 1997, development policy was a neglected corner of government. Under Margaret Thatcher, the little attention paid to developing countries was driven by Cold War concerns and her governments’ wholesale support for the neoliberal policies forced on the Global South by the World Bank and the IMF. Aid spending shrunk to just 0.24% of GDP by the end of the 1990s.

Radical reverse

This was radically reversed under Tony Blair and Gordon Brown. In 1997 Blair created an entirely new and independent department of state, the Department for International Development (DfID), led by Claire Short, and spending was continually increased from the start of the new millennium. The Gleneagles G8 summit in 2005 reflected the UK’s growing focus on Africa as a core part of its foreign policy, while that year Blair committed Britain to increase development aid to 0.7% of Gross National Income (GNI).

The 0.7 target had originally been set by the UN in 1970. Although the figure was somewhat arbitrary, it became a totem in development policy and for diplomatic relations between developing and developed countries. Labour’s commitment was repeated by every Labour leader and in every manifesto from 2005 to 2019, while it featured in just about every single speech by a Labour development secretary or shadow secretary for 20 years.

Seeking to move the Conservatives to the middle ground, David Cameron and his international development secretary, Andrew Mitchell adopted the goal. The UK reached the 0.7% target in 2013 and it was written into law in 2015.

The Conservatives began backtracking rapidly, however, once Cameron was out of office. Boris Johnson removed DfID’s independence, making it part of the newly named Foreign Commonwealth and Development Office, while during the pandemic he reduced the UK commitment to 0.5% of GNI. The move was welcomed by the Daily Mail and other right-wing media who have long been critical of international development spending.

Labour’s own retreat under Starmer has been less noticed. During the opposition years from 2010, Labour’s international development policy became deeper and richer in a number of ways. Under Ed Miliband, policy aims were expanded beyond the basic spending target to encompass goals on public health, gender, anti-corruption, labour conditions and human rights. These were extended further under Jeremy Corbyn to include goals on reducing inequality, combatting climate change and fairer trade.

Many of these have been dropped since 2019, or given no more than lip service. The 2024 manifesto committed only to maintaining the 0.5% spending level and increasing it to 0.7% “as soon as fiscal circumstances allow”. There was no commitment to restore DfID as an independent department of state and other goals were pared down considerably, amounting only to vague promises to renew Britain’s reputation in development and increase expertise on key policy areas (women and girls, conflict prevention and climate).

Lack of vision

The level of cuts now being enacted betrays even those proposals. Under the Conservatives, aid spending was not only reduced but substantial amounts were diverted, first under George Osborne to finance other foreign and defence policies, and later to fund the costs of housing asylum seekers. Spending on the latter now accounts for nearly a third of the ‘development’ budget.

Independent commentators estimate that even if the cost of housing asylum seekers is halved by 2027, that will still leave spending on overseas development at just 0.23% of GNI, the lowest it has been since the 1960s.

Appalled by this prospect, more than 130 NGO leaders wrote to the government to protest at the humanitarian cost this will exact and the damage it will do to the UK’s reputation in the Global South. Castigating the government for “balancing its books on the back of the world’s poor”, they warned that it would “destroy Labour’s legacy on international development”.

Others have criticised the government’s short-termism and lack of strategic vision. Contrary to Labour’s 2024 manifesto commitment to maximise long-term gains from development so that it is “closely aligned with our foreign policy aims, co-ordinated to tackle global poverty, instability, and the climate and nature crisis”, the new policy pitches development goals against security ones.

Previous Labour policy contained quite forward-thinking approaches, aiming to combine the ‘three D’s’ – defence, development and diplomacy – in order to join up strategic and humanitarian goals and maximise the UK’s soft and hard power. These aims were first articulated at the tail end of Brown’s prime ministership, expanded under Miliband and maintained even under Corbyn (not someone given to thinking much about defence and security needs).

Now the government is facing criticism even from the most conventional of voices. While former Chief of Defence Staff, General Lord Richard Dannatt, welcomed the increase in defence spending (not surprisingly), he called the move to finance it from development aid “a fundamental strategic error”.

“To wield power effectively,” he wrote, “we need hard and soft power working hand in hand. Cutting development aid undermines our ability to stabilise fragile states, reduce the conditions for extremism and build alliances that enhance our security. Simply put, well-targeted aid prevents conflict and reduces the burden on our armed forces in the long run.”

The cuts proved too much for the international development minister, Annalise Dodds, who resigned on February 28th. She said the move would “remove food and healthcare from desperate people” and reduce Britain’s influence in African and Caribbean countries at a time when Russia was aggressively increasing its presence.

Discontent has also spread elsewhere in the party. The generally Blairite Labour Campaign for International Development issued a strongly-worded criticism saying the cut “will see fragile states made more fragile, poor people made poorer, and the impacts of climate change made harsher”. And Labour MP Sara Campion, chair of the Commons International Development Committee, urged Starmer to rethink, saying the move was “not only pulling the rug from under some of the world’s most vulnerable people but endangering our long-term security”.

As with so many of the mis-steps this government has made since July, what underpins Starmer’s move is his and his chancellor’s unwillingness to think more radically about how to finance public expenditure. A new approach to that – as Mary Stratford has argued here – is fundamental to reversing this ill-advised decision and many of the government’s other mistaken policy choices.

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William Brown is an academic at The Open University.

See also: ‘Labour’s Elections & the Left’ by Will Brown.