Culture war against the needy is bad economics as well as flawed politics

Cuts to overseas aid and to the wallets of Britain’s poorest may seem a potent weapon in the culture war but it’s bad economics that will further undermine Boris Johnson’s attempt to revive the levelling up agenda, writes Phil Thornton

Cuts to overseas aid and to the wallets of Britain’s poorest will further undermine Boris Johnson’s attempt to revive the levelling up agenda (AFP/Getty)

The culture war that is engulfing British politics is now threatening to consume economic policymaking. A series of decisions by the government has shown it is keen to take decisions whose impact is more symbolic than fiscal.

As prime minister Boris Johnson has reminded us, our national debt is climbing towards 100 per cent of GDP (or £2.19 trillion in plain English) – the highest for nearly six decades – thanks to the necessary move to borrow more than £407bn to protect businesses, workers and public services from the worst effects of the Covid-19 pandemic.

Johnson has also said that he will not repeat the mistake of his predecessor David Cameron and embark on an austerity programme of spending cuts, and instead will “level up and unite the country”.

Admittedly, he needs to skate over the fact that real-terms cuts to all departments – bar the Ministry of Defence, the NHS and English schools – will leave those “unprotected” departments facing a 1 per cent cut between now and 2023.

But the size of those numbers makes it even more startling that the government would seek to push through a £4.1bn reduction in overseas aid, from 0.7 per cent to 0.5 per cent of gross national income (GNI).

In other words, this cut will shave 0.2 per cent off the debt at the expense of the poorest and most beleaguered people across the world. The impact is already being felt. A total of £6.1m has been cut from existing or agreed projects affecting war-torn countries across sub-Saharan Africa and in Myanmar.

The salami-slicing operation was already under way even before the start of this financial year. The Foreign Office had halved its funding for human rights work and the promotion of democracy, with a saving of £8.5m, in the fiscal year that ended in April.

This might be seen as a good politics – making cuts that will be popular with the party’s new supporters – although the furious response from the Tory old guard might say otherwise. But it is bad economics.

Forget the moral debate: the point is that aid actually pays for itself. Joint research by the National Institute of Economic and Social Research and think tank the Overseas Development Institute some 10 years ago highlighted the benefit to the giver as well as the receiver.

Their work looked at the European Union’s €51bn 2014-2020 aid programme, and concluded that EU aid was an investment that benefitted poor countries, the world generally, and the EU as a sender of aid in particular. The money spent would be completely recouped by EU taxpayers, and the effects on the ground would give a clear return on the investment.

Unsurprisingly, one of the authors, Dirk Willem te Velde, used Twitter last week to set out a critique of the aid decision, under the bald opening line that Sunak’s statement did “not make much economic sense”.

Chancellor Rishi Sunak focused on the UK as a donor, and how even after the cut it will still spend some £10bn, making it the third-largest donor in the G7 in terms of percentage of GNI.

But according to Te Velde, this ignores the fact that the original decision to achieve 0.7 percent of GNI was motivated by the provision of global public goods such as vaccines, which benefits the UK too.

Again, where Sunak says that he is making a “difficult decision” to get borrowing down and restore the public finances, Te Velde queries whether it is sensible to link spending on aid to repaying a lump sum of debt.

The feeling that there is a hidden agenda here is compounded by the move to remove the £20 weekly Covid supplement to universal credit payments for some 6 million households, saving £6.2bn. Again, a small amount of money (relatively) but an adept way to send a signal on familiar themes such as “feckless benefit scroungers”.

Although, of course, many of the recipients are in work. Indeed, the Joseph Rowntree Foundation pointed out last week that even with a full-time job on the national living wage, a lone parent would be £66 a week, or 17 per cent, short of its minimum income standard.

We are in familiar territory. A few months ago, England football star Marcus Rashford forced the government into a series of U-turns on its decision not to extend free school meals to children from low-income families during school holidays.

Here is where the politics and economics of the culture “war” come full circle. Rashford was one of the black members of the England football team that was on the end of poisonous racial abuse after last Sunday’s final.

When a graffiti portrait of Rashford in south Manchester was also defaced with racist messages, local people united to cover it up and pay tributes to the local icon. One message that stood out came from six-year-old Reggie, who said: “Thank you for all our dinner(s).” Those who start culture wars should realise they can lose them – especially if they can’t count.