Chapter 4


The Overseas Aid Policy of the Conservative Government



The coming to power of the Conservative government in 1979 produced a shift of aid policy, but one which was somewhat ambivalent and shot through with a number of contradictions. These resulted from the conflict between the underlying political ideology of Thatcherism and the perceived political resistance to a rigid application of that ideology in the field of overseas aid. This approach was perhaps best summed up in the press by Professor Peter Bauer, leading ideologue of the New Right anti-aid school shortly before the shift of aid policy was announced in Parliament:

"... By increasing the money and patronage of the recipient governments, aid promotes the disastrous politicisation of life in the Third World and intensifies the struggle for power... It directs energy and attention away from productive activity to the political arena... Further, aid promotes state controlled economies which again leads to politicisation... The effective way to relieve poverty and distress in the Third World is through voluntary, non-politicised charities... Ideally, official aid should be terminated. But this is not now practical... Bilateral aid should replace multilateral aid to retain parliamentary control of taxpayers' money. Aid should be untied grants to distinguish between subsidies to foreign governments and to British exporters and also between aid and investment. It should go to governments genuinely interested in the welfare of their subjects and promote it by effective administration...and the pursuit of liberal economic policies. This would reduce the effect of aid in politicising life..."[114]

It was not practical to abolish aid, according to Bauer, because of the momentum of existing commitments and also because of the enormous power of vested interests both commercial and emotional, including those of the aid bureaucracy.[115]

Whilst many people in the Thatcher government subscribed to the view that official aid was counter-productive in bringing about Third World development, it was not politically possible to come out openly and say so as a policy statement. Thus, throughout the past ten years of the Conservative government, no new White Paper has been introduced challenging the "More Help for the Poorest" policy of the previous Labour government. Instead, a brief statement was made simultaneously, by Foreign Secretary Carrington in the Lords and Overseas Development Minister Neil Marten in the Commons, on 20 February 1980, which introduced what would become the oft-repeated refrain:

"Our ability to support development overseas is dependent on the state of our economy and the need to strengthen it. Nevertheless, the government will continue to provide aid to the developing countries on a substantial scale. Official aid continues to be an essential element in development, especially for the poorest countries. Within the limits of our resources, we must seek to relieve poverty in the developing world so as to create conditions for greater peace and stability and to contribute to the growth of world trade on which Britain so critically depends."[116]

So the argument was not that official aid was bad in itself, but that Britain was restricted in the amount it could disburse by its own need to restore its economy and this, in the context of the need to trim public spending, would mean that cuts in aid would be necessary. This concession to the old Labour policy was highlighted by former Labour Minister for Overseas Development, Judith Hart, in the debate which followed the statement.

"Will the Hon. Gentleman accept that the statement basically endorses the aid strategy of the Labour Government...Our strategy has been nibbled at the edges, but substantially remains?"[117]

The Minister replied that, owing to the existing commitments, there was little room for manoeuvre and that any change must be gradual. This was obviously true, but at the same time it evaded the issue being raised. The "nibbling at the edges" referred to the part of the statement which spoke of giving greater weight to "political, industrial and commercial" criteria in the allocation of aid "alongside the basic developmental objectives." A common argument made by both Labour and Conservative MPs, other than those from the hard-line anti-aid school, was that Britain had a lot to gain from overseas aid in terms of orders for British industry as a result of the tying of aid to British goods. As we have seen in the previous chapter, this was challenged by anti-aid "think tanks" such as the Centre for Policy Studies, which argued that the tax burden on British firms created by large aid budgets would more than offset any such gains. And we have seen in the quotation above that Peter Bauer was arguing that even tying should be scrapped. The emphasis in the Marten statement on "political, industrial and commercial considerations", was thus, despite being a step away from the "More Help for the Poorest" strategy, at the same time a victory for what might be termed the industrial export lobby in the Tory party which did not adopt the approach of the Thatcherite anti-aid ideologues. Indeed, this was noted by Judith Hart in the same debate following the statement:

"I hope I shall not embarrass the Lord Privy Seal... the Foreign Secretary and the Hon. Gentleman (Mr Marten), but will they accept my congratulations on their powers of persuasion and influence on their free-market, monetarist and anti-aid colleagues at a crucial point?"[118]

The Marten statement also announced that there would be an increase in the Aid for Trade provision (ATP) by which aid grants could be used to "sweeten" tenders by British firms for overseas contracts usually with very little in the way of an opportunity to appraise these projects on developmental grounds.

The growth of the ATP as a percentage of the aid budget was to become a focus for much criticism by the "More Help for the Poorest" lobby over the course of the next few years; yet it is important to recognise that this too was a further indicator of the strength of the "industrial lobby" of the Tory party on this issue rather than the anti-aid lobby.

Just a few weeks prior to the Marten statement, the first Brandt report had been published calling, among other things, for a massive flow of funds into the Third World. The impact of the report was to strengthen the pro-aid lobby, and the presence of former Conservative Prime Minister Edward Heath on the Commission which drew up the report illustrated once again the existence of a strong countervailing trend to the Thatcherite ideologues within the Conservative party on the issue of aid and development. The effect of the publication of the report was to create a chorus of demands for its implementation from a wide spectrum of opinion within the country which clashed sharply with the intentions of the government to progressively cut aid as part of its shake-out of the public sector. This may also have been a factor which was responsible for the muted tone of the Marten statement. At any rate, the report certainly provided a sharp contrast to it.

A lobby of Parliament organised by the development agencies and the churches in May 1981 calling for the implementation of the Brandt report and opposing the cuts in aid, brought out 10,000 people and provoked a perceptive article from The Times which highlighted the dilemma for the government in explaining their more ideological position on aid to the public:

"The place was besieged by progressive vicars and like-minded souls. Harassed back-benchers summoned by aid-crazed constituents could be heard explaining in the Central Lobby that they agreed with the lobbyists' aims. For economic reasons the government had been forced to slow down aid a bit, but it would pick up after the recession. But according to the New Right, that is not the correct line at all on aid. The correct line is that the poverty of all those countries is not caused by insufficient Western aid and that in any case the money cannot be other than wasted and only makes the whole situation worse. Mrs Thatcher was briefed on the arguments many times in gatherings during the years of the Long March in opposition. It is probably still her view. But maddeningly the world on such matters seems to go on much as it did before, with nearly everyone automatically assuming overseas aid to be a good thing..."[119]

In defending the Government record Ministers have tended to shift the argument away from aid to trade, saying that the most effective way to help the Third World is to promote growth in Britain. The continued efforts to promote an open trading system with free access to Northern markets for Third World exports would do far more than aid ever could, so the argument ran. This kind of statement is usually followed by a few side-swipes at Labour's policy of import controls which deny such access to Northern markets. Such statements exploit Labour's vulnerability to pressure from trade unions in industries competing with Third World imports. Such an argument raises a thorny issue which has been much debated in the development movement: does access to Northern markets promote a dependent development by drawing Third World countries further into an unequal trading relationship with the North? Would it not be a better policy to promote self-sufficiency in both the North and the South which would minimise unequal trade? Is it not the case that the New Right in Britain are in favour of an open trading system partly or wholly because they are conscious of the advantages that the North, including Britain, has in this regard? This is not to suggest that Labour's protectionist policy of import controls is in any way an alternative based on Third World interests – it is clearly a self-interested, nationalist policy in terms of its motivation. The logic of the leftist anti-aid lobby in many ways would seem to be inspired by a similar concern that Northern aid is primarily bound up with Northern political, industrial and commercial interests. The extent to which aid is aimed at agro-export production to serve Northern needs rather than subsistence farming and other basic needs production, for example, is one aspect of this concern. It would seem important to avoid throwing the baby out with the bath water. It is clear that many Third World governments will continue to receive aid despite the conditionality and strings. It would appear to be necessary therefore to continue to campaign for aid to be less conditional and better quality. It would also seem important not to let Northern governments "off the hook". Simply calling for the ending of aid does nothing to advance the efforts of those pressure groups seeking to make aid genuinely developmental. However difficult – even hopeless – such a task might seem in the context of the entrenched power of the industrial and commercial lobbies with their ready access to governmental ears, it does seem rather self-defeating to refuse to make positive demands of Northern governments in terms of providing aid "without strings" for the Third World. Even if such efforts only achieve a small improvement in the terms of aid giving, it would seem to be a worthwhile exercise.

The budget of June 1979 had already trimmed the aid budget from £840m to £790m. The Overseas Development Ministry was once again relegated to a department of the Foreign Office. It had already lost its ministerial Cabinet status under Labour. The status of the Minister for Overseas Development, in Whitehall terms, was recently described as being analogous to that of a manager of a Siberian power station.[120]

In addition, the Thatcherite hatchet men had been let loose on the civil service to look for areas of waste. A vivid picture of the scene was drawn in a Times article at the time:

"(The ODA) has resembled nothing so much as a pre-operative patient being pored over by successive teams of surgeons, scalpels glinting. A senior official believes he counted nine concurrent reviews at one stage.

One imagines Sir Leo Pliansky's quango hunters, Sir Derek Rayner's waste eliminators, and the anonymous analysts of the inter-departmental aid policy review – another one has been mauling the British Council – and of the ODA's management review tripping over each other on their way to the operating theatre."[121]

In March 1980, a public expenditure white paper announced that aid would continue to be cut over the next few years.[122] An article in The Times estimated the cut to be 14 per cent in real terms between 1979/80 and 1983/84, compared with an overall cut in public spending over the same period of only 4 per cent.[123]

At the same time, The Times also carried reports of a number of export contracts which showed a continuing trend towards using overseas aid as a means of creating jobs in the depressed regions of Britain – a trend which we have already noted under the previous Labour Government. One such deal was a £330m contract won by Davy Corporation to build a steel plate mill in Mexico. In order to beat rivals, Britain provided £183m in cheap export credits and £35m in aid. The latter being a straight gift. A further example was a series of projects worth £360m in orders with Brazil for shipbuilding, transport, electronic and construction work. Some £300m of this was to be financed by export credits and £13m by a gift of aid which was to go towards the conversion of Santa Cruz power station from oil to coal. A third example, and by far the biggest deal, again with the Davy Corporation, was a project to build a steel works in India. This was worth £1,250 m. In this case Britain offered £600m in export credits and £150m in aid, thus making it the largest single aid project ever.[124]

The Aid for Trade provision was to be used in the first two examples. It had risen from 5 per cent of the aid budget under Judith Hart and had reached 8 per cent of the budget at a time when the overall budget had been cut. ATP funds were for use in countries that do not normally qualify for aid or else for projects in countries that do, but where the aid quota has already been used up. As we have noted in the previous chapter, these funds do not go through the usual development appraisal process. All other aid projects have to go through the high-powered Projects and Evaluation Committee of the Overseas Development Administration. The third deal was different. It was not from the ATP. As the Times article which reported these deals pointed out, it was effectively "sewn up" by the Prime Minister during her recent visit to India in the spring of that year (1980) before any pretence of appraisal could have been carried out. Of the £150m aid, £50m came out of the regular aid quota to India and another £100m came out of the "unallocated reserve" within the aid budget. The important point here was that the distinction between ATP and the rest of the aid budget was becoming blurred since, in this case, the funds from the unallocated reserve and even the country allocations were being used in the same informal way. The was a reflection, according to the article, of the shift in emphasis indicated by the Marten statement towards giving greater emphasis to political, industrial and commercial considerations. The article went on to draw the conclusion that:

"It is evident from Ministers' statements that aid is being used as a job-creating mechanism in the depressed regions of Britain. This avoids the embarrassment of an avowedly anti-interventionist government having to increase spending on its industrial support. It also avoids having – within a fixed level of overall spending – to make corresponding cuts in the aid budget."[125]

Although a set of rules and regulations had been agreed between major donor countries about honesty in mixing export credits with aid, a loophole existed whereby it was possible to circumvent these rules if the aid and credit terms reached a certain level of "generosity". They were treated as part of an aid programme in such circumstances and not as part of a commercial contract. Nevertheless, these methods were still considered to be sailing close to the wind and excused by the DTI because they were no worse than competitors.

As future aid minister Timothy Raison put it:

"The ODA didn't of course instinctively rather objectively like ATP. On the other hand I think it's still perfectly possible for ATP projects to be good sensible projects, but then it's perfectly well known that they were designed to help British industry, British exports and the time spent on evaluation was less than on conventional projects."[126]

Another Conservative MP, Jim Lestor, while calling for an increase in the ATP to help get competitive contracts signed, opposes its use for uncompetitive products:

"What we shouldn't have is a slush fund for British industry, you know, if it's uncompetitive then you shouldn't actually make it competitive by the Aid and Trade provision."[127]

A recent indication of the ODA's difficulties in appraising ATP projects and the sensitivity of this issue was revealed by the leaking of an internal ODA report on power generation projects to the Labour Party. This document is included in full in Appendix 2. The internal report was published as an evaluation report with a whole number of embarrassing parts deleted and replaced by innocuous-sounding evasions.[128]

The deletions included the names of companies involved in the projects, references to "frequent problems in identification and appraisal" and economic impact on the project being "low or negative". One of the most important deletions, however ,was the following:

"For the ATP projects it involved a 'minimum test of developmental soundness'. In practice for the three cases involved, this does not seem to have been very meaningful: no test was carried out on the first part of the Burma project because no information existed, and on the second part of the project the test was based only on an acceptance of an Asian Development Bank assertion that gas turbines were the least cost option."[129]

Another embarrassing revelation referred to was:

"The Department of Trade and Industry/Department of Trade Appraisal provided in the case papers were described by the evaluators as inadequate. They contained assertions which were unsubstantiated and in the event incorrect assertions about sales prospects (Burma, Botswana)". Also deleted was the statement that "On some occasions important information available to the DTI was not conveyed to the ODA."

Further deletions referred to the "often inappropriate nature of plant design used in the projects". The statement that this was partly a result of the need to pack the ATP project with "adequate UK content" was also hidden, according to the Labour Party Press statement. According to ATP rules at least 35 per cent of ATP projects must be UK produced goods and services. Later on, however, another deletion says that these content rules were "blatently broken" in order to approve another project.[130]

Another deletion says:

"In the event the equipment is now hardly used as the tariff does not cover fuel costs. The only possible justification (and one which the Indian authorities may have found difficult to resist given the relative abundance of aid for power equipment) was that such plant met the political pressure to expand generating capacity quickly."[131]

This is confirmed by another deletion in relation to an oil-fired power station in Sudan, which says:

"The choice of technology has been inadequate in terms of size and type...the diesel plant contains too complicated electronic controls currently disconnected and ignored."[132]

And, similarly, in relation to a generating plant project in Bangladesh:

"The sustainability of the project is in some doubt in that the local staff are unable to run the equipment and are thought unlikely to learn to do so given its high level of automation... the plant creates a heavy demand for spares (£0.5 million per year) for which foreign exchange is in short supply."[133]

As the Labour press release goes on to say:

"This paragraph goes to the heart of the controversy over ATP – it shows how ATP has been used to subsidise the off-loading of, often inappropriate, excess UK power plant capacity, on the developing countries, through a subsidy from the tax-payer, in the name of aid.[134]"

If there was any doubt about the Prime Minister's lack of enthusiasm for aid it was to be dispelled when, on 24 February 1981, she made a statement in the Commons during which she commented:

"It would be a nice position if we were able to make enormous handouts for overseas aid, but we must give our own people priority first."[135]

This bald statement was reported in the same article to have created a few raised eyebrows among some Tory back-benchers as well the opposition members. The statement also provoked an opposition inspired debate around a motion specifically deploring the Prime Minister's statement, which was described by one MP, Guy Barnett, as a "Freudian slip".[136]

Timothy Raison, who took over as aid minister after Marten, provides some revealing comments about Margaret Thatcher's priorities.

"It [the aid programme] wasn't one of her highest priorities. She approached it very much as a British politician rather than from the point of view greatly of the Third World. But I mean she would support a good project, but I think she was always interested in whether there was a pay-off for Britain, by which I mean I don't necessarily mean a financial pay-off for Britain, but whether it was serving British interests in terms of creating good relationships or maybe providing employment for British industry and so on – I think that is true.

"She liked the big projects, for instance the big Victoria dam in Sri Lanka would be an example of the project which I think she would be very enthusiastic about. I would think she was enthusiastic about the power station project in India. I mean I think these are the the kind of projects that she would see as being good because they were important prestige... or seen as as prestige projects. They, as I say, would mean a lot of work for British industrial companies. But they were also seen as being good development projects in their own right."[137]

The arguments used to defend the government's cuts in aid varied in their bluntness and sophistication. On the one hand there was the case of Mr John Townend, Conservative MP for Bridlington, who made the following contribution to the above debate:

"I agree with the use of overseas aid if it is to the financial and political benefit of this country. Britain has used aid in this manner for several hundred years. However, in recent years we have not had an adequate return on our investment. An example is India our largest recipient. It is clear from India's voting in the United Nations that it is far from one of our best allies.

"...If the massive resources recommended by the Brandt report were put into operation, it would mean transferring resources from the relatively efficient and skilled to the relatively inefficient and unskilled; from the honest to the corrupt; from the experienced to the inexperienced; and from the productive sector of the Western economies to the parasitic public sectors of many Third World economies.

"One has only to look at those Third World economies which have succeeded – South Korea, Taiwan, Hong Kong and Singapore – to see the importance of the free market economy. One must be honest and say that racial and religeous differences must play a part, because the peoples I have just mentioned are mainly of Chinese origin, compared with the Africans, whose success rate has been far worse.

"Aid will not stop the slide in Africa which has progressively accelerated since the end of Western colonisation. Under such circumstances, perhaps the only answer to the terrible things that we have seen on the continent... is some form of re-colonisation in the long term. I accept that that is completely impractical and I do not put it forward as a valid argument."[138]

Such bluntness, which uses crude racial stereotypes as one of its criteria, along with a simplistic and selective identity of success with the free market (Brazil springs to mind as a case where the state played a large-scale role in the economic "miracle"), is relatively rare. Instead, it is more usual to hear a more sophisticated rationale for the government policy on aid to the effect that Britain has to get its economy back in shape before it can increase its aid. However, on occasions even this more sophisticated argument can be overstated. This was the case with the statement of Lord Carrington, made simultaneously to the Marten statement to the Commons, announcing the shift in aid policy on 20 February 1980:

"What we must do is to put our economy in order before we can increase our aid programme and before we can even keep to the sum of money which we spent the year before last. These are unpalateable facts but the fact remains that we simply cannot afford to pretend that we are a rich country."[139]

Such an assertion would surely sound rather hollow in certain of the world's poorest countries, especially when, as we have seen, the cut in the aid budget was greater than the overall cut in public spending, and at a time when the ratio of defence spending to aid was rising. For every pound spent on aid in 1979-80, £9.7 was spent on defence. By 1983-84 the ratio was planned to rise to 1:12.9.

Another theme which cropped up in Ministerial statements was the idea that there is no conflict between development objectives and "enlightened" self-interest on the part of the donor. As the ODA Minister Chris Patten put it at a Royal Institute of International Affairs event in 1987:

"We should not be coy about the extent to which to do what is right can also be to do what is good for Britain... This is a case where virtue can bring its own rewards...It is no crime to be popular."[140]

The question revolved around whether "enlightened self-interest" was primary or secondary in relation to development objectives. The trend towards a more informal and self-interested approach to assessing aid projects which we have noted above would seem to suggest that increasingly it was self-interest that came first. A letter to The Times in August 1982 by Labour Spokesperson on Overseas Development, Frank McElhone, and several other Labour MPs quoted from a recent Overseas Development Institute Review on this issue:

"'What has been lost is the paramountcy of development criteria in taking and executing aid decisions the 'Aid to the Poorest' strategy is still nominally alive, but the quality and poverty-relieving orientation of Britain's aid has diminished as the development assistance objectives of the programme have been subdued'.

The figures and policy changes reveal that the Government believes it has ridden out the storm of protest which blew up in the wake of its initial aid cuts and that it has successfully absorbed the impact of the widespread enthusiasm... generated by the publication of the Brandt report."[141]

The obstacles in the way of further shifts in emphasis away from the "More Help for the Poorest" approach were the long-term commitments which the Labour government had entered into both in terms of multilateral aid (to which the Tories were committed to withdrawing from as far as possible) and even in the case of many bilateral projects which were also often long term. The commitments to the International Development Agency, the soft loan arm of the World Bank on the other hand had to be replenished periodically, but because it lent to the poorest countries which could not get commercial credit because of their low credit rating, it would have been politically very difficult to withdraw from it even in a context in which the US was apparently trying to do so in the early 1980s. In the case of UNESCO, however, a history of alleged leftist political manipulation provided a relatively easy candidate for withdrawal in the early 1980s.

The famines in the horn of Africa which came to the attention of the media in 1984 provoked renewed interest in the aid question. Despite the magnitude of the crisis, no new funds were devoted to the aid budget to compensate for the funds spent on emergency relief operations. Indeed, just as the famines hit the headlines and television screens, the government was embroiled in a row with its own backbenchers over another round of cuts in the Foreign Office budget (which includes the aid budget). Conservative members of the House of Commons Foreign Affairs Committee led by the chair, Sir Peter Blaker, requested a meeting with the Prime Minister to lobby against the cuts and were furious when she refused to meet them.

Despite the threat of a substantial backbench rebellion, no concession was made and the most that Foreign Secretary Howe could do was to reallocate the threatened aid cuts to other departments within the Foreign Office. The drop in the value of sterling and high inflation in the poorest Third world countries meant that, although the there was a 3 per cent increase, as had originally been planned, in cash terms, it was a cut in real terms. Sixty Conservative MPs abstained and eight voted against the government in the vote. In the run-up to this, an exchange in The Times indicated the ferocity of the debate that was going on. Members of the Independent Group on British Aid, an organisation comprising leading development academics and development agency officers, wrote a letter protesting against the proposed cuts in aid pointing out that the feared 15 per cent cut would come on top of the 20 per cent reduction since the Conservatives came to power, and demanding the resignation of the ODA Minister if the cuts went through. The proposed cuts since 1979 would amount to a total which was three times the amount raised by charity in the same period. A Times leader in the same issue responded with a personal attack on one of the IGBA members, Professor Charles Elliott, in relation to some comments he had made in a radio broadcast about the politically motivated ending of British and other Western bilateral aid to Ethiopia in the late 1970s:

"The Elliott argument contends that the Marxist regime in Addis Ababa has been deprived of funds from the West because of its Soviet orientation and has thus not been able to develop the areas which are now suffering. The facts tell a different story, though they lead to the same conclusion of Western culpability. Between 1975 and 1982, the Ethiopian regime received one billion dollars of Western aid... most of which was channelled through multilateral institutions... Professor Elliott was right to blame the West for helping to disable Ethiopian peasants from meeting the challenge of drought, because it supported a regime whose active measures of oppression, large-scale evictions and prevention of peasant agriculture have all contributed as much to this catastrophe as have the years of drought."[142]

The editorial went on to make the barbed comment that it was "incongruous" for those who normally attack bilateral aid in favour of multilateral to call for more direct aid from Britain in a crisis. As a number of subsequent letters, including one from Professor Elliott, responding to this editorial pointed out, the writer of the editorial was confusing long-term development aid with emergency disaster relief. As the letter from Professor Elliott said:

"I am... at one with much (though not all) of what you say about the Dergue. I am especially critical of its agricultural policy and its over emphasis on industrialisation. From that, it does not follow, however, that it was either ethically justifiable or politically sensible to withhold emergency relief for 21 months, despite abundant and independently justified evidence of the need for it. By muddling development aid with emergency relief, you pillory me, but reveal only your own confusion."[143]

The effect of television pictures of the Ethiopean famine created a great deal of pressure for some kind of long-term developmental action as well as emergency relief. This was reflected in a Foreign Affairs Committee (which has a Conservative majority) report, Famine in Africa., published in 1985. It argued that:

"To help in the prevention of a reccurrance of the present crisis, assistance by the donor community is required in various ways for the food producing sector (principally small-holder agricultural and horticultural production), in particular in the field of environmental protection and research; but this assistance must be accompanied by continued and increased appropriate developmental assistance in other areas."[144]

It should be remembered that no long-term developmental assistance to Ethiopia had been given by Britain since the late 1970s for political reasons. The government response was to endorse the conclusion of the report, to commit itself to providing more emphasis on spares and replacement equipment to maintain existing investments rather than new assets, and to help with the rebuilding of national research and extension services via technical personnel.

The British record on aid to African agriculture had been somewhat uninspiring to date, as a report by the All Party Group on Overseas Development was to highlight subsequently. In 1984 only 19 per cent of bilateral project aid, globally, went to the renewable natural resources sector (which includes agriculture and conservation).[145]

As the All Party Group report highlighted, the real value of aid for African agriculture fell by about one third from 1979 to 1984. Aid to African agriculture accounted for only 10 per cent of the UK aid programme, even if multilateral and indirect agricultural spending were included. The report concluded from its examination of ODA figures that "direct benefit" aid to African agriculture is mainly spent on cash crops like rubber, sugar, coffee and tea; "indirect" benefit aid (like roads and infrastucture) has grown sharply recently. The breakdown of the figures was as follows: two-thirds of UK aid to African agriculture went on roads, paper and rubber schemes and a further ten per cent went on sugar, coffee, cocoa and teas projects. This compared with just 1.5 per cent for the livestock sector and 1 per cent for rural water supplies. Rural development aid has declined very sharply, from £3.7m in 1979 to £10m in 1980 to under £0.2m in 1984.[146]

The All-Party Group report also emphasised that commercial criteria were responsible for diverting aid from "direct" benefits (crops, livestock and forestry) towards "indirect" benefits such as roads and infractructure. There was also a tendency to focus aid on the more productive areas rather than on the vulnerable regions. In Sudan a great deal of UK aid had gone to a massive irrigation scheme in Gezira, prducing mainly cotton, rather than on small-scale irrigation for subsistence farming in the famine-prone areas of Darfur and Kordfan. Although two-thirds of all irrigated land in Sub-Saharan Africa is found in Sudan, large areas of the country were suffering from famine.[147]

As we have already noted, it has been government policy to shift aid away from multilateral to bilateral channels on the grounds of having more British control over its distribution. Not surprisingly, therefore, British policy within the multilateral aid institutions has paralleled its bilateral reductions in aid to the poorest. The main obstacle to reducing funds has been the longevity of previous commitments under Labour. The International Development Association (IDA), as we have seen, is the soft loan arm of the World Bank which lends to the poorest countries which lack credit-worthiness in commercial terms. Although it was politically difficult to withdraw completely from the IDA, it has nevertheless suffered a substantial reduction at a time when the need for its funds has increased.

The replenishment of IDA funds comes in three-yearly cycles. The sixth (1981) replenishment saw Britain contribute $1212m, ie 10.1 per cent of the $12bn agreed altogether by donors. For the seventh replenishment (1984) it was cut to $585m. This drastic cut was partly a result of the hostility of the Reagan administration to the World Bank because it did not sufficiently reflect US interests. It forced a reduction in the overall funds for the seventh replenishment from $12bn to $9bn against the wishes of other donors, including Britain. A further reason was Britain's insistence that its relative contribution to IDA be cut in line with its declining relative GNP compared to other domors. This was a reduction from 10.1 per cent to 6.5 per cent between the two replenishments. To its credit, Britain did make clear that it would still be willing to contribute this percentage of the original $12bn before the US forced the reduction in overall funds and said that it would contribute its 6.1 per cent of the $3bn difference to a special fund to supplement IDA resources. This was never taken up because of lack of agreement between donors. Just before the African famines hit the headlines in 1984, the World Bank launched a special fund to counter the shortfall in the IDA replenishment so that it could respond to this new crisis. Despite having offered the money to the IDA special fund earlier, Britain was unwilling to make the same funds available to the special fund for Africa. Britain and the US thus became the only two donors not to contribute to this fund in January 1985, despite the full glare of publicity about the famine having been focussed on this issue internationally. This provoked an outcry in Britain and an early day motion signed by over a hundred Conservative MPs. This in turn forced the government to make available £75m ($110m) for this fund. Nevertheless, when the total British contribution to the IDA and the special fund for Africa was added together it came to only $700m compared to $1212m contributed to the sixth replenishment.[148]

Joan Lestor MP, later to become Labour spokesperson on Overseas Development, provides some interesting insights into the tensions which this issue set up within the Conservative Government, and in particular the role of Minister for Overseas development Minister Timothy Raison in relation to the Special fund for Africa:

"He fought for it. He went there [Ethiopia] at some stage if I remember rightly and he came back and he was quite horrified at what he'd seen. And I think he put pressure on... I know we were aware at that time that this question was going on because we got... I'm sure of this...that we got the sort of signal to put more pressure on him because he needed it, you know, he wanted pressure."[149]

This niggardly approach was repeated with the case of another multilateral institution the International Fund for Agricultural Development which was set up in the early 1970s following food shortages in several countries (including Ethiopia). Its objectives were to improve food production in these countries and thus do away with the need for food aid. After two years of haggling, it was agreed that in January 1986, the second replenishment of IFAD's funds would comprise of $460m for the three year period beginning from January 1985. This was only half the previous replenishment of $1100m. The OPEC countries, hit by the fall in the price of oil, were unwilling to contribute on the scale that they had previously done. The other Western donors insisted, however, that the OPEC countries must contribute 40 per cent to their 60 per cent. Because the OPEC countries were unable to maintain their earlier amount, the total was scaled down accordingly. Britain, again had been willing to support a figure greater then $460m but, as with the previous case, it was not willing to transfer this amount to a special fund for African famine, despite the majority of other donors having given support to the fund and in spite of political pressure at home. The Special fund for Africa was first proposed in May 1985. It took until October 1986 for Britain to finally cough up $10m. for the fund after much lobbying and arm-bending by a wide spectrum of politicians and development agencies.[150]

When, in September 1986, the ODA Minister Timothy Raison was replaced by Christopher Patten, an "open letter" appeared in the Sunday Telegraph from him, addressed to the new Minister, which gave a him a little piece of advice about the Prime Minister "straight from the horse's mouth":

"...The Guardian' overstated it when they said that 'you seem to have been sadly dispatched to the salt mines of overseas aid'... I've no doubt that Geoffrey will fight the battle well. I only hope that the Prime Minister, having put you there, will be sympathetic. She has many qualities, but I can't say that over-enthusiasm for the aid programme is one of them... I couldn't help thinking, as we had our aimiable farewell chat last Wednesday, that it was about the first time that I had ever had a conversation with her about what I'd been up to at the ODA....We simply don't have a big enough programme by international standards..."[151]

The above vividly sketches the abysmally low status that the ODA Minister had now sunk to in Whitehall terms and provides a good indication of the singular lack of political clout which he wielded in government.

Joan Lestor MP sheds some light on the relations within the Conservative administration at this time in relation to aid and the demise of Timothy Raison:

"Well, all we heard at the time was, you know, she got rid of him, basically. But he was fed up because Margaret Thatcher certainly wasn't interested in Third World countries. She certainly wasn't interested in aid and development. Neither was the Chancellor – Geoffrey Howe, and Lawson under Patten. Patten told me that himself; he'd had some row when I was waiting to see him, he had some row with Lawson. At first I thought: is this being put on for my benefit? But it wasn't. I heard afterwards he'd been to see him, he'd said – look, for Christ's sake I'm being kicked all over the place, you know, I need money. And Lawson wouldn't look at him. And I think Raison, when he wrote that [the above letter] he knew he was finished in the sense that he wasn't after anything else, you know. And he's quite a sad man... because on certain things I think he was dedicated – he did care."[152]

 An article in The Times the following year gave a further indication of this in relation to other government departments:

"Last week Alan Clark, DTI, annoyed the ODA with a package of ideas on how policy should be spruced up. Clearly enjoying the role of provocateur, he wants aid to be more commercially orientated, with less analysis of the aided country's economy and 'best interests'. Keen to transfer the administration of the Aid and Trade provision to his own realm, Clark also suggests that these funds for supporting export contracts to the Third World should be made accessible to small companies, with more emphasis on soft loans, and more say for recipients on how they spend the cash. Replying to a planted question in the House, Patten made clear that the ODA appraisal was designed to ensure that Aid and Trade provision was a 'sound investment' for the recipient (not the small businessman). But asked if he thought this aid should best be taken care of by the ODA, he was evasive. A formal response would have to wait. The fight goes on."[153]

The lack of support for aid within the Conservative Party and government is indicated once again by Joan Lestor:

He [Raison – CE] got very little support, very little support as indeed ...I mean Linda [Chalker] doesn't, and Patten didn't. There's a few – [Jim] Lestor and Bowen Wells and one or two others – that cluster around, but on the whole they get very little support. And it's not a popular thing for a young Tory, an aspiring Tory to have... you can make a bit of a name for yourself there because you can appear to be the human face of the Tory Party, but you'll move on... And I mean Linda Chalker survived Thatcher, but I mean she had things to contend with – Thatcher calling the ANC a lot of terrorists and she's meeting them, you know!... For Thatcher to do that was showing a certain contempt for the whole office."[154]

The disturbing trend towards commercialisation of the bilateral aid programme was illustrated perhaps even more vivdly than previously in March 1986, when the British government offered to supply Westland helicopters to India, financed almost wholly out of India's normal country aid allocation – not the ATP. The project, worth £65m, was to supply 21 helicopters for off-shore oil exploration work. The Indian government stated that it did not wish for aid in this form, but was told that it was either the helicopters or the loss of £65m from the country allocation for the following two years. Faced with this ultimatum, it reluctantly agreed to accept them. The project was not what many within the ODA would have wished, and it was generally accepted that it was a means of helping out the ailing Westland company after its recent and much-publicised crisis. This represented a large chunk of the aid budget spent on a project which had little to do with aiding the hungry of India.[155]

Other examples were brought to light by Professor Paul Mosley in evidence to the Commons Foreign Affairs Committee in July 1986. A set of gas turbines supplied to Egypt, which the Overseas Development Sub-Committee of the Foreign Affairs Committee had investigated in 1982, were found to be an extremely high cost means of supplying power and were, like the Westland helicopters, being thrust on the Egyptian government because Rolls Royce had them as unsold stock and wanted to get rid of them. The Middle Eastern division of the ODA in Amman had already rejected this project on developmental grounds, but the project was reactivated by the DTI, under pressure from Rolls Royce, and the project was rushed through the ODA with little time to reappraise the scheme. The project received support from the Aid for Trade provision and was given the go-ahead.[156]

Then there was the case of the 50 buses supplied by Willowbrook (a Midlands firm which had given £50,000 to Conservative funds) to the Zambian government under the Aid for Trade provision. The British High Commission staff in Zambia advised against the project because they thought the buses would not be able to withstand the pounding from Zambia's rough dirt roads. The ODA was not given time to properly appraise the project and it went through "on the nod". Within a year all of the buses had fallen apart and the Zambian government was furious. Unfortunately, by this time Willowbrook had gone into receivership.[157]

There have also been indications in the press that aid has been linked to arms. Reports appeared in The Guardian and The Independent in 1988 after the deals had been attacked by the Campaign Against the Arms Trade. The Guardian report stated that:

"Arms at well over £1 billion are to be sold to re-equip every important element of the Malaysian armed forces under a government agreement signed yetsreday in London by Mrs Thatcher and the Malaysian Prime Minister, Mathathir Mohamad. The Malaysians demanded earlier this year that aid should also be included in the deal, but Downing Streeet insists that neither civil nor military assistance will be involved. Defence sources suggested yesterday, however, that civil contracts associated with the sales might qualify for inclusion in a separate aid programme."[158]

The Independent also reported that:

"The huge arms deal signed yesterday by Mrs Thatcher and her Malaysian counterparts will be supported by indirect credit from the British Government and largely paid for by Malaysia in oil and other commodities... Downing Street and other Whitehall sources denied that Britain was providing any direct aid to help the Malaysians finance the arms purchases. However, Malaysia will be allowed to pay in oil, natural gas and other commodities through a series of barter deals. This is likely to involve the Government providing overdraft facilities – effectively a form of supplier credit. Parallel talks are going on which are expected to lead to an increase in the level of UK aid to Malaysia channelled through the Government's Overseas Aid Administration."[159]

The following year The Observer took up the issue and did a very big exposé which accused Thatcher of "lubricating" the arms deal with promises of civil aid.

"Mrs Thatcher has personally "lubricated" a huge £1000 million arms deal with Malaysia involving the sale of Tornado jet fighters, artillery and radar equipment with a promise of British government aid ... the formal Memorandum of Understanding... giving the go-ahead to the Tornado sale, coincided with pledges of a large civil aid package... 'We have made it crystal clear that we do not mix the two' said a Foreign Office official. 'If the Malaysians want to make the connection they can but we do not.'... Whitehall sources concede that there were several exchanges between the two governments on aid before the arms agreement was signed but stress that the actual arms agreement does not contain any reference to aid... The ODA says it was approached by Malaysia last autumn to help finance a four-lane road highway project linking three remote resort villages in the Cameron Highlands. 'We offered a feasibility study', says a spokesman, 'but that offer has not yet been taken up'. The timing of the approach coinciding with with the signing of the arms deal, insists the spokeman, was chance. British aid is already running at a high level for a potentially rich country. Two years ago a £60 million grant was made available for a water project, the largest ever allocated for a single scheme from Britain's aid and trade provision. The size of the grant and the fact that the contract was let without tender to a single British company, Biwater, whose Malaysian partner Antah is controlled by the Malaysian Negri Sembilan Royal Family, led to questions in both the Malaysian and British parliaments."[160]

This was followed by two months of questions in the Commons by Opposition Spokeswoman on Overseas Development Joan Lestor to elicit further details of this case. There was a good deal of resistance to these requests for information on the part of the government.

Two months later The Observer reported that:

"Mrs Thatcher was forced last night to admit, tacitly and very reluctantly, that a promise of British overseas aid was discussed in negotiations leading to a £1 billion arms deal with Malaysia ... The first question, put down for written priority answer on 17 May, asked the Defence Secretary whether there was any reference to overseas aid in the correspondence which led to up to last year's arms agreement with Malaysia. The Minister for Defence Procurement chose to answer a different question: 'All dealings between the two governments on the proposed sale of arms were formalised in the Memorandum of Understanding signed in September 1988. No mention is made in that document of overseas aid to Malaysia. Three weeks later, on 13 June, Miss Lestor tried again. This time the Minister for Defence Procurement was obliged to attempt to reply but his answer was still designed to mislead: 'Following the exchanges of Malaysian interest in UK overseas aid in early exchanges, my right honourable friend the Secretary of State for Defence made it clear to the Malaysian Finance Minister that it would not be acceptable to Her Majesty's Government to link aid with the defence sales package.'

Ten days later Miss Lestor tried once more to get at the truth, asking the Prime Minister to say who had indicated to the Malaysians that Britain would consider a request for overseas aid in the correspondence concerning the arms deal between the two governments. Mrs Thatcher first gave a holding reply and then this revealing reponse: 'The Government made it clear to the Malaysian Government on a number of occasions in 1988 that we were most willing to consider Malaysian requests for aid.' The Prime Minister's answer added that the Defence Secretary had subsequently made it clear that the provision of overseas aid, as 'an integral part' of a negotiated agreement on the defence package was not possible.

Finally last Thursday Miss Lestor ran her quarry to ground, asking the Prime Minister whether promises of aid to Malaysia had been contained in the correspondence between the two governments on the arms deal. Mrs Thatcher chose to reply: 'The contents of Government to Government correspondence are confidential.' "[161]

The article concludes by quoting Joan Lestor as saying that she believed that, although there was no official link, the two things were clearly linked and that the parliamentary answers showed this. She also thought that it was significant that Malaysia, which was not one of the most poor countries, was receiving so much British project aid. As she has recently pointed out in relation to this controversy:

" It was never proven but it certainly put the fear of God in Chris Patten at the time – that there were any links between aid programme, offers of aid and the supplying of arms... It went on for a period of weeks in the Sunday Observer and he [Adam Raphael] was never sued... but I'm sure the connecting of giving of aid and the commercial side of it, of arms particularly –  I think that story has still yet to come out... and I would have thought that this goes on much more than we'll ever know."[162]

The truth did, in fact, emerge on 18 January 1994, just as this thesis was being finalised. The former Permanent Secretary to the ODA, Sir Timothy Lankester, testified to the Commons Public Accounts Committee that there was, in fact, a "perception of linkage" between aid and arms in Malaysia (see Appendix 7 for the details of this).

The background to this increasing commercialisation of British bilateral aid was highlighted by the Independent Group on British Aid in its report, Missed Opportunities (1986). An earlier IGBA report, Real Aid (1982), had sharply criticised the Aid for Trade provision. These criticisms were echoed by the Commons Foreign Affairs Committee report on the Supply Estimates (1982-83) and by a Treasury report (the Byatt report – 1983). The government defence was that other competitors used similar methods. Owing to a threat that the US might retaliate, Britain initiated and chaired an OECD discussion on "mixed credit" which agreed in principle to phase out such export subsidies and to allow for much greater disclosure of what each country was doing in this regard. At the same time, however, the exporters' lobby was campaigning for even more speeded-up procedures for ATP projects, complaining that even the nominal development appraisal of such schemes by the ODA was too slow, losing contracts for British exporters. After visits to the Far East by Lord Young and the Prime Minster in the Spring of 1985, a Cabinet review decided that a higher proportion of the aid budget should go to the ATP. In November 1985 a £2m increase in ATP was announced as part of a modest increase in the overall aid budget. This was not as big as had been feared. The important change came with the speeding up of the procedures for its use and the increased power over its disbursement by the DTI. Greater flexibility in the form in which it could be disbursed was facilitated by the use of a slice of the ATP to pay the interest on commercial loans for large construction projects. An aggressive policy of "generalised matching" to meet the subsidies of the foreign competitor nations was announced through the use of aid funds to soften private sector loans. This was to complement the existing facility by which ATP grant funds were used in association with export credits. It was necessary to involve the ODA because GATT rules prohibited the use of subsidies by non-developmental government departments such as the DTI. The 1986 White Paper on public spending for the three year period starting from 1985 projected that the amount used for the soft loan facility would rise from £3m to £20m. If this facility was removed, the slight increases in the overall aid budget were cancelled in the first year and replaced by a 0.5 per cent decline in the other two years in real terms.[163]

The decline in both the quantitative as well as qualitative aspects of British aid under the Conservative government has not, as we have seen, gone unchallenged. The work of the churches, development agencies and pressure groups like the Independent Group on British Aid and the World Development Movement has been important in highlighting and challenging every step of the decline. In one of the most recent generalised investigations of British bilateral aid conducted by the Commons Foreign Affairs Committee, it was the Independent Group on British Aid which provided the most telling evidence of the decline and which summarised current British aid policy weaknesses:

Professor Elliott: "... It does seem to us that there are two strands in policy. The first is the strand left over from the celebrated White Paper, More Help for the Poorest, which was reinforced by the events surrounding the African famine of the last couple of years... The second strand is the 1980 statement following the review that industrial, commercial and political considerations would be given greater weight. It seems to us that... in general the conflict, and the conflict goes so deep in the process of aid policy formation that it is no exaggeration to say that there is now a need for a much clearer statement of policy that does not have at its heart a fundamental contradiction."

Mr Mikardo: "Would you say that the role of the industrial and commercial considerations of our aid programme is your greatest concern in terms of the quality of the programme?"

Professor Elliott: "I think our concerns about the quality of the programme follow directly from that, because a whole range of considerations follows: for example, rigid tying, a parsimonious attitude to the provision of local costs. A reluctance to supply recurrent costs, the increasing role of the ATP and the run down, as we see it of the technical expertise within the ODA. We believe all this follows from the confusion which we have identified."[164]

Professor Elliott went on to say that there was a mismatch between the rhetoric which was in vogue during the famines which suggested that the "More Help for the Poorest" policy was being reaffirmed and what is happening in the way the aid budget is increasingly being spent.

We continue this survey by examining, in some detail, the subsequent report of the Foreign Affairs Committee, because it dealt with most of the issues that have been raised

In this chapter, along with the government response to its recommendations. The report of the Committee recommended that the government clarify its aid objectives as the IGBA witnesses had suggested. The Government Observations on the report included a statement that there was no need for a new White Paper to set out government policy, but that it would present a more detailed, brief statement which it included with the Government Observations. This contained the following section on conflicts of objectives:

"... the objectives are not divisible... as between 'developmental' and 'non-developmental'; not are there separate 'developmental', 'commercial' and 'political' objectives. There is one objective, which is the promotion of development. This is entirely compatible with also serving our political, industrial and commercial interests... Higher living standards are likely to create stable, thriving and solvent trading partners. Development is concerned with sustainable long term benefits rather than transient, short-term ones; with political stability rather than short-term popularity; with the development of markets rather than securing an order."[165]

It also recommended that the ATP be removed from the ODA budget and considered separately within the public expenditure survey, with the DTI taking responsibility for the budget with the ODA retaining the role of appraiser of the developmental aspects of ATP projects. The Government reply rejected this recommendation on the grounds that it:

"...does not accept that there is any need for conflict between the commercial and other objectives of ATP. Britain's commercial interests are best served by promoting prosperity overseas and by supporting successful projects overseas which will also enhance the reputation of British firms."[166]

The report did not recommend, however, that tying should be discontinued, recommending only that local costs be dealt with more flexibly, despite the fact that the former is responsible for the limitation of the latter. This is a crucial issue which is very much at the heart of a poverty orientation. It would appear to have been one which the Committee had ducked. The Government Observations were only too pleased to agree with this conclusion while asserting that its local costs provision was "generous".

The report also recommended that the policy of giving aid to countries "friendly" to Britain, including Commonwealth countries, and that the aid budget should continue to be spread as widely as possible for political purposes. This would appear to be a concession to non-developmental criteria.

The report did, however, recommend that emergency relief should not be allowed to decrease the resources available for long term development. This proposal was rejected on the grounds that there was a contingency reserve within the ODA budget. The scale of the 1984, and subsequent, famines were so enormous in their demands for relief that it was felt that the Central Government Contingency Reserve should have been used. The cost of relief to Ethiopia in 1984 was £95m, for example, which compared with the overall aid budget of just over a billion pounds. It is difficult to see how such a high proportion of the budget could not have affected other developmental projects.

The report also made the point that it should not be assumed that the poorest groups in a given Third World nation would necessarily benefit from economic growth and that the steps should be taken to improve the sparsity and vagueness of project evaluations in relation to the effects on lowest income groups.

The first point was not effectively acknowledged in the Government Observations. Instead it was simply asserted that "the long term alleviation of poverty requires economic growth to enhance employment opportunities and create the wealth necessary to improve the provision of resources to the poor". This was a reaffirmation of the "trickle-down" model of development. This was supplemented by a vague assertion that there was "much that can be done directly to help the poor participate in, and benefit from, the process of development". The claims that the ODA adequately "commits funds which directly benefit the poor" should be measured against the record of British aid outlined in the All Party Group on Overseas Aid report on UK Aid to African Agriculture, mentioned above. The recommendation that much more should be done in the way of evaluation of the effects of projects on the lowest income groups (which, astonishingly, it was reported by the IGBA witnesses, had never been done, or done so only in such a vague and uninformative fashion as to be useless, at any point in the history of British aid to date) was not satisfactorily answered except to state that existing procedures would be "kept under review".

Whilst the Committee reported an IGBA witness's view, that the ODA should not rely exclusively on the IMF and the World Bank to assess what "reforms" (ie structural adjustment programmes) should be made conditional for the disbursement of British programme aid, ie that it should assess these things independently; this was not made a recommendation in the report. The question of how the imposition of harsh austerity measures by such programmes was consistent with a concern to improve the lot of vulnerable groups, which were inevitably hit the hardest by them, was not dealt with by the report either. The Government Observations did claim, however, that "the ODA already required explicit consideration of this issue in proposals in support of IMF and World Bank-led programmes". It is difficult to see how this could be implemented in view of the fact that it would, seemingly, be a self-defeating exercise for those trying to impose public sector austerity, privatisation of the state sector and unfettered free market forces: such programmes could do no other than hit the vulnerable groups to achieve their aim.

The report also recommended that the extent to which the "policy environment and administrative capacity" of the recipient was "conducive to development" should be a factor in assessing its aid suitability. This suitability, apart from the obviously important question of corruption and administrative inability to cope with large amounts of aid through lack of expertise, was not specified in the report. It was, however, clear that suitable "policy environment" was interpreted in the Government Observations as meaning IMF/World Bank imposed "reforms".

The report recommended that the following criteria should govern the allocation of bilateral country programmes, in order of priority:

"(i) The developmental needs... assessed against:

– the degree of poverty. This should be assessed not by reference to per capita income alone, but by reference to the extent to which there are poor people within the country;

– the degree to which the policy environment and the administrative capacity of the recipient country is conducive to development;

– the degree to which the developmental needs of the country give rise to appropriate project opportunities which meet the needs of the poorest people and, in particular, to opportunities which can be met by what ODA has to offer.

(ii) Political considerations...:

 – countries which are friendly to Britain or have a historic relationship with Britain, in particular the Commonwealth countries, should be favoured;

– the maintenance of at least a small programme in as many countries as possible, for political purposes, is to be encouraged so long as this does not undermine the broad concentration of resources on a much smaller number of main programmes for particular countries.

 – a poor human rights record should not by itself preclude the maintenance of a bilateral aid programme, but should affect the size and nature of the programme.

(iii) Commercial considerations should have less influence in country allocations than the factors mentioned above."[167]

This attempt to pin the government down to this list of priorities received the following response which is perhaps the clearest statement to be extracted from them:

"The Government accepts as relevant each of the criteria for allocating bilateral country aid programme funds listed by the Committee... As has been explained in the Introduction, the Government does not see these criteria as divisible, conflicting or susceptible to listing in order of priority.

"Countries with relatively high incomes per head should be able to meet their external financing without recourse to concessional aid flows, even though they may contain significant numbers of poor people. The aid programme cannot achieve distributive justice within its recipients; but it can take account of the extent to which a recipient government is concerned about its poorest groups."[168]

From this response, and other statements referred to above, it is clear that the Government do not acknowledge the distortion of the developmental role of aid caused by commercial, industrial and political criteria being given greater emphasis. It is clear also that they do not intend to desist from giving these criteria even greater emphasis in future. The references to concern for the poorest groups, as Professor Elliott put it, can only be assumed to be "rhetorical". The aid budget has become at times little more than an arena for periodic "raiding parties" from the DTI and the exporting firms.

The above list of priorities makes many unacceptable concessions to non-developmental criteria. A serious commitment to alleviating poverty in the Third World would not regard historic connections as important. Neither would the need to "fly the flag" in as many countries as possible for political reasons be an important consideration. As for the question of human rights, perhaps the best approach has been that advocated by Teresa Hayter. She suggests that if a well developed domestic opposition to a repressive and corrupt regime exists which itself calls for the withdrawal of foreign aid and for sanctions (for example, South Africa before 1994) then the aid should be withdrawn. If, on the other hand, such an opposition does not exist and there is no sign of one appearing in the foreseeable future, then attempts should be made to find ways of aiding the poorest by other means, since a boycott would needlessly punish them for no good reason.[169]

The formulation of the human rights criterion in the Foreign Affairs Committee report above left the field open for the present government to carry on a policy of aiding repressive regimes (for example, Chile in the 1980s) where the domestic opposition was demanding the withdrawal of support by donor governments. The record of the British government has not been good on this question, and the suggestion that British aid should only be reduced cannot be seen as anything other than a cosmetic exercise. The provision of aid to such dictatorships as the Turkish regime in the early 1980s, the Philippines under Marcos and Nicaragua under Somoza also reflect this regrettable policy.

This chapter is concluded with an examination of the ODA's response to criticisms made of it by the NGOs and pressure groups and the relationship between the NGOs and the ODA in general. Much critical information on the ODA activities comes from the NGOs, pressure groups, independent consultants based in privately- funded "think tanks" as well as academics in the universities. These organisations are well informed about the ODA and have the potential to provide very damaging publicity about the ODA and official aid in general. Chris Patten, faced with a growing public awareness on the connection between aid and poverty, gender and environmental issues shifted ODA policy towards a greater openness towards the NGOs. This openness has been recognised by John Mitchell, former Director of Britain's leading aid pressure group, the World Development Movement.[170]

The existence of the Joint Funding Scheme (JFS), initiated in 1975 by Judith Hart allowed for a policy of co-opting of the NGOs. As has been pointed out by Mark Robinson of the "think tank", the Overseas Development Institute (ODI), which receives ODA money itself for some of its research projects, the JFS grew from £290,000 in 1976-77 to £2.5 million in 1981-82, and to `£6.2 million in 1989-90. He goes on to comment:

"As we have seen, official funding for NGOs increased substantially over the course of the 1980s, at a time when the official aid budget was declining. One result has been that relations between the ODA and the NGOs are dominated by financial considerations. Although it would be an exaggeration to claim that the government has deliberately sought to co-opt NGOs by offering them increased resources, it is nevertheless the case that voluntary agencies have become more muted in their criticism of the ODA in the 1980s".[171]

Robinson also points out that comments on the critical role of NGOs by Government Ministers have also put them on the defensive. He cites the following comments by Lynda Chalker:

"Honesty about the standard of aid work is essential. Not all NGOs are in fact good at grassroots development. Not all NGOs are cost effective. Some spend a great deal on glossy public relations and awards which have little to do with the poor. And there are I fear, rather too many who are readier to be unhelpfully critical of each other or of our ODA programme than to look honestly at their own failings."[172]

Robinson also cites a further factor inhibiting the NGOs which is the Charity Laws which he quotes as stipulating that charities must avoid:

"seeking to influence or remedy those causes of poverty which lie in the social and political structures of countries and communities... bring pressure to bear on a government to procure a change in policies or administrative practices... (and) seeking to eliminate social, economic, political or other injustice."[173]

At the same time, Robinson points out that the ODA has been unenthusiastic about funding development education. A picture emerges from all of this of the ODA utilising a carrot and stick approach to the NGOs to undercut their potential for damaging criticism of official aid practice. On the one hand they stand to gain considerable sums of money if they curtail or mute their criticisms, but on the other hand they stand to lose their charitable status if they do not. Of course, charities do still criticise the ODA. It would wrong to suggest that there is a mechanical relationship between the threat of loss of funds or charitable status and the behaviour of charities in relation to criticising official aid practice. Nevertheless, the threat is real and the charities can only sail so close to the wind. There have been attempts to set up  independent non-charitable campaigning organisations to take over the role of criticising official aid, but they suffer from shoestring budgets and lack the resources of the mainstream charities.

The independent consultants involved in advising and evaluating ODA projects, whether they are from private "think tanks" or university departments, are also constrained by similar pressures to those at work on the NGOs. They will only be asked to undertake such consultancy work to the extent that they operate within certain limits in terms of the conclusions they draw. Those who do not will find themselves cut off as was Teresa Hayter, of the privately-funded "think tank", the Overseas Development Institute, in the early seventies. When she produced a report funded by the World Bank which was critical of them the ODI refused to publish it under pressure from the Bank.[174]

Similarly, many consultants in university departments face the same unstated conditions of employment. They too can become dependent on ODA funding for the research projects. They too will only be invited to act as consultants on ODA projects to the extent that their conclusions are within the limits which are acceptable to the ODA. It is not a question of the ODA not accepting any criticisms: that would be too mechanical an understanding of the constraints which are imposed. It is a question of limits to criticism. This is inevitable as long as the ODA is able to select its own evaluators. As Hancock has noted:

"Those of us, for example, who wish to evaluate the progress or effectiveness or quality of development assistance will soon discover that the aid bureaucracies have already carried out all the evaluations that they believe to be necessary and are prepared to resist – with armour plated resolve – the 'ignorant', or 'biased' or 'hostile' attentions of outsiders. Even the few apparently independent studies in this field turn out in the majority of cases to have been financed by one or other of the aid agencies or by institutes set up with aid money. And where there is no such direct link, more subtle influences are generally at work. Academics at schools of development studies, for instance, often aspire to highly-paid jobs in the United Nations or the World Bank and can be forgiven for not biting too hard the hand that feeds them. Western journalists investigating projects to poor countries usually do so under aid agency auspices and tend to come away with a partisan view of what they have seen."[175]

Recent examples of leading critics from the NGOs being recruited to official aid agencies include John Mitchell, former director of the World Development Movement who is now working for the World Bank, as is Oxfam's former Policy Adviser, John Clark, both of whom are members of the Independent Group on British Aid.

There have also been some attempts at co-opting lobby organisations seeking to change ODA policy. An example is the National Alliance of Women's Organisations (NAWO), which has been engaged in lobbying the ODA for a number of years on gender issues. They have received funding from the ODA for a project which they are carrying out to help NGOs improve their own gender policies and practices. The point about this is not that it will necessarily stop this organisation from continuing to effectively lobby the ODA. Again, it would be wrong to imply a mechanical relationship here. It is that there is a danger that the threat of cutting this funding will involve a certain amount of self- censorship in order not to "bite too hard the hand that feeds it", as Hancock puts it. These mechanisms can be very subtle.

There is no doubt that under Chris Patten a shift towards co-opting the NGOs did take place. He also instituted a number of changes in ODA policy and practice in relation to gender and the environment which have taken on board some of the proposals of the NGO critics. This adaptation to NGO proposals may also be seen as part of the policy of co-opting of NGOs. This was done by modifying those aspects of policy and practice most exposed to damaging criticism by a powerful environment and gender lobby. The extent of public awareness of, and media attention devoted to, environmental issues in particular meant that it was no longer tenable for the ODA to ignore these issues.

An example of this is the Bangladeshi Rural Advancement Committee Project, a poverty focussed project aimed at the rural landless with an emphasis on gender issues implemented by a Bangladeshi NGO. In the internal project report it says in a paragraph justifying the project:

"ODA participation in this project would go some way to counter criticism by the UK aid lobby that aid to Bangladesh carries insufficient benefits for the poorest."[176]

Whatever changes have taken place in ODA procedures and practice in relation to poverty focus, gender and the environment, it should be borne in mind that the amount of the aid budget spent on projects relating to these areas is still a small fraction of the total aid budget otherwise spent on infrastructure and cash crops, unrelated to what the UNDP calls "human development" (see figures in chapter on quantitative aspects of British aid). In such a context, the changes instituted by Patten and fought for by some dedicated and enlightened members of the ODA staff and lobby organisations can nevertheless only be described as being cosmetic in their scope.

Patten was flexible enough to see that changes in relation to these issues were necessary if the ODA was not to lose credibility. He was also instrumental, as Mitchell has noted, in using his position as chair of the European Community Council of Ministers in 1986 to reform EC food aid. This reform separated the food aid programme from the dumping of European farm surpluses. He also demonstrated a willingness to take on board proposals from pressure groups. Mitchell cites the World Development Movement proposals that the ODA should contribute to the IFAD Special Fund for Africa and that it should increase its contribution to UNICEF. Patten agreed to both of these proposals and admitted that he had been influenced by the WDM in making these decisions.[177]

ODA social development advisers, for example, are at pains to stress the changes in ODA procedures since Patten's time. Some of these changes will be described in the chapters on gender and the environment. In relation to changes in terms of poverty focus, the number of social development advisers is clearly important. Criticisms have been levelled that there are nowhere near enough advisers to enable all projects to be properly monitored. Only 28 per cent by value of all ODA projects were monitored by social development advisers, according to an analysis referred to in the Oxfam White Paper published in 1987.[178]

The response of the ODA social development advisers to these claims is to accept that there are not enough social development advisers, but to point out also that they are increasing in numbers. In 1986 there were just two social development advisers in London. Now there are five in London and two in the overseas development divisions. However, while every division has its own economist they do not all have a social development adviser. One social development adviser at the ODA claimed that in her opinion they would need at least ten social development advisers to do the job properly.[179]

The same social development adviser also claimed that at the moment they were not able to monitor all ODA projects. They did not have time to monitor multilateral projects and that this was particularly bad because it was claimed that the multilateral and EC aid agencies were even worse than ODA in terms of social development advice. They were not able to monitor disaster relief. The Joint Funding Scheme was sub-contracted out to Edinburgh University. In terms of evaluation it was claimed that if there was a bad project it is likely that it would not be evaluated because they are expensive to do and the money available is limited. It was also claimed that it is quite likely that the ODA projects only reached those farmers with access to credit, those without it were very hard to reach.[180]

In terms of the proportion of projects which the social development advisers were able to scrutinise one social development adviser had this to say:

"... bigger projects – we see them all. You know we have a Projects and Evaluations Committee, the PEC. Big projects used to be above £3 million and now it's above £5 million. Projects above £5 million must go to the PEC. And mandatorily they must go the Senior Development Adviser to be looked at. So yes, all big projects we see. I don't think we see all the smaller projects. How many we miss I don't know."[181]

This indicates that there is a problem of scrutinising projects. Big projects do not in fact account for much of the aid programme as the ODA had indicated. In 1987 the ODA wrote to Julia Mazza of War on Want stating that:

"British aid finances projects ranging from those costing a few thousand pounds to several million pounds, but 90 per cent of our projects amount to less than £1 million. Only exceptionally do we finance the very big projects that get so much publicity."[182]

Or, we might add, get any scrutiny by social development advisers. As inflation eats into the value of "big projects" the cut off point gets bigger: in 1987, when Mazza was in correspondence with the ODA, the "big projects" were those over £1 million; they were subsequently projects over £3 million and now they are projects over £5 million. Thus it would seem that, assuming that these "big projects" account for a similar proportion of the aid budget, less than ten per cent of the aid programme, ie "big projects", must mandatorily even be scrutinised let alone modified by the social development advisers.

Thus there is still some way to go in terms of social development advisers' ability to effectively scrutinise projects. A step in the right direction has recently been taken by the decision to give the social development advisers their own department separate from the economic advisers: this should increase their status and weight within the ODA to some extent.

A symposium on aid organised by ActionAid in October 1987 provides some illuminating glimpses at the relations between NGOs and the ODA. Chris Patten and Paul Mosley were the main speakers at this event, and we have already seen in the chapter on Labour aid policy what lessons the latter had drawn in relation to poverty-focussed projects in the 1970s. These were expressed in a report specially written for the ActionAid symposium which has already been referred to elsewhere in this thesis.[183]

The chapter on Labour aid policy has already discussed the lessons of the 1970s poverty-focussed projects contained within Mosley's report. Chris Patten's reaction at the symposium was to defend the need to promote economic growth. He agreed that there was a need to tackle poverty alleviation directly by recognising the importance of agricultural development and social services. However, he uncritically defended road-building within agriculturally-related aid and suggested that social services could be improved by making them more "efficient" implying a shake-out of labour and an intensification of workload on the remaining workforce with all the neo-colonialist overtones that this approach necessarily entails. He also spoke of the need to eliminate agricultural protectionism in the North without stating that there was a narrower British interest in this policy in relation to EC subsidies. He also defended infrastructure projects in an uncritical way, ie without recognising that these are often motivated by the export lobby and not developmental imperatives. Patten also defended Structural Adjustment Lending. He argued in favour of doing this with a human face, but for the following reason:

"... not least because I think structural adjustment programmes are more likely to work if we do, but I am not going to put myself in the situation in which I am advocating or working for the sort of global egalitarianism which I find it difficult to accept in national terms".[184]

This is at least honest. It does, however, reveal the true ODA motive behind "structural adjustment with a human face".

He suggested that the "Real Aid" lobby should cooperate with the commercial export lobby to create a "wider constituency" for aid. Strongly criticising official aid and attacking the commercial lobby undermined the potential for creating this wider constituency, he argued.

One of Mosley's criticism's of the ODA was its failure to commission proper evaluations of the impact of projects on income distribution and the effects on different socio-economic groups. The numbers of such studies by any donor anywhere in the world could be counted on the fingers of one's hands, he said. This drew a reply from a former ODA staff member, Basil Cracknell, who suggested that Mosley more then anyone should be aware of the difficulty of doing such studies because he was employed by the ODA some years previously to do such a study in Peru and the result was extremely hard to assess. Mosley replied that this was because the ODA had axed the project before he had had a chance to measure the results. Mosley stuck to his point and tried to pin Chris Patten down to commission just one such study. Patten said he would discuss this issue and let him know.[185]

When interviewed about this issue in 1991, however, Mosley claimed that no such study had yet been implemented.[186]

Mosley elaborated on this theme at the symposium, saying that what worried him was that the sheer difficulty of such studies was being used as a criterion for deciding whether or not to continue or to terminate them and that this might explain why agriculture remains a relatively small part of the ODA portfolio. The difficulties should be tackled and overcome rather than cited as a reason for preferring projects which are much more simple to run administratively, he argued.

Another ODA contributor to the symposium, Brian Thomson, said there was a contradiction between Mosley's proposal to increase rural development spending and his advice about not overloading the local administrative structure. Mosley replied by suggesting that local autonomous rural development agencies based in particular regions might be set up to implement such projects, as had been done by the World Bank. The other solution was to give more programme aid rather than project aid.

There are obvious issues of neo-colonialism in the former proposal which are problematical. What this debate really indicates is that there are limits to what aid can legitimately do in a context of administratively weak recipient country structures. Patten also spoke in the symposium about the problems of neo-colonialism encountered in trying to persuade recipient governments of the need to shift for example health-care away from institutional health-care towards primary health care. It is important to bear in mind however that these governments are often sustained in power by the North – aid being one method of doing this. The "solidarity not aid" critique (see Conclusion) suggests that what is necessary is to help the poor to clear away the very institutions and governments which perpetuate weak, incompetent and corrupt administrative structures and replace them with institutions more responsive to their needs. The North has never hesitated to violate Third World sovereignty when it has suited it – contrary to Patten's worries over the dangers of imperialism in relation to primary heath-care.

A further contributor, Yao Agbesi of ActionAid, criticised Mosley's report for arguing for more aid for the renewable natural resources sector. He said:

"My comment is that I think the history of British colonialism in the main has been a history of vast investments in raw materials and the impact on rates of development is left to anyone's imagination really. I think what would make Britain semper primus in the world, would be aid which is geared more towards manufacturing and processing of be it raw materials and agricultural produce. I think that it is in that aspect of any development programme that the real growth and development does take place. I mean the history of Europe and America development only goes to point to that."[187]

There would appear to be an element of confusion in this contribution because it is obviously necessary to increase resources to renewable natural resources in order to implement a poverty-focussed aid programme. Nevertheless, it is true that British colonialism historically invested in raw materials and wiped out domestic industries in the colonies through free-trade policies. What it does not point out, however, is that it is not in the interest of the North to sustain industries that would compete with its own industrial and commercial activities. This does not mean that it will not invest where such enterprise are controlled by multinational corporations, however. It has already been pointed out elsewhere in this thesis that populist ideas within the development and environmental lobby either ignore this aspect of the question or else are opposed to it.

This symposium served to shed a good deal of light on what progress there had been in government attitudes on the question of implementing a poverty-focussed aid programme in the late 1980s. It indicates that there had been step backwards in term of policy-based lending. Patten was able to say:

"What I find encouraging about the debate more recently is that nearly everyone recognises that adjustment is actually necessary. The issue is how we design programmes that are politically tenable and will protect the poorest".[188]

In terms of tackling poverty directly, Patten defended the status quo in relation to roads in agriculturally-related aid. On the crucial question of commissioning studies on measuring properly the effects of projects on the poor and other income groups there has been no movement. We have seen how the projects are not effectively monitored because of the still inadequate number (despite increases in staffing) of social development advisers. It is clear that the poverty-focus of projects is nowhere near adequate. The question of Patten's approach to gender and environment will be considered later in this thesis.


[114]The Times, 5 February 1980.

[115]Interview with Lord Bauer. 4 April 1991.

[116]Hansard, 20 February 1980, c464.

[117]Ibid, c465.

[118]Ibid, c465.

[119]The Times, 8 May 1981.

[120]The Guardian, 25 July 1989.

[121]The Times, 21 February 1980.

[122]Session 1979-80. Cmnd 7841.

[123]The Times, 14 August 1980.

[124]The Times, 12 November 1980, p17.

[125]The Times, 12 November 1980, p17.

[126]Interview with Sir Timothy Raison. 26 February 1991.

[127]Interview with Jim Lester. 28 March 1991.

[128]ODA. A Synthesis of Six Evaluations of ODA Large Power Generation Schemes. July 1990. The unpublished internal report has the same title but is dated 1988. Labour Party press release. Secret Report Shows Government Hid the Truth about Aid from Parliament. September 1991.

[129]ODA. Internal Report. Op cit, p14, para 37 (quoted in Labour Party press release. Op cit, p3.

[130]Ibid, p16, para 44 and p18, para 49 (quoted in Labour Party press release. Op cit, p4-5).

[131]Ibid, p15, para 18 (quoted in Labour Party press release. Op cit, p4).

[132]Ibid, p30, para 22 (quoted in Labour Party press release. Op cit, p7).

[133]Ibid, p33, para 50 (quoted in Labour Party press release. Op cit, p8).

[134]Labour Party press release. Op cit, p4.

[135]Reported in The Times, 25 February 1981, p6.

[136]Hansard, Session 1980-81. Vol 1, c821.

[137]Interview with Sir Timothy Raison. 26 February 1991.

[138]Hansard, Session 1979-80. Vol 1, c833.

[139]Lords Hansard, 20 February 1980, c747.

[140]The Times, 19 March 1987.

[141]The Times, 3 August 1989, p9.

[142]The Times, 12 November 1984, p9.

[143]The Times, 17 November 1984, p9.

[144]Foreign Affairs Committee. Famine in Africa. 1985. Para 102.

[145]ODA. Review, 1984.

[146]All-Party Group on Overseas Development. UK Aid to African Agriculture. ODI, 1985 (figures summarised in and quoted from: Missed Opportunities. Report of the Independent Group on British Aid. 1986, p14, and Clark, J. For Richer, For Poorer. Oxfam. p27).

[147] UNICEF. Within Human Reach. 1985 (quoted in Clark, J. Op cit, p28).

[148]Independent Group on British Aid. Missed Opportunities. Report. 1986, p28-29.

[149]Interview with Joan Lestor. 28.3.91.

[150]IGBA. Missed Opportunities, op cit, p31-32.

[151]Letter to Sunday Telegraph (quoted from Hansard, 28 July 1988, c690).

[152]Interview with Joan Lestor. 28 March 1991.

[153]The Times, 21 July 1987, p21.

[154]Interview with Joan Lestor. 28 March 1991.

[155]Clark, J. Op cit, p21.

[156]Commons Foreign Affairs Committee. Bilateral Aid: Country Programmes. Minutes of Evidence. Second Report. Session 1986-87, HCP 32, p101.

[157]Ibid, p103.

[158]The Guardian, 28 September 1988.

[159]The Independent, 28 September 1988.

[160]The Observer, 7 May 1989.

[161]The Observer, 2 July 1989.

[162]Interview with Joan Lestor. 28 March 1991.

[163]IGBA. Missed Opportunities, op cit, pp22-25.

[164]Commons Foreign Affairs Committee. Bilateral Aid: Country Programmes. Op cit, p101.

[165]Bilateral Aid: Country Programmes. Observations by the Government. Session 1986-87. Cmnd 225, p1.

[166]Ibid, p5.

[167]Commons Foreign Affairs Committee. Bilateral Aid: Country Programmes. Op cit, pxx.

[168]Observations by Government on Bilateral Aid: Country Programmes, op cit, p9.

[169]Hayter, T. "Solidarity Not Aid: World Economy in Crisis". Paper submitted to the Conference of Socialist Economists. July 1983, p75–77.

[170]Mitchell, J. "Public Campaigning in the 1980s". In Bose, A and Burnell, P (eds). Britain's Overseas Aid Since 1979. London, 1991, p154.

[171]Robinson, M. "An Uncertain Partnership: the Overseas Development Administration and the Voluntary Secton in the 1980s". In Bose and Burnell. Op cit, p175.

[172]Cecil Jackson Cole Memorial Lecture at the Commonwealth Institute, London, 26 October 1989. Cited by Robinson, M, in "The ODA and the Voluntary Sector". In Bose, A and Burnell, P (eds). Op cit, p175.

[173]Charity Commissioners for England and Wales. Political Activities by Charities. London, 1986. Quoted by Robinson, M in Bose and Burnell. Op cit, p175.

[174]Hayter, T. Aid Is Imperialism. 1971.

[175]Hancock, G. Lords of Poverty op cit, pxiii-xiv.

[176]ODA Projects and Evaluations Committee. Bangladesh Rural Advancement Committee (BRAC) Project. 1990, para 18.

[177]Mitchell, J. Public Campaigning in the 1980s, op cit, p153-4.

[178]Quoted in Clark, J. Oxfam White Paper, op cit, p9.

[179]Interview with Pat Holden, ODA Social Development Adviser, 23 April 1991.

[180]Interview with Pat Holden. 23 April 1991.

[181]Interview with Rosalind Eyben, Senior Social Development Adviser, ODA. 4 July 1991.

[182]Mazza, J. Op cit, p21.

[183]ActionAid/Mosley, P. Poverty-Focussed Aid: The Lessons of Experience Report for ActionAid op cit. This also contains the Proceedings of the ActionAid Symposium, 5 October 1987..

[184]ActionAid. ActionAid Symposium on Poverty-Focussed Aid. Transcript of Proceedings, p12. In Mosley, P. Op cit.

[185]Ibid, p16.

[186]interview with Paul Mosley. 19 December 1991.

[187]ActionAid. Proceedings, p20.

[188]Ibid, p8.