As much as a quarter of Britain’s £11.7 billion aid budget is squandered on unworkable projects and private contractors, the Mail on Sunday has found. The scale of wasteful spending with private companies is such that one charity has dubbed the booming aid industry “the new colonialism”.
More than £1 billion has been handed over to British and American consultancy firms to run aid projects on the ground, and a further sum in excess of £1 billion was also handed to the EU and World Bank, investigators have found. But many of the projects have been criticised as ineffectual – or worse, for actively harming the people they are meant to help. Furthermore, in a classic case of corporatism, some of the companies used are major donors to British political parties and politicians.
Despite the poor spending record, the government is set to stick rigidly to its target of spending 0.7 percent of GDP on aid this year, meaning that the budget will rise to £12.2 billion in 2015; about 1.6 percent of the overall public sector budget.
Last night Philip Davies, Conservative MP for Shipley, called the increase a scandal, saying “It is completely idiotic for the Government to be spending all of this money on dubious schemes at a time of necessary austerity at home. It shows completely the wrong priorities.”
Payments to firms which donate to the political parties have left the parties open to accusations of “moral corruption”. In total, £138 million was last year given to just four consultancy firms which have handed money to the establishment parties over the years.
PricewaterhouseCoopers (PwC) received £122 million from the Department for International Development (DfID), which bears responsibility for splurging the cash. Between 2008 and 2010, PwC donated £613,811 to the Conservative Party and its MPs.
Among those MPs was Justine Greening, current Secretary of State for International Development, who is also a former accountant for PwC. Her entry in the House of Commons Register for Members’ Interests for April 2008 reads: “Sponsorship or financial or material support from PricewaterhouseCoopers [now PwC] to the Conservative Shadow Treasury Team. Technical advice, analysis and drafting assistance in relation to scrutiny of the Finance Bill 2008.”
Also amongst PwC’s beneficiaries was Jim Murphey, formerly Labour’s shadow International Development Secretary and current leader of the Labour Party in Scotland. Last year he declared a £54,250 research assistant donated by PwC, and had previously accepted £15,000 worth of policy analysis from the company.
The accountancy and advisory firm KPMG is another to receive aid funding: it was paid £10.7 million in aid money last year, donating £124,469 to Labour, £19,277 to the Conservatives and £42,000 to the Lib Dems in the same period. EY (formerly Ernst and Young) and Deloitte Touche also received sums in the millions whilst making donations to the Conservatives and Labour.
Nick Dearden, from Global Justice Now, said: “You should not be accepting money to support your campaign and then giving those companies contracts when you get into office. That is just basically wrong.
“It is not a direct and deliberate corruption but it is a moral corruption. A small handful of businesses are moving in the same circles as politicians quite separate from the real world. It is like a club.
“The sad thing is that you’ve got consultants set up to spread free-market ideas who are reliant on an aid budget.
“Aid money is just going into the pockets of people who work in the City of London, which is extraordinary, because if you asked anyone in the street that’s the complete opposite of what they would expect. They think it is going on hospitals and schools.
“They are like colonial outposts implementing programmes we think these countries need.”
Sadly, the money is not even being spent wisely. Last year DfID paid £82 million towards a project designed to improve Ethiopians’ access to basic services which has cost British taxpayers £234 million in total to date. But the plans involved moving 1.5 million Ethiopians off their land and into new “model” villages; something which many of the people themselves were unwilling to do.
In order to resolve the issue those people were forcibly evicted, with some being raped and attacked, according to witnesses. A farmer who claims that he himself was forcibly evicted has now brought the matter to the High Court, seeking a review. Despite these obvious failings, DfID announced earlier this year that it was ending the program thanks to Ethiopia’s “growing success.”
And in Uganda, money meant to help lift people out of poverty instead lined the pockets of corrupt staff in the Prime Ministers Office acting fraudulently. Although Greening declared that the £51 million Ugandan program would be stopped, money continued to flow into the region via consultants instead.
In Nigeria, a £100 million project intended to privatise the country’s electricity system managed instead to send prices rocketing upwards, left half of the country’s energy workers jobless and caused street riots. At the same time, a £100 million project to improve education in Nigeria was slammed as “neither realistic nor affordable’ by the aid agency watchdog ICAI. DfID disagreed, and extended the program to 2017 at a cost of £141 million.
India has regularly come under the spotlight amidst questions of whether a country able to run its own space program needs an aid budget. Yet despite assurances that aid spending in India would be brought to a close at the end of this year, DfID has just spend £442,978 on redesigning their New Delhi office. The splurge included the purchase of 280 special desks, despite only 90 people actually working in the offices.
Astonishingly, the Mail has discovered that, although both Greening and her predecessor Andrew Mitchell repeatedly promised that aid would not be sent to India beyond 2015, DfID has slated a further £250million to be spent in India between 2015 and 2019. “In essence, ‘aid’ will continue. Only the name will change. There will be no job losses,” the paper noted.
Jonathan Isaby, chief executive of the TaxPayers’ Alliance has called for the whole programme to be scrapped, saying “We have to rip up the aid programme and start again, as it looks too often like a black hole for taxpayers’ cash,” he said.
“If consultants are offering value for money, why are we still spending money on Indian renovations and why do independent reports keep warning that aid money isn’t improving people’s lives on the ground?
“The ludicrous aid spending target of 0.7 per cent of GDP means that too often money is spent for the sake of it – including on consultants.”