Government Affairs and Advocacy

I know many of you receive funding from the UK Government and/or take an interest.  We will in future post news about policy changes and our related advocacy in the Government Affairs and Advocacy Connect channel alone, rather than also posting in the FCDO (formerly DFID) Community.  We'll leave that community open for now, in case you have questions about FCDO you want to ask each other, but it's been pretty quiet so we may close it down and do everything via the main Government affairs and Advocacy channel soon.

Official dialogue stalled

I'm afraid there has still been no further 'official' dialogue meetings with FCDO since the March Advocacy newsletter.  And that means that the 'agile' High-level Steering Group the UK government created to engage the sector hasn't met since January 2021... The government has also continued to stonewall any questions about cuts, leaving all the communication to officials to carry out on an organization-by-organization basis.  What we do know from Humentum and Bond members is that the cuts have been hard, deep and have often been delivered with the very minimum of notice.  This was exactly what we have asked Ministers NOT TO DO since these senior engagement mechanisms were created in March 2020.  So while we have had some notable advocacy wins with the US government lately, (kudos Cynthia Smith!), it often feels like we are getting nowhere with the UK.

New approach of briefing US Officials

We have, therefore, in the last month tried a different approach.  We have started meeting and communicating privately with US officials in the USAID, Dept of State and London embassy to share information about the UK aid cuts and explore how this might affect US priorities. The US officials have shown an active interest.  Our reading of this is that they are unlikely to seek to apply influence asking for a reversal of the cuts, but will be as encouraging as possible for the UK to return to its 0.7% commitment as early as 'the fiscal situation allows'.  There will be a lot of opportunity for this influence to be applied with G7, and COP being hosted by the UK this year.

What does returning to 0.7% when the fiscal situation allows mean?

Interpreting when 'the fiscal situation allows' will probably be more political than arithmetic.  CGD did a good blog exploring the key factors around this.

Learning from 2020 - the recent ICAI report

This week ICAI, (the Independent Commission on Aid Impact), published a fuller review of the process around the 2020 cuts of £2.9bn, (not the 2021 cuts we are currently reeling from).  This shows that the decision-making process was primarily political and that the decision was taken at a very high level to 'cut early, cut deep'.  Given this is an official report often written in dry careful language this section is pretty clear:
Para 3.13 "The cuts approved by Star Chambers on 9 July and then endorsed by the prime minister on 20 July were therefore more drastic than were needed based on the information available to HM Treasury at the time, even taking the most negative scenario into account. Officials said that, at the time, this was a 'reasonable worst case' assumption and noted that hindsight might set this decision in a harsher light." (See Para 3.57 which explores in more detail on what the PM knew about GNI when he signed off the cuts on 20 July, which is basically that the GNI forecasts were better than when the cuts were looked at on 9 July).

What is pertinent to any influencing that US officials may be attempting, is that the UK was only one of a handful of OECD countries that cut aid in the pandemic. Most OECD DAC countries increased aid in 2020 instead. The UK cut in 2020 was 10%. (See para 3.2).

What is also interesting is that, despite stating intentions about protecting the 'bottom billion' and more vulnerable countries, the actual cuts to the most vulnerable countries were harsher.  On average the cuts to the most vulnerable countries were SIX TIMES DEEPER than to less vulnerable countries. (Para 3.28). This was in some ways a consequence of the 'deep hard cuts' strategy, as this was rightly where spend was previously highest - but arguably should have prompted a rethink if any impact assessment had been taken as cuts were actually executed.

What do the cuts in 2020 tell us about cuts in 2021?

This is all useful background to what is now happening in 2021, as the cuts to move from 0.7% to 0.5% (in calendar year 2021) hit the FCDO budget for April 2021-March 2022.  The overarching impression I have is that the FCDO officials have tried, but largely failed once again, to protect the more vulnerable countries.  This is because the way multilateral spending was shifted from calendar year 2020 into 2021 created a hangover which has bit into the bilateral budget for fiscal year 2021-22 exceptionally hard.  In my opinion, this may be why it has been such a scramble to find the final rafts of cuts to hit the targets that FCDO were set by the UK Treasury.  It may also explain why so many cuts were only communicated in April 2021.  Please take this all as my informed opinion only, as there are still hardly any facts to come by, (the UK government has now denied two Freedom of Information requests about the cuts.)

I suspect many of you will be trying to work out what this all means for where you apply your business development effort and how you might need to rate down your revenue forecasts in relation to income from the UK.  It does look like 2021 will be awful.  I get to hear the woes of UK-based CEOs and CFOs regularly and it is really sad at present with many getting no notice before having to issue redundancy notices for staff.  What is worse is the broken promises to partners and communities in the countries where we work.  
A final note of optimism for 2022 on beyond 

Notwithstanding all I have said so far, I would like to leave you with a note of optimism that doesn't seem to be shared by most UK-based colleagues that I meet at present.  The savage and disproportional cut to the bilateral budget may be a temporary measure caused by the rapid way cuts have to be found and the fact that the first cuts in 2020 were made in the expectation that 0.7% would continue, (leaving much more to do in 2021). It is important to remember that even at 0.5% the $10bn aid budget this generates is still large by international standards.  Furthermore, I believe Boris Johnson will be seeking a victory moment, based on a post lock-down economic bounce where he can announce to the international community that Global Britain is back at 0.7%.  Even if it's just a promise to do so in the future, (which is something he has used in many ways in the past).  I expect this is what many in the US administration will be pushing for.  This is just my opinion, and you should not take any decisions based on it!  But I do want to balance the feeling that the sky is falling in that I get from many convening events at present.  Only time will tell…

Stay safe and please ask questions and pass comments – that's what Connect is for!!

Tim