Mike Phipps

The scandal of privatised aid

Mike Phipps

If you thought energy privatisation was bad for UK consumers, take a look at Nigeria. The result has been up to 45% higher prices, regular blackouts, workers made redundant and the companies involved being bailed out by the central bank. The process is part of a £100 million project being run by consultants Adam Smith International (ASI). Around half this money was put up by the UK government in the form of “aid”.

A recent report from Global Justice Now, 'The Privatisation of UK Aid', reveals that in 2014 alone the Department for International Development (DfID) spent £90 million through ASI. This is more than the entire amount spent on human rights and women’s equality organisations, and the latest slice of the £450 million of aid-funded contracts awarded to ASI since 2011. It’s a lucrative business - ASI directors are on six-figure salaries and made £14 million in after-tax profits in 2014.

The government’s aid strategy explicitly aims to “strengthen UK trade and investment opportunities around the world.” This is increasingly at the expense of help reaching those who need it most. “UK aid is being spent on projects to expand the private provision of basic services in poor countries, help governments write more ‘business-friendly’ laws, and support public-private partnerships in infrastructure,” says the report.

Fifteen years after UK aid was formally “untied” from its commercial interests and opened up to bids from developing countries, the wheel has turned full circle. UK companies again are devouring over 90% of DfID contracts, with the result that large amounts of “aid” money go nowhere near developing countries, but straight into the pockets of companies from rich donor countries. Besides ASI, other beneficiaries are Crown Agents, once part of the British Empire’s administrative apparatus, now privatised, PricewaterhouseCoopers and Atos, notorious for having run the government’s punitive disability benefit tests. “Despite the government’s stated commitments to transparency, it is almost impossible to fully ascertain what this money is eventually spent on,” says the report.

As in other areas of government, the close relationship between corporate work and Parliament is much in evidence. Lord Malcolm Bruce, previously the chair of the parliamentary committee that scrutinises aid spending, wrote the foreword to the ASI’s most recent promotional brochure and many of the company’s senior staff have been recruited directly from DfID. One if its non-executive directors is Sir Malcolm Rifkind, who was forced to resign as chair of a senior parliamentary committee last year after undercover reporters taped him appearing to offer favours in return for cash.

ASI is also a leading contractor in the British government’s £10 million Extractive Sector Support Programme aimed supposedly at encouraging foreign investment in Afghanistan, whose untapped mineral wealth is estimated at $1 trillion. But the arrival of mining companies, while highly profitable for some, is fuelling human rights abuses, corruption and attracting armed groups who commit horrific violence against the local population.

Here in the UK, over a third of the public-private partnerships signed by local authorities between 2000 and 2007 have now come back in-house, after they failed to produce the promised efficiencies and savings. So why is DfID now pushing this failed policy at poorer countries?

The Privatisation of UK Aid, by Global Justice Now is available here.