UK Development Aid: Money (Literally) Well Spent

03/10/2016 17:27 | Updated 04 October 2016
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Since taking up her post a few months ago, Britain's new International Development Secretary, Priti Patel, has been talking up how she's going to crackdown on waste and fraud in the way her budget is spent.

In her first speech to a Tory party conference as Secretary of State at the weekend, she continued in this vein, promising to "follow the money" to root out waste and corruption.

A laudable ambition which no one can argue with.

But what constitutes "waste" seems to depend quite a bit on your overall view of aid.

Critics of the amount the UK spends on aid - and last year the Department for International Development, DFID, spent just over £10billion - seem to define waste as spending on things they disapprove of.

Popular tabloids, like the Mail, which has run a campaign to reduce the amount spent on development aid, and the Express, for instance, highlight stories about what they describe as money being squandered on trivial things.

Fraud, on the other hand, is something where it's easier to agree on a definition.

So please bear with me, as a look at some statistics tells an interesting story.

Last year, figures recently released by DFID show £1.04million of spending was lost to fraud.

That works out at 0.0104% of the budget.

Compare that with the rest of government spending.

With a little digging, I turned up fraud figures from 2013/14 financial year which show that of total government spending, 5.5% was lost to dishonest activity.

This was in a year when DFID's figures show it lost 0.0076% of its spend in this way.

If you compare that to the NHS for the same year, fraud cost the health service 1.97% of its spending, while the proportion for Whitehall as a whole was 3.72%.

Now, one penny lost to fraud is clearly one penny too much.

But these figures suggest DFID does a relatively rigorous job of ensuring its budget is spent honestly - which is even more impressive when you consider most of it is given to international organisations, NGOs and other governments who actually control the day to day spending of the money.

Ask any NGO or international organisation about the detailed monitoring and reporting they are required to do by DFID - a perspective you rarely hear from the critics who highlight misuse of the aid budget.

That said; is aid fraud a growing problem?

The eagle-eyed among you will have spotted from the percentages above that the amount of aid money identified as lost to fraud has gone up over the past two years - in cash terms it has risen from £772,000 to £1,040,000.

On the surface that looks like a growing problem.

But as with many statistics, this needs to be seen in context.

The apparent growth in fraud can be largely put down to more effective detection and reporting. So, rather than the problem getting worse, it seems DFID is getting better at spotting it - the department says the higher figure is a result of heightened scrutiny by its staff and its counter fraud unit.

Of course, that hasn't prevented sensational headlines such as "40% leap in foreign aid cash stolen by fraudsters".

Such reporting helps to reinforce public's scepticism about spending their taxes on development aid.

This is a pity.

The reality is Britain's aid budget is among the most transparent and least vulnerable to fraud across government.