Let’s dive straight into the heart of the matter. There’s a strong case against slashing Britain’s aid budget to bolster defense spending, and it boils down to two main reasons. Firstly, such a move has dire humanitarian consequences. These cuts mean fewer resources for humanitarian crises, vaccinations, and hospitals, potentially leading to loss of life. While some might argue that realpolitik—political maneuvering based on practical and material factors—is behind this decision, that doesn’t necessarily make it a sound one.
There’s also a compelling economic rationale for wealthier nations to extend financial aid to those less fortunate. This point was clearly articulated in last year’s Labour party manifesto, which emphasized that international aid contributes to making “the world a safer, more prosperous place.” This idea held true when Labour rose to power last summer, and it continues to resonate today. Remember when Donald Trump, in one of his initial moves, slashed the US aid budget? The UK’s Foreign Secretary, David Lammy, warned at the time that it could be a “big strategic mistake.” Now, with the UK reducing its aid expenditure from 0.5% to 0.3% of national output, Lammy describes it as a tough yet pragmatic choice. However, his earlier intuition seems more accurate than his current stance.
At its core, the economic argument for foreign aid is straightforward—it benefits business. As nations grow wealthier, they present new opportunities for exports. Historically, the US grasped this concept well. Post-World War II, the Marshall Plan aimed at European recovery was as much about preventing the spread of communism as it was about opening up markets for American products. Past US administrations also strategically used humanitarian aid to channel agricultural surpluses into worldwide food programs.
In our interconnected world, it’s increasingly untenable to view aid and defense spending as separate entities. Many of the world’s poorest regions, grappling with extreme poverty, are those hardest hit by conflict and the climate crisis. Just five years ago, the global economy was on the brink of disruption from the Covid-19 pandemic—a shock the UK still hasn’t fully bounced back from. Given these realities, ministers should consider this: does slashing the aid budget make the world more susceptible to another global health crisis?
Developing nations now, more than ever, need assistance to spark economic growth, having been battered by Covid and the steep food prices resulting from Russia’s invasion of Ukraine three years ago. A looming debt crisis adds to the urgency, with the IMF and World Bank cautioning that funds needed for schools, hospitals, and climate resilience are instead redirected to debt repayments.
Under Tony Blair and Gordon Brown, the Labour governments of the time led pioneering debt relief initiatives, underscoring Britain’s commitment to international aid. This included establishing the Department for International Development, setting a goal to meet the UN target of allocating 0.7% of national income to aid, and maintaining a clear strategy. Enhanced aid spending not only benefited poorer nations but also served the interests of wealthier countries like Britain. It was a quintessential example of soft power, amplifying Britain’s influence on development discussions at both the IMF and World Bank.
Today, the global landscape is far more fragile and divided than it was back in the early 2000s, a time when economic growth seemed robust and major crises were yet to unfold. With the US and China vying for economic dominance, winning hearts and minds is crucial. Viewed in this light, the UK’s alignment with the US on reduced aid spending appears shortsighted. It risks making lower-income countries more vulnerable to assistance from China.
That said, it’s important to acknowledge not every aid dollar is perfectly allocated—there’s waste, just as there is in defense budgets. By choosing this path, the UK government is siding with the rightwing narrative that aid fosters dependency more than progress. Labour should tread carefully here. The right employs similar arguments against welfare systems, which could be the next target.
Certainly, there are legitimate arguments for increasing defense budgets. The world is growing more perilous, and Britain can’t always count on the US for military support. However, let’s be clear: reducing the aid budget for military funding isn’t the best financial strategy—it’s simply the path of least resistance. The government calculates that it will provoke less backlash from voters—especially those Labour supporters considering a shift to Reform UK.
There are other paths to explore. Rachel Reeves could propose higher taxes on the wealthy. If the urgency is as pronounced as the government claims, the chancellor could justify borrowing more. A genuinely progressive administration might even resurrect the idea of a Robin Hood tax on financial transactions to fulfill its pledge of restoring aid to 0.7% of GDP.
Instead, it appears that Starmer has made a choice contrary to the spirit of a Robin Hood tax. By adjusting finances at the expense of the world’s poorest, he is not fostering a safer, more prosperous world. In reality, it’s quite the opposite.
