SR2002/DFID
15 July 2002
FURTHER BOOST TO AID BUDGET
The UK's level of Official Development Assistance (ODA) will increase by £1.5 billion to reach 0.40% of national income by 2005-06, the Chancellor announced today. This is the biggest ever rise in UK aid, making a 93 per cent real terms increase since 1997. This is the highest UK ODA/GNI level for over twenty years and proof of the Government's continued commitment to make progress towards meeting the UN target of an ODA/GNI ratio of 0.7%.
DfID's budget will grow to nearly £4.6 billion a year by 2005-06, an average increase of 8.1% a year in real terms, including a £1 billion annual bilateral programme for Africa for the first time. This increase means a substantial contribution to the reduction of poverty, getting children into primary school and the provision of basic health services in the poorest countries in Africa and Asia. DfID will also continue spending in other essential areas such as conflict prevention, strengthening good governance and making long-term commitments to support those countries which effectively implement their own poverty reduction strategies.
The increase means the UK's aid ratio will be more than double the current G7 ODA/GNI country average and well ahead of the current OECD average (0.22%). The UK will also have exceeded the average EU ODA/GNI target agreed earlier this year in the run up to the UN Financing for Development conference held at Monterrey, Mexico.
The UK will now push for others to follow our example. The government wants this new finance from the UK to be an encouragement and a signal for a new $50 billion international financing facility involving all rich countries: a new alliance against poverty which recognises that by meeting our moral obligations to the poorest of the world we advance opportunity and security for all of the world.
The UK is also improving the effectiveness of its aid spending. It has untied 100% of its aid and by 2005-06, 90% of DfID's bilateral spending will be in low income countries where research tells us it is most effective. The UK is also pressing other donors, including the multilateral institutions, eg the EU, to direct their aid in line with best practice.
Clare Short said today:
"Since 1997 the Government has worked to focus the international community on the goal of halving world poverty by 2015. The UK programme has increased in size, effectiveness and poverty focus. This further increase in UK assistance enables us to increase significantly our contribution to the reduction of poverty and to help increase the number of children in school and the access of the poor to health care".
NOTES FOR EDITORS
Department for International Development: key figures
| £ million | 2002-03 | 2003-04 | 2004-05 | 2005-06 |
| Department for International Development (DfID) | ||||
| Resource Budget | 3374 | 3709 | 3846 | 4599 |
| Capital Budget | 14 | 11 | 18 | 14 |
| Total Departmental Expenditure Limit1 | 3371 | 3699 | 3843 | 4592 |
| Near-cash spending in DFID DEL2 | 3339 | 3560 | 3674 | 4443 |
1 Full resource budgeting basis, net of depreciation
|
ODA/GNI ratio
2. Official Development Assistance (ODA) to Gross National Income (GNI) is an internationally agreed statistic for measuring aid flows to developing countries. The Development Assistance Committee (DAC) of the OECD defines what elements score as ODA.
3. As shown below, the UK will meet its commitment, made in the last Spending Review, to increase ODA to 0.33% in 2003-04. The UK is committed to the UN target of an ODA/GNI ratio of 0.7% as these latest increases in UK ODA demonstrate.
| 2002-03 | 2003-04 | 2004-05 | 2005-06 | |
| Official Development Assistance (ODA) | ||||
| Total UK ODA (£m)1 | 3420 | 3669 | 4131 | 4902 |
| ODA as a proportion of GNI (%) | 0.32% | 0.33% | 0.35% | 0.40% |
1 To ensure consistency with national accounts, the proportion of GNI is calculated using near-cash numbers |
Leading the way internationally
4. The UK continues to raise development issues internationally. At the UN Financing for Development Conference in Monterrey in March, following the Chancellor's earlier personal intervention, EU Member States announced their decision to raise their aid budgets collectively by an estimated $7bn (£4.5bn) a year to reach an EU ODA/GNI average of 0.39% by 2006. The Chancellor's announcement today means the UK will exceed this target. The Chancellor is now calling on other donors to follow the UK's example and increase their aid commitments.
Aid untying
5. Tied aid is the requirement that aid funds are used to purchase goods and services from donor country suppliers. The UK has untied 100% of its aid. Research suggests that aid untying can improve the effectiveness of aid by between 15 and 30 per cent.
Public Service Agreement
6. The Government conducted a comprehensive review of public services - the Comprehensive Spending Review - in 1998. The 2000 Spending Review built on this by setting targets and allocating resources for the three years to 2003-04. The 2002 Spending Review revises these plans for 2003-04 and outlines new plans for 2004-05 and 2005-06. The new plans for DFID are built around the Millennium Development Goals to ensure spending achieves demonstrable progress on poverty reduction. (Further details from www.developmentgoals.org).
7. For further details please contact the DfID Press Office on 020 7023 0600 or visit the DfID website at www.dfid.gov.uk.