Saturday, November 14, 2009

Cost Of Aid Admin

Big overheads

We've blogged the waste and misdirection in the government's £7bn pa international aid programme many times (see all previous posts gathered here).

Now, Ben Farrugia of the TaxPayers' Alliance has taken a closer look at how much of the Department for International Development's (DfID) budget gets Lost Along the Way, before it ever reaches the people we're supposed to be helping.

His key finding is that around 14% is lost to administrative and other non-front line costs at DfID and the various external agencies through which it funnels the bulk of its aid - ie multilateral organisations such as the UN and the EU, and Non-Governmental Organisations such as Oxfam and the Red Cross.

That's a shocking overhead, which by next year will be costing us over £1bn pa.

 But even more shocking to Tyler is the the fact that it's the NGOs which are the worst offenders.

After all, we expect the UN and the EU to be bloated, inefficient, and self-serving - that's what tax-funded big government is all about. But most of these NGOs still purport to be charities. And charities are surely meant to be run on a shoestring by passionate enthusiasts working for a pittance. The TPA's summary table tells a rather different story:

So when the government channels our tax pounds through Oxfam, the Red Cross, and Christian Aid, it seems less than two-thirds reaches the frontline. The rest is overhead.

As it happens, Tyler has a particular and personal reason to be upset about Oxfam. Because many moons ago, it was while engaged on a fund raising project for Oxfam that he first set his eyes on sweet Mrs T.

At the time, Oxfam told us that virtually all the dosh was going to help real people starving in Africa and India. And wide-eyed young innocents that we were, we believed them.

Of course, back then Oxfam was probably more reliant on private donations rather than tax-funding . So maybe it was more careful with its costs. But these days, like many other "charities", Oxfam gets a fair chunk of its money from the taxpayer - just under one-third of its net income. And that can be a very corrosive arrangement, changing the entire ethos of a charity, and turning it into little more than another branch of government (see previous blogs, eg here and here).

Unfortunately, this problem looks set to get a whole lot worse. If Mr Cam is serious about replacing Big Government with The Big Society,we're going to making a lot more use of charities and "social entrepreneurs" in the field of welfare here at home. Which will mean yet more bodies pushing to get their snouts in the public trough.

All we can say is that Cam at least recognises the problem. A little commented-on paragraph from his poverty speech reads:
"If we are to break the culture of charities and social bodies being dependent on the state for hand-outs we need to look at how government can use loans alongside grants to help make them more sustainable and effective."

We're not at all clear how that would work in practice, but he should certainly implement a similar critical approach to the money we hand over to the aid NGOs.

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