Abbott attacks ‘Lords of Poverty’ creaming millions in overseas aid

I’ve blogged before about how this government are turning the overseas aid budget into a giant slush fund to ‘incentivise’ British businesses to invest in developing countries – and repatriate the profits back to the UK – rather than focussing on traditional aid priorities of poverty alleviation. Yesterday Diane Abbott exposed one element of this, how the Department for International Development (DfID) are handing millions to UK-based private consultants while rejecting clean water projects in places like Burkina Faso.

Speaking in a private members debate in Westminster Hall, the Labour MP said:

We are seeing the emergence of Lords of Poverty. People are building fat businesses and paying themselves fat salaries creamed from the budget of the Department for International Development. Lords of Poverty, hardship tycoons, pinstriped famine magnates: whatever we call them, the phenomenon is growing.

The Sunday Telegraph did an analysis of DFID spending that showed that £29 million was paid in the past 12 months to Triple Line [a London-based company that advises on overseas aid]. It seems that the only thing that Triple Line triples is its own bottom line.

It kept £1.9 million as a fee for its services. The public will be baffled by DFID’s outsourcing assessing a bid for aid to one mega-consultancy and then outsourcing it again to a different consultancy, a specialist branch of the accountants, KPMG.

In the past 12 months, DFID has paid KPMG more than £35 million. Of course, KPMG says that a lot of that is passed on to aid providers, and perhaps it kept back £3.5 million as a fee.

Of the 117 major DFID contracts and procurement agreements worth nearly £750 million only nine went to non-UK firms. Several of the best-paid consultants are former DFID officials, who appear to have gained substantial increases in their personal wealth since leaving the Department, even though they are still doing essentially the same work.

Abbott also highlighted the role of Adam Smith International, an offspring of the Right wing think tank the Adam Smith Institute:

Adam Smith International was paid a total of £37 million by DFID last year to promote the free market in the third world. The managing director of Adam Smith International trousers £1.3 million. Anything further removed from the public’s idea of the kind of people who go abroad to help some of the poorest people in other countries could not be imagined.

William Morrison, another member of Adam Smith International, earned £200,000 from that firm and collected dividends worth £1.06 million from its parent company,

Amphion Group, which is wholly owned by him and three of his fellow directors. A director of Adam Smith International and Amphion, Peter Young, justified the payments, saying: “If you want to get a good job done, you have to get people who know what they’re doing.”

With the greatest respect to Adam Smith International, the idea that one cannot get the skills to improve and strengthen the government and economic structures of third-world countries without paying UK-based directors £125,000 each is risible. There are so many people of Nigerian, Afghan, Caribbean or horn of Africa origin with the skills, ability and talent, but they are unable to break into this sort of work because companies such as Adam Smith International have a death grip on it.

Having visiting Zimbabwe several times I have seen how many aid workers appear to be living well-off lives, driving around in 4×4 cars and socialising in their own cafés and restaurants without making any discernible difference on the ground. As a great supporter of overseas aid it is frustrating that so much of it appears to be squandered on giving largely white middle class Britons a comfortable existence abroad while being of so little benefit to the local populations it is supposed to be helping.

The fact that DfID is now handing out millions of taxpayers pounds to private consultants looks like an extension of this problem, and it is one which further brings the aid budget into disrepute at the very time when many of the poorest countries desperately need practical assistance to tackle issues like disease and sanitation, and building schools, clinics and infrastructure to facilitate economic growth.

The involvement of an organisation so ideologically Right wing as Adam Smith International also looks like a further politicisation of international aid. Even though the aid budget is ring-fenced much of it is now being redirected towards “stimulating private investment” as this report by the former international aid minister Andrew Mitchell – yes he of Plebgate fame – makes clear.

The Conservatives clearly see the overseas aid budget as one great big business opportunity, with the beneficiaries being people who look like them. Indeed some of the beneficiaries may actually be them. The losers, of course, are the world’s poor who are getting even less help than before.

Last year Lib Dem peer Paddy Ashdown set out a number of recommendations about how to improve the effectiveness of international aid. Many of his ideas are sensible but what is missing from the debate is how the Tories are forcing through an ideological shift while helping their consultant and business friends. It’s about time more MPs joined Abbott in highlighting these issues. 

By Lester Holloway @brolezholloway

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