Friday, 9 November 2012

Minister sounds death knell for UK aid to rich nations: Greening axes £280m-a-year handout to India

  • India's controversial £280million a year aid programme is to be scrapped
  • Under Labour, India became the biggest net recipient of British aid
  • Announcement seen as first step in Britain pulling back from aid programmes to relatively wealthy countries

  • International Development Secretary Justine Greening will today signal that Britain is to stop sending billions of pounds in foreign aid to well-off nations.

    She will tell MPs that India's controversial £280million a year aid programme will be scrapped.

    Miss Greening has spent several days this week brokering an end to Britain's aid programme with senior political figures in India.

    There had been speculation that the Government wanted to halve the subsidies, but she will tell MPs that as a result of the talks she is cancelling them altogether from 2015.

    Critics argue that pouring millions of pounds into relatively wealthy countries devalues the concept of aid.

    India's economy is growing at the rate of eight per cent a year. It spends vast sums on defence and has its own space programme. It also has its own overseas aid programme worth £328million a year.

    Under Labour, India became the biggest net recipient of British aid, receiving £421million in 2010.

    Despite India's rapid economic development, former international development secretary Andrew Mitchell decided to approve a further £1.1billion in aid over the following four years.

    Today's announcement is seen as the first step in Britain pulling back from its aid programmes to relatively wealthy countries.

    Miss Greening told last month's Tory conference: 'We should recognise that as countries get richer, we need to be responsible about how we transition in our relationship with them from aid to trade.'

    David Cameron has pledged to spend 0.7 per cent of national income on overseas aid. The programme will be worth £12.6 billion a year in 2014 – far more than the £12.1 billion spent on Britain's police.

    A Government source said: 'Justine Greening has been in India this week in talks with senior politicians in India. As a result she will end financial aid to India in 2015.

    'She wanted to make the decision based on consensus, so that is why she went to talk to people there.

    They acknowledge that India's place in the world has changed. This is about recognising that they are a global player. They are happy that financial aid will now end. The 0.7 per cent commitment is not in question and the money will be reallocated to poorer countries.'
    In February, India's then finance minister Pranab Mukherjee – now the country's president – embarrassed the Government by suggesting Britain's aid payments were 'a peanut in our total development expenditure'.

    Last month, former UN chief Kofi Annan backed calls for Britain and the EU to stop giving billions of pounds in aid to wealthier countries.

    He said booming nations such as China, Brazil and India should wean themselves off development funding so it could be targeted at 'weaker' parts of the world instead.

    Miss Greening has already called for the EU to stop giving aid to relatively rich nations. The UK contributes £1billion a year to the EU's aid fund.

    Turkey has been one of the top five recipients of EU aid money for years. In 2010 it received almost £200million, much of which was used to upgrade its sewers.
    Other relatively wealthy countries receiving British aid money via the EU include Serbia, Croatia and Iceland.

    The payments are made to help countries wanting to join the EU upgrade their infrastructure. There is no requirement to repay the money if the country later decides not to join or is refused membership.

    Last night a spokesman for the Department for International Development confirmed Miss Greening had been examining the issue of aid to India, but refused to comment further ahead of today's announcement. 'We cannot confirm any details,' she said.

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