Britain can’t be a global leader if we are the only G7 member to cut aid

·4-min read
<p>Philip Collins </p> (Daniel Hambury)

Philip Collins

(Daniel Hambury)

In his preface to Global Britain in a Competitive Age, the Government’s integrated review of foreign policy, the Prime Minister wrote that “having left the European Union, the UK has started a new chapter in our history. We will be open to the world, free to tread our own path, blessed with a global network of friends and partners”. This is a big week for global Britain which will expose some of the contradictions in the way the Brexit government sees the place of this nation in the world.

First, the good news. On Saturday the G7 finance ministers, hosted by the Chancellor Rishi Sunak in London, reached an agreement, many years in the negotiating, to make multi-national companies pay more tax. The deal has two main points. Companies such as Amazon and Google, which do business in cyber-space but declare profits in the most tax-friendly jurisdiction, will be forced to pay tax more clearly in line with the revenue they generate in each nation. This will be accompanied, and in part enforced, by a global minimum corporation tax rate of 15 per cent.

The need for revenue is part of the motivation. The coffers are empty after the pandemic. But a tax position is more than a demand for payment. As Einstein once said, while failing to figure out his US income tax return: “This is too difficult for a mathematician; it takes a philosopher.” Indeed it does and the right to set tax rates is one of the most important sovereign powers. No sooner has Britain ostensibly taken back control than its Chancellor is setting tax policy in concert with the other developed nations. In truth, of course, the idea of a single small nation taking isolated economic control is a chimera. We can, of course, choose the alliances we strike but there can be no effective global management of money flows without global regulation.

Even now, the G7 has by no means completed the task. Finance ministers will firm up the details in July in Venice but they will need to hope the rest of the world follows their lead at the G20 next month.

This is Britain’s moment on the world stage. As President of the G7, this country will soon be hosting the summit in Carbis Bay in Cornwall. In July, Britain co-hosts the Global Partnership for Education with Kenya and in November we host the 26th UN Climate Change Conference in Glasgow. With a seat on every major multilateral organisation — Nato, the World Bank, the International Monetary Fund, the United Nations Security Council, the G7 and the G20 — this is meant to be boom-time for global Britain.

Yet for all the energetic trade negotiation of Liz Truss, the president of the Board of Trade, it is all going to be harder than this easy rhetoric. When the Culture Secretary is tweeting that British musicians have been granted a permit to tour Liechtenstein, you know we have got a bit desperate. There is a reason too that the Prime Minister was criminally slow in closing the borders, allowing the Indian variant of Covid to spread. It was because he was determined not to annoy his Indian counterpart Narendra Modi and thereby jeopardise the trade deal that is so important to the shtick of global Britain.

So here is the bad news. The Chancellor has become so exasperated with the Prime Minister’s refusal to cut domestic spending that he has made the error of cutting Britain’s commitment to spend 0.7 per cent of its GDP on overseas aid. Sunak’s cut saves £4 billion which is one per cent of his borrowing requirement for the year. It is trivial in the context of Britain’s debt and wholly serious in the context of the affected countries. As the former International Development Secretary Andrew Mitchell has said, aid is both a clever exercise in soft power and a matter of life and death. Britain is the only G7 nation cutting aid and neither will the government’s backbench critics allow Mr Johnson to claim that the transfer of up to 100 million surplus vaccines to low income countries should count as part of the aid budget. In a powerful piece on the subject, the former Brexit Secretary David Davis called the cut “an act of diplomatic self-harm”.

Global Britain should not need to welcome Hungary’s egregious Viktor Orban to London because he is a rude presence within the EU. We can be better than that and we can start with a simple trade. Take some of the money which will be raised by the G7 taxation deal and use it to restore the target of 0.7 per cent of GDP spent on overseas aid. Now that would be the joined-up policy of a nation that was defining its place in the world.

What do you think about the Government’s plan to cut foreign aid? Let us know in the comments below.

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