Tory ‘aid vouchers’ would not benefit the poor

By Mike Ion

The news at the weekend that the Tories are “investigating” the use of ‘aid vouchers’ – redeemable for development services of any kind with an aid agency or supplier – is as revealing as it is somewhat depressing. Revealing because the application of Friedman economics to overseas aid policy is another sign that Team Cameron is moving further and further to the right, and depressing because it is a policy that really would end up benefiting the few and not the many.

Take education as one example. We know that Tories are fans of the US Charter Schools programme introduced by the Bush administration in 2002, they are de facto private institutions, run for a profit and subsidised by the state. Schools like these have a vested interest in selecting the best pupils in order to ensure that the results justify the subsidy. Aid vouchers for the likes of Charter Schools or for basic adult education would not help ensure a universal service but would greatly benefit those whose needs, circumstances and income already place them in an advantageous position.

The whole policy, of course, pre-supposes the existence of a thriving market, of consumer choice and of numerous providers. The reality for many developing countries is that there are no teachers, no doctors or nurses and the introduction of vouchers is unlikely to solve this. The affable Tory shadow International Development Secretary Andrew Mitchell is quoted as saying that he does not have any ideological hang-ups about whether aid is given by private or public providers but is interested only in what works.

What does this mean? How does Mr. Mitchell propose we measure the impact of such a policy? By how quickly standards rise for a few or by the impact it has on the majority?

The first step for a country with high levels of illiteracy and above average infant mortality rates is to build and maintain a free education and public health system. This requires governments committing resources that will lead to a reduction of poverty through furthering sustainable development and promoting the welfare of people.

My concern is that the Tories are moving towards a proposal that would link foreign aid with foreign policy, which historically, has had disastrous consequences for donor countries – particularly in South America and Africa. When properly directed aid from foreign governments has proved particularly effective in boosting health and education, which have both improved markedly around the world in the last four decades. In developing countries, life expectancy at birth increased from 43 to 59 years between 1960 and 2002, and infant mortality rates fell from 147 to 79 per thousand. Although aid was not the only contributor to these trends, many analysts believe it played a key role.

It is true that Britain could unquestionably increase the effectiveness of its aid by reducing bureaucratic overheads, increasing coordination with other donors, and directing fewer funds at corrupt or incompetent governments. Nevertheless, evidence suggests that in most cases, aid has positively contributed to the well-being of developing countries around the world – without needing to resort to the use of vouchers of any kind.

Sadly the reality is that this is a policy proposal that has been driven by the desire to appease the hard right of the Tory party.

Of course the question that many Tory party members will be asking – particularly those on the traditional wing of the party – is if they are a good idea for other countries why can’t vouchers for schools and health services be introduced by a future Tory government here? Answer: because they are a bad idea!