Swanky new aid offices in India costing £442,000 are just one example of the disturbing way British taxpayers’ money is wasted
Gethin Chamberlain for Mail on Sunday, 12 April 2015
Set inside the walls of the High Commission compound in the smartest part of New Delhi, Britain’s aid offices are an oasis of calm amid the noisy bustle of the Indian capital.
Well protected from the searing heat and clouds of traffic fumes that threaten to overwhelm the city, employees of the Department for International Development (DfID) can enjoy a swimming pool, well-stocked bar and tennis court.
It is ‘a little bit of England,’ as the daughter of one British diplomat excitedly blogged on seeing it for the first time, apart perhaps from the jarring neon pink and orange colour scheme of the spanking new offices.
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An investigation has established that hundreds of millions of pounds of the £11.7 billion Britain sends overseas – perhaps as much as a quarter – are squandered on unworkable projects and ‘consultants’ who are little more than private contractors
The lurid decor, however, is not the only thing that is eye-watering about this high-profile refurbishment: the new interior created by chic design firm Cherry Hill Interiors cost a whopping £442,000.
Today the building stands as a monument to the profligate spending and unaccountability of Britain’s unwieldy aid budget.
The lavish refurbishment of the offices was designed to help administer Britain’s programme of aid to India – even though it is a programme which, by the end of this year, is no longer supposed to exist.
In fact, the offices are just one example of the disturbing way DfID wastes British taxpayers’ money.
The Mail on Sunday has spent months investigating how the foreign aid budget is spent, speaking to diplomats, aid agencies and civil servants, and has established that hundreds of millions of pounds of the £11.7 billion Britain sends overseas – perhaps as much as a quarter – are squandered on unworkable projects and ‘consultants’ who are little more than private contractors.
More than half of industrialised nations reduced their aid budget between 2013 and 2014, but it was revealed last week that under new European Union rules, Britain’s total will swell by £1 billion over the next two years, making it the second-largest donor in the world after the US.
In all, according to UK Aid Network – a coalition of aid groups – the Government is set to spend £12.2 billion on aid this year, accounting for 1.6 per cent of its total spending.
A detailed analysis of DfID’s records has revealed that:
– Britain is now handing more than £1 billion of its aid budget to British and American consultancy firms which run aid programmes on a commercial basis, for profit.
– £881 million was shared between 58 consultancy firms.
– The EU and World Bank were each handed more than £1 billion, which they used to pay consultants to run their programmes. One such £234 million project to improve public services in Ethiopia had to be scrapped amid reports of a spate of deaths and rapes.
– £1.2 million was paid to recruitment firms.
– DfID splurged more than £1.1 billion of its budget in December alone as it raced to hit spending targets.
– Some of the biggest recipients of DfID cash are also major donors to the main political parties, including accounting and advisory giant PwC, which was handed £122 million of aid funds last year.
The company – which has retained its aid contracts despite facing accusations from the Commons Public Accounts Committee of ‘promoting tax avoidance on an industrial scale’ – has, intriguingly, helped a number of senior politicians, including current International Development Secretary Justine Greening and her former shadow, Jim Murphy, now leader of Scottish Labour.
– Astonishingly, the amount paid to private-sector contractors has almost doubled in the past three years, to £1.2 billion last year. This is despite Government promises to end the gravy train. One charity branded the booming aid industry ‘the new colonialism’.
The revelations will reignite the debate over aid, with critics arguing that the money would be better spent at home on defence, education and the NHS.
There is particular anger over the Government’s decision to spend more on aid while cutting the defence budget, including a 20 per cent reduction in regular troop numbers and selling Britain’s fleet of Harrier jets.
The lurid decor, however, is not the only thing that is eye-watering about this high-profile refurbishment: the new interior created by chic design firm Cherry Hill Interiors cost a whopping £442,000
Nick Dearden, director of campaign group Global Justice Now, warns that the aid budget needs a complete overhaul.
He said: ‘Aid money is just going into the pockets of people who work in the City of London, which is extraordinary, because if you asked anyone in the street that’s the complete opposite of what they would expect. They think it is going on hospitals and schools.
‘They are like colonial outposts implementing programmes we think these countries need.’
Of all the spending, perhaps the most perplexing for taxpayers is the hiring of a firm of interior designers to work on DfID’s opulent offices in New Delhi at a cost of £442,978.
Although the department has about 90 staff, this didn’t prevent the purchase of 280 special desks during its refurbishment.
Bizarrely, the office opened one month before Greening announced that the aid programme to India was ending – and a full year after her predecessor, Andrew Mitchell, made it quite clear that it was drawing to a close.
And while Greening has promised that aid to India would end ‘by 2015’, DfID’s own figures reveal there is still about £250 million due to be paid out up to 2019.
This money, however, won’t be called ‘aid’. Instead, the weasel words ‘technical assistance’ will be used by DfID. This is, coincidentally, the same amount that India paid to launch its first mission to put a man on the moon.
The department has poured about £280 million a year into a variety of projects, including reforming local government. So in essence, ‘aid’ will continue. Only the name will change. There will be no job losses.
The wholesale, and expensive, use of private consultants is another embarrassment at a time when the aid budget is under intense scrutiny.
DfID claimed that it actually spent a mere £200,000 on consultancy last year, which it insisted was down from £700,000 in 2011-12 – when a previous investigation revealed that £500 million was being spent on consultants, prompting Greening to order an inquiry by her department. The results were never published.
DfID told this newspaper that payment to consultancy firms did not necessarily mean it was hiring consultants.
A spokesman said: ‘DfID has slashed spending on external consultancy and advisory services by 98.9 per cent since 2009, down to just £200,000 last year, but we rightly continue to use the private sector where it delivers aid projects on the ground that are effective and the best value for money.’
In the case of India the ‘consultants’ don’t even operate out of the expensively refurbished Delhi offices. They often have their own offices or live in hotels.
The reliance on consultancy firms that donate to political parties has left politicians open to accusations of favouritism. Margaret Hodge, outspoken chairwoman of the Commons Public Accounts Committee, last month criticised fellow Labour Party members for accepting support from PwC, describing it as ‘inappropriate’.
Last year a total of £138 million was handed by DfID to four consultancy firms that have been significant donors to the main political parties in recent years.
PwC, which received the second highest payment of £122 million, donated £613,811 to the Conservative party and Conservative MPs between 2008 and 2010.
According to the House of Commons Register of Members’ Interests, Greening, a former PwC accountant, was among the beneficiaries of the consultancy’s services.
Her entry in the Register for April 2008 reads: ‘Sponsorship or financial or material support from PricewaterhouseCoopers [now PwC] to the Conservative Shadow Treasury Team. Technical advice, analysis and drafting assistance in relation to scrutiny of the Finance Bill 2008.’
Jim Murphy, shadow International Development Secretary before he took over as Labour’s leader in Scotland, also benefited from the firm’s generosity.
He declared a £54,250 research assistant donated by PwC last year and had previously accepted policy analysis valued at £15,000 from the company while shadow Defence Secretary in 2011.
Three other aid recipients also made significant political donations.
Accounting and advisory firm KPMG, which received £10.7 million in aid money last year, donated £124,469 to Labour, £19,277 to the Conservatives and £42,000 to the Lib Dems in the same period.
EY (formerly Ernst & Young) received £2.8 million and donated £90,197 to the Conservatives while they were in Opposition.
Deloitte Touche received £3.1 million and donated £122,228 to Labour last year, and £786,927 to the Conservatives while they were in Opposition. Nick Dearden, from Global Justice Now, said: ‘You should not be accepting money to support your campaign and then giving those companies contracts when you get into office. That is just basically wrong.
‘It is not a direct and deliberate corruption but it is a moral corruption. A small handful of businesses are moving in the same circles as politicians quite separate from the real world. It is like a club.
‘The sad thing is that you’ve got consultants set up to spread free-market ideas who are reliant on an aid budget.’
When aid money does make it through to consultant-run projects designed to help communities, they have a nasty habit of backfiring, sometimes spectacularly.
DfID paid out £82 million last year in an attempt to improve Ethiopia’s basic services, a project that has cost UK taxpayers £234 million.
Most of the money was shared out between the World Bank – which provides loans to developing countries for capital programmes and which took the largest proportion –and consultants Coffey International (which last year received £23 million in total from DfID) and Itad Ltd.
The plan meant moving 1.5 million Ethiopians off their land and into new ‘model’ villages. Understandably, some did not want to go. Matters came to a head when one farmer approached the High Court in London seeking a judicial review of DfID’s funding of the project.
As this newspaper revealed in 2014, the farmer, known only as Mr O, claimed he was forcibly evicted. He said he had witnessed rapes and attacks during the evictions. DfID announced it was ending its contributions earlier this year because of Ethiopia’s ‘growing success’.
It was corruption that caused problems for another consultant- managed project in Uganda, after a report exposed evidence of fraud involving staff in the office of the country’s prime minister, though not the leader himself.
The UK was spending £51 million on its Expanding Social Protection in Uganda project, intended to lift people out of poverty.
When the corruption allegations surfaced in 2012, Greening publicly announced that the UK was cutting aid to the Ugandan government.
But rather than stop the project, the department channelled the money through the project’s managing agent, Maxwell Stamp, a UK-based consultancy that was paid £19 million by DfID last year.
There was trouble, too, on the other side of the continent in Nigeria, whose economy is now the largest in Africa after overtaking South Africa.
A £100 million scheme to privatise Nigeria’s electricity system sent prices through the roof, left half the country’s power workers out of a job and sparked street protests.
And a £100 million project run by the Cambridge Education consultancy to improve education in Nigeria failed to make an impact. Cambridge is part of the Mott MacDonald group, which received £39.4 million in aid cash last year.
It wasn’t as if DfID wasn’t warned. Two years ago the leading independent British aid watchdog, ICAI, said it should scrap the education programme because it had limited benefits and was ‘neither realistic nor affordable’.
There was ‘no major improvement in pupil learning, with significant numbers of children out of school’.
DfID disagreed. Instead, it criticised the review. And then it extended the programme so it now has a budget of £141 million and is due to run until 2017.
Back in India, the aid programme is winding down. But for the teams of civil servants and administrators inside the colourful DfID offices, the spending continues unabated – this time dressed up as ‘technical assistance’, of course.
It is emblematic. Yet even some of the most credible voices on the issue seem powerless to halt the progress of the aid juggernaut.
Last night, Philip Davies, Conservative MP for Shipley, said the increase of the overseas aid budget was a scandal.
‘It is completely idiotic for the Government to be spending all of this money on dubious schemes at a time of necessary austerity at home. It shows completely the wrong priorities,’ he added.
Jonathan Isaby, chief executive of the TaxPayers’ Alliance, echoed the criticism. ‘We have to rip up the aid programme and start again, as it looks too often like a black hole for taxpayers’ cash,’ he said.
‘If consultants are offering value for money, why are we still spending money on Indian renovations and why do independent reports keep warning that aid money isn’t improving people’s lives on the ground?
‘The ludicrous aid spending target of 0.7 per cent of GDP means that too often money is spent for the sake of it – including on consultants.