International development secretary Penny Mordaunt has been accused of trying to make poverty a “commodity” after unveiling plans to allow private investors to back up the UK’s aid budget.
In a major speech on Tuesday morning, Mordaunt said she had been working to “shift the dial” on international aid rules to allow British investors such as pension funds to pump cash into poorer countries, thereby “doing good, while making money”.
Arguing that the move would help tackle the global aid gap, the Portsmouth North MP said it would spark “innovation, increased competition and sustainable growth”.
“It will also deliver a more explicit win by helping address some of the priorities of the British people,” she continued. “We want to give British savers the chance to make a financial return in exchange for their good will to change the world for the better.”
But Mordaunt failed to put to bed claims that such private investment would allow the government to slash its aid budget, which is currently set at 0.7% of the UK’s GDP.
“And as we leave the EU, in time we will have more flexibility to consider how we use our aid budget and the £1.5bn we currently channel through the EU on an annual basis,” she told the audience.
“Taking back control of our development funds, we have an opportunity to use our aid to mobilise the private investment needed to fill that financing gap to deliver the global goals, tackling the barriers that prevent more investment flowing into developing countries.”
Mordaunt’s self-proclaimed “radical” pitch to transform international aid post-Brexit has been slammed by both campaigners and the Labour Party – despite the Cabinet minister’s insistence it is a “once in a generation opportunity”.
Shadow international development secretary Kate Osamor accused her Tory counterpart of trying to turn global poverty into an “investment”, adding: “Poverty is not a commodity, and today’s announcement will do nothing but make the rich richer and entrench both poverty and inequality across the world.
“This is an outrageous distortion of the country’s overseas development programme.”
Meanwhile, Ed Lewis, aid policy manager for campaigners Global Justice Now, said Mordaunt’s announcement set the stage for the “full-scale privatisation of aid spending”.
“This is a betrayal of our country’s responsibility for ending global poverty and inequality, and instead turns other people’s poverty into a money-making opportunity,” he said.
“The gains of anti-poverty campaigning over the last thirty years to put people before profit are under threat if this wrong-headed privatisation of the aid budget is allowed to proceed.”