In 2020, facing the eye-watering costs of furlough and the rest of the Government’s response to the Covid-19 pandemic, then-Chancellor Rishi Sunak cut the overseas aid spending target from 0.7% of GDP to 0.5%. Labour politicians, in Opposition at the time, responded with howls of outrage.

What a difference five years make. In February, Labour announced that it was cutting the target again, from 0.5% to 0.3% — and, unlike the previous government, Keir Starmer isn’t pretending that it’s temporary. Now Development Minister Jenny Chapman has described this policy as the “new normal” in a “0.3 world”.

This isn’t the sort of matter on which you’d expect Labour to be tougher than the Conservatives. The reason given by Chapman is that the sector needs to regain the trust of an increasingly sceptical public.

There is some truth in that. However well-intentioned previous policies might have been, there is a fundamental problem with any target that measures inputs (how much money you spend) instead of outputs (what that money achieves). This actively discourages both spending controls and any serious inquiry into whether money is being spent effectively.

During the heyday of David Cameron’s original 0.7% target, it was never difficult for the press to find absurd examples of things on which the British Government was spending money, or inside chatter from the Department for International Development about civil servants trying to get cash out of the door ahead of deadline day. This provided an uncomfortable contrast with the domestic austerity programme which George Osborne was spearheading at the time.

But whatever truth there is in this argument, one suspects it isn’t the real one. Labour ministers would almost certainly have been just as able as their Tory predecessors to put up with public grumbling about aid spending — if they could afford it. The British state is trapped, and the real driving force of this volte-face will be the Treasury.

On the one hand, the UK has for a long time had stagnant growth, meaning none of the year-on-year increase in projected tax receipts upon which chancellors could rely before 2008. On the other hand, an ageing population and woeful spending controls mean that the Government’s big revenue expenditures — the NHS, pensions, social care, and so on — are growing relentlessly.

They need to be cut. But there is no appetite for another round of austerity on the part of voters, for many of whom the recession which followed the 2008 crash never really ended. We live in a Britain where Gordon Brown delivered on his promise to abolish the cycle of boom and bust — but, alas, by abolishing booms.

Both major parties therefore find themselves facing not so much an Overton window as an Overton tightrope: a tiny sliver of economic policy terrain which allows them to stagger from one week to the next without the entire state collapsing. That’s why Jeremy Hunt and Rachel Reeves fought the last election while agreeing on nearly everything.

But the Government can only do this by allowing those revenue expenditures to eat the rest of the state from the inside out. Every unprotected budget is cut and cut again, never strategically but always in another round of mythical “efficiency savings”, while councils are quietly converted into institutions which merely fund social care and provide for children with special needs.

Ultimately, Reeves has realised that overseas development is an easier cut than any of the big domestic items — not just with potential Reform UK voters, whom Labour is rightly worried about losing, but also likely with much of the party’s progressive, urban base. However much they dislike aid cuts, many would surely hate attacks on domestic welfare spending even more.

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Henry Hill is Deputy Editor of ConservativeHome.

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