Labour would shift focus of development aid to fewer countries, says Lisa Nandy

Lisa Nandy said the development budget was being ‘raided constantly’ across Whitehall and was delivering ‘poor value for money’. Photograph: Peter Byrne/PA

A future Labour government would reduce the number of foreign countries that receive development aid, Lisa Nandy has said, arguing money should go to the poorest states, not middle-income ones.

The shadow secretary of state for international development told a meeting of NGOs at the Overseas Development Institute (ODI) this week that there should be a shift in focus of aid and that Labour would take “a more strategic approach based on Britain’s unique strengths”.

Nandy, who has been consulting a range of former development aid ministers, said the current minister, Andrew Mitchell, had told her UK aid was being sent to 33 countries when Labour left office in 2010.

“We’re now working in 88, with just a fraction of the budget,” she said. Nandy stressed a Labour government would “never pull out the rug from under countries who rely on us”.

However, she said: “But this is not 1997. Our economy is not twice the size of China’s, and the world’s debt is no longer primarily owed to countries like ours.”

Nandy’s comments come amid debate in her party about how it should approach foreign aid.

While there are those who want the party to rapidly return to spending 0.7% of GDP on aid, she reiterated that a Labour government would only return to the target – ditched under Boris Johnson’s premiership – “when circumstances allow”. The shadow chancellor, Rachel Reeves, is understood to be engaged in the discussions, with a view to getting “value for money” from Britain’s aid spend.

“But the immediate task will be to ensure that our development budget is spent on development and not raided constantly by badly managed departments across Whitehall,” Nandy said, referring to its use by the Home Office on refugees and asylum-seekers in the UK.

“It’s poor value for money. It’s depleting badly needed resources, and it undermines our reputation in every corner of the globe as a long-term reliable partner.”

Nandy said Labour was looking at whether the British government could provide guarantees to developing countries risking unmanageable debt burdens, and backing a push for an international definition of unsustainable debt.

“The UK is home to the City of London and the legal jurisdiction where many of these debts are settled. These countries need us, and we owe it to them to help,” Nandy said.

Labour is likely to come under particular pressure from NGOs including Save the Children and Oxfam to restore the aid budget back to 0.7% of national income. Charities were among those who last year described UK aid cuts as a “death sentence” for children in the world’s most dangerous places.