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Yes vote 'could cost £1bn in aid'

Aid cash from the UK could fall by £1 billion if Scotland becomes independent, a committee of MPs has warned.

The House of Commons International Development Committee also said if Scotland left the UK and set up its own international development agency, this would not be able to achieve the "genuinely transformational" impact of the UK's Department for International Development (DFID).

From 2013 onwards, the UK Government plans to spend 0.7% of Gross National Income on Official Development Assistance (ODA), but the report from MPs said if Scotland were to become independent following next year's referendum, the gross national income of the rest of the UK would fall.

Aid cash would then drop as a consequence of this.

The report said the £12.2 billion the UK is expected to spend on aid in 2015-16 could be reduced by £1 billion if there was a Yes vote in the referendum, with the MPs adding they would expect some parts of DFID's work "t o be subject to cuts" as a result.

Committee chair Sir Malcolm Bruce said: "Scotland has 8.3% of the UK's population share, so we estimate that the UK's ODA would fall by around 8.3%, or £1 billion. DFID's work - either its bilateral programmes or its funding to multilateral organisations - would inevitably then be subject to cuts."

While independence would lead to the establishment of a separate Scottish international development agency, the committee claimed there could be "significant administration costs" involved.

The MPs said: "Despite the Scottish Government's stated desire to keep administration costs low, we are concerned that during the transitional period, the set up of an independent Scottish development agency would require a greater share of an independent Scotland's ODA to be spent on administration rather than on front-line delivery."

They also argued DFID was a "h ighly influential organisation on the world stage, whose work is genuinely transformational", adding that "an independent Scottish development agency could not achieve the same level of transformation and influence".

They said the Scottish Government currently had a "very small" international development fund, with an aid budget of £10 million, compared to the DFID budget for 2012-13 of £8.7 billion.

Sir Malcolm said: "The UK's aid programme, much of which is delivered from Scotland, is genuinely transformational. The UK provided £8.7 billion of aid in 2012/13, but it is the quality of this aid - not just its quantity - which sets the UK apart.

"DFID is a world leader in its field, and as a big player on the world stage, the UK also wields considerable influence in multilateral organisations. One example is the World Bank, where the UK has the power to appoint one of the executive directors."

The Gordon MP added that as part of the UK, Scotland "makes a tremendous contribution to all this" but said: "If Scotland were to become an independent country, its development agency would inevitably be a much smaller player."

The MPs also raised fears about the impact independence could have on the 553 staff DFID employs at its office in East Kilbride, South Lanarkshire.

While the committee said it did " not expect the office to close immediately on the day Scotland became independent", it added that any transitional period was unlikely to last more than five years.

" East Kilbride-based staff are likely to have to relocate or face redundancy," the report said.

"Whilst some may be offered work with an independent Scottish development agency, the number of jobs available with such an agency is likely to be relatively few."

As a result, the MPs urged DFID to consider the impact Scottish independence would have on the jobs of its East Kilbride staff, as the "loss of key staff to an independent Scottish development agency - even if only in relatively small numbers - could lead to major disruption".

International Development Secretary Justine Greening said the report "s ets out clearly the 'transformational' nature of the UK's development work", adding: "Scottish taxpayers can be proud of the contribution they make to our influential development aid programme."

But she said: " An independent Scotland would inevitably lose much of that power to transform the lives of people living in extreme poverty. The Scottish Government has failed to provide credible answers to many legitimate questions on set-up costs, implications for jobs and how the aid programme would be affected if Scotland voted for independence."

Ms Greening added: "Lo oking at other countries of a comparable size, it is hard to see how an independent Scotland's development office would employ as many staff as DFID currently does there."

A Scottish Government spokeswoman said: " To suggest that countries of Scotland's size cannot have a transformational role in international development is simply wrong - indeed the Contribution to Development Index puts the UK eighth worldwide - with all of the countries above the UK being smaller, independent European nations - including the top three, Denmark, Sweden and Norway.

"We are pleased that the report welcomes our plans to enshrine the 0.7% UN aid pledge in law as a sign of our commitment to international development - which is a surprising admission given that the UK Government have broken their own repeated promises to do just that.

"We also welcome that the report finds that the Scottish Government is more effective than the UK Government in engaging with Scotland's international development charities, which make a vital contribution to fighting poverty worldwide."

The spokeswoman added that on the issue of jobs, the Scottish Government's White Paper on independence made clear " there will be continuity of employment for all staff based in Scotland post-independence".

She also noted that "this report expects the UK Department for International Development to retain a presence in Scotland for at least five years after independence - almost seven years after the referendum - allowing ample time for a sensible transition of staff to the Scottish civil service".

The spokeswoman added: "Noticeable by its absence in this report is the admission in one of the committee's previous reports that the UK Government is already planning job cuts at East Kilbride."

She stressed: " Scotland's contribution to tackling global poverty is transformational - through our international development fund and world-leading climate justice fund we are improving the lives of thousands across the world. With independence we would have the powers to continue being a good global citizen with our own voice on the world stage, helping some of the world's most vulnerable people."


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