Should Aid Money be Used as a Tool for Expanding Free Markets?

Ask a particularly extreme proponent of the free market how they see the future, and they might conjure up schools run by Coca-Cola and education programmes administered by Price Waterhouse Coopers. Or they might see hospitals operated as companies by nurse-entrepreneurs who compete for private equity funds.

To the rest of us, this sounds like a nightmare. But it is a vision of society which is not far off in parts of Africa and Asia, brought to hundreds of thousands of people thanks to British aid money.

Turning basic needs into commodities to be bought and sold for profit takes a long time in a country with an established welfare state, where people are proud of their NHS and comprehensive school system. It's easier in countries where public provision has been destroyed by decades of savage austerity imposed by western-controlled institutions like the International Monetary Fund and World Bank.

It's in those countries that our government has used the development budget - another aspect of public provision we should be proud of - to test out ultra-free-market ideas. Our new report exposes the Department for International Development (DFID) as a world leader in spearheading this push towards privatisation of education and healthcare.

In one example, DFID is spending PS355 million on a project called the Girl's Education Challenge which is managed by British multinational Price Waterhouse Coopers. Key to the initiative is the promotion of private provision of education, including in the Democratic Republic of Congo, Ethiopia, Mozambique, Nepal and Uganda. One partner in the Challenge is Coca-Cola, which is working in Nigeria to promote 'the economic empowerment of 5 million female entrepreneurs across the global Coca-Cola value chain'. So Coca-Cola doesn't simply see this as an opportunity to 'greenwash' its brand, but a direct commercial advantage.

Another key partner is education multinational Pearson. Not only is Pearson involved in intensive school testing in the UK, it is a massive global player in the 'low cost' schools' market targeted at the poor. DFID is supporting that effort and it's a cosy relationship - senior Pearson executive and former Blair advisor Sir Michael Barber also works as a DFID education representative in Pakistan.

Pearson believes that 'low cost private schools offer quality education solutions'. In fact research suggests that low cost schools often rely on classroom scripts, very large classes and poorly prepared teachers. At one such school in Ghana teachers were found to be earning roughly $3 per day, which is 15-20% of what public sector teachers earn.

No wonder the UN special rapporteur Kishore Singh has publically stated that governments "should not allow or promote low-cost private schools" which fuel inequality and exclusion. He argues that private education companies are "capitalising on the inability of governments to cope with rising demands on public learning".

DfiD is pushing similar policies in relation to healthcare, sometimes through intermediaries. One such programme in Rwanda aims to establish 'Health Posts' that "follow a Public Private Partnership model and operate as a franchise, with each Health Post being owned, operated and managed by a nurse as a small business". Another DfID partner aims at "removing barriers impeding efficiency in global markets for essential commodities (for instance, in health and nutrition)"

One way or another, aid is being used a tool to convince, cajole and compel the majority of the world to undertake policies which help Western business, but which undermine public services from emerging or thriving. One DfID scheme aims to 'help' governments 'improve the regulatory environment for private provision of education' and support officials who "lack the skills and experience to effectively negotiate and manage public private partnerships" - surely a joke given the British Government's own record negotiating disastrous PFI contracts.

These schemes are driven by an outdated ideology to turn the world into a giant marketplace and our basic needs into commodities to be bought and sold. Access to services and the quality of services we can use will depend upon the amount of money we have, which often depend in turn upon race, class and gender. It is a world of entrenched inequality and privilege.

We should look to a different tradition to guide aid spending. The introduction of universal education, the increasing length of compulsory education, the creation of comprehensive schools, the foundation of the NHS - these are some of the greatest social achievements we have ever made, and we remain rightly proud of them. The aid budget could be used to help others to achieve these vital components of a decent society.

To do so, we need to push for a progressive and democratic vision of development. The Conservative-Lib Dem government does not have a monopoly on supporting privatisation with aid money. The last Labour government did so too, albeit in a less extreme fashion. Today, Labour's election manifesto shows almost no vision for what progressive development should look like.

Neither are they pushed by anti-poverty campaigners, who either benefit from the privatisation schemes or are so concerned with protecting aid spending against a narrow minded and inward looking minority, that they forget what they are defending. There's no doubt that those who want to abolish or slash aid would take the public discussion backwards, and make genuinely redistributive policies even more difficult to enact. We have seen some of these politics on display as part of the election campaign. But we also need to be honest. Unless we turn our minds to challenging the political consensus which currently exists around aid, we will end up with something which cannot be defended and is not worth defending. We will have won the most empty of victories.