Standing in line, Pakistani families wait at a cashpoint used to withdraw money on cards loaded with funds from British taxpayers.

More than £1billion of our foreign aid budget has been given away in cash over the past five years, it can be revealed today.

Despite warnings of fraud, officials have quietly quadrupled expenditure on cash and debit cards that recipients can spend at will.

More than £1billion of our foreign aid budget has been given away in cash over the past five years, it can be revealed today (Pictured, people queuing for cash in Peshawar)

The budget has soared from £53million in 2005 to an annual average of £219million in the period 2011-15. MPs last night compared the foreign cash handouts to ‘exporting the dole’.

As much as £300million is being lavished on a scheme in Pakistan that has been dogged by claims of corruption.

The men and women pictured above are queuing at a cash machine in Peshawar used by many to withdraw money under the project.

Around 235,000 families are pocketing payments every three months to boost their incomes, funded by UK taxpayers. Despite judging the scheme high risk, Whitehall officials plan to expand it to 441,000 Pakistani households by 2020.

The revelations fuelled calls from MPs for the Government to ditch the commitment to spend 0.7 per cent of national income on foreign aid.

Backbenchers have argued it is a scandal that so much is being spent abroad while elderly care in the UK is in crisis and town halls are threatening double-digit council tax hikes to close a funding gap.

Nigel Evans, a Tory MP who sits on the Commons international development committee, last night demanded an investigation into the £1billion cash handouts.

Standing in line, these Pakistani families wait at a cashpoint used to withdraw money on cards loaded with funds from British taxpayers

He said: ‘Normally this sort of aid is only given in a crisis or emergency when it is the only way to give help.

‘It only should be a temporary measure, but it seems like we’re exporting the dole to Pakistan, which is clearly not a clever idea.

‘Anything that involves money needs to be properly scrutinised and is clearly open to fraud with money siphoned away when it ought to be directed to those most in need.

‘This is something that International Development Secretary Priti Patel needs to look at urgently to ensure that there is proper accounting for how this money is being delivered.’

More than 9.3million people across 14 countries have received cash payments funded by the British government since 2010.

HOW WE'RE THE MOST GENEROUS The UK is the only member of the G7 group of leading nations even close to hitting the target of spending 0.7 per cent of national income overseas. Since 2004 the amount Britain hands to foreign governments and other aid bodies has rocketed by 144 per cent, according to the G7. The annual aid bill is between £12billion and £13billion, more than £360 for every income tax payer. On some forecasts, that figure will increase to around £16billion by the next election, and £30billion by 2030. Germany, France, Italy, the US, Japan and Canada each spend just 0.4 per cent or less. Over the past decade, spending on aid by Japan is up by just 4 per cent and France by 25 per cent. One dollar in every five spent by the G7 on aid now comes from British taxpayers – despite huge public concern over corruption and waste. The EU is failing in its own commitment to hit the 0.7 per cent aid target. Its various institutions managed to spend only 0.43 per cent in 2014. Pakistan, which has longstanding corruption problems, saw a 40.6 per cent increase in UK aid last year, receiving £374million. This is despite the fact that less than 1 per cent of the population in Pakistan pays any income tax. Pakistan has a space programme and is one of a very limited number of nuclear powers, possessing between 110 and 130 warheads. Advertisement

The UK is also funding several projects through the EU, including a programme in wartorn Yemen, which aid bosses claim is a better way to preserve the ‘dignity’ of recipients than food handouts.

In Pakistan families get 4,500 rupees (£34.50) a quarter, which they can spend however they want, as part of the Benazir Income Support Programme. British taxpayers currently fund 7 per cent of the BISP programme, although in previous years the UK contribution has been nearly 20 per cent.

One in ten people get their money in envelopes at post offices, while others get cash cards that are regularly topped up with money that they can withdraw or use in shops. But in a village on the outskirts of Peshawar, the Daily Mail found people taking out money from cash points with cards they said they had been given after paying kickbacks to officials.

Safiullah Khan, 49, a cart pusher in the Khyber Bazaar area of the city, said a local councillor demanded a bribe to enrol his family in the programme. ‘I paid the money and my card was prepared,’ he added.

The most recent Department for International Development annual review admitted there were problems with the database of recipients, which it said ‘needed to be strengthened’. A Dfid-commissioned study into the project also warned that those given cash cards were susceptible to being tricked out of money as they do not know how to use cash machines properly and are easily cheated. They included the example of one place where ‘the village school master collects everyone’s cards’ and takes a 100 rupee (77p) cut from their money in return for helping them take it out.

Around 235,000 Pakistani families are pocketing payments every three months to boost their incomes, funded by UK taxpayers (pictured, a man uses a debit card provided under the income support scheme)

Pakistani newspapers reported in August that a nationwide probe was being launched ‘after growing number of complaints about fake accounts and alleged corruption’ from project staff. Seven employees have been suspended on corruption charges and 125,714 suspicious accounts have been suspended.

Last September, the chief minister of one of Pakistan’s four regions, Balochistan, complained about ‘massive corruption’ in the programme and warned most of the money meant for poor families in his area was being misappropriated.

Abdul Malik Baloch said: ‘Uneducated people registered with the BISP do not know how to use the ATMs to draw the money. They are also deprived of the money at the post offices and the BISP offices by the staff.’

The scheme was set up by Asif Ali Zardari, the widower of Benazir Bhutto, in 2008, a year after her assassination, and was seen as an attempt to help him be re-elected as president.

Last night Dfid defended the cash transfers and said in Pakistan it has started rolling out biometric payment cards, which verify who people are with their fingerprints, in order to cut out middlemen.

A spokesman said: ‘Cash transfers allow aid to be more efficiently targeted to those who need it, when they need it.

‘In Pakistan, the use of biometric payments makes our programme one of the most secure cash transfers in the world, and means British taxpayers can be sure that the help they provide goes to the less fortunate, not those abusing the system. We have a zero-tolerance approach to fraud and corruption.’

Bribe an official - and get your card for the ATM

by Guy Adams

Shortly after breakfast, two queues form outside a tatty building on the grand trunk road in Peshawar, a major city not far from the Afghan border in northern Pakistan.

One is for the women, several dozen of them, wearing dusty head-scarves and the occasional burqa; the other contains men who, according to tradition, are forbidden from even standing in line with females.

In front of them sits a branch of Allied Bank. Or, more specifically, a working ATM machine belonging to Allied Bank, from which each member of the crowd will be able to use a special debit card to withdraw the sum of 4,500 rupees, around £35. Each of the men and women is accessing this money – a decent amount in a country where average weekly incomes are around £19 – via a scheme called the Benazir Income Support Programme.

The Benazir Income Support Programme is Pakistan’s equivalent of a benefits system (pictured, a woman holds up the card she uses to withdraw cash)

It’s Pakistan’s equivalent of a benefits system, which is supposed to give around five million of the nation’s poorest families a quarterly stipend, in cash. They can spend the money as they like.

So far, so unremarkable – were it not for one extraordinary fact. What no one on this bustling street, and precious few people anywhere in the impoverished South Asian country, realise is that a hefty portion of this handout has come directly from the pockets of British taxpayers.

Under the astonishing terms of a deal which was quietly authorised in 2012, and has barely been reported since, the UK is giving almost £300million to ordinary Pakistanis in cash.

We are making regular payments, for at least eight years, via SWIFT transfers from the coffers of the Department for International Development to a bank account controlled by the notoriously corrupt government of Pakistan.

The vast majority of this cash – £279million – is supposed to be handed directly to the country’s most impoverished citizens, sometimes via debit cards, at other times in envelopes stuffed with banknotes. As we shall see, plenty goes astray.

YEMENIS CLUTCHING AID NOTES Yemenis are just some of the millions of people worldwide pocketing handouts backed by UK taxpayers. The women pictured below, whose faces are almost completely covered by their veils, live in a rural area outside the city of Hodeida. Aid chiefs last night claimed they were handing out cash rather than food in the war-torn country to preserve people’s dignity. Acted, a French charity which runs the project on behalf of the EU, said it was important to give recipients freedom of choice. Clutching wads of bank notes, these Yemenis are just some of the millions of people worldwide pocketing handouts backed by UK taxpayers In 2015, the charity’s projects received more than £15.3million from the EU’s aid budget, with another £6.1million direct from the UK’s Department for International Development. The project in Yemen was funded solely with money from Brussels, Britain contributing around a tenth of the total. Yemen’s civil war, which began in March 2015, has cost at least 10,000 lives and pushed millions toward famine. Three quarters of the country’s 28million people are thought to need some form of aid. Adrien Tomarchio of Acted said: ‘Cash transfers are an effective way to support vulnerable populations affected by humanitarian crises. ‘They are effective because they are timely and they ensure aid is delivered swiftly. Not only do they benefit individuals, they also support local markets and livelihoods. ‘Most importantly, cash transfers preserve one’s dignity. It gives one the choice to use the support we provide as they see fit, according to their own priorities and needs. It ensures freedom of choice. Moreover, cash can be used immediately or can be saved for later.’ A European Commission spokesman said in some circumstances cash handouts were ‘one of the most efficient and cost effective ways to directly reach those in greatest need in a timely manner’. Acted workers Ayida Esamaeel Badwi and Wafa Ahmed Ibrahim Dunia wrote on an EU website that cash transfers can be a lifeline. They added: ‘The widespread shortages of basic food items in Hodeida have added to the challenges. It has meant that the cost of goods available has doubled or tripled since the conflict started. Vulnerable households facing shortages of household necessities frequently cope during crises by selling assets and borrowing money. Disruptions to imports and fuel shortages have brought economic life to a standstill.’ They cited the example of a woman called Yasmina, who has received cash from the charity. She said: ‘We cannot complete our work outside the home because of heavy airstrikes and fighters who near our homes. Even in our homes, we are worried because our traditional houses will not protect us under these conditions. We are facing a lot of problems buying food.’ Advertisement

The remaining £21million pays for ‘technical support’ for the BISP scheme. Already the UK has spent £181million in this manner, and the project has four years to run. It means British taxpayers are footing 7 per cent of the entire Pakistani dole bill; in previous years our contributions have hit almost 20 per cent.

If you think this sounds dubious, you are not alone: a host of leading academics, aid campaigners and politicians criticised the scheme last night. One MP called it a scandal and another called for an urgent review.

However – and here you will be further shocked – our £300million eight-year outlay is far from the end of the spending. The United Kingdom is reserving £219million of the annual foreign aid budget for ‘cash transfers’ – a form of overseas aid which, as in Pakistan, sees money given straight to the man and woman in the street. This figure, sneaked out in official papers several months ago, has more than quadrupled in the past decade – it was £53million in 2005.

It will grow again this year, at a time of supposed austerity, as Whitehall officials try to find ways to hand out more than £12billion in order to honour the Cameron government’s commitment to spend 0.7 percent of national income on overseas aid.

British funds will therefore be literally handed out, using banknotes and cash cards, in the coming years, in such places as Burma via the £152million we are quietly spending on a ‘Livelihood and Food Security Trust Fund’. And in the Stalinist one-party state of Ethiopia with £130million going on the ‘Productive Safety Nets Programme’.

In another of the at least 19 ‘cash transfer’ schemes we will splash out £57million around the repressive and highly corrupt state of Rwanda under a project called ‘Social Protection Support to the Poorest’.

Pictured: Two women stand outside a bank in Pakistan after withdrawing cash given to them as part of the Benazir Income Support Programme

Then there is £53million for ‘Expanding Social Protection’ in Uganda, whose dictator Yoweri Museveni has been in power since 1986 – accumulating a personal fortune put at more than £3 billion – and another £21million on a ‘Child Protection Fund’ in Robert Mugabe’s Zimbabwe. The £219million bill for cash transfers may not even include money being spent on schemes being handled – with little to no UK oversight – by the European Union.

So, one might reasonably wonder, what actually happens to this astonishing £219million that Britain is handing out, each year, in cash?

The answer is impossible to pin down. For, like almost all forms of overseas aid spending, cash transfers are riddled with waste and beset by corruption. On paper, many seem perfectly well intentioned: in theory, a small and regular piece of financial support can represent a relatively efficient way to improve the lives of the world’s poorest people.

Yet in the real world, theory and practice are never the same. So large amounts of our money is being stolen or embezzled, while still more goes to well-heeled charity bosses and high-earning consultants.

The BISP scheme in Pakistan is a case in point. Speak to a just few humble recipients and you’ll immediately hear tales of corruption.

Safiullah Khan, a cart pusher with five daughters and four sons, was standing in line outside the Allied Bank this week. The 43-year-old earns a daily income of between 300 and 600 rupees (£2.30-£4.60). But in order to enrol on BISP, and receive a debit card that would allow him to access the cash, he was forced to bribe a politician. ‘My income is not enough to cover day-to-day expenses of my family, so someone in my neighbourhood told me about the BISP card,’ he said.

‘I went to see my local councillor, and he asked for a bribe for enrolling my name into the programme. After a few months, I managed to find this amount, and so my card was eventually prepared.’

Or take Kishwar Bobo, a 53-year-old mother of eight from the rural Sheikhupura province near Lahore. She says she managed to obtain a BISP card because her brother belongs to the Muslim League, an opposition party with contacts in the local administrative office. However there are no ATM machines in her village, forcing her to pay a ‘commission’ to a shopkeeper.

‘Whenever payments come into the bank, I give my card to the owner of the grocery store, with an extra 300 rupees (£2.30),’ she says. ‘He will withdraw the cash for me when he next travels to the bank.’

Benazir Income Support Programme, is dogged by tales of corruption (pictured, men hold up the scheme's debit cards)

Such low-level scams are par for the course in Pakistan, where corruption has for years been endemic. Yet embezzlement claims afflicting BISP run all the way to the top.

Pakistan’s newspapers carry details of corruption scandals on almost a daily basis.

In October, for example, the Frontier Star newspaper reported that 59 senior BISP employees were being probed by Pakistan’s federal investigation agency for ‘looting’ BISP funds. Dfid says it believes the claim to be untrue.

September saw protests outside the city of Rawalpindi over BISP employees charging ‘commissions’ in order to process cash payments to impoverished clients. August brought news that a government audit had identified no fewer than 125,714 ‘suspicious’ beneficiaries of the scheme, who may have been fraudulently receiving cash.

At least 10,000 had for years been paid a quarterly 4,500 rupees when they were dead. No one knows where the money went, but as a result of this audit, around 100 employees of BISP were said to be under investigation for setting up the accounts, with seven facing charges.

Pakistan’s National Accountability Bureau, the anti-corruption watchdog, was also that month said to have summoned BISP’s former chairman, Farzana Raja, for interrogation over the alleged embezzlement of around £23million from its advertising budget. The allegations, stretching back to before 2012, remain unproven. In May, meanwhile, the News International, a national title, claimed that an audit in the Sindh province found that 52,000 people supposed to be receiving allowances had not been paid a penny for three years. Their cash had instead been pocketed by corrupt officials, 75 of whom were placed under investigation, its report said. Officials denied the charge.

These, remember, are just some of the reports of alleged corruption that were published in a few months of the past year.

If just a fraction of them are even partly true, they would suggest BISP is riddled with corruption. And yet, at a time of supposed austerity, with British social care in crisis and people facing month-long waits to see their GP, the Government sees fit to bankroll this scheme to the tune of £300million.

Little wonder that growing numbers of respected aid experts are starting to raise red flags about the project.

Akbar Zaidi, a prominent Pakistani economist who has worked at Oxford, as well as Columbia University in the US, believes overseas aid is hugely damaging for his country.

‘I don’t think there is anything in Pakistan which is not misused, siphoned off, misappropriated, and so on,’ he says. ‘Pakistan ranks high on all corruption indices and those in power have the ability to misappropriate funds, in all schemes.’

In academic papers, Professor Zaidi has argued that the huge amounts being spent on aid to Pakistan means that British workers are effectively ‘subsidising’ Pakistan’s elite.

‘Less than 1 per cent of Pakistan’s population pays any income tax,’ he said. ‘Many members of parliament and other respected members of society avoid taxes because it is so easy. By continuing to give Pakistan aid, donors have allowed Pakistan’s elite to avoid and ignore major reforms.’

Ehtisham Ahmad, of the London School of Economics, says cash transfers can become a poverty trap that distort the economy by dissuading people from getting jobs.

He has given evidence to Parliament describing BISP as particularly flawed, because it has been named after the assassinated politician Benazir Bhutto. Her image appears on the debit cards used to access cash, making the scheme overtly party political. Dr Ahmad argued in 2012 that British taxpayers were effectively ‘contributing to her party’s election campaigns’.

Dfid officials appear to agree. In their early assessments of BISP, they judged the project to be high risk on several fronts, warning that ‘serious efforts need to be made to depoliticise the branding of the programme’.

But that did not stop them ploughing £300million into it. And no effort was made to depoliticise the project. Thanks to a law passed in 2015 we must spend 0.7 of national income on aid – making us the only one of the G7 group of leading nations to do so. It means that Dfid which, when it was founded by Tony Blair in 1997, had a budget of £2.6billion, must now plough through around four times that amount.

Even before the 2015 legislation, aid spending had risen by 144 per cent between 2004 and 2014 – a period when France’s increased by just 25 per cent, and Japan’s rose by 4 per cent. Dfid, the Foreign Office and other agencies now send abroad more than £360 for every income taxpayer in the land. That figure that will increase to around £16billion by the next election, and £30billion by 2030.

Were all of this cash, or even a large proportion of it, to end up in the pockets of the neediest people on Earth, one might legitimately call it a worthwhile exercise.

CHARITY BEGINS AT HOME MORE than 5,800 nursing home places could have been funded if the £219million in aid money paid out in cash each year was spent on social care in Britain instead. Across the country, the average nursing home fee is £726 per week, or £37,752 a year. The cash could have also paid for 58million hot meals for the elderly costing £3.80 each. Nearly half of councils – or 45 per cent – have cut their meals on wheels schemes for the elderly since 2010 due to budget cuts. The Local Government Association has said the social care funding gap will reach £2.6billion by the end of this Parliament. This could be filled by slicing off just 7 per cent of the annual aid budget over the next three years. Advertisement

Indeed, properly channelled aid spending can enhance Britain’s ‘soft power’ on the world stage, persuading citizens in otherwise hostile parts of the globe to regard us sympathetically. Yet for this to happen, cash needs to be spent competently. In Pakistan, for example, you’d expect Britain to demand that welfare recipients be made fully aware of the fact that their quarterly stipend was being bankrolled by the UK (by, for example, a union flag being stamped on their debit cards).

Needless to say, however, no such system exists. Indeed, not one of the BISP beneficiaries the Mail encountered this week had a clue of Britain’s involvement in the scheme.

One group however has definitely benefited from spiralling aid budgets: the men and women who work in our booming aid industry. That’s why Dfid civil servants have a median income of £52,700, the highest in Whitehall. It is why charity bosses such as David Miliband, who earns £486,894 as head of the International Rescue Committee, pocket astonishing salaries and why bosses of consultancy firms overseeing aid projects are laughing all the way to the bank.

The £220million we spend on cash handouts each year has been very lucrative for such firms as Oxford Policy Management, which has received £89.7million of British aid funds since 2011 and was hired to work on BISP, as well as ‘cash transfer’ schemes in Kenya, Nigeria, Uganda and Zambia. The firm increased its turnover from £34million to £46million last year, making gross profits of £10million, a 30 per cent increase. It employed an average of 223 people, up from 164 the year before.

Then there is a consultancy business called ECORYS, which works on cash transfer schemes in Bangladesh and Rwanda. It turned over £23million last year, declaring gross profits of £11.6million. In the same year, as business boomed, it grew its number of employees from 159 to 191.

The biggest contractor on BISP, however, is Mott MacDonald, a conglomerate headquartered in Croydon, which made more than £40million last year and paid one of its directors a whacking £1.2million.

Nigel Evans, an MP who sits on the Commons international development committee, says that while he supports cash transfer programmes in very limited circumstances – such as ‘a crisis or emergency where it is the only way to give help’ – in the case of BISP we are simply ‘exporting the dole to Pakistan, which is clearly not a good idea’.

Until voters can be sure the money is being efficiently spent, Mr Evans believes our 0.7 per cent aid allocation ought to be kept in a ring-fenced bank account. The coming months will see publication of a study by the Independent Commission for Aid Impact, the official watchdog, into cash transfer schemes.

It will pose a big question: does the extraordinary practice of handing out British public funds overseas, via bundles of bank notes, or on cash cards, represents a sensible use of public money? Many taxpayers will doubtless think they know the answer.