Government ends tied aid

Poverty has increased in many African countries

The UK government has urged foreign aid to be given to poor countries without any obligation as to where to spend the money

In the past, 'tied aid' meant that some funds intended to help alleviate poverty had to be spent in the country that contributed it.

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Aid agencies welcomed that plan, but warned that more needed to be done to target aid towards the poor.

The UK has also pledged to raise its contribution to eliminating world poverty to 0.3% of GDP, from the current level of 0.26%.

But International Development Secretary Clare Short, who was launching the white paper, entitled Eliminating World Poverty: Making Globalisation Work for the Poor, said that globalisation could benefit the poor.

People have been demonstrating around the world, in Nice, Prague and Seattle, all frustrated at the impact of globalisation...we understand that frustration and we have tried to respond to it

George Foulkes, Development Minister

"If the poorest people and countries can be included in the global economy on more beneficial terms, it could lead to a rapid reduction in global poverty.. . if we go on as we are, the poor will become more marginalised."

Junior development George Foulkes said the aim of the government was to steer a middle way between critics of globalisation and advocates of pure market capitalism.

"People have been demonstrating around the world, in Nice, Prague and Seattle, all frustrated at the impact of globalisation...we understand that frustration and we have tried to respond to it."

The Conservatives criticised the proposals as half-hearted and lukewarm.

"It is long on rhetoric and short on specifics, which three years into Government is just not good enough," said Gary Streeter, the Shadow Overseas Development Secretary.

Charities cautious welcome

Charities such as Christian Aid and Action Aid welcomed the government's move to untie aid, which they said would release up to $8bn more for international development.

Laura Kelly of ActionAid told BBC News Online that she was "extremely pleased" by the news, and hoped that the government would now pursue the matter in the EU.

Christain Aid said they hoped the paper will lead the government towards taking a stronger role in pushing for debt relief for poor countries.

Christian Aid's head of policy, Mark Curtis, said poverty was the greatest challenge of the age and globalisation was failing to rise to that challenge.

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Mark Curtis, Christian Aid

"Forty years ago the gap between the richest and the poorest people in the world was less than half what it is today, and if the rules of globalisation are not changed that gap will widen still further," he said.

And Barry Coates of the World Development Movement said that the government needed to adopt a more radical approach.

"Globalisation has enriched the few and excluded the majority of the world...It is clear that the problem is not the policies of a few governments, but the fundamental rules and power relations that underlie the processes of globalisation. Despite some welcome initiatives, the white paper fails to address this challenge."

Struggle over trade

There is less consensus among the aid agencies about the government's support for the world's international economic institutions, which they believe need to undergo signficant reform.

"Globalisation is no accident. It is shaped by global institutions like the World Trade Organisation, the World Bank and the IMF, as well as governments and multinational companies." said Mr Curtis.

And other aid agencies, like the World Development Movement, urged the government to modify its support for free trade policies.

Barry Coates said that "the current trade rules benefit large multinationals rather than the world's poor."

But Ms Short has previously dismissed such calls as the rich refusing to share the benefits of economic growth with the poor.