International Aid

Baroness Verma Excerpts

Monday 29th November 2010 Lords Chamber

[Lord Sheikh]

To ask Her Majesty’s Government what proportion of the United Kingdom’s international aid budget is currently spent through international bodies; and whether they have any plans to change this proportion.

[Baroness Verma]

My Lords, I thank my noble friend for asking the Question. I know that he shares a great interest in overseas development. In 2009-10, 62 per cent of DfID’s aid budget was spent through multilateral organisations. This includes funding at headquarters level and support for particular programmes and projects at country level. The Government are currently reviewing their bilateral and multilateral spending in order to maximise effectiveness and value for money. These reviews will determine the future shape of our aid budget in terms of how much funding we provide to different countries and international organisations.

[Lord Sheikh]

My Lords, I thank the Minister for that response. Is she satisfied that these multilateral bodies to which we contribute are assiduous in ensuring that we gain value for money as a result of the contribution made? What more can be done to guarantee that our foreign policy priorities are reflected in the distribution of funds through this mechanism?

[Baroness Verma]

My Lords, multilateral organisations have strong controls in place on financial accountability and transparency. The UK, as a shareholder, has helped to shape these controls and we work hard to monitor effectiveness of multilateral expenditure. The ongoing multilateral aid review is assessing the overall effectiveness of organisations. Each multilateral organisation has its own mandate designed to address a specific challenge. The review is also looking at the relevance of each organisation to the UK’s objectives.

[Baroness Kinnock of Holyhead]

My Lords, does the Minister agree that the European Commission has made significant progress on aid effectiveness and transparency? Does she also agree that the budget support, which the Commission gives directly to developing countries, makes a huge difference to their ability to meet the MDGs and to provide predictability and long-term funding?

[Baroness Verma]

My Lords, I agree with much of what the noble Baroness has just said. Some 56 per cent of the world’s ODA is provided through the EU and 43 per cent of the European Commission’s overall budget goes to low-income countries. The EU also supports middle income countries, where 75 per cent of the world’s poor live. The effectiveness of EU aid has increased steadily over the past 10 years. It is now faster, more flexible and more predictable. Over the past five years, EC aid has helped 9 million children to enrol in primary education and 31 million households to access better drinking water.

[Lord Waddington]

Does my noble friend agree that the EU’s involvement in overseas aid is the worst possible example of EU empire building? Is it not quite absurd that we should hand over money to Brussels to be laundered there? A considerable sum is taken out for the payment of the bureaucrats and then what is left is handed over to the recipients. Would it not be far better if all the aid went direct from the donor countries to the people who need it?

[Baroness Verma]

My Lords, what my noble friend refers to is an agreement with the previous Government under the Lisbon treaty. We did not agree with that, but unfortunately it is now in place and we will need to make it work. We will need to make sure that controls are in place. However, spending through the EU has its own management systems—the Internal Audit Service, the European Court of Auditors and the independent European Anti-Fraud Office.

[The Countess of Mar]

My Lords, does the noble Baroness agree that in African countries and other third-world countries agriculture is the primary source of income for a vast majority of their populations? What proportion of DfID’s spending goes directly on agricultural projects?

[Baroness Verma]

My Lords, the noble Countess is right. Some 75 per cent of the developing world’s poor—2 billion people—live in rural areas. The majority depend on agriculture to provide jobs and incomes. Agriculture has a key role to play in helping to meet the millennium development goal of halving the proportion of people in the world suffering from extreme poverty and hunger. Further allocations to agricultural programmes in each country will be determined after the bilateral reviews.

[Lord Tomlinson]

May I invite the noble Baroness to turn again to the question asked by the noble Lord, Lord Waddington, and stand up and say quite clearly to him that he is wrong?

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[Baroness Verma]

My Lords, in my answer to my noble friend I think I answered what he asked.

[Lord Lawson of Blaby]

My Lords, does my noble friend recognise that although economic development is well intentioned the preponderance of academic studies have demonstrated that in fact it does more harm than good? Will the Government now reconsider allowing overseas development aid to increase substantially at a time when severe cuts are necessary in all other forms of public expenditure?

[Baroness Verma]

My Lords, I cannot agree with my noble friend. Development aid helps millions of people and even though we are going through difficult times ourselves, we will not save money on the backs of poor people.

[Lord Lea of Crondall]

My Lords—

--- Later in debate ---

[Lord Lea of Crondall]

My Lords, it is interesting to see the dinosaur tendency coming out on this. Does the Minister agree that multilateral aid in a typical African country is far more effective than seven or eight European countries giving different views on auditing and different views on public expenditure generally?

[Baroness Verma]

My Lords, we will deliver aid through multilateral agencies as well as through bilateral programmes. However, as the noble Lord is aware, we are going through reviews to make sure that the money spent is best directed towards achieving better outcomes.

[Baroness Falkner of Margravine]

May I help my noble friend by congratulating her on this Government’s stance on international development? Are we going to continue to press for reform of the multilateral institutions, most notably the IMF and the World Bank, so that their recipients are the beneficiaries of better governance?

[Baroness Verma]

My Lords, my noble friend has raised a very good point. That is why we are determined that any money spent on aid, through both our bilateral and multilateral programmes, is reviewed and spent in the most effective way possible.