International Development (Official Development Assistance Target) Bill

Debate between Lord Forsyth of Drumlean and Lord Tugendhat

Friday 6th February 2015 Lords Chamber

[Lord Tugendhat (Con)]

My Lords, this amendment stands in my name and in the names of my noble friend Lord Forsyth and the noble Lord, Lord Lipsey. It would replace the words “national income” with the words “domestic product” on page 1, line 4 of the Bill. I hope that, in view of the exchanges in the previous debate, we can all agree that that is what we are debating on this occasion.

Before coming to the substance of the amendment, I want to make it absolutely clear that, as I said in the Second Reading debate, I support the British aid budget, I am quite prepared to see it increased further in the light of economic circumstances, and I admire the achievements of DfID, which, as the result of our examination in the Economic Affairs Committee, I recognise is held in high esteem across the world. I hope that there is no misunderstanding on that point and that noble Lords do not mistake criticisms of the Bill as it stands as being criticisms of the aid project. It is very important to clarify that.

My objection is to a legally enforceable annual expenditure target and my views on that subject are very close to those enunciated by the noble Lord, Lord Butler of Brockwell, speaking from his great experience. I not only oppose a legally enforceable limit in respect of the aid budget but would do so in respect of any budget, because I believe that it will lead to the misallocation of resources and distortions of various kinds. If it is adopted in its present form for the aid budget, that will in due course bring the aid budget into disrepute.

However, as the Government want to go down this road, and as the development community very much supports that, it is our task in this House, as far as possible, to save them from the consequences of that folly by improving the Bill. This amendment would go a small way—not more than that—towards doing that. I say that because the Bill confers on the aid budget, as others have pointed out, a unique privilege: it gives it a guaranteed share of national wealth, something that is denied to the National Health Service, education, defence, and other very important programmes. Therefore we must be sure, both for that reason and because of the legal obligation of the expenditure target, that the expenditure can be measured in the most precise and accurate way. I hope that no one would disagree with that.

The Bill defines the 0.7% in terms of a percentage of GNI and defines the period as a calendar year. Of course, as the House very well knows, the vast bulk of UK public expenditures are recorded as a percentage of GDP and on the basis of the financial year. This amendment would have the effect of enabling aid expenditure to be measured and recorded on the same basis as the overwhelming bulk of the budget. This is not a question of quantity—I am advised that the change from GNI to GDP would make virtually no difference on that score—but it would greatly increase transparency, which is something that in general the House approves of, and it might also avoid problems in future. Although there is not very much difference, as I understand it, between GNI and GDP at present, one has only to look at what happens with cost of living indices, whereby the differences between RPI and CPI can fluctuate quite markedly and lead to a great deal of misunderstanding. In that sphere, pensions, index-linked bonds and so on are measured by RPI, while other things are measured by CPI—and distortions arise. I suspect that distortions would also arise in relation to the difference between GNI and GDP.

If, as I suspect, this amendment is rejected, I think that the proposer of the Bill and the Minister—I emphasise “and the Minister”—should answer three questions. First, why use GNI? Presumably, it is being used for international reasons, but can we have an explanation as to precisely why it is GNI? Secondly, how will the aid expenditure figures and those relating to other programmes be reconciled? It is very important that the Government answer that question at the Committee stage. Thirdly, have the Government sought advice from the OBR or the NAO on this matter, and what did they say?

Let me just repeat the point about the Minister. Noble Lords will remember that about a year ago we debated the European Union (Referendum) Bill. I found myself at that time closer to the Liberal Democrat party and the Labour Party than to my own party. My noble friend Lord Dobbs, who proposed the Private Member’s Bill, summed up at the end of each amendment debate but the Minister on the Front Bench also intervened because of the implications for government policy. I have asked three absolutely relevant and explicit questions, which lie not in the province of my noble friend who proposes the Bill but in the province of the Government. I very much hope that the Minister will be able to answer the questions that I have put forward. I beg to move.

[Lord Forsyth of Drumlean]

My Lords, I rise to support my noble friend’s amendment. It may seem a nitpicking point to distinguish between GDP and GNI—the noble Baroness on the Front Bench says, “Yes, it is”. But I suspect that that is because she does not know the difference between them, because if she did know the difference she would know that it was not a nitpicking point.

International Development (Official Development Assistance Target) Bill

Debate between Lord Forsyth of Drumlean and Lord Tugendhat

Friday 6th February 2015 Lords Chamber

[Lord Tugendhat]

I am talking only about the future. The amendment refers quite explicitly to the future. I hope I am repeating myself correctly; I said that if it was suggested that the present arrangements are sufficient, then that would imply that the introduction of the new legally enforceable target made no difference. That is what I was saying. I am not talking about whether the report was insufficient in the past. We did not have a legally enforceable target in the past but we are going to in future. That is why I suggested that new arrangements would be required. So we are looking to the future, not the past, and I should be very interested to know why the proposer and the Minister—if indeed they are not going to accept the amendment—think that new arrangements should not be required in the future.

[Lord Forsyth of Drumlean]

My Lords, I support my noble friend and very much agree with his remarks in respect of the conduct of the business today. The only thing in his excellent remarks on which I disagree with him is that he kept referring to a legally enforceable target. On my reading of the Bill, there is no legally enforceable target; there is a requirement for the department to try to spend exactly 0.7% of GDP in any one year, and a failure to do so simply requires it to produce yet another report to Parliament explaining why it has failed to do so. It is very important that we are clear on that because in the outside world it is being sold as something else, and the damage that is being done is the implementation of the 0.7% target.

The noble Lord, Lord Purvis, suggested that my noble friend go back and read the reports but that is not the point. This amendment is about seeking to ensure that we are aware of the influence of the 0.7% target on the quality and oversight of, and the opportunities for corruption from, UK aid. That is a really important point. The system is being changed. Until now, the department has had a budget. Part of the overseas development budget has been with other departments, including the Foreign Office—some of it might be associated with climate change, which I find a great mystery—and these departments have been able to spend on their programmes accordingly. The fact that between them all they now have to reach the target of 0.7% within a calendar year, as opposed to a financial year, will create and—the evidence is quite clear—has already created substantial problems.

Therefore, it is very important that we look at the impact of the inclusion of this target on the quality and effectiveness of the ODA programme and, similarly, at the degree to which DfID has been able to provide oversight of the other departments. If, as we discussed earlier, the effect of the target is that more has to be given to other organisations over which it has no control and from which there is no accountability, that will have an impact on proposed new paragraph (b) in the amendment, which concerns,

“the Department for International Development’s oversight of UK Overseas Development Programmes”.

I do not want to go over the same arguments at this hour but, as my noble friend Lord Lawson pointed out, there have recently been some quite disturbing reports from the NAO suggesting that money for programmes is being used by criminal elements on an international scale.

I think that the amendment is very sensible. If the Minister or the noble Lord, Lord Purvis, feel unable to accept it, we may have to return to this matter in rather more detail on Report because the impact of the department having a target of 0.7% will, in my view, have a seriously deleterious effect on the effectiveness of the overseas aid programme, and that needs to be monitored.