International Development (Official Development Assistance Target) Bill

Lord Foulkes of Cumnock Excerpts

Friday 6th February 2015 Lords Chamber

[Lord Lawson of Blaby]

I am talking about debt relief for low-income countries. This is just prolonging the debate. I do not wish to prolong it but it is being prolonged as a result of the interventions. The IMF study states:

“1987 marked a watershed in the financing of LICs. In April, Nigel Lawson, then UK Chancellor of the Exchequer, launched the first of what proved to be a series of UK LIC debt Initiatives by arguing that Paris Club rescheduling for the LICs should be at below market rates of interest. Thus, for the first time it was proposed that reschedulings of commercially priced ECA debt should involve a reduction in the present value of the debt outstanding”.

[Lord Foulkes of Cumnock (Lab)]

The noble Lord, Lord Lawson, and I used to be Members of the other place. Does he recall that if he had tried this tactic there, the Speaker would have ruled him out of order?

[Lord Lawson of Blaby]

That is a bit rich coming from the noble Lord.

[Lord Foulkes of Cumnock]

The noble Lord is absolutely right.

[The Lord Speaker (Baroness D'Souza)]

Amendment proposed, “Page 1, line 2, leave out the second “the” and insert “a”.

--- Later in debate ---

[Lord Forsyth of Drumlean]

No, she has not, because if she had read the report she would not have made that intervention. The problem arises because the target of 0.7% is over a calendar year, so from January to December it is necessary to reach 0.7%, but the department’s budget period runs from April. Therefore, it is trying to manage programmes in respect of one financial year against a target set over a different financial year. The reason for that is because the Government are trying to set an example to other countries by meeting what they believe to be the UN target, which is measured over the calendar year in order to get equivalence.

The effect of that is that the unfortunate civil servants in DfID find themselves having to organise the budget with those two financial years. Even then, it is further complicated by the fact that only 82% of that budget is within the control of the department, because another bit of the budget is spent on environmental measures and another is spent by the Foreign Office, over which it has no control, so the civil servants have to find out what is happening in those other departments. The effect is that they end up shuffling money or writing cheques to multilateral organisations to meet the target when they should be concentrating on using the available resources efficiently and effectively to do the best for people in abject poverty around the world.

I know that the noble Baroness and others think that this is some kind of exercise to try to stop the Bill. I do not wish to stop the Bill, but I wish it to operate in a way that ensures value for money for the taxpayer and that projects around the globe are properly supported, not subject to some last-minute financial juggling in order to meet a ridiculous, but no doubt well intentioned, target in the Bill.

The amendment which my noble friend Lord Lawson was trying to move—the House was very discourteous to him over that—draws attention to that. The very same point was made two years ago by the Economic Affairs Committee unanimously, with all-party support—

[Lord Foulkes of Cumnock]

We have already heard that on a number of occasions, and this repetition is becoming tedious.

[Lord Forsyth of Drumlean]

I defer to the noble Lord, who is the absolute expert, as acknowledged by everyone in the House, on tedious repetition.

That is why I believe that the House and my noble and learned friend and the noble Lord, Lord Purvis of Tweed, need to consider the amendment seriously, because I do not believe that what they intend to happen will be achieved.

--- Later in debate ---

[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.

[Lord Foulkes of Cumnock (Lab)]

The noble Lord is very rude today.

[Lord Forsyth of Drumlean]

Well, I have been on the receiving end of a certain amount of abuse, and this is a very important point. As my noble friend has indicated, the difference between GDP and GNI for the United Kingdom is limited. But in support of the United Kingdom being in the van and being ahead of virtually every other OECD country in committing itself to a target of 0.7% of GNI, the proponents of that policy have argued that other countries—I think that there are five—have set an example. One of those countries is Luxembourg. The difference between GDP and GNI is that, for a country such as Luxembourg, which appears to meet the target very generously, the GNI is considerably higher than the GDP, because the GNI includes revenues that are repatriated from the country to outside. So if you set a target that is based on GNI, it gives anywhere that is a tax haven a huge advantage in meeting the target as opposed to countries that are not—and I thought that Members opposite were rather against tax havens and making life easier for tax havens. I cannot give the exact figure, but I would estimate that, if we take into account the moneys going through Luxembourg through multinational companies and going back to the United States and elsewhere, instead of more than meeting the target, I suspect that it is less than halfway towards it. This is not a nitpicking point. It is an important point. It is important because, as I said earlier—I am not going to repeat the argument—when the target was originally set by the UN, it was for GDP.