International Development (Official Development Assistance Target) Bill

Lord Hamilton of Epsom Excerpts

Friday 6th February 2015 Lords Chamber

[Lord Ramsbotham (CB)]

My Lords, I make a very brief intervention in support of the word used by my noble friend Lord Butler and the noble Viscount, Lord Eccles: flexibility. I came to support the amendment to substitute “a” for “the” because it introduces flexibility. I cite two examples. One was in the Select Committee on Soft Power, chaired so expertly by the noble Lord, Lord Howell. One of our recommendations was that consideration should be given to the lack of tie-up between DfID, the Foreign Office and the Ministry of Defence in Afghanistan, and the need to pool cross-government contributions to aid. Secondly, to pick up a point made by the noble Lord, Lord MacGregor, in relation to the Armed Forces, something that always worried me is the overcharging of overseas cadets coming to places such as Sandhurst, which forces them to go elsewhere. If we allowed some aid to subsidise their attendance here, it might encourage them on to our side in future, with future benefits for this country.

[Lord Hamilton of Epsom (Con)]

Will the noble Lord comment on whether it might be better if some aid projects were managed by the military? Would that not cut down on corruption?

[Lord Ramsbotham]

All I would say is that if we are talking about 0.7%, it should include every contribution made by every ministry.

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[Lord Hamilton of Epsom]

Can my noble friend comment on the point made by the noble Lord, Lord Butler, about hypothecation? Is he quite comfortable about slabs of government expenditure being hypothecated so that there is no flexibility at all on behalf of the Treasury?

[Lord Fowler]

I am, in fact, comfortable in this position, because I think that we have a particular duty as far as the developing world is concerned. I would not be happy to have hypothecation in every government measure, but here we have a particular responsibility. There is a lack of imagination about what is happening out there in Africa and in the rest of the world. That is the point. If we have a duty, it is a duty in this respect. I am therefore entirely happy with hypothecation in this respect.

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[Lord Cormack (Con)]

My Lords, I sat through virtually the whole of the Second Reading debate, as my noble friend Lord Purvis knows. He also knows why I was not able to take part in that debate. It was a very good-humoured debate, which saw this House very much at its best. I regret that the hallmarks of our debates—courteous good humour and willingness to listen to the other point of view—have not been the defining characteristic of this morning’s debate. That is a great pity.

The fact that we can all accept a principle as being wholly desirable and good does not mean that we all have to accept that every particular is also wholly desirable and good. My noble friend Lord Tugendhat moved this amendment with precision and brevity, clarity and force. He made an extremely powerful argument. I hope it is an argument that will be recognised as such by my noble friend Lord Purvis and that he will feel that an amendment of this sort—although I sincerely hope there will be no pressing to a Division today—would not in any sense invalidate or undermine his admirable Bill, but would strengthen it in the ways that have been indicated. I hope that the rest of today’s debate can be conducted in a way that is more reflective of the good humour and good temperament of your Lordships’ House than the debate on the first amendment was.

[Lord Hamilton of Epsom]

I very much support my noble friend Lord Tugendhat’s amendment. In the spirit of my noble friend Lord Cormack, I certainly do not intend to speak for very long.

The first point that my noble friend Lord Tugendhat made was one of transparency. He made the point, quite rightly, that we measure everything else in terms of GDP rather than GNI. If we want to take the public with us it seems to me to be very sensible to use GDP rather than GNI. Let us be honest: the reason why people support this Bill with the enthusiasm they do is because they want to be seen to be generous with other people’s money. We all like people to be generous with their own money; it is slightly different when they are being generous with other people’s money. As that is the purpose of the Bill, we might as well make it as clear as we possibly can by using GDP rather than GNI.

My noble friend Lord Tugendhat also made the point that the difference between GNI and GDP is very small at the moment. In that case, this is a unique and wonderful opportunity to use GDP instead of GNI before the two indices start to part from each other. We have no idea what might happen in the future; the economy of this country may change and it may well be that we start getting less money if GNI starts to increase above GDP.

If we really want to nail this down, I say to my noble friend the Minister that this is a wonderful opportunity to embrace the amendment and get it on GDP, which everybody understands. That also means that we then guarantee that the 0.7% figure means something in the future, if that is what the Bill and the House desire.

[The Parliamentary Under-Secretary of State, Department for International Development (Baroness Northover) (LD)]

My Lords, I intervene briefly at the invitation of my noble friend Lord Forsyth. Amendment 2, proposed by the noble Lords, Lord Tugendhat, Lord Lipsey and Lord Forsyth, seeks to change the 0.7% target from GNI to GDP. If my noble friend Lord Forsyth was addressing me in seeking a reaction from the Front Bench—he did say “she”—he must have misheard. I made no comment. I would not have dreamt of doing so as a comment on what he was saying, even though I have found that reading economics textbooks to my dyslexic son has helped to inform me.

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[Lord Howell of Guildford]

My Lords, I listened almost with amusement to the last forceful intervention of the noble Lord, Lord Cashman. He summed up in an excellent, succinct phrase exactly the content of my maiden speech in this House in 1997—namely, that economics is not a science, as many of its proponents insist, but an art, and a very ambiguous art at that, which is full of subjective views. To look back, frankly, at the development activities of the past 40 and 50 years, post the Second World War, the economists have not done a very good job. They have applied all kinds of economic rulings to the proposed triggers for development and have found that they have not worked. Of course, far more than economics is involved. There is a whole range of psychological and particularly local factors in all the countries that all of us have visited over the years—I have visited dozens of them—which are operating not to the laws of economics. I say “Well done” to the noble Lord, Lord Cashman. That is exactly the truth of the matter. We do not want to be guided too much by economists.

What we want is flexibility and room in which we can look to the future for once rather than the past and see the ways in which development can be triggered and promoted in the future. As my noble friend Lord Lawson said, the world has changed totally in the last 40 years. The developing countries are looking for new priorities and new ways of assistance. They are looking for ways in which they can graduate away from official development systems à la 20th century into new forms of support and development in the 21st century.

All sorts of distinguished reports from the other place and your Lordships’ House emphasise that. The latest report from the excellent House of Commons International Development Committee on the future—not the past—of UK development co-operation states:

“The impact of DFID’s support … depends less on the volume of financial support and more on its ability to act as a purveyor of development excellence, helping its partner countries to identify innovative solutions”.

Your Lordships’ House should be thinking about innovative solutions and not the past. The committee also states:

“As grants of aid become less appropriate in some countries, so new forms of development co-operation are necessary”.

It goes on to identify the evidence that it had gathered in the various countries that it had visited. That is the reality of the moment. New forms are required to promote development. If we glue ourselves into the old ways of thinking, we will deny ourselves the flexibility of this kind of goal, which our superb staffs in DfID, the Foreign and Commonwealth Office and other areas will seek to be guided by, and we will do a disservice to development on a massive scale.

[Lord Hamilton of Epsom]

I follow my noble friend Lord Howell on the remarks of the noble Lord, Lord Cashman. He is absolutely right that economists indulge themselves in a form of science that is not exactly reputable. Some noble Lords may remember the letter written to the Times by, I think, in excess of 360 economists, who said that the Thatcher economic policies were absolutely doomed to pitch this country into constant recession. That was the turning point for the economy in the United Kingdom, and things really took off from there. We are very much at home with him on that.

The noble Lord also spoke about how we should feel enormous compassion for those in great need in places in Africa and so forth. We all very much sympathise with where he comes from there, but the point has already been made in this debate that only 10% of what goes to these countries comes from development aid programmes. The rest comes from investments made in these countries. Let us face it: what is really going to make a difference in a desperately backward country such as the Democratic Republic of Congo is the fact that the Chinese are prepared to put in extensive railway and road networks in return for copper and cobalt concessions in that country. These are the things that will really make a dramatic difference in a country such as the DRC. In terms of relativity, development aid programmes are merely a pinprick compared with what is being invested in return for mineral resources.

To return to the amendment, the noble Lord, Lord Cashman, is right that this is not about economics. This is much more about accountancy. Some people will argue that accountancy is one of these other rather faulty arts, rather than a science, but I think it comes nearer to being a science than an art. What we are talking about here is how you manage money effectively. It must surely be right that you can take somewhat longer to meet a programme, rather than restricting yourself to 12 months. People who support this Bill have not really answered my noble friend Lord Forsyth’s point about 40% of the budget being spent in November and December of a year because it is bumping up against the end of the financial year. This should strike an enormous amount of disquiet in people’s minds, because it suggests to anybody that the expenditure of this money is being rushed. No control is being put in—we are just trying to meet targets to show that we spent all this money, and where the money goes is of much less concern.

I spent a certain amount of my youth in the army in Kenya. After independence, one of the famous elements of Kenyan politics was the Wabenzi, people in government who drove around in Mercedes-Benzes, many of which had been paid for of course by development aid money. One has to recognise that, in these sub-Saharan African countries, the elements of corruption are very great indeed and there is no respect for development aid programmes. People do not say, “This is being brought into my country to aid the poor, therefore I will not put my hands on it”. The fact is that those in charge manage to get hold of an awful lot of that money, which is why so many of them are driving around in Mercedes-Benzes today.

[Baroness Northover]

My Lords, in considering this group of amendments, I hear what my noble friends are saying about seeking to help the Government to manage our spending on official development assistance in a more flexible and predictable manner. However, these amendments, if carried, would have significant disadvantages, in our view, not least in terms of the flexibility and predictability noble Lords are seeking to promote.

First, as has been made clear previously, there is a need for an internationally consistent approach. The OECD DAC is made up of 29 members, and to ensure that monitoring and reporting of DAC members’ budgets is consistent and can be reported transparently, the DAC has decided to monitor ODA on the basis of single calendar years. If the UK moved to a five-year average, the UK would still have to submit annual ODA information to the OECD DAC. The need for consistency and clarity is essential. Importantly, using an alternative definition would also undermine the weight that our commitment to 0.7% carries with our international partners, as I mentioned before.

It is also important to note that the department already manages to an annual target, as does any other government department—as the noble Baroness, Lady Farrington, mentioned—in order to deliver within annual budgets. Therefore—

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[Lord Forsyth of Drumlean]

The noble Baroness, for whom I have the highest regard, says, “Good”. I have to say that the European Union does not have a terribly good record in accountability for public money. Indeed, one of DfID’s objectives is to improve accountability and be less dependent on multilateral programmes.

However, as has been pointed out by the noble Lord, Lord Purvis, and indeed the Minister, in her short intervention in the debate, the way in which you solve the problem of not being able to reach the target is to put money into multilateral programmes. For accounting purposes—I am sure that the Minister will intervene if I am wrong about this—if the department writes a cheque to a multilateral organisation, it counts as expenditure in year, whereas if it actually supports a bilateral programme, the expenditure accrues as the programme continues. So the perverse incentives will be to put more and more into multilateral programmes or those run by other agencies such as the EU and the UN, where the degree of accountability which I think all of us in the Committee believe we should have would not be delivered.

[Lord Hamilton of Epsom]

It was some years ago now that I went to visit my noble friend Lord Patten of Barnes when he was commissioner for overseas aid in the European Union. He spent quite some time complaining about how few staff he had in comparison with the number that he had when doing the same job in London. I do not know whether that situation has improved but I suspect that it probably has not—and my noble friend was saying quite clearly that he did not have the resources to manage the programmes under his control.

[Lord Forsyth of Drumlean]

Indeed, and while I do not particularly wish to detain the House, that is also an issue for DfID. When we took evidence from the body set up to monitor the spending, it had four commissioners and a very small staff to deal with a programme which was being increased in size by more than a third. Similarly, DfID itself—although it is common ground that it has done a great job—is having a huge increase in its budget and, at the same time, a 40% reduction in the size of the department.