Official Development Assistance

Lord Hannan of Kingsclere Excerpts

Thursday 15th December 2022 Lords Chamber

[Lord Hannan of Kingsclere (Con)]

My Lords, it is a huge privilege to follow the noble Lord, Lord Bruce of Bennachie. I first heard him speak more than 30 years ago, when he was president of the Scottish Liberal Democrats and I was an undergraduate. He was then, as now, detailed, good-humoured and generous to opponents, as he is in all his interventions.

I feel, looking at who is speaking after me, that it will probably fall to me to point out that there is an alternative case—a counterargument that was best expressed by the great American economist Thomas Sowell. Foreign aid, if badly done, can provide perverse incentives. You end up rewarding countries that are doing the wrong thing and ceasing to reward countries that are doing the right thing. Foreign aid, if badly done, becomes an alternative revenue stream, so that a Government do not need to raise money through taxation, and this can lead to bad democratic as well as bad economic outcomes. There are numerous surveys comparing countries in receipt of aid and not, and the same country in times when it was and was not, that show that there can be these negative correlations.

None of this, however, is an argument against foreign aid: it is an argument against doing it wrongly, or without proper concentration on the outcomes. There is a general argument against feeling that you are doing the right thing if you put a fiver into every outstretched hat without thinking through exactly where it is going. To take the most uncontroversial aspects, I think we can all agree that Governments have an important role to play in disaster relief: the capacity of many countries is simply not up to dealing with extraordinary catastrophes that are not budgeted for normally. But Governments also have an important role to play in doing the things—the unsexy things, if you like—that charities will struggle to raise the money for. There is a lot to be said, for example, for improving infrastructure, but that is a much harder thing to raise money for from the general population than clinics, schools or whatever.

We, the UK, are doing quite a lot of good work in Africa. DfID is funding a lot of schemes on practically removing trade barriers at borders; dealing not with the treaties but with the actual implementation, so that we increase the flow of goods across borders, which is of course an incredibly important poverty alleviation mechanism but one that no charity is going to be able to make a big appeal out of. So let us all agree—the noble Lord, Lord Bruce, put it very well—that we have refocused on areas that are more important and where we get, if you like, more bang for our buck. There was a particular move, during the coalition years that he referred to, away from funding organisations that spent a lot of money on advocacy and trying to refocus them on spending money on getting actual product on the ground in the places where they were delivering. I think that was the right thing to do: there was a certain dishonesty involved with some organisations that would raise money, saying, “We are going to provide farm tools for a family in Zimbabwe”, or whatever, and then the bulk of their budget would go on lobbying operations in London.

So, we have already done a number of good things. We are becoming more focused and it is possible to get a great deal out of limited budgets. But where I have a problem—I am afraid I am going to make myself incredibly unpopular, not for the first time, as I say this—is with the idea of setting arbitrary budgetary targets, whether for overseas aid or for any other aspect of government spending. First, I think it is always a bad idea to judge one’s policy in terms of cost rather than outcome. This is true whether it is a local council budget or a Whitehall department. There is a lamentable tendency, which carries on under this Conservative Government, to boast about the fact that we are spending £200 million on X or Y, rather than looking at what we are doing with it. That also creates perverse incentives.

There is a deeper problem, and it is the democratic one. It may very well be desirable to spend 0.7% of GDP on international assistance; it may very well be desirable to spend 2% of GDP on defence, as the NATO alliance demands; but if those things are true, why is it not equally desirable to spend whatever arbitrary figure we come up with on education, on healthcare or on policing? At which point, what is the point of having general elections? Democracy is about the arbitration of competing goals. It is not our job in this Chamber, but I argue that it is the primary job of the other place. There are clashing interests, people who have perfectly good arguments for why they need more money, there is not a magic wand or a magic money tree, and it is the role of elected representatives to decide on the most equitable outcome. If all that is lifted out of the democratic process and set in stone in statute—or even, as Gordon Brown now suggests, in a constitutional settlement that would guarantee a certain amount of health spending, or whatever—there is precious little point in people voting at all.

We did, indeed, show leadership, whether or not we use the phrase “superpower in foreign aid”, but I think we also have historically shown leadership as a democracy. We have held up an example of a free, open society in which leaders are answerable to the wider population. We have shown that that model works and people around the world have chosen to mimic it. For that reason, if for no other, we should be very careful about abandoning the principle that taxes should not be raised except by elected representatives.