EAC Report: Development Aid

Lord Hannay of Chiswick Excerpts

Monday 22nd October 2012 Lords Chamber

[Lord Hannay of Chiswick]

My Lords, in this House we do not get many opportunities to debate the general case for development aid and the place of Britain’s aid programme within it—probably fewer than we should. So I very much welcome the chance to discuss the report on the economic impact and effectiveness of development aid produced by the Economic Affairs Committee and so ably introduced this evening by the noble Lord, Lord MacGregor, even if I disagree quite sharply with some of its recommendations—I am in rather greater sympathy with the Government’s response to them.

Development aid is a crucial part of Britain’s projection of soft power; it is a practical expression of our role in the world as a leading developed nation, able to help others less fortunately placed. Frankly, that is a moral obligation as well as a self-interested one. It is a not insignificant part of an overall effort, under the aegis of the United Nations, to make the world a more equitable and thus a more secure place. It matters and we need to get it right. Broadly speaking, I believe that the coalition Government have done precisely that, particularly by their decision to ring-fence the aid budget from spending cuts. They have taken a large amount of criticism for that decision, mainly from their own supporters, but it was a bold and laudable decision. They got it right.

The report recommends the dismantling of the UN’s 0.7% of GNI target for official development aid. What is the justification for that? Is the quantum excessive? Far from it, I would argue. Developing countries, particularly those whose populations make up what has been called by Professor Collier—who I was delighted to see gave evidence to the committee—the bottom billion of the world’s citizens, have needs in developing agriculture, education, health services, infrastructure and environmentally responsible policies far in excess of their own fiscal capacity, even when that capacity is put together with the sums that would be raised by the UN target, if only the donors actually provided them, which most of them do not. If our own aid budget is currently growing rapidly to meet that target, it is largely because, for many years, we shamefully fell far short of it while continuing, year after year, to sign up to it in any number of UN resolutions. Should that target be dropped? What signal would that send to the world’s poorest people? I suggest a disastrous one. We should not forget that by setting the target in terms of a percentage of the donor’s gross national income, the system already takes account—the noble Lord, Lord McConnell, made this point—of recession or stagnation in those economies.

The report is also rather critical of efforts to focus aid on fragile states. No one would dispute that mounting aid programmes in such countries is fraught with technical, security and political problems, but a situation in which aid to fragile states simply dries up, as was the case some years ago in a number of those countries, drives those states into a downward spiral, leading eventually to state failure, which puts huge costs on the international community to remedy. I believe that the previous Labour Government, who began a shift in our aid policy to give fragile states more prominence, were quite correct, as has been this Government’s decision to continue that effort. Above all, the development work in fragile states requires the most intensive co-operation between DfID and the Foreign and Commonwealth Office. I very much support the call for that co-operation by my noble friend Lord Jay of Ewelme, and the progress in getting away from the unhealthy dichotomy between the two departments, which tended to be the order of the day under the previous Government. It must not be allowed to return.

Thirdly, I do not entirely agree with the criticism of the European Union aid budget, to which we make a substantial contribution, of not concentrating enough on poverty alleviation in the poorest countries. I note that the new Secretary of State for International Development took up that theme recently in one of her first public pronouncements. I rather regret that. The EU has a whole string of fragile states around its periphery, from the states of the former Soviet Union, through the Caucasus, to the Balkans and north Africa, which are not among the poorest countries in the world but which it is surely in our interest to see emerging as stable democracies and market economies and which need European help, including trade outlets and investment, to do so. We invariably support the EU’s neighbourhood policy when it comes before the EU Council and rightly so, so we should not be sniping at one of its inevitable consequences, which is a substantial aid budget for those fragile states on our periphery.

I have two more positive themes. First, nothing was heard in this report, or naturally enough in the Government’s response, about the desirability of our working closely with the principal emerging powers, such as China, India and Brazil, which are just beginning to become important players in the aid field. Often those countries have really valuable experience of programmes to lift their own populations out of poverty. Should we not be co-operating with them rather than regarding them as competitors? Perhaps the Minister could say something about that in her reply to the debate.

Secondly, there is the future of the United Nations’ millennium development goals after 2015. The Prime Minister is joint chair with the presidents of Indonesia and Liberia of the UN panel set up to prepare the post-2015 phase, which is a welcome tribute to the role that Britain is playing on development issues. Perhaps the Minister could say something about our approach to the MDGs post-2015. How can we get a better focus on the problems of that bottom billion? How can we refine the very broad-brush approach of the present MDGs? How can we ensure better monitoring of the recipients’ performance in using and in matching up to their own targets? She may also take on board that it might be really good if we had a full debate in the House, in government time, before too long on the post-2015 MDGs and the objectives that the Government are pursuing in respect of them.