National Debt

Lord Lawson of Blaby Excerpts

Wednesday 14th March 2018 Lords Chamber

[Lord Bates]

I believe there is. First, I join the noble Lord in wishing a speedy recovery to the noble Lord, Lord Bird, who has done so much for alleviating poverty and giving people hope, a chance and a future in this country. Of course it is welcome that the OBR forecasts are now showing that debt will begin to fall from next year as a percentage of GDP, but it is still at the very high level of 85%. The interest we have to spend on that debt represents the combined amount combined on police and defence services. It is critical that we improve our productivity, which is why we have the £31 billion National Productivity Investment Fund, which is designed to do that by investing in R&D, housing and technology. But perhaps the best thing we can do for the poorest in our country is what we have been doing. We have seen an increase in employment to near-record levels, with 3 million new jobs, and the pay of the lowest paid has been driven up so that they are now experiencing, as a result of the national living wage, the fastest growth in real income that they have had for 20 years.

[Lord Lawson of Blaby (Con)]

My Lords, can my noble friend explain why the Government insist on making the national debt appear even bigger than it in fact is? Is he not aware that as a result of quantitative easing—QE—a good quarter of the outstanding national debt is in fact owned by the Bank of England. In other words, it has been bought back. In the private sector, if a company buys back any of its debt, it is written off. Why do the Government not do the same?

[Lord Bates]

My noble friend, who comes to this with immense experience, makes an interesting point. Even if the element of total debt covered by the quantitative easing programme initiated by the Bank of England—about £120 billion—is taken out, the debt figure is still continuing to fall. That is the point we are trying to emphasise: debt is beginning to fall and we are beginning to live within our means, which is the right thing to do.

International Development Policies

Lord Lawson of Blaby Excerpts

Thursday 19th November 2015 Lords Chamber

[Lord Lawson of Blaby (Con)]

My Lords, I am sure that the whole House was delighted with the news last month that the Nobel prize for economics had been awarded to a British economist, Professor Angus Deaton. It was awarded for his work on global poverty, on which he is the world’s leading expert. I commend to all noble Lords who have participated in this debate his best-known book, The Great Escape, which I suspect many have not read. I commend it in particular to my noble friend who will be winding up in the debate, and I hope that she will draw it to the attention of her boss, the Secretary of State.

I should like to end this very brief intervention in the gap by quoting, in his own words, Professor Deaton’s conclusion in the book on official foreign aid:

“While some of this aid has clearly done good—and I think the case for assistance to fight disease such as HIV/AIDS or smallpox is strong—I have come to believe that most external aid is doing more harm than good. If it is undermining countries’ chance to grow—as I believe it is—there is no argument for continuing it on the grounds that ‘we must do something’. The something that we should do is to stop”.

International Development (Official Development Assistance Target) Bill

Lord Lawson of Blaby Excerpts

Friday 27th February 2015 Lords Chamber

[Lord Lawson of Blaby (Con)]

My Lords, I give my full support to the amendment that the noble Lord, Lord Butler, has just moved. He pointed to the names of noble Lords who have put their names to this amendment, all of them former Permanent Secretaries to the Treasury, Cabinet Secretaries or, in some cases, both. In all my 23 years as a Member of your Lordships’ House, I cannot remember this ever occurring before, and it may well be that it is unprecedented. There is a reason for that.

I pay tribute personally to the noble Lord, Lord Butler. I have known him for many years. When I first became Chancellor, he was Permanent Secretary in charge of public expenditure at the Treasury, a duty that he fulfilled impeccably and has done over the years. We are very lucky in our senior Civil Service. He has been an outstanding public servant in a number of ways over a large number of years, and we ignore what he says at our peril.

The amendment is fundamentally about good government. I do not know whether this is still the case, but in my day the Treasury used to be known as “the central department”. It was called that because it had a responsibility that went beyond the question of the management of the economy, in so far as one is capable of doing so; it also had a responsibility for good government. We in this House also have an overarching and overriding responsibility for good government. However well intentioned, the Bill, for the reasons outlined by the noble Lord, Lord Butler, is the antithesis of good government. It is gesture politics. Good government really matters, and the amendment from the noble Lord, Lord Butler, goes to the heart of that issue. I warmly support it.

[Lord Davies of Stamford (Lab)]

My Lords, the noble Lord, Lord Butler, in his normal way, spoke extremely powerfully. His arguments are extremely strong, his logic is irrefutable and his experience is something that no one would wish to challenge.

The trouble is that I think he has missed the essential point of the Bill, which is that it is a quite exceptional measure designed to send an exceptional message to the world. First, it says to the developing world, the poor countries containing the 4 billion or 5 billion people in this world who live on less than $1,000 a year per capita income, that we care about inequality and are making a fundamental qualitative change in order to demonstrate the authenticity, the reality, of that commitment and a desire to make a new move in that direction. The second reason is of course to send an equally unmistakable signal to other developed countries and to set an example that we hope they may follow.

The trouble with the amendment from the noble Lord, Lord Butler, for all the quite sincere compliments that I have just paid it, is that it undermines completely that sense of authenticity. If it is clear that at any time the Treasury can decide in a given year that our obligation to spend 0.7% of GDP on international development no longer applies, then the whole commitment that we are trying to make will simply be emptied of its content. The message will not have any strength at all for either the developing world or the rest of the developed world, and that is the basis on which, very sadly, I feel I have to oppose the amendment.

--- Later in debate ---

Moved by

[Lord Lawson of Blaby]

16A: Clause 2, page 2, line 15, at end insert—
“(d) circumstances where meeting the 0.7% target would lead to excessive spending towards the end of a calendar year;(e) circumstances where anything outlined in paragraphs (a) to (d) is likely to persist.”

[Lord Lawson of Blaby]

My Lords, when the noble Lord, Lord Butler, introduced his excellent amendment, he prefaced it by saying that he was strongly in favour of the 0.7% target. I will preface my brief remarks by saying that I am not in favour of the 0.7% target and that I am not alone. In an earlier debate, one noble Lord mentioned the role of Select Committees in all this. The only Select Committee of your Lordships’ House to have looked at this issue in great detail is the Economic Affairs Committee, which, under the chairmanship of my noble friend Lord MacGregor, produced a unanimous report. It was unanimous because the evidence was so strong that 0.7% should not be a plank, let alone the plank, of the Government’s policy in this area and that least of all should it be enshrined in legislation.

What I am in favour of is economic development, and particularly of helping the poorest countries of the world, and the poorest people in those countries, to have a better standard of living. We received evidence about the role that ODA played in that process, and I am glad to say that since this ridiculous target was first suggested in the 1950s and then agreed by the United Nations in 1970, the world has changed. One of the great changes is that there has been an improvement in the countries of the so-called emerging world, and it has not been due to overseas aid. As my noble friend Lord Howell mentioned, there are other things that are far more important, although when my noble friend the Minister replied, she seemed to be totally unaware of this. She said, “Of course there are other things; DfID and other government agencies are doing this and doing that”—but it is not government agencies, it is the expansion of trade and, above all, the massive expansion of private capital flows to these countries that have made the change.

[Lord Lamont of Lerwick]

Would my noble friend also agree that the whole phenomenon of remittances has played a major part in development, perhaps even more so than investment per se? The value of remittances is several times that of official aid.

[Lord Lawson of Blaby]

It is certainly true that remittances are important, but I was including them in private capital flows, because remittances are one example of them. There is also a great deal of business investment in these countries. That is what is making a difference. There are other things, too, such as better governance. The so-called failed states, which are riddled with corruption, are a real problem, as noble Lords on both sides of the House are well aware—as DfID is well aware and as the evidence that we had on the committee pointed out very clearly. However, the problem of corruption is not going to be solved by dishing out 0.7% of GNI on overseas aid.

Because this is so absurd, I welcome, in general, Clause 2, to which this amendment refers. The clause makes it quite clear that this is not really a serious commitment at all, because all that the Government have to do, if the 0.7% target is not reached in any year, is to lay a Statement before Parliament saying why it has not been reached. This is what my amendment relates to. The clause gives three reasons that the Government can give in telling Parliament why the 0.7% has not been attained, which are,

“economic circumstances … fiscal circumstances and … circumstances arising outside the United Kingdom”.

Noble Lords might think that is pretty comprehensive, but it is not completely comprehensive, which is why I have added one further condition—there are two further conditions, but one in particular belongs to this set—which has been alluded to, very rightly, in some earlier contributions today. It refers to,

“circumstances where meeting the 0.7% target would lead to excessive spending towards the end of a calendar year”.

That is separate from overall economic circumstances, fiscal circumstances or things happening overseas that have affected the picture.

We know that this is a problem. The NAO was extremely critical of it only last year. If you have to shovel stuff quickly out of the door, it will not have the same value-for-money scrutiny that DfID tries to ensure throughout the year on everything it does. I commend DfID for its attempts to get value for money so far as that is possible in this area. It is far better than any other national aid agency in doing that. It is certainly better than the multinational organisations—the United Nations or the European Union. We discovered that in the evidence we took. But of course the incentive will be to shovel it out to, say, the United Nations in order to hit the target. Therefore, this should be as good and real a reason as the other reasons that are listed in the Bill—economic, fiscal and overseas events—why the Minister should go to Parliament and say, “That is why we have not achieved the target, because to do so would have meant shovelling a large amount out at the end of the year without adequate scrutiny”.

The other condition that I am asking the House to accept is,

“circumstances where anything outlined in paragraphs (a) to (d) is likely to persist”:

that is, economic, fiscal, overseas, and (d), which is my suggestion that it would require too much money to be shoved out quickly to meet the end-year target. This really concerns Clause 2(4), where the Secretary of State also has to inform Parliament of what steps are going to be taken to ensure that the target will be met in the subsequent year. This is even more absurd—we are even more in Alice in Wonderland territory. How on earth can the Secretary of State for Industrial Development—and I have a high regard for the present incumbent, my right honourable friend Justine Greening— ensure that,

“circumstances arising outside the United Kingdom”,

are not going to continue to make the achievement of the target difficult? It is a complete absurdity. Therefore, to try to minimise the absurdity slightly I have suggested this amendment. I beg to move.

[Lord Forsyth of Drumlean]

My Lords, I support my noble friend’s amendment, which I think is an important one, particularly in the light of the material that has been produced by the National Audit Office and others showing that in the last eight weeks of 2013, while most people were thinking about Santa Claus, the department spent £1 billion of its budget, and 40% of its budget was spent in the last two months of the year. That indicates what we used to have blighting local government, where suddenly all the roads were being dug up and the parks were being spruced up in the last few weeks of March because the local authority had to spend the budget. We all know that that does not result in value for money. I am entirely persuaded that there may have been examples in the last two months of 2013 that did represent value for money, but that is not the point that is being made. My noble friend’s amendment is very important for that reason.

--- Later in debate ---

[Lord Purvis of Tweed]

My Lords, I thank my noble friends for their amendment and the case that they made, which I understood clearly and which was sincerely made. However, I cannot accept the amendment and shall explain briefly why. In doing so, I hope to give satisfactory answers to the points that they made.

As I understand it, the amendment would place a duty on the Secretary of State to report to Parliament if they had not met the target because the budget was low at the start of the year, they had no ability properly to deliver the expenditure towards the end of the year and this mismanagement would persist in future years. However, not only are there other parts of the Bill that provide for independent evaluation of the impact of the aid in the widest terms, but this Bill complements the 2006 Bill, which also requires statistical reporting that addresses many of those aspects, too. Together, they provide a proper reporting mechanism on the proper delivery of the budget that DfID will have. Therefore, it is a quite distinct issue from whether there are factors that mean that it is hard for DfID to deliver its budget from year to year. That is a slightly wider aspect to which the Minister responded to very properly.

The NAO report was cited again. It is worth stating that I agree with the report and have sympathy with its finding at paragraph 12, which states:

“The requirement to hit, but not significantly exceed, aid spending equal to 0.7% of gross national income every calendar year means the Department has to hit a fairly narrow target against a background of considerable uncertainty”.

That is of course the case. Indeed, the delivery of aid has often been one of the more difficult aspects in different circumstances around the world. That is why there are a number of tools available to government for the proper delivery of it, either through multilateral organisations or from the promissory note mechanism. They are a positive means of delivering proper budget management. In responding to the previous group of amendments, the Minister indicated, for example, that towards the end of a calendar year DfID provides a £1 billion contribution to EC ODA. That is drawn down in December after approval, funnily enough, by the Treasury. Deposits on promissory notes, the Global Fund to Fight AIDS, TB and Malaria and the World Bank contributions are concentrated at the year end. What this Bill affords is the ability for the UK now to enter into a different form of discussions with its multilateral partners, because we will be moving from a situation where we are seeking to reach the target to one where we have met it and are seeking to sustain that. Not only will we be striving to have better delivery of our own aid programme, but we will have a much stronger standing internationally to deliver this for our partners around the world.

Even in the circumstances where we were meeting the target, as we were discussing in Committee, the NAO report recognised the work of DfID in delivering this. I think that the Bill addresses what my noble friends are seeking to achieve, which is that all factors with the proper delivery of aid will be reported to Parliament and will be afforded proper parliamentary scrutiny. Together with the 2006 Act, this legislation will provide for that ability. On that basis, I hope that my noble friend will withdraw his amendment.

[Lord Lawson of Blaby]

My Lords, I listened very carefully to what the noble Lord, Lord Purvis, the promoter of this Bill in this House, has said, as well as to my noble friend the Minister, who is no longer in her place. I have to say that neither of them went anywhere near addressing the points that I made.

I am glad to see that my noble friend the Minister is now back to grace us with her presence and hear what I have to say. I was surprised that she mentioned Jim O’Neill in this context. Like the noble Lord, Lord Reid, I know Jim O’Neill well, and at no time has he said —nor would he dream of saying—that the 0.7% target is necessary for human development. The 0.7% target is a great irrelevance. Look around the world at the big countries, the G7 countries. The other six have no intention of meeting that target. The ones who are nearest to it, France and Germany, contribute 0.4%. At the other end of the scale, Italy and United States contribute 0.2%. They have no intention of doing any more. Some of those countries are actually reducing the amount they give, for reasons that we have gone through before, which I shall not repeat now.

--- Later in debate ---

[Lord Hollick (Lab)]

My Lords, we now come to the part of the Bill relating to scrutiny. It is particularly important because, as we discussed on the first amendment, there is no prior scrutiny by the Treasury of this expenditure. So I think that we all recognise that scrutiny after the event is of particular importance and this amendment seeks to answer the question of who is to provide the independent evaluation of official development assistance to ensure that it represents value for money.

The Bill gives the appointment of the independent evaluation official to the Secretary of State. We think this is wrong. We believe that the Bill should make it clear at this stage that independent evaluation should be provided by the Independent Commission for Aid Impact. This was established in 2011 as an independent body to scrutinise the impact and effectiveness of the UK aid budget on intended beneficiaries, to assess the delivery of value for money for the UK taxpayer and to provide important evidence-based feedback to Government decision-making and performance. Over the last three years the ICAI has accumulated a deep knowledge and understanding of the impact and effectiveness of aid programmes on a country-by-country basis. The House of Commons International Development Committee has praised the work of the ICAI. Its expertise, growing reputation and independence make it the ideal body to carry out the independent evaluation required by the Bill.

Clarity about who is responsible for oversight is critical both to the effectiveness and the authority of the evaluation process. Oversight by a number of different bodies in a piecemeal way—a sort of “flexible” approach—is a recipe for muddle, confusion and ineffective scrutiny. Institutions and corporations have learnt the hard way that clear lines of responsibility are essential to good governance. Flexible oversight is not good governance.

The noble Lord, Lord Purvis, and the Minister, the noble Baroness, Lady Northover, are correct to highlight the important role played by the NAO. Parliamentary oversight by the Public Accounts Committee and the International Development Committee will draw upon the work of the NAO, and in particular its assessment of the effectiveness of the ICAI itself, so we can be confident that there is effective oversight of the ICAI. The suggestion that the Secretary of State should decide which body should scrutinise the performance of his or her department and the effectiveness and value for money of its aid programme is surely completely out of place in a world where rigorous, arm’s-length and independent scrutiny is now the norm.

Michael Moore, when he introduced the Bill in the other place, said that we must all be conscious of the need to reassure the public that the large and increasing amount of overseas development expenditure is spent not only appropriately, but effectively and efficiently. The public today are deeply sceptical of the ability of institutions to do what they say they should be doing and to be effectively held to account. In order to pass Michael Moore’s test—an important test which I agree with—there must be complete clarity about who is responsible for oversight.

My noble friend Lord Collins made this very point with his characteristic succinctness when he said:

“As the aid budget rises, so must our ability to control it. That is why Labour strongly supports the Independent Commission for Aid Impact”.—[Official Report, 23/1/15; col. 1566.]

The Minister told us that when the Bill was introduced, there was considerable concern about duplication of responsibilities because the ICAI had also come into existence. She went on to say that it was “highly likely” that the ICAI would be the body appointed to be responsible for providing independent evaluation of the aid programme. We look forward to hearing her confirm that that will indeed be the case. I beg to move.

[Lord Lawson of Blaby]

My Lords, I shall speak mainly to my Amendment 24, which is grouped with the amendment that has just been proposed so ably by the noble Lord, Lord Hollick. However, I shall first say a few words about his amendment, for which a very strong case can be made. The Economic Affairs Committee of this House took evidence from representatives of the Independent Commission on Aid Impact, and I am glad to see that my noble friend Lord Tugendhat is in his place because he was a member of the committee at the time. The ICAI was a useful innovation which was introduced by Andrew Mitchell when he was Secretary of State. However, we did not find the evidence very impressive—but that was in late 2011 or early 2012, when the commission was very new. I hope that the commission has subsequently improved because a strong ICAI is badly needed.

--- Later in debate ---

[Baroness Northover]

My Lords, I thank the noble Lord, Lord Collins, for his support. I think that we all agree that independent evaluation of the value for money of our ODA is essential. That is why the Government have significantly strengthened external scrutiny and accountability mechanisms for UK aid, including establishing ICAI. I thank noble Lords for their tributes to it.

ICAI has a key role to play in evaluating the department’s work, and I emphasise that it is likely in practice to be the main body through which this part of the Bill is delivered—I agree here with my right honourable friend Desmond Swayne. However, we do not agree that tying the function of independent verification entirely to one particular organisation, and enshrining that organisation in statute, is the right step to take. We do not want to limit the current range of scrutiny options that are available.

ICAI is an independent scrutiny body that reports not to the DfID Secretary of State but to Parliament through the International Development Select Committee. The IDC has a specific sub-committee which is responsible for overseeing the work of ICAI, approving ICAI’s work plan and taking evidence in public hearings following the publication of each ICAI report. It holds an inquiry into ICAI’s annual report. Noble Lords have emphasised their respect for what ICAI is doing.

The Bill asks that the Secretary of State include in each DfID annual report a statement as to how he or she has complied with the duty to ensure that there is independent verification of development assistance. As I have said, it is likely that that would be done for ICAI. The annual report is subject to scrutiny by both the National Audit Office and the IDC. Clause 5 of the Bill thus ensures that the Secretary of State will be answerable, including to Parliament, through the IDC, on whether his or her choice was of an independent and suitable body. It also allows transparent reporting on the full range of independent evaluations, and allows for scrutiny of whether the spread of arrangements in place effectively examines value for money. We believe that Clause 5 strengthens the current framework in such a way that adds value, increases accountability for programmes and projects and ensures that the value for money of our work is independently evaluated, but it does not enshrine a new body in law.

The whole thrust of this Parliament’s policy has been to bear down on the creation—

[Lord Lawson of Blaby]

My Lords—

[Baroness Northover]

Perhaps I might complete what I am going to say.

The whole thrust of this Parliament’s policy has been to bear down on the creation of new statutory bodies, such as would be established by the IIDO amendment. This Parliament passed the Public Bodies Act 2011, and we seek to eliminate the creation in statute of what have been called quangos and other such bodies. Noble Lords will remember the blood on the carpet as we went through the then Public Bodies Bill. That is why we think that it is proper to avoid doing that in the Bill. A mechanism is there to ensure that independent scrutiny takes place. I reassure noble Lords that it is highly likely to be ICAI, given its track record, but there are scrutiny bodies which help to ensure that that is an effective route of scrutiny.

[Lord Lawson of Blaby]

I am grateful to my noble friend for giving way. The question of creating a new quango does not arise if the Government are prepared to accept the amendment proposed by the noble Lord, Lord Hollick, because ICAI already exists. There would be no new quango. There would be if the Michael Moore proposal incorporated in my amendment was agreed, that is true, but not if it is ICAI. My noble friend said that it will probably be ICAI. That is not good enough. We want a commitment that ICAI will be charged with that responsibility and that that will be written into the Bill. It is no good saying that there are other bodies such as Select Committees. Select Committees perform a completely different function—it is a very important one, but they are not under my noble friend’s department’s command. It is the Secretary of State’s responsibility to charge ICAI with this role. To say that it is very likely that it will be, but that it may not be, really is bad government.

[Baroness Northover]

My noble friend will have heard what the noble Lord said about respecting how ICAI is operating now. One would hope that that is the case in future.

I point out that ICAI is one part of a wider suite of scrutiny mechanisms. The National Audit Office has statutory responsibility for conducting value for money studies on DfID’s work, and it reports to the PAC, often critically, which also makes recommendations about DfID’s work. The Organisation for Economic Co-operation and Development’s Development Assistance Committee also examines the UK’s development assistance as part of a regular series of peer reviews of donor aid policies and programmes.

The structure in the Bill provides that the Secretary of State is held to account to ensure that there is proper independent scrutiny. As I said, it is highly likely that it will be ICAI, and I hope that noble Lords will take as our commitment to ensure that our aid is very thoroughly scrutinised the fact that ICAI was set up in the first place. It is not appropriate to specify it in the Bill, for the reasons that I have given. There are checks there to ensure that scrutiny. I make clear that we will oppose the amendment.

--- Later in debate ---

[Lord Purvis of Tweed]

I understand the point that my noble friend makes but the purpose of the Bill, as I indicated to the noble Lord, Lord Hollick, is to require the duty for independent evaluation to be carried out and then for the Government to state how that is carried out. It is the role of the Government then to provide that—

[Lord Lawson of Blaby]

If my noble friend will allow me—

[Lord Bourne of Aberystwyth (Con)]

Perhaps I could say that, after the Minister has spoken, only short questions of elucidation to the Minister are permitted on Report.

International Development (Official Development Assistance Target) Bill

Lord Lawson of Blaby Excerpts

Friday 6th February 2015 Lords Chamber

Moved by

[Lord Lawson of Blaby]

1*: Clause 1, page 1, line 2, leave out first “the” and insert “a”

[Lord Lawson of Blaby (Con)]

My Lords, I regret and apologise for the fact that I was unable to be here in the House for the Second Reading of this Liberal Democrat Private Member’s Bill. However, my regret is somewhat tempered by the fact that contributions were limited to five minutes. This is a very important subject; it is an extremely complex subject; and there is no way that justice can be done to it in five minutes. So I hope that we shall have a little bit more time today.

It is a thoroughly bad Bill. It represents the triumph of gesture politics over good government.

[The Countess of Mar (CB)]

My Lords, I hope that the noble Lord will not mind me interrupting, but this is Committee stage and, although the noble Lord did not come for the Second Reading, I hope that he is not going to make a Second Reading speech and that he will attend to the amendment in hand.

[Lord Lawson of Blaby]

I am speaking to the amendment. It is a very modest amendment: it just introduces the word “a”. The purpose of the amendment is to give the Secretary of State slightly greater flexibility which can be used in the light of changing circumstances as they evolve in the future. That is clearly desirable.

It is one of a number of amendments and I must explain to the noble Countess why it is necessary to look more broadly. A large number of amendments are down on the Marshalled List, which noble Lords will have recognised. None of them is a wrecking amendment. They are all designed to make the Bill somewhat less bad. I hope that that is a proper exercise for this Committee to be engaged in.

Noble Lords will have noticed that pretty much all the signatories to the amendments on the Marshalled List were members of the Economic Affairs Committee of this House under the excellent chairmanship of my noble friend Lord MacGregor when we produced our report in 2012 on the economic effectiveness of development aid. We produced a unanimous, all-party report based entirely on the evidence, which was overwhelming. I reassure the noble Countess that I am not going to make this speech on each of the amendments, but this is the first one and it is necessary to explain why we have put down all these different amendments to try to make the Bill slightly less bad.

The Economic Affairs Committee report had a number of findings. First, it found that the 0.7% target should not be a plank, let alone the main plank, of British aid policy. Secondly, it found that the,

“Government should therefore drop its commitment”,

to establish in law the requirement to spend 0.7% of GNI on aid. Thirdly, it found that,

“the evidence that aid makes a contribution to growth in recipient countries is inconclusive”.

But aid certainly makes a great contribution to corruption in recipient countries. This is a major problem which comes up time and again and was most recently identified in the report of the House of Commons Public Accounts Committee earlier this week.

Since this is a Liberal Democrat Bill, if the Committee will allow me, I will quote from a letter written to me by—

[Baroness Manzoor (LD)]

My Lords, this Bill has cross-party support.

[Lord Lawson of Blaby]

We will see about the support. I am sure my noble friend is right that there different views in different parts of the Committee, but it is significant—and I repeat this since perhaps she did not hear—that the Economic Affairs Committee of this House, which took extensive evidence on this, produced a unanimous all-party report with the conclusions that I summarised a moment ago.

[Lord Purvis of Tweed (LD)]

I apologise for intervening on my noble friend. After five minutes he is obviously gearing up to begin his arguments. His amendment states,

“leave out first “the” and insert “a”.

That would change the wording of the Bill to:

“It is a duty of the Secretary of State to ensure that the target for official development assistance”.

Does he actually mean to delete the second “the” in that sentence rather than the first “the”. Can he clarify that for the benefit of the Committee?

[Lord Lawson of Blaby]

My noble friend is absolutely right. It is the second “the” that I seek to change. I am most grateful to him and I will be grateful for any further interventions that he may wish to make.

I will for his benefit read out a letter from the former Liberal Democrat mayor of Guildford. He is interesting in this context because he was for many years a senior official in the ODA, which was the predecessor of DfID, and he has maintained a continued interest since his ODA days in the aid programme in its reality. He writes:

“I would be prepared to brief anyone who needs to be convinced that there is a now a massive misuse of our aid programme—most recently in Ghana, Mozambique, Nepal, Malawi, Uganda, Rwanda—not to mention Nigeria, Kenya or Pakistan—to which must be added the transfers to the IBRD and other organisations in excess of our obligations to them”.

The corruption issue—

[Lord Avebury (LD)]

The noble Lord said that he was not going to make a Second Reading speech, and that is exactly what he is doing.

[Lord Lawson of Blaby]

I am making a speech which puts the context, which is essential for all the amendments on the Marshalled List. I am sorry that noble Lords are terrified of the argument. They realise that this is an absurd Bill. They are not prepared to listen to any arguments against it. Noble Lords will want to read the report of the Economic Affairs Committee. We have ample evidence of all the corruption there is.

Let me make two things absolutely clear. First, we are not discussing humanitarian aid. My view is that it would be good for us to do more than we do at present in humanitarian aid, but 90% of the British aid programme is so-called development aid, and that is what we are debating today in this Bill. Secondly, I am not at all opposed to the great cause of alleviating poverty in the poorest countries of the world. Indeed, I have always been strongly supportive of that and was lucky enough to be in a position to do something about aid. Some noble Lords will remember the so-called Toronto terms of 1988, which were called the Toronto terms because they were finally agreed at the G7 summit in Toronto. Their aim was to give debt relief to the poorest of the poor countries.

[The Countess of Mar]

The noble Lord is not listening to the Committee. Will he please address whichever “the” or “a” it is in line 2, give us a reason to change it and then sit down?

[Lord Lawson of Blaby]

The reason for changing the Bill in this way to make it less bad is the contents of the Bill. The contents of the Bill are highly relevant. If I may quote—

[Lord Spicer (Con)]

I have a question which is directly relevant to the amendment. Yesterday, I was told that we cannot ring-fence the defence budget. What is the difference between that and ring-fencing the foreign aid budget?

[Lord Lawson of Blaby]

That is a question for the promoters of this Bill, not for me. However, it is certainly a good question. I am not in favour of any kind of ring-fencing, whether it is aid, defence or anything else.

In defence of my own record, let me refer to the definitive IMF study published in 1999 entitled, From Toronto Terms to the HIPC Initiative: A Brief History of Debt Relief for Low-Income Countries. There it states—

[Baroness Royall of Blaisdon (Lab)]

This has absolutely nothing to do with the Bill. The noble Lord may have a very fine record—I would question some of it—but it has nothing to do with the Bill before us today.

[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.

--- Later in debate ---

[Lord Purvis of Tweed]

I not only respect my noble friend but acknowledge the point that he makes. However, I will refer him to the Hansard of the Second Reading debate; I feel that I covered his point in detail there. I refer him not only to my speech but to that of his noble friend Lady Chalker of Wallasey. She said that,

“it is critical that people know from year to year how they are going to be able to finance projects. One of our great nightmares was that we never knew how much we were going to have”.—[Official Report, 23/1/15; col. 1523.]

Not only does the UK’s acceptance of the obligation mean that we have continual year planning; now that we have met the target, the question is its effective delivery, not concern about the level of support for the international aid budget in future. Because we have this international obligation and undertaking as a proportion of GNI, we have worked in recent years to ensure that our processes can be as robust as possible and that meeting the target can also be done in a sustainable way, with predictability for those who we need to provide support for, and with proper public and parliamentary scrutiny. Since my noble friend’s report in 2012, a considerable level of work has been done, not only on parliamentary scrutiny but on the functioning of the Independent Commission for Aid Impact, now with over 40 reports, some of them critical of the department but many of them constructive. That is how we would expect an independent commission to carry out this role.

I do not think that anyone who supports the Bill would query at any stage that it is a complex budget in a circumstance where many areas of its delivery are the worst scenarios that you could possibly imagine for delivering a budget—war zones, areas where Governments are not functioning and so on. However, the NAO report, the OECD peer review, the Commons committee and the Independent Commission for Aid Impact all now have a serious body of work, done since 2012, that I genuinely think addresses the main considerations of my noble friends’ reports.

The question of whether it should be “a” or “the” in the first element is for the mover of the amended amendment to address. However, the substantive points made by my noble friends Lord Howell and Lord MacGregor have been addressed since the report. That is why, while of course we would value his contributions later in the debate, if we take him at his word that these assurances and the work that has been done since his report have been taken into consideration, I respectfully ask him not to press his amendments, and I ask my noble friend Lord Lawson not to press his.

[Lord Lawson of Blaby]

My Lords, we have had an interesting debate so far. I would like to reply to some of the points that have been made, not least by my noble friend Lord Purvis, who has just sat down. First, though, I thank the noble Lord the Lord Chairman of Committees for his very helpful clarification of precisely what it is that we are debating in this amendment. The question of the amendment goes deeper, though, because what it is about—some of the later amendments are also about this—is introducing a degree of flexibility into the Bill. The reasons why that is necessary have been set out very well by the noble Lord, Lord Butler, and my noble friend Lord MacGregor.

It is quite impossible to debate this amendment without explaining why it is that, for a good Government, a degree of flexibility is necessary. The fact is that the 0.7% target is an anachronism. As my noble friend Lord Purvis mentioned, it was set in 1970, but the world has changed dramatically since then. What has changed it most is, in a word, globalisation: that is to say, the huge increase in both trade flows, which are the most important aspects for the developing world—I am strongly in favour of reducing barriers to imports from the developing world; that is what it needs and that is what we should do for it—and the huge increase in private capital flows, which my noble friend Lord Howell mentioned, and which are vital. Today, totally unlike the case in 1970, ODA is only 1/10th of the total amount of capital flows to the developing world. As the distinguished development economist Paul Collier said in evidence to us, aid is now “almost a sideshow”, although as my noble friend Lord Forsyth and others, and indeed our report, have pointed out, it has a much bigger effect on the extent of corruption in the developing world, for which the evidence is incontrovertible. One noble Lord has already mentioned the report by the House of Commons Public Accounts Committee on the so-called Private Infrastructure Development Group, which was produced this week in only the latest example.

There is a more fundamental problem about the 0.7% target, and it is development aid. I should respond to the very impassioned contribution from my noble friend Lord Fowler: this is not about humanitarian aid. As I said in my opening remarks, I believe that the case for increasing humanitarian aid is strong. This is about so-called development aid, aid for economic development, which is 90% of the DfID budget while humanitarian aid is a tiny part. Humanitarian aid needs the support of Governments; it is not exclusively for them, as charities and churches do good work in this area, but it is still a very strong responsibility of government, whereas capital flows, as my noble friend Lord Howell said, are now overwhelmingly private capital flows. The 0.7% target is therefore completely obsolete. That is no doubt why no other major country has the slightest intention of observing it. The G7, which consists of the major economies of the world—

[The Countess of Mar]

My Lords, I am afraid the noble Lord is slipping into Second Reading mode again. Would he kindly address the amendment?

[Lord Lawson of Blaby]

This is the necessary background to the amendment. I repeat what my noble friend Lord MacGregor said: it is not my intention to go over this in the course of subsequent amendments. If it is felt better to take more time in subsequent amendments—if that is the will of the House—I will do so, but that is not my intention. I think it is more coherent, a more efficient use of time and more helpful to the House if the argument is made on this, the first amendment that we are discussing today.

As I say, I know that the noble Countess obviously does not want to hear this, but I am afraid that it is a fact that in the G7 countries, the amount of aid that the other six give ranges from 0.4% in the case of France and Germany to 0.2% in the case of Italy and the United States. None of them has the slightest intention of increasing that, and certainly they have no intention of making it legally binding.

--- Later in debate ---

[Lord McConnell of Glenscorrodale]

Will the noble Lord accept that the noble Lord who is proposing the Bill showed some respect to the House in summing up the debate very briefly and not repeating arguments that had been made at an earlier stage—instead referring noble Lords to read those arguments from the report of the Second Reading and other debates. Will he please show the same respect?

[Lord Lawson of Blaby]

I was not repeating myself in the slightest. I was making a number of additional points which are highly relevant to the Bill, to this amendment and to subsequent amendments. However, I will draw to a conclusion to allow other noble Lords to take part, if they wish to, in the debate.

The question is, which is more important: good intentions or good outcomes? I know that those who are keen on the Bill as it stands have the best intentions—I do not deny that for a moment. I know that people who support it are certainly well intentioned. Alas, however, as Members of one of the two Houses of Parliament, we have to consider not what the intentions are—I think we are all well intentioned; most of us have good intentions, whatever side of the House we are on—but what are the likely outcomes. If the outcomes are damaging—which they are in the Bill as it stands—the fact that they are well intentioned is no help at all.

In conclusion, we are very privileged to have the noble and right reverend Lord, the former Archbishop of Canterbury, among us. He knows what the road to hell is paved with.

It is the custom in this House for there to be few Divisions on amendments—they can come at a later stage, when we come to Report. At this stage, I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

--- Later in debate ---

[Baroness Northover]

I am sure that my noble friend Lord Purvis will address this issue. It is a Private Member’s Bill and the Government support it as it stands, unamended.

[Lord Lawson of Blaby]

I hope very much that my noble friend Lord Purvis will give a full and complete answer to the important question which my noble friend Lord Forsyth has just put. As to what the Minister said, I find myself wholly unconvinced. She did not seem to understand the purpose of these amendments.

Before I comment on that, I must respond to the impassioned interventions of the noble Lord, Lord Cashman. He was concerned about how the reluctance to pass the Bill, almost sight unseen, will be considered outside the House. He made an emotional speech. It is true, as I said, that the Bill is a triumph of gesture politics over good government. How it is seen outside the House I do not know, but I am not aware of overwhelming popular support in the country for the Bill. Indeed, my impression is that it has minority support. However, leaving aside the question of whether you believe gesture politics is more important than good government, our responsibility as a House is with good government and we should not be diverted from that. Whatever misleading remarks the noble Lord, Lord Cashman, may care to make, it is our responsibility to promote good government, and that is the purpose of these amendments.

[Lord Forsyth of Drumlean]

On the point of creating impressions, my noble friend might be interested to know that the noble Lord, Lord Cashman, has just tweeted:

“Lord Forsyth clearly enjoys fillibustering and denying with weasel words the needs of the poorest”.

[Lord Lawson of Blaby]

That is disgraceful. No doubt the noble Lord, Lord Cashman, will want to withdraw his tweet. I am not sure how you “untweet” or “detweet”, but I am sure he will wish to do so. I am afraid I am not sufficiently technologically proficient to advise him on this matter, but I am sure he knows all about it.

Turning now to the remarks of the Minister, I wish to deal with three points in particular. First, she made a great defence of her department, DfID. I have to say that she has half a point here. If one looks at the various aid agencies around the world, DfID is probably one of the best. However, part of the problem is that a large proportion of British overseas aid is handled not by DfID but by multinational institutions, in particular the United Nations and the European Union—and all the evidence we have indicates that neither of those institutions has anything like the robust high standards to which DfID aspires. That is a major problem, and of course the more ODA is increased, the greater the problem becomes.

--- Later in debate ---

[Lord Lawson of Blaby]

My Lords, I am very sorry for the cause of the disturbance. I hope the noble Baroness who had the slight accident is making a full recovery.

I will close by saying that I cannot accept for a moment what my noble friend the Minister said about how, if we had a five-year flexibility, that would put us at odds with the rest of the world, which accepts a one-year thing. The rest of the world is not doing 0.7%, as I pointed out. It is doing very much less. It does not want to make it legally binding. I have to say of my noble friend’s final remark—that we have to do this to influence and persuade the rest of the world to follow our example—that this is a post-imperial spasm of the worst kind. There is no way that the United States, to take one country at random, will say, “My goodness me, look at this wonderful Bill that the British Parliament has enacted. Therefore, we will do the same”. It has not the slightest intention to do that. Our leadership must be based on a number of factors—rather, our influence; alas, it is not as much leadership as it once was. But one thing our influence must not be based on is other countries saying that because we have passed this Bill they will do the same. That is nonsense. It is as well that we live in a world of reality and not the pipe dreams which evidently are the world in which DfID lives.

[Lord Purvis of Tweed]

My Lords, I also reinforce the concern for the noble Baroness. We have had an hour on this group and even after that hour I am not any clearer as to what the movers of these amendments mean by “spread” or “average” over that five-year period. Indeed, after the very detailed explanation by the Minister, it is perfectly clear that these amendments would inhibit our ability to have better annual budgeting and programming, not only as part of the OECD DAC mechanisms but also with the relationship between DfID, the Treasury and those that, on our behalf, scrutinise their work in the NAO and publish data in the ONS.

Indeed, the long contribution on the NAO report—it seemed that this was a debate on that report rather than the amendment—fundamentally conflated two aspects of it. Paragraph 7 of the NAO report clearly indicated that the report is in two parts. One is the ODA target and the second is the large increase in its budget for us to meet our historic obligation to satisfy that. What stretched from that was a false conclusion that diluting the Bill would somehow enhance that ability.

Two points were specifically raised in the debate, so let me address them. One was: do we have an annual obligation and is that appropriate? As noble Lords who may not have been here for Second Reading but who have had the opportunity to read the debate will know, I was perfectly clear in citing the Pearson commission more than five decades ago, which analysed the benefit of both the concessional and direct flows of aid which was then replicated in an annual obligation.

[Lord Lawson of Blaby]

I have just one very small point. I simply do not understand why my noble friend cannot grasp that a five-year target must allow more flexibility than one for one year. Does he think that if we have a six-month target, that would not mean less flexibility, or would it mean more, by his argument?

[Lord Purvis of Tweed]

My noble friend again conflates two aspects. One is that we are not dealing with annual programmes or annual work. Much of our work with multilateral partners is long term. Long-term programmes require long-term funding. Secondly, we operate within parliamentary budgets, so we have to have annual reporting in the Budget to Parliament to scrutinise it. Having the two together is not easy. Michael Moore and I accept that that is not easy. I cannot do any better than refer back to the speeches of my noble friend Lord Fowler and the Minister.

The final technical point made by my noble friend Lord Forsyth concerned the legal duty on Ministers. I think that the Bill is perfectly clear. It was outlined in the Commons scrutiny of the Bill. It is perfectly clear what the duties on Ministers are. It is also clear in Clause 3, entitled “Accountability to Parliament”, what are the duties on Ministers of accountability to Parliament.

International Development (Official Development Assistance Target) Bill

Lord Lawson of Blaby Excerpts

Friday 6th February 2015 Lords Chamber

Moved by

[Lord Lawson of Blaby]

8: After Clause 1, insert the following new Clause—
“Exceptions
The provisions of this Act will cease to apply for the following year if—(a) spending on ODA as a percentage of gross national income in any year is above one-eleventh of spending on health,(b) spending on ODA as a percentage of gross national income in any year is above one-eighth of spending on education, (c) any shortfall in meeting the 0.7% target could only be met by increasing spending on ODA in any one year by more than 5% in real terms, or(d) the United Kingdom Government is running a budget deficit that is higher than 5% of gross domestic product.”

[Lord Lawson of Blaby (Con)]

My Lords, this amendment is also in the name of my noble friends Lord McGregor and Lord Tugendhat, as well as the noble Lord, Lord Lipsey, who, as we have heard, unfortunately is unable to be with us today.

A number of the earlier amendments were concerned, as I should think all helpful amendments are in practice, to create a degree of flexibility, which is necessary for good government and in particular for the control of public expenditure. I regret that even though it is customary for this House to rise at 3 pm on a Friday, it is now 4 pm and we are still going. The Bill does not seek emergency powers or anything like that; it should have been tabled for the very first Session of this Parliament, as I think was promised, but we have had to wait until now. That is highly undesirable and somewhat disreputable conduct along the line.

[Lord McConnell of Glenscorrodale (Lab)]

In response to that point, it is important for noble Lords and for the noble Lord himself to note that the Bill was carried on a Friday, shortly before a general election, with Members of all Houses turning up in large numbers. The Conservative Members of Parliament in the other House voted 58 votes to six; Labour Members 70 to zero; and Liberal Democrats 30 to zero. It is clearly the will of the elected Chamber in the other place, so it is entirely appropriate that this House helps to expedite and not block the Bill.

[Lord Lawson of Blaby]

It is our job to do our duty. That argument could have been used by the noble Lord and the noble Lord’s office opposite when the European Union referendum Bill came to this place. I did not hear any of them saying that we should accept it because it had gone through by a large majority in the other place. Therefore that disposes of the noble Lord’s objection.

I will say a little more about what this amendment is about. Earlier amendments have been designed to create an area of flexibility which is necessary for good government and for the proper control of public expenditure and conduct of public expenditure, and as I was about to say before I was interrupted, the noble Lord, Lord Butler, who has great expertise in these matters, was very strong on the need for flexibility. This has nothing to do with aid in particular but is necessary for public expenditure overall.

This amendment points to particular forms of flexibility. For example, paragraphs (a) and (b) of this proposed new clause relate spending on ODA to the amount of spending on health and education respectively. People in this country feel very keenly about spending on health, and the party opposite speaks almost of nothing else at present. The people of this country feel very keenly about spending on education. There needs to be some comparison of priorities—some connection between the spending on ODA and on other departments. Here we single out health and education, but of course the question of spending on defence was already raised earlier in our debate. There is a 2% NATO target, which of course is not legally binding but is an aspiration; this goes much further. At a time when there is great danger to this country and the world has become a much more dangerous place, that also should be compared with it. However, I will confine myself to spending on health and on education.

There are two other paragraphs in the proposed new clause. The third paragraph says that if the,

“target could only be met by increasing spending on ODA in any one year by more than 5% in real terms … the target should be set aside”.

It is a massive amount, and it is almost certain that we would not get value for money if there were a huge increase in spending in any one year. That would get the Secretary of State and the Government of the day off the hook.

The fourth paragraph to give the Government the flexibility to get off the hook is if there is a budget deficit of above,

“5% of gross domestic product”.

We all know that the budget deficit is too high. All parties are agreed that it has to come down. If, for whatever reason, it is not coming down satisfactorily, that is a serious business, and it should be a reason why in that particular year the Government are not on the hook of the 0.7% aid target.

On the status of the target, questions were put which were not really answered by the Minister, nor by my noble friend behind me who proposed the Bill in this place to questions asked by my noble friend Lord Forsyth about the precise nature of the legally binding commitment. Legally binding sounds, to me, like legally binding. It sounds similar to the Climate Change Act, where there are legally binding targets for the reduction of carbon dioxide emissions. Apparently, it is legally binding—and, no doubt, my noble friends Lady Northover and Lord Purvis will answer specifically on this point. When my noble friend Lord Forsyth raised it, it was not adequately answered, but scrutiny of the Bill seems to make it the case that it is not really legally binding at all. All the Government are bound to do is to lay a report to Parliament saying why the target has been missed.

I hope that this proposed new clause will be accepted, as it is very reasonable and designed to be helpful. I hope, in addition to that, the question of the nature of whether the legislation is legally binding can be clarified. I beg to move.

[Lord Forsyth of Drumlean]

I support my noble friend in respect of this amendment. Our GDP is forecast to increase by more than 3%, which will mean that more than £400 million extra will have to be spent on overseas aid next year to meet the target. That is at the same time as the Chancellor saying that we are in an age of austerity. Given what the Chancellor said in his Autumn Statement and given the OBR’s projections, government spending as a proportion of GDP—or gross national income, if you prefer that terminology—will have to come down. So, as the OBR has highlighted, even health spending will come down as a proportion of GDP. If the Bill goes through unamended, the percentage of government spending that goes on overseas aid will have to keep rising rather than remain constant. Is that the intention—that the spending on overseas development aid not only should be ring-fenced and given special status but should always rise as a proportion of overall government spending? I believe that my noble friend’s amendment addresses that particular anomaly, and I look forward to hearing from the sponsor of this Bill, the noble Lord, Lord Purvis, as to whether that is indeed his intention.

I do not want to detain the House. I just say to the Front Benches that I think that it is absolutely outrageous that the business was changed and that we are dealing with these very important matters at 4 pm on a Friday afternoon, particularly since this is apparently a Private Member’s Bill. I look forward to citing these precedents in future regarding other Private Members’ Bills. If the Government think that this will in some way prevent the House from having an opportunity for all Members to be here to debate these matters, they have another thing coming. There is another stage, Report, when I hope we will be able to discuss these matters more fully. On that basis, I leave it at that in respect of this amendment.

[Lord Purvis of Tweed]

My Lords, the whole concept of seeking to add legislative exceptions to the UK meeting its international obligations, in comparison with other levels of expenditure choices that any Government of the day may make, is not consistent either with our undertaking to meet the 0.7% target or with the Bill. That alone would be sufficient reason for me not to accept the amendment, but there are two others.

The first is that the amendment does not make clear what “health spending” means. Is it health spending in England? Is it United Kingdom health spending? Is it health and social protection? Is it health and social care? Is it current health expenditure or health capital expenditure? The second proposed new paragraph of the amendment refers to education: is it education across all nations of the United Kingdom? I need not go on, other than to highlight the deficiency of the amendment.

The second reason is that the amendment is slightly confusing. I suspect that if I had accepted previous amendments for only one report over a five-year period, this amendment could not have been moved because it calls for annual reporting, which the mover of the amendment said was not an appropriate way to go forward because there should be a single five-year report.

[Lord Lawson of Blaby]

Will my noble friend allow me?

[Lord Purvis of Tweed]

My noble friend will have an opportunity to sum up this short debate. I am sure that, in his argument, he will do the best he can to defend what is an indefensible amendment.

Our legislation needs to be robust. Therefore, I think that the amendment is deficient in comparison with the 2006 Act and its reporting mechanisms—to which no one putting forward amendments has yet referred—and with the OECD DAC’s clear areas of reporting.

Finally, I addressed the points that my noble friend Lord Forsyth made before the break in proceedings today. Just because noble friends do not agree with my propositions, it does not necessarily mean that I have not answered the questions. Nevertheless, with what I hope is clarification regarding the deficiencies of the amendment and why I cannot accept it, in that spirit, I hope the mover will withdraw it.

--- Later in debate ---

[Lord Purvis of Tweed]

I referred to the very useful Library paper which shows that the UK’s contribution to development aid since the 1980s has gone up in absolute terms and, of course, as a proportion of overall expenditure. That is clear and it is something of which I, as a Liberal Democrat, am proud. It means that we have met our international obligations that were set many years ago, and we can now see a more reliable and predictable trend for that expenditure going forward. I take delight in answering my noble friend’s question because it is something that I am proud of.

[Lord Lawson of Blaby]

My Lords, that most recent exchange between my noble friends Lord Forsyth and Lord Purvis has been quite illuminating. I want to mention two points that came up in the discussion but, before I do so, I want to go back to the earlier remarks of my noble friend Lord Purvis. He was completely muddled and I would like to straighten him out. He said that this amendment was inconsistent with the amendment that sought to look at aid expenditure over a five-year period in connection with the target. Even if you look at it over five years, in this country, as in most countries, there is an annual Budget, an annual Autumn Statement, figures for public expenditure and figures for taxation, and they are all, and will continue to be, produced annually, even if the amendment relating to the five-year period, which was withdrawn, had been passed. So that does not change anything at all and there is no conflict whatever.

I now turn to the two matters that my noble friend Lord Forsyth and I raised, and my first point may be what lies, to some extent, behind the question put by my noble friend Lord Forsyth. At the moment, expenditure on aid is running at more than £11 billion a year. That is not far short of what we spend on the police. The police are not a protected programme and therefore, inevitably, given the overall policy to curb public expenditure, spending on the police will go down and spending on aid will go up. It will not be long before we are spending more on aid than on the police. No doubt my noble friend Lord Purvis will be, to use his own words, very proud of that, but that cannot go on for ever. You cannot have this ratchet effect year in, year out. We have the danger of terrorism in our midst and the police have all their other duties of catching and prosecuting criminals. We cannot have public expenditure on aid going up and up indefinitely, irrespective of the needs of other heads of expenditure. The technicalities of what education spending and health spending mean do not wash; they are just nitpicking. There is a fundamental point here that needs to be addressed.

However, on the other point that was raised, I am less dissatisfied because the noble Lord, Lord Purvis, has admitted that if a future Government—we know where the present Government stand—take seriously the problems of spending on the police, the health service and education, and take the view that they cannot properly continue to increase aid spending, the term “legally binding” does not amount to a row of beans because all they have to do is present a statement to Parliament explaining why they are not increasing aid spending and are falling short of the 0.7% target. That is a great relief, and it will be a great relief to the people of this country. The commitment is a bit of a paper tiger. With that, I beg leave to withdraw the amendment.

Amendment 8 withdrawn.

--- Later in debate ---

[Lord Lawson of Blaby]

My Lords, I support my noble friend Lord MacGregor. There should be no difficulty whatever in the Government, and indeed the promoter of the Bill, accepting this amendment. The issue relates to Clause 5, which is headed:

“Independent evaluation of official development assistance”.

When the Bill was first introduced in the other place, the Government and Mr Michael Moore, the promoter in the other place, were absolutely clear that how this independent evaluation was to be done and by whom needed to be specified. As I am sure noble Lords are well aware, there was a three-page schedule headed:

“The Independent International Development Office”.

The schedule would have set up that office specifically for this purpose, considering that it is so important. However, mysteriously, or at least semi-mysteriously, when the Bill emerged from its Committee stage the promoters of the Bill and the Minister of State from DfID moved an amendment to delete this schedule, which had been an integral part of the Bill.

Now all the Bill says is:

“The Secretary of State must make arrangements for the independent evaluation of the extent to which ODA provided by the United Kingdom represents value for money in relation to the purposes for which it is provided”,

but it does not say how that should be done. As I say, they had decided that it should be done by this new body, which was incorporated in the form of a three-page schedule to the Bill.

When explaining why that schedule was to be removed, the Minister of State gave two reasons. The first was that there was no need to create a new body. The other was that the schedule would provide many opportunities for amendments that might have delayed the passage of the Bill. That second reason is probably the real reason, and it is completely discreditable. There is a point to the first reason: there is no need to create a new body because there is an existing one that can do the job, and that is the Independent Commission for Aid Impact. That is why our amendment says that the independent commission should do the job. At the moment, however, the whole thing has been left in limbo. No one is doing it, which leaves it up to DfID to do it itself, and in effect it is saying that it is independent when it is only a charade of independence. There is a need for some proper body to do this, which had originally been accepted in a schedule to the Bill setting up this new body, but that has now gone.

So I hope that the Independent Commission for Aid Impact doing the job will satisfy the complaint of the Minister in the other place that we do not need to set up a new body, and that this amendment can be accepted.

As my noble friend Lord MacGregor said, this is something about which the noble Lord, Lord Hollick, felt particularly strongly and he is very regretful that he cannot be here today at this late hour, but of course if it is not accepted now by the Government it can come back on Report—as many other amendments, I suspect, might come back on Report—when I hope that the noble Lord, Lord Hollick, will be able to move it with his customary eloquence and expertise. I support very strongly this amendment and I cannot think of a single good reason why it cannot be accepted.

--- Later in debate ---

[Baroness Northover]

To start, I agree with noble Lords that the principle of independent evaluation is extremely important. It is important that ODA provided by the United Kingdom represents value for money. That is key to this legislation. Of course, the Independent Commission for Aid Impact is independent: it decides what it wishes to do. We heard some important criticisms from my noble friend Lord MacGregor of some of DfID’s work, which should reassure noble Lords that DfID will not go unscrutinised. However, the effect of the amendment could be to limit the current range of scrutiny options available, including the National Audit Office—which the noble Lord quoted extensively.

The Bill already asks the Secretary of State to include in each annual report a statement as to how he or she has complied with the duty under this clause. The annual report is already subject to scrutiny by both the National Audit Office and the International Development Committee in the House of Commons. The Independent Commission for Aid Impact also scrutinises what DfID does. Noble Lords are right that the duty to ensure independent evaluation is an important part of this legislation. However, we do not feel that tying that function to one particular agency is the answer.

As noble Lords will know, the IDC holds public hearings to take evidence—for example, on every ICAI report. In addition, it holds inquiries every year into ICAI’s annual reports, which again are held in public. The IDC’s recommendations are then published. Of course, the NAO has statutory responsibility for doing value for money studies on DfID’s work. The NAO reports to the PAC, which also makes recommendations about DfID’s work, in addition to ICAI.

[Lord Lawson of Blaby]

I was puzzled when my noble friend said she does not believe that there should be a particular organisation responsible for this. The Bill as originally published specifically set out an independent organisation to do this job. That is very important. When the amendment to remove that was discussed in the other place, at no time did my noble friend’s counterpart there say that the reason it was being removed was because they did not want just one body doing it. They said they did not want to set up an additional body. What we suggest is not an additional body but an existing one. Clearly the job needs to be done and it needs to be specified in the Bill how it is done.

[Lord Forsyth of Drumlean]

Could the noble Baroness help me in respect of this amendment? Clause 5 says:

“The Secretary of State must make arrangements for the independent evaluation of the extent to which ODA provided by the United Kingdom represents value for money in relation to the purposes for which it is provided”.

My noble friend thinks—and I agree—that that is somewhat inadequate. Then, subsection (2) says:

“The Secretary of State must include in each annual report a statement as to how he or she has complied with the duty under subsection (1)”.

I presume that means subsection (1) of this clause, which says that she must make arrangements for the independent evaluation. Is the idea that the arrangements for the independent evaluation are subject to some kind of annual review? Surely the arrangements for independent evaluation should mean the creation of some kind of authoritative body to carry it out. The fact that Clause 5(2) says that you must have an annual report on this suggests that we will never get there.

--- Later in debate ---

[Lord Purvis of Tweed]

My Lords, I wonder if I may draw this to a conclusion from my point of view before my noble friend sums up his amendments, without going down the sidetrack that some have gone down. As the Minister has indicated, Section 1(1) of the International Development (Reporting and Transparency) Act 2006 states:

“It shall be the duty of the Secretary of State to lay before each House of Parliament each year a report about international aid pursuant to the provisions of this Act”.

It is only Section 3 of that Act that is subsequently repealed by the measure before the House, and indeed that annual report will include a statement about how the arrangements for the independent evaluation of the extent to which ODA provided by the UK represents value for money. That is perfectly clear.

I am satisfied that the arrangements that need to be carried out to provide for independent evaluation should be carried out with the duties provided for under this legislation. It provides flexibility so that it is not constrained with regard to the body that carries that out. It is perfectly clear why that is the position of my right honourable friend Michael Moore, and I hope that that satisfies my noble friend.

[Lord Lawson of Blaby]

Before my noble friend sits down—

[Lord Purvis of Tweed]

Not this noble friend; I meant my noble friend Lord MacGregor.

[Lord Lawson of Blaby]

Yes. I think that we have had sufficient discussion for the day about Clause 5(2), but we have still not had a satisfactory answer about the rather important Clause 5(1), which says:

“The Secretary of State must make arrangements for the independent evaluation of the extent to which ODA provided by the United Kingdom represents value for money in relation to the purposes for which it is provided”.

What the arrangements are should be and must be in the Bill. They were originally, because there was a schedule setting up a new body to do it. The schedule was taken out, and there is now a vacuum. We are not told in the Bill what these arrangements are, which body will ensure and evaluate the extent to which the ODA provided gives value for money, and so on.

My noble friend suggested in this amendment, “Why not use the ICAI and put it on a statutory basis?”, and that can be done. That seems very sensible, and I am rather suspicious about the rejection of this amendment, because it suggests that they are trying to weasel out of any effective independent evaluation. If they are not, what are the arrangements for the evaluation? Why not the ICAI, or why not restore the other body that was there originally? That must be in the Bill. I suspect, having heard the noble Lord’s obduracy on this point, that we will have to come to this again on Report. However, it is a very real point. No satisfactory answer of any kind has been given, either by the Minister or by the noble Lord, Lord Purvis.

[Lord MacGregor of Pulham Market]

My Lords, I share my noble friend’s concerns about this. We have been given very inadequate answers on this today, particularly from the Minister, and we will simply have to return to this on Report. It is a very important issue, because the size of the budget now, as my noble friend Lord Forsyth pointed out—about one-third of the defence budget—is huge. The taxpayer needs to be satisfied that the tasks have been properly and effectively carried out. It is one thing to set up an independent evaluation, which in the Secretary of State’s mind is an independent evaluation, and another thing to have one that is effective and that can convince us all that the department will undertake to get proper value for money.

That PAC report, which is probably one of the worst I have ever seen, does not give me a great deal of confidence that the Secretary of State is given total entitlement to set up the organisation that will reassure him about value for money. There are therefore some important distinctions here, and we have not yet had a satisfactory answer. As I said, it is a very important issue, and we shall have to return to it on Report. However, on that basis, I beg leave to withdraw the amendment.

--- Later in debate ---

[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.

[Lord Lawson of Blaby]

My Lords, my noble friend mentioned climate change—

[Noble Lords]

Oh!

[Lord Lawson of Blaby]

It is particularly relevant to what we are debating today, and I very much hope that the Minister will address it. I am opposed to the climate change policy of this Government because its purpose is to procure worldwide decarbonisation. That means getting the poor people in the developing world, whom we have been discussing, to move away from the cheapest form of energy and, instead, to embrace, at present and for the foreseeable future, much more expensive energy. In other words, it is a policy to impoverish poor people in the developing world. That is why I am opposed to it. It seems a bizarre and odd way in which to run a whelk stall having a Bill that is intended to relieve the poverty that we intend to create. I should be grateful if my noble friend can explain that.

[Baroness Northover]

I say to my noble friend Lord Tugendhat that I never expected anything other than full scrutiny of the Bill in this House. He can be assured that I made that extremely clear within my department, as I have done on other Bills in other departments in other instances.

The key issue here is that the Bill is about ensuring that the UK continues to meet its commitment on aid, which it has finally met. I am incredibly heartened by the cross-party agreement on this. As we heard at Second Reading, we know how much this is needed. However, underlying this debate is a sense that this is not the case and that there may not, therefore, be value for money. I emphasise that the Government have a clear commitment to ensuring value for money. I know that the Economic Affairs Committee in 2012 was concerned about the planned scale-up to meet the target because there was a significant increase in the budget. Clearly, the committee was right to raise that issue. However, we have now completed the scale-up to 0.7% and a number of external bodies have looked at this, including the December 2014 DAC external peer review, which said of our scale-up that our,

“Well planned … implementation was carefully monitored … and at the same time, strong efforts were made to avoid compromising the quality of the ODA programme, and progress towards results was regularly reviewed”.

In addition, we have strengthened the evidence base and procedures for project investment decisions. All proposals must have a business case, with proposals for projects of £40 million and above being subject to review through the department’s quality assurance unit. We have invested in strengthening programme management processes, capability and systems to transform the way in which we deliver programmes so that we are better able to tackle the underlying causes of poverty and conflict. We have introduced tighter spending controls. The threshold for ministerial approval of project business cases was reduced from £40 million to £5 million, with Ministers also approving supplier contracts worth more than £1 million. We have increased the use of payment by results. Under this approach, the department makes payments only after pre-agreed results are achieved, rather than up front. We have launched a development tracker online tool to provide more public information on UK development investment in projects. The department has also been commended for its openness. We have also talked in other amendments about the external scrutiny that occurs. I therefore hope that noble Lords are reassured about the level of scrutiny and what we have put in place within DfID.

There may be, at heart, disagreement here. Does the world still need this assistance or not? In terms of value for money, the assumption that because the budget has increased it would therefore be poor value for money needs to be challenged. As to the comments of my noble friend Lord Lawson, I am happy to engage on climate change, but perhaps not now.

--- Later in debate ---

[Lord Purvis of Tweed]

My Lords, on a number of occasions today I have referred noble Lords to the Second Reading debate. In that debate I said that if this Bill passes, it will be because it is based on an entrenched and wide consensus across the three main political parties, external groups and the public, and it will become an enduring law. If a future Parliament chooses to repeal this legislation it will also be repealing that high degree of consensus. It would also have to be accountable to the electorate, and to some extent, constitutionally, that would be proper.

Therefore I end, with regret, by having to disappoint my noble friend Lord Forsyth. At the end of a long day, I record my appreciation for noble Lords whose support for the legislation Hansard will not be able to reflect—including the noble Lord, Lord Collins of Highbury, on the Opposition Benches, and my noble friend Lady Hodgson and other noble Lords on the Conservative Benches. Hansard does not always reflect the level of support or accurately reflect the opinions of Members in Committee. I hope I have corrected that. In that spirit, I hope that, after sunset, my noble friend will withdraw his amendment.

[Lord Lawson of Blaby]

My Lords, the hour is late so I shall be brief. My noble friend Lord Purvis made a point about this being agreed by all three political parties. That is true. That makes me worry. In my long experience, in most cases—not all, but most—when all three parties agree on something, they are wrong. There is a very good reason why that should be so. It means that the issue has not been properly examined. If there is not a proper political argument back and forth, there is not adequate examination. So I am afraid that the statement he made does not reassure me in the slightest.

As for the amendment before us, although my noble friend Lord Howell said that he disagreed with my noble friend Lord Forsyth, I think there was no conflict; I certainly agree with both of them. As far as my noble friend Lord Forsyth is concerned, I believe that we need to look at this new, greatly expanded aid programme and how it is working out. One of the problems, which has been alluded to briefly, is that the focus of aid is changing and more and more is going to fragile states and to what are often described as failed states. In those states the amount of corruption is absolutely appalling and there is nothing that DfID can do to eliminate that corruption, although it would like to. So one of the things that we will need to examine if there is a sunset clause and we want to renew this is whether we have, not deliberately, produced a machine that has significantly increased the amount of corruption, which is one of the great evils in these countries and, indeed, is one of the great reasons why they cannot lift their people out of poverty in the way that, happily, so many countries in the emerging world have done over the past few years. But there are others that have not, and that is where we are focusing our aid.

One of the most important things is the separation of economic and political power. This is fundamental to development. If people want to enrich themselves they go into the economic sphere; or they go, for different motives, into public service and the political sphere. If you do not have this separation and people go into politics in order to enrich themselves, which happens in a large number of countries, that is where it is so damaging and where aid will not help. That is why it needs to be reviewed at the end of five years.

Another valid point made by my noble friend Lord Forsyth is that the Minister said explicitly that one of the main purposes of the Bill was to set an example to the rest of the world. Fine. Actually, I do not think that is fine; it is not a proper reason for legislation. But leaving that aside, if that is the reason, after five years we can see whether the United States, Germany, France and Italy have followed suit. I am willing to have a modest wager with the Minister that in five years’ time—if I am still alive in five years’ time, which is unlikely—they will not have followed suit. Our efforts to get other countries to follow our example will prove to have failed, and that is another reason why Parliament should have positively to re-enact this legislation, if it wants to do so.

The final and important point made by my noble friend Lord Howell is that the world has changed—a point that I also made in an earlier amendment—and that there are better ways of trying to creating a better world than dishing out development aid. If that is so and we find that other countries are doing a better job by other means—we do not have time to discuss them now, but my noble friend has sketched them—that is another reason why Parliament should be required to take stock at the end of five years rather than ploughing on with this.

This is not chickenfeed: we are already spending well over £11 billion a year on aid. As a result of this Bill, this amount is scheduled to go on rising inexorably, year in, year out, if the economy is growing. We all hope that the economy will grow—even my noble friend the Minister wishes to see the economy grow—and, if it does, this will get bigger and bigger, year in, year out. However, if this is not the best way to achieve a better world in which there is less poverty and more economic development, we certainly do not want to continue with it.

If this Bill becomes an Act, its first five years will be a test bed. We want a provision that Parliament is obliged to address this issue anew at the end of five years. I strongly support my noble friend’s amendment.

[Lord Forsyth of Drumlean]

My Lords, of course, if Labour wins the next general election there will be a massive cut in the overseas aid budget because our GDP will fall. I do not know if that is the intention behind the Bill, but it is a curious way of deciding priorities.

I am not going to rehearse the arguments and I am most grateful to my noble friends for their support. I thought, just for a nanosecond, that the noble Lord, Lord Purvis, was going to accept the amendment when he said that by the end of the next Parliament there will be such a consensus across the political parties that no one would dare to repeal this Bill. I thought he would say, “I have the confidence to accept the amendment because the position will be that crowds will be cheering in the streets at the prospect of this legislation being renewed”, based on the fantastic experience that the noble Lord predicts. I have to say to the noble Baroness, Lady Falkner, as she says, “Hear, hear”, that she does not seem to have the courage of her convictions. But I am not going to be tempted into making party-political points. If noble Lords who support the Bill believe that it is going to be so successful, then the very point made by the noble Lord, Lord Purvis, in his remarks would make them open to accepting this amendment.

I sense that people have probably had enough of the Bill for today, and we look forward to returning to it on Report, hopefully after we have had a long rest and everyone has had an opportunity to read all the reports which have been referred to. They provide overwhelming evidence that the Bill should go forward, but that it is in need of amendment. I beg leave to withdraw the amendment.

Queen’s Speech

Lord Lawson of Blaby Excerpts

Wednesday 15th May 2013 Lords Chamber

[Lord Lawson of Blaby]

My Lords, there seems to be a growing interest in the question of whether this country should remain within the European Union, so if noble Lords will forgive me I will confine my remarks to that important issue. In that context I start by welcoming very warmly the Prime Minister’s pledge in the important Bloomberg speech he gave a little while back to provide the people of this country with an “in or out” referendum in 2017. I am also glad that a draft Bill was published today to give effect to this pledge. I gather, incidentally, that it is likely that an amendment may be moved in another place today, regretting the absence of any mention of this in the gracious Speech.

I would not presume—and neither, I am sure, would any noble Lord—to give advice to my right honourable and honourable friends in that place. However, if I may venture a personal opinion, what is needed is a thorough debate about the momentous political and economic issues involved. This will not be assisted by unnecessary and pointless votes. The Prime Minister’s position, as I understand it, is that the EU as presently constituted is not acceptable to the United Kingdom, and perhaps not acceptable on a wider basis. Therefore he will seek to renegotiate the terms of our membership to make it acceptable before holding his promised referendum if he is in a position to do so.

One does not serve as a Minister of the Crown for more than a decade, as I did, without getting to know the realities of the European Union pretty well. In light of that knowledge I do not believe that it will be possible for the Prime Minister to secure the fundamental changes that he seeks. It will certainly not be possible if it is thought that at the end of the day he will, following in the footsteps of his predecessor, Harold Wilson, recommend an “in” vote however inconsequential his renegotiation proves to be.

We are severely limited for time in this debate so I cannot touch on all the important issues involved, many of which I sought to address in an article in the Times last week, which some noble Lords may have had time to read. I will therefore focus on what inevitably is the central concern in all this, which is the fundamental change in the European Union following the coming into being of monetary union and the eurozone, with the United Kingdom rightly outside it. It is no use living in the past and deluding ourselves; that was a watershed and a Rubicon. Judged as an economic venture, monetary union is clearly and predictably a disaster, condemning the eurozone to long-term economic underperformance, which of course none of us wishes to see, as it lurches from crisis to crisis—not to mention the political discord that we see today in Europe as a result.

Of course, it is not an economic venture but a political venture, seen as leading inexorably to the creation of a full-blooded political union and a new superstate, the United States of Europe. This is the only context in which European monetary union can make any sense whatever, and it is not for us. Nor is there any future for a United Kingdom outside the political union, increasingly marginalised but still shackled to it. That, au fond, to use the language of the country in which I live, is why, unless monetary union is abandoned, we must leave the European Union.

Finally, I am puzzled, not upset, that this view is frequently characterised by the media as being rightwing. Of course, it used to be the view of the party opposite, and I have never considered the Labour Party to be a particularly rightwing outfit. My mind at this time goes back to a small private dinner party in Chelsea some 50 years ago, where the guest of honour was the then leader of the Labour Party and leader of the Opposition, Hugh Gaitskell. It was only a very few weeks before his sadly premature death. The discussion turned, not surprisingly, to the then topical question of whether we should join what was then known as the Common Market. I was in favour, but Hugh Gaitskell was passionately against it. His argument was that we should not be part of a European political union, a United States of Europe. At that time, when we had our argument 50 years ago, I insisted that that was not the issue before us and that the European Economic Community, to give it its correct name at that time, was something quite different. That may have been true then, but the issue today, after the watershed and after the Rubicon has been crossed, is clearly that identified by Hugh Gaitskell 50 years ago, and I find myself standing now pretty close to where he stood then.

EAC Report: Development Aid

Lord Lawson of Blaby Excerpts

Monday 22nd October 2012 Lords Chamber

[Lord Lawson of Blaby]

My Lords, I hope that the right reverend Prelate will forgive me if I do not address the points he made in his contribution to the debate. We are strongly constrained for time, which unfortunately prevents us having a debate in the real sense of the word.

As the first member of the Economic Affairs Committee of your Lordships’ House to speak after our chairman, I start by paying a large tribute to his outstanding chairmanship. He pointed out that in this tricky area we produced an absolutely unanimous report. I think that the main reason for our unanimity, if I may say so, was because the weight of evidence that we received was so overwhelming—evidence that noble Lords who have spoken so far seem to regard as of no account. However, his outstanding chairmanship also played a part, and I thank him.

This country’s aid programme stands out in at least three ways. First, as my noble friend said, we give more in overseas development aid than any country in the world with the sole exception of the United States. Secondly, while in order to achieve sadly necessary fiscal consolidation, all other public expenditure programmes are being either frozen or cut back, the UK overseas aid budget is roaring ahead—at a time when most other countries are slowing down on this front. Thirdly, we are doing this explicitly in pursuit of a pledge to meet the 42 year-old United Nations target of spending 0.7% of our GNP on aid by next year; and, unlike any other country in the world, and in contrast to all other areas of public expenditure in this country, we have said that we will introduce legislation to bind this and all future UK Governments to maintaining this level of spending in perpetuity.

As my noble friend Lord MacGregor pointed out, the principal conclusion of our report, although not the only one, was that, far from making it a legal obligation, we should abandon this antique and wholly arbitrary target altogether. He admirably set out why we unanimously reached that conclusion. In particular, he pointed out how the 0.7% target prioritises the amount spent rather than the results achieved, and thus makes the achievement of the spending target more important than the effectiveness—if any—of the programmes. The Government’s pathetic response to our report was that the 0.7% commitment was a solemn pledge by all three political parties, and that is that.

[Baroness Royall of Blaisdon]

Hear, hear.

[Lord Lawson of Blaby]

I very much hope that the Minister will do better than that this evening, even if the Leader of the Opposition is unable to do so.

In my rather long political experience, when all three political parties are agreed on a policy, it is nearly always mistaken—as it is in this case. There is a very clear reason why that should be. The existence of all-party consensus ensures that the policy in question is never properly debated or scrutinised. If the evidence shows that a policy is mistaken, it should be abandoned: it is as simple as that.

I do not question for a moment that the policy is well meant, or that the intentions behind it are noble. However, as we all know, the road to hell is paved with good intentions. Policies need to be judged by their outcomes, not by their intentions. I cannot stress this too strongly. I believe that all of us on all sides of the House are well intentioned, but that does not prevent us frequently disagreeing strongly with the proposals of those who sit opposite us, on the grounds that the consequences of what they propose would be damaging. For example, I am sure that Mr Blair had the most high-minded intentions when he took this country to war with Iraq. However, that does not mean that he was right to do so. It is outcomes, not intentions, which matter.

I return to the proposal that the 0.7% aid target should be abandoned. I suspect that we might not have felt quite so strongly about this had there not been serious doubts about the efficacy of development aid more generally. To quote the cautious conclusion of our report,

“the evidence that aid makes a contribution to growth in recipient countries is inconclusive”.

We did not go deeply into the question of why development aid does not, on balance, promote economic development, although we did point to the malign relationship between aid and corruption, which has already been mentioned in this debate. But corruption—important as it is—is only part of the story. The real issue is more fundamental than that.

A useful analysis, which I commend to the House, is to be found in a penetrating new study, Why Nations Fail, by a couple of economists, Acemoglu and Robinson, which unfortunately was not published until after we had completed our inquiry. They say that what the nations that fail,

“all share is extractive institutions. In all these cases the basis of these institutions is an elite who design economic institutions in order to enrich themselves and perpetuate their power at the expense of the vast majority of people in society”.

In parenthesis, my noble friend Lady Falkner reminded us earlier of my old friend, the distinguished development economist the late Professor Peter Bauer, who many noble Lords will recall was a stimulating Member of this House. He used to say that the principal effect of official development aid was to transfer money from the poor in the rich countries to the rich in the poor countries. That is far too true for comfort.

Be that as it may, Acemoglu and Robinson continue:

“The idea that rich Western countries should provide large amounts of ‘developmental aid’ in order to solve the problem of poverty in sub-Saharan Africa, the Caribbean, Central America and South Asia is based on an incorrect understanding of what causes poverty. Countries such as Afghanistan are poor because of their extractive institutions—which result in a lack of property rights, law and order, or well-functioning legal systems and the stifling dominance of national and, more often, local elites over political and economic life. If sustained economic growth depends on inclusive institutions, giving aid to regimes presiding over extractive institutions cannot be the solution”.

That must be right. But I would myself put it more simply. The crucial requirement for economic development is a variant of the separation of powers: in this case, a separation between the political and the economic spheres.

Without that separation, if the route to individual wealth is via political office, government becomes a means of extracting wealth for the benefit of those in government, at the expense of the governed; and the notion of facilitating economic development or growth by providing conditions in which the governed can escape from poverty by their own efforts, outside the political process, is conspicuous by its absence—hence the futility of development aid.

I stress that I am not speaking here about disaster relief, although even in the area of disaster relief, the reality is all too frequently far from the intention, as Linda Polman has devastatingly documented in her book War Games: The Story of Aid and War in Modern Times..

The record of development aid, however well intentioned— and I admit that it is—is as disappointing as it is because it does not and cannot achieve the indispensable political and institutional requirement of a separation between the political and economic spheres in the recipient countries. Without that, development aid is futile; with it, development aid is unnecessary. Indeed, official development aid is likely to be worse than futile, and actively counterproductive overall—even though individual projects may bring useful if minor benefits, such as better paid schoolteachers and thus, we hope, better schools.

This is because the principal consequence of the provision of official development aid to Governments in the developing world is to boost the already excessive dependence on government and, more specifically, to reinforce the concentration of political and economic power—the very reverse of what history has shown is required for successful economic development, without taking into account the extent to which aid promotes corruption in the recipient countries; a well documented phenomenon.

It is, of course, important that we do nothing actually to impede the economic development of what used to be known as the third world. That means, in particular, putting no barriers in the way of their exports to us. But if we seriously wish to use taxpayers’ money to help the people of the developing world, the best thing we can do is probably to spend a fraction of what we are currently mis-spending on development aid on educating the future leaders of those countries in our best schools and universities. It is only they who may, in future, be able to effect the political and institutional transformation that their countries so badly need.

International Aid

Lord Lawson of Blaby Excerpts

Monday 29th November 2010 Lords Chamber

[Baroness Verma]

My Lords, in my answer to my noble friend I think I answered what he asked.

[Lord Lawson of Blaby]

My Lords, does my noble friend recognise that although economic development is well intentioned the preponderance of academic studies have demonstrated that in fact it does more harm than good? Will the Government now reconsider allowing overseas development aid to increase substantially at a time when severe cuts are necessary in all other forms of public expenditure?

[Baroness Verma]

My Lords, I cannot agree with my noble friend. Development aid helps millions of people and even though we are going through difficult times ourselves, we will not save money on the backs of poor people.