Official Development Assistance

Lord Londesborough Excerpts

Thursday 15th December 2022 Lords Chamber

[Lord Londesborough (CB)]

My Lords, I thank the noble Baroness, Lady Northover, for securing this timely and critical debate. I am sorry that she is not able to be with us today, and I thank the noble Lord, Lord Bruce, for leading it instead.

The debate is timely because, as we all know, there is huge demand and need for aid and assistance overseas following the pandemic, war in Ukraine, Afghanistan and multiple other humanitarian crises, and it is critical because our ODA budget appears to be suffering death by a thousand cuts. As Andrew Mitchell, the new Minister of State, admitted to the International Development Committee last week, the UK has lost its “development superpower” status as domestic issues increasingly marginalise overseas aid.

Rather than simply wringing my hands, I want to suggest to the Minister a strategy that is gaining support across both Houses. To that end, I should declare that I am vice-chair of the newly formed APPG on Aid Match, which includes 19 parliamentarians across all party groups. I shall say more on that later.

I want to focus on the ODA budget itself and seek some transparency on the key numbers. Many of us here have spoken out against the Government’s appalling decision to cut overseas aid by 30%, from 0.7% of GNI to 0.5%. I will not rehearse the arguments now as it is clear that the measure will not be reversed by this Government, even though both Andrew Mitchell and the Chancellor, Jeremy Hunt, spoke out and voted against the cuts two years ago.

However, I ask the Minister to confirm the Treasury’s view on when the UK economy will meet the two fiscal tests—notably, that underlying government debt as a percentage of GDP is falling—to restore the 0.7%. We have been told “fiscal 2025” but also that the new Prime Minister is considering extending the freeze at 0.5% for two years beyond that. I ask because many of the projects that we support are necessarily long-term and structural, as the noble Lord, Lord McConnell, pointed out, such as education, healthcare and sanitation. Our aid partners have an increasingly impossible job to plan and execute if their budgets are being reduced by 50% or more, as they are in many cases, especially for bilateral aid.

What should we make of the startling fact that in 2021 we cut our bilateral aid to lower-income countries by 40%, compared to a 17% reduction to middle-income countries? Can the Minister advise on when we will see the full impact reports of these cuts? We need greater transparency on the casualties of these costs, as the noble Lord, Lord Fowler, highlighted.

The problem is exacerbated by some 30% of this diminished ODA budget now being siphoned off to the Home Office to finance the burgeoning costs of housing refugees and asylum seekers in the UK, notably from Ukraine. In real terms, I believe this has reduced our overseas aid budget—I stress “overseas”—to close to 0.3% and not 0.5% of GNI. That is less than it was in 1997. I appreciate that international rules allow for this cost, which I believe is some £3 billion, to be taken from the ODA budget, as the noble Baroness, Lady Sheehan, has just pointed out. However, we are the only G7 country doing this in practice, rather than taking it from Treasury reserves. Can the Minister please confirm what proportion of ODA is expected to fund the cost of refugees in the UK in 2023? Given that many of these refugees become economically active in this country within their first 12 months here, which is very welcome given our shrinking workforce, it seems entirely wrong that the ODA shoulders the whole burden.

I too am delighted to see Andrew Mitchell back as Minister of State for Development. I read with interest his comments in front of the International Development Committee last week. He spoke a lot of sense, especially about the quality and quantity of spend. In particular, he raised a point about squeezing

“a quart out of a pint pot”

in looking for collaborative and innovative ways to bolster overseas aid spending. In search of such a multiplier, I refer the Minister to the concept of using the Government’s ODA to match-fund, and therefore attract substantial private donations. This model, pioneered by the Fortune Forum charity, was adopted by DfID in 2011; it led to the formation of the private sector department and its design of UK Aid Match. This resulted in delivering effective aid through over 100 blue-chip NGOs in more than 50 countries, impacting some 100 million lives.

Yet, impressive though those numbers are, the £377 million in matching funds through the various rounds between 2011 and today represents just 0.2% of the UK’s ODA. It should and could be so much more. Raising it to just 2% of ODA would represent real progress, unlocking hundreds of millions of pounds of private donations for front-line NGOs, without draining further funds from the taxpayer. Can I therefore ask the Minister to look into this initiative and raise it with the Secretary of State at the earliest opportunity?