Royal Bank of Scotland
Lord Tugendhat Excerpts(6 years, 6 months ago)
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Lord Bates
First, on the share price, the noble Lord will be aware—he was on this side of the House at the time it happened—that the shares were purchased for £5 per share. Within three months they were worth £2.20 per share, and we sold them at £2.71. They flatlined for about nine years. Rightly, because of the instruments that were set up by the previous Labour Government, these sales are done by arms-length bodies, so UK Government Investments takes independent advice. They are strictly governed as regards when disposals can take place, to ensure, quite rightly, that we are not in possession of any information which the market is not aware of. Those are established practices; therefore, it was right that actions did not take place while the decision by the US Department of Justice about the scale of the fine was not in the public domain. They have followed those procedures, and we follow them independently, but we are dealing with the legacy issues of some very concerning behaviour.
Lord Tugendhat (Con)
My Lords, does my noble friend not agree that, although the noble Lords opposite have raised important points, the sale of shares in RBS cannot be dictated by a single situation such as the noble Baroness seems to suggest? It is not just a question of whether the shares can be sold at a profit. They were bought in a distressed situation by the last Labour Government for reasons that we all understand. Now the sale must depend not just on the current market situation but on the way in which the Government feel the market might move in the future and whether the bank would be better off outside the Government’s purview than within it. It might well be able to conduct its business more effectively.
Lord Bates
My noble friend is absolutely right. The RBS shares were acquired not as an investment but as a rescue, and all parties supported that systemic action to restore confidence in the sector. When you are left with a large proportion of stock on your hands and you have stated publicly that you want to dispose of that asset, the only way to do it is on independent advice and over a period of time to avoid any market fluctuations, and that is what has been done.
Budget Statement
Lord Tugendhat Excerpts(7 years ago)
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Lord Tugendhat (Con)
My Lords, many years ago, I was the Parliamentary Private Secretary to Willie Whitelaw. As many noble Lords will recall, one of his most famous comments about politics was that things are never quite as good or quite as bad as they seem.
This saying came into my mind when I heard about the OBR’s downgrade of our productivity. It is understandable, after the OBR’s overestimates in the past, but I wonder whether the situation is quite as bad as it appears; I think that there is scope for looking further and deeper into its estimates. I say this because when one considers, on the one hand, the impact of hi-tech developments on the way in which services are bought, sold and produced in this country and, on the other, the impact of the gig economy, it is very difficult to believe that the situation is as dire as the OBR points out. I also feel that the way in which tax revenues have held up rather better than expected is another reason why one ought to query whether the OBR’s figures are as sound as they appear. This is not a criticism of the OBR at all. We all know that models are very difficult things; it is very difficult for them to keep up with changes in the economy. I wonder whether we can be confident that the model being used by the OBR is fit for purpose in the present circumstances. I hope that a good deal of work will go into looking at that and determining whether the situation is as it currently appears, despite all that is happening in the realm of hi-tech, despite the gig economy and despite the way in which tax revenues have held up.
My next point concerns the housing market. I do not wish to carp; I welcome what has been done. However, there is no getting away from the fact that what has been done is modest. As the Institute for Fiscal Studies pointed out, the extra spending will amount to about £1.5 billion a year and the target is 300,000 new houses. That was pretty good when Harold Macmillan did it, but a target that was regarded as good in the 1950s seems a little modest when we are almost in the 2020s. The stamp duty concession is certainly helpful, but I do not think anybody would suppose that it is game-changing. How much better it would be, as the noble Lord, Lord Darling, pointed out, if there had been changes in the planning rules as well. Some time ago, we had a debate on intergenerational fairness; I, along with several noble Lords, made the point that if something was going to be done on stamp duty, it would push up prices unless something was also done about planning. Of course, I quite understand why nothing was done—the Government are not strong enough to do it. Political reality is what it is.
Of course, political reality has also made it very difficult for the Government to tackle another problem—the privileges of the elderly. That problem also came up in the debate on intergenerational fairness; my noble friend Lady Neville-Rolfe had some wise things to say on it a short time ago. Unless and until the Government are in a position to tackle the very privileged position of the elderly, many of whom are sitting around me—I am myself an octogenarian—it will be very difficult indeed to do anything to help the younger generation. I draw particular attention to the triple lock, which provides an extraordinary boost to pensioners’ incomes at a time when the average pensioner’s income is above that of people in work.
The third striking feature of the Budget was the £3 billion for Brexit. That is certainly a very wise precaution, but it confirms what many of us have said for a long time: whatever the long-term consequences of leaving the EU may be, the short-term ones are extremely expensive. The Government were wise to put the £3 billion aside, but they now need to be far more open and up-front about where the cost will fall in disruption and changes to existing practices. My noble friend Lord Bridges has from time to time pointed out the need for honesty in this respect. Until there is more clarity on that point there will be a very considerable cloud hanging over investment decisions. Certainly today, after the disappointing news from Brussels, that is particularly true.
Finally, as we all know, the Government’s record in office will be defined by Brexit. Whether we bring it off successfully or fail to do so, the amount of effort, time and energy Ministers have to put into Brexit leaves very little time or energy for other matters. There is very little time for tackling intergenerational unfairness, social inequalities and regional differences. These are the issues that the electorate will judge us by. To the extent we are unable to play on those wickets, we leave a huge gap for the Opposition to take advantage of. The more Conservative Ministers and MPs make it difficult for the Prime Minister to bring about an agreement and pursue her chosen course, the more difficult it will be for the Conservative Party to win the next election.
Brexit: Financial Settlement
Lord Tugendhat Excerpts(7 years, 1 month ago)
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Lord Bates
I had the benefit of seeing the faces of the noble Lord’s colleagues behind him when he was asking that question, which reminds us that the negotiation is not necessarily easy for any of us, in any party. Where do the Opposition stand on free movement and the single market? The only thing they seem to agree on is that we ought to sign up to whatever is put in front of us. We are saying no—this is a negotiation and we have the right to say no.
Lord Tugendhat (Con)
My Lords, does my noble friend agree that these matters are very complicated, that it is very important for the United Kingdom to get the best deal it can and that in putting a date in the Bill, the Government are handing negotiating cards to the other side and making it much more difficult for them to secure their own objective?
Lord Bates
I beg to disagree with my noble friend, although I recognise his immense experience in this area. All that has been proposed is to make explicit what has been implicit and what has been set out in the Florence speech and all the way through the process, ever since Article 50 was triggered.
Public Sector Pay Cap
Lord Tugendhat Excerpts(7 years, 5 months ago)
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Lord Bates
Certainly, the Cabinet is not as the noble Lord describes. The reality of all these things is that we do not have a Cabinet of clones; we have a Cabinet of individuals—a lot of individuals who care very passionately about the areas for which they are responsible. I declare an interest as a Minister for International Development, about which I care very passionately and on which I might occasionally be prepared to make my case. But the fact of the matter is that the collective government policy is as set out by the Chancellor in the Budget. We listen carefully to the independent pay review bodies.
Lord Tugendhat (Con)
My Lords, does my noble friend agree that there is a great deal of support for the view implied in the question of my noble friend Lord Cormack? However, does he agree that perhaps we are moving towards a moment when it might be right to consider raising taxation to deal with some of the problems being discussed today?
Lord Bates
I am not sure that I agree with my noble friend in that respect because the way that we have raised tax thresholds, particularly for lower-paid workers, has meant that on average they have benefited by an additional £1,005, which is a significant increase to their salary. Further, there is the increase in the living wage, with the equivalent of a 4.2% increase for the lowest paid. Therefore, I think there are other mechanisms by which we can ensure that people’s pay and conditions improve without resorting to raising taxes.
International Development (Official Development Assistance Target) Bill
Lord Tugendhat Excerpts(9 years, 10 months ago)
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Lord Stirrup (CB)
My Lords, I suspect that it will not surprise the House to learn that I agree with everything that has been said so far on this amendment. Let me be clear: I support the 0.7% target, although I accept and acknowledge the importance of the much wider suite of tools that can and should be brought to bear on international development, as the noble Lord, Lord Lawson, has rightly pointed out.
I have been in the position to see personally some of the outstanding work that is done abroad by the Department for International Development. I have also been in a position personally to witness how much of this work has contributed not just to the betterment of humankind in general but to our own national security; it is important to us in a much wider sense. Equally, I have been in a position to see the importance of what the noble Lord, Lord Howell of Guildford, who is not in his place at the moment, referred to earlier as the comprehensive approach. In so many difficult areas of the world, development and military effort have gone hand in hand, as they need to do. Indeed, one of the great improvements we have made in this country over recent years is the breaking down of the barriers that used to exist between the different departments. Here I include the Foreign Office, the Department for International Development and the Ministry of Defence. Their joint working has improved immeasurably over the years, and as a consequence, the output, the effect that we have in the world, has improved immeasurably as well.
I have listened very carefully to the arguments that have been made in support of this legislation and for why the 0.7% target needs to be enshrined in legislation. I listened very carefully to the arguments the noble Baroness the Minister made in resisting a number of the amendments that have been put forward. Any one of her colleagues from any of the other spending departments could stand at the Dispatch Box and make the same case with the same force for their own department. Most of the arguments that have been advanced today have no particular significance in international development over any other task that the Government undertake in general public expenditure, except, perhaps, for one, and that one is that we have agreed to an international target for international development, but so we have for defence, as the noble Lord, Lord Forsyth, has pointed out. We have said that it is crucial that nations do not fall below spending 2% of their GDP on defence within NATO. Those nations that do not meet that target should work towards achieving it. We have taken the lead, at least in terms of words, in this regard. What we have not yet done is taken the lead in terms of action.
Surely two departments that have worked and will continue to work so closely together in future as defence and international development, two departments that rely upon each other so much for a synergistic approach in the world, two departments, perhaps the only two departments, which have an international commitment to a specific target, two departments that are linked so closely, should be treated the same in our legislation. I support the amendment.
Lord Tugendhat (Con)
My Lords, the Minister will recall that at Second Reading and in Committee I stressed my support for the aid programme and that I have also supported the 0.7% target. The points made by my noble friend Lord Forsyth and the noble and gallant Lord, Lord Stirrup, are central to the debate we are having. Although I and other colleagues doubt the wisdom of guaranteeing a particular share of the national budget to one particular spending programme for exactly the reasons that the noble and gallant Lord, Lord Stirrup, emphasised, the Government are arguing that that is the right thing to do in the case of this programme, as distinct from any other, partly because of its international nature, partly because of the commitments we have entered into, partly because of their belief that we would be setting an example to other people and partly because of their belief that others will follow that example.
Given that that is the Government’s position, the Minister owes it to the House to explain why what is sauce for the development goose is not sauce for the defence gander. I recognise that she is not a member of the Conservative Party, but she is speaking on behalf of the Government in this House and the Prime Minister, who leads the Government of which she is a member, has been emphasising very strongly in recent days the importance of other nations following our example in relation to the 2% target set for NATO. We have recently received evidence that the British Government may not be able to meet that target next year. If this idea of setting targets and guaranteeing a share of national expenditure is so important in one field, the Minister must be able to argue, for the reasons set out so eloquently by my noble friend Lord Forsyth and the noble and gallant Lord, Lord Stirrup, why they should not apply in the case of defence.
I hope she will also be able to accept that while the problems of the developing world are of a continuing nature, problems in the case of defence wax and wane, and at the moment, when we look at what is happening in Ukraine and the Middle East, problems in the defence sphere are certainly waxing. Therefore, if the Government are going to be able to defend on a rational basis the reasons why they are privileging the development budget in his way, it is essential that they are able to explain why they do not wish to do so for defence. I know defence is not the Minister’s department, but she is proposing this Bill and doing so on a particular set of grounds which apply to the defence area, where we are also committed to a particular target.
Lord Davies of Stamford
My Lords, the noble Lord, Lord Forsyth, invited me to be consistent in my attitude towards this amendment and the first amendment we debated this morning. I think it might have been a slightly rhetorical invitation, so I will probably surprise him when I say that I propose to be exactly that. The way in which the amendment is worded, making public expenditure in one department a function of public expenditure in another, is a rather peculiar way to go about managing public expenditure. I rather doubt whether the noble Lord and his colleagues, including my noble friend, plan to put this amendment to the vote, but I certainly share the aspirations and inspiration behind this initiative.
Earlier, I said, and I stand by it, that one of the two major points of this Bill is to set an example in the world and therefore to achieve something of a leverage effect so that, where we spend more money, we may succeed in persuading others to spend more money in the same way and the same direction and thereby greatly promote the cause we have in mind. That applies, in my view, to the 0.7% target in international aid. It would also apply in the case of the 2% of GDP defence spending target that NATO has formally adopted. As the noble and gallant Lord, Lord Stirrup, just said, that is the only other field in which such an international target exists.
Baroness Northover
I am very happy to share these figures with noble Lords but I am making a comparison with the aid budget, which is what we are addressing—perhaps I could bring noble Lords back to that. I do not dispute the value of the defence budget but we are trying to make sure that the aid budget is much more predictable. I hope that I may be allowed to carry on because I realise that noble Lords wish to get through some other elements.
Lord Tugendhat
I thank the noble Baroness. She has just asserted that there has been considerable continuity as regards defence expenditure. I recognise that the noble Lord opposite disputed that but she has asserted that there has been considerable continuity in that regard. That continuity has been achieved without a legal obligation, so does not that cast doubt on the whole essence of her argument that a legal obligation is necessary to achieve continuity?
Baroness Northover
That is an interesting point. The problem with the aid budget is that you do not see the level of continuity and predictability that you see in other government departments, so, in some ways, the noble Lord has put his finger on why we have this Bill.
Several noble Lords have linked aid and defence. Of course, we recognise that conflict is development in reverse, with no fragile low-income country meeting a single millennium development goal. Helping rebuild fragile states will help tackle the root causes of global problems such as disease, drugs, migration and terrorism, and is far less costly than military interventions. The United Kingdom is, and has long been, a global leader in promoting a “whole of government” approach to international peace and security. The establishment of a new, more than £1 billion Conflict, Stability and Security Fund in 2015-16 will support a larger and more integrated UK effort in National Security Council priority countries.
The noble Lord, Lord Reid, rightly pointed to the outstanding contribution that the military has provided in supporting civilian efforts to combat Ebola in Sierra Leone. I welcome, as we all do, that close working and am sure that we will need to develop it further in the future. Some ODA is, of course, spent by the MoD as well as by the FCO, DECC, Defra, DoH and the Department for Education. I come back to my main point: we are trying to ensure that aid is predictable. It should not be tied to the entirely laudable aim of ensuring that defence or other areas are properly addressed. That is why we cannot support this amendment and I hope that the noble Lord will be willing to withdraw it.
International Development (Official Development Assistance Target) Bill
Lord Tugendhat Excerpts(9 years, 10 months ago)
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Lord Tugendhat
Lord Tugendhat (Con)
My Lords, this amendment stands in my name and in the names of my noble friend Lord Forsyth and the noble Lord, Lord Lipsey. It would replace the words “national income” with the words “domestic product” on page 1, line 4 of the Bill. I hope that, in view of the exchanges in the previous debate, we can all agree that that is what we are debating on this occasion.
Before coming to the substance of the amendment, I want to make it absolutely clear that, as I said in the Second Reading debate, I support the British aid budget, I am quite prepared to see it increased further in the light of economic circumstances, and I admire the achievements of DfID, which, as the result of our examination in the Economic Affairs Committee, I recognise is held in high esteem across the world. I hope that there is no misunderstanding on that point and that noble Lords do not mistake criticisms of the Bill as it stands as being criticisms of the aid project. It is very important to clarify that.
My objection is to a legally enforceable annual expenditure target and my views on that subject are very close to those enunciated by the noble Lord, Lord Butler of Brockwell, speaking from his great experience. I not only oppose a legally enforceable limit in respect of the aid budget but would do so in respect of any budget, because I believe that it will lead to the misallocation of resources and distortions of various kinds. If it is adopted in its present form for the aid budget, that will in due course bring the aid budget into disrepute.
However, as the Government want to go down this road, and as the development community very much supports that, it is our task in this House, as far as possible, to save them from the consequences of that folly by improving the Bill. This amendment would go a small way—not more than that—towards doing that. I say that because the Bill confers on the aid budget, as others have pointed out, a unique privilege: it gives it a guaranteed share of national wealth, something that is denied to the National Health Service, education, defence, and other very important programmes. Therefore we must be sure, both for that reason and because of the legal obligation of the expenditure target, that the expenditure can be measured in the most precise and accurate way. I hope that no one would disagree with that.
The Bill defines the 0.7% in terms of a percentage of GNI and defines the period as a calendar year. Of course, as the House very well knows, the vast bulk of UK public expenditures are recorded as a percentage of GDP and on the basis of the financial year. This amendment would have the effect of enabling aid expenditure to be measured and recorded on the same basis as the overwhelming bulk of the budget. This is not a question of quantity—I am advised that the change from GNI to GDP would make virtually no difference on that score—but it would greatly increase transparency, which is something that in general the House approves of, and it might also avoid problems in future. Although there is not very much difference, as I understand it, between GNI and GDP at present, one has only to look at what happens with cost of living indices, whereby the differences between RPI and CPI can fluctuate quite markedly and lead to a great deal of misunderstanding. In that sphere, pensions, index-linked bonds and so on are measured by RPI, while other things are measured by CPI—and distortions arise. I suspect that distortions would also arise in relation to the difference between GNI and GDP.
If, as I suspect, this amendment is rejected, I think that the proposer of the Bill and the Minister—I emphasise “and the Minister”—should answer three questions. First, why use GNI? Presumably, it is being used for international reasons, but can we have an explanation as to precisely why it is GNI? Secondly, how will the aid expenditure figures and those relating to other programmes be reconciled? It is very important that the Government answer that question at the Committee stage. Thirdly, have the Government sought advice from the OBR or the NAO on this matter, and what did they say?
Let me just repeat the point about the Minister. Noble Lords will remember that about a year ago we debated the European Union (Referendum) Bill. I found myself at that time closer to the Liberal Democrat party and the Labour Party than to my own party. My noble friend Lord Dobbs, who proposed the Private Member’s Bill, summed up at the end of each amendment debate but the Minister on the Front Bench also intervened because of the implications for government policy. I have asked three absolutely relevant and explicit questions, which lie not in the province of my noble friend who proposes the Bill but in the province of the Government. I very much hope that the Minister will be able to answer the questions that I have put forward. I beg to move.
Lord Forsyth of Drumlean
My Lords, I rise to support my noble friend’s amendment. It may seem a nitpicking point to distinguish between GDP and GNI—the noble Baroness on the Front Bench says, “Yes, it is”. But I suspect that that is because she does not know the difference between them, because if she did know the difference she would know that it was not a nitpicking point.
Lord Purvis of Tweed
We are making law and debating an amendment that proposes a change to the Bill. I have explained why that would not be appropriate and why we operate under our system of national accounts, which we adopted 20 years ago when my noble friend was a Cabinet Minister. On that basis, I invite my noble friend to withdraw his amendment.
Lord Tugendhat
My Lords, I thank those noble Lords who have participated in the debate. I also thank the proposer, who, in so far as he is responsible for the Bill, sought to meet the points that I raised. However, I have to confess that I am slightly disappointed with the Minister’s reply, and I hope very much that the Government will be able to put up a better performance on Report.
First, the noble Baroness explained, as did my noble friend who introduced the Bill, the external considerations that have led to the adoption of GNI, and I understand those. However, I raised—I think talking about British budgetary procedures is quite legitimate in the British Parliament—the difficulties that will be caused by measuring this expenditure against other public expenditure programmes. That is something that the Government ought to be very much concerned with. Of course, they ought to be concerned with international considerations, but they ought also to be concerned with domestic budgetary considerations. I raised specific questions in relation to those, which the Minister simply did not answer. She did not address the points at all. I also asked whether the Office for Budget Responsibility and the NAO had been asked for their opinions and what they had said. Again, answer came there none.
As I made quite clear when I introduced the amendment, I support the aid programme and its objectives. I have no problem with its increase in relation to national circumstances. However, it will be very dangerous if the aid budget is put into a uniquely privileged position. It is already having privileges lavished on it by a guaranteed share of the national income. That is one big privilege that I think will lead to it coming into disrepute. Now, the Minister compounds the problem by completely failing to take any account of the questions that I raised about the interaction between this budget and the domestic budget.
I very much hope that the Government will be able to put on a better show on Report and, for the sake of clarity, answer the specific questions that I have raised. First, what steps are they taking to reconcile these different measurements in terms of the domestic and international considerations? Secondly, have they consulted the NAO and the OBR, which they certainly should have done? If they have, what did the NAO and the OBR say? If they have not, why not?
In the—I hope not forlorn—hope that the Government will come back with a better answer on Report, I currently beg leave to withdraw the amendment.
Lord Tugendhat
My Lords, I had not intended to speak a second time, but I feel that I cannot allow the words of the noble Lord, Lord Cashman, to go unanswered. I and a number of other noble Lords have made it clear that we support the British aid programme and its objectives and we understand that DfID is a very good administrator in these fields. The suggestion that in trying to improve the Bill one is in some way trying to deny the needy or trying to take food from the hungry is quite unjustified. I very much hope that he was not uttering those words in a personal sense.
Let me continue, because there has been a certain amount of moral indignation, which I find very difficult to take. Noble Lords, including two former Chancellors of the Exchequer and a former Chief Secretary to the Treasury—I am a former Budget Commissioner in the EU and have had a lot to do with large expenditure programmes in the private sector and the public sector—owe it to the House to draw on our experience to seek to improve the legislation that comes before us. I recognise that, as my noble friend Lord Fowler says, we are in a minority. I also recognise that although the Economic Affairs Committee, which is made up of members from all parties, reached a unanimous conclusion, its view is in a minority in this House.
However, the fact that one is in a minority does not mean that one should be constrained from drawing on one’s experience in trying to improve legislation. I believe that this Bill is flawed and that the amendments will improve the Bill. If the Bill can be improved, it will be more effective. However, if the Bill falls, that will in no way interrupt the flow of British aid or inhibit the Government’s ability to spend 0.7% or 0.8%. I hope that noble Lords, such as the noble Lord, Lord Cashman, and others who think like him, will accept that we are speaking with good intentions.
Lord Cashman
I thank the noble Lord. I am happy to go back to the record but I think that it will show that I stated to your Lordships that that is how this debate will be reviewed and viewed outside this House.
Lord Tugendhat
Perhaps I may ask the noble Lord whether he believes that the way in which one’s words are viewed and reviewed should be an inhibiting factor in drawing on one’s experience in order to seek to improve legislation.
Lord Cashman
My Lords, I have always believed that we must speak in defence of our principles without hesitation and bring to that our wisdom. However, one must also be aware of the weight of one’s words and how those words will be represented. In terms of one’s experience, I also said that economics is being viewed as a science. If it is such a science, how come economists and Chancellors have got it so wrong for so long?
Lord Tugendhat
I am afraid that the way in which human beings are constructed means that error is endemic in all our assessments, but that should not be an inhibition in drawing on our experience to try to improve the proposals before us. I quite accept the point made by the noble Lord about how statements may be viewed and reviewed. I would also say to him that there is a danger of them being misrepresented and that what he has said will encourage that.
Lord Brooke of Sutton Mandeville (Con)
My Lords, I have very few qualifications for speaking in these debates, although I had the extreme privilege, thanks to my noble friend Lord Lawson of Blaby, of serving as the British Minister on the Budget Council of the European Union for the four years when I was in the Treasury—I suspect that that is about as long as anyone has ever done that job. During that time, we had to deal with problems that were, effectively, intractable. The Budget Council is a body with which the noble Lord, Lord Cashman, will be familiar. I am delighted to say that it was this Government who found solutions that meant that we did not have a continuous repetition of the failure of the process at the end of the year in arriving at a budget, which, in the final analysis, was determined by the European Parliament. It was a rich and pleasurable responsibility to hold and we earned the respect of our confrères on the Budget Council—rather as DfID is earning respect—for our concentration on solutions rather than on argument.
The second thing that I wish to say—there is an enormous amount to read on this subject, particularly in the short space of time between Second Reading and Committee stage—relates to the extreme utility, on the subject that we are discussing, of the footnotes in small print in the NAO report. It propounds issues that the International Development Committee might wish to consider. At least 11 out of 15 such issues apply directly to this as a way of making what may also be relatively intractable problems easier to solve.
International Development (Official Development Assistance Target) Bill
Lord Tugendhat Excerpts(9 years, 10 months ago)
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Lord Tugendhat
“( ) The Secretary of State must include in each report an explanation as to how the implementation of the 0.7% target has influenced the following—
(a) the quality and effectiveness of UK Overseas Development Programmes;(b) the Department for International Development’s oversight of UK Overseas Development Programmes;(c) reported corruption relating to UK Overseas Development Programmes.”
Lord Tugendhat
My Lords, I think that we are nearing the end—I hope so—of what, to me, has been a deeply depressing day. Time and again my noble friends and I have come forward with suggestions designed to improve the Bill. Others have intervened to support these suggestions and to share some of the concerns that we have raised. I think particularly of the notable contribution of the noble Lord, Lord Butler of Brockwell, whose knowledge, authority and understanding in these matters must be second to none.
However, the proposer of the Bill and the Minister have both refused to countenance any change; they have been unable or unwilling to meet a number of the concerns that have been raised—we saw an example of that in the debate before last—but they have been unable to accept that the Bill is capable of any improvement. That is their position, but I have been around longer than they have and suggest to them that, if they look at some recent political history, those Bills that are driven through regardless of the opinion of the House, against the advice of a number of people who know what they are talking about and in defiance of any suggestion for improvement, generally run into a great deal of trouble down the track. I think that the noble Lord the proposer and the noble Baroness the Minister will find—perhaps along with other noble Lords on the other side of the House, if they find themselves in government—that a number of the points raised in the debate today come back to haunt them at Select Committee meetings and other meetings in future.
That said, I commend both the proposer of the Bill and the Minister for their courtesy, good humour and patience. They have treated the House with great respect. I regret the fact that the noble Lord, Lord McConnell, has left us, because what he and others must understand is that not only does Parliament have the right and duty to consider legislation thoroughly, but when a particular item is put into a privileged position—but the noble Lord has now returned, so I withdraw the point that I just made.
What must be understood is that when an item of expenditure—a budget—is put in a very privileged position on a particular pedestal, it must expect particularly rigorous examination, which does not mean hostile examination. Rigorous examination is required when large amounts of public money are being spent in areas that are themselves often very controversial. It serves no good purpose and is of no benefit to the budget concerned to call into question the good faith of those who raise those questions. That is a very important point to remember. The more that good faith is called into question, the more difficult things become for the programme under discussion.
Lord Purvis of Tweed
I am grateful to my noble friend for giving way. With regard to this specific amendment, could he inform the House which of the annual reports that have been laid before Parliament under the 2006 Act, and which cover aid effectiveness, policy effectiveness and transparency, does he feel are deficient and have not provided this information?
Lord Tugendhat
If I felt it was sufficient, I would not be suggesting the three propositions put down in the amendment. I think that each is valid.
Lord Purvis of Tweed
Is the noble Lord saying that the reports, or the information in them, have been insufficient? Could he perhaps give us the years for the reports that he is referring to?
Lord Tugendhat
I am saying that the Secretary of State must include in each report an explanation of how the implementation of the 0.7% target has influenced the following—and then the words in the amendment. I am looking to the future. I think that that is perfectly clear. In the past we did not have a legally enforceable target and in the future we will.
Lord Purvis of Tweed
My noble friend has just told the House that the reports so far, which have already been provided under the 2006 Act, have been insufficient. For which years were those reports? If he has not read them and if he is not aware of them, that is a problem with the information that he is providing to the House.
Lord Tugendhat
I am talking only about the future. The amendment refers quite explicitly to the future. I hope I am repeating myself correctly; I said that if it was suggested that the present arrangements are sufficient, then that would imply that the introduction of the new legally enforceable target made no difference. That is what I was saying. I am not talking about whether the report was insufficient in the past. We did not have a legally enforceable target in the past but we are going to in future. That is why I suggested that new arrangements would be required. So we are looking to the future, not the past, and I should be very interested to know why the proposer and the Minister—if indeed they are not going to accept the amendment—think that new arrangements should not be required in the future.
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 Tugendhat
I will make just two points. First, as regards participation in the debate, I was very pleased to hear what my noble friend had to say. I gained the distinct impression this morning, and in the debates we had before the break, that a number of Members of this House seemed to feel that there was something improper about intervening in the debate to suggest changes to the Bill. That was certainly the impression which I felt a number of noble Lords gave—although not my noble friend himself or the Minister. But that impression certainly came through very strongly from the other side of the Committee.
Secondly, the noble Lord made some very interesting points. I want to make it clear that value for money means two things. It means value for money for the recipients of the aid programmes and value for money for the British taxpayers who are putting up the money. It is more difficult to ensure value for money for the recipients of the programmes, because in some of the countries in which the programmes take place administrations are rather exiguous and the vested interests to which the noble and right reverend Lord the former Archbishop of Canterbury drew attention at Second Reading are more powerful. As we discussed at Second Reading, DfID is quite rightly shifting the emphasis of its programmes towards the more fragile and poorer states. But, by definition, it is in the more fragile and poorer states that administrations are weakest and that vested interests that may oppose the Government, or may indeed control the Government, are strongest. I emphasise that point.
I cannot pretend that I am entirely reassured, but now is not the time to pursue the matter further. Like so many other things, we will come back to this on Report. I beg leave to withdraw the amendment.
International Development (Official Development Assistance Target) Bill
Lord Tugendhat Excerpts(9 years, 11 months ago)
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Lord Tugendhat (Con)
My Lords, like my noble friend Lord Fowler, I begin today by saying a word or two about my dear friend Leon Brittan. A lifelong friend, I met him in our first week at Cambridge in 1957. He was a man of outstanding ability—generous, loyal, wise and of the utmost integrity—who gave great service to this country. I mourn him deeply and pay tribute to his character, life and achievements. I want, from this Chamber today, to send my condolences to his wife Diana and to my former colleague, Sam Brittan, with whom I was once on the Financial Times. It is a very, very sad day for me.
Like the noble Lords, Lord Lipsey and Lord Shipley, I, too, was on the Economic Affairs Committee under the leadership of my noble friend Lord MacGregor, who very much regrets that he cannot be here today. I repeat the point that they made: it issued a unanimous report that was against coming down in favour of the 0.7% target, with Conservatives, Liberal Democrats, Labour and Cross-Benchers, all of whom had seen the same evidence, reaching the same conclusion. I stress that this does not mean that we were against development aid. We all want poor countries, and especially poor people in poor countries, to escape from poverty and we all agree that British aid has an important and continuing role to play. In that connection, we were very pleased to hear that DfID is widely regarded as one of the most effective and efficient operators in the field—a point made by the noble Baroness, Lady Royall, and by the noble Lord, Lord Chidgey.
However, to set an expenditure target that must be met, come what may, as a legal obligation, is never a good idea. It will deprive government of flexibility to respond to changing circumstances, whether here or in the recipient countries. It is also bound to lead to distortions and misallocations, as administrators strive to spend given percentage amounts, on an annual basis, of what are bound to be multi-year programmes, instead of in accordance with the practical needs and rhythms of those programmes. In my view, the noble and right reverend Lord, Lord Williams of Oystermouth, made exactly the wrong point when he talked about the target helping good administration, while the noble Lords, Lord Lipsey and Lord Shipley, made exactly the right point.
I do not oppose the target just because it is set in this field—far from it. I would oppose it in any area of expenditure and believe that in setting it in one, we are establishing a very bad precedent which is likely to be followed in others. I very much hope that the Minister will give an assurance, as far as she is able, that the Government do not regard this as a precedent. If the Government do not regard it as a precedent, why do they think it is such a good idea on this occasion?
In this particular case, there is an additional problem that we need to consider. The Government are rightly shifting the emphasis of the aid programme to the more fragile and needy states, but those, by definition, are often the states where Administrations are weakest and the temptations to corruption greatest, and where the pressures of the powerful elites, to which the noble and right reverend Lord, Lord Williams, referred, can also be very considerable indeed. I am afraid that the provisions of Clause 5 are very unlikely to put up a substantial barrier to the difficulties that are going to arise.
I would also like to draw attention to the extent to which the landscape of international development has changed in recent years—a point made by the noble Lord, Lord Purvis. Aid used to be a major element in the flow of capital to developing countries. Now, although it has increased greatly since the 1970s, when the 0.7% target was set, it is dwarfed by private flows by about nine to one. The major elements in the private flows are not just investment—foreign direct investment and portfolio investment, very important as they are—but the remittances from citizens of developing countries working abroad also play a major role and are, indeed, very much more substantial these days than aid itself. If we want to be more helpful, we should be encouraging still further the investment by corporations—private and foreign direct—as well as finding ways to help those who have migrated to developed countries such as ours to send remittances home. That would be something practical that we could do.
Finally, I ask the House to remember that development aid is no longer something that flows only from western countries to developing countries. Important new players in the game—China, India and Brazil—have joined Japan as substantial providers of aid. We should welcome this, particularly this week, when so much attention is being given to the proportion of the world’s wealth in the hands of the top 1%. Oxfam, I read in the Guardian, claims that the 85 richest people on earth have the same wealth as the 3.5 billion poorest. As we all know, a significant number of those 85 are to be found in India, China and Latin America. They, among others, should be doing much more to help relieve the poverty in their countries and elsewhere in the developing world.
Baroness Northover
I have in my notes an answer to the noble Lord, which was slightly lower down in what I was seeking to address. He said that he was mystified as to why we were dealing with this now. What occurred to me was that I was somewhat mystified that the previous Government had not legislated for this, despite their commitment. What we should welcome—and that is true across this House—is that we have finally ensured that we have met that 0.7% commitment, and that we are now seeking to legislate. That is the important thing and I welcome the cross-party support for it.
The House of Commons has passed the Bill overwhelmingly and handed it to us. It is now our responsibility to help ensure that my noble friend Lord Purvis is able to carry this through and into law. We have heard outstanding and compelling speeches and even those who feel that this is not the right move—
Lord Tugendhat
I take the Minister’s point about the responsibility to carry it forward into law, if that is what the majority want. However, I hope she will agree that this is an amending and revising House, and that there is a duty to seek to amend and improve Bills, regardless of where they are. I think back to the debate we had some months ago on the referendum Bill where many noble Lords opposite, whom I supported, argued that just because such a Bill had a majority in the Commons that was no reason not to try to improve it in the Lords. The same applies on this occasion.
Baroness Northover
I will be coming on to that in a while. Perhaps the noble Lord will be satisfied to wait a little for that.
As I have said, we have heard outstanding and compelling speeches which have recognised that aid is transformational. It is also interesting to note that even those who do not feel that this is the right move are committed in terms of aid, which of course is important. The noble Lord, Lord Lipsey, is an economist and not one to misuse statistics, but he expressed more than 90% agreement to what we are doing in terms of aid. I for one will bank that. I knew that we would have a powerful debate on this Bill, that noble Lords would speak from huge experience, and that we would take a far-reaching international perspective.
We know only too well that no man is an island—I might feminise that. As my noble friend Lord Purvis made clear, the first point to make is the moral case, and many noble Lords have made that case. Indeed, it was made with particular power by the right reverend Prelate the Bishop of Derby and—not least through his presence here—the former Archbishop of Canterbury the noble and right reverend Lord, Lord Williams of Oystermouth. I welcome his engagement, and we are pleased to see them involved today. My noble friend Lord Steel quoted strong passages from two global religions as to why we must do this. We heard my noble friend Lord Chidgey’s moving account from Juba, as well as those from the noble Lord, Lord Judd, and others. They all made the moral case exceptionally clear.
As noble Lords also laid out, we recognise our interests and how we are all interlinked. We can see that a weak health system in Sierra Leone, seemingly a distant place, results in an epidemic taking hold on an unprecedented scale. Even in Britain we have felt the effects of that. International development is not an optional extra or an afterthought; it is vital. Investing now to help the poorest can and will prevent some of the terrible situations we see today from happening tomorrow and affecting us. I was especially struck by the powerful speech of the noble Lord, Lord McConnell, about what might have happened had this measure been implemented 40 or 45 years ago. The noble Baroness, Lady Royall, quoted Nelson Mandela saying that:
“Poverty is not an accident”,
while my noble friend Lady Manzoor talked about tackling poverty.
The 2004 report of the UN High-Level Panel on Threats, Challenges and Change, of which our colleague the noble Lord, Lord Hannay, was a leading member, noted the interconnectedness of our world. That was a very important conclusion for the panel to come to. I shall quote from the report:
“Development and security are inextricably linked. A more secure world is only possible if poor countries are given a real chance to develop. Extreme poverty and infectious diseases threaten many people directly, but they also provide a fertile breeding-ground for other threats, including civil conflict. Even people in rich countries will be more secure if their Governments help poor countries to defeat poverty and disease by meeting the Millennium Development Goals”.
Quite so, and that underpins the powerful speech of my noble friend Lady Falkner about what other countries should be doing. It is excellent that at least we are taking the lead in this.
One of the most important principles of effective development is to ensure continuity. It is no use moving into a development programme one year and abandoning it the next. Continuity and certainty of programmes over a number of years are essential to securing good development outcomes. That is why we have committed to budgets over four years and why a Bill such as this, which commits us to spending 0.7% of our national income, is so important. There is otherwise the risk that the international development budget will fluctuate and fail to provide our partners with certainty when they need to make critical investments in health and education. I can recall, as no doubt can other noble Lords, when Ireland was delighted to make the commitment that it would reach an aid budget of 0.7% by 2007. I remember that that happened after an internal struggle. I also recall, with great disappointment, how quickly it moved away from that—and it is not yet achieved. Neither, prior to 2013, did we in the United Kingdom achieve it.
There is voter pressure in the United Kingdom for other budgets; for example, for the Department of Health, the Department for Education, and the DWP. Their budgets are very large, as my noble friend Lady Barker pointed out, and they are, largely, predictable. That has never been the case for overseas aid. The pressures are very clear as regards that budget, yet we seek to support similar projects: for example, getting girls into and through schools, and establishing and maintaining clinics, as the noble Baroness, Lady Tonge, rightly demanded of us.
I hope that the noble Lord, Lord Tugendhat, recognises that need for predictability. I am sure that he supports our long-term financial commitment to the EU—would it not be easy to push that budget back and forth?—yet we grant to the EU according to our legal obligation, and we are right to do so. The EU can then plan and budget. This is no different. The conflict across borders—
Lord Tugendhat
It is totally different. The problem that I—and I think other members of the committee—have is that while we are fully supportive of aid and made that quite clear, we also made it clear that we are worried, as are others, about the way in which money is spent. We are dealing with multiyear programmes. With such programmes, you will run into a lot of trouble if you have to spend on what is called—since the noble Baroness invokes Europe—the douzième provisoire: that is, if you have to spend one-12th on an annual basis instead of spreading it over the commitment. In the case of the EU, there is a formula by which the member states are assessed, and we pay according to that formula. However, it is not linked to projects. The problem here is that you have a multiyear project and you are saying that a given amount has to be spent each year. The Minister may or may not agree with me, but she is invoking a false parallel.
Baroness Northover
Having been a Minister in the Department for International Development, I know that there is obviously flexibility in the department, because humanitarian conflicts will arise, which you have to put money into, while you also sustain support for various other projects. The noble Lord might read the NAO report; one of the things that struck me when I read it was that every department in government has to budget, and they know more or less what their budgets will be. There may be contingencies, and they may have a contingency fund, but they have to plan. It is not just left to what they may decide to do after six months or so.
The situation is no different in DfID. I assure the noble Lord that if he reads the NAO report very carefully he will see that it concludes that business was properly stress-tested and assessed. I think I should proceed, because I am now on 14 minutes, and I will come on to some of these other points. I will also be happy to meet the noble Lord after this debate, if that would help, so that we can explore some of those issues.
Noble Lords will be fully aware of the kind of projects that DfID is involved in; during this debate noble Lords have very helpfully outlined a number of these areas. A number of noble Lords emphasised in particular our support for women and girls and how right this is, including my noble friends Lady Hodgson, Lady Jenkin, Lady Manzoor, and the noble Baronesses, Lady Kinnock and Lady Flather. We fully recognise the importance of supporting women and girls and thank noble Lords for supporting us in doing that. In addition, as part of that, the emphasis on maternal health and family planning was mentioned by the noble Lord, Lord Watson, as well as by the noble Baronesses, Lady Tonge and Lady Flather.
Mention was made of women giving birth on a concrete slab. Today is my eldest son’s birthday. This morning I found myself thinking that, had I given birth in a developing country, he would have died and so would I. Noble Lords who think about it will probably recognise that either they or their close family might very well have been in that situation. As has been said, poverty is not an accident. It is not something that certain groups need to suffer from or should suffer from.
Noble Lords have made mention of our commitment of 0.7%, and some have suggested that the increase has not improved the quality of that spend. I assure them that the Development Assistance Committee of the OECD concluded recently in its formal peer review of DfID on the effectiveness of the way in which we have scaled up our spending in recent years, planning carefully to meet the target—and I have seen that this is very much the case—while at the same time increasing the quality of our spend. As noble Lords were speaking, I found myself thinking about the commitment that we have been able to make, for example, on so-called neglected tropical diseases. We hope that they are no longer neglected, so we can combat blindness, which is totally avoidable—something that we were able to do because of the increase in the budget.
In response to the noble Baroness, Lady Tonge, of course there are many lessons to learn from Sierra Leone. This was an unprecedented crisis. We have done a huge amount, as was noted during the debate, to ensure that it did not become a pandemic. She will know the details of our support there.
India: Aid
Lord Tugendhat Excerpts(11 years, 7 months ago)
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Lord Tugendhat
My Lords, India has one of the most rapidly growing economies in the world—
Baroness Northover
The noble Baroness needs to bear it in mind that it is through economic development that you lift people out of poverty and that India has lifted 60 million people out of poverty. The changes in the UK’s aid arrangements reflect India’s rapid growth and development process. We will continue to be involved with it in how this is taken forward.
Lord Tugendhat
Does the noble Baroness not agree that as India is one of the most rapidly growing economies in the world, with a very substantial space programme, a foreign aid programme of its own and an ambitious defence programme, the responsibility for dealing with its very considerable social problems rests with the Government of India? The purpose of British aid should be not only to help very poor people but to help very poor people in poor countries that do not have the means at their disposal which the Indian Government have. The Indian Government choose to spend money on space, foreign aid and defence, and that is their right, but it is not the responsibility of Britain to fill the gaps.
Baroness Northover
The two noble Lords may want to have a conversation in the margins of the Chamber. I would point out that the Government of India have been putting an increasing amount of money into education, higher education, access to finance, comprehensive village development, and so on. There is a range of areas where India is taking forward the kind of programmes that both noble Lords would wish to see.
DfID: Tied Aid
Lord Tugendhat Excerpts(11 years, 9 months ago)
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Baroness Northover
I appreciate what the noble Lord has to say, and I hope that he continues to say such things loud and clear, because in a time of austerity there is a clamour of voices asking whether this is the right thing to do. As we meet the 0.7% commitment, which we have built to and kept to, we have a moral obligation to address the difference in the levels of need around the world. There is also the interest in terms of greater stability. If you are addressing the most abject poverty around the world, that helps to stabilise things for everybody, whether in that region or in our own.
Lord Tugendhat
Does the Minister agree that Africa is now one of the fastest growing regions in the world and that we should all be very pleased about that? Aid is now a relatively small proportion of the disbursements that go from the developed world to what used to be called the developing world. Remittances and direct investment have grown enormously, and the role of aid is far less significant than it used to be. It is not a question of this Government cutting back on what they have been giving; the extraordinary thing about this Government is that, at a time when they are cutting back on almost everything else, they have been increasing the overseas aid budget by 30%. I find that barely explicable.