International Development (Official Development Assistance Target) Bill

Viscount Astor Excerpts

Friday 6th February 2015 Lords Chamber

[Lord McConnell of Glenscorrodale]

I thank the noble Lord for allowing me to respond to his reference to my Second Reading speech. I wish to make two points. First—I hope that the noble Lord accepts this—the National Audit Office report makes clear that it does not believe, and has no evidence to suggest, that any of the money that was spent on projects in that financial year was wrongly spent or that the projects were not worth while. That is very clear in the National Audit Office report. Secondly, that report was specifically commissioned because this was the first year of meeting the new target and clearly there were going to be timescale issues in meeting the target in the first year. The point that noble Lords are making—including the noble Lord, Lord Purvis, in bringing forward this Bill—is that bringing consistency and predictability to meeting this target year after year will help deal with those timescale issues, not exacerbate them.

[Viscount Astor (Con)]

My Lords, before my noble friend replies to the noble Lord, will he confirm that he is speaking to all the amendments in the group as it is a large group? I say to the noble Lord, Lord McConnell, that it is normal in Committee to allow the mover of the amendment to make his speech. There is plenty of opportunity to respond afterwards. Indeed, the mover of the amendment can then respond at the end of the debate.

[Lord Forsyth of Drumlean]

It is true that there are a lot of amendments in the group but they are consequential on the concept of creating a five-year period. The noble Lord, Lord McConnell, and I are old sparring partners and old habits die hard for him. In response to his intervention, and at the risk of being accused of repetition—I note that the noble Countess, Lady Mar, is not present—I stress that the National Audit Office report said that DfID was having to,

“quickly add some activities to its 2013 plans but delay others set for 2014, making it more difficult to achieve value for money”.

What does that mean if not that it was not getting the best bang for the buck? The noble Lord said that 2013 was the first year for meeting the relevant target. He is absolutely right about that. However, the report goes on to say:

“The Department’s plans for delivering the 2015 ODA target require it to rapidly increase its investments, which could be difficult for it to achieve”.

If that is not saying loud and clear that we are unnecessarily putting the department in a straitjacket, I do not know what is. My amendment would prevent that and I hope that the noble Lord, Lord Purvis, will accept it.

The noble Lord opposite is clearly not persuaded by the National Audit Office report. My noble friend Lord Fowler was very unkind to Margaret Hodge, the chairman of the Public Accounts Committee, who I think in many respects has done a great job in chairing that committee. Indeed, she has said that it appeared that the cash has been “rushed out” to “meet the 0.7% target”.

She added:

“This raises questions about value for money which Parliament will be keen to look into”.

I do not think we can ignore that. Just to show that I am being balanced and fair, Sir Peter Luff, a very distinguished colleague, who many of us in this House remember with great affection, said:

“The committee must grill Dfid very carefully to make sure this money was spent wisely and well. This proves the folly of binding targets which set out how much you have to spend irrespective of need”.

Neither of these parliamentarians is noted for holding extreme views.

However, as the noble Lord is not happy with National Audit Office’s view, I turn to the International Development Committee, which was also concerned about the impact of the 0.7% target on the effectiveness of aid. It stated in its annual report of May 2014:

“2013 was an exceptional year. DFID’s expenditure increased rapidly as UK ODA rose from 0.56% to 0.7% of GNI. Nevertheless, it does seem surprising that DFID should spend over a quarter of its budget in December and almost 40% of its budget in November and December. DFID should provide the reassurance that its expenditure is rational and costeffective and not rushed out at the end of the year, which is the impression that can be given by its spending profile in 2013. We recommend that DFID carefully monitor its ability to meet the 0.7% target given uncertainties about both its own spending and that of other Departments and the GNI figure, which is itself subject to regular revision”.

As regards that latter point on regular revision, to which my noble friend Lord Howell referred, suddenly, it is decided that we need to take account of illegal drugs activity and prostitution and, as a result of that, we have to find an extra several hundred million pounds to spend on the aid budget. Does that make sense? It may be a bonus for the department, but it will certainly not be part of a planned approach.

I feel strongly about this issue as I was a member of the Economic Affairs Committee, under the splendid chairmanship of my noble friend Lord MacGregor, which took evidence on this issue. The evidence is there for people to see. It highlighted the problems, including that of wrongly prioritising the amount that is spent rather than the results that are achieved. Throughout the morning we have talked about how much is spent rather than how to get the best value for money from what is spent, as I said when we discussed the earlier amendment of my noble friend Lord MacGregor. We thought that a single-year target,

“makes the achievement of the spending target more important than the overall effectiveness of the programme”.

That was one of the conclusions of this House’s distinguished committee. We also said that,

“the speed of the planned increase risks reducing the quality, value for money and accountability of the aid programme”.

That is what we concluded a few years ago and that view is supported by the NAO and the International Development Committee.

A further point that has not been touched on this morning is that reaching the target increases the risk that aid will have a corrosive effect on other political systems by creating aid dependency. That, again, points to what DfID is doing very successfully—that is, looking at more targeted and sophisticated ways of providing aid and support and involving the private sector. I sense that the House has probably heard enough of this argument. I beg to move.

International Development (Official Development Assistance Target) Bill

Viscount Astor Excerpts

Friday 6th February 2015 Lords Chamber

Moved by

[Viscount Astor]

18: Clause 2, page 2, line 15, at end insert—
“( ) the fact that expenditure on a programme has been rolled over into a future year.”

[Viscount Astor (Con)]

My Lords, my amendment is, I hope, a modest and helpful one that might find some favour with the noble Lord, Lord Purvis, and which addresses some concerns that I raised at Second Reading.

Perhaps I should say again that I support the principle of our foreign aid budget being 0.7% of GDP. I hope that that is clear enough to the noble Lord opposite so he will not have to address his Twitter account about those of us who are speaking from this side of the Committee. The issue has always been whether that figure should be a target or enshrined in law. The Government have encouraged the Private Member’s Bill that the noble Lord, Lord Purvis, has brought forward, which indeed enshrines the percentage in law. We therefore have to consider the Bill, what it achieves and whether it can be improved or amended during its passage through your Lordships’ House.

My main concern is that in order to achieve the spending required, the department will not always be able to have a reserve for emergencies, particularly humanitarian emergencies, or be able to account for programmes that go over from one year to the next. Emergencies are always important, whether they are due to war, famine or disease. As we have heard, humanitarian aid is a very small part of the total budget of the department. There must be funds available for the expected and the unexpected; there must be a reserve fund.

The Minister also wrote to me about the difficulties of having two year-ends—the calendar year-end and the financial year-end. She said in her letter that,

“it is not unusual for accounts to be converted from calendar to financial years across a range of public and private sector activity”.

That is entirely true, but what is not usual is for them to be converted on an annual basis. That would be an auditor’s nightmare.

What my modest amendment is designed to do—I accept that it might not be as well drafted as it should be—is give the department some flexibility in the way it operates without in any way affecting the aims of the Bill. Although the Minister was kind enough to write to me, one issue that she did not address—perhaps she can do so today—was answering the question I asked at Second Reading about what portion of our contribution to the EU budget is spent on aid. It is substantial and is something we should perhaps be proud of. Why should the amount not be stated in the report that the Secretary of State brings before Parliament?

My amendment relates to Clause 2(3); and your Lordships will see that in the Statement that has to be made to Parliament if the target has not been met, various reasons have to be given, which include,

“(a) economic circumstances and, in particular, any substantial change in gross national income … (b) fiscal circumstances and, in particular, the likely impact of meeting the target on taxation, public spending and public borrowing”,

or,

(c) circumstances arising outside the United Kingdom”.

My amendment would add a small extra paragraph saying,

“the fact that expenditure on a programme has been rolled over into a future year”.

That would allow the department, when looking at its budget, to say, “We haven’t spent all the money this year. We will roll it into the following year”, which means that it does not have to engage in what has been described as the “ugly rush” to spend all its money before the year end, and thus would have flexibility. I hope that the Minister will be able to answer my question and that the noble Lord, Lord Purvis, will consider that the amendment is helpful to both the aims of the Bill and the way that the Secretary of State will report to Parliament. I beg to move.

[Lord Howell of Guildford (Con)]

My Lords, as we are looking at page 2 of the Bill and the amendment of my noble friend Lord Astor, which seeks to add a further paragraph to the three issues listed in paragraphs (a), (b) and (c), one or more of which might lead the report to explain why the target has not been hit, may I ask a question of my noble friend Lord Purvis, or perhaps the Minister, about paragraph (c), which refers to,

“circumstances arising outside the United Kingdom”?

Would that include the views of the proposed recipient countries of overseas aid saying that they no longer want the aid? We had this situation with India recently, where India reviewed its relationship with Britain, felt that the relationship should mature and that far better outcomes for development and escaping from poverty would be achieved through other fiscal changes such as two-way investment flows, impact value investment and a whole range of new techniques, and therefore it did not want to go on receiving old-fashioned official aid because official aid, as a large part of the world has discovered—not, I fear, everybody in your Lordships’ House—is not the main instrument, or even the most effective instrument, for lifting people out of poverty, ending real suffering and accelerating economic growth. So if countries come forward and say, “We do not actually want this assistance”, would that be one of the,

“circumstances arising outside the United Kingdom”,

which might disembarrass the Secretary of State and enable him to explain why the target had not been hit?

--- Later in debate ---

[Viscount Astor]

My Lords, I am grateful to the noble Lord, Lord Purvis, for his response. Obviously I do not have Section 6 of the International Development Act at hand but I will look at it carefully and read what he said in Hansard. He certainly gave a considered response, for which I am grateful.

I am also grateful to the Minister. She said, importantly, that there was flexibility in the department, and we are all grateful for that. I would have been happier if she had been able to say that, should the Bill go through, there will still be flexibility in the department. That is the important thing that we all want and are trying to achieve.

[Baroness Northover]

I can assure my noble friend that that will still be the case: there will be flexibility.

[Viscount Astor]

I am pleased to hear that. It certainly satisfies one of my concerns. I still think that the department will have a difficult time with its two year ends. The working out will be one of the games for the accountants, if nothing else.

I am grateful to my noble friend Lord Forsyth for joining in the debate. He did something that even Lloyd George was not able to do for my great-grandfather, when he referred to me as a noble Earl as opposed to a mere Viscount. I am grateful for his support for that. I beg leave to withdraw the amendment.

Amendment 18 withdrawn.

International Development (Official Development Assistance Target) Bill

Viscount Astor Excerpts

Friday 23rd January 2015 Lords Chamber

[Viscount Astor (Con)]

My Lords, it is surprising, when one has heard that the Bill has all-party support and was a manifesto commitment, that it is not a government Bill but has been left for the noble Lord, Lord Purvis, to introduce as a Private Member’s Bill at what might only be described as the very end of the parliamentary Session.

I fully support the Government’s intention to keep the aid budget at 0.7%. I would be delighted if economic and financial circumstances in this country allowed that percentage to increase in future, but I am concerned by the way the Bill enshrines the percentage in legislation. Surely that should be a matter of policy rather than law. Future Governments might feel constrained not to increase the percentage because it would require legislation. Equally, in severe economic times, they might be discouraged from lowering it if that was necessary in one particular year. I am nervous of enshrining any percentage of expenditure in legislation. This seems to be one Parliament binding the next, something that we have so far always avoided in legislation. Why the exception in this case? If the aid budget, why not the health service or defence spending? They are all just as important.

The argument has been put forward that we want to encourage other countries to follow suit. That is a laudable aim, but I am not sure that domestic legislation is the right way forward. We should be putting pressure on other members of the EU through the Commission, and other countries through the UN, to increase their development spending.

Then we have the problem of defining exactly what aid is. Is it just money spent by DfID? What about the sums that we send to the EU that is spent by the Commission in its aid budget? Should not that contribution be taken into account? Can the Minister tell us how much we send and how much is spent by the Commission?

Then we have to consider the MoD. It is currently manning hospitals in Sierra Leone, treating Ebola patients. It is vital work; is it not also a form of foreign aid? We should all be very proud of the work that our Armed Forces and health workers are doing in that country, which is not without risk.

If we added all that together—together with the work of the British Council, which the noble Lord, Lord Anderson, mentioned—would that not increase the amount of money that we are spending? We should be championing that.

Then we have the issue that the NAO report raised about year-end spending. We know that the department spent £1 billion in eight weeks to hit the target. Anyone who has spent time in a government department has seen that when that department suddenly finds an underspend, there is always an ugly rush to spend the money. It cannot be given back or rolled over. Projects that have been rejected are revived, or brought out of mothballs. One way that that could be solved for DfID is if it was allowed to roll over spending from one year to another, rather than go through what looks like a panic to spend money before the year’s end. Would that be allowed under Clause 3(3)?

Another issue is that the department’s year end is March, but the OECD year end is calendar. The National Audit Office report says:

“This difference is likely to represent more than an accounting difficulty because of the need to hit a target with little or no flexibility, causing significant decisions to be made late in the year and at short notice”.

The report recommends a three-year rolling average when specifying spending targets. Perhaps the Minister will respond to that suggestion.

In Committee in another place, the Minister, Desmond Swayne, answered that question with the following words:

“I come finally to the question about the difference between the calendar year in which we report overseas development aid and the financial year in which we do all our other business. I confess that that has caused me some angst over recent weeks as it has crossed my desk again and again. If you will excuse my French, Mr Crausby, it is a bugger”.—[Official Report, Commons, International Development (Official Development Assistance Target) Bill Committee, 4/11/14; cols. 26-7.]

I hope that the Minister will today be able to give a less colourful but more explicit answer to that question.

I fully support our aid budget. It helps to control economic migration, it helps countries to develop their infrastructure, it promotes self-sufficiency and, above all, it helps those in dire need. It saves lives. However, I have questions that I hope that the Minister will answer. Anyone listening to the debate today will wonder whether it is just a debate about the benefits of the money we send to countries in need. There is no question about that, but I respectfully suggest that we ought also to consider the detail of the Bill to see whether it achieves its laudable aims.