0.7% Official Development Assistance Target

Harriett Baldwin Excerpts

Tuesday 8th June 2021 Commons Chamber

[The Chief Secretary to the Treasury (Steve Barclay)]

Let me begin by acknowledging the words and the good intentions of my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell). He knows as well as I do that decisions such as this are not easy. In short, this is a hugely difficult economic and fiscal situation that requires difficult actions.

Responding to twin health and economic emergencies, the Government have acted on a scale unmatched in recent history to protect people’s jobs and livelihoods and to support businesses and public services, paying out £352 billion in support since the start of the pandemic last year. That is equivalent to 17% of GDP and one of the largest fiscal support packages of any country in the world.

Our plan is working. The economy grew by 2.1% in March alone, and the Bank of England now expects the economy to return to its pre-crisis levels by the end of this year—two quarters earlier than previously expected. At the beginning of the crisis, unemployment was forecast to reach 12% or more. The latest projections show that it is due to peak at 5.5%, meaning that almost 2 million fewer people will lose their jobs than was expected last spring.

As the House will note, however, much of that response has relied on borrowing. Last year saw the highest peacetime levels of borrowing on record—£300 billion of borrowing—and we are forecast to borrow £234 billion more this year and a further £109 billion the following year, so without corrective action, borrowing would continue at untenable levels, leaving underlying debt rising indefinitely. At our higher level of debt, the public finances are more vulnerable to changes in inflation and interest rates. Indeed, a sustained increase in inflation and interest rates of just 1% would increase debt interest level spending by over £25 billion in 2025-26. The goal of any Government should be sustainable finances, and the current level of borrowing is not sustainable.

My right hon. Friend the Member for Sutton Coldfield used a number of emotive terms around the morality of the context of these changes, but leaving the next generation vulnerable to the degree of fiscal threat that would be entailed with a high debt level is not itself morally sound. At the same time, loading ourselves with more debt now might well damage our ability to spend on aid later. There are some in this House who say that since we are already borrowing to protect jobs and businesses, what is £4 billion more? Indeed, that was the nature of the intervention from my hon. Friend the Member for Winchester (Steve Brine). Crucially, the only reason we were able to act during the pandemic in the way that we did is that we came into the crisis with strong public finances, and we believe it is our duty as the economy recovers to return to a sustainable fiscal position.

[Harriett Baldwin (West Worcestershire) (Con)]

I thank the Chief Secretary to the Treasury for giving way and I appreciate his fiscal stance, but can he explain to the House why the only manifesto pledge he has chosen to break is the one that forces the World Food Programme in South Sudan to choose between feeding hungry children and feeding starving children?

[Steve Barclay]

The point is that we have made a number of difficult decisions, and I will come on to that, but we are also continuing to spend £10 billion in response to the commitments that we have made. I am sure that my hon. Friend, as a former Treasury Minister, is well aware of the fiscal reality we face.

Strong public finances mean making difficult decisions, such as increasing corporation tax. That is one of the difficult decisions that my right hon. Friend the Chancellor has made, alongside the decision around overseas aid. Indeed, this is something that the International Development (Official Development Assistance Target) Act 2015 explicitly anticipates when it refers to the effects of one or more of the following:

“(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;

(c) circumstances arising outside the United Kingdom.”

In other words, the 2015 Act clearly envisages situations in which a departure from the target may be necessary. It provides for the Secretary of State’s accountability to Parliament by way of the requirement to lay a statement before Parliament and, if relevant, makes reference to economic and fiscal circumstances, as well as circumstances outside the United Kingdom. Indeed, the Foreign Secretary has already committed to doing that, as required by the Act.

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[Harriett Baldwin (West Worcestershire) (Con)]

Mr Deputy Speaker, may I thank you and Mr Speaker for allowing today’s emergency debate and congratulate my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) on securing it?

I have had the privilege of representing the UK as a Minister in the Foreign Office and the Department for International Development and of seeing, around the world, the good that our aid budget does. Whether from our work in the midst of the Ebola outbreak in the eastern part of the Democratic Republic of Congo—where the fact that the UK had invested in vaccines and their cold chain deployment meant that we were able to contain that deadly disease—or from the work that we put into neglected tropical diseases, which has meant that we have been able to contain and control other diseases from reaching the UK, surely we should have learned how important it is for the UK for us to work on such shared global challenges for humanity.

I have had the privilege of going to Goma, near where the volcano is erupting, and seeing how we have brought fresh water there. It was UK expertise and UK firms that won the contract to do that, which benefits our economy here and those exporters as well. It is a win-win for the UK public and for the world. I feel very strongly that it was a great privilege to say that we were—as we used to be—the only G20 country that met its NATO 2% target and the 0.7% UN target for aid. Surely if global Britain means anything, it means that, and being able to say that so proudly.

I was particularly proud to stand on a manifesto that again committed to those metrics for our position in the world. Politicians hesitate to break manifesto pledges because they know that the electorate will punish them at the next election if they do, whether they are George H. W. Bush saying “Read my lips: no new taxes” or Nick Clegg with his tuition fees. People realise that they should not break manifesto pledges because the electorate dislike it, but in this case I feel that the people who benefit from our aid budget the most are the ones who have no voice in this place. I have met them, and I need to articulate on their behalf how important this spending is.

There is another reason why I feel particularly passionate about the subject: the fact that we have enshrined the 0.7% in law. I know that there is a get-out in section 2 of the 2015 Act, under which a Secretary of State who inadvertently does not meet the 0.7% target can come to Parliament, explain why and state how they will get back to it. However, actually targeting 0.5% is absolutely a contentious legal issue and something that I think may well be challenged in the courts. The Government have a large majority, so the simplest thing to do, if it is such a good idea, would be to come to Parliament for that consent. The power that the Executive have is derived through us in Parliament; therefore they need to show respect for Parliament by coming and asking us, and giving us a vote, as my right hon. Friend the Member for Gainsborough (Sir Edward Leigh) put it so powerfully.

I could expatiate at length about how passionately I feel that we are making the wrong decision, but in this week, when we are hosting the G7, when we need to vaccinate the world and when cases are really beginning to grow exponentially across many African and Asian countries, and when we heard last week from every country at the 142nd Inter-Parliamentary Union Assembly that they need the vaccines, let us get out of this hole by giving our vaccines to the world.