DfID Economic Development Strategy

Lord Bruce of Bennachie Excerpts

Monday 27th November 2017 Lords Chamber

[Lord Bruce of Bennachie (LD)]

My Lords, I join in thanking the noble Baroness, Lady Nicholson, for giving us the opportunity to have this debate. I agree with her call for engagement in development not only across government but across UK plc. That is something that struck a chord in the House and which we could do a lot more of. Many of us would wish to respond to that and encourage private businesses, professional organisations and others to do more on participation with DfID.

The noble Baroness went through a list of professions and sectors, many of which are engaged but clearly could do more. In particular she mentioned the NHS, which I suggest is effectively engaged. It was perhaps the best cross-party response we saw during the Ebola crisis—which engaged pretty much every government department, including the NHS. It is interesting to see that the budget in Sierra Leone has now been cut. That raises the issue of the need to secure long-term capacity.

The contributions we have heard have ranged much more widely than just the CDC; indeed, the noble Baroness was more concerned about the wider interest than just about the CDC itself. The only thing I wish to say is that the Government have increased the funding for the CDC by a substantial amount, and the CDC has been radically restructured to enable it to do more and to focus on poverty reduction in the poorest countries. Many of us agree it is in a much better shape to do so now than it was three or four years ago. When the International Development Committee reported on the CDC, when Andrew Mitchell indicated he was looking at restructuring it, we suggested it should concentrate on more high-risk, poorer areas using frontier investment, but it did not have the capacity to do so. It now does, but there is still a question mark over whether it will be able to absorb the scale of finance available to it. Although the CDC feels that it can definitely increase funding, I think it is absolutely clear, having met with it in recent weeks, that it has to invest where others would not to make things happen that would not otherwise happen; otherwise, it will perfectly legitimately earn criticism for stepping in where the private sector could perfectly well have done so without state involvement at all. That is quite an important qualification.

The noble Lord, Lord Judd, made a strong case for some of the traditional values of aid and development not being lost sight of. I echo quite a lot of what he said. There is no doubt whatever that no country that has lifted people out of poverty in significant numbers has done so other than by a very significant expansion of its private sector. That is incontrovertibly the case. To the extent that aid can and does help that happen, that clearly has to be an objective if we are to end absolute poverty and leave no one behind. The question is what the role of aid is in that and how we should do it. I would divide it into three components.

The first component is much discussed: the humanitarian response. That generally gets wide support and no criticism from almost every sector and point of view because it is obvious, apparent and immediate—people are in distress, first aid is required and we need to respond. We nearly doubled our response in UK funding; the British public added to that by their own generous response to appeals. That is completely understandable, but I suggest we can do better in bringing more private finance into humanitarian responses by use of, for example, more insurance-based and bond-based funding.

Many of these crises and disasters are predictable, if not the exact time and scale. Many countries are prone to flooding, drought or earthquakes. They know they will happen but they just do not know when, and the people are too poor to make adequate provision. By working together we can do two things. We can effectively pay insurance premiums on their behalf and get the benefit of risk assessment by the insurance industry to ensure: first, that people are better prepared if there is a disaster and they are adequately compensated to make the quickest possible recovery; and secondly, that when rebuilding or rehabilitation goes on, it is done in a way that will make the next disaster less severe because resilience has been built in. That is a way of bringing public and private money together and unlocking a great deal more funding than would otherwise be the case.

The noble Lord, Lord Desai, mentioned the recent hurricanes in the Caribbean. I think that most of us completely understand the OECD criteria but also accept that the scale of the devastation was such that, regardless of whether it is ODA, we should respond. We have responded, as is right and proper. I am a member of the APPG on the Caribbean. We had evidence last week that some of the smaller islands have effectively had their economic wealth wiped out, so it is possibly arguable that one or two of them have dropped below the threshold that would qualify them for ODA. If that is the case, I hope the OECD will take that into account. However, we should be very careful that we do not try to drive a coach and horses through the correct safeguards that the OECD has put in to ensure that aid money is targeted at the most vulnerable and poorest people in the poorest countries and is not diverted for other purposes. Indeed, the noble Lord, Lord McInnes, gave ample warning that it should not be used as a cover for trade deals that are in our interests rather than related to the real needs of poor countries, and he is absolutely right.

Development spending is not widely understood. Indeed, many times in debates in this House I have heard noble Lords say, “Well of course we should do the humanitarian stuff, but I am really not sure about this other aid. We can surely spend it in other ways”. By definition, aid is long term. We are trying to build the capacity of some of the weakest, most fragile countries so that they have, in the long run, the ability to develop themselves and to graduate from aid. As a country, successive Governments, including the present one, have made a policy decision that we should prioritise those countries emerging from conflict that are particularly vulnerable, particularly crisis-prone, particularly dysfunctional and particularly corrupt. If we have taken that policy decision, we have to accept that we are going to have to give aid in a variety of ways which are difficult and long term. What are we trying to do? We are trying to lay down the foundations of a functioning education system, a functioning health service, a decent infrastructure and ultimately a civil service and parliamentary capacity that will give governance that might ultimately create the platform that will enable both domestic and inward investment to take off in those countries. That is not going to happen in a year or two. It will take, if we are lucky, a generation.

One can look at the really bad countries, such as South Sudan, which is going solidly backwards. One of the tragedies of recent years is that a country that fought for its independence for 50 years and secured its independence by a democratic vote immediately went to war with the country it had just got its independence from and then decided to have a civil war at the same time. A country that was quite capable of building a future for itself has effectively destroyed it. Do we just walk away? Unfortunately, the UK has a legacy in many of these countries. We have a responsibility, but we have to work with partners, and partners do not always have the capacity we wish they had, but development is about helping that to happen.

There are countries that are further up the ladder where development can and does work, and we can see the quality of healthcare, vaccination and diet improving. People say that aid does not work, but the noble Lord, Lord Judd, quoted statistics on the reduction in poverty that has taken place over the years. I do not think anybody should tell Members of this House that that has happened by happenstance. It happened because the international community had a development policy to tackle unemployment and it has actually delivered. But there are still too many people hungry and poor and we still need to ensure that we can reach them.

Many of us who have the advantage of travelling and seeing what is going on can see the practical benefits of partnership in countries which are beginning to show signs of positive development. I cite the example that I saw some time ago in Tanzania, where a combination of philanthropic private organisations, namely Gatsby and the Wood Foundation, working with DfID and Unilever, were providing agricultural support to tea planters to raise the yield and the quality of the tea they produced, with Unilever providing a guarantee that it would buy the tea at a price that would give an improved return. That was a really good example of philanthropy, state aid and commercial interests coming together in ways that were really beneficial. There are hundreds if not thousands of such examples. Indeed, as the noble Viscount pointed out, it is something that the CDC has traditionally done, and does, in significant and potentially growing operations now. Many of us look forward to seeing the CDC report back with some end results, but with the caution that we cannot expect the CDC to carry the full burden of aid and development.

As a number of contributors have made clear, what is fundamentally needed is a holistic approach that says, “We will fund humanitarian aid as necessary, innovatively and creatively, to meet a need. We will make sure that we encourage private sector development to try to build skills and capacity, and work with the private sector to create investment and jobs that will help countries lift themselves out of poverty. But we will continue to invest in public goods and the building of capacity, whether it is functioning parliaments, bureaucracies, health services, education—institutions across these countries that will ultimately enable them to take their place as successful economic countries that will not require aid”. I think that none of us who have been involved in this sector for a significant time believes that now is a moment when we could or should be cutting aid.

I would say to those who dismiss the idea that aid is not wasted and is getting to where it needs to go that one of the most striking things is how little evidence there is of misspent aid, given the risks that we associate with where we are spending it. The experience of DfID and its partners—whether they are NGOs, private contractors, commercial partners, specialist agencies or international agencies such as the World Bank—is that they know what they are doing. They make mistakes because they are operating in difficult environments but they learn from those mistakes and have become expert and professional.

I have just one question for the Minister. I have asked him this before and I suspect he will not want to answer. We have, on the verge of Brexit, a very substantial commitment to the World Development Fund. It has been rated a very effective way of delivering UK aid. Can we expect a constructive conversation between ourselves and the EU to ensure that the best of the co-operation between the UK and the EU on development can continue in a constructive, ongoing way? The poor people of the world would really appreciate it if we did.