Queen’s Speech

Lord Chidgey Excerpts

Wednesday 11th June 2014 Lords Chamber

[Lord Chidgey (LD)]

My Lords, in the limited time available, I shall concentrate my remarks on some aspects of international development, starting with the Global Partnership for Effective Development Co-operation. It has helped countries and organisations to work together towards ending poverty since before the turn of the millennium. The legislative perspective began to be organised through the energetic participation of parliamentary delegations, demanding greater recognition for the key role of parliament and legislators in this debate.

There is a growing emphasis on accrual of natural resource revenues, foreign direct investment, taxation, philanthropy and other domestic resources, and thus the pool of resources to be accounted for has deepened and widened. Partner governments and parliaments are now responsible for managing and accounting for the growth of local domestic resources, as well as for external finance such as ODA.

The new focus on the private sector makes sense. Developing countries need jobs and wealth creation. Strong institutions are vital. In the developing world, parliamentary institutions are not only the political underdogs in an executive-dominated landscape; they are chronically ill informed, barely engaged and sorely under-resourced. In fact, capacity is often minimal. Parliaments, the only institutions to hold the mandate of the people and thus at the apex of every country’s accountability structure, do not have the resources to carry out their roles effectively. In fact, the chief constraint to effective development is often the weak capacity for oversight in parliament.

Donors should not, however, shy away from supporting legislatures and instead invest in CSOs as their “development watchdogs”. They should not seek comfort through the idea of stronger NGOs; instead, they should look at building stronger parliaments. Continuing to bypass parliaments because they are weak just further weakens them rather than developing their capacity.

After I delivered the report from the parliamentary forum at the fourth high-level forum in Busan in 2011, parliamentary capacity was included as a key indicator of aid effectiveness in the final statement. However, by the time we reached Mexico City this April, after 18 months of meetings of the committee for Global Partnership for Effective Development Co-operation—a committee of which our own Secretary of State for DfID was the co-chair—the role of parliaments had all but disappeared. What we did have, however, was the glossy launch of Unleashing the Power of Business, which is a practical road map for systematically engaging business as a partner in development. It professes to be a road map all about partnerships. Set out on the cover are partnerships between donors, between business, between civil society and between recipient governments. Is anything missing? Parliament— the one organisation with the electoral mandate of the people to hold each of the others to account and to demand transparency is parliament. Over eight pages of glossy diagrams, action areas, sectoral roles and examples of public-private sector partnerships, there is not a single mention of parliament—not one.

To be clear, there is a great deal of support for the Government’s initiative for boosting the role of business in aid and development programmes, including from NGOs delivering major programmes, and from the European Commission, which is not exactly renowned as a haven of capitalism, but it comes with a health warning of risking putting profits before the needs of the world’s poorest people. Surely, the major criticisms by the Government’s aid watchdog, the Independent Commission for Aid Impact, of the £1.8 billion economic development programme have to be a major wake-up call. That includes, for example, the need to define and articulate where the programme can add most value and to be more realistic in its ambitions and impact; the need for clear guidance to staff on how to design well-balanced country portfolios that match the goals for an end to extreme poverty; the need better to calibrate and manage the risks associated with private sector development; and the need to work harder to understand the barriers and business imperatives faced by the private sector engaged in development. No wonder the ICAI gave DfID a red-amber health warning. If these were the comments from the auditors on the company accounts presented to an AGM, I suspect that the rather banal response to the ICAI from DfID would be swept aside, with the company’s share price dropping like a stone as unconvinced shareholders fled in droves. However, in this case, it is not shareholders that the Government have to worry about; it is the voters.

Given that private sector development is a top priority for DfID, the ICAI report should be seen as an urgent call for DfID to put its work on hold and start open discussions with a much wider array of CSOs, businesses and parliamentary representatives in the UK and overseas. In this area, as was demonstrated in Mexico, DfID is a world leader and the private sector has DfID to thank for the larger space that it now has in development co-operation. That is welcome in many ways but the welcome will soon fade if, in the process, DfID begins to abandon the aid effectiveness agenda. The private sector must have a role and supporting economic development is crucial, recognising that our 0.7% GNI aid allocation is a precious resource that must be focused on aid effectiveness.

In conclusion, the new approach in the fight against poverty is as yet insufficiently evidence-based. Not all growth delivers on poverty reduction and broader economic opportunities. The ICAI report highlights how difficult it is to know how much money is being channelled into this tranche of work. Establishing proper impact assessments without the benefit of clear transparency procedures is daunting and weakening corporate accountability, with some aid not directly targeted at the poor. The private sector is just one ingredient of many in the mix of inclusive economic growth. Taxation, education, health and a sound institutional and parliamentary framework all play crucial roles. While we know the ingredients, far less is known on how best to combine them. Setting them in the guidelines set up by the aid effectiveness agenda could be a good way to start.