International Development (Official Development Assistance Target) Bill

Lord Forsyth of Drumlean Excerpts

Friday 27th February 2015 Lords Chamber

[Lord Brown of Eaton-under-Heywood (CB)]

My Lords, I speak from a position of deep ignorance, having had no relationship with the aid programme nor in any shape or form with the Treasury—except that I used to think myself a rather overgenerous contributor to it during my years at the Bar. I support this amendment, but I see the force of the point made by the noble Lord, Lord Davies of Stamford, about the messages sent. I appreciate of course that one cannot amend the amendment today, but there is an opportunity between today and Third Reading; one could, after the proposed addition set out in Amendment 1, include in parentheses something to the following effect, which would accommodate the noble Lord’s point. After saying:

“Subject to the assent of the Treasury following each Spending Round”,

one could add, in parentheses: “which shall not be withheld, save only to promote the most effective use of the committed fund”. That, with respect, would indicate plainly in the statute that the only point about this amendment is to have the scrutiny to ensure the efficient, effective use of this fund, so you do not escape—as unamended you would escape—all discipline at all in the use of this money.

[Lord Forsyth of Drumlean (Con)]

My Lords, I will make a brief point in response to the point that was made, and the point made by the noble Lord, Lord Davies. It would appear that some noble Lords are under a misapprehension about what the Bill does. All it does is require the Secretary of State to have a target of 0.7%, and where under Clause 2 he or she has established that target, they have to make a statement to Parliament if they have not met the target. Clause 2(3) says that a statement made,

“must explain why the 0.7% target has not been met in the report year and, if relevant, refer to the effect of one or more of the following”,

which are, in paragraphs (a) to (c),

“economic circumstances and, in particular, any substantial change in gross national income … fiscal circumstances and, in particular, the likely impact of meeting the target on taxation, public spending and public borrowing … circumstances arising outside the United Kingdom”.

The noble Lord, Lord Davies, thinks that that is a flag, but it is more of a dish-cloth. All it does is to say, “This target is desirable, but if it’s not met, you’ve got to give a statement to Parliament, and these are the range of reasons”.

Circumstances outside the United Kingdom could be anything whatever. There could be a crisis in euroland or a whole range of things such as difficulties in Ukraine. The Bill does not impose an absolute statutory duty to spend 0.7%, as has been suggested by some noble Lords; it simply imposes a duty to tell Parliament if this has not been done and to give a reason for that. What it does do, however, is to mess up the procedures by which our country has accountability for public expenditure and to confuse the fiscal year with the financial year, and it does so because it is a flag-waving Bill in terms of meeting an international target. Those of us in this House who are seriously concerned about getting money to poor people in poor countries, and ensuring that that money is spent wisely, ought to support this amendment. Far from weakening the Bill, it would strengthen it as it would bring the Treasury into the process from day one and avoid the situation whereby the Secretary of State can say, “I didn’t meet the target because the economy wasn’t right and the Treasury wasn’t too happy”. This amendment would strengthen the Bill and preserve the integrity of our financial control.

[The Parliamentary Under-Secretary of State, Department for International Development (Baroness Northover) (LD)]

My Lords, I thank noble Lords for bringing this amendment before us and welcome the level of attendance in the Chamber.

The noble Lords who have tabled this amendment have a formidable track record in the Civil Service and in government, not least in the Treasury, as the House will recognise, and are supported by very experienced voices. I value enormously their input and insights. It is extremely important that we take what they say very seriously. Nevertheless, I am afraid that, on behalf of the Government, I must resist this amendment. Perhaps I can explain why.

The Bill places a duty on the Secretary of State for International Development to meet the 0.7% GNI ODA target in 2015 and each subsequent year, and to lay a statement before Parliament in the event of it not being met. This proposed amendment in effect places the decision, though not the responsibility, to meet the target first and foremost with the Treasury at each spending round. It therefore provides the possibility for the Treasury to decide that 0.7% is no longer a priority, and for budgets to be accordingly adjusted downwards.

Of course, I am certain that the Treasury will fully scrutinise what DfID does, as, I assure the noble Lord, it does now. The department will, of course, still be subject to scrutiny through the spending review process in terms of how it spends the money. The department is scrutinised not only by the Treasury through the spending review process, as are all departments, but also through the Treasury approval of individual programmes within an agreed regime of delegated authority. I assure noble Lords that this Bill does not affect the role of the Treasury. What it does is send a clear message from this Parliament of its expectations in regard to the aid programme. As the noble Lord, Lord Anderson, put it, it would be wrong to interpose the Treasury into this arrangement through writing it into legislation. The Treasury’s role remains unchanged. Therefore, the proposed amendment of the noble and learned Lord, Lord Brown, is not needed either because of the scrutiny I mentioned, and it too should be resisted, if it were put.

The allocation of public expenditure is already a primary Treasury function. The Treasury’s role in the spending review is to ensure that the Government’s limited resources are allocated in the best way possible to DfID and other government departments to deliver government objectives, including enabling the UK to meet the 0.7% target—a commitment which this Parliament has debated and on which it has come to a settled view in the other place, and may yet in this place.

One of the challenges of the ODA level has been its huge variation, dropping sometimes to around 0.2%, and at other times moving up to 0.5% and now to 0.7%. That is not the pattern for other departments. Stability and long-term commitment are required. As the noble Lord, Lord McConnell, pointed out, this Bill enables us to move beyond the quantity to the quality of aid. We would not reach 0.7% if we did not already have formal Treasury approval in the spending round. This amendment proposes an additional legislative requirement to do what the Government are already required to do: tell Parliament how they propose to allocate public expenditure.

The noble Lord, Lord Butler, and other noble Lords expressed concerns that legislation of this nature relieves departments of having to make a case for expenditure. The noble Lord was particularly concerned about the impact that the commitment to 0.7% would have on value for money, as he said in Committee. I reassure him that the commitment to 0.7% is in fact having the opposite effect to that which he fears. It has resulted in a great increase in scrutiny, not a reduction. The Government have stepped up scrutiny and value for money. We have set up the Independent Commission for Aid Impact, which enables strong parliamentary oversight. All DfID spend is subject to a rigorous value for money assessment. A recent review by the OECD’s Development Assistance Committee said that the scaling up of the UK’s aid budget was planned in a way to ensure that the extra money was well spent and had the greatest possible impact. We are now ranked second in the world in transparency on aid finance.

In conclusion, I am afraid we do not feel that this proposed amendment is in the spirit of the Bill. The Bill allows Parliament to send a clear message to the Government about the spending expected on ODA from year to year. Most accept that the need is there. I thank the noble Lord, Lord Butler, and others for their recognition of that. Most accept that we can be very effective in helping to meet that need, for which I thank them. One day, of course, we all hope that this assistance will not be needed, but we are still very far from that place. Of course, as my noble friend Lord Howell said, we also harness many other means to assist development, including working with very fragile states such as Somalia and Syria.

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[Baroness Northover]

My Lords, I entirely understand and appreciate the sentiments behind these amendments as they seek to introduce greater flexibility through turning the target into a five-year one rather than an annual one. However, in practice, the greater flexibility that noble Lords are seeking cannot be achieved in this way and I cannot support the amendment.

First, as the House is aware, the 0.7% target is an internationally agreed one, monitored by the OECD Development Assistance Committee. Through a consensus of its 29 member countries, the DAC has long monitored levels of ODA spend—

[Lord Forsyth of Drumlean]

My Lords, will my noble friend confirm that the international target is 0.7% but that it is not 0.7% in any one year?

[Baroness Northover]

I can inform my noble friend that the DAC measures this on an annual basis. That is why the UK needs to report its ODA spend to the OECD in that way. Making this amendment to the Bill would have no bearing on our international reporting requirement, and it is crucial for clarity, consistency and transparency that we continue to report to the OECD in this way.

Secondly, regardless of this amendment, DfID will still have an annual budget, allocated by the Treasury, as we discussed in much detail in the last amendment, which it will plan to spend according to agreed forecasts. DfID will continue to seek funding from the Treasury that would enable the UK to meet the 0.7% ODA target from year to year. This amendment would serve only to risk reducing somewhat the predictability and consistency of the size of the annual budget, again something we addressed in the last amendment. I can assure the House that annual limits and measurements do not prevent long-term planning, which is what I think noble Lords are seeking to do in their amendments. As I said in response to the last amendment, delivering 0.7% GNI as ODA annually provides the United Kingdom with a relatively steady ODA budget each year. This allows for better long-term planning and more effective use of resources over multi-year periods, providing greater certainty over funding levels than would happen if this same target were measured over a five-year period.

DfID has a flexible portfolio of programmes and all of DfID’s spend is subject to a rigorous value-for-money assessment. Due to the dynamic nature of DfID’s portfolio, it is reasonable for programmes to be accelerated and decelerated to accommodate emerging priorities such as the crisis within Syria, for example. In its reporting on managing delivery of the 2013 ODA target, the National Audit Office found no evidence that DfID had failed to deliver value for money in the programmes contributing to the delivery of the ODA target.

My noble friend Lord Lamont expressed concern about measuring the ODA:GNI ratio. There is a clear and agreed statistical process which is overseen by the Office for National Statistics for reporting the ODA:GNI ratio. This enables a final figure to be reported in the year following the year in question. Of course, GNI estimates can and do vary. However, estimates are updated on a quarterly basis during the year in question and the method for assessing 0.7% allows for a reasonable level of statistical rounding to accommodate modest last-minute changes.

The noble Lord, Lord Lipsey, and my noble friend Lord Lamont were also concerned about a potential rush to spend at the end of the calendar year. This is something that we addressed both at Second Reading and in Committee. I would like to reassure noble Lords once more that this is not the case and that there are mechanisms which the department uses to ensure that it spends its money in a strategic and long-term way. As noble Lords will be aware, the spending around the end of the calendar year 2013 was in part because there are some bills which always come in during December. Our bill for the EC attribution always comes in in December. Deposits of promissory notes for the Global Fund to Fight AIDS, Tuberculosis and Malaria and the World Bank are concentrated at the end of the year. I would dispute the suggestion that contributions to the global fund would be a less effective use of resources. I am sure that my noble friend Lord Fowler would certainly dispute that. Reaching the poorest through an organisation like that is often the best use of such funding. The NAO and the OECD DAC have recognised this good practice and have given their assurance that the Government have robust processes and mechanisms in place to manage those budgets.

My noble friend Lord Howell mentioned ways of making sure that we are contributing to development other than through grants. He will be well aware, for example, of the CDC and the contribution that DfID can make through that organisation. The Government are able to invest in a wide range of activities of which I am sure he would be supportive. They lead to wider development and can also contribute in terms of ODA. I will be very happy to give my noble friend all the details of what DfID does in that regard. As I said in response to the last amendment, giving 0.7% of GNI as ODA annually provides a steady budget.

I was extremely glad to hear about the family background of my noble friend Lord Brooke, which rather differs from my own. However, that said, I hope that noble Lords will be prepared not to press these amendments. I understand what they are arguing for, but I would like to reassure them that there is a strategic long-term plan, and adopting 0.7% enables us to deliver it more effectively. We report on it on an annual basis, but that does not mean to say that it is simply an annual budget. It is a longer-term, strategic approach to what we wish to achieve through development. On the basis of that, I hope that the noble Lord will withdraw his amendment, but if he decides that he wishes to test the opinion of the House, I should make it very clear that we will oppose it.

[Lord Purvis of Tweed]

My Lords, I do not think that any new arguments have been put forward on Report on these amendments, which are identical to those we debated in Committee. I do not think that the case has been prosecuted, but let me respond to some of the points that have been raised. I believe that far from improving financial management or making the delivery of ODA more effective, these amendments would actually create a worse situation. In addition, they do not acknowledge that we would have to continue to report annually in accordance with the OECD Development Assistance Committee requirements along with what has not been mentioned, which is the International Development (Reporting and Transparency) Act 2006. These would carry on, quite rightly, because the annual target, which is based on the UN annual target for the number of annual transfers that are direct from government, and the OECD DAC annual reporting mechanisms are both there.

[Lord Forsyth of Drumlean]

Will my noble friend give way?

[Lord Purvis of Tweed]

Of course I will because I know that my noble friend enjoys intervening on me. It would be churlish to refuse him another opportunity to do so.

[Lord Forsyth of Drumlean]

I have to tell him that I can think of better things to do on a Friday morning. He keeps referring to an annual target, and it is true that the Bill provides for one. The target that was adopted by the UN is that:

“Each economically advanced country will progressively increase its official development assistance to the developing countries and will exert its best efforts to reach a minimum net amount of 0.7% of its gross national product at market prices by the middle of the Decade”.

That, by the way, was in 1975. It makes no mention whatever of having to do that each and every year.

[Lord Purvis of Tweed]

My noble friend is repeating a point he put to me in Committee and says from a sedentary position that I was not listening. I did listen, and not only did I listen, but I responded. The whole UN resolution is the context. The 0.7% is one part of it and it was based on the Pearson Commission report which analysed what the annual transfers were going to be with regard to direct aid from countries that adopted the target. It is perfectly clear. My noble friend says that he has better things to do than intervene on me, and I have better things to do than to respond to that type of intervention.

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[Lord Lawson of Blaby]

It is certainly true that remittances are important, but I was including them in private capital flows, because remittances are one example of them. There is also a great deal of business investment in these countries. That is what is making a difference. There are other things, too, such as better governance. The so-called failed states, which are riddled with corruption, are a real problem, as noble Lords on both sides of the House are well aware—as DfID is well aware and as the evidence that we had on the committee pointed out very clearly. However, the problem of corruption is not going to be solved by dishing out 0.7% of GNI on overseas aid.

Because this is so absurd, I welcome, in general, Clause 2, to which this amendment refers. The clause makes it quite clear that this is not really a serious commitment at all, because all that the Government have to do, if the 0.7% target is not reached in any year, is to lay a Statement before Parliament saying why it has not been reached. This is what my amendment relates to. The clause gives three reasons that the Government can give in telling Parliament why the 0.7% has not been attained, which are,

“economic circumstances … fiscal circumstances and … circumstances arising outside the United Kingdom”.

Noble Lords might think that is pretty comprehensive, but it is not completely comprehensive, which is why I have added one further condition—there are two further conditions, but one in particular belongs to this set—which has been alluded to, very rightly, in some earlier contributions today. It refers to,

“circumstances where meeting the 0.7% target would lead to excessive spending towards the end of a calendar year”.

That is separate from overall economic circumstances, fiscal circumstances or things happening overseas that have affected the picture.

We know that this is a problem. The NAO was extremely critical of it only last year. If you have to shovel stuff quickly out of the door, it will not have the same value-for-money scrutiny that DfID tries to ensure throughout the year on everything it does. I commend DfID for its attempts to get value for money so far as that is possible in this area. It is far better than any other national aid agency in doing that. It is certainly better than the multinational organisations—the United Nations or the European Union. We discovered that in the evidence we took. But of course the incentive will be to shovel it out to, say, the United Nations in order to hit the target. Therefore, this should be as good and real a reason as the other reasons that are listed in the Bill—economic, fiscal and overseas events—why the Minister should go to Parliament and say, “That is why we have not achieved the target, because to do so would have meant shovelling a large amount out at the end of the year without adequate scrutiny”.

The other condition that I am asking the House to accept is,

“circumstances where anything outlined in paragraphs (a) to (d) is likely to persist”:

that is, economic, fiscal, overseas, and (d), which is my suggestion that it would require too much money to be shoved out quickly to meet the end-year target. This really concerns Clause 2(4), where the Secretary of State also has to inform Parliament of what steps are going to be taken to ensure that the target will be met in the subsequent year. This is even more absurd—we are even more in Alice in Wonderland territory. How on earth can the Secretary of State for Industrial Development—and I have a high regard for the present incumbent, my right honourable friend Justine Greening— ensure that,

“circumstances arising outside the United Kingdom”,

are not going to continue to make the achievement of the target difficult? It is a complete absurdity. Therefore, to try to minimise the absurdity slightly I have suggested this amendment. I beg to move.

[Lord Forsyth of Drumlean]

My Lords, I support my noble friend’s amendment, which I think is an important one, particularly in the light of the material that has been produced by the National Audit Office and others showing that in the last eight weeks of 2013, while most people were thinking about Santa Claus, the department spent £1 billion of its budget, and 40% of its budget was spent in the last two months of the year. That indicates what we used to have blighting local government, where suddenly all the roads were being dug up and the parks were being spruced up in the last few weeks of March because the local authority had to spend the budget. We all know that that does not result in value for money. I am entirely persuaded that there may have been examples in the last two months of 2013 that did represent value for money, but that is not the point that is being made. My noble friend’s amendment is very important for that reason.

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Moved by

[Lord Forsyth of Drumlean]

21: After Clause 2, insert the following new Clause—
“Duties related to defence expenditure
(1) The duties under sections 1 and 2 will not apply in any year following a year in which the expenditure on ODA is greater than 35% of the amount of defence expenditure.
(2) In this section “defence expenditure” has the same meaning as the NATO definition of defence expenditure.”

[Lord Forsyth of Drumlean]

My Lords, the amendment has the effect that in the event that the ODA’s expenditure is greater than 35% of spending on defence, the provisions of the Bill will not apply for the following year. Noble Lords will have worked out that that percentage corresponds to the UK’s international target of 0.7% of GNI and the UK’s NATO defence spending commitment of 2% of GDP. The provisions offered by the amendment seek to ensure that commitments on international aid do not hamper the United Kingdom’s military capabilities.

It must be obvious by now to everyone in this House and those who have been following our debate that the Bill is a piece of public relations. The arguments put forward by the Minister this morning and by the sponsor of the Bill, the noble Lord, Lord Purvis, just a few moments ago are all about how it will give us international standing and enable us to take a lead. As my noble friend Lord Lawson pointed out, there is quite a lot of catching up to do by other member states on their commitment.

If we take that as a principle and take it as read, I should have thought that the promoters of the Bill would find the amendment extremely attractive. It takes exactly the same argument in respect of our commitment to development aid and applies it to our commitment in NATO. I believe that the first duty of any Government, above anything else, is the defence of its people and the security of the country. Therefore, that 2% commitment to NATO is to my mind far more important than the 0.7% commitment in the Bill.

It is striking, and it is important that we address this issue, that our ability to meet that NATO commitment depends on us having the money and making it a priority. The effect of the Bill is to give overseas aid priority over defence. That seems wholly wrong and inappropriate—particularly in the circumstances in which we find ourselves today.

I am looking forward to hearing from the noble Lord, Lord West, and others who are far more experienced and knowledgeable about defence expenditure than I. I had hoped that I would get a glimpse of the extent of the challenge from the speech which the Chief of the Defence Staff was going to make at Chatham House on Monday but, for reasons that are completely mysterious, apparently he was told by the Government that he could not make that speech. I find that quite extraordinary. Was that because, at a later stage, the Defence Secretary wishes to take credit for the situation that we are in, or was it because people are nervous at this sensitive time about what is happening to defence expenditure? There is an opportunity through the amendment to reassure those of us who believe that we absolutely must meet that NATO commitment. Of course, I can claim as a strong ally in that respect the Prime Minister himself, who has been telling other members of NATO how they must meet the 2% commitment for expenditure.

Having said that, I think that the only country which will spend 2% of GDP on defence in the fiscal year 2015 is Estonia. Again, there is a parallel in the position on overseas aid. I expect those Members—such as the noble Lord, Lord Davies—who have argued in this House with great passion that we need to take a lead, fly a flag and send a signal on overseas aid to support the amendment, because we need to send a signal on defence expenditure as well.

I just highlight a couple of issues which explain my very strong feeling that we should make that commitment. The United States is spending 3.8% of GDP on defence. Having scrapped the Nimrod programme, our Navy is very vulnerable to submarine attack. I am sure that the noble Lord, Lord West, will be able to reassure me that that is correct. I read in a newspaper the other day that a periscope was spotted in the Irish Sea and the MoD had to ask our ally forces to come to its rescue with their own military marine patrol assets.

In the SDSR 2010, the number of battle tanks was reduced by 40%, as a Ukraine-type conflict was not anticipated to take place. In 2001—long after I had left government—we had 33 frigates and destroyers. It is now down to 19. The RAF has seven fast jet squadrons; it had 33 in 1990. It is true that we have taken on an order for the F-35 joint strike fighter, but that is a few years away. Despite the fantastic efforts being made in Fife, at present we do not have an aircraft carrier capability. The Harriers which operated from the aircraft carriers which were decommissioned have been sold to the US for spares, leaving us in the position where, in Libya, the Typhoons are having to fly much further and get refuelled in the air.

Let us consider troop numbers. Our Army will be down to the smallest since the Boer War at 82,000, cut from 110,000, the Navy service will be down by 5,000 to 30,000 and RAF personnel will be reduced by 5,000 to 33,000. General Richard Shirreff, who is Deputy NATO Supreme Allied Commander, says that,

“the sort of defence cuts we have seen … have really hollowed out the British armed forces and I think that people need to sit up and recognise that”,

and that it is,

“one hell of a risk”.

President Obama, who I know has a few supporters in this House, earlier this month called on the Prime Minister not to let the figure fall below 2%. I have reservations about hypothecation, which I have spent a great deal of time arguing about. However, if we are to have hypothecation for overseas aid and if that is because the Government want to take an international lead and believe that we have a moral duty to do so, we need to have hypothecation for the commitments that we have made in respect of our defence. The highest duty of government is to defend our people. I beg to move.

[Lord West of Spithead (Lab)]

My Lords, I have put my name to this amendment and I support it. I should add that the noble Lord, Lord Dannatt, has also put his name to the amendment but has asked me to say that he unavoidably cannot attend today, and to mention that he had raised this very issue in Questions earlier in the week.

Defence and security of the nation, as has been said by the noble Lord, Lord Forsyth, are the first responsibility of any Government. Indeed, the Prime Minister has said so, as did the Prime Minister before him and the Prime Minister before him. But in 2015-16, the next financial year, defence spending is on track to fall to 1.88% of our GDP. This is the lowest percentage of our GDP in 25 years, yet we are in a highly dangerous and chaotic world.

In that highly dangerous and chaotic world, defence spending has been reduced by 8% since 2010 through a lot of the measures that the noble Lord, Lord Forsyth, mentioned. A recent study by the International Institute for Strategic Studies shows that the United Kingdom’s military capability—our capability to do things—has reduced by more than 20% since 2010. That is more than a fifth; which is an incredible reduction in our military capability. We are standing into danger—I apologise for using a nautical term but that is what you say when you are about to go on to the rocks—and I think we should be afraid. Our forces have not just been cut to the bone; they have been cut into the bone. Our military now is unable to do what the people of our great nation expect it to be able to do. The noble Lord, Lord Forsyth, mentioned a submarine to the west of the UK. Our inability to prosecute that properly is a dreadful indictment of what has happened to our forces.

If our defence forces are incapable of defending our nation, its people and its interests worldwide then to be quite honest welfare, health, education and foreign aid are as naught. They become irrelevant if we cannot do those other things and, ironically, in many parts of the world where DfID is working it can do so only courtesy of the military. As has been said, the Government made it very clear at the NATO summit in Wales that the European nations of NATO should spend a minimum of 2% of their GDP on defence because of the threats that there were, which are now seen rising within the European theatre, let alone worldwide. Indeed, the Secretary of State for Defence has referred to a “real and present danger”.

One would like to think that the Government believe that the UK should do the same as it has told all these other countries to do, yet almost every statement and action by this Government since the NATO summit seems to indicate that the Chancellor wishes to renege on that promise. I can of course understand the problem that he has. As a result of multiple ring-fencing of budgets, his room for manoeuvre over the allocation of sufficient funding to departments is seriously curtailed, right across government. Indeed, ring-fencing has a lot of unintended consequences and is not necessarily a clever thing to do.

For this reason, if we are going to ring-fence I believe that it makes absolute sense to link the ODA to the defence budget so that as the noble Lord, Lord Forsyth, says, we can show that defence is more important —because without the defence, we cannot have an aid budget. This amendment would assist the Government in meeting their promise of spending 2% of GDP on defence. For that reason, it is a very sensible and proportionate amendment, which would enhance the security of our nation and therefore enable us to continue to provide aid into the future.

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[Lord Marlesford]

My Lords, the speeches of the noble Lord, Lord Reid, and the noble and gallant Lord, Lord Stirrup, emphasise a very important point: the synergistic act between aid and the military. We know that the help we recently sent to Sierra Leone to combat Ebola had to be assisted by military forces to make it possible to administer it. I suspect that there are a lot of instances where the provision of what we loosely call aid is the need to make it possible to deliver the aid.

I suggest—it may not be a matter for this amendment, although I think it is the point of the amendment—that very much more careful consideration be given to the extent to which the Ministry of Defence budget is used to facilitate aid. Particularly now, in the days of ISIS, that so much is needed to introduce minimum stability—to help refugees, for example—I suggest that one could look at the defence budget and the aid budget as a single budget and use that synergy to make both most effective. It is quite extraordinary to me that we set aside the aid budget with a special ring-fence and do not do the same for defence, especially when we are underspending on it.

[Lord Forsyth of Drumlean]

I entirely agree with what my noble friend is saying. However, of course the root of this problem is that the Government’s focus is on meeting an international target, and the requirements as to what can be included in the international target exclude things which are contributed by the MoD, even though they are helping poor people in difficult circumstances.

[Lord Marlesford]

In that case, I would have thought that we should redefine aid to take into account the need to be able to deliver it, if necessary unilaterally but maybe with other countries as well—particularly the United States, where the expenditure is not that great, as we have heard.

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[Lord Purvis of Tweed]

I do not think that there is any question that we owe our liberties and freedoms to defence spending, and that is why it is required. Not only that, I understand absolutely the Wales Declaration on the Transatlantic Bond that we signed up to, which states that we will aim to move towards the existing NATO guideline of spending 2% of GDP on defence within a decade. I know that we have a leading role in this and know the strength of the argument made by my noble friends and noble Lords to ensure that the UK continues in this leading role.

[Lord Forsyth of Drumlean]

My Lords, I am a very humble sort of chap. I have sat here this morning, participated in the debate and have listened to former Cabinet Secretaries, former Permanent Secretaries, former chiefs of staff with great experience in defence, former Secretaries of State and former Treasury Ministers. There is an almost unanimous voice saying, “Look, we support the principle but, actually, the way in which this is being implemented is mistaken”. No doubt the Bill will make its way towards the statute book and people will be able to change it in the future. However, on this matter of the defence of our country, we are in territory that is of fundamental importance.

Having listened to the speeches of the noble and gallant Lord, Lord Stirrup, the noble Lord, Lord West, and, speaking from the opposition Benches, a former Secretary of State for Defence, who has held quite a number of other positions—a vast experience of government—I am very surprised that my noble friend the Minister has not said, “You know what? We need to go back and think about this”. I did not grasp whether she was saying that the Government remain committed to a target of 2% or that they would meet their 2% target this year. I shall happily give way to her if she can clarify what she was saying, because there is a degree of confusion about that.

[Baroness Northover]

I trust that I made it clear in answer to my noble friend Lord Tugendhat. He made the very reasonable point: why hypothecate this one but not the other one? I responded that the defence budget has been much more predictable. I understand the pressures on it and, therefore, there is a strong argument for making sure that the aid budget, which has zig-zagged all over the place, as we have heard, is fixed in the way in which we are seeking.

[Lord Forsyth of Drumlean]

I am rather disappointed with that answer. I am happy to give the Minister another go as she did not actually answer the question. The reason the aid budget has, as she said, wiggled all over the place is because the Government have added another £5 billion to it in order to meet their target. They have met—in fact, they have more than met—the 0.7% target this year, without the need for the Bill. Saying that the defence budget has been reasonably consistent has been challenged and I do not want to go over those arguments. The aid budget has moved all over the place because of the decisions made by Governments.

The point that I am asking her about is this: was she saying that the Government will indeed meet the 2% target this year, and are committed to that? If she is saying that, I am much less concerned about my amendment, and that is fine. If she was just saying that the Government have committed themselves to the NATO target, that is a completely different position. That is why she is arguing for the Bill in respect of the overseas aid target: it is not enough for the Government to commit to meet the target and we need to have it in statute. What she is saying about this is very important, so what was she saying?

[Baroness Northover]

We are talking about a Bill relating to development. We are talking about a 0.7% target to do with development. That is what the Bill is about and that is why we oppose the amendment: it does not relate to the Bill in question.

[Lord Forsyth of Drumlean]

We can all take it from that that the Government are not prepared to say on the record, with all the risks and threats around us in the world, that they are committed to meeting that 2% target. That is extremely disappointing, especially when the Prime Minister is going around telling other countries that they ought to do so. Surely the whole basis of the debate has been about setting an example to the rest of the world.

A number of points have been made. I want to pick up on points made by my noble friend Lord Marlesford and by the noble and gallant Lord, Lord Stirrup, which are profoundly important. The noble and gallant Lord talked about the fantastic job being done by our troops around the world, in conflict zones and elsewhere, to help improve people’s quality of life. That is something of which we should be immensely proud. We should not be proud of the fact that only £5 million of Ministry of Defence spending counted as overseas development aid for the year 2013. The Government are obsessed with sticking to conditions set by other people—who do not actually meet the target—as to what can be included in the target.

I listened to my noble friend the Minister’s boss, the Secretary of State, on the radio this morning, speaking from Sierra Leone. She was very good indeed. She said how committed she was to aid being about helping people economically. She spoke with great affection about the role being played there by our defence forces. But that is not allowed to come off her budget because it does not meet the target. Indeed, in one instance where we sent troops and people—I think to Haiti—the only thing that the MoD was allowed to claim was the fuel for the ships. That is an absurd position, which arises from being determined to meet a particular target determined by someone else, as opposed to thinking about how we can spend the money most effectively to help people in distress and need. In that latter example, humanitarian aid is less than 10% of the budget that we are discussing.

[Lord Reid of Cardowan]

I am grateful to the noble Lord for allowing me to intervene. This is an important point for recognition, I hope, by those who approach this not from the defence side but from the side of international development, whether economic development or aid. The point is simply this. We synergise the efforts, finances and resources of DfID and the Ministry of Defence when specific emergencies arise. We did so in relation to Ebola and the Pakistan earthquake and so on, as I think everyone would accept.

However, there is so much more that we could do on a more general scale to aid the development of countries throughout the world in two areas. One is post-conflict reconstruction, where a massive job could be done for the benefit of people, and I would go further by referring to the second area, pre-conflict reconstruction. Both those are part of what the noble Lord, Lord Howell, mentioned today as developing areas for international development and aid, and they are relatively recent. If we could conscript a vast army not of soldiers but of civilians with expertise in human rights, law, prisons, policing and so on, pre and post-conflicts, there would be enormous benefits. This is not just a matter of the protection of our own country.

[Lord Forsyth of Drumlean]

I am most grateful to the noble Lord, who speaks from experience, and I agree with everything he says. What we spend at the moment on overseas development aid accounts for about a third of the defence budget. All my amendment would do is say, “If you want to increase the overseas aid budget, you can do so, but we have to meet that other target as well”. That seems entirely reasonable and sensible, and I am afraid that the arguments put forward for not linking these two things were thoroughly inadequate. The advocates of the Bill have been hoist by their own petard.

I would just like to pay a small tribute to the noble Lord, Lord Davies, for saying right at the start that he would be consistent, but I was a little disappointed that he suggested that if I divided the House he might not be able to vote for the amendment because of the drafting. That seems to be something that he should be able to overcome. If the House decides to accept the amendment, I shall be quite happy for the Government to come back with new drafting. I am very happy to work with the noble Lord to ensure that we reach agreement on the drafting, just as we have agreed on the principle of maintaining the support for our Armed Forces and ensuring the security of our country.

[Baroness Northover]

Perhaps I may clarify that we will be giving no further thought to the amendment. I also clarify that if DfID contracts the MoD to deliver humanitarian assistance, it counts as ODA. However, following what the noble Lord has just said to the noble Lord, Lord Davies, I want to clarify that we will not be giving further thought to improving his amendment.

[Lord Forsyth of Drumlean]

If that was designed to prevent me dividing the House, it was a pretty good example of negative advocacy. I beg leave to test the opinion of the House.

--- Later in debate ---

[Lord Collins of Highbury (Lab)]

I am sorely tempted now, after all this time. Let me reassure my noble friend Lord Hollick that, absolutely, accountability is vital to the Bill. We can be very satisfied that, as we have heard in every debate on every group of amendments, transparency on aid financing and the level of accountability is unique. ICAI has been doing a very good job. The fact that it has produced critical reports in recent times highlights its important role. I want to ensure that we develop its role and defend its responsibilities. I certainly want to ensure that we have a system of accountability that is robust and sustainable. I have every faith in the parliamentary accountability of ICAI through the development committee. That is why I am satisfied, and the party is satisfied, with the level of accountability on value for money and the impact that the spending has. However, for the avoidance of any doubt, if that independence or capability was ever brought into doubt, I assure my noble friend that we would not hesitate to legislate further to ensure that it is sustainable and robust.

[Lord Forsyth of Drumlean]

Before the noble Lord sits down, will he explain, having said how important it is and that he is prepared to legislate in the future, why he would not be prepared to accept his noble friend’s amendment?

[Lord Collins of Highbury]

The simple fact of the matter is that I am satisfied with the current arrangements and that we have a very strong level of accountability. Any amendments proposed at this time are not necessary.

--- Later in debate ---

[Baroness Northover]

My noble friend will have heard what the noble Lord said about respecting how ICAI is operating now. One would hope that that is the case in future.

I point out that ICAI is one part of a wider suite of scrutiny mechanisms. The National Audit Office has statutory responsibility for conducting value for money studies on DfID’s work, and it reports to the PAC, often critically, which also makes recommendations about DfID’s work. The Organisation for Economic Co-operation and Development’s Development Assistance Committee also examines the UK’s development assistance as part of a regular series of peer reviews of donor aid policies and programmes.

The structure in the Bill provides that the Secretary of State is held to account to ensure that there is proper independent scrutiny. As I said, it is highly likely that it will be ICAI, and I hope that noble Lords will take as our commitment to ensure that our aid is very thoroughly scrutinised the fact that ICAI was set up in the first place. It is not appropriate to specify it in the Bill, for the reasons that I have given. There are checks there to ensure that scrutiny. I make clear that we will oppose the amendment.

[Lord Forsyth of Drumlean]

Before my noble friend sits down, by way of analogy, what would she think about a company which was spending, say, £11 billion or so that came up with the proposition that instead of appointing an auditor, it would appoint several auditors who were all jointly responsible and then pick the result that suited its interests?

[Baroness Northover]

I think that my noble friend has missed the elements where I mentioned the way in which the Secretary of State will be held to account for how our aid budget is properly and independently scrutinised.