International Development (Official Development Assistance Target) Bill

Lord Lawson of Blaby Excerpts

Friday 27th February 2015 Lords Chamber

[Lord Lawson of Blaby (Con)]

My Lords, I give my full support to the amendment that the noble Lord, Lord Butler, has just moved. He pointed to the names of noble Lords who have put their names to this amendment, all of them former Permanent Secretaries to the Treasury, Cabinet Secretaries or, in some cases, both. In all my 23 years as a Member of your Lordships’ House, I cannot remember this ever occurring before, and it may well be that it is unprecedented. There is a reason for that.

I pay tribute personally to the noble Lord, Lord Butler. I have known him for many years. When I first became Chancellor, he was Permanent Secretary in charge of public expenditure at the Treasury, a duty that he fulfilled impeccably and has done over the years. We are very lucky in our senior Civil Service. He has been an outstanding public servant in a number of ways over a large number of years, and we ignore what he says at our peril.

The amendment is fundamentally about good government. I do not know whether this is still the case, but in my day the Treasury used to be known as “the central department”. It was called that because it had a responsibility that went beyond the question of the management of the economy, in so far as one is capable of doing so; it also had a responsibility for good government. We in this House also have an overarching and overriding responsibility for good government. However well intentioned, the Bill, for the reasons outlined by the noble Lord, Lord Butler, is the antithesis of good government. It is gesture politics. Good government really matters, and the amendment from the noble Lord, Lord Butler, goes to the heart of that issue. I warmly support it.

[Lord Davies of Stamford (Lab)]

My Lords, the noble Lord, Lord Butler, in his normal way, spoke extremely powerfully. His arguments are extremely strong, his logic is irrefutable and his experience is something that no one would wish to challenge.

The trouble is that I think he has missed the essential point of the Bill, which is that it is a quite exceptional measure designed to send an exceptional message to the world. First, it says to the developing world, the poor countries containing the 4 billion or 5 billion people in this world who live on less than $1,000 a year per capita income, that we care about inequality and are making a fundamental qualitative change in order to demonstrate the authenticity, the reality, of that commitment and a desire to make a new move in that direction. The second reason is of course to send an equally unmistakable signal to other developed countries and to set an example that we hope they may follow.

The trouble with the amendment from the noble Lord, Lord Butler, for all the quite sincere compliments that I have just paid it, is that it undermines completely that sense of authenticity. If it is clear that at any time the Treasury can decide in a given year that our obligation to spend 0.7% of GDP on international development no longer applies, then the whole commitment that we are trying to make will simply be emptied of its content. The message will not have any strength at all for either the developing world or the rest of the developed world, and that is the basis on which, very sadly, I feel I have to oppose the amendment.

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Moved by

[Lord Lawson of Blaby]

16A: Clause 2, page 2, line 15, at end insert—
“(d) circumstances where meeting the 0.7% target would lead to excessive spending towards the end of a calendar year;(e) circumstances where anything outlined in paragraphs (a) to (d) is likely to persist.”

[Lord Lawson of Blaby]

My Lords, when the noble Lord, Lord Butler, introduced his excellent amendment, he prefaced it by saying that he was strongly in favour of the 0.7% target. I will preface my brief remarks by saying that I am not in favour of the 0.7% target and that I am not alone. In an earlier debate, one noble Lord mentioned the role of Select Committees in all this. The only Select Committee of your Lordships’ House to have looked at this issue in great detail is the Economic Affairs Committee, which, under the chairmanship of my noble friend Lord MacGregor, produced a unanimous report. It was unanimous because the evidence was so strong that 0.7% should not be a plank, let alone the plank, of the Government’s policy in this area and that least of all should it be enshrined in legislation.

What I am in favour of is economic development, and particularly of helping the poorest countries of the world, and the poorest people in those countries, to have a better standard of living. We received evidence about the role that ODA played in that process, and I am glad to say that since this ridiculous target was first suggested in the 1950s and then agreed by the United Nations in 1970, the world has changed. One of the great changes is that there has been an improvement in the countries of the so-called emerging world, and it has not been due to overseas aid. As my noble friend Lord Howell mentioned, there are other things that are far more important, although when my noble friend the Minister replied, she seemed to be totally unaware of this. She said, “Of course there are other things; DfID and other government agencies are doing this and doing that”—but it is not government agencies, it is the expansion of trade and, above all, the massive expansion of private capital flows to these countries that have made the change.

[Lord Lamont of Lerwick]

Would my noble friend also agree that the whole phenomenon of remittances has played a major part in development, perhaps even more so than investment per se? The value of remittances is several times that of official aid.

[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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[Lord Purvis of Tweed]

My Lords, I thank my noble friends for their amendment and the case that they made, which I understood clearly and which was sincerely made. However, I cannot accept the amendment and shall explain briefly why. In doing so, I hope to give satisfactory answers to the points that they made.

As I understand it, the amendment would place a duty on the Secretary of State to report to Parliament if they had not met the target because the budget was low at the start of the year, they had no ability properly to deliver the expenditure towards the end of the year and this mismanagement would persist in future years. However, not only are there other parts of the Bill that provide for independent evaluation of the impact of the aid in the widest terms, but this Bill complements the 2006 Bill, which also requires statistical reporting that addresses many of those aspects, too. Together, they provide a proper reporting mechanism on the proper delivery of the budget that DfID will have. Therefore, it is a quite distinct issue from whether there are factors that mean that it is hard for DfID to deliver its budget from year to year. That is a slightly wider aspect to which the Minister responded to very properly.

The NAO report was cited again. It is worth stating that I agree with the report and have sympathy with its finding at paragraph 12, which states:

“The requirement to hit, but not significantly exceed, aid spending equal to 0.7% of gross national income every calendar year means the Department has to hit a fairly narrow target against a background of considerable uncertainty”.

That is of course the case. Indeed, the delivery of aid has often been one of the more difficult aspects in different circumstances around the world. That is why there are a number of tools available to government for the proper delivery of it, either through multilateral organisations or from the promissory note mechanism. They are a positive means of delivering proper budget management. In responding to the previous group of amendments, the Minister indicated, for example, that towards the end of a calendar year DfID provides a £1 billion contribution to EC ODA. That is drawn down in December after approval, funnily enough, by the Treasury. Deposits on promissory notes, the Global Fund to Fight AIDS, TB and Malaria and the World Bank contributions are concentrated at the year end. What this Bill affords is the ability for the UK now to enter into a different form of discussions with its multilateral partners, because we will be moving from a situation where we are seeking to reach the target to one where we have met it and are seeking to sustain that. Not only will we be striving to have better delivery of our own aid programme, but we will have a much stronger standing internationally to deliver this for our partners around the world.

Even in the circumstances where we were meeting the target, as we were discussing in Committee, the NAO report recognised the work of DfID in delivering this. I think that the Bill addresses what my noble friends are seeking to achieve, which is that all factors with the proper delivery of aid will be reported to Parliament and will be afforded proper parliamentary scrutiny. Together with the 2006 Act, this legislation will provide for that ability. On that basis, I hope that my noble friend will withdraw his amendment.

[Lord Lawson of Blaby]

My Lords, I listened very carefully to what the noble Lord, Lord Purvis, the promoter of this Bill in this House, has said, as well as to my noble friend the Minister, who is no longer in her place. I have to say that neither of them went anywhere near addressing the points that I made.

I am glad to see that my noble friend the Minister is now back to grace us with her presence and hear what I have to say. I was surprised that she mentioned Jim O’Neill in this context. Like the noble Lord, Lord Reid, I know Jim O’Neill well, and at no time has he said —nor would he dream of saying—that the 0.7% target is necessary for human development. The 0.7% target is a great irrelevance. Look around the world at the big countries, the G7 countries. The other six have no intention of meeting that target. The ones who are nearest to it, France and Germany, contribute 0.4%. At the other end of the scale, Italy and United States contribute 0.2%. They have no intention of doing any more. Some of those countries are actually reducing the amount they give, for reasons that we have gone through before, which I shall not repeat now.

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[Lord Hollick (Lab)]

My Lords, we now come to the part of the Bill relating to scrutiny. It is particularly important because, as we discussed on the first amendment, there is no prior scrutiny by the Treasury of this expenditure. So I think that we all recognise that scrutiny after the event is of particular importance and this amendment seeks to answer the question of who is to provide the independent evaluation of official development assistance to ensure that it represents value for money.

The Bill gives the appointment of the independent evaluation official to the Secretary of State. We think this is wrong. We believe that the Bill should make it clear at this stage that independent evaluation should be provided by the Independent Commission for Aid Impact. This was established in 2011 as an independent body to scrutinise the impact and effectiveness of the UK aid budget on intended beneficiaries, to assess the delivery of value for money for the UK taxpayer and to provide important evidence-based feedback to Government decision-making and performance. Over the last three years the ICAI has accumulated a deep knowledge and understanding of the impact and effectiveness of aid programmes on a country-by-country basis. The House of Commons International Development Committee has praised the work of the ICAI. Its expertise, growing reputation and independence make it the ideal body to carry out the independent evaluation required by the Bill.

Clarity about who is responsible for oversight is critical both to the effectiveness and the authority of the evaluation process. Oversight by a number of different bodies in a piecemeal way—a sort of “flexible” approach—is a recipe for muddle, confusion and ineffective scrutiny. Institutions and corporations have learnt the hard way that clear lines of responsibility are essential to good governance. Flexible oversight is not good governance.

The noble Lord, Lord Purvis, and the Minister, the noble Baroness, Lady Northover, are correct to highlight the important role played by the NAO. Parliamentary oversight by the Public Accounts Committee and the International Development Committee will draw upon the work of the NAO, and in particular its assessment of the effectiveness of the ICAI itself, so we can be confident that there is effective oversight of the ICAI. The suggestion that the Secretary of State should decide which body should scrutinise the performance of his or her department and the effectiveness and value for money of its aid programme is surely completely out of place in a world where rigorous, arm’s-length and independent scrutiny is now the norm.

Michael Moore, when he introduced the Bill in the other place, said that we must all be conscious of the need to reassure the public that the large and increasing amount of overseas development expenditure is spent not only appropriately, but effectively and efficiently. The public today are deeply sceptical of the ability of institutions to do what they say they should be doing and to be effectively held to account. In order to pass Michael Moore’s test—an important test which I agree with—there must be complete clarity about who is responsible for oversight.

My noble friend Lord Collins made this very point with his characteristic succinctness when he said:

“As the aid budget rises, so must our ability to control it. That is why Labour strongly supports the Independent Commission for Aid Impact”.—[Official Report, 23/1/15; col. 1566.]

The Minister told us that when the Bill was introduced, there was considerable concern about duplication of responsibilities because the ICAI had also come into existence. She went on to say that it was “highly likely” that the ICAI would be the body appointed to be responsible for providing independent evaluation of the aid programme. We look forward to hearing her confirm that that will indeed be the case. I beg to move.

[Lord Lawson of Blaby]

My Lords, I shall speak mainly to my Amendment 24, which is grouped with the amendment that has just been proposed so ably by the noble Lord, Lord Hollick. However, I shall first say a few words about his amendment, for which a very strong case can be made. The Economic Affairs Committee of this House took evidence from representatives of the Independent Commission on Aid Impact, and I am glad to see that my noble friend Lord Tugendhat is in his place because he was a member of the committee at the time. The ICAI was a useful innovation which was introduced by Andrew Mitchell when he was Secretary of State. However, we did not find the evidence very impressive—but that was in late 2011 or early 2012, when the commission was very new. I hope that the commission has subsequently improved because a strong ICAI is badly needed.

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[Baroness Northover]

My Lords, I thank the noble Lord, Lord Collins, for his support. I think that we all agree that independent evaluation of the value for money of our ODA is essential. That is why the Government have significantly strengthened external scrutiny and accountability mechanisms for UK aid, including establishing ICAI. I thank noble Lords for their tributes to it.

ICAI has a key role to play in evaluating the department’s work, and I emphasise that it is likely in practice to be the main body through which this part of the Bill is delivered—I agree here with my right honourable friend Desmond Swayne. However, we do not agree that tying the function of independent verification entirely to one particular organisation, and enshrining that organisation in statute, is the right step to take. We do not want to limit the current range of scrutiny options that are available.

ICAI is an independent scrutiny body that reports not to the DfID Secretary of State but to Parliament through the International Development Select Committee. The IDC has a specific sub-committee which is responsible for overseeing the work of ICAI, approving ICAI’s work plan and taking evidence in public hearings following the publication of each ICAI report. It holds an inquiry into ICAI’s annual report. Noble Lords have emphasised their respect for what ICAI is doing.

The Bill asks that the Secretary of State include in each DfID annual report a statement as to how he or she has complied with the duty to ensure that there is independent verification of development assistance. As I have said, it is likely that that would be done for ICAI. The annual report is subject to scrutiny by both the National Audit Office and the IDC. Clause 5 of the Bill thus ensures that the Secretary of State will be answerable, including to Parliament, through the IDC, on whether his or her choice was of an independent and suitable body. It also allows transparent reporting on the full range of independent evaluations, and allows for scrutiny of whether the spread of arrangements in place effectively examines value for money. We believe that Clause 5 strengthens the current framework in such a way that adds value, increases accountability for programmes and projects and ensures that the value for money of our work is independently evaluated, but it does not enshrine a new body in law.

The whole thrust of this Parliament’s policy has been to bear down on the creation—

[Lord Lawson of Blaby]

My Lords—

[Baroness Northover]

Perhaps I might complete what I am going to say.

The whole thrust of this Parliament’s policy has been to bear down on the creation of new statutory bodies, such as would be established by the IIDO amendment. This Parliament passed the Public Bodies Act 2011, and we seek to eliminate the creation in statute of what have been called quangos and other such bodies. Noble Lords will remember the blood on the carpet as we went through the then Public Bodies Bill. That is why we think that it is proper to avoid doing that in the Bill. A mechanism is there to ensure that independent scrutiny takes place. I reassure noble Lords that it is highly likely to be ICAI, given its track record, but there are scrutiny bodies which help to ensure that that is an effective route of scrutiny.

[Lord Lawson of Blaby]

I am grateful to my noble friend for giving way. The question of creating a new quango does not arise if the Government are prepared to accept the amendment proposed by the noble Lord, Lord Hollick, because ICAI already exists. There would be no new quango. There would be if the Michael Moore proposal incorporated in my amendment was agreed, that is true, but not if it is ICAI. My noble friend said that it will probably be ICAI. That is not good enough. We want a commitment that ICAI will be charged with that responsibility and that that will be written into the Bill. It is no good saying that there are other bodies such as Select Committees. Select Committees perform a completely different function—it is a very important one, but they are not under my noble friend’s department’s command. It is the Secretary of State’s responsibility to charge ICAI with this role. To say that it is very likely that it will be, but that it may not be, really is bad government.

[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.

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[Lord Purvis of Tweed]

I understand the point that my noble friend makes but the purpose of the Bill, as I indicated to the noble Lord, Lord Hollick, is to require the duty for independent evaluation to be carried out and then for the Government to state how that is carried out. It is the role of the Government then to provide that—

[Lord Lawson of Blaby]

If my noble friend will allow me—

[Lord Bourne of Aberystwyth (Con)]

Perhaps I could say that, after the Minister has spoken, only short questions of elucidation to the Minister are permitted on Report.