International Development (Official Development Assistance Target) Bill

Lord MacGregor of Pulham Market Excerpts

Friday 6th February 2015 Lords Chamber

Moved by

[Lord MacGregor of Pulham Market]

6: Clause 1, page 1, line 8, leave out “in an annual report” and insert “by the Office for Budget Responsibility”

[Lord MacGregor of Pulham Market (Con)]

My Lords, before the noble Lord, Lord Best, leaves the Chamber it is highly appropriate that this debate follows the Second Reading of the housing Bill, which he has just introduced. That Bill originated in the House of Commons and was led, designed and carried through by my very good friend Richard Bacon MP, who is not only an admirable MP but was my successor as Member of Parliament for South Norfolk. I know him and his housing interests very well. I am delighted that the Bill is making such good progress, and I am delighted to see Richard Bacon here with us now. It is also highly appropriate that he listens to some of our debates now: he is an admirable member of the Public Accounts Committee as well as the House of Commons, has written an extremely well researched book about getting value for money and avoiding waste in whole sectors of government departments, and is a very strong advocate of value for money. In fact, that is what quite a lot of our debates are about today.

The amendment that I am dealing with now is straightforward and probing. Clause 1(2) says:

“Whether the 0.7% target has been met by the United Kingdom in any year is to be determined for the purposes of this Act by reference to the amounts specified for that year in an annual report”.

Subsection (3) says what an annual report means, but it does not say who determines whether that 0.7% has been met, and it must do so. Is it just the department, or is it underpinned and independently verified from outside? We believe that it should be the latter, and that this is best done by the Office for Budget Responsibility, which has established its independent position for establishing and verifying such issues. I beg to move.

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[Lord Purvis of Tweed (LD)]

My Lords, I am grateful to the noble Lord for keeping his word this morning when he said that his subsequent contributions would be brief. I am not willing to accept his amendments because I do not think that the OBR is the appropriate body to carry out this function. The OBR has four main objectives, which are perfectly clear: to provide five-year forecasts on public finances, to use public finance forecasts to judge the Government’s performance on fiscal targets, to scrutinise costings of tax and welfare plans, and to assess the long-term sustainability of public finances. It also has an additional role: to assess the performance on the welfare cap.

The fundamental role of the OPR is for future forecasting and to have a relationship with, and report to, Parliament on that basis. However, thanks to the Independent Commission for Aid Impact—reporting to Parliament, as has been indicated previously in today’s proceedings—we now have a wealth of 40 reports, informed not least by the more recent work of the Office for National Statistics. Indeed in the latest report, which I am sure my noble friend has looked at, the ONS is quite clear that there is now a straightforward way of the ONS doing its work, informed by information from the Treasury and DfID and having clear reporting as to whether the UN target has been met. Reporting mechanisms have already been established in law. In addition, the International Development (Reporting and Transparency) Act 2006 is already on the statute book, providing, I hope, much of the satisfaction that the noble Lord seeks.

Given that explanation, and the fact that not only does the Bill offer a framework to be used but existing statutory reporting mechanisms have been in place for nearly a decade, I ask the noble Lord to withdraw his amendment.

[Lord MacGregor of Pulham Market]

I thank my noble friend Lord Purvis for that response. It is very helpful to have it on the record, and I beg leave to withdraw the amendment.

Amendment 6 withdrawn.

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Moved by

[Lord MacGregor of Pulham Market]

23: Clause 5, page 2, line 35, at end insert “by the Independent Commission for Aid Impact”

[Lord MacGregor of Pulham Market (Con)]

My Lords, the noble Lord, Lord Hollick, is very sad that he cannot be here—his name is on the amendment as the prime mover—because with his business interests he has a very strong concern about value for money. Unfortunately he has had to go because we are now at a quite late stage of a Friday afternoon for considering Bills.

The amendment is all about value for money. The clause to which it refers states:

“The Secretary of State must make arrangements for the independent evaluation of the extent to which ODA provided by the United Kingdom represents value for money in relation to the purposes for which it is provided”.

The amendment queries why the Secretary of State has been given in the legislation the task of making arrangements for the independent evaluation and why it is not clear in the legislation where that independent evaluation has to take place. We believe that it should be the Independent Commission for Aid Impact.

Let me explain exactly why we believe it should be the Independent Commission for Aid Impact, and why that should be described in legislation and not left to the discretion of the Secretary of State. I will simply quote a number of passages from a report that came out very recently—indeed, I think it was on 19 January—from the House of Commons Committee of Public Accounts, chaired by the right honourable Margaret Hodge. It is a report on the oversight of the Private Infrastructure Development Group and graphically illustrates why it is important to have an independent evaluation of value for money on aid and not leave it simply to the Secretary of State to make the arrangements.

The report is absolutely devastating. It states, first:

“The Department’s oversight of PIDG”—

the Private Infrastructure Development Group—

“has not been sufficiently ‘hands on’. We are concerned that the Department has insufficient assurance over the integrity of PIDG’s investments and the companies with which it works and the Department has not done enough to put a stop to PIDG’s wasteful travel policies and poor financial management … the Department should do more to make sure PIDG takes a robust approach to the assessment and management of these risks. The Department was not well briefed on the specifics of individual investments which had attracted public concern”.

The committee therefore recommended:

“The Department must ensure that PIDG has a robust and appropriate approach to due diligence in general and that it receives detailed briefings when concerns are raised about specific investments”.

Next, the committee says:

“The Department’s weak oversight of PIDG means that some of PIDG’s operational decisions are at odds with the Department’s objectives”,

and therefore recommends that:

“The Department should review its oversight mechanisms for PIDG to make sure that it has an appropriate level of visibility of operational matters, and that sound financial controls are in place and that money is appropriately spent”.

Next, the committee says:

“The Department’s poor oversight of PIDG allowed money to sit idle in a bank account rather than funding projects … The Department is not using its position as the dominant funder to drive improvements in PIDG’s performance”.

It therefore recommends:

“The Department should use its 2015 multilateral aid review to develop a proportionate and risk-based approach to how it funds and oversees multilaterals, with a clear focus on whether its level of influence in multilaterals is commensurate with its level of funding, both in absolute terms and relative to other donors”.

Next, the committee says:

“Public confidence on spending on overseas aid through PIDG requires robust and independent information on the impacts achieved, which is currently lacking … While the Department has commissioned some independent evaluation of PIDG’s performance, it is too reliant on information from PIDG itself in making judgements about performance.

It therefore recommends:

“The Department should push PIDG to have a robust system to monitor and evaluate impacts using the Department’s own expertise to gain assurance over the adequacy of PIDG’s approach”.

Next, the committee says:

“The Department has failed to draw sufficiently on the insight of its country teams to influence the investment decisions PIDG is making. PIDG represents a major investment by the Department”.

I could go on.

That is not me; that is the Public Accounts Committee. That is why I believe that the department should not be responsible for deciding how value for money is evaluated but should give it to the independent committee that I suggest. I beg to move.

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[Lord Lawson of Blaby]

Yes. I think that we have had sufficient discussion for the day about Clause 5(2), but we have still not had a satisfactory answer about the rather important Clause 5(1), which says:

“The Secretary of State must make arrangements for the independent evaluation of the extent to which ODA provided by the United Kingdom represents value for money in relation to the purposes for which it is provided”.

What the arrangements are should be and must be in the Bill. They were originally, because there was a schedule setting up a new body to do it. The schedule was taken out, and there is now a vacuum. We are not told in the Bill what these arrangements are, which body will ensure and evaluate the extent to which the ODA provided gives value for money, and so on.

My noble friend suggested in this amendment, “Why not use the ICAI and put it on a statutory basis?”, and that can be done. That seems very sensible, and I am rather suspicious about the rejection of this amendment, because it suggests that they are trying to weasel out of any effective independent evaluation. If they are not, what are the arrangements for the evaluation? Why not the ICAI, or why not restore the other body that was there originally? That must be in the Bill. I suspect, having heard the noble Lord’s obduracy on this point, that we will have to come to this again on Report. However, it is a very real point. No satisfactory answer of any kind has been given, either by the Minister or by the noble Lord, Lord Purvis.

[Lord MacGregor of Pulham Market]

My Lords, I share my noble friend’s concerns about this. We have been given very inadequate answers on this today, particularly from the Minister, and we will simply have to return to this on Report. It is a very important issue, because the size of the budget now, as my noble friend Lord Forsyth pointed out—about one-third of the defence budget—is huge. The taxpayer needs to be satisfied that the tasks have been properly and effectively carried out. It is one thing to set up an independent evaluation, which in the Secretary of State’s mind is an independent evaluation, and another thing to have one that is effective and that can convince us all that the department will undertake to get proper value for money.

That PAC report, which is probably one of the worst I have ever seen, does not give me a great deal of confidence that the Secretary of State is given total entitlement to set up the organisation that will reassure him about value for money. There are therefore some important distinctions here, and we have not yet had a satisfactory answer. As I said, it is a very important issue, and we shall have to return to it on Report. However, on that basis, I beg leave to withdraw the amendment.

Amendment 23 withdrawn.

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Moved by

[Lord MacGregor of Pulham Market]

25: Clause 5, page 2, line 39, at end insert—
“( ) The Secretary of State shall set up an independent inquiry into the independence, efficiency and effectiveness of the Independent Commission for Aid Impact.”

[Lord MacGregor of Pulham Market]

My Lords, it may seem a little odd, having been somewhat critical of how independent the Independent Commission for Aid Impact might be, to suggest that the Secretary of State should rely on that commission to set up an independent inquiry into independence, efficiency, and effectiveness. I do not wish to press this amendment; I am just seeking answers from the Minister.

In our Economic Affairs Committee report in March 2012—I accept that quite a lot could have changed since then—we were a bit concerned about the effectiveness of the Independent Commission for Aid Impact. It had only just been set up, so it was very early days, but I wanted to mention one or two of the points we made then, to enable the Minister to give us assurances that the concerns we had then should no longer be concerns.

We said that we were,

“concerned that the Commission is not in practice fulfilling the role which it has been given”.

That was largely based on the oral evidence that we received at the time in our inquiry, which failed to convince the committee that it was appropriately resourced for the work with which it was charged. That is a very important issue as regards our discussion on the previous amendment. How much the independent evaluating body is resourced is crucial. We went on to say that,

“it could be relied on adequately to fulfil its role. These are early days for ICAI, but we recommend that both Parliament and DFID monitor ICAI’s own effectiveness closely, and”—

this is the point—

“take steps necessary to ensure that both its work and its staffing are sufficient both in quality and in quantity for it effectively to discharge its duties”.

Therefore, the reason for tabling this amendment is to enable the Minister to reassure us on those points. I beg to move.

[Baroness Northover]

My Lords, I reassure my noble friends in relation to ICAI that it already reports to Parliament via the International Development Select Committee in the House of Commons. The International Development Committee scrutinises ICAI’s work; it holds a public hearing every year to consider ICAI’s annual report, and a special sub-committee has been set up to take evidence after the publication of each ICAI report. The committee also approves ICAI’s work plan. Noble Lords may also be aware—and this would have happened after my noble friend’s Select Committee reported—that a triennial review of ICAI was published in December 2013 and a further review is scheduled for 2016. Triennial reviews are designed to consider whether public bodies such as ICAI are meeting good standards of corporate governance, and so on, and whether they are still needed.

In addition to the above, the National Audit Office and International Development Committee can, of course, already review the independence, efficiency and effectiveness of ICAI if they wish to do so, and also provide regular assessments of value for money within DfID to the Public Accounts Committee of the House of Commons. I hear what my noble friend says about his previous concern being somewhat ameliorated, and I hope that this will give him further reassurance.

[Lord Purvis of Tweed]

My Lords, I have nothing to add from the point of view of the sponsors of the Bill to the reassurances that the Minister has provided. They are satisfactory, and I request that my noble friend withdraw his amendment.

[Lord MacGregor of Pulham Market]

I am grateful for that response, and it encourages me that the discussion that we had on the previous amendment on the role that we were giving to the independent commission is proper and correct, and that we need not have fears on that score. I am grateful to my noble friend for that answer, and I beg leave to withdraw the amendment.

Amendment 25 withdrawn.