Strategic Defence and Security Review

Lord Oates Excerpts

Thursday 3rd December 2015 Lords Chamber

[Lord Oates (LD)]

My Lords, I congratulate my noble friend Lord Bruce of Bennachie on his excellent and informative maiden speech. His expertise on international development is obvious, but his knowledge and experience are much wider. During the coalition, he was always a source of wise and generous counsel. He was also one of the most articulate advocates in the media for the role of the Liberal Democrats in the coalition, a job we did not, I confess, always make easy for him.

I also congratulate all the noble Lords who have made compelling maiden speeches. I spent a number of years working in South Africa, where the name of the noble Lord, Lord Hain, is not surprisingly held in very high regard.

I will focus on the Government’s strategy for international development assistance, which was published alongside the SDSR. In particular, I will address the key role of economic development as part of our international aid effort, the strengthening of tax collection systems and the development of own resources. First, however, I will address the tone of the document. It describes the approach of the Government as a,

“fundamental shift in how we use 0.7%”,

which will show that,

“reducing poverty, tackling global challenges and serving our national interest … are inextricably linked”.

But I am not sure how that marks a fundamental shift. The coalition strongly believed that these issues were intrinsically linked. It supported a greater emphasis on economic development, recognised the role of ODA in strengthening global peace and security and responding effectively to crises, and was committed to helping the world’s most vulnerable.

The fact that this strategy was published under the imprimatur of the Chancellor of the Exchequer makes me slightly uneasy. I suppose that by now we are getting used to George Osborne’s omnipresence—if not his omniscience—but in my experience, if George gets involved, there is always a trick to look out for. Therefore, we will need to scrutinise very carefully the budgets of those departments which will now spend ODA to check that the Chancellor has not just found a way to fund departments he is otherwise cutting.

However, I strongly support the emphasis of the coalition Government, continued by the current Government, on economic development as part of their aid strategy. It seems self-evident to me that the purpose of our aid budget must be to assist countries to get to the position where development can be driven from their own resources. Aid is necessary to assist many countries in overcoming the huge challenges that they face, and I am proud that the coalition met the 0.7% GNI target. However, the provision of aid is not a demonstration of success—it is the opposite. Our objective must be to provide aid in the most intelligent and effective manner to release the economic potential of the countries to which we provide it so that in time they no longer require our support. Stimulating private sector growth and freeing up trade is critical to driving this development. However, we must be clear about our objectives.

The Government are keen to stress the opportunities for British business that arise from our aid strategy. If that means that with economic development will come rising demand and that British business will be well positioned to take advantage, I wholeheartedly support it. However, our economic development strategy has to be about creating an environment where indigenous business can spring up and grow, where an educated populace can provide a skilled workforce and where the resulting economic activity can fund social development. It cannot be about flogging British goods and services or about multinational corporations further exploiting the resources of developing nations. That approach has comprehensively failed in the past.

That brings me to the second key issue: how Governments can strengthen their ability to get hold of their own resources through strengthened tax collection systems. As Dr Carlos Lopes, executive director of the UN Economic Commission for Africa, told us this morning at a breakfast for the Africa APPG, the solution for Africa is not more aid but using aid effectively to release domestic resources. The tax take in African countries is half the world average. The extractive industries pay less than half that.

In conclusion, I welcome the emphasis in the strategy on tackling tax evasion and avoidance and on improving tax systems in the developing world. That is closely tied to tackling corruption, for although the formal tax take is low in many developing countries, the informal tax burden through corruption can make the costs of doing business prohibitive.