International Development (Official Development Assistance Target) Bill

Lord Purvis of Tweed Excerpts

Friday 6th February 2015 Lords Chamber

[Lord Lawson of Blaby]

We will see about the support. I am sure my noble friend is right that there different views in different parts of the Committee, but it is significant—and I repeat this since perhaps she did not hear—that the Economic Affairs Committee of this House, which took extensive evidence on this, produced a unanimous all-party report with the conclusions that I summarised a moment ago.

[Lord Purvis of Tweed (LD)]

I apologise for intervening on my noble friend. After five minutes he is obviously gearing up to begin his arguments. His amendment states,

“leave out first “the” and insert “a”.

That would change the wording of the Bill to:

“It is a duty of the Secretary of State to ensure that the target for official development assistance”.

Does he actually mean to delete the second “the” in that sentence rather than the first “the”. Can he clarify that for the benefit of the Committee?

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[Lord Forsyth of Drumlean]

In which case my noble friend got it right and that is what we will discuss. If we are to talk about the target, that is what I want to address. My understanding of the Bill and its genesis—the idea was included in our manifesto as something that we would do in the first Session of this Parliament; the timetable has slipped a little—was that we wanted to enshrine in statute the UN target of 0.7%. That is what I thought we were trying to do. The UN resolution made in 1970 in respect of the target that we are apparently signing up to said:

“In recognition of the special importance of the role which can be fulfilled only by official development assistance, a major part of financial resource transfers to the developing countries should be provided in the form of official development assistance. 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 per cent of its gross national product at market prices by the middle of the Decade”.

That would have been in 1975, so we are some 40 years behind that deadline. I point out that the target was 0.7% of “gross national product”, but the Bill before us sets a target for a percentage of gross national income. That is not the same thing.

[Lord Purvis of Tweed]

I apologise to the noble Lord. With that point, is he now addressing Amendment 2, which is in a separate group?

[Lord Forsyth of Drumlean]

No, but I will do so at length—I keep being interrupted—when we get to Amendment 2. I am simply making the point that the target set in the Bill is not the target set by the UN. On a later amendment, we can discuss the implications of that.

My second point is that if we are to put “a” duty on the Secretary of State or whether the Secretary of State has “the” duty in respect of “a” target or “the” target—

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[Lord Fowler]

I am, in fact, comfortable in this position, because I think that we have a particular duty as far as the developing world is concerned. I would not be happy to have hypothecation in every government measure, but here we have a particular responsibility. There is a lack of imagination about what is happening out there in Africa and in the rest of the world. That is the point. If we have a duty, it is a duty in this respect. I am therefore entirely happy with hypothecation in this respect.

[Lord Purvis of Tweed]

My Lords, as the sponsor, I will attempt to sum up this short debate. Perhaps the House will offer me a degree of forbearance as I find myself in the rather difficult position of having to respond to almost a second Second Reading debate, as well as to an amendment that was not moved by the mover but proposed by another noble Lord, an amendment which was then changed by the Chairman of Committees as we were debating it. To respond directly to my noble friend Lord MacGregor, his contribution, I think, got to the core of what this short debate is about. If this is about the essence of the Bill, let us consider whether a “the” should be replaced by an “a” and get to the core of it. The noble Lord, Lord Butler, and others may have been more accurately covering other amendments in other groups, but I will try to address them briefly with this point.

The United Kingdom has an international obligation which it has undertaken to meet over many decades; that is, the 1970 target. I do not consider it a ridiculous target, as my noble friend Lord Forsyth described it; I consider it a target that has been undertaken by the United Kingdom for many decades and under many previous Governments.

[Lord Forsyth of Drumlean]

The noble Lord referred to me but he has misrepresented what I said. I did not say that the UN target was ridiculous. I said that the target in the Bill is not the UN target because the UN target is related to GDP and not to gross national income. If that sounds like a ridiculous point—which we can deal with later in our consideration of the Bill—I would offer an example. Luxembourg might be held to have met the target on the basis of GNI, but on the basis of GDP it would have met 50% of the target.

[Lord Purvis of Tweed]

Yes; and indeed that seems a very tempting preview of the debate on the next amendment. My noble friend Lord Forsyth will no doubt make that point then.

The United Kingdom has given an undertaking to meet the 0.7% target. In 1970, that related to gross national product; now, it relates to gross national income. The target has been further developed by the OECD Development Assistance Committee, which recognises that this is indeed the international standard to meet. It is therefore a mature, settled and respected target in an undertaking which the United Kingdom has given over many decades to meet. It is with considerable pride that we have met it.

[Lord Trimble (Con)]

My Lords—

[Lord Purvis of Tweed]

I will give way to my noble friend in just a moment. The questions about the undertaking we have given are, first, whether it is appropriate to have an annual target; and, secondly, how we can best monitor whether the spend within that budget is being delivered appropriately. These were thoroughly rehearsed in the Second Reading debate. They have been, and continue to be, analysed by the Commons International Development Committee. They have been reviewed by the OECD Development Assistance Committee in its peer review report in 2014, which I quoted at Second Reading. Furthermore, as my noble friend Lord Fowler has indicated, the National Audit Office report has been thoroughly investigating this. I will come to my noble friend Lord MacGregor’s point in a moment after giving way to my noble friend Lord Trimble.

[Lord Trimble]

I am not going to quibble with 0.7%, nor with the idea of the target. However, will the noble Lord address the question about putting a statutory target down and the problems that then arise from the inflexibility of that? The target itself, if you just think of the concept of a target, contains the notion of flexibility. That is the issue that is at stake here: putting down a target that is inflexible and the consequences that follow from that.

[Lord Purvis of Tweed]

I not only respect my noble friend but acknowledge the point that he makes. However, I will refer him to the Hansard of the Second Reading debate; I feel that I covered his point in detail there. I refer him not only to my speech but to that of his noble friend Lady Chalker of Wallasey. She said that,

“it is critical that people know from year to year how they are going to be able to finance projects. One of our great nightmares was that we never knew how much we were going to have”.—[Official Report, 23/1/15; col. 1523.]

Not only does the UK’s acceptance of the obligation mean that we have continual year planning; now that we have met the target, the question is its effective delivery, not concern about the level of support for the international aid budget in future. Because we have this international obligation and undertaking as a proportion of GNI, we have worked in recent years to ensure that our processes can be as robust as possible and that meeting the target can also be done in a sustainable way, with predictability for those who we need to provide support for, and with proper public and parliamentary scrutiny. Since my noble friend’s report in 2012, a considerable level of work has been done, not only on parliamentary scrutiny but on the functioning of the Independent Commission for Aid Impact, now with over 40 reports, some of them critical of the department but many of them constructive. That is how we would expect an independent commission to carry out this role.

I do not think that anyone who supports the Bill would query at any stage that it is a complex budget in a circumstance where many areas of its delivery are the worst scenarios that you could possibly imagine for delivering a budget—war zones, areas where Governments are not functioning and so on. However, the NAO report, the OECD peer review, the Commons committee and the Independent Commission for Aid Impact all now have a serious body of work, done since 2012, that I genuinely think addresses the main considerations of my noble friends’ reports.

The question of whether it should be “a” or “the” in the first element is for the mover of the amended amendment to address. However, the substantive points made by my noble friends Lord Howell and Lord MacGregor have been addressed since the report. That is why, while of course we would value his contributions later in the debate, if we take him at his word that these assurances and the work that has been done since his report have been taken into consideration, I respectfully ask him not to press his amendments, and I ask my noble friend Lord Lawson not to press his.

[Lord Lawson of Blaby]

My Lords, we have had an interesting debate so far. I would like to reply to some of the points that have been made, not least by my noble friend Lord Purvis, who has just sat down. First, though, I thank the noble Lord the Lord Chairman of Committees for his very helpful clarification of precisely what it is that we are debating in this amendment. The question of the amendment goes deeper, though, because what it is about—some of the later amendments are also about this—is introducing a degree of flexibility into the Bill. The reasons why that is necessary have been set out very well by the noble Lord, Lord Butler, and my noble friend Lord MacGregor.

It is quite impossible to debate this amendment without explaining why it is that, for a good Government, a degree of flexibility is necessary. The fact is that the 0.7% target is an anachronism. As my noble friend Lord Purvis mentioned, it was set in 1970, but the world has changed dramatically since then. What has changed it most is, in a word, globalisation: that is to say, the huge increase in both trade flows, which are the most important aspects for the developing world—I am strongly in favour of reducing barriers to imports from the developing world; that is what it needs and that is what we should do for it—and the huge increase in private capital flows, which my noble friend Lord Howell mentioned, and which are vital. Today, totally unlike the case in 1970, ODA is only 1/10th of the total amount of capital flows to the developing world. As the distinguished development economist Paul Collier said in evidence to us, aid is now “almost a sideshow”, although as my noble friend Lord Forsyth and others, and indeed our report, have pointed out, it has a much bigger effect on the extent of corruption in the developing world, for which the evidence is incontrovertible. One noble Lord has already mentioned the report by the House of Commons Public Accounts Committee on the so-called Private Infrastructure Development Group, which was produced this week in only the latest example.

There is a more fundamental problem about the 0.7% target, and it is development aid. I should respond to the very impassioned contribution from my noble friend Lord Fowler: this is not about humanitarian aid. As I said in my opening remarks, I believe that the case for increasing humanitarian aid is strong. This is about so-called development aid, aid for economic development, which is 90% of the DfID budget while humanitarian aid is a tiny part. Humanitarian aid needs the support of Governments; it is not exclusively for them, as charities and churches do good work in this area, but it is still a very strong responsibility of government, whereas capital flows, as my noble friend Lord Howell said, are now overwhelmingly private capital flows. The 0.7% target is therefore completely obsolete. That is no doubt why no other major country has the slightest intention of observing it. The G7, which consists of the major economies of the world—

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[Baroness Northover]

I think I just said when this change occurred. I emphasise too that the budget is subject to annual scrutiny, as my noble friend Lord Purvis said in the debate on the previous amendment.

[Lord Purvis of Tweed]

My Lords, I regret that I cannot accept my noble friend Lord Tugendhat’s amendment. Let me explain why. In doing so, perhaps I may correct my noble friend Lord Forsyth and address specifically the point from my noble friend Lord Cormack.

Paragraph 43 of UN Resolution 2626 from 1970 is the target that we have been debating consistently in this country. Indeed, it is the foundation of the Bill. I shall quote from it and perhaps that will answer the question. It states that each economically advanced country,

“will exert its best efforts to reach a minimum net amount of 0.7 per cent of its gross national product at market prices by the middle of the Decade”.

It does not say “gross domestic product”. As the Minister clarified, the UN system of national accounts adopted by the United Kingdom in 1993, during which I think my noble friend Lord Forsyth was a Minister in the Government, had GNI as the successor of GNP as the accepted international comparator of national economic activity. He will know, as he indicated to the Opposition Front Bench, the difference between GDP, which includes foreign economic activity within the territorial area of Britain but excludes those operations owned by Britain externally, and GNI, which includes those and has therefore been considered to be the standard economic comparator. To address the point raised by the noble Lord, Lord Tugendhat, that was adopted by the United Kingdom in 1995—I think that my noble friend was in the Cabinet at that point—for European Union payments and as a standard for European Union classifications. I think that he may well have been commenting on that late last year.

As that is now the adopted framework within the OECD and a successor to the obligation that we made in 1970, any change to the Bill would be a retrograde step, as the Minister explained, because under our obligations in the OECD we would still have to report on GNI anyway.

With that explanation, and having answered the noble Lord’s specific point, I hope that he will withdraw his amendment.

[Lord Forsyth of Drumlean]

What are we doing here? Are we passing law that affects what the United Kingdom will do in terms of its contribution to overseas aid, making that as stable a target as possible, or are we using legislation to make some declaratory statement about what we are doing internationally? It is very important to recognise the difference between the two. As the mover of this Bill, is my noble friend really saying that he prefers a measure that enables countries such as Luxembourg to appear to meet the target, whereas if they were subject to GDP they would have to contribute almost twice as much? Is he really saying that he is happy with that situation?

[Lord Purvis of Tweed]

We are making law and debating an amendment that proposes a change to the Bill. I have explained why that would not be appropriate and why we operate under our system of national accounts, which we adopted 20 years ago when my noble friend was a Cabinet Minister. On that basis, I invite my noble friend to withdraw his amendment.

[Lord Tugendhat]

My Lords, I thank those noble Lords who have participated in the debate. I also thank the proposer, who, in so far as he is responsible for the Bill, sought to meet the points that I raised. However, I have to confess that I am slightly disappointed with the Minister’s reply, and I hope very much that the Government will be able to put up a better performance on Report.

First, the noble Baroness explained, as did my noble friend who introduced the Bill, the external considerations that have led to the adoption of GNI, and I understand those. However, I raised—I think talking about British budgetary procedures is quite legitimate in the British Parliament—the difficulties that will be caused by measuring this expenditure against other public expenditure programmes. That is something that the Government ought to be very much concerned with. Of course, they ought to be concerned with international considerations, but they ought also to be concerned with domestic budgetary considerations. I raised specific questions in relation to those, which the Minister simply did not answer. She did not address the points at all. I also asked whether the Office for Budget Responsibility and the NAO had been asked for their opinions and what they had said. Again, answer came there none.

As I made quite clear when I introduced the amendment, I support the aid programme and its objectives. I have no problem with its increase in relation to national circumstances. However, it will be very dangerous if the aid budget is put into a uniquely privileged position. It is already having privileges lavished on it by a guaranteed share of the national income. That is one big privilege that I think will lead to it coming into disrepute. Now, the Minister compounds the problem by completely failing to take any account of the questions that I raised about the interaction between this budget and the domestic budget.

I very much hope that the Government will be able to put on a better show on Report and, for the sake of clarity, answer the specific questions that I have raised. First, what steps are they taking to reconcile these different measurements in terms of the domestic and international considerations? Secondly, have they consulted the NAO and the OBR, which they certainly should have done? If they have, what did the NAO and the OBR say? If they have not, why not?

In the—I hope not forlorn—hope that the Government will come back with a better answer on Report, I currently beg leave to withdraw the amendment.

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[Lord Lawson of Blaby]

My Lords, I am very sorry for the cause of the disturbance. I hope the noble Baroness who had the slight accident is making a full recovery.

I will close by saying that I cannot accept for a moment what my noble friend the Minister said about how, if we had a five-year flexibility, that would put us at odds with the rest of the world, which accepts a one-year thing. The rest of the world is not doing 0.7%, as I pointed out. It is doing very much less. It does not want to make it legally binding. I have to say of my noble friend’s final remark—that we have to do this to influence and persuade the rest of the world to follow our example—that this is a post-imperial spasm of the worst kind. There is no way that the United States, to take one country at random, will say, “My goodness me, look at this wonderful Bill that the British Parliament has enacted. Therefore, we will do the same”. It has not the slightest intention to do that. Our leadership must be based on a number of factors—rather, our influence; alas, it is not as much leadership as it once was. But one thing our influence must not be based on is other countries saying that because we have passed this Bill they will do the same. That is nonsense. It is as well that we live in a world of reality and not the pipe dreams which evidently are the world in which DfID lives.

[Lord Purvis of Tweed]

My Lords, I also reinforce the concern for the noble Baroness. We have had an hour on this group and even after that hour I am not any clearer as to what the movers of these amendments mean by “spread” or “average” over that five-year period. Indeed, after the very detailed explanation by the Minister, it is perfectly clear that these amendments would inhibit our ability to have better annual budgeting and programming, not only as part of the OECD DAC mechanisms but also with the relationship between DfID, the Treasury and those that, on our behalf, scrutinise their work in the NAO and publish data in the ONS.

Indeed, the long contribution on the NAO report—it seemed that this was a debate on that report rather than the amendment—fundamentally conflated two aspects of it. Paragraph 7 of the NAO report clearly indicated that the report is in two parts. One is the ODA target and the second is the large increase in its budget for us to meet our historic obligation to satisfy that. What stretched from that was a false conclusion that diluting the Bill would somehow enhance that ability.

Two points were specifically raised in the debate, so let me address them. One was: do we have an annual obligation and is that appropriate? As noble Lords who may not have been here for Second Reading but who have had the opportunity to read the debate will know, I was perfectly clear in citing the Pearson commission more than five decades ago, which analysed the benefit of both the concessional and direct flows of aid which was then replicated in an annual obligation.

[Lord Lawson of Blaby]

I have just one very small point. I simply do not understand why my noble friend cannot grasp that a five-year target must allow more flexibility than one for one year. Does he think that if we have a six-month target, that would not mean less flexibility, or would it mean more, by his argument?

[Lord Purvis of Tweed]

My noble friend again conflates two aspects. One is that we are not dealing with annual programmes or annual work. Much of our work with multilateral partners is long term. Long-term programmes require long-term funding. Secondly, we operate within parliamentary budgets, so we have to have annual reporting in the Budget to Parliament to scrutinise it. Having the two together is not easy. Michael Moore and I accept that that is not easy. I cannot do any better than refer back to the speeches of my noble friend Lord Fowler and the Minister.

The final technical point made by my noble friend Lord Forsyth concerned the legal duty on Ministers. I think that the Bill is perfectly clear. It was outlined in the Commons scrutiny of the Bill. It is perfectly clear what the duties on Ministers are. It is also clear in Clause 3, entitled “Accountability to Parliament”, what are the duties on Ministers of accountability to Parliament.

[Lord Forsyth of Drumlean]

My Lords—

[Lord Purvis of Tweed]

I have obviously not satisfied my noble friend, but with the clarification provided on the first element, I will give way to him.

[Lord Forsyth of Drumlean]

I am rather alarmed by that, because I thought that I must be misreading the Bill, because I asked: am I right that all the Bill does is require the Secretary of State to reach a particular target, and if he does not reach the target, to come to Parliament to say, “I have not reached it because actually, the economy is in a bad way”, but then there is no redress for those outside? If you had a Government who did not wish to meet the 0.7% target, all that the Minister has to do is to come along and say, “I am not going to meet the target, because I think that the economy is in great difficulty”. If that is what the Bill says, I do not think that that is what the noble Lord has put on the tin.

[Lord Purvis of Tweed]

It is not just what is on the tin but what is in the Bill. I am a proud parliamentarian. I take very seriously my role of scrutinising and holding government to account. It is the duty of Ministers and DfID to bring information to Parliament and for Parliament to do its job. Parliament is perfectly capable of calling Ministers to account; it has in the past, and I am proud to be part of the process to do that in future. On that basis, I hope that the noble Lord will not press his amendment.

[Lord Forsyth of Drumlean]

My Lords, we have had a very interesting debate, particularly that last confirmation from the proposer of the Bill. Many people outside—indeed, many people in both Houses—believed that the Bill guaranteed that 0.7% of GDP would be spent on overseas development aid. Many of those who spoke on Second Reading appeared to believe that that was the case. This is a public relations exercise to tell us that that is what the Bill does. If, as many of us do, we want considerable resources to be made available for development aid, it seems to me perverse as part of that exercise to put in place a system of targets which need to be met in one year rather than five years which, as we have argued at great length this morning, would result in damage to ensuring value for money and proper accountability.

In his response the noble Lord, Lord Purvis, pointed out that much of the development aid goes into multilateral programmes. That is true; a minority of the aid goes on emergency relief and disaster—less than 10%, I believe. It is a small proportion. Many people believe that that is what we are discussing when we talk about £11 billion being spent, when only just more than £1 billion is actually going on that purpose. We are talking about development aid here, and a large part of that goes to other agencies such as the European Union.

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[Lord Forsyth of Drumlean]

I do not know whether the noble Baroness shares my concern, but she is quite right that it was a government decision—and I think it is a foolish government decision to say that we are going to hugely increase the money and the programmes being provided while greatly reducing the people who are going to be responsible for seeing that the money is well spent. Perhaps we might come on to that at a later stage.

The noble Lord, Lord Cashman, made an impassioned plea and told the House that he was very concerned that the discussions which we are having about accountability and value for money would be misrepresented outside this House. I have to say that for him to have tweeted that,

“Lord Forsyth clearly enjoys fillibustering and denying with weasel words the needs of the poorest”,

is really unworthy of him. I think that I have raised nearly £100,000 for women in India. The noble Lord should not question our motives. It should be obvious from the speeches made and the amendments which are being considered that the intention here is to provide flexibility for the department to use scarce resources wisely.

[Lord Purvis of Tweed]

My Lords—

[Lord Forsyth of Drumlean]

In a second. Indeed, the promoter of the Bill at Second Reading in the other place, Michael Moore, said that it was a duty to all constituents, who he pointed out were struggling in the current economic climate, to advocate what is in the best interests of our country—and I agree with that.

I remind people, when they are talking about spending 0.7% of GDP, that this is not money that we have—it is money that we are borrowing. The proposition here is that we borrow money in order to make a commitment. If you are borrowing money in order to spend it, at the very least you should be absolutely certain that you are getting a sensible return on it, and recognise that you are passing on the burden to the next generation—because borrowing is simply taxation deferred. I beg leave to withdraw my amendment.