6: Clause 1, page 1, line 8, leave out “in an annual report” and insert “by the Office for Budget Responsibility”
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.
I must advise the Committee that if this amendment is agreed, I am not able to call Amendment 7 by reason of pre-emption.
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.
Amendment 6 withdrawn.
Amendment 7 not moved.
Clause 1 agreed.
8: After Clause 1, insert the following new Clause—
The provisions of this Act will cease to apply for the following year if—(a) spending on ODA as a percentage of gross national income in any year is above one-eleventh of spending on health,(b) spending on ODA as a percentage of gross national income in any year is above one-eighth of spending on education, (c) any shortfall in meeting the 0.7% target could only be met by increasing spending on ODA in any one year by more than 5% in real terms, or(d) the United Kingdom Government is running a budget deficit that is higher than 5% of gross domestic product.”
My Lords, this amendment is also in the name of my noble friends Lord McGregor and Lord Tugendhat, as well as the noble Lord, Lord Lipsey, who, as we have heard, unfortunately is unable to be with us today.
A number of the earlier amendments were concerned, as I should think all helpful amendments are in practice, to create a degree of flexibility, which is necessary for good government and in particular for the control of public expenditure. I regret that even though it is customary for this House to rise at 3 pm on a Friday, it is now 4 pm and we are still going. The Bill does not seek emergency powers or anything like that; it should have been tabled for the very first Session of this Parliament, as I think was promised, but we have had to wait until now. That is highly undesirable and somewhat disreputable conduct along the line.
In response to that point, it is important for noble Lords and for the noble Lord himself to note that the Bill was carried on a Friday, shortly before a general election, with Members of all Houses turning up in large numbers. The Conservative Members of Parliament in the other House voted 58 votes to six; Labour Members 70 to zero; and Liberal Democrats 30 to zero. It is clearly the will of the elected Chamber in the other place, so it is entirely appropriate that this House helps to expedite and not block the Bill.
It is our job to do our duty. That argument could have been used by the noble Lord and the noble Lord’s office opposite when the European Union referendum Bill came to this place. I did not hear any of them saying that we should accept it because it had gone through by a large majority in the other place. Therefore that disposes of the noble Lord’s objection.
I will say a little more about what this amendment is about. Earlier amendments have been designed to create an area of flexibility which is necessary for good government and for the proper control of public expenditure and conduct of public expenditure, and as I was about to say before I was interrupted, the noble Lord, Lord Butler, who has great expertise in these matters, was very strong on the need for flexibility. This has nothing to do with aid in particular but is necessary for public expenditure overall.
This amendment points to particular forms of flexibility. For example, paragraphs (a) and (b) of this proposed new clause relate spending on ODA to the amount of spending on health and education respectively. People in this country feel very keenly about spending on health, and the party opposite speaks almost of nothing else at present. The people of this country feel very keenly about spending on education. There needs to be some comparison of priorities—some connection between the spending on ODA and on other departments. Here we single out health and education, but of course the question of spending on defence was already raised earlier in our debate. There is a 2% NATO target, which of course is not legally binding but is an aspiration; this goes much further. At a time when there is great danger to this country and the world has become a much more dangerous place, that also should be compared with it. However, I will confine myself to spending on health and on education.
There are two other paragraphs in the proposed new clause. The third paragraph says that if the,
“target could only be met by increasing spending on ODA in any one year by more than 5% in real terms … the target should be set aside”.
It is a massive amount, and it is almost certain that we would not get value for money if there were a huge increase in spending in any one year. That would get the Secretary of State and the Government of the day off the hook.
The fourth paragraph to give the Government the flexibility to get off the hook is if there is a budget deficit of above,
“5% of gross domestic product”.
We all know that the budget deficit is too high. All parties are agreed that it has to come down. If, for whatever reason, it is not coming down satisfactorily, that is a serious business, and it should be a reason why in that particular year the Government are not on the hook of the 0.7% aid target.
On the status of the target, questions were put which were not really answered by the Minister, nor by my noble friend behind me who proposed the Bill in this place to questions asked by my noble friend Lord Forsyth about the precise nature of the legally binding commitment. Legally binding sounds, to me, like legally binding. It sounds similar to the Climate Change Act, where there are legally binding targets for the reduction of carbon dioxide emissions. Apparently, it is legally binding—and, no doubt, my noble friends Lady Northover and Lord Purvis will answer specifically on this point. When my noble friend Lord Forsyth raised it, it was not adequately answered, but scrutiny of the Bill seems to make it the case that it is not really legally binding at all. All the Government are bound to do is to lay a report to Parliament saying why the target has been missed.
I hope that this proposed new clause will be accepted, as it is very reasonable and designed to be helpful. I hope, in addition to that, the question of the nature of whether the legislation is legally binding can be clarified. I beg to move.
I support my noble friend in respect of this amendment. Our GDP is forecast to increase by more than 3%, which will mean that more than £400 million extra will have to be spent on overseas aid next year to meet the target. That is at the same time as the Chancellor saying that we are in an age of austerity. Given what the Chancellor said in his Autumn Statement and given the OBR’s projections, government spending as a proportion of GDP—or gross national income, if you prefer that terminology—will have to come down. So, as the OBR has highlighted, even health spending will come down as a proportion of GDP. If the Bill goes through unamended, the percentage of government spending that goes on overseas aid will have to keep rising rather than remain constant. Is that the intention—that the spending on overseas development aid not only should be ring-fenced and given special status but should always rise as a proportion of overall government spending? I believe that my noble friend’s amendment addresses that particular anomaly, and I look forward to hearing from the sponsor of this Bill, the noble Lord, Lord Purvis, as to whether that is indeed his intention.
I do not want to detain the House. I just say to the Front Benches that I think that it is absolutely outrageous that the business was changed and that we are dealing with these very important matters at 4 pm on a Friday afternoon, particularly since this is apparently a Private Member’s Bill. I look forward to citing these precedents in future regarding other Private Members’ Bills. If the Government think that this will in some way prevent the House from having an opportunity for all Members to be here to debate these matters, they have another thing coming. There is another stage, Report, when I hope we will be able to discuss these matters more fully. On that basis, I leave it at that in respect of this amendment.
My Lords, the whole concept of seeking to add legislative exceptions to the UK meeting its international obligations, in comparison with other levels of expenditure choices that any Government of the day may make, is not consistent either with our undertaking to meet the 0.7% target or with the Bill. That alone would be sufficient reason for me not to accept the amendment, but there are two others.
The first is that the amendment does not make clear what “health spending” means. Is it health spending in England? Is it United Kingdom health spending? Is it health and social protection? Is it health and social care? Is it current health expenditure or health capital expenditure? The second proposed new paragraph of the amendment refers to education: is it education across all nations of the United Kingdom? I need not go on, other than to highlight the deficiency of the amendment.
The second reason is that the amendment is slightly confusing. I suspect that if I had accepted previous amendments for only one report over a five-year period, this amendment could not have been moved because it calls for annual reporting, which the mover of the amendment said was not an appropriate way to go forward because there should be a single five-year report.
My noble friend will have an opportunity to sum up this short debate. I am sure that, in his argument, he will do the best he can to defend what is an indefensible amendment.
Our legislation needs to be robust. Therefore, I think that the amendment is deficient in comparison with the 2006 Act and its reporting mechanisms—to which no one putting forward amendments has yet referred—and with the OECD DAC’s clear areas of reporting.
Finally, I addressed the points that my noble friend Lord Forsyth made before the break in proceedings today. Just because noble friends do not agree with my propositions, it does not necessarily mean that I have not answered the questions. Nevertheless, with what I hope is clarification regarding the deficiencies of the amendment and why I cannot accept it, in that spirit, I hope the mover will withdraw it.
The noble Lord has been asked two specific questions. One was asked by my noble friend, which was whether the Bill is a paper tiger and there is no sanction on any Secretary of State if they do not meet the target, other than that they must produce a report explaining why. With respect to the noble Lord, I do not think he answered it. All he has to say is, “Yes, that’s right”.
The second question I put to him was: is he really content to have the effect of this Bill in an era where public expenditure is being restrained? We hope that the economy will start to grow; the effect of the Bill will be that spending on development aid will rise as a proportion of overall government expenditure, unlike any other programme.
In maintaining our target of 0.7% of GNI, it is perfectly clear what profile GNI will have with the profile of expenditure. That is part of our undertaking. That is not being introduced by the Bill. This is where my difficulty is with my noble friend. The Bill is not introducing that concept; the United Kingdom has adopted that concept over many years and Governments, including the Government of which he was a member. As referred to earlier, it is regrettably the case that while my noble friend was Chancellor of the Exchequer the United Kingdom was meeting only 0.26%, as my noble friend Lady Chalker indicated at Second Reading. Indeed, in the Government that my noble friends were part of, the United Kingdom was the sixth largest contributor to aid. We are now the second largest. I consider that something that the United Kingdom should be proud of, but maybe the noble Lords are in sincere disagreement on that.
I turn to the second aspect of the legislative basis. I said to my noble friend that the legislative basis is clear on the duties on Ministers in the Bill and the duty of accountability that Ministers have to Parliament. That is perfectly consistent with, for example, the legislation that my noble friend supported—the Budget Responsibility and National Audit Act 2011. That established the Charter for Budget Responsibility and placed duties on Ministers to report to Parliament, with Parliament holding them to account and the electorate deciding whether Parliament was doing its job. The Bill does not deviate from that approach; it is consistent with parliamentary accountability and ministerial duties.
Again, can the noble Lord answer the question that I asked him? Is he content to have a situation as a consequence of the Bill where the proportion of government expenditure that goes on overseas aid rises while it does not rise for other programmes? That would be the effect of what he is proposing.
I referred to the very useful Library paper which shows that the UK’s contribution to development aid since the 1980s has gone up in absolute terms and, of course, as a proportion of overall expenditure. That is clear and it is something of which I, as a Liberal Democrat, am proud. It means that we have met our international obligations that were set many years ago, and we can now see a more reliable and predictable trend for that expenditure going forward. I take delight in answering my noble friend’s question because it is something that I am proud of.
My Lords, that most recent exchange between my noble friends Lord Forsyth and Lord Purvis has been quite illuminating. I want to mention two points that came up in the discussion but, before I do so, I want to go back to the earlier remarks of my noble friend Lord Purvis. He was completely muddled and I would like to straighten him out. He said that this amendment was inconsistent with the amendment that sought to look at aid expenditure over a five-year period in connection with the target. Even if you look at it over five years, in this country, as in most countries, there is an annual Budget, an annual Autumn Statement, figures for public expenditure and figures for taxation, and they are all, and will continue to be, produced annually, even if the amendment relating to the five-year period, which was withdrawn, had been passed. So that does not change anything at all and there is no conflict whatever.
I now turn to the two matters that my noble friend Lord Forsyth and I raised, and my first point may be what lies, to some extent, behind the question put by my noble friend Lord Forsyth. At the moment, expenditure on aid is running at more than £11 billion a year. That is not far short of what we spend on the police. The police are not a protected programme and therefore, inevitably, given the overall policy to curb public expenditure, spending on the police will go down and spending on aid will go up. It will not be long before we are spending more on aid than on the police. No doubt my noble friend Lord Purvis will be, to use his own words, very proud of that, but that cannot go on for ever. You cannot have this ratchet effect year in, year out. We have the danger of terrorism in our midst and the police have all their other duties of catching and prosecuting criminals. We cannot have public expenditure on aid going up and up indefinitely, irrespective of the needs of other heads of expenditure. The technicalities of what education spending and health spending mean do not wash; they are just nitpicking. There is a fundamental point here that needs to be addressed.
However, on the other point that was raised, I am less dissatisfied because the noble Lord, Lord Purvis, has admitted that if a future Government—we know where the present Government stand—take seriously the problems of spending on the police, the health service and education, and take the view that they cannot properly continue to increase aid spending, the term “legally binding” does not amount to a row of beans because all they have to do is present a statement to Parliament explaining why they are not increasing aid spending and are falling short of the 0.7% target. That is a great relief, and it will be a great relief to the people of this country. The commitment is a bit of a paper tiger. With that, I beg leave to withdraw the amendment.
Amendment 8 withdrawn.
Clause 2: Duty to lay statement before Parliament if 0.7% target not met
Amendments 9 to 17 not moved.
18: Clause 2, page 2, line 15, at end insert—
“( ) the fact that expenditure on a programme has been rolled over into a future year.”
My Lords, my amendment is, I hope, a modest and helpful one that might find some favour with the noble Lord, Lord Purvis, and which addresses some concerns that I raised at Second Reading.
Perhaps I should say again that I support the principle of our foreign aid budget being 0.7% of GDP. I hope that that is clear enough to the noble Lord opposite so he will not have to address his Twitter account about those of us who are speaking from this side of the Committee. The issue has always been whether that figure should be a target or enshrined in law. The Government have encouraged the Private Member’s Bill that the noble Lord, Lord Purvis, has brought forward, which indeed enshrines the percentage in law. We therefore have to consider the Bill, what it achieves and whether it can be improved or amended during its passage through your Lordships’ House.
My main concern is that in order to achieve the spending required, the department will not always be able to have a reserve for emergencies, particularly humanitarian emergencies, or be able to account for programmes that go over from one year to the next. Emergencies are always important, whether they are due to war, famine or disease. As we have heard, humanitarian aid is a very small part of the total budget of the department. There must be funds available for the expected and the unexpected; there must be a reserve fund.
The Minister also wrote to me about the difficulties of having two year-ends—the calendar year-end and the financial year-end. She said in her letter that,
“it is not unusual for accounts to be converted from calendar to financial years across a range of public and private sector activity”.
That is entirely true, but what is not usual is for them to be converted on an annual basis. That would be an auditor’s nightmare.
What my modest amendment is designed to do—I accept that it might not be as well drafted as it should be—is give the department some flexibility in the way it operates without in any way affecting the aims of the Bill. Although the Minister was kind enough to write to me, one issue that she did not address—perhaps she can do so today—was answering the question I asked at Second Reading about what portion of our contribution to the EU budget is spent on aid. It is substantial and is something we should perhaps be proud of. Why should the amount not be stated in the report that the Secretary of State brings before Parliament?
My amendment relates to Clause 2(3); and your Lordships will see that in the Statement that has to be made to Parliament if the target has not been met, various reasons have to be given, which include,
“(a) economic circumstances and, in particular, any substantial change in gross national income … (b) fiscal circumstances and, in particular, the likely impact of meeting the target on taxation, public spending and public borrowing”,
(c) circumstances arising outside the United Kingdom”.
My amendment would add a small extra paragraph saying,
“the fact that expenditure on a programme has been rolled over into a future year”.
That would allow the department, when looking at its budget, to say, “We haven’t spent all the money this year. We will roll it into the following year”, which means that it does not have to engage in what has been described as the “ugly rush” to spend all its money before the year end, and thus would have flexibility. I hope that the Minister will be able to answer my question and that the noble Lord, Lord Purvis, will consider that the amendment is helpful to both the aims of the Bill and the way that the Secretary of State will report to Parliament. I beg to move.
My Lords, as we are looking at page 2 of the Bill and the amendment of my noble friend Lord Astor, which seeks to add a further paragraph to the three issues listed in paragraphs (a), (b) and (c), one or more of which might lead the report to explain why the target has not been hit, may I ask a question of my noble friend Lord Purvis, or perhaps the Minister, about paragraph (c), which refers to,
“circumstances arising outside the United Kingdom”?
Would that include the views of the proposed recipient countries of overseas aid saying that they no longer want the aid? We had this situation with India recently, where India reviewed its relationship with Britain, felt that the relationship should mature and that far better outcomes for development and escaping from poverty would be achieved through other fiscal changes such as two-way investment flows, impact value investment and a whole range of new techniques, and therefore it did not want to go on receiving old-fashioned official aid because official aid, as a large part of the world has discovered—not, I fear, everybody in your Lordships’ House—is not the main instrument, or even the most effective instrument, for lifting people out of poverty, ending real suffering and accelerating economic growth. So if countries come forward and say, “We do not actually want this assistance”, would that be one of the,
“circumstances arising outside the United Kingdom”,
which might disembarrass the Secretary of State and enable him to explain why the target had not been hit?
My Lords, I shall respond to the questions put to me. I apologise to my noble friend Lord Astor if I did not adequately answer in my letter to him all the questions that he raised. We will get back to him with further answers.
The EU came up in discussion on earlier groups of amendments of multilateral organisations generally. I expect, or at least hope, that noble Lords will be aware that when we came into government, we undertook a bilateral aid review of every programme, which included what was then taken forward as far as India was concerned, and a multilateral aid review. We pulled back from those organisations that did not score well in the multilateral aid review. I know that the party opposite was concerned, for example, that we pulled back from the ILO on the basis of that, although it is aware that we are engaged with the ILO in Bangladesh. However, many multilateral organisations came out of the aid review extremely well, and so did the EU budget.
Earlier, noble Lords referred to what my noble friend Lord Patten of Barnes—Chris Patten—said many years ago, after which he took forward the most formidable reform programme of what EU aid did. Since then, others have built upon that, which has been extremely welcome and no doubt has brought us to the situation that we are in. I hope that I can reassure noble Lords that we remain closely engaged in trying to ensure that we get value for money from that and that all is scrutinised.
Long discussions and negotiations with the Indian Government came from the bilateral review. The aid programme in India continues to 2015. It continued over a long period and then moves to technical support. It is not something which suddenly happened. If anything, countries tend to say, “Please don’t go”, rather than “Do go”. I hope that I have reassured noble Lords in that regard.
My Lords, on that point about the use of multilateral organisations, does the Minister agree with the National Audit Office report? It states:
“The Department phased its contributions to 2 key multilateral organisations to increase 2013 ODA. The Department has used the flexibility it has over when it issues promissory notes to fund some multilateral organisations to help manage ODA. In line with OECD rules the notes count as ODA when they are issued, which is typically 2 years before they are cashed”.
I mentioned earlier the way in which the notes promising the assistance were carried through. Obviously, with something like the Global Fund, one might make the kind of commitment to which my noble friend Lord Fowler referred in a particular year, which then is programmed in. A programme is constructed, which we carefully monitor, to carry forward the spending of that. I would think that the noble Lord would welcome that strategic way of doing things.
I would like to make some progress. I am sure that the noble Lord will come back in again. I assure noble Lords that there is flexibility in DfID’s programming and budgeting. I should like to reassure my noble friend Lord Astor of that point. It is why at the end of 2013 it was possible to respond to a typhoon, which we had not anticipated any more than anyone else had, and to the unexpected level of displaced people coming from Syria who needed to be assisted over the winter. Part of the way in which DfID responds is to have that flexibility built in.
I am most grateful to my noble friend. I do not mean to harass her, but she did not really deal with the point that I was making. I am not making a point that the department does not give money to multilateral organisations, often for very good causes. I was asking her to confirm that the department uses multilateral organisations where the rules on what constitutes expenditure, which in this case was two years ahead of the programme being achieved, are driven by the need to balance the budget and not by the merits of the programme and that that arises because of the lack of the flexibility for which my noble friend’s amendment would provide.
I understand what my noble friend is saying. I can totally refute that. If the noble Lord were to look carefully at what the Global Fund manages to achieve, because it is a large-scale operation that is able to assist in the poorest of countries with the greatest need, or if he were to look at Gavi, which deals with vaccines and vaccine research, he would see that our supporting vaccinations directly through our bilateral programmes may not be the best way to go. Working with Gates and others in a very large enterprise brings down the prices, invests in research and takes forward vaccination, which has saved millions and millions of children’s lives.
My Lords, I was not really intending to speak on this amendment, but I want to get to the bottom of this point. I entirely agree with my noble friend Lord Fowler about the importance of that programme and I pay tribute to the work that is done all over the globe in combating AIDS and to the organisations involved.
This is not about the merits of particular programmes; it is about the means by which the money is managed because of the lack of flexibility, which the amendment would provide for. Paragraph 15 on page 8 of the summary of the NAO report says:
“The need to increase spending was a factor the Department considered when it decided in autumn 2013 on the size of promissory notes it subsequently issued in December 2013 to the World Bank’s International Development Association and to the Global Fund to Fight AIDS, Tuberculosis and Malaria. The Department’s decision to issue more notes to both organisations in 2013 did not alter the total value of notes it planned to provide them and did not affect the content and timing of the programmes”.
So we are not talking about the programmes; we are talking about what happens as a result of having to find programmes in year where you have no flexibility. The advantage of going to multilateral organisations is that the expenditure counts towards the target when it is issued, even though it might not be incurred until two years down the line. That does not apply to bilateral programmes. Therefore, it creates a bias against bilateral programmes in circumstances where the budget needs to be managed. It is not about the merits of the programmes; it is about how the rules and the corset that is being imposed by the provisions in this Bill result in bad decisions potentially being made.
That was what I was refuting. The NAO report that the noble Lord quoted—I have read every word of it—found no evidence that the department had failed to follow its normal business processes. I can assure the noble Lord that business cases are put as to why DfID should support one thing rather than another. If the most cost-effective and effective way of supporting, let us say, the vaccination of children is to go through Gavi, it makes sense to do so. To have some artificial emphasis on bilateral programmes, which then reached fewer children, would be perverse. What I am saying to the noble Lord, and I hope that he will understand this, is that very thorough procedures are gone through before decisions are made. In many instances, depending on what DfID is trying to achieve, it may well be that a multilateral organisation can deliver more for the money that we put in and which we then lever also from others. I think that we have probably covered this matter sufficiently.
Before my noble friend sits down, perhaps I may get absolute clarity on this. The reports states, on page 8, paragraph 15:
“The need to increase spending was a factor the Department considered when it decided in autumn 2013 on the size of promissory notes it subsequently issued in December 2013 to the World Bank’s International Development Association and to the Global Fund to Fight AIDS, Tuberculosis and Malaria”.
Is she saying that that is not correct?
What I am saying—I hope that it is clear—is that DfID needs to decide how it is going to spend its money. It was always known from 2010 what the trajectory was of that DfID budget. I think that the noble Lord was a member of the Economic Affairs Committee that reported in 2012 and took its evidence in 2011. At that point, that escalation had not occurred and the committee rightly expressed concern about that. However, all the reports thereafter have looked very carefully at whether that escalation was effective and value for money. It has been found to be a rigorous process.
We are now at 0.7%. We are not into escalation, but these multilateral organisations, which were stress-tested through the multilateral aid review in 2010-11, were judged to be value for money for the reasons that I have given. Bilateral programmes can be very limited in a very limited number of countries. What Gavi can do in sourcing vaccines, investing in research and so on and in involvement in many different countries can be much more effective. That is why DfID is a strong supporter of such organisations.
My Lords, I thank my noble friend Lord Astor for his amendment, for being consistent with the points he raised at Second Reading and for the manner in which he did it. I am most grateful for that, and I will attempt very briefly to address his points. In so doing, I wish to put on record my appreciation for the points that the Minister made. There are two aspects to this: forward expenditure, which is part of wider plans in existence, and the possibility of other factors which mean that, outwith the scope of the responsibility of DfID, the international target would not have been met. I suspect that that gets to the core of my noble friend’s amendment.
On the first point, paragraph 15 of the NAO report has been cited. I am sure it was an oversight that paragraph 16 was not referred to. That states:
“Promissory notes accounted for 19% of the Department’s ODA in 2013, similar to the level in 2012”.
Given the NAO’s findings, I do not think that this is an issue that needs to take up much more of our time in Committee.
Let me address the point made by my noble friend. The question is whether elements of this Bill complement the International Development (Reporting and Transparency) Act 2006 and the existing mechanisms through which DfID, the Treasury and the ONS report on information to do with programme profiling, budget decisions and external factors and provide sufficient information to allow Parliament to understand why a target has not been met. With the mechanisms that we already have in place—including, importantly, Section 6 of the International Development (Reporting and Transparency) Act 2006 on the methods for transparency, where there is provision to specify future allocations of aid, in addition to all the other reporting mechanisms, the work of the Office for National Statistics and the external peer review by the OECD—I believe there is sufficient work within the programme on reporting, accountability and transparency to satisfy my noble friend.
My noble friend Lord Howell made a point about potential external factors and gave an interesting reason. The Minister responded very clearly with regard to that specific case. The Bill affords freedom for external impacts to be reported and then, through Parliament, to be scrutinised fully and for Parliament to determine the justification. On that basis, I respectfully ask my noble friend to withdraw his amendment.
My Lords, I am grateful to the noble Lord, Lord Purvis, for his response. Obviously I do not have Section 6 of the International Development Act at hand but I will look at it carefully and read what he said in Hansard. He certainly gave a considered response, for which I am grateful.
I am also grateful to the Minister. She said, importantly, that there was flexibility in the department, and we are all grateful for that. I would have been happier if she had been able to say that, should the Bill go through, there will still be flexibility in the department. That is the important thing that we all want and are trying to achieve.
I am pleased to hear that. It certainly satisfies one of my concerns. I still think that the department will have a difficult time with its two year ends. The working out will be one of the games for the accountants, if nothing else.
I am grateful to my noble friend Lord Forsyth for joining in the debate. He did something that even Lloyd George was not able to do for my great-grandfather, when he referred to me as a noble Earl as opposed to a mere Viscount. I am grateful for his support for that. I beg leave to withdraw the amendment.
Amendment 18 withdrawn.
Amendments 19 to 22 not moved.
Clause 2 agreed.
Clauses 3 and 4 agreed.
Clause 5: Independent evaluation of official development assistance
23: Clause 5, page 2, line 35, at end insert “by the Independent Commission for Aid Impact”
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.
My Lords, I support my noble friend Lord MacGregor. There should be no difficulty whatever in the Government, and indeed the promoter of the Bill, accepting this amendment. The issue relates to Clause 5, which is headed:
“Independent evaluation of official development assistance”.
When the Bill was first introduced in the other place, the Government and Mr Michael Moore, the promoter in the other place, were absolutely clear that how this independent evaluation was to be done and by whom needed to be specified. As I am sure noble Lords are well aware, there was a three-page schedule headed:
“The Independent International Development Office”.
The schedule would have set up that office specifically for this purpose, considering that it is so important. However, mysteriously, or at least semi-mysteriously, when the Bill emerged from its Committee stage the promoters of the Bill and the Minister of State from DfID moved an amendment to delete this schedule, which had been an integral part of the Bill.
Now all the Bill says is:
“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”,
but it does not say how that should be done. As I say, they had decided that it should be done by this new body, which was incorporated in the form of a three-page schedule to the Bill.
When explaining why that schedule was to be removed, the Minister of State gave two reasons. The first was that there was no need to create a new body. The other was that the schedule would provide many opportunities for amendments that might have delayed the passage of the Bill. That second reason is probably the real reason, and it is completely discreditable. There is a point to the first reason: there is no need to create a new body because there is an existing one that can do the job, and that is the Independent Commission for Aid Impact. That is why our amendment says that the independent commission should do the job. At the moment, however, the whole thing has been left in limbo. No one is doing it, which leaves it up to DfID to do it itself, and in effect it is saying that it is independent when it is only a charade of independence. There is a need for some proper body to do this, which had originally been accepted in a schedule to the Bill setting up this new body, but that has now gone.
So I hope that the Independent Commission for Aid Impact doing the job will satisfy the complaint of the Minister in the other place that we do not need to set up a new body, and that this amendment can be accepted.
As my noble friend Lord MacGregor said, this is something about which the noble Lord, Lord Hollick, felt particularly strongly and he is very regretful that he cannot be here today at this late hour, but of course if it is not accepted now by the Government it can come back on Report—as many other amendments, I suspect, might come back on Report—when I hope that the noble Lord, Lord Hollick, will be able to move it with his customary eloquence and expertise. I support very strongly this amendment and I cannot think of a single good reason why it cannot be accepted.
My Lords, I, too, support this amendment. Like my noble friend, I was very surprised that the provisions for scrutiny were withdrawn from the Bill in the other place.
I have to say that when the Independent Commission for Aid Impact gave evidence to the Economic Affairs Committee before our report, we were less than impressed with it. We felt that it was rather extraordinary that there were four commissioners to deal with a huge budget that was going to be increased very substantially. But having read the NAO report and various other reports in preparation for the consideration of this Bill, it would seem that it has in fact done a good job. Perhaps the committee’s worries on that score were taken on board.
I still worry, of course, that we are dealing with a programme that is being increased enormously and a department that is being reduced enormously. In business, in the private sector, if I saw a company that was reducing its back office by 40% while increasing its balance sheet by 30%, I would sell the shares pretty rapidly. But once again, we must put our faith in the ability of the officials at DfID to cope with this stress.
Having said that, it seems that an earlier amendment was withdrawn because it proposed setting up an entirely different body to carry out the scrutiny. It was not proposing that the Independent Commission for Aid Impact should be that body so I assume that it was taken out of the Bill in line with our policy of having a bonfire of the quangos and reducing the number of public bodies that are a burden on the taxpayer. Perhaps the Government had the thought that the Independent Commission for Aid Impact might be that body. But of course, as we have seen, even though this is a Private Member’s Bill, the Government seem absolutely determined to rush the Bill through both Houses without proper scrutiny. The Independent Commission for Aid Impact seems to be the obvious body to carry out that scrutiny.
However, that body is in a bit of an odd position. It is a creature of the department but it is supposedly independent. I would have thought that my noble friend Lord Hollick’s amendment would have been even more effective and the Government might wish to take it on board, as might the noble Lord, Lord Purvis, if it was a statutory body and had statutory independence. It is an absolute nonsense to have a body that does not have statutory independence scrutinising a programme that is a third of the size of the defence budget. It is an enormous amount of money being spent. I would have thought that any person wanting to ensure that the least amount of controversy surrounded our overseas development aid would welcome having in place mechanisms that would avoid any future scandals or disquiet on the part of what is, in the opinion polls, a rather uncertain and dissatisfied public.
To start, I agree with noble Lords that the principle of independent evaluation is extremely important. It is important that ODA provided by the United Kingdom represents value for money. That is key to this legislation. Of course, the Independent Commission for Aid Impact is independent: it decides what it wishes to do. We heard some important criticisms from my noble friend Lord MacGregor of some of DfID’s work, which should reassure noble Lords that DfID will not go unscrutinised. However, the effect of the amendment could be to limit the current range of scrutiny options available, including the National Audit Office—which the noble Lord quoted extensively.
The Bill already asks the Secretary of State to include in each annual report a statement as to how he or she has complied with the duty under this clause. The annual report is already subject to scrutiny by both the National Audit Office and the International Development Committee in the House of Commons. The Independent Commission for Aid Impact also scrutinises what DfID does. Noble Lords are right that the duty to ensure independent evaluation is an important part of this legislation. However, we do not feel that tying that function to one particular agency is the answer.
As noble Lords will know, the IDC holds public hearings to take evidence—for example, on every ICAI report. In addition, it holds inquiries every year into ICAI’s annual reports, which again are held in public. The IDC’s recommendations are then published. Of course, the NAO has statutory responsibility for doing value for money studies on DfID’s work. The NAO reports to the PAC, which also makes recommendations about DfID’s work, in addition to ICAI.
I was puzzled when my noble friend said she does not believe that there should be a particular organisation responsible for this. The Bill as originally published specifically set out an independent organisation to do this job. That is very important. When the amendment to remove that was discussed in the other place, at no time did my noble friend’s counterpart there say that the reason it was being removed was because they did not want just one body doing it. They said they did not want to set up an additional body. What we suggest is not an additional body but an existing one. Clearly the job needs to be done and it needs to be specified in the Bill how it is done.
Could the noble Baroness help me in respect of this amendment? Clause 5 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”.
My noble friend thinks—and I agree—that that is somewhat inadequate. Then, subsection (2) says:
“The Secretary of State must include in each annual report a statement as to how he or she has complied with the duty under subsection (1)”.
I presume that means subsection (1) of this clause, which says that she must make arrangements for the independent evaluation. Is the idea that the arrangements for the independent evaluation are subject to some kind of annual review? Surely the arrangements for independent evaluation should mean the creation of some kind of authoritative body to carry it out. The fact that Clause 5(2) says that you must have an annual report on this suggests that we will never get there.
When the Bill was introduced, there was considerable concern about duplication because ICAI existed. It is highly likely that ICAI will be the body that undertakes the reviews. My concern is simply to ensure that we do not exclude the operation of the other bodies that I mentioned—in particular, the NAO, which the noble Lord seems very much to appreciate.
I am most grateful to my noble friend, but what then does Clause 5(2) mean when it states:
“The Secretary of State must include in each annual report a statement as to how he or she has complied with the duty under subsection (1)”?
By the way, I do not know why we have “he or she”, because the rule is laid down that you do not need to provide for both genders in statutory legislation.
I am just saying that the guidance given does not provide for that. If she wants to change the guidance, I would be very happy to support that; I am just making the point that it is not consistent with other legislation.
Very cleverly, my noble friend has diverted me from my main point—
No, you have diverted.
Yes, very stupidly, I have diverted from my main point. As we are here discussing not equality legislation but overseas aid, can my noble friend explain why it is necessary for the Secretary of State in each annual report to include a statement about how the Secretary of State has complied with the duty under subsection (1)? Surely that duty should be complied with immediately, not subject to some annual review.
That is a very important point, but can my noble friend answer my question, which is: why is it necessary to have in each annual report a statement as to how the Secretary of State has made,
“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”?
Surely she should have those arrangements in place, or is the intention that they should go on for ever and never be completed?
I would like an answer to that perfectly sensible question. What is that subsection doing there? My noble friend has several people in a Box who do not seem to be rushing the information to her. Either she or the Box has the answer. What is that subsection doing there?
My Lords, as I hope that the House will appreciate, the sponsors of the Bill are responsible for drafting. I know that my noble friends will have read the report of both Committee and Report in another place, where those points were raised and responded to. My right honourable friend Michael Moore was perfectly clear in another place when he said that when he first proposed the Bill and consulted on it, it was an open, public consultation. At that time, he said in another place:
“I said on Second Reading that I thought the independent international development office proposed to fulfil the important function set out in the Bill was a good model, but that I was open to suggestions as to how it might be improved”.—[Official Report, Commons, International Development (Official Development Assistance Target) Bill Committee, 11/11/14; col. 35.]
Far from it being either mysteriously changed or rushed, there was proper parliamentary scrutiny in another place at Second Reading, in Committee and on Report, where the Government did not accept the amendments proposed by Mr Nuttall, et cetera, because it was felt that there was a more effective way to answer the valid points that my noble friend Lord MacGregor has cited. Let me turn to them.
What is the fundamental question that the Bill is asking? In addition to the 2006 legislation, is there for the first time independent evaluation of the value for money of United Kingdom ODA? The Bill will afford that. It goes further. It states that there is a duty on the Government to come to Parliament to explain annually how that independent evaluation is being carried out. That answers the second question raised: not only is there provision for independent evaluation but Parliament will be receiving from government, on an annual basis, how that independent evaluation is carried out. Subsection (2) is a considerable safeguard to Parliament for effective scrutiny of the independent evaluation.
This means that we come to whether a new body is created or ICAI is put on a statutory footing. When we look at all the consideration of how this independent evaluation can be carried out, not necessarily but potentially by one body and informed by the National Audit Office or other bodies, I think it is right that the Bill simply states that the principle for that evaluation will be carried out with flexibility as to what body or bodies will carry out that function. It is important that Parliament should have the ability to scrutinise properly that independent evaluation and how it is carried out. As the sponsor in this place, I cannot accept the amendment but I understand why my noble friend spoke to it. I believe that the elements in the Bill afford that protection.
I am most grateful to the noble Lord for answering the question which the Minister did not answer in respect of Clause 5(2). He is saying that the Secretary of State will produce an annual report on how he or she is being evaluated. That is not independent scrutiny and reporting. What is needed is an independent body which looks at the department and reports to Parliament, not to the Secretary of State. It is very helpful that the noble Lord should have answered this point because he is saying that Clause 5 effectively says, “The Secretary of State will decide who is going to hold him or her accountable for the programme of overseas development aid, then the Secretary of State will on an annual basis report to Parliament on how well the people reporting on him are doing”. That is a nonsense.
Do noble Lords have the Bill here? Perhaps my noble friend might bear in mind that the Secretary of State already has to make an annual report to Parliament, under previous legislation. Clause 5(1) says that:
“The Secretary of State must make arrangements for … independent evaluation”,
which is what we have been talking about and is indeed extremely important. Clause 5(2) says that:
“The Secretary of State must include in each annual report”—
the annual report that the Secretary of State is giving to Parliament—
“a statement as to how he or she has complied with the duty under subsection (1)”;
in other words, that the independent scrutiny of ODA has been carried out and that it is 0.7%. I think that the noble Lord is missing the point about the annual report, which is already in legislation and which the Secretary of State must lay before Parliament.
No, I am bringing my noble friend back to the fact that the Secretary of State makes an annual report to Parliament anyway, under the 2006 Act. That is an annual report not about how they have been independently scrutinised but about what DfID has done. I am sure that the noble Lord has seen those reports.
And very good they are too. My issue is: how do you make an annual statement about how the Secretary of State has complied with the duty under Clause 5(1)? Clause 5(1) 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”.
My point, which is my noble friend’s point, and was the original intention of the noble Lord, Lord Hollick, had he been able to be here, is that to determine whether there is value for money in these programmes, it is necessary to have a powerful independent body that reports to Parliament. However, what the clause provides for in subsection (2) is for the Secretary of State to put in the annual report, which the Minister has mentioned, a statement about how the Secretary of State has complied with the duty to make arrangements for the independent evaluation.
The noble Lord, Lord Purvis—I am sure he is anxious to get back on his feet—in his explanation of this clause, said something completely different. He seemed to say that what was being proposed here was that the Secretary of State would indicate in the annual report how well he had complied with the duty to ensure the independent evaluation of the programme. I am saying that that is a nonsense, and that what my noble friend’s—
In a second. My noble friend’s amendment seeks to have an independent body that reports to Parliament and says, “Look, the Secretary of State’s programme has gone wrong here and has gone well there”, and then Parliament holds the Secretary of State to account. The problem with this arrangement is that the independent body is the creature of the Secretary of State, and the Secretary of State reports in his annual report on how it is doing. That is all I am saying.
With all due respect to the noble Lord, Lord Forsyth, I suspect that most other Members in your Lordships’ Chamber both understand and accept the explanation that has been given by both the noble Lord, Lord Purvis, and the Minister. In fact, the noble Lord, Lord Purvis, made a very good point about comparing aspects of this legislation with previous legislation in this Parliament on the parliamentary scrutiny of ministerial financial expectations. I implore the noble Lord, Lord Forsyth, to accept—or at least allow the rest of us to accept—the explanations and understandings that have been given, and allow us to move on.
My Lords, I wonder if I may draw this to a conclusion from my point of view before my noble friend sums up his amendments, without going down the sidetrack that some have gone down. As the Minister has indicated, Section 1(1) of the International Development (Reporting and Transparency) Act 2006 states:
“It shall be the duty of the Secretary of State to lay before each House of Parliament each year a report about international aid pursuant to the provisions of this Act”.
It is only Section 3 of that Act that is subsequently repealed by the measure before the House, and indeed that annual report will include a statement about how the arrangements for the independent evaluation of the extent to which ODA provided by the UK represents value for money. That is perfectly clear.
I am satisfied that the arrangements that need to be carried out to provide for independent evaluation should be carried out with the duties provided for under this legislation. It provides flexibility so that it is not constrained with regard to the body that carries that out. It is perfectly clear why that is the position of my right honourable friend Michael Moore, and I hope that that satisfies my noble friend.
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:
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.
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.
Amendment 24 not moved.
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.”
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.
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.
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.
26*: Clause 5, page 2, line 39, at end insert—
“( ) The Secretary of State must include in each report an explanation as to how the implementation of the 0.7% target has influenced the following—
(a) the quality and effectiveness of UK Overseas Development Programmes;(b) the Department for International Development’s oversight of UK Overseas Development Programmes;(c) reported corruption relating to UK Overseas Development Programmes.”
My Lords, I think that we are nearing the end—I hope so—of what, to me, has been a deeply depressing day. Time and again my noble friends and I have come forward with suggestions designed to improve the Bill. Others have intervened to support these suggestions and to share some of the concerns that we have raised. I think particularly of the notable contribution of the noble Lord, Lord Butler of Brockwell, whose knowledge, authority and understanding in these matters must be second to none.
However, the proposer of the Bill and the Minister have both refused to countenance any change; they have been unable or unwilling to meet a number of the concerns that have been raised—we saw an example of that in the debate before last—but they have been unable to accept that the Bill is capable of any improvement. That is their position, but I have been around longer than they have and suggest to them that, if they look at some recent political history, those Bills that are driven through regardless of the opinion of the House, against the advice of a number of people who know what they are talking about and in defiance of any suggestion for improvement, generally run into a great deal of trouble down the track. I think that the noble Lord the proposer and the noble Baroness the Minister will find—perhaps along with other noble Lords on the other side of the House, if they find themselves in government—that a number of the points raised in the debate today come back to haunt them at Select Committee meetings and other meetings in future.
That said, I commend both the proposer of the Bill and the Minister for their courtesy, good humour and patience. They have treated the House with great respect. I regret the fact that the noble Lord, Lord McConnell, has left us, because what he and others must understand is that not only does Parliament have the right and duty to consider legislation thoroughly, but when a particular item is put into a privileged position—but the noble Lord has now returned, so I withdraw the point that I just made.
What must be understood is that when an item of expenditure—a budget—is put in a very privileged position on a particular pedestal, it must expect particularly rigorous examination, which does not mean hostile examination. Rigorous examination is required when large amounts of public money are being spent in areas that are themselves often very controversial. It serves no good purpose and is of no benefit to the budget concerned to call into question the good faith of those who raise those questions. That is a very important point to remember. The more that good faith is called into question, the more difficult things become for the programme under discussion.
I very much hope that even at this late stage it is not impossible for the proposer or the Minister to concede that there might be some wisdom in the proposal being put forward. The proposed amendment leaves the 0.7% target untouched; it is concerned only to improve the effectiveness and quality of the aid programme in the new circumstances created by the introduction of the new legally enforceable target. I hope that the Minister will not suggest that the existing arrangements are sufficient. If she were to suggest that, she would imply that the new legally enforceable target has no practical impact. If the existing arrangements suffice, why are we going down the route of a legally enforceable target? I cannot believe that she would argue that the legally enforceable target has no effect on the existing arrangements.
I am grateful to my noble friend for giving way. With regard to this specific amendment, could he inform the House which of the annual reports that have been laid before Parliament under the 2006 Act, and which cover aid effectiveness, policy effectiveness and transparency, does he feel are deficient and have not provided this information?
I am saying that the Secretary of State must include in each report an explanation of how the implementation of the 0.7% target has influenced the following—and then the words in the amendment. I am looking to the future. I think that that is perfectly clear. In the past we did not have a legally enforceable target and in the future we will.
My noble friend has just told the House that the reports so far, which have already been provided under the 2006 Act, have been insufficient. For which years were those reports? If he has not read them and if he is not aware of them, that is a problem with the information that he is providing to the House.
I am talking only about the future. The amendment refers quite explicitly to the future. I hope I am repeating myself correctly; I said that if it was suggested that the present arrangements are sufficient, then that would imply that the introduction of the new legally enforceable target made no difference. That is what I was saying. I am not talking about whether the report was insufficient in the past. We did not have a legally enforceable target in the past but we are going to in future. That is why I suggested that new arrangements would be required. So we are looking to the future, not the past, and I should be very interested to know why the proposer and the Minister—if indeed they are not going to accept the amendment—think that new arrangements should not be required in the future.
My Lords, I support my noble friend and very much agree with his remarks in respect of the conduct of the business today. The only thing in his excellent remarks on which I disagree with him is that he kept referring to a legally enforceable target. On my reading of the Bill, there is no legally enforceable target; there is a requirement for the department to try to spend exactly 0.7% of GDP in any one year, and a failure to do so simply requires it to produce yet another report to Parliament explaining why it has failed to do so. It is very important that we are clear on that because in the outside world it is being sold as something else, and the damage that is being done is the implementation of the 0.7% target.
The noble Lord, Lord Purvis, suggested that my noble friend go back and read the reports but that is not the point. This amendment is about seeking to ensure that we are aware of the influence of the 0.7% target on the quality and oversight of, and the opportunities for corruption from, UK aid. That is a really important point. The system is being changed. Until now, the department has had a budget. Part of the overseas development budget has been with other departments, including the Foreign Office—some of it might be associated with climate change, which I find a great mystery—and these departments have been able to spend on their programmes accordingly. The fact that between them all they now have to reach the target of 0.7% within a calendar year, as opposed to a financial year, will create and—the evidence is quite clear—has already created substantial problems.
Therefore, it is very important that we look at the impact of the inclusion of this target on the quality and effectiveness of the ODA programme and, similarly, at the degree to which DfID has been able to provide oversight of the other departments. If, as we discussed earlier, the effect of the target is that more has to be given to other organisations over which it has no control and from which there is no accountability, that will have an impact on proposed new paragraph (b) in the amendment, which concerns,
“the Department for International Development’s oversight of UK Overseas Development Programmes”.
I do not want to go over the same arguments at this hour but, as my noble friend Lord Lawson pointed out, there have recently been some quite disturbing reports from the NAO suggesting that money for programmes is being used by criminal elements on an international scale.
I think that the amendment is very sensible. If the Minister or the noble Lord, Lord Purvis, feel unable to accept it, we may have to return to this matter in rather more detail on Report because the impact of the department having a target of 0.7% will, in my view, have a seriously deleterious effect on the effectiveness of the overseas aid programme, and that needs to be monitored.
It is particularly relevant to what we are debating today, and I very much hope that the Minister will address it. I am opposed to the climate change policy of this Government because its purpose is to procure worldwide decarbonisation. That means getting the poor people in the developing world, whom we have been discussing, to move away from the cheapest form of energy and, instead, to embrace, at present and for the foreseeable future, much more expensive energy. In other words, it is a policy to impoverish poor people in the developing world. That is why I am opposed to it. It seems a bizarre and odd way in which to run a whelk stall having a Bill that is intended to relieve the poverty that we intend to create. I should be grateful if my noble friend can explain that.
I say to my noble friend Lord Tugendhat that I never expected anything other than full scrutiny of the Bill in this House. He can be assured that I made that extremely clear within my department, as I have done on other Bills in other departments in other instances.
The key issue here is that the Bill is about ensuring that the UK continues to meet its commitment on aid, which it has finally met. I am incredibly heartened by the cross-party agreement on this. As we heard at Second Reading, we know how much this is needed. However, underlying this debate is a sense that this is not the case and that there may not, therefore, be value for money. I emphasise that the Government have a clear commitment to ensuring value for money. I know that the Economic Affairs Committee in 2012 was concerned about the planned scale-up to meet the target because there was a significant increase in the budget. Clearly, the committee was right to raise that issue. However, we have now completed the scale-up to 0.7% and a number of external bodies have looked at this, including the December 2014 DAC external peer review, which said of our scale-up that our,
“Well planned … implementation was carefully monitored … and at the same time, strong efforts were made to avoid compromising the quality of the ODA programme, and progress towards results was regularly reviewed”.
In addition, we have strengthened the evidence base and procedures for project investment decisions. All proposals must have a business case, with proposals for projects of £40 million and above being subject to review through the department’s quality assurance unit. We have invested in strengthening programme management processes, capability and systems to transform the way in which we deliver programmes so that we are better able to tackle the underlying causes of poverty and conflict. We have introduced tighter spending controls. The threshold for ministerial approval of project business cases was reduced from £40 million to £5 million, with Ministers also approving supplier contracts worth more than £1 million. We have increased the use of payment by results. Under this approach, the department makes payments only after pre-agreed results are achieved, rather than up front. We have launched a development tracker online tool to provide more public information on UK development investment in projects. The department has also been commended for its openness. We have also talked in other amendments about the external scrutiny that occurs. I therefore hope that noble Lords are reassured about the level of scrutiny and what we have put in place within DfID.
There may be, at heart, disagreement here. Does the world still need this assistance or not? In terms of value for money, the assumption that because the budget has increased it would therefore be poor value for money needs to be challenged. As to the comments of my noble friend Lord Lawson, I am happy to engage on climate change, but perhaps not now.
My Lords, I am grateful for the opportunity to respond to the points that have been made. I hope that my noble friend considers that there has been proper consideration of all these issues in Parliament and that he does not feel that some Members of this House have a greater right than others to take part in any of the proceedings—whether because of age, experience or anything else.
The Bill repeals only one section of the 2006 Act, which is why I was exploring the existing duty within that Act on Ministers to report. The section that would be repealed requires,
“each annual report to include an assessment of the year in which the 0.7% target is expected to be met”.
However, as I have said on a number of occasions today, because this Bill maintains the position that the target will be met, it will, in addition to the provisions in the 2006 Act, be the mechanism for reporting going forward. Therefore, is it appropriate to include the noble Lord’s amendment in the Bill, or are the provisions in the 2006 Act and in this Bill the correct mechanisms for reporting?
I believe that the mechanisms in the Bill, in addition to those already on the statute book, are appropriate and that the criteria on effectiveness, potential corruption, whether the ODA budget is meeting the UN development goals and all the undertakings that we have made to international organisations—and, indeed, on value for money—are already covered by the 2006 Act and the independent evaluation that will be provided in the relevant reports. On that basis, I invite the noble Lord to withdraw his amendment.
I will make just two points. First, as regards participation in the debate, I was very pleased to hear what my noble friend had to say. I gained the distinct impression this morning, and in the debates we had before the break, that a number of Members of this House seemed to feel that there was something improper about intervening in the debate to suggest changes to the Bill. That was certainly the impression which I felt a number of noble Lords gave—although not my noble friend himself or the Minister. But that impression certainly came through very strongly from the other side of the Committee.
Secondly, the noble Lord made some very interesting points. I want to make it clear that value for money means two things. It means value for money for the recipients of the aid programmes and value for money for the British taxpayers who are putting up the money. It is more difficult to ensure value for money for the recipients of the programmes, because in some of the countries in which the programmes take place administrations are rather exiguous and the vested interests to which the noble and right reverend Lord the former Archbishop of Canterbury drew attention at Second Reading are more powerful. As we discussed at Second Reading, DfID is quite rightly shifting the emphasis of its programmes towards the more fragile and poorer states. But, by definition, it is in the more fragile and poorer states that administrations are weakest and that vested interests that may oppose the Government, or may indeed control the Government, are strongest. I emphasise that point.
I cannot pretend that I am entirely reassured, but now is not the time to pursue the matter further. Like so many other things, we will come back to this on Report. I beg leave to withdraw the amendment.
Amendment 26 withdrawn.
Clause 5 agreed.
Clause 6 agreed.
27: After Clause 6, insert the following new Clause—
The provisions of this Act shall cease to have effect after 31st December 2020.”
My Lords, at last we are getting to the end of these amendments—long after sunset, I suspect.
This amendment seeks to introduce a sunset clause. It would enable the Bill’s provisions to apply for a reasonable period of time—that is, to 2020. There has been sometimes quite vigorous disagreement in this Chamber about the merits of the Bill, and a number of anxieties have been expressed about the 0.7% target and the impact that it is likely to have on value for money, the decisions that are taken by DfID and other government departments, the impact on aid programmes themselves, on the relationship with the multilateral organisations and on accountability. Some believe that having a declaratory target in the Bill will somehow encourage other countries in this regard. I believe that the United States, for example, which is still the richest country in the world, spends less than 2% of GDP or GNI—I am not sure what the GNI figure is—on overseas development aid.
I think that these arguments will be tested once the Bill reaches the statute book. There will be an opportunity for people to look back after five years to see whether all these other countries were inspired and moved forward. It is rather like the argument that we used to get from CND: if we gave up our nuclear weapons, everyone else would give up theirs. It is quite interesting that many of the people who have faith in this idea are the same as those who were advocating that we should give up our nuclear weapons not so long ago.
I hear gasps from the back. It is exactly the same argument. The argument by CND was that if we gave up our nuclear weapons, everyone else would follow suit. That is the argument that was put. The argument put now is that if we enshrine 0.7% in law, all these other recalcitrant countries will follow our example. Interestingly, many former Treasury Ministers and Chancellors of the Exchequer have put their name to this, as have people who have taken evidence. The argument is that those fears that have been expressed are misguided and that none of the disadvantages we have pointed to will come about. Let us test it. If, after five years, we find that those of us who have been a bit concerned were wrong, the Bill can be enshrined again. Indeed, if those who have argued for the Bill are right, it will no longer be a matter of controversy and we will not need a Bill which says that the Secretary of State has to tell Parliament why these proposals fail to meet the target, and that will be the end of the matter. Perhaps we might need a Bill that has a proper penalty and creates a legally enforceable duty on the Secretary of State, which is how this Bill has been sold erroneously to the public, as we have discovered this afternoon.
I believe that the sunset clause is a way to unite us all, end the division over this and give the proponents of the Bill an opportunity to show that their arguments are valid. I have to say that I have my doubts. I beg to move.
I disagree slightly with my noble and tireless friend Lord Forsyth in that he talks about the other countries that have not set upon this kind of fixed target as being recalcitrant. I do not think that that is quite right. They are innovative. If one makes a study of where the Netherlands and Germany are going, and where the advanced thinking in America is going, they are going in a slightly different direction from those who are urging that we must have a fixed amount of official development assistance. They are saying that the whole scene for development is changing. I know that I am coming at this from a slightly different angle from my noble friends and many of your Lordships.
I apologise for interrupting. I was not advancing that view: I was just repeating the view put earlier in our debates, which was held by those who argued that it was necessary to have the target to encourage the others. I agree with my noble friend.
Of course, the implications are that this is not the kind of encouragement that will move them because they are already advancing in different and, in many cases, more advanced directions than we appear to be stuck in at the moment. As we wind up this debate, I fear that this has been an afternoon of sadly missed opportunities. I fully accept that aid still matters intensely. It is notably for humanitarian purposes to support poverty reduction and human development in low-income countries. It is important. Many of us have fought for it over the years and we are a good development power, which gives me pride.
However, it is of increasingly limited help in building partnerships with the emerging powers and with the low to middle-income countries. The point has been forgotten that the thrust of 40 years of development thinking and aid development is to enable these countries to graduate away from development assistance, which in many cases they do not like. It does not fill them with the esteem and the power that they need to get development going.
As grants of aid become less appropriate in some countries, we should be thinking about the new forms of development co-operation that are necessary. Over the next five years, where we could have this sunset clause, all kinds of new perspectives will emerge on development; that I can promise your Lordships. As they develop, this commitment to a fixed percentage of old-fashioned ODA-able kind of aid will look more and more inappropriate. That is why I simply say I hope that, on Report, we will have a little more imagination and understanding that the world has changed. In the mean time, it would be nice to have a sunset clause of this kind. That is why I support this amendment.
My Lords, on a number of occasions today I have referred noble Lords to the Second Reading debate. In that debate I said that if this Bill passes, it will be because it is based on an entrenched and wide consensus across the three main political parties, external groups and the public, and it will become an enduring law. If a future Parliament chooses to repeal this legislation it will also be repealing that high degree of consensus. It would also have to be accountable to the electorate, and to some extent, constitutionally, that would be proper.
Therefore I end, with regret, by having to disappoint my noble friend Lord Forsyth. At the end of a long day, I record my appreciation for noble Lords whose support for the legislation Hansard will not be able to reflect—including the noble Lord, Lord Collins of Highbury, on the Opposition Benches, and my noble friend Lady Hodgson and other noble Lords on the Conservative Benches. Hansard does not always reflect the level of support or accurately reflect the opinions of Members in Committee. I hope I have corrected that. In that spirit, I hope that, after sunset, my noble friend will withdraw his amendment.
My Lords, the hour is late so I shall be brief. My noble friend Lord Purvis made a point about this being agreed by all three political parties. That is true. That makes me worry. In my long experience, in most cases—not all, but most—when all three parties agree on something, they are wrong. There is a very good reason why that should be so. It means that the issue has not been properly examined. If there is not a proper political argument back and forth, there is not adequate examination. So I am afraid that the statement he made does not reassure me in the slightest.
As for the amendment before us, although my noble friend Lord Howell said that he disagreed with my noble friend Lord Forsyth, I think there was no conflict; I certainly agree with both of them. As far as my noble friend Lord Forsyth is concerned, I believe that we need to look at this new, greatly expanded aid programme and how it is working out. One of the problems, which has been alluded to briefly, is that the focus of aid is changing and more and more is going to fragile states and to what are often described as failed states. In those states the amount of corruption is absolutely appalling and there is nothing that DfID can do to eliminate that corruption, although it would like to. So one of the things that we will need to examine if there is a sunset clause and we want to renew this is whether we have, not deliberately, produced a machine that has significantly increased the amount of corruption, which is one of the great evils in these countries and, indeed, is one of the great reasons why they cannot lift their people out of poverty in the way that, happily, so many countries in the emerging world have done over the past few years. But there are others that have not, and that is where we are focusing our aid.
One of the most important things is the separation of economic and political power. This is fundamental to development. If people want to enrich themselves they go into the economic sphere; or they go, for different motives, into public service and the political sphere. If you do not have this separation and people go into politics in order to enrich themselves, which happens in a large number of countries, that is where it is so damaging and where aid will not help. That is why it needs to be reviewed at the end of five years.
Another valid point made by my noble friend Lord Forsyth is that the Minister said explicitly that one of the main purposes of the Bill was to set an example to the rest of the world. Fine. Actually, I do not think that is fine; it is not a proper reason for legislation. But leaving that aside, if that is the reason, after five years we can see whether the United States, Germany, France and Italy have followed suit. I am willing to have a modest wager with the Minister that in five years’ time—if I am still alive in five years’ time, which is unlikely—they will not have followed suit. Our efforts to get other countries to follow our example will prove to have failed, and that is another reason why Parliament should have positively to re-enact this legislation, if it wants to do so.
The final and important point made by my noble friend Lord Howell is that the world has changed—a point that I also made in an earlier amendment—and that there are better ways of trying to creating a better world than dishing out development aid. If that is so and we find that other countries are doing a better job by other means—we do not have time to discuss them now, but my noble friend has sketched them—that is another reason why Parliament should be required to take stock at the end of five years rather than ploughing on with this.
This is not chickenfeed: we are already spending well over £11 billion a year on aid. As a result of this Bill, this amount is scheduled to go on rising inexorably, year in, year out, if the economy is growing. We all hope that the economy will grow—even my noble friend the Minister wishes to see the economy grow—and, if it does, this will get bigger and bigger, year in, year out. However, if this is not the best way to achieve a better world in which there is less poverty and more economic development, we certainly do not want to continue with it.
If this Bill becomes an Act, its first five years will be a test bed. We want a provision that Parliament is obliged to address this issue anew at the end of five years. I strongly support my noble friend’s amendment.
My Lords, of course, if Labour wins the next general election there will be a massive cut in the overseas aid budget because our GDP will fall. I do not know if that is the intention behind the Bill, but it is a curious way of deciding priorities.
I am not going to rehearse the arguments and I am most grateful to my noble friends for their support. I thought, just for a nanosecond, that the noble Lord, Lord Purvis, was going to accept the amendment when he said that by the end of the next Parliament there will be such a consensus across the political parties that no one would dare to repeal this Bill. I thought he would say, “I have the confidence to accept the amendment because the position will be that crowds will be cheering in the streets at the prospect of this legislation being renewed”, based on the fantastic experience that the noble Lord predicts. I have to say to the noble Baroness, Lady Falkner, as she says, “Hear, hear”, that she does not seem to have the courage of her convictions. But I am not going to be tempted into making party-political points. If noble Lords who support the Bill believe that it is going to be so successful, then the very point made by the noble Lord, Lord Purvis, in his remarks would make them open to accepting this amendment.
I sense that people have probably had enough of the Bill for today, and we look forward to returning to it on Report, hopefully after we have had a long rest and everyone has had an opportunity to read all the reports which have been referred to. They provide overwhelming evidence that the Bill should go forward, but that it is in need of amendment. I beg leave to withdraw the amendment.
Amendment 27 withdrawn.
Bill reported without amendment.
House adjourned at 6.05 pm.