International Development (Official Development Assistance Target) Bill — House of Lords, 2015-01-23
Topic: Macroeconomics
John Davies (Labour, Centre-left): My Lords, I endorse the very fine tributes given by the noble Lords, Lord Fowler and Lord Tugendhat, to Leon Brittan. Being from a slightly different generation, I was not as close to him as they were, but I always regarded him as a friend and I have, and will always have, the greatest affection and admiration for him The last thing that I want to do today is to make a party-political point. However, and I put it no more strongly than this, I am genuinely mystified that this measure—the Government support it, I believe, with complete sincerity—was not only in their manifesto, as it was in all our manifestos, but in their first Queen’s Speech and they have done nothing about it at all until the last few months of the Parliament. Even then, it came forward not as a government measure but as a Private Member’s Bill, with all the constraints that that entails. I am just mystified to know why that has happened and, when the Minister sums up, I would love her to explain to us why we find ourselves in that position today I pay tribute to my noble friend Lord Lipsey and to the noble Lord, Lord Tugendhat, for having had the courage to go somewhat against the current this morning in arguing against the Bill. There is no question at all but that it presents some remarkable anomalies and some problematic aspects and I think that we would be failing in our duty if we did not engage with them thoroughly. It is not normal practice to decide arbitrarily to spend a certain amount of money in a certain area without knowing what you are going to purchase. That is not the way that budgeting or financial governance is taught in any business school or, indeed, in any graduate school of public administration. As has been said, there is a real danger of distortion when you hypothecate certain elements in public spending. I might add to that a point that has already been made this morning: if you do that often enough, it becomes impossible to pursue any stabilisation policy. If the economy grows above trend, you suddenly find that, because GDP goes up, you are required to increase government spending and may be adding to overheating in the economy. That would be very perverse What worries me most about the Bill is almost the inevitability that if you place on a bureaucracy and on a Minister the obligation to spend a certain amount of money by a certain deadline, you will induce the operation of the law of diminishing returns and the productivity of that spending will fall. That worries me considerably However, unlike my noble friend Lord Lipsey and the noble Lord, Lord Tugendhat, and despite all those reservations and very genuine concerns, I support the Bill. It is essential to do something. First and foremost is the need to make a contribution to relieve the appalling human suffering that exists in the third world today. Some of the examples given by the noble Lord, Lord Chidgey, were deeply moving. Secondly, as an earnest of our sincerity, we need to do something about the worrying levels of inequality in the world today. Thirdly, as a subsidiary consideration, we need to take action for the sake of the credibility of the British political system. If all three major parties have committed themselves to doing something and they do not do it by the end of the Parliament, that will undermine public credibility in our whole system. Therefore, I support the Bill, despite all the reservations that I have set out However, I want to propose three safeguards. First, we must strengthen the audit controls that we have in place, particularly because there will almost certainly be a greater degree of mis-spending than in the past. I have no confidence at all—indeed, I think that the Economic Affairs Committee had no confidence at all; it said as much—in the DfID statement that in the last year for which it had figures, which I think was 2011-12, only £1 million of its budget was mis-spent or wasted, having been subject to fraud, corruption or what have you. That is completely non-credible and I think that DfID is deceiving itself. Whether by strengthening Clause 5, if we have the opportunity to do that, or by some other means, we need greatly to improve our financial controls Secondly, I am concerned about budget support. It inevitably increases the power and influence of the existing Government and bureaucracy in the country that receives it. Where you have a democratic, incorrupt Government and state pursuing rational economic policies, budgetary support is a thoroughly good thing—the Government are part of the solution, not part of the problem. All too often, however, as noble Lords know, that is not the case. We should make it a principle that we will not provide budget support to states that are single-party dictatorships. We are supplying budget support to Vietnam, which is a colossal mistake, and we should not be doing that. There are other examples that we should look at carefully. I should like a much more critical view to be taken of the candidates eligible in this world for budgetary support Thirdly, if we are to enhance the productivity of our spending on aid and to secure the achievement of the aims that we all hold so dear in spending this money in what is admittedly a very anomalous way—a salient exception to our normal way of doing things—it is essential to have regular audit review meetings with the recipients of the aid under budget support, those who are taking the decisions in the country concerned as to the allocation of funds in the sector that we are supporting No decision-takers in any bureaucracy in the world have the time to get involved in detailed discussions of that kind with 10, 12 or 15 separate people. In practice, they can at best manage with three. The three who will be chosen will be the EU, the biggest provider of aid in the world, USAID and the World Bank. If we are to have any influence we need to remain fully committed to the EU programmes and, even when we have national programmes in addition to the EU programme, to concert with our EU partners in having those review meetings. Otherwise, we shall not have the leverage and influence that we need and shall need increasingly as the sums that the British taxpayer expends on this thoroughly worthwhile cause increase.