Select Committee on International Development Minutes of Evidence


Examination of Witnesses (Questions 142-159)


RT HON HILARY BENN MP AND DR CHARLOTTE SEYMOUR-SMITH

7 DECEMBER 2004

  Q142 Chairman: Secretary of State, thank you very much for coming and giving evidence on India. Thank you, Charlotte and your team, for organising an amazingly comprehensive visit. There was a lot of work in that and we are genuinely grateful.

  Hilary Benn: An epic, I think.

  Q143 Chairman: It was very well structured. We saw a lot and, notwithstanding there was not any down time, everything we saw and did colleagues found worthwhile. I was struck yesterday that Oxfam came out with a report[1] which had a fair amount of coverage in The FT and elsewhere. It had a rather stark figure for 2002. A third of the increased aid from rich to poor countries came from allocations to Afghanistan and Pakistan and their general thrust was that those countries that were involved in the war on terror were getting lots of extra aid whereas Africa was not. The development campaign is a contrast to the progress in reaching agreement on the Paris Club countries to write off up to 80% of Iraq's debt and the slow progress on the debt of poor African countries. I wondered what you thought of that.

  Hilary Benn: I saw the Oxfam report. It makes reference to figures in particular relating to the United States of America in addition to those you have just quoted. As far as the UK's aid budget is concerned, that is not the case. We are moving, as you will know, next year to 90% of the bilateral programme going to low income countries. We are in the process of very significantly increasing our aid to Africa. A debt deal has been done in relation to Iraq but the UK, from 1 January next year, will implement the proposal that the Chancellor has made to meet 10% of the cost of servicing multilateral debt owed to the World Bank and the African Development Bank, not only for HIPC [Heavily Indebted Poor Countries] completion point countries but other IDA [International Development Association] only low income countries receiving poverty reduction support credit. Those are some practical examples of the ways in which, if you look at how the UK's development programme is growing and developing, we are very clearly focused on poverty reduction. That is not to say that countries in particular like Afghanistan, which is suffering enormously—we have a development programme there—do not need assistance because the human indicators there have been pretty bad. My view is very clearly that it is important that we keep our eye on poverty reduction while also recognising that for development work you have to be interested in security, because without security you cannot have development.

  Q144 Chairman: You have recently been to India. The Parliamentary Under Secretary has recently been to India and we have recently been to India, so it is fresh in all our minds. We all went away with a lot of questions. One of the questions I went away with was: does the Government of India want to be a partner for development? We had a very pleasant meeting with the Minister for Finance, a very impressive man, a lawyer, but I think we all went away slightly with the impression that he was saying, "Look, thank you very much for the cheque. We greatly appreciate the money that has been given for the National AIDS Control Programme, the money that has been given to the education programme. Please keep sending the cheques in the post but we don't need very much more." Taking it to one level, one thought one could almost reduce the DFID team in India to three people: one to write the cheque, one to put it in an envelope and one to carry it round to the Ministry of Finance. When you were there you doubtless had a longer time than we did with the Minister for Finance and other key, senior ministers in the Cabinet. What was your impression about whether India wanted to be a partner for development or whether their agenda was much more concerned about how does India become a member of the Security Council; how does India get to be seen as a key player in the world in the war against terror, a key player in trade, a much broader agenda? What was your impression?

  Hilary Benn: It is a very important question because I, like you, came back with a lot of thoughts and ideas in my head. The Inquiry has been a very good opportunity, not just for the Select Committee but for me, as we work towards the next Country Assistance Plan, to try and resolve some of those questions. Do I think a great deal would be lost if we reduced ourselves to three people?

  Q145 Chairman: I was more interested in your views about India.

  Hilary Benn: A great deal would be lost. I agree with you that the Finance Minister is a very impressive individual. He is focused, as finance ministers are, on the particular responsibilities he has, which are to manage the finances, to try and address the question of fiscal stress and difficulty in the states. I came away very clearly convinced that the programme that we have, what will be a rising aid programme in India, is making a difference and producing benefit. Certainly the partners that we have at many different levels in the centrally run federal level schemes and in the four states where we are working—I went to Andhra Pradesh (AP) and saw some examples of really outstanding work—in that sense, India as a whole is interested. I was very struck by what one person said to me, so much so that I wrote it down. They said, "We really value DFID for its ideas and its flexibility." It is more about that, frankly, than the resources. At one level you could say, looking at the need in India, there would be a case for more resources but in the end we have to strike a balance in these things. My view is I think we have the balance right. The Government of India is interested. The change of policy under the new government, the previous administration having said, "We want a number of smaller donors to go", demonstrates that the new government is interested in that partnership and it is up to us, working with the government, to make sure that that partnership is used to best effect.

  Q146 Mr Colman: Can I press you on the rationale for our assistance to India? What is DFID's analysis of the principal factors which have driven development in India over the past 15-20 years? Have ODA and DFID contributed to these drivers of development? Clearly, the amount of aid we give is tiny compared to the total amount of India's GDP and even external aid is only 0.35% of India's GDP, so tiny amounts. Why has development happened and has ODA/DFID helped towards this development in the last 15-20 years?

  Hilary Benn: Why has progress happened? Why is India on track to meet the income, poverty, TB and safe water Millennium Development Goals (MDGs)? At the same time, it is not on track to meet the maternal health, malnutrition and sanitation MDGs. Above all, it has been a result of in part the economic development of the country, the very striking growth rates that India has had, the success that this has brought them in terms of reducing poverty. That is why they are on track for that particularly important MDG. I have a very strong sense that India is a country that is making real progress and, in development terms, we ought to see it as doing that. Having said that, there remain, despite the progress, over 300 million people still living on less than a dollar a day. The development challenge in India remains substantial. There are problems of governance; there are problems of fiscal stress, particularly at state level; there are issues of growing inequality; there are issues about the extent to which the very poorest people are able to participate in that economic growth and development that India has been very successful in developing. For all of those reasons, notwithstanding the fact that it is a different development challenge and a different type of development relationship precisely because our aid and aid overall is such a small proportion of the country's GDP, I am quite clear in my mind that it is right that we should be there, but we have to work in ways which take account of that set of circumstances which may be very different from a country where 50% of the government revenue is dependent on overseas aid.

  Q147 Mr Colman: Why should DFID be giving India the largest amount of money of any aid that we give to developing countries, and it is growing? Why should India be getting what appears to be more than its fair share or perhaps more than other more deserving cases?

  Hilary Benn: I would not agree with the argument that it was more than its fair share. If you look at income poverty and population and the operating environment in which we work, those are the broad indicators that we use to determine aid allocation. You could in some respects argue that, given those, India has been under-aided. That is why I say that in the end you have to strike a balance. Our programme in India tries to reflect that balance but I would not accept the argument if it were put that somehow India was receiving more than its fair share, given the large number of people still living below the poverty line.

  Q148 Hugh Bayley: We were told to expect that India would become a middle income country in ten years or so, in 2013 to 2015. Given that your Department is focused quite correctly on poverty alleviation, it would be difficult to maintain the argument that development assistance should be given on any large scale at all to central government when India has become a middle income country, but could a case be made to maintain development programmes with states that have large numbers of people below the MDG poverty level? Is that how you would see the programme going?

  Hilary Benn: Ten years is some way off. Nobody knows for sure when India will achieve middle income status but it is one of the issues that all of us have to have in the backs of our minds as we plan the programme and think about the future, although rightly our programme in India is above all concentrating on the here and now and the next two, three or four years rather than what is going to happen in ten years' time. If one looks at our programmes in other middle income countries, where there remains the case for involvement, that is one of the issues we would have to address at that time. I see the argument that you put, Mr Bayley, about the balance between activity working at national level and at state level. We would have to reflect upon that. It would depend on what the remaining challenges were, what was happening in the particular states. In that sense, it would have to draw on the process that we are grappling with at the moment, which is what should be the balance of our activity among the different states that there are in India. In a sense, what has happened in India certainly at state level has reflected what has happened to development assistance globally, which is in general we find it easier to work in places where there is a good policy environment, large numbers of poor people, a commitment to reform, because we know the support and the assistance properly used can really make a difference. It is more difficult to work in more difficult environments, whether they are countries or states like Bihar. We recognise that we would like to do more and we may come on to that in further questions but it is a question of finding the right way to work in circumstances such as this.

  Q149 Hugh Bayley: The FT correspondent, Mr Luce, spoke to us and he described India as the most callous society he had ever lived in, by which he meant it was a country of contrasts with a rich population, a growing middle class, which we saw, co-existing with some of the poorest people in the world. The implication of that surely is that effective development would mean that India needs to address those inequalities itself and to effect some redistribution. Is that something that our bilateral relationship with India and your Department particularly will seek to encourage?

  Hilary Benn: I agree with you. In the end, it is for sovereign countries to determine how they distribute the fruits of economic growth and success. All countries face a choice and the political process is the means by which those choices are made and those outcomes determined. Part of what we are seeking to do through our programme is to improve the delivery of services. During your visit, you will have seen a number of examples of that. The other part of what we are seeking to do is to try and increase demand for those services, to raise people's expectations so that they can participate better in the process of answering the very important question that you have just put.

  Q150 Hugh Bayley: If you look at India's position in the world, it is an emerging super power. Its importance globally in the global economy and trade, from a strategic perspective and quite possibly through and within the United Nations, is going to change enormously. It is strategically enormously important as a global player and will become more so over time. To what extent therefore is the maintenance of your Department's development assistance programme driven by foreign policy considerations rather than poverty alleviation considerations and should such considerations form part of our government's judgment about whether we should have a large development assistance programme in India?

  Hilary Benn: To be absolutely clear about it, our development programme in India is driven clearly and wholly as far as the Department for International Development is concerned by the case for reducing poverty and the large number of poor people there are in India have become a challenge. It is also the case that India is beginning to consider its role as a donor. Part of the dialogue that we would seek to have is on those issues, as India indeed becomes a very important power in the world. We are there for one very clear, very particular reason which is to do the things that I have just described. The government as a whole of course has an interest in maintaining relations with countries large and not so large, for reasons of foreign policy, their influence and so on. That relationship between India and the United Kingdom is extremely important but our development programme is very clearly focused on trying to tackle poverty.

  Q151 John Barrett: You and Mr Bayley mentioned how India's position in the world is changing. What is also changing is the Indian government's attitude towards aid and how the aid flows in the future. You mentioned that India itself is becoming a donor and it is becoming an increasingly large investor in the UK. Jobs are moving from the UK call centres and so on. How do you see DFID's role developing in the light of India's evolving self-image?

  Hilary Benn: We have to deal with the policies and circumstances that the Indian political process itself throws up. We have seen the change with the new government reversing the previous policy of asking all but a very significant number of donors to leave. That is a process I welcome. On the other hand, the new government has come along and said, "We do not want bilateral donors to engage in direct budget support." What we were doing in Andhra Pradesh we will not be doing in future, although separate budget support, as far as the new government is concerned, is fine. We are doing that through some of the national programmes and we are looking to see whether we could do some sectoral budget support, for example, in health in some of the states in which we are working. We have to adapt to the framework that the Government of India as its policy evolves and changes sets and respond accordingly but continue to bring what we can, which is money—very small in relation to the overall wealth of the country—ideas, capacity to innovate and capacity to influence. We have seen that in the way in which our programme has worked to date and I am sure we will see the same in the future.

  Q152 John Barrett: There is clearly a lot of work to be done in India. Are there any examples of areas where DFID has suggested that we work separately to technical advisers and they have said, "No, we would rather you did not do that"? How would we approach that if they were saying effectively, "Back off"?

  Hilary Benn: In the end, it has to be a partnership. It would not be right for us to say, "We are going to do it, come what may." To have a partnership, you have to have two partners and the partners have to agree on what they are going to do together.

  Q153 John Barrett: There is a potential conflict of tackling the poorest of the poor and the people who are just above the poverty line. If you focus on the people immediately below the poverty line, it is easier to shift people up above that line rather than tackling the very poorest of the poor, where a lot more effort and a lot more money has gone in but they still remain below the poverty line. How does DFID deal with that dilemma about being most effective and putting resources into the poorest of the poor or maybe having a push to get more people just above the poverty line so they are moving towards the MDGs?

  Hilary Benn: In terms of our development programmes, these are not so finely calibrated that one could say, "If we put a bit more in here, we are going to have to shift more people over that boundary from one level to another." The fact that India is making real progress in lifting people out of poverty is a function of much bigger forces at work but part of what we contribute is focusing on the poorest of the poor, seeking to include them in the programmes that we run. I know you have visited one of our rural livelihoods projects. The one I went to see in Bhongir was very clear about the way in which it was involving not just changes to the physical infrastructure. That was water management, very impressive and very practical; very much in tune with one of the other new priorities of the government which is a focus on rural development. Our programme there was combining those physical improvements to increase the supply of water with community based development that got the community to think about the very poorest in their communities, how they could be helped to find better ways of earning a living, ways of supplementing their income and so on. In time, that will feed its way through to the statistics but that is where we are trying to put our effort to make a difference. I do not think it is the case that we are focusing on those that are easiest to shift although, yes, if you look at where our programme has been prioritising certainly money in the past, we have worked particularly with states where we think there is capacity for change. We need to balance that with working in the states where it is more difficult but where there remains a considerable need.

  Q154 Mr Battle: Can I start by adding a personal word of thanks to Charlotte and her team for the visit. I have travelled to a few places in my time and I thought DFID's team in India, in terms of the calibre and quality of the people, the mix, was the best in the world. My initial response might have been following Hugh's line: get them spread across Africa as quickly as possible and we will see some real action, but I want to suggest something else. It is the first visit I have made to India and I was incredibly overwhelmed by the scale of the wonderful mess that the place is. I was also overwhelmed by the fact that an individual state had more people in it and more poor people in it than some of the countries that I visited in Latin America. If you were to say to me, "Treat India like a continent and break it down into states" that might make more sense in terms of the numbers, poverty alleviation and where we address our attention. That brings me to that issue of focus on the states because India is very different to everywhere else. There is some focus already on the states. What sense do you make of that and where do you see that going?

  Hilary Benn: First of all, can I thank you for what you have said about our colleagues in DFID India. I very much share your view. It is in my experience characteristic of the people who work for DFID's organisation but it is very impressive to see it in operation. Secondly, I too share your view about the scale of the place. Let us take an example that is very close to home to us as individual Members of Parliament: the size of constituencies. You have constituencies that might have a population of 2.5 million people. Can you imagine any of us trying to represent a constituency of that size? It creates a really big challenge.

  Q155 Chairman: Let us just say that India does not have a Child Support Agency.

  Hilary Benn: Absolutely. I hate to think what our secretarial and office cost allowance requirement would be if we were serving constituencies of that size or indeed the size of bureaucracy that would be required to answer the letters that we would then send on behalf of our constituents. I honestly believe that the answer lies in trying to strike a balance. I have come away more convinced that we need to find the right balance in India between doing things centrally—and you will be aware of the programmes that we are involved in—and we can work at a deeper level and help to bring about more change by also working in the states. We focused on four. There are issues of human capacity which we may come on to later, particularly with the reduction in head count that DFID India as an organisation and government departments are going through as we speak. The challenge is how do we use that very valuable resource and expertise to best effect as we try and see whether we can do more in some of the states where we know the development challenge remains very large but the circumstances in which we can operate are more difficult than the states in which we have been working up until now.

  Q156 Mr Battle: On what basis can you make the decisions between the states? In Kerala State, for example, where DFID does not have a programme, literacy rates are 93% for lots of historical reasons. The engagement of the people in people's development planning is the highest in the world probably compared perhaps with Bangladesh. There is great work going on there and DFID is not directly engaged there. DFID is engaged in Andhra Pradesh and West Bengal but is going to be tapering those programmes down in 2007-10. If we look to the engagement in Orissa and Madhya Pradesh, you see that as long term. If I were to say to you, "What about the plans for places like Uttar Pradesh (UP) and Bihar?" They are the poorest of the poor and going nowhere. Dysfunctionality is a word that comes to mind. How do you see yourselves engaging with them or do you not? How do you choose which country state to choose and which not to?

  Hilary Benn: The process that we have been through to determine the selection of focus states is very much like the process that we have been through in determining the size of the overall aid programme in India: population size, poverty, policy environment, performance. That is what has determined those choices. In Andhra Pradesh, one can see the real progress that has been made in reducing poverty, more so in urban areas than in rural areas, and obviously that has been an issue in that particular state. Let us be frank. If UP and Bihar were countries in their own right, we would be in there but everybody acknowledges that the operating environment there is much more difficult. What we are currently looking at is: can we increase our presence there, first, through some of the central schemes that we are supporting and, second, looking at Bihar and UNICEF which is working there; thirdly, through our PACS [Poorest Areas Civil Society] programme which is working with civil society and fourthly to see whether there are areas in which we might be able to discuss questions of governance and reform with those two state governments. I must be very honest and say that there are difficulties involved in trying to do more in those states. I want to be very straight with the Select Committee about that. We are trying to see what we can do more of within the constraints that we face, including human resource constraints that DFID India as a whole has.

  Q157 Chairman: I am not sure we know very much about how you intend to deal with Gershon[2] in the   Department. Are the cuts going to fall disproportionately on larger offices like India and Bangladesh? When they fall, is it going to be more locally engaged staff upon which they are going to fall or contracts from London and so on? Perhaps you might comment on how you see Gershon impacting on the Department generally?

http://www.hm-treasury.gov.uk/media/B2C/11/efficiency_review120704.pdf

  Hilary Benn: There are both head count targets that we have to achieve for UK based staff and also for staff appointed in country. The way the Treasury has set up those arrangements and the targets, it applies to both. We are in the process in particular of discussing the directors' delivery plans for next year and I am in the middle of talking to directors about what those plans are going to look like. In allocating out those head count reductions to different parts of the organisation, it is having an impact on DFID India. It is a difficult process to go through. Let us be very frank. It has taken a little time for staff in the office. Charlotte has lived and breathed this together with her colleagues. It is difficult to come to terms with. As clarity comes about the number of reductions there are going to have to be and who is going to move on, people can then think about what else they are going to do with their lives. We will work through it. It has had a bit of an impact. I would not be telling the truth if I did not say it has an impact, but I have a sense that the office is moving through that process. The broader question is that we are looking at the competing priorities we have. In some countries, because of the nature of the work that we are doing and the way we do it, we require more human capacity to do it; in others, we may not require so much. For example, if more of what we are doing is through direct budget support. In the end, we are trying to balance all of these things out and allocate those reductions as fairly as we can, consistent with the things that we are trying to achieve and consistent with the fact that we have a rising aid budget to deliver with fewer people. Therefore, we will have to be more efficient and more smart about how we do that.

  Chairman: And growing demands such as the Commission for Africa and so on.

  Q158 Hugh Bayley: Your contributions towards centrally sponsored schemes absorb large amounts of money but DFID and everybody else seems to acknowledge that the impact on central government policy is minimal because, although they are large sums of money in our terms, in terms of the Government of India budget, they are small sums of money. We have looked for evidence that UK involvement in the centrally sponsored schemes has a real, demonstrable impact and, with the possible exception of the education world, we have really failed to come up with evidence that that is the case. Is there such evidence or is it unrealistic to expect such evidence?

  Hilary Benn: If you are talking about evidence in terms of the capacity of DFID by supporting those programmes to influence what happens, I acknowledge what you say about education, but if one takes reproductive and child health, certainly as that national programme has evolved, we would feel that we have played a part in shifting federal government thinking in particular so that there is greater involvement of the states in that process, more involvement from the bottom up, designing the scheme in a way that improves the livelihood so that the resources it provides can be spent. I think I am right in saying in relation to the previous version of this that in some cases that money was not getting spent. We would argue certainly that we have had an impact in relation to reproductive and child health by being involved in that programme and changing the way it has been delivered to make it more effective. That is an example of ideas contributing to what is more effective development. That is the case for being involved, in part, in national central schemes as well as being involved with particular states.

  Q159 Hugh Bayley: Do you think there is sufficient evidence of impact to shift more resources into centrally sponsored schemes, the implication being relatively less for state schemes, either in the four states where we have large programmes already or possibly in other areas?

  Hilary Benn: We have already been through a process where there has been a bit of a shift. That arose out of our reflection, as you know, on what we were doing previously. We are looking in the end to about half and half, roughly. That is what we are aiming for. Previously it was slightly more at the state level, as I recollect it. We have to rebalance that and we think half and half strikes the kind of balance that I was talking about earlier.

  Dr Seymour-Smith: Some of these schemes are extremely large and therefore a small policy change leverages quite a lot of increased effectiveness. That needs to be factored into the thinking.


1   Oxfam Paying the Price, Why Rich Countries Must Invest Now in a War on Poverty. http://www.oxfam.org.uk/what_we_do/issues/debt_aid/mdgs_price.htm Back

2   Sir Peter Gershon, Releasing Resources for the Frontline: Independent Review of Public Sector Efficiency Back


 
previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2005
Prepared 17 March 2005