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 enormouslywe have a development programme theredo
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
workingI went to Andhra Pradesh (AP) and saw some examples
of really outstanding workin 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 moneyvery small in relation to the overall wealth
of the countryideas, 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 centrallyand you will be
aware of the programmes that we are involved inand 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
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