International Development (Reporting and Transparency) Bill

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Mr. Ellwood: I endorse amendment (a) tabled by my hon. Friend the Member for Boston and Skegness. It is Parliament’s purpose to scrutinise what the Government are doing. If we are spending an awful lot of money—wisely, I hope—it is important that we scrutinise where it is going. It is a logical extension to seek to monitor the 20 countries that receive the most money from the UK.

I am pleased that humanitarian aid has been included, but the provision needs to be seen alongside longer-term interests. Humanitarian aid is immediate aid: it is there to help a state, region or area overcome a particular challenge—whether famine, flood or the aftermath of civil war. It is not designed to be permanent; it is to help in emergencies. It should be used alongside efforts to assist the state, the region or the area in sustaining itself, and both sides of that equation need to be monitored.

John Barrett (Edinburgh, West) (LD): Will the Minister give us clarity on that point about the 20 countries? As the wording stands, there is a possibility that the provision could apply to the 20 countries that receive least aid. That needs to be clarified.

Mr. Thomas: I clarify that I am urging members of the Committee to oppose clauses 5 and 7 standing part of the Bill. Similarly, I urge the Committee to support my right hon. Friend’s new clause 5.

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As I highlighted on Second Reading, the Government were worried about the potential for duplication in clauses 5 and 7 as drafted and my right hon. Friend’s proposal is an extremely helpful way to resolve it. New clause 5 goes beyond that requirement and includes the need to report progress in achieving millennium development goals 1 to 7 and the role of UK bilateral aid to that end. It is an important additional benefit of new clause 5, which reflects not only what my right hon. Friend has been saying in private but the concerns expressed on Second Reading by hon. Members on both sides of the House.

As my right hon. Friend said, the new clause extends the number of bilateral aid programmes to be reported on from 10 to not fewer than 20, which the Government support. For the duration of this Parliament—I cannot make a commitment beyond then—it is the intention of my right hon. Friend the Secretary of State that the annual report will cover 25 countries. [Hon. Members: “Hear, hear.”] Those 25 will be the countries on which we are required to report to the Treasury under public service agreements on the effectiveness of our aid. It seemed sensible to bring what the Bill requires us to report to Parliament into line with what we are rightly required to report to the Treasury.

Mark Simmonds: Is there a difference between the reports to the Treasury and those on the largest recipient countries? Are they the same 25 countries and if not, why are they different?

Mr. Thomas: The hon. Gentleman pre-empts my next point: the 25 PSA countries account for about 65 per cent. of the bilateral aid that we disperse. The effect of his amendment would be to require us to report on only 47 per cent. of our aid. I hope he will accept that the Committee should resist the amendment, given my additional commitment for the duration of this Parliament.

Mr. Clarke: I do not wish to prolong the Committee but what the Minister said is so important that it is right to acknowledge it. What he said about 25 countries is very welcome; indeed, it goes beyond what was requested on Second Reading. We also see the wisdom of linking the requirements to PSA countries. Therefore, my hon. Friend should feel comfortable that the Committee—I am sure that I speak for all its members—welcomes what he said and hopes that other Governments will emulate his commitment.

Mr. Thomas: I am grateful for my right hon. Friend’s comments. We were minded to increase the requirement in the Bill to report on 10 countries to report on not fewer than 20, in order to provide safeguards in future Parliaments that Governments will have to report in more substantial ways than they might have wanted in the past.

The breakdown of multilateral aid according to the main categories of organisations that we use, which was originally sought in clause 5(1), is now in paragraph 3 of the new schedule, which I hope the Committee will accept. A requirement to report on
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untied multilateral aid was originally in clause 5(2); there is a requirement in new clause 5 to report on progress in promoting untied aid, which can capture developments in both multilateral and bilateral fields. A list of issues in clause 7(2) will be dropped, as the new clause encapsulates a requirement to report on progress in meeting millennium development goals 1 to 7. That subsumes the need for the original list.

The hon. Member for Kettering asked me about cases in which we do not provide aid directly to a Government, such as in Zimbabwe. We will have to report on all the ways in which we deliver aid to countries. It might be through UN organisations and non-governmental organisations, as in the case of Zimbabwe, or as we prefer, directly to a reforming Government and where there are appropriate safeguards.

The professed support of the hon. Member for Boston and Skegness for budget support seems, given the way in which he has developed arguments over recent weeks, to be of the same degree that a noose gives to a condemned man. I would be interested to hear, in one of the future debates that we shall no doubt have, to which countries he thinks we are right to give budget support.

The hon. Member for Perth and North Perthshire asked me about economic conditionality. He will know that my right hon. Friend the Secretary of State published our view on that point last March. He made clear our pledge that none of our bilateral aid would have economic conditions attached to it, and that we would press the multilateral organisations with which we work—particularly the World Bank and the International Monetary Fund—to make progress in that regard.

I do not think that the hon. Gentleman had the good fortune to be called to serve on the Committee that looked yesterday at the 14th replenishment of the IDA part of the World Bank. We had a lengthy discussion about the economic conditionality used by the World Bank, and the progress that the bank is making. When the Government make significant policy shifts on economic conditionality, such as that initiated by my right hon. Friend the Secretary of State last year, I expect them to be included in the annual report.

Mark Simmonds: This is not the time to debate the rights and wrongs of the policy of direct budgetary support—you would quite rightly rule me out of order if I were to try to do so, Mr. Hood. That said, the Minister did not specifically answer my question as to why British taxpayers’ money going into direct budgetary support is not covered in the Bill.

I do not dispute the figures that the Minister gave, but he said that the PSA countries take up 65 per cent. of British bilateral aid, as against the top 20 which take up 47 per cent. The House of Commons Library believes that the figure is 62 per cent. I accept that that is less than 65 per cent., but there is a clear disparity between those figures. The Minister may not be able to respond to that point now, but I would be grateful if he could write to me setting out how he arrived at those percentages, so that we can return to the matter on Report if necessary.

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Mr. Thomas: I cannot explain any discrepancy between what the House of Commons Library said to the hon. Gentleman and the figure that I gave, but I will of course write to him to clarify the figure that I used, if indeed it is wrong, or to explain the discrepancy.

On the question of bilateral aid in the form of budget support to Governments, we will be required by the Bill to report on the money that we give, both in terms of its financial value and its effectiveness. The hon. Gentleman will have opportunities to use the annual report to explore both his position and the Government’s on budget support.

During this exchange I have had the opportunity to reflect on the point about the figure of 65 per cent. I am told that the hon. Gentleman and the Library are right, and that the correct figure for the top 20 countries is 62 per cent. He gave the figure that the top 20 recipients are worth some 47 per cent. of DFID bilateral aid; the figure actually stands at 42 per cent.

Question put and negatived.

Clause 5 disagreed to.

Clause 6

Progress towards net expenditure target

Question proposed, That the clause stand part of the Bill.

The Chairman: With this it will be convenient to discuss the following: New clause 4—Progress towards United Nations 0.7% expenditure target—

    ‘The Secretary of State shall include in each annual report his assessment of the year in which he expects that the target for expenditure on official development assistance to amount to 0.7% of gross national income will be met by the United Kingdom.’.

10.15 am

Mr. Clarke: The new clause deals with one of the most important issues in the Bill: progress towards the UN target of 0.7 per cent. of gross national income. For the purposes of simplicity, provision for the historical financial reporting on official development assistance as a proportion of GNI has been moved to the schedule. Again that takes into account representations made on Second Reading concerning repetition and streamlining of the Bill. Other than that, the new clause is substantively the same as the one that it seeks to replace. In other words, it contains the clear commitment.

I am privileged and delighted to put the new clause before the Committee. If it is endorsed by the Committee and by Parliament, it will be the first time that the UN target of 0.7 per cent. of GNI has been embraced in statute. The Committee will know that for 36 years, all Governments have been committed to obtaining that figure. The late Judith Hart, the Minister’s predecessor, played a formidable role in seeking to achieve it, and we acknowledge that today. However, over those years, there have been ups and downs, and the plain and simple fact is that we have never made it. The House will want to know what has
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been achieved, and how we are reaching the target and staying there. What better way could there be of doing so than by recording progress in the annual report that we propose and which is at the heart of our discussions today? I commend the new clause to the Committee.

Mark Simmonds: I agree with the right hon. Gentleman. This provision is probably the most significant aspect of the Bill. He is right to state that the ambition has not hitherto been put in statute, even though it has been an aspiration—I use the word loosely—of most of the developed world since the late 1960s and early 1970s. As he and, I hope, the whole Committee will be aware, the Opposition support the achieving of the 0.7 per cent. target by 2013, and we will do all we can to ensure that it is reached.

I have some general questions for the Minister. Have he and his officials given any thought to reporting this element? Will they break down how the 0.7 per cent. is being achieved as the years go by towards 2013? Will the split between multilateral aid, bilateral aid, debt relief, humanitarian aid and technical assistance—all elements that make up the total DFID budget—be documented in the report? If so, will it include the methodology of the split between multilateral assistance and bilateral assistance? Where and how the resources are allocated between those two largest areas of British aid seems relatively arbitrary at the moment.

Mr. Thomas: I support my right hon. Friend’s new clause and I urge the Committee to oppose clause 6. His new clause helpfully clarifies the requirement to report on the UN 0.7 per cent. target. The other elements of financial reporting set out in clause 6 are best addressed with all the other requirements for financial reporting in the new schedule that I propose.

I assure the hon. Member for Boston and Skegness that we will seek to break down how we spend the UK’s development budget, so that hon. Members from all parts of the House will be clear about the methods by which we are making progress towards the 0.7 per cent. target With that, I support my right hon. Friend’s new clause.

Question put and negatived.

Clause 6 disagreed to.

Clause 7 disagreed to.

Clause 8


Question proposed, That the clause stand part of the Bill.

The Chairman: With this it will be convenient to discuss the following:

Government amendment No. 10

Government new clause 2—Transparency.

And the following amendments thereto: (a), in line 1, leave out

    ‘such observations as he thinks appropriate’

and insert ‘observations’.

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(b), in line 13, at end add—

    ‘(   )   Observations made in accordance with subsections (1) and (2) shall be made in respect of each of the countries specified under section (Aid effectiveness and Millennium Development Goals 1 to 7).

Government amendments Nos. 12 and 13

Mr. Thomas: Perhaps it would be helpful if I set out our concerns about clause 8 and explain why I am urging the Committee to decide that it should not stand part of the Bill and why I am proposing the new clause. The concerns relate to subsection (2)(a) and (b) in particular. The substance of subsection (1) is included in the new clause.

I outlined on Second Reading our concerns about subsection (2)(a)(i). One of the great innovations of this Government, and in particular of my right hon. Friend the Chancellor, has been to initiate comprehensive spending reviews to give Departments some clarity about their level of funding over a three-year period, as opposed to the one-year annual budgeting cycle that existed prior to that. However, the subsection goes beyond what we could reasonably expect to provide detailed information on. I recognise the desire for Members to have some sense of future commitments to developing countries, which is why the wording in the new clause is intended to commit the Government to giving additional information, where possible, on future spending plans, in so far as they have been agreed, in developing countries.

We are doing that not only for the benefit of hon. Members, but because we want to see donors moving towards giving predictable aid to developing countries over the long term. I will give an example of the merit of that. Finance and Health Ministers in a developing country might want to recruit additional nurses and doctors to help meet the desire to get universal access to antiretroviral drugs, but might be worried about whether donors will continue to provide the additional resources necessary to pay the salaries of those doctors and nurses. They might be worried that the developing country would be left with a huge financial requirement that it does not have either the domestic tax revenues or the donor assistance to meet. We want to move to a situation in which there is some sense of predictable aid flows to developing countries—subject, of course, to their continuing good performance. However, as I said, subsection (2)(a)(i) goes beyond what we can currently do.

I recognise the appetite, too, in subsection (2)(a)(ii) to

    “specify the development objectives in that country”.

However, what we seek to do with our development assistance is to come in behind the developing country’s own development priorities, as set out in its poverty reduction strategy. The current wording of subsection (2)(a)(ii) goes beyond that sense of country ownership that we seek to promote in spending our development assistance.

Lastly, perhaps it would help if I explained our particular concern about subsections (2)(b) and (2)(a)(iii). They would require us to secure and publish agreements with recipient countries for aid. Given that we give aid to some 130 countries—albeit much of it
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involving relatively small sums of money—that could require us to try to negotiate separate agreements with each of those countries. I put it to members of the Committee that that would involve a disproportionate cost and would require a disproportionate effort on the part of staff. I hope that the requirement to report on a minimum of 20 countries—and, indeed, my commitment to go beyond that for the duration of the current Parliament—will provide a useful hook in an annual report for Members to debate the achievement of our development objectives as a result of our development assistance in certain countries.

I recognise the concerns that all Members have that money given by British taxpayers for development assistance must not be lost as a result of corruption. Therefore, it is appropriate that we take the opportunity provided by our new clause to ensure that the Government have a specific commitment to continuing to report on the fight against corruption in developing countries.

Mark Simmonds: As with the other new clauses, my party welcomes the simplification and clarity that the new clause provides by replacing clause 8. We also welcome the additional provisions on corruption and governance, which the Minister explained, and which he will know from comments on Second Reading cause concern to some of my party colleagues—and to Members from other parties as well.

I have proposed two amendments to the new clause. The first relates to a point I made in respect of a provision we debated earlier: we believe that the wording of the new clause will allow the Secretary of State to do what he or she sees fit, rather than what Parliament desires, which is to have the specific information referred to. Unusually, the Minister has not given a particularly full response on that point. I would like him to give a fuller response on why this amendment cannot be included. If he fails to do so, I will have no option but to return to this point on Report.

My amendment (b) to Government new clause 2 relates to aid effectiveness and millennium development goals 1 to 7. As the new clause is currently drafted, the report could get away with some general comments in a couple of paragraphs about those issues. We would like it to be made clear in the Bill that, in respect of the minimum of 20 countries—or of the 25 that the Minister has assured the Committee he will report on up to the end of this Parliament—the aid effectiveness will be analysed against the specific MDGs in those countries. Otherwise, DFID might choose to draw on only the most successful examples in a particular year.

The Minister started to address the other issue I would like him to deal with in his introductory remarks on the new clause. It is to do with the objective described in subsection (2)(a)(iii), which is to

    “make provision for the independent monitoring and evaluation of the effectiveness of policy and expenditure in achieving its stated objectives”.

I share the Minister’s view that it would be totally unrealistic and not cost-effective to have to do that for all 130 countries to which DFID gives assistance.
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However, I do not accept that it is unrealistic and not cost-effective to do so for the 20 or 25 countries in respect of which analysis of effectiveness will, as the Minister has accepted, be put in the annual report and I cannot see why that cannot be done.

10.30 am

Mr. Thomas: Let me deal, if I may, with the hon. Gentleman’s last point first. The issue is how we use our resources to strengthen the quality of Government systems in general in a developing country, particularly where we are giving budget support. That must be about how we strengthen the capacity of the Government to deliver assistance to developing countries in respect of education and health care, and how we help deliver better rule of law, effective police, good courts and so forth. It is also surely about how we help the citizens in that developing country to have confidence that their Government are spending properly the money that has been donated by countries such as ours and the money that has been collected from them in the form of taxation. We should therefore strengthen the quality of financial systems in the developing country and its independent audit arrangements as part of that process.

We have a responsibility not only to the individual poor people in the developing countries to which we provide assistance, but to the British taxpayer. We have to ensure that the auditing systems in those countries are robust and that we have further processes in place to check on the efficacy of our own spending there. As I indicated on Second Reading, our procedures for disbursing budget support or support to UN organisations, or indeed for disbursing financial support to NGOs, have been agreed with the National Audit Office.

We have to provide reports to the Comptroller and Auditor General. We have been given a clean bill of health every year to date for the effectiveness of our spend and the safeguards that we have in place. In addition, in developing countries we use a range of other audit arrangements such as the requirements of the World Bank and the IMF to give us confidence in the way those resources are being spent. Where we do not have confidence that our auditing arrangements are as robust as we would like, we have the opportunity to bring in independent auditors to monitor our current spend.

The hon. Gentleman’s concerns are misplaced. There are already robust systems in place to monitor the effectiveness of UK development assistance. In any case, we shall seek to strengthen still further the auditing arrangements in developing countries so that not only is our aid money well spent, but so are other moneys given to that developing country’s Government. Alongside our financial support, we also give considerable technical assistance to Governments to help them to continue to strengthen their financial systems, as well as individual assistance on occasion to anticorruption commissions or programmes of
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support. Although the hon. Gentleman’s concerns are perfectly understandable, on this occasion they are misplaced.

I understand what the hon. Gentleman is seeking to do with amendment (a) to new clause 2, but again I am not persuaded of the need for it. I do not think it would achieve what he thinks it would. The Secretary of State will by definition have to continue to provide and include observations in the annual report. He or she will have to use their judgment as to what needs to be reported to Parliament. It is sensible to recognise that in the Bill. There are already and, if hon. Members have their way, there will be still more opportunities to question what is in the annual report and what progress the Government are making in helping to tackle corruption. Furthermore, various systems are already in place to report on the effectiveness of aid.

As for amendment (b), we are aware that important changes have been made relating to the issues set out in the new clause on aid effectiveness and the millennium development goals 1 to 7. Of course we will report on those developments because it would be a new, substantial issue. We would want to ensure that the House was aware of the progress in that area.

There is a danger that the provision that the hon. Gentleman wants to place in the Bill would require us to come up with parallel reporting. When there are substantial developments, I have given a commitment to report on them in the way we have already committed ourselves to doing in respect of an increased number of countries from 10 to 20—and to 25—during this Parliament.

Question put and negatived.

Clause 8 disagreed to.

Clause 9

Definition of key terms

Question proposed, That the clause stand part of the Bill.

The Chairman: With this we will take the following: clause 11 stand part.

Government New clause 3—Interpretation, and meaning of terms used in annual report.

Mr. Thomas: I commend new clause 3 on the basis that the various changes that have been made to the Bill have resulted in clauses 9 and 11 being redundant. The new clause necessarily streamlines the Bill and I hope that the Committee will accept it.

Mark Simmonds: As the Minister rightly said, the new clause clarifies matters and sets down the definitions of the terms set out under the Bill. I welcome the fact that there is an additional definition of untied aid, which was not originally in the Bill. Will he explain where the reporting structures for progress towards harmonisation should be outlined in the Bill? Is it appropriate to place them in this clause? Harmonisation should be welcomed when it works for the recipients of aid, but the Minister will be aware that worry has been expressed by certain developing
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countries that harmonisation is slowing down the process of delivering the necessary improvements that we all want. As was said to me not too long ago, there is also a danger that Governments are using it as a reason to “harmonise corruption” rather than to harmonise aid. I think that somewhere in the Bill, whether in clause 9 or elsewhere, reference should be made to the ever growing and important harmonisation issue to ensure that projects are sustainable and successful.

There have been examples of non-governmental organisations and others building a school and the funding running out after three years. After that, there is no funding to continue paying the teachers or to pay for the running of the school, so co-ordination and co-operation between various donors and recipient Governments are necessary. We support harmonisation, but do not understand where in the Bill it is analysed.

Mr. Thomas: As for the requirement to report on the effectiveness of our spend in respect of the 20 or 25 countries, we shall report on our efforts to promote harmonisation and development of assistance under the Bill. Although such matters are not explained under the general definition of reporting on the effectiveness of our spend, we shall report on our efforts to promote harmonisation and predictability of aid. With that explanation, I urge the Committee to support new clause 3. As I said, it is a useful streamlining of the Bill. I suggested inadvertently that clause 10 needed to be deleted. We shall come to that shortly.

Question put and negatived.

Clause 9 disagreed to.

Clauses 10 and 11 disagreed to.

Clause 12 ordered to stand part of the Bill.

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