Draft International Development (Official Development Assistance Target) Bill - International Development Committee Contents

Examination of Witnesses (Question Number 80-99)


24 FEBRUARY 2010

  Q80  Mr Hendrick: Apart from our commitment to 0.7% and the fact that we want to put it into legislation, is the aim of this to act as a spur to other governments and other countries to legislate in a similar way, or is it the fact that some countries have met the target without legislation and is it that we just feel the need to do it in order to show our commitment?

  Mr Thomas: I think there is a particularly significant international moment coming up in September when the Millennium Development Goals are reviewed in terms of the progress made. There is no question that there is a series of other countries who are off-track on their commitments to meeting the 0.7%, so I think that, as well as locking in ourselves to trying to achieve progress towards 0.7%, it would send a very powerful signal to other countries around the globe, other rich countries, to do more to enable more progress more quickly to meet the Millennium Development Goals.

  Q81  Mr Hendrick: Do you think the fact that it might not actually result in legislation on the statute book would in any way make our efforts seem a bit feeble?

  Mr Thomas: I do not think so. I think that, if you put it in context of the leadership that our current Prime Minister and the previous Prime Minister have shown on development, if you add in the progress in terms of the legislation that has already gone through, I think people will see it as a progression, as a further indication of the journey of renewed commitment to international development that this current Government has initiated.

  Q82  Mr Lancaster: One of the stated advantages of this Bill is that it helps underline the degree of predictability for aid, which of course we would all support, but of course, in practice, when you begin to unpack that slightly, because of the fluctuations in gross national income (CGNI) on an annual basis and indeed the fluctuations in the value of the pound, there is still going to be some unpredictability in aid, so how effective a tool is it, in reality, to delivering the predictability of aid?

  Mr Thomas: Well, you are right, there would be some unpredictability still, but what, in reality, you would have is that developing countries would have a lot more confidence in the overall size of the funding envelope, to use the jargon, that is available for development spending by the UK. It would, as a result, help us to move, I think, to do more longer-term development partnership agreements with the developing countries with whom we work, be they five years or ten years in length.

  Q83  Andrew Stunell: Just picking that up, if I am sitting in the Finance Ministry in Nepal and looking at the UK aid programme, can you say something about the benefits there will be in terms of predictability, say, to the Government of Nepal in terms of the passage of this Bill?

  Mr Thomas: Well, if you forgive me, I do not want to use the example of Nepal because I do not have direct responsibility for our aid programme in Nepal and it is some time since I did, but essentially, if this commitment were to get on to the statute book and we were to follow through as a country in terms of the funding commitment to achieve it, there would be significant additional aid available, for example, to help us to fund more teachers on the ground, to invest in better health systems, perhaps to get more bed nets to those who might otherwise be at risk of being infected by malaria. There is still a huge job of work to do in terms of the level of need in terms of the numbers living in poverty and we would be able to clearly do more with the extra resource that was available as a result of this Bill and the political will that it would imply being available by Government.

  Q84  Andrew Stunell: Well, at the moment, say, about two-thirds of ODA goes to country programmes. Would you see that proportion increasing or reducing? It was put to us this morning that there might be a risk, though perhaps `risk' is the wrong word, but there might be an alternative of using a rapid increase more to support multilateral programmes than country programmes. I wonder if you would like to comment on that and perhaps say whether you think the Bill might have a provision in it that a certain proportion ought to be for country programmes or not less than a certain proportion should be for country programmes.

  Mr Thomas: I would not want to have specific amendments to the Bill to say that a particular percentage of our aid should go to country programmes or a particular percentage should go to multilateral programmes. I think we have to make judgments as ministers, and obviously the Select Committee and others will test the quality of those judgments, about the merits of spending through particular country programmes or spending through particular multilaterals. We chart the effectiveness of multilaterals, we evaluate the quality of our own country programmes and then we make judgments as a result about where to allocate our money, depending on where we think it is most effective. I think being prescriptive now about the particular balance of spend would be the wrong thing and would be the wrong approach to take. I think we do need to allow the Department to take a view, which clearly should be tested as we get a better sense of what the particular multilaterals can do or what the particular need is and what the particular political situation is in particular countries.

  Q85  Andrew Stunell: So, taking that at its face value, this will not actually increase the predictability in the Ministry of Finance in Nepal because it will still be the range of decisions outwith the statutory which will affect the amount of aid that they get from the UK?

  Mr Thomas: I do not think that is a fair characterisation of the answer I have given, although I understand why you say that. There would be a series of reasons why we might not want to increase aid or we might not even be able to follow through on the particular long-term agreement that we had with particular countries, which potentially could relate to the level of commitment to poverty reduction in the particular country, concerns about human rights in that country or concerns about corruption in that country, so, notwithstanding the balance of spend, there could be a series of reasons for not wanting to follow through, but, if the overall funding envelope increases, then we would be in a position to do more longer-term agreements and to give more longer-term predictability as a result to developing countries. What I do not think we should be prescriptive about is the exact balance between multilateral and bilateral and between funding through civil society organisations either. I think you do have to make a judgment on the circumstances at the time, as you see fit, and clearly be willing to be held to account for those decisions.

  Q86  John Battle: I think we would accept that you need the flexibility and that must be there, but, if I can put it to you in these terms, I think one of the really good things that DFID has done is to have developed country programmes with partner governments and to work out exactly what predictability and what programmes they could support in the past, and 65% of our ODA goes to those programmes now.[9] My point following Andrew's would be that it would put extra pressure on those programmes, I hope, for the people working up those programmes to absorb more money. Otherwise, there would be a fear, and I put it in these terms, that, if you get a big dollop of extra money coming along and you have not worked on the country programmes, the easiest and quickest way to get rid of it is to shove it into the multilaterals without thinking about it and saying, "Well, it will be our contribution to the World Bank or the World Food Programme" or whatever, and it is just whether the Department is working with the partner countries to say, "Well, actually, if we can meet these targets and we ramp up the aid budget in these terms, we would be working harder with you and we will actually be putting more people and resources into working up the country programmes", so that means they will be intensifying the work in-country. Is that the way that the Department is approaching it?

  Mr Thomas: No, I do not think so. I think what we would want to do is actually to look at the level of need in particular countries, and we, as you know, have a focus on low-income countries and want to continue, as we said in the last White Paper, to direct more of our aid, in particular, to those countries that are most fragile in terms of low-income countries. What we also want to do is to sit down with the other donor players in the developing countries concerned and look at each other's comparative strengths, whether they are a multilateral or another bilateral, look at the needs of the particular countries there and then make decisions about how each of our aid programmes should be spent. I think there is also a judgment to be made about the particular effectiveness of particular multilaterals in particular countries, and we have a process for evaluating the effectiveness of our multilaterals, but let us take the issue, if we may, Mr Bruce, of the particular country we were discussing yesterday, Zimbabwe. Now, there are a number of different scenarios for the politics, the economic situation and, as a result, the development response in Zimbabwe going forward where certainly at the moment it is entirely appropriate that we use both civil society and international organisations, such as the UN, as the route for our aid. If the best-case scenario were to develop, then maybe that balance would change and, therefore, I do not think it is appropriate for us to be specific about multilateral versus bilateral versus civil society; we have got to look at the situation on its merits at the particular time.

  Q87  John Battle: I welcome that, but, if I could lead back then to my colleague Mark Hendrick's questions, I would push to say that, if then you were in Zimbabwe, or let us take Malawi as a slightly less difficult case in a way, if Britain were able to ramp up its country programme in Malawi and we were doing it in conversations with the other donors, quite a few of those other donors ought also to be ramping up their contribution because they should be increasing their targets. Can we use that conversation to put leverage on them to honour their commitments to 0.7% as well because a lot of them are a long way behind us, otherwise, it is us putting all the money in and them doing nothing? Do you see it as sharpening up that conversation so that, as well as the lobby at the EU end or internationally, we are lobbying in-country?

  Mr Thomas: There are already discussions that take place at country level about levels of aid which particular bilaterals or indeed particular multilaterals are going to be able to put in to help that country, so, in that sense, those conversations already take place. We speak to our country heads of office about the levels of need in particular countries and we make judgments collectively as a result as to where ministers should put pressure on multilaterals perhaps to do more or on the types of conversations we should have with bilateral donors. Perhaps I could just add in response to Mr Battle's question that I attended what is a regular meeting of European development ministers under the Spanish Presidency this time last week and there was considerable interest in this Bill from the Commission and indeed from other Member States and there was a series of interventions about people being off-track in terms of their commitments, so I think, in that sense, there has already been merit in this Bill being published.

  Q88  Chairman: I think we welcome that, but the other issue we have had discussions about this morning is how you define ODA because of course, under our own International Development Acts, we have defined it more strictly and more narrowly than does the DAC, and I think this Committee certainly recognises that, but is there not a danger that enshrining the 0.7% commitment might lead to an attempt to define in a broader way what ODA is? From the Government's point of view, do you actually believe that the definitions, as agreed by the DAC, should be revisited? The evidence we had this morning was that they had not changed and there was no current drive to change them, so does the Government have a view about that?

  Mr Thomas: Well, my understanding, and I have not read the evidence that you took from the OECD-DAC this morning, but my understanding is that the DAC are seeking to renew their guidance in a series of areas at the moment, and we will obviously have to reflect on that guidance when it eventually emerges.

  Q89  Chairman: Well, perhaps I could put it the other way round: if that is the case, would it be the British Government's input to make it tighter and more robust, or is the pressure the other way? Presumably, the UK Government is in quite a strong position in the OECD in that we are legislating ahead of the game compared with other countries who are not meeting their targets or falling away and might want to loosen the definition of ODA to make it easier for them to improve their performance.

  Mr Thomas: No, I think we would want continuing progress to make the definitions as robust as is possible. You ask me more broadly about the question of definitions and we have deliberately not included any definitional clauses in the draft Bill precisely because I think it would certainly dramatically complicate this particular piece of legislation. Also, we have no intention of moving away from the existing commitment we have made in terms of use of the OECD-DAC's guidance for the definition of ODA or that the Department for International Development's spend should be predominantly focused on poverty reduction.

  Q90  Andrew Stunell: In the passage of time, there are going to be changes in the priorities that any government has and, perhaps looking at the aid and development climate in a country, it might be that it would be expedient and maybe even good for some of these definitions to be changed, and one could think about security and fragile states and clearly there are issues about policing. There are a number of topics which at the moment are outside the current DFID legislative framework here which it might be convenient to include in the future. Do you think that there is in fact quite a risk that, if we have a much increased, rapidly increased aid budget, there will be some temptation by other departments to look at ways of using this money for purposes outside the current definitions?

  Mr Thomas: I am not going to speculate on what might happen in the future or the types of conversations that take place between ministers and officials in future governments. In terms of security expenditure or this debate about the militarisation of aid, which I think has motivated some of the concerns in this area, I think it is a bit of a bogus debate. I think we are very clear that spending around enforcement in terms of security does not count as ODA, but, for example, human rights work, election monitoring and police training within UN missions, which some might see as security, I see as perfectly reasonable spending under our definition of official development assistance and it is perfectly legitimate that it should be included in ODA figures. What, I think, is important actually is that we do not see a substantial change in the definition of ODA, and let me be clear: that is not what the OECD is working on. What they are working on is how you report your ODA and trying to clarify, as I understand it, guidance for Member States in terms of the reporting of their ODA going forward, so it is that type of conversation to get the reporting as robust as is possible and as consistent as is possible which I think is an important piece of work internationally.

  Andrew Stunell: So, if I take another topic which would be climate change, I think there has already been evidence, and I think you perhaps were the Minister who gave it to us, where we had to take a double-take on whether some of the money announced for climate change was or was not inside the existing aid budget. There are clearly some grey areas. How do you see that being approached in the future?

  Q91  Chairman: Just for the record, I think it was your colleague Mike Foster.

  Mr Thomas: I certainly do not remember being scrutinised on that particular issue! I think we said in the White Paper last year that we would bring in from 2013 a 10% cap on ODA spending as climate finance. I think there is a clear overlap between, for example, the work to tackle and prevent deforestation in developing countries and the fact that, when you tackle deforestation, you are actually helping the very poorest people in those developing countries too, so I think it is perfectly reasonable that some ODA should be right to be counted as for climate finance too. What everybody in Government is also clear about is that we will need additional finance both in the comparatively short and the long term to meet all the needs that there are for climate issues. Again, I think the DAC are looking at how climate finance should be reported and I welcome the fact that they are doing so.

  Q92  Mr Hendrick: Could I just add on that then that, if you are saying that climate finance is becoming more and more effective in helping to deal with poverty reduction, then why have the 10% cap at all and why not look at raising that cap? Do you think there is any possibility that a future government might actually choose to get to the 0.7% by throwing in things, such as climate change, and actually taking that money from, say, DECC[10] where climate change is obviously one of its responsibilities?

  Mr Thomas: Well, I do not know, Mr Bruce, whether you are likely to ask me questions about the extent to which other government departments' spending is counted as ODA.

  Q93  Chairman: Yes, we will be coming to that.

  Mr Thomas: I sort of feared that that might be the next direction of travel. Some of the spending that certainly DECC has is countable as ODA, as is spending by a number of other government departments, of which the FCO will be the least surprising to the Committee. Quite what the balance will be between departments going forward, I cannot speculate on, but I think the vast majority of ODA, certainly under this Government, will continue to be spent by the Department for International Development.

  Q94  Chairman: Well, can I press you on that question then. The 2008 figure we had was that 88.1% of ODA was through DFID and 11.9% was through other departments, so the first question is: does the International Development Act apply to ODA spending by departments other than the Department for International Development?

  Mr Thomas: Forgive me, Mr Bruce, my attention was slightly elsewhere.

  Q95  Chairman: Well, 11.9% of UK ODA, as defined and agreed by the DAC, is spent by departments other than DFID. Does the International Development Act apply to spending on ODA by departments other than DFID?

  Mr Thomas: Well, we would expect this draft Bill and the commitment to 0.7% to require us to count up all ODA spending, whether it is by the Department or by other government departments, in that calculation.

  Q96  Chairman: Perhaps I can ask the Treasury solicitor if she might answer that. There is an important point in law: does the Act apply to spending by other departments?

  Mr Thomas: Are you referring to the 2002 Act or to the draft Bill that we have before us?

  Q97  Chairman: No, the 2002 Act, in other words, the poverty reduction Bill.

  Mr Thomas: The 2002 Act refers to DFID, to the Department only.

  Q98  Chairman: Well, that is where the problem arises because, if that is the case, then is there not a danger that money can be transferred out of the Department in order to avoid that?

  Mr Thomas: Well, this Bill is not about the challenge to one particular Department, it is about the challenge to Government as a whole and I think it is right that it should be, with respect.

  Chairman: I am not trying to be difficult. What we are trying to explore is the danger which could arise with this piece of legislation that, in order to meet the targets, there will be some temptation to finesse funding accordingly to areas where it will meet this legislation, but where it might undermine previous legislation.

  Mr Hendrick: And the work of other departments.

  Q99  John Battle: I tell you how I look at it, and there are two ways of looking at it. One is to say that we want to keep development spending purely for poverty reduction, and that was partly the purpose of the 2002 Act, in other words, and anything extraneous, such as building hotels, energy plants that were not absolutely vital, that kind of infrastructure which was not seen as essential and necessary poverty reduction, by and large, was not. Now, I do not see the difficulty in protecting the budget of DFID as being purely for poverty reduction. I think in a situation where this Bill, in the best of all worlds, got through, whatever government is in power, and we agree on the 0.7%, if I were in the Health Department or in the Social Security Department, I would want to raid the budget of DFID because yours would be the only one growing and, if I were a minister there, I would be after your budget to get a slice of it because my budget is contracting and yours is growing, so I would be pulling things across to my Department and claiming that they are ODA and that would allow the Government as a whole to wrap them all around and to say, `We've met the target". How do you actually ensure that spending by other departments is genuine money spent on poverty reduction in line with that original 2002 Act?

  Mr Thomas: Well, government departments have got to have those robust conversations with each other, come what may. What there is is a clear definition in terms of official development assistance and we have the DAC trying to clarify guidance so that there is a more robust and consistent process of reporting what counts as ODA. I think it is important to be clear that what this Bill is focusing on is the commitment to achieving 0.7% of ODA as a part of GNI. The exact balance of how ODA is spent and whether or not it is spent purely on poverty reduction through the Department for International Development is of course a conversation that government departments will have to have and will no doubt continue to have going forward. There are departments, the Department of Health is one, some of whose international spend can legitimately be counted as ODA, but simply because the Department of Health, if you were a minister, might want to try and count some of its spending as ODA does not mean that it could do so because there is a clear definition available for judging that through the Development Assistance Committee, the DAC, and they monitor how governments meet the commitment. The other crucial thing perhaps, in order to give further confidence to the Committee, is that the ODA-GNI ratio is about to become a national statistic, so the Office for National Statistics, which is obviously independent of Government, will also be able to do its own scrutiny of whether or not the definition has been properly adhered to.

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10   Department for Energy and Climate Change. Back

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