Examination of Witnesses (Question Number
80-99)
MR GARETH
THOMAS MP, MR
SAM SHARPE
AND MS
LIZZIE RATTEE
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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