International Development Bill [Lords]

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Tony Cunningham: I want to place on the record my utmost respect for British NGOs and charities. I have had experience of their work in many developing countries. They do an incredible job in very difficult circumstances.

The amendment draws attention to a problem that we have encountered before. On one hand, we demand that everything must be whiter than white and of the utmost probity, with full audits, annual reports and so on, but on the other we say, ``For heaven's sake, cut back on administration.'' We want to spend less on administration, because we want more money spent on what it needs to be spent on in the developing world. There must be a balance. That is the problem, and that is the judgment that the Minister has to make.

Unfortunately, I have some experience of European aid. To some extent because of corruption in parts of the world, everything has been tightened up so much that millions of euros are never spent. The work that needs to be done is not being done because of the administrative burden. The question is one of judgment and balance.

12 noon

Dr. Julian Lewis: Does the hon. Gentleman accept that the amendment is phrased to give the Minister precisely the flexibility that he needs? When he looks at a third party's record, he can decide whether the proportion of money allowed for administration is relatively high or low.

Tony Cunningham: I do not think that the amendment gives the Minister that flexibility, but the clause does. It allows him to make the judgment and balance the administrative burden that such organisations have to bear against ensuring that the bulk of the money is spent in developing countries.

The Chairman: I call Mr. Lamb.

Norman Lamb: I have nothing to say.

Hilary Benn: For just a nanosecond, I was tempted to follow the example set by the hon. Member for North Norfolk, but if I had done so I should not have been able to respond briefly to the points raised by the hon. Members for Meriden and for Gainsborough (Mr. Leigh). Not for the first time, the hon. Gentleman has enabled me to reduce the length of my contribution by accepting, as did the hon. Lady, that the amendment was a probing one. There would be practical difficulties in imposing a fetter, not least of which in certain circumstances would be the time and effort involved in deciding the appropriate sum to be spent on administration in relation, for example, to humanitarian relief. I shudder to think of people negotiating on that issue while those waiting for the relief wondered where on earth it was.

I accept what the hon. Gentleman said about charities. In the end, it is clearly for the charities to determine that they use the money that they receive as effectively as possible to their own system of governance, auditors, board of trustees and so on, as well as to the people who give generously to a wide range of charities that support development work. We would all concur with that, and we want to encourage it.

What my hon. Friend the Member for Workington said on Europe gives me an opportunity to draw attention to what is going on inside the European Community at the moment. A process is taking place to ensure that the substantial amount of aid that we give, in terms of our assigned contribution and that of other European Community member states, is used as effectively as possible, that the administrative costs are kept as low as possible, and that the maximum outcome in terms of improved opportunities for people in developing countries is achieved. As far as the European Community is concerned, we are in the middle of a process with the jury still out. Reforms and structures have been put in place, and we all want to see those changes deliver in the long term, for precisely the reasons that the hon. Lady outlined when she moved the amendment.

It is clearly essential that we keep the administrative costs of DFID as low as possible. Our general practice is to build a specific and identified sum for administrative costs into our arrangements with third parties, whether they are NGOs as we discussed in relation to the previous amendment, the UN, other intergovernmental bodies or private sector consultants and contractors. The amounts to be allocated for administrative costs are determined in negotiation, taking into account the nature of the task and the body in question. When we give unearmarked contributions to an international organisation, we make considerable efforts through its governing body to ensure that it is transparent about its administrative costs and keeps them to a minimum. When, for example, an international body on which we have representation discusses its budget for a forthcoming year, we pay particular attention to the impact of administrative costs on its operation.

As for the percentage spent on administration, I am advised that it ranges from about 5 per cent. to 12 or 13 per cent., depending on the organisation and the nature of the particular project. However, I am grateful to the hon. Lady and the other hon. Members who raised the issue.

Mr. Leigh: The percentage range that the Minister gave us is very large. I am interested in this subject and the overseeing role played by the charity commissions. The Minister may have been a bit disingenuous when he said, ``It is up to the charities themselves, and to their trustees.'' The public do not know what is happening; charities are driven, after all, by people who work full time for them and are involved in administration. They draw salaries.

The wide range of administration costs is interesting and perhaps we might learn more on the issue—if not now, perhaps on Report.

Hilary Benn: I give the hon. Gentleman the assurance that if he wants to discuss the matter further on Report, I will be happy to do so and to provide as much information as I can.

I did not intend to be disingenuous in saying that it was a matter for the charities themselves. I merely reflected the fact that they were responsible for their own governance. I accept the point that the hon. Gentleman makes about the extent of interest in the way in which charities operate and to what degree the money that they raise is spent on administration. Charities, however, are independent, free-standing organisations. The Government may say that it is in all our interests that organisations involved in development aid ensure that they spend as effectively as possible and minimise administrative costs. The Department for International Development is responsible for its own development aid, must demonstrate that that is being done and can encourage others to do so. However, it is simply a statement of fact that charities themselves have responsibility to ensure that the objective that the hon. Gentleman and hon. Lady have set out is adhered to.

Mrs. Spelman: It has been useful to debate this probing amendment, because I have learned from it something that I did not know. The range of percentages spent on administration is interesting, and if we had not had the debate I would still be in the dark on that fact. I do not know whether those figures are published anywhere.

Tantalisingly, at the end, the Minister said that there must be consistency between what the Government themselves do and what they expect third parties to do. It would be interesting to see a breakdown of the administrative costs of Government-funded initiatives. That would create a new degree of transparency, which would help to deal with the public's concern, to which I alluded, that their money is spent on the projects for which they intended it. The public accept that a reasonable percentage must be spent on administration, but they would find it interesting to know how the process is undertaken and what the outcome is.

I took on board the point made by the hon. Member for Workington about the need to strike a balance. We were originally asking for more diligent auditing of where our money went and what it achieved, recognising that that comes with a certain administrative burden. Of course that balance must be struck, but I would reassert that there is a need to check thoroughly how the money is spent. That will inspire the public to go on being as generous as they are and allow this country to enjoy a good reputation for providing aid effectively.

My purpose in moving the amendment was to initiate a discussion on the matter. We have done so, and I am satisfied. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 8 ordered to stand part of the Bill.

Clause 9

Arrangements with third parties

Mrs. Spelman: I beg to move amendment No. 16A, in page 3, line 35, leave out from `agreements' to end of line 2 on page 4 and insert

    `consistent with the aims of this Act set out in sections 1 and 3'.

This is a simple amendment. It is designed to simplify clause 9. We had an extensive debate on the Bill's aims, as set out in clauses 1 and 3. I was looking to provide a more specific application of those aims; my previous amendments would have added another five subsections. I thought that it would simplify the Bill if clause 9 condensed the aims set out in those clauses. They do not need to be reiterated.

Hilary Benn: I will try to brief. The hon. Lady has said that the amendment is simple. The difficulty is that it could have a number of undesirable effects, depending on how the wording was read. If it was interpreted in a narrow way, it would ensure that statutory bodies could act only under clauses 1 and 3 and therefore that they could enter into and carry out agreements using development assistance provided by the Secretary of State only under those clauses, and that it would be channelled to them under clause 8. Clause 9 is intended to allow statutory bodies to engage in activities in other countries that promote sustainable development, improve the welfare of people or alleviate the effects of disasters using resources from anywhere—their own, the Secretary of State's or someone else's.

The other consequence that could arise from a narrow interpretation of the amendment would be that the statutory bodies listed in schedule 1, though not those able to act in other countries under their existing powers, could not make agreements to work in the overseas territories under clause 2. It would be rather strange to include a provision that would impose the strict poverty criterion, from which assistance to those territories is generally exempted, only on assistance provided to them through the statutory bodies. For instance, one of the tourist boards listed under schedule 1 might wish to work with one of the overseas territories. It would be unfortunate if we imposed a stricter requirement on it to give that assistance than we impose on ourselves by virtue of clause 2.

For those reasons, I shall urge the Committee to resist the amendment if it is pressed to a Division.

 
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Prepared 27 November 2001