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Lord McCarthy: My Lords, I hope the noble Lord will answer my two questions about work sharing and the NIS subsidy.

Lord Henley: My Lords, I shall not be addressing those issues on this occasion but the noble Lord can be assured that, where appropriate, I shall be writing to noble Lords. However, if the noble Lord will allow me, in the short time I have available I shall deal with my speech in my own way.

For the benefit of the noble Lord I was going to tell him a little about regional variations in unemployment patterns in this country compared with other countries. He may find it of edification in terms of assisting him in knowledge about just how our deregulated labour market is operating. I can assure him that regional variations between the best region and the worst region in the United Kingdom are of the order of 7.2 per cent. If he goes to the more regulated economies of Germany, Spain or Italy he will find the figures in those countries are of the order of 14 per cent., 12 per cent. and 17 per cent. Those impose enormous strains on the country as they create much greater differences in levels of unemployment between one section and another.

We believe that one of the key ingredients for our success is that lightness of touch in our labour market. We are tough where it matters--in equal opportunities legislation, about which the noble Baroness, Lady Lockwood, feels so strongly; on health and safety requirements and on unfair dismissal rules. But we do not interfere when we do not have to. That means businesses themselves can get on with running their companies in the most effective way. The result is that we have seen more jobs and a fall in unemployment.

What we have not seen, as noble Lords opposite seem to imply, is a massive growth in levels of temporary employment. I can assure the noble Lord that the proportion of workers in this country in what is described as temporary employment is a mere 6.3 per cent. If the noble Lord, Lord McCarthy, goes to those countries with the much more regulated economies and regulated labour markets which he is seeking, in Germany he will find the figure to be 10.2 per cent., in France 10.9 per cent. and in Spain, where they have the unfair dismissal rules which he would like where even for large-scale redundancies

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you have to go to the Minister to seek his permission, the figure is a massive 33.6 per cent. So no one will give you a job if they think they are going to be tied down.

Lord McCarthy: My Lords, has the noble Lord got the trend figures?

Lord Henley: My Lords, I have not. Those are the current figures. He will find that we have a much lower rate of temporary employment than the other countries.

Lord McCarthy: My Lords, but they have always been the same.

Lord Henley: My Lords, in the regulated economy of the sort which the noble Lord so admires, where there are unfair dismissal rules of the kind that he seeks, we find that in Spain the figure is 32.6 per cent. because no one will be given a permanent job because they cannot be got rid of. A de-regulated labour market creates jobs, but the regulated market of the kind which the noble Lord likes would not. Over 7 million jobs now become vacant every year. As I believe everyone accepts, no one can be guaranteed the same job for life. But in a successful economy, with a de-regulated labour market, people can face the prospect of a job change with more confidence than in the highly regulated economies which the noble Lord and his friends look to so frequently.

I can assure my own noble friends and the House that, unlike the party opposite, we aim to ensure that the labour market, and in particular the financial services sector, remain free of the excessive regulation that noble Lords opposite seek.

5.51 p.m.

Baroness Turner of Camden: My Lords, there is insufficient time to reply to all the points made by the Minister in response to this debate. I shall confine myself simply to thanking noble Lords on all sides of the House who have participated in the debate. There seems to be general agreement that we have some case when we talk about the lack of security in financial services employment. I repeat again what I was told in a letter from the union for Barclays Bank staff:


    "Job security is a thing of the past; temporary and agency staff very much characterise the present".

I would also like to emphasise that as far as I am concerned--and I am sure that I speak for my noble friends--we want to see a successful financial services sector. Indeed, many of the members of my union work in it. Obviously, we wish to see the kind of successful environment that will provide good and continuous employment for them. I am also vice-chairman of the All-Party Parliamentary Group on Financial Services. I am glad that two members of that group on the other side of the House participated in the debate. We believe that the financial services sector is important, but we also feel that we are right to express our concerns about the feelings of staff working in this industry.

I am rather disappointed at the Minister's complacent approach in response to the many points made from this side of the House. Nobody is suggesting that there are

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easy solutions and neither are we suggesting on this side of the House that one can go back 20 or 30 years to the situation as it once was.

On our side of the House we would like to see a little more acknowledgement of the fact that there are problems here; that the lack of security felt by people not only in this particularly important sector, but in the services sector generally, will have, and is having, a spin-off with certain social effects which I am sure the Government will not find very conducive to their success at the next election. These are people who hitherto have been mainly Conservative supporters, but they have had their faith in the system very badly shaken as a result of their employment experiences.

As regards the references to regulations, it is true that I am chairman of the PIA Ombudsman Council and therefore have some concern about regulation generally. I believe that a regulatory framework is necessary because of the public disquiet about certain things that have gone wrong in the investment sector. I also believe that there is a need to ensure that we have the right amount of regulation. One should not over-regulate because I agree that that can put a burden on employees and employers in the industry. That is something which the regulatory mechanisms are taking on board. I repeat my thanks to everyone who has participated in this extremely interesting debate. I beg leave to withdraw the Motion.

Motion for Papers, by leave, withdrawn.

Overseas Development Administration

5.55 p.m.

Lord Judd rose to call attention to the future viability of the Overseas Development Administration in the light of the Fundamental Expenditure Review and the cuts in overseas aid announced in the last Budget; and to move for Papers.

The noble Lord said: My Lords, we are particularly grateful to the Minister for having made a special overnight journey from Southern Africa to be with us. We hope that she is not too exhausted.

Let there be no misunderstanding about the effectiveness and potential of sound overseas aid policies. In a powerful paragraph (4.10) the Overseas Development Administration's own Fundamental Expenditure Review spells out the evidence: post Second World War Europe, the East Asian Tigers, South Asia, Latin America and part of Africa--the record has been impressive.

In my own years of work with humanitarian agencies, I have seen for myself the countless community-level, aid-assisted success stories ranging from the farmers in Burkina Faso building walls to retain the scanty rainfall to irrigate their fields; the war victims of Mozambique seeking seed and tools to start growing their own food again; the brave women in the slums of Manila running their own community health service; the Indian villagers fighting for the environment and their own well-being with re-afforestation programmes; or the Peruvian

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villagers effectively battling to build the river-retaining walls to prevent the flash-flooding which has repeatedly destroyed their villages.

Still today, while we celebrate multi-million pound lottery prizes, 800 million men, women and children go to bed hungry every night; 1.3 billion live below the poverty line and 35,000 children die every day from preventable diseases. Is that a world we are prepared to tolerate as we enter the new millennium? These stark statistics do not begin adequately to convey the sheer human misery of such poverty.

The central case for aid remains the basic recognition of human interdependence, the fulfilment to be found in belonging in solidarity and the moral imperative of responding to need. In the words of Nelson Mandela,


    "Our common humanity transcends the oceans and all national boundaries ... Let it never be asked of any of us--what did we do when we knew another was oppressed".
Most especially, let it never be asked of a Britain which still aspires to global leadership, as one of only five permanent members of the United Nations Security Council.

The positive spirit of the British people is well demonstrated in their generous response to emergency appeals by voluntary agencies and it is confirmed in opinion polls. In a Harris poll undertaken only last Autumn, 81 per cent. of those questioned agreed that richer nations had a special responsibility to help poorer nations.

But let us not pretend that giving aid is not also in our own best material national interest. As the review makes plain, aid promotes British trade and investment by increasing prosperity and stability. It generates income for the many British firms or organisations which deliver aid or provide goods and services used in the aid programme; and of course it enhances Britain's reputation and strengthens her influence in the world.

But if we interpret self-interest in the broadest sense of the term, the case for aid is even stronger. Many of the current threats we face, such as environmental degradation, mass migration, the spread of AIDS, the increase in drug trafficking, the eruption of intra-state conflicts, international terrorism and crime, are problems which require global and not national solutions. In the face of such threats, isolationist policies make no sense at all and in each case judicious use of development assistance, coupled with a strengthened commitment to the conflict resolution and pro-active diplomacy, for which the review so rightly calls, could have a crucial role to play.

Here I must declare an interest in view of my professional work with Saferworld and my role as a trustee of International Alert. Of course, accelerated debt relief, not least multilateral, is also an imperative.

We welcome the review's suggestion that ODA's over-arching goal should be,


    "to improve the quality of life and reduce poverty and suffering in poor countries".
That puts poverty reduction at the heart of the ODA's programme.

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We note that beneath this goal the review recommends a new hierarchy of aims for ODA, the first of which is,


    "to encourage sound development policies, efficient markets and good government".
But if "sound development" really means unquestioning compliance with IMF and World Bank structural adjustment programmes, I think that that is something that we should question. Of course, adjustment is often essential--there is no doubt about it--but for millions of people in Africa and Latin America such programmes have exacerbated poverty and suffering. After a decade of adjustment, economic and human indicators in many sub-Saharan African countries are worse than they were 10 years ago. If that represents "sound development", it is difficult to see how it contributes to the overall goal of reducing poverty.

The second suggested aim in the review is,


    "to help people to achieve better health, education and opportunity, particularly for women".
I would have thought that that should come first; the rest is how we make it possible. What could be more important than delivering basic social services--primary education, healthcare, access to clean water and sanitation--to people living in poverty? However, although the review was completed only four months after the World Summit for Social Development in Copenhagen, it makes no reference to agreements signed up to at that summit, such as the 20:20 compact which was endorsed, albeit on a voluntary basis. Does the Minister accept the suggested target of 20 per cent. of development assistance to be spent on basic social services? If she does, what steps is her department taking to meet the target? Why are we still at barely half the target level?

With regard to the review's third suggested aim, which is


    "to enhance productive capacity and to conserve the environment",
I simply point out that the two do not necessarily go together. It is perfectly possible to enhance productive capacity by chopping down trees, but frequently that is not very good for the environment.

The fourth aim is,


    "to promote international policies for sustainable development and to enhance the effectiveness of multilateral institutions".
It is, frankly, disappointing that the review does not contain an honest evaluation of what should be the split between multilateral and bilateral aid; instead discussion is curtailed by the confines of a total budget which is shrinking at a time when the relentless increase in contributions to the European Union is putting a squeeze on the bilateral programme. Indeed, the review suggests that the ODA may be able to protect its bilateral programme only by cutting its voluntary contributions to multilateral agencies. Those proposals appear to be made on a fairly arbitrary basis with little regard to the quality of the aid provided. The review concedes that both the United Nations development programme and UNICEF are doing a reasonably good job and making a significant contribution, but then amazingly concludes that UK contributions to both agencies could be cut.

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Multilateralism has a great deal in its favour. It is less likely to be tied to other questionable political or economic agendas. It avoids the disruption of competing bilateral programmes, but much of it nevertheless needs reform. How do we increase our influence for reform at the same time as withdrawing from our commitments? It is just not convincing. By contrast, conditional positive financial engagement could be a powerful lever.

The review recommends that the ODA should target 85 per cent. of bilateral aid on 20 of the poorest countries, all of which would be in sub-Saharan Africa and South Asia. The ODA would then prepare "graduation strategies" for countries in Latin America, the Caribbean, the Pacific and South-East Asia, and maintain what it refers to as a meaningful aid relationship through the British Partnership Scheme.

It is true that in some parts of the world economic growth has led to rapid improvements in per capita gross national product, but the fruits of economic growth have not been evenly distributed. Brazil is now classified as an "upper middle income country", but it is still a country where 32 million people go hungry. The United Nations Development Programme's Human Development Report calculates that, while southern Brazil has a human development index rating which would give it a ranking of 27th, along with Luxembourg, the north-east region of the country would score somewhere in between Bolivia (ranked only 113th) and Gabon (114th).

In the face of growing inequality, is it not simplistic to suggest that the best way to reduce poverty is simply to give money to poor countries? The net result of the review's proposal would be swingeing cuts in aid to Latin America and the Caribbean. The withdrawal of British aid from those regions would signal an end to Britain's global role in development co-operation, traditionally one of our strengths as an aid donor.

But we must be candid about what the driving force behind such cuts really is. The ODA presents them as a drive towards greater effectiveness. But we all know that they are in reality a drive towards a smaller aid budget. Last November, the total aid budget was cut by 5.4 per cent. Now, I know what the Minister will probably tell us. She will tell us that, despite this, Britain will continue to have the fifth largest aid programme in the world: true, in terms of volume; false, in terms of aid as a percentage of GNP, our national wealth. Against that far more significant measure of commitment, we ranked only 14th with little Finland in 1994.

In relation to the bilateral programme, it seems even more sophistry is on offer from the Minister and from her Government. The formulation of words in the ODA's budget press release and the Chancellor's speech are so ingenious that I hope your Lordships will indulge me by allowing me to read them out:


    "In a tight public spending round, the planned allocation for bilateral aid is likely to be little changed from that set out in last year's Departmental Report".
Ah! we can all give a sigh of relief; the bilateral programme is going to be protected. Until, of course, we consult last year's departmental report and look at the planning allocations for 1996-97. These reveal that

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bilateral aid is scheduled to fall from £1,065 million in 1995-96 to £963 million in 1996-97, a fall of £102 million or 9.6 per cent. in real terms.

The Minister will no doubt tell us that private investment is also key to development. We agree. We need far more of it. But private investment has been concentrated on a few rapidly industrialising countries. Worldwide, 80 billion US dollars were invested in developing countries in 1994, but 80 per cent. went to 10 countries (40 per cent. to China alone). Sub-Saharan Africa enjoys few benefits from private investment; in 1993 it got just 3 per cent. of such global investment.

While debt relief--not least multilateral--and private investment are vital, they can never be substitutes for aid. In paragraph 5.24 the review questions whether the current level of aid is sufficient to allow the ODA to fulfil its purpose, and that was before last November's cuts. When the Labour Government left office in 1979, aid as a percentage of GNP was 0.51 per cent. and rising. After 17 years of Conservative government, it is now down to 0.31 per cent. and falling. The review predicts that aid as a percentage of GNP will fall to 0.26 per cent. by 1997-98--and remember, that was before last year's cuts. Now it will fall even lower.

By the time this Government leave office, it seems likely that aid as a percentage of GNP will have halved during their period in office and the noble Baroness will have presided over the culmination of that halving. For such a decent and widely respected person as we all know the Minister to be, it must be a painful truth, but it is one that must be faced. Her colleagues love to have her benign countenance and genuine concern at their disposal, but repeatedly they cynically sell her short. There is now real anxiety as to whether the Government have any strategy at all for their aid programme. If they have, the sooner they bring it to the House the better.

As we look forward, I underline the undertakings given by my honourable friends Joan Lestor and George Foulkes in another place last week. The Labour Government will transform the ODA into a full department of state with its own Secretary of State to put development issues at the heart of government policy where they belong, and in the first year of government we will start to reverse the decline in aid spending. We endorse the United Nations Social Summit proposal for a 20:20 compact, with donors allocating 20 per cent. of their development assistance, and the governments of developing countries allocating 20 per cent. of their public expenditure, to basic social needs programmes.

Under Labour, all aid programmes will be audited systematically for their impact on the poor as well as on women, children and the environment. We shall introduce greater consultation and involvement of local communities in the design, implementation and evaluation of development programmes. In government we shall press for improvements to EU aid and development programmes, particularly in relation to poverty focus, participation and accountability. We shall seek better harmonisation of EU development policy

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with the bilateral programmes of member states, and greater consistency between aid, trade, agriculture and economic reform policies of the EU.

We shall do all that, and much more besides, because of the scale of the challenge which remains, to which we have no alternative but to respond if we are to be true to the values we hold dear. We shall also do it because the cornerstone of our approach to government overall will be positive social responsibility as the means to strengthen at home and across the world the community to which we all belong. In all that, the words of John Donne will be our guide:


    "No man is an island entire of itself...Any man's death diminishes me because I am involved in mankind; and therefore never send to ask for whom the bell tolls; it tolls for thee".

My Lords, I beg to move for Papers.

6.11 p.m.

Lord Soulsby of Swaffham Prior: My Lords, the House will be grateful to the noble Lord, Lord Judd, for initiating a debate on a subject which must be of concern to many noble Lords--overseas aid, third world development, and sustainable production within a global environment. We are all aware of the noble Lord's knowledge of that sphere and work in it over the years.

After decades of increasing development aid, often mediated by political motivation and considerations, from the 1950s to the 1990s, in 1993 there was a drop in global aid of 6 per cent. Now, I read that the ODA's overseas aid is 0.29 per cent. of total GNP. An increasing share of that decreasing pie is directed towards emergency aid, and rightly so. However, one must note that the pie is not an ever-expanding pie. There are now, of course, some new claimants for the pie--Eastern Europe and the countries of the former Soviet Union. There was a time when they sent aid to the developing world, but they do not do so now; and 12 per cent. of the ODA's funds go in that direction.

The UK has every right to be proud of the ODA's efforts. Although we are not in the lead position in proportion of GNP allocated to overseas aid--I understand that it is about 5 per cent. and that we are 12th behind Finland, according to the noble Lord--it is greater than that of the USA. Nevertheless, large sums are devoted to overseas aid. Although we may not be in the lead position in the amount of money or proportion of GNP allocated, we are probably in the lead position in terms of the focus of the aid, its administration, and the competence and dedication of the personnel.

My association with the ODA has been over many years in several continents, connected largely with livestock development. I make no excuse for concentrating tonight on that aspect of the subject, because of the shortage of time. Livestock development plays an especially important role in human livelihoods in the developing world and in the poorest countries. The animals do not just produce food by conversion of some of the poorest quality cellulose to high quality protein (meat and milk), alleviating the hunger and misery referred to by the noble Lord, they also provide the motive power (the draught power) to pull ploughs, to transport produce, and to do a variety of other tasks. They are especially important in the third world.

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Animals still provide 50 per cent. of the motive energy in agriculture, despite the great developments in the internal combustion engine and the like. In Tanzania, for example, 250,000 donkeys haul 56,000 tonnes of cargo daily. It is interesting to note that the women of Tanzania prefer the donkeys while the men prefer the oxen and the cattle. There may be something to learn from that. Without such motive power in those various countries, the small farmer's ability to farm and to produce food for their families is affected seriously. It is not only obvious disease and malnutrition that is the problem, but the chronic and sub-chronic form of ill health.

Research on those animals is important. Research is needed to improve food and the draught ability of the animals because they are important for survival. It is research that one might call "downstream" or strategic. It is not the type of research that is funded by the normal research bodies in this country such as the research councils, the Wellcome Trust. It is research that must be underpinned by the ODA. If the ODA does not fund it, it is unlikely to be done. If it is not done, new developments are not brought to the attention of the developing world.

In the UK there is one institute (the Centre for Tropical Veterinary Medicine) in Edinburgh, where the ODA has provided funding to do such work, as my noble friend the Minister is well aware. She has visited that institute on numerous occasions. The funding of that institute will decrease by 30 per cent. That will clearly have a decided effect on its ability to undertake training and the type of research that I have described. That research may not be done.

That reduction in funding may well have a wider effect than merely a lack of research into and understanding of disease control. It will, as the noble Lord said, reduce the UK's influence overseas on livestock development. It will reduce the UK's input into trade and reform of agriculture and research. With the new wealth-producing technologies such as biotechnology, it will reduce the UK's ability to play an important role in the development of livestock and other forms of agriculture.

I am fearful that the UK will not share in such developments while other countries will. Obviously, hard decisions must be made in the future, but I trust that agriculture and livestock development will be regarded as areas of particular importance and will be, to some extent, safeguarded.

As a final comment, the director general of the FAO in celebration of the 50th anniversary of that UN organisation launched what he has called the "new green revolution". Dr. Jacques Diouf has said that he intends to:


    "intervene where the needs are greatest and the agricultural sector most vulnerable".
I hope that I have sketched some of the problems. He went on to say that governments need to act with determination. I hope and trust that Her Majesty's Government will ever do so.

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6.20 p.m.

Lord Wallace of Saltaire: My Lords, I read the Fundamental Expenditure Review with interest, although occasionally with some difficulty. I hope that the Minister shares some of my scepticism about current management jargon and techniques within the Civil Service. She may recall that my wife used to teach in the Civil Service College three generations of management jargon ago. It has become worse since then. I was a little involved in attempts to introduce into the Foreign and Commonwealth Office a strategic objective review. I recall the then head of the FCO security department responding that the objective of his department was to prevent the outbreak of nuclear conflict throughout the world and in that it had been 100 per cent. successful during the previous year.

Therefore, I am not entirely sure that the management by objectives principles outlined in the report are exactly appropriate to overseas aid. However, I would argue that some of the statements made in Chapter 3, and in particular at paragraph 3.11, suggest that the Minister might be encouraged to argue the case for an integrated overseas budget rather than for the separation of defence, foreign policy and ODA into separate contenders. If it is the case that peace-keeping using armed forces, preventive diplomacy and aid interventions targeted in particular on institutions which are key to the functioning of civil society is precisely the way we should be going forward--and in the part of the world with which I am most concerned, the former Soviet Union and central and eastern Europe, that is exactly what we need--we should be thinking of aid expenditure and military expenditure under the same overall head. I venture to suggest that it might be easier to defend the ODA budget in that overall context.

When I read the motivations for aid, I was surprised to see such little attention paid to the environmental dimension both on moral grounds and as a national interest. Poor countries waste their land and their resources. What we have seen in Ethiopia, what we have seen in the reduction of forest cover in India and the whole progress of desertification in Africa demonstrates the extent to which poor countries damage their environment and therefore ours, too. I am sure that it would gain increasing popular support even in this country by stressing that dimension.

If we are talking about national interest it is also increasingly clear that overseas development assistance is important in migration terms. I have some experience of looking at man struggling through central and eastern Europe during the past three or four years. One sees desperate people from the Middle East, the Punjab and Africa trying to get into Europe. There are no jobs for many of them at home, and it is hardly surprising that illegal immigration--economic migration, as we put it--comes from the countries which have least opportunities at home.

As regards bilateral aid, I agree with the Fundamental Expenditure Review that concentration is correct in the circumstances. It gains the most impact on the countries concerned. I also agree that graduation is desirable; but I disagree with the noble Lord, Lord Judd, about Brazil.

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Brazil has an extremely inegalitarian society. The wealth of some of the diplomats one meets occasionally at conferences on overseas aid suggests that they could spare a little for the poorer people in their own country. We have a case for supporting non-governmental organisations working in north-east Brazil but solving the problems of countries which should be solving their own problems is not a high priority for our bilateral trade programme. Furthermore, I believe that the funding out of ATP is politically desirable, in particular from countries such as Malaysia for reasons which I am sure the Minister will recall. Niche funding, strengthening the kind of activities which the know-how fund as I have seen does extremely well, is precisely the way we should be going forward. There should be joint funding wherever possible both with other governments and non-governmental organisations. I have seen the European Union multilateral aid programmes and in that area the EU works extremely effectively. It is often much more cost efficient to do things together rather than country by country. EU multilateral aid to southern Africa, central America and the Mediterranean is increasingly important in terms of security and migration; and now increasingly it is of vital importance to central Europe and the former Soviet Union.

Perhaps I may declare a certain interest as I work with the Open Society Foundations and am employed part-time by the Central European University. One might say that the Open Society Foundations are indirectly funded by the British Government since much of the money which George Soros put into them came out of various forms of international speculation, including some against the pound. At present we are the largest single set of foundations funding technical assistance and education and training in central Europe and the former Soviet Union. Plenty of emergency assistance is needed in those areas and much more will be needed in Bosnia, the Caucasus, Tajikistan, if and when the conflict ends, and in Moldavia now the conflict appears to be finished.

Some of those countries are extremely poor. Countries in the Caucasus and in central Asia will need a great deal of assistance if they are to make a successful transition from socialism under the Soviet Union to market economies. I was puzzled by the statement at paragraph 10.11 which states,


    "The UK has neither the strongest historical associations nor size of programme in the... CEE/FSU to be very effective in influencing recipient governments, other donors or UK interest groups".
No one else has either, apart from Russia. We have as good a chance of influencing them as anyone else. What is being done through the know-how fund is extremely valuable. I support the suggestion in the review that this should all be under the ODA's overall direction as in many cases they are poor countries in severe need of development assistance. I hope that the Minister will push that through in unhappy collaboration with some of her colleagues who, I dare say, may resist.

6.23 p.m.

The Lord Bishop of Lincoln: My Lords, I am grateful to the noble Lord, Lord Judd, for the

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opportunity to debate this matter, which is clearly significant, not to say life giving. The first and principal justification for aid must be that we who live in a society that is relatively secure and prosperous and largely free from fear have a moral obligation to those who are not so fortunate and who are insecure, poor and afraid. I believe that that moral obligation is inescapable. It cannot be avoided. It determines in a quite fundamental way the kind of life that we seek to create, the quality of life to which we aspire and the nature of the society in which we want to live.

It will be rightly said that there are very poor people in our own communities and we should care for them too; that a growing number of people in Britain are becoming insecure; and that in certain parts of our country, many people are afraid, even physically afraid. That, too, is an issue we cannot duck. Although it is not the subject of the debate, we are called to look at it just as hard because, like the other, our response will determine the character of our society. I say that there is no difference in our duty to assist, whether those who are in acute insecurity are here or overseas. That is why, as leaders of our churches, we remain so critical of the reasoning that underpins the Asylum Bill as well as of its content.

I wish to make two main points in support of overseas aid. Other noble Lords are much more able than I to address the technical issues. I simply wish to add my voice to those who argue that aid is justified, first, by the level of need in the poorest countries and, secondly, by the evidence that it works.

One in every five human beings in the world still lives in acute poverty--that is more than 1 billion people. Nearly 800 million people, as we have heard, are still short of food and 500 million are chronically malnourished. Many millions die every year from infectious and treatable diseases such as diarrhoea, malaria and tuberculosis. In the developing world there are more than 13 million refugees.

Those are just a few statistics and it is difficult to respond feelingly to such numbers. But we have all seen from numerous television reports from various countries the acute suffering experienced by people in Rwanda, the Sudan and Angola. Those people are caught up in a violent crisis over which they have no control. We remember orphans and elderly refugees dying of hunger and exhaustion. Equally, we have seen the ordinary misery that very many poor people experience day by day as they attempt to grind out a living with virtually no resources available to help them to do so. They have no land, capital or education on which to build.

The scale and extent of poverty and need in the poorest countries which we have all seen and can all feel with a little imagination is starkly greater than in our own country. It seems to me that that is the unanswerable justification for increasing, or at the very least maintaining in real terms, the value of our overseas aid.

In addition, aid works. Too often that is forgotten. There are positive statistics, too, to set alongside those that I have given. In the past 30 years life expectancy has increased by one-third in the developing world.

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Primary school attendance has increased by nearly two-thirds. The infant mortality rate has halved. Basic immunisation saves the lives of some 3 million children per year. Food production per capita has risen by 10 per cent. in the last decade. All that is tangible progress, measurable in lives and well being and benefiting millions living on our planet.

Of course, aid is not the only cause of that progress. Indeed, on its own aid can resolve few of the problems associated with poverty. Fair trade, education, investment, human rights and good government are among other elements which must contribute. But equally, it would be a grave mistake to think that aid can be omitted from the list of interventions that must be made to reduce poverty. The noble Lord, Lord Judd, has already drawn attention to sub-Saharan Africa and the need to continue aid to an enormous degree to that particular area.

We shall continue to debate directions of aid policy and how to improve its efficiency and focus and, indeed, how our responsibilities at home should be set alongside our responsibilities abroad. But let us not forget that the fundamental issue is the obligation upon us to assist those who, through no choice of their own, have been born poor and who cannot, by any action that is open to them, improve their condition without the help of others.

Our overseas aid programme has become smaller as a result of the decisions made in the last Budget. I believe that we have become a little smaller ourselves in consequence. The £124 million that has been cut from the aid budget is not a large sum when set alongside the other expenditures that we make in this country. It amounts to three roll-over jackpots in the National Lottery. But for those who live in near or absolute poverty, the assistance that it represents is a lifeline that we should not sever. Therefore, I hope that when next year's Budget is announced, the Government will reverse their decision and restore the real value of our overseas aid.

6.35 p.m.

Lord Shepherd: My Lords, my noble friend Lord Judd asked me to speak in this debate. I asked him to provide me with some up-dated information and I have been inundated. However, much of the information that I received, I now find that he has already covered in his brilliant speech.

There is no question about the challenges and the need for aid. I used to believe that trade was more important than aid. In some cases at least that is true. I see the tremendous changes that have taken place in South-East Asia. But there are other reasons for that. Except for South Africa perhaps, those countries will not be able to emerge as what are called tigers of South-East Asia.

In his Motion, the noble Lord refers to the viability of the ODA. I should like to approach that in terms of the future of the ODA. As I understand it, the difficulty is that in recent years there has been a flat plateau of money available for overseas aid. From reading the report, it seems to me that we must anticipate further cuts. But it was at the Edinburgh council meeting of

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heads of state that the decision was made to increase the aid programme to include Asia and in particular the countries of eastern and central Europe. That is all to be welcomed. But for the ODA, with its flat budget availability, it has meant that the bilateral aid is just being contained and is now under very considerable threat.

I had a terrible thought and wondered whether we should look towards multilateral aid as the sole vehicle for distributing our aid. I reached the conclusion that bilateral aid is an essential part of multilateral aid. The knowledge and experience which the ODA has acquired over the years, plus the dedication of those who work there--and the noble Baroness herself represents that dedication--in itself contributes to the knowledge and experience of the multilateral organisations. Therefore, unless we maintain, support and develop our bilateral aid, there will be a cost in terms of our multilateral contribution. Therefore, I reject my first terrible thought. I have reached the conclusion that we must choose a blend of the two.

At what stage would the ODA cease to be a viable organisation as it is now? It is true that it is part of the Foreign Office but it is an identifiable organisation. When I became Minister of State at the Commonwealth Office, I was in the rump of the Colonial Office. I remember the anxiety, which was proven to a degree, caused by the loss of the Colonial Office experience. I remember when looking for a Governor of Hong Kong that we had nobody from the old Colonial Office who had experience of running colonies who was able to take it on. Fortunately, we found the noble Lord, Lord MacLehose, who was outstanding in every respect. But if we were to lose the experience, knowledge and dedication of the ODA organisation, our contribution would indeed be parlous.

The noble Lord, Lord Judd, referred to our own failure, in a sense, to support overseas aid. It is true, and we must admit it, that almost every developed country has failed, some even more disastrously than ourselves, to maintain its overseas aid contribution. The costs of any project undertaken continue to rise. Unless the budget for bilateral aid is maintained and developed, the contribution that we make will continue to be less and less effective.

I agree with some parts of the report of the review body. However, it seemed to me to be an orderly retreat from the battlefield. It was not going to be caught out; it had a plan to retreat. I do not believe that that is the way in which a Minister can win battles with the Treasury. We need to be infinitely more positive.

My noble friend may be critical of me. However, whatever contributions we make to multilateral organisations, we have to maintain the highest possible level of funding--and certainly today's level--in bilateral aid whatever the consequences as regards multilateral aid. If we see that level declining, the future of the ODA, with all its knowledge and experience, is lost.

The right reverend Prelate referred to the Lottery. If we were to take an extra percentage or two--the Treasury already take that--in order to finance overseas

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aid, I wonder what the reaction of ordinary people would be. I have a son who collects regularly for Save the Children at railway stations. He is amazed at the money he receives from the ordinary men and women who pass through those stations. The question could be asked, "Would you agree to 1 per cent. or 2 per cent. of the Lottery being syphoned off without allowing the Government to reduce funding because they are gaining new money?" That money could be treated in a new way--perhaps to help organisations which act in an agency capacity for the ODA. That is one way in which one could find new finances in these rather straitened times. It is a thought that I give to the noble Baroness. I believe that noble Lords would be surprised at the reaction of the people who put their pound in the till in the hope of winning the jackpot.

6.43 p.m.

The Earl of Sandwich: My Lords, I thank the noble Lord, Lord Judd, for introducing the debate. The Fundamental Expenditure Review gives both Houses another opportunity to comment on our aid programme. It also gives me the chance to say one or two nice things about the ODA which I know it appreciates at this time of restructuring and buffeting. I should perhaps also declare an interest. Anyone who has sheltered in NGO glasshouses occasionally reinforced by government grants has to be careful not to throw too many stones.

First, I welcome the openness and co-operative spirit of the FER. It is a management plan which also expresses the ODA's commitment to a new definition of aid and new policy objectives and it shows a willingness to share those with ordinary mortals. This may be part of a new vogue for transparency but it is refreshing to those of us who remember over many years how hallowed the corridors of Victoria Street have sometimes been.

I also welcome the co-operation which takes place at a policy level between the ODA and some of the voluntary aid agencies, especially on the regional desks, but also more and more between senior officials. Preparations for last year's Beijing Summit was a good example. While other areas of government go in for public relations and print, ODA staff tend to be more concerned with getting proper practical messages over to the people who need to receive them, many of them in the voluntary sector. If anything, ODA could do more for public education, but I shall return to that later.

Unfortunately, one of the messages that the ODA has been trying to get over is about cuts. I shall not add much to what has been said about the quantity of aid except to say that it is deplorable that the Treasury has allowed the aid budget to fall so low over the years. It is not for want of trying by the Minister who has been a champion of the developing nations, as have been some Conservative Members who also deplore the cuts. But I feel sympathy with the overseas beneficiaries who have seen British aid slipping away from them. Only this week a small organisation with which I am connected in Asia received one of those letters of apology from ODA. While being grateful for the support that we have received in the past, I cannot help feeling sorry that, but

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for Britain's own economic state, many more children overseas would be receiving education and primary healthcare.

We are told that Britain is in such a sorry state that it cannot sustain even the present bilateral aid programme which has already been cut back. Only last week the Minister of State said in a debate in another place that the Government still hold to the 0.7 per cent. for official aid. He stated:


    "We are at 0.3 per cent. and diminishing ... because we are ensuring that our economy is strong enough for us to achieve the target in time".
In other words Reculer, pour mieux sauter. Yet the Government continually reassure us that the economy under their guidance is strengthening all the time. We may be entering an election period, but how can they have it both ways? I believe that the Government are genuinely proud of the aid programme. The question is whether enough time really remains for them in this Parliament to stop the slide and begin the reascent. Is it possible that to make up for the money they would be giving in official aid the public would, in their wisdom, decide to give more through the voluntary sector, as the noble Lord, Lord Shepherd, remarked? I know that some voluntary giving is based on that idea. But it would be a degrading experience for a government committed to doubling aid. The voluntary agencies themselves are hard pressed. Honourable Members in another place praised the work of the British NGOs. Their success suggests they deserve more support, not less, at a time of retrenchment.

I know that the Minister has given many assurances about the NGOs. She will be well aware of the research by the Overseas Development Institute published by OUP last month based on 16 case studies in India and Africa. It is the most thorough evaluation conducted into NGO development programmes, and supported by ODA for that reason. It broadly confirms that, despite the acknowledged difficulties of implementing aid, British NGOs are highly professional and effective channels of development.

I welcome the increase in the joint funding scheme. But there have also been cuts and knock-on effects in other areas of NGO programmes. I wonder whether ODA could not make new on-the-ground commitments to NGO development and contract out more of its existing programmes to NGOs, as it does more readily with emergency programmes. There is little doubt that in areas like Andhra Pradesh and Orissa, for example, where ODA is becoming heavily involved in health and education, more could be left to Indian and international NGOs which would reduce the management costs. Is there room for more collaboration here? I would welcome a response from the Minister.

As to the concentration of aid recommended in the review, it is an old game well known inside and outside the ODA which takes up staff time and, if taken too literally, can end in tears. Spending not 73 per cent. but 85 per cent. of bilateral aid in only 20 countries may be aiming too high. It is laudable to focus attention on some countries and areas of the world, but no aid policy should be devised which excludes any country or area

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which meets the basic criteria. The most important policy is one which allows access to a deserving group in any part of the world.

I am pleased to see that the Government remain committed to women's development in the review's headline objectives. Knowing the vital importance of education, health and income-generation projects specifically designed for women, I hope that the ODA in its smaller print continues to recognise the critical role of those projects in its portfolio.

I should like to have seen some clear statement about development education in the UK--that is, the building of public awareness of our overseas aid programmes and of the more urgent needs of developing countries. That could have a much greater impact in this country. There is some urgency about it if the Government genuinely want to revive the position of aid within public expenditure. The review refers to the importance of raising the international profile of British aid, which is important, but I am not convinced that the Government are taking development education as seriously as the other political parties. I hope that that can be the subject of a debate in itself.

Finally, I note that economic reform and "good government" are at the top of ODA's list of priorities. When consulting NGOs on country strategies, I hope that ODA will also listen to their views on the sometimes crippling effects of new economic policies on the poorest sections.

In welcoming the review, I conclude with a reminder to the Government; namely, that there is strong support for overseas aid among all parties and throughout the country--not for the aid which goes into large prestige projects or even British products, which can also be important, but the aid which meets the needs of people who do not have access to cars and electricity but who desperately need proper healthcare and better access to education. If the ODA can get that message over, it will surely be a benefit to any government at the next election.

6.52 p.m.

Lord Grenfell: My Lords, I, too, am most grateful to my noble friend Lord Judd for initiating today's debate. It is both timely and necessary. The ODA's Fundamental Expenditure Review has set some alarm bells ringing. It seems sadly to me to signal something of a loss of heart. The review, coupled with the November announcement of the Chancellor of the Exchequer of a further 6 per cent. cut in the total aid budget can only heighten our concern.

I should like, first, to declare two related interests: one past and one current. Last November, I retired after some 30 years at the World Bank which, as noble Lords know, is an institution dedicated to assisting economic and social advancement in the developing world. It was a great privilege to have served in that organisation. My current and second interest to declare is the fact that, for five days a month, I assist the World Bank in strengthening its relations and joint activities with the Council of Europe and the Inter-Parliamentary Union, both of which are doing invaluable work in the

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promotion of democratic values and institutions and respect for human rights in countries in which the World Bank itself is most active in the economic and social sectors.

I have just three points to make. The first is about perceptions of overseas aid and its potential. Noble Lords who have already spoken in the debate have mentioned, and sometimes quantified, the huge challenge of fighting global poverty. Perhaps I may quantify a little more. Over the past 30 years, incomes in countries with the richest 20 per cent. of the world's population grew nearly three times faster than in those countries with the poorest 20 per cent. and the gap is still widening. Nearly 8 million children in the developing world die each year from diseases linked to dirty water and air pollution; 50 million children are mentally or physically impaired due to inadequate nutrition; 130 million children--80 per cent. of them girls--are denied the opportunity to go to school; 140 million people are unemployed and almost 1 billion are underemployed to the extent that they cannot earn enough to feed their families. The terrifying prospect is that 3 billion more people will be added to the world's population in the next 40 years, of whom 90 per cent. will be born in the developing countries.

The real challenge facing aid-donor governments as they set their spending priorities can be put this way. A child born today in one of the poorest countries is more likely to be malnourished than to go to primary school and is more likely to die before the age of five than enter a secondary school. That is the challenge. So what is the response? Do we throw up our hands in horror and say that it is all beyond our means to put right and that the scale of the problems is too great? Do we talk defeatedly of pouring good money after bad? Fortunately that is the view of only a few misguided people.

However, too many people still overlook how much has already been achieved. The more conscious we are of those achievements, the more conscious we ought to be of the absurdity of permitting our aid budgets to decline as a percentage of our national wealth. Perhaps I may add to the list of achievements offered to the House a few moments ago by the right reverend Prelate. Adult literacy has risen from around 40 per cent. to nearly 70 per cent. since 1960; the share of households with access to clean water has nearly doubled; the average per capita incomes in poor countries have also doubled; indeed, in some eastern Asian nations they have quintupled. More and more developing countries have become integrated into the global economy and many have joined the ranks of what we call the emerging markets. Therefore, real progress can be measured in the fact that a child born today in the developing world is half as likely to die before the age of five as a child born a generation ago; is twice as likely to learn to read; and can expect more than twice the standard of living.

However, let us give credit where it is due. The peoples of the developing world have been the principal agents of their own progress; but, let us also remember that development assistance has played a crucial role in that progress. For example, 40 years ago, South Korea

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was labelled as a "basket case" country which was wholly dependent on external assistance. Today it is a thriving, industrialised country with a per capita income of over 8,000 dollars, which is twice that of Mexico, well ahead of that in Greece and catching up with that of Portugal. South Korea could not have done that without concessional assistance at the time that it was needed and in sufficient quantities. We should not dismiss the possibility that what Korea has achieved can eventually happen in Africa, given the right assistance.

The second of my three points reinforces what my noble friend Lord Judd said earlier. We must not fall into the trap of believing that private capital can assume the full burden of supplying the capital needs of the developing countries. Much is made these days of the fact that private sector capital flows into the developing countries are running at about 150 billion dollars a year, which is three times as much as that from international institutions. But, as my noble friend pointed out, 80 per cent. goes to only 12 countries. Certainly private capital has a growing role to play, especially in infrastructure financing. But the private sector cannot and will not meet all the needs of the poor countries, particularly the social sectors. That is why falling aid budgets, especially concessional finance, must alarm us.

The latter brings me to my third and final point. During two of my assignments at the World Bank I came into quite close contact with Britain's development assistance programme. At the OECD I attended a number of the Development Assistance Committee reviews of the UK's aid programme. Although other member countries did not pull their punches in criticising certain aspects of Britain's aid programme, especially on aid tying--and I welcome the FER's recommendation about that--Britain usually scored quite high on the quality of its programme, if not on its quantity. If the quality is to remain a hallmark of the aid programme, I suggest that, for a start, there is an urgent need, as my noble friend said, to respect the commitment made at Copenhagen to the 20:20 compact as only 10.5 per cent. of our bilateral aid was spent on the social sectors in 1994-95.

As to quantity, I have only this to say. It cannot be a matter of much pride to the Government--or, indeed, to any of us--that Britain is so low in the league table of per capita income spent on aid, with the FBR predicting a fall to 0.26 per cent. in 1997-98--a calculation which even predates the announcement of the Chancellor of the Exchequer of further cuts.

I confess that I am not much wedded to the setting of time-bound targets with unrealistic objectives. I spent seven years at the UN in New York as the World Bank's representative and witnessed targets of every kind being set by the General Assembly with impossible timeframes and hopelessly over-ambitious objectives. Those lead only to shattered objectives and bitter recriminations.

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I believe that we on this side of the House are quite right to speak of a commitment by a future Labour government to begin reversing the trend in the first year in office. We shall, after all, be starting from the lowest foothills, looking up at a very high mountain.

High quantity and high quality of aid are not mutually exclusive. Past Labour Governments have proved that. A high quantity, high quality aid programme is the hallmark of a government which truly understands the meaning of global solidarity with the world's underprivileged people. The future viability of the Overseas Development Administration depends on those responsible for our aid programme being committed to its growth and not resigned to its decline.

7 p.m.

Lord Winston: My Lords, as a new and junior Member of this House I rise with some trepidation to speak in this debate, which I regard as singularly important. I do so partly out of a sense of its importance and partly because my noble friend Lord Judd twisted my arm.

It seems almost churlish to criticise our past record with regard to overseas aid, which in some respects and at least on paper appears to be remarkable and much better than those of many other developed countries. The UK's role has been pivotal and of the utmost importance in many respects. I have always taken pride in that, and wish to congratulate the noble Baroness, Lady Chalker, on her achievement, which is extraordinarily important and recognised throughout the world. I should also like to commiserate with her on the way the Treasury has cut her budget and therefore her effectiveness.

I should perhaps declare an interest in that for some years, 15 to 20 years ago, I was scientific adviser to the WHO and also to the International Planned Parenthood Federation. It is on those matters that I should like to speak.

This debate covers a crucial issue. In my view it is certainly the most important issue which has been debated since I took my seat. It is an irony that yesterday we saw a full House when we discussed sport on television, a subject which attracted everyone's attention. It is a sad reflection on our priorities that today this debate is not taken more seriously.

When we review the issues concerning the ODA we face the most serious crisis of our generation. We leave a legacy which imperils our children. That is what I want to talk about.

Above all, we have a problem of world overpopulation. It is that aspect of aid that I want to address. I should like to take India as an example, because I visit the country quite often. A year ago our gross domestic product was about 16,200 dollars per capita while in India it was 280 dollars per capita. That is a 58-fold differential. In Bombay over 1 million people live on the street. They are conceived there, they breastfeed there, they copulate there, they sleep there and they die there. Among the 10 million population of Delhi there are people who have inadequate or no electricity and inadequate water supplies.

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In 1972 the world population was approximately 3.5 billion; in 1984 it was 4.7 billion. By the year 2000 it will be approximately 6 billion, and by the year 2025 it will be around 8 billion. Those are the best estimates that are available. In general I have found that people who work in fertility research have tended to underestimate the rise in population. Therefore, those figures are fairly conservative. Our children will inherit a world with double the present population.

The worst scenario is in the most poverty-stricken, resource depleted and undeveloped countries of southern Asia, Africa and Latin America. How can they, already bulging at the seams, cope with a two- to five-fold increase in that population? The higher the birthrate the less chance there is of economic progress.

It is not merely a matter of mass contraception. One cannot simply throw the condom, the birth control pill or sterilisation at those populations. We know very well from a great deal of research that the way to control population is by improving hygiene and education. The drive to population growth is due primarily to infant mortality. The higher the infant mortality the greater the drive to increase family size, because in a poor country one's children are one's insurance in old age. I met a woman in Bangladesh who looked 65 but was only 35. She had not had a menstrual period since the age of 15 because she had been continually reproducing, and child after child had died. That is a common scenario. It is not an exaggeration. I also remember a man outside his hut in an Indian village who said that he was a rich man because he had eight children and would be safe in his old age.

When we look at the British experience of birth control we see that population control was not due to the condom, the contraceptive pill or Marie Stopes. None of them had the slightest effect. It was the water closet and the power of sanitation in the Industrial Revolution which achieved that.

I want to make three or four points briefly, because time is short. First, as the right reverend Prelate said, we face a moral perspective. We are not an island. This issue affects us. Basic social necessities are denied to more than 1 billion people. We in the West live at a far higher level than fellow humans elsewhere. We consume far more of the world's resources. Our prosperity, and indeed this House with its glories, has been built partly on their contribution. Our gain is effectively their loss.

My second point concerns the principle of self-interest. Conditions in the third world threaten our environment and, even more, future generations of the human race irreparably. We have global warming; consumption of essential food and mineral resources; consumption of energy; destruction of many species, plants and animals; the risk of political instability and even war; but, above all, overpopulation which brings those risks ever closer.

As has been mentioned, the other point concerning self interest is that by providing benefits to those countries, for example through the offices of the British Council and education, we gain huge invisible benefits.

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Thirdly, other speakers have not mentioned that the cuts in our aid budget provide excuses for other countries to follow suit. Look at the United States. Her gross national product exceeds those of Japan, West Germany, France, the United Kingdom, Italy, Spain, Holland, Sweden and Portugal put together. The United Nations' target was 0.7 per cent. of gross national product. The EC as a whole gives 0.4 per cent.; the UK currently gives 0.31 per cent., and that is falling; and the United States gives 0.15 per cent.--half of the percentage of gross national product that we give. Governments must work together. We need to explain to other governments that this is a vital need. We need to work simultaneously and urgently on all fronts.

What is the effect of shutting off the tap? I shall take one example, immunisation. The Minister in another place said that immunisation is one of the most cost-effective means available for improving human health. That is true. However, here is a cruel irony. I remember going to a camp in India where there were five year-old children none of whom was as big as my own three year-old in physical stature. An aid worker said to me, "If we had not immunised these children they would not be alive". Are we to dump such children because we are no longer able to provide aid?

I am sorry to say this, but I feel that I must. The overseas aid budget has been cut not because of a famine in Birmingham, an outbreak of typhoid in Tyneside, or an earthquake in Edinburgh; it has been cut because the Government want to reduce taxation in order to win a general election.

7.10 p.m.

Viscount Waverley: My Lords, we must find sustainable solutions to the short and long-term difficulties facing Africa. I should like to ask this evening whether it is time for a rethink on the problem and an attempt to halt the dependency on aid. On 24th January, during a debate on the proposed free trade area of the Americas, I drew attention to the principles of the 1994 Miami Summit. The Department of Trade and Industry was responding to a Motion in the name of the noble Viscount, Lord Montgomery. I believe that the principles are as relevant to this evening's Motion as they were then.

What lessons might be drawn from the agreed principles? Could those principles be adapted to Africa's advantage? I wonder whether I might be allowed briefly to repeat them. I said that the wide-ranging proposals are,


    "intended to encompass not only the promotion of prosperity, through economic integration ... but [contain] also specific measures for the eradication of poverty and discrimination through improved access to education and health care".
I continued:


    "The strengthening of the role of women in political, social and economic life; the guarantee of sustainable development and conservation of the natural environment; support for democracy, migrant workers' rights, eradication of corruption, money laundering and a volunteer corps of people to tackle natural disasters, for development needs and emergencies, are also part of the package designed to integrate ... the [American] hemisphere".--[Official Report, 24/1/96; col. 1052.]

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Could not Africa be linked with the European Union in a similar way? Continuous aid is not the answer.

7.11 p.m.

Lord Desai: My Lords, I was rather surprised at the brevity of the noble Viscount's speech, but one advantage of speaking late is that almost everything that needs to be said on the subject has been said. Consequently, I shall not repeat it but try to follow an interesting train of thought. Yesterday the Chancellor of the Exchequer came to the London School of Economics on the 5th anniversary of the foundation of the Centre for Economic Performance. He made a powerful speech to the effect that an efficient economy needs good social support. He was arguing for a good welfare state as a necessary counterpart of a flexible, modern competitive economy in a globalised world. The noble Baroness should read the speech and remind the Chancellor that if he believes that for the UK perhaps he ought to believe it for the rest of the world.

One has to put the argument for aid not only on moral grounds, or that we somehow owe a debt to the poor countries, but also on the ground that the combination of efficiency and good welfare is an optimum combination. One is not sustainable without the other.

I also commiserate with the noble Baroness on having to read a document like the review which is an appalling piece of work. I do not know how anyone is paid to produce documents like it, but I presume that they are. I missed one simple proposition in the review. When in the 1950s we started on development people believed that interesting units of economic analysis were countries: rich countries and poor countries. Rich countries give money to poor countries and that is how poor countries will become rich countries. Much good development has come about, as was emphasised by the right reverend Prelate and my noble friend Lord Grenfell; and the index in the human development report last year demonstrated that many countries have progressed. However, we are now at a stage where there needs to be greater differentiation in development.

I wish to put a paradox. Aid is not electorally popular. I know that my noble friend said that a Harris poll showed that X per cent. of people like aid but by and large aid is not electorally a high priority on the agenda, unlike the crown jewels of British sport. That is why there are so few people present today compared with yesterday. Our debate today will not make headlines in The Times and the Guardian tomorrow.

Why is aid not popular while on the other hand humanitarian assistance is? People have now accepted the principle that if there is an earthquake, a famine, a refugee problem, we ought to do something about it. British people, through both public money and private charity, are willing to put their hands in their pockets and do something. The reason is that it is no longer possible to sustain the idea that there are rich countries and poor countries, rich people and poor people, differentially distributed around the world. There are more poor people and fewer rich people in the poor

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countries and more rich people than poor people in the rich countries. The British taxpayers are probably willing to give money where it is directly seen to help people. They will no longer find giving to countries X, Y and Z a sustainable proposition.

That leads us to consider that money should be increased as a proportion of GNP. I take that to be axiomatic, I do not wish to labour it. Rather than focus on the country or regional perspective, as the Fundamental Expenditure Review does, taking money out of Latin America and putting it in sub-Saharan Africa, we ought to ask where the real problems are in the world economy. They are probably not definable at a country level but certain communities and certain programmes, like clean water, immunisation or the education of women, are a priority. If there are priority areas scattered round the world, we could find out where they are and direct money to those causes. We could demonstrate to the taxpayer what we are doing and that every pound spent helps poor people. That is what people are willing to spend money on and it would enhance the effectiveness of our aid.

It is hard to see anything in the report at all, but I do not see in it a clear redirection of our development efforts in that way. We must concentrate in each country on the priority areas where aid can be effective. We must avoid areas where it will only be either neutral or positively harmful.

I have said it to the noble Baroness on other occasions. We ought to have a purchaser-provider split in aid. Governments are good purchasers of aid but not good providers. The recipient host governments are also not good providers of aid. I know that the noble Baroness does it anyway, but aid should be directed more and more through NGOs, either local or international. I should like to see a public competition such as we have in the universities for research money. People bid for projects and say: "I know a corner of Guatemala where £50,000 would make a difference". We ought to award money in that way and then the effectiveness of the aid projects could be monitored and examined. It would have more impact than saying: "Let's find the regions". That route will lead us into diplomatic nonsense. Aid will become mixed up with other foreign policy objectives, military objectives. The history of the Cold War is that if aid is blamed it is because it was mixed up with diplomatic, military and other objectives which should not have been part of it. Now, after the Cold War, we are ready to rethink the problem. The feeling is that the money of poor people here should not go to rich people there. Until that suspicion is removed, and unless we can take dramatic, direct and effective action, there will be a political problem in arguing the case for aid.

7.20 p.m.

Lord Monkswell: My Lords, as is usual on this subject we have had a fascinating debate, admirably introduced by my noble friend Lord Judd. Also as usual, the House will not be surprised if I take a slightly different tack from that of a number of other speakers. I hate the very concept of aid. I associate aid with the beggars that we see on the streets and with the concept

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of charity--the idea of Lady Bountiful going round the serfs and handing out a few groats here and there to the peasants. Expressed in that way, I suspect that the vast majority of people in this country would also hate it.

An examination of the experience of our own country might give us some inkling of how we might develop. There are two problems. One is the lack of volume of aid; and as we heard from a number of speakers it is being reduced. The other is that aid is inefficiently distributed. There are national governments around the world spending aid money; there is a whole panoply of NGOs spending money. With all those organisations each contributing a little to the pot, how efficiently will the money be spent? I repeat: there is an absolute lack of volume.

The example I intended to give of this country and the development of our own society related to the position of old people at the turn of the century. There was no pension provision. The relatively well-off would be able to make savings in order to keep themselves in their old age. But for the vast majority of working people, once they ceased to earn their own living, they were destitute; and there were various mechanisms available to alleviate that destitution--whether in the form of charity from the lady of the manor or the workhouse. Again, there were effectively two problems: first, the lack of amount of provision; secondly, it was inefficiently distributed.

As a result of popular demand--pressure from trade unions, friendly societies and the Churches--the situation was revolutionised by the advent of the old-age pension. It was hailed as Lloyd George's achievement. However, from the background to its introduction we see that he responded to popular pressure. There was an amazing popular campaign to ensure the provision of decent conditions for those who could no longer provide for themselves. I hope that such an example might develop out of aid; out of the charitable context.

After the war, popular feeling was translated into the 0.7 per cent. of GDP that was available for disbursement to poorer countries. I do not think any other country has achieved that, and this country is now going backwards. A rather similar analogy might be that of rich people being livid on receipt of an income demand--for that is effectively what it is--and those rich people turning round and saying, "I don't really want to pay all that money in income tax. I'll only pay a bit of it". If, overtly, we had that situation in this country, there would quite rightly be popular outrage. (The fact that it goes on at the moment, with income tax for the very rich almost a voluntary matter, is another subject for debate.) That is effectively the situation now on a world scale.

If we could rekindle that popular consensus and demand an agreement that rich countries should pay a proper amount of income tax, perhaps we could develop a mechanism for the disbursement of that "world taxation" on a sensible and rational basis. In that way old-age pensions could be paid to people in poorer countries who at present do not receive an old-age pension; unemployment benefit could be paid to people in poorer countries who are unemployed.

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That is only the revenue side. If we examine the capital side, we see the example of Joseph Chamberlain, the Conservative city father of Birmingham, who engaged in municipal enterprise. His is not the only example. Municipalities up and down the country built the capital infrastructure, the sewerage and water systems for instance that provide the basis for our very high standard of living in this country even today. Investment was made for the community by the community over a 100 years ago. It still pays dividends today.

We might think of the world as a global village. Our neighbours, our parents, or our sons and daughters may travel around the world. Why should they not have decent water and roads wherever they go? If they live there for a period, why should they not have decent housing? Why should we effectively penalise ourselves by not investing in the kind of capital infrastructure that provides the very basis of the civilisation that we enjoy? Why should we not expect such an infrastructure to be in place anywhere in the world that we happen to be?

I hope that my brief remarks will contribute to the debate. I hope that we can find a way of effectively getting rid of aid.

7.27 p.m.

Earl Attlee: My Lords, I too am grateful to the noble Lord, Lord Judd, for introducing a debate on this subject. I do not intend to delay the House very long, but it would be peculiar if I did not make a few observations based on my experience of ODA. I spent most of last year running an NGO called British Direct Aid in Rwanda as an implementing partner of the UNHCR. That logistic operation was originally mounted in August 1994, immediately after the end of the devastating war. To that extent, I have a past interest to declare.

Looking through our files, it is obvious to me that ODA was fundamental in providing the finance that facilitated deployment in a matter of two or three weeks from start to finish. Fortunately, ODA understands how important logistics are to a large aid operation. When I arrived in theatre in January 1995 ODA was one of the most talked about and respected organisations in the region. According to some analyses of aid donation I have seen, ODA is second only to the EU itself in terms of the size of contribution. But it is to the speed and efficiency with which ODA operates that I pay tribute.

Sometimes funding is not forthcoming. That may be due to the budgetary problems we are discussing tonight. On the other hand, the proposed project may not be appropriate to the policy laid down by the Minister. But the point is that ODA will straightaway say that it is sorry but cannot help.

Some noble Lords, particularly the noble Earl, Lord Sandwich, spoke of the problem of concentration of effort in certain countries. But the advantage of concentration of effort is that significant progress can be made in the countries where ODA is active. If the effort is spread thinly to many countries, the result may be negligible. Even worse is the risk of serious errors owing to lack of knowledge of the recipient country.

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I appreciate that my comments and experience relate to emergency aid rather than development aid. It would be nice if the need for emergency aid could be reduced, especially that due to war. As to the matters in question, I can do no more than say how valuable is ODA's contribution to development aid and disaster relief. Whether anyone can do better than the noble Baroness and her department remains to be seen.

7.31 p.m.

Lord Redesdale: My Lords, I thank the noble Lord, Lord Judd, for initiating the debate, and the Minister for being present. I must admit that the noble Lord's passionate speech dredged up some of the only lines of Shakespeare I know:


    "Once more unto the breach, dear friends".
That line will strike a chord with most noble Lords present. I especially welcome back the Minister from her trips to Africa. She has undertaken extremely valuable work in Sierra Leone and Tanzania. Her efforts on good governance show the leading role she takes in that area. On a personal note, I hope that she did not have to take Lariam while she was there. It has been hitting the papers recently. When I monitored the elections in Tanzania, I was put on Lariam and it did have psychological side-effects. I became incredibly paranoid about malaria, though perhaps I was not so badly affected as another election monitor who passed out during a meal. I have a feeling that the effects were still with me when the debate began. I became ODA spokesman for the Liberal Democrats over two years ago and I wondered whether there has been a debate in which anything other than aid cuts has been debated, having done a little research, I find that I am not paranoid since every debate has touched on that issue.

The Fundamental Expenditure Review has to be looked at in its proper context. It is a framework for decline in the operational capacity of the ODA. I realise that the review was written before the cuts took place. However, it will be the guiding force under which the cuts are implemented. I shall not dwell on the nature of the cuts. Many noble Lords and the right reverend Prelate covered the issue comprehensively. We all understand the effects of the cuts. I wish to look at some specific points raised by the review itself.

As my noble friend Lord Wallace--I welcome him to our debates on aid--pointed out, one of the most depressing facts is that the review is such a weighty document. Unlike the noble Lord, Lord Desai, I would not completely write it off. In such a large document there are bound to be some points with which one agrees. I shall pick out the positive points. I believe there are some.

The goal of improving the quality of life and reducing poverty and suffering in poor countries has to be one of the highlights of the document. I personally feel that the ODA is most serious in putting as its chief objective poverty reduction. Another positive aspect is that the review recommends that the Overseas Development Administration should take on a wider role in development policy, influencing other Whitehall

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departments such as the Treasury and DTI. I was rather interested in that because I do not see how anyone can influence the Treasury.

I return to a point raised earlier about the use of the military in emergency relief. I am taking part in discussions on the Reserve Forces Bill. Will the Minister give some indication of how she sees an increased role for the military and the expense involved as against use of non-governmental organisations.

The review recommends that the United Kingdom should contribute to the untying of aid by making a unilateral statement in a multilateral forum. I look forward to that statement. Many noble Lords have dwelt on the role of NGOs. The review expresses the view that the NGOs should be consulted in drawing up this country's strategy plans. I thoroughly agree with that, especially when looking at some of the excellent work done by many NGOs in Africa. The section of the review on the joint funding scheme makes clear that the ODA recognises NGOs not just as a contractor but as a partner in development. The idea of continuing to adopt a hands-off approach, minimising its interference in co-funded projects should be looked at carefully.

There are areas in which I do not agree with the review. The view that the best form of expenditure is that pursued through economic liberalisation is a double-edged sword. Many noble Lords have studied the effect of structural adjustment programmes and trade liberalisation without proper thought to the social safety net. They will realise that although it is an aim that we should try to achieve, it is not without its dangers.

Another area which I feel is not adequately examined is the balance between multilateral and bilateral aid. The noble Lord, Lord Shepherd, spoke about the need to maintain the bilateral budget. The proposed cuts in voluntary contributions to UN agencies should not be arbitrary. They should be examined very carefully. There should be cuts only in institutions which do not produce the best results.

I am surprised, like the noble Lord, Lord Grenfell, that the 20:20 compact agreed at Copenhagen was not included in the review. I am also disappointed to see the separate commitment to women dropped as an aim, considering the recent Beijing Conference. As 80 per cent. of displaced persons and refugees are women and children, that can perhaps be reinstated as one of the major objectives.

As the noble Lord, Lord Judd, pointed out, the aim of increasing productivity and conserving the environment has an appeal. Both concepts were put into the same sentence to save on the number of objectives. Productivity and the environment do not usually sit hand in hand. I realise that by protecting the environment one would have to look carefully at the major cause of destruction--usually the growth in an economy. However, I have a feeling that they could have been separated.

The review concentrates on 20 countries to which 85 per cent. of our bilateral budget is directed. We must give most money to the poorest countries. The Minister will be looking carefully at how to protect the most valuable projects in other countries, especially to enable

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us to meet our commitments to the environment and family planning. But if we go too far down that line we may end up throwing the baby out with the bathwater.

The idea that national interests have a large role to play in relation to aid is realistic. I agree that aid should be higher up the political agenda and that not to recognise the role of the ODA in promoting Britain abroad would be a mistake. Some noble Lords mentioned the private investor. One of the main problems with private investment is that without a government body such as the ODA taking a lead role and making sure that the environment is safe for private investors they will be thin on the ground. Considering that national interest is one of the priorities, the cuts in the British Council, which may destroy that institution, are puzzling. I hope the Minister can give an assurance that the British Council will be protected.

The debate has shown that there is a degree of interest in aid and that the ODA has a role to play. I hope that in the future, when and if the noble Lord, Lord Judd, can come up with the money to increase the aid budget, I shall be able to stand up and shout that for once the ODA contribution is not being cut.

7.42 p.m.

Lord Rea: My Lords, my noble friend Lord Judd tabled this debate to draw attention to the ODA's Fundamental Expenditure Review and the further reduction in its budget arising from the November Budget. The Fundamental Expenditure Review tries hard, as other noble Lords pointed out, to accomplish a difficult task; that is, to both justify and argue the case for ODA's existence and at the same time cut its coat to fit its increasingly skimpy bolt of cloth.

It is a worthy, though wordy document and is full of details. There are over 200 acronyms in the glossary. I was surprised to find that I knew what 58 stood for. Above all disciplines, overseas development is riddled with acronyms. Possibly somebody will be able to explain to me what "cascading and iteration" means in terms of running an organisation.

It is interesting to read, on page 25, in regard to the right level of the aid budget,


    "It is, however, questionable whether the present level is high enough to meet the Government's targets, particularly in maintaining the share of aid going through bilateral channels and in continuing to be seen to shoulder"--
"to be seen" rather than just "to shoulder"--


    "our share of the global burden".

I suggest that the word "questionable" in "Yes, Minister" language is a powerful expression of opinion from within a government department. The document states clearly both the moral and national interest cases for the continuation of a substantial aid programme. It says,


    "There is no intrinsic conflict between the moral and national interest motivations",
but that,


    "For all developed country governments, the moral motivation was probably stronger twenty to thirty years ago than today".

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That is possibly true. There was a more democratic feel to the governments of the world just after 1945 and in the past 20 years things have become a little more selfish. That may be true of governments, but I do not believe it is true of people.

A number of noble Lords mentioned the Harris Poll last autumn showing that 79 per cent. of people felt that the aid budget should be increased or at least not reduced. Perhaps in contradiction to my noble friend Lord Desai I believe that there are votes in development aid and especially if they target the poorest people in the world. This is perhaps not the place to examine the administrative changes advocated by the FER in great detail. But, as the noble Lord, Lord Redesdale, said, there is a subtle policy shift to overall development, especially economic reforms, rather than the main focus being on poverty reduction. That seems to indicate support for the International Monetary Fund and the World Bank's structural adjustment programmes which, as the noble Baroness knows full well, have had the effect in many countries of increasing poverty. As the noble Lord, Lord Redesdale, said, they are a double-edged weapon.

I am aware that the World Bank says that it is trying to avoid the worst aspects of structural adjustment. We await evidence of that in the future and I shall be delighted to see more evidence of World Bank loans to support human investment and the social sector.

While talking about the World Bank, it would be helpful if the noble Baroness could tell us the Government's plans for the next IDA replenishment. Are we following the lead of the United States? It severely cut its contributions to the last, 10th, replenishment. Or are we, together with other countries, going to make good the deficit? Labour, if elected, will improve the links between Parliament and our representatives in the bank. There will be opportunities in both Houses at least annually to debate the workings of the bank. At present, I suggest that the bank is too remote from government and from Parliament.

What else does Labour propose for ODA? My noble friend and other noble Lords have stated clearly that in the first year of office a Labour Government will start to reverse the decline in overseas expenditure; we will try to ensure that aid is truly directed to the poorest in any country. We are unhappy about the plan in the Fundamental Expenditure Review to concentrate 85 per cent. of aid on 20 countries. There are poor people in all societies and one of the features of the economy as it has developed in all countries under the current monetarist market approach over the past 15 years, is that inequalities both between and within countries have widened.

Aid must surely be targeted at people; it must invest in human capital. That means, as many noble Lords have pointed out, clean water; sewage systems for cities; schools for all, particularly girls; training for employment opportunities; loans for small businesses and farmers; and help for primary and secondary health care and family planning. Although my noble friend Lord Winston rightly said that this depends on economic development and education, there is still a need for modern contraceptive supplies.

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The Government are very much to be congratulated on expanding the joint funding scheme, in which NGOs close to the ground are supported in their work. The noble Baroness herself took a special part in that. That should be continued. It is efficient and less likely to lead to a misuse of funds, even though there have been some slightly unwelcome stories recently. It is surely wrong, as other noble Lords have said, to cut our aid to the multilateral agencies which have a discretionary contribution, especially if they are doing very good work. Private financial flows must be used if we can possibly harness them to human, social investment. But I should like to see more of this before I believe we can rely on it in any big way. There is very little private finance going to sub-Saharan Africa. There is a huge need for development assistance there before private flows start to come in. At present more is going out from Africa in debt repayment than new private investment is coming in.

In the minute that is left to me I cannot give more than a brief indication of how Labour will change the Overseas Development Administration. We shall be developing and setting out in detail our agenda over the next few months. But it is certain, as my noble friend pointed out, that we shall transform the ODA into a full Department of State again, with a ministerial seat in the Cabinet, where we should very much have liked to have seen the noble Baroness during the past few years.

Rebuilding Britain's aid programme will be an uphill, though very rewarding, task after the decline of the past 16 years. By allowing this decline the Government have failed to play as full a part as they should in the biggest task in the world today--to lift a fifth to a quarter of the world's population out of grinding, degrading poverty. By not fully engaging in that task--and we have special skills there, as many noble Lords have pointed out, going unused--we have shot ourselves in the foot by allowing environmental degradation, as the noble Lord, Lord Wallace, suggested, by failing to develop export markets and by failing to reduce the flows of millions of refugees and economic migrants.

7.53 p.m.

The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, this has been an excellent opportunity for a debate on the aid programme and I thank the noble Lord, Lord Judd, for providing the occasion. I noted the noble Lord's wording in the Labour Party's Motion. I also noted carefully everything he said today, much of which we have heard before. I have no doubt that we shall probably hear it again. I have no doubt, too, that he will continue to approach, with his colleagues, the whole question of aid in a sympathetic manner but lacking a certain management reality--something of which the Minister in charge always has to be conscious. I hope that whatever happens to the aid budget it will grow. I shall come back to that point. But I also tell the noble Lord that it needs a good deal of managing when one is operational in more than 160 countries, when one is working with more than 150 NGOs, and

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when one is seeking to get the best value for money not only for the British taxpayer, whose money one is using, but also for all the recipients who so desperately need our help.

Some of the remarks in the debate have been almost simplistic. However, I am not here to attack the noble Lord. I shall try to respond to the debate. Perhaps I may assure him right at the beginning that there is not and never was any doubt about the future viability of the aid programme or of the department. That is absolute nonsense. Of course I should like to have seen the department with a full seat in the Cabinet. But he knows that I have had from three successive Secretaries of State nothing but support. It is true that we have our battles with the Treasury, and so, should he ever be in government, will he. It will not be so easy to do the things he and his colleague in the Commons have been promising tonight. He will find out perhaps, but I hope not too soon, just what a task it is to manage the whole of this area.

What is necessary in all management is from time to time to refocus our efforts and to review what we do and how we do it. We did it in 1990-91. We carried out a similar and important review in 1995-96. I believe that is right and proper because of the need to maintain value for money and to keep up with the changing development patterns around the world. We have to note what others are doing--the countries themselves which have been the recipients as well as the other donors. We have to try to work in partnership so that the total given worldwide is far more than the sum of the parts.

Perhaps I may say to the noble Lord that while this has been an interesting debate the FER is a much deeper thing than I think he understands. But I shall be happy to talk to him further about the FER and about the senior management review because I think that is worth doing. I also know how much I owe to the officials in the department. I am grateful to my noble friend Lord Soulsby of Swaffham Prior, to the noble Earl, Lord Sandwich, and to many other noble Lords for their kind comments about the department's work and about me personally. It carries out excellent work.

I turn now to the Fundamental Expenditure Review. It was thorough; it was certainly wide-ranging; and it involved consultation with many of our principal partners. We discussed with enormous numbers of people how aid should be delivered. We discussed the best ways of doing things before the report was written. The report was deposited in the Library of the House back in December. Copies are available from the ODA for anyone who wants to read it in detail--or perhaps I should say reread it. We have also received many comments over recent weeks which are most welcome. Last month the Foreign Secretary and I held useful discussions with chief executives of the major development non-governmental organisations. Today I should like to take this opportunity to set out some of our responses to the key recommendations.

Perhaps I may say to the noble Lord, Lord Redesdale, that this is not a framework for decline. This is a management tool. While the noble Lord,

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Lord Wallace of Saltaire, may be tired of the changing language of management review, I think he knows that in the real world it has to go on. Management is about priorities. That is why we have narrowed down to four key aims in the FER. The most important first confirmation from the FER was the continuing need for the UK to provide substantial flows of concessional aid. It also recommended that the ODA should retain responsibility for bilateral and multilateral aid. I might have thrown out the FER if it had not done so. But we strongly agree with both recommendations because they underpin the Government's commitment to remain a major donor.

It was important that the review should recommend the clarification of the purpose of the aid programme by a better definition of its basic purpose and aims. That is why we have agreed with the revised mission statement, to which the noble Lord, Lord Judd, referred supportively. The ODA's overriding purpose is to improve the quality of life for people in poorer countries by continuing our contribution to sustainable development and reducing poverty and suffering.

I shall not go through the four subsidiary aims except to say this. The noble Lord, Lord Judd, seemed to think that there was some specific meaning that the second aim to help people to achieve better education and health and to widen opportunities, particularly for women, should be second in the list. There is no particular order--sound development, efficient markets and good government are essential if any of these countries are going to provide all the things that they need for their people.

The full mission statement is in the departmental report which will be published next month. I believe that that will advance understanding of what we are trying to do. I shall answer a Parliamentary Question, which will be repeated in another place, covering the Government's response to any comments that have been received on the FER.

One of the key recommendations of the FER was that the ODA's country programme resources should be more concentrated in order to enhance impact. The noble Lord, Lord Wallace of Saltaire, supported that. We certainly agree that that must happen and more clearly. The noble Lord, Lord Desai, seemed to be rather against the mechanism that we use for managing country programmes. By concentrating a larger proportion of the bilateral resources on the countries which need them most, I hope that we can be more effective than we are today because in that way we can have more impact. But to do that effectively we have to work on a country-by-country basis simply as a tool of managing the resources.

It is right, too, that wider national interests should be taken account of. But I can assure your Lordships that there will be no sudden changes. I believe that many of your Lordships know already that the 20 largest recipients accounted for about 69 per cent. of the planned country programme expenditure in the last financial year and on current plans we expect that proportion to increase to about 73 per cent. by 1998-99. This is a gradual process, but an important one because it is there to enhance the effectiveness of all we do.

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The list of the largest recipients may not be exactly the same from year to year, but the concentration on the poorer countries in Africa and Asia and in particular the Commonwealth ones, will continue. The key decision criteria for achieving this further concentration will be the relative need for aid, our capacity to deliver it effectively and efficiently, whether directly ourselves or through NGOs or other means. We must be able to have a real development impact and to influence others in the development community to work likewise. The Commonwealth countries will certainly be helped by this. The last two criteria are particularly relevant, including our British national interest, given our shared experience and our Commonwealth ties. As the noble Lord, Lord Shepherd, has often said, we have always regarded our Commonwealth connections to be an asset. We certainly have a significant influence and interest in the countries that I have just seen--Tanzania, Swaziland and South Africa. That significant influence, interest and investment in their futures will continue.

At the same time as avoiding disruptive changes to our development assistance, we must sharpen our focus on the activities which contribute directly to achieving the aims. The Fundamental Expenditure Review made a number of sensible recommendations which will enhance the strategic planning process. Better corporate and business planning has already begun. We are strengthening the important links in all cases between the objectives and the resources of all kinds that we can use to achieve them. We are making an increasing contribution through multilateral aid. It is a fact of life that in a world where regional groups are becoming ever more common, whether they be recipient groups or donor groups, we must improve the multilateral performance, as the noble Lord, Lord Shepherd, said. I welcome the fact that the FER recommended strengthening our role in the multilateral organisations; improving linkages with our bilateral aid and securing better value.

Perhaps I may say something here about the multilateral-bilateral split. Government policy aims to achieve a satisfactory balance between bilateral and multilateral aid, both of which have their place. Until recently about 40 per cent. of the total resources was spent multilaterally. The exact figure varies from year to year. Because of the increase in funds being put through the European Union, in the last full financial year about 50 per cent. was spent multilaterally and 50 per cent. bilaterally. That process will indeed continue because in the current financial year I believe that we shall end up with multilateral contributions exceeding bilateral contributions for the first time.

I say this to the noble Lord, Lord Judd, and to others who have mentioned this issue. Because we are putting more aid through the European Union that does not mean that it is necessarily less effective. We have to work to make it more effective and that is exactly what we are doing by seconding members of ODA to the European Union to work on their programmes; by encouraging the European Union to use British NGOs who have a first-class reputation in the delivery of aid,

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and by influencing the policy discussions of the working groups as regards how the aid is spent through the European Union.

Many believe, as the noble Lord, Lord Shepherd, said, that bilateral aid seems to be more effective than multilateral aid. That depends on the form of assistance and the objectives. It is true that we can obviously more closely target aid and that is good for Britain because that aid is identified as British. But there are useful roles for the multilateral agencies to co-ordinate assistance. Sometimes they can exercise more leverage in support of an important objective such as economic reform.

That brings me to say a special word about the World Bank. Since Jim Wolfensohn took over as president last June, he made clear his intention to carry forward the reorientation of the bank. I believe that is very important because a large amount of donor resources go through the bank. In particular he has endorsed poverty reduction as the bank's overriding objective and indeed that is the very reason for its existence. That is absolutely right. He has always underlined that he has much to learn about the bank, its mission, and its clients. So it was no accident that his first visit in an intensive programme was to Africa whose development challenges he considers to be the bank's highest priority. The bank's performance will be judged by the impact of the work in its field. We are firmly committed to working with Jim Wolfensohn on this agenda.

I was extremely interested in the comments made by the noble Lord, Lord Grenfell, when he spoke of the work that the bank has done and the role that concessional assistance has played. How right he was to refer to a graduation strategy which has been advanced by the work of the World Bank. He particularly mentioned Korea.

I believe that it is very important to realise that the World Bank is only as operational as the extent of its resources. In answer to the question from the noble Lord, Lord Rea, about the replenishment of IDA, he is well aware that IDA 11 discussions are being conducted under very difficult circumstances. That is predominantly because of US budgetary constraints, their arrears to IDA 10 and the uncertainties about their intentions for IDA 11. We have no doubt that IDA must be provided with the resources to continue its leadership role in support of poverty reduction, sound economic management and sustainable development. We are working actively with other donors to maintain a strong IDA and to ensure a satisfactory outcome to the current replenishment negotiations. We cannot predict the shape of the final package but I believe that we can play a very important role. Next month I shall be going to talk with the World Bank again about how we can strengthen its effectiveness as well as get the best possible deal out of what is available.

We have accepted most of the FER recommendations. We shall continue to have the lead policy and financial responsibility for those multilateral programmes which are a charge to the aid budget. We shall reinforce our efforts to improve the quality and focus of programmes managed by multilateral organisations. That will include

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not only working with the multilateral agencies, but also reforming UN agencies as well as continuing work in Brussels.

I have made it absolutely clear that UK membership of UN agencies will be assessed in the light of progress with reform. We shall continue to press for reforms, but we shall also continue to fund the good agencies, such as UNICEF and many others which have done such fundamental work. I have been much saddened by the false comments that have been made about our funding of the worthwhile UN agencies, the funding of which we are not cutting, but are maintaining and trying to enhance where they have programmes which fit in with the priorities that we have set.

Many recommendations in the FER concern internal management processes. I do not have the time to go into them tonight, except to say that all have a common purpose: to enhance the effectiveness of the ODA, to increase its impact and to obtain better value for money. The majority have already been accepted and are already being implemented. They are a continuum of what we were doing before.

Much has been said about aid volume, as well as aid targeting. I realise the anxiety that is shared on all sides of the House that this is the first year in which there has been a reduction, but we remain the fifth largest donor in the world and have a better record of delivery than many others who spend much more money but far less effectively. After this year the overall budget will increase by £47 million to £2.2 billion in 1997-98 and by another £69 million to almost £2.3 billion in 1998-99. Our twin goals remain the retention of a substantial and effective programme and an even more effective British role in ensuring that multilateral aid is well spent.

We are not alone in having had to consider the restraints on public expenditure. There is no G7 donor which is not finding it difficult to move towards the targets that it would like to meet. Our contribution is still more than the average for all donors in the OECD. We still maintain that the UN target of 0.7 per cent. is the correct target, but we cannot set down the timetable for meeting it. If the noble Lord, Lord Judd, is ever in government, I think that he will find it difficult to change the pattern which has now evolved in many countries, not just our own. The noble Lord may already know that Italy's aid expenditure fell by 36 per cent. last year; ours rose last year. Canada is reducing its aid by over 20 per cent. The United States, which still provides only 0.15 per cent. of its GNP as aid compared with our 0.31 per cent., is reducing its programme still further. We have avoided cuts of similar magnitude but we have to get even better value out of what we have because volume is not the only issue.

When the noble Lord, Lord Rea, spoke about the further reductions in the ODA budget, I wondered whether he had considered the year-by-year figures since 1987 which show that it has been growing slowly. I believe that the noble Lord overlooked the fact that our reduction in this year's budget is entirely due to the reduced estimates for EC spending--that has been the case for the majority of the reduction.

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I must make several other comments. The noble Earl, Lord Sandwich, talked about NGOs. We have made it a policy over recent years to ensure that the NGO method of delivery should be enhanced wherever it is practical to do so. The funding of NGOs has risen from £65 million in 1989-90 to £185 million in the last full financial year. The joint funding scheme will receive another rise in the next financial year which will help it in its work. Our support to the volunteer-sending agencies has also increased substantially over recent years. We intend to continue to work through the NGOs where they best deliver the programmes to which we are committed.

The noble Lord, Lord Judd, asked me about the 20:20 target because he was concerned about social spending and the poverty focus. I think that I told him at the time that the conclusion of the social summit was accepted by us all, but the conclusion left open whether any developing country and donor might wish to draw up a specific programme. We need to have mutual commitment for any of this to work. I am not aware of any case in which we have been asked by a recipient for a commitment since the summit because in many cases we are spending more than that.

The noble Lord, Lord Grenfell, talked about spending on basic needs. It is true that if you ignore all emergency aid, which is absolutely vital to such countries, you end up with 10.4 per cent. of our budget being spent on basic needs. However, the real proportion is 27.1 per cent. when one includes sanitation and all the things that we have done to benefit such countries, not only in emergencies, but in work that continues after an emergency. Therefore, the true figure is much higher than that quoted.

We shall continue to work on population matters. I was delighted to hear the speech of the noble Lord, Lord Winston, which was one of the most effective and moving speeches of the debate. I am glad to tell your Lordships tonight that although in July 1994 I felt that we could commit only about £100 million for population and reproductive health activities in 1994-95 and have about 50 new projects, we have achieved £184 million being committed to that work with 112 new projects being supported. The noble Lord will thus see that I have total sympathy with what he was saying about family planning and how it can help the lives of not only women, but the whole family and society.

Other points have been made concerning UN organisations. I touched on them briefly just now and said that we would ensure that the good agencies continue to be funded. We have not made any decision to leave any UN agency. In fact, we have just announced our 1996 contribution to UNDP and UNICEF. Those programmes will not be cut, but will be maintained at a similar level to last year.

The noble Lord, Lord Redesdale, commented on the British Council. In my absence my noble friend Lord Chesham answered a debate on that a few days ago. We have no intention of doing to the British Council all the things that have been threatened, but it is right that the British Council should not be reliant solely on the taxpayer. At a time of resource constraint,

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it is inevitable that reductions must apply to all. We believe that they can be sensibly managed and the Secretary of State has been talking today with the British Council about how they can be managed.

I have been asked a number of other questions about how the ODA will influence the DTI and the Treasury. A debate like this helps particularly when it is well-focused. As the noble Lord, Lord Shepherd, said--others have said this on many occasions--we need to improve development education. The noble Earl, Lord Sandwich, also referred to that. Development education among all sectors of the community is very necessary.

The noble Lord, Lord Redesdale, asked about the Reserve Forces Bill. I cannot go into that in detail, but as an honorary colonel I know that there is a very real TA role in terms of developing the work of the forces with the relief organisations. I cannot speak too highly of the Royal Logistic Corps, 9 Supply Regiment, which was operational in Angola at the beginning of the deployment last summer. Its work has been much heralded by the UN as a model of its kind. There will be more such work. There is no question about the value of military expertise in certain relief situations. The Reserve Forces Bill will give access to that expertise, which is a very good thing.

I have described the quality of our bilateral programme and our increased efforts to ensure that multilateral aid is well co-ordinated. I share the wish for greater spending on long-term development. I have already put in train the suggestion which the noble Lord, Lord Shepherd, made about the possible use of lottery funds in the future.

I am glad that there is widespread support in all parts of the House for a strong aid programme that makes a real contribution toward reducing poverty in the poorest countries, and that aid should go to the countries where it can do the most good. Of course it is not perfect. No programme is. I have sought to respond constructively to the debate, but I have to say to the noble Lord, Lord Judd, that criticism without costed alternatives is not helpful, just as in another place last week the Opposition failed to give any real detail of how they will achieve all their worthy aims. It is well acknowledged here that we do a good job with what we have. We intend to do an even better job in the future.

8.20 p.m.

Lord Judd: My Lords, first, I thank everyone who has participated in the debate. I am sure that all who have participated would also want to thank those responsible for drafting the Fundamental Expenditure Review, which was an extremely interesting and stimulating document. We may not have agreed with everything in it, but it has given us a great deal of food for thought. We look forward to the Government's response next month, and to continuing the debate.

Perhaps I may say to the noble Baroness--she knows this--that I am second to none in my admiration for her and her commitment, but she can do better than come to this House and lecture us on the need for responsibility towards management when her officials are burning the

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midnight oil, grappling all the time with a reducing budget and increased commitments, as indeed the review itself has underlined. She knows that, and it is not good enough for her to protest that somehow the efficiency of her department removes any responsibility for the vicious cuts that are being made in the programme.

In concluding the debate, perhaps I may make three observations. First, what has come clearly from the debate is that we need to look more at the balance between bilateral and multilateral programmes. It is not an issue of either or, but the balance. As my noble friend Lord Shepherd said so powerfully, we need the bilateral programme as the basis of experience to contribute well into the multilateral programme.

Another point which came out strongly in the debate is that we must decide--with great respect, the speech of the noble Lord, Lord Wallace, was extremely interesting, but there is a difference between poor countries and poverty--whether or not the aid programme is about poverty; because if it is about poverty, that introduces some new demands which are not necessarily covered by a country-oriented approach. I agree wholeheartedly with the Minister that the speech on population by my noble friend Lord Winston, was tremendously important. But the Minister knows--she heard his arguments--that if population is to be tackled effectively, it is in the context of effective economic and social development. Therefore a reducing aid programme undermines the battle for population strategy itself.

It has been a great debate. I thank all who participated. At this hour, I beg leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.


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