Beware Greeks bearing gifts? The House of Lords on aid impact and effectiveness

For the House of Lords Economic Affairs Committee to tackle development aid is no small matter. The Committee itself is one of only a handful of standing committees in the UK’s upper house. It has a distinguished membership of thirteen senior legislators. And the topic itself is wide-ranging and ambitious, at a much higher level of generality than the House of Commons International Development Select Committee would normally work. Add a senior and experienced specialist adviser, Professor Chris Adam from Nuffield College, Oxford, some sixty written submissions, and a cast of more than forty witnesses giving evidence in person - no wonder that the enquiry took the best part of a year. The result is a main report of 145 paragraphs, backed up by over 700 pages of memoranda and transcripts.

When the report was published on 29 March, the Committee itself highlighted, as its main finding, criticism of the pledge to legislate for 0.7% of GNI. There is, however, much more in the report, as evidenced by the summary of conclusions and recommendations reproduced here: enthusiasm for growth; scepticism about budget support; call for reduced funding of the World Bank, UNDPUnited Nations Development Programme and the EU; caution on aid to fragile states; zero tolerance of corruption; and insistence on phasing out aid to middle income countries, not least India. The Committee is also explicit that aid should complement British foreign policy.

At first sight, there is much here for the Secretary of State, Andrew Mitchell, to be pleased with. Growth, the private sector, phased exit from middle income countries, anti-corruption, linkage with diplomacy and defence: all these are features of current Government policy. Andrew Mitchell might even be pleased to be presented with the option of abandoning the commitment to legislate for 0.7 – though there is no evidence that he intends to follow that route. We may have to be patient in waiting for actual legislation, but the Government’s commitment to aid must have been reinforced, as theGuardian newspaper has suggested, now that David Cameron has been charged by Ban Ki Moon with shaping the next generation, post-2015, development goals. Indeed, it would be surprising if Andrew Mitchell did not have a hand in that appointment, and good for him if he did.

On the other hand, it may be wise to beware Greeks bearing gifts – especially when the Greeks in question are not our modern-day European partners, suffering on the front line of the euro crisis (read my take on that here), but rather those of three thousand years ago, about to destroy the city of Troy.

That is because Andrew Mitchell and we might be in for a surprise if the thirteen Lords a’leaping were to emerge from the Trojan horse with the power to implement their recommendations. We would have an aid programme that was distinctly more bilateral in character, with more traditional projects and much less budget support, even sector budget support. There would be less spending on health and education, given the new emphasis on growth. There would be much tighter administrative control of spending, in order to control possible corruption, and therefore more conditionality. There might well be greater subservience to foreign policy priorities. And total volume would be less certain, more vulnerable to changing political priorities.

Furthermore, a principal theme of Andrew Mitchell’s tenure at DFIDDepartment for International Development would be at risk, namely the emphasis on resilience, and on bridging relief and development. The House of Lords Committee might have captured this if they had not ruled humanitarian assistance out of their investigation. Resilience was a major theme of the DFIDDepartment for International Development humanitarian review led by Lord Ashdown (and in which I participated – read my reflections here) and has become a central plank of DFIDDepartment for International Development policy.

There is a retro feel to the House of Lords report – a fashion flash-back to as far back as the 1960s. This was a time when growth dominated the development debate: before poverty came onto the agenda following then World Bank President Robert McNamara’s famous speech in Nairobi in 1973; before basic needs; before human development; and before the re-engineering of aid to encompass programme-based approaches and sector-wide support. Importantly, the symbiosis between growth and social development was underplayed in the 1960s: it is a pity that Frances Stewart was not called to give evidence of her work on this topic.

Of course, there is nothing wrong with retro fashion, especially if adapted to the modern age. Bell-bottomed trousers and flower prints are back in the shops today, in new fabrics and more stylish cuts. The Lords are right to emphasise growth, though would have done well to emphasise green growth – see my piece here advocating a green growth guarantee in the G20. They are right also to stress the primacy of developing country institutions over aid (I am just reading Acemoglu and Robinson’s latest book on that subject). They are right, in my view, to raise the issue of planning for exit from middle income countries. On the other hand, as readers of my work will know, we disagree on budget support, on the intrinsic and instrumental value of multilateralism, and also on the centrality of a basic right to food, education and health. A truly modern approach to development would also have had more to say about global challenges and global public goods, ranging from peace and security, through financial stability and inclusive globalisation, to a healthy climate and a secure environment. All these have been themes of my work on revisioning development cooperation.

On the headline issue of 0.7, the Lords report is dismissive, arguing that ‘the Secretary of State has not put forward any case for legislation other than the Government's political commitment to it’. I’m sure Andrew Mitchell can do better than that. I certainly can. We’ve seen across Europe that political commitments to increase aid have been abandoned in the face of budget pressures. In the UK, the Government has resolutely maintained its commitment to 0.7. Andrew Mitchell has argued that ‘we will not balance the books on the backs of the world’s poorest people’. On the other hand, long-term UK commitments in other fields have been vulnerable to economic stress, for example in relation to the European Emissions Trading Scheme. Other people do not always keep their promises; nor, it seems, do we. In that context, legislation provides a guarantee that no promise, however well-meant, can offer. It also offers the possibility of redress if the commitment is broken. Developing countries depend on predictable flows, and legislation can underpin their rational long-term planning.

Stronger arguments in favour of legislating for 0.7 might be that the money is used well and is needed. The former argument is easy to sustain, given the weight of evaluation evidence and the new emphasis by Andrew Mitchell on results and value-for-money. Indeed, the Lords themselves praise DFID’s performance as an ‘effective aid agent’. The latter argument might be thought more difficult, especially as the number of low income countries falls. The Lords are right to highlight issues of absorptive capacity as the number of recipients falls and the volume of aid rises. However, this is a problem for the medium term. Does anyone doubt that it is possible to spend current aid budgets successfully in pursuit of the totality of the Millennium Development Goals (including both poverty reduction through growth, and social service provision)? In any case, worries about how to spend aid may fade to insignificance as the funding required rises for the provision of global public goods. Remember that the rich countries have pledged $US 100 billion per year in climate funding alone by 2020, much (though of course not all) from public sources. From this perspective, 0.7 may come to seem a floor commitment, not a specific target – and therefore more easily justified in legislation.

Overall, my reading of the Lords report is that it provides a qualified endorsement of some kinds of aid, delivered through certain channels and with a high degree of operational management by HMG. I would have liked to see a more upbeat tone, recognising the immensity of global challenges, the need for wide-ranging engagement, and the scope for UK leadership internationally – all in the service of an unshakeable commitment that aid and other forms of development cooperation should be directed to inclusive global ends.