In 1997, the administration of the UK's aid budget was removed from the Foreign Secretary's remit (previously the Overseas Development Administration had been under the supervision of the Foreign and Commonwealth Office). The new department, the Department for International Development (DfID), has its own Secretary of State who is a member of the Cabinet. In 1995, during the Cabinet reshuffle widely seen as setting up the Conservative team which would contest the next election, Hurd retired from frontline politics after 11 years in the Cabinet and was replaced by Malcolm Rifkind.
Hurd left the House of Commons at the 1997 general election, and on 13 June 1997 was created Baron Hurd of Westwell, of Westwell in the County of Oxfordshire, which enabled him to continue sitting in Parliament as a member of the House of Lords. He retired from the Lords on 9 June 2016.
In December 1997, Hurd was appointed Chairman of British Invisibles (now renamed International Financial Services London or IFSL). He was Chairman of the judging panel for the 1998 Booker Prize for Fiction. He became a member of the Royal Commission on the Reform of the House of Lords in February 1999, and in September 1999 he was appointed High Steward of Westminster Abbey, reflecting his long active membership of the Church of England. He later went on to chair the Hurd Commission which produced a review of the roles and functions of the Archbishop of Canterbury.