International Finance Facility

Oral Answers to Questions — Treasury – in the House of Commons at 11:30 am on 10th March 2005.

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Photo of Ann McKechin Ann McKechin Labour, Glasgow Maryhill 11:30 am, 10th March 2005

If he will make a statement on progress made with G8 partners on support for the international finance facility.

Photo of Ian Lucas Ian Lucas Labour, Wrexham

what steps he is taking to promote the international finance facility.

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

Frontloading aid and doubling it through the international finance facility would enable us to provide free primary education for all young children and help to meet the millennium development goals by 2015. Fifty countries have indicated support for the IFF and for the pilot IFF on immunisation in partnership with the Gates Foundation. It would frontload $4 billion of investment in vaccination and could save 5 million young lives between now and 2015.

Photo of Ann McKechin Ann McKechin Labour, Glasgow Maryhill

I thank my right hon. Friend for his commendable efforts in trying to secure the additional aid that the world needs to eradicate poverty. As he knows, a number of alternative forms of financing aid have recently been proposed, including a revised form of the Tobin tax and a tax on aviation fuel. Has he had an opportunity to assess those particular alternatives and whether the international community is likely to accept such proposals to try to achieve the goal of doubling aid?

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

A few weeks ago, the G7 meeting of Finance Ministers agreed to examine all those specific proposals. The advantages of the international finance facility are that it would frontload aid, that it could be implemented immediately, and that it would provide the necessary money to give us a chance of meeting our millennium development goals.

If present rates of progress were to continue in sub-Saharan Africa, we would not meet the goal of primary education for all by 2015—we would meet it in 2150, 135 years late—which is why additional finance is required and why the world community must examine the provision of resources. Scientists have highlighted malaria in a report published today, and the additional money provided by the IFF could enable the provision of malaria bed nets, which can save a life at the very small cost of less than $10.

The IFF will also allow us to introduce an advance purchase scheme for the newly developed malaria vaccine, which is being tested in Mozambique, and the drugs companies and the Gates Foundation believe that it could be up and running as a preventive vaccine very soon. Advance purchasing, which the rich countries must support, will be required, which is another reason why we need the frontloading mechanism.

Photo of Ian Lucas Ian Lucas Labour, Wrexham

It is excellent news that the German Government have swung behind the IFF, but the real concern is the US Government's position. Will my right hon. Friend give us his assessment of the US Government's position, and tell us what steps he has taken to persuade them?

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

When President Bush spoke at the debt and development conference in Monterrey, he said that no country that is making the necessary reforms to achieve economic development should be denied resources for health and education. After that speech, the Americans set up the millennium challenge account and trebled their spending on HIV/AIDS. In our discussions over the next few months, we will examine how each continent can support the IFF and other innovative financing mechanisms. We hope to reach an agreement with all our G7 partners, and I believe that the developed world is looking to the G7 and to the UN special summit to achieve a settlement that will make it possible for us to achieve the millennium development goals.

Photo of Peter Tapsell Peter Tapsell Conservative, Louth and Horncastle

Does the latest International Monetary Fund report suggest to the Chancellor that his ministerial colleagues on the G8 may be losing confidence in his capacity to guide the international finance facility or, indeed, the British economy? The report warns of the likely necessity of a massive rise in British taxes by £10 billion a year to fill the black hole in the Chancellor's calculations, following what the IMF describes as a sharp deterioration in Britain's public accounts over the past five years.

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

Trust the hon. Gentleman to turn a question about developing countries into a question not about the IFF, but about the IMF—he is wrong to do so. The IMF has praised the British Government on their macro-economic management.

Photo of Vincent Cable Vincent Cable Shadow Chancellor of the Exchequer, Liberal Democrat Spokesperson (Treasury)

I welcome the Chancellor's efforts to speed up aid flows through the IFF. At this week's meeting of ECOFIN Ministers, what success did he have in dealing with the European Commission and its statisticians, who say that IFF contributions cannot be treated as contingent liabilities and be taken off the balance sheet, but that they must be counted against Government borrowing debt, thereby imperilling the pledged contributions from France and Germany? How will that problem be dealt with in terms of Britain's public accounts?

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

First, the hon. Gentleman is wrong—the matter was not discussed at the ECOFIN meeting. Secondly, EUROSTAT is independent of ECOFIN, and it makes independent judgments. Thirdly, EUROSTAT has said no such thing. The hon. Gentleman has been reading speculation in the newspapers, which is invariably inaccurate.

Along with the Gates Foundation, we are considering a proposal for a pilot facility for vaccination, which many countries, including South Africa, Canada and Scandinavian countries, would support. That proposal has not yet gone before EUROSTAT, but it should be accepted, and I hope that it will be accepted.

Photo of Andy Reed Andy Reed Labour/Co-operative, Loughborough

The Chancellor is to be congratulated on coming up with the initiative of the IFF and on the work that he has done to make progress so far, but what assessment has he made of the impact of the discussions to date on how far he will be able to go? Without reaching the £100 billion target that he has set himself, most of the targets in the millennium development goals will not be met. Does he have any ideas about ways in which other countries will be able to buy into the idea of 0.7 per cent. through different finance facilities, if not through the IFF?

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

I am grateful to my hon. Friend, who is chairman of an all-party committee on these matters, which will continue to be discussed. Our first aim is get 100 per cent. debt relief for the multilateral debts owed by the poorest countries. That would itself provide substantial additional resources on an annual basis for those countries. Our second aim is to get the IFF pilot set up. I believe that there is now sufficient support for the vaccination pilot to move ahead very quickly; it is not necessary for the whole world to support it. Our third aim, which will be discussed at the G8 at Gleneagles, is the creation of the new facility itself.

My hon. Friend may see tomorrow a report from the Commission for Africa which will recommend that we move fast to set up the facility. Those are the next three stages. I believe that we will see success in the first and second very soon, and the third is a matter for debate at Gleneagles.