Clause 5 - Multilateral development assistance and Millennium Development Goals 1 to 7

International Development (Reporting and Transparency) Bill – in a Public Bill Committee at 9:45 am on 15th February 2006.

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Question proposed, That the clause stand part of the Bill.

Photo of Jimmy Hood Jimmy Hood Chair, European Scrutiny Committee, Chair, European Scrutiny Committee

With this it will be convenient to discuss the following: clause 7 stand part.

New clause 5—Aid effectiveness and Millennium Development Goals 1 to 7—

‘(1)Each annual report must include the Secretary of State’s assessment of the following matters—

(a)what progress has been made generally towards the achievement of Millennium Development Goals 1 to 7,

(b)the effectiveness in pursuing Millennium Development Goals 1 to 7 of multilateral aid generally to which the United Kingdom contributes,

(c)the effectiveness in pursuing Millennium Development Goals 1 to 7 of bilateral aid provided by the United Kingdom to not fewer than 20 countries specified in the report, selected according to criteria so specified,

(d)what progress has been made in promoting untied aid.

(2)In this section—

(a)references to “Millennium Development Goals 1 to 7” are to Goals 1 to 7 set out in the Annex to United Nations General Assembly document A/56/326 dated 6th September 2001, entitled “Road map towards the implementation of the United Nations Millennium Declaration: Report of the Secretary General”, as those Goals may be amended or modified from time to time,

(b)“untied aid” means aid which falls within subsection (3).

Aid falls within this subsection if—

(a)it is either not subject to a condition restricting the states from which goods or services may be purchased using the aid, or (if it is subject to such a condition) the states from which goods or services may be purchased using the aid include all the member states of the Organisation for Economic Co-operation and Development and substantially all states which receive aid from any source, and

(b)the provider of the aid has, so far as reasonably practicable, secured that there will be no significant impediment in the purchasing process which would have the effect of a narrower restriction than that mentioned in paragraph (a) on the states from which goods or services will be purchased using the aid.’.

And the following amendment thereto: (a), in line 9, leave out

‘selected according to criteria so specified’ and insert

‘which shall be the 20 recipients of the greatest amount of United Kingdom bilateral aid’.

Photo of Tom Clarke Tom Clarke Labour, Coatbridge, Chryston and Bellshill

In new clause 5 I propose to merge clause 5, which deals with the effectiveness of multilateral aid in achieving millennium development goals 1 to 7, with clause 7, which deals with the effectiveness of bilateral aid. Again, I propose that we specifically make reference to the MDGs. The hon. Member for Banbury, in remarks that I otherwise agreed with, said something about this being a Government Bill. I do not want to develop the point too much, but if he were a fly on the wall he would not reach the same conclusion, and that is reflected in what I am proposing to the Committee.

New clause 5 also deals with tied aid, which was in clause 4, as I am now convinced that this is a matter of aid effectiveness rather than policy coherence. After consulting hon. Members from all parts of the House, and given that all UK bilateral aid agreed since 2001 has been untied—indeed tied aid has been outlawed—I have chosen to focus instead on the more positive promotion of untied aid, of which the UK is in the vanguard in the EU and the Development Assistance   Committee. The changes that I propose identify and celebrate the UK’s position as a world leader in this matter.

After consulting my hon. Friend the Minister—I want to acknowledge a positive Government contribution, because I am trying to be as even-handed as I have been from the beginning—I am pleased to propose that, in line with the important points put forward on Second Reading by the hon. Members for Boston and Skegness, for Bournemouth, East and for Kettering (Mr. Hollobone), the cap on the number of countries under scrutiny in the Bill shall be increased to a number not fewer than 20, with room for the Government of the day to focus on even more should they choose to do so. I understand that the Minister will wish to add his comments to what I have just said.

By way of explanation, reference to humanitarian assistance has been removed from the new clause and included in the schedule. To say in the new clause that bilateral aid includes humanitarian assistance would imply that elsewhere it does not. Moreover, humanitarian assistance is not primarily aimed at MDGs 1 to 7, which is the principal focus of the new clause, which I commend to the Committee.

Photo of Philip Hollobone Philip Hollobone Conservative, Kettering

I congratulate the right hon. Gentleman on his remarks and on listening to many of us who were concerned that the scope of the Bill as it first appeared was too narrow. Reporting on at least 20 countries makes far more sense. However, I have a concern—it is genuine, which might be unusual for this place—about countries such as Zimbabwe, whose regime we despise. We give the Zimbabwe Government no official aid, but non-governmental agencies provide humanitarian assistance. Would that be picked up and reported on under the new clause?

Photo of Pete Wishart Pete Wishart Opposition Whip (Commons), Shadow Spokesperson (Cabinet Office), Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (International Development)

Having listened to the right hon. Member for Coatbridge, Chryston and Bellshill, I am satisfied that there will be clarity. He has given assurances about the tied aid that the UK Government give bilaterally and multilaterally. However, can he assure me that we will have clarity on aid that is given by the World Bank and which is tied to economic policy? I am thinking particularly of Mali, where the railroad was privatised at great expense and at a great cost to jobs and the country’s economic performance. Can we ensure that any reporting makes clear the economic policy conditions to which UK assistance might have been indirectly tied? I am thinking primarily of institutions such as the World Bank. Can we have assurances that any reporting will provide clarity and show whether there are economic ties to DFID’s contributions to the World Bank and other multilateral agencies?

Photo of Mark Simmonds Mark Simmonds Shadow Minister (International Development)

I agree with the right hon. Member for Coatbridge, Chryston and Bellshill that humanitarian aid is a necessary and important addition to the Bill, but the current provision is not the appropriate place for it. The fact that such aid has been included in the new schedule is a testament to my hon. Friend the Member for Bournemouth, East, as well as   to the right hon. Gentleman and the Minister, who listened to the Second Reading debate and made that important addition to the Bill.

I am also grateful to the right hon. Gentleman and the Minister for listening to the points that were made on Second Reading about the need to carry out analysis of specific millennium development goals, rather than the sectoral analysis that might have been deemed appropriate at one point. That is a significant step forward, particularly because it will, I hope, allow the effectiveness and delivery of British multilateral and bilateral aid to target countries to be analysed.

Amendment (a) to new clause 5 relates to the number of countries on which we shall have to report. The right hon. Gentleman must take enormous credit for corralling and persuading the Department to increase the number from 10 to 20. I very much welcome the commitment that he and the Minister have given to report on more than 20 countries, and the annual report will have to include details on a minimum of 20. However, I am concerned about the wording of the new clause, which my amendment seeks to address. New clause 5 states that the report must deal with

“not fewer than 20 countries specified in the report, selected according to criteria so specified”.

I cannot find where in the Bill those criteria are specified or what they are. I do not know whether they are the Minister’s personal criteria or specifications, based on which countries received him with the most luxurious accommodation or the best wine. The amendment is therefore important. It states that the 20 countries should be

“the recipients of the greatest amount of United Kingdom bilateral aid”

—the countries that receive the greatest amount of British taxpayers’ money. That is not an unreasonable request, and I shall be interested to hear the Minister’s response.

I should also like to draw the Committee’s attention to the provisions that were in the original Bill, but which have been amended today and which will not be included in future. Under clause 2, the report must

“show to what extent action taken by the Government of the United Kingdom, across all departments, in relation to one or more countries outside the United Kingdom, assists in contributing to a reduction in poverty”.

That provision has now been removed. We believe that there should be an independent analysis of the effectiveness of the UK’s bilateral development assistance in respect of each millennium development goal. Again, I can find that nowhere in the Bill.

I return to the point that I made earlier: in relation to IDA 14, an analysis takes place within DFID on country rankings. We would like to see those rankings included in the report, so that we can analyse and debate the effectiveness of British aid and decide whether those funds need to be reassessed and reallocated to ensure the maximum alleviation of poverty and the maximum progress towards meeting   millennium development goals 1 to 7. We would like a more robust and detailed account of the effectiveness of British aid, showing how resources have been allocated from the previous year’s report—that obviously cannot happen with the first year’s report.

The Bill makes no mention, either in the original or the amended versions, of direct budgetary support. A significant amount of British taxpayers’ money is clearly going through direct budgetary support—it is going from DFID directly to recipient Governments rather than through NGOs or other mechanisms. Since 2000, £1.5 billion of British taxpayers’ money has gone through direct budgetary support. The Opposition are supportive of direct budgetary support, but there is not necessarily enough analysis of it.

Monitoring what happens to that money is important. The Minister will be aware that significant percentages are rumoured not to end up where they are supposed to go, and we should have greater control and monitoring of where the money goes. The entire DIFD budget is predicated on support from the British electorate, which is based on the effectiveness of outputs rather than inputs.

As we have recently seen, problems are emerging in Uganda and Ethiopia—countries that we have provided with direct budgetary support—and the Secretary of State and the Minister have quite rightly reduced the funding going to those Governments because of the way in which they are operating. I do not see why the important role of building capacity, both economically and democratically, and of building civil societies, should not be included in the Bill.

Photo of Tobias Ellwood Tobias Ellwood Opposition Whip (Commons) 10:00 am, 15th February 2006

I endorse amendment (a) tabled by my hon. Friend the Member for Boston and Skegness. It is Parliament’s purpose to scrutinise what the Government are doing. If we are spending an awful lot of money—wisely, I hope—it is important that we scrutinise where it is going. It is a logical extension to seek to monitor the 20 countries that receive the most money from the UK.

I am pleased that humanitarian aid has been included, but the provision needs to be seen alongside longer-term interests. Humanitarian aid is immediate aid: it is there to help a state, region or area overcome a particular challenge—whether famine, flood or the aftermath of civil war. It is not designed to be permanent; it is to help in emergencies. It should be used alongside efforts to assist the state, the region or the area in sustaining itself, and both sides of that equation need to be monitored.

Photo of John Barrett John Barrett Shadow Minister, Scotland

Will the Minister give us clarity on that point about the 20 countries? As the wording stands, there is a possibility that the provision could apply to the 20 countries that receive least aid. That needs to be clarified.

Photo of Gareth Thomas Gareth Thomas The Parliamentary Under-Secretary of State for International Development, Party Chair, Co-operative Party

I clarify that I am urging members of the Committee to oppose clauses 5 and 7 standing part of the Bill. Similarly, I urge the Committee to support my right hon. Friend’s new clause 5.

As I highlighted on Second Reading, the Government were worried about the potential for duplication in clauses 5 and 7 as drafted and my right hon. Friend’s proposal is an extremely helpful way to resolve it. New clause 5 goes beyond that requirement and includes the need to report progress in achieving millennium development goals 1 to 7 and the role of UK bilateral aid to that end. It is an important additional benefit of new clause 5, which reflects not only what my right hon. Friend has been saying in private but the concerns expressed on Second Reading by hon. Members on both sides of the House.

As my right hon. Friend said, the new clause extends the number of bilateral aid programmes to be reported on from 10 to not fewer than 20, which the Government support. For the duration of this Parliament—I cannot make a commitment beyond then—it is the intention of my right hon. Friend the Secretary of State that the annual report will cover 25 countries. [Hon. Members: “Hear, hear.”] Those 25 will be the countries on which we are required to report to the Treasury under public service agreements on the effectiveness of our aid. It seemed sensible to bring what the Bill requires us to report to Parliament into line with what we are rightly required to report to the Treasury.

Photo of Mark Simmonds Mark Simmonds Shadow Minister (International Development)

Is there a difference between the reports to the Treasury and those on the largest recipient countries? Are they the same 25 countries and if not, why are they different?

Photo of Gareth Thomas Gareth Thomas The Parliamentary Under-Secretary of State for International Development, Party Chair, Co-operative Party

The hon. Gentleman pre-empts my next point: the 25 PSA countries account for about 65 per cent. of the bilateral aid that we disperse. The effect of his amendment would be to require us to report on only 47 per cent. of our aid. I hope he will accept that the Committee should resist the amendment, given my additional commitment for the duration of this Parliament.

Photo of Tom Clarke Tom Clarke Labour, Coatbridge, Chryston and Bellshill

I do not wish to prolong the Committee but what the Minister said is so important that it is right to acknowledge it. What he said about 25 countries is very welcome; indeed, it goes beyond what was requested on Second Reading. We also see the wisdom of linking the requirements to PSA countries. Therefore, my hon. Friend should feel comfortable that the Committee—I am sure that I speak for all its members—welcomes what he said and hopes that other Governments will emulate his commitment.

Photo of Gareth Thomas Gareth Thomas The Parliamentary Under-Secretary of State for International Development, Party Chair, Co-operative Party

I am grateful for my right hon. Friend’s comments. We were minded to increase the requirement in the Bill to report on 10 countries to report on not fewer than 20, in order to provide safeguards in future Parliaments that Governments will have to report in more substantial ways than they might have wanted in the past.

The breakdown of multilateral aid according to the main categories of organisations that we use, which was originally sought in clause 5(1), is now in paragraph 3 of the new schedule, which I hope the Committee will accept. A requirement to report on   untied multilateral aid was originally in clause 5(2); there is a requirement in new clause 5 to report on progress in promoting untied aid, which can capture developments in both multilateral and bilateral fields. A list of issues in clause 7(2) will be dropped, as the new clause encapsulates a requirement to report on progress in meeting millennium development goals 1 to 7. That subsumes the need for the original list.

The hon. Member for Kettering asked me about cases in which we do not provide aid directly to a Government, such as in Zimbabwe. We will have to report on all the ways in which we deliver aid to countries. It might be through UN organisations and non-governmental organisations, as in the case of Zimbabwe, or as we prefer, directly to a reforming Government and where there are appropriate safeguards.

The professed support of the hon. Member for Boston and Skegness for budget support seems, given the way in which he has developed arguments over recent weeks, to be of the same degree that a noose gives to a condemned man. I would be interested to hear, in one of the future debates that we shall no doubt have, to which countries he thinks we are right to give budget support.

The hon. Member for Perth and North Perthshire asked me about economic conditionality. He will know that my right hon. Friend the Secretary of State published our view on that point last March. He made clear our pledge that none of our bilateral aid would have economic conditions attached to it, and that we would press the multilateral organisations with which we work—particularly the World Bank and the International Monetary Fund—to make progress in that regard.

I do not think that the hon. Gentleman had the good fortune to be called to serve on the Committee that looked yesterday at the 14th replenishment of the IDA part of the World Bank. We had a lengthy discussion about the economic conditionality used by the World Bank, and the progress that the bank is making. When the Government make significant policy shifts on economic conditionality, such as that initiated by my right hon. Friend the Secretary of State last year, I expect them to be included in the annual report.

Photo of Mark Simmonds Mark Simmonds Shadow Minister (International Development)

This is not the time to debate the rights and wrongs of the policy of direct budgetary support—you would quite rightly rule me out of order if I were to try to do so, Mr. Hood. That said, the Minister did not specifically answer my question as to why British taxpayers’ money going into direct budgetary support is not covered in the Bill.

I do not dispute the figures that the Minister gave, but he said that the PSA countries take up 65 per cent. of British bilateral aid, as against the top 20 which take up 47 per cent. The House of Commons Library believes that the figure is 62 per cent. I accept that that is less than 65 per cent., but there is a clear disparity between those figures. The Minister may not be able to respond to that point now, but I would be grateful if he could write to me setting out how he arrived at those percentages, so that we can return to the matter on Report if necessary.

Photo of Gareth Thomas Gareth Thomas The Parliamentary Under-Secretary of State for International Development, Party Chair, Co-operative Party

I cannot explain any discrepancy between what the House of Commons Library said to the hon. Gentleman and the figure that I gave, but I will of course write to him to clarify the figure that I used, if indeed it is wrong, or to explain the discrepancy.

On the question of bilateral aid in the form of budget support to Governments, we will be required by the Bill to report on the money that we give, both in terms of its financial value and its effectiveness. The hon. Gentleman will have opportunities to use the annual report to explore both his position and the Government’s on budget support.

During this exchange I have had the opportunity to reflect on the point about the figure of 65 per cent. I am told that the hon. Gentleman and the Library are right, and that the correct figure for the top 20 countries is 62 per cent. He gave the figure that the top 20 recipients are worth some 47 per cent. of DFID bilateral aid; the figure actually stands at 42 per cent.

Question put and negatived.

Clause 5 disagreed to.