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Mr MacNeil
Again, my remarks have been anticipated. I welcome the right hon. Gentleman’s comments. It is important that money is spent properly and that, if changes are made, there is a managed transition, not a breakneck-speed shift overnight.
VSO has also helped in one of the most important government activities, without which there would no health care, no education and no spending. It has helped the Governments of Bangladesh and Sierra Leone specifically to collect taxes from their people. Perhaps Ministers’ eyes will light up at this point—perhaps not—but that is a sign that people are getting round to trusting their Governments. Perhaps some hon. Members would like VSO to go into the City of London to ensure that every penny of tax is paid. But I digress. VSO’s work in that regard shows that corruption abroad can be tackled, that the high-value components we take for granted in our civic lives can be established and that normal society can start to be built.
VSO specialises in capacity building. It takes nationals from various countries—mainly the United Kingdom—and places them mainly in less fortunate countries. The value of the professionalism of volunteers, if they were to be paid what the market paid them before they joined VSO, would be some £18 million. Hon. Members might want to think about that. Volunteers forgo £18 million in wages annually, presumably based on a 40-hour week, but on top of that they move abroad. However, it is not quite the abroad that we know or as we like to imagine it—it is the other abroad of malaria and dengue fever. I met a volunteer in Phnom Penh who was getting over a rather nasty dose of dengue fever. Of course, volunteers are often abroad in a village with no electricity and, perhaps, no running water—for not just 40 hours a week, but 168 hours a week and 24/7.
Volunteers build capacity in education and health. They build capacity wherever it is needed. They are ordinary men and women and I would argue, perhaps controversially in the current surroundings, that they have a greater sense of service than politicians, although, in fairness, most politicians get into politics to serve society. However, these people seem to get into volunteering to serve humanity.
These examples are just the tip of the iceberg and I am sure—I know—that other organisations do good work as well. However, this is threatened by what could happen to just 1% of the DFID budget. My colleague from Northern Ireland, the hon. Member for Upper Bann (David Simpson), raised the following matter in his intervention. VSO received 51% of its funding last year—less than a third of 1% of DFID’s budget in that period—from DFID. Almost a decade ago, VSO received 90% of its funding from that source, but this year it is projected to fall to 48% and in five years it will be less than 40%.
The problem stems from that rainy afternoon, where I read in point 2 of the FAQs titled, “Proposal and Logical Framework information”:
“Successful applicants cannot receive a PPA which is more than 40% of their annual income, averaged over the previous three years.”
That would be immediate from next April.
I know and hope that the Government’s heart—like that of every hon. and right hon. Member in this Chamber—is in the right place, but do they realise what a sudden swing of the axe could do? It could equate to a reduction of volunteers by 50% and reduce the number of beneficiaries—the 26 million who are affected, reached and touched by VSO programmes—to 12 million. In short, the cuts will not hurt VSO as much as they will hurt those who benefit from the help and aid.
Organisations such as One World Action and Progressio will be pushed to cut where it is administratively quickest and easiest. Cuts will be too quick and too deep; transitional arrangements will be hard to make, if indeed they can be made at all. However, DFID is receiving an increase in funding. It is one of four Whitehall Departments to receive an increase, and one of two Departments, together with the Cabinet Office, to receive a double-digit increase in funding. According to the comprehensive spending review, the Cabinet Office budget has risen by 28% and that of DFID by 37%. On the surface, that seems to bode well for all organisations that use DFID funds. However, an increase in the departmental administration budget seems not to guarantee the safety of funds that go to the overseas voluntary sector.
The Minister of State, Department for International Development (Mr Alan Duncan)
Perhaps it might help to shape the rest of the debate if I were to point out that the partnership programme agreement funding is but one source of possible funding streams for voluntary organisations. If there is, as there will be, a 40% cap on a PPA, that is not necessarily a 40% cap on all the money that could go to a voluntary organisation. Such organisations could, for instance, also apply for in-country funds.
Mr MacNeil
I greatly welcome the tone of the Minister’s remarks. They seem to indicate that the door is ajar, and that he is ready to ensure that the transition happens in the managed way that all in the Chamber would hope for and expect. The threat is perhaps not so great given that opening door from the Minister, and we have heard of the value of volunteering from the Prime Minister. I hope that I am wrong, and that this is not an instance where one arm of the Government is not fully aware of what another arm might do. In reality, we have been told that the PPA will give no organisation more than 40% of what they received, although the Minister now indicates differently and I am pleased at that.
What does the Department intend to do with the increase in funds? Under current budgetary plans, DFID’s budget will rise from £7.8 billion to £11.5 billion over the next four to five years.
The Minister of State, Department for International Development (Mr Alan Duncan)
I thank the hon. Member for Western Isles—[Laughter.] I have copped out—for initiating the debate, which is particularly poignant in the light of the recent death of Linda Norgrove in Afghanistan, who came from the hon. Gentleman’s constituency. We have people like Linda in mind when we approach this debate.
I welcome the opportunity to address the issue of international development and the important contribution that can be made by the voluntary sector. I assure hon. Members that the coalition Government are certainly not reducing the budget for the work of the voluntary sector overseas. Indeed, as will be seen, we have set out our plans for increasing support to the most effective voluntary organisations. Over the years, Britain has established a global reputation for its work on international development, as a result of the work of successive UK Governments and the contributions from civil society, the private sector and UK citizens.
Mr MacNeil
I shall not say Na h-Eileanan an Iar again. What the Minister said sounded very welcome on first hearing. Is he guaranteeing that VSO organisations that believe their funding will be cut will not suffer a sudden drop in their funding but will be able to continue on their expected path—that come this April, the axe will not be falling?
Mr Duncan
I shall come to that point more specifically in a moment. In short, the answer is that I am not going to guarantee that individual organisations will have all their funding guaranteed in perpetuity. The whole point of what the Department is doing is to establish value for money, but I shall come to those arguments later.
Mr MacNeil
Our argument is not for funding in perpetuity, but for managed funding transitions and changes. We do not want a sudden drop in April. We want organisations to be able to manage the changes that are already projected, with spending being limited to below 40% in the next three to four years. I ask the Minister to take that on board, and to ensure that the good work that we heard about from all Members is not threatened in any way. That is a really serious point.
Mr Duncan
I fully understand the hon. Gentleman’s argument. I shall deal with it later in more detail, but we believe that there are additional components in any organisation’s potential funding that will allow flexibility and additional funding on top of the core funding. That could—although it is not necessarily guaranteed—sustain the level of funding that they hope for.
The House will be aware that, despite the difficult economic challenges, the coalition Government have publicly stated that we will not balance the books on the backs of the world’s poor. We have protected the aid budget, and made a firm commitment to achieving the aid target of 0.7% of gross national income from 2013. The Prime Minister, the Chancellor and the Secretary of State for International Development have shown tremendous courage and leadership at a time when many were calling for reductions in the UK’s aid budget.
Tackling poverty is not only a moral imperative; it is in Britain’s self-interest. Well spent UK aid is one of the best investments we can make. Not only does it enable poor people to improve their lives, but it is good for our economy, our environment, our safety and our future. Quite simply, it is tremendous value for money. Our vision is simple. It is to make life better for the poorest in the poorest countries.
There is clear evidence that aid works. Over the past 25 years, we have seen 500 million fewer people living in poverty despite the rapid growth in the world’s population. In 2007-08, UK Aid trained more than 100,000 teachers, vaccinated 3 million children against measles and supplied just short of 7 million anti-malaria bed nets. However, we should not underestimate the scale of the challenges that we face. Some 25,000 children die every day from easily preventable and treatable diseases; and 1.4 billion people still live on less than $1.25 a day, more than two thirds of them being women and girls. Those factors, as well as new challenges such as climate change, mean that we need to maintain and strengthen our efforts.
I recognise the valuable contribution made by international voluntary organisations, many of which are effective in tackling poverty and promoting growth. They deliver services to improve the lives of poor and marginalised people, often in places that official donors do not reach. They enable citizens to be more effective participants in decisions that affect their lives. They hold Governments and others to account, and they assist public engagement in development. It is for those reasons that the UK places importance on building and maintaining the capacity and space for an active civil society; it is part of our overall approach to international development.
Members will be aware that an important part of the UK voluntary sector’s work overseas includes the special contribution of international volunteering organisations. Such organisations make a valuable contribution by offering UK citizens and others a unique opportunity to make a practical difference to poor people’s lives in developing countries by sharing their skills, their knowledge and their commitment. I pay special tribute to former volunteers who have returned to the UK from their overseas assignments and are putting their knowledge, skills and learning to good use in their local communities. Some, it seems, are in the Chamber doing just that.
The House will be aware that in October the Prime Minister announced a new scheme to support international volunteering. The international citizen service will give thousands of young adults in the UK the opportunity to join the fight against poverty by volunteering in developing countries. Volunteering is a powerful way to experience other cultures, and it allows the returned volunteers to broaden the UK’s public understanding of global poverty.
The Department for International Development funds voluntary organisations in many ways. More than 50% of the support provided by DFID to civil society organisations is made through DFID’s country offices. The remainder is provided from central funds. I shall come to these shortly. In 2009-10, DFID provided £362 million to UK civil society organisations to assist in poverty reduction overseas. That was equivalent to roughly 9% of UK bilateral assistance. Additionally, DFID provides support to many local voluntary organisations in those countries where the UK has a presence. The UK also supports voluntary organisations indirectly, through contributions to the United Nations, the European Commission and other multilateral organisations.
Through those investments, we have been able to achieve significant results. With DFID support, Care UK is working with the private sector in India to provide affordable micro-insurance to 210,000 families in disaster-affected communities; the Gender Links programme in Malawi has contributed to an increase in women’s representation in its Parliament from 14% to 22% in the May 2009 national elections; and WaterAid is helping 1 million people gain access to clean water and sanitation in Asia and Africa. These are significant results, and the UK can and should take pride in them.
The coalition Government are strongly committed to supporting effective civil society organisations. The House will be aware that DFID is providing support to civil society organisations over the next three years through its PPAs, or programme partnership arrangements.
Mr MacNeil
Aid works—as the Minister said, fewer are in poverty, and he gave a list of impressive statistics. However, I have to say that I am not as heartened as I was when he intervened on me. Will he work to ensure that there is a manageable and careful transition—the £26 million being reduced to £12 million—without damaging any of the good work?
I say this with open hands: I do not want the Minister to find himself painted into a corner. I am sure he is not trying to do that. I ask for the flexibility of approach that will enable this good work to remain intact. That is really important. I know he might not feel able to give a full commitment this morning, but he might want to give himself wriggle room to make the transition manageable. It is most important, but it is above politics.
Mr Duncan
There is plenty of scope in the way the system works to give the hon. Gentleman a solid degree of reassurance and the comfort he seeks. I shall explain the components of the system; it might lead him to feel he has had that reassurance.
I start with the programme partnership arrangements, the crux of our funding debate. They provide flexible funding. That is the key. A flexible contract emerges from the PPAs for those partners that get a three-year funding deal. The PPAs provide funding for some of the best-performing organisations, and they are highly competitive. We also want to ensure that voluntary organisations do not become dependent on DFID funds. That is a key part of the argument. That is why, in the next round of PPA funding that begins in 2011, DFID will provide funding to a maximum of 40% of an organisation’s annual income. That is what we have been discussing this morning.
Our commitment to supporting voluntary organisations extends far beyond the PPAs. In October, the Government launched a new £40 million a year global poverty action fund, and projects will be selected on the basis of demonstrable impact on poverty, the clarity of their outcomes and the value for money they offer.
Let me respond to some of the contributions made this morning, which will add further detail to our discussion. We have covered—if not wholly to the satisfaction of the Member for Western Isles—the shortfall point.
My hon. Friend the Member for North Thanet asked if the 40% threshold should apply to an organisation’s global income. We have to look at the audited accounts of any such organisation. Looking at global income compared with UK-only income, we see that UK-only income is the major component of British voluntary organisations’ income. For instance, for VSO in the year 2009-10, the UK-only income was about £50 million and the global income was about £60 million. So, yes, my hon. Friend’s suggestion would make a difference, but the difference between global income and UK-only income is not so huge that it is—let us say—a multiple of the amount of money that would otherwise emerge from a PPA.
My hon. Friend also asked if his charity, or the likes of it, could be represented on the Disasters Emergency Committee. DEC is not in the gift of DFID. It is a voluntary alliance of the UK’s biggest charities and is designed to co-ordinate urgent action in response to any large-scale disaster. So, membership of DEC is more about scale and urgent response than anything else.
My hon. Friend the Member for Harlow (Robert Halfon) asked whether we could support overseas apprenticeships. That is why we are supporting the new international citizen service, so there is scope for a very positive outcome regarding the objectives set by my hon. Friend.
My hon. Friend the Member for Southend West (Mr Amess) asked how we can support volunteer organisations. Let me outline again the components of our support. We offer support through PPAs; through in-country funds, which have significant scope for supplementing anything that emerges out of the capped 40% of a PPA; through challenge funds, which can do the same, and now we also have both the global poverty action fund and the international citizen service. So there are many routes through which the total picture of a volunteering organisation’s funding can be pieced together.
Mr Duncan
I will give way one more time in a moment.
The key for the coalition, at a time when we are under enhanced scrutiny of the way we spend our development money, as my hon. Friend the Member for North Thanet rightly said, is that we must look for quality and value for money in everything we do. We also need to enhance the process by which we do that—hence, the various components I have just outlined—and not just offer a lump sum of funding through a PPA.
Mr MacNeil
One point I want to draw to his attention is that I fear that organisations that are holding PPA money are unable to apply for or access other pots of money from DFID. I am not certain whether the Minister is saying today that they will now be able to do that, or that other organisations might come in. However, the difficulty is that we have this transition phase; the organisations are planning for that change anyway, but it is just the speed of the change that is a concern. It is in April—or two or three years from next April—that the change is due, and I ask him to allow some latitude to ensure that it is a managed and not a brutal change.
Mr Duncan
I would wholly agree with the hon. Gentleman if there were to be a sudden cut with no alternative funding stream or transitional source, but that is not the picture. Yes, there will be a cap of 40% on the underlying three-year agreement, but I have just outlined three, four, even five different channels that an organisation, if it can show value for money, can readily use to supplement what he describes as a “shortfall”.
For example, if we take an organisation that might have, through its PPA, 50% of its annual income paid for by DFID, and that figure goes down to 40%, it is not beyond possibility that that 10% difference can once again be made up from the alternative funding sources I have outlined.
Mr Duncan
I will say something else, if I may, and then see whether the hon. Gentleman still wants to intervene. He himself asked whether other funding schemes have a 40% cap. The 40% figure applies only to PPAs because a PPA provides far more flexible funding than project-based funding does, and that is why the regime is designed to be different.
Mark Lazarowicz
I am grateful to the Minister for giving way. Can we have some clarity, either in today’s debate or afterwards, regarding the ability of organisations that qualify for PPA funding to get other types of support as well? I have been briefed that one of the schemes that VSO might otherwise have been able to gain support for from the global poverty action fund will not be able to gain such support because VSO holds a PPA with the Department. Is the Minister saying that in fact, organisations can have a PPA and also receive funding from some of the other sources he has outlined?
Mr Duncan
I cannot say whether that is true in all cases; I do not want to mislead the hon. Gentleman by saying for certain that it is true in all cases. However, in many if not most cases, I believe it to be true. I undertake to write to him with a clear explanation of how the system works in detail, which is one of the advantages of having a debate such as this in Westminster Hall.
Robert Halfon
I thank my right hon. Friend for giving way and for his remarks on the international citizen service. However, will he give real incentives to companies, particularly multinational companies, to ensure that the service offers real apprenticeships for people to work overseas in the countries we have discussed?
Mr Duncan
I am grateful to my hon. Friend for raising that point, because one of the important thrusts of DFID under the coalition Government is that we want far greater engagement from the private sector, both in the delivery of development and in the likes of the apprenticeship scheme he is describing. So, the answer is yes—that is exactly the direction in which we want to go. That is why my right hon. Friend the Secretary of State for International Development is setting up a specific, bespoke private sector section within DFID, to ensure that the private sector can be a real engine for development in the years ahead.
In today’s difficult fiscal landscape, the increased funding that DFID is making available imposes a double duty to ensure that every pound of taxpayers’ money is well spent and can demonstrate real value for money. We cannot maintain support for a growing aid budget unless we can offer the British public independently verified evidence that funds are being well spent and achieving practical results. That is why the coalition Government have established the independent commission on aid impact, and why we are seeking value for money in every review we conduct and decision we make.
Earlier this year, the Secretary of State announced that DFID was undertaking comprehensive reviews of the UK’s bilateral aid, multilateral assistance and humanitarian and emergency support. Those reviews aim to ensure that UK aid focuses on the areas where we can have most impact and deliver maximum results and maximum value for money. We are also working to ensure maximum value for money from our support to voluntary organisations. That will mean higher levels of competition.
Many British organisations are doing a brilliant job in tackling poverty. We will continue to support those excellent organisations, and through greater competition we will ensure that every pound of taxpayers’ money is well spent and produces top quality results.
Mr Peter Bone (in the Chair)
Order. Thank you for that splendid debate. As the hon. Gentleman who has secured the next debate is here in advance, and as I believe that the Minister is doing a “double-act” this morning—
Mr Peter Bone (in the Chair)
Therefore, we will move on to the next debate.