(6 years, 7 months ago)
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The Earl of Sandwich
To ask Her Majesty’s Government what support they intend to provide to the least developed countries in relation to any adverse effects resulting from Brexit.
The Earl of Sandwich (CB)
My Lords, I am grateful to the Minister for answering this debate at a difficult time for DfID, and I can only wish the new Secretary of State well. I also look forward to hearing from old friends and campaigners today, including the noble Baroness, Lady Chalker, who is just off an aeroplane, who has wide and continuing experience, especially in Africa.
There are several levels of discussion when it comes to the LDCs and Brexit. I shall focus on trade because it is widely understood that trade can be an effective form of aid. Changes in UK trade policy as a result of Brexit will have profound effects on all developing countries. There are existing concessionary arrangements such as the Everything but Arms agreement, which specifically helps the LDCs. I know that the Minister will not rest his case on the EBA alone, but a fairly strong press release this summer reassured us that the EBA will stay in place. Will it really stay? How can it? It is an EU initiative and there can be no absolute guarantee about anything unless and until we actually leave the European Union.
However, the new White Paper on trade promises duty-free, quota-free access for 49 LDCs, presumably under another form of EBA. It provides for full or partial Generalised Scheme of Preferences for 13 other developing countries and GSP+ for nine countries that are committed to implementing human rights and good governance. So will the Government establish a new category of vulnerable least-developed countries, “VDCs”, and offer them non-reciprocal, tariff-free access with more flexible rules of origin?
EU concessions currently help only about one-third of imports from the poorest countries. I remain concerned about the possible direct effects of withdrawal on the ACP group—the African, Caribbean and Pacific countries—which derived from the Lomé Convention and the Cotonou agreement. We will have to sign new economic partnership agreements and FTAs with these countries. Some are cushioned by minerals and cash crops that help to inflate their national GDP while doing little for their population. Commodity prices can appear to make all the difference to a country that, while remaining poor, may not qualify for any concessions. Corruption, the power of elites, and of course conflict can and do distort the economic profile. Highly indebted LDCs are in a category of their own and even potentially wealthy ones like Mozambique are still in default. A country such as South Sudan, the newest of the LDCs, is hardly in a state to be measured at all, yet we must and do make every effort to support it. Zimbabwe will now become another priority.
Some of the poorest countries that are not technically LDCs may suffer from Brexit if they are currently benefiting from an EPA with the EU. Exports to the EU from some middle income developing countries can account for half of their total exports, such as 57% in the case of Seychelles and 47% for Cameroon. Through tariff elimination, young industries in these countries could be exposed to competition. I expect the Minister will say something about EPAs and how we can continue or improve on the present EU arrangements, which are far from ideal, when we are outside the EU. The word “partnership” is used increasingly by the Government as though there will still have to be close trading arrangements with Europe, which must mean with the EU as well. If we are to end up close offshore like Norway we will still be associated with the existing EPAs and other EU trading arrangements.
Then there is the uncertainty factor. No one can yet accurately forecast what Brexit will mean even to citizens of the UK and Europe, let alone to the rest of the world, so this debate may seem premature. Changes are unlikely to occur until the UK is effectively out of the EU and beyond transition, but the same dilemma affects all departments. People directly affected by our decisions, whether they are EU citizens here or small farmers in poorer countries, need to have the answers as soon as possible.
It seems that many who voted for Brexit are now seeing the downside, although it is unlikely they will have the chance to vote again, short of a general election. What we do know is that currency fluctuations have not spared the poorest countries. The 10% fall in the pound in the week post Brexit, for example, along with the UK’s lower GDP, would have led to lower exports from the LDCs. Sterling has suffered again this week. I do not deny there will be opportunities ahead, but we must admit that the present UK economic climate is discouraging.
What of aid? What relationship will the UK have with the EU’s aid programme in the future? Priti Patel said on 18 October:
“An important part of the UK’s future development strategy will be to continue working closely with our European partners”.
Will the Minister spell this out a little? Will he say whether there will be a relationship with the European Development Fund and ECHO, the humanitarian agency? Will the EU become our preferred or most favoured partner in aid and development, as will need to happen in the fields of justice, security and defence?
Returning to trade, I know that the Government are strong supporters of free and fair trade and of the concept of aid for trade. Priti Patel has also said:
“Britain will lead the world in free trade, but, importantly, we will also help the poorest countries to invest in skills, technical assistance and capacity building and create new markets”.—[Official Report, Commons, 18/10/17; cols. 825.]
We can all agree with that.
The CDC, for all its failings—it is still monitored in Private Eye—will need to adapt its own style of investment to join DfID in reaching the poorest communities, not from the top down but from the needs of those communities upwards. This is something it still has to learn and we may hear more about that later. We should encourage DfID, through the various watchdogs and committees, to continue this trend and show that CDC can create new jobs directly.
One pathway frequently talked about at the UN, and in particular by the noble Lord, Lord McConnell, who could not be here today, is the focus on sustainable development goals. The whole point of sustainability is that whatever scheme is involved, it has to belong to the community and be viable and sustainable or it will simply fail like so many aid programmes. Trade can and should be an essential means of achieving some of the SDGs—notably numbers 8, 9 and 10—and the primary goals of eradicating poverty and hunger. Fair trade is an example which has already proved its own success. Microcredit, when it is properly anchored in loan and credit schemes, is another effective way of reaching the poorest.
Climate change—SDG 13—presents a serious challenge for the LDCs because natural disasters, both sudden and insidious, can overturn years of economic development. Both aid and trade are important because of the need to prevent these disasters through aid and subsidised input, sometimes through large-scale infrastructure and the control of carbon emissions, and targeted action at the micro level. This subject, including the need to implement the Paris agreement, is under urgent discussion in Bonn at the moment.
A question arises about the Sahel and Francophone Africa. Are we saying goodbye to countries such as Mali and Niger, currently an aid and security concern of ours through the EU, simply by pursuing Brexit?
The Commonwealth is, I am glad to say, gaining a higher profile because of the CHOGM in London next April. The Commonwealth is increasingly being mentioned as an alternative for Brexit, a vision of the wider world we need to embrace, but I am not sure that this vision goes very far when you look at the data. The Financial Times recently pointed out that the EU and the Commonwealth are not comparable if you consider the supply chain, for example, in the car-making, aerospace and machinery industries, where the UK is embedded in the EU network. Even countries such as Canada and Australia cannot make up for the components currently being supplied to industries in the UK at competitive prices. Brexit requires radical changes and some of these will impact on all the UK’s present trading partners, including those in the Commonwealth that may enjoy preferences. I look forward to the Minister’s assessment.
In closing, I would briefly like to mention two good friends we have lost who made huge contributions to international development—Lord Joffe, who was well known to this House, a former chair of Oxfam and a hero of South Africa, whose memorial service took place yesterday, and Andrew Hutchinson, head of education at Save the Children, another person of great integrity and moral purpose, who died last week and whose funeral is taking place at this moment in Southwark Cathedral. They will be missed by many.
Baroness Chalker of Wallasey (Con)
My Lords, I thank the noble Earl for tabling this important debate. I endorse practically every word he said. I shall refer briefly to the EU work in the Sahel. It is no good leaving that critical work uninfluenced by British foreign policy. This issue is not often debated in this House or another place and I hope that DfID will look with great care at what we can do to continue to support the work that the EU is currently doing in the Sahel.
I declare my interests as listed in the Register of Lords’ Interests. As colleagues know, I continue to be involved in matters in Africa—more so on the finance, trade and business side than on development. I too have always believed that the best way to help African countries, and indeed those LDCs in the rest of the world, is to help them into business, production and employment rather than give them handouts. I of course support the work that goes on in health, education and many other areas, but I believe it is critical to include the work on economic development. That is why I was glad to read the previous Secretary of State’s commitment on 24 June this year to help the world’s poorest by securing existing duty-free access to UK markets, as well as providing new opportunities to increase trade links. This will apply to the 48 countries that continue to benefit from duty-free exports to the UK on all goods, other than arms and ammunition.
It is worth reading DfID’s Economic Development Strategy. More than £20 billion-worth of goods per annum is shipped from these countries to the UK and, with that strategy, outlined by DfID earlier this year, that sum should increase steadily provided that the funding arrangements for training and business development in the LDCs continue. That has to underpin the national programmes for skills development, in which the EU—and other member states in the EU—have been much involved. They continue to help one another in this respect.
The serious co-ordination of cross-country assistance to the LDCs has to extend beyond Britain’s boundaries and we have to maximise the improving use of development assistance. I know that the UK has been a very positive contributor to the better use of funds with many of our development partners, and this needs to continue beyond March 2019. I hope that the new Secretary of State, Penny Mordaunt, will continue Priti Patel’s important focus on job-creating growth in our own development programmes, regardless of who originated the programmes. With a very much better budget than I ever enjoyed as the Minister for Development, it may be possible for us to put money into programmes paralleling those in the EU when we are no longer a member. Economic development and the training and skills from which so many LDCs benefit at present have to be protected if we are to be honest with ourselves in relation to what development is about. Thus, I urge colleagues to see that we continue the good things in the EU development programme beyond March 2019.
We also need to make sure that this sad departure of the UK from the EU will not be used as an excuse not to do things. I hear far too many pretty ignorant comments about what we will not do in the future. One thing that we will be doing is good development assistance. I am very glad to learn that Rory Stewart, who is a Minister for both the Foreign Office and DfID—something that I enjoyed on the Africa score for many years—has just set up a special review of development assistance in the event of our exit, which seems likely. I hope that this debate will be able to contribute to Foreign Office and DfID thinking on the changed situation that we will face.
I should like to say one word on Mozambique. It desperately needs our help. It is trying to find a way out of its debt situation but it is in some considerable difficulty. I hope that Britain will be able to help.
Lord Hughes of Woodside (Lab)
My Lords, I join the noble Baroness, Lady Chalker, in congratulating my noble friend Lord Sandwich on bringing forward this very important subject. The noble Baroness and I shared many happy hours in the other place and, even then, more united us than divided us, and I am glad that that is still the case. We are talking about dealing with what we now call lesser developed countries. We used to call them underdeveloped countries; the jargon has changed quite a bit. I hope noble Lords realise that this is an extremely important issue.
People tend to speak about gross domestic product, the average wage and so on. I am going to take a slightly different approach. On 11 November, the Economist published a couple of very useful articles about Africa and the lack of capacity for people there to access electricity. That is a different approach but nevertheless quite useful. Some of the figures are astonishing. For example, in South Africa, which is arguably the most highly industrialised country in Africa, 28% of people still have no access to electricity. In Nigeria, the figure is between 25% and 49%. In Mozambique, it is between 50% and 70%. The astonishing thing is that the Cahora Bassa dam in Mozambique, which is a major power supplier, sends most of its electricity to South Africa. It does not stay within the country itself.
There is a conundrum as far as the future is concerned. Everyone wants industry to grow but it cannot grow without electricity, and the electricity supply cannot expand without businesses to buy the product. In Kenya in particular, a lot of work has been done on solar panels and innovative pricing methods for the product. Nevertheless, there will still be a need for large energy suppliers. We know from our own experience how difficult it is to arrive at a decision about when to build a new power station. If it is bad for us, how difficult must it be for countries without the capacity to do so? We have to grow these economies. Although the Kenyan experiment is useful, without large energy suppliers they cannot have the business. How are we going to square the circle and resolve that conundrum?
There is much to be done, possibly by the World Bank and other agencies, to take a risk and build the electricity supply before the demand is there; otherwise, things will never move. Unless we act soon and properly on the energy supply in what we call the lesser developed countries, we are in very great danger that in 10, 20 or 30 years from now, we will be in the same place, arguing the same questions but in a slightly different way. This is an extremely important issue and one which the Government need to take account of. When we go into the post-Brexit talks, a lot of technical matters will be involved. But much more important are the matters of principle and practice that need to be addressed. I unfortunately see no signs at the moment that the Government have any idea of how they are going to proceed. I hope that this debate helps to clear their mind.
Lord Jay of Ewelme (CB)
My Lords, I too congratulate my noble friend Lord Sandwich on organising this debate. Much debate on Brexit is about what will happen over the next 21 months or so, and it is good to be able to look a bit beyond that. Indeed, it is good to look at some aspects of Brexit that might conceivably even be of some advantage to the United Kingdom, rather unusually.
The size and structure of the British aid programme has been rightly admired around the world, if, alas, not always in this country. The focus on aid to the least developed countries has been a key part of that, together with the very good work of NGOs, which has not been mentioned so far today and which deserves great praise. It has made a real difference to the lives of some very poor people around the world. I hope that the emphasis in the aid programme on the least developed countries will continue after Brexit. I cannot see why it should not; indeed, I can see every reason why it should. It would be good to have confirmation from the Minister that that will be the case.
Less than perfect administrative capacity is inevitable in the least developed countries, which means that the misuse of aid must be minimised. However, it will never be eliminated. We have to accept that, from time to time, there will inevitably be complaints about the way in which aid has been used; alas, that will not always go down well in the papers here, but it is an inevitable consequence of a focus on the least developed countries. There will always be tensions too between the wish to support the poorest people in poor countries and real concerns about supporting countries with questionable political systems.
The key here—I very much agree with what was said by the noble Baroness, Lady Chalker—is that the FCO and DfID should work closely together and complement one another. I am sure that they will do that in future, after the adventures of the past few weeks. For the avoidance of doubt, and as a Cross-Bencher, I should say that poor relationships between the FCO and DfID are not new and not a prerogative of any one particular political party. As Permanent Secretary to the Foreign Office, I remember calling on Prime Minister Meles in Addis Ababa to pass on the rather firm message from Prime Minister Blair and the Foreign Secretary Jack Straw that locking up the opposition was not the best way to burnish his social democratic credentials—only to find that the DfID representative in Addis Ababa had called on the Financial Minister the very same day and promised him a rather large sum of money. I did not feel that that enhanced the message I was trying to give. However, I am quite sure that that will not happen in the future.
As the noble Earl, Lord Sandwich, has said, trade is important. I am glad that the Government have said that after Brexit they will, as a minimum, provide the same level of access to developing countries as the current EU trade preference schemes. That is a very important commitment. The EU has not been as generous as it might have been in its trade policy to developing countries. I hope that the Government, outside the European Union, may be able to devise more generous policies, especially to the poorest countries. I welcome anything the Minister can say about that too.
Viscount Eccles (Con)
My Lords, I should remind myself and the Committee that I was in development for a long time, working for the Commonwealth Development Corporation. I am historical because I became its chief executive about 30 years ago. Subsequently, of course, my noble friend Lady Chalker was my boss, so I had to pay very careful attention. If I may make a personal remark, I much preferred it then. It would be better today if DfID were part of the Foreign Office; making it a separate department was a mistake, and remains so.
I will duck Brexit because I do not have the slightest idea what will happen after it, and in the life of CDC, it will not make any significant difference, whatever the agreement or whichever way it goes. We are in long-term economic development. We will have investments at the time and will be making more, so I do not think it will make any difference. Co-operation with our European and United States partners, such as the IFC, DEG in Germany and FMO in Holland, goes on all the time and will undoubtedly continue. We will have joint investments and so we will have to talk to each other in a quiet and friendly way, otherwise things will not go well.
I say to the noble Lord, Lord Hughes, that for the 70 years of its history, CDC has been investing in power stations and electricity distribution, using hydroelectric as well as conventional electricity. It is still doing that; at the moment, it is working very hard in Sierra Leone on power generation and distribution. Of course that is tremendously important. You cannot have economic development and you cannot increase trade unless you have things to sell—and you do not have things to sell unless you create the companies to produce things that people want to buy. In the long term, it is economic development that tells the story.
I want to illustrate that point by talking about three countries. The Comoros have 800,000 people who are Sunni Muslim and $1,500 of income per capita. They were French—there are three islands and the French kept the fourth one, presumably because it was the best—and 300,000 Comorans live in France. How do you do long-term development for those islands? They export vanilla, which you can synthesise—but still, they export natural vanilla—and they have a tourist trade, with very good snorkelling. They also have political instability.
Then we go to the other end of the scale and the countries that are the least developed. Ethiopia has $1,900 dollars per capita and 105 million people. It has a difficult history, but it is the country from which coffee came. Coffee has not been mentioned specifically, but the way in which the European Union behaves about coffee is scandalous. It debars the least developed countries effectively from processing their own coffee; it tells them, “You can send us beans”. So there are things that might get better after Brexit. In Ethiopia, 45% of the population are Ethiopian orthodox Christians—rather different from 98% Sunni. In the middle, you have Tanzania with 50 million people. It was German but then it became British.
When you are thinking about aid, trade and economic development, it is incredibly important to understand the complexity of what you are engaged in and the amount of information that you have to collect. The banners that are put up to say that we are going to do the same thing everywhere just do not work.
It is incredibly important that we continue with a development finance institution such as the CDC, which puts people on the ground and has technology, electricity generation and distribution, and mobile telephones, for example. It used to have—and I hope it will have again—a lot of sophisticated agricultural technology, and will continue with the business of long-term economic development. Please may we cease to argue about the relative benefits of aid, trade and economic development? They all have their place but, if you want to solve the problems, it is economic development that will do it.
Viscount Craigavon (CB)
My Lords, I am most grateful to my noble friend Lord Sandwich for raising this debate and focusing our minds on this aspect of international development. For what it is worth, and as a fellow strong Brexit supporter, I hope that I may congratulate Penny Mordaunt on becoming the new Secretary of State, and wish her well.
One positive result of Brexit will be that we, this country, will be forced to address more carefully the merits and advantages of how we spend taxpayers’ money, which in the past we left to the EU, rather than handing over large sums and leaving it to the EU largely to decide the best way in which to disburse it. In theory, in the longer term, that should lead to the need for more parliamentary debate and input on this subject. However, in contributing to this debate, I realise that the immediate bridging on departure from the EU will lead to some difficult consequences, particularly in trade, that need to be addressed. Obviously, we should continue to co-operate closely with EU countries on the ground but, at the end of the day, crucial decisions will be ours. As the noble Lord, Lord Jay, said, we can be more generous.
Usually, and rightly, underpinning debates such as this are the sustainable development goals—and I shall come back later to what I believe to be important about that, if I have time.
We should congratulate the department on already having announced, as other Lords have noted—that on leaving the EU it intends to continue the EBA—Everything But Arms—scheme that provides the least developed countries with duty-free market access. The announcement went further, without many details, to the effect that improved market access would be offered to the next tier of countries. We should also be grateful to the NGOs that have been prompting DfID in this direction. For many countries, their narrow range of products, such as sugar or coffee, would not be competitive in our market unless such preferences were given. We understand that there is also a commitment to trade in a way that protects human rights and the health and safety of workers. Existing agreements and preferences could be improved in negotiating the new arrangements. However, given the pressures we will now be under in other areas to safeguard our own general position and interests, we will need to rely on the relevant countries to come forward, with their allies in this country—the NGOs and businesses affected here.
I come to the subject of support—the word in the title of this debate—that is given by DfID other than through trade, in financial assistance. For example, in the Government’s paper, Foreign Policy, Defence and Development—a Future Partnership Paper, mention was made of the positive leadership of the UK in calling a family planning summit in London earlier this year, along with seven other EU member states, in the build-up to 2020. In her introductory speech at the summit the then Secretary of State said that the UK would boost its support for family planning around the world by 25%, and that that commitment would last until 2022. We have been trying to lead other EU countries in this field for some time and I hope that we may continue to do that.
After the worrying withdrawal of the American contribution in this field, we are now the lead donor to the United Nations Population Fund, and it is vital that this continues, along with the contributions of other EU countries. In the opinion of many, and as stated in the SDGs, successful reproductive health programmes are one of the keys to sustainable development. It is accepted that such investment in that field yields a benefit to that society many times over. The Sahel, which has been mentioned by two noble Lords, is a region that needs much encouragement in the area of reproductive health.
I hope that, even in the uncertain times to come, DfID will find it desirable to prioritise such investment in reproductive health. In this field, and in much of what we have heard today, many fine words and good intentions have been expressed. I hope that we and the department can live up to them and deliver what we all hope for.
Lord Jones of Cheltenham (LD)
My Lords, I, too, thank the noble Earl for initiating this important debate. During my 25 years in Parliament, I have devoted some of my time to understanding and supporting the work carried out by the Department for International Development.
I also have an interest in spreading democracy, and have been to several countries in Africa, including Mozambique and Sierra Leone—two of the countries mentioned today as being most in need of help—and to the Palestinian territories, as an observer of their elections. Observing elections is always a fascinating and uplifting experience. The UK uses its international development policy to address a number of global challenges, including poverty, diseases, climate change, migration and state fragility. While we are a highly generous donor, we cannot hope to solve these problems alone and need to work with other donors and to mobilise them to pursue similar goals.
It is possible—indeed likely—that, as a result of Brexit, the EU’s development focuses will shift. The central and eastern European countries are keen on diverting EU aid from the poorest countries, such as those in sub-Saharan Africa, towards the EU’s eastern neighbourhood, something which the UK—quite rightly —has so far resisted. The migration crisis has also strengthened calls for diverting EU aid.
A potentially long and painful Brexit-induced recession may force the Government to make cuts and abandon the 0.7% overseas aid target. In September this year, the UK Government published a policy paper, Foreign Policy, Defence and Development—a Future Partnership Paper, which stated that,
“the UK will continue to use its international development budget through its international development partnerships, to advance global development impact or to tackle specific country problems”.
I was encouraged by that. However, the former Secretary of State, Priti Patel, said in October that leaving the EU would allow the Government to reclaim billions of pounds of annual aid funding currently diverted via Brussels. It could then be used not only for “humanitarian” work, but for,
“prosperity, Britain post Brexit, trade and economic development”.
She said this to the Commons International Development Committee. She added:
“There are a whole raft of opportunities”,
where we can use that money for,
“our national interest, global Britain’s interest, as well as helping to alleviate poverty around the world”.
The primary purpose of development should be lifting the poorest people in the world out of poverty, not serving the Government’s post-Brexit trade strategy.
When Hurricanes Irma and Maria tore through the Caribbean in September, the UK Government came under sharp criticism for a slow and seemingly reluctant effort—although they got there eventually—in the recovery of its Overseas Territories, including the British Virgin Islands, Anguilla and the Turks and Caicos Islands. One of the excuses used by DfID was that, under international rules, those islands are too wealthy to be eligible for official development assistance. That may be so, but these are UK Overseas Territories. They are not independent countries; they each have a UK governor. They are our responsibility and we carry any liability caused by unusual and devastating events such as hurricanes. Frankly, neither France nor the Netherlands had any hesitation in getting support to their overseas territories.
I have a couple of questions for the Minister. What discussions have the Government had with the Department for Exiting the European Union to ensure that funding for British Overseas Territories is protected in real terms if and when the UK leaves the EU? What assessment have they made of the UK’s ability to commit to spending 0.7% of the UK’s GNI on overseas development assistance after we have left the EU?
Lord Collins of Highbury (Lab)
My Lords, I too thank the noble Earl for initiating the debate. Over the weeks and months ahead we will have plenty of opportunity to debate even further. We will have more time.
A cliff-edge Brexit will have catastrophic consequences. As we heard yesterday in your Lordships’ EU Financial Affairs Sub-Committee, JP Morgan’s contingency plans include beefing up its operations in Ireland, Germany and Luxembourg in preparation for a hard Brexit. We see from reports this afternoon that that seems quite possible. There is no doubt that many in the development community fear the consequences of a cliff edge and face the need to make contingency plans. What discussions have DfID had with NGOs to address such fears? What will be the position of INGOs receiving funds from DfID on funding from DfID and the EU post Brexit? Will British NGOs have to register elsewhere, such as in Scandinavian countries, to secure and obtain EU funding?
According to the Minister, in Hansard vol. 783,
“the UK contributed £935 million in overseas development assistance to the EU budget in 2015 through core funding. In addition, DfID contributed £392 million to the European Development Fund”.—[Official Report, 4/7/17; col. 783.]
That is significant, and in DfID’s multilateral development review the EDF was deemed among the most effective of any multilateral organisations. The noble Lord argued that decisions on whether we want to contribute or stay out of the EDF will be made as part of the process of exiting the EU, asserting,
“at least we have a choice”.—[Official Report, 4/7/17; col. 783.]
Does that mean a choice not to support the most effective programmes—a choice not to augment our priorities through partnership in the EU?
I welcome the Government’s approach to trade policy towards developing countries, released by DfID, but it is not as generous as it may appear. As we have heard, the strategy addresses everything but arms agreements, which allows for the UK to negotiate agreements unilaterally, but it does not address the economic partnership agreements which are vital to many developing countries in terms of trade going into the UK and the EU. How are the Government going to address this issue in negotiating Brexit? Are we meant to be satisfied by the assertion that they will continue until Brexit? What about the requirement for planning, the longer term commitments, the 10-year plans? All we hear from the Government is that the details will be handled as part of the exiting EU strategy. We are told the UK strategy is a cross-government, cross-Whitehall approach about where our priorities should be. Is DfID there when crucial decisions are being made?
Under EU law, it is required that trade policy promotes sustainable development. Liam Fox commented that the Government are committed to helping developing countries grow their economies and reduce poverty through trade. However, the recently published Trade Bill has been described as a missed opportunity by the Fairtrade Foundation for the Government to place poverty reduction at the heart of future trade deals and to ensure open and democratic scrutiny of future trade negotiations.
We are told that the UK is committed to ensuring that when companies source from developing countries they do so in a way that protects the human rights of workers and their health and safety—we heard this in the debate from the noble Viscount—but I would like to hear from the Minister what steps the Government are taking to ensure that forthcoming deals being negotiated by his colleagues in the Cabinet are properly assessed to avoid unintended knock-on damage to poverty reduction and human rights.
The Minister of State, Department for International Development (Lord Bates) (Con)
My Lords, I join with others in paying tribute to the noble Earl for securing this debate and for the way he has set the scene. I particularly thank him for his good wishes to the new Secretary of State, Penny Mordaunt. She has already addressed staff at DfID stressing her priorities, one of which will resonate with many in this Room—disability. She was Minister for Disabilities at DWP, an area I know well and on which we are already doing a great deal of work. We can look for that to be enhanced in the future.
The focus of this debate is on the implications of exiting the European Union; our trading relationships with developing countries; our future development partnership with the EU; and annual UK development assistance. On the sums referred to by the noble Lord, Lord Collins, this morning we had the timely publication of Statistics on International Development 2017, which gives the latest figures for 2016. These show that the annual development assistance channelled through the EU was £1.5 billion in 2016. This comprises 15% of the EU development funding and consists of contributions to EU Budget Heading IV instruments of £1.031 billion and to the European Development Fund of £473 million.
The noble Lord, Lord Collins, asked what arrangements there might be going forward. We will continue to work closely and in parallel with the EU in many areas. I will come on to these later and particularly touch on the Sahel. However, there are structural changes that the EU will need to make. For example, the European Development Fund would not allow a non-member state to be a member. Although I accept that it is a well-performing fund, it would need to be opened up and made available to non-members if the UK was to continue to be part of it.
The EU’s development priorities are closely aligned with the UK’s—indeed, they have to a considerable extent been shaped by the UK during our EU membership. However, where the EU currently provides development assistance to more than 140 countries, UK aid is focused on 32 priority countries—the noble Earl referred to this, saying that where aid is needed most is in the difficult areas, in the tough areas. My noble friend Lord Eccles referred to the mission of CDC as being to work in the most difficult and challenging areas. That is where we focus our effort.
I join the noble Lord, Lord Jay, in paying tribute to the work done by British NGOs around the world. One of the most shocking statistics we see is that for the deaths of humanitarian workers. Sadly, in many conflicts humanitarian workers are targeted for delivering humanitarian aid. We should honour the sacrifice that so many of those NGOs make. I was asked by the noble Lord, Lord Collins, whether I had met the NGOs. I had a round table recently with the major NGOs that work with DfID, including Bond, where we discussed this very issue. I have relayed its concerns and we are working with the Department for Exiting the European Union to ensure that our world-class NGOs are not disadvantaged by any changes.
The question of how much will be reallocated to DfID is subject to agreement with the Treasury. DfID has a tried-and-tested resource allocation process that has enabled us to deliver the Government’s target of 0.7% of GNI for five consecutive years. I am confident that we would be able to absorb any additional funds allocated to us. Of course, it would be premature to announce detailed spending plans, not least because there are significant areas of uncertainty, such as the point at which the UK will stop making contributions to the EU—the noble Lord mentioned that many such contracts are long-term engagements. That needs to be fully clarified. Another area is how the EU will respond once UK funding ceases; specifically, whether member states will increase their ODA contributions to compensate for a 15% reduction in the EU’s development budgets. Finally, it is uncertain what the UK’s ODA budget will be in future years, as it is linked by law to gross national income, which by its nature fluctuates.
The noble Lord, Lord Hughes, touched on power supply, which is a crucial element. Just as with economic development in this country the maxim is that investment follows infrastructure, so it is true everywhere else. Where there is investment in infrastructure, it acts as a catalyst for investment. As my noble friend Lord Eccles mentioned, it is a prime reason why we are increasing the resource available to CDC. In some of the areas I work on, I am struck by how many incredible solutions—in education, for example—can come through use of tablets and computers, yet the absence of electricity makes them a non-starter. In economic development, mobile payment technology is liberating parts of east Africa through the TradeMark East Africa project, but some people are missing out simply because they do not have electricity. Therefore, the advance of solar power, particularly small-scale solar power, is revolutionising what we can do in those areas.
I remind noble Lords of our recent commitment to remain the largest donor to the International Development Association, which in its next cycle will double the resources going to fragile states, as well as of our decision significantly to scale up our contribution to CDC to support its job-creating investment activities. Together with our multilateral reform efforts, this will deliver a higher volume and quality of resources to the least developed countries.
We have incredible expertise here, including former Permanent Secretaries—I think that the noble Lord, Lord Jay, was at the Foreign Office at the time of the incredible Gleneagles agreement, which was certainly a landmark under the previous Labour Government. Our longest-serving Overseas Development Minister, my noble friend Lady Chalker, talked about close working between the FCO and DfID—a number of noble Lords, including the noble Viscount, Lord Craigavon, mentioned this as well. For the first time, we now have joint Ministers between departments in Rory Stewart and Alistair Burt. We have new cross-Whitehall funds: the Conflict, Stability and Security Fund; the prosperity fund; and the empowerment fund. They are distributing aid and, together, forcing that effort of co-ordination. I would like to be able to say, hand on heart, that the Addis Ababa experience will not be repeated, but I think the chances are reduced, especially now that when you visit a lot of these missions, we are co-located with the Foreign Office in buildings. That seems a very sensible way forward.
Turning to the future, it is in the UK’s interest that the EU remains a strong development partner after we have left, and that we work coherently on helping the world’s most vulnerable. On 12 September we published the future partnership paper referred to by the noble Viscount, Lord Craigavon, and the noble Lord, Lord Collins. In it, we expressed our desire for future co-operation with the EU that goes beyond existing third country arrangements, building on our shared interests and values. We look forward to formal discussions in phase 2 of the negotiations. In the meantime, as a member state, we are engaged in discussions with the European Commission and other member states on a successor to the Cotonou agreement. Through those discussions, we are pushing for more flexible EU development instruments after 2020 to allow greater co-operation with non-member states.
I turn now to a point made by my noble friend Lady Chalker and the noble Lords, Lord Jay and Lord Jones—the situation in the Sahel. The UK is one of the largest donors to humanitarian relief in the Sahel. Between 2015 and 2018, the UK will provide nearly £190 million of humanitarian assistance to support over 2.3 million people affected by conflict. To the noble Lords and the noble Baroness who spoke on this, perhaps the most encouraging part of this update is that, given the ongoing development of the humanitarian political challenges faced by the region, it is significant that the UK will have a new, permanent office in Chad before the end of the year, comprising a DfID/FCO joint mission. I hope noble Lords will be encouraged by that.
I want to make one point to the noble Lord, Lord Jones, on overseas territories. Of the £62 million that we provided immediately for those who suffered Hurricanes Irma and Maria, only £5 million was ODA-eligible, but that did not stop us—quite rightly, as the noble Lord urged—from recognising our responsibilities under law and under the UN charter to care for and protect those important citizens in the overseas territories. The UK Government share a responsibility with overseas Governments to ensure the security and prosperity of British citizens living in those territories. Part of the UK’s support to overseas territories is provided through the EU. The European Commission has already assured our overseas territories that they will receive their full allocation from the EDF.
I am conscious that time is running out, but I know this issue is of great concern. Perhaps I can close with some good news that I have heard through the usual channels: an additional debate in the name of my noble friend Lady Nicholson on the economic development strategy of the Department for International Development has been secured next week; on Wednesday, I think.
Lord Bates
The usual channels are working in their wonderful way. It may indeed be on Monday the following week—yes, the usual channels have just informed me that it will be on the 27th. I hope that will be another opportunity to follow up on this, but I thank the noble Earl again for an informed, interesting and helpful debate.