Draft International Development Association (Twenty-First Replenishment) Order 2025
(1 day, 9 hours ago)
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The Parliamentary Under-Secretary of State for Foreign, Commonwealth and Development Affairs (Chris Elmore)
I beg to move,
That the Committee has considered the draft International Development Association (Twenty-First Replenishment) Order 2025.
It is a privilege to serve under your chairmanship for the first time, Mr Western. The draft order, which was laid before the House on 11 September, will permit the UK Government to make financial contributions to the World Bank’s International Development Association up to the values stated in the order. The International Development Association, or IDA, is the largest source of grant and concessional finance for the world’s poorest countries and plays a vital role in supporting growth, tackling poverty and getting the sustainable development goals back on track.
The external financing needs of low-income countries are growing, but progress on global poverty reduction has stalled following high inflation, low growth and increasing fragility. Poverty today is also increasingly concentrated, with more than 70% of the global population in extreme poverty living in countries supported by IDA. This is exacerbated by protracted crises, regional conflict and the effects of climate change. Addressing those challenges will become increasingly important for achieving our objectives on migration, growth, security and development.
IDA is normally replenished by donors every three years, and following negotiations throughout 2024, the UK and other donors agreed to a $100 billion IDA21 replenishment, the largest yet. The UK has committed to increase our pledge by 40% to £1.98 billion over the next three years, positioning us as the third-largest donor, after the US and Japan. The decision to protect the UK’s pledge, despite reductions to the official development assistance budget, is a testament to the UK’s new approach to development: delivering value for money for the British taxpayer and maximum impact for the most vulnerable overseas. That means prioritising spending through the most impactful multilateral organisations.
IDA delivers excellent value for money for UK taxpayers. The use of an innovative financing model, which combines donor contributions with income from loan repayments and borrowing from the markets, means that every £1 we put into IDA generates over £4 for its borrowers. The UK has also agreed a new way to make payments that reduces costs to UK taxpayers. By paying our contribution to IDA on an accelerated timeframe, we will get a discount from the bank. That is because it reduces the amount that the bank needs to borrow from financial markets in the short term. That means the UK will pay around 10% less, while providing the same value to the bank.
The UK has also pushed IDA to use more of its own resources than ever before. The bank’s middle-income-country lending arm will transfer $2.8 billion to IDA21—three times higher than IDA20—and the bank’s private sector arm will use $500 million to support IDA21. IDA not only provides good value for money but is one of the most impactful development organisations. In the last year alone, it has supported 81 million people in receiving essential health and nutrition services and provided 23 million people with new or improved electricity services, while 12 million benefited from interventions to help to create more jobs.
Through the IDA21 negotiations, the UK also secured important new commitments from the bank to ensure that IDA delivers even greater impact: deepening support to fragile and conflict-affected states and improving the association’s staffing in fragile countries, which will also help to tackle the root cause of migration; improving disaster preparedness and scaling up access to ready-to-use insurance-type financing for emergency response; creating more jobs and expanding private investment while increasing accountability on progress; and supporting the advancement of gender equality through the implementation of a new gender strategy and the inclusion of a new target for sexual and reproductive health rights interventions in 35 countries.
IDA also plays a leading role in supporting IDA countries to build resilience to climate change, with 45% of its financing going to tackling climate change, at least half of which will help countries to adapt to the changes brought about by climate change. IDA is also becoming simpler and faster for borrower countries, through simplifying its policy commitments and financing architecture. Since its creation, there has been strong support across the House for IDA and recognition of its central role in improving the lives of millions of the world’s poorest people.
The UK can be proud of its leadership as one of the major donors to IDA. We have played a central role in the negotiation of the financing and policy package to ensure that IDA resources deliver the best impact and align with UK foreign policy and development priorities. However, in a constrained ODA world, that support must come with a renewed push for reform to further maximise efficiencies and the impact for people on the ground.
The draft order secures our commitment to the UK’s most important development partner, IDA—the largest provider of concessional assistance worldwide. Through its scale, multilateral character and proven impact, IDA enables us to tackle the global challenges that the UK cannot address alone. I commend the draft order to the Committee.
Wendy Morton (Aldridge-Brownhills) (Con)
It is a pleasure to serve under your chairmanship, Mr Western. I thank the Minister for his explanation of the draft order. As he will expect, I have a number of questions on which some further clarity would be helpful for the Committee.
His Majesty’s Opposition recognise the long-standing role that the UK has played in supporting IDA, which is the World Bank’s concessional arm, working in some of the poorest and most fragile countries in the world. We also recognise the scale of the challenges facing those countries, from conflict and food security to the growing pressure of climate shocks and debt distress. IDA has been, and remains, an important part of the global response.
However, the draft order legislates for payments of up to £1.98 billion in UK aid, which is an extremely significant commitment. Therefore, Parliament deserves some clear and detailed assurances about how this money will be used, what impacts it is expected to deliver and how the Government intend to oversee it. Can the Minister explain, in broad terms, how IDA allocates where resources go under this replenishment? What balance does IDA expect between grants and concessional loans? What criteria are used to allocate funds between countries, particularly those facing acute debt pressure? As the UK shareholder, what role have the Government played in deciding where taxpayers’ money will go?
Secondly, can the Minister set out the themes and priorities that the UK argued for during the IDA21 negotiations? IDA covers a wide agenda, from health and climate resilience to education and digital infrastructure, so it would be helpful to know where the Government have sought to focus UK influence, not least in view of the reduction to the aid budget from 0.5% to 0.3%. Do the themes and priorities meet UK development objectives, and how have key UK interests been prioritised?
On the issue of debt sustainability, can the Minister reassure the Committee that IDA’s lending will not compound existing debt vulnerabilities? Have any safeguards been strengthened since IDA20? What assurances can the Government give that UK taxpayers’ money will not be used for debt reduction where countries have been trapped into debt by China? ODA should not be paying down debts to China.
Turning to oversight, what monitoring and evaluation arrangements does the Foreign, Commonwealth and Development Office rely on to demonstrate that UK contributions to IDA21 deliver measurable outcomes and value for money? How often will Parliament receive updates on performance and progress against UK objectives? Will the FCDO publish a report on delivery against measurable outcomes?
Governance is another key area. Can the Minister confirm whether there have been any changes to IDA’s transparency, accountability or anti-corruption safeguards, which should give Parliament confidence in how this replenishment will operate? Finally, can the Minister say whether the UK sought particular conditions or expectations from other donors during the negotiations? How do the Government intend to use the UK’s seat on IDA’s board to ensure alignment with our bilateral work, so that efforts are not duplicated?
IDA remains an important development instrument, but the scrutiny of large multilateral commitments is essential. We hope the Minister can address those points and we look forward to his response.
Dr Beccy Cooper (Worthing West) (Lab)
It is a pleasure to serve under your chairship, Mr Western. I rise to put on record my support for this delegated legislation, and to make three very quick points.
It is not always easy to make the argument for global investment in this time and age, but this is an excellent example of how we can really add to global investment and see a real return for taxpayers. As the Minister alluded to, each $1 invested will generate more than $4 for programming in IDA-specific countries. That is a fantastic return on investment.
As the shadow Minister said, IDA21 will work alongside the World Bank Group’s evolution. We are always looking at the global architecture to make sure that governance is sufficient. The bank is talking about an improved scorecard, looking at performance and looking seriously at quantitative data as well as qualitative results. It is really important when we look at development, and at populations’ wellbeing, that we look at quantitative and qualitative data.
Finally, there are obviously discussions around borders at the moment, but climate change is affecting us all. If we do not mitigate the worst effects of climate change, it will push 130 million more people into poverty by 2030. We are part of that global world and must address that. Similarly, in my own world of global health, infectious diseases do not respect borders. By investing in global infrastructure and global development, we are protecting our own borders and security, as well as global health.
Chris Elmore
I thank the shadow Minister. I will come back to her in writing on the issues around governance and transparency, because I would rather that she receive a substantive answer. I reassure her that we take those issues very seriously.
On what the UK got out of the negotiations, I will run through a couple of things for the Committee’s benefit: stronger capability in fragile and conflict-affected countries; greater focus on crisis preparedness and supporting countries in resilience and scaling up investment; a stronger focus on adaptation and nature financing, in line with the UK’s priorities around climate and nature; increased ambition on sexual and reproductive health rights; and IDA using more of its own resources than ever before, in terms of additional funding.
On supporting countries’ debt, IDA provides grants to the poorest countries and those facing the highest levels of debt distress, ensuring that support reaches the most vulnerable without adding to their debt burden. I can give the shadow Minister that reassurance. On her broader questions around debt, countries at high risk of debt distress get 100% of their allocation as grants rather than loans. Again, we are not adding to that burden through the IDA programme.
As I said, I will come back to the shadow Minister more formally on the governance elements, but I reassure her about our key focus as a Government. Because of IDA’s efficiency and the fact that we are able to deliver on the ground, much of what she has raised is part of the work that happened under the last Government, and that has happened and will continue under this Government.
I welcome the comments of my hon. Friend the Member for Worthing West, and the fact that we are finding an efficiency in the 10% saving, which enables the Government to use it for other pieces of work. This is a really positive piece of work that has been done, cross-party, for more than a decade now, by the previous Government and this one. It shows how we can actually deliver meaningful support for the countries that need it the most. I commend the draft order to the Committee.
Question put and agreed to.
The Customs Tariff (Establishment) (EU Exit) (Amendment) Regulations 2025
(1 day, 9 hours ago)
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The Exchequer Secretary to the Treasury (Dan Tomlinson)
I beg to move,
That the Committee has considered the Customs Tariff (Establishment) (EU Exit) (Amendment) Regulations 2025 (S.I., 2025, No. 1199).
This statutory instrument updates the UK’s tariff schedule to correct two errors relating to three tariff lines. These tariff lines apply to imports of specific varieties of basmati rice and tropical fruit and nut jams—if any hon. Member knows what a nut jam is, I look forward to talking to them about it later in the Tea Room. Both errors will be corrected in “The Tariff of the United Kingdom” reference document that sets out the UK global tariff rates for each good. For context, these errors relate to only three out of many thousands of commodity codes.
First, the correction relating to tropical fruit and nut jams reinserts the correct tariff of 14% into the reference document. This tariff has applied in the UK’s tariff schedule since 2021, but in an update earlier this year, the rate was erroneously left blank, leaving it sadly undefined. Before the error was discovered, His Majesty’s Revenue and Customs continued to collect the correct 14% tariff rate on imports of these goods. To repay traders who paid this rate, HMRC will shortly start the process for issuing repayments. By correcting this error, the instrument removes uncertainty for traders and ensures that they pay the correct rate as introduced in 2021.
Secondly, the correction relating to specific varieties of basmati rice realigns the tariff rate applying to two commodity codes with the original policy intention, by increasing the rate from 0% to £25 a tonne. These two codes were introduced in 2023—so Conservative and Labour Governments are both responsible for one of these errors—and the tariff rate was erroneously set at 0% instead of £25 a tonne, as applies to other basmati rice codes. Similarly, the new codes did not require traders to certify that their rice was genuine basmati rice, which meant there was a risk that traders could import other varieties of rice under the two new codes, paying a significantly lower tariff rate than they should.
This instrument realigns the tariff with the original policy intention and eliminates the risk of circumvention, ensuring that all traders pay the correct duty. I do want to highlight, however, that less than 1% of basmati rice imports were declared under these two new codes in 2024, so the impact on traders will be minimal. I hope that hon. Members will join me in supporting this instrument, which I commend to the Committee.
James Wild (North West Norfolk) (Con)
It is a pleasure to serve under your chairmanship, Ms Barker. As the Minister said, this statutory instrument clears up a couple of errors, one of which happened on our watch, as he pointed out—fair cop; we plead guilty to that one. The other part of the instrument corrects a previous error by reinstating the 14% import duty for fruit jellies, marmalades, fruit or nut purée and fruit or nut pastes.
There is no impact assessment for the instrument because, as the explanatory memorandum says, the impact on the private and public sector is expected to be minimal, but I did get the House of Commons Library to do a bit of research for me. According to HMRC’s trade tariff tool, the incorrectly applied 0% tariff on jams, fruit jellies, marmalades, fruit or nut purée and fruit or nut pastes appeared on July 2025, and the UK imported roughly £3.2 million of such products in 2024. I am keen to understand from the Minister how the error occurred. Was it simply human error? What measures are in place to prevent slightly more important tariff codes being incorrectly entered, with the impact that that could have?
Tariffs are taxes, of course, with higher prices passed on to consumers. We have just had a Budget that increased taxes on incomes, savings and employment, and that introduced a new tourist tax and a taxi tax. We now have another one: the marmalade tax. Marmalade makers in Peru will be giving the Minister a Paddington stare after this.
On basmati rice, as the Minister said, this was an error made by the previous Conservative Government. The Library was unable to find any data on the volume imported, so how much does he expect the new £25 a tonne rate—the rate that should have been in place—to raise in the years to come? If he does not have those figures at his fingertips, perhaps he will write to me.
To conclude, higher import tariffs mean higher prices for consumers. There can be good reasons for them, such as ensuring a level playing field for our domestic producers, but it does seem that this Government have yet to come across a tax they do not like—even on marmalade.
Dan Tomlinson
The Opposition spokesman is right that the import of tropical fruit and nut jams is a relatively small import stream. To give him and other interested hon. Members a sense of quantity, we expect the total amount owed in repayments to be lower than £7,000—quite a small amount in the grand scheme of things.
The Opposition spokesman mentioned other tax changes in the Budget, which I believe are broadly out of scope of this Committee, but I will correct him about the overnight visitor levy. Mayors will have a choice as to whether to introduce it or not; the Government are not applying the tax ourselves. We believe in devolution and we want to enable mayors to choose whether to make that decision to raise more revenue and invest in their local areas. It is up to them. That is what genuine devolution looks like.
I sadly do not have an answer to the Opposition spokesman’s question about the volume of basmati rice imports, but it is an important topic and my officials will endeavour to write to him on it. In concluding, he reminds me that I may have made the biggest mistake of my political career to date by upsetting Paddington, and I will reflect on that deeply this evening, and in the days and weeks to come.
Question put and agreed to.