Draft International Development Association (Multilateral Debt Relief Initiative) (Amendment) Order 2022
Draft International Development Association (Twentieth Replenishment) Order 2022
(Limited Text - Ministerial Extracts only)
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The Minister for Development (Mr Andrew Mitchell)
I beg to move,
That the Committee has considered the draft International Development Association (Multilateral Debt Relief Initiative) (Amendment) Order 2022.
The Chair
With this it will be convenient to consider the draft International Development Association (Twentieth Replenishment) Order 2022.
Mr Mitchell
It is a great pleasure to serve under your benign chairmanship, Mr Sharma. It is 10 years since I last had the last had the privilege of addressing the House on the subject of international development as a Minister and 25 years since I last spoke as a Minister on a statutory instrument, when I was a junior Minister in the Department of Social Security, which is now the Department for Work and Pensions. It is a pleasure to be back.
Both orders were laid before the House on 23 September. They will permit the UK Government to make financial contributions to the World Bank’s International Development Association—or IDA for short—up to the stated values. IDA provides grants or loans on concessional terms to 74 of the world’s poorest countries. It uses an innovative finance model that combines donor contributions with income from loan repayments and borrowing from the markets. That means that for every £1 we put in, IDA generates more than £3.50 for the world’s poorest countries, providing excellent value for money for UK taxpayers.
IDA is normally replenished by donors every three years. However, to respond the impacts of the pandemic, IDA stepped up to provide $35 billion dollars annually to the poorest countries in the financial years 2020-21 and 2021-22, rather than the $27 billion dollars previously envisaged. As a result, the latest replenishment, IDA20, took place one year early.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
May I say what a pleasure it is to have the right hon. Gentleman back as a Minister? We always liked him when he was in the role previously. There obviously is life after death, politically.
I used to chair a committee of the World Bank. I am a bit worried, because the Minister is saying this after a weekend when we heard that some international aid money is going to be spent on work with poor families within the United Kingdom. When I worked for the World Bank, some of the match funding came from pretty dubious sources such as big oil companies; is that still the case?
Mr Mitchell
It is a pleasure to see the hon. Gentleman in his place, because I know how much he did for the World Bank and Britain’s relationship with it. The reports at the weekend were about spending on refugees in particular, principally from Ukraine but also from Afghanistan, Syria and Hong Kong. In the first year of their residence here, it is entirely in accordance with the principles that govern the official development assistance rules—in other words, the development spend—that the first year’s expenditure should be covered. As the hon. Gentleman implied, that of course imposes considerable strains on the development budget and leads to spending in the UK, but we all accept that it is perfectly legitimate public expenditure within the definition.
Following negotiations throughout 2021, the UK and other donors committed to a record-breaking $93 billion replenishment in December. As announced to Parliament through a written ministerial statement earlier this year, the UK pledged £1.4 billion, positioning us as the third largest donor after the US and Japan. That was a 54% reduction on our pledge to the previous replenishment round, IDA19. This is in line with our international development strategy, which set out how we will rebalance the aid budget towards the bilateral programmes, thereby giving us greater control and flexibility over how taxpayers’ money is spent.
Since the replenishment was agreed in December, Vladimir Putin’s illegal invasion of Ukraine has had a devastating impact on developing countries across the globe, which face growing debt, food and energy crises. As a result, extreme poverty is rising for the first time in two decades. Once again, IDA is responding flexibly, using financing from the UK and other donors, to support the poorest countries to respond to rising inflation and food insecurity.
The World Bank is providing $36 billion this year as part of its wider global crisis response package. For example, over the last few months, IDA has financed social protection payments to support over 400,000 households in Somalia who face food insecurity. It is helping half a million households in Ethiopia to cope with drought by providing livestock feed, water and veterinary drugs. IDA has also provided an additional $1 billion of exceptional financing for Ukraine without diverting funds from the poorest countries.
The UK can be proud of our role as a major donor to IDA. We have shaped its strategic direction and priorities to align them with our own, and ensured that IDA resources have the best possible impact on the world’s poorest people. That was confirmed by the review into IDA by the Independent Commission for Aid Impact—ICAI—earlier this year. It found that the UK was the most influential donor, that IDA represented excellent value of money, and that our priorities were well aligned.
In the IDA20 replenishment negotiations, the UK secured commitments from the World Bank to use IDA’s balance sheet to increase the overall volume of financing by an additional $14 billion, reduce learning losses in 20 countries, with a particular focus on girls’ education, support all IDA countries to better prepare for and respond to future crises, expand the provision of core services to people with disabilities, and strengthen disability statistics in 34 countries.
Mr Sheerman
My daughter, who works for the International Rescue Committee, has just come back from Somalia. She is very worried that so much aid is not getting to the people who really need it, particularly people with disabilities. I am keen to understand whether we are ascertaining that aid gets to the right places at the right time.
Mr Mitchell
The hon. Gentleman’s daughter is right, and all of us are horrified and extremely worried about what is happening in the horn of Africa, where the dreadful spectre of famine looms, and indeed has started in some parts. There is no question about that. He will understand that it is 10 years since I last stood at the crease, but I am pretty confident that the quality of development spending over those last 10 years has increased. He is quite right to put his finger on the importance of getting humanitarian aid speedily to the people who most need it. Without it they will perish. I am afraid that there is no better example of that than the horn of Africa at this time.
IDA will also help to deliver the Glasgow climate pact by using 35% of its finance to tackle climate change, and by supporting 30 countries to develop long-term strategies to transition towards net zero. Since its creation, there has been strong support across the House for IDA, and recognition of the positive impact it has had on the lives of millions of the world’s poorest people, including people from marginalised groups, such as those with disabilities, women and girls.
The other draft order permits the UK Government to provide an additional £119 million to support IDA’s participation in the multilateral debt relief initiative, which, through the G8 presidency, the UK played a leading role in creating in 2005. The multilateral debt relief initiative enables the World Bank and the African Development Bank to cancel debts that were owed to them by countries at the time through an agreement that donors would compensate the banks for the loss of repayments. The order allows the Government to continue to make good on that commitment by contributing £119 million between 2031 and 2033.
IDA is an important development partner; it tackles global challenges that the UK cannot address alone. The contributions covered by these two orders will deliver UK foreign policy and development objectives in countries with the greatest need, and they are an important part of this country’s commitment to the world’s poorest. I commend the orders to the Committee.
Mr Mitchell
I welcome the comments made by members of the Committee. The IDA is an important partner in delivering life-changing support for the poorest and most vulnerable people around the world. It increases the reach and scale of UK aid spending, and represents considerable value for money.
I start by responding to the hon. Member for Birmingham, Edgbaston, with whom I work very closely back in Birmingham. Indeed, we co-chair—or I did until last Thursday—the all-party parliamentary group for levelling up Birmingham. I wish her every success in that work, and I will be supporting her all the way. She made the very good point that this is not a Conservative or Labour policy, but a British policy. Many people in Britain are immensely proud of the good that Britain does in some of the poorest and most wretched parts of the world. The policy is not owned by any one party; it is something that is of value to all of us, and we all strongly support it.
The hon. Lady asked me a number of questions. I have identified seven, but if I miss anything out I will certainly respond to her by letter. She asked how much debt has been cancelled during this period. The figure is £3.2 billion, of which the UK has paid £1 billion; if I am not correct, I know that an official near me will shake their head. The total value of the multilateral debt relief initiative, including all the MDBs, is £43.3 billion. She referred to the “brain drain” from dismantling DFID, and quoted a number of things that I have said. I am pleased to assure the Committee that collective responsibility is not retrospective, and so I cannot be held to account by the Government for what I have said in the past.
The hon. Lady made several extremely good points, and I am very happy to take responsibility from now on for the work that the Government do on development. She mentioned the importance of improving the quality of IDA. I will write to her on that point, because she is on to an extremely good issue; it would be good for me to be able to come back to her and set out precisely how IDA has improved since I last had responsibility for this matter. She asked whether the spending of IDA is still focused on the poor, and I can assure her that it certainly is. IDA is still providing the vast majority of financing to Governments—50% of it is spent in Africa, and 40% is spent in fragile states. I hope that that reassures her.
The hon. Lady also asked whether I accept ICAI’s recommendations. I set up ICAI 12 years ago, and it is a brilliant organisation. It is the taxpayer’s friend. It often causes Ministers and civil servants discomfort, but that is its purpose. It is there to stand up proudly and independently, and to confirm whether the expenditure is in the best interests of the taxpayer and is doing what it says on the tin. I have enormous respect for ICAI, which is an extremely good organisation, and I hope that its power will continue to increase.
Anthony Mangnall (Totnes) (Con)
I am delighted to hear my right hon. Friend make the case for ICAI. As he has professed his keenness on the organisation, does he support ICAI’s recommendations on preventing sexual violence in conflict and the need for us to do more for women and girls through our development policy?
Mr Mitchell
My hon. Friend has done a lot of work in this area, for which he deserves both thanks and credit. The answer is that I do support those recommendations. It is a very good report by ICAI, and I very much support what it has said.
There were two more questions from the hon. Member for Birmingham, Edgbaston. She is absolutely right to say that we are providing substantially less money, but we have been right at the top of the list in the past. Indeed, before 2010, we were the largest provider at the IDA replenishment. Our contribution was scaled back a bit then, because my view was that it was too much. It has now come back to a more European level, and it is still larger than the amounts in the replenishment that France and Germany have allocated. I hope that the hon. Lady will accept that this is a prudent way to adjust a budget that has been diminished by the reduction in gross national income, and by the decision of the Government to lower the amount temporarily from 0.7% to 0.5%. It does not in any way express a diminution in the respect that we hold for the work of the World Bank and IDA; indeed, that work is absolutely brilliant. IDA is one of the only organisations where, through a trust fund mechanism, it is possible to pursue very direct needs and requirements and to bring the might of the World Bank to bear on that in a multi-country way. I hope that I have dealt with the majority of what the hon. Lady said.
I thank the hon. Member for East Dunbartonshire for her remarks, and I hope that I have covered them in what I have said already. I thank my hon. Friend the Member for Gloucester for his kind words, but also for reminiscing about 36 years ago, which was just before I was first elected to the House of Commons. It shows that we are both older than we look. He is right in saying that the brilliant work that the high commission in Kenya is leading is very important, and I pay tribute to the staff for that and for the important work that they do in the region. He talked about the structures, but I do not think that today is the time for me to respond to that. However, he also advocated the one-platform approach, with which I strongly agree. Although that was there anyway, it would, of course, have been strengthened by the merger. The grip on that, which is now quite rightly exercised by the high commissioner or the ambassador, is absolutely right.
I come finally to my right hon. Friend and predecessor, the Member for Chelmsford. I pay tribute to her for the work she did in this job. Of course, it came as no surprise to me, when I came to the Department, to hear what a fantastic contribution she made during her time there. That is because, as she rightly said, many years ago she and I went to Rwanda to learn at first hand what works and what does not work in international development and to see what was happening in a very poor country that had had the most traumatic and dreadful past and how it was pulling itself up by its bootstraps and making changes to its social infrastructure, educating girls and boys and developing healthcare. She and I learned valuable lessons from that trip, I hope.
I am very grateful for what my right hon. Friend has said today. She rightly pointed out the importance of focusing on the poorest. She talked about the importance of focusing on debt, and gave good examples of why that was so. She talked about the importance of innovation and expanding the balance sheet of what the World Bank does, so that, at this critical time, it can go even further.
It is 10 years since I was last the British governor at the World Bank—it is a position that I understand I have now taken up again. I give the Committee this assurance: I will seek to ensure that the World Bank continues the magnificent work it has done in the past and that Britain’s diminished replenishment does not affect our absolute commitment to the noble goals and aspirations that the World Bank epitomises.
Question put and agreed to.
Resolved,
That the Committee has considered the draft International Development Association (Multilateral Debt Relief Initiative) (Amendment) Order 2022.
Draft international Development Association (Twentieth Replenishment) Order 2022
Resolved,
That the Committee has considered the draft International Development Association (Twentieth Replenishment) Order 2022.—(Mr Andrew Mitchell.)