G8 Summit

Baroness Jenkin of Kennington Excerpts

Thursday 13th June 2013 Lords Chamber

[Baroness Jenkin of Kennington]

My Lords, I, too, thank the noble Lord, Lord Trimble, for initiating this very timely debate. As we all know, the priorities for the G8 are to push for practical action to achieve fairer taxes, greater transparency and freer trade. These are essential actions in shaping the rules that characterise a fair and open global economy, ensuring that both developed and developing countries benefit. Like others in the debate, I congratulate the Prime Minister and his team on their hard work and commitment in driving the G8 agenda.

G8 summits have sometimes been seen as places where western nations have pointed the finger at developing countries, but this meeting is also about the G8 countries getting their own house in order. To make a difference to developing countries, it is vital to reach agreement on things such as tax transparency and trade. This will allow developing nations to know, when developed nations go into their country, what they are paying for the contracts, what those Governments are receiving, and what the real benefits are for the people of those nations.

As we have discussed, fairer taxation will be a key priority at the talks. It is important that we get political support for ensuring that global tax rules are fit for the 21st century. As the recent hoo-hah has shown, it cannot be acceptable for companies to create shadow shell companies offshore, effectively meaning that neither the developed nor the developing countries get the benefit from tax revenue that should come from profits.

If these companies are not paying tax on their profits, developed and developing nations cannot provide the public services and support that are needed. We do not underestimate the complexities and challenges, but it must be a key part of what we are doing at the G8 to say to companies, “You have to be transparent about who owns you, where you are owned and what tax you are paying”. As my noble friend Lord Brooke pointed out, research suggests that Jersey is now the world’s largest exporter of bananas. We know that that is not true and needs to be sorted out.

Greater transparency of taxation must also be accompanied by greater transparency of other financial flows. The UK, through DfID, has led the way in becoming the world’s most transparent aid donor. Through its role in the international aid transparency initiative, DfID is ensuring that UK taxpayers, and citizens in developing countries, will be able to track funds right through the aid chain to the point of delivery, ensuring that countries can better manage the aid that they receive, plan effectively, co-ordinate better and, most importantly, make sure that the money gets to where it is supposed to go.

Three of the other seven G8 countries—the US, Canada and Germany—are now also publishing their aid transactions, through the initiative. We hope that the remaining G8 countries will also prioritise the information needs of developing countries, and fulfil these transparency commitments.

Accompanying progress in aid, the UK and French Governments have made a joint agreement in the run-up to the G8 which will mean that both Governments will apply for formal candidacy of the extractives industry transparency initiative, which was set up to help tackle corruption, to improve the way revenues from oil, gas and minerals, are managed, and to make sure that people across the world share in the economic benefits of the natural resources in their country. I am proud that our Government are playing a key role in ensuring that people benefit fairly from the natural resources of the country in which they live. As the noble Earl, Lord Listowel, pointed out, mineral wealth in developing countries should be a blessing, and not, as so often in the past, a curse.

Finally, on transparency, last week the UK Government took a further step in enhancing transparency through the launch of the Lough Erne G8 Accountability Report. The G8 has never before produced such a comprehensive accountability report, showing it being open about where it has delivered against its commitments, and where it needs to do more. The results rate progress as good in six sectors: economic development; health; water and sanitation; food security; governance; and peace and security. It is satisfactory in three others: aid and aid effectiveness; education; and environment and energy. This report demonstrates that the G8 has made progress on its commitments but that there is more to do. It is well worth a read.

Greater transparency and a fairer tax system will go a long way to creating a fair and open global economy, but nothing can match the power of freer trade in improving people’s lives. The EU and the US together make up about a third of all global trade. As the noble Lord, Lord Trimble, said in his opening speech, a deal between these two regions could add—and we could discuss the figures—a huge amount to the EU economy alone. Trade between developing countries and within Africa is growing, and we should encourage that work further. This means continuing to support the multilateral system, and working through the WTO to agree a deal to sweep away trade bureaucracy. That alone could be worth huge amounts of money—$70 billion—to the global economy, and help trade to flow freely across the world.

I, too, highlight the work and achievements that have already happened as part of this year’s G8 agenda. On Saturday, as the noble Lord, Lord Bates, remarked, the Prime Minister held a high level meeting entitled, Nutrition for Growth: Beating Hunger through Business and Science. Undernutrition is a chronic lack of nutrients that can result in death, stunted physical development, and a lower resistance to illnesses in later life. It is the biggest underlying cause of death in those aged under five in the world and is responsible for 8,000 child deaths each day. It stunts the growth of children, reducing their potential, undermining their adult earnings by up to 10%, and in some countries reducing the size of the economy by 11% as a result.

The Global Nutrition for Growth Compact was endorsed by a total of 90 stakeholders, including 24 Governments and 28 business and science organizations. It secured new funding of up to £2.7 billion to tackle undernutrition up to 2020. This money will lead ultimately to enhancing the lives of those most in need: improving the nutrition of 500 million pregnant women and young children; reducing the number of children under five who are stunted, by an additional 20 million; and saving lives of at least 1.7 million children by preventing stunting, increasing breastfeeding, and better treatment of severe and acute malnutrition. As the noble Lord, Lord Bates, said, if nothing else comes out of this summit, that is a huge achievement.

This year’s G8 agenda is ambitious, but it is an agenda that has the potential to shape the rules leading to a genuinely fair and open global economy. Healthy, educated populations in poor countries will lead to poverty reduction and ultimately to trade with us here in the UK. We must ensure that all G8 countries work together over the next few days for the benefit of both developed and developing countries around the world.