Draft International Development Association (Multilateral Debt Relief Initiative) (Amendment) Order 2022 Draft International Development Association (Twentieth Replenishment) Order 2022

Barry Sheerman Excerpts

Monday 31st October 2022 General Committees

[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.

--- Later in debate ---

[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.