Cross-Government Prosperity Fund

David Gauke Excerpts

Monday 24th April 2017 Written Statements

[The Chief Secretary to the Treasury (Mr David Gauke)]

I wish to update the House on how the Prosperity Fund has supported global and UK prosperity in its first year and its plans for future years. As we leave the European Union the Prosperity Fund is a vital part of how the UK will be a global, outward-looking nation that is confident on the world stage and has strong, fruitful relationships with countries around the world.

On 21 July 2016 I informed the House of the aims and objectives of the £1.3 billion Prosperity Fund (HCWS104) and a short paper was published on gov.uk that details how the fund operates. The fund uses primarily Official Development Assistance (ODA) resources to promote economic reform in ODA-eligible middle income countries, which are home to 70% of the world’s poor, contributing to a reduction in poverty. Shared prosperity is a key part of the UK aid strategy. The fund has a secondary benefit of opening up opportunities for international, including UK, business.

Projects are focused on countries and sectors identified through cross-Whitehall economic analysis as being those areas with large numbers of people living in poverty, potential for inclusive growth and where UK expertise can make a real difference.

As set out in the fund’s spending round 2015 settlement letter, the fund is 97% ODA with a small non-ODA allocation. ODA projects must meet the primary purpose to support poverty reduction and promote sustainable economic growth.

The strategic direction for the fund is set by a cross-Government Ministerial Board supported by a director level portfolio board composed of representatives from key departments. This structure reflects the cross-Government nature of the fund and ensures that programmes deliver value for money and support Government objectives. Accounting Officers remain responsible for ensuring the value for money of programmes funded by the Prosperity Fund.

The Ministerial Board has met nine times since January 2016. These regular meetings have allowed it to respond promptly and flexibly to changing circumstances—for example endorsing increased funds to trade related projects after the EU referendum.

The Prosperity Fund has continued to refine its systems and processes throughout the first year in order to ensure that it succeeds. It has acted on positive feedback and helpful advice from the Infrastructure and Projects Authority, the National Audit Office, and, most recently, the Independent Commission for Aid Impact (ICAI).

We welcome this external scrutiny as an opportunity to test the portfolio and management systems with independent experts. As stated in our formal management response to the ICAI review, the Prosperity Fund accepts and is implementing their recommendations, many of which it had already identified through its own internal reviews.

Year one of the Prosperity Fund was designed as a transition year. The Ministerial Board allocated £55 million of ODA to projects in a range of ODA eligible countries including China, India, Brazil, Mexico, Colombia, Indonesia, Nigeria and South Africa and in areas such as financial services, infrastructure, business environment, energy, and trade and regulation. It also allocated £5 million of non-ODA in support of Government prosperity objectives in both ODA-eligible countries and developed markets.

In South Africa, electricity shortages have cut GDP by 2% in recent years. The Prosperity Fund piloted an innovative British technology to help address this, enabling local government, universities, businesses and utilities to save a minimum of 15% on their electricity consumption.

In Brazil, the work of the Prosperity Fund has been recently celebrated in national media as an example of the importance of international co-operation to tackle transnational bribery and reduce corruption, and has helped to shape the recently approved “10 Measures against Corruption” law in Brazil.

The Prosperity Fund financed the former Prime Minister’s anti-corruption summit in May 2016 which brought together world leaders, business and civil society to agree measures to reduce corruption. The fund has also placed the UK at the forefront of delivering international commitments to tackle corruption such as setting up the International Anti-Corruption Co-ordination Centre, financed by the Prosperity Fund and hosted by the UK’s National Crime Agency.

The fund is committed to meeting the UK Government transparency commitments on ODA spend. Details of all year one programmes will be released on gov.uk in mid 2017 and an annual report on the first year will be issued by autumn 2017.

The majority of the Prosperity Fund will be allocated to large, high impact, multi-year programmes. To date 18 such programmes have been endorsed by the Ministerial Board and are now being developed by UK Government Departments including HM Treasury, the Department for International Development and the Foreign and Commonwealth Office. Many other Government Departments are involved in the design and delivery of individual programmes.

These programmes include country specific work in South America and Asia, regional programmes in South East Asia, and multi-country, sector specific programmes on trade reform, insurance, education and anti-corruption. The focus of all programmes is high impact and value for money. We expect the first of these to launch later in the year.

We will refresh our gov.uk page with more information on the fund following this update and will continue to develop these pages as the fund progresses, including with information on programmes as they launch.

[HCWS608]