Brexit: Least Developed Countries

Lord Collins of Highbury Excerpts

Thursday 16th November 2017 Grand Committee

[Lord Collins of Highbury (Lab)]

My Lords, I too thank the noble Earl for initiating the debate. Over the weeks and months ahead we will have plenty of opportunity to debate even further. We will have more time.

A cliff-edge Brexit will have catastrophic consequences. As we heard yesterday in your Lordships’ EU Financial Affairs Sub-Committee, JP Morgan’s contingency plans include beefing up its operations in Ireland, Germany and Luxembourg in preparation for a hard Brexit. We see from reports this afternoon that that seems quite possible. There is no doubt that many in the development community fear the consequences of a cliff edge and face the need to make contingency plans. What discussions have DfID had with NGOs to address such fears? What will be the position of INGOs receiving funds from DfID on funding from DfID and the EU post Brexit? Will British NGOs have to register elsewhere, such as in Scandinavian countries, to secure and obtain EU funding?

According to the Minister, in Hansard vol. 783,

“the UK contributed £935 million in overseas development assistance to the EU budget in 2015 through core funding. In addition, DfID contributed £392 million to the European Development Fund”.—[Official Report, 4/7/17; col. 783.]

That is significant, and in DfID’s multilateral development review the EDF was deemed among the most effective of any multilateral organisations. The noble Lord argued that decisions on whether we want to contribute or stay out of the EDF will be made as part of the process of exiting the EU, asserting,

“at least we have a choice”.—[Official Report, 4/7/17; col. 783.]

Does that mean a choice not to support the most effective programmes—a choice not to augment our priorities through partnership in the EU?

I welcome the Government’s approach to trade policy towards developing countries, released by DfID, but it is not as generous as it may appear. As we have heard, the strategy addresses everything but arms agreements, which allows for the UK to negotiate agreements unilaterally, but it does not address the economic partnership agreements which are vital to many developing countries in terms of trade going into the UK and the EU. How are the Government going to address this issue in negotiating Brexit? Are we meant to be satisfied by the assertion that they will continue until Brexit? What about the requirement for planning, the longer term commitments, the 10-year plans? All we hear from the Government is that the details will be handled as part of the exiting EU strategy. We are told the UK strategy is a cross-government, cross-Whitehall approach about where our priorities should be. Is DfID there when crucial decisions are being made?

Under EU law, it is required that trade policy promotes sustainable development. Liam Fox commented that the Government are committed to helping developing countries grow their economies and reduce poverty through trade. However, the recently published Trade Bill has been described as a missed opportunity by the Fairtrade Foundation for the Government to place poverty reduction at the heart of future trade deals and to ensure open and democratic scrutiny of future trade negotiations.

We are told that the UK is committed to ensuring that when companies source from developing countries they do so in a way that protects the human rights of workers and their health and safety—we heard this in the debate from the noble Viscount—but I would like to hear from the Minister what steps the Government are taking to ensure that forthcoming deals being negotiated by his colleagues in the Cabinet are properly assessed to avoid unintended knock-on damage to poverty reduction and human rights.

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[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, I join with others in paying tribute to the noble Earl for securing this debate and for the way he has set the scene. I particularly thank him for his good wishes to the new Secretary of State, Penny Mordaunt. She has already addressed staff at DfID stressing her priorities, one of which will resonate with many in this Room—disability. She was Minister for Disabilities at DWP, an area I know well and on which we are already doing a great deal of work. We can look for that to be enhanced in the future.

The focus of this debate is on the implications of exiting the European Union; our trading relationships with developing countries; our future development partnership with the EU; and annual UK development assistance. On the sums referred to by the noble Lord, Lord Collins, this morning we had the timely publication of Statistics on International Development 2017, which gives the latest figures for 2016. These show that the annual development assistance channelled through the EU was £1.5 billion in 2016. This comprises 15% of the EU development funding and consists of contributions to EU Budget Heading IV instruments of £1.031 billion and to the European Development Fund of £473 million.

The noble Lord, Lord Collins, asked what arrangements there might be going forward. We will continue to work closely and in parallel with the EU in many areas. I will come on to these later and particularly touch on the Sahel. However, there are structural changes that the EU will need to make. For example, the European Development Fund would not allow a non-member state to be a member. Although I accept that it is a well-performing fund, it would need to be opened up and made available to non-members if the UK was to continue to be part of it.

The EU’s development priorities are closely aligned with the UK’s—indeed, they have to a considerable extent been shaped by the UK during our EU membership. However, where the EU currently provides development assistance to more than 140 countries, UK aid is focused on 32 priority countries—the noble Earl referred to this, saying that where aid is needed most is in the difficult areas, in the tough areas. My noble friend Lord Eccles referred to the mission of CDC as being to work in the most difficult and challenging areas. That is where we focus our effort.

I join the noble Lord, Lord Jay, in paying tribute to the work done by British NGOs around the world. One of the most shocking statistics we see is that for the deaths of humanitarian workers. Sadly, in many conflicts humanitarian workers are targeted for delivering humanitarian aid. We should honour the sacrifice that so many of those NGOs make. I was asked by the noble Lord, Lord Collins, whether I had met the NGOs. I had a round table recently with the major NGOs that work with DfID, including Bond, where we discussed this very issue. I have relayed its concerns and we are working with the Department for Exiting the European Union to ensure that our world-class NGOs are not disadvantaged by any changes.

The question of how much will be reallocated to DfID is subject to agreement with the Treasury. DfID has a tried-and-tested resource allocation process that has enabled us to deliver the Government’s target of 0.7% of GNI for five consecutive years. I am confident that we would be able to absorb any additional funds allocated to us. Of course, it would be premature to announce detailed spending plans, not least because there are significant areas of uncertainty, such as the point at which the UK will stop making contributions to the EU—the noble Lord mentioned that many such contracts are long-term engagements. That needs to be fully clarified. Another area is how the EU will respond once UK funding ceases; specifically, whether member states will increase their ODA contributions to compensate for a 15% reduction in the EU’s development budgets. Finally, it is uncertain what the UK’s ODA budget will be in future years, as it is linked by law to gross national income, which by its nature fluctuates.

The noble Lord, Lord Hughes, touched on power supply, which is a crucial element. Just as with economic development in this country the maxim is that investment follows infrastructure, so it is true everywhere else. Where there is investment in infrastructure, it acts as a catalyst for investment. As my noble friend Lord Eccles mentioned, it is a prime reason why we are increasing the resource available to CDC. In some of the areas I work on, I am struck by how many incredible solutions—in education, for example—can come through use of tablets and computers, yet the absence of electricity makes them a non-starter. In economic development, mobile payment technology is liberating parts of east Africa through the TradeMark East Africa project, but some people are missing out simply because they do not have electricity. Therefore, the advance of solar power, particularly small-scale solar power, is revolutionising what we can do in those areas.

I remind noble Lords of our recent commitment to remain the largest donor to the International Development Association, which in its next cycle will double the resources going to fragile states, as well as of our decision significantly to scale up our contribution to CDC to support its job-creating investment activities. Together with our multilateral reform efforts, this will deliver a higher volume and quality of resources to the least developed countries.

We have incredible expertise here, including former Permanent Secretaries—I think that the noble Lord, Lord Jay, was at the Foreign Office at the time of the incredible Gleneagles agreement, which was certainly a landmark under the previous Labour Government. Our longest-serving Overseas Development Minister, my noble friend Lady Chalker, talked about close working between the FCO and DfID—a number of noble Lords, including the noble Viscount, Lord Craigavon, mentioned this as well. For the first time, we now have joint Ministers between departments in Rory Stewart and Alistair Burt. We have new cross-Whitehall funds: the Conflict, Stability and Security Fund; the prosperity fund; and the empowerment fund. They are distributing aid and, together, forcing that effort of co-ordination. I would like to be able to say, hand on heart, that the Addis Ababa experience will not be repeated, but I think the chances are reduced, especially now that when you visit a lot of these missions, we are co-located with the Foreign Office in buildings. That seems a very sensible way forward.

Turning to the future, it is in the UK’s interest that the EU remains a strong development partner after we have left, and that we work coherently on helping the world’s most vulnerable. On 12 September we published the future partnership paper referred to by the noble Viscount, Lord Craigavon, and the noble Lord, Lord Collins. In it, we expressed our desire for future co-operation with the EU that goes beyond existing third country arrangements, building on our shared interests and values. We look forward to formal discussions in phase 2 of the negotiations. In the meantime, as a member state, we are engaged in discussions with the European Commission and other member states on a successor to the Cotonou agreement. Through those discussions, we are pushing for more flexible EU development instruments after 2020 to allow greater co-operation with non-member states.

I turn now to a point made by my noble friend Lady Chalker and the noble Lords, Lord Jay and Lord Jones—the situation in the Sahel. The UK is one of the largest donors to humanitarian relief in the Sahel. Between 2015 and 2018, the UK will provide nearly £190 million of humanitarian assistance to support over 2.3 million people affected by conflict. To the noble Lords and the noble Baroness who spoke on this, perhaps the most encouraging part of this update is that, given the ongoing development of the humanitarian political challenges faced by the region, it is significant that the UK will have a new, permanent office in Chad before the end of the year, comprising a DfID/FCO joint mission. I hope noble Lords will be encouraged by that.

I want to make one point to the noble Lord, Lord Jones, on overseas territories. Of the £62 million that we provided immediately for those who suffered Hurricanes Irma and Maria, only £5 million was ODA-eligible, but that did not stop us—quite rightly, as the noble Lord urged—from recognising our responsibilities under law and under the UN charter to care for and protect those important citizens in the overseas territories. The UK Government share a responsibility with overseas Governments to ensure the security and prosperity of British citizens living in those territories. Part of the UK’s support to overseas territories is provided through the EU. The European Commission has already assured our overseas territories that they will receive their full allocation from the EDF.

I am conscious that time is running out, but I know this issue is of great concern. Perhaps I can close with some good news that I have heard through the usual channels: an additional debate in the name of my noble friend Lady Nicholson on the economic development strategy of the Department for International Development has been secured next week; on Wednesday, I think.

[Lord Collins of Highbury]

It might be on Monday the following week.

[Lord Bates]

The usual channels are working in their wonderful way. It may indeed be on Monday the following week—yes, the usual channels have just informed me that it will be on the 27th. I hope that will be another opportunity to follow up on this, but I thank the noble Earl again for an informed, interesting and helpful debate.