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

Preet Kaur Gill Excerpts

Monday 31st October 2022 General Committees

[Preet Kaur Gill (Birmingham, Edgbaston) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Sharma. I congratulate the right hon. Member for Sutton Coldfield on his appointment, and I look forward to working with him. There is much that we agree on, but I will certainly still be on his case and hold him to account. I am grateful to him for outlining the draft International Development Association orders and I welcome the support they indicate for tackling poverty and disease, giving millions the opportunity of an education and tackling climate change in line with the Paris agreement.

Global co-operation has never mattered more: the world reels from the pandemic; we face energy, debt and food crises; the climate emergency is wreaking havoc; and 100 million people are now displaced around the world. Over the past 62 years, the International Development Association has provided nearly half a trillion dollars of investment in 114 of the world’s poorest countries. The technical assistance and grant and concessional finance that IDA provides has been vital for those countries, which are unable to borrow on global markets to develop their economies and lift their populations out of poverty. As a result, many borrower countries have since graduated from debt distress and gone on to be real success stories of the world. Our country can be proud of the role it has played in supporting that historic progress, where many hundreds of millions more human beings have been able to flourish and live good lives.

It has been 18 years since a quarter of a million people marched on the streets of Edinburgh as part of the Make Poverty History movement. I know that the right hon. Member for Sutton Coldfield was a strong supporter of that campaign in the run up to the historic Gleneagles G8 summit. It was an outstanding example of what British leadership on the world stage can achieve, and one of the proudest legacies of the last Labour Government. Since then, the multilateral debt relief initiative has enabled us to make substantial progress toward the global goals. It has had a transformative impact on many poor countries, freeing up their Governments to invest billions in global goods, such as health systems, climate action and education, that would otherwise have been spent servicing debts. Will the Minister tell us how much debt UK support has enabled IDA to cancel over the recent accounting period?

Much of the progress we have made in recent decades is at risk of reversal. The pandemic and Putin’s disastrous war in Ukraine have knocked us backward. Some 263 million more people will crash into extreme poverty this year. In times of crisis, the British public have stepped up, whether by helping neighbours through covid or opening their wallets and homes for Ukrainian refugees, and they expect their Government to play their part too. The aims of the 20th IDA replenishment are to support poor countries to recover and rebuild from the pandemic, while fostering greener, more resilient and more inclusive development. We strongly support these aims, so we will not seek to divide the Committee on these orders.

However, I must raise several issues of concern with the Minister, not least the impact of his Government’s decision to reduce the UK’s contribution to the International Development Association by half. The decision to reduce our contribution by £1.5 billion was first reported in March, as part of the former Foreign Secretary’s strategy to divert aid spending from multilateral to bilateral projects. This is less than half of the £3.1 billion provided in 2020, and the lowest for 20 years. The international development strategy, when it was finally published in May, confirmed this tilt away from our historical strengths in poverty alleviation toward transactional objectives and short-term political self-interest.

Since then, we have had two more Prime Ministers and two new Development Ministers, and these orders appear to have been the last thing that the hon. Member for Chelmsford did before she returned to the Back Benches. Can I check with the Minister that this is still his policy? With specific regard to the decision to take from the budget’s multilaterals, I remind the Minister of his comments in response to the international development strategy. He said this was a decision that the former Foreign Secretary

“should never have had to make”.—[Official Report, 6 July 2022; Vol. 717, c. 921.]

He went on to make some good points that I agreed with, because they are points that I have made time and again.

The shift to bringing more programming in-house is a huge strategic call, because it puts significant additional pressures on British international development expertise to design and deliver effective multimillion-pound programmes. Yet, since this Government’s disastrous decision to abolish the Department for International Development, we have seen a brain drain of development expertise from Government. This has been bad for transparency, for British influence and impact and for securing value for taxpayers’ money, as the appalling mess that has been made of the FCDO budget this year shows. As the right hon. Member for Sutton Coldfield himself said, the merger has been an absolute disaster. He said,

“Most importantly, the top 100 people who were responsible for driving forward the Government’s agenda in DFID have gone. Of course they have, because they have been headhunted by the international system, whether in New York, Geneva or the charitable sector. They have gone because they see a Government who do not recognise or appreciate that extraordinary skill that existed in DFID. The Government are now faced with a large budget but a diminishing level of expertise.”—[Official Report, 6 July 2022; Vol. 717, c. 923.]

I ask the Minister how he expects to secure value for taxpayers’ money when this Government have vandalised the very expertise they need to take on this increased responsibility. Does he dispute the findings of his Government’s own multilateral development review, which found that funding through multilaterals can deliver more bang for buck, reduce admin costs to the taxpayer and reach places the UK itself cannot? He may be aware that in that review the International Development Association received top marks from this Government, both for its strength as an organisation and its alignment with the UK’s own policy objectives. Out of 38 multilateral agencies, only investments in the World Bank and the Global Fund achieve that. However, if rumours are true, we are about to decimate our contribution to both those organisations.

Even the explanatory memorandum to the replenishment order we are discussing explicitly says that IDA is

“well-aligned to UK development priorities”

and

“one of the most important partners to the United Kingdom for achieving its poverty reduction aims”.

It acknowledges that

“for every £1 of grant finance provided by the United Kingdom, the Association will provide around £3.95 support to borrower countries”.

That was echoed in the Independent Commission for Aid Impact’s review of IDA earlier this year, which found it to be in alignment with UK priorities. The review said IDA’s ability to generate significant amounts of funding from other sources, and the scale and reach of its operation and expertise, provided good value for money. Could the Minister explain why this Government are targeting IDA for cuts while no other G7 economy is reducing its contribution in that way?

IDA’s contribution to global development is great, and I praise its work during the covid pandemic and the speed of its response, especially in terms of funding social protections for those who lost livelihoods and funding vaccines for low-income countries, which was essential. We do not seek to divide the Committee on the replenishment order, as we recognise the importance of IDA’s work. However, I would like to request further information from the Minister on how the UK Government are improving the management of IDA, ensuring that it maximises its poverty reduction efforts and works to strengthen its focus on climate action. How will he ensure that we remain a strong and influential presence at the World Bank while reducing our contribution?

What are the Government doing to ensure IDA is laser-focused on helping the poorest and most fragile countries? As ICAI has recommended, will the Minister confirm that he will not reduce the engagement and technical expertise that the UK invests in its relationship with IDA, so that we can remain an influential presence? Does he accept ICAI’s recommendations of increased accountability for the “leave no one behind” commitment and compliance with agreed standards for environmental and social protections?

One area where we would like to see more progress is IDA’s dependence on lending to Governments, which means many valuable projects in fragile countries get stuck due to concerns about corruption. It has meant that while IDA disbursements to non-fragile countries have doubled in 15 years, support to some of the most fractured, conflict-driven countries has grown much less. Does the Minister agree that IDA can do more to diversify the delivery partners it works with to ensure that projects in fragile countries actually reach the people they are meant to?

As Labour raised during the previous replenishment, we remain concerned about the declining development impact of the International Finance Corporation and the net loss it has incurred to the World Bank in recent years. What representations have Ministers made about the decision to subsidise underperforming IFC projects? Given that the IFC as a whole is focused on larger formal sector firms in richer countries with easier access to market finance, does he share my concerns that these investments represent a relatively ineffective approach to poverty reduction, particularly during the downturn of the pandemic?

Finally, I was profoundly disappointed to read that the new Prime Minister has decided not to attend COP27 in Egypt as we hand over our presidency. It is a crucial opportunity to meet other global leaders, see to fruition some of the good work started in Glasgow last year, and galvanise ambitious global action to tackle the issue that will define this century. It is an issue we all have a common interest in fighting and something that this Government have called their No. 1 international priority. Can I ask the Minister if that remains the case? If so, will he accept ICAI’s recommendation to advocate for a stronger focus on climate action at IDA if the Government are to meet their own climate ambitions?

The next Labour Government’s approach to international development would underline the importance of tackling global poverty, reclaiming the UK’s past leadership in international development and within the multilateral system and bringing Britain back to the world stage as a trusted partner. For Labour, the power of co-operation is unmistakeable: we can choose to turn to each other when confronted with global crisis, rather than inwards. We can choose to renew and update the world’s approach to international development, learning from each other.

We can, and must, address the world’s biggest challenges together. The International Development Association has played a big part in helping us achieve that goal over many years, and has been a very effective vehicle for doing so. The Labour party will not oppose today’s orders, but I reiterate my concern about the decision of this Government to retreat from the multilateral system, doing such damage to Britain’s reputation and influence on the world stage.