APPENDIX
THE GOVERNMENT'S RESPONSE TO THE INTERNATIONAL DEVELOPMENT
COMMITTEE'S SECOND REPORT OF 1997-98: THE WHITE PAPER ON INTERNATIONAL
DEVELOPMENT
Memorandum from the Secretary of State for International
Development
The Government welcomes the Report from the International
Development Committee in Session 1997-98 on the White Paper on
International Development. Detailed points raised in the Committee's
Report are dealt with below.
INTERNATIONAL DEVELOPMENT
AND WHITEHALL
Paragraph 1: Recommendation 1
International development must be at the centre of all
government policy, not just a well-meaning afterthought. It is
an essential part of responsible planning for the future of our
own country.
The Government fully agrees that international development
must be an integral part of government policy. Preparation of
the White Paper involved detailed discussions among departments
which are continuing to work closely together to ensure a coherent
approach to development.
The favourable response to our White Paper both from the
international community (including the multilateral development
organisations), and from other bilateral donors, has been very
encouraging and puts us in a strong position to persuade and influence
others to take a similarly focused approach, with a particular
emphasis on poverty elimination.
Paragraph 3: Recommendation 2
We welcome the creation of DFID. We believe that it will
give new focus to the United Kingdom's development activity and
also inject greater sensitivity to development issues throughout
Whitehall.
The Government shares the view of the Committee that the
creation of DFID gives clarity and focus to the UK's development
policies and will raise the profile of development issues throughout
Whitehall and more widely.
INTERNATIONAL DEVELOPMENT
AND WHITEHALL
Paragraph 9: Recommendation 3
We recommend that the Secretary of State for International
Development be a full member of the Cabinet Committee on Defence
and Overseas Policy.
The Government notes the recommendation. The Prime Minister
keeps the membership of all Cabinet Committees under regular review.
He prefers the composition of DOP to remain as it is, as a high-level
strategy Committee. The Secretary of State for International Development
will continue to be invited to attend whenever issues of relevance
to her portfolio are considered.
Paragraph 10: Recommendation 4
We recommend that the departmental reports of other government
departments, including the FCO, the Treasury, DTI, MAFF, DfEE,
DH and DETR, all include a section on how their policy and activities
have promoted international development and the elimination of
poverty. We intend from time to time to take evidence from them
on this matter.
The Government agrees that it would be useful for those government
departments whose work has a significant development aspect to
cover the subject in their departmental reports.
THE ELIMINATION
OF POVERTY
Paragraph 11: Recommendation 5
The concern to eliminate poverty provides an admirable
focusing of our development efforts on the truly important.
The Government welcomes the Committee's endorsement of the
aim to eliminate poverty in poorer countries. The Government has
pledged to measure the effectiveness of its development efforts
against internationally agreed development targets, including
halving the proportion of the world's population living in extreme
poverty by 2015. Sometimes our efforts will directly target poor
people. Sometimes our efforts will support wider policies which
promote sustainable economic growth and protect human rights of
all. We will work through our own programmes but also seek to
increase our influence with the multilateral institutions to strengthen
the commitment of the international system to meeting the international
poverty eradication targets. In all cases, the Government will
seek to ensure that these efforts contribute positively to the
elimination of poverty.
Paragraph 15: Recommendation 6
We recommend that in the office of the United Kingdom
Representative to the European Commission in Brussels there be
personnel and input from DFID at the highest level to ensure progress
in the reform of the European Union development programme. This
should be at the same level as DFID's representation at the World
Bank.
There are currently two DFID officers in UKRep Brussels.
One of these is a new Second Secretary post created since the
publication of the White Paper. The other is a First Secretary
post. The grading of which was increased from A2 to A1 (previously
G7 to G6) when the current incumbent took up her position in the
third quarter of 1997. DFID staffing in UKRep Brussels has therefore
been strengthened considerably in the last six months. The Government
nonetheless takes note of the Committee's recommendation.
Paragraph 16: Recommendation 7
We recommend that the United Kingdom press for the adoption
of the DAC targets by the European Union.
We believe that the adoption of the DAC targets by the
European Union must be in the context of a new coherent development
policy. The European Union needs its own "Development White
Paper" and the United Kingdom should work for one in 1998.
The Government agrees that we should press for adoption of
the international development targets by the EU. We aim to pursue
this during our Presidency by hosting a seminar for Development
Ministers in the member states, appropriate Commissioners and
members of the European Parliament's Development Committee on
the 21st century strategy and targets. We are also pressing for
appropriate references to the targets in the negotiating mandate
for the Lomé re-negotiation. The Government notes the Committee's
suggestion that the EU should have its own "Development White
Paper".
Paragraph 17: Recommendation 8
We recommend that the OECD be encouraged to produce interim
development targets for international agreement.
The Government agrees with the Committee about the need to
track progress towards the international development targets.
We are contributing to work going on in the OECD, UN and World
Bank on how to measure progress against the main targets. A February
1998 seminar under the auspices of OECD, UN and World Bank was
an important step in formulating detailed proposals.[1]
Paragraph 23: Recommendation 9
We invite the Government to explain what formal relationship
they propose between the Multilateral Agreement on Investment
and the OECD Guidelines on Multinational Enterprises and whether
they support the formal incorporation of the Guidelines into the
MAI.
The Government believes that the OECD Guidelines should be
annexed to the text of the MAI. This will not alter the voluntary
nature of the Guidelines, which will not be subject to dispute
settlement. But in raising the profile of the Guidelines in relation
to the MAI, we believe that the MAI will help to promote the observance
of labour and environmental standards in business. This reflects
the government's commitment to ethical business and the development
of voluntary codes of conduct in this area. A review of the Guidelines
will take place later in 1998.
Paragraph 24: Recommendation 10
The British Government had "put in reservations on
the MAI on the question of poor labour standards and environmental
protection to make sure that countries are not driven into creating
incentives to attract investment that mean constantly cutting
labour standards or cutting environmental standards". We
welcome this concern to protect core labour and environmental
standards.
The Government shares the Committee's concern for the protection
of core labour and environmental standards under the Multilateral
Agreement on Investment (MAI). This is to be achieved through
three "anchors": the Preamble to the Agreement, the
association of the OECD Guidelines for Multinational Enterprises,
and a clause on "not lowering standards". On this last
provision, the Government is supporting a binding obligation not
to derogate from labour or environmental standards in order to
attract a specific investment. In addition, we are working with
our negotiating partners to make it clear that the MAI should
not interfere with the ability of governments to regulate in a
non-discriminatory way to protect labour or environmental standards.
Paragraph 25: Recommendation 11
We recommend that the Government provide more detail of
its macroeconomic policy, and in particular the advantages and
disadvantages of globalisation and the kinds of pro-poor policy
which can be adopted to avoid marginalisation. We also recommend
that the Government press for "poverty audits" to be
applied to the proposals and structural adjustment programmes
of multilateral institutions such as the IMF and the World Bank.
The Government notes the Committee's concern for clarification
in matters of macroeconomic policy and refers it to the note submitted
by the Department to the Lomé Hearing (10 December 1997).
Globalisation offers our partner governments an opportunity to
engage in trade and to attract the investment which can help generate
broad-based sustainable development. We share the Committee's
concerns about the dangers of marginalisation. DFID is currently
leading efforts to take forward recommendations from a recent
High Level Meeting hosted by the WTO to enhance market access
and provide technical assistance for the least developed countries.
DFID is also involved with the Commonwealth Trade and Investment
Access Facility and a UNCTAD/ITC/WTO initiative which provides
a broad programme of assistance to eight African countries.
The Government welcomes the Committee's recommendation for
assessment of the poverty implications of stabilisation and adjustment
packages. DFID has been working with other donors within the Special
Programme for Africa to improve the treatment of poverty in adjustment,
especially within the poverty and social policy working group
which we co-chair with the World Bank. This group both identifies
and communicates good practice approaches to the treatment of
poverty, and seeks to monitor trends in poverty and the evidence
on the effects of policy change. As part of this effort, DFID
has for the last three years reviewed the treatment of poverty
and gender issues in World Bank adjustment credit and policy frameworks
for the poorest African nations. These issues are also addressed
via our efforts at meetings of the Executive Board to improve
Bank practice. There has been evidence of positive change in the
last year.
The Secretary of State for International Development met
the IMF's Managing Director, Michel Camdessus, on 20 February,
and stressed the importance we attach to the attainment of the
international development targets. She welcomed the emphasis Mr
Camdessus placed on promoting high quality growth and reducing
poverty at last year's IMF/World Bank Annual Meetings, and encouraged
him to look at how the IMF could co-operate further with the World
Bank and other international financial institutions to tackle
poverty. A report by external evaluators of the IMF's Enhanced
Structural Adjustment Facility (ESAF), looking particularly at
the impact of economic reform programmes on different poor groups,
is to be considered by the IMF Board in March. DFID is studying
the results carefully, and will be working with the Treasury (which
leads within HMG on the IMF) on the UK's response. The Government
has also made proposals for improving the process by which the
IMF, governments and donors work together in aid dependent countries.
Paragraph 26: Recommendation 12
We would welcome an account by DFID of how they intend
to assist the small scale and informal economies of the developing
world and how DFID can encourage the provision of micro-credit,
in particular to women.
DFID has a well developed programme of assistance for small
enterprises, which delivers support in three ways. DFID provides
direct non-financial support, helps to develop financial services
(for example micro-credit) and helps to create an enabling regulatory
environment for private enterprise. In these three areas the total
value of DFID's portfolio of projects is currently over £110
million.
Since 1990 DFID has made vigorous efforts to promote micro-finance
(this includes micro-credit but also savings institutions
which are found to be of particular significance for the poor),
for example in East Africa and South Asia. This year our portfolio
stands at nearly £42 million. Most of our funds go towards
building strong and accountable institutions which can provide
savings and lending services to their clients in a sustainable
way. DFID is working closely with the World Bank-led Consultation
Group to Assist the Poorest (CGAP) to achieve common standards
of best practice in micro-finance which all donors can adhere
to.
Though research has shown that access to micro-finance can
improve the status of poor women, this is not always the case.
DIFD's gender equality strategy will enable us to build further
on the work we have already done to improve poor women's access
to credit. We will continue to fund research in order to improve
our understanding of this important issue.
Paragraph 27: Recommendation 13
We look forward to the creation of specific programmes
to assist women, to the establishment of gender-specific targets
within development programmes, and to an assessment of the effect
on women to be included in all evaluation of development assistance.
The Government is pursuing a "twin-track" approach
to promoting gender equality in its development assistance programmes.
We are enhancing our direct assistance to women, especially poor
women, in developing countries. We continue to "mainstream",
that is actively take into account in all our development work
the needs of women as well as men. We are working within the DAC
to ensure that the measurement of progress towards the achievement
of the 21st century targets includes provision for measurement
of progress on gender issues wherever possible. This includes
disaggregation of figures relating to men and women. We will continue
to develop the use of gender sensitive indicators in our bilateral
work. All evaluation studies carried out by DFID already include
a consideration of gender effects. DFID's Evaluation Department
will be starting work in 1998/99 on a major evaluation study of
our gender work to date.
TARGETS
Paragraph 30: Recommendation 14
Great improvements can no doubt be achieved through effective
development policy. This should not blind us to the continuing
need for more money to fund the development programme. On that
point the White Paper remains unacceptably reticent. We recommend
that the Government commit itself to an expenditure of at least
0.37 per cent of GNP on official development assistance by the
end of this Parliament.
The Government agrees with the Committee's conclusion that
there is a good case for additional resources to support the Government's
international development strategy, and to make progress toward
the international development targets. Equally important as increasing
the volume of UK development resources, is using those resources
effectively to tackle poverty. There is no quick fix.
The Government has made its commitment to 0.7 per cent UN
target clear, and will begin to reverse the decline in the aid
budget during the current Parliament. Decisions on the future
levels of aid spending will be announced at the conclusion of
the Comprehensive Spending Review.
Paragraph 31: Recommendation 15
We recommend that targets for DFID's bilateral programmes
and performance against those targets be published in the annual
reports. We recommend that the Government also provide regular
information on how its bilateral programmes, and in particular
technical assistance, have reduced poverty. We recommend that
the Government commit itself to the 20/20 initiative and provide
the Committee with information on how this target can be integrated
into the agreed country programmes.
The Government shares the Committee's view on the publication
of targets for bilateral programmes and performance against those
targets.
We are committed to reporting annually on progress against
the strategy and targets set out in the White Paper. DFID also
operates a policy information marker system (PIMS) to track the
targeting of bilateral commitments and expenditure on priority
policy objectives of the aid programme. PIMS is being reviewed
and revised to ensure that it reflects the new objectives set
out in the White Paper. An analysis of PIMS-marked expenditure
is provided in the annual report on British Aid Statistics.
On the 20/20 initiative, DIFD has made it clear that it is
willing to explore this with interested developing countries.
None has as yet indicated an interest in taking this up in the
framework of bilateral programme discussions. The White Paper
makes clear the Government's commitment to providing support for
the social sectors and human development and to working with governments
to redirect spending to these services. At the Denver Summit the
Prime Minister committed the UK to increased social sector spending
in Africa. However, we are as much concerned about the quality
of social spending as the levels of expenditure. Our objective
is to ensure that our contributions lead to lasting benefits for
poor people.
1 Note: Seminar held in Paris, 16-17 February
1998. Back
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