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Ed Balls (Normanton) (Lab): As a fellow co-sponsor of the Bill, I am grateful to my hon. Friend for giving way. On her present point, and in the light of the comments of the hon. Member for Buckingham (John Bercow), what are her views on transparency of reporting and on the role it can play in pursuing the Bill's objectives and the millennium development goals? The Bill's emphasis on transparency of reporting is important for reasons that go beyond simply making sure that people are aware of the scale of the challenge, or holding people in the House to account for the actions that need to be taken.
 
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Cannot the very process of transparency and reporting play an important role in building the consensus required to take the necessary actions to meet the goals? Does she agree—

Mr. Deputy Speaker: Order. The hon. Gentleman has perhaps given the hon. Lady enough to agree with.

Ann McKechin : I agree with my hon. Friend, who, before he came to the House, played an important part in directing Government policy in the areas we are discussing. If we are to instil the principles of good governance throughout the world, we need to be able to show that our own standards are fully transparent and as accountable as possible. The report will be read not only by people in the House or by our constituents: it will be read by parliamentarians in many of the developing nations that we seek to help and will assist them in holding their own Governments to account. They will know how much money has been received.

John Bercow: The hon. Lady will have to blame the hon. Member for Normanton (Ed Balls) for prompting this intervention, but he made a very important point. Does she agree that in making people aware in our constituencies of the scale of what is being done, we are also reminding them of the importance of their ratcheting up their contributions? Would not it be helpful if, in as many cases as possible, voluntary giving could be devoted to specific and identifiable projects, in which one could be sure that the intended beneficiaries are the beneficiaries and that money is not lost unnecessarily?

Ann McKechin: The hon. Gentleman makes a very good point. It is important that it is not just our Government but NGOs and other donors who, when they receive money from the general public, are directly accountable to the public for how they spend the money. In return, if they advise how much they are spending, and what they are spending it on, not just the donor but the donee nation will know how the money is spent. That is just as important a side of the equation. Parliamentarians from developing nations frequently tell me that their major problem is the lack of information by which they can hold people to account, whether it be their own Governments or NGOs operating within their borders.

In reaching the millennium goals and increasing aid we have to have a sense of great urgency. I commend the UK Government's efforts to increase and front-load aid. The Bill attributes importance to the 0.7 per cent. target.

I welcome the holistic approach found in clause 2, which requires the report not only to review DFID's progress towards eradicating poverty, but all other Departments. That is a crucial point. DFID's work will only ever have limited success, unless the Government as a whole incorporate poverty reduction policies into their agenda. The report should not only be about the presentation of statistics. It should allow us to ask fundamental questions about how cohesive our own Government's policies are in fostering sustainable development. I should like to give one example. The Tax Justice Network estimates that $385 billion is lost in the developing world every year through a combination of
 
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tax evasion, tax avoidance and money laundering. The organisation argues that the British Government are in a unique position to tackle the problem, given the UK's known strength in the international financial markets and the fact that a large number of tax havens—about 35 of the 72 in the world—either have close links with or are dependencies of the United Kingdom.

Sub-Saharan Africa will be the major beneficiary of last year's G8 agreement, which delivers about $1 billion a year in debt cancellation and about $25 billion in aid. Capital flight in that part of the world is estimated to be $50 billion, and the figure continues to rise in real terms, so any increase in aid to the area threatens to be eroded by money flowing out of the region.

It is estimated that more than 55 per cent. of international trade passes through offshore tax havens. The biggest cause of the so-called leaked income is the widespread practice of mispricing exports and imports to shift profits out of a country. For example, African diamonds have been exported by businesses at a book price that is only a fraction of their true value, so that the real profit shows up only in the offshore location. Private firms, including many multinational corporations, use a sophisticated and wholly illegal network of notional companies to remove millions of dollars of profit from the taxman. Other leaks, including criminal proceeds and corrupt funds, are important, albeit much smaller in volume, but they piggyback on the sophisticated money-moving apparatus set up by western banks and financial institutions. Every nation loses to that type of system. The loss to the UK is estimated to be £100 billion per annum, so putting in place effective anti-avoidance legislation and working to achieve much greater international co-operation would benefit not only the developing world, but all of us.

Good governance must include the ability to administer and collect taxes efficiently, but if increasing amounts of untaxed income and profits are taken out of countries, both legitimately and through corruption, that will severely undermine developing nations' ability to increase their own revenue streams, which would in turn allow them to provide essential public services to their citizens and become less aid dependent. Our objective in working towards the millennium development goals is not just to increase aid but to allow countries to become less aid dependent and able to provide basic public services and meet the needs of their own citizens, which in turn increases accountability, helps the establishment of democracy, and encourages good governance.

We all have a duty to consider every aspect of the way in which we try to achieve that. If we are serious about meeting the millennium development goals, we need to examine our own legislation to rectify and control the problems that I have outlined. It is not simply a matter of increasing funding through a single Government Department. Only by tackling all the issues in a cohesive manner with a unified goal of poverty reduction—from the less obvious issues such as tax havens to central ones such as international trade and the role of the World Trade Organisation—can the UK Government take significant steps towards achieving the millennium development goals and eliminating poverty.
 
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Debt relief is dear to me as chair of the all-party group on debt, aid and trade. The Bill rightly highlights how crucial debt relief is to international development. The UK Government have an outstanding record of making debt relief central to international political priorities, and the G8 deal, combined with the Paris Club deal on Nigerian debt, will make a huge difference by lifting part of the unsustainable debt burden. We need clear and comprehensive reporting, however, because debt relief is an extremely complex matter. One hundred per cent. debt relief must mean 100 per cent. relief, but there are questions about whether it refers to debt stock or to interest payments.

Crucially, the Bill includes the reporting of an area known in debt relief circles as export credit debt. That is important because it accounts for 34 per cent. of global debt and about 20 per cent. of heavily indebted poor countries' debt. When private companies export goods abroad, they obtain an export credit from their own country—say, a rich western nation. The export credit is a guarantee that they will receive payment. If the contract goes sour, they reclaim the money from their own country, which in turn seeks to recover the money from the country in which the contract was carried out under its export credit system; and that country is left with the often hopeless task of trying to recover the money from a domestic private firm. As a result of that system, substantial debt is placed on developing nations.

To be fair, the UK Government have a good record in this respect: they have a policy of writing off the export credit debt of HIPC nations. However, it is important that that element of the debt burden is reported correctly and transparently. I hope that the example provided by the Bill will be followed by other donor nations, so that we can see the full extent of how they are tackling the burden placed on developing nations. By increasing the visibility and scrutiny of such matters, the Bill will highlight the fact that debt relief is not yet a done deal and thus help to maintain the effort to achieve increased debt relief. The Government have recently made announcements on ensuring that other nations support their aim, which I fully support, of extending the HIPC initiative to a further 30 or 40 nations, but the Bill will allow us to track our record and compare it with that of other creditor nations.

Not only will the Bill increase accountability in respect of the Government's international development policy within Westminster, but through the provisions of clause 8 it calls for agreements between the UK Government and its developing nations partners to increase accountability between the parties. Local ownership and a dialogue between donors and recipients is crucial for successful development programmes that meet the needs of local populations. The provision of a forecast of aid three years in advance will put recipient countries in a better position to plan and implement their development programmes. For too long, aid has been provided from year to year on a rather ad hoc basis, which makes it impossible to plan for long-term investment and infrastructure projects such as hospitals, schools and roads. If we provide clear information on how much we are to spend in the next three years, developing nations can make their own plans on how they hope to invest the funds.

The Bill will increase accountability to international partners, as I have said, and it will serve as an example for international financial institutions, and perhaps
 
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persuade them to apply similar transparency and accountability measures. Last year, the international parliamentarians' petition for democratic oversight of the IMF and the World Bank attracted the signatures of more than 1,000 parliamentarians across the globe, including 250 from the UK. Parliamentarians and civic society groups in the least developed countries often have the least access to comprehensive and reliable information on the source of Government funding. The Bill will assist their efforts to hold their own Governments to account.

Transparency and accountability are at the heart of the Bill, and I commend my right hon. Friend the Member for Coatbridge, Chryston and Bellshill for raising those issues. Critically, the Bill relates not only to the amount of aid being spent but to the efficiency with which it is spent: it sets out basic standards to measure efficiency and creates the opportunity for that to be scrutinised and debated in the public realm. The Bill has the potential to contribute to much better public understanding of aid and its complexities, while encouraging new debate, thinking and learning on aid efficiency in the next few years within Westminster and Government Departments, as well as in the broader development community.

That transparency, by breaking down aid country by country, allows scrutiny of the interests and agenda driving aid allocation, and allows parliamentarians to ensure that the needs of the poor rather than political interests determine that. I commend the Bill for introducing some important practical measures to promote the Government's poverty reduction policy. I hope that it will be followed by an annual debate on the Floor of the House, in which the general public could participate by increasing their representations to parliamentarians throughout the year. I am sure that Members are more than willing to take up that challenge and to represent their constituents in making poverty history.

11.40 am

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