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Written Ministerial Statements
Thursday 2 March 2006
TREASURY
Innovative Financing for Development
The Chancellor of the Exchequer (Mr. Gordon Brown): I attended a conference in Paris this week on innovative financing for development. At this conference, France and the UK set out their commitment to move forward on these issues.
In 2005, significant progress was made in delivering 100 per cent. multilateral debt relief and a significant increase in resources for development to help countries to meet the MDGs. The international community committed to increase aid by $50 billion and the European Union committed to double aid by 2010, reaching 0.7 per cent. by 2015.
In order to deliver and bring forward these commitments, there is a clear need for innovative forms of finance.
In September last year, the IFF for Immunisation (IFFIm) was launched with contributions from France, Italy, Spain, Sweden and now Norway, as well as the UK. By frontloading aid and investing an extra $4 billion in vaccination now, the IFFIm is expected to save a total of 10 million lives, including 5 million children before 2015. France has reiterated its support for this important initiative and will contribute an average of $100 million a year over 20 years. The IFFIm is now so advanced that the first bonds will be issued within a matter of weeks, and the IFFm will begin purchasing vaccines and delivering these to the poorest countries in the first half of 2006.
Last year, the G8 agreed to provide universal access to HIV/AIDS by 2010. The UK is committed to spend £1.5 billion on HIV/AIDS over the next three years, including on the purchase of drugs, and expects at least this level of spending to continue over the long term. It has agreed to support the French proposal for an International Drug Purchase Facility, which will provide greater access to those in developing countries to much-needed drugs to tackle HIV/AIDS and malaria.
Given the scale of the challenge for reaching the MDGs by 2015, France and the UK have agreed to work on a larger initiative—an International Finance Facility (IFF)—not just focused on vaccination, but on the achievement of all the MDGs including on health and education.
The UK and France have agreed to jointly establish a working group to consider the implementation of an IFF going to health and education, among other sectors, which will be partly funded by an air ticket levy. The UK will hypothecate part of its Air Passenger Duty to provide a long-term stream of finance to the IFFIm and IFF. This working group will report back in advance of the September meetings of the IMF and the World Bank meetings.
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European Economic Reform
The Chancellor of the Exchequer (Mr. Gordon Brown): In May last year I set out to the House how Europe must adapt to the changing balance of global economic activity and the rise of fast-growing emerging economies. Following the end of the UK presidency, I am pleased to be able to report significant progress on this agenda at ECOFIN that will help equip Europe to meet the global economic challenge.
Better Regulation and Enterprise
Regulatory reform was at the heart of our presidency programme. We made good progress over the six months of our presidency, including:
a commitment for administrative burdens to be measured in all EU proposals and a call to set targets to reduce burdens on business; and
agreement on the next steps for the better regulation agenda with the Austrian and Finnish presidencies, including a focus on risk-based regulation and business consultation.
The UK presidency also launched the first European Centres of Enterprise Competition which rolls out the successful British annual competition for local and regional authorities to reward initiatives to support entrepreneurship across the whole EU.
At the Manchester ECOFIN Informal meeting in September, Finance Ministers and Business Leaders reached consensus on the reforms needed to deliver stronger economic growth and social justice in Europe in the face of rapid global economic change.
Subsequently, in October I published a report on "Global Europe: Full Employment Europe" setting out proposals for major reforms to enable Europe to grow faster and tackle unemployment, and member states also published the first Lisbon National Reform Programmes as part of the re-launched Lisbon Strategy. In the context of responding to globalisation, Finance Ministers reviewed the programmes in December as the priority for reform, adopting Council Conclusions confirming that:
globalisation represents opportunities for Europe provided we put in place the policies needed to realise these;
labour market reform is key, but policies need to reflect the different social models in member states; and
As part of the EU's commitment to a more outward-looking Europe, Finance Ministers made significant progress in finance for developing countries, including:
Agreeing to double annual aid from 2004 to 2010, and Member States that joined the EU before 2002 agreed to reach 0.7 per cent. ODA/GNI by 2015.
Launching the pilot International Finance Facility for Immunisation on 9 September with the participation of the UK, France, Italy, Spain and Sweden.
Agreeing that those Member States who were willing would go ahead with launching the International Finance Facility and an air passenger levy for Development.
The European Commission reported to ECOFIN in October on the launch of sectoral inquiries into market failures in energy and financial services.
The Commission published its report on implementation of the gas and electricity directives in November, and published its interim findings on the energy sector competition inquiry on 16 February. The Energy Council agreed in December on the need to complete the implementation of existing legislation and improve energy market competition, and noted the Commission's determination to take forward work on energy liberalisation.
The UK presidency hosted a successful conference on state aids, and the Commission's June Communication setting out its State Aid Action Plan is in line with UK reform priorities.
As part of our outward-looking agenda, following the ambitious economic declaration at the EU-US Summit, we agreed three presidency Conclusions in October and the inaugural EU-US Economic Ministerial in November agreed a comprehensive action plan, including:
A joint EU-US statement set out future priorities for Financial Markets Regulatory Dialogue to accelerate progress towards a barrier-free transatlantic financial marketplace. The European Commission has identified an EU-India financial services dialogue as a priority for 2005–10.
The UK presidency also worked through the European Union to build support for economic regeneration as a contribution to the Middle East Peace Process.
The UK presidency set the shape of financial services policy in the European Union for the medium term, including:
endorsement of the European Commission's EU financial services policy 2005–10 founded on better regulation principles;
reaching a first reading deal on the Capital Requirements Directive—which introduces modern risk based capital rules for EU banks and investment firms;
the Lamfalussy Committee Chairmen reporting to ECOFIN in October on how they plan to cooperate more effectively to reduce burdens on business. They signed a memorandum of understanding on closer cooperation. The Finnish presidency have indicated they will take this forward; and
completing work on the Third Money Laundering Directive and reaching a Council Common position on the Funds Transfers Regulation—both adopting a risk based approach to combating terrorist financing and financial crime.
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