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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 418-i House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE INTERNATIONAL DEVELOPMENT COMMITTEE
MAKING POVERTY HISTORY? THE PROMISES OF GLENEAGLES
Tuesday 19 July 2005 RT HON HILARY BENN, MP, MR GRAHAM STEGMANN and MS MELANIE SPEIGHT Evidence heard in Public Questions 1 - 56
USE OF THE TRANSCRIPT
Oral Evidence Taken before the International Development Committee on Tuesday 19 July 2005 Members present Malcolm Bruce, in the Chair John Barrett Hugh Bayley John Bercow Richard Burden Mr Quentin Davies Mr Jeremy Hunt Ann McKechin Mr Marsha Singh ________________
Examination of Witnesses
Witnesses: Rt Hon Hilary Benn, a Member of the House, Secretary of State for International Development, Mr Graham Stegmann, Director, 2005 Unit, DFID, and Ms Melanie Speight, Policy Analyst, 2005 Unit, DFID, examined. Q1 Chairman: Good morning. Thank you very much indeed for coming to give evidence to us at our first evidence session of the new parliament. We very much appreciate your being here and the circumstances in which you are here, after a generally regarded successful G8 Summit. I wonder, first of all, if you would introduce your team; and then you might want to make a brief opening statement to set the scene on the G8 situation and then we will move into questions. Hilary Benn: Thank you very much indeed. Can I introduce, on my right, Graham Stegmann, who heads our 2005 Unit; and, on my left, Melanie Speight from the Unit. To be honest, I would be very happy to go straight into questions, if that is all right with the Committee. I had not come prepared to say anything by way of introduction because I am sure we will get into the issues pretty quickly. There is a lot to talk about after what has been a very interesting and, I think, a significant G8 process that has certainly moved us forward; but there is a lot to do. Q2 Chairman: If that is all right with you, let us go straight into questions. What the statement has said is "100 per cent debt relief". However, this is not quite true, is it, because it is not 100 per cent for all countries; it is 100 per cent for agreed countries and then the queue is coming down the track. First of all, could you elaborate on who is getting 100 per cent debt relief; what is the process for that; and how the other countries that are not yet qualifying can do so? Hilary Benn: First of all, to say it relates to multilateral debt owed to the World Bank, the IMF and the African Development Bank. It is 100 per cent debt cancellation for those that are eligible to participate. There are 14 African countries that will benefit immediately because they have reached HIPC completion point, so it will flow. Subject to the IMF and the World Bank meetings in the autumn sorting out the details, that first group of countries benefits straight away; and then there are others in the queue waiting to come. It flows from having completed the HIPC process. As far as how it is going to work technically and the funding of it is concerned: stage one is that the new loans and grants to the eligible countries are reduced by the equivalent amount to the debt service that they are no longer going to be having to pay; secondly, donors then provide additional resources (because that was the key to getting this agreement in the G7 Finance Ministers). As you will know, Chairman, there were really three camps: those who wanted multilateral debt cancellation, but did not want to put any more money into it; those who wanted it and were prepared to put more money into it - and the UK was part of that camp, because we had started doing that from 1st January with our multilateral debt service relief arrangement; and then a third group of countries that were not wholly convinced of the argument for a comprehensive approach. It was getting agreement that we would put in additional resources to make this happen (so we were not just taking the money out of existing aid flows) that was the key to reaching that agreement. Therefore, in putting in the additional resources they would then be distributed to all World Bank, IDA and African Development Fund recipients. In other words, poor countries that are not themselves receiving the benefit of the debt cancellation will also benefit from the additional resources that are made available. That is the way it is going to work. Q3 Chairman: It is quite complicated, so can you explain the difference between debt relief and aid, and what is additional within that context? Hilary Benn: What is additional is the commitment of countries to put in additional funding to make sure that the money that would otherwise be available to those multilateral institutions was not just drawn upon to fund the debt cancellation, because then we would have been taking out of the existing resources and we would not have put more money in. That was the very clear position we took. That is the first point. The second point is, obviously the agreement on aid that has been reached really received a very significant boost when, as EU Development Ministers, we met in May and agreed the new ODA GNI target; and that, I think, really gave the process very, very significant momentum. As a result, we have ended up through the G8 process, according to the OECD DAC, with commitments to increase total global aid by $50 billion by 2010, of which half is going to go to Africa - which is $25 billion - and that is the sum by 2010 which the Commission for Africa recommended was needed. That money will be available for a whole raft of things which no doubt we will come onto later. Q4 Richard Burden: My question is about the debt/aid relationship. I understand what is being said there but one of the points which has been made is if debt relief is given there, potential aid is reduced to then be put back in via the multilateral institutions. That process of putting it back in via the multilateral institutions may then dilute where that aid goes. How can we ensure that it is additional in the right place? Hilary Benn: I would not say it dilutes it, because it spreads it. In a sense it goes back to the original question, Chairman, that there are certain countries which benefit (14 African countries immediately) from the multilateral debt cancellation agreement; 38 countries are potentially eligible in total, depending on how they come through the HIPC process, and 32 of those are African countries; but the way that this is being funded means that other countries, in addition to those that get the multilateral debt cancellation, are going to benefit from the additional resources countries have said they will put it. Q5 Chairman: Can I raise an issue that ran over the weekend in some of the media, and you did mention it in your response to me at the beginning - subject to the tidying up by the institutions in the autumn. We saw an initiative led by the Belgians basically saying that they wanted strict controls over the 18 countries, and that the IMF should have the right to approve key economic policies, which implied some additional conditions. This was interpreted by some of the campaigners as being a dilution of the agreement of the G8. Is that in fact the case; or can you explain what this Belgium initiative is; where it stands; and how you would dealt with it? Hilary Benn: I cannot explain what the Belgium initiative is; the Belgians will have to answer for that. Our view is very, very clear: the G8 have reached an agreement. Insofar as we are talking about conditionality - and that is, of course, one of the issues that has been raised, the HIPC process has its own conditionalities (as we are aware) within it - once countries have reached HIPC completion point then they are eligible to benefit from this new multilateral debt cancellation agreement. I am not in favour of further burdensome conditionality being applied to countries; but everyone wants to be sure that the debt relief, the debt cancellation that this agreement is going to bring, is used for the purposes of poverty reduction. The HIPC framework has within it ways of ensuring that that is the case. I think we should stick with that. I myself and the UK would not be in favour of any dilution of that. If, when we get to the World Bank meetings in the autumn, others bring proposals which run contrary to what has been agreed then we shall make our views very clear. Q6 Chairman: To pick up that exchange of views that appeared in the media, some people were saying this could be a dilution. We have an agreement; it could be undermined. The argument that seems to run is that the G8 countries clearly, if they are all agreed, will stand by it; but I understand it takes 15 per cent objections to modify it. What I am really asking you is: is there a danger that qualification be asked? I have a comment, this is Willy Kierkens who says, "Under my proposal if a new type of PRGF programme goes off track the expected grants would not be made available". He is clearly saying this 100 per cent relief could be clawed back if certain conditions were not met. Hilary Benn: As I say, if other countries that have not been party to the agreement that has been reached so far bring proposals to the table at the World Bank annual meeting then we are going to have to argue it out. I have tried to make clear this morning what my view is about how we should proceed on this. There having been this very strong political commitment on the part of the G8 to make progress, it is very important that the world together delivers what it is we have promised. Q7 Chairman: You are sure that the other seven will back you up at least? Hilary Benn: The heads of government, the heads of state, signed the G8 Communiqué, and that is the clear and settled view of the G8. We now have to take that into discussions that will take place in the autumn. Q8 Hugh Bayley: I would like the Secretary of State to focus on the outcome on poverty reduction. Is it the case, in you view, that a doubling of aid will double the rate at which poverty is reduced? Is there the absorptive capacity in Africa to use twice as much aid, as well as the existing amount of aid? Where are the examples which show that aids are used? If there are problems with absorptive capacity what will your Department be doing to enable recipient countries in Africa to develop their capacity to use aid more effectively? Hilary Benn: As you know, Mr Bayley, there is not a straight causal link between the quantity of aid which is committed and the progress; but, undoubtedly, there are countries which currently lack the means to get all of their children into school, to buy the drugs that will treat people who have AIDS, TB, malaria or other diseases from which they die. One has to look at what was agreed as far as aid is concerned at Gleneagles in the context of the overall package: because we know that without progress on peace and security, governance, building capacity, ability to trade, access to world markets, economic development, debt relief and aid, without progress on all of those Africa is not going to meet the Millennium Development goals. Part of the answer to your question is: what are we going to do about the question of capacity, including absorptive capacity? I think there is absorptive capacity. Part of what we have to do is to help the countries of Africa to build that capacity. That is why I welcome so much, in the wake of the Commission for Africa report, the debate there has been about governance and capacity. I think it has been the most striking thing, because we have moved beyond just talking about aid. If the quantity of aid was the solution alone - if we could raise the money we could fix the problem; and it is not as simple as that as we know. Does aid work? Undoubtedly it does used in the right way. There are many examples of that: in Kenya where aid helped to pay for the abolition of school fees and they have got a million more children in school there: progress has been made in Tanzania and Rwanda; there is nearly a doubling in the number of people who attend primary health clinics in Uganda after they abolished the user fees. It is a combination, it seems to me, of using those resources - to support African countries in the context of the $25 billion, and other developing countries in the context of the rest of the money - to meet the needs of their people but, at the same time, to help them to build their capacity to spend their own resources and the money which the world is making available effectively. It is going to be a big task, because we are moving from a world in which we have $79 billion in aid to, by 2010, a world where there is $129 billion in aid. This is a very big step up. Working together, we have got to make sure we use the money effectively so that in the end it does change people's lives, and we are able to make the kind of progress towards achieving the MDGs that currently we are not seeing, particularly in sub-Saharan Africa. Q9 Hugh Bayley: After quite some years of emphasis on basic social needs, on health and education, the Commission for Africa report surprised some people and broke with tradition by laying greater emphasise once again on investment and infrastructure. I would be interested to know where those ideas came from. Of course, ministers in Africa, as elsewhere, like opening new roads, airports, ports and buildings - but what is it that convinced the Commission that investing in infrastructure was the key to higher growth? What does that mean for your Department's staff? Are you going to be taking on a lot more engineers? What will the mix of public sector donor money and private sector pilot investment be in the 10 billion extra of aid or investment in infrastructure each year between now and 2010, and the 20 billion thereafter which the Commission for Africa was talking about? Hilary Benn: In one sense I think President Wade of Senegal deserves credit and praise because I think he produced the original Omega Plan. We went through a period where, to be honest, it became a little bit fashionable to say, "Hey, the private sector will deal with all of the infrastructure". For some parts of the infrastructure in Africa that is the case. Mobile telephony is a really good example of that. The fact is mobile telephony has extended across Africa pretty quickly. People can make money. In a sense, it is a generational shift in the technology. It is bringing access to a telephone to people in some remote rural areas who might rent a phone for a minute and a farmer will ring up the local market, which may be ten miles away, to see what the prices are like today; and then he or she can decide whether they are going to take their goods today or wait until next week. There I think it is getting on with it. There are other aspects of infrastructure - the road and transport system - where the high cost of moving goods around in Africa is undoubtedly a bar to economic activity. There are many striking statistics in the Commission for Africa report but there are two parts I remember in particular: one is the description that it costs $1,500 to move a car from Japan to Abidjan, and then $5,000 to move the same car to Abidjan to Addis Ababa across the continent. When I was in Ethiopia last year the reason why farmers in Wallow(?) find it very hard to improve their land is because fertiliser is so expensive. What is one of the big reasons why fertiliser is so expensive: because of the cost of transporting it. The other point made in the Commission for Africa report is, if you look at the historical legacy as far as transport infrastructure is concerned (and it does not quite fit because they are not the same shape), you lay a map of India over a map of Africa and the transport connections in India connect the country; in Africa, historically, they were built to take raw materials to the coast and away. Which is why businessmen in West Africa (and I met a group when I was there not long ago) complain that it is often quicker, if you want to travel across West Africa, to get on a plane, go to Europe, change planes and come back again. Those are all examples of how the lack of infrastructure gets in the way of economic activity. How is the money going to be spent? The African Development Bank has a big responsibility here. One of its problems, frankly, has been that it has been a bit slow in spending the money it has got already - partly because of its own internal procedures, capacity and procurement systems - but also because you are trying to do projects that involve more than one country, trying to reach agreement. There is a process of reform which is taking place within the ADB that is taking steps to improve that. I think we have some way yet to go. I think the other thing I would say is that it is really for the countries of Africa, through the structures they are setting up (and NEPAD is doing work on this), to identify what the priorities are. The final point I would make is, there are yet other types of infrastructure, the most fundamental of which is water. Since almost all of the growth in population in Africa, as well as in the developed world, is going to be in towns and cities over the next 25 years, the need for water pipes, sanitation, schools and hospitals is going to be enormous. That is why one of the things I did on World Water Day was to say that over the next few years we are going to double our investment in water. Frankly, developing countries (and certainly in Africa) have been spending less on water in the last decade or so; donors have been spending less on water. We are now in the process of reversing that trend and I, for one, welcome that enormously because you cannot live without it. Q10 Hugh Bayley: In relation to water, can you say a little more about the balance between private and public sector funding? There has been a lot of NGO criticism of private investment in water schemes. Are there similar considerations in relation to, say, roads; or is there something special about water? Hilary Benn: Water is clearly more politically sensitive. In the end I do not think we should be detained for a millisecond by an ideological argument about how you do it. In the end what I am interested in, and what I think everybody else is interested in, is: what works? How do we get more clean water to more people? The evidence on bringing in the private sector is quite mixed. In some cases it has not worked at all; in other cases it has been successful. There is a lot of misinformation in this debate, I have to say. If you want to talk about water in Tanzania or you want to talk about water in Ghana, the best people to have the conversation with are President Mkapa and President Kufuor because they will tell you why they have taken the decisions they have. This notion that is about, that somehow the nasty old donors are currently twisting people's arms up behind their backs to say, "You must do this", does not actually reflect the truth. In Ghana they are bringing in the private sector to manage the water supply (they are not privatising because they are retaining ownership of the assets) because they lose a lot of water through leakage (a problem not unknown to us here in the UK and other countries) so they want to repair some of those, and they want to improve the production of water at the top end of the system. As I saw for myself in Nima when I was there last year, the people who really pay through the nose for water are those who buy from that bit of the private sector that sells it in plastic bags and buckets; and last year in Nima I was told they paid five to six times as much per litre of water if you bought it through that bit of the private sector than if you got it through the leaky, creaky water supply system - for those who are lucky enough to have access to taps. It is a really big, really complex problem. The investment has to come from somewhere. I do not think the private sector is going to provide a huge amount of it because, rather like roads and other bits of infrastructure, we went through a period in the 1990s when people said, "The private sector will do all of this", and that is not actually the truth. What works? What is going to be successful in doing this? That is what we should be interested in and not, in my view, a rather sterile ideological debate, if I may say so. Q11 Mr Davies: First of all, can I just ask you, Secretary of State, for the greater clarity of everybody, to quantify what you were saying earlier about debt relief, and the increase in resources for aid. We have agreed the G8; there should be $48 billion more of aid by 2010 in relation to the 2004 figure. We have also agreed on this debt relief programme. You have said that a large amount of that $48 billion is being budgeted to pay for the debt relief. How much of that $48 billion is being budgeted to cover the cost of the debt relief? How much is resources additional to that, either for the countries that are also benefiting from the debt relief or from those other countries which you referred to who got money and can expect money from debt relief but may benefit from the second part of the additional resources? Can we just see how those additional resources are split between those two areas? Hilary Benn: There is a lot of information contained in that question and it might be helpful if I were to give the Committee a note. Q12 Mr Davies: It is actually a very simple question. It is a sort of A plus B equals C type of question. Hilary Benn: Indeed. I can tell you in relation to the UK, if that is helpful, what we think it is going to cost in terms of additional contribution. We think that by 2007/8 it will be between $130-$150 million dollars in that year. In the period up to 2015 it will be between $0.7-$1 billion from the UK. Q13 Mr Davies: That is the total of new resources or the total of debt relief? Hilary Benn: That is what the cost will be to us of this debt relief. We had already made provision in the spending review settlement last year as you will be aware - because that is where we got the resources from for the multilateral debt relief initiative that started in January before the summit agreed this funding. The money will come out of what is a rising UK aid budget so by definition that is additional. Q14 Mr Davies: What I want to know is: what proportion of the rising aid budget is being pre-empted by the commitment to pay for the debt relief? Hilary Benn: In 2007/8 you have got $130-$150 million, which is about £80 million; and our aid budget in 2007/8, from memory, is going to be about 5.3 billion in total, and this year it is about 4.5 billion. I will give you a calculation as to precisely what proportion it is, but you can see that we have, more than enough, made additional resources available to provide for this and the other things we are seeking to do out of our rising aid budget. Q15 Mr Davies: Globally, in broad brush terms, have you any idea of the proportion of the $48 billion incremental aid that will be taken up by the burden of paying for the debt relief? Hilary Benn: About just under ten per cent we think. Q16 Mr Davies: The debt relief itself will obviously relieve the benefiting countries from their present debt service burdens to the tune, I believe, of about a billion dollars a year. That is an additional billion dollars a year of cash flow available to them. It will result in a corresponding reduction in entitlements to aid programmes, as we understand. Is there any conditionality, however, attached to that $1 billion of the kind that would have been attached to an equivalent amount of current aid programmes? Or is that going to be free cash flow which, if they want to, they can spend any way they want on arms, on prestige projects, or anything of that kind? Hilary Benn: In order to qualify for the multilateral debt cancellation agreement countries have to have reached HIPC completion point. In order to reach HIPC completion point countries have to meet the conditions relating to governance, having a poverty reduction plan, whatever conditions are put in place by the IMF or the World Bank as part of that. Q17 Mr Davies: That is to qualify in the first place. Once they have got the money on a continuing basis they are going to be, in aggregate, roughly $1 billion a year better off. Are there any conditions being applied to that $1 billion of incremental cash flow; or, effectively, can they spend it as they will, even on policies that we would regard as being perverse or wasteful? Hilary Benn: The conditions that apply to the HIPC process, and conditions of receiving facilities, PIGFs or PRSCs from the World Bank and the IMF, continue to apply as part of that. These are running in parallel. Q18 Mr Davies: They will apply not just retrospectively - to the point at which you qualify under the HIPC rules - they will apply prospectively indefinitely in the future, so long as those countries continue to gain incremental cash flows as the result of having benefited from debt relief? Hilary Benn: It is the same conditionality that relates to what they were required to do in relation to HIPC, which I hope will give people reassurance that we are able to say, and people are able to see, that the resources made available are used for the purposes of reducing poverty. That is the whole purpose of doing the debt cancellation in the first place. Q19 Mr Davies: Can I just ask you a question about conditionality in general. You were saying just now, and very rightly so, that the main effort in combating poverty has to be made by the beneficiary countries themselves? Hilary Benn: Yes. Q20 Mr Davies: You were talking, rightly, about governance, capacity building and so forth. You did not use the phrase but you also had in mind, I think, the necessity for sensible policy frameworks in these countries? Hilary Benn: Yes. Q21 Mr Davies: Therefore, our aid, if it is effective at all, is going to be supportive. It is not going to be the decisive factor. It is very important we use it as effective leverage to make sure there is as sensible a policy framework as possible, and as much progress as possible being made in such areas as governance, for example, in the beneficiary countries. You might think that since the amount of money being made available is increasing very substantially, from 70-odd million to 120-million, that actually the conditionality is going to be even more critical; and the linkage between the additional effort made by donors, and the additional effort made by donees, is of even greater macroeconomic importance simply by virtue of the increased amounts involved: but at that particular moment you chose in March, I think, to produce a paper suggesting you are already taking a completely new approach to conditionality. There is an element of confusion here. Is it not the case with conditionality it may be possible to make it more intelligent, more effective; but it is actually more important, not less important going forward? Hilary Benn: With respect, I do not think there is confusion. I think the right type of conditionality is extremely important. What the paper published earlier this year was about was trying to ensure that we apply conditionality in the right ways. What has happened in the past - and we will no longer do it in relation to our own aid, because this is relating to privatisation (going back to the previous question about water or trade liberalisation) - I do not think it is appropriate for us to use our aid to require that of developing countries. Indeed, if you look at paragraph 31 of the Gleneagles Communiqué ----- Q22 Mr Davies: We have not been doing that. Hilary Benn: ----- there was a very important statement there on the part of the G8 about enabling developing countries to take their own decisions about their economic policies. Having said that, where I think the debate and conversation ought to take place (and I will come on to governance in a moment because that I think is indeed the important and emerging issue) --- developing countries, in relation to economic policy, are free to take their own decisions and those responsibilities that come with that. If you continue to put money into loss-making publicly-owned enterprises as a government you are denying yourself the use of those resources for other purposes. If a country is taking decisions which lead it to be reducing its expenditure on health and education of course it will be very hard to explain why one would, for example, be giving direct budget support, and I would not do that in those circumstances. When it comes to governance, however, I take a different view; because when it comes to international obligations, when it comes to human rights and the development of democracy I do not believe (and I do not think anybody else does) that the right of developing countries to take their own decisions extends to them saying, "We don't really subscribe to those principles and we're going to do something else". If I may give you three examples recently where I have taken decisions which demonstrate that I take governance very seriously: one, we have agreed some benchmarks with the Government of Uganda; we assessed progress against those benchmarks and I withheld some of the budget support payment because I thought Uganda had not delivered on what it had promised in the field of governance. A second example is Sierra Leone, where I did the same. The third example is the decision I took in relation to Ethiopia where, after an extraordinary election in terms of its openness, access to the media and people feeling free to vote, there has been the terrible trouble, people killed and now a bitter dispute about the outcome of the election results. In those circumstances I thought it was prudent to say that I would not be taking a decision now on increasing budget support for Ethiopia. I hope that those three examples demonstrate I do take governance very seriously. You are right, Mr Davies, particularly as the aid is going up people will want to be assured that the money is going for the purpose for which it is intended. Therefore, the debate about conditionality for me is about the right type of conditionality. I hope by my answer I have demonstrated there is not confusion. I hope there is clarity about where we think it is appropriate and where we do not. Q23 Mr Davies: We are totally agreed that conditionality is vital and I support you in the decisions you have referred to. We had been applying conditionality, and your predecessor applied conditionality in the case of Tanzania when they bought a wasteful air traffic control system, if I recall. There have been sensible policies by the British Government in this area - we acknowledge that. What I do not understand, you said in March in this paper that you are changing your policy. You are saying this new paper here, quoting from page 4, "represents signals: a significant change in our thinking and practice": but I do not see a significant change in our thinking and practice. Actually you have just explained to us that you had been adopting what you and I regard as sensible policies of conditionality in the past and are continuing to do so. Actually there has been a continuum, I hope and I trust, and I believe that is the case. You are saying, perhaps for purely propaganda or psychological purposes, that there has been a significant change - that is why I fail to follow the coherence between this statement here and your description of the continuing practice. Hilary Benn: That is a new one to me that I am doing things for psychological purposes. I will have to ponder on that one! The truth is, over time we have been reducing our use of policy, conditionality relating to economic policy. What the policy statement did was to make it clear that we would no longer use conditionality (and I gave the two examples which are most controversial and much debated) in relation to privatisation and trade liberalisation. Q24 Mr Davies: But we had not used them before? Hilary Benn: We had in the past. Q25 Mr Davies: When? Hilary Benn: It was declining, and this policy document made it clear that we would no longer do so, not least because some people in a state of confusion were continuing to accuse us of having done so. The second point which is important is: arising out of that process the World Bank, at the annual meeting last year, agreed to undertake a review of its own policy towards conditionality. I, and some others, persuaded them to do that; because this is a debate not just for bilateral donors, but this is a debate for multilateral donors. Q26 Mr Davies: Your statement in March said that "this document signals a significant change in our thinking and practice" - UK thinking and practice. Now there has not been a change in our thinking and practice in March about not making privatisation a condition because we were not doing that already. What the World Bank may be doing or may be changing is not relevant to our thinking and practice. What I am really saying to you is, I think what this documents contains is something of a false antithesis. There has not actually been a break - "a significant change" to use your phrase. There has been a continuum in policy. For whatever reason (and perhaps you would like to say what the reason is) you decided in March to come out with a document with some striking phrases about everything being changed very dramatically and actually things are not being changed very dramatically. That is the point I am trying to establish. Hilary Benn: I understand that is the point you are trying to establish, but I would not agree with the assessment. As you will have seen, the response to the publication of that document, which was widely welcomed by a number of people who take a very close interest in the issue of conditionality, I think that demonstrates that people regarded it as a change. I would accept that people's perception of what was going on has lagged behind reality. What that set for the very first time very clearly was a matter of policy in a policy document that we would no longer be doing the things we had done in the past. I accept entirely we have been doing less and less of it over time. The second thing it represents is a clear statement of where we stand, which is very important in relation to what we are now trying to persuade the World Bank, in particular, to do. Chairman: The only thing I would say to you, Secretary of State, is that it still remains the fact that all of us get campaign postcards and letters saying, "It's time the British Government stopped forcing governments to privatise as a condition of aid". So there is some need of a statement which says, "That's not actually what we are doing". Q27 Ann McKechin: Following on from Mr Davies's question, Secretary of State, can I clarify that in effect because the World Bank and IMF are still imposing economic conditionality for the donee countries very little has actually changed in terms of the way in which they are able to make their own decisions. For example, last year in Zambia (which is one of the countries which will benefit from the 100 per cent debt relief) it was a condition of their PRGF that they had to have almost a nil deficit on their budget, which resulted in about 5,000 teachers not being employed. Are you saying, because HIPC conditionality is still continuing as part of this current debt relief process at present with the World Bank policies, that that type of conditionality would still be likely to be imposed on them? Hilary Benn: The situation in Zambia has now changed. When I was there earlier this year I asked what the current position was in relation to that, and that has freed up since then. The truth is that both the World Bank and the IMF have been reducing the amount of conditionality which they impose. In relation to privatisation and trade liberalisation it has declined since the 1990s. I understand that trade conditions currently count for less than two per cent of the conditions used by the Bank, and generally they focus on reform of customs agencies, the share of World Bank programmes, and conditions covering privatisation have also decreased; and around half of programmes had such conditions in 2003. I think it is worth making the point that those two institutions themselves are in a process of change. There is less conditionality than there was in the past; but I welcome the fact that the IMF itself has looked at what it is doing; and I welcome the fact that the World Bank is currently undertaking that review. We will discuss at the autumn meetings what the outcome is when the review itself is published. Q28 Richard Burden: Could I take you on to the recent report by ActionAid, which made a claim that as much as two-thirds of the aid provided by the developed world could be counted as "phantom aid" rather than real aid. You have given a fairly robust response to some of the claims in that report. I was just wondering if there were any aspects of the report which you feel are valid and, if so, what those are; and where are the ones you think are not valid? Hilary Benn: In truth it was a bit of a Jekyll and Hyde report, if I may say so; because most of it was a very interesting study of the question of effectiveness. The trouble was that the bit relating to phantom aid, if I may use the phrase, was spun - and I was very strong in my response because I do not accept that debt relief is phantom aid; I do not. When I was in Ghana last year (and they had a great debate about whether to participate in HIPC; they did; and they now earmark that money they no longer have to spend, as a result of having reached HIPC completion point, and local authorities use it to build new facilities) one of the things I saw was a new school building. I think I may have told the Committee before, they paint a rainbow and they write "HIPC benefit" underneath to demonstrate this is part of the debt relief. It is not a phantom school building; it is a real school building. I have seen it; I took a pic of it. I do not accept it is phantom. I do not accept that expenditure on consultancy is phantom aid. It goes back to the question Mr Bayley was asking about capacity. Helping countries to reform their customs administration so they collect more revenue, and we provide technical assistance to do that, is certainly about improving the prospects of development, because if governments have got more money they can then choose to spend on health and education, or providing technical assistance to anti-corruption commissions, as we are doing. I fundamentally disagree with that description because I think it clouded what the result of the report is about, which is: how can we ensure that aid is effective? That is a debate all of us are interested in. Q29 Richard Burden: Perhaps you can come on to the technical assistance issue in a second. Just on the issue of phantom aid, I understand the point you are making and it has some force, but would you accept there is also an issue if debt relief is counted as aid in the situation, say, of a country which has not actually been making any debt repayments, gets debt relief but it does not actually produce any additional resources? That is a point ActionAid make, and that presumably does have some relevance, does it not? Hilary Benn: Clearly, if debt relief were to result in no additional resources being available then it is clearly not a benefit to that country. As a result of the HIPC process a lot of debt service payments countries were making they are no longer making, and those are additional resources. I know there has been this other debate that money for debt relief has to be additional to money for aid. When the Comprehensive Spending Review was agreed last summer DFID got the increase in its budget that it is going to get between now and 2007/8; that included money for additional work on debt relief. That is how we funded the multilateral debt relief initiative. In the end, if it is additional then it is additional. I know some people appear to say, "We will be happier if you could say, 'Here's the pot for aid, and here separately is the pot for debt relief'", If the sum total is the same, what is the difference? The fact is, it is additional. That is the key. I have always found it a rather theological argument, to be honest. Q30 Chairman: How do you answer what I would call the "Botswana point". The argument is that debt relief is a reward for irresponsibility, and that those countries that actually have managed their affairs better --- well, this is part of the argument that even some of the G8 members are putting down that it creates a bad signal. How do you square that? Hilary Benn: I am well aware of the moral hazard argument. Why are we doing this? Because in the end, notwithstanding what has happened to countries in the past, if countries are currently faced with this terrible choice between servicing unsustainable levels of debt and not having enough money (to go back to Mr Bayley's original question and progress towards the MDGs in Africa) is it right to sit back and allow that to happen? I think Nigeria (which we have not touched on) is a really good example of that. Part of what has been agreed is, of course, this debt cancellation agreement for Nigeria. Nigeria has a long and very troubled history. If you had said a year ago, "What do you think the chances are of the Paris Club reaching agreement on a debt cancellation agreement for Nigeria?" you would have found almost nobody was prepared to countenance that it was possible. Why has it happened? It goes back to Mr Davies's point, because of changes in governance that are beginning to happen in Nigeria: the attack on corruption; the reform of public financial management; the greater transparency; and what planners and Mr Ngosi and the team have done. Nigeria has said it will earmark this money in a fund. NGOs, I understand, are going to be part of the process for overseeing how the money is spent. You could say, "Well, it was Nigeria's past rulers who were responsible for all of this, and acted very badly, and military dictatorships and so on", but Nigeria is the largest country in sub-Saharan Africa; its GDP per head is $350; there are a lot of very, very poor people; and if Africa is to meet the MDGs Nigeria has got to meet the MDGs; and this debt cancellation agreement is going to help it to be in a better position to do it than would otherwise have been the case. Q31 Mr Hunt: Secretary of State, one of the few very specific commitments made at the G8 was to do with access to ARVs for HIV/AIDS sufferers. I know that everyone would welcome the fact that there is a date, even if some people would like the date to be sooner, by which ARVs will be made available to all those who need it. Going to ActionAid for a moment, they estimate the cost of that could be $18 billion. In the context of a total, of an additional £25 billion going to Africa by 2010, if it is going to be that much, do you have a different estimate as to the cost of expanding the availability of ARVs; and is that included within the sums that have been agreed? Hilary Benn: The sums that have been agreed are available for all of the needs that there are: health, education and the fight against HIV/AIDS. Where are we currently? Last month 500,000 people were on ARV treatment in Africa - we are not quite sure where that will get to; it is a million globally; it is 500,000 in Africa. With the 3 by 5 Initiative, which the World Health Organisation set out, we are probably going to get about halfway by the end of 2005. The UK is the second biggest donor in the fight against AIDS in the world, as you will know, Mr Hunt. We have committed 1.5 billion over the next three years. It is partly about the availability of the drugs, and it is partly about building up the capacity of health services to deliver this treatment. What I welcome about what the G8 has done, clearly 3 by 5 comes to an end as a target at the end of this year, because five has passed; and the fact that the G8 was able to agree this new target and said it wanted to get as close as possible to it is, I think, significant. It is hard going. It is partly about the amount of money, but the other part (and this is an issue for the global funds as well as for donors) is: how do we make the money we have got currently work as effectively as possible? It is only if we do both of those things we are going to be able to progress. As far as the global funds is concerned, it estimates that it needs an additional $7 billion, as I recollect over the next couple of years; and the replenishment conference is going to be here in London in September. Q32 Mr Hunt: I am sure the G8 would not have agreed to this target if they did not think it was achievable. We would obviously like to scrutinise the progress towards achieving that target. Would you be willing to publish a programme which indicated how many extra people you would hope to get onto ARVs in Africa over the next five years, so that we can look every year and actually see how much progress we are making towards that target? Hilary Benn: If you are talking about the UK alone - and this is not obviously a responsibility for the UK alone - I am sure that as part of that process (and we may come on to that: the monitoring of the implementation of these commitments through the arrangements that are going to be put in place) part of that will indeed be monitoring the progress that is being made against achieving that particular target. I do not think we are yet at the stage where we can say, "If we want to get everybody on by 2010", it depends what your estimate is of how many people are going to need it in 2010 and we cannot be sure because that depends on what progress we are making in improving prevention. You might have one estimate now on current rates of growth; it may come down if countries are successful in preventing people from becoming HIV Positive in the first place. Undoubtedly we will need to be able to report on a regular basis collectively (and that is why I say it is not just a question for one country) on the progress we are making towards achieving that target. The target itself may move depending on the success of other things we are trying to do. Q33 Mr Hunt: We could perhaps have a target based around percentage of people who have HIV/AIDS who have access to ARVs in Africa. I think my concern is really that there is some mechanism by which we (and I appreciate it is not just the UK) on behalf of the public can actually scrutinise how much real progress is being made. It is very difficult to do that when there is a target which is five years away. Hilary Benn: I accept that. I think the best figure is the figure that the World Health Organisation is currently producing, reporting on the number of people who are on treatment, because then we can watch as the numbers go up. It may be difficult to forecast where we hope to be at a particular stage in the process, but I undertake to reflect upon it. Q34 Richard Burden: If we could just return to the issue of technical assistance. I understand the point you are making: it is easy to say technical assistance, bad - not real; or, all consultants, bad - not real. There is presumably still an issue that does need looking at there. One of the points made in the ActionAid report is that we are talking on 2003 figures of round about a quarter of total aid going on technical assistance. The OECD themselves have said that aid figures are sadly deficient when it comes to technical assistance. How do you think we can better monitor technical assistance; whether the money is being well spent, or whether we are actually paying over the odds? Hilary Benn: There are two issues there: there is how much you pay for the technical assistance; and what benefit is being derived from it. If one is talking about, say, the use of consultancy, clearly part of what DFID's staff do is to provide support; we also take on other people to assist in that process. The proportion of DFID's bilateral budget which is spent on consultancy, as I recollect, is now about five per cent; a few years ago it was ten per cent; so it is a falling proportion. The test is, for the project people have been taken on to do, have they been successful? We have a very well established system in place in DFID for assessing the success of those programmes that consultants and others are working on, and people can see that. The point I simply make is that the idea in some quarters that somehow technical assistance is not really about development and it is about something else, is an idea we do have to challenge head-on. It arises out of the discussions we have with our partner countries we work with; there are things they want help and assistance with. You with be aware particularly, Mr Burden, of some of the technical assistance we give the Palestinian authority through part of that programme; the help we have given Grenada to recover from the hurricane. It applies in lots of different ways, and the aim of it is to help the developing countries build their capacity and build their ability in the end to do it for themselves. If we accept (which I think we do) that capacity is at the core of governance, I think it is one of the strongest messages in the Commission for Africa report, then doing things to help build capacity is a sensible use of part of our aid money. Q35 Richard Burden: You referred to the Palestinians and I take your point. One of the interesting things about that is, whilst the funding of various technical assistants comes from the developed world, and even though some of the technical assistants involved are no doubt educated in the US, and so on, they are actually Palestinians. I wonder if we are doing enough to seek out consultants in other parts of the world, say, India, Africa and so on, so that the technical assistance which is given is actually itself part of the capacity-building process, rather than importing technical assistance from outside? Hilary Benn: It is a very important point, and of course the contracts are let above a certain threshold through international competition. I welcome the fact that it is still a small proportion, as I recollect, of consultancies from the south, from the developing world; but I hope very much over time we are going to see that proportion increase; because there is a lot of expertise, a growing amount of expertise and experience and we should draw on that. No longer is it tied, as was the case in the past, to consultancies just from the UK. We have changed that; and it is now done on the basis of international competition. Some of the people winning contracts are indeed from developing countries themselves. That is a good thing and I hope it is going to grow. Q36 Ann McKechin: Turning now to the trade agenda, Secretary of State. There were some positive noises from the G8 Summit about the need to reduce subsidies and to widen market access. How do you think the G8 are going to ensure that --- should there be a successful WTO round in Hong Kong at the end of this year, developing countries, particularly in Africa, are poorly equipped to benefit from market access. The question of capacity has been raised. Also their preferential treatment may well be eroded as a result of any final settlement. We have seen recently the EU agreement on sugar is one example where that has happened and which has had possible adverse effects. How do you think the G8 can assist the poorest countries in terms of getting a fairer deal at the new round of talks? Hilary Benn: Dealing, first of all, with sugar: the regime has to change; I think everybody accepts that. The big issue is the amount of financial support that is given to those countries which have been most adversely affected. The truth is, as a result of this change, some developing countries are going to do well out of it, and some are going to do very badly; the same for bananas. The fact is developing countries are not undifferentiated groups; they have different circumstances; some are very heavily dependent on particular commodities. Therefore, the immediate issue for the European Union is the degree of financial support. The 40 million euros that is currently being made available for adaptation arising out of the changes to the sugar regime are, in my view, insufficient and we need to do more. That is the first thing. I know there was disappointment about what the G8 had to say on trade, but I do think the G8 sent a very clear message in relation to export subsidies, for instance, that they have to go. The European Union had agreed that a year previously when in the Framework Agreement it said that it would set an end date for export subsidies. The Prime Minister expressed the view in the press conference he hoped that would be 2010. That is certainly the position we have and which we are arguing. It will be at Hong Kong where this progress is made. That is the first thing. The second thing to say in answer to your question is that the UK has, of course, been providing a lot of support to developing countries to build their capacity to deal with the negotiations; to understand the consequences of the proposals that are on the table: although, as we saw in Cancun in the end, when they see what is before them, are just as capable as anybody else deciding whether it is in their interests or not. I welcome the fact we have moved away from where the debate was in the past both in relation to the WTO - and the people who said we did not want it - and those who gave the impression sometimes, rather paternalistically, that this was all too challenging for developing countries - it is not. It is the key actually to them improving their market access. I think the third thing we can do is to ensure that in those negotiations, through the terrible jargon of special and differential treatment, we recognise that not all countries can move at the same pace. It is vital, if an agreement is going to be reached in Hong Kong, that that is recognised in the details of the deal, because developing countries have different interests. I do not see that we will reach a deal unless that is the case. We really have to get a move on. Q37 Ann McKechin: Did the G8 at its Summit discuss the question of dumping, because that is one issue which of course has a direct effect on the world's poorest people? There was no indication from the final Communiqué that they were going to set a clear end date for dumping. Hilary Benn: If you are talking about the export subsidies, what was agreed was that an end date for export subsidies must be set, and it has to be a credible date. In the end it was not possible. Some people hoped, but it was not possible to get agreement there. I do think the G8 has sent a clear message. There is no doubt the focus of campaigning and lobbying activity between now and December is going to focus increasingly on trade, especially once we get the Millennium Review Summit out of the way, and that will be one of the big tests because it is indefensible. President Bush made a statement about it just before the G8. We have the agreement in principle in Europe to set an end date and now we have to go and agree that date. Q38 Ann McKechin: Finally, I wonder if you could just comment on the aid-for-trade (which is the IMF trade) integration mechanism, about whether you consider that will actually, in fact, add to the debt stocks of the developing countries because of granting loans to countries to cope with the costs of adjustment - whether that should be grants as opposed to loans? Hilary Benn: Well, as far as the UK is concerned, we are giving a lot of support in the form of grants to countries to support them in that process. I do not know about the answer to the second part of the question about the IMF. Mr Stegmann: I think part of the answer lies in the fact that the trade facilitation that will be given will come through either lending services at pretty low levels of loans and it forms part of the overall debt sustainability analysis for any particular country. I think that is the safeguard. Q39 John Bercow: Secretary of State, is there any chance of (or, for that matter, point in) a development round being concluded in the absence of a clear end-date for export subsidies? Hilary Benn: It would not be a development round and, therefore, it could not be concluded - to answer your question - if there was not an end date set for export subsidies. It seems to me it is one of the most important things that has to be achieved as part of an agreement. Q40 John Bercow: So, for the avoidance of doubt, there is no prospect of or purpose in having an agreement around - call it development or call it blue cheese - unless there is an end-date? So the Secretary of State then says not just an end-date is desirable but an end-date is essential, without which an agreement is not worth the paper on which it is written? Hilary Benn: I do not see how an agreement could be reached, bearing in mind it takes all the countries to agree at the WTO, if as part of that there was not an end-date agreed for export subsidies. Q41 John Bercow: Following on from Ann McKechin's enquiry, what is the strategy as far as the UK Government is concerned for securing progress on this matter to maximise the chance that by December, a period of less than six months from the failure to set a date, a date will be set? Hilary Benn: Principally, it is a question of political momentum, frankly, because when the negotiators gather in Hong Kong at the end of the year, in the same way that in relation to the G8 there was a very clear focus on aid and debt relief and, also, trade (although there was not the progress that some people hoped for, for the reasons that I outlined), there is a clear expectation on the part of all of those who are looking at those negotiations that this is going to be part of what is done. In the end, it is a question of will, and it was political will that led Europe a year ago to agree the framework agreement that said for the first time "Yes, we undertake that we now will have to set an end-date for export subsidies." It is political momentum and pressure that led President Bush to say what he said, but it is going to be part of a negotiated settlement. I just think we all have to be very clear that we have to get a move on; people have to start demonstrating where they are prepared to move on particular issues and, as far as Europe is concerned, the British Government having said 2010 is the end-date that we would like to see happen, argue the case with our European colleagues in support of that, recognising that the trade negotiations are, of course, the responsibility of the Commission. I think that is the best way of achieving it because if you had said two years ago: "What are the chances of an extra $25 billion a year in aid for Africa? What are the chances of a debt cancellation agreement? What are the chances of a debt deal for Nigeria?" you would have had very few people who would have thought it was possible. What changed was, in the end, enough people said: "We have got to do this". I think, in the end, that is what is going to deliver a deal, but nothing is certain and it depends on what people choose to do when they get there, and in the preparation. Q42 John Bercow: The difference, Secretary of State, I put it to you is that the effectiveness of campaigning and communication on the issues of aid and debt relief are vastly greater than in relation, so far, to trade. In other words, put it this way: there is a general agreement that trade distorting subsidies to Western agricultural production are damaging, that they prevent the developing world having a chance to compete and grow, that it is all very disgraceful, and so on and so forth. However, when it gets down to the specifics, things that will actually hurt decision-makers in developed countries, requiring them to explain themselves to powerful bested interests, the initial resolve seems quite quickly to be weakened. I would like to put it to you that there are two very specific and rather different tasks here. One is to recognise that very often in trade policy things, Chairman, are not what they seem. For example, when there is a commitment to phase out subsidies that distort trade, when you look at the detail you very often find that actually what developed countries have in mind is shifting subsidies from one category to another. So I would like to ask you whether you agree that the Green Box category of subsidies requires to be fundamentally reviewed. Would the British Government press, for example, for the World Bank to look at that whole set of issues and satisfy themselves on the subject - in other words, satisfy themselves either that those subsidies are not substantially trade distorting or that, if they are, countries cannot be allowed to get away with claiming that they are doing a good job and they are improving performance and they are reducing trade-distorting subsidies when, in fact, all they are doing is replacing one form of trade distortion with another. What is the harm in the British Government, very up-front, very dynamic and very forward looking, saying: "This is something that needs to be looked at; let there be an independent review and, obviously, it has got to be done well in time for the possibility of reaching an agreement in December"? Hilary Benn: There are two points you make. One is, quite rightly, about the political difficulty of countries moving on this. Seventy per cent of the European budget was spent on the CAP in years gone by; it is now down to 40 per cent and that has been the result of a process of change and adaptation. It is difficult, and it is more difficult for some countries than others, but you have one form of political pressure which is domestic and you have another form of political pressure which says: "In the interests of development across the globe and, particularly, in Africa, if we are serious about Africa meeting the MDGs, if we are serious about them building a better life for their people then this is something that we have to do." It is what the balance of force is between that. Secondly, there is no point in reaching agreement to get rid of the export subsidies if it does not actually have that effect. As part of the negotiations there is obviously lot of technical detail that has to be gone into but it is important that people are satisfied, as part of those negotiations, that people have done what they have said they are going to do. I think developing countries will be in the best position, as they look at what is being proposed, to satisfy themselves that what is being offered will actually have the beneficial consequence that they are looking for. Therefore, my view is that we should look at all of the change and ensure that they are, in fact, going to enable - the purpose of all this is to enable developing countries to participate more in the global economy, to export more to us and to improve the lives of their people. We should look at the means of doing it, whatever they are. Q43 John Bercow: Let us be clear, then, on my second point, Secretary of State, that it is, after all, not accidental that living standards are being damaged and that there is not a proper supply of public services in the developing countries as a whole; albeit they are not homogenous and there are great differences between, there is a broad theme here that it is the knowing, deliberate and calculated policy of the richest governments on earth to bolster their trade at the expense of others. Are you broadly in agreement with that proposition, that there is a quite deliberate process in which we think it is more important to subsidise our agricultural exports because of the satisfaction that it provides to a certain sector in our own countries than it is to stop the deliberate deterioration in the living standards of people in sub-Saharan Africa? Hilary Benn: That has undoubtedly been the case in the past but we are in the middle of a process of change. If you had said ten years ago: "What are the chances of Europe saying 'We are going to set an end-date for export subsidies'?" you would not have found very many people who would have thought it was possible, yet that is what happened last July. Now, when that date is going to be is what the negotiations are about, but what I think that demonstrates is how this political argument and process is moving. Have we got a long way to go? Yes, we have, but have we moved from where we were before - as is the basis of your question - yes, we have moved. John Bercow: Let us go a bit further then, Secretary of State, because this is really rather a curious case, in the sense that if you champion the cause of an end-date and if you very explicitly set out to the reluctant parties in this matter, for example, France and the United States, the devastating consequences of failing to stop this damaging behaviour, it is not in any sense a doubled-edged sword for H Benn; you will be even more popular, Secretary of State, in the country than you currently are because people will say: "Hilary Benn, the Secretary of State, is setting it out in terms; he is being quite explicit, and he is saying if there is not an end-date and if the French insist on behaving in a way that satisfies a particular sector in their own economy but worsens living standards this is how many people in the developing world will continue to suffer; this is the quantifiable extent to which resources available for the public services in sub-Saharan Africa will be reduced." It is not actually all that difficult to envisage; you could do, as a department - and you would probably find it would satisfy government advertising requirements - a magnificent score-sheet, could you not, of what will be the consequences for the developing world if other countries do sign up, and what will be the consequences for the developing world if they do not? What I am getting at here, Secretary of State, is that although the detail is complex - and I readily accept that and there is much negotiation to be undertaken - the moral imperative is overriding, and it is possible, is it not, in broad terms to quantify both the benefits of reform and the desperate damage of failing to achieve it? You could do that in very explicit terms. The French probably would not like it but the French do not have a vote in Leeds Central. Q44 Chairman: You cannot resist the blandishments of John Bercow's style of populism, can you, Secretary of State? Hilary Benn: Well, I can. The passion evident in putting that question in support of trade as a means of enabling Africa to earn its way out of poverty is one I would not disagree with. It is not about anybody's popularity, if I may humbly say; the case is self-evident. I think there is a greater focus on trade now than there was in the past, and I welcome that. It goes back to the point I made earlier about telling the full story. The answer is that even with more open trade, if one takes Darfur (a subject about which I know Mr Bercow you feel extremely passionately), without political progress and without peace and stability it does not matter what happens in Hong Kong; it does not matter what happens on aid and debt relief. Therefore, all of these things have to be in place, but there is no doubt whatsoever that enabling developing countries to participate on a more fair and equitable basis in the global economy - in the end, enabling them to raise their own financing for development because that is what we want in the end. People say: "Where are the resources going to come from for aid in 10 to 15 years' time?" Well, if this works, if there is peace and stability and good governance and people come and invest in Africa, that is what we want, because you have got to have something to sell. There are agricultural products but you have got to have other things to sell, and Africa's tragedy has been that people have not come to invest in Africa. Forty per cent of the wealth it generates itself every year flees the continent. As someone put it: "If Africa cannot hang on to half of its own money, or just under half, how does it expect anyone else to come in and invest?" Now, with investment, with peace and stability, with good governance, with creating a climate in which economic development can take place, enabling the continent of Africa to trade on a more fair and equitable basis is the long-term key to changing people's lives. Aid and debt relief help, and they are very important along the way, but this is where we can really make progress. That is why the talks matter so much. I do think the world understands that better now. Is a good outcome guaranteed? No, it is not. You are asking me can I say with certainty an end-date will be reached. I cannot tell you that, but what I can say is if we are serious about making progress this is one of the things that we have to do. Q45 John Bercow: We are, nevertheless, extremely grateful to you for pressing for 2010. Very briefly, on the other side of the equation we all accept that if liberalisation goes ahead there will be some losers. Would you not agree, further to what you were saying earlier about special and differential treatment, that it would be perfectly fitting for money saved in agricultural support subsidies (by this country and others) to be used to bolster special and differential treatment for the nations that in the short and medium term will lose out? Hilary Benn: Whether the money comes from that source or from other sources, and we have a rising aid budget, I think it is very important that, going back to Ann McKechin's point, when it comes to managing transition (and you are right, change to a different type of economy does involve winners and losers, and that is another thing we have to be honest about), in the end it is for countries to determine how they want to deal with that change and do they want to go down that road, but I think it is important that we provide support for those countries that are going to be affected by that transition so that it can manage it in as effective a way as possible. We have seen in the groupings that have come together in developing countries that people are beginning to understand better now that there are different interests. In the past, people have thought: "Well, all developing countries have the same interests". They do not. That is why the devil is indeed in the detail, because it depends how those different interests are taken into account and on that will depend whether, in the end, a deal can be done - alongside all the other things that we have discussed. John Bercow: I am very grateful, Secretary of State. Thank you. Q46 Mr Singh: Secretary of State, you mentioned the importance of peace and stability just a few moments ago. Hilary Benn: Yes. Q47 Mr Singh: You will obviously agree that conflict seriously undermines development and governance in Africa. Are you disappointed that the G8 did not deal properly with the issues of arms proliferation? Hilary Benn: We got a form of words in the Communiqué. As you know, Britain (Jack Straw made his speech in the Autumn) wants to get the world to agree a news Arms Trade Treaty. It is going to be difficult - let us be honest, it is going to be difficult - but I think it is the right thing to do because arms, combined with people who decide in their heads that they want to fight, are the cause of a great deal of under-development. Africa has had more than its fair share of conflict. Different countries take different views, I think, but we have got to try and do this because unless we are more effective at controlling the flow of arms then we are denying ourselves one of the means, but it is only one of the means, of dealing with the conflict that has caused that under-development and meant that a number of countries in Africa have not been able to progress. It is an important part but you also need a political process and you need people to deal with their differences not by fighting but by coming together and reaching agreement. I hope we can make progress, but it is going to be hard going. Q48 Mr Singh: What are the chances of, say, India, Russia, China and the USA changing their stance on an international arms trade treaty? I understand they are quite opposed to any concept of that at the moment. Hilary Benn: They are in a position to answer that question rather than I. All I can say is that the UK Government is going to push this. A bit like the discussion we have just had in relation to trade, it is about persuading people that this is something that we ought to do if we are serious about dealing with one of the sets of conditions that give rise to under-development. I think we just have to argue the case. As with the last question, do I know what the outcome is going to be? No, I do not, but I think it is worth making the effort, in exactly the same way as we have made the effort on aid and debt relief in the run-up to the G8 summit. Q49 Mr Singh: There is a review conference, I think, in 2006 of the UN programme of action on small arms. Is there any chance of any progress being made on this issue before then? Hilary Benn: I do not know is the short answer. Can I think about it and drop the Committee a note? Is that all right? Can I just say, on small arms, we have been strong advocates of what has been known as the transfer control initiative, which has been trying to address this problem of small arms and light weapons, because most of the people who have been killed in the conflicts in Asia and in Africa have been killed by, bluntly, the wash of Kalashnikovs and other weapons that have come out of the former Soviet Union and which are in very easy and free supply. Part of what we are doing is trying to have more effective control of that and part of what we are doing through our aid programme and other things through the conflict pools (?) is when peace processes come to succeed, obviously, to take the weapons off people, and that is why work on DDR is so important. First of all, you have to disarm people's minds - that is stage one - and then you take the weapons off them and give them a different way of living their lives. We have to make progress on all of that, but, yes, small arms are responsible for most of the people who get killed. Q50 Mr Singh: Is it something that you will pursue during our Presidency of the European Union? Hilary Benn: We have a number of priorities. Clearly, the position that Europe takes in relation to that is going to be important. I am very helpfully advised that we hope to start a formal negotiating process in the UN in the second half of 2006. One of the things I hope we can make progress on in Europe out of our Presidency is the EU/Africa strategy which Louis Michel (?) has promised, I think, to publish in draft in October. That is going to be about the contribution that Europe can make to helping Africa to progress. I think one of the issues that Europe is going to have to look at is where can Europe make a particular contribution? That will go alongside the new development policy statement that has just been published and which we will be discussing, and, also, the new development instrument about which there is a lot of argument and debate. Q51 Mr Singh: Is there any linkage, Secretary of State, between debt relief, aid and African defence budgets? Are any conditions imposed? For example, if debts are being removed entirely - 100 per cent for some countries - how can the world be guaranteed that the money saved by those nations will not be spent on arms? Hilary Benn: One has to take as the starting point in all of this that countries have the right to acquire the means to defend themselves. That sets the framework for the Export Control Act and the arrangements we already have in place from the UK. When we take decisions as the UK, when it comes to how we give our aid, then, of course, one of the things that we look at is what is happening to trends in public expenditure. Going back to the earlier point I made: if we are giving aid people are going to want to see that expenditure on the things that really tackle poverty - health and education - are increasing. We take decisions about the way in which we give our aid. I suppose I should have mentioned in answer to the earlier discussions we were having, raised particularly by Mr Davies, that we have a range of aid instruments. At one end, Zimbabwe, we do not give any money to the government at all but we do have a significant AIDS programme. Why? Because AIDS is a big problem in Zimbabwe. We do it through NGOs and others. That is one end of the spectrum. Direct budget support is the other end of the spectrum and there is a range of methods that we can use in between. That is how we form a judgement about where the country is going, what priorities it has set out and then we adjust the aid instruments that we have got accordingly to deal with the issue that you have raised. Q52 John Barrett: If I can turn to the link between investment, poverty reduction and the improvement in governance in countries, we have all heard people describe aid as "poor people in rich countries giving to rich people in poor countries", and earlier today you gave examples of how, in relation to Uganda and Sierra Leone, action had to be taken for a variety of reasons to make sure that aid was being efficiently delivered. What more can DFID do, without infringing on the sovereignty of these countries, to make sure that the developing countries themselves actually improve their governance so that aid is efficiently spent and goes where we and other donor countries would like to see it ending? Hilary Benn: As I indicated in answer to Mr Davies earlier, I think this is going to become the source of increasing debate. I welcome that, actually, because it is an issue not just for us as donors but, of course, it is an issue in the countries themselves. There is a fine balance to be struck here because, in the end, a developing country government should be responsible to their own people - not to us as donors. You could conceive of a system where you put all sorts of controls in place; you would end up with the money that donors were giving, in effect, being the government of the country taking those decisions, and that is not in the end where we want to end up. Where we do want to end up is where people give their own governments a hard time, just as you give me a hard time. That is one of the things that was so striking about the bit of research work done by the Commission for Africa. I think we popped some questions on the end of an omnibus survey done in a number of African countries and one of the questions was: "Who do you hold responsible for the state of your country?" and the majority answer in every case was "The Government". I found that very reassuring because it shows whoever is in government gets the blame, wherever it is they happen to be. It is both about capacity, which we have talked about, but it is also about building the expectation on the part of people that governments should be doing something for them; that people should be asking questions: "What have you done with the money? Why are you spending this much on defence as opposed to this much on health?" How do we do that? In part by the aid instruments that we use, as I indicated to Mr Singh a moment ago, partly in the nature of the relationship that we have got by encouraging our developing country partners to set out what they themselves are trying to do to improve governance, and to make that part of the aid relationship. So, if setting up an anti-corruption commission is part of that, then that is something that we can take into account in deciding if we have a "performance related" element to our budget support; to say: "Well, you have not made as much progress as you said you were going to make" and apply a bit of incentive in that way. I have to be honest: this is quite a difficult process because we have got to get the balance right. I must say, I am very open to what I hope is going to be a lively debate, which I am sure the Select Committee will participate in, on exactly how we do this. Have we got it absolutely right now? I am not entirely sure, but we need to find mechanisms that do not result in us, in the end, being a former colonial power that is trying to run the country, and we have to find mechanisms that really enable people in those countries to hold their own governments to account. We have got to find the right way of doing that. Q53 Hugh Bayley: I agree with you, Secretary of State, that some very major steps forward in terms of policy and commitments by G8 countries were made at the G8 summit and at the preparatory meetings leading up to it, and that those commitments would not have been made if the UK Government had not given the priority to Africa which it gave to Africa. What needs to happen now is a programme of work that ensures that those commitments are met. How will the implementation of the promises made at Gleneagles be monitored and by whom? Will you, Secretary of State, consider the proposal made by Professor Nkulu the Head of the NEPAD Secretariat at a speech to the ODI earlier this month, where he proposed that there might be some process of peer review and mutual accountability that applies to donor countries and not just to recipients of aid, where as you know there is a peer review process as part of NEPAD? Hilary Benn: In relation to donors, there is the existing DAC peer review process, as you know, Mr Bayley. This is the big question. The body where this is going to happen, the monitoring commitment, is going to be the Africa Partners Forum, because up until now the G8 has been monitoring, in preparation for its commitments on Africa, through the G8 Africa Connection Plan. One of the most important things that came out of Gleneagles on this issue was recognition that there now needed to be a joint plan because, in the spirit of partnership, "Why is this happening?" "Because Africa is taking a lead in helping itself". That is one of the reasons politically why we were able to make progress, because people could see not only was this morally the right thing to do but now is the time to do it because of change that is happening in Africa. What the G8 agreed, and it is certainly my view, is we need a joint plan that is jointly monitored. The Africa Partners Forum is the mechanism to do it. There are some things about the way it is constituted currently, including the level of representation of people who come to it, that need to change, because I think we need more senior representation at the Africa Partners Forum. I know from talking to many colleagues in Africa how much importance they attach to it and what we need is a body which is able to, first of all, chart what all the commitments are and to monitor progress in implementing them but, crucially, where commitments are not being implemented - if things are getting along, great - has the power and the authority to make sure that those who are not doing what they promised to do jolly well get on and do it. We have some way to go in ensuring that that is the case. In part, it is about sustaining the political pressure that got us to Gleneagles and the outcome that was achieved, I think, does represent significant progress, and it is how we sustain that politically, because that is how we achieved this. That would be the best means of ensuring that people do the things that they promised they are going to do. Q54 Hugh Bayley: Just two quick supplementaries: will you publish in advance the dates of the Africa Partnership Forum? Will you publish the reports which are made to those meetings and the outcomes from them? You mentioned the OECD: I wonder, Secretary of State, if you could say what is the timetable for action on the OECD's Development Effectiveness Agenda? Hilary Benn: The answer to the first question is yes, 4 and 5 October - the first meeting. The answer to the second question is yes, they are published in the papers, and if you are talking about the follow-up to Paris, which I think you are referring to, then we aim to agree by September. We left a number of square boxes, as I am sure you know, at that rather interesting meeting, and the aim is to agree by September the numbers that are going to go in to fill the boxes to demonstrate that we are not just talking about co-ordination and harmonisation, we have actually set some targets, which we will work to deliver it. I hope that is helpful. Q55 Chairman: Thank you, Secretary of State. Just one final point: we have the Presidency of the EU as well. Some of our EU partners - I mentioned Belgium, but there are others - do not quite share exactly the same perspective as the UK. Can you say what we will be doing during our Presidency, perhaps, to increase the contribution of the EU to Africa and perhaps ensure that their concern - the understandable concern - with the near-abroad does not actually conflict with that? Hilary Benn: This balance of argument, the different interests that different bits of Europe have got, has been with us for quite sometime. Of course, with the accession states, they brought with them a whole new near-abroad. I think one really has to pay tribute to Europe, because that agreement reached, in the discussion we had at the dinner on the Monday night and confirmed at the meeting on the Tuesday, to set this EU/ODA/GNI target for the 15 Member States of 0.56 per cent with a floor for each one of the 15 of 0.51 if they have not reached it, and the commitment of those 15 to undertake to reach the 0.7 per cent by 2015 (?) - was, in one sense, extraordinary. Very few people thought it was going to happen. Therefore, I think Europe deserves enormous credit. I think this was Europe at its best and, at a time when there is a big debate going on about Europe, its purpose and what it should be trying to do, here really is an example of Europe coming together and saying, "Hey, we are going to do this". That one decision will deliver two-thirds of the additional $25 billion a year in aid for Africa that the Commission for Africa recommended and Europe did at one fail swoop. So I think Europe has done a lot already with that, but I think the place where these debates are going to be played out will be (1) in the Development Policy Statement, which we will come to discuss, (2) in the EU/Africa Strategy, which we hope to bring to the Council in December and, the third, when it comes to the way in which we do things, will be around the development instrument. The European Parliament has some very serious reservations, as I am sure you know, about the draft which the Commission has currently produced, and we are going to be working to try and find a way forward. I discussed that with the Development Committee of the European Parliament when I was there last week. Europe is making an important contribution. The final point I would make is that the process of reform at the EC's own development programmes, which has gone some way, still has some way to go; we have got to keep working on it. Q56 Chairman: Thank you very much indeed. I am sure we will have many of these exchanges, but thank you very much for giving us your time today. Hilary Benn: Thank you. I look forward to it. |