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Public Bill Committee Debates

Draft European Communities (Definition of Treaties) (Amended Cotonou Agreement) (Community Aid Internal Agreement) Order 2007

The Committee consisted of the following Members:

Chairman: Mr. Martyn Jones
Allen, Mr. Graham (Nottingham, North) (Lab)
Barrett, John (Edinburgh, West) (LD)
Blackman, Liz (Erewash) (Lab)
Burns, Mr. Simon (West Chelmsford) (Con)
Crausby, Mr. David (Bolton, North-East) (Lab)
Davidson, Mr. Ian (Glasgow, South-West) (Lab/Co-op)
Dorries, Mrs. Nadine (Mid-Bedfordshire) (Con)
Featherstone, Lynne (Hornsey and Wood Green) (LD)
Foster, Michael Jabez (Hastings and Rye) (Lab)
Hoyle, Mr. Lindsay (Chorley) (Lab)
Kumar, Dr. Ashok (Middlesbrough, South and East Cleveland) (Lab)
Lazarowicz, Mark (Edinburgh, North and Leith) (Lab/Co-op)
Leigh, Mr. Edward (Gainsborough) (Con)
Lilley, Mr. Peter (Hitchin and Harpenden) (Con)
Purchase, Mr. Ken (Wolverhampton, North-East) (Lab/Co-op)
Simmonds, Mark (Boston and Skegness) (Con)
Thomas, Mr. Gareth (Parliamentary Under-Secretary of State for International Development)
Glenn McKee, Jyoti Chandola, Committee Clerks
† attended the Committee

Fifth Delegated Legislation Committee

Tuesday 26 June 2007

[Mr. Martyn Jones in the Chair]

Draft European Communities (Definition of Treaties) (Amended Cotonou Agreement) (Community Aid Internal Agreement) Order 2007

4.30 pm
The Parliamentary Under-Secretary of State for International Development (Mr. Gareth Thomas): I beg to move,
That the Committee has considered the draft European Communities (Definition of Treaties) (Amended Cotonou Agreement) (Community Aid Internal Agreement) Order 2007.
The Chairman: With this it will be convenient to consider the draft European Communities (Definition of Treaties) (Agreement amending the Cotonou Agreement) Order 2007.
Mr. Thomas: It is a pleasure to serve under your chairmanship, Mr. Jones. Given your nationality, we have no doubt about your capacity for the post and to keep us in order.
The European Union is more important for development than ever. It is active in international politics, makes policies that matter to developing countries and spends 55 per cent. of the world’s aid funds. As the world’s largest multilateral grant provider, largest single market and main trading partner of most developing countries, the EU can potentially make a huge contribution to eradicating global poverty.
The Cotonou agreement was agreed about five years ago by the EU and African, Caribbean and Pacific partners. It was considered a landmark agreement, bringing together political dialogue, trade and development co-operation. It represented an important step forward in the EU’s relationship with the ACP countries, with its clear overall objective to reduce poverty and its emphasis on the principle of partnership. It included several important changes; notably, measures to improve and simplify development assistance, making good governance underpin the agreement, and a new trade deal that maximised ACP states’ access to the EU market while promoting gradual integration into the global economy.
The Cotonou agreement provides for a revision every five years. For the first review the EU and ACP states agreed that the overall framework and key objectives and principles remained valid, but they wanted to introduce some measures to improve their implementation and address new political and security issues. The agreement’s trade provisions were not considered as part of that review. Hon. Members who follow those issues closely will recognise that economic partnership agreements are being negotiated separately.
The new order before the Committee details the agreed changes. The Cotonou agreement’s central objective remains the reduction and eventual eradication of poverty. For example, new international agreements to the millennium development goals have been reflected in the new order and now provide a clear vision for moving co-operation forward between the European Community and ACP countries.
The changing security and foreign policy climate has also been taken into account, with ACP and EU states agreeing to co-operate in the fight against terrorism, combat the proliferation of weapons of mass destruction, try to prevent illegal mercenary activities and support the work of the International Criminal Court. The procedures for conducting political dialogue and addressing concerns over human rights, democracy and the rule of law have also been updated and enhanced. Several potential areas of co-operation have also been strengthened, such as in health, youth development and the use of information and communications technologies. A new emphasis has been given to countries facing post-conflict or post-natural disaster situations.
Finally, management and implementation procedures have been amended to strengthen the ACP states’ ownership, ensure more effective and efficient implementation and co-ordination of assistance from the European development fund and improve the investment facility managed by the European Investment Bank. The UK played an active role in discussions with EU partners and the Commission and supports all the changes agreed. They will strengthen our long-standing partnership with the ACP states. The amendment of the Cotonou agreement also provides for the establishment of a new framework for the European Community’s co-operation with ACP states and, crucially, the EU’s overseas countries and territories as well.
In June 2006, EU member states also agreed a 10th replenishment of the European development fund, which is the subject of the second order to be considered by the Committee. A total of €22.682 billion—approximately £15.746 billion—will be available between 2008 and 2013. That represents a significant increase over the ninth European development fund. The UK will contribute €3.36 billion—£2.3 billion—which is roughly 14.8 per cent. of the total. That too is a significant increase from our contribution to the ninth European development fund, reflecting our confidence in the European Commission’s ability to deliver poverty-focused assistance to ACP and overseas countries and territories partners.
Mr. Edward Leigh (Gainsborough) (Con): The Minister mentioned a very large sum of money to be expended. What procedures will be used by this House to ensure that the money is spent wisely, economically and efficiently?
Mr. Thomas: The hon. Gentleman himself serves on the Select Committee on Public Accounts, which has scrutinised European Community aid and the Department for International Development on many occasions. I am sure that the Public Accounts Committee and the Select Committee on International Development will continue to have opportunities to scrutinise how funds are spent through the European Commission. I have no doubt that there will be many debates on how moneys are spent through the EU scrutiny process—monies in terms of the European development fund and monies spent through the EC’s main budget.
The majority of funds, some €17.8 billion, will be allocated to country and regional programmes, with most of it supporting African countries. Intra-ACP and inter-regional programmes will take some €2.7 billion, with €1.5 billion allocated for loans and interest rate subsidies through the investment facility. The European Investment Bank will supplement those resources with an additional €2.03 billion. Some €280 million will be available to OCTs.
EU member states will have the opportunity to increase their contributions to the European development fund if they should want to. As aid is scaled up in the context of the EU’s 2005 aid volume commitments, member states will be able to look to the EDF as a vehicle for channelling additional resources, if they so wish.
Mr. Ian Davidson (Glasgow, South-West) (Lab/Co-op): The Minister indicated that countries will be able to add to the amount that they spend through this mechanism. Given the EU’s poor record on efficiency and extravagance in relation to aid and given the amount of money that it wastes on bureaucracy, why would any country in its right mind want to give the EU additional money to spend, when it can spend it far more efficiently and effectively and focus it far more on poverty itself?
Mr. Thomas: I have a very high regard for my hon. Friend in virtually everything except his attitude to the European Community. His characterisation of the effectiveness of European Community aid is completely unfair. His description may have been appropriate some 10 years ago, but it is entirely inappropriate now. I hope that he will sit down with the new addition to our ranks, the hon. Member for Grantham and Stamford (Mr. Davies); I suspect that my hon. Friend will have much to explain to him about just how effective European Community aid can be.
The revised Cotonou agreement and the 10th European development fund represent further important steps in Europe’s efforts to help ACP countries meet the millennium development goals. I therefore commend the two orders to the Committee.
4.38 pm
Mark Simmonds (Boston and Skegness) (Con): May I start by saying how pleased I am to be serving under your guidance, Mr. Jones?
As the Minister rightly pointed out, the EU is the world’s largest provider of development assistance, the world’s largest single market, despite what was agreed at last week’s conference, and a major player in international trade. As such, it is well placed to assist in the alleviation of poverty through development assistance and international trade. It is vital for the millions of people in the developing world who live on less than a dollar a day that the EU fulfils that potential by delivering efficient and effective aid and by making trade agreements that are beneficial to developing nations; ultimately, they are the only way to provide sustainable poverty alleviation and wealth and job creation.
The Cotonou agreement signed in 2000 was to last 20 years. It allowed for political and trade relationships and development co-operation and its central objective was the reduction and eventual eradication of poverty. It initially established five interdependent pillars: an enhanced political dimension; increased participation; a more strategic approach to co-operation, centred on poverty reduction; a negotiation and conclusion of economic partnership arrangements; and an improvement in fiscal co-operation.
The original Cotonou agreement, subject to five-year reviews, is going to have significant and important additional facets inserted into it. Before I come to those, I want to highlight that the trade element of the Cotonou agreement currently exists as a waiver to the World Trade Organisation, but that that must be replaced by EPAs by 1 January 2008. The Minister tried to move the discussion on EPAs to a different day, but we have to discuss the matter today, as it is an essential part of the Cotonou agreement. We need to discuss the progress, or lack of progress, that has been made, and what will happen if all the EPAs have not been concluded by the end of the calendar year. There does not seem to be an option B.
The Conservative party recognises that international trade has lifted millions of people out of poverty, including an estimated 500 million in south-east Asia in the past 20 years. We support the Doha round and hope that there will be a successful conclusion. We support EPAs, but are concerned that they are off track and not sufficiently development focused. However, the benefits of freer trade are immense. It leads to faster growth rates, cheaper imports and new technologies, and it enables Governments to generate revenue that can then be used to develop their own public services.
Despite preferential access through the Cotonou agreement, access from the ACP countries to the European Union has declined from 6.7 per cent. in 1976 to 3 per cent. in 2002. The Cotonou agreement is absolutely vital. It covers 750 million people worldwide. The Conservative party supported it when it was agreed in 2000, and it also supports the insertion into the agreement of procedures that will fight terrorism and support the non-proliferation of weapons of mass destruction.
We are discussing two statutory instruments today. The first is on the Community aid internal agreement, which considers the financial framework and the allocation of the resources that have been provided under the Cotonou agreement. It will affect eligible countries between 2008 and 2013. Britain has pledged £2,333.5 million between 2008 and 2013—a significant sum of money. My hon. Friend the Member for Gainsborough was absolutely right to raise with the Minister the issue of how that aid will be effectively monitored to ensure its effective distribution and to make sure that it is spent on the purposes for which it is intended.
Mr. Davidson: Does the hon. Gentleman agree that it is important for the Minister to provide information on a country-by-country basis, listing all the members of the Cotonou agreement and stating how much money each will receive? I am sure the Minister can do that, and it would be very helpful.
Mark Simmonds: I am grateful for that intervention. As the hon. Gentleman knows, the Minister is on top of his brief and I am sure that he will be able to provide the necessary information. However, we are not talking only about money going directly to countries through EU mechanisms. Some of that money also goes through multilateral instruments such as the World Bank, and that, of course, involves doubled administrative costs that could be taken out to allow more money to reach the front line.
The second statutory instrument includes provisions that may not have been relevant in 2000 when the original agreement was pulled together. It allows the Cotonou agreement to cover security concerns including combating terrorism, WMDs and the International Criminal Court. It also includes, quite rightly, more explicit references to the millennium development goals, tackling killer diseases such as HIV/AIDS and extending regional co-operation, all of which is eminently sensible. There are 10 to 15 additional points contained in the agreement that I will not bother reading out.
There are some particular questions that I would like to put to the Minister, which I will tackle on an instrument-by-instrument basis, even though it is sensible to discuss them together and they are inextricably linked. I will first deal with the Community aid order. It aims to describe the framework through which member states are to contribute to the Community’s development assistance, which will be provided under the Cotonou agreement from 2008 to 2013 to those countries that qualify. Not all countries are bound by that agreement, however. It is a combination of ACP countries and overseas countries and territories, as outlined in the appendix that came with the original document. It would be helpful if the Minister stated how much of the UK’s contribution—the UK has pledged to contribute 14.6 per cent. of the total EDF in 2008-13—will go to areas classified as overseas territories and countries, and how much will go to the other ACP countries.
How will the money be allocated? Will it be front-loaded or allocated on an even, year-by-year basis? What percentage of the EU’s development assistance will go through multilateral organisations such as the World Bank, and how much will go in direct budgetary support? That is a theme to which I shall return, as the Minister will not be surprised to hear.
Building on the point made by my hon. Friend the Member for Gainsborough, what mechanisms exist to monitor and ensure that the resources that have been allocated are used effectively? The hon. Member for Glasgow, South-West was right to highlight the historic problems that parts of the EU development mechanisms have had in delivering aid late or not delivering it at all, and in having high administrative costs and high levels of corruption involved in the distribution of aid. It is essential that British taxpayers retain confidence in the development mechanisms and instruments if we are to see, as we on the Opposition Benches wish, the continued engagement of DFID and the British taxpayer in helping to improve lives in developing nations and making a significant contribution to alleviating poverty.
It is intended that this statutory instrument will be ratified by every single member state. Perhaps the Minister would say how many member states have ratified the instruments to date, and whether he anticipates any problems with ratification.
Mr. Thomas: I will help the hon. Gentleman by allowing him to draw breath and catch a glass of water. Eight EU and eight ACP states have so far ratified the two orders. All 27 EU states and 51 of the 77 ACP states need to ratify the agreements by the end of November 2007. A late ratification would mean a delay to the resources of the 10th EDF becoming available. We remain optimistic that we will receive ratification within that time scale.
Mark Simmonds: The Minister may also be aware of the issue of budgetisation. For the benefit of members of the Committee, that means integrating the EDF into the EU budget, which may mean more parliamentary scrutiny than there has been previously, but there are significant implications for the beneficiaries in terms of focus and predictability of funds. It would be helpful if the Minister said a little about what proposals are being put in place to safeguard the amount that has been dedicated to development assistance. What are the implications of the EDF budgetisation in terms of ring-fencing and ensuring that development resources are specifically allocated? What discussions has he had with his European counterparts about separating out the development budget from other external action budgets?
Mr. Thomas: To clarify, we have not agreed to budgetise the EDF. There was considerable and robust debate on that issue two years ago, but we made our opposition to it very clear, precisely because of concerns about what might happen if money was shifted from the EDF into the main budget. One of the reasons that we are great supporters of the EDF is its focus. Roughly 90 per cent. of EDF moneys go to low-income countries and we want to protect that continuing focus.
It is stated in paragraph (k) of the annexe to the explanatory memorandum that there will be a performance review of the 10th EDF in 2010. Obviously, that EDF will have expired by then. There is a time lag that will have to be considered in the analysis and dissection of its performance. Will that be a public document and will the Minister confirm how that analysis will take place? Will there be a comparison of delivery mechanisms, ensuring that we can properly debate the most effective mechanisms for the ninth, and hopefully the 10th, EDF?
I would like to raise some general points with regard to EU performance. Although the Minister has rightly said that progress has been slow, I dispute whether that happened in the past 10 years—I would say it was over the past five years. Still, 20 per cent. of EU aid arrives over one year late, compared with only 3 per cent. for other EU donors. The administrative costs of distributing aid via the EU are significantly higher than via the Department for International Development and many other donor communities—the costs are about 8.7 per cent. of the total budget spent on administrative costs for the EU and between 5 and 5.5 per cent. for DFID.
It is also proposed in the 10th replenishment EDF to spend more on budget support. The Conservatives support building governmental capacity and understand the important factor of governmental issues. However, the Minister will be aware, for example, of the recent corruption scandals that hit Kenya, as a result of which every country that was contributing bilateral aid, including our own Government, withdrew that support. Yet, despite the corruption and public knowledge of it, the EU continued to provide direct budgetary support through the mechanisms that we are discussing. Conservative Members are uncomfortable with that, and I want the Minister to give the Committee an assurance that in the 10th EDF structures will be put in place to ensure that such a situation cannot be replicated.
It would also be helpful if the Minister were to explain what discussions have taken place on increased efficiency and effectiveness of delivery and the lack of focus on poverty in parts of the EU aid-delivery mechanism. However, he is right to highlight the fact that the ninth EDF concentrated mainly on poor nations.
I move quickly on to the second statutory instrument under discussion, the agreement amending the Cotonou proposals and the additions, some of which we have discussed. Will the Minister say whether the development money that is being proposed for use in addressing new political security concerns, rather than the alleviation of poverty, is contained within the 10th EDF, or whether it is additional money? Is that money included in the target of 0.7 per cent. of gross national product by 2013, which we all support?
Mark Simmonds: I am grateful to the Minister for that clarification. Paragraph 7.3 of the explanatory notes refers to the
“‘essential elements’ of the agreement”
and says that those
“relate to human rights, democratic principles, the rule of the law...the counter proliferation of weapons of mass destruction.”
It continues:
“A consequence of an obligation being an essential element is that the parties may, as a last resort, suspend the Cotonou Agreement in relation to a party that fails to comply with that obligation.”
It would be helpful if the Minister were to explain against which benchmarks or criteria a country is judged to have failed on those essential elements. If those criteria had been in the Cotonou agreement, would members have failed and been removed from Cotonou co-operation?
What mechanisms will monitor those organisations to ensure that they use funds effectively? I do not want to dwell on economic partnership agreements, but it is essential that the Committee understands how these proposals will link with EPAs. Developing nations are concerned that that money will be used to open up their markets symmetrically, whereas the essence of EPAs is to be asymmetrical and enable developing nations more easily to export their goods to the EU.
Perhaps the Minister will deal with two final points. First, will the additional sums for structural adjustment costs in the implementation of EPAs come out of EDF 10 or are they separate? Secondly, will the aid-for-trade budget, which has rightly been a major plank of many discussions, be additional to the sums allocated to EDF 10? I do not know whether he was present, but he will be aware of the significant discussions that took place on those issues at last summer’s meeting of the ministerial committee on development finance co-operation at Port Moresby.
Conservative Members support international development contributing to the alleviation of poverty in the developing world. We want stronger mechanisms to monitor the efficient and effective delivery of aid, and we remain to be convinced that the EU is the most efficient aid channel. We accept that progress has been made, albeit slowly. There is an understanding in Europe that Europe needs to do better and to do more to achieve the effective and speedy delivery of aid.
The Minister knows that Conservative Members support the measure, but we must ensure that the significant sums that are being put into international development retain the support of the British public.
The Chairman: Before calling the next speaker, I must ask hon. Members to keep their conversations down, or preferably not to have them at all. I call Mr. Barrett.
4.57 pm
John Barrett (Edinburgh, West) (LD): The five-yearly review of the agreement is welcome, as are the additions that the Minister has mentioned, particularly in relation to those changes that will restrict or help to prevent conflict. However, does he think that the lack of progress on arms control through a raft of other agreements is working against the battle against conflict in a number of zones?
The hon. Member for Boston and Skegness has said everything that I wanted to say, apart from the fact that the key issue is to ensure that aid, whether from the UK taxpayer or through the EU, is effective. I think that all members of the Committee agree on that, and the hon. Member who is a new recruit to the Labour ranks might initiate an interesting debate on the Government side, as he did during many years on the Conservative Benches when he was a member of the Select Committee on International Development.
As I have said, the review is welcome, and my only question relates to the importance of restricting the flow of arms to conflict zones.
Mr. Thomas: Let me try to answer the hon. Gentleman’s point. It is clear that the continuing absence of an international arms trade treaty and the international controls that Members on both sides of the Committee want to be implemented will make it easier for the flow of small arms and light weapons into countries where there are conflicts, particularly in Africa, to continue. It also makes it harder for us to crack down on the unscrupulous arms brokers who are engaged in this trade. One of the things that has driven the progress that we have made on an international arms trade treaty is the strong agreement within the European Union. We have been able to build a steadily growing consensus out of the different connections that each member state has with ACP countries. We still need agreement with one or two countries, and we are continuing to work to persuade them of the validity of the case for an international arms trade treaty.
John Barrett: Finally, the ultimate sanction is the threat of suspension of aid deliveries to countries that are signatories to the agreement. We must not allow people who are often the poorest of the poor and the most needy in those countries to become victims because of their Governments’ actions. We have seen the case of the Mugabe regime in Zimbabwe. The actions of Governments must not facilitate the suspension of aid to the most needy in those countries.
5.1 pm
Mr. Davidson: May I start by complimenting the Minister on the work that he does in this field? He has been to my constituency on several occasions, where he has always spoken well. Indeed, he is spoken of well by the people there, because of the contribution that he makes.
Britain is contributing £2.3 billion. Why are we giving that amount? Is there a formula on which that contribution is calculated? Is it part of a European trade off? The Minister has indicated that it was open to us to contribute more. Was it open to us to contribute less and spend the money in a more efficient manner elsewhere? I ask that because I am not convinced that the European Union adds much value to aid spending.
I regret that the Chairman of the Select Committee on Public Accounts is no longer with us, because at a recent meeting of that Committee we examined the way in which a number of multilateral agencies spent their money. When we considered the proportion of aid given to the poorest 10 per cent. in the world, we noticed that it made up 15 per cent. of EU expenditure, whereas the figures were 28 per cent. for the World Bank, 23 per cent. for the United Nations and 54 per cent. for the African Development Bank.
The Committee then examined the proportion of aid given to the poorest 40 per cent. in the world: the International Fund for Agricultural Development gave 54 per cent.; the Asian Development Bank gave 82 per cent.; the African Development Bank gave 84 per cent.; the United Nations gave 51 per cent.; and the World Bank gave 70 per cent. The proportion of European Union expenditure on the poorest 40 per cent. in the world was 28 per cent. The poorest in the world did not even get a pro rata share of the money that the European Union was spending on aid and development.
I fail to understand why we continue to throw good money after bad in this case. It is clear, as I think that the Minister agrees, that more money is spent on Africa north of the Sahara than south of it. However, the populations do not compare. The numbers south of the Sahara are far greater, and they are far poorer. There seems to be a complete absence of focus on those in greatest need in EU expenditure on such matters.
The point about bureaucracy has already been made. Does the Minister accept that much more is spent on bureaucracy when spending is carried out through the EU than when it is carried out by his Department? I hope that he agrees with that point, because it is based on figures provided by his Department. Why are we spending money through an organisation that does so less efficiently than we do? Why do we give some money to the European Union, which then takes a cut and passes some of it on to the World Bank and other organisations, which also take a cut before passing it on to countries for budget support, when we could cut out the middlemen and spend the money directly ourselves?
Does the Minister accept the point, which has already been made, that a much higher percentage of EU aid arrives up to a year late compared with British Government spending? The EU should not be proud of that record. Will he accept that the proportion of European Union third world aid identified by the European Court of Auditors as either wasteful or fraudulent is far higher than the proportion of DFID aid so identified? Why are we giving money to people who allow it to be wasted or stolen, when we can distribute it much more efficiently?
Will the Minister list the countries involved in the agreement, as the hon. Member for Boston and Skegness has asked, and say how much money each is receiving? Why have the British Government strongly opposed moves by various countries to allow Cuba to join the agreement. On a number of occasions, the British Government have either vetoed that proposal or joined other European Union countries in lobbying against it. I find that difficult to understand, given the nature of some of the regimes that they have supported financially or in other ways in the past.
On economic partnership agreements, to what extent has DFID played a role in forcing some of these countries to open up their markets to competition, which will result in not only the privatisation of their services but the destruction of many of their domestic industrial and agricultural enterprises? The opening up of the third world to competition from the west might appear fair and equal on paper, but it is not balanced and has undoubtedly resulted in the spread of poverty and misery in some of those countries. The influences in the European Union driving that process forward have not been resisted by the British Government to the extent that many Labour Members would like. Incidentally, our side is being swelled by the minute, and who knows who will be joining us tomorrow, although we may soon be full up.
The Government’s record is much better when they deal directly with the third world on aid and trade. We have done a tremendous amount, and we have a clear focus on poverty, unlike the European Union, which takes the clear view that aid and trade should be an arm of foreign policy.
We will all be very grateful if the Minister can start by telling us what countries are in the agreement, and how much each will receive.
5.8 pm
Mr. Peter Lilley (Hitchin and Harpenden) (Con): I shall be brief, as the hon. Member for Glasgow, South-West has asked an array of telling questions that I would have asked myself, had I thought of them.
All the publications that I have seen from the Department for International Development are obscure on how the Department and the Government arrive at our contribution to the European Development Fund and why it is 14.85 per cent. rather than 14.95 per cent., 1.95 per cent. or 29 per cent. No indication is given. Is it anything to do with the combination of countries that form the membership of the Cotonou agreement? By and large, they are countries with links with or proximity to the European Community. Are they countries that we feel we would not otherwise help because our direct bilateral links are not with them, or are they countries that we particularly want to help, in which case why not do it bilaterally? What is the philosophy behind our giving through this collective organisation, the EDF, rather than bilaterally?
To what extent does the EDF subsequently channel money through multilateral funds and other multilateral organisations? I believe that a high proportion of other money from the European Union subsequently goes through multilaterals, and it has always seemed an odd business for us to give money to one multilateral organisation to pass to another and another before it finally gets to the countries and the poor people whom we wish to help.
Reading the papers, one cannot help noticing that we are considering the order because the original legislation gives us a fleeting opportunity as a Parliament to comment on something that one suspects will go through whatever our views or votes might be. The proposed constitutional treaty that the Government agreed in outline at the European Council will the give the European Union the power to enter into treaties in its own right. Under that arrangement, will the House be allowed to comment on measures such as those in the order?
5.11 pm
Mr. Thomas: On the last point, I have no doubt that we will continue to debate the issue. The hon. Member for Boston and Skegness asked about the 2010 review. I cannot tell him at this stage the detailed way in which that process will be conducted. However, there will be discussion among member states and the ACP states, and both sides will meet. Any changes that both sides agree need to be made to the Cotonou treaty will come before the House in the same way as these changes. Any changes to the European development fund either that arise out of the Cotonou review or that are needed more generally when EDF 10 is concluded will have to be debated by the House in the way in which we are debating the changes today.
Let me try to answer the questions that have been raised. I was asked to break down a little more the figure for the total amount of money between national, regional and intra-ACP. I gave some of those figures, but we expect €17.766 billion to be spent on national and regional programmes through EDF 10 and €2.7b billion to be spent through intra-ACP programmes. As I have said, €1.5 billion will be spent through the investment facility.
The hon. Gentleman also asked how we will draw up the programmes in the recipient countries. Before I deal with that, I shall address the right hon. Member for Hitchin and Harpenden’s more fundamental question of why we want to put aid through the EDF. No donor can provide both the level of aid and the aid to all the different sectors that a developing country needs. More and more, we are encouraging donors to specialise in the provision of aid. The Department has a comparative advantage, to use the jargon, in supporting health and education programmes, for example. I also like to think that we have strong expertise on private sector development.
The European Community is a donor that has a particular skill in terms of infrastructure, and we look to it in that respect. It also brings—perhaps to the horror of one or two hon. Members—considerable expertise to the provision of budget support in developing countries. There are sometimes misunderstandings about budget support, and there is sometimes a sense that donors simply hand Governments large sums to spend as they see fit without any checks, balances or monitoring arrangements. Indeed, my hon. Friend the Member for Glasgow, South-West, who is usually so accurate and astute, fell into that trap just a little bit—I am sure unintentionally in his case.
Let me put it on record that are a whole series of checks and balances that we and the European Community use before taking the route of budget support. We do not provide such support in isolation from technical assistance to build up a country’s financial systems and ways of monitoring. We will often provide additional support to help the public accounts committee, as it will be in many cases, of the Parliament in question to help it to build up its effectiveness to monitor how money and resources are being provided.
Mark Simmonds: Is the Minister confident that in every single country where DFID gives money to the Government through direct budgetary support or where British taxpayers’ money is given through the various EU development instruments, because of the excellent monitoring mechanisms—I use his words—that are in place, none of that money goes astray or is used for purposes for which it was not intended?
Mr. Thomas: There are very strong controls in place. I do not believe that we can ever relax about the quality of the controls, but we always want to strengthen still further the quality of our monitoring arrangements. One of the things that is particularly attractive about the 10th EDF is the incentive tranche ensuring that where there are improvements in governance in a country, further resources can be provided to it. Let me make it clear to the Committee that, where we have profound concerns about the level of corruption and the attitude of the Government in question to that corruption, we provide resources not as budget support, but in other ways through NGOs or UN organisations. I hope that that answers the point raised by the hon. Member for Edinburgh, West, who rightly said that the people of a country should not be penalised for the actions of their Government. Zimbabwe is a classic case in which resources are provided to UN organisations and NGOs and not to people.
My hon. Friend the Member for Glasgow, South-West painted a picture of the European Community that, as I told him, would have been more appropriate 10 years ago. When my right hon. Friend the Member for Birmingham, Ladywood (Clare Short) was Secretary of State for International Development, she famously described the EC as the worst aid agency in the world. Since that time—this was in part started by her, and it has been carried on under my right hon. Friend the current Secretary of State—there has been a considerable effort to seek improvements in the way in which the EC operates, not least through the creation of EuropeAid, a dedicated agency managing the implementation of Community aid.
We have seen a much greater decentralisation programme in-country. If there are more staff with more responsibility in the recipient country, we can understand better what is going on in that country and what works there. As the European Community has set up its reform programme, one of its elements has been a much greater decentralisation of spending. We are now seeing to a much lesser extent decisions initiated and finalised in Brussels, and many more decisions originating in-country with staff who are development experts with an understanding of the situation. Those staff are making suggestions to their superiors in Brussels, after which there has to be a discussion with member states. That greater technical expertise is based in-country and is helping to drive improvement.
Mr. Davidson: It is undoubtedly the case that there have been some improvements, but does the Minister accept that the statistics that I gave, whereby only 20 per cent. of EU aid is going to the poorest 40 per cent., which came from the National Audit Office report of March 2007, show that improvements in focusing on poverty have not been particularly substantial? Does he also accept that the figures none the less indicate that the aid distributed by the European Union has a much higher percentage administrative cost than that of DFID? That is much more inefficient than delivering aid directly. Indeed, developments in the countries to which the Minister referred is further evidence of the development of Europe as a state that wishes to have its own civil service, its own bureaucracy and its own foreign policy.
Mr. Thomas: My hon. Friend threw a number of matters into that question. Another reason why I remain a strong supporter of the EC providing development and assistance is that if aid were repatriated back to member states, we would not see the same level and volume of aid for development. I suggest that my hon. Friend looks at the record of various right-wing Administrations across the whole of Europe, including the UK, to see the record of their commitment to development spending in the past. Among other things, that makes the case for continuing to provide resources through a multilateral route.
My hon. Friend asked a series of other questions. One further reform that we sought from the European Community, both on EDF funding and EC funding more generally, was a much greater focus on poverty, and my hon. Friend has rightly challenged me on that. When we held the presidency of the European Union, renegotiation took place on the principles by which development assistance is provided. At centre stage in that document, we secured a commitment to making progress on the millennium development goals—the raison d’être for development assistance—and we see that encapsulated in the reforms to Cotonou included in the order.
My hon. Friend cited some figures. By way of challenge, I shall cite some others. Information received through the OECD’s development assistance committee, which charts how much aid is given, shows that the EC is increasing the percentage of its aid that goes to low-income countries, the poorest countries in the world, from some 51 per cent. in 2002 to the current level of 56 per cent. Those figures are for the EC as a whole. The bulk of European development fund resources, estimated to be just over 90 per cent., goes to low-income countries. I ask my hon. Friend to distinguish between EDF resources and the total European Community budget.
I agree with my hon. Friend that 56 per cent. is not good enough. We and other countries should continue to push for more resources to be provided to the lowest income countries. In other parts of the world, middle-income countries have significant pockets of very poor people, and we must provide them with assistance, too.
Mr. Thomas: My hon. Friend is absolutely right that the agreements are a recognition of our responsibilities as a European family of nations to the least developed countries. There is a moral responsibility to act, but I believe strongly that it is also in Britain’s interests to provide aid to developing countries. Afghanistan, while not relevant in this context, is a powerful example of a country whose development has not been supported with assistance. The resulting terrorism and opium poppy have done considerable damage worldwide.
My hon. Friend touched on a broader point about aid effectiveness: rich donors providing aid in a more co-ordinated and effective way than they have done; the recognition of the talents of staff within agencies; and the need to concentrate those talents where they are greatest and leave other areas of development to donors who specialise in them. Part of the reason why continue supporting the European Community in doing more is that it has particular expertise in the provision of infrastructure. That is just one of the areas that it has expertise in. On that basis, I think that we should continue to support it.
Mr. Davidson: I am grateful to the Minister for giving way. He is being very generous.
Mr. Lindsay Hoyle (Chorley) (Lab): Too generous.
Mr. Davidson: No, no, adequately generous.
How much of the EU aid relating to infrastructure is tied to contracts being awarded to EU companies? I understand that Britain has quite rightly freed up a large proportion—if not virtually all—of its aid, but that is not true of the aid of many other European countries or, indeed, of the EU. Is it appropriate for us to be contributing British taxpayers’ money to the EU only for it to demand, for example, that the contracts be awarded to Italian contractors?
Mr. Thomas: We have quite rightly untied our aid, as my hon. Friend says. The Pergau dam affair was a powerful driver for untying UK aid. We have made the case for other EU member states to untie theirs and many have. We will continue to make that case.
In answer to the question from the hon. Member for Boston and Skegness on how decisions are taken on how EDF money is spent in-country, what happens is that EC delegation staff in the developing country draw up a draft strategy for spending the development assistance. That happens after discussions with the Government of that country to hear their priorities for spending and after discussions with other member states that are providing aid in-country. We expect there to be discussions with other international organisations such as the UN and, equally importantly, with the many civil society groups that provide aid in-country, which often have crucial perspectives on how aid can be driven. Those draft strategies are then discussed in Brussels by member states before they can be signed off.
The right hon. Member for Hitchin and Harpenden asked about how we arrived at the figure that we will pay through the 10th European development fund. The decision was taken in the broader context of the discussions about the financial perspectives for 2007 to 2013. It was taken as a result of a specific set of negotiations about the EDF and, in part, because of our sense that the EDF is becoming increasingly more effective. I have said that over 90 per cent. of resources go to low income countries. Perhaps I should also say that over 80 per cent. goes to the least developed countries. I touched on infrastructure, but let me spell it out: transport, water and energy form the bulk of how the EC provides assistance.
The right hon. Gentleman also asked whether we will increase our aid through the additional voluntary mechanism, but I am afraid that he will have to wait for the outcome of the comprehensive spending review for that information. We will look at that issue, and we believe that the EC is improving its effectiveness. In that spirit, I commend the orders to the Committee.
Mr. Davidson: May I say how much I regret the fact that the Minister chose not to respond to the points that I made about Cuba? I think that it is appropriate to allow Cuba to join this arrangement, yet the Government have continually objected to it. Will he clarify whether, as part of the review, he intends to support Cuba’s entry to the agreement?
Mr. Thomas: I will look into my hon. Friend’s specific point about Cuba and write to him on it. My understanding, though, is that countries that receive resources through the EDF are ones with strong historical, and indeed imperial, relationships with Europe.
Mark Simmonds: I thank the Minister for the responses that he has made, but I must point out that he has not answered all the queries put by me and other hon. Members. He needs to address a key issue, although I understand that why he cannot do so today. Perhaps he will write to members of the Committee on it, or write to me and put a copy of the letter in the Library. We need a breakdown of where the EDF money will be spent—multilaterally or bilaterally—and of how much of it is going into direct budgetary support in the EDF 10 proposal. We need to know which countries get what proportions of the moneys. It would be helpful if he put that information in the public domain.
Mr. Thomas: I will write to the hon. Gentleman with more information on that breakdown, and indeed on the process for agreement on the further distribution of resources, although he will recognise that this is a moving target for him to shoot at, so to speak.
Mr. Thomas: I will be delighted to provide written confirmation of the information that I have already given to my hon. Friend on the increase in spend by the EC to low-income countries. I will also look at what additional written information I can provide to inspire him on the issue. I welcome his great interest and look forward to him continuing to attend such Committees and getting stuck into issues of great importance.
Mr. Davidson: May I point out to the Minister the fact that I am here as punishment for offences committed in the past, and probably in the future? I hope that today has been an indication to him, and indeed to the Whip, that it is perhaps more bother than it is worth.
Question put and agreed to.
That the Committee has considered the draft European Communities (Definition of Treaties) (Amended Cotonou Agreement) (Community Aid Internal Agreement) Order 2007.


That the Committee has considered the draft European Communities (Definition of Treaties) (Agreement amending the Cotonou Agreement) Order 2007.—[Mr. Thomas.]
Committee rose at twenty-three minutes to Six o’clock.

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