The Parliamentary Under-Secretary of State for International Development (Mr. Gareth Thomas): I welcome the chance to serve under your chairmanship, Mr. Pope, as we consider the many different documents before us and the key issue of how we make progresson achieving a better division of labour among EU donors.

The EU code of conduct seeks to improve aid effectiveness by addressing two issues. The first is global imbalances in aid allocations. The second is the problems caused by too many donors working in the same place. By global imbalances, I mean the way in which some developing countries attract many donors and a lot of funding, while others, which are equally needy, attract few offers of support or funds. Examples of donor overcrowding include the 17 donors working in the health sector in Tanzania and the 20 working in the health sector in Uganda. Such overcrowding inevitably takes up a lot of precious partner Government resources and time.

The Government have already begun to look at the problem of global imbalances in aid allocations. In our White Paper, we said that we would encourage the development assistance committee of the Organisation for Economic Co-operation and Development to increase its work on the issue. We also said that we would work better with multilaterals and other EU donors to tackle the problem and that we would look at our own allocation system. We recognised that donors, including the UK, need to work better together.

That does not mean that we will be transferring our programme to the Commission or, indeed, to any other donor, who might not be able to do the job as wellas us. However, EU donors share common values and aspirations, as articulated in the EU development consensus, which was agreed under our presidency in 2005. The consensus gives us a good basis on which to consider how we can work better with each other. The voluntary EU code of conduct sets out a framework for how we, as donors, can streamline what we do in developing countries without risking the quality or quantity of our aid.

In November 2004, EU Ministers agreed a set of actions to promote more joint working. The Paris declaration on aid effectiveness, which was signed at the DAC’s high-level forum in February 2005 by more than 100 donors and developing country Governments, also set out commitments and targets to increasethe pace of improved aid effectiveness. Developing countries have rightly become impatient with the lack of progress on the issue, and we can expect it to remain a major area for action. Indeed, it will be highlighted again at the next aid effectiveness forum in Ghanain 2008.

The EU code has many strengths: it is voluntary, flexible and practical; it places action at the country level and puts the partner Government in the driving seat; it has the potential to attract not only donors from the EU but all donors to participate and tomake a difference; it takes account of the fact that every developing country offers donors different opportunities to work better together; it does not prescribe stereotyped solutions; and, finally, it demonstrates EU commitment and will provide a useful platform at the next high-level forum. On that basis, I commend it to the Committee.

The Chairman: We now have until half-past 5 for questions to the Minister. I remind Members that questions should be brief and asked one at a time. I am sure that all Members will have ample opportunity to ask more than one question.

Mark Simmonds (Boston and Skegness) (Con): Let me begin by saying how pleased I am to serve under your chairmanship this afternoon, Mr. Pope.

Will the Minister explain what impact the document will have on the three parts of the EU that are responsible for aid—Relex, the directorate-general for external relations; Echo, the Commission’s humanitarian aid department; and the directorate-general for development? One is responsible for European aid, but the other two are under different commissioners. It would be helpful if the Minister were to explain how the documents impact on them.

Mr. Thomas: We see the division of labour as beginning to influence not only the Commission’s work in the three areas that the hon. Gentleman has described, but the work of EU donors as a whole. It will influence the EC plus the member states. We need to get better at sitting around the table as a group of EU donors, and with other donors too. We need to share best practice and look at what each country is doing in each area of development in the relevant country. We need to consider which has the comparative advantage and is better in particular areas and to recognise the need to draw back, when we can, from doing everything that we might have done in the past. If we have confidence in another donor, we should let them lead in that area.

John Barrett (Edinburgh, West) (LD): The Minister will be aware that there is already a lot of co-operation between EU donors, non-governmental organisations and non-EU donors such as the World Bank, the International Monetary Fund and many more. What additional value does he believe the code of conduct will bring?

Mr. Thomas: On occasion, there is good co-operation in many developing countries. However, there is frustration among many such countries at the huge number of donors working in particular areas and the fact that they often do not work together. That makes the hon. Gentleman’s slightly rosy interpretation of the degree of aid effectiveness unjustified. The division of labour document will provide a focus for discussions, in particular among EU nations, about what more we can do to streamline the demands that we inevitably place as donors on partner Governments.

Jim Cousins (Newcastle upon Tyne, Central) (Lab): One of the precursors of these better co-ordinated arrangements was the appointment by the European Union of a special representative to central Asia, with the precise object of better co-ordinating support for the republics in that region. Will the Minister say whether that has provided a useful model for the code of conduct arrangements?

Mr. Thomas: Many models and discussions have influenced how we arrived at this point and at the need for the policy that we are discussing. To be completely candid, what drives the division of labour document is, as I have said to the hon. Member for Edinburgh, West, the frustration of developing countries that donors do not work together more effectively.

In the sense that it brings donors together, the example given by my hon. Friend the Member for Newcastle upon Tyne, Central is a helpful sign. However, donors can do an awful lot more to work more effectively together. The document is about trying to provide a focus for discussion among not only EU donors, although it starts with them, but other donors.

Mark Simmonds: I want to ask the Minister about the guiding principles in the document. How, in practice, would the lead country be chosen in any individual circumstance? The document states that it would probably be the donor country that is most effective in the recipient country. Alternatively, would the choice be sector-driven or combine both considerations? We could get into a situation inwhich a less efficient country was responsible for a Department, such as the Department for International Development, of a more efficient country.

Mr. Thomas: The hon. Gentleman is right to say that if we were over-prescriptive about how the division of labour should be taken forward, there would be a problem. The intention is for the developing country’s Government to be in the driving seat. If that Government were to say, “We want this particular donor to lead,” we would expect and hope that other donors would be willing to follow that donor’s lead.

The truth is that there will have to be, as there are already, further discussions about aid effectiveness at country level with the developing country Government. The document provides a focus for the developing country Government to say, “You’ve committed to a better division of labour and to aid effectiveness—now sit down with us and let us talk about how we will implement things in practice.”

The measures are not about being prescriptive, although the hon. Gentleman rightly worried about that, but providing a focus for discussion at country level about how we move things forward.

Harry Cohen (Leyton and Wanstead) (Lab): Is there any preference in this development policy towards privatisation? The Minister will be aware that the World Bank was accused of having a policy on water privatisation that killed a lot of people, because the charges were too high for them. Is the European Union following a similar path? Is it neutral on, or even positive towards, state development of such important infrastructures, or is there a preference for privatisation?

Mr. Thomas: Let me reassure my hon. Friend that there is no preference for any particular economic approach set out in the document. We recognise that donors work in a range of areas, including the health and education sectors, governance issues and private sector development, and that they have particular skills in areas such as education, health and, sometimes, private sector development. Given the skills of our staff, it might be appropriate, in certain countries, for those staff to take a lead in our work with other donors. With other donors, it might be more appropriate for us to follow their lead and work with them in that way—for example, the Belgians have a comparative advantage on land reform in South Africa. There is no prescription to any particular economic approach set out in the document.

John Barrett: First, I must tell the Minister that I do not have a rosy view of this issue. I have often seen the problems involved in getting donors together for meetings, because we needed to find a room large enough to get every donor into. If I gave him the impression that I take a rosy view, I would like to correct that.

Clearly, what is most important is that aid has the maximum effectiveness. I am concerned that the proposal to limit the number of donors working in any sphere could create real problems. If what is required is the integration of health, education, housing, water and sanitation, does the Minister share my concern that concentrating on limiting the number of donors involved, rather than on the best way to make aid most effective, could cause problems?

Mr. Thomas: I apologise if I was unnecessarily provocative in my answer to the hon. Gentleman’s first question. He is right to suggest that a rigid focus on two sectors—or, indeed, three, as that is the number in the revised draft—would be a mistake. We have sought amendments to the document to recognise the situation that we face as a donor: in some of our key countries, we work in nine different sectors. Clearly, some developing countries’ Governments will want donors who work in many sectors to maintain their spread in those sectors. We have sought an amendment to reflect that fact and have thus far been successful in getting a key footnote written into the document to reflect our position, which is shared by a few other countries. However, it is important to have a number in the document, because there are now 25 countries that have to have development policies, including 10 that have only recently had to develop such policies. Encouraging as many countries as possible to limit the number of sectors in which they work will help to prevent an even greater proliferation of donors.

Mark Simmonds: There is a general understanding that we need to limit the proliferation of donors and that where harmonisation can be effected, it should be implemented. Will the Minister clarify his comments to the hon. Member for Edinburgh, West? Is he saying that where DFID is involved in more than two sectors in a country, unless the document is changed and the UK amendment is included, he will not allow UK taxpayers’ money to be the responsibility of another European nation?

Mr. Thomas: Let me be even clearer than that. If the Secretary of State or I are not confident that another donor, whether they are a member of the EU or not, has the ability to spend our money effectively, we will not put our money through that donor. Similarly, if we do not have confidence in the developing country’s Government systems, we will not put money through those systems. The important general principle is that where we can work together more effectively with donors whom we trust and in whom we have confidence, we should do so. We needed to include that caveat in the document, given the range of countries where we work in many more than three sectors. If the developing country’s Government want us to stay in that many sectors, it would be nonsense at this stage to commit dramatically to reduce the number of sectors in which we work. We know that we can do more on aid effectiveness, and in that spirit, we welcome the document.

Jim Cousins: When will the code of conduct andthe arrangements that form part of it link to a widerset of European security and defence considerationsin which, for example, improvements in customs administration, border control, nuclear security and so on might be involved? Which will come first?

Mr. Thomas: If my hon. Friend will forgive me for replying in this way, he must recognise that the issue is primarily about development spending—money which is predominantly focused on the needs of the very poorest. Customs regulation is important in the context of the trade that is necessary to generate the jobs that in turn generate incomes for poor people. There are often many donors working in private sector development in one developing country, and if they have particular leads in private sector development, it makes sense to begin a discussion about whether we can sensibly reduce the number of donors working in the area without compromising the quality or quantity of our aid.

Harry Cohen: Will the Minister say something about the impact of EU development policy on the terrible plight of people affected by HIV/AIDS in Africa? I was shocked some years ago to find that no single factory in Africa produced condoms, which I always thought were pretty important in the fight against HIV/AIDS. There are now one or two such factories, but does the policy before us allow for, or in fact encourage and help, the direct production of condoms in African countries, so that each country can fight that battle?

Mr. Thomas: My hon. Friend raises a number of questions. Let me reassure him that there are factories in Africa producing condoms—I have visited one and have a picture to prove it. The division of labour policy before us will not lead on its own to the distribution of more condoms, or indeed of any other sexual and reproductive health commodities. However, health is one area in which we are bedevilled by a huge number of donors—EU donors and a series of others such as the Global Fund to Fight AIDS, the World Bank and organisations from the USA and Canada such as the Bill and Melinda Gates Foundation. We must develop a much more joined-up approach in order to improve health systems in developing countries.

Mark Simmonds: The Minister, in response to my previous question, seemed to imply that there were circumstances in which withdrawal would take place from certain sectors in recipient countries. That, inevitably, will have an impact on DFID staff in-country and in the UK, and I wonder what analysis his civil servants have made to predict the fall in DFID staff numbers. They will no longer be required, because the work will be done by another European country.

Mr. Thomas: The hon. Gentleman and his party have often criticised the Government in general for having too many civil servants. He will be aware that my right hon. Friend the Chancellor of the Exchequer has placed a requirement on all Departments to reduce the number of their staff. We are busy looking at how we can continue to comply with that objective.

It makes sense to concentrate our staff, as we are doing, to help to provide a better, more focused service where we have confidence that other donors are picking up other areas in developing countries that need support. This is not about us withdrawing and leaving whole sectors of development isolated and forgotten. It is about us trying to work better with other donors who have particular skills in particular areas and who we and the developing country Government trust and have confidence in. We either put money through their systems, where we have confidence, or leave that area if in our view they are putting in enough money, allowing them to get on with their work with the developing country Government.

The example that I touched on was land reform in South Africa, where we work closely with the Belgians. They have a long track record of working on land reform in South Africa. They have the confidence of the South African Government. It makes sense for us not to put significant staff resources there. Therefore, we have gradually scaled back direct staff time in that area, because we have confidence in the relationship that the Belgians have with the South African Government.

John Barrett: The Minister will share my concern that, in order for EU development policy to be as successful as it can be, EU agricultural policy must recognise the development implications of the common agricultural policy. Are those concerns shared by the Minister’s European colleagues? Unless we get the CAP correct and agricultural policies change or improve, our development policy will constantly be battling against EU agricultural policy.

Mr. Thomas: The hon. Gentleman will know that there has already been reform of the common agricultural policy, which has allowed Peter Mandelson, the Trade Commissioner, to go a long way in proposing sensible measures to help us to get a deal in the Doha development round. The hon. Gentleman may remember, too, that we secured a commitment for a further review of the common agricultural policy. The preparatory work for that review is under way, and we certainly intend to press for more reform.

Anne Main (St. Albans) (Con): Further to the comments of my hon. Friend the Member for Boston and Skegness about scaling down staff, does the Minister have any concerns about the impact of that on evaluation and scrutiny of project delivery?

Mr. Thomas: No. The hon. Lady is right that we need to continue to evaluate and scrutinise what we do in our aid work. That is what we do, and we have scaled up and sought to improve the quality of our evaluation framework. The Secretary of State for International Development is expecting to make further comments on that issue in the not-too-distant future.

Harry Cohen: Plainly, there are efforts within what is before us today to improve the effectiveness of aid from the EU to the developing world, but my hon. Friend the Minister will be aware that there is a lot of criticism that too much of the aid gets left behind and spent in the EU countries themselves, rather than getting to the front line in those developing countries where it is needed. Will he assure me that, as a result of the proposals in the document, more money will go to the front line, rather than it being left behind?

Mr. Thomas: I can give my hon. Friend that assurance. I encourage him not to believe the right-wing sceptics who peddle the sort of argument that he played back to me. I think that the European Commission does a superb job. That does not mean that it cannot improve still further, but there has been dramatic reform over the past seven years in the quality, effectiveness and size of European Union aid.

I will give my hon. Friend just one example of the quality and effectiveness of EC aid. He may be aware that the Government of India have been seeking to get all their out-of-school primary age children into school, and that we have been seeking to support them in that process. Since 2003, this country, as a bilateral donor, has committed additional resources, as hasthe European Community. We have helped the Government of India to get an extra 9.5 million children into primary school during the period 2003-05.

More can be done to make the EC even more effective, but it has come a long way. We should not allow Conservative Members or others outside this House to continue to peddle the myth that the EC does not do a good job. It does do a good job. We should recognise that fact and press it to do more.

Mark Simmonds: We on the Conservative Benches wish to see British taxpayers’ money used effectively and efficiently for the maximum impact in the shortest possible time. If that means that funds should be transferred through highly efficient DFID structures rather than relatively inefficient EU ones, we should not be put at fault for pointing that out.

Further to the Minister’s response to my previous question about staff numbers, that is all very well as long as a reduction in the number of staff does not mean a reduction in the level of expertise that exists in DFID or in the effectiveness of aid delivery. On that basis, will he comment on general principle 10 in the document, which refers to

What does he think the document means by that?

Mr. Thomas: In answer to the hon. Gentleman’s point, it is perfectly reasonable for any hon. Memberto continue to press the EC to improve still further,but perhaps he needs to be a little careful with his comments about the EC. He should say whether he goes along with the line of some of his colleagues who argue that EC aid should be repatriated to member state Governments. If that were to happen, there would actually be a reduction, not an increase, in the amount of aid.

On the general principles, it is perfectly fair to say that, in making any change in the division of labour in-country, we need to ensure that the quality and quantity of advisory support from donor agencies is not reduced in any way. We certainly do not think that the document seeks such a reduction. We want to try to get a better concentration of skilled staff—not only ours, but those in other donor agencies. If we could concentrate more of our staff on a smaller number of sectors, we could help the developing country to be more effective in achieving its plans. Similarly, ifother donors could concentrate more of their staffon a smaller number of sectors, in other areas of development, they could help the developing country to move faster. That is the general principle behind the document.

We need to have discussions at country level and with the developing country and Government about who does what. There is not a rigid set of principles or a rigid implementation plan behind the document. The document is about providing a focus for a sensible discussion in-country, with donors sat around the table with the developing country Government to consider who does what and who does it best, and to hear what the developing country Government want to take forward.

Anne Main: May I bring the Minister back to his remarks on scrutiny? I am sure that he is well aware that at a joint evidence session of the Communities and Local Government Committee and the International Development Committee, Mrs. Tibaijuka had some difficulty outlining any completed projects when we asked where the aid had gone. On behalf of the British public, we need assurances that there are not just nebulous concepts of engagement, but ongoing projects actually being delivered. I hope that he will accept that we are genuinely concerned about the issue. This is not point-scoring at all.

Mr. Thomas: With the greatest respect to the hon. Lady, a little more research might help to provide more of those examples. If she were to drop me a line, I would happily provide a comprehensive list of projects and programmes, from which I hope she would seethat real benefits are being delivered to developing countries. I could certainly do that for DFID and EC programmes.

Jim Cousins: The document draws a distinction between so-called focal sectors and non-focal sectors—a curious concept. I hope that the Minister will not regard me as a right-wing sceptic if I say that I find the concept of a non-focal sector rather hard. Such sectors include science, education and research. We are in a fiercely competitive situation in respect of some such sectors. For example, we compete with France and Germany over the recruitment of overseas postgraduate students. How will that work under this code of conduct?

Mr. Thomas: I would not dream of calling my hon. Friend a right-wing sceptic, and I recognise that some of the language in the document is not always as accessible as it might be. I also recognise his point about the competition for student resources. To use his example, the document is about helping developing countries to improve their own education systems. Surely it makes sense for there to be a smaller number of donors working more systematically in a sectorsuch as education—providing the same amount of resources, but rationalising down the number of donors working in it to provide better support to the developing country Government.

As I said in answer to the hon. Member for Boston and Skegness, there is not a rigid implementation plan behind the code of conduct. The document is more about providing a focus to begin a more systematic conversation between the developing country Government and the donors in their country.

Mark Simmonds: It is clear from the document that many EU countries believe that development assistance is a significant foreign policy instrument. Does the Minister agree? Would he be comfortable for UK aid to be put behind a country co-ordinating aid expenditure if that nation still responded to tied aid?

Mr. Thomas: Those points are part of the discussions that we have to have in every developing country. I always encourage every donor not to tie their aid. In the European development consensus, we set out a number of values on which we think development policy should be based. If those policies and values were adhered to, that would open the door to our having confidence in the donor involved. I have given the example of our work with Belgium in South Africa, and we have also worked closely with the Frenchin different African countries. The French give us resources on occasion and we put resources into their work. In Niger, for example, we have helped them help the Niger Government to move things forward on primary education that much faster.

The issue is about considering the particular circumstances in particular developing countries with their Governments. To reassure my hon. Friends and Opposition Members, I should say that there is no rigid implementation plan. The document is about providing a focus for discussion about how we can do aid and development more effectively than in the past. On occasion, so many donors are operating in particular sectors that it becomes crowded and Governments are prevented from getting on as fast as they would like and making the improvements that they want.

Harry Cohen: The document states that the Commission’s analysis shows which EU member states are pulling their weight and which are not. What is the process from here on making member states that are not pulling their weight accountable and on putting pressure on them to pull their weight?

Mr. Thomas: We can all do more as member states. On the division of labour, once the code of conduct goes through, every member state needs to considerits own practices with the developing country Government and colleague donors and see what else they can do to help reduce the burden on developing country Governments. I see that as the way forward—no donor can sit back and relax. I agree that some have more to do than others, but all of us should take the code of conduct and consider what else we can do.

Mark Simmonds: May I move the debate on to the second batch of documents on the special framework of assistance for African, Caribbean and Pacific countries in relation to bananas? The framework was clearly a shambles, and it is described in the document as

The document also states that the Minister had, unusually, “given up”. Will the Minister explain that? Presumably he did not give up, but it is interesting that that is in the document. Clearly, the framework was not a success. Will the Minister assure the Committee that he and his officials are monitoring the situation very carefully, particularly with regard to the diversification of the economies that will be affected? Will he also assure us that the same mistakes will not be made on the sugar regime, which is a similar issue?

Mr. Thomas: The hon. Gentleman has made some important points about the lessons that must be learned as a result of the framework, which, it is fairto say, was not the European Community’s finest moment. Since I appeared before the European Scrutiny Committee to answer its questions on the framework in more detail, we have spoken to the head of the EuropAid Co-operation Office, Koos Richelle, regarding our concerns about how the programme has worked, or, indeed, not worked as well as we would have liked. We have also seen key parts of the Commission’s evaluation, on which our office in the Caribbean has commented. We expect there to be a full discussion among EU member states at official level at the next working group in late May.

Mark Simmonds: Obviously, a key issue forcountries that produce bananas, particularly Caribbean countries, is the current economic partnership agreement discussions about enabling them to trade better and more freely with the European Union. What position are those negotiations at? Is the Minister optimistic that a Caribbean agreement will be completed by the December deadline? What if there is no agreement when the World Trade Organisation waiver expires on 31 December?

Mr. Thomas: I am optimistic that we are making substantial progress. The Commission has put several proposals on the table to move the EPA negotiations forward, and I pay tribute to Peter Mandelson for his flexibility on that. He has proposed a duty and quota-free market access offer, which has caused some concern among one or two member states, but we are keen that there should be no rowing back from that offer. We now need all six ACP regions, and not just the Caribbean, to respond to the offer, which is more complex than I have described, to make progress. The Commission has recently made significant moves on this issue, but we need to give the six regions a little more time to respond. I am, however, optimistic about ending negotiations by the end-of-the-year deadline.

Mark Simmonds: May I ask two quick questions,one at a time, Mr. Pope, on the Commission’s joint background paper on energy co-operation? It is clear that all the money for phase 1 of the EU energy initiative, which was launched in 2002, still has not been spent or even allocated. Is the Minister nervous about taking phase 2 through the Committee, given that phase 1 has not been resolved properly?

Mr. Thomas: Let me try to be clear with the hon. Gentleman. In a sense, the explanatory memorandum now gives the Commission permission to go away and work up a draft proposal for an Africa-EU partnership on energy. The rough time scale for the publication of that strategy, if it can be agreed in time, would be the EU-Africa summit in Lisbon in December. The hon. Gentleman might be referring to the ACP EU energy facility, which has some £150 million set aside—give or take the odd euro. Later this month, we expect the Commission to publish details of how that money will be spent.

Harry Cohen: Does the EU development policy give sufficient encouragement for fair trade arrangements? I cannot see much evidence for it in the documents before us. Surely, such a policy must deal with trade barriers and customs problems. Will the Minister tell us whether a fair trade policy is being encouraged across Europe?

Mr. Thomas: My hon. Friend is right to say that the document on the division of labour does not touch on the great issue of improving access for developing countries to the EU market. The hon. Member for Boston and Skegness has touched on some of the trade issues, including economic partnership agreements, and the hon. Member for Edinburgh, West has touchedon negotiations at the Doha round. We need greater flexibility in the position of a number of developed country blocks. We think that Peter Mandelson has indicated some flexibility, but we need to see progress from our American friends and, indeed, one or two of the developed country blocks need to give ground in some areas.

I shall turn to aid for trade. My hon. Friend the Member for Newcastle upon Tyne, Central has touched on customs, but the issue also relates to infrastructure, on which the document on the division of labour might touch. Many donors work on infrastructure in order to make it easier for countries to trade. A smaller number of donors with more staff might well be able to provide better support to the Government of a developing country. However, there is no rigid plan for that. We need to sit down with such Governments and give the matter some consideration.

Mark Simmonds: On the paper on energy co-operation between Africa and Europe, what consideration was given to environmental concerns—for instance, the impact of climate change on energy and of energy on climate change?

Mr. Thomas: That is a very important point given the significance of climate change. We need to help developing countries to adapt to it, and to recognise the huge number of very poor people in developing countries who do not have access to energy. Helping them to access energy is crucial to progress on other millennium development goals.

We must try to ensure that energy provided is made available more and more through low carbon energy technologies. We are working on that not only with the EU, but with the World Bank. It was a feature of the discussions with Development Ministers, in which the Secretary of State took part, which the Germans recently hosted. In the White Paper published last July, we committed ourselves to giving further attention to that issue.

Mark Simmonds: I have one further question on the Euro-African pact to accelerate Africa’s development. Page 375 of the document states that

Mr. Thomas: The EU-Africa document is discussed each year and progress is looked at. As I touched on in my answer to the hon. Member for St. Albans, thereis now much greater monitoring of EC projects,both before they are approved and after they are implemented. Greater evaluation is taking place, specifically within the Euro-Africa context. There are more regular annual reviews of our progress on helping Africa to move forward. That reflects the EU’s commitment to doing more to help developing African countries to accelerate progress and to achieve the millennium development goals.

Motion made, and Question proposed,

That the Committee takes note of European Union Document No. 7124/07 and Addendum 1, Commission Communication, EU Code of Conduct on Divisionof Labour in Development Policy; and welcomes proposals to lower the transaction costs for developing countries and increase the effectiveness of providing aid.—[Mr. Thomas.]

Mark Simmonds: We on the Conservative Benches are sympathetic to the perspective of many recipient nations that have resources taken up by having to respond to donor nations. Indeed, one African country has to write 10,000 reports every quarter in order to satisfy donors. Clearly, those resources could be allocated better elsewhere, particularly in delivering betterment and alleviating poverty in those countries.

Harmonisation has a role, as we have put on the record, but that must not harm the quality of aid effectiveness or its efficient delivery. We do not believe that the EU is necessarily the most effective or efficient channel through which to deliver aid. In Bolivia, which I visited recently, I was told that there were 1,000 aid channels into the country, many of which were duplications attempting to provide the much needed education, health and building a civil society facilities required in certain parts of the country. That situation is replicated elsewhere in the developing world.

At the moment, we believe that DFID is a far more effective aid channel than the EU, despite the Minister’s defence of it. It is fair to say that the EU has higher administrative costs and levels of corruption, weaker monitoring structures and slower delivery mechanisms. However, Conservative Members acknowledge and understand that there is a role not only for co-ordinated funding, but for the provision of aid by the EU. For instance, it could reach places that the United Kingdom cannot. For example, our influence in Palestine has weakened in recent years, for obvious reasons. That applies to much of the middle east. Other instruments have a role, therefore, in getting much needed aid into some of those countries. Furthermore, if the EU were not allocating aid, particularly to some fragile states, to which many individual countries cannot provide aid owing to difficulties with monitoring such an aid structure efficiently, individual bilateral programmes would be required. Again, the EU has a role there.

Having said that, on a visit to the EU in Brussels that was undertaken in the past two or three weeks, it became clear to me and to my colleagues that the EU aid programme is disparate and dislocated. Aid is channelled through a variety of structures under the responsibility of different commissioners—those responsible for foreign affairs, trade and international development. We need greater co-ordination in Brussels, not just between member states, but within the Commission and the EU itself. I hope that I and the Minister will have further opportunities to discuss that, because I imagine that a separate statutory instrument of replenishment will be forthcoming in the next few months as we deal with the nitty-gritty.

It is essential that aid is channelled via the most efficient and effectives means in order to give the developing world—particularly sub-Saharan Africa—the maximum opportunity to meet the millennium development goals. We need to be convinced about harmonising through the EU and giving money to other EU countries that might not have as stronga record as the UK, or the necessary effectivenessand efficiency mechanisms in place. They need to understand that the UK and DFID will monitor expenditure very carefully. I hope that the Minister can confirm that that will be the case.

I did not think that the Minister answered my question on tied aid. Conservative Members are not in favour of tied aid. We agree with the Government. The Minister cited as an example of existing successful co-operation DFID money—UK taxpayers’ money—being given to the Belgians for land reform in South Africa, which is a worthy and noble cause. However, he will be aware that 10 per cent. of the aid of the Belgian Government is tied aid. We are not comfortable with that. He needs to look at that.

I do not want to spend too much time talking about the banana regime. The Minister acknowledgedtoday and in his evidence to the European Scrutiny Committee that the special framework of assistance was not a success. The SFA was not monitored properly or delivered properly. There are two comments in the Committee’s report about the Minister; I assume that they are about him The first is:

Then, having failed to get the EU to engage with the issue,

the European Scrutiny Committee, which I understand he has now done.

Mr. Thomas: I hope that the hon. Gentleman will take the opportunity to draw attention again to the answer that I gave him earlier. As a Government, we have not given up on the SFA, and we have pursuedour concerns and those of the European Scrutiny Committee—hence the discussion with Koos Richelle and the discussion among all the member states, which will take place in May, about the evaluation of the SFA that the Commission has commissioned.

Mark Simmonds: I am grateful for the Minister’s intervention. I hope that he did not misinterpret my comments as a personal criticism. I think that he is an extremely assiduous Minister and is not to be held responsible for other EU nation state Government activities. However, I think that there needs to be an explanation as to why the Commission delayed an independent evaluation for such a long time. Why has the evaluation still not been published? Significant lessons need to be learnt from the banana farce to ensure that the same effect does not occur under the sugar regime or any other policy that is put in place in that particular sector. It is important to rebuild developing nations’ economies.

With regard to energy co-operation between the EU and Africa, it is essential that infrastructure, including electrification in rural areas and providing renewable energy sources, is a focus for developing nations. Without that, they will not be able to achieve economic regeneration, to create jobs or to alleviate poverty in a sustainable way. The Minister was right to confirm that the interaction between international development expenditure and climate change is right at the top of DFID’s priority list. Unfortunately, back in 2003, DFID thought it appropriate to get rid of, or to allow to go, some of the environmental specialists who it is now having to rehire to get that important policy area back to the top of the DFID agenda.

Even though the code is voluntary, as the Minister has made clear, we believe that there are dangers and possible negative impacts on UK interests and performance if it is not handled and monitored appropriately. The code is only voluntary, but it needs to be complied with in terms of the delivery instrument and it needs to be more effective for the UK and for DFID. Presumably, the only time the Minister and the Secretary of State will allow British taxpayers’ money to be given to another EU country to look after is when that money can be delivered more effectively and efficiently than at the moment or than through the instruments that DFID uses directly.

Jim Cousins: I am following the hon. Gentleman’s arguments closely, and they are intricate and interesting. What conclusions are we to draw from the dilemmas that he raises? Are we to move to something more respectful of British interests and limit as much as we can our participation in the arrangements, or should we take the opposite view? That is, should we be concerned about rigour, auditing and scrutiny, push voluntarism to its limits and have much tighter control under these common arrangements? In which direction does he really want us to go?

Mark Simmonds: The hon. Gentleman makes a good point. My response is that we need a balance between making sure that harmonisation is used when it is effective and not going down the harmonisation route when it hinders the efficient delivery of aid.

I should like to highlight one point in response tothe hon. Gentleman’s question. It is clear that the document is talking only about European Union nation states. Why should not countries outside the EU structure—those with which we have a historic link, such as Australia or Canada—be allowed to give their money to the UK, if we were the lead country, if that meant a greater impact in alleviating poverty on the ground? The Minister and his team need to consider such issues, although they are probably not appropriate for this debate.

Finally, we will closely and carefully monitor the effectiveness of this statutory instrument. When the decisions are made, we will want to see which countries we have allowed to be responsible for our taxpayers’ money, what those countries have spent it on and how DFID will check that it is being spent effectively. I hope that the Minister will put that information in the House of Commons Library. We need to free up the very limited resources of some developing nations so that they deliver, and alleviate poverty as fast as possible—and, hopefully, meet the millennium development goals in 2015.

John Barrett: If this hefty document moves in the right direction, it will lower transaction costs in developing countries and increase the effectiveness of aid. We owe it to the taxpayers in our constituencies to ensure that their money is efficiently spent, and we also owe it to the recipients to get the maximum bang for our buck. There is plenty of work to be done and there are plenty of developing countries with many millions of poor and needy people in them. We must ensure that there is no duplication of effort. The document mentioned that too many donors were concentrating on the same countries. If that issue can be effectively dealt with, that will be good too.

We must ensure that transparency is increased so that we can deal with the dangers of potential corruption. One issue raised on both sides of the Committee is that, although DFID’s budget is increasing and we are dealing with increasing funds, there is a problem of reducing staff. We must ensure that the scrutiny of the vast sums involved is maintained to the last degree. As I said, in many cases, the issue is one of life and death. If the aid ends up in the wrong pockets and bank accounts or does not get through at all, that will mean that some people will not survive until the end of the year.

Given that after the US, the EU is the secondlargest distributor of overseas aid, improving the co-ordination of aid spending among member states would have a significant benefit for the delivery of front-line services in developing countries. There is agreement on both sides of the Committee that if the document is a move in the right direction, it is one well worth supporting.

Mr. Thomas: I shall try to deal with a couple of points. In supporting the document and our support for it, the hon. Members for Boston and Skegness and for Edinburgh, West made the perfectly reasonable point that it must not lead to a dilution in the quality and quantity of aid. We accept absolutely that key concern. The document is about not being prescriptive, but about sitting down with developing country Governments and donors that we trust and considering a more rational way of working.

It does not make sense to have 17 or 20 different donors working to improve the health system in a developing country, because those donors will all have annual, if not six-monthly, missions to that country, on which they will probably want to meet not only the Minister but the best officials within the Minister’s Department to talk about what they are spending money on. All those donors will also need separate sets of paperwork to be filled in, just to comment on health. That is, potentially, a waste of taxpayers’ resources. It also puts huge pressures on the limited number of talented people in the developing country working in that key sector—health. The ideal way forward must be to get a smaller number of donors to work on health in that developing country, while providing the same amount of aid—or more, ideally—and a greater number of high-quality health advisors. There is no prescription as to how to go about doing that. The document is simply about providing a focal point for a conversation at country level about how we might move forward.

The hon. Member for Boston and Skegness highlighted the need to increase the quality of evaluation and to maintain the focus on reducing administration costs. I agree, and I welcome the continuing pressure that comes from him and other hon. Members on both sides of the House on that. That is why my right hon. Friend the Chancellor has asked DFID and other Departments to consider how we can reduce our administration costs, which we are doing. That will not lead to a reduction in the number of high-quality advisors that we can provide in developing countries. However, it is sensible, given the aid effectiveness initiative, to consider what we are doing and whether we can do it better.

The hon. Member for Boston and Skegness rightly began to move away from the traditional ultra-right wing argument for the repatriation of aid from the European Community. He highlighted some of the areas in which the EC makes a very important difference—infrastructure being an obvious example. Our Department does not have a comparative advantage in road building and we do not do it in many of our programmes. In Zambia and Ethiopia, the Commission has provided budgetary support to help the Governments to build good roads, which are crucial for trade, the private sector, health and education.

For those who think that the repatriation of aid might be a good idea, I say simply that it would make it much more difficult to use aid effectively. St. Kitts in the Caribbean benefits from EC aid. A very small number of donors provide support in the Caribbean. If 25 or 27 donors each had their own programme of aid in that country, it would place huge pressure on its very small civil service. It therefore makes sense for EU member states, which I am sure are concerned about what is happening in the Caribbean, to combine their aid through the Commission to offer targeted support. It is also reasonable to wonder whether aid levels would be as high as they are, and rising, if member states were not required to contribute money for aid development through the EC.

I might have been a little brusque in my answer to the hon. Member for St. Albans, who was right to say that we need to give examples of aid that is working in order to maintain our constituents’ confidence that their taxes are being well spent on development. The health sector in Malawi is a good example to use. Some £55 million of UK support is helping, through DFID, with a programme to double the number of nurses and to treble the number of doctors in the health sector over the next six years, while stemming the outflow of health professionals into other developing countries. We are but a year into that programme and 500 or so health professionals have already been recruited.

The EU as a whole is considering endorsing the UK’s code of conduct that prevents the active recruitment of health professionals from developing countries into the national health service or private agencies that support the NHS. We would strongly support such a move. I hope that the hon. Lady can use that example to continue her constituents’ confidence in what we and the EC are doing on development.

The hon. Member for Edinburgh, West touched on the importance of continuing our scrutiny of the EC and on the need for us and other member states to continue to press the EC for further efficiency improvements. I share that commitment, and we will continue to do that. In that spirit, I hope that the Committee will allow the debate to move forward.

Question put and agreed t o.

Resolved,

Committee rose at twenty-three minutes to Six o’clock.