Examination of Witnesses (Questions 60-76)
MR GARETH
THOMAS MP AND
MR DONAL
BROWN
21 JUNE 2007
Q60 Sir Robert Smith: The other thing
you mentioned in your opening remarks is how fragile a lot of
people taken out of poverty are in terms of 45% of the population
still being under two dollars a day, and quite exposed to any
economic shocks in the region or in the global market that knock
them back. What sort of strategy is DFID involved in in conjunction
with the government to try and prepare for that or to avoid the
worst impacts of such a shock?
Mr Thomas: The universal social
protection system is one obvious way but what we are trying to
work on with the government as well is the broader governance
challenges which Vietnam faces. If you have stronger capacity
within your government to deal with economic crises and other
types of shock, maybe climatic shocks, for example, given the
nature of climate change too, the country would be in a much stronger
position if it had the depth of talent in the senior civil service
for example. We are looking at what we can do to help government
strengthen its ability in a governance sense to respond. I mentioned
the climate change and environment issues, again we are working
through the UN family to look at what we can do collectively as
a donor community to help the government prepare for the continuing
impact of climate change and any climatic shocks that may come.
Q61 Sir Robert Smith: The view we
had of witnesses earlier was that when it comes to natural disasters,
Vietnam is quite well-developed at the moment in terms of being
able to respond to the impact and trying to limit the consequences
of natural disasters.
Mr Thomas: I think the tsunami
and the earthquake in Pakistan demonstrated there is much more
that countries can do, and indeed should do. I know Vietnam wants
to bring in its own environmental protection law, and we are working
through UNDP[1]
to look at what we can do to help with that. I agree with you
though that probably the most immediate challenge in terms of
vulnerability is an economic one. Through the social protection
system, which the government want to bring in, we will look at
how we can help with the broader governance challenges, and the
funding we give for education will also help in terms of giving
people more skills so they are better placed to react as well.
Q62 Joan Ruddock: Minister, we have established
that the current aid programme is about £55 million, there
is going to be a minimum of £50 million a year to 2010. I
think over the past five years the proportion that is going to
budget support has increased from 43% to 70%. My questions are
not informed by having gone on the visit, I should say, I have
not been able to go on the visit to Vietnam or Burma so this is
based very much on what you have provided yourself in terms of
your written evidence. In the independent evaluation of the Vietnam
programme you say: "Despite the thrust towards `programmes
not projects', some of the best results, for example, in road
transport and in education, have come from a combination of the
two". It is clear to us this debate occurs in many country
programmes but this terrific increase in budget support as opposed
to projects is significant in the case of Vietnam. I can see that
in terms of budget support there may be some efficiency and expediency
involved but outcomes ought to be on the basis of maximum effectiveness.
I would ask you if there is a case for re-examining the balance
between the aid instruments that are being used in Vietnam in
the light of your own internal evaluation on that of the best
results are being found in a combination of both types of instruments?
Mr Thomas: It is something we
keep under review all the time so we are always looking at the
mix of budget support, project support, support for civil society,
et cetera. As Hilary Benn has said a number of times, it is not
one thing or the other. We will provide substantial technical
assistance as well to make sure that the budget support money
is well spent. Through our funding of the UN we are supporting
the development of civil society in-country too so that it can
better hold government to account. We are working, also, with
the National Assembly so that it can hold government much better
to account. I would agree with you, in a sense you need a combination
of responses to the development challenge in every country. In
Vietnam, because of the government situation in Vietnam, and the
attitude of the government, we have confidence that our aid money
can be well spent if it is delivered as budget support and the
Vietnamese have made clear that if we are willing to then they
want our aid to come in as budget support, indeed they have said
they wish many more countries would follow our example in terms
of giving aid as budget support. Given that we have got confidence
that the money can be well spent—and I am happy to give
some further information about outcomes from that aid—given
we are able to monitor how our aid is spent very well, and given
the attitude of government, its commitment to reduce poverty,
its willingness to follow up concerns, to investigate corruption,
its commitment to improving its position on human rights, we do
think we are right to use budget support mechanisms as much as
we do.
Q63 Joan Ruddock: A fine answer.
Let me test it against the MDG goals, first of all on HIV/AIDS
and secondly on sanitation. In the case of HIV/AIDS the budget
is massively underspent, and again I think some internal evaluations
of your own are quite critical about what has happened. Another
DFID memorandum commenting on sanitation says: "Sanitation
is now the most off track MDG target in Vietnam ... Government
programmes have relied on state subsidies for the construction
of household latrines, with little success". Here we have
two examples, vital MDG goals and failure even to remain on track
to meet them through programmes where clearly DFID has been working
with the government, and seemingly to rather limited success.
Mr Thomas: There are a whole series
of other areas where we give budget support also where there has
been considerable success in-country in terms of the early Millennium
Development Goals and perhaps around education, the programmes
of budget support that we give to the poorest rural communes,
et cetera. You are right, two of the key Millennium Development
Goals where Vietnam are off track are sanitation and HIV/AIDS.
We can be proud of what we have done. There has been a huge legal
and cultural shift in attitude to how to deal with the threat
of HIV/AIDS. We were one of the first donors to fund large scale
prevention programmes in Vietnam. We pioneered work, for example,
around needle exchange programmes and making access to condoms
vastly more widespread than it was. We are now seeing evidence
that some 60% of sex workers are using condoms in one of the recent
surveys. That is proof of success in terms of the journey that
Vietnam has come on but I accept the point it is proof, also,
of a job which still clearly needs to be followed through on.
Q64 Joan Ruddock: May I just interrupt
at that point. The figures are quite startling: £17.5 million
is the programme but only £6.5 million has been spent, at
least those were the figures for May this year. Given that you
outlined the programme where you say there is great success, what
are the difficulties in making those successes achievable on a
greater scale in the budget you have allocated yourselves?
Mr Thomas: Let me bring Mr Brown
in on some of the specifics around why there has not been more
disbursement but let me also point you to the increase, for example,
just over the space of 12 months in access to clean needles, up
from one million in 2006 to some 10 million this year. That is
an example of the scaling up that is taking place. Perhaps Mr
Brown will comment on some of the specific challenges we have
had in disbursement.
Mr Brown: Firstly, this is certainly
the most sensitive area of working in Vietnam and some of the
difficulties are because until two years ago it was classed as
a social evil. It has been a major shift in changing minds and
attitude so that has slowed some of the spend down. However, I
can report we have just done a recent review, and that is now
back on track and one of the reasons has been because the project,
as initially designed, was a joint partnership between WHO and
the Government of Vietnam. Under a redesigned process last year
it has been put fully under the Government of Vietnam. That sole
ownership is what has changed the whole process round, and why
it is now back on track, and it shows how strong leadership by
the Government of Vietnam, when they understand, can turn things
around.
Q65 Ann McKechin: It was very clear
on our visit that DFID enjoys an excellent relationship with the
Government of Vietnam, and its ability to influence the policy
agenda. At the cost of using an over-used phrase this afternoon,
do you consider that is DFID's main comparative advantage in its
work in Vietnam over other donors? Given the fact that we are
planning to reduce our budget in the medium term, in what way
do you think we can retain our influence and build on that relationship
we have with the Government of Vietnam at the current time?
Mr Thomas: I would not want you
to take as gospel my comments at the beginning, in response to
Mr Bruce's question, that there has been any definite decision
made to reduce our aid. We will take a decision at the five year
point of the Partnership Agreement. Those are simply my own personal
thoughts as to what the scenario might be if the rate of progress
is maintained. We do have a close relationship with government.
On occasions it is a robust relationship but, given the Government
of Vietnam's commitment to tackling poverty and given the progress
that they have made, it has seemed eminently sensible for us to
continue to work extremely closely with the Government of Vietnam.
They do give very good leadership to the donor community. If we
saw the type of leadership that the Government of Vietnam are
willing to give on poverty reduction in their own country replicated
in a whole series of other developing countries then we would
be achieving the Millennium Development Goals much faster across
the rest of the world.
Q66 Sir Robert Smith: One of the
concerns expressed is that if you get too involved in just doing
direct funding through the government you start to lose the influence
because you are not engaged through the civil society, and you
have not got evidence to go to the government. Is there a concern
of losing that influence if you go too much down the road?
Mr Thomas: There absolutely would
be if we did not engage with civil society. One of the reasons
why we have a process of consulting, as we have started again,
on how our aid programme is delivered is deliberately to make
sure that we do get the perspective from civil society and civil
society groups. One of the things that the Department has always
recognised is that even in the best governance situations you
need a strong civil society to give voice to the aspirations of
the people in-country to be holding the political leaders to account
for what they are doing and in a sense to be pointing out problems.
You need a strong media and that is one of the things which we
have had a dialogue with government about. We wanted the media
to be much more open and much freer. We are seeing now some 200
different media outlets in-country and they are able to look at
some often quite difficult issues, such as HIV/AIDS, the issue
of corruption, monitoring how the government spends its money.
That is a very encouraging sign in terms of civil society but
we cannot relax and that is why we are working through the UN
to continue to build up the capacity of civil society.
Q67 Chairman: In terms of how you
monitor budget support, I have a slight contradiction because
your own internal evaluation says that: "The Government of
Vietnam's monitoring and evaluation mechanisms remain weak ...
without more effort, DFID cannot be sure that its resources are
being optimally deployed". When we went up to Hoa Binh, Donal
will recall that, here is a very physical demonstration of where
the money is going, the two bits of road with a gap in the middle
which we experienced physically. If you are giving money through
budget support but the government's evaluations of that budget
support are pretty weak, how confident are you that DFID's money
is or will continue to be delivering poverty reduction as opposed
to something else? There seemed to be a contradiction in your
analysis and yet confidence on the ground that you could physically
see the result?
Mr Brown: Firstly, I think the
important issue in Vietnam is to build up Vietnam's systems for
monitoring and evaluation. I think we have seen in too many countries
that donors impose their own systems and you have a whole range
of systems which take the effort away from what government needs.
The first thing is to work through the government systems and
build them up. We, DFID, and a number of other donors have been
putting support into the Ministry of Planning and Investment's
own monitoring evaluation frameworks and a major part of the new
poverty reduction strategy for government, the SEDP[2],
for the first time has a monitoring and evaluation framework next
to it. We have been supporting the capacity building and technical
support through the World Bank, through the UN, to put that framework
in place and have it functioning properly. At the same time, we
do our own evaluations. For example, on the Programme 135, which
is a targeted budget support instrument, we did a tracking study
of the money on this a year and a half ago, and that showed that
only about 3% of the total funding was unaccountable for which
in most developed countries is extremely good. We do our own systems,
every budget support instrument also has a strong fiduciary risk
analysis done as a precursor to ensure—
Q68 Chairman: Do I take it from what
you are saying that the Government of Vietnam's monitoring and
evaluation is not very good but the bits that DFID are supporting,
partly because you are doing that, you are confident are being
delivered?
Mr Brown: We have a two track
approach: developing the government systems and at the same time
ensuring we have our own accountability without duplicating.
Mr Thomas: Mr Bruce, just to be
clear, we never give budget support without at the same time investing
technical assistance in developing the fiduciary systems to make
sure controls are strong enough. It would a crazy decision to
do and you would rightly bring us to task very quickly.
Q69 Richard Burden: Compared with
other countries in Asia, one of the areas that Vietnam is doing
pretty well on is gender. I would like to ask you a little bit
about how far that is mainstreamed in terms of DFID's own operation
there and also what the effectiveness of that is. DFID's Gender
Equality Fact Sheet from November of last year said: "Gender
equality can only be achieved when women's voices can be heard,
and they have the opportunity to participate in decision-making
processes which affect themselves, their families, communities
and, ultimately, their countries. All too often, women are excluded
from discussions and decision-making processes, both within the
home and in public." This struck us when we went up, particularly
to Hang Kia village, because there, on the plus side, was 100%
enrolment of girls in primary education but when you get up to
upper secondary level it goes from 100% down to 2%. In the school
that we saw, there were zero girls that we saw there. We were
all struck by the fact when we went to meet the commune leaders,
it was entirely men. Admittedly we did meet the Women's Union
afterwards but they did not appear to be involved in any positions
within the commune. Similarly, when we went to see the Making
Markets Work for the Poor projects, rush weaving, biogas and so
on, there did not seem to be a significant gender dimension there.
I am not in any way under-estimating the challenges and that somehow
DFID can go into a village like the one we visited and suddenly
everything will change. I wonder what is being done to try to
make a difference in projects like that and how far is the gender
strategy being mainstreamed in DFID's work in Vietnam?
Mr Thomas: When we provide support
to particular programmes of assistance, we will have a dialogue
with the relevant bit of government about a whole range of issues,
of which the gender dimension is one part of the conversation.
For example, our support, as you describe, is getting more ethnic
minority girls into school, so that is one element where we have
been able to make a direct impact as a result of the dialogue
we have. We are also supporting, for example, the National Assembly
to promote the leadership of women through training women parliamentarians
through exchange programmes. We are seeking to get that leadership
at the top as well. We are looking, also, at a variety of other
issues where there is a very specific gender dimension, such as
the issue of selective abortions where the Government of Vietnam
have made very clear that if evidence was presented to them they
would take action. We have funded a study looking at the issue
to make sure we could put evidence before the Government of Vietnam
in order to catalyse action by them.
Q70 Ann McKechin: Your written evidence
says that: "corruption poses a serious threat to continued
development" but currently only around 3% of your programme
is focused on those issues. Do you accept the balance needs to
change if we are going to support long-term development and improvement
in governance in Vietnam?
Mr Thomas: I do not think it is
the size of money that matters, it is the impact of the money
you spend. We have a whole series of different ways in which we
are helping to tackle the issue of corruption. Perhaps most encouraging
of all is the fact that the Government of Vietnam take corruption
extremely seriously themselves. The Deputy Prime Minister, for
example, chairs a steering committee on anti-corruption which
is seeking to modernise the institutions in Vietnam so they are
better able to scrutinise budgets, change laws, follow through
and track how money is being spent. Some specific things we are
doing: we are funding, for example, the equivalent of the Public
Accounts Committee in the Assembly to scale up their ability to
monitor budgets and hold different departments to account; we
are funding a new inspectorate under the leadership of the Ministry
of Planning and Investment to investigate corruption allegations.
As part of the agreement around our general budget support, we
made a policy action requirement before disbursement to be that
the government would make declaration of assets by senior officials
and MPs a requirement. That has come into place and several candidates
have already been disqualified in these elections for irregularities.
On the Construction Sector Transparency Initiative which, Ms McKechin,
you may be familiar with, Vietnam is one of the countries that
wants to pilot that initiative and some of their officials were
in the UK yesterday talking to us about how that programme might
work. There is a substantial engagement by our office in Hanoi
with the government over corruption. Crucially they recognise
they have a substantial problem and need to do more to tackle
it.
Q71 Sir Robert Smith: You mentioned
earlier that maybe one of the challenges is the social security
system, some kind of safety net. It is a major challenge and a
big structural change for Vietnam. What do you see as the main
hurdles and risks?
Mr Brown: One of the main challenges
is affordability of social security systems the world over. The
government is adopting a stepped approach. It set itself some
quite ambitious targets on this, for example in the current Poverty
Reduction Strategy they want 100% of health coverage by 2011,
and they want 30% of the population covered by pensions. We think
they are achievable targets. One of the issues though is to ensure
that it moves from the formal sector to the informal sector so
it picks up the poor. That is where people like DFID are working
with them to get that sort of coverage and work through those
issues. The other key challenge is to make it simple. It is very
complex social security systems that do not work particularly
well in some of these developing countries.
Q72 Chairman: I think our Chancellor
of the Exchequer has discovered that.
Mr Brown: They are looking at
the one number credit card systems for all your different services
which should be encouraged. We are working with them on that.
Q73 Sir Robert Smith: In the internal,
independent evaluation of DFID's own work, it did say, "It
is unclear how DFID can make a meaningful financial contribution
at the level of financing likely to be required". What is
the view on DFID's financial contribution to any scheme?
Mr Thomas: It may well be that
one of the things we can do is provide technical assistance to
deal with some of the problems that Mr Brown has described. I
think this is an on-going conversation with government. They are
looking at some of the lessons from the very basic social protection
that is provided under their poorest commune programme, and they
have a number of decisions to make as to how they want to proceed.
They will look at the total amount of donor aid that is available
and what the opportunity cost would be of using some of that aid
for social protection as opposed to other issues. What I would
say at this stage is I think this is something we will continue
to have an open mind about but, as you say, the scale of money
that is required will certainly mean we do not fund social protection
on our own but it may well be a small contribution from us can
help to catalyse larger sums of money from elsewhere and maybe
we can provide the technical assistance. I would not want to make
a commitment to the Committee at this stage but in a number of
other countries in other programmes which are very expensive other
donors often want us to come on board because we have particular
expertise in particular areas, be it governance or social inclusion,
for example. Co-financing an aid programme perhaps to help the
Vietnamese around social protection may be one avenue we can explore.
Q74 Sir Robert Smith: Do you see
a role in trying to enhance the ability of organisations in the
community to make sure that users of the system understand how
to best obtain their rights and adopt almost a demand-led approach
of ensuring that people get what they are entitled to out of any
system that is developed?
Mr Thomas: I think that would
be essential.
Q75 Sir Robert Smith: Do you see
a DFID role for that?
Mr Thomas: That is the point about
making sure you have effective civil society on the ground and
in-country. If a bigger programme is developed in terms of social
protection, we will need to make sure as a donor working with
the government that there are civil society groups doing that.
It may well be appropriate for us to fund it, it may well be appropriate
for another donor to fund it, but you are absolutely right in
saying that somebody will need to fund civil society to help the
very poorest people make sure they are getting entitlement. Perhaps,
Mr Bruce, I could say that the co-ordination in Vietnam between
donors and government is pretty strong. I do not think there is
anything like any of the issues that we have discussed in the
context of Burma. It shows donors do work extremely closely together.
Obviously because there are not the problems that there are in
Burma we can share information much more freely, both with civil
society and between ourselves. These are types of issues that
we would explore in the various donor fora that there are.
Q76 Chairman: I could safely say,
two contrasting visits, two contrasting evidence sessions, both
fascinating in their own way but a very positive story in Vietnam.
We wanted to look at it because we thought it was an awful lot
of money but I think we came away very much impressed that the
money is being well spent in delivering real results. I can formally
record to Donal Brown and his team, as others have said, thanks
for the programme that he set up. We saw the poor ethnic minority
communities in the highlands. We saw the more dubious end of life
in Hanoi. We were well entertained in the former house of ill-repute
that passes as Her Majesty's Ambassador's residence! We also saw
a range of projects paddling around in the rain in Hue. I think
the serious point is that there is a team there working extremely
effectively and delivering real results. I guess from British
taxpayers' point of view this is one report where they will see
taxpayers' money being spent in ways which really are bringing
down poverty and we are making a direct contribution. That is
a report I think you will enjoy reading; the other one I am not
so sure about. Nevertheless, thank you very much, both of you
for coming here and, Donal, thank you very much for the programme
you put together.
Mr Thomas: Thank you very much.
1 UN Development Programme Back
2
The Socio-Economic Development Plan Back
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