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More than 80 per cent. of the extraction projects funded by the World Bank provide fuel for markets in industrialised and developed countries. Although there
are, of course, some local jobs and export earnings, the overall economic, social and environmental impact on poor countries is often negative. Investigations into the west African pipeline and the Baku-Ceyhan pipeline show the sort of social and environmental damage that is often inflicted. The recent debacle about the Chad-Cameroon pipeline just what a fraught area of World Bank investment such projects are. That makes it crucial that the framework for assessing aid or other support for such projects is robust and focused on poverty reduction and that it takes full account of the opportunity cost of alternative support for renewable energy, energy efficiency and energy conservation.
In its published response to the Ditch Dirty Development campaign, I was pleased to see the Department for International Development agree with the overall purpose of the campaignthe need for faster progress on tackling climate change and its impact on the worlds poorest people. I was also pleased to see the emphasis on working with developing countries to invest in renewable energy and higher energy efficiency. However, I have questions about the shape and pace of the initiatives to carry forward that commitment.
As the Minister will be aware, the World Bank and regional development banks clean energy investment framework has come under fire from international and environmental non-governmental organisations, which have questioned its effectiveness in tackling climate change and improving poor peoples access to energy. A report by the Bretton Woods Project and others last September stated that the World Bank framework includes raising $10 billion for conventional energy technologies and investing in coal-fired, nuclear and large hydroelectric schemes, while not doing nearly enough for renewable and smaller-scale projects. The report criticised the fact that as much as 77 per cent. of the World Banks greatly expanded energy commitments are going on oil, gas and power sector projects, while only 5 per cent. are earmarked for so-called new renewables. Will the Minister say how far the Government share those concerns and what they are doing, through the World Bank and in other ways, to shift priorities to much more attention being given to renewables and energy conservation?
As the Minister will be aware, there are also real and valid concerns about what happens to the oil revenues that are remitted to producer countries and their Governments. Nigerias oil revenues have increased tenfold in value since 1965, but the countrys per capita real gross domestic product has not increased at all. One must ask where all that money has gone. In too many cases, it has gone to military spending or padding the offshore accounts of the oligarchs, rather than helping the poor.
I know that DFID supports the extractive industries transparency initiative, which seeks greater openness and accountability about revenues to Governments from extraction in resource-rich countries. Such greater openness would, of course, be a good thing. The Department has already spent £6.9 million in support of EITI work. A parliamentary answer to me on 24 January stated that the initiatives impact had so far been measured by the number of countries signing up to it. It also stated:
Evidence of EITIs success is currently anecdotal.
The new independent EITI Secretariat will conduct impact reviews and qualitative evaluation work as part of their annual review. These will be presented at the next EITI Conference which will take place in the autumn.[Official Report, 24 January 2008; Vol. 470, c. 2211W.]
Will my hon. Friend the Minister assure me that her Department will give close and proactive scrutiny to those reviews and that we will get not only qualitative impressions, but some meaningful numbers?
The initiative has a long way to go to deliver results. If the Minister looks on the EITI website, she will see under the heading Implementing Countries the number of compliant countries listed as None. I do not wish to belittle the progress that the initiative may be makingif it can really deliver, it will be an important step forwardbut let us remember that transparency is only the first step.
We need revenues to be spent on reducing poverty and on providing health care, clean water, housing, education and basic infrastructure. We must ask why the international community is putting so much into fossil fuel extraction, when there is so little evidence of poor people benefiting at the other end and when the imperative of tackling climate change points in other directions altogether.
An important and welcome part of the UKs response is the international element of the environmental transformation fund. Over the next three years, the fund will commit £800 million to projects that support development and poverty reduction through environmental protection, as well as helping poor countries to tackle climate change. Will the Minister give an update on how plans for the use of that money are progressing? Will she also give an update on what governance and accountability arrangements are in place, particularly the criteria that must be met to gain support for clean energy and energy efficiency projects? The criteria must include climate change impact, and I should like to know how that will be assessed.
Will the Minister also say what progress is being made on assessing the carbon footprint of all DFIDs programmes and related areas of Government responsibility, such as export credit guarantees? That is an essential element of having proper evaluation, transparency and accountability in the formulation and implementation of policy. Comprehensive carbon auditing, along with poverty reduction, could provide the basis of a framework against which all multilateral and bilateral aid and programmes could be assessed, making explicit the environmental, social and economic impact of projects and the trade-offs between those elements. That would gear programmes and aid more effectively towards meeting our social and environmental responsibilities and would, indeed, ditch dirty development.
The Parliamentary Under-Secretary of State for International Development (Gillian Merron): I congratulate my right hon. Friend on securing this debate on an issue that is important across the world, including in his constituency. I am sure that organisations such as People and Planet and Oxfam have every reason to be grateful to him for bringing their key concerns to the heart of Parliament today.
It might help if I outline the Governments position on development aid and oil extraction and what we are doing to address some of the challenges that my right
hon. Friend has rightly brought to the attention of the House, including promoting energy efficiency and the use of renewable energy. This area is of great interest to the Government, developing countries, industry, affected communities, non-governmental organisations, donors and others. I agree that there is tremendous potential for oil to contribute towards development. Unfortunately, however, in developing countries it is often associated with poverty, conflict and corruption, which is not what any of us want.
My right hon. Friend made it absolutely clear that oil use contributes to one of the greatest challenges we face: climate change. This issue is particularly topical given that world oil and mineral prices are at an all-time high and that major oil companies are reporting ever greater profits. However, there have been great changes in the past 10 years: oil, gas and mining companies and the extractive industries are all better placed to support development. My right hon. Friend has outlined the problems that remain, and I agree that more must be done. It is helpful to focus on the damage that may be done to the environment. This is a particular challenge as exploration moves to ever remoter parts of the world, which are often pristine and home to minority indigenous people.
There is a less localised environmental issue: some have called for a moratorium on fossil fuel extraction. My right hon. Friend talked about the very active Ditch Dirty Development campaign by People and Planet in his constituency, which calls for an end to support for fossil fuel projects by international financial institutions such as the World Bank. We do not support that campaigns position, but we very much welcome the debate that it raises and the fact that concerns are being expressed. I am happy to continue to consider closely the points that it raises. Fossil fuels have played an important role in our development and it would not be right or fair to deny that opportunity to developing nations. If we went down that road, those countries would be denied the opportunity to support their own development.
Mr. Smith: Does my hon. Friend agree that there are important questions to be asked about whether support and subsidies from the international community, particularly the World Bank, for fossil fuel extraction projects, are a better use of money to alleviate poverty than alternative methods? Does she agree that it would make sense to have searching criteria against which both multilateral and bilateral support for projects should be assessed? Even if she will not accept an immediate moratorium, does she agree that we should set targets for the reduction of support for fossil fuel extraction?
I certainly accept that those searching questions need to be asked and answered. My right hon. Friend asked earlier why the international community is putting so much effort into fossil fuel extraction. It is important to step back and consider that fuel extraction is funded mainly by private sector finance, especially in the case of oil and gas. As a result, developing countries, which need energy to develop, also benefit. Access to electricity in developing countries is lowless than 25 per cent. in Africaso we do need to ask questions about the issue.
I agree that we need to do more with institutions such as the World Bank. More should and will be done to press it to raise its ambitions by focusing more on renewables. That is something that my right hon. Friend seeks.
Mr. Smith: I am glad that the Minister raises the question of renewables. Returning to the important point about access for the worlds poor to electricity, does she accept that it would be better to invest public money, bilaterally and multilaterally, in projects that actually get electricity to the poorest people in the poorest countries? Investment in oil extraction and pipelines is a rather convoluted way of generating export earnings, which might end up being used for electricity projects, if not spent on weaponry or sent to some offshore account. Why not target the aid where it can have the most impact in transforming the life chances of the poor?
Gillian Merron: As always, my right hon. Friend makes a robust argument and important points. I put it back to him that those are the questions. The answers depend on the countries, on the resources available and on the challenges. This is where I part company with the campaign: I feel that it is important to view extraction as part of the contribution to developing countries. The debate is not just about aid, as my right hon. Friend understands, but about developing countries moving out of that world and into the developed world. They must be able to grow in a way that is sustainable, and that deals with the many challenges of poverty and, obviously, of being a developing country.
Perhaps I can give my right hon. Friend another assurance. Much of the work of the Department for International Development on behalf of the UK Government is directed at the promotion of renewable energy and improved energy use efficiency. Even in the work that we do directly, we are conscious of the important points that he makes. If I had to summarise my answer, I would say that there is no either/or: the aim is to support the country to grow in the interests of its people.
I put to my right hon. Friend that it is quite possible to view oil as a blessing to developing countries. The challenge for us is how to make it a real blessing and not a curse, as it has been portrayed. Oil, gas and mineral resources are major natural benefits for any developing country. In many cases, they are the major natural asset. It is not surprising that developing countries want to exploit commercially viable deposits to help support their economic growth and to encourage poverty reduction.
High prices in oil, gas and mineral commodities have been driving Africas higher growth rates since 2000. Three countries have growth rates above 7 per cent., largely fuelled by extractives exploitation. Seven per cent. per annum growth is, of course, what is required for sub-Saharan Africa to achieve the millennium development goal of halving the number of people who live on $1 a day or less.
Perhaps I can reassure my right hon. Friend and his constituents by saying that the role of the international community should be to help countries, as appropriate, to exploit their resources productively for the benefit of their people. The primary benefit would be the revenues
that accrue to Governments through royalties, special petroleum taxes and so on. Wider sustainable economic benefits can accrue, including local procurement of materials and services by companies, and, perhaps, jobs and the establishment of businesses linked to the processing of crude oil into petrol and other products. Those in turn generate income and tax. Earlier this month, Ghana published a long list of benefits that it expects to derive from its recent oil discoveries. Companies can also contribute by building necessary new infrastructure and by providing benefits such as skills and productivity transfer.
What are the UK Government doing to help? The first thing to make clear is that the UK aid programme does not invest directly in the oil and gas industry, but we do work to help Governments maximise the value of oil and mineral deposits. A few examples of our work might be helpful.
First, the UK Government expect all companies to operate to appropriate social, economic and environmental standards in their work. We promote adherence to the OECD guidelines for multinational enterprises and the related risk awareness tool, which set standards for good corporate behaviour. The UK has a national contact point that involves three DepartmentsDFID, the Department for Business, Enterprise and Regulatory Reform and the Foreign and Commonwealth Officethrough which complaints of poor conduct can be brought and investigated.
Secondly, the UK Government established and supports the extractive industries transparency initiative, to which my right hon. Friend referred. I was glad to hear that he agrees that it is of great importance. I believe that it represents a groundbreaking way of bringing business, Governments and civil society together to tackle some of the negative impacts of extractive industries.
Mr. Smith: The Minister is being very generous in accepting my interventions. Will she act on my suggestion that ahead of this autumns annual meeting the Government need to be proactive in getting real, clear evidence of progress on the reviews that the EITI is committed to completing?
Gillian Merron: I certainly agree with my right hon. Friends comments and concerns. Tangible evidence is indeed requiredI hope that that will be an assurance. I can add that the EITI is driving the debate about how revenues are spent in Ghana, Nigeria, Côte dIvoire, Azerbaijan and other places. That, too, is an area of concern that my right hon. Friend rightly raised. Yes, we will be pushing for the more tangible evidence that he has requested.
However, the level of disclosure that exists now was unprecedented just five years ago. The EITI has achieved
a change in the way that extractives revenues are viewed, and transparency is becoming an international norm. Furthermore, DFID works through country programmes to support Governments in respect of their oil exploitation. The Government of Ghana, for example, are committed to using their oil revenues productively, and DFID, along with several other donors, is supporting them in organising a major week-long series of events at the end of this month that will allow them to access international expertise on mineral wealth management. We work with other donors on such issues.
My right hon. Friend discussed the need to promote development, the use of renewable energy and improved energy efficiency. Perhaps I could briefly refer to some examples of what we are doing in that respect. He referred to the clean energy investment framework. As part of that framework and to take forward plans, the UK Government, through DFID, provide money to fund new posts in the World Bank.
Secondly, the UK Government have committed £800 million for the environmental transformation fund, and we are working with othersthe G8, the World Bank and so onon its development. On funding for renewable energy in low-income countries, we are pressing the World Bank and other financial institutions to step up their efforts, and we are funding the Global Village Energy Partnership to increase access to modern energy services in developing countries.
My right hon. Friend rightly referred to the tension between climate change and energy access. I very much share his concerns about that. The clean energy investment framework is one of the most important instruments for tackling the problem, and its focus will be on large countries such as China and India, which have high future emissions potential. Of course, all countries can take steps towards low-carbon energy development, including countries in Africa, where clean hydropower opportunities remain to be exploited.
This is an important issue, and one that we take seriously. We consider that the UK Government, through DFID, have a major role to play. It is true that poor management of oil, gas and mineral reserves can lead to poverty, conflict and corruption, and that oil consumption poses significant environmental challenges, but effective management of oil revenues, coupled with moves towards greater energy efficiency and the use of new technologies, must be the solution, rather than removing from developing countries the right to use their own natural resources. We will continue our work in this area, and I am grateful to my right hon. Friend for his interest.
Mr. Stewart Jackson (Peterborough) (Con): It is a pleasure to serve under your benign chairmanship for the second time today, Mr. Gale. I am delighted to have the opportunity to debate this issue, which is of significant concern to not only my constituents in Peterborough, but local residents and taxpayers across Cambridgeshire, who are represented by my hon. Friends the Members for Huntingdon (Mr. Djanogly) and for North-West Cambridgeshire (Mr. Vara) and the hon. Member for Cambridge (David Howarth). I am grateful that those hon. Members are here today.
I pay tribute to the men and women of Cambridgeshire constabulary, who serve and protect us in the county so ably, given the resources at their disposal, which is the kernel of todays debate. In particular, I pay tribute to the northern divisional commander, Chief Superintendent Paul Phillipson, and the men and women who serve every day in the city of Peterborough and put duty above personal risk and the ever-increasing danger of injury and even death.
It would be remiss of me to overlook the leadership shown by the chief constable of Cambridgeshire, Julie Spence, who has shown guts and determination in waging her campaign for a fairer deal for my area. She has been strongly supported in speaking out by the chairman of the police authority, Councillor Keith Waltersleadership is about speaking out and sometimes making oneself unpopular, sustained in the knowledge that ones cause is just. The arguments made in the excellent paper, The changing demography of Cambridgeshire: implications for policing, published last September, are unanswerable, and Mrs. Spence would have been derelict in her duty not to have raised those arguments so forthrightly.
Both the Home Secretary and the Minister for Security, Counter-Terrorism, Crime and Policing have met Cambridgeshire constabulary and the police authority in the past six months to discuss funding, and I thank them for their courtesy in making themselves available. According to robust and independent data, Cambridgeshire is the worst-funded police force in England and Wales. It has been disproportionately affected by the current funding formula for at least the past five years and, as a result of a unique set of factors, should be regarded as a special case. Ministers should, in the light of that, consider reviewing Cambridgeshires grant settlement this year and up to 2012.
It is important to put Cambridgeshire's current and ongoing fiscal position in the national context fully to understand its severity and the likely impact on the delivery of front-line policing. The Minister will be familiar with the national picture of a tight 2.7 per cent. grant increase this year through until 2012 as part of the three-year comprehensive spending review settlement. As we know, with the exception of counter-terrorism funding, there will be no real-terms increase in funding to police authorities.
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