Examination of Witnesses (Questions 260-279)
MR MICHAEL
FOSTER MP, MR
ELWYN GRAINGER-JONES,
LORD HUNT
OF KINGS
HEATH AND
MR ANDREW
RANDALL
29 APRIL 2009
Q260 Andrew Stunell: You say plan
ahead, I think the United Kingdom has pledged $1.5 billion to
adaptation schemes, and if the Guardian is to be believed,
which it is not always of course, only £300 million of that
so far has been forthcoming and not a lot of that has gone into
Africa, for instance. Could you say something about the rate of
spend and the nature of the projects because in terms of the predictability
and the planning, I would have expected the United Kingdom to
be right at the front in enabling that to happen?
Mr Foster: We have a list of case
studies which we can certainly provide the Committee with in detail
if that was helpful, but in terms of areas I think I mentioned
earlier in the session today the Chars Livelihoods Programme which
is an example of where we have actively been involved in adaptation
measures to help in Bangladesh. There is the SAWI initiative.[3]
There is a project in India. We have got projects in the Caribbean
and Latin America and some in Africa, all of which we can provide
the Committee with in terms of more detail.
Mr Grainger-Jones: In addition
to that, the Climate Investment Fund, which I think you are referring
to, on which there was a Guardian piece, those are a three-year
series of disbursements. The first year was £100 million
as the UK Government contribution. We made that contribution and
the projects are being developed, but projects are not developed
overnight. These are complex projects and we need to allow governments
space to work up the programmes, but we have already agreed three
country investment programmes from the Clean Technology Fund,
so there is a lot of work underway and some pretty good country
investment programmes that we have already seen. In the current
financial year we will make a £200 million contribution and
then in the subsequent year there will be a £500 million
contribution, so in terms of the Guardian article, we would
see the contributions actually going as planned.
Q261 Andrew Stunell: Adding up your
figures that seemed to be 800 million, a one, a two, and a five,
I think you have said, which does not seem to be the 1.5 billion
which is in the whole programme.
Mr Foster: Is the 1.5 billion
in dollars? We are talking pounds.
Andrew Stunell: You are talking pounds,
I do beg your pardon. Thank you.
Q262 John Bercow: Good morning, Minister.
In July 2008 DFID officials told us that no decisions had been
made on whether environmental expenditures would be deducted from
existing Official Development Assistance (ODA) commitments or
whether there would be additional funding forthcoming specifically
for work on climate change. Can you tell us this morning, Minister,
what progress has been made by the UK on this in preparation for
the Copenhagen summit?
Mr Foster: In terms of our position
it has moved forward in the sense that we recognise that there
is an additionality gap. I think that is the term that has been
used to describe where we are on ODA compared to dealing with
climate change. We recognise that ODA will not be able to deliver
all of the additional finance that is going to be required to
tackle climate change, but I am wary of taking it much further,
Mr Bercow, because of the nature of the negotiation process that
is going on ahead of Copenhagen. That is the prize that we are
all looking at. We are clear that there has got to be some additionality.
Q263 John Bercow: Can you just remind
me of the timescale?
Mr Foster: I think Copenhagen
is December this year.
Q264 John Bercow: Of course, as you
know Minister, it is always the very greatest of pleasures to
receive you and it may be that such is the comprehensiveness and
courtesy of your contribution this morning that you will become
a serial recidivist and we might want to invite you again, I do
not know. December is some considerable time away and, whilst
I take note of the point that you make about the negotiations
and they are very important and very sensitive and probably very
confidential, et cetera, et cetera, it would be useful to have
a sort of a hint or a nudge or a wink which indicates that there
would definitely be some progress on this matter, even in the
light of what is a very serious fiscal position here and elsewhere.
If we are going to make progress on these matters it comes with
a price tag. Would I be right in thinking—and I certainly
do not want to tie you down too specifically—in three months'
time you might have more to report?
Mr Foster: What I can promise,
Mr Bercow, because you put it in such a persuasive manner, is
that obviously the Government response to this particular inquiry
might be an opportunity where we can inform the Committee further,
and I will certainly take it upon myself, where we are able to
discuss publicly a clearer picture of where we are, to write to
the Committee to let them know and keep them informed of the progress
that we are making.
Q265 John Bercow: Not necessarily
as part of the Government's response but as an interim measure?
Mr Foster: As and when we have
got more information we can furnish the Committee, then we will
do that.
Q266 John Bercow: I must say that
is helpful and I appreciate that and I hope colleagues will because
there is nothing we dislike more than a void and a lengthy period
of hearing nothing, so thank you for that. Is there a consensus
within DFID on the way to deliver adaptation finance to poor people?
Mr Foster: Can I ask in what respect
you mean a consensus? Could you repeat that question?
Q267 John Bercow: An agreed view
about how it should be done, I give this but as an example, the
provision of the resource should be, if you like, open-ended for
use as decreed by the recipient or would you take the view, as
I think the Dutch have done, that resources should be ring-fenced
for specific types of projects? I know ring-fencing seems to be
somewhat out of fashion as far as the British Government is concerned,
certainly in respect of domestic policy (but that is another debate
and I must not go down that avenue otherwise the Chairman will
get irritated). As far as development assistance is concerned
I think it is a relevant issue. Is there a sense about how this
should be done, not just it is a desirable thing, rather like
motherhood and apple pie, but whether there is a definitive view
about how it should be done and how either permissive or prescriptive,
how general or specific allocations of funds should be?
Mr Foster: Could I ask Elwyn to
come in.
Q268 John Bercow: Then there are
issues to do with reporting requirements and monitoring and accountability
and so on, all of which are extremely salient matters.
Mr Foster: Perhaps I could ask
Elwyn to come in and give a little bit more detail about our approach
on this.
Mr Grainger-Jones: To some extent
this whole negotiation over additionality, whether there will
be additional money, has perhaps led to an approach in some areas
that leads to separating out the way that adaptation money is
provided right throughout the system, at the international level,
at the allocation level and at the country level. In a sense,
taking this question separately from the additionality question,
where the money hits the ground it should be integrated, and that
is a consensus view in DFID. It does not make sense, essentially,
to have entirely parallel systems where there is a PRSP[4]
which looks at national development or agriculture policy which
does the poverty bit of all of this, and then there is a separate
thing which looks at agriculture and the climate change impacts
of agriculture from a climate bit. That does not make sense. We
are very keen to use and improve existing mechanisms to deliver
finance to do this and we are keen to get it integrated into national
planning.
Q269 John Bercow: That is quite helpful.
Maybe I was a trifle opaque and maybe I should be a bit more explicit.
I think there are some concerns about the international financial
architecture, if I can use that pompous but on the whole accurate
term. The International Institute for Environment and Development
for example has noted that some developing countries have complained
about the difficulty of accessing adaptation funds managed by
the Global Environmental Facility (GEF), which carries with it
quite a high burden in terms both of reporting and of the obligation
to co-finance. The management of adaptation funds by the GEF,
which is closely linked to the World Bank, is quite problematic
for some developing countries who are rather suspicious of the
World Bank's role in environmental management. The World Development
Movement reports that the G77 and China have both stated that
funds for mitigation and adaptation in developing countries should
not go through the World Bank. These are significant concerns.
My understanding also is that the UK has decided to provide £800
million from the Environmental Transformation Fund to the World
Bank-managed Climate Investment Facility. This is quite a lot
larger sum than the UK contribution to the UNFCCC funds (£18.5
million) and it is seen by some NGOs as rather undermining those
funds. There is an element perhaps of needless competivity and
duplication resulting, even if inadvertently. Christian Aid, for
example, a very respected institution, told the Committee that
it was concerned that DFID would not be able to properly monitor
the Bank's allocation of these funds to different investment projects.
The Dutch have got around this by a process of ring-fencing, as
I indicated a moment ago. My wrap-up question here is: what is
the rationale for relying so heavily on the World Bank as a channel
for funding when some developing countries have expressed, in
some cases quite pungently, concern about the Bank's track record
on the environment?
Mr Grainger-Jones: Perhaps if
I could follow up on that follow-up question. In a sense, there
were a number of elements to that. Perhaps taking them as I understand
the question, yes, we agree that the GEF systems to access Global
Environment Facility projects need to be streamlined and improved.
We are working with the GEF secretariat and other Council members
to reduce the transaction costs, and there are a number of ways
we are trying do that. Secondly, we are major financiers of the
Global Environment Facility. We are the fourth largest donor,
providing £140 million to the latest replenishment, and actively
engaged in the up-coming replenishment, so it is not as if we
are not funding GEF. We also provide funding to GEF-specific trust
funds such as the LDCF[5]
fund which provides money for adaptation. We have met our commitments
to financing that fund. Nevertheless, when we designed the Climate
Investment Funds we saw scope to pilot new ways of financing climate
change that currently do not sit within the way in which GEF is
designed because we wanted to pilot these ways of financing climate
change with a view to informing how we design the GEF of the future,
and indeed the wider international architecture of the future.
Also in terms of the scale of finance that we were providing and
the time window we had to allocate that expenditure, we saw a
clear role for the World Bank. We do not see it as a poverty-enhancing
measure to restrict what the World Bank does on environment and
not to make efforts to improve the World Bank's overall specific
activities on the environment. We see it as an instrument among
many, and I think given the emergency situation we have on climate
change we would want to use a number of organisations internationally,
not only the World Bank. It does not make sense to exclude one
or other when indeed there was so much interest by the World Bank
in engaging actively on this agenda.
Q270 John Bercow: If I may say so,
the normal response in these circumstances is almost a cultural
or social phenomenon, which is to nod sagely at the outpouring
of information that has just been volunteered in one's direction.
I feel a bit sheepish about saying what I am about to say. It
may be that the assembled multitudes listening will think this
fellow really is frightfully stupid and slow-witted and bone-headed,
and they may be right, but I have to say that although I regard
your answer, both in terms of comprehensiveness of content and
eloquence of flow, as quite unsurpassable, I am very sorry to
have to tell you that I am absolutely none the wiser on the subject
of the World Bank. I am going to have a final go. As I say, it
may very well be my stupidity and not your lack of clarity. Let
me put it to you like this: you described the governance arrangement
of having the majority of developing country members on the trust
fund committees of the World Bank Climate Investment Funds as,
as you put it, extremely novel. This may well be the case for
World Bank institutions and it might well be quite a novel approach
but it does, with respect, have clear precedence under the UNFCCC,
for example on the board of the Adaptation Fund, so I come back,
if I may, to my rather persistent and thus far unanswered question:
why is DFID and the UK so keen on the World Bank? What is going
on? I am not a conspiracy theorist but I am not quite sure as
to the reason for the love affair.
Mr Foster: Mr Bercow, I genuinely
do not have anybody saying to me in discussions let us look at
sending money through the World Bank route as the preferred option,
so I do not think we are in love and certainly there is no conspiracy
within DFID to prop up the World Bank this way. We are keen to
encourage the World Bank to reform what it does. The international
architecture does need to be looked at closely to get a decent
2012 regime in place, but we are also keen to look to deliver
on the architecture through the multilateral development banks
as well. I do not think that we are putting all our eggs in one
basket of the World Bank, far from it. We are looking at the full
range of players who will be involved and have the potential to
exert a lot of influence.
Q271 John Bercow: Minister, Mr Grainger-Jones
and Mr Randall, you will be mightily pleased to know that my sequence
of rather pedestrian enquiries is reaching its conclusion but
I have just got one question that I must put to you. What in your
judgment are the strengths and weaknesses of the proposal put
forward by the Group of Least Developed Countries for an International
Air Passenger Adaptation Levy as a means of raising funds for
adaptation in developing countries? The related point is how will
the Government ensure that tourism to developing countries is
not adversely affected by any new measures agreed to mitigate
greenhouse gas emissions in the aviation sector?
Mr Foster: We think that global
tax mechanisms can provide a way in which additional funding can
be raised to deal with adaptation. Clearly there are then going
to be challenges on mitigating any adverse impact that it might
have in the tourism sector that you mentioned. There is a tension
that clearly exists between the development and growth potential
of tourism. We know what contribution it can make to international
currencies within the developing world. What we also know is that
it is a major contributor, and increasingly aviation is a rapidly
growing contributor, to greenhouse gas emissions, so there is
a tension and a balance there, and we think that the global tax
mechanism is one way in which we can raise additional funding.
In terms of what we can do to mitigate the impacts on tourism
and the effect it might have on tourism, we are looking currently
at a scheme in South Africa to promote the concept of fair trade
in tourism to make sustainable tourism an attractive option. I
think Defra are doing some work in Mexico that, Andrew, you might
want to mention, and in terms of the Caribbean we are also looking
at working with specific projects there about how do we have a
discussion about dealing with this seeming conflict between wanting
to reduce the emissions from aviation compared to wanting to use
tourism as one of the tools, although not the only tool, of promoting
economic growth. Andrew, you might want to say something about
Mexico.
Mr Randall: Yes, it is worth adding
that under the Sustainable Development Dialogues that Defra leads
with the Plus Five countries there are projects on a number of
different issues, but with Mexico specifically there has been
a discussion around sustainable tourism and how might we develop
models for tourism which are beneficial for economic development,
poverty eradication, and in the interests of indigenous people,
at the same time minimising the environmental impacts, whether
that is climate impacts or indeed impacts on eco-systems and biodiversity.
That work is on-going but the intention is that that should produce
recommendations which could be replicated elsewhere so it would
potentially serve as a model which we could then discuss with
other countries internationally. In addition there has also been
some work going on with Forum for the Future looking at what a
sustainable tourism model might look like for the UK's outward
bound tourism. We are going to be drawing up a strategy and action
plan for that later on this year.[6]
John Bercow: Thank you very much.
Q272 Chairman: It would be remiss
of us not to pass on to you the very express concerns of the Tanzanian
department of tourism about UK aviation taxation on long-haul
flights. They are already suffering a downturn and they say that
increasing that taxation would (a) reduce the number of tourists
and (b) reduce the share of the tourist expenditure that accrues
to Tanzania as opposed to the UK Exchequer. They felt that this
should be taken into account. The point they also make is that
the revenues they get from tourism are substantially used to fund
the conservation of the wildlife which the tourists are actually
going to see. I am not asking you to comment, I appreciate that
it is a Treasury decision but, as I say, it would be very remiss
of us not to mention what is a very explicit concern expressed
to us by the Tanzanians.
Mr Foster: Chairman, the point
has been noted and as a Department we have also had conversations
with countries in the Caribbean, where we have a close standing
relationship, who also fear the impact of any changes in aviation
taxation.
Q273 Chairman: If aviation taxes
are agreed in Copenhagen would they be specifically directed towards
developing countries? Is that the sort of form of proposal that
is being worked up and being considered or being recommended?
Mr Foster: I am not certain that
a formal proposal is being worked up ahead of Copenhagen along
these lines. I can certainly find out where discussions are on
that front and refer back to the Committee, but I genuinely do
not know whether that is part of the plan.
Q274 Chairman: Of course if the money
were going into adaptation funds that would obviously be less
reprehensible than going into the Exchequer.
Mr Foster: I understand the logic
of the line of questioning.
Q275 Hugh Bayley: A couple of years
ago the former Secretary of State, Hilary Benn, caused a bits
of furore just before Valentine's Day by encouraging people to
buy flowers from East Africa because of the development benefits
and because the carbon emissions of the flowers were lower. A
lot of environmentalists threw up their hands in horror. We have
seen the Cranfield University study that worked out that hothouse
flowers grown in the Netherlands had six times the carbon emissions
of Kenyan products. Just so the public and consumers in particular
are better informed, has the Government been looking at the possibility
of some form of carbon labelling of produce?
Mr Foster: First of all, you are
right to point out the controversy that was raised. In 2007, DFID
chose Valentine's Day to really make the point of the impact on
a developing country growing flowers and being paid for the growth
of the flowers, but actually it was Pascal Lamy[7]
last year who also confirmed that Kenyan flowers air freighted
emitted a third less CO2 than those grown in a hothouse in the
Netherlands, so that argument is still there. It is incredibly
complicated though when it comes to dealing with food. I am not
certain whether adding to the burden of labelling is necessarily
the right way forward. We certainly have not had any great calls
upon DFID to put further labelling on produce, but in terms of
the overall issue about informing the consumer, I genuinely think
that it is a thoroughly interesting area that we should be exploring.
We do a little thing on our website which is not so much a game
but something you can work through to find out whether you are
a smart consumer on that front, and it does challenge people to
look at the whole cycle of a product rather than just the transportation
element of a product and, quite frankly, that will apply to an
awful lot of products that we have and it will give rise to tensions
here in the UK between the argument to buy local produce to support
local farmers, without consumers necessarily knowing what the
climate change impact will be of that decision, let alone the
developmental impact that that will have.
Q276 Hugh Bayley: Here is a simple
solution. I agree with you that you do not want to burden the
system with regulation unnecessarily, but given that a lot of
African horticulture starts with a lower carbon content anyway
than greenhouse-grown European produce, have DFID and other donors
considered the possibility of using DFID resources to buy carbon
offsets for horticulture from Africa to enable it to be sold as
carbon zero or carbon neutral produce, which would be much easier
to label? You might be able to establish an ethical consumer buying
pattern that says, "I am going to go for one of these developing
country products providing it has got this carbon zero label on
it." Does that make any sense at all?
Mr Foster: I can understand the
logic of the approach and wanting to have rational consumer choice
exercised when it comes to the buying decision to actually make
a difference. The success of Fair Trade labelling has obviously
sparked off the thought of using this as a way in which consumers
can exercise their market power to then drive change through the
whole supply chain. I understand the logic of that. I am not certain
that we have gone into the detail of buying carbon offsets for
that purpose in mind, but we do think that there is a role to
play in informing consumers about the whole rationality of the
decision that they make. I accept totally that that is a longer
term outcome, Mr Bayley, but at the moment we are certainly getting
no pressure to deliver that type of label. I do not know if Defra
have got anything.
Mr Randall: I just wanted to add
that Defra is working quite closely with DFID on food security
issues generally, including food security internationally, to
develop increased production capacity internationally while maintaining
environmental sustainability, but also, yes, domestically, food
security. To be very clear, since you mentioned UK farmers, Defra's
position is that UK food security is about diversity of supply
and sustainability; it is not about self-sufficiency. We are very
much on the same lines as DFID are on this. One can look at the
possibilities for labelling schemes but we are not interested
in crude measures like food miles. It just does not do the trick.
It does not take account of social and economic sustainability
nor, as you have said, does it take account of the full GHG impact
across the life cycle.
Q277 Chairman: Anecdotally, and other
members of the Committee may have the same thing, I have explained
what we saw at a flower farm in Kenya and how low carbon it was
and a number of people have simply said, "Then I can buy
my flowers in Tesco," the implication being that they were
a bit reluctant to buy them because they thought they were high
carbon when in fact they are low carbon and pro-poor as well,
so it does suggest that something that advertised that fact would
have a significant benefit in terms of consumer perception.
Mr Foster: I accept totally that
there is this educational process that we have to go through to
explain to consumers like the ones you have mentioned who can
then make a better-informed choice as to the products that they
buy. It is a discussion that I have in Worcestershire which is
a market garden area, and the impact of decisions to buy beans
from Kenya that it might have on agricultural industry locally.
If you try to look at the climate change aspects, all people do
focus in on, unfortunately, is the aviation side. They do not
look at the fact that growing things in a greenhouse is contributing
enormously to climate change.
Chairman: If Mr Quentin Davies were here,
he would remind us of Ricardo's Law of Comparative Advantage which
is being exploited but not always understood.
Q278 John Bercow: I do not know if
you are familiar with it, Minister, but it is a theory that perhaps
I need to develop at some reasonable length and perhaps I could
submit a memo to the department. He is a distinguished ministerial
colleague of yours now of course but he used to entertain the
Committee on the subject of Ricardo's Law as well and Ludwig von
Mises and Alfred Marshall!
Mr Foster: I would be going back
in my studies of economics but they are familiar individuals,
shall we say.
Q279 Chairman: Mr Bercow did stun
Hilary Benn with a rendition of his father in one Committee session
which I do not think we need to repeat. There is a particular
point about tourism which is something we have also looked at.
First of all, DFID does not really engage very much in promoting
tourism. A point that has been made by the ODI, however, is that
80 % of low income countries include tourism in their Poverty
Reduction Strategy so one of the broader questions is to what
extent does DFID take account of tourism development as part of
its Poverty Reduction Strategy? Is it something that it should
revisit? In that context can I say that attending a seminar on
tourism sponsored by the UN World Tourist Organisation I was stunned,
and indeed rebuked for it from the platform, by the fact that
the British Government is withdrawing from membership of this
organisation, which I have to say I found astonishing. It costs
apparently €330,000 a year. There are 150 country members
of which the UK is about not to be one. It was DCMS who were the
sponsor and they decided that it was too expensive. Does DFID
have a view on this and indeed would DFID be prepared to take
up that membership? I am sure that our report will reflect that
it seems to us quite shocking that we are withdrawing from such
an important organisation.
Mr Foster: May I ask if I can
go away and look into this particular aspect and come back to
the Committee as soon as I possibly can.
3 South Asia Water Initiative Back
4
Poverty Reduction Strategy Programme Back
5
Least Developed Countries Fund Back
6
Mr Randall meant to say the aim is for this work to inform forum
for the future's development of a strategy and action plan for
later on this year. Back
7
Director-General of the World Trade Organisation Back
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