DFID's Performance in 2008-09 and the 2009 White Paper - International Development Committee Contents


Examination of Witnesses (Question Numbers 140-159)

RT HON DOUGLAS ALEXANDER MP, MR ANDREW STEER AND MR MARTIN DINHAM

25 NOVEMBER 2009

  Q140  Richard Burden: Would it be possible to let us have an idea about what that results framework is?

  Mr Steer: Yes.

  Mr Alexander: Basically the first annual report draft is in preparation at the moment and we should be able to let you have that first annual report in a relatively quick period. What seems implicit in your question is the same question I have been asking Andrew and the team which is how can we actually move this forward rapidly. I have had quite convincing arguments put to me in terms of, in part, the sheer complexity of some of the projects and the scale of some of the projects that are now in contemplation. We are moving at a fairly rapid clip. Whether it is solar power in north Africa potentially providing power sources to Europe, these are seriously big projects that are now being contemplated in part because we have been able to take that downpayment of £800 million and look at it now in a much broader multilateral context

  Mr Steer: I think it is the only place in the world today where sitting around the table are serious officials from China, India, Brazil, Mexico and several other emerging and developing countries, together with the United States, the United Kingdom, Japan and the other major donors, discussing a low carbon plan for Mexico, say, or for Egypt. That is already happening. It is happening at each meeting. In terms of the assessment, we could already start assessing that process, which is actually very interesting but, as you say, much, much more important will be a year and a half from now when we can start seeing whether the criteria, for example in the Clean Technology Fund which was reduced carbon at a very cost-efficient rate, do it in a way that is truly transformational, with serious criteria as to what transformational means, the ability to scale up and to bring down costs and so on, and do it in a way with a legitimate governance participatory process. That will be 18 months from now before we can really dig deep on that.

  Q141  Mr Evans: Apologies for not being here for your opening remarks, Secretary of State. Looking at climate change and the phenomenal figures that we hear bandied about to tackle this particular issue, what role do you see for your Department in having an impact on technology transfer? Getting stuck in with industry in this country, which is involved in industry in developing countries, we would be appalled if there were firms here that because they are not allowed child labour here were exporting it abroad, or indeed because sweat shops were not allowed here they were exporting sweat shops to Bangladesh, or because they were not allowed pollution here they were exporting the pollution to other countries; simply because if they are not allowed it here they should not be allowed it there. Clearly there is technology transfer where they partner with industry within developing countries, and I include China amongst that. Do you see yourself having a role on that or would you partner with Peter Mandelson and other ministers in trying to have an impact on industry here in transferring some of the technology that they have got here out to the developing world?

  Mr Alexander: Often the constraints on technology transfer can be more than simply the capacity to promote it to the developing world, in the sense that when I was in India with my colleague Ed Miliband, technology transfer and technology diffusion was one of the central issues. The whole intellectual property regime was an issue that was fairly regularly being raised by Indian interlocutors and in that sense it would seem to me that one of the issues that will be on the table as soon as Copenhagen will be this issue of technology transfer. There is no doubt that there is a huge appetite for technology at the right price in the developing world and in that sense "at the right price" contains both issues of intellectual property and issues of funding. We have some expertise and have developed some expertise, which I will maybe ask Andrew to say a word about, in relation to advanced market commitments and the capacity to use public money effectively to be able to stimulate the production of goods at the right price. I would add two other points. China and India are not waiting for the UK in this in the sense that when you visit India now they share with you with their own thinking around, for example, solar power and renewables. The scale of their ambition is comfortably in excess of any other country in the world in terms of their set targets now for the proportion of power to be generated from renewables, for example. Similarly, China is already the largest manufacturer of renewables anywhere in the world. In that sense it seems to me there are issues of common concern and direct relevance both to India and to China and to other parts of the developing world. There is also a much broader public policy issue, which is where will the British economy be able to make the greatest contribution to the potential for new wealth that climate adaptation creates within the whole economy, and how do we find our place within that global value chain. We would all anticipate, I am sure, that is not going to be at the lower added value, low technology end of the value chain; it is going to be in science and research in the high-skilled high wage end of it. As I say, I came away quite humbled by the scale of ambition that I encountered and they were not saying, "Please can you give us money," they were saying, "We need assistance in terms of ensuring that Copenhagen allows for the genuine diffusion of the technologies that we believe we could use."

  Mr Steer: I think there is a big win here if it is done carefully. There is a good analogy with drug development for tropical countries. 15 years ago there were no new drugs being developed by the private sector for what we call now "neglected" tropical diseases. Now there are 35 being developed, some of them about to come on to the market. The reason is because of clever public/private linkages, where for example the Gates Foundation, Rockefeller, ourselves have worked with private drug companies to help push the drugs through the system and now we are also pulling the drugs out from the system through these advanced market commitments where drug companies were not willing to make long-term investments because they did not know there would be a market in poor countries. We are thinking about the same idea for clean technology in developing countries, so we are having a technical conference here in January that will explore exactly that. In the White Paper we are also suggesting that in three countries we will set up what we call technology centres. It is not so much to generate brand new technology because, as the Secretary of State says, that is being done in a very sophisticated manner; it is to adapt that technology for on-the-ground development in low income-countries primarily. Third, we are setting up what we call a Climate Change Network which will provide for 40 countries technical advice and research on both policies and technologies.

  Q142  Andrew Stunell: The White Paper says that half of the financing gap for meeting climate change will come from the carbon market. I am not quite clear whether that is half of the $100 billion or whether the $100 billion is a half and the carbon market is the other half but, either way, it is a very, very big sum that is coming from the carbon market. How do you assess that figure and how do you see it actually being delivered?

  Mr Alexander: There are carbon markets which are under development at the moment, and the general expectation is that Copenhagen will provide a means by which those can both be broadened and deepened in terms of their operation. There is a great deal of technical work that is being done by our colleagues in the Treasury and in DECC and elsewhere within government, and indeed a lot of independent research, in terms of the capacity for the carbon market to generate, as you say, very significant sums of money into the future. In essence, the effectiveness of carbon markets is driven by the emission caps that are set, and in particular that the developed countries adopt. In that sense the financial yield that will be secured cannot be differentiated from the negotiations that are being taken forward. However, there was modelling done in terms of the figures that were produced. We therefore see that there are great benefits as the science dictates that tighter caps are set coming out of Copenhagen. In that sense there is quite extensive evidence both within government and beyond government in terms of the potential for the carbon markets to be a much bigger player in terms of financing in the future.

  Q143  Andrew Stunell: Is that half of the $100 billion?

  Mr Alexander: Yes.

  Q144  Andrew Stunell: I see, fine. There is a lot of scepticism, one might say cynicism, about whether carbon markets will deliver and the first generation has had some rather problematic outcomes. How satisfied are you that Copenhagen, or indeed any other international conference, can deliver the sort of framework which will have the integrity that is needed?

  Mr Alexander: I partly draw on my experiences as a former Transport Secretary where the Emissions Trading System had its critics within Europe but nonetheless it proved to be a mechanism which I think is capable of reform and improvement. In that sense it is right to recognise whether the Clean Development Mechanism or other initiatives that have been taken forward at the moment have the disadvantage of not being joined up and, like any process, it is subject to improvement by experience. In that sense I would err on the side of confidence that in time the carbon markets can not simply make a material contribution towards dealing with climate change but also provide the resources that are necessary for adaptation. There is a great deal more work to be done and Copenhagen will be the beginning of that journey rather than the last word.

  Q145  Andrew Stunell: Are the Norwegian proposals a step in the right direction? What is the departmental view on that?

  Mr Alexander: It has informed our thinking in terms of the $100 billion figure. The Norwegian notion that there could essentially be a precept in terms of the trading that takes place is one very constructive contribution to explain how you could deliver that scale of financing out of the carbon markets, yes.

  Q146  Mr Evans: Can we turn to the impact or effect of population growth on climate change. Secretary of State, could you state whether you think this is an important contributor and something that should be addressed?

  Mr Alexander: I think one has to have a sense of relative importance. Again, I will turn to Andrew in a moment to give you the exact figures, but if you judge that global population is anticipated to rise up to 9.2 billion people by 2050, of course we are going to be living on a planet where there are more mouths to feed and more productive agricultural land required to be able to sustain a population at a higher level. On the other hand, as John Battle pointed out to us earlier, if you look at the emissions per capita in a country like Uganda and compare it with the United States or the United Kingdom, then I think you would be hard-pressed to make the case that the biggest challenge facing us is to stem population rise in the developing world, as distinct from having effective cuts in per capita emissions in the developed world, because actually when you are at 20 tonnes per US citizen, we are in a very, very different position.

  Q147  Mr Evans: Before Andrew comes in, could I just relate what the UN Population Fund report The State of the World Population 2009 stated. It says that population control could be a more effective means of cutting emissions than investing in clean energy. The world's population is estimated to grow to 10.5 billion by 2050 from 6.8 billion today. They say that reducing this total by one billion would save as much carbon dioxide as constructing two million giant wind turbines. If you could actually do both then clearly that would have a much greater impact.

  Mr Alexander: If you or your colleagues in your party would like to advance that as a negotiating strategy at Copenhagen to persuade Sheikh Hasina or others that their primary responsibility is to reduce their own populations and then the developed world will follow by cutting emissions, I wish you good luck, but I am not sure that that is actually a realistic prospect for securing global agreement on the timescale that we require. In the Department for International Development we have done a great deal of work with a number of countries on reproductive health over a number of years, and in that sense there are very clear correlations between improvements and development and relative decline in birth rates within those countries. We do that as part of our day job. It is important work to be undertaken, but I struggle to see, notwithstanding the research that you quote, that it would be a meaningful basis for negotiations when the world comes together in a fortnight's time in Copenhagen.

  Q148  Mr Evans: From the response you have just given, do I assume therefore that population is simply not being advanced at all by DFID as part of our negotiations?

  Mr Alexander: As I say, the issue of population and its relationship to development is fundamental to DFID's mission, and in that sense it has shaped and affected work that we have done for many years. To the extent that we contribute to discussions across government we reflect the breadth of the work that we take forward, including on the issue of reproductive health. On the other hand, is it going to be a negotiating strategy of the United Kingdom Government that we demand a reduction in population from the developing world as the price for emission reductions from the developed world in a fortnight's time? It is no revelation to say that is not going to be the first requirement that Gordon Brown or Ed Miliband is going to articulate when they arrive in the Danish capital. Would you offer a different point of view?

  Q149  Chairman: The point is, Secretary of State, I do not think we are suggesting that it should be a pre-condition or part of the negotiation, but it is a matter of concern to the Committee that these forecast populations have a huge impact on all environmental issues and climate change issues, and it is slightly strange that population has gone off the agenda having been 20 or 30 years ago a much higher priority. It is not a question of it being a pre-condition.

  Mr Alexander: Forgive me, I would not suggest that it has gone off the agenda in any way, shape or form, whether it is the additional work we are doing on reproductive health, whether it is the work we are doing on agricultural productivity where we have committed £400 million to agricultural research. I think there is quite an important issue here, from the discussions I have had with developing countries, as to whether they would deem this to be an appropriate or effective negotiating strategy for a developed country like the United Kingdom to pursue in climate negotiations, and beyond saying it is part of the work that we do in these countries, I am struggling to see its immediate relevance in terms of the negotiating mandate that should be taken forward.

  Q150  Mr Evans: If you are saying you are not doing it at Copenhagen, are you doing it outside of Copenhagen then? Clearly looking at a report from The Economist, which was talking about the fact that in most developing countries the population rates have been falling fast in any event, and they refer in the developing world to Bangladesh, where it has fallen from six children per mum to three, and that has happened over a relatively short space of time whereas in the United Kingdom that similar fall took 130 years to bring about. Then it says that rising populations in the areas that are most vulnerable to climate change and will exacerbate the key impacts of climate change: water shortages, mass migration and declining food yields, so all of this is important.

  Mr Alexander: I could not agree more and that is why I am intrigued as to why somebody as knowledgeable as a member of this Committee would question whether we are doing this anywhere else. I could take you to the schools where we are educating young girls. I could quote you, if I was not constrained by Presbyterian reserve, the number of condoms that we are paying for every day that are used around the world. I could remind you that the first major announcement I made on this issue was £100 million for reproductive health at a time which the US Administration took a very different view in terms of reproductive health services in the developing world. DFID has policy form on all of these issues in both areas directly related to health and also areas directly related to education, because the emerging evidence is very clear that if you educate a young girl she will marry later, have fewer children, be more likely to be employed in the formal economy and take better care of herself in terms of health outputs. It also has form in terms of raising these issues on a regular basis with countries and governments around the world. I took the opportunity to discuss this issue at length with the Indian Government, a government which, much as we admire them and work closely in partnership with them, are often quite sensitive to issues being raised which they regard as being issues primarily of domestic concern. In that sense it is absolutely fundamental to the work that DFID does that we look at this issue of population. I am afraid there is not a single silver bullet to address the issue, but in terms of the sophistication that we bring to this issue we raise it through policy advocacy, we raise it through out commitment on education, we raise it through our commitment on health, in a whole range of different ways.

  Q151  Mr Evans: We are talking about climate change now as one of the vitally important aspects that is going to affect the world in the future and in the near future. If the world population does grow as fast as we have said by 2050 clearly this is a crisis also. Do you believe that this ought therefore to be approached with the same sort of urgency that we are approaching climate change?

  Mr Alexander: In terms of the urgency and immediacy of climate change, I would struggle to say that population growth holds out as absolute a prospect for planetary destruction as rising temperatures, so I think I am probably in disagreement with you on that. In terms of the urgency of addressing the challenge of a rising world population, I would certainly agree with you. That is why I would commend to you the speech that I made last year to the World Food Summit where again DFID took policy leadership on the issue of agricultural research, because whether it is the headline announcement that we made there or the work that we are now doing with 14 African countries through CAADP[6] in terms of agricultural productivity, there are mitigation measures that can be taken in relation to population immediately—whether it is through raising levels of agricultural productivity in Africa simply to levels that are being secured already in South and South-East Asia or whether it is through a combination of better seed technology, better irrigation and better infrastructure raising that agricultural yield—there is a whole number of steps which can and should be taken to anticipate now the consequences of that rise in population, at the same time as putting in place strategies which the evidence suggests will over a period of time moderate rises in population as development advances in these countries.

  Mr Evans: For the record, we do not disagree so far as the impact of climate change is concerned. Clearly that is the number one and the impact of population growth would not be the same, but clearly the impact of population growth is vitally important and what I am saying is perhaps it should be attacked with similar enthusiasm.

  Chairman: To be fair, I think it is a view that the Committee has expressed although not formally in a report and we are concerned that this seems to be a lower priority. John Battle?

  Q152  John Battle: Could I switch to what might be called new mechanisms for raising development funding whether it is for ODA or for climate change and adaptation and that is the idea of a tax on global financial transactions. It used to be called the Tobin tax. As someone who has put down parliamentary questions and had debates and EDMs on it over the last ten years, to be told it would be too complicated, we cannot go alone being one country or the whole financial system will migrate, I was a bit bemused and surprised—and pleasantly surprised—that the Prime Minister raised it at the G20 as a good idea. Could you give us a clue where you think we are up to on it and whether it will be of any assistance to your budgets or indeed the international budgets for both aid and climate change and adaptation?

  Mr Alexander: Candidly, I think there is a political and a policy answer to that. I think politically it is right to acknowledge that there are certain circumstances when more space opens up for progressive change. That can be as a consequence of a crisis or by policy leadership. A parallel example that I would cite would be the issue of tax havens. You have probably similarly signed EDMs and asked challenging questions of me and of others on the issue of tax havens over many years, and you will have had a fairly standard reply saying the Treasury is in the lead on this matter and it is a serious issue but there needs to be multi-lateral support. I think you could reasonably argue that we have made more progress in the last seven or eight months on tax havens than the international community secured in the previous seven or eight years, and that is because the global financial crisis exposed the existence of the shadow banking system in all of its many manifestations, one of which was a degree of opaqueness and a lack of transparency that everybody recognised had contributed to the crisis. What then happened was there was a willingness on the part of the British Government, ahead of the G20 summit in London, to try and grasp that nettle and to see if we could drive forward the issue of transparency, the OECD "white list" and all of the information exchange mechanisms that would be a means to deal with tax havens effectively. Similarly, the issue of the so-called Tobin tax has been an issue which, as you say, has been around the debates for a number of years, but there has not been judged to be the capacity to translate an idea into an achievement, and that is not yet there, frankly. As some of the responses in St Andrews indicated, there are many still to be convinced as to the merits of saying that there should be a tax of this sort, but I welcome the fact that that policy space has opened up. I welcome the remarks that the Prime Minister has made. In terms of the specific remarks that were made in St Andrews, it was not a classic Tobin tax to be hypothecated for development. In fact, it was raised in the context of the issue of the banks meeting their responsibilities to the public who had funded them. Traditionally, the British Treasury has not been the greatest advocate or the greatest fan of hypothecated forms of taxation generally, as the exchequer function likes the discretion to be able to allocate income against expenditure. In that sense I did see the Prime Minister's statement in St Andrews as being an exciting opportunity rather than yet an achievement. It is the beginning of that debate and that policy discussion. In terms of its impact on development, there is other work that is already underway, for example the initiative that Bob Zoellick, the President of the World Bank, and Gordon Brown led in terms of innovative funding for health, where others have advocated a range of different mechanisms that could be used, and there is continuing work that is being taken forward on that, and even as recently as the last few weeks Stephen Timms, my colleague in the Treasury, has been attending discussions that have been taking place in Paris about the use of innovative financing mechanisms. I do not think we are at a point of conclusion but there is more energy in this area on this agenda than there has been for many years.

  Chairman: You have announced a stronger focus on fragile states and we have a few questions on that. Richard Burden?

  Q153  Richard Burden: Whilst the focus on this chimes with a lot of what we have been saying in recent years in terms of seeing peace, security and justice as being pretty basic services, if there is going to be an extra focus on that, with very substantial amounts of new bilateral funding of up to 50% focusing on fragile states, put bluntly, what are we going to be spending less on?

  Mr Alexander: There are two answers to that. One is to say of course we have, as the earlier questions anticipated, a rising budget line and in that sense we are in a position to be able to do more in the future, but it does oblige us continually to discipline ourselves in terms of which countries we are working in and what that focus should be. We have also reduced and are reducing the number of countries in which we are working—and I am sure Martin has the detail of that—but we not in a position where we do not move out of countries. We quite regularly move out of countries as they graduate to middle-income status, and in that sense we are constantly looking at our portfolio to make judgments in terms of where we can have the biggest impact.

  Q154  Richard Burden: Taking into account your point about a rising budget, generally where the reduction would be is in terms of numbers of countries rather than the range of activities within countries?

  Mr Alexander: It is interesting, one of the discussions I had with the Africa heads of office at the time of the launch of the White Paper was to persuade them that as Secretary of State I did not really want them to send me submissions that felt obliged to have a little bit about conflict resolution, a little bit about climate change, a little bit about economic growth and a little bit about working with the multilateral system. I said you should regard this as country heads as being a menu rather than a menu fixe, if you like, but they should not feel an obligation to try and do everything, and in that sense the real thinking behind the new commitment to fragile states in part reflects the work of this Committee, in part reflects other research like Paul Collier's which evidences the coincidence of conflict and state fragility with poverty, and a certain determination on our part that somebody needs to do this. Actually while we would not claim yet to have all the answers of working in conflict-affected and fragile states, we do recognise that as an international community we need to do this better in the future, and if DFID, with all of its strengths, its depth of understanding and the quality of its staff, is not prepared to engage in some of these, frankly, very tough environments, then the risk is that everybody will choose to continue to work in the much more benign environments where you can meet your Paris Principles but effectively write off a billion plus people to lives lived not just immiserated by conflict but also by poverty.

  Mr Dinham: A couple of points on the question of numbers of countries. Just looking in perspective, we will have cut by a third the number of countries in which we operate since 1997 and in the three years up to 2010-11 we will have withdrawn bilateral funding from about ten countries—Armenia, Moldova, Ukraine, the Gambia, Nicaragua and countries like that. On the staffing level, obviously for working in fragile states we need to have a level of expertise because it can be quite labour-intensive and there are some really tricky issues, and so we are looking at the overall balance of our staff and trying to maintain or, in some cases, increase the numbers of staff in fragile states. We are looking at, for example, the number of staff in our corporate services to see where we can make that leaner so that frees up some resources for working in the fragile states. It is looking to make the most effective use of the staff that we have.

  Q155  Mr Lancaster: How meaningful is your commitment to spend 50% of new bilateral funding expenditure in fragile states given that there seems to be no agreed definition of what a fragile state is? There is a certain amount of wriggle room there where definitions could be changed. Perhaps the Secretary of State would like to set in stone what he considers a fragile state to be.

  Mr Alexander: I suppose if I had to offer a working definition before this Committee just now I would probably say countries where the government cannot or will not deliver core functions of the state for the majority of its people. In that sense, internally, we have an operating list in terms of countries that we regard as fragile. We do not tend to publicise that list for very understandable reasons; that it would not necessarily enhance our diplomatic relations or our working relationships with all of the countries, but in that sense I do not think it is particularly difficult to recognise the attributes of state fragility when you encounter them in country.

  Q156  Mr Lancaster: I accept that but of course cynics would say—certainly not me, Secretary of State—that by not publishing the list (and I understand why not) there is a degree of wriggle room here where you can effectively change which states are currently considered to be fragile to enable you to meet this target.

  Mr Alexander: Why would we want to do that?

  Q157  Mr Lancaster: I am simply responding to some criticisms that have been raised about the Department, and there are concerns.

  Mr Alexander: By who?

  Q158  Mr Lancaster: Well, that is fascinating. If you read some of the submissions that have been made, people are concerned. All we are trying to do is to tie you down to ensure that this commitment is met.

  Mr Alexander: Well, I understand Mark Lowcock was before the Committee yesterday, one of our very esteemed officials, and he set out for you four of the key fragile states where there is a great deal of work underway and indeed significant resources are being committed. In that sense I do not think there is anything particularly controversial about the countries in which we are called on to work. It seems to me to be a bigger and more substantive issue not to suggest malfeasance in definition but to be honest as to the motivation, and I have sought to say that the emerging evidence over many years of the coincidence of poverty and conflict, the sense that unless we as an international community do better at dealing with the consequences of state fragility, then actually not just would that represent a moral failure to those many millions of people condemned to lives diminished by poverty but actually, in an era of inter-dependence, the consequences of that state fragility in apparently remote countries can be visited on countries on the other side of the world. In that sense it seems to me both morally right and strategically wise as an international community to better understand these challenges and to commit to undertaking that work. We would probably be more vulnerable to the kind of criticism you suggest if we were ignoring this challenge rather than being honest about it.

  Q159  Mr Lancaster: Let us move on to the commitment in the White Paper to develop joint strategies with the FCO and the MoD in fragile states. Of course the Stabilisation Unit has been set up to do some of this work. The Stabilisation Unit has come under some criticism. People, perhaps rightly or wrongly, have said that it has effectively had its wings clipped by the three departments who almost see it as a threat. What assessment does the Secretary of State make of the work of the Stabilisation Unit and how would you like to empower the unit in the future?

  Mr Alexander: Firstly, I would draw a pretty clear distinction between the joint working anticipated in the White Paper and the important, but quite distinctive, role that the Stabilisation Unit plays. I would not anticipate that the Stabilisation Unit would be the principal driver of the work that we are doing in a number of different countries where there is a logic to working collaboratively and closely with our colleagues in the MoD and the FCO, for example the kind of work that we are taking forward in the DRC. I have visited Kinshasa myself and seen that and that seems to be an area where there is quite effective joint working underway at the moment, but it is an area where we need to cascade and share that kind of learning elsewhere. In terms of the Stabilisation Unit, again I am intrigued by the line of questioning you are offering because it is a not a description I recognise either from my own point of view or from my colleague Bob Ainsworth's in the MoD or David Miliband's in the Foreign Office. In what sense would we have an interest in seeing a unit which we have jointly supported and jointly encouraged as being a threat rather than an instrument for the advancement of the Government's policy?



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