CORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 48-iiHouse of COMMONSMINUTES OF EVIDENCETAKEN BEFOREINTERNATIONAL DEVELOPMENT committee
DFID ANNUAL REPORT 2009 AND DFID WHITE PAPER 2009
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This is an uncorrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.
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Transcribed by the Official Shorthand Writers to the Houses of Parliament: W B Gurney & Sons LLP, Hope House, Telephone Number: 020 7233 1935 |
Oral Evidence
Taken before the International Development Committee
on
Members present
Malcolm Bruce, in the Chair
John Battle
Richard Burden
Mr Nigel Evans
Mr Mark Hendrick
Mr Mark Lancaster
Mr Virendra Sharma
Andrew Stunell
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Witnesses: Rt Hon Douglas Alexander MP, Secretary of State for International Development, Mr Andrew Steer, Director General for Policy and Research, and Mr Martin Dinham, Director General, International, DFID, gave evidence.
Q109 Chairman: Good afternoon, Secretary of State. Thank you very much for coming in. Although I do not think any of you require introduction, perhaps for the record you could introduce your team.
Mr Alexander: Of course. Martin Dinham, the Director General, International, on one side and Andrew Steer, responsible for pretty much everything in research and policy.
Q110 Chairman: Obviously this is primarily focused on the Annual Report and the White Paper and questions arise for both. In the Queen's Speech, the Queen told us that you were bringing forward a Bill to pass legislation that the British Government should be obliged to raise spending money on aid to the poorest countries to 0.7 % of our national income. All parties are publicly signed up for this. You shake your head. There is an opportunity to respond when you come back, but can you perhaps explain why you are introducing this Bill, whether you actually intend to have it passed before the date of an election, whenever that may be, and what it is designed to do? What is the point of the Bill?
Mr Alexander: Firstly, let me clarify your point in terms of the public position of the other parties that I am aware of. One of your colleagues, the shadow Liberal Democrat spokesman, has written to me in recent days confirming his support for the legislation and the support of the Liberal Democrats. Alas, that support has as yet not been forthcoming from the principal opposition party, the Conservative Party. Indeed, I shared a platform in recent days with Andrew Mitchell, the shadow international development spokesman, and repeatedly afforded Andrew the opportunity to commit the Conservative Party to back this legislation but the silence spoke volumes. Let us see whether in time, as in so many other areas, the Conservative Party comes to follow where the Labour Party has led. As yet, no commitment has been made by the Conservative Party. In terms of the timetable and the way forward, as you know, the Gracious Address reflected the remarks that were made by the Prime Minister at the Labour Party conference where he stated his desire for this legislation. The fact that it was literally a matter of weeks from that statement being issued in September by the Prime Minister to its inclusion in the Gracious Address reflects, I believe, the clear sense of priority that we attach to this legislation. The aim is to publish a draft Bill shortly after the New Year for pre-legislative scrutiny. We are still awaiting final decisions with familiar and normal discussions underway as to what would be the appropriate forum for that scrutiny to be handled in, but I understand that this Committee has indicated a willingness to participate in that process, which of course I welcome. In terms of the purpose of the legislation, I think it will have the effect of both reflecting the seriousness of intent and the seriousness of commitment of the British Government, not simply for the first time to reach the goal - obviously 0.7 % GNI expenditure by 2013 - but the Gracious Address was carefully worded to reflect that as an on-going commitment from 2013. It is an opportunity to place in the laws of the land the solemn promise that we have made as a Government and we believe there is widespread support for honouring that commitment on an on-going basis. There are issues which are presently under discussion with our colleagues across government in terms of how this legislation will sit alongside other commitments. For example, the Fiscal Responsibility Act, which is also anticipated, but I am confident that these are issues that can be overcome and that we should hit that timetable of being able to publish a draft Bill very early in the New Year to afford then an appropriate period for scrutiny.
Q111 Chairman: It is a well-known article of the British Constitution that one Parliament cannot bind its successors. In that sense, I am sure that the Government is fully aware of that, but is it an attempt to try and make it difficult for a government in future to fall back on a commitment on the grounds that they would presumably have to amend legislation or repeal it? Will it actually try to set out a specific timetable or a commitment to say that each year for example that must be adhered to? I am not asking you to give us the text of the Bill.
Mr Alexander: I think there are useful precedents in terms of the reporting that is now obligatory under previous legislation that has been passed in terms of reporting to Parliament on progress that has been made. It comes as no surprise that we have no intention of relinquishing government any time soon and in that sense we see this as being an on-going commitment of this Government. I think your point is well taken that it would require a conscious decision for any subsequent Government to amend that legislation. My sincere hope would be that that would cause any Government of any political hue to reflect carefully as to whether we should be breaking the promises that we have made and that we believe are sufficiently important to be written into the legislation of our country.
Chairman: I am not sure I can press you any further in the sense that we will see the Bill in the New Year, other than to put on formal record that this Committee certainly would wish to be a central part of the pre-legislative process and we think it would be appropriate for the Committee to do so. I just put that on the record formally. Unless any colleagues want to comment on what has been said, I will ask Virendra Sharma to ask his question.
Q112 Mr Sharma: The Annual Report reconfirms DFID's commitment to disburse 0.56 % of GNI as aid by 2010 and 0.7 % by 2013, but how can we be confident that this will happen when the percentage between 2006 and 2007 fell and remains lower in 2008 than in both 2005 and 2006?
Mr Alexander: If you look at the trend over recent years in relation to the GNI, it has been upwards and therefore I am confident that we are on track to meet the 2013 deadline. It is right to acknowledge that within that upward trajectory there has been movement, depending on particular transactions in particular years. In particular, my recollection is in the year that you spoke of there was a particular debt write-off in the preceding year, I think for Nigeria, which accounted for a spike and then some decline on the way back up. In that sense, partly on the basis of the resources that have been committed as part of this Comprehensive Spending Review, I am confident that we remain on track to meet the commitments that we have made.
Q113 Mr Sharma: You said in response to a recommendation we made earlier in the year that milestones can be useful in monitoring progress towards commitments on expenditure. Will your draft legislation propose the setting of annual milestones?
Mr Alexander: The language that was used in the Gracious Address did not refer to the period prior to 2013 but from 2013. The language that was used by Her Majesty stated that draft legislation will come in to make binding my Government's commitment to spend 0.7 % of national income on international development from 2013. I am confident on the basis both of the form, the track record and also the continuing commitment of this Government that we will be in a position that we will have met, in 2013, the commitments that we have made. We were keen in the legislation to anticipate the period following the achievement of that target from 2013 onwards, which was the language that was carefully drafted for the Gracious Address.
Q114 Mr Sharma: Do you plan to set out milestones for annual expenditure towards meeting the 0.7 % target before the new legislation is enacted?
Mr Alexander: We work on a tri-annual basis, on the basis of the Comprehensive Spending Reviews and in that sense the numbers have been published during this spending review period. There will then in due course be a further period covered by a further Comprehensive Spending Review and that will get us certainly very close to 2013. I would not expect that there will be a different approach adopted by the Department for International Development to the general expenditure framework that is set out for the whole of the Government, but I have to say that both on the basis of our track record and our contemporary commitment I am confident that, notwithstanding those broad obligations across Whitehall, we are on track to meet those commitments. I would not have concerns in that regard.
Q115 Chairman: I assume we are talking about DAC definitions of ODA?[1]
Mr Alexander: When I talk about ODA, it is on the basis of the OECD DAC categorisations.
Q116 Mr Lancaster: Can we turn to ODA contributions from other government departments? The 2009 Budget acknowledged that contributions to ODA were going to be higher than expected from other government departments, so could you perhaps put some meat on those bones and outline in which areas you expect non-DFID ODA to be spent and by which departments?
Mr Alexander: Historically it has been the case, even before the establishment of DFID in 1997, that a number of government departments had ODA scorable expenditure. In that sense there is nothing new or particularly innovative in the fact that other government departments have expenditure that is appropriately categorised, both in our response to the DAC and in turn by DAC, as being ODA scorable. The one substantive change that has taken place which was reflected I think in the White Paper was perhaps a more significant ODA contribution from the new Climate Change Ministry, given the funds that we put into the strategic climate fund, what was originally an £800 million contribution, the Environmental Transformation Fund. Beyond the CIF[2], what was originally the Environmental Transformation Fund, we are talking more limited sums of money. There is some conflict and stabilisation aid funding, through both the FCO and working with the Ministry of Defence. There are the Chevening Scholarships which account for, if I recollect, about £15 million. The broad parameters are, if I recollect, that about 85 % of ODA scorable money passes through DFID, about 15 % through other government departments, but the biggest single lump is the strategic climate funds which Andrew might say a word about.
Mr Steer: It is an £800 million programme. 50 % is on DECC's budget. 50 % is on DFID's budget. We make the decisions jointly about spending.
Mr Alexander: I have just found those Chevening figures. It is £19 million not £15 million that is the Chevening Scholarships.
Q117 Mr Lancaster: Given that the 15 % that is not spent by the Department is not covered by the Act, how are you going to ensure that that 15 % is spent on development projects or appropriate projects?
Mr Alexander: Because the responsibility rests with OECD DAC in terms of what is ODA scorable, the categories of expenditure are set internationally and in that sense it is up to each government, including the British Government, to account for whether that money can fall within the category set by OECD.
Q118 Chairman: What you are saying is that is a broader DAC definition rather than the International Development Act?
Mr Alexander: We have always been clear that ODA is a creature, if you like, of the OECD DAC and in that sense that is not a change in policy. It has long been the case that the GNI proportion is worked out in relation to the OECD DAC categorisation.
Q119 Chairman: I am not trying to be mischievous but, to push a little bit harder, if more of the budget was going through multilateral organisations then - I appreciate it is a rising budget - it effectively dilutes the impact of the anti-poverty priority of the Act because it means a smaller proportion is subject to the Act.
Mr Alexander: Implicit in your question would be the suggestion that money spent through the multilaterals is not targeted towards poverty reduction.
Q120 Chairman: No. Just to be clear, the Act specifically states that 90 % of bilateral aid will go to low income countries. It is that specific point. That is not the case in relation to the money that goes to multilaterals. It has to conform to the international ODA definition but not the International Development Act. I am not trying to be mischievous; I am just trying to get clarification.
Mr Alexander: I appreciate that, but I would say two things in response. One is: even if we continue to work to a 90/10 split in bilateral funding, we have made a conscious choice in the White Paper to try and ensure that we better shape and influence the multilateral system. It is not that we are looking for a reason to avoid a 90/10 split that we are putting more money into multilaterals. It is a conscious policy decision to say: how can we influence major global institutions like the World Bank and others. Also I would argue that we are having real success in terms of using the exemplar of our 90/10 split in our bilateral programme to influence the approaches that are being taken by others. I know that there was some discussion before the Committee yesterday in relation to the European Commission and EDF[3] funding. That is an example where I welcome the fact that the proportion of money that is being spent in low income countries is rising. Similarly, we are working hard with the Bank and with others to ensure that there is a very clear focus on those countries that most require those resources. In that sense I think it would be the wrong response to say we are going to constrain, as you say, against a rising budget line, a willingness where we judge it appropriate to put money into the multilateral system in order to be caught by the International Development Act. I think actually the right response is to say: how do we take the experience that we have learned from the bilateral programme and seek to cascade that learning and that example out into the multilateral system.
Chairman: I think it reinforces the role of this Committee, not only in holding your Department to account but constantly holding the multilaterals to account, who have such a substantial proportion of the aid budget.
Q121 Andrew Stunell: There are a number of other major ODA contributors and some of them have become wobbly. Let us say Italy, France or Ireland. Can you say something about what you are doing to encourage G8 partners to honour their Gleneagles commitments, particularly in relation of course to Africa?
Mr Alexander: The dilemma that we often face in discussions such as this is that some see the metric of our commitment to influence others as being the volume of our public criticism of them. As a fellow politician, you will appreciate that that is not always the most effective way to influence partners to engage in activities that otherwise they might not engage in. Whether it is as recently as last week - I will ask Martin to say a word or two about the General Affairs Council of the European Union (GAERC) - or whether it is the action that we took at the G20, whether it is the action that we took at the United Nations high level meeting as recently as September, I think even those countries that find themselves on the other end of the telephone or the other end of discussions would concede we are fairly relentless in our encouragement of partners to meet the promises that they have made. The final point I would make before I would ask Martin to take you through two or three of those specifics is that our credibility in making that case is contingent on us meeting our own promises. That is why it is for us so fundamental, both in terms of the legislative commitment we have now made but also the commitments that we are under at the moment, that we are in a position to try and advocate effectively for other countries to meet their Gleneagles commitments, because if we were not in as strong a position ourselves I think our words would ring rather more hollow.
Mr Dinham: On the General Affairs Development Council last week, we were instrumental both before the meeting, in the margins of the meeting and during the meeting itself in arguing very strongly that EU members should keep to their commitments which for the older Europe members, as it were, is 0.51 % and, for newer members, 0.12 %; and to their commitments to 0.7 % by 2015. We were also instrumental, working with the Presidency, to establish a very strong statement by the Presidency at the end of that GAERC on the importance of those commitments and what we need to do to achieve those. That includes a proposal that EU leaders should each year, in the spring of each year, look at progress on those targets to make sure that there is the highest political pressure behind them to actually reach them in view of the importance of reaching them by 2015. I would just add on the G8 that we have also been instrumental in the proposal for an accountability framework which would hold all members of the G8 to account, both individually but also collectively, for the various commitments that they have made, both on ODA volumes but also in relationship to thematic issues, such as what we are doing on health and education and so on. These are two areas where we have been really pushing very hard to keep people to the commitments they have made.
Mr Alexander: I think it is fair to say in
both of those examples, which are just the most recent examples in relation to
the accountability framework, had it not been for British pressure, albeit
exerted behind the scenes in the days preceding the summit, the summit would simply
not have produced the initiative on food security which the Americans were
promoting. We simply would not have seen
the accountability framework being delivered.
Similarly in terms of the General Affairs Council I myself was engaged
in discussions in the days immediately preceding the General Affairs Council
with Bert Koenders, my opposite number in the
Q122 Andrew Stunell: Can you say something more about the G8 and the implementation of the accountability framework? Where have we actually got to, following on from that agreement?
Mr Dinham: There was a commitment at the last G8 summit that the results on the accountability framework which were delivered last year would be built on and worked on and a more detailed accountability framework would be delivered for the summit this year. There is work going on through the year to ensure that that is kept up to date with more detail and more strength behind it. Another proposal alongside that which is kind of similar and related was the MDG needs assessment which we got onto the table at the last summit, which is doing the same thing, indicating what is needed both by G8 and other countries to deliver the MDGs. The assessment will be delivered in time for the next G8 summit in the middle of next year.
Q123 Andrew Stunell: We should be able to see some outcome at that point?
Mr Dinham: That is right. The idea is you set the proposal and then you give a date for when it is going to be followed up, so there is an accountability process built into that.
Mr Alexander: As Martin says, we were working towards twin tracks in a sense. It was a significant prize to secure a degree of transparency in terms of progress made in relation to ODA commitments. We also judged however that it was worth pushing the boat out, if you like, to try and get an assessment on the MDGs because that also provides a degree of transparency to say, "Actually, even if these commitments are made, let us be clear as to what is required internationally if we are to achieve the MDGs." In that sense again, the pursuit of that proposal was not without scepticism or in some cases resistance but nonetheless we judged that it was a significant prize to try and secure.
Q124 Chairman: We are just under two weeks away from the Copenhagen conference. The assessment of where that is going seems to be up and down. I was attending a legislators' conference about a month ago in Copenhagen which was convened by the Prime Minister of Denmark who at that point seemed to be playing down the likelihood of any fixed agreement. We now have notification of 60 heads of state going and suggestions that something might come out of it. What is your assessment of the situation right now? I suppose what we are talking about is what is the best and worst outcome one could expect. Presumably not a complete text that everybody will sign up to, but some practical progress. What is the assessment?
Mr Alexander: I am not sure if this is a
manifestation of coincidence but within a few minutes of me arriving in this committee
room President Obama confirmed he is going to be travelling to
Q125 Chairman: I think en route to collecting his Nobel Prize in the process.
Mr Alexander: I am not sure whether this
was to assist me in answering this question, but it helps nonetheless. You are right. There are now more than 60 heads of
government who have said they will attend and President Obama within the last
hour has made a public statement confirming that he will attend. Our objectives are what they have always
been, which are to have a fair, effective and ambitious outcome. In essence that comes down to two or arguably
three key issues, the first issue being what is the appropriate distribution of
emissions cuts to keep us within the science.
That is within a two degree temperature rise. Essentially, that turns on the balance of
responsibilities between a historic responsibility largely following on developed
countries as a result of present levels of emissions, whereby the historic
responsibility is clear, but on the other hand a recognition that, looking
forward, the significant rises in emissions anticipated in the years ahead are
predominantly from developing countries.
Therefore, that balance is going to be one of the central issues for
negotiation. Related to that issue is
the second main pillar of negotiations, which is the issue around climate
finance. We put numbers on the table
back in June, a figure of US$100 billion a year by 2020. That has since been the basis on which there
have been further discussions at the European Council with European numbers
being put on the table. The third issue
which some would argue is going to be as central - although personally I have
always believed, without diminishing it, it would be an issue that could be
resolved if the first two are resolved - is the issue of governance of any
agreement and what would be the mechanism post-Copenhagen for ensuring the
appropriate disbursement of funds, monitoring of emissions cuts and the other consequences. There has been variously speculation in the
newspapers in recent days which has ebbed and flowed as to whether we are
realistic in our objective now, given the very limited number of days between
now and Copenhagen, in securing a legally binding agreement. That remains
Mr Steer: One of the encouraging things
is that some of the middle-income countries are now coming out with explicit
offers with regard to how they will reduce their carbon emissions below
business as usual. Some of them are
coming out with two numbers. One, what
we will promise to do, and then a more ambitious number if we get adequate
finance. That is of course where the
issue of finance will then come in. The
issue of adaptation finance is obviously very central to
Q126 Chairman: Does the Copenhagen process run the same danger as the Doha process, in a sense that nothing is agreed until everything is agreed and everybody has to agree? You give a very fair analysis as far as I can see, Secretary of State, of where we are at. The American President has a problem of Congressional approval which he therefore has to cope with. The Chinese are unlikely to sign up to something that puts them at a disadvantage in relation to the United States. On the other end of the scale, as we found out in Bangladesh and in Africa, countries are saying, "You caused the problem. Unless you come up with the money, we are not interested in the emissions, trying to get them to sign anything or nothing, because we are not causing the problem. If you want us to agree to those things, then we need the money." That seems a heck of a big ask to get out of the next three weeks.
Mr Alexander: Doha is very instructive and
it informs my own thinking about the prospects for the deal in Copenhagen in
part because I, along with my ministerial colleague Gareth Thomas, bear the
scars of those eight days in Geneva the year before last, where there was a
great weight of expectation and effectively as an international community we
failed to find that common ground and to reach agreement. What lessons do I draw? Firstly, even the WTO with a really
outstanding Secretary General in Pascal Lamy and a tried and tested
architecture of negotiation did not manage to pull off a big win for
multilateralism in
Q127 Mr Hendrick: On the point you made about getting the big players to get to an agreement, are you aware of any bilateral discussions for example between the US and China or are any bilateral discussions going to take place that actually could make Copenhagen that much easier in terms of getting a deal? As you say, if you sat down today, it might take another year. Has this work been going on between the big players as it is coming to an end with Copenhagen? How far down the track are they?
Mr Alexander: There is a huge amount of
that work that is underway. President
Obama himself has just very recently visited
Q128 John Battle: There was a rather good debate yesterday on Copenhagen. I thought it reflected well on the House and all parties. I thought at least the British position, Government and Opposition, in relation to Copenhagen was quite strong. Things are moving and there is still some movement, but I really want to focus not on what can or cannot be achieved at Copenhagen. I want to look at what we are doing and the funding from our Government, including DFID, on climate change. Regardless of Copenhagen, this issue is not going to go away. We have still to take action. At the present time, the costs of adaptation for the poor countries alone massively overwhelm the ODA flows. For example, the estimates of 120 to 160 or 170 billion dollars by 2030 for adaptation to climate change. Some of our Committee were recently in Bangladesh where the Chars Islands, as they are called, are being overwhelmed by the tide coming in now. What I learned from that experience is that it is not just the water coming in, because you can grow rice in water. If it is salt water, you have a hell of a problem because desalination becomes a major, major challenge. Some 13 million people in Bangladesh now are under pressure and might have to be moved somewhere. By 2030 it could be 35 million people. How do we address that? One of the things that was in the White Paper was this paragraph: "The UK will also increase its poverty related expenditure on climate change, recognising that part of the climate financing gap could legitimately come from official development assistance." I just want to say to you I feel slightly that that could be interpreted ambivalently. We can use the development budget to do climate change now. I am looking to you to see if you can give me assurances that DFID is not going to use that money and say, "Well, we can do climate change now because that is the hot topic", and the poor pay a price by losing out on the other funds. How much does DFID currently spend in terms of its percentage? How does that compare with other donors? Is it 8 %? Is it 3 %? How did you arrive at that 10 %? You say a bit later in the paragraph you want the money for climate change to be limited to 10 % of ODA and you want other countries to limit theirs to 10 %. Can you talk me around that and say what is the thinking behind it, because your Department has a great track record on pro-poverty policies. I do not want them to be undermined by switching the budget to climate change. They need it but not at the expense of the poverty reduction strategy.
Mr Alexander: I hope I can offer you
exactly the assurance you are looking for.
Firstly, we look forward with interest to the report of the Committee on
Mr Steer: We have been struggling, as
have others, to try and understand why estimates vary so greatly on
adaptation. We have been financing quite
a bit of work ourselves on that. Estimates
range from low to extremely high. In a
nutshell, at the risk of slight over-exaggeration, those that are very high
assume that people keep doing basically exactly what they are doing now, the
same economic activities, the same patterns of life and so on. Adaptation has to be very precise around
current patterns of work, current structures of the economy and so on. Those that are very low assume a great deal
of flexibility in terms of the structure of the economy adjusting and some,
which we would not subscribe to, even accept the fact that people will move
location. Then, your costs of adaptation
come much lower. What we are trying to
do is get the right kind of sensible number.
We are going to have to be flexible in terms of what the financing needs
are. As the Secretary of State was
saying, in UNFCCC[4]
for example, the total costs they have estimated are $120 to $160-odd billion
per year overall adaptation and mitigation for the year 2030. The World Bank last year came up with again
2030 numbers that again were quite high, almost $200 billion up to more than $600
billion, so quite large variations and they explained why. Bringing it back to 2020, we do not know what
the sum of money is. The $30 billion is
at least a sensible starting number. In
terms of what we are doing ourselves, you may have seen the press today and
yesterday about the commitments that were made in
Q129 John Battle: You have given us the figures and the numbers but what percentage now is spent on climate change?
Mr Steer: If next year for example were to be £400 million, our total spend next year will be £7 billion, so it is less than the 10 %, but not much less, so probably about 6 % next year.
Q130 Mr Hendrick: Mr Steer has taken the wind a little bit out of my sails because he has obviously partly answered the question that I was going to ask about the disbursal of funds, pledged funds in particular. As you know, $283 million was pledged to the UNFCCC and, as we understand it at the moment, only $133 million has been received and $32 million disbursed. As you know the BBC today has reported that the 20 industrialised countries, including the UK - but obviously you have made the point that the UK has more than paid its way on this - have pledged $410 million per year from 2005 to 2008 under the Bonn Declaration. Nevertheless, Mr Ban-Ki Moon is saying that there is an issue of trust here, to quote him. There is the spectre that the poor countries might not sign up to a new agreement unless they are convinced that the promises will be kept and also that mechanisms are put in place to ensure that other countries pay up like the UK is paying up. What can we do to ensure that those mechanisms are put in place to make sure everybody keeps to their commitments?
Mr Alexander: It rather echoes our more
general discussion about ODA commitments in the sense that the first thing we
need to do is to keep doing the right thing, because it gives us the
credibility to encourage others. In that
sense, it is not simply as Andrew said that we have spent £120 million in the
period 2005 to 2008, but it is likely that that will more than double this in
the following period to 2012. In that
sense, the upward trajectory that Andrew described is entirely accurate. It also makes the case for why, even at this
late hour ahead of
Q131 John Battle: If I were the delegate of Bangladesh at Copenhagen though, I might point out that with my population of millions I make a 0.03 % contribution to carbon emissions, which is the lowest in the world per population. They need more assistance rather than less.
Mr Alexander: That is in part why, when I
met Sheikh Hasina, the Prime Minister, I actively encouraged her to travel to
Q132 Richard Burden: Staying on the issue of climate change, could we just spend a little bit of time looking at the role of the World Bank in this? Andrew, I think you were mentioning a figure of £400 million. You mentioned including the Environmental Transformation Fund. Could you perhaps just start off by laying out for us how much of DFID expenditure goes to the World Bank and also what that is in terms of proportion disbursed via the World Bank on climate change?
Mr Alexander: $6.5 billion is the figure globally around the CIFs, of which we are making a contribution of £800 million. I would ask Andrew to speak about that and then we can come back to the more general issue in terms of funding for the Bank.
Q133 Richard Burden: As a proportion of DFID expenditure, that would be roughly ----?
Mr Steer: As a share of DFID spending on climate change, less than half. I would have to get you the detailed numbers but let us say, if £400 million was the total, I would say 170/180 would be what we would put through the Climate Investment Funds which are then implemented by regional banks and the World Bank. They are implemented by governments but they are channelled through these international financial institutions.
Q134 Richard Burden: Looking to the future, would you see that balance staying roughly constant or would you see the World Bank moving much more to becoming the primary mechanism for disbursing climate change funding? There has been talk occasionally in the past of seeing the World Bank as an environment bank. That is something we as a Committee would have something to say on. How do you see the World Bank?
Mr Alexander: It is difficult to give a
definitive answer ahead of
Q135 Richard Burden: That is very helpful. You mention there the worries that some would have about the World Bank assuming too big a role in being a major mechanism for disbursement of climate change funding. Key within those people who would be uncertain when they express choices are the NGOs. They have provided evidence to us saying that. During the visit to Bangladesh similar worries were expressed then. How far do you think those worries are valid? You say that, as far as the UK is concerned, you would sit somewhere between doing it all through the World Bank and those who would say that is a really dangerous way to go. How far do you think the concerns of the NGOs go?
Mr Alexander: I have already mentioned Peter Mandelson once in this discussion but I would probably keep to the third way on this one. I am neither an apologist for the Bank nor an unreconstructed critic who fails to recognise that the Bank does some good things. Perhaps at the cost of popularity with some of the NGOs, I have been unrelenting in challenging everybody to produce evidence to substantiate their point of view - the Bank, in their defence of their conduct - and as recently as the annual meetings in Istanbul I was very forceful in my advocacy of a process of reform within the Bank but, at the same time when Bob Zoellick, the President of the Bank, was here in the UK I know as well as meeting this Committee I afforded him the opportunity to meet with a number of NGO policy leads and gave them the opportunity to ask the searching questions. I think one of the difficulties is that the Bank casts a long shadow and in that sense, whether it is discussions around conditionality, forced privatisation or Washington consensus, the risk is that at times legacy thinking on all sides gets in the way of a constructive dialogue. That is not to say that the Bank is beyond improvement. Quite the reverse. On the issue of climate finance, I think there is some confusion as to what could be the role of the Bank in any post-Copenhagen world in the sense that it seems to me sensible to say, "If we recognise the legitimacy and authority of the UNFCCC whereby all countries are represented, there is a degree of equity which many NGOs in many countries rightly want in terms of climate negotiations". How do we discharge something as basic as an exchequer function with really very significant sums of money? If we are talking US$100 billion by 2020, that is, if I recollect, broadly comparable to the total global aid flows at the moment. In that sense it is not an unreasonable question to say if you have the legitimacy of the UNFCCC, if they are the body that can authorise and accept national plans being offered up as part of the national compact, then given that they are very significant new and additional sources of public money potentially flowing, we should look at whichever institution can discharge that exchequer function and accounting function in an effective way. For all of its critics amongst the NGO community, the Bank has quite a strong claim to being a body that is able to deliver robust systems of financial management.
Q136 Richard Burden: That is helpful. One of the sources of unease - and there is a number of sources of unease - that NGOs have about the World Bank would be the balance between using concessionary loans around climate change finance and money given in grants. Would you expect the proportions that are there at the moment to stay roughly constant or is that also "how long is a piece of string?"
Mr Alexander: His answer once again risks making himself unpopular with the NGOs! One of my frustrations in this conversation with the NGOs about this is if they actually take the trouble to read the Bali Action Plan it anticipated concessionary lending and, in that sense, I struggle to see why that is a terrible bad thing done by the World Bank when it was a UN process in Bali that actually raised the prospect of concessionary funding being used in terms of climate finance. I understand people have concerns, not least in terms of issues of debt sustainability looking to the future, but on the other hand I would rather get beyond an instinctive neuralgic approach to lending and say what are the debt sustainability criteria that are being applied, what did the Bali Action Plan agree with widespread participation and, if those conditions are met, then I think it is a conversation that countries are well able to participate in themselves.
Mr Steer: All financial institutions, whether it is the World Bank or a regional bank or any financial institution, would be delighted to make grants. It is who provides the money that decides whether it is a loan or whether it is a grant, so to the extent in the post-Copenhagen agreement it is grants that are provided, any financial institution that is chosen will do as it is instructed. If the instruction is to pass it on as grants it would be passed on as grants. The decision is at a different point, if you like, than in the institution itself.
Q137 Richard Burden: Just a couple more questions to finish off on this, specifically about the Environmental Transformation Fund. Could you clarify how that fits with the 10 % figure for climate; is it included within it or would it be on top of it or what?
Mr Steer: Of course the Environmental Transformation Fund is a three-year fund. It will disappear, if you like. The 10 % was a 10 % sort of bound that would be something that is on-going into the future. The idea was that you want to do exactly as Mr Battle was saying and you want to make absolutely sure that you are not siphoning off money that was going to provide immunisations and so on for climate change, so the 10 % is to bound that. The 10 % does not exist at the moment. Currently if somebody were to ask us how much the British Government is providing for climate change, we would include the ETF.
Q138 Richard Burden: A last question on the ETF is in October you said it was probably a bit early to evaluate the use of ETF spending but spending was progressing well. How close are we to looking at the effectiveness of the ETF and what measures will you be using to evaluate it?
Mr Alexander: Andrew lives and breathes this stuff but let me add one or two points from my point of view. Firstly, we can already judge the effectiveness of the ETF in the sense we have taken £800 million and turned it into $6.5 billion, in the sense that we have managed to persuade others to come on board in exactly the kind of example of multilateralism that I should probably have thought of earlier in saying that if you are intelligent in how you use national resource you can extend influence through the multilateral system. Secondly, we are also at a stage now where countries are developing their own national plans which the CIF will fund, and in that sense there are quite advanced discussions underway at the moment. As I say, Andrew, you are our resident expert on the CIF.
Mr Steer: We have now agreed a results framework that lays out exactly what is expected and that will be monitored. The first annual statement of achievements will be out in December of this year, next month, so that will be the first step. It would be possible shortly thereafter to analyse the effectiveness mainly based on the process so far. In terms of the quality of the delivery on the ground, that will take another year or two before you start to really see that in implementation.
Q139 Richard Burden: Would your results framework encompass that?
Mr Steer: Definitely, yes, it is central. Of the different funds, for example ---
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
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
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
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
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
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
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 -
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?
Q160 Mr Lancaster: I am simply relaying some of the concerns that have been expressed, Secretary of State. If you dismiss them, that is fine. I am simply asking you whether or not you would like to see that unit empowered, and I am assuming from your answers that you would not.
Mr Alexander: You would be entirely wrong to draw that conclusion. I have offered you the opportunity to provide any evidence that any of the three departments involved in the Stabilisation Unit has done anything other than support the Unit. If you have evidence that you would like to bring either before the Committee or to provide to me, I am very happy to look at it.
Q161 Mr Lancaster: When it comes to joint working then, if we look for example at the latest revision of the Helmand Roadmap, which is obviously one of the key documents which defines how the three departments work together, that is currently under its third revision at the moment. Can the Secretary of State tell the Committee what sort of terms of reference he suggested for that latest review, given the joint working nature of it?
Mr Alexander: I will set out for you that what we are comfortable to place in the public domain is the position that we are taking forward.
Q162 Mr Lancaster: Sorry, so what were the terms of reference?
Mr Alexander: Sorry?
Q163 Mr Lancaster: I am simply asking you when it came to the joint working, when it came to the latest revision of the Helmand Roadmap, which is on-going at the moment, and we were talking about joint working so we are talking about three departments coming together to set the terms of reference for that latest Roadmap, which is key to working together in Helmand, what input you had on that and what the terms of reference were that you suggested?
Mr Alexander: I think the last meeting I had with my
colleagues in the Foreign Office and the Ministry of Defence was within the
last seven days. I next have a video
conference with my Foreign Office colleagues in
Q164 Mr Lancaster: Okay. We are short of time so perhaps I can ask a question which the Secretary of State may be more comfortable with. Can you perhaps tell us some of the lessons you think we have taken out of this comprehensive approach in Afghanistan which could be applied elsewhere to other fragile states?
Mr Alexander: One of the difficulties, and your question reflects this, is that so central is the focus on Afghanistan, both in the Government's work - my colleague, David Miliband, only yesterday was repeating in the House it is the central focus of his work - and it is a very significant part of my own work, that people elide the distinction between what are very distinctive circumstances in Afghanistan (with the commitment of 9,000 British armed forces, part of the 43-country coalition, and the very distinctive circumstances where there is an armed insurgency taking place across the south of the country and indeed in other parts of the country) with the broader issue of how the international community can work effectively both as a government and as part of the international community in circumstances of state fragility and conflict. In that sense, if you look at even the design of the White Paper I launched, I was determined to make sure there was a distinctive passage and section in the document which acknowledged the centrality of Afghanistan but did not suggest that Afghanistan is the model for every aspect of working with colleagues in Government and with other governments in circumstances which are profoundly different from the particular circumstances within Afghanistan. In that sense, I am happy to talk all afternoon about the work we are doing in Afghanistan if that would be of interest to the Committee, but I think it would be disingenuous to suggest that the lessons which can be drawn from Afghanistan are of universal application when in fact the circumstances in Afghanistan are a very particular reflection of the fact not least we have 9,000 of our brave armed servicemen serving there at the moment.
Mr Lancaster: I would like to talk about it all afternoon as well, Chairman, but I think we are short of time, so I had better allow you to move on.
Chairman: Thank you. You are, as we have already discussed, doing more through multi-lateral institutions, and I think Mr Sharma has some questions on that.
Q165 Mr Sharma: I am thinking of the World Bank. You have already set out a detailed agenda for the reform of the World Bank and also you are seeking substantial changes in the way the Bank operates. What is your timescale for these reforms and which of your proposed reforms has the highest priority?
Mr Alexander: In terms of the next stage for making progress, I would very much hope at the spring meetings of the World Bank we will be able to make some further progress. In terms of the key issues, one is the issue of governance, one is the issue of voice, and one is the issue of operational effectiveness. In that sense, we have always been clear in the strategy we have devised for the Bank that issues of effectiveness and legitimacy are linked. That is why one of the prizes we secured at the Istanbul meeting of the Bank earlier this year was to try and move towards a package emerging in the spring of next year rather than be in a position where the issue of voice was dealt with on one timescale, the issue of governance was dealt with on another timescale and the issue of operational effectiveness and internal management was dealt with on a different timescale. We would hope we could work with others to create the conditions - this is far from guaranteed - where a broader bargain could emerge whereby we could address a number of these issues simultaneously.
Q166 Mr Sharma: Thank you.
Mr Dinham: Sir, could I add that one of the other aspects which was discussed at the last G20 Summit, and also at the last Annual Meeting of the World Bank, was the setting up of a crisis response window for the International Development Association, IDA, so that it would be more rapid in its responses to the crisis and we have been making some good progress on that. At the meeting looking at the mid-term review of the current replenishment last week, it was agreed that a pilot permanent facility should be set up in January, subject to board discussion, with a view we hope to a permanent facility being set up by the end of 2010. That is good progress on a piece of very important new architecture which will make the World Bank more nimble and flexible in its response to crises.
Mr Sharma: Thank you.
Q167 Andrew Stunell: The September Report from the Global Impact and Vulnerability Alert System, yet another acronym, said that the impact of the global recession was only just really starting to hit the vulnerable in the Third World, in the developing world. Could you tell us what your current assessment of the situation is as far as this impact is concerned?
Mr Alexander: We would broadly echo the Global Impact and Vulnerability Alert System assessment, that in the developed world what started as a banking crisis and became a real economy crisis has almost had the reverse effect on the developing world, whereby the transmission mechanisms by which a crisis which started within the global financial core have now reached the developing world, taking a range of different forms, whether that is a reduction in commodity prices, the drying up of available credit, the drying up of trade financing, declining levels of remittances from people sending money back home. Through a various range of different transmission mechanisms, the consequences are now being felt and indeed the risk was that that would play itself back into the banking system. We have for some time kept a vulnerability matrix within our own Department in terms of looking at how we can within our own bilateral programme allocate resource against need, and in that sense we will look at each individual country on a case by case basis to make those judgments as to what is necessary. One particular area where we have put a strong emphasis on the basis of good emerging evidence as to its effectiveness is social protection - front-loading money in relation to social protection - to avoid a situation whereby the level of impoverishment has become worse than it would otherwise be. The best number that we work with is somewhere between 90 and 100 million more people being forced into lives lived on less than $1.25 a day. That is drawn from World Bank numbers and that is a combined effect of the global food, the global financial and the global fuel crises.
Q168 Richard Burden: Could I ask you about the World Bank's call for a Crisis Response Facility. As I understand it, the White Paper supports that call in principle, but if you would be able to just outline for us what the key elements of it would be and what it would actually offer to developing countries that is not available right now?
Mr Dinham: I think what we are keen to achieve is an IDA which is able to respond very quickly to a crisis when it emerges. That partly depends on the structure of the architecture. At the moment IDA allocations tend to be based on need and performance looking backwards rather than needs which are immediately occurring. What we are looking for - and that is what we have been pushing both through the G20 mechanisms and through the mechanisms of the Bank - is a facility which can respond in an agile way to a crisis when it happens. We have been pressing for, as I was saying a bit earlier, a facility to be set up. That has now been agreed in principle that a pilot should be set up by the beginning of next year, January 2010. Then as we go into the next IDA replenishment, for which the negotiations will be starting and going through the course of next year, we hope that one of the outcomes of that will be the setting up of this facility on a permanent basis. There is lots of discussion about how that will be funded. For example, it could be a combination of money provided by the World Bank, the IBRD,[7] which in effect is softened by a commitment by bilateral donors to put in grant funds so that it becomes like IDA money when a crisis hits. We are on a good trajectory to achieving that facility. It will be something which developing countries, particularly the poorer countries, have said to us during consultations is a piece of the IDA architecture that they would really like to be reformed.
Q169 Richard Burden: How would the pilot be structured? What kind of pilot would it be?
Mr Dinham: The way the pilot is being funded is that money which is currently unallocated within the current IDA is being allocated to the pilot. I think it is a figure of about $1.3 billion and plus, from our point of view, £100 million of the £200 million which we have allocated for this process will be going into that pilot. In effect from January it will be ready-funded and then the permanent process, when we have an agreement with all shareholders on how the permanent funding will go, will be from the end of the year onwards.
Q170 Chairman: Secretary of State, you announced in the White Paper the new logo for UKaid which we saw in Bangladesh. There were five countries which included Afghanistan, Rwanda and I cannot remember what the other two were, where I understand you were rolling it out. Obviously we called for something of this kind and it would be interesting to know what the reaction has been to it. We have heard mixed reactions. Some people do not like having it at all but that was always their starting point. There are others who like the idea but do not necessarily like the actual logo. I have to say the Committee, having reflected on it, had some difficulty coming up with an alternative, I have to be honest about that. Could you give us an indication, first of all, of how it has gone so far, where you are taking it, and perhaps what it might cost to implement?
Mr Alexander: I can answer part of that question.
In terms of countries, my recollection is there are five where we are
piloting. If I recollect it correctly,
the
Chairman: If
you are able to do that that would be helpful.
Can I ask you specifically a completely unrelated question to this but
it has been going around just recently, which is about the situation relating
to
Q171 Mr Lancaster: I will let the Secretary of State speak and then I am sure I can ask him something, without wishing to annoy him again.
Mr Alexander: We are in a position where the public consultation has now concluded in terms of the options that have been considered. My recollection is that I or my colleague Michael Foster made a written ministerial statement at the conclusion of that public consultation, which was just a matter of weeks ago, and we would expect, on the basis of that, to consider specific propositions that were put to us and will bring forward the Government's view in relation to the responses to the consultation in due course.
Q172 Chairman: I do not know whether it is appropriate but does this alternative business plan that people are putting forward have merit from your perspective?
Mr Alexander: Being candid, that is what we are looking at at the moment, in the sense we need to understand whether it is a serious proposition given that I understand - and no doubt other members of the Committee will take the opportunity to advocate the fact - there is clearly a significant number of people on St Helena who would want the airport if an airport can be developed, and in that sense it seems to me that the responsible course is not simply to give consideration to the public consultation but also to better understand the detail of what is being proposed in terms of the new private consortium that has emerged, and that is where we are at the moment.
Q173 Mr Lancaster: I am grateful. I know the Secretary of State will appreciate the sense of frustration on the island. People feel very strongly that they were rather led down the garden path on this issue and then for a very late decision to change their mind. I remember when the consultation was announced the Government was very keen to say that they wanted to put the views of the islanders not necessarily first but certainly take consideration of them, and the Secretary of State will be aware that fewer than 1 % of the respondents to the consultation agree with the Government's position - fewer than 1 %. I am simply going to ask to what level that figure has to fall before the Government is prepared to take their concerns seriously?
Mr Alexander: I can assure you that we take their concerns seriously, which is why we had the consultation, but this is not a decision that can be taken in isolation from broader considerations in relation to other calls on government resources, and that was reflected both at the initiation of the consultation and will be reflected in the judgment that ultimately we reach.
Q174 Mr Lancaster: Given that the Government are very keen to say that the islanders' views would be taken into account, and indeed this is why we have spent this money on the consultation, and given that less than 1 % support it, if you do not agree with the islanders, how are you going to square their concerns that, frankly, the whole consultation was something of a sham?
Mr Alexander: Ultimately, a judgment will be reached. I can give you the assurance that you are looking for that we are giving consideration to not simply the general views of the islanders, "Would you like an airport or would you not like an airport?" but one particular response to the consultation which suggested that there was an alternative basis on which an airport can be provided and financed than that which had been previously considered by the Government. I am not sure I can state it more clearly than that.
Q175 Chairman: Do you have a timetable at all?
Mr Alexander: I would hope that we would be able to make progress but in part what is in issue at this stage is what detail can be provided and what understanding can be gained in relation to this new consortium's proposal. I am conscious that there is a desire for an expeditious decision. On the other hand, I am equally conscious that in light of concerns that the islanders have raised, we need to give serious consideration to all of the proposals that have been put to us. I think it would be the right course for us at this time to consider seriously a proposal that has been put to us.
Q176 Mr Evans: Is that six months?
Mr Alexander: I am not in a position ---
Q177 Mr Evans: It could be longer than six months while you deliberate?
Mr Alexander: I am sorry, if you would allow me the courtesy of answering your question before you anticipate the answer I did not give you, then I will try my best! I am conscious that people are keen for a decision to be taken. My responsibility and the responsibility of my officials and the Department is to ensure that there is serious consideration given not simply to the individual views that have been expressed within the consultation but any specific proposals that have been tabled as part of the consultation, and that is exactly what we are doing.
Q178 Mr Lancaster: The Government made clear in the consultations that they would respond by the end of the year, ie 31 December, so are you now going back on that promise?
Mr Alexander: No, I am saying that we are giving serious consideration to the terms. I am standing by exactly what we said in our written ministerial statement, which is that the consultation period is concluded; we are now giving consideration to the findings of that consultation, not simply the point that you make in terms of the general views of the islanders, although I think there were some people who presently work on the boat who took a different view and were quite keen to see the tenure of boat extended, but in that sense there is no change in the timescale that I am announcing today and I stand by the position that I set out to Parliament.
Q179 Mr Lancaster: Sorry, I have to be clear on this. You have made a commitment in the consultation to respond by 31 December. Are you going to respond by 31 December or not?
Mr Alexander: I have made very clear there is no change in the timescale that I am announcing today at the Committee
Mr Lancaster: So yes?
Q180 Chairman: I must make it clear the Committee has not taken a view on this issue.
Mr Alexander: It sounds like it!
Chairman: No, the Committee has not taken a view. Members are entitled to their view but the Committee has not taken a view. On the other hand, it is an issue that I felt important to put on the record because individually a number of us have been quite heavily lobbied and it was an opportunity.
Mr Lancaster: I think that was a "Yes", Chairman!
Chairman: Thank you very much to you and your colleagues for your co-operation as always. Our report will be published in due course and we will see you all again at some future occasion.
[1] The Development Assistance Committee of the OECD definition of Official Development Assistance
[2] Climate Investment Funds
[3] European Development Fund
[4] UN Framework Convention on Climate Change
[5] Global Environment Facility
[6] Comprehensive
[7] International Bank for Reconstruction and Development