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Budget Support

Volume 464: debated on Wednesday 17 October 2007

The Department delivers poverty-reduction budget support to Ethiopia, Ghana, Malawi, Mozambique, Rwanda, Sierra Leone, Tanzania, Uganda, Zambia, India, Nepal, Pakistan, Vietnam and Nicaragua. Poverty-reduction budget support is aid given to a partner Government to support poverty-reduction programmes, and is spent with the use of the Government’s financial management procurement and accountability systems.

It is good news that the Department is being given more money, but it is important to ensure that that money is spent in the best possible way. Is the Secretary of State aware of the World Bank’s assertion that the outcomes of some 90 per cent. of budget support are never audited, which means that we do not know the extent of its effectiveness? Is it not time for an independent and impartial body to monitor and assess the outcomes, as has been suggested by my hon. Friends on the Opposition Front Bench?

I am grateful to the hon. Gentleman, who brings real expertise to this issue, not least because of his service on the International Development Committee.

The Independent Advisory Committee on Development Impact is due to hold its first meeting in just over six weeks’ time, and I believe that that will give the hon. Gentleman some confidence that we take the issue seriously. It is also important to recognise the steps that we are taking on budget support in particular. The Department always conducts a fiduciary risk assessment before entering into budget support, we monitor performance regularly, additional assurance is provided by the internal audit department, and we undertake annual reporting which provides oversight through its corporate reporting and auditing mechanisms.

What funding, if any—direct or indirect, through international monetary funds—is given to the Sudanese Government? If there is such funding, direct or indirect, would my right hon. Friend consider withholding it until such time as the Sudanese Government act in accord with international law, in the context of civil conflict and more importantly and urgently in the context of attempts to bring a cessation to the abomination of human rights abuse in that country?

I find myself in sympathy with my hon. Friend, both because of the longer-term challenge of making progress with the comprehensive peace agreement in relation to the north-south conflict in Sudan and because of the pressing challenge of the humanitarian crisis in the Darfur region. We do give considerable humanitarian assistance to the people of Sudan. I recently visited the al-Salam camp in el-Fasher in northern Darfur and saw, for example, the hugely important work undertaken by Oxfam, a British charity, in providing water and sanitation in the camps.

As well as the humanitarian work that we are doing, there is an important diplomatic dialogue with the Government of Sudan, so that—along with signatories and non-signatories to the Darfur peace agreement—they are clear about their responsibilities. Those responsibilities include an immediate ceasefire, a cessation of aerial bombing and the facilitation of talks between all parties in important talks at the end of this month.

Will the Secretary of State acknowledge that budget support is an extremely important instrument for building the capacity of recipient countries, provided that strict criteria apply? Is he satisfied with recent developments in Uganda and Ethiopia which led to a cut in budget support, and does he feel that their Governments’ attitude to the opposition justifies the reinstatement at this stage?

I defer to the right hon. Gentleman’s expertise, given his examination of the issues in the Select Committee, but the fact that in certain circumstances—for example, the political crisis in Ethiopia—we are prepared to withhold elements of budget support testifies to the fact that we monitor extremely carefully the circumstances in which it is appropriate for funds to flow directly through Government systems.

That being said, I find myself in full agreement with the right hon. Gentleman’s observation about budget support. It is certainly pioneering. At times it involves risks which must be judged very carefully, but it can clearly develop a sustainable means by which countries can help themselves to emerge from poverty rather than finding themselves dealing with innumerable international donors with whom, in many cases, their Governments lack the capacity to engage effectively.

In circumstances where general budget support has been cut, as in Ethiopia, will my right hon. Friend consider very carefully other means of delivering assistance, so that we can help the poorest people in the poorest countries?

I can give my right hon. Friend exactly the assurance that he seeks. Budget support for Ethiopia was withheld in response to the political crisis in 2005, but we do not want the poor to suffer in Ethiopia as a consequence of the actions of Government. That is why, through the protection of basic services programme, we have continued to support development efforts in Ethiopia. In the last year alone, 1.2 million more children attended primary school. Over 70 per cent. of Ethiopia’s children are now in school, and all households in malaria areas will have insecticide-treated bed nets by the end of this year. Those are just two examples of our continuing commitment to the people of Ethiopia.