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Fraudulent Use of Aid

Volume 529: debated on Wednesday 8 June 2011

1. By what means he plans to assess levels of fraudulent use of aid in fragile and conflict-affected states. (57736)

The Government are committed to spending 30% of UK aid on conflict-affected and fragile states where the millennium development goals are most off track. We have a zero-tolerance approach to fraud and other abuse and all our programmes include safeguards to ensure that taxpayers’ money is spent properly.

A very high proportion of that taxpayers’ money flows through the EU. Is the Secretary of State satisfied that that EU money is being properly used and accounted for?

About a third of that money goes to the European development fund, which scored highly in the multilateral aid review, and that suits Britain’s interests because around 40% of it goes to Commonwealth countries and we contribute only 17%. The money spent through the budget is £800 million, over which we have much less control, and we are seeking to ensure that it is better deployed.

The Secretary of State will of course acknowledge that the Government have committed additional funding to post-conflict states because that is where the greatest poverty and the greatest risk of falling back into conflict lies. Nevertheless, does he accept that, although we must do everything we can to stamp out corruption, it is precisely in those difficult climates that risks must be taken if achievements in poverty reduction and conflict prevention are to be secured?

My right hon. Friend is absolutely right that there are greater risks when operating in conflict states, but in such states the very poorest in the world lose out twice over, once because they are poor and again because they are living in frightening and conflicted circumstances.

I welcome my right hon. Friend’s commitment to a zero-tolerance attitude to fraud. Will he encourage the World Bank to continue to have its regular survey of 32,000 small businesses across different developing countries, which shows that although fraud is a problem, it by no means absorbs all the aid entering those countries, as bar-room gossip would have it, and that it is more prevalent in south Asia than in Africa?

My right hon. Friend’s analysis is absolutely right. He will have seen the world development report, produced by the World Bank, on working in conflict states, which focuses on security and development. It is a very good report, produced at Britain’s request, which focuses specifically on the points he has made.