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Know How Fund: Expenditure

Volume 591: debated on Thursday 9 July 1998

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My Lords, on behalf of my noble friend Lord Wallace of Saltaire, and at his request, I ask the Question standing in his name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government whether they propose to increase resources for the United Kingdom Know How Fund as a means of strengthening links with central and east European states now preparing for future membership of the European Union.

My Lords, expenditure on the Know How Fund is set to remain broadly at current levels over the next three years. Of the countries preparing for EU accession, expenditure will increase for Bulgaria and Romania, where incomes are lower, social problems are more pronounced and progress in transition has been less rapid. In central European countries where economic reform has progressed further, assistance will be gradually reduced.

My Lords, in thanking the Minister for that Answer, perhaps I may say that many of us in the House have great sympathy with his aim of concentrating on areas of great poverty. But, given the great importance over the next few years of establishing democratic institutions in central and eastern Europe prior to countries entering the European Union, will he consider some increase of a temporary nature for this purpose only, as the Know How Fund has not been increased over the past couple of years?

My Lords, the strategy for the Know How Fund has been to concentrate more on the areas of greater need and is not solely related to the countries seeking membership of the EU. In fact, the biggest programme is in the Russian Federation. There are other steps which the Government, bilaterally and multilaterally, are taking to improve the democratic and administrative structures in the countries seeking accession, principally the one being co-ordinated by the Commission which involves twinning between EU countries and applicant countries.

My Lords, does the Minister agree that the Know How Fund is largely British staffed, that it enjoys a very high reputation for its projects in the countries concerned, and that its influence is way out of proportion to the modest funds it has available?

My Lords, I am very happy to endorse that view. To my knowledge, it is almost entirely British staffed and it is certainly appreciated by the representatives of the applicant countries whom I meet.

My Lords, can my noble friend say what arrangements are in place to evaluate the sustained progress and performance after a particular phase in the Know How Fund has come to a conclusion? The objective is surely to ensure that the people of the countries themselves are taking things forward and that we are not increasing dependency.

My Lords, the principal method of assessing progress and performance comes in the review process and the screening process for the applicant countries, both the first six moving towards formal negotiations and the other five. In that context the effects of the Know How Fund and other forms of assistance will be assessed.

My Lords, is the Minister aware of the vital importance of the Know How Fund to the three Baltic States, Estonia, Latvia and Lithuania? Will he join me in congratulating the Strathclyde police authority, which has done so much to establish a democratic police force in Estonia, where there is enormous crime, often promoted from outside that nation's borders. Will the Minister assure us that the Know How Fund will not be decreased in respect either of assistance to the police force of Estonia or of language training through the British Council?

My Lords, there will be continuing assistance on that front to Estonia. However, the general picture is as I stated, that there will be a slight reduction in the total amount of Know How Fund expenditure in the Baltic States.

My Lords, does the Know How Fund extend its operations to helping less developed countries to adopt the latest techniques in banking, not least correspondence banking?

Yes, my Lords. The skills transferred via the Know How Fund include those related to financial services and advice to other enterprises on the banking aspects of their operations.

My Lords, will the Minister bear in mind the need to help countries in eastern Europe to put right the legacy of huge environmental damage which many of those countries inherited from the communist regimes and the valuable part the Know How Fund can play in helping them to do that?

My Lords, the Know How Fund is essentially to provide expertise. Some of these problems also require substantial amounts of money which would come under other programmes, mainly EU rather than British.

My Lords, I agree with all the favourable comments made by noble Lords about the Know How Fund and its excellent work. But can the Minister tell us the current situation with regard to the balance of funds for that fund and the overall development fund for the poorest nations of the world?

My Lords, Know How Fund expenditure, excluding emergencies, is about £80 million of the total Department for International Development budget. It is therefore a relatively small expenditure because it concerns the transfer of expertise rather than the provision of whole projects. It does not divert from the general strategy of the department to concentrate on the areas of greatest poverty.

My Lords, I thank the Minister for mentioning Bulgaria. Given that it is the third poorest country in eastern and central Europe, will the Minister give the House assurances that high priority is accorded Bulgaria by the Know How Fund and that it will definitely be maintained?

My Lords, I believe that I can give that assurance. As I indicated in my original Answer, Bulgaria and Romania in particular need some concentrated activity. There have been very severe economic setbacks in Bulgaria as well as slower progress towards meeting the requirements for accession to the European Union.

My Lords, may I commend the Know How Fund for choosing partners in the countries in which it works and say in particular how very important is the work that it is doing in Russia in trying to establish democratic political parties in a still very chaotic political scene?

My Lords, as I said, the largest single activity is in Russia. That is partly because of tremendous problems in both democratic and economic development. It includes areas of social expenditure as well as the more traditional areas.