Skip to main content

Developing Countries: Budgetary Support

Volume 745: debated on Wednesday 15 May 2013


Asked by

To ask Her Majesty’s Government what criteria they will employ for the allocations of direct budgetary support to developing countries in 2013-14.

My Lords, DfID will continue to provide budget support when it represents the best way of delivering results and value for money compared to other forms of development assistance, and when a Government are committed to the UK’s partnership principles of poverty reduction, human rights, fighting corruption and strengthening accountability to citizens.

The Government suspended general budget support to Malawi in July 2011, and to Rwanda in November 2012. Malawi is a long-term ally of this country, with a new president who is changing many of the policies that were of concern to the Government back in 2011, and Rwanda has an excellent reputation on both corruption and spending this money as wisely as possible. Will the Government review both these decisions in 2013?

Both those decisions are kept under review. As the noble Lord will know, as regards Malawi, in November 2012 the UK provided emergency budget support, recognising what Joyce Banda had done. We will continue to monitor the situation in Malawi. As regards Rwanda, as he will know, the budget support was suspended because of actions by the Rwandan Government towards the rebel groups in the DRC. The Secretary of State will take a decision during the summer regarding any further disbursements and reprogramming decisions.

Is my noble friend aware that the international development co-operation agreement, reached at the fourth high-level forum in Busan, established parliamentary capacity, accountability and transparency as key indicators for monitoring development progress? Can my noble friend confirm that these criteria for allocating budget support for HM Government will, in fact, follow the Busan international development model?

Parliamentarians clearly play a major role, or need to. My noble friend will know that in terms of the UK partnership principles, the third one is:

“Improving public financial management, promoting good governance and transparency and fighting corruption”.

Parliamentarians play a key role in making sure that those things are delivered.

Is the Minister aware that not only is Haiti the poorest country in the new world but that it has suffered from earthquakes and, more recently, hurricanes? Why is there no direct bilateral assistance from the UK Government to Haiti?

The United Kingdom cannot assist in every part of the world, and the French have played a leading role in Haiti. The United Kingdom works out where best to focus its aid, as did the noble Lord’s Government, and we assess that through the bilateral review. However, as he will know, through our multilateral obligations and indirectly through multilateral organisations we support work in Haiti.

My Lords, it is Christian Aid week and research recently published by Christian Aid shows that in India companies with links to tax havens pay on average 30% less tax, indicating that they are shifting profits to secretive, low-tax jurisdictions, many of which have come under UK rule. Alongside allocation of direct budget support, how are Her Majesty’s Government encouraging poorer countries to have a more effective tax system to ensure that money is kept in the appropriate place?

The right reverend Prelate is quite right. He will have noted that my right honourable friends the Prime Minister and the Foreign Secretary have focused very much on this and are emphasising it at the G8. DfID has a number of programmes assisting in the development of the tax collection regimes in countries in which we work, because we recognise that it is extremely important that those within developing countries, whether they are international companies or prospering citizens, contribute to the country’s development.

My Lords, the Minister told us that the Government want value for money in international development—and rightly so. Will the Government therefore consider stopping aid to the Palestinians in the West Bank and Gaza, and persuading, if not forcing, Israel to pay for its illegal occupation of those territories?

My Lords, having visited the West Bank and Gaza, as has the noble Baroness, I would be extremely reluctant to do anything to stop aid to those in Palestine. I am sure that we will come on to a further discussion of the Middle East in the debate that is to follow. We continue to engage very actively in seeking to take forward a Middle East peace process, because that is the key to sorting out the problem.

My Lords, the Minister mentioned that the criteria for budget support included respect for human rights. Why has there been a large decrease in direct budgetary support since 2010?

We keep this under constant review, as did the previous Government. The noble Lord will know that the previous Government reduced budget support, particularly when it was reassessed under Hilary Benn. We continue to work out how best to support the poorest in these countries. Sometimes that is best done through supporting the wider Governments and sometimes in other ways. There is no specific policy to reduce this or increase that. We look at the situation in each country and how best to support the poorest within it.

My Lords, Ethiopia has come in and out of direct budget support over the past decade. Will the Minister tell us which criteria, and especially which human rights criteria, are being applied to Ethiopia?

I refer the noble Earl to my initial Answer. There are four partnership principles that must apply, including one on human rights, when using budget support.