Monday 24 April 2017
Cross-Government Prosperity Fund
I wish to update the House on how the Prosperity Fund has supported global and UK prosperity in its first year and its plans for future years. As we leave the European Union the Prosperity Fund is a vital part of how the UK will be a global, outward-looking nation that is confident on the world stage and has strong, fruitful relationships with countries around the world.
On 21 July 2016 I informed the House of the aims and objectives of the £1.3 billion Prosperity Fund (HCWS104) and a short paper was published on gov.uk that details how the fund operates. The fund uses primarily Official Development Assistance (ODA) resources to promote economic reform in ODA-eligible middle income countries, which are home to 70% of the world’s poor, contributing to a reduction in poverty. Shared prosperity is a key part of the UK aid strategy. The fund has a secondary benefit of opening up opportunities for international, including UK, business.
Projects are focused on countries and sectors identified through cross-Whitehall economic analysis as being those areas with large numbers of people living in poverty, potential for inclusive growth and where UK expertise can make a real difference.
As set out in the fund’s spending round 2015 settlement letter, the fund is 97% ODA with a small non-ODA allocation. ODA projects must meet the primary purpose to support poverty reduction and promote sustainable economic growth.
The strategic direction for the fund is set by a cross-Government Ministerial Board supported by a director level portfolio board composed of representatives from key departments. This structure reflects the cross-Government nature of the fund and ensures that programmes deliver value for money and support Government objectives. Accounting Officers remain responsible for ensuring the value for money of programmes funded by the Prosperity Fund.
The Ministerial Board has met nine times since January 2016. These regular meetings have allowed it to respond promptly and flexibly to changing circumstances—for example endorsing increased funds to trade related projects after the EU referendum.
The Prosperity Fund has continued to refine its systems and processes throughout the first year in order to ensure that it succeeds. It has acted on positive feedback and helpful advice from the Infrastructure and Projects Authority, the National Audit Office, and, most recently, the Independent Commission for Aid Impact (ICAI).
We welcome this external scrutiny as an opportunity to test the portfolio and management systems with independent experts. As stated in our formal management response to the ICAI review, the Prosperity Fund accepts and is implementing their recommendations, many of which it had already identified through its own internal reviews.
Year one of the Prosperity Fund was designed as a transition year. The Ministerial Board allocated £55 million of ODA to projects in a range of ODA eligible countries including China, India, Brazil, Mexico, Colombia, Indonesia, Nigeria and South Africa and in areas such as financial services, infrastructure, business environment, energy, and trade and regulation. It also allocated £5 million of non-ODA in support of Government prosperity objectives in both ODA-eligible countries and developed markets.
In South Africa, electricity shortages have cut GDP by 2% in recent years. The Prosperity Fund piloted an innovative British technology to help address this, enabling local government, universities, businesses and utilities to save a minimum of 15% on their electricity consumption.
In Brazil, the work of the Prosperity Fund has been recently celebrated in national media as an example of the importance of international co-operation to tackle transnational bribery and reduce corruption, and has helped to shape the recently approved “10 Measures against Corruption” law in Brazil.
The Prosperity Fund financed the former Prime Minister’s anti-corruption summit in May 2016 which brought together world leaders, business and civil society to agree measures to reduce corruption. The fund has also placed the UK at the forefront of delivering international commitments to tackle corruption such as setting up the International Anti-Corruption Co-ordination Centre, financed by the Prosperity Fund and hosted by the UK’s National Crime Agency.
The fund is committed to meeting the UK Government transparency commitments on ODA spend. Details of all year one programmes will be released on gov.uk in mid 2017 and an annual report on the first year will be issued by autumn 2017.
The majority of the Prosperity Fund will be allocated to large, high impact, multi-year programmes. To date 18 such programmes have been endorsed by the Ministerial Board and are now being developed by UK Government Departments including HM Treasury, the Department for International Development and the Foreign and Commonwealth Office. Many other Government Departments are involved in the design and delivery of individual programmes.
These programmes include country specific work in South America and Asia, regional programmes in South East Asia, and multi-country, sector specific programmes on trade reform, insurance, education and anti-corruption. The focus of all programmes is high impact and value for money. We expect the first of these to launch later in the year.
We will refresh our gov.uk page with more information on the fund following this update and will continue to develop these pages as the fund progresses, including with information on programmes as they launch.
Culture, Media and Sport
Tailored Review of Arts Council England
I am today publishing the report of the tailored review of Arts Council England. The review was first announced in the culture White Paper in March 2016, and was officially launched on 9 August 2016.
The review’s purpose was to challenge and seek assurance of the continuing need, efficiency and good governance of Arts Council England. The review concluded that the functions of Arts Council England are necessary and should continue to be delivered by Arts Council England in its current form as a non-departmental public body.
The review found Arts Council England to be an efficient and well governed organisation that was highly regarded across the arts and culture sectors. The review made a number of recommendations for further improving the effectiveness of Arts Council England, for example through further integrating museums and libraries; further supporting skills capability and financial resilience; developing more local partnerships and strengthening the use of cultural investment as regeneration capital; strengthening the assessment of the impact of its funding; and ensuring that its funding is fully accessible in order to benefit everyone and not just the privileged few. There are recommendations too for DCMS, on providing stronger assurance that the Arts Council is investing public money effectively, and reviewing the cultural property and export licence functions.
The review was carried out by DCMS, and an independent challenge panel was appointed to assure its robustness and impartiality. The review was carried out with the full participation of Arts Council England, and gathered evidence from a range of stakeholders from across Government and the arts and culture sectors and through a public consultation. I would like to thank all those who contributed to the review.
The report will be placed in the Libraries of both Houses and is available at: https://www.gov.uk/government/publications/tailored-review-of-arts-council-england
On Thursday 16 March I intervened in the proposed acquisition of Sky by 21st Century Fox on the media public interest grounds of media plurality and commitment to broadcasting standards by issuing a European Intervention Notice (EIN).
The EIN triggered the requirement for Ofcom to assess and report to me on the public interest grounds specified and for the Competition and Markets Authority (CMA) to report to me on jurisdiction. I required Ofcom and the CMA to provide their reports to me in response to the EIN by Tuesday 16 May. Once I receive these reports, my decision-making role in this process would resume.
Given the proximity of this decision to the forthcoming general election and following discussions with the parties, Ofcom, the CMA and the Cabinet Office Propriety and Ethics team I wrote to Ofcom and the CMA on Friday 21 April to extend the period by which these reports should be submitted to Tuesday 20 June.
Exiting the European Union
General Affairs Council
The General Affairs Council (GAC) on 25 April 2017 is expected to focus on: modification of the Commons provisions regulation; bringing cohesion policy closer to our citizens; and implementation of EU macro-regional strategies; followed by a working lunch.
Modification of the Commons provisions regulation
The presidency will provide an update on proposed changes to the legislation which governs the common provisions regulation, the overarching EU regulation which governs the European structural and investment funds. These are expected to be in place before our withdrawal from the EU and were proposed by the Commission as part of the mid-term review of the Multiannual Financial Framework (MFF) in order to simplify and harmonise existing regulations.
Bringing cohesion policy closer to our citizens
The Council will adopt conclusions which: assess the EU’s cohesion policy in recent years; recognise the need for greater visibility in its implementation; and call for further simplification and flexibility in the period beyond 2020. A discussion between member states on the themes raised during the negotiation of the conclusions is expected.
Implementation of EU macro-regional strategies
The Council will adopt conclusions on ‘EU macro-regional strategies’, the frameworks for co-operation between member states and non-member states in tackling common challenges by better using existing EU initiatives and sources of funding.
Following the meeting there will be a working lunch, at which Ministers will have the opportunity to exchange views on the role of cohesion policy post 2020 with Corina Cretu, European Commissioner for Regional Policy. This is expected to be an informal discussion.
Foreign and Commonwealth Office
Law and Order Trust Fund Afghanistan
On 23 December 2016 the Foreign and Commonwealth Office fulfilled the promise given by the former Prime Minister at the NATO Chicago summit in 2012 to commit £70 million for each of the calendar years 2015 to 2017 towards Afghan National Defence and Security Force (ANDSF) sustainment. At the NATO summit in Warsaw in 2016, the UK committed a further £210 million to sustain its commitment of £70 million per year until 2020.
The UK’s 2016 contribution, funded from the Conflict, Stability and Security Fund (CSSF), has been channelled through the United Nations development programme’s Law and Order Trust Fund Afghanistan (LOTFA) to support payroll management, Afghan National Police (ANP) salaries and Ministry of Interior (MoI) and ANP development.
The development of a capable, accountable and responsive MoI and ANP, committed to delivering rule of law, is essential to long term stability and security in Afghanistan. The ANP play a fundamental role in providing security; rule of law and public order; as well as helping to build trust in the legitimacy of the state. Due to the challenging security environment international support for Afghan policing continues to be required. The UK remains committed to supporting the development of security institutions in Afghanistan, including the ANP and MoI.
Northern Irelamd Finances
At the point when the Assembly dissolved in January, there had been no budget set for the Northern Ireland Executive for the 2017-18 financial year. As a result, since the end of March it has fallen to the Permanent Secretary of the Department of Finance to allocate cash to Northern Ireland Departments under powers provided by section 59 of the Northern Ireland Act 1998. Since that point, consistent with the UK Government’s ultimate responsibility for political stability in Northern Ireland, I have been working closely with the Head of the Northern Ireland Civil Service (NICS), in conjunction with the NICS Board, to explore the most appropriate means by which to provide further assurance around the budget for Northern Ireland Departments in the absence of an executive.
I outline in the tables on the attachments, an indicative budget position and set of departmental allocations, based on advice from the Head of the NICS in conjunction with the NICS Board. These allocations seek to reflect, as far as possible, their assessment as to the priorities of the political parties prior to the dissolution of the Assembly and the further allocations they consider are required within the budget available. By so doing I intend to give clarity to Northern Ireland Departments as to the basis for departmental allocations in the absence of an executive, so that Permanent Secretaries can plan and prepare to take more detailed decisions in that light.
Alongside that, I wish to make it clear—as I shall also do in proceedings on the Northern Ireland (Ministerial Appointments and Regional Rates) Bill—that this Government, if returned and efforts to secure the resumption of devolved Government do not succeed, would ultimately be prepared to provide legislative authority for the expenditure of Northern Ireland Departments for 2017-18.
The totals I set out would not constrain the future ability of an incoming Executive to adjust its priorities during the course of the year. Any future UK Government would similarly need to reflect upon the final shape of allocations in the light of the circumstances at the appropriate time.
Resource - Departmental Expenditure Limits
The resource positions begin from the indicative departmental totals set by the Permanent Secretary of the NI Department of Finance under his s59 powers. From there further allocations have been made in the light of the assessment made by the Head of the Civil Service, in conjunction with the Northern Ireland Civil Service Board, as to pressures to be addressed. These totals do not include the £42 million of resource provided in the March Budget, as that extra funding was allocated after the last Executive dissolved. This is in order to maintain flexibility for the any new Executive to allocate resources to meet further priorities as they deem appropriate.
Capital - Departmental Expenditure Limits
The capital position has been determined by the Head of the NICS, in conjunction with the NICS Board, based on engagement with individual departments, again reflecting the decisions and priorities of the last Executive. It includes the allocation of £114 million of Financial Transactions Capital. It would make available funding for projects which were announced by the Executive as part of their 2016-17 Budget. These include the A5 and A6 road projects, the Belfast Transport Hub, and the Mother and Children’s Hospital. However it would be for individual departments to prioritise and allocate their capital budgets. As with the resource totals above, this does not include the £7 million of capital provided in the March Budget.
It can also be viewed, with the attachments, online at: http://www.parliament.uk/business/publications/written-questions-answers-statements/written-statements/Commons/2017-04-24/HCWS612/.