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Poverty and Inequality and UK Aid

Volume 692: debated on Tuesday 20 April 2021

What steps he is taking to ensure that tackling poverty and inequality remains a focus of his Department. (914441)

What recent assessment he has made of the potential effect of reductions in the UK aid budget on poverty in developing countries. (914463)

The UK remains a global leader in international development and is committed to supporting the world’s poorest people. Based on current GNI forecasts, we will spend over £10 billion of ODA in 2021. The Foreign Secretary has set out seven priorities for the UK’s aid budget this year, all of which are in the overarching pursuit of poverty reduction. This new strategic approach will allow us to achieve greater impact from our aid budget, notwithstanding the difficult financial position that we face, and UK ODA continues to serve the primary aim of reducing poverty in developing countries.

I thank the Minister for her response. I am pleased that I am due to meet the Under-Secretary of State for Foreign, Commonwealth and Development Affairs, my hon. Friend the Member for Rochford and Southend East (James Duddridge), shortly to discuss development bonds and a specific opportunity that has arisen. What steps is the FCDO taking to embed innovative finance solutions within the Department’s work to ensure that the UK’s development approach is the most effective at combating poverty globally?

My hon. Friend makes an important point. I know that this is something she takes an interest in. Aid alone cannot deliver the sustainable development goals. The $2.5 trillion annual financing gap for the SDGs means that we need creative solutions that engage the private sector to end global poverty, and the FCDO is testing innovative financing tools that will pull private finance towards sustainable development. We are currently running a pilot on development impact bonds that will draw in impact investment to achieve the SDG outcomes, such as helping 13,000 households living in extreme poverty in rural Kenya and Uganda to set up income-generating businesses.

This Government’s decision to cut the aid budget at a time of a global pandemic and economic crisis risks pushing millions of vulnerable people in developing countries into extreme poverty. Co-operative development in sectors such as farming is vital in reducing poverty, generating wealth and power fairly among producers. Can the Secretary of State guarantee that the co-operative sectors will not be damaged by these cuts?

It is important to remind ourselves and recognise that we will still be spending £10 billion of ODA in 2021 and that the UK economy is 11.3% smaller than last year and undergoing the worst contraction for 300 years. That said, the Foreign Secretary set out clearly in his written ministerial statement on 26 January the conclusion of the cross-Government review on ODA. Driven by the integrated review, our process is really focusing on seven key priorities: climate and biodiversity; covid and global health security; girls’ education; science and research; open societies and conflict; humanitarian assistance; and trade.