Select Committee on International Development Minutes of Evidence

Examination of Witnesses(Questions 20-39)


  20. Again it may be an idea to have perhaps a note from the Treasury as to what has happened so far on that.
  (Clare Short) We can certainly get you a note on special drawing rights[4]. The Chancellor's proposal for the extra 50 billion rests on countries pre-committing growth in ODA resources and borrowing against those commitments and getting a triple "A" rating and raising some money from the markets to bring forward through partnering with private sector funds what would come out of increasing ODA budgets through to 2015. That is the core of that proposal and it does not rest in its core on special drawing rights, but certainly where we are with special drawing rights, and I am pretty sure because I did follow that this Soros thing might go somewhere and then I found that I thought it was going nowhere on that, I must say, and I have not found out what happened since, but we can certainly get you a note on both.


  21. I am not sure whether, as a matter of courtesy, we send the Department copies of submissions that we have been sent by others, but just rounding off this particular bit of questions, Secretary of State, when you came and spoke to the All-Party Group, you very accurately said that the Jubilee campaign had been the largest and most effective civil campaign since the abolition of slavery, and I paraphrase.
  (Clare Short) Probably, yes, because it was global.

  22. Yes, absolutely. So there are a lot of or all of our constituents have been very interested in that campaign and how it has been working. I think the exchange of questions and answers so far this morning has illustrated that this is an area which is moving forward, and it is quite technical. I think all of us are still getting postcards from constituents which do not suggest there is a very simple black and white issue and I just wondered, and you will probably tell me you have done this in a speech or somewhere, whether in response to some of the campaign that is going on we could between us all draft a plain person's guide to where we are on debt relief. We can all imagine our typical concerned constituent is very interested in this issue, but needs to be content that somehow the politicians are confident that actually some progress is being made, it is really having an impact on countries and that there are some poor countries where it really has had an impact and that the UK has been in the lead on many of these initiatives. I just think that would be enormously helpful for a large number of colleagues in the House and it could perhaps even be put in the House of Commons Library which we could draw upon so that one can actually engage in a correspondence with constituents which is informed rather than the ghastly kind of postcard standard letter response, if indeed you understand my shorthand.
  (Clare Short) We have done that, but I am more than happy to try and update it and put it perhaps to you to see if you think there is any way of clarifying it. There are some countries and institutions that are not co-operating and we could do with a campaign on that, but getting this greater generosity at Completion Point is fantastically important and we could do with some more pressure on that. The other thing that the campaigning NGOs are moving on to, and it is the partner to debt relief, is trade access. Of course once you have got rid of your foreign currency debt, you want to be able to borrow responsibly and trade responsibly in order to grow your economy, so I think the thrust of the campaigning is moving there. I am more than happy to let you have a draft standard letter and briefing that we have because the problem is that people's sense of moral clarity is very simple and clear and we are into then some very technical and complex issues and there is a sort of clashing mood about the two.

  23. But I think that people who have demonstrated concern in the past should be reassured that things are moving forward and that there is progress being made even if it is quite technical. I am sure we would be very happy to see that.
  (Clare Short) Let me let you have what we have got and see if you can help us make it better.

  Chairman: Perhaps then one can also move campaign groups on to the campaigns that need people rather than the campaigns that do not.

Ann Clwyd

  24. Since this Committee first started, I think we have criticised the International Financial Institutions, as you have yourself, for not practising what they preach in terms of transparency, accountability and good governance with the voting power of the seven countries who have nearly 50 per cent of the total voting power, the feeling that developing countries are squeezed out of the process, the fact that gender balance does not seem to have occurred to the Boards of the IMF and the World Bank with 100 per cent, I think, male membership on one and 92 per cent on the other. Now, I know that because of pressure from the UK in particular, the IMF and the World Bank have promised to prepare a new position paper in the Spring of next year. I was wondering what ways you have identified in which you would like to see the votes of the developing countries heard in the whole process and in fact the views you have of what kind of paper they ought to prepare in the Spring of next year?
  (Clare Short) Let me say a word on the G7 because we had an argument about the last replenishment of IDA, the very concessional, long-term loans of the World Bank to the poorest countries, and there was a difference between the European perspective and the US perspective. I would just note the point that if Europe stands together, it is a majority, but it does not always do so because one of the problems is that the lead in the Bank in a lot of countries is in the finance ministry, not in the development ministry, unlike us, so you do not get the people who are as sympathetic to or as informed about development lending in the World Bank, so you get that division, which is kind of interesting and we could do more with the World Bank and moving forward reform faster, I think, if all countries had their development ministry leading. Some do and some do not. On the gender balance, at the first meeting of the Development Committee I went to, which I think was in 1997 in Hong Kong, I think I was the only woman and there were all these ministers either from finance ministries or indeed from central banks reading out sort of turgid macroeconomic advice. We then got a whole series of women ministers who started talking about poverty and I was thinking at the last meeting that you would not recognise the two meetings, that people now talk up rather than read, there are more women at the meetings, still not 50 per cent, but it has changed the atmosphere and the focus on poverty is a transformation. So change can happen in these institutions and it is worth trying. Strengthening the developing country voice is very, very important and it is one of the promises of Monterrey. Lots of countries are not keen on it. It is slightly complex in that obviously the commitment into the institution is according to the wealth of the country and the countries that put the money in want to have their say about how much money is put in, but the borrowing countries have a big interest in what the policy is. It seems to me that this is what we need to unpack. Of course if you said, "The borrowers can tell everyone that is putting money into the institution", you might get some pretty crazy decisions, but, on the other hand, the borrowers have a fantastic interest in how the institution is used and what the policy lead is and, therefore, it is much too weak there. There is room for looking at which decisions, who has consulted about what and how much say everyone has. Then the other thing is the offices in Washington, how many executive directors there are, Africa has two, so you have two people, one Francophone, one Anglophone, paid to represent every country in Africa. Weak communications, enormous complexity. Just being resourced to do that, they are not adequately resourced. There is a thing about voice and influence on policy, I think, but also there is how well serviced the people are who are doing this heroic job of trying to represent very frail countries with a weak capacity to brief their people in Washington about what their interest is. We have got some proposals, we have been working to try and strengthen the African EDs and there is more that can be done there. We did press at the annual meeting which has just gone for a report on improving the developing country voice to be brought to the Spring meeting. A lot of people do not like it but because it was promised at Monterrey they have got to do it. It is well worth watching. It is very important to change the atmosphere in the institution. There has been a massive improvement in the relationship between the UN institutions and the Bank which used to fight and really be hostile, it is more collaborative now. I think getting a stronger developing country voice would balance it again and everyone would start seeing them as institutions which can help everybody, we are not there yet.

  25. I know the UK has supported an open democratic system for selecting the top management of the financial institutions. I wonder how you are supporting the introduction of an open process for selecting the next President of the World Bank?
  (Clare Short) As you know, this is an old carve up since the Bretton Woods meeting. Funnily enough the US gets the World Bank and Europe gets the IMF and it cannot go on, surely. What about the rest of the world? This is disgraceful. The World Bank's first remit was thinking about restoring Europe and you can see how that was the mindset then but now it is the important institution for developing countries and they are carved up by that deal of everyone contemplating taking up the leadership. It is intolerable. The geographical carve up is intolerable and then the system for selecting is a kind of political fix system, lots of UN appointments are too, let me say. We need to have a much more open process saying what are the skills which are required. I think when you are looking for these international jobs you need international head hunting because just to have an application system when you are looking at five or six continents is not right. I have been having this discussion with Kofi Annan too. Of course he has got to balance African/Asian men, women, Europe but I think you could have a head hunt for people who are in the bracket of competence and then if you need to balance continents you can do it. Then the final selection is a bit like political selections, as long as the short list is competent in the end it does not matter who wins. It is an outrage the present system and it needs continuing pressure to make it transparent, to go for competent and to have a political fix. It extends to UN appointments too.

  26. I quite agree. What is the timescale for the next head of the World Bank?
  (Clare Short) Jim Wolfensohn keeps saying he has got anther two and a bit years.
  (Mr Faint) It is just over two years, yes.
  (Clare Short) I must say we are not winning this. We are arguing it. Tony, do you want to say something?
  (Mr Faint) I was going to say, I think that we have made some progress internationally. Some jobs, for example the head of UNESCO appointed a year or two ago was done by a very open and competitive process. The process for the head of the WHO looks like it will be quite open, although—
  (Clare Short) I think that is a bit romantic.
  (Mr Faint)—it will be structured in a certain way, nominations by member governments. On the IFIs, well, you have very powerful large shareholders who still feel comfortable with the current system which as the Secretary of State says is contrary to the principles of multilateralism and we have to go on pressing to try and change it.

  27. Are we the only large shareholder that is pushing for this change then?
  (Clare Short) Of course the Scandinavians and so on, the smaller ones, would always support. Is there anyone else? G7?
  (Mr Faint) I think a decision in G7 is what this would take.
  (Clare Short) Yes, but there is no-one else?
  (Ms McMillin) No.
  (Clare Short) I think the truth is without more energy behind this the prospect of a change by the appointment in the next President of the World Bank is less than 50:50.
  (Mr Faint) Even if we can have a competitive open process limited by nationality that would be a big step forward from the current one name nomination.

  28. Finally, can I put a point to you about the concern among NGOs, particularly those concerned with the rights of indigenous people and environmental conservation in the face of the World Bank financed construction projects, pipelines, dams and so on. The World Bank's social and environmental safeguard polices are being weakened. The safeguard policies are guidelines about what World Bank staff must do and provide an important means of holding the World Bank to account. It has been suggested that the UK Government does not regard the maintenance of such safeguards as a priority, and this was illustrated in UK support for the Chad-Cameroon Pipeline Project. Can you tell us what the UK position is?
  (Clare Short) Yes. I think some of these campaigners are opposed to the interests of people in developing countries and tend to oppose any dam, any development, any pipeline, any energy project. If you take, for example, the Chad-Cameroon pipeline, these are desperately poor countries which have got oil. They must be allowed to exploit it surely for the benefit of their development which means a pipeline and surely it is better to have the World Bank engaged. The campaigners come in to get the World Bank out, if you get the World Bank out it will just be done commercially. You are right, they mount enormous campaigns, it tends to be environmental groups with little knowledge of development and therefore ending up often unsympathetic to development. We had a similar campaign about a project in the west of China amongst some desperately poor people and in the end China just said "Get the World Bank out we will do it on our own". There have been a number of these campaigns where we stand very strongly against that kind of cheap headline grabbing campaigning but we insist as a Government with our influence that all the proper environmental checks are done and such investments, which are often in frail and environmentally precious environments, are done responsibly. Yes, personally I and the Department have stood against some of these campaigns because they are often anti-development campaigns and they are people living in rich countries who have access to energy and clean water and sanitation who mean well but are against any development in poor countries. We think the World Bank should have the highest standards but it is better to have the Bank in than out on a lot of these projects. The effect of some of those campaigns is to get the Bank out and just leave it to pure commercial exploitation which will have lower environmental standards then.

  29. Would you not say some of these campaigns are justified because large scale shifting of populations takes place? For instance, I know you were not involved in this but the Illisu Dam in Turkey where tens of thousands of people were pushed out.
  (Clare Short) Of course, but you asked specifically about Chad-Cameroon and I think the campaign was run on that and I think it was right to go ahead and keep the Bank engaged. I think the campaign against the Western China project—can you remember what that was called?
  (Ms McMillin) Western China Poverty Reduction.
  (Clare Short) Western China Poverty Reduction Project, the net effect was to get the Bank out so the thing is going ahead without the Bank's environmental standards being engaged. China is moving on environmental standards. That was the whole point of, for example, the World Commission on Dams. There were big infrastructure projects when that was the fashion of the time with exaggerated notions of what the irrigation effect or the power effect would be, displacing people, disrespecting people, not looking at all the human consequences. I think it swung then to no infrastructure development, no dams, no power, which you cannot go to. We need to go much more to the sort of wisdom that was in the World Commission on Dams, responsible projects, properly managed, properly considering all the interests of all the people involved. Of course there have been propositions which have been disgracefully not considerate of poor people and indeed of the environment. That does not mean every single project should be opposed. Some groups have got to that point and that is where the argument is with my Department.

  30. There are occasions where for social and environmental reasons we might have to challenge the World Bank's involvement in some project?
  (Clare Short) Absolutely or require a further screening of the potential environmental effects and an adjustment. In the Western China project I know we asked for another stage of consulting local people and so on. We intervene often to try and make sure the projects are more responsible but we always look at what is the interest of poor people in the country, can it help reduce poverty and be responsible environmentally and in considering the interests of the poor. My own bias is to have the Bank in if you can rather than leave it to pure commercial development which will tend to be less considerate of people and the environment.

Hugh Bayley

  31. What is it that is holding up the writing and the agreement of Poverty Reduction Strategy papers in those highly indebted poor countries which have not produced them? To what extent are the donor nations or the Bank putting brakes on the process? To what extent are those developing countries that have not yet produced the strategies responsible?
  (Clare Short) There are a massive number of strategies being developed. I think the Poverty Reduction Strategy way of working has taken off in the international system. For example, Bangladesh is doing one that is not a HIPC because it does bring together macro-economic policy and social policy and revenues and how to deal with debt and how aid is dispersed together and more long term and then looking at what trade can contribute and get a more holistic approach and a more open approach. You can go too fast or at least a lot of the highly indebted poor countries, they had interim Poverty Reduction Strategies and because they needed their debt relief fast it was often only an outline. Then we needed to stick with it and deepen them and lengthen them and widen them; that process has been going on. My sense is—but Penny might want to comment on this—some of the other countries represented on the board of the Bank have started piling on the conditionality and slowing things down a bit but some countries are less committed to reform than others. A lot of development talk is as though all leaders of all developing countries care about the poor and as you know that is not the case.

  Hugh Bayley: If only.
  (Clare Short) Sometimes the strategy is not good enough. Do you want to comment? It has gone slower than we hoped.
  (Ms McMillin) Certainly it has gone slower than we hoped. I think in the very broadest terms with a lot of the countries which have been slow preparing the PRSPs before reaching a decision point on HIPC it has been due to conflict and especially in sub-Saharan Africa. There has been a certain slowness between decision point and completion point which has sometimes been related to poor policy and slower implementation of reforms than perhaps we would have expected. I am not sure about the conditionality point that you raise, Secretary of State. I think that as the process has gone on from its very early days we have realised just what is involved and what potential it has to draw in absolutely everything. This is a very large process so we have to make sure that we get it right. As we go on and have got more experience with it we have realised just how much can be built into this to make it a real Poverty Reduction Strategy.

  32. Can I ask what the UK Government is doing to make sure that the Poverty Reduction Strategies are nationally owned, owned by the countries to which they apply, and that they are developed in consultation with civil society and the parliament of the people of those countries? What is our Government doing to ensure that? Are we in a position to ensure that when a country is debating its Poverty Reduction Strategy that it faces real choices between doing one thing or doing something different, and that there are a range of options, policy options, both as regards economic policy choices and social policy choices. How do we get the countries in the driving seat, the people involved and both in a position to steer a process rather than responding to demands from the rich world?
  (Clare Short) On the first point, in my view the Poverty Reduction Strategy process borne out of debt relief but now going much more widely, and the transformed way of the Bank and the IMF working in developing countries, is a revolutionary shift from reform agendas written in Washington, imposed on countries, often in collusion with some of their governments, because reform is difficult, and if you can say the IMF made us do it, it is sometimes easier. There was some of that collusion going on. If you talk to the HIPC finance ministers they say it is politically more difficult but they prefer it. It means they take the flack at home, they cannot just say "It is all the IMF's fault". You can get this shift from Washington so we can do what we like, it is not that. It has to be the genuine partnership aimed at meeting the Millennium Development Goals, the beauty of them being that we have all agreed to them. You have got corrupt governments who do not really care and who want their debt relief but do not want to spend it on people. You have got very powerful elites in developing countries and they want the health and education budget spent on hospitals and university places for the capital and the elite. Those tensions are very strongly still in government so you do need this kind of partnership conditionality, it is about delivering to the poor, it is about working together to meet the Millennium Development Goals but it needs to be driven by the country and open in the country, that has been a condition of the PRSPs. I think everywhere it has opened governments to criticism by civil society that they were not used to when it came to reform, they were agreeing with the Washington institution. Those reforms used to be agreed behind the back of people, limited at first often because a lot of people in very poor countries are not used to being consulted, they do not have the means or the knowledge to know what all these phrases mean. We have been trying to work with church groups in particular which tend to penetrate right down to the grass roots so if they are more informed about the processes really they can bring the people in. That is ongoing work and we are very committed to it. I think in the early stage we missed parliaments because we said it must be open with the people, we were all concentrating on civil society. Parliaments were hardly in the process in many countries. I think that has been corrected and in countries where we have been engaging with the kind of reform in finance ministries on budgets and so on, like Tanzania, then it has to go into the parliament because they have now got procedures which mean financial commitments have to go into the parliament. I think not just us but the whole inspiration of the PRSP, this country lead and openness is very much a part of it but there was a tension in the early days, the interim PRSP was to trigger the debt relief so countries wanted to do it fast. Of course then they want to put down what the Bank and the Fund will approve so I think in the early days sometimes it was not as locally owned a process. There is a tension between speed and local ownership. I think local ownership is deepening. We are very committed to this and I think it is deepening across the world in a very important way. How can you make sure that the debate is about real choices? This is enormously important. The Poverty—what do you call them.
  (Mr Faint) Poverty and Social Impact Analysis.
  (Clare Short)—which we are very, very keen on. You know the arguments about good water being run by a private sector provider or should there be any charges or the whole misleading campaign against the Ghana water reorganisation. The view of my Department is we should not take an ideological position on these questions if it is the water sector or something else. How is the country doing? What are the interests of the poor? How can you get a better service and keep the prices and so on? If you then say "Should we build this dam or not?" or "Should we reorganise the way we do our water supplies? Should we bring in a private sector partner or not?" then countries get choices if they have a procedure that can check what are the benefits. There are always thousands of different ways of doing things. I think we are moving there. We are very keen on this Poverty and Social Impact Analysis. We are doing some work to experiment with rolling them forward and giving them an example. Funnily enough, up to now the IMF has been keener than the Bank. I have been pressing the Bank too. We have been pressing at all levels. I took it up with Jim Wolfensohn. Do you want to add something? This is really important to all. Within the strategy the PRSP would enable countries to look at different options and where the interests of the poor lay. That gives the choice and sense of control you are looking for.
  (Mr Faint) I think conceptually we have won the argument. It is accepted that you need to have a good analytical base for the key choices facing countries in designing Poverty Reduction Strategies. The way to go is through a disciplined assessment process. The IMF is a consumer for this. The IMF needs the analysis in order to design its programmes better and have its dialogue with the Government. The World Bank with the donors has helped to deliver this product. I think we have an analytical tool which will do this job but there is a lot of work to be done. We have done some pilot exercises. We have had discussions with the Bank and the Fund on the underlying concepts and what is needed now is to roll this out, and it is quite a large task, to identify key issues within Poverty Reduction Strategies that require this kind of analysis and then programme it. It is going to take a period to do this job. Conceptually I think we are there but there is quite a lot of implementation still to be done.
  (Clare Short) We are doing these studies to try and drive it forward which I think we should share with you<fu5>. I think this is very important. There are five—Mozambique, Uganda, Rwanda, Armenia and Honduras—which are complete and there are others coming, Indonesia and Pakistan. I know we are going to do a dissemination with NGOs. I think we should keep the Select Committee informed. It is a thing which will need driving. It is a tool of more local ownership and choice again that civil society needs to understand so they can face up to what the real choices are in a country.


  33. As a Select Committee, as we have visited various countries, I think all of us have been struck with governments very often engaged in poverty reduction. DFID very often is helping civil service and civil service reform. A lot of work has been done on civil society and engaging civil society on these things. Parliamentarians are a big black hole. Many of us will remember Hugh giving a very gentle lecture to some of our Nigerian parliamentary colleagues about accountability. This concept of accountability, very often it is a country which has emerged from civil war and conflict where there is not a long tradition of parliamentary accountability. There was a feeling amongst many of us that maybe the Commonwealth Parliamentary Association and other organisations ought to do more in trying to help parliamentarians in Commonwealth countries, in Africa and elsewhere, have a better understanding of what is the role of being a member of parliament otherwise one has that important bit of the jigsaw, not just on these issues but on many other issues, continuously missing.
  (Clare Short) I agree with this. Let me say there is another thing, the cost of getting elected. We pushed multi-party democracy on to countries without thinking through who pays for politics. It is estimated it costs £20,000 to be elected in Uganda, as much as £750,000 in India. I have been trying to get Transparency International to be interested in an index of how much it costs to be elected because if people are paying that kind of money then for sure they are going to try to get it back from somewhere, so that is another part of the battle. I agree within goodwill—and there is always some of that—you never get total corruption, there are always some people who care. Giving them the tools of holding their government to account we do try to work it into the improved financial accountability but more could be done. I agree it is a really important aspiration and we ought to think it through more. The Commonwealth Parliamentary Association does enormously important work but maybe we could add to it and sharpen it and this sharing of skills could be a very important effort. The World Bank has set up a parliamentary tier which I am sure some of you have been involved in.

Mr Colman

  34. Can I say, Secretary of State, that is steaming ahead, obviously, the parliamentarians and the World Bank. One thing which is outstanding still is the accreditation of parliamentarians to the meetings of the World Bank and the IMF. At the moment that is not allowed apparently because of the decision of member governments. Perhaps this is something which you might wish to look into, to enable parliamentarians in their own right to be able to attend meetings of the World Bank and the IMF in the way NGOs are able to do so. At the moment parliamentarians cannot go on their own, they can go if they are accredited to an NGO and they can go if they are accredited to a government delegation but they cannot go in their own right.
  (Clare Short) I will have to look into that. That is the first time that point has ever been put to me. Let me say, the old style of everyone turning up mob handed to the meetings of all these multilateral organisations, and NGOs spending a fortune of the money they collect charitably to go there, is a crazy system. Getting back to the proper systems of accountability—which are to parliament and to civil society at home which we have been trying to work on through these routes and indeed this kind of scrutiny—is the right way.

  Mr Colman: I agree.
  (Clare Short) Then having some representation of parliament and maybe NGOs in government delegations, as you know, I think is a good thing. I think the idea that everyone has to travel to know what is going on at the meeting is madness because it gives people a sense that everything is out of control and there is no way of holding their government to account. I will look into it.

  Mr Colman: Please.
  (Clare Short) I know you do like attending these meetings.

  Mr Colman: I am informed and I think it is important that other parliamentarians can be equally informed.
  (Clare Short) We cannot have all 650.

John Barrett

  35. Can I ask about the Poverty and Social Impact Analysis. You mentioned DFID is piloting studies independently from the World Bank. There is going to be a conflict clearly in the countries where this is most needed and countries where it is important to deliver. In areas, for instance, where there is difficulty with the poor governance in the country it is going to be difficult for pilot studies taking place within an area where it has been difficult to deliver such an analysis. How will this be translated into a country where the poor are separated from the reduction target strategy by their own government?
  (Clare Short) This is a wider point about how to get development in the poorest, most misgoverned countries. We have made a lot of progress in the last five years in improving the way we back reformers and back countries which are willing to go for reform. That has tended to lead to them turning away from the countries with terrible corruption and bad government. Lots of the very poorest people and most depressed people in the world live in those countries. There has been work going on in the Bank, they call it LICUS—Low Income Countries Under Stress, terrible set of initials—and there is work going on in the development committee of the OECD. I think this is the next theme we have to pay attention to, how to drive forward progress in countries where that energy is not coming from the government, and it is very difficult to work in the country when you have got corruption and oppression and so on. I have been thinking things like maybe in a country where you just cannot get a commitment from the government to primary education, say, for the poor, maybe the donor should fund it to get one generation of children through because we know that brings about deep change. You can do things on social marketing, things like condoms, bed nets and so on. Improving our capacity to intervene in countries where you cannot get a commitment to reform out of the government we are working on and I think we need to do more on. I think it is very important to get pressure on it but it is very difficult in the nature of the task. If you take Nigeria, it has come to democracy, enormously important, it is more than one in five of sub-Saharan Africans, very little reform has happened since the last elections. It is an oil rich country with 70 per cent of the people being a dollar a day poor. It is a very difficult country to reform: the separation of powers between the federal and the state and so on, if the Archangel Gabriel became the President it would be very difficult. No, we need to be serious, how can we help Nigeria reform itself? This is the biggest, hardest question in international development that you ask. We are working on it.

Mr Khabra

  36. The World Bank and the IMF at their Spring meeting this year endorsed a new Education for All action plan to help make primary education a reality for all children by 2015 and to achieve gender equality in primary and secondary education by 2005. This plan includes a new fast track initiative to speed up donor efforts to financially support developing countries' national education plans. Twelve countries are ready to participate already in the fast track initiative but need donor financing in order to do so. What progress did the Autumn meetings make as regards generating funding for the Education For All initiative and with finalising a strategy and timetable to expand the list of participating countries? What resources will the UK put towards the fast track initiative?
  (Clare Short) Yes. First of all, the World Bank did not launch the initiative on Education For All by 2015 and gender equality, that was one of the international development targets, now the Millennium Development Goals. It did not come out of the Bank, it came out of the UN system backed by the development committee of the OECD and then reaffirmed most powerfully in the Millennium Development Goals. It was already there as an agreed international objective and lots of work had gone on. Then the World Bank launched its fast track initiative under a lot of pressure from NGO campaigning but tended to frame the question of what we needed to do to get faster progress on primary education in terms of extra donor resources. The first announcement of the fast track initiative was like a cosmetic presentation and a false analysis. It listed the countries where we have made some of the best progress and departments like mine and others have worked very hard: the Ugandas, the Mozambiques, the Rwandas and so on, and then said "We are going to have a World Bank fast track initiative". It was like they were going to have a trust fund, ask for some extra money, sprinkle it into the reformers and then claim that they had driven forward progress on primary education. That was the initial fast track initiative. We engaged very strongly. Then on a number of these countries like Uganda and Rwanda, where we are very involved, we are having arguments with the IMF that they are over-aided, so they are making progress on education and there are limits on the international system, so they cannot have more aid. We argued for the extension to countries with very large numbers of children out of school which are not leading the reform effort and are not moving forward. You have got then the so-called analytical fast track which is conceptual and complex and you look at the Nigerias, the Ethiopias, the Indias where there is some effort to make progress but there are still so many children not in school and so on and then the question becomes how can you energise the international system to put supportive pressure on a country to be willing to go for the kind of reform behind which extra resources can drive forward progress on getting more children into school. We are working very hard to try and reshape the fast track initiative in that way. I happened to go to Tanzania and be talking to ministers from Uganda and so on after the fast track initiative had been launched, it was being announced in Washington and NGOs were proclaiming it but people who lived in the country who were reforming education did not know anything about it. So there was a lot of that going on which really is no good. Also we need to get this thing under control because then it was suggested we will have a fast track health initiative and a fast track water initiative and then these are going to be cosmetic Washington, bits of funds, not delivering on the ground, not part of Poverty Reduction Strategies, not sustainable, not reaching scale. So in terms of the UK's commitment to finance, in the early stages they were talking about a World Bank Trust Fund, and it was part of this conception dole out a bit of extra money and you crack the problem. We are not proposing to put any money in a trust fund. We believe absolutely in working bottom up, backing Poverty Reduction Strategies, as we have been saying earlier this morning, putting money through budgets where you can because you are getting sustainable long term reform and reform in the use of the country's own revenues. You will know these figures. Since 1997 we have committed £700 million to driving forward the commitment to universal primary education. We have just done an exercise in the Department and projected spend—which is not the same as committed but these are plans in the Department if governments will commit to move—over the next five years is £1.3 billion. We believe passionately in driving forward primary education. As you know the evidence is that it is the most powerful intervention you can make in a country which brings about development. We are trying to reshape the fast track initiative to make it something useful and add energy to progress rather than a falsely based cosmetic initiative.

  37. The problem with primary education for all children in some of the countries is that the children in the family, because of poverty, are involved in making a contribution to wealth. They are big earners in many countries and particularly in India, I know, the children are involved in making a contribution by working at different places, maybe in the farms or maybe some factories, as you know, that is well known to the international community. I was with the delegation in Malawi and education for every child is impossible in a country like that. The target which has been set up by 2015, it is impossible to achieve that target.
  (Clare Short) It is not impossible. The problems you outline are there but the reality on the ground in many countries is that we have learned how to make progress. We have seen—and this is one of the most moving things I have seen—very poor families who, yes, rely on the work of their children. Either you have got fees or often in countries it is not fees but you have to buy the books, you have to have special clothes, there are all sorts of barriers which stop poor children getting to school. In the case of Uganda or indeed Malawi, which is a desperately poor country, when absolutely free education was announced millions of extra children came out of their desperately poor families with this fantastic hunger for education. That is the experience across the world. Then there are other things like girls will not stay at school, especially as they get a bit older, if there are not toilets there and simple things which you do not think about which are very important for dignity and security. Across the world there is work going on in the poorest countries. The reason we have a long Summer holiday in this country is because our children used to help with the harvest. In many countries when children are from poor rural communities and they are needed for the harvest there should be a break from school. In many, many poor countries this is driving forward. In Andhra Pradesh in India massive progress is being made. I do not know if I have said this to you before. I have been to a village in Andhra Pradesh where there was not a single illiterate woman. It is a tribal village. Every single girl, including the special needs girls, is in school. It is not easy but it is doable with all this absolute drive and commitment but it must be free and it must not have hidden costs like books and uniform and all that sort of thing. We can make very considerable progress. The places where we have got problems are places like the Nigerias where reform is not driving or the conflict countries of course, the Myanmar, Burma, the Congo and so on, Sudan, you have to end the conflict before you can begin to try and get all children into school but we can make progress and that is the commitment. We are determined to drive it in any way we can. In Africa we have become more and more interested in resolving conflict partly because you cannot get the Millennium Development Goals in those countries until you have ended the conflict. Then if you concentrate on the Sudan there is a prospect of it coming to peace. If we all would focus on the Congo we can help that country to peace and then it will get its debt relief. There are something like 60 million people in the Congo so it is enormously difficult but enormous progress is possible. I have just come back from Afghanistan, schools are opening there and children are queuing up to go to school. Please do not be so pessimistic.

Mr Colman

  38. Can I ask you, Secretary of State, about the World Bank's Private Sector Development Strategy which I understand was approved in February this year and aims to encourage the transfer of public services into private hands. In response to my colleague, Hugh Bayley, you talked about the need for more ownership and choice for countries. Do you think this is compatible with things like the World Bank's strategy in this area? I understand this is conditional in some cases on policy for lending and, of course, within monopolistic markets dominated by transnational private sector utility firms there is concern that effective regulation cannot work and you cannot get reliable pro-poor service delivery.
  (Clare Short) I do not agree at all that is what the World Bank's Private Sector Development Strategy says. There are some NGOs who are devoted to campaigning against engagement of the private sector in the provision of utilities which are misinformed, I think, and stand against the interests of developing countries. There has been less investment in modern telecommunications in Africa than any other region in the world. It is the place with less connections to the internet than anywhere else in the world and where being connected to the internet—just to take one example—is more expensive than anywhere else in the world. It is the technology that is driving transformation and change. No country can get the kind of investment in modern telecommunications which are needed without getting some private sector investment. We have got to bring responsible private investment into the poorest countries if they are to get the investments in transport systems, telecommunications, water, sanitation and so on that they need to get the infrastructure for their economies to move forward. There are some campaigning NGOs who want to say the private sector should never engage, even though in our own country it is different. I do ask them always "Look at what is happening in our own country and what we are achieving by regulation. Do not project one set of values on to developing countries that you would not advocate at home" and many of them do. I do not agree that the World Bank Strategy is all about privatising the utilities, that is just a complete distortion. The view of my Department, and I think the Bank agrees, is there should be this assessment of where the interests of the investment in the economy of a poor country lies and it should be looked at in all the different ways. You need to go towards the private sector learning the lessons of good regulation. Some countries have made terrible errors, like Russia moving very fast without good regulation, regulation is very important. It was only a couple of years back when there was a big row in the World Bank with most of our campaigning NGOs joining in about whether you should be in favour of redistribution or economic growth. What a piece of absolute nonsense. We cannot reduce poverty without economic growth. You can have responsible economic growth just as you can have responsible private sector investment. You know the figures for Africa: 40 per cent of its domestic savings leave the continent, is it that way round, because the banks are weak and they all come out into our kind of banks. Getting the kind of improvements in savings, banking that keep domestic savings at home, that get them reinvested in a country, growing the local private sector and creating the conditions where responsible foreign direct investment comes in is absolutely key to development and the improvements in infrastructure which are needed. Sorry about this little rant but I mean it.

  39. Secretary of State, the thing about choice is that there is an interesting paper you will see from the Public Services International Research Unit from Greenwich

  (Clare Short) Which I have never heard of, may I say, which is making false claims, whoever they are.

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