Select Committee on International Development Minutes of Evidence

Examination of Witnesses (Questions 1 - 19)




  1. Good morning, and thank you for coming to give evidence on the reform of European Development Assistance. First can I just say, on behalf of the whole of the Committee, how grateful we were for the help that we had from DFID colleagues in Pakistan last week, which was much appreciated, and I think ensured that we had a positive and constructive visit, seeing the humanitarian relief work which is going on there. Mr Ireton, would you like to make a brief opening introduction? We have got your very helpful paper, that I think colleagues will have read, but it seemed to us it might be helpful for you just to set the scene, as you see it?

  (Mr Ireton) By all means, Chairman. Could I introduce first though Anthony Smith, who I think is known to the Committee, who heads our European Union Department. I think the only key points I would make, firstly, is the obvious point, which I am sure the Committee is very aware of, how enormously significant, in volume terms, the European Community's programmes are, something of the order of

5 billion, excluding pre-accession, and that that absorbs something between 25 and 30 per cent of DFID's budget, in expenditure terms. The second thing I would perhaps just say is that, as I think the Committee is aware, Brussels have embarked upon a process of reform, of significant change, but it is obviously too early to judge the impact of that. I think most people recognise that, if I can put it this way, Brussels underperforms its potential, in terms of the impact that it could have with the very large resources that it does have available. The Policy Statement of last year, which did put poverty reduction at the heart of its external programmes, was a very important step forward, certainly in our own terms, though we still would wish to see a much larger proportion of official development assistance from Brussels going to the low-income countries. We are following closely the changes being made in Brussels, with the establishment of EuropeAid, with the streamlining of the procedures, with the new Country Strategy Paper process, which is strongly under way, and, I think, also, very importantly, what Brussels calls deconcentration, which we tend to call decentralisation, i.e. establishing a much stronger field presence in the countries which they are dealing with. We are aware of some of the problems that that can give rise to; we ourselves, as DFID, have continued to decentralise our own operations, over many years, but including quite significantly in recent years, and therefore we want to share some of those experiences with our Commission colleagues.

  2. Thank you. You say it is too early to judge the progress of reform, but have DFID got some clear objectives of where you want this reform to go, and have you got in mind a clear sort of timetable by which you think it should get there?
  (Mr Ireton) We published only recently our revised Institutional Strategy Paper, which probably the Committee should have.

  3. We have seen it, yes.
  (Mr Ireton) Which sets out how we want to work with the Commission to achieve the changes that we all agree upon. I think the key thing is that the changes that are taking place, in terms of impact on the ground, in terms of, if you like, development assistance commitments and expenditure, are bound to take place over a fairly long period of time, and therefore it would be wrong to think that we are going to see a major shift, or step change, in the impact of those programmes over sort of a one, two-year period.

  4. Is not there always then the danger that everyone says `it is marvellous, we are in the process of reform,' and you never actually get to where you are meant to be going?
  (Mr Ireton) I think, on an important issue such as deconcentration, the Commission does have a programme, and it has a programme of the first wave, which I think is to be completed, Anthony, towards the end of this year; right, which includes a number of important recipients of Community assistance, including India, though not many in Africa, at this stage, that will come in the second wave. So there is a timetable for that change in structure. What we obviously need to see is a change in the actual impact of that assistance on the ground, as a result of those changes; the changes in improvements in the sort of country programming process, I think, are already becoming evident, we could discuss that, Anthony might want to say something about the detail of that.

  Chairman: This is not a question, it is just a statement really, we have got plenty of issues that we might like to discuss. Because, getting information from the NGOs and Members of the European Parliament and other groups, there are still plenty of criticisms, including lack of a clear statement of development policy, lack of a poverty-reduction focus, susceptibility of the development budget to changing political-cum-security conditions, excessive spending on middle-income near-abroad countries at the expense of low-income countries, confusing and overlapping structures and relations between different Directorates General, administrative inefficiencies which have led to the slow disbursement of funds, underspends and late payments to NGOs, and the lack of evaluation, learning or accountability. So perhaps during the rest of the morning we can work out just how much of that report is real.

Mr Robathan

  5. Mr Ireton, as you know, we have been on to this before, in fact, we have discussed this matter with you in the past, with you, as well, I think, Mr Smith, and so really we are revisiting this. And you said, well, you do not expect things to happen in one or two years, well, I have to say, I think one year is quite a long time, it is now over a year since the Statement on Development Policy, I think it is 11 months since the new set-up came into being, as I understand it. Do you think the Statement on Development Policy actually has provided sufficient focus, you say there has been progress, but what progress has there been following that Statement, in the mainstreaming of development issues, and to all sorts of other issues, particularly, of course, world trade issues, which we have been discussing recently, and to Qatar, or was it Dakar,—
  (Mr Ireton) Doha.

  6. Wherever it was, I was not there. But also environmental issues; because you will know we are going to be looking at climate change and development in our next inquiry, and I think this is where the whole development world should be progressing?
  (Mr Ireton) Can I try to take that in a sort of concrete way. First, the point the Chairman made about the allocation of total EC resources, clearly, from a DFID perspective, I think from HMG's perspective, is imbalanced, I do not think there is any disagreement with that. We have a clear objective that we would like to see a much larger proportion of EC spending in low-income countries. And, yes, the very large increases that have taken place in external spending over the last decade have been primarily to middle-income countries, the figures are very clear, the balance, indeed, in per capita terms, in terms of spending, is biased towards very much middle-income countries, compared to low-income countries. We have a current issue at the moment, which is going on, in terms of next year's budget, as to the proportion and amounts that should be going towards Asia, for example, bearing in mind the probable needs of Afghanistan and how things go there. So that is fairly clear, we can measure progress towards that over time. Not all our partners in Europe share our view on these matters, as you will appreciate, and the near-abroad agenda is clearly very important to many of those countries, and that will continue to be an issue for discussion. On the question of focus, the Development Policy Statement we thought was a major step forward in getting the Union, Member States, the Commission, to accept that the overarching purpose of these programmes, however it was implemented, was concerned with poverty reduction and development. And I do not think that should be underestimated, because there was a feeling amongst certain Member States that really some of these programmes were nothing to do with poverty reduction, they were to do with something rather different, whereas we tend to see, whatever the other considerations, that unless one is moving towards poverty reduction, and elimination over time, then these other goals will not be achieved effectively either; so, actually, if you can focus on poverty reduction, you are in, essentially, a win-win situation. Now the issue would then be how is it translated into country or regional programmes; and here I might ask Anthony, if he would, to say a word, because, in practical terms, that then starts developing into what are the Country Strategy Papers that are being produced, what is their quality, how well are they focused, and so on, and you can start tracking that, and through the various committee structures in Brussels we are able to make a contribution to that, both before they are formulated and at the time they are then formally considered. Could I ask Anthony to comment, do you want to say a word about how that is going?
  (Mr Smith) I think the issue of mainstreaming is crucial, because it is a lovely piece of paper, the Development Policy Statement, but not worth much unless it is implemented, and that is increasingly the focus of our work in DFID towards the Community, getting that Statement put into practice. I think there are a couple of things to point to. As always, in the Community, there is no single, clear, decision-making point for changing things, in the way that we want to change. You have to work on lots of different fronts which often are unco-ordinated and sometimes contradictory. I think one point is that, while we have that declaration, a joint Commission-Council declaration, we also have regulations in force, which have been adopted by the Community, governing individual programmes; so there is a regulation for the MEDA programme, for Asia, Latin America, for every regional programme, and other sectoral ones. And the way in which you can push the Development Policy Statement in a programme which already has a legal base is not easy, you have to persuade people over time that we need to adapt this legal text and adapt the way it is implemented to reflect the new policy which has been adopted; and there is often resistance and inertia, which means that it takes a long time to do that. One vehicle for doing it is the new structure of Country Strategy Papers. I think, along with the Development Policy Statement, the adoption last year of a standard framework for Country Strategy Papers in the Community was also a major step forward, both in the fact that they will now exist, that they have agreed that this should be a standard tool for managing their programmes, something which sets out their strategy and objectives and reduces the number of areas in which they work, but also the way in which the framework was developed, that it refers to poverty reduction, it refers to other donors. Which, again, is an advance for the Community, which has traditionally shunned collaboration with other donors, it is a process of opening up, and it refers to the need to consult both with Member States and with the partner Government and civil society, when drawing up these documents. We may come on to this later, but the establishment of a Quality Support Group within the Commission is also important, and the Quality Support Group, chaired by a very senior member of DG Development, has the task of scrutinising all of these Country Strategy Papers, as they appear, and providing guidance which applies across all programmes on how they are produced. And I think the reason I mention that is that they have seen it as important to mainstream the development policy declaration, so, as Country Strategy Papers come through, they give guidance that they need to take into account the Policy Statement, to explain how their programme is going, to promote the achievement of the International Development targets, how they are going to collaborate with other donors effectively, and, in an important way, gets the Community working much more in tune with the international agenda on development, that they have been left behind by, in many ways, over the past years.

  7. Thank you, that is extremely helpful, but could I stick with mainstreaming and the WTO and Doha and this current round. We have heard, from the ODI, amongst others, that what the developing countries want is agricultural reform, a reform of the subsidy system, above all else, and we are well aware that the EU is resistant to this, in parts, at least. Now the WTO has caused, as you know, from Seattle onwards, enormous hassle and headlines around the world; do you believe that this new Statement on Development Policy will influence the EU's behaviour, when it comes to considering agricultural reform in the context of WTO? Have we any evidence; we asked about mainstreaming, this is a critical issue?
  (Mr Ireton) We believe the Development Policy Statement should seriously inform the Community's approach to Doha, that that is absolutely right, and the UK's position on this is, I think, very clear. Just how successful we will be in getting Brussels to be taking a forward position on some of these very difficult issues, like the CAP reform, we do not know, at this stage; but our position on this and the Minister's position on it is very clear. And I think the Development Policy Statement does provide an important lever, in that respect.

  8. That is a fair answer and I wish the Secretary of State well in pursuing it. You have covered actually some of the questions I wanted to ask. It would be fair to say that there is not yet any commitment to the target of 70 per cent of EC development assistance allocated to the poorest countries by the year 2006, is there?
  (Mr Ireton) Only by us.

  9. No, I am talking about the other Member States?
  (Mr Smith) I think that is right. I think there is a pretty good commitment among a fair-sized group of countries to increasing, but I do not think that there is wide buy-in to the particular number.

  10. You have mentioned partner countries; partner countries, of course, may have different priorities, in terms of sectoral allocations. What do you think the EC development budget can do to ensure that its funds are spent on poverty reduction, when, of course, a partner country may have other ideas?
  (Mr Ireton) I think Anthony can come in on some of the specifics. The important thing, both for Commission and indeed our own programmes, is that, particularly in the poorer countries, we are backing a poverty reduction strategy which has been developed and owned by the Government. Now if we are all putting our funds and our expertise behind that, and that is a realistic and serious commitment to poverty reduction, then the issue as to what individual donors do, in some senses, becomes a second-order point, an important point but second order to having agreed the totality of domestic resources and aid resources that are available are seriously committed to a poverty reduction strategy. Within that, what we then encourage is that Brussels should focus on some areas of relative comparative advantage, in terms of its own contribution and the six areas that have been defined, which perhaps Anthony could say a word about. One of those is transport, where they have had historical comparative advantage, or certainly history, and another important area is more generally budgetary support, in support of an overall poverty reduction strategy and macroeconomic framework. And if that can be achieved and if also the Commission, as Anthony was saying a little earlier, is more open to not just having what is often called co-ordination and harmonisation within the European Union but also within the wider donor community, then we can achieve much more than we have done in the past. Do you want to refer to the six particular areas and how you think it is going to work out in a country context.
  (Mr Smith) Yes. The Commission, when it started its work on the development policy, proposed six areas in which it should focus its activities generally, and within any individual country it would limit itself to one or two of those areas, and they are set out in the development policy declaration: regional integration, trade, institutional capacity-building, transport, social sectors in the context of macroeconomic support, and food security, I think is the sixth. And those are areas where it feels it has some capacity; those cover a pretty broad range of issues, so it is not limiting itself too much, but it has said that it wants to be restrictive, which is good. And it needs to work out how, within each of those areas, it will contribute to poverty reduction; transport can be poverty-focused or not, and all donors have experiences of different quality programmes in those areas. But I think the key thing is what Barrie said, that it has to change the way it works, it has to work with other donors, has to back poverty reduction strategies, owned by the country, developed in a consultative way, involving civil society, that has some credibility, and it is not easy and it can take a long time to make them effective. But the systems that we are trying to promote within the EC are meant to ensure that the Community engages, as part of the wider donor community, in those poverty reduction activities and does not try to restrict itself to its own particular commercial interests, which has been a tendency in the past.

  11. Can I finally just ask, and you have mentioned the fact that it will take time, we understand the pressures there are, and indeed the Secretary of State has been pretty forthright, I think, one might say, on this matter, we have talked about 2006, but there is a tendency in the EU for things to be very, very slow and bureaucratic, and actually the world has moved on by the time they come round to where we thought we were. When would you expect to be able to report to this Committee, for instance, there might have been some significant changes; when does DFID want to see significant changes that they can talk about?
  (Mr Ireton) I would hope that in the next annual report that the Commission produce we will see evidence of some significant improvements, i.e. for the year 2002.

Ann Clwyd

  12. I hope you are right. As someone who was a Euro MP for five years, I know that change took place very slowly. I would not have thought it would take 20 years to achieve some of the changes that I thought would happen within five years when I was first a Euro MP. So I realise that the whole process is complex and difficult. But, nevertheless, there are some things, like having two Directors General, two Commissioners, for an area which I would have thought would be better co-ordinated under one department. It is a comment that we made when we visited this last time round. Can you envisage that happening, because I suspect that at least one of the Commissioners would very much like to see that happen and believes it essential to achieve any progress?
  (Mr Ireton) What to reply. I think, originally, before the decisions were taken, when there were many more Commissioners, we had in mind that one might be appropriate; a decision was taken that there will be two, we have now got to give that time to see whether that is going to work, and if it does not then to revisit the issue. But, for the moment, we have got two Directors General, Directorates, and we do have a more streamlined and, potentially, at least, streamlined management and administration, and we need to try to make it work, or come back.

  13. I must say, I am quite doubtful myself that it can work under two Commissioners, but we may be revisiting this year after year after year. I somehow suspect that we will be, I am not as optimistic as you are. There was one area of reform, which is conflict prevention; have you seen any impact of that reform on conflict prevention policies, or action, which you can point to?
  (Mr Smith) There is a lot of activity on conflict prevention and on work in post-conflict situations as well, in the EC, and some of them are new initiatives which have been promoted pretty much on the foreign policy side for response to crises. And we have been working to try to ensure that those initiatives take proper account of the contribution that development policy, which works, as you know, over a much longer term, should play in that area. Within development programmes themselves, I think there has been very limited change so far, I think that Mr Nielson, the Development Commissioner, has been hesitant at a time of major reform to promote simultaneously a major new area of expertise, which they have not traditionally had in the Community programmes, and here we are talking about rather specialised work on conflict assessments and particular activities, I do not know, to do with security sector reform, and things like that, where the Community has not had a lot of expertise. So he has wanted to go relatively slowly on that. Within the ACP area, the Cotonou Agreement, like Lomé before it, has a political dialogue element to it, which we think is at least an element which can be used to understand the political and other tensions within a country which will affect its long-term development. And the new provisions in Cotonou have not really been explored enough, and we have been asking for more discussion about how to do that, not so much the issue of stopping aid but more dialogue and consultation about issues that have arisen outside the normal development framework. So I think there is not major change at the moment. One of the areas in our new Strategy Paper, which we published, is to work with the Commission on conflict issues and to try to share some of the lessons that we have learned in our programmes about handling conflict and to try to develop, in a way that the Commission can handle, their expertise in this area.

Hugh Bayley

  14. Just one follow-up. To what extent will the development of a European common foreign and security policy marginalise development, and how do departments like yours, which do not want to see that, resist those pressures?
  (Mr Ireton) I do not see why that should marginalise development.

  15. I think, if the EU co-ordinates better and puts a greater focus on some common, shared foreign policy and security issues, I can imagine people putting greater pressure on some of the near-abroad problems, on issues like immigration, and so on, which may be sensible things for Europe to do, but if it is not putting as much effort on development and does not have a clear poverty focus in its common foreign and security policy then the timetable that Ann Clwyd was talking about is likely to slip further, is it not?
  (Mr Ireton) No. I accept fully and I think we are all aware of the dangers of that policy resulting in too great a concentration of development assistance, grant assistance, to relatively better-off, middle-income, near-abroad countries, that is an issue which we are grappling with and we have targets for; we have some, like-minded, who tend to agree with us. The issue, I think, that we face is to continue to explore how those foreign policy security issues are pursued through means other than large amounts of development assistance grants. There is a trade issue, for example, there is a political policy dialogue issue with our neighbours. There is a tendency for some Members in the European Union to think that that policy has to mean large amounts of grant assistance; we do not necessarily agree with that, we think there are other instruments that can be used and that the financial resources that are available through the Community should be distributed differently. That is undoubtedly where the main tension lies. In other respects, it seems to me, looking at it more generally, that if the Community is able to take a broad view of security and foreign policy issues of a longer-term nature then, arguably, it would point towards a greater concern with solving problems of poverty and injustice more broadly in the world.

  Tony Worthington: We have now got DG RELEX, DG Development and EuropeAid. We argued, and the Department argued, for a single department, as far as development is concerned, but the Commission set up something which split development into two, and then, having split it into two, brought it together again into EuropeAid. How is that working?


  16. I do not think our record can show the smiles, actually; I think the record ought to say, `showed broad, beaming smiles,' in the answer to that question.
  (Mr Smith) My smile was just because, it is such a big and fundamental question, do we have enough time to answer it. It is, I am afraid to say, too early to say whether it has worked, but there is, I would say, initial evidence that it has overcome some of the problems which existed 12, 18 months ago, in terms of the mechanics of implementation. You know that when they created EuropeAid they replaced the previous body, the SCR, the common external service, which was an implementing body as well for the external programmes. But EuropeAid has a much bigger slice of the implementation cake, so, essentially, the two headquarters departments, RELEX and Development, are meant to do just strategies, programming, they call it, so they write a Country Strategy Paper, then EuropeAid does everything else, so it decides on exactly what interventions will be appropriate to achieve the objectives of that strategy, it does all the contracting and manages the programmes. And I think that, even in this first 11 months, we have found that there has been a reduction in the number of steps that people have had to go through and the amount of shuffling backwards and forwards between Directorates that were needed; because, in the old days, the SCR only had a much smaller role at the end of the process and contracting, and they were constantly having to go back to the headquarters departments to resolve contracting issues. Now that EuropeAid has a bigger slice, most of those conflicts are resolved within EuropeAid, and therefore under a single management structure, and, on the whole, more easily. However, as I say, I think we know, from our own system, which is quite different, where we do it all ourselves, there are always issues to discuss throughout a project, a programme, from beginning to end, and the fact that you have the strategies separate does not mean that there is no need for dialogue between EuropeAid and the headquarters department. And that is the area where we will expect to see the test come, whether the communication will be good enough between EuropeAid and the headquarters department in ensuring that programmes, however well they are administered, they might be much quicker at making the payments and much more effective at getting contracts done, however effective the mechanics are, are they meeting the objectives that they have set and are they able to respond to changes in the context which will inevitably happen in almost any programme in difficult countries and difficult parts of the world.

Tony Worthington

  17. What I suspect might happen is that Nielson's department would be poverty-focused, with the ACP countries, but Chris Patten's department is going to be dominated by foreign policy issues, and that, therefore, there is not a very good structure, for example, for remedying the traditional imbalance, the lack of money going to those parts of the world, Asia, China and India, Pakistan, lack of money going to that part of the world because Patten's department will still be dominated by neighbours?
  (Mr Smith) That is a problem, and I think we need to tackle it in two ways. One by dealing with the issue that Mr Bayley raised, about CFSP, ensuring that people integrate development policy into foreign policy, essentially, this came up at the last Development Council, when The Netherlands Foreign Minister said the same thing, she was concerned about that same issue.

  18. But it never happened when the Foreign Office ran Development?
  (Mr Smith) That was before my time, I am afraid.

  19. It did not happen in this country, did it, when the Foreign Office had the ODA as a small entity?
  (Mr Ireton) I think I had better pass on that. I do not wish to be naïve about this, but there is a long-term congruence of foreign policy and poverty reduction, and the debate in Brussels, forget what ODA did or did not do, has got to be about that issue and about using the right instruments, whether it is trade, investment promotion, and so forth, in the near neighbours, to increase prosperity, reduce migration, if that is what countries are concerned about, rather than simply believing that large amounts of grant assistance is going to solve that particular problem, and using grant assistance, and it is always going to be a scarce resource, in those parts of the world that actually need it most. In a world, sorry to use the word cliché, but which is becoming smaller, instability, as we see in Afghanistan, is as important to the European Community as instability on the other side of the Mediterranean; and that is the debate that we have got to have, and we are not going to convert everybody overnight to this, but that is what we have set ourselves the task of doing.

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