Documents considered by the Committee on 20 June 2012 - European Scrutiny Committee Contents


12   Increasing the impact of EU development policy

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15560/11

+ ADDs 1-2

COM(11) 637

Commission Communication: Increasing the impact of EU development policy: An Agenda for Change

Legal base
DepartmentInternational Development
Basis of considerationMinister's letter of 6 June 2012
Previous Committee ReportHC 428-xli (2010-12), chapter 6 (9 November 2011); also see (32174) 16146/10: HC 428-xi (2010-11), chapter 18 (15 December 2010)
Discussion in Council14 May Development Foreign Affairs Council
Committee's assessmentPolitically important
Committee's decisionCleared

Background

12.1  The 2005 European Consensus on Development (signed jointly by the Council, the Commission and the European Parliament under the UK's EU Presidency) sets out a clear framework for EU development policy focused on poverty reduction and achieving the Millennium Development Goals (MDGs) and is based on best practice principles for delivering aid.

12.2  The Consensus identifies shared values, goals, principles and commitments which the European Commission and EU Member States will implement in their development policies, in particular:

—  reducing poverty, particularly focussing on the MDGs;

—  development based on Europe's democratic values (respect for human rights, democracy, fundamental freedoms and the rule of law, good governance, gender equality, solidarity, social justice and effective multilateral action, particularly through the UN); and

—  developing countries to be mainly responsible for their own development (national strategies developed in collaboration with non-government bodies, and mobilising domestic resources; EU aid aligned with these national strategies and procedures).[107]

The earlier Green Paper

12.3  In November 2011, the European Commission Development Commissioner, Andris Piebalgs, announced his intention to update the EU's development policy and, depending on the outcome of a Green Paper consultation (which was to run until 17 January 2011), that he might choose to launch a full review of the Consensus in late 2011, aiming to conclude in 2012.

12.4  The Green Paper considered how to update the EU's development policy so as to improve its impact and increase its focus on economic growth as a driver of sustainable development.

12.5  In his Explanatory Memorandum of 24 November 2010, the Minister of State at the Department for International Development (Mr Alan Duncan) noted that the Green Paper posed questions covering a range of EU development policies, focusing on the following areas:

—  Putting 'High Impact' cooperation into practice: Should the EU and Member States develop guidance setting out conditions to be met (for example, on coordination and results) before any programmes can be implemented? How should different aid flows (for example, from public and private sources or different EU budget instruments) be managed together?

—  Growth for human development: How can the EU and Member States ensure that aid for health and education contributes to human development and growth? How should the EU support skills development, for example through its approach to migration?

—  Promoting Governance: How should the EU adapt its development policy to support governance reforms in partner countries, with greater incentives for reform? How should the EU promote more robust results monitoring?

—  Security and Fragility: How should the EU intervene in fragile and conflict-affected States, coordinating short term conflict or crisis response with longer term development?

—  Making coordination of aid a reality: How can the EU promote aid effectiveness and make European Country Strategy documents a reality?

—  Policy Coherence for Development: How can policy coherence be improved and measured?[108]

—  Partnerships for inclusive growth: How should the EU support industrial investments in partner countries, e.g. in the extractive or post-extractive sectors? How can the EU better protect social and economic rights, such as labour standards? How can the EU help partner countries to promote a business-friendly environment, especially for small and medium sized enterprises? How can the EU support low cost finance and financial guarantees? How can EU funding promote innovation and technology transfer in partner countries?

—  Fostering regional integration: How can the EU's experience inform regions seeking to strengthen their integration?

—  Continuing to ensure trade for development: How can the EU improve aid for trade provisions and ensure consistency between its trade and development policies?

—  Climate change, biodiversity and development: How can climate adaptation and disaster risk reduction be mainstreamed into the EU's development policy?

—  Energy and development: How can the EU help partner countries to secure sustainable energy for their citizens, combining climate change funding and leveraged loans from Development Finance Institutions?

—  Agriculture and food security: How can EU development policy better support food security and stimulate sustainable intensification of agriculture, fishing and aquaculture? How can the EU support the fight against malnutrition?

12.6  The Minister went on to say that it was not currently clear whether the Green Paper consultation was intended to focus only on growth, or cover the entire remit of EU development policy. He saw the broad remit of questions as suggesting a wholesale review, although also noted that the title of the Green Paper and discussions with Commission officials put the emphasis on growth.

12.7  The Minister also noted that similar consultations were presently being run on the EU's approach to Budget Support,[109] while those on the future of the EU's external financial instruments had yet to be officially launched. The Commission had, he said, indicated that all these consultations would feed into a Communication in autumn 2011, at which point a decision would be taken on whether to open up the European Consensus on Development for a full review.

12.8  The Minister saw this consultation process as an important opportunity to influence emerging EU priorities on development. He welcomed the focus on sustainable growth and wealth creation in the Green Paper and reference to the private sector as a key driver of growth, which he said was an area in which the Department for International Development was stepping up its efforts. He also welcomed the increased focus on demonstrating the impact and results achieved by EU development aid. However, he was concerned that a major review of the Consensus in the current climate could downgrade its poverty reduction focus and undo the achievements of 2005. In addition to focusing on growth and the private sector, he would want any potential review of the Consensus to ensure that EU development policy continued to prioritise poverty reduction and the MDGs, certainly the most off track ones like maternal mortality, as well as press for a stronger focus on ensuring value for money from the EU's aid budget; and it should also embrace the EU's future role in combating climate change and preventing conflicts across the globe.

12.9  In the short term, the Minister noted that general discussion on the Green Paper was scheduled for the 9 December 2010 "Development" Council, and that the Government would provide written comments on the Green Paper (consulting other Government Departments, including the Foreign and Commonwealth Office and Department for Business, Innovation and Skills) and work closely with the Commission and other EU Member States through experts' groups and officials' meetings to steer the emerging Communication.

Our assessment

12.10  We reported this development to the House because of the importance of the subject matter and also drew it to the attention of the International Development Committee.

12.11  We asked the Minister to write to the Committee in due course about the outcome of his Department's consultations and the Government's response.

12.12  In the meantime, we cleared the Green Paper from scrutiny.[110]

The Minister's letter of 2 March 2011

12.13  On 2 March 2011, the Parliamentary Under-Secretary of State at the Department for International Development (Mr Stephen O'Brien) wrote to update the Committee on his Department's responses to the Commission's recent consultations on development policy and budget support, and to set out the then Hungarian EU Presidency's development priorities.

12.14  With regard to EU development policy, the Minister said that the Government's response emphasised that it should:

  • stay focused on poverty reduction;
  • promote economic growth and the role of the private sector;
  • demonstrate clear results;
  • improve aid transparency;
  • ensure coherence between development and wider EU policies;
  • meet commitments on aid volumes;
  • review the EU approach to aid effectiveness and strategic partnerships.

12.15  The Minister also attached a copy of the Government's full response, as set out in a 3 February 2011 letter to the EU Development Commissioner, Andris Piebalgs.

12.16  As the Minister's lengthy letter and attachments were also copied to the chair of the International Development Committee, we decided that a further Report to the House at that point would be otiose.

The Commission Communication

12.17  In his Explanatory Memorandum of 28 October 2011, the Minister recalled that the aim of the consultation, to which he says the UK provided significant input, was to launch a public debate on how the EU could best support developing countries in mobilising their economic, natural and human resources in support of poverty reduction strategies. The Minister noted that, as well as providing written comments on the Green Paper, the UK worked closely with the Commission and EU Member States through expert groups and officials' meetings to steer the direction of the Communication; and in so doing, pushed for a strong focus on demonstrating impact and results achieved by EU development aid as well as ensuring strong engagement with the private sector as a driver of growth.

12.18  The Minister went on to say that the consultation confirmed the relevance of the existing policy framework, but agreed on the need to increase impact, with a convergence of views on ensuring:

  • a strong poverty focus;
  • the EU achieves its commitments on ODA;
  • greater transparency of EU aid;
  • the importance of inclusive growth for human development;
  • the adoption of a differentiation approach, with resource allocation based on partner countries needs and capacities;
  • the achievement of clear development results;
  • good governance;
  • the importance of country ownership; and
  • private sector engagement.

12.19  The Communication set out a more strategic EU approach to reducing poverty, including through a more targeted allocation of funding. It noted that the EU is "not simply the 28th European donor", implementing 20% of the EU effort, but "also acts as coordinator, convener and policy-maker."[111] To be fully effective, the Commission said, "the EU and its Member States must speak and act as one to achieve better results and to improve EU's visibility."[112]

12.20  Against this background, the Commission contended that the EU must seek to focus its efforts where it can have the greatest impact and concentrate development cooperation in support of:

—  human rights, democracy and good governance; and

—  inclusive and sustainable growth.

12.21  With this in mind, the Commission laid out an Agenda for Change (see Annex to this chapter of our Report). To ensure best value for money, this should be accompanied by differentiated development partnerships; coordinated EU action and improved coherence among EU policies. The main proposals are:

—  Differentiation of partnerships and aid allocations and mechanisms: target aid based on where it is needed for poverty reduction and where it will have the greatest impact. In particular, focus on the EU neighbourhood and sub-Saharan Africa. The Communication details criteria for differentiation which includes: a) Country needs; b) Capacity (the ability of the country to generate financial resources and their aid absorption capacity); c) Commitments and Performance; and d) Potential EU impact;

—  Fragile situations: specific forms of support for fragile States from the EU should be defined to enable recovery and resilience; country-based decision-making will give the EU the flexibility to respond to unexpected events and shocks;

—  Human Rights, Democracy and Good Governance: EU support to governance should feature more prominently in all partnerships and further focus on partners' commitments to human rights, democracy and the rule of law; the mix and level of aid should therefore depend on the country's situation, including its ability to conduct reforms;

—  Inclusive and Sustainable Growth for Human Development: the EU should encourage more inclusive growth through sectors such as social protection, health and education and through doing so promote a "green economy"; there should be continued support for social inclusion and human development, including implementing the Gender action plan;

—  Business Environment, Regional Integration and World Markets: the EU should support the development of competitive local private sectors with a greater focus on investing in drivers for growth and job creation; also further develop blending mechanisms to boost financial resources for development with a greater focus on innovative financial tools;

—  Coordinated EU action: the EU should give further consideration to Joint Programming as a way to reduce fragmentation and increase its impact proportionally to commitment levels; programming should be synchronised with the strategy cycles of partner countries where possible; and also work towards a common EU results reporting framework; and

—  Policy Coherence for Development (PCD): intensify the EU's joined-up approach with more PCD through new thematic programmes especially in regards to security and poverty.

12.22  The Commission concluded with a section on Embracing The Agenda For Change, in which it called on the Council to endorse the proposed Agenda for Change that it says seeks to:

—  equip the EU with high-impact development policy and practice for the coming decade and give it a leading role in setting a comprehensive international development agenda up to and beyond 2015; and

—  support the change needed in partner countries to bring about faster progress towards poverty reduction and the MDGs.

12.23  The Commission said its services and the European External Action Service will ensure that the guiding principles set out in this Communication are progressively reflected during the remainder of the current programming cycle and in future programming documents, as well as in the proposals regarding the architecture, legislation and programming of future financial instruments for external action; and urged Member States also implement the Agenda.

The Government's view on the Communication

12.24  The Minister began by noting that the Communication did not represent further decision-making powers granted to the EU — "rather its intention is to improve the effectiveness of existing EU aid", and "to improve the impact of EU development cooperation in support of a) human rights, democracy and other key elements of good governance, and, b) inclusive and sustainable growth for human development."

12.25  The Minister said that he supported the emphasis that the Commission put on improved value for money through a differentiated development partnership based on the needs, capacities and commitment of the partner country and the potential impact of EU's support, and its call for improved coordinated EU action and coherence among EU policies; and that he would work closely with Commission, European External Action Service (EEAS) and Member States to implement these policy changes.

12.26  Overall, the Minister said, the Communication was broadly in line with UK priorities and he professed himself pleased with the focus on poverty reduction and targeting aid to where it will have most impact. The Communication is, he said, in line with the UK priority for aid to be based on individual country needs and priorities.

12.27  The Minister then commented on the notion of greater EU coordination at country level as follows:

"there is a clear value for money rationale in doing so. However, we are not satisfied with the EC's suggested Joint Programming approach in its current form. The UK's view is that the EU approach needs to be country-led, pragmatic, flexible and open to others who are willing to align around partner country led dialogue and coordination. This is reflected in the Communication stating that the process will be country-led and will support partner country strategies. The UK has made this clear to the EC and Member States from the outset that this process should not be led by the Commission in Brussels — there is evidence that this increases transaction costs in partner countries. We will continue to work with the EU, alongside like-minded Member States such as Sweden, Denmark and the Netherlands, to make sure coordination will be country-owned, transparent and have a focus on results."

12.28  The Minister then recalled that a key priority for the UK, as outlined in DFID's Multilateral Aid Review 2011, was improving the results focus, value for money and the transparency of the Commission:

"The Communication has a strong focus on results and the need to develop a results framework and improved monitoring. The UK will continue to engage with the EC and like-minded Member States to ensure that the new emphasis on EU results leads to a more effective EC with the ability to demonstrate development results."

12.29  Looking ahead, the Minister said:

—  there has been no consultation process on his Explanatory Memorandum but he will be consulting with other Government Departments, including the Foreign and Commonwealth Office, in working with the Commission on the policy changes it proposes;

—  Council Conclusions are expected in the first half of 2012.

Our assessment

12.30  We discerned a distinct undertone of the Commission calling the other Member States to order in this Communication — for example, its description of itself as "not simply the 28th donor" but the "coordinator, convenor and policy-maker" — and wondered if it was this that the Minister had in mind when noting that he had sought to make it clear that a dirigiste approach from Brussels was not the right one. That he did not expect early Council Conclusions on the Communication suggested that this discussion was not yet concluded.

12.31  That being so, we continued to retain the document under scrutiny until the Minister was able to let us know what shape he expected those Conclusions to take, and whether or not he expected them to endorse the proper balance that he was seeking.

12.32  Given the importance of the policy under discussion, we also made use of our power under Standing Order No. 143 (11) to request an opinion on the Commission's approach from the International Development Committee.[113]

The Minister's letter of 27 April 2012

12.33  The Minister said that, as they were nearing finalisation following discussions in CODEV (the Council working group on Development Cooperation) and will be adopted by Development Ministers at the 14 May Development Foreign Affairs Council, he was now in a position to update the Committee on the shape of the Council Conclusions.

12.34  He said that, from the outset, his negotiating position has been fully in line with his 28 October 2011 Explanatory Memorandum, and continued as follows:

"As in the Commission Communication, the proposed outcome of the Council Conclusions is broadly in line with UK priorities, including a strong focus on poverty reduction and targeting aid to where it will have the most impact. As a result of significant UK lobbying, there is a strong emphasis on results, transparency and value for money — all of which are UK priorities for EU aid. Furthermore, as stated in the EM, we are determined to ensure the EU achieves its commitments on Official Development Assistance (ODA) and engages further with the private sector. Specific priorities for the UK have been to ensure that vulnerable small island states are protected in future EU funding and that middle-income countries graduate away from bilateral grants. As negotiations conclude, we will continue to press for the EU to adopt a differentiated approach with a greater focus on low-income countries.

"The UK has made good progress on influencing the Council Conclusions — particularly concerning the one issue of contention. On Joint Programming, we are content that the approach suggested in the Council Conclusions reflects the UK's view and that any form of proposed EU coordination will be country-led, pragmatic, flexible and open to others. Throughout negotiations, the UK has worked uncompromisingly and tirelessly to ensure that we retain our sovereign decision-making."

12.35  The Minister concluded by saying that he will continue to work closely with the Commission, European External Action Service and Member States to ensure that UK views are reflected as discussions conclude.

12.36  In its response of 16 May, the Committee said that it welcomed in particular that the Minister would be pressing for a greater focus on low income countries, and asked him, after the Foreign Affairs Council meeting, to send it a copy of the Conclusions and illustrate how they did indeed reflect UK positions and protect UK sovereign decision making in the way that he anticipated.

12.37  The Committee also said that, by the time he replied, it expected to be able to take into account the Opinion that it had sought, in its report of 9 November 2011, from the International Development Committee on this important policy document.

12.38  On 27 April, the International Development Committee published a report on EU Development Assistance. At that time, the Chair of the Committee said:

"British taxpayers want the aid they give to go to the places where it can make the most difference — to countries where millions of people are getting by on less than a pound a day.

"Giving aid to relatively rich countries like Turkey could devalue the concept of aid."[114]

12.39  The International Development Committee noted that the UK spends approximately £1.23 billion each year on aid through the European Union, approximately 16% of the UK's total aid budget; and observed that only 46% of this aid, however, goes to low income countries — a figure that the Committee said was "unacceptable" — and that, instead middle income countries bordering Europe are benefiting (Turkey having consistently been in the top five recipients of European Commission aid (€223 million in 2010) as has Serbia (€218 million in 2010)). [115]

The letter of 21 May 2012 from the Chair of the International Development Committee

12.40  The letter reads as follows:

"In your Committee's 46th Report of the last Session you referred the Commission's Communication on: Increasing the impact of EU development policy: An Agenda for Change to the International Development Committee for an Opinion, using your powers under the House's Standing Orders.

"In the last Session of Parliament the International Development Committee published a report on EU Development Assistance — the sixteenth report from the Committee —which the Committee invites you to treat as its Opinion.

"The report came to a number of conclusions relevant to the Communication, in particular on the following items:

  • 'Targeting resources where they are most needed and differentiated development partnerships' — the Committee concluded that too little of the EU's ODA was spent on the poorest people and the poorest countries and too much on higher middle income countries bordering Europe; it also found that the Commission spreads its aid too widely and this leads to inefficiencies, including high administrative costs. DFID should press the European Commission to reduce further the number of countries it has programmes in.
  • Joint programming — The Committee had concerns that, although joint programming had the potential to prevent the overlap of Member State bilateral programmes and reduce transaction cost for recipient countries, the European Commission did not necessarily have the capacity or the expertise to lead the coordination. The lead donor who coordinated policy for bilateral donors should be the one with the most experience in the area and a proven track record.
  • Policy coherence — Greater policy coherence in Europe on development is a worthy aim. There has been a slight improvement in the trade agenda and the Minister is optimistic on the potential for coherence between Climate Change and Development policies. However, the reform of the Common Agricultural Policy (CAP) could do more good than anything else. DFID should press Commissioner Piebalgs to engage widely in Europe on development, challenging those with vested interests in the CAP and who oppose its reform."

The Minister's letter of 6 June 2012

12.41  The Minister encloses the Council Conclusions ("Improving the EU's contribution to development in a global world")[116] and says that they reflect the UK priorities set out in his Explanatory Memorandum and in his letter of 27 April 2012, and reaffirm the EU commitment of eradicating poverty and the key role Official Development Assistance (ODA) continues to play in the EU achieving its development aid targets, including the collective 0.7% ODA target to be reached by 2015.

12.42  The Minister then continues as follows:

"Throughout the discussions the UK lobbied for a strong emphasis on results, transparency and value for money — all of which are reflected in the Council Conclusions. They also recognise the importance of the private sector and wealth creation. EU development policy will need to enable a business environment that encourages private sector participation and looks at ways of increasing regional integration so as to develop and expand existing markets.

"Following UK pressure, the Council Conclusions propose that future partnerships between the EU and partner countries now have a differentiated approach. This will allow the EU to adapt its support to a country's situation but still permit it to monitor a country's progress on its commitments and record on the key principles of human rights, democracy and the rule of law. By implementing these new approaches the EU will be able to assess more effectively a partner countries' ability to conduct reforms and meet the needs of its people.

"The Council Conclusions reflect the UK's view that any form of proposed EU coordination will be country-led, pragmatic, flexible and open to others, in line with international consensus agreed in the Busan Partnership for Effective Development Cooperation. Future EU coordination, including joint programming, will take into account the existing agreed international and EU commitments.

"The Coalition Government will continue to work uncompromisingly and tirelessly to ensure that the UK retains its sovereign decision-making and continues to hold EU Development Institutions accountable for the delivery of EU development aid."

Conclusion

12.43   The picture having now been completed, we are content to allow interested Members to pursue the important issues covered in the Commission Communication, and in the Council Conclusions, in the many ways open to them.

12.44  With that in mind, we are forwarding a copy of this chapter of our Report to the International Development Committee.

12.45  We also now clear the Commission Communication.

Annex: Commission Agenda for Change[117]

"The Commission proposes an Agenda for Change that would lead to:
  • "an increased share of EU country and regional cooperation programmes dedicated to the policy priorities given in sections 2 and 3 below;[118]
  • "the concentration of EU activities in each country on a maximum of three sectors;
  • "an increased volume and share of EU aid to the countries most in need and where the EU can have a real impact, including fragile states;
  • "enhanced importance of human rights, democracy and good governance trends in determining the mix of instruments and aid modalities at country level;
  • "continued support for social inclusion and human development through at least 20% of EU aid;
  • "a greater focus on investing in drivers for inclusive and sustainable economic growth, providing the backbone of efforts to reduce poverty;
  • "a higher share of EU aid through innovative financial instruments, including under facilities for blending grants and loans;
  • "a focus on helping reduce developing countries' exposure to global shocks such as climate change, ecosystem and resource degradation, and volatile and escalating energy and agricultural prices, by concentrating investment in sustainable agriculture and energy;
  • "tackling the challenges of security, fragility and transition;
  • "joint EU and Member States response strategies based on partners' own development strategies, with a sectoral division of labour;
  • "a common EU results reporting framework;
  • "improved Policy Coherence for Development, including through new thematic programmes that build synergies between global interests and poverty eradication."




107   See http://ec.europa.eu/europeaid/what/development-policies/european-consensus/index_en.htm for further information. The text of the Consensus is available at http://ec.europa.eu/development/icenter/repository/european_consensus_2005_en.pdf. Back

108   The EU seeks to build synergies between policies other than development cooperation that have a strong impact on developing countries, for the benefit of overseas development (Policy Coherence For Development, or PCD). In 2005, the EU agreed to apply the PCD approach in 12 policy areas that could accelerate progress towards the Millenium Development Goals For Development: trade, environment and climate change, security, agriculture, bilateral fisheries agreements, social policies (employment), migration, research/ innovation, information technologies and transport and energy. The European Commission reports every two years on progress made on PCD by the EU in the 12 areas. The aim is to encourage continual progress, based on feedback from developing countries, Member States, civil society and the European Parliament. For full information on PCD, see http://ec.europa.eu/europeaid/what/development-policies/policy-coherence/index_en.htm. Back

109   For the Committee's consideration of that other Green Paper, see (32105) 15240/10: HC 428-viii (2010-11), chapter 11 (17 November2010).AndforitsconsiderationofthesubsequentCommissionCommunication,see(33245)15561/11:HC428-xl(2010-2012),chapter3(2November2011). Back

110   See headnote: (32174) 16146/10: HC 428-xi (2010-11), chapter 18 (15 December 2010). Back

111   COM(11) 637, p. 3. Back

112   Ibid. Back

113   See headnote: HC 428-xli (2010-12), chapter 6 (9 November 2011). Back

114   See press release: http://www.parliament.uk/business/committees/committees-a-z/commons-select/international-development-committee/news/substantive-eu-dev-report-press-release/. Back

115   Ibid. Back

116   The Council Conclusions are available at http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/EN/foraff/130243.pdf. Back

117   See pp. 4-5 of the Communication. Back

118   "Human Rights, Democracy and other key elements of Good Governance" and Inclusive and Sustainable Growth for Human Development". Back


 
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