I am pleased to be able to update the House on the Government’s significant recent achievements in modernising the global definitions of Official Development Assistance.
No task is more urgent than ending extreme poverty. Our aid saves lives and brings hope to people who have none. It is right that that we have clear, common international rules about what counts as aid. The UK is a firm champion of the rules-based international system. As one of the few leading countries to honour our promise to invest 0.7% of national income as aid, it is in our interests to ensure that the quality, poverty-focus and value for money of other countries’ aid investments match our own high standards.
The world is changing rapidly, with extreme poverty now increasingly concentrated in fragile states, and climate change increasing the risks of natural disasters. The global rules that govern aid spending - agreed by the 30 leading donors comprising the OECD Development Assistance Committee - were first set over 40 years ago. We are determined to ensure that they remain up-to-date and effective in the face of the complex challenges of the 21st Century.
As a country that plays by the rules, we take a leading role in influencing and shaping these rules. We committed in our manifesto to work with like-minded countries to change the rules so that they are updated and better reflect the breadth of our assistance around the world. At a meeting of leading donors earlier this week, the UK delivered on this commitment.
The UK has argued for flexibility in the rules for how the world responds to catastrophic humanitarian crises such as the recent hurricanes in the Caribbean, and how the rules can properly recognise the unique vulnerabilities of Small Island Developing States. As a direct result of the UK raising this issue, the DAC has for the first time agreed on the need to create a new mechanism to re-admit countries that had graduated from ODA eligibility back to the list of ODA-eligible countries, if their GNI per capital falls low enough, for example as a result of a catastrophic natural disaster or other crisis. This addresses a long-standing gap in the rules and recognises the fact that development is not linear.
In addition, members of the DAC have agreed to establish a process which could allow previous ODA recipients to receive short-term ODA support in the event of catastrophic humanitarian crises, such as the recent hurricanes in the Caribbean, even where their Gross National Income per capita would normally rule them out of receiving ODA. This is a significant and welcome step, and a clear response to the UK’s work on this issue.
We have also achieved changes that more than double the amount of our multilateral contribution to UN peacekeeping operations we can count as ODA, from 7% to 15%. This will help incentivise stronger international support for such missions. This is important because people cannot pull themselves out of poverty when they are surrounded by war and violence - and global stability helps prevent the chaos in which terrorists and extremists thrive.
Further, we have secured changes that recognise that 85% of the UK’s contribution to the Asian Infrastructure Investment Bank can count as Official Development Assistance for 2016 – a critical acknowledgement of this organisation’s important work to boost investment across a range of developing countries.
As a result of these changes, we have formally confirmed that over £100 million of UK government spending will be classified as ODA this year and count towards the 0.7% target.
This set of changes builds upon an ambitious set of reforms to the ODA rules that the UK government has already delivered in recent years. The meeting in Paris this week confirmed previous reforms that will ensure that a wider range of military activities - such as demining - can count as aid, and recognition that certain types of work to tackle violent extremism should count as aid.
Over the long term, we want to continue to build consensus for further reforms that support delivery of the Sustainable Development Goals. We will work with the DAC to examine whether the ODA rules could do even more to better incentivise and capture the development effects of UN-mandated peacekeeping activity that creates the necessary conditions for sustainable development. The system should properly recognise the contribution of the multilateral system to poverty reduction – especially that of the Commonwealth. We would therefore support a review of both the UN and Commonwealth Secretariat’s regular budgets in order to better capture their ODA eligible activities. Further, we believe the DAC can do more to ensure that other countries’ aid meets the same high standards on gender equality and transparency that the UK’s aid does. We will work on these issues over the coming years.
Taken together, we believe that the new steps this week - on UN peacekeeping, support to the AIIB, assisting counties hit by disasters, and re-admitting countries which fall back into low-income status, including as a result of catastrophic crises - represent very significant achievements. Combined with the important reforms which were agreed last year, these successes demonstrate that, when we work patiently and constructively with international partners, we can drive through important changes and get these rules updated. Over the coming months and years, the UK will continue to work in a patient and constructive spirit to maximise the impact of the significant reforms which have been agreed, and to secure further progress. Our commitment to maintaining the integrity of the global rules remains strong. And our objective, throughout all our efforts, will be to deliver the best possible outcomes for the world’s poorest and most vulnerable people.