The Chief Secretary to the Treasury (Mr David Gauke)
I wish to update the House on how the Prosperity Fund has
supported global and UK prosperity in its first year and its
plans for future years. As we leave the European Union the
Prosperity Fund is a vital part of how the UK will be a
global, outward-looking nation that is confident on the world
stage and has strong, fruitful relationships with countries
around the world.
On 21 July 2016 I informed the House on the aims and
objectives of the £1.3 billion Prosperity Fund (HCWS104) and
a short paper was published on gov.uk that details how the
fund operates. The fund uses primarily Official Development
Assistance (ODA) resources to promote economic reform in
ODA-eligible middle income countries, which are home to 70%
of the world’s poor, contributing to a reduction in poverty.
Shared prosperity is a key part of the UK aid strategy. The
fund has a secondary benefit of opening up opportunities for
international, including UK, business.
Projects are focused on countries and sectors identified
through cross-Whitehall economic analysis as being those
areas with large numbers of people living in poverty,
potential for inclusive growth and where UK expertise can
make a real difference.
As set out in the fund’s spending round 2015 settlement
letter, the fund is 97% ODA with a small non-ODA allocation.
ODA projects must meet the primary purpose to support poverty
reduction and promote sustainable economic growth.
The strategic direction for the fund is set by a
cross-Government Ministerial Board supported by a director
level portfolio board composed of representatives from key
departments. This structure reflects the cross-Government
nature of the fund and ensures that programmes deliver value
for money and support Government objectives. Accounting
Officers remain responsible for ensuring the value for money
of programmes funded by the Prosperity Fund.
The Ministerial Board has met nine times since January 2016.
These regular meetings have allowed it to respond promptly
and flexibly to changing circumstances—for example endorsing
increased funds to trade related projects after the EU
referendum.
The Prosperity Fund has continued to refine its systems and
processes throughout the first year in order to ensure that
it succeeds. It has acted on positive feedback and helpful
advice from the Infrastructure and Projects Authority, the
National Audit Office, and, most recently, the Independent
Commission for Aid Impact (ICAI).
We welcome this external scrutiny as an opportunity to test
the portfolio and management systems with independent
experts. As stated in our formal management response to the
ICAI review, the Prosperity Fund accepts and is implementing
their recommendations, many of which it had already
identified through its own internal reviews.
Year one of the Prosperity Fund was designed as a transition
year. The Ministerial Board allocated £55 million of ODA to
projects in a range of ODA eligible countries including
China, India, Brazil, Mexico, Colombia, Indonesia, Nigeria
and South Africa and in areas such as financial services,
infrastructure, business environment, energy, and trade and
regulation. It also allocated £5 million of non-ODA in
support of Government prosperity objectives in both
ODA-eligible countries and developed markets.
In South Africa, electricity shortages have cut GDP by 2% in
recent years. The Prosperity Fund piloted an innovative
British technology to help address this, enabling local
government, universities, businesses and utilities to save a
minimum of 15% on their electricity consumption.
In Brazil, the work of the Prosperity Fund has been recently
celebrated in national media as an example of the importance
of international co-operation to tackle transnational bribery
and reduce corruption, and has helped to shape the recently
approved “10 Measures against Corruption” law in Brazil.
The Prosperity Fund financed the former Prime Minister’s
anti-corruption summit in May 2016 which brought together
world leaders, business and civil society to agree measures
to reduce corruption. The fund has also placed the UK at the
forefront of delivering international commitments to tackle
corruption such as setting up the International
Anti-Corruption Co-ordination Centre, financed by the
Prosperity Fund and hosted by the UK’s National Crime Agency.
The fund is committed to meeting the UK Government
transparency commitments on ODA spend. Details of all year
one programmes will be released on gov.uk in mid 2017 and an
annual report on the first year will be issued by autumn
2017.
The majority of the Prosperity Fund will be allocated to
large, high impact, multi-year programmes. To date 18 such
programmes have been endorsed by the Ministerial Board and
are now being developed by UK Government Departments
including HM Treasury, the Department for International
Development and the Foreign and Commonwealth Office. Many
other Government Departments are involved in the design and
delivery of individual programmes.
These programmes include country specific work in South
America and Asia, regional programmes in South East Asia, and
multi-country, sector specific programmes on trade reform,
insurance, education and anti-corruption. The focus of all
programmes is high impact and value for money. We expect the
first of these to launch later in the year.
We will refresh our gov.uk page with more information on the
fund following this update and will continue to develop these
pages as the fund progresses, including with information on
programmes as they launch.
