UK 'should set up development bank' following Brexit

28 Feb 19

The UK should set up a development bank to fund long-term projects after leaving the European Union to stay a leading aid actor, an MP has urged.

Jeremy Lefroy, conservative MP for Stafford, was speaking at a debate on the future of the UK’s Department for International Development and its aid budget, where MPs called for both to be protected.

Lefroy said UK aid should not only be secured but expanded to fund more long-term projects, where there is a current “gap”.

He said: “Every other major development actor—the Germans, the French, the Japanese, the Brazilians and the European Union, of which we will no longer be a member—has a development bank, so it is important that we look at establishing one.”

This could help Britain support long-term projects that “cannot be funded through short-term grants”, he said. He did not give any more details about what a development bank would do or how it would operate.  

He told MPs: “Of course there is much more that can be done, including more scrutiny, and there are times when the work is not good enough, but the answer is not to abolish the department [DfID].

“The answer is to strengthen it, to scrutinise it and to ensure it does the job it was set up to do—to relieve poverty.”

The debate came after it was reported that secretary of state Penny Mordaunt said the commitment of giving 0.7% of national income in aid was unsustainable and fears have hiked over the idea that DfID be abolished and merged with the Foreign Office.

Tanmanjeet Singh Dhesi, the Labour MP who initiated the debate, said: “I have secured this debate because of deep concerns about the future of DfID and its funding, and threats to our proud tradition as a contributor of aid to the most impoverished places on the planet.”

Parliamentarians overwhelmingly agreed that the 0.7%, which accounts for around £14bn, should be protected and that DfID should not be abolished.

Gareth Thomas, Labour co-op MP for Harrow West, said: “We are one of the richest nations in the world. Surely we have a responsibility to help those in other countries who, through no fault of their own, live in terrible circumstances.”

He also said that as a result of the “huge commitment to international development”, Britain is “highly regarded” at the United Nations, the EU and the international sector.

The UK aid budget is one of the most scrutinised areas of government spending, with oversight from the International Development Committee, the Independent Commission for Aid Impact and the National Audit Office, the debate heard.

MPs taking part in the debate talked about the importance of DfID.

Jim Shannon, DUP MP for Strangford, said: “It is estimated that UK aid saves a life every two minutes, for less than a penny in every pound…If we ever needed a reason for DFID, the best reason I can think of is that it saves lives.”

Alex Chalk, Conservative MP for Cheltenham, questioned the aid budget, which he compared to the £4bn prisons budget. He said: “We can hold our heads high because we meet the commitment. The United States, France, Germany, Italy and Spain do not.

“This House must not fall into the trap of thinking that we are somehow skimping on our international obligations. Far from it. We stand comparison with any nation on earth.”

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