Draft International Development Association (Twenty-First Replenishment) Order 2025
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The Parliamentary Under-Secretary of State for Foreign, Commonwealth and Development Affairs (Chris Elmore)
I beg to move,
That the Committee has considered the draft International Development Association (Twenty-First Replenishment) Order 2025.
It is a privilege to serve under your chairmanship for the first time, Mr Western. The draft order, which was laid before the House on 11 September, will permit the UK Government to make financial contributions to the World Bank’s International Development Association up to the values stated in the order. The International Development Association, or IDA, is the largest source of grant and concessional finance for the world’s poorest countries and plays a vital role in supporting growth, tackling poverty and getting the sustainable development goals back on track.
The external financing needs of low-income countries are growing, but progress on global poverty reduction has stalled following high inflation, low growth and increasing fragility. Poverty today is also increasingly concentrated, with more than 70% of the global population in extreme poverty living in countries supported by IDA. This is exacerbated by protracted crises, regional conflict and the effects of climate change. Addressing those challenges will become increasingly important for achieving our objectives on migration, growth, security and development.
IDA is normally replenished by donors every three years, and following negotiations throughout 2024, the UK and other donors agreed to a $100 billion IDA21 replenishment, the largest yet. The UK has committed to increase our pledge by 40% to £1.98 billion over the next three years, positioning us as the third-largest donor, after the US and Japan. The decision to protect the UK’s pledge, despite reductions to the official development assistance budget, is a testament to the UK’s new approach to development: delivering value for money for the British taxpayer and maximum impact for the most vulnerable overseas. That means prioritising spending through the most impactful multilateral organisations.
IDA delivers excellent value for money for UK taxpayers. The use of an innovative financing model, which combines donor contributions with income from loan repayments and borrowing from the markets, means that every £1 we put into IDA generates over £4 for its borrowers. The UK has also agreed a new way to make payments that reduces costs to UK taxpayers. By paying our contribution to IDA on an accelerated timeframe, we will get a discount from the bank. That is because it reduces the amount that the bank needs to borrow from financial markets in the short term. That means the UK will pay around 10% less, while providing the same value to the bank.
The UK has also pushed IDA to use more of its own resources than ever before. The bank’s middle-income-country lending arm will transfer $2.8 billion to IDA21—three times higher than IDA20—and the bank’s private sector arm will use $500 million to support IDA21. IDA not only provides good value for money but is one of the most impactful development organisations. In the last year alone, it has supported 81 million people in receiving essential health and nutrition services and provided 23 million people with new or improved electricity services, while 12 million benefited from interventions to help to create more jobs.
Through the IDA21 negotiations, the UK also secured important new commitments from the bank to ensure that IDA delivers even greater impact: deepening support to fragile and conflict-affected states and improving the association’s staffing in fragile countries, which will also help to tackle the root cause of migration; improving disaster preparedness and scaling up access to ready-to-use insurance-type financing for emergency response; creating more jobs and expanding private investment while increasing accountability on progress; and supporting the advancement of gender equality through the implementation of a new gender strategy and the inclusion of a new target for sexual and reproductive health rights interventions in 35 countries.
IDA also plays a leading role in supporting IDA countries to build resilience to climate change, with 45% of its financing going to tackling climate change, at least half of which will help countries to adapt to the changes brought about by climate change. IDA is also becoming simpler and faster for borrower countries, through simplifying its policy commitments and financing architecture. Since its creation, there has been strong support across the House for IDA and recognition of its central role in improving the lives of millions of the world’s poorest people.
The UK can be proud of its leadership as one of the major donors to IDA. We have played a central role in the negotiation of the financing and policy package to ensure that IDA resources deliver the best impact and align with UK foreign policy and development priorities. However, in a constrained ODA world, that support must come with a renewed push for reform to further maximise efficiencies and the impact for people on the ground.
The draft order secures our commitment to the UK’s most important development partner, IDA—the largest provider of concessional assistance worldwide. Through its scale, multilateral character and proven impact, IDA enables us to tackle the global challenges that the UK cannot address alone. I commend the draft order to the Committee.
Wendy Morton (Aldridge-Brownhills) (Con)
It is a pleasure to serve under your chairmanship, Mr Western. I thank the Minister for his explanation of the draft order. As he will expect, I have a number of questions on which some further clarity would be helpful for the Committee.
His Majesty’s Opposition recognise the long-standing role that the UK has played in supporting IDA, which is the World Bank’s concessional arm, working in some of the poorest and most fragile countries in the world. We also recognise the scale of the challenges facing those countries, from conflict and food security to the growing pressure of climate shocks and debt distress. IDA has been, and remains, an important part of the global response.
However, the draft order legislates for payments of up to £1.98 billion in UK aid, which is an extremely significant commitment. Therefore, Parliament deserves some clear and detailed assurances about how this money will be used, what impacts it is expected to deliver and how the Government intend to oversee it. Can the Minister explain, in broad terms, how IDA allocates where resources go under this replenishment? What balance does IDA expect between grants and concessional loans? What criteria are used to allocate funds between countries, particularly those facing acute debt pressure? As the UK shareholder, what role have the Government played in deciding where taxpayers’ money will go?
Secondly, can the Minister set out the themes and priorities that the UK argued for during the IDA21 negotiations? IDA covers a wide agenda, from health and climate resilience to education and digital infrastructure, so it would be helpful to know where the Government have sought to focus UK influence, not least in view of the reduction to the aid budget from 0.5% to 0.3%. Do the themes and priorities meet UK development objectives, and how have key UK interests been prioritised?
On the issue of debt sustainability, can the Minister reassure the Committee that IDA’s lending will not compound existing debt vulnerabilities? Have any safeguards been strengthened since IDA20? What assurances can the Government give that UK taxpayers’ money will not be used for debt reduction where countries have been trapped into debt by China? ODA should not be paying down debts to China.
Turning to oversight, what monitoring and evaluation arrangements does the Foreign, Commonwealth and Development Office rely on to demonstrate that UK contributions to IDA21 deliver measurable outcomes and value for money? How often will Parliament receive updates on performance and progress against UK objectives? Will the FCDO publish a report on delivery against measurable outcomes?
Governance is another key area. Can the Minister confirm whether there have been any changes to IDA’s transparency, accountability or anti-corruption safeguards, which should give Parliament confidence in how this replenishment will operate? Finally, can the Minister say whether the UK sought particular conditions or expectations from other donors during the negotiations? How do the Government intend to use the UK’s seat on IDA’s board to ensure alignment with our bilateral work, so that efforts are not duplicated?
IDA remains an important development instrument, but the scrutiny of large multilateral commitments is essential. We hope the Minister can address those points and we look forward to his response.
Dr Beccy Cooper (Worthing West) (Lab)
It is a pleasure to serve under your chairship, Mr Western. I rise to put on record my support for this delegated legislation, and to make three very quick points.
It is not always easy to make the argument for global investment in this time and age, but this is an excellent example of how we can really add to global investment and see a real return for taxpayers. As the Minister alluded to, each $1 invested will generate more than $4 for programming in IDA-specific countries. That is a fantastic return on investment.
As the shadow Minister said, IDA21 will work alongside the World Bank Group’s evolution. We are always looking at the global architecture to make sure that governance is sufficient. The bank is talking about an improved scorecard, looking at performance and looking seriously at quantitative data as well as qualitative results. It is really important when we look at development, and at populations’ wellbeing, that we look at quantitative and qualitative data.
Finally, there are obviously discussions around borders at the moment, but climate change is affecting us all. If we do not mitigate the worst effects of climate change, it will push 130 million more people into poverty by 2030. We are part of that global world and must address that. Similarly, in my own world of global health, infectious diseases do not respect borders. By investing in global infrastructure and global development, we are protecting our own borders and security, as well as global health.
Chris Elmore
I thank the shadow Minister. I will come back to her in writing on the issues around governance and transparency, because I would rather that she receive a substantive answer. I reassure her that we take those issues very seriously.
On what the UK got out of the negotiations, I will run through a couple of things for the Committee’s benefit: stronger capability in fragile and conflict-affected countries; greater focus on crisis preparedness and supporting countries in resilience and scaling up investment; a stronger focus on adaptation and nature financing, in line with the UK’s priorities around climate and nature; increased ambition on sexual and reproductive health rights; and IDA using more of its own resources than ever before, in terms of additional funding.
On supporting countries’ debt, IDA provides grants to the poorest countries and those facing the highest levels of debt distress, ensuring that support reaches the most vulnerable without adding to their debt burden. I can give the shadow Minister that reassurance. On her broader questions around debt, countries at high risk of debt distress get 100% of their allocation as grants rather than loans. Again, we are not adding to that burden through the IDA programme.
As I said, I will come back to the shadow Minister more formally on the governance elements, but I reassure her about our key focus as a Government. Because of IDA’s efficiency and the fact that we are able to deliver on the ground, much of what she has raised is part of the work that happened under the last Government, and that has happened and will continue under this Government.
I welcome the comments of my hon. Friend the Member for Worthing West, and the fact that we are finding an efficiency in the 10% saving, which enables the Government to use it for other pieces of work. This is a really positive piece of work that has been done, cross-party, for more than a decade now, by the previous Government and this one. It shows how we can actually deliver meaningful support for the countries that need it the most. I commend the draft order to the Committee.
Question put and agreed to.