7
Examination of witnesses
Matt Toombs and Paul Durrant.
Q9 The Chair: We are joined by Matt Toombs, the Director for International Net Zero, Climate Finance and Strategy at the Department for Energy Security and Net Zero, and his colleague Paul Durrant. Thank you both very much for coming to talk to us today about UNIDO. We have just had a very interesting session with the key staff. The main question that recurred is the obvious question: why should we actually rejoin the organisation itself? It seems that we have a very good relationship with UNIDO, we do not have to get involved in the politics of it and it is acting as a successful delivery agent as we probably have in many other areas.
The second is a question that has also been obliquely referred to: what genuine reforms have been made to UNIDO that you think justify us reversing the decision that we took to leave 15 years ago? That decision was quite carefully made, so we need to be convinced that there has been genuine reform and value for this relationship that is different from previous times.
Matt Toombs: Thank you for the chance to be able to talk this through. I appreciate the contribution from colleagues from UNIDO in the session before. To the core question of why we are looking to rejoin now, it really comes down to the fact that the context that we are operating in now is very different from the context back in 2012 and before that. Our relationship with UNIDO has also changed significantly since then, partly as a result of all the different levels of programme engagement and delivery that we have been involved in over the last five years. We are in a different place in terms of the relationship, the context and what we are trying to achieve.
The overall context is obviously one where we know that industrial development—particularly clean, green industrial development—is absolutely critical to developing countries’ own economic prospects and development. This industrial development is taking place. The question is: can it take place in a way that is sustainable and green and supports the decarbonisation efforts that are also needed to meet wider climate goals? Then there is the question about whether it can take place in a way in which the UK can contribute, gain and be part of the growth potential that comes from this. There is a very big industrial economic transition being seen across the world. The question is whether the UK will be able to gain from the growth and commercial benefits from it.
There are a number of reasons why we believe that having a strong UK position within UNIDO is necessary at the moment. I said that the context had changed in terms of our relationship. Back in 2012 the UK did not have any programmes working through UNIDO and had a fairly thin relationship with the organisation. Since then, we have worked very closely with UNIDO through COP 26 and we have worked with India in terms of green public procurement on the industrial decarbonisation initiative, which is a big initiative to increase demand signals for clean steel and concrete. We have been involved in some major programmes such as the Accelerate-to-Demonstrate programme, which is around £125 million.
We have also been working on individual case studies. We can talk through some details—for example, our work with Brazil developing its industrial decarbonisation activities, which is really moving to scale. The depth of our relationship is larger, so the value in us rejoining is larger in terms of needing to have an influence in the organisation and being able to open access to British business and to wider programmes that UNIDO is involved in.
What genuine reforms have taken place? We have heard from the UNIDO team about the reforms it has been involved in and that the current director-general has been involved in leading. It is a smaller, more efficient organisation than it was when the multilateral aid review took place back in 2011, which, as you say, identified some real reasons for leaving at the time. It is more efficient, transparent and open. It has an independent evaluation unit and regularly publishes information about the effectiveness of its programmes. It has a much greater level of disclosure than we saw in the past. Those are some examples of why we need to move, but I am sure we will want to explore more in further questions.
Q10 Baroness Anelay of St Johns: My question is reflecting on what you just said about how we are in a different context now from what it was like in 2012. You have given some substance to that. What about other countries that left? We were not the only one by any means; several left. Have you been able to have discussions and engagement with them to find out whether they are considering returning? If they are not, why do you think that is when we have heard from you the benefits that might accrue to the UK?
Matt Toombs: We are in conversation with a number of like-minded countries about their relationship with UNIDO, as you would expect. I am not going to speak on behalf of other countries and their positions. What I can say is some countries left in previous years but a number of industrialised countries remain. As we have heard, Japan, Italy, Germany and the EU all have strong relationships with UNIDO, so we would not be an exception in any way in being part of UNIDO. We are not moving from no relationship to suddenly rejoining; this is a path that we have been on for at least the last five years of strengthening the relationship and determining where the benefits could come from building on that relationship that we have been involved in.
Baroness Anelay of St Johns: Clearly, there are still some countries that have decided it is not worth the candle for them to join and be part of governance. Of course they may well be continuing to provide contributions, as the UK has. Without naming countries, do you think that there is perhaps a likelihood that some other countries that left will rejoin?
Matt Toombs: The short answer is yes. Next week will be the UN General Assembly and Climate Week NYC, where there are a number of discussions around green industrialisation. It is very clear that this is an issue that matters a lot to developing countries. It is a priority for the Turkish presidency of COP 31 and the Ethiopian presidency coming into COP 32. This is something that really matters. Just as we have built a relationship through running a number of programmes through UNIDO that have built us the confidence to see that it is worth while to re-engage, we would expect that other countries would take a similar route.
Q11 Lord Boateng: Mr Toombs, Japan, Italy and Germany—the countries you have mentioned that remained within UNIDO—have always been strong proponents of an industrial policy. Indeed, their economies have thrived as a result of it, while in ours, for many years over all administrations of industrial policy, scepticism has been in the doldrums. There is a lesson there for us and a lesson that UNIDO can share with the developing world.
The problem that we face on this committee is that as a country historically we have spent billions and billions of dollars on development aid and assistance, with insufficient impact for the poorest of the poor in the developing world. We are now spending much less and indeed have cut our development budget. We are now being asked to pay a subscription to UNIDO and, given limited funds, that must be at the expense of something else that we could be spending in relation to projects.
I declare my interest as chair of Water & Sanitation for Urban Populations, formerly Water & Sanitation for the Urban Poor. The question I have for you specifically in relation to green finance and climate finance is: how is our membership of UNIDO going to assist in addressing the issue? How is that going to assist people on the ground facing climate and water and sanitation emergencies when less than 3% of global climate finance goes to water supply and sanitation and the overall share of water, waste management and hygiene relates to only 0.3% of total global climate finance? There are girls unable to go to school because they do not have decent toilet facilities in their schools while they are menstruating; they are not safe, so they do not go to school. These are practical experiences of people on the ground now. How is UNIDO and our membership of it going to improve the situation of the most marginalised and deprived countries suffering from climate change that do not get their share of global climate finance? If it is not, it is very hard to persuade our taxpayers that this is money worth spending.
Matt Toombs: I agree that it is incredibly important that our international climate finance can support those countries and communities that need it most and can have the greatest impact on the challenges they face. Our international climate finance is smaller than it was; we have had a reduction in UK ICF. One thing that we have had to do as part of that reduction is be really clear about how we prioritise within that and what we focus on. The Government published an updated strategy on ICF earlier this year, their 2026 strategy. That essentially showed that with smaller amounts of money we need that money to go further, have greater impact and enable us to mobilise larger amounts of money through the investments that we make.
Lord Boateng: That is all good stuff, but how does membership of UNIDO assist that? How does it assist people on the ground in the countries who cannot access the green climate finance fund?
Matt Toombs: By being a member of UNIDO, that supports the question that the committee was asking earlier about how we get the scale so that we are not just investing in small numbers of individual projects but transforming the outcomes for vulnerable communities and countries. For example, look at the work with Brazil, where a relatively small amount of UK investment—about £15 million of investment alongside Brazil looking at its industrial development—has led to it being able to access £250 million of wider international finance, which is expected to raise about £2 billion of private finance to support its industrial development. It is an example of where we are trying to use small amounts of money to have a real difference, and that means jobs on the ground in critical parts of Brazil that will really change livelihoods.
Q12 Baroness Verma: Very quickly, do you think it may be time to revisit how climate finance is actually accessed? From what I hear from those on the ground, it is one of the most complicated, difficult areas to try to access anything. It takes far too long and there are too many hurdles, so the people who would benefit the most do not access it. Secondly, do you think it may be time to look at how ODA is now fit for purpose for this century and all the challenges it is facing?
Matt Toombs: I agree that access to finance is a real challenge. The UK has worked with some of the biggest climate funds on how we speed up and improve access to finance. We have been working with the Green Climate Fund on access to finance, as it is a real issue. It is something that is a priority for the UK across the whole of our international climate finance work.
I do not think it is a particular concern or issue in terms of UNIDO and its work; it is a wider challenge for us in terms of ODA. In fact, Baroness, you were asking about whether our wider ODA approach is fit for purpose. As I was trying to describe earlier, a smaller amount of ODA—not just in the UK, as we are seeing other countries coming under greater financial pressure on their ODA commitments—means that we need to be very clear about how we are using that money to have the greatest effect and impact. It means that we are looking at areas where you can have scale and mobilise wider sources of finance; they become increasingly important.
Baroness Verma: Are you restricted by the way you can actually spend money from ODA with private companies? For the purposes of development, if you want greater investment from the private sector you need to be able to make sure that ODA is much easier to navigate for those businesses, because otherwise you will not get the development or at least the scale-up.
Matt Toombs: We absolutely agree that having a really strong connection between private finance and the private sector with publicly financed activities is absolutely critical. There are lots of examples of our work with UNIDO that involves individual businesses—UK businesses that are working with Kenya on the green tea facility, which colleagues discussed, or work in green steel in South Africa or other examples. We are not going to make progress on industrial development unless the private sector is completely and fully part of the solution.
The Chair: We have two final questions, because we want to have a private session as well and we have to go and speak in a debate on a report we have written previously.
Q13 Baroness Lawlor: Very quickly on Baroness Anelay’s question about engagement with parties that left with us or subsequently, I noticed you mentioned countries with which you are engaged, including Japan, but what about the US, Australia and New Zealand, with which we share concerns? Have we engaged with them? Are they likely to go back?
Matt Toombs: As I said earlier, I do not want to speak to the position of individual countries; it is obviously for them to set out what their view is in relation to UNIDO. The US’s broader position in terms of its work on climate change is well known.
Lord Boateng: It does not believe in it. What is the position of USAID and FCDO, which used to work very closely together—very effectively I may add—on many of these issues?
Matt Toombs: The UK works with the US where we can—where there are points of similarity in our policy—but clearly on the international development and ODA front, the US has withdrawn from a number of agencies and reduced funding in a number of areas.
Baroness Lawlor: What about Australia and New Zealand?
Matt Toombs: We work with them both very closely.
Baroness Lawlor: Have you discussed rejoining with them?
Matt Toombs: We have ongoing discussions with them about our work on industrial development. Australia has taken on the presidency alongside Turkey for this year’s COP and will be overseeing discussions around industrial development as part of that. We are talking to it both as part of their COP presidency role but also as a like-minded partner.
Baroness Lawlor: Do you not know or can you not comment on whether Australia is going back?
Matt Toombs: I would not want to comment on its specific relationship with UNIDO.
The Chair: We want to see whether any statements have been made around that; it might be quite interesting.
Q14 Lord Hannay of Chiswick: I should begin by declaring an interest since I was the British ambassador to the UN in the 1990s. We are told by our Government here and the UNIDO officials that it is on a good reforming route at the moment. Let us assume that we are going to rejoin; how do we ensure that it does not slip backwards again at some stage or another? I can recall that the FAO, which was established after the war with a very high reputation, had an appalling reputation by the 1990s. It was a kind of rest home for developing country politicians and it was not doing anything much for the expenditure of very large sums of money. We cannot simply assume that UNIDO will stay on a good path even if we rejoin it.
The second thing is of course that UN organisations spend far too much time turf fighting with other UN organisations. When the pandemic struck, everyone was astonished to discover that there was one organisation that dealt with human health and a completely different one in a completely different capital that dealt with animal health. That was not a very good idea and Baroness Anelay wrote a rather good report on that; it was one of the aspects she drew to our attention. How do we make sure that UNIDO does not spend a lot of its effort on turf fighting with other UN organisations?
All this leads to one single question. Have we established a way in which after a fixed term—let us say five years or whatever the Government choose—we are going to review whether UNIDO is still on an improving, reforming path or is slipping back into some rather well-known symptoms? If you conduct a review, and it would be helpful if you could say whether it is the department’s intention to conduct a review after a fixed period, do you intend to come back to this committee to seek our views on it?
Matt Toombs: First, I recognise the noble Lord’s experience in this area. We certainly would not assume that things would not slip backwards. Part of the purpose of being a member is that we have greater engagement in the development of UNIDO and more oversight over the way that it moves forward. We would give ourselves a stronger set of levers to act against if we saw things developing in the wrong direction. That is part of the case for us to rejoin, as we have an active relationship with UNIDO.
In terms of turf fighting, the context around UN80 is important: as our colleagues have talked about before, a lot of the UN agencies are undergoing some very challenging reforms and changes and will end up being a lot more streamlined and efficient as a result. Again, being part of the organisation allows us to ensure that it is being run as effectively as possible.
Do we have a plan to review? We have a plan to review whether we are achieving the benefits of rejoining in 2029 and that relates to the nature of the funding agreement that we have made with UNIDO, which we can discuss in the next session. In 2029, we will be looking at whether we have achieved the benefits that we are setting now as a test of rejoining.
Lord Hannay of Chiswick: That will depend on whether we sustain our membership or conclude that we might need to withdraw again.
Matt Toombs: Our intention is to make rejoining a positive move, which can then be a sustained relationship that we have moving forward. It is also right that we review whether we are achieving the benefits that we have set out in three years.
Lord Hannay of Chiswick: If this is made public—that Britain’s Parliament is involved in the process of reviewing—when we complete the scrutiny of this decision to rejoin, would it help your hand when it comes to the governance of UNIDO?
The Chair: I am sure we would be very keen to participate in that process, but I do not know whether you are able to commit to that today. Is it correct that a review point is set in the agreement or is that like saying, “We review everything anyway”?
Matt Toombs: The review point is for the UK to decide, rather than it being part of a formal agreement that we have with UNIDO.
Lord Hannay of Chiswick: That is what I intended by my question: it would be a UK review of the UK’s decision to rejoin, not a UNIDO review, which, like many UN reviews, would often end with hundreds of pages of paper and not very much action.
The Chair: If you do not mind, we are going to come to the end of the public session, because we are quite tight for time.
