Written evidence submitted by Paul Scully MP, Minister for Small Business, Consumers & Labour markets (FL0031)
Darren Jones MP
Chair of Business, Energy and Industrial Strategy Select Committee House of Commons
SW1A 0AA
19 November 2020
Dear Darren,
Following the recent session on 5th November, concerning forced labour in UK supply chains, I promised to reply to you with more evidence regarding the Department’s Official Development Assistance (ODA) spend.
Though your questions were more specifically about the Newton Fund, I would like to assure the Committee that I have assessed all of the Department’s ODA funds – the Newton Fund, the Global Challenges Research Fund (GCRF) and International Climate Finance (ICF) – with the answers below covering all three. The Committee asked me to address each of the following three points:
“Confirm that no money is going through BEIS into the Xinjiang region, where human rights abuses are happening.”
I am happy to confirm that none of BEIS’s ODA funding is going into the Xinjiang region, either through funding projects based in the region, or through research partners based there. As UK researchers are recipients of grant funding, BEIS cannot specify who researchers can contract with for materials or services, as is standard practice for grant management. However, these suppliers must be compliant with wider fund policy on matters such as safeguarding and anti-slavery compliance. BEIS requires that Delivery Partners ensure implementation of these policies throughout the programme lifecycle, and through the ODA Assurance Plan, independently evidences that Delivery Partners have complied with this requirement. As such, we can be confident that no organisations involved in, or profiting from forced labour would be eligible suppliers.
With regards to the Newton Fund, the matched funding arrangements under which the Newton Fund operates mean that UK ODA funding is provided to UK researchers, to pay for their research costs - whilst partners, in this case China, pay the costs of their researchers. BEIS does not provide any ODA funding to the Chinese government.
“Audit the trail of money and give the committee a detailed explanation of which organisations and projects receive funding from BEIS, and the sums of money involved.”
Annexes A & B of this letter detail a line-by-line breakdown of the active projects receiving BEIS ODA funding, taking place in China. The Department’s ODA spend broadly falls under two categories: Research & Innovation (R&I) ODA – covering the Newton Fund and GCRF – and ICF, with each having different established funding relationships and mechanisms.
For R&I ODA, all funding from BEIS is allocated to Fund “Delivery Partners”. With a high degree of overlap across GCRF and the Newton Fund, these Delivery Partners are all established, UK-based institutions with recognised research funding mechanisms:
- UK Research and Innovation (UKRI)
- National Academies (Royal Society, Royal Academy of Engineering, Academy of Medical Sciences, British Academy)
- BEIS Executive Agencies (the Met Office and the UK Space Agency)
- UK universities through the four Higher Education Funding Councils as Quality Research (QR) funding
- The British Council
Annex C of this letter illustrates how much money has been used by each Delivery Partner with China in 2019. The terms of this funding are set each year by BEIS in each Delivery Partner’s respective “Grant Allocation Letter”.
For ICF funding, given the sheer scale of the investment challenge and scarcity of available concessional resources, the approach to date has not focussed on buying down the cheapest carbon to reduce emissions in the short term. Instead, we have sought to drive ‘transformational change’, by which we mean change that catalyses further changes and ultimately results in a global shift towards low-carbon, sustainable growth in line with Paris temperature targets. This approach has broadly translated into a portfolio whereby we use our strategy to set the overall direction and then select the best investment opportunities from projects initiated externally. Rather than conceiving and/or delivering programmes internally, the majority of our programming goes through either global or multi-country (as opposed to bilateral) channels - delivered through the major multilateral climate funds and development institutions such as the Multilateral Development Banks (MDBs). China is eligible to apply for some of these, as an ODA eligible country.
Through our country targeted approach, £5m of ICF has been committed to activities through the UK PACT programme in China to support divestment from high emissions activity and to mobilise investment into low emissions activity. The funding is spent on sharing expertise and best practice with China, enabling key stakeholders and decision makers to understand climate issues, and address them in line with international standards, based on learnings from the UK. This work includes an explicit focus on greening the Belt and Road Initiative. By working with a country which is the largest investor in coal fired power generation and the largest investor in renewables, with an increasing international footprint, the UK is better able to reduce global carbon emissions. We have a financial commitment to all developing countries under the UNFCCC, and the ICF is our main contribution to this; it is essential for driving delivery of the Paris Agreement, and is central to the UK’s reputation as a climate leader. Further details on BEIS ICF funded programmes which support activities within China can be found in the Annex A. “Give detail on the risk assessments that are carried out to ensure that no public money is contributing to organisations involved in human rights abuses in Xinjiang.”
The two R&I ODA funds – the Newton Fund and GCRF – operate through a similar, devolved model. Funds are allocated from BEIS to UK Delivery Partners, who are then responsible for creating and managing research funding competitions. ODA R&I Delivery Partners are either in the Official Government Sector, or are established research institutions, so have passed BEIS due diligence requirements regarding internal funding mechanisms at the organisational level.
The annual Allocation Letter BEIS issues to Delivery Partners outlines governance and oversight requirements. These include conditions requiring Delivery Partners to implement appropriate policies and processes to ensure anti-slavery, safeguarding, probity in spending public funds and transparency requirements are met. Delivery Partners have a legal responsibility to monitor and report incidents of non-compliance. BEIS maintains oversight through quarterly compliance reports from Delivery Partners, supported by audit and assurance actions which require Delivery Partners to show clear evidence of compliance.
These standards set by BEIS are in line with best practice as established by Cabinet Office principles on spending public funds and FCDO and OECD guidance on ODA.
With regards to risk assessments during the programme delivery life cycle, as well- established organisations, Delivery Partners have their own comprehensive funding and due diligence mechanisms. Once a Delivery Partner has established a research funding competition, a research consortium can apply for funding, typically led by a UK-based Principal Investigator (PI), from a university. These PIs are responsible for contracting with any local parties but must do so in-line with the governance requirements outlined above, of the Delivery Partner and the Fund more generally, thereby complying with all relevant aspects of UK law. As such, due diligence of risk and ensuring appropriate funding happens at all levels and with regular reviews.
ICF has various assurance structures in place to minimise safeguarding risks across the portfolio, and we work closely with our delivery partners to ensure they uphold the assurances.
In 2018, former Minister of State for Energy and Clean Growth Claire Perry wrote to ICF delivery partners funded by BEIS to seek reassurances on four key safeguarding principles; all delivery partners have since provided assurances on their implementation of these principles.
ICF has also introduced safeguarding as a new criterion into our due diligence of delivery partners, to enable them to assess that they are upholding these principles. BEIS and FCDO officials are also working to create a more unified system for
