Contingent Liability: Financial Assurance:Written statement - HCWS1456

WS
Department for International Development
Made on: 27 March 2019
Made by: Penny Mordaunt (Secretary of State for International Development)
Commons

Contingent Liability: Financial Assurance

On 23 August 2018, the Department for International Development (DFID) published its technical notice entitled ‘Delivering humanitarian aid programmes if there’s no deal Brexit deal’. The notice committed DFID to funding the post-March outputs of European Civil Protection and Humanitarian Aid Operations (ECHO) programmes contracted to UK organisations, if ECHO terminates funding in the event of no deal.

The technical notice was issued to enable UK organisations to bid for ECHO funding prior to our Exit, where they were bidding as lead or sole implementers. UK organisations argued that they were losing bidding opportunities due to ECHO’s requirement that they prove at application stage that they could fund the post-March 2019 outputs of the programme in the event of a no deal. The UK government’s commitment enabled UK organisations to demonstrate in their applications that programmes would be funded in a no deal scenario. UK aid spending in this case will prevent both loss of funding to UK organisations, and severe disruption to humanitarian programmes.

At present, the House is due to be in recess from 4 April. Therefore, it is not possible to offer the standard scrutiny period of fourteen sitting days due to the potential urgency of the situation. However, if a Member signifies an objection by giving notice of a Parliamentary Question or otherwise raising the matter in Parliament before Parliament rises for the Easter recess, final approval to proceed with incurring the liability will be withheld pending an examination of the objection. In addition, if a Member raises an objection with me by correspondence after the Easter recess has begun but before 10 April, final approval to proceed will likewise be withheld pending an examination of the objection. The consequences of withholding the liability would be the halting or even cancellation of programmes delivering vital aid programmes to the world’s vulnerable, and the failure to uphold our commitment to UK humanitarian and development organisations.

Parliament was informed of this commitment on 23 August, when a letter from the Secretary of State drawing attention to the technical notice was deposited in both House Libraries.

In March 2019 I agreed to extend the financial assurance to cover any direct bid ECHO, European Development Fund, Development Cooperation Instrument and EU Aid Volunteers ODA funding to UK organisations where that funding will be cut by the EU in the event of No Deal. This includes contracts and grants awarded prior to August 23. My Foreign Office colleague will make a separate announcement regarding Heading 4 instruments under his remit.

The exact size of the contingency liability is still unknown, as UK organisations continue to bid for ECHO programming and we continue to await the EU approval processes. The size of the liability is therefore subject to change, though our current estimate is approximately £90m, based on a reduced number of bids this year. The likelihood that the liability will be called is directly proportional to the likelihood of no deal.

The Treasury has approved this proposal.

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