§ Mr. McFall
To ask the Chancellor of the Exchequer if he will make a statement on the EU aid budget for developing countries. 
§ Ruth Kelly
The Government believe it is vital that the EU puts development assistance to the most effective use and maintains flexibility in the budget to meet new international challenges such as Iraq. Research evidence strongly suggests that development assistance is most effective when focused on the poorest regions that want to reform, and on poverty reduction programmes. In addition, the ED, through its member states, is committed to meeting the Millennium Development Goals, placing poverty reduction at the heart of the Union's development objectives.
However, the proportion of EU assistance spent on poverty reduction is still only around 50 per cent. (provisional figure for 2002). A substantial shift in favour of poorer regions, poverty programmes and quality is 336W called for. To support this my right hon. Friend, the Chancellor of the Exchequer, presented at ECOFIN in May an action plan, designed to improve the effectiveness of EU development assistance, particularly in terms of poverty reduction and meeting the Millennium Development Goals. The action plan covers the remainder of the current Financial Perspective and seeks to ensure that reform is institutionalised after 2006.
The action plan builds on the Commission's on-going reforms and has been well received by Finance Ministers and by the Commission. Some elements of it are already being implemented, albeit at the early stages. However, it will take time to bear fruit: the Government does not expect significant changes in the allocation of EU development assistance before 2007, when most assistance programmes are due for renewal. The Government will be working in ECOFIN and the General Affairs and External Relations Council, to pursue implementation of the plan.