Thursday, 24 October 2013

France and Japan among major donors failing on aid transparency

Japanese aid
Japan is among a host of major donors falling short on aid transparency, according to Publish What You Fund's annual index. Photograph: How Hwee Young/EPA
Dozens of major aid donors are failing to deliver on commitments to open their books and be more transparent about where and how they spend foreign aid money, according to an index published by the campaign group Publish What You Fund.
French and Japanese government agencies are among more than 40 donor organisations that receive overall "poor" or "very poor" scores in the latest aid transparency index, published on Thursday.
Italy, Spain, and the Bill and Melinda Gates Foundation also feature among the index's worst performers.
The UK's Department for International Development (DfID), which topped the index in 2012, is in third place this year. Pole position instead goes to the Millennium Challenge Corporation (MCC), a US agency that takes the top slot for the first time. Britain's Foreign Office and Ministry of Defence, which also spend UK aid money, received overall "poor" and "very poor" scores respectively.
David Hall-Matthews, director of Publish What You Fund, said that while open data and transparency have become "fashionable watchwords", too many donors are failing to fulfil their promises.
"No matter how many international promises are made, no matter how many speeches there are around openness, a startling amount of organisations are still not delivering on their aid transparency goals," he said.
Hall-Matthews added that this year's index, which scores, ranks and categorises 67 donor organisations on the aid information they publish, shows a "very polarised picture, with great data at the very top and a long tail of agencies publishing poor, bad quality information … there's definitely a lot of catching up to do".
For the first time, the index measures not only the quantity but also the quality of information published by aid donors. Unlike previous years, it awards more points to agencies publishing information in formats that are easy to access, analyse and reuse – and penalises those releasing data in formats such as pdfs, or on websites that are difficult to navigate.
Publish What You Fund argues that more open and transparent information about aid is necessary to ensure effective and accountable spending. The campaign for aid transparency, now in its fifth year, is part of a broader global movement for more transparent and open government.
The MCC is ranked first in this year's index with an overall score of 89% – more than double the average score. The MCC is a specialised aid agency that gives large-scale grants to countries it deems committed to good governance and "economic freedom".
Besides the MCC, only three other donor organisations – Gavi, DfID, and the UN development programme – received overall scores of between 80% and 100%, earning them slots in the index's "very good" category.
The average score for all organisations in the index is low (32.6%), with 25 organisations – more than a third of the total – scoring less than 20%. This means most aid information is still not published in a timely, standardised way, and reflects the fact that too much of the information released remains patchy.
China ranks last in the index, with a score of 2.2%.
In recent years, many donors have made commitments and high-profile pledges to be more open and transparent with their aid budgets. A total of 33 donors – accounting for more than 85% of official development finance – have signed up to the International Aid Transparency Initiative (IATI).
The US, Germany, three European commission departments, a raft of UN agencies and two regional development banks started publishing in the IATI standard data format for the first time this year.
While aid transparency advocates are quick to applaud these developments, the problem, say analysts, is that commitments are often implemented in the weakest form possible. Some information published to IATI, for example, is simply old data converted to the new format. Information that could add value – such as more precise location details, budget documents, conditions, and results data – is too rarely published.
It isn't completely surprising that so many agencies do badly, according to Hall-Mathews. "Look at the hundreds of international agreements that get signed and then ignored," he says.
Hall-Matthews insists, however, that monitoring donor activity and holding agencies to account for their promises means they won't be able to forget them. "We have no doubt that this index has made people pay more attention," he says.
The 2013 index scores 67 donors on 39 indicators, looking at their overall commitment to aid transparency and the availability and accessibility of the information they publish. Because of the changes to the methdology, absolute scores are not directly comparable between years.
The index comes ahead of the Open Government Partnership's (OGP) annual summit in London next week. The OGP, which the UK chairs this year, is an international effort to secure concrete commitments from governments to promote transparency, empower citizens, fight corruption and harness new technologies to strengthen governance.
Reacting to the index, UK development secretary Justine Greening said: "The Aid Transparency Index demonstrates the UK's continued lead in this area by publishing good quality, accessible data. We will continue to help and encourage others to do the same."

The 2013 Aid Transparency Index

Click column heading to sort
Donor organisation
Ranking
Score (%)
Category
US – Millennium Challenge Corporation188.9Very good
GAVI287.3Very good
UK – DFID383.5Very good
UNDP483.4Very good
World Bank – IDA573.8Good
Global Fund670.6Good
African Development Bank763.7Good
Canada862.6Good
Sweden960.4Good
Asian Development Bank1057.6Fair
Inter-American Development Bank1157.1Fair
EC-ECHO1254.2Fair
EC-DEVCO1352.1Fair
EC-FPI1451.1Fair
Denmark1550.7Fair
Netherlands1649.4Fair
EC-ELARG1748.1Fair
New Zealand1847.8Fair
US – Treasury1947.4Fair
Germany – GIZ2045.9Fair
UNICEF2144.3Fair
US – USAID2244.3Fair
Germany – KfW2343.7Fair
Australia2443.1Fair
UN OCHA2541.7Fair
UK – Foreign Office2634.7Poor
US – Defence2733.7Poor
IMF2831.8Poor
World Bank – IFC2930.1Poor
Korea3027.9Poor
Norway3126.9Poor
Ireland3226.7Poor
EIB3326.6Poor
EBRD3424.5Poor
Czech Republic3524.4Poor
Estonia3623.6Poor
Japan – JICA3723.5Poor
Belgium3823.4Poor
Finland3923Poor
US – State Department4022.1Poor
Austria4120.4Poor
Luxembourg4219.2Very poor
Gates Foundation4318.1Very poor
Switzerland4418.1Very poor
Latvia4517.8Very poor
Portugal4617.4Very poor
Spain4717.4Very poor
Japan – MOFA4817.2Very poor
France – AFD4916.3Very poor
US – Pepfar5016.1Very poor
Romania5114.8Very poor
France – Ministry of Foreign Affairs5213.3Very poor
France – Ministry of Economy, Finance and Industry5312.2Very poor
UK – Ministry of Defence5412Very poor
Slovakia5512Very poor
Brazil5611.8Very poor
Poland5711.3Very poor
Slovenia5810.8Very poor
Germany – Foreign Office5910Very poor
Italy6010Very poor
Lithuania618.2Very poor
Cyprus626.5Very poor
Bulgaria635.7Very poor
Hungary644.7Very poor
Malta653.8Very poor
Greece663.6Very poor
China672.2Very poor

Grangemouth plant shutdown leaves government fighting to save 800 jobs

Workers walk through the Grangemouth oil refinery
Workers walk through the Grangemouth oil refinery in Falkirk, Scotland. Photograph: David Cheskin/PA
The government is scrambling to save 800 jobs at the Grangemouth petrochemicals site in Scotland after its owner, Ineos, abruptly closed the plant in a rancorous industrial dispute.
As the energy and climate change secretary, Ed Davey, said that "all efforts" would be made to rescue the plant, Ineos also refused to rule out closing the oil refinery on the same site.
Workers were given the grim news at a meeting with Ineos's chairman, Calum MacLean. Ineos had given the workforce until Monday evening to accept its demands for radical changes to terms and conditions but the company concluded there was not enough support.
Its decision means that up to 800 petrochemicals workers will lose their jobs, and it threatens the positions of some 600 or more employees at the refinery plus 2,000 contract staff.
Staff reacted with shock to the news, as Ineos followed through on its warning that the threat of closure was not a bluff.
The fate of the giant plant on the Firth of Forth has far-reaching implications for Scotland and the UK. Grangemouth is Scotland's biggest manufacturing business, its refinery supplies most of its fuel and the petrochemicals plant produces plastics used in industries ranging from cars to packaging.
In an urgent question on Grangemouth in parliament, Davey told MPs repeatedly that the government wanted the plant to stay open if at all possible. It would still consider a business case to provide investment to help keep the plant running.
"We will be using all our efforts through the [Business] department and UKTI [UK Trade and Industry body] to assist should we need to have a buyer for the petrochemical plant," he said.
However, Ineos has already warned that the refinery – currently shut down because of the dispute – could be closed permanently if the Unitetrade union did not agree to a no-strike deal.
Davey also confirmed that detailed contingency plans had been drawn up to protect firms and customers from running out of fuel and chemical supplies. He met MPs later to discuss the issue in more detail.
Downing Street has insisted the closure of the Grangemouth refinery would not pose a threat to fuel supplies, after the AA warned it could hitpetrol prices. The prime minister said in an answer to a parliamentary question from the Labour MP Tom Watson that ministers had discussed the closure during Cobra meetings.
Downing Street dismissed speculation that the plant could be nationalised, saying it was a matter for unions and owner to resolve. The prime minister's spokesman said it was disappointing that the petrochemicals side of the plant had closed and called on "both parties" to "continue their dialogue" over the future of the refinery.
The closure of the petrochemicals plant follows a standoff between Ineos and Unite, which represents about 1,100 of Grangemouth's permanent employees as well as many contract workers. Many businesses – from the Rumbling Tum burger van near the site to cab firms, pubs and hotels – rely on trade from Grangemouth.
Gordon Alexander, who owns Grange Radio Cabs, said closure would devastate local businesses. "Local shops and local snack bars would definitely go out of business. We do a lot of executive work for them and if they were to close I would probably lose about half of my 50 cabs."
Edmund King, the president of the AA, warned that petrol prices could rise if Grangemouth and other European refineries closed down.
"The AA is concerned with the impact of this refinery closure," he said. The European commodity trading houses have been predicting the loss of five to six refinery plants over the next two years.
"In March to April of last year, with the closure of refineries and the impending start of the US motoring season, wholesale prices went up by 20%, adding 8p to 10p to a litre of petrol. The spike was short-lived because US drivers cut back and some of the refineries were bought. However, the damage was done and a new UK petrol record [142.48p a litre] was set."

Bitter dispute

The announcement follows the passing of a deadline on a survival plan put to employees, which asked them to accept changes to pensions and other terms and conditions.
The Unite union said about 680 of the site's 1,370-strong workforce had rejected the company's proposals, which include a pay freeze for 2014-16, removal of a bonus up to 2016, a reduced shift allowance and ending of the final-salary pension scheme.
Ineos said its owner, Jim Ratcliffe, and other shareholders met on Tuesday to study the response from the workforce to their survival plan, and wanted the employees to be the first to know of any decision the company made.
A dispute over pay and conditions at the oil refinery remains unresolved.
Unite has accused the company of "playing Russian roulette" with the future of Grangemouth, the biggest industrial site in Scotland, and is backing any efforts by the Scottish government to find a new buyer for the oil refinery and petrochemical complex.
Ineos sent a letter to workers last Thursday asking them to indicate their rejection or acceptance of the plan.
It said those who supported the survival plan would receive a transitional payment of up to £15,000.
The two sides have been embroiled in a bitter dispute for weeks, initially over the treatment of the Unite convener, Stephen Deans, who was involved in the row over the selection of a Labour candidate in Falkirk, where he is chairman of the constituency party.
He was suspended, then reinstated, then was subject to an internal investigation, which is due to report on Friday.
The dispute has since widened to the future of the entire site, with Ineos warning that it would close without investment and changes to pensions and other terms and conditions.
The company said the plant, which has been shut down since last week because of the dispute, was losing £10m a month.
Ineos had said it was ready to invest £300m in Grangemouth, but only if workers agreed to the new terms.

View from the workforce

Gordon Stewart joined the chemicals business five months ago. He is a Unite member.
"I was attracted by a set of pay and conditions and I left a good job somewhere else. They have explained that because of the union vote they are going to close the petrochemicals side. They talked about finding a buyer but they were not very hopeful because it's a distressed business. The assets on the chemicals side probably will opening in the short term but further out it's not clear.
"Despite the union activity I still took it as a shock the way it has been done so abruptly. It's as if it was preordained. I have put a lot of faith in the union and I still hope they can do something about it but they may have acted too quickly.
"Everyone will be affected: people contractually obliged working here and businesses associated with the place. The way Calum MacLean walked in you could tell what he was going to say before he started speaking. He was ashen faced." Asked if there was any hope Ineos might negotiate: "I certainly hope so.

Sir Alex Ferguson lacks 'old school ethics', says Brendan Rodgers

Steven Gerrard
Steven Gerrard was said to be not a 'top, top player by Sir Alex Ferguson in his autobiography. Photograph: Clive Brunskill/Getty Images
Rodgers was also unhappy with Ferguson for criticising the Liverpoolcaptain Steven Gerrard who he had said was not was not a "top, top player" despite having tried to buy him in 2005. The Scot had also riled the red half of Merseyside by suggesting that Liverpool were eight players short of a title-winning side
"Anyone who's been in football knows that whatever is said behind closed doors and in the changing room is something you wouldn't want to hear again," Rodgers was reported as saying by the Daily Mail.
"It's something that's vitally important. You want to know as a human being that you can speak openly and communication is honest, and hopefully wouldn't get repeated.
Ferguson had lifted the lid on his falling out with the captain Roy Keaneand the reasons behind the sale of David Beckham, and Rodgers said: "You would like to think you would still have some old school values and ethics that whatever is said you take it on the chin and keep it behind closed doors and move on."

The Liverpool manager said of the Gerrard comment: "Everyone who's seen that would probably say it's more than harsh."
He told the Alan Brazil Sports Breakfast show: "I've watched Steven over many years and recognised he was a top player but it's only when you come in and work with the man and realise how professional he is on a daily basis that you understand his performance level.
"This is a guy who at 33 years of age who is a top, top player. He's a wonderful talent and I don't think anyone could argue."

Mild panic in the City as rate rise nears

City of London
'As a life-long Londoner I have never ever seen anything like the current frenzy,' says Albert Edwards of Société Générale. Photograph: Alamy
There is a sense of mild panic in the City as the end of cheap money appears on the horizon. An interest rate rise is nearing.
Maybe not tomorrow, when GDP for the third quarter is expected to be strong, or even next year, but most likely before the Bank of England's target date of late 2016.
Minutes of the last monetary policy committee meeting, published on Wednesday, have added to a sense of unease among those investors who rely on base rates at 0.5% to give them an easy profit. Banks, in particular, have recovered on the back of cheap funds, much of which they have retained to rebuild their balance sheets rather than pass on to customers.
Higher interest rates cannot come too soon for the band of analysts who view the current situation with alarm.
Albert Edwards, Société Générale's global strategist, argues in a note for clients that four years of low rates have encouraged a return of the kind of risky investment behaviour that we saw before the crash. He cites evidence, albeit anecdotal, that the crazy derivatives favoured by traders prior to 2008 are in heavy use and posing a distinct danger to the stability of world markets. He calls as evidence an interview in the Financial Times where Craig Parker, head of leveraged finance at Goldman Sachs, says: "We're in the third year of the greatest leveraged finance markets of all time because of the efforts by the Fed, and all the central banks around the world, to keep rates at zero."
Edwards believes there are signs of asset bubbles everywhere and the US, the UK and Japan are standing on the edge of a precipice, much as they did in 2006.
Making matters worse is the seductive charm of low interest rates for governments. Most western governments have borrowed heavily in the last four years. The UK has doubled its debt mountain and is still running a considerable annual budget deficit.
Public sector debt issuance as a proportion of GDP Public sector debt issuance as a proportion of GDP. Source: Datastream
Edwards reproduces a chart showing public sector debt issuance as a proportion of GDP in 17 key economies that puts Japan at the top with a startling figure of 58.4%. The US ranks third behind Italy with a total of 23.9%. The UK reaches 11th in the table with 12.1%.
The chart measures the amount of government debt that has matured this year and must be renewed. To some extent it merely shows the length of maturity on government bonds, and because the US has many more short-dated bonds than the UK, they therefore come up for renewal more often.
But the point Edwards is making needs to be recognised. Whatever each government's bond strategy, they are all relying on cheap borrowing for their newly minted debt.
In the UK's case, the Bank of England has been a major buyer and now owns around a third of the overall total. Without the central bank as a buyer, demand will be lower and the interest rate higher.
So quantitative easing and low interest rates are not only good for mortgage payers with big loans, investors who want to speculate with cheap money and banks that need to increase their reserves, it helps governments that need to borrow.
Sadly, bringing current spending under control is not a silver bullet when there is so much debt coming up for renewal, which is why finance ministers are tempted to just keep low rates rolling along forever, or at least until the middle distance.
Edwards argues that Japan is now in a situation where, like a junkie strung out on adulterated crack, it must keep pumping more and more into its system just to stay afloat (the junkie image is mine, by the way).
Edwards says of the UK: "Make no mistake, as a life-long Londoner I have never ever seen anything like the current frenzy. We are in the midst of the mother of all housing bubbles, and although the rest of the country has yet to follow, it inevitably will do so – it always does.
"The London housing bubble is no longer driven by Asian or eurozone buyers looking for safe havens. This bubble, like the one in the mid-noughties, is about excessively loose monetary policy and light touch regulation. No one should have any confidence the authorities will rein in this bubble. Indeed, quite the reverse. Getting house prices moving briskly upwards is the objective of monetary policy. And this is before the George Osborne's 'moronic' Help-To-Buy (votes …) scheme really begins to kick in."
It is hard to agree with Edwards' theory when evidence of reckless lending is hard to find, (see the Guardian video debate on the subject). The London market is dominated by cash buyers, foreigners and corporate interests, all of which can withstand higher interest rates (if they have a mortgage at all).
London is soaring and grabbing an greater slice of UK GDP, as set out by my colleague Aditya Chakrabortty. Yet there is no evidence that self-certified and 125% mortgages are back. In 2007 we had arrived at a point where a decade of booming house sales, some of them to people with no income or an uncertain ability to pay, had built up in the system. A crash of sorts was inevitable. Sure, left to its own devices, the UK property market will accelerate, there will be a bubble and the bubble will burst. Just give it five years.
Yet his wider argument, echoed by HSBC's chief economist Stephen King on the BBC Radio 4 show Analysis this week, that the global system is becoming unstable as QE distorts private sector and government behaviour, needs to be addressed openly by central banks and politicians alike.

CBI industrial trends survey shows UK manufacturing sector recovery dented

UK manufacturing
Official GDP figures on Friday are expected to show all major sectors of the economy grew strongly in the third quarter. Photograph: Christopher Furlong/Getty Images
A faltering eurozone economy and a steep rise in the exchange rate appeared to dent the recovery of the UK's manufacturing sector in October.
The CBI's industrial trends survey reported that confidence in the sector grew this month, but a slump in the export order book to -12 slowed output.
The business lobby group, which surveys 350 manufacturers, said the trend over the last three months remained positive and the sector was continuing to make a contribution to economic growth.
Official figures on Friday are expected to show all the major sectors of the economy – manufacturing, construction and services – grew strongly in the third quarter of the year.
Senior policymakers, including the Bank of England's chief economist, Spencer Dale, have estimated that GDP is improving by 3-4% on an annualised basis at the moment.
But the CBI report highlighted the struggle faced by David Cameron to meet one his key goals of re-balancing the economy away from financial services and property to manufacturing and exports.
The survey found that the export order book fell from +6 to -12. Output over the next three months is expected to slow after seven months of double-digit expansion, culminating in a +33 figure in September, declined to +9 in October.
Samuel Tombs, UK economist at Capital Economics, said the survey suggests the manufacturing recovery is built on "fairly robust foundations", though he remained concerned about the low level of investment.
He said: "Growth in manufacturing output may struggle to gather pace, given that domestic consumers' incomes remain under pressure from inflation and the recent rise in the pound has undermined exporters' competitiveness slightly. But with output still more than 10% below its peak, their remains plenty of scope for the manufacturing sector to continue to recover in the coming years."
A survey by financial data provider Markit of eurozone businesses found that a pickup in momentum during the summer, which ended an 18-month recession, slowed in October.
Markit said the upturn was more modest after its composite index fell from 52.2 in September to 51.5.
"The expansion was broad-based across the region, though there were signs of moderation in the bloc's two largest economies," said Markit.
"Growth slowed to a three-month low in Germany, while France registered only a negligible expansion as its PMI dipped closer toward neutrality. The rest of the eurozone, meanwhile, reported modest growth of activity for the third month running, representing the first period of growth for these countries since early-2011."
The pound has appreciated from $1.52 in July to around $1.62 in recent weeks. The 10 cent rise appears to have done little so far to undermine exports to the US or regions that are tied to the dollar, though a further strengthening of the exchange rate is feared by manufacturers that could find themselves priced out of vital markets.

London's economic boom leaves rest of Britain behind

London
London and the south-east’s share of growth in output has soared since 2007 while every other region except Scotland has declined. Photograph: Nicholas Bailey/Rex
London's economy is doing even better after the banking crash than during the bubble – while nearly every other part of the UK has seen its economy shrink by comparison. Exclusive findings published by the Guardian show that London and the south-east are racing away from the rest of the UK at a pace that would have seemed almost incredible at the height of the financial panic.
During the boom from 1997 to 2006, London and the south-east was responsible for 37% of the UK's growth in output. Since the crash of 2007, however, their share has rocketed to 48%. Every other nation and region – with the exception of Scotland – has suffered relative decline over the same period. The upshot is about a quarter of the population is responsible for half of the UK's growth, leaving the remaining three-quarters of Britons to share the rest.
The research also shows that the UK's highest-earners have become relatively more prosperous after the crash, while many on middle incomes are being squeezed hard. In austerity Britain, the top 20% of earning households are enjoying 37.5% of all Britain's income growth, even after accounting for taxes and benefits.
These findings will embarrass the government, especially as they come shortly before the release of the latest GDP figures on Friday. Ministers are poised to celebrate news that the economy is at last enjoying strong growth, and may even have racked up its best quarter in 13 years. But the Guardian's analysis raises questions about who is enjoying Britain's growth and how sustainable it is, and will fuel the debate over who should bear the burden for an economic crisis that began in the Square Mile.
The Guardian's analysis is based on official measures of gross value added, often used to assess regional and industrial performance, and was conducted by the Centre for Research on Socio-Cultural Change at Manchester University.
The findings suggests that David Cameron has failed to meet some of his most important promises: on making Britain's economy less lopsided; on ensuring that the pain from its cuts would be fairly shared out; and that banks would lend more to small businesses.
In his first major speech as prime minister, Cameron described Britain as "more and more unbalanced, with our fortunes hitched to a few industries in one corner of the country". Analysis of the statistics shows that regional imbalance has grown sharply since the crash.
The chancellor, George Osborne, has repeatedly claimed that "we're all in this together". But while the highest-earning 20% of households have done well, and the fortunes of the bottom 20% have been boosted by the minimum wage, most of the rest – the so-called squeezed middle – have seen their incomes stretched.
UK lending by financial institutionsUK lending by financial institutions Photograph: Guardian
Osborne and the business secretary, Vince Cable, have exhorted banks to lend more to small businesses and to manufacturing. The Guardian's analysis of the Bank of England's own lending figures shows that the share of loans to manufacturers and other real businesses have fallen since the crash. In the decade to 2007, manufacturing and other "productive businesses" took 9.7% of all bank loans. From 2008 to 2012, however, that plummeted to just 5.9%. That compares with the 40% of bank loans to other financial institutions and the 52% of credit extended to individuals, much of which would have been used for mortgages.
In 2010, Cameron described Britain's economy as "unsustainable, unstable, unfair and, frankly, uninspiring", and said that transforming it would be his first priority. Three years on, these figures suggest no such transformation has taken place. Indeed, some of the coalition's policies have been criticised for only Britain's regional and social inqualities.
Infrastructure projects such as the Olympics and the Channel tunnel rail link have seen a huge amount of public spending flowing into London. Last year, the construction skills industry training board forecast that Greater London would receive more economic-development spending than than Scotland, Wales and Northern Ireland put together.
This has sat alongside policies aimed at making credit cheaper and easier, which have had the effect of making owners of homes and other assets better off. This month, Nigel Wilson, the chief executive of Legal and General, described the £375bn quantitative easing programme as "a policy designed by the rich for the rich".
Share of regional GVA growthShare of regional GVA growth Photograph: Guardian
"Since the crash, London and the south-east have continued to pull away from the rest of the national economy. The wedge between them and the rest of Britain has been driven in deeper," said Adam Leaver at the Manchester Business School, and a member of Cresc. The academic team's work is drawn on the latest GVA (gross value added) figures, which end in 2011, but there are indications that the divide has only grown since.
This week, a Rightmove survey showed house prices jumping 10% in London in just one month but falling in other regions such as the West Midlands.