Labour urges ministers to tackle looming global debt crisis set to drive up poverty

Labour has urged UK government ministers to help tackle the looming global debt crisis by legislating to temporarily stop private creditors from suing for debt recovery in a move that would help the world’s poorest countries.

Ahead of the climate and development ministerial meeting today, hosted by the government in the lead-up to the 2021 United Nations climate change conference ‘COP26’, Preet Kaur Gill has written to Alok Sharma and Dominic Raab.

The Labour frontbencher highlighted that African countries are “currently spending three times more on debt repayments to banks and speculators alone than it would cost to vaccinate the entire continent against Covid-19”.

This money could be going towards tackling the climate emergency, creating and maintaining millions of jobs needed for a green recovery, and building greater resilience against ecological disasters, the shadow cabinet member said.

Putting pressure on the UK government to encourage debt relief, Gill asked ministers to consider amending English law to “temporarily limit the ability of private creditors to sue for debt recovery for 73 of the world’s poorest countries”.

She also suggested that the UK push for more of climate finance to be made up of grants rather than loans, with the aim of not creating greater debt burdens for low-income countries that are hard-hit by the climate emergency.

Labour is more broadly campaigning for cuts to the aid budget to be reversed. Chancellor Rishi Sunak announced this year that UK aid spending would be cut “temporarily” from the legally binding 0.7% of gross national income target to 0.5%.

Gill argued that this would “damage the UK’s reputation around the world”, and accused the government of “turning their backs on the world’s poorest” despite having “handed over millions of pounds of UK taxpayers’ money to its friends”.

Below is the full text of Preet Kaur Gill’s letter to Alok Sharma and Dominic Raab.

Dear Alok and Dominic,

Climate and Development Ministerial meeting

The United Nations have been clear that with less than 10 years to avert the worst impacts of climate change we cannot afford to continue to wait.

In the past decade, 1.7 billion people have been affected by climate and weather-related disasters and almost half a million deaths have been caused.

The health and wellbeing of people and the planet rely on action and as the hosts of COP26 the UK is in a strong position to support those who bear the brunt of the crisis and ensure that, as we emerge from the pandemic, our recovery delivers a better, fairer safer world here in the UK and around the world.

The Climate and Development Ministerial meeting is a crucial event, in a crucial year to deliver a truly global plan to tackle the climate crisis. Rather than just more rhetoric, we need genuine action. Securing the resources, we need to address the crisis will maximise buy in and give us the best chance of protecting people and our planet.

The debt crisis

The looming global debt crisis among low-income countries will drive up poverty, increase political instability and undermine all our efforts to address climate change.

Swapping even a small percentage of global debt could direct billions toward tackling the Covid-19 and climate crises.

Right now, African countries are spending three times more on debt repayments to banks and speculators alone than it would cost to vaccinate the entire continent against Covid-19.

Imagine what it could be doing with that money to tackle the climate emergency, create and maintain millions of jobs essential for a green economic recovery and build greater resilience against ecological disasters.

However, current rules do not do enough to get private creditors on board with the process of debt relief. With the World Bank and IMF Spring Meetings taking place next week, will the UK unilaterally bring forward legislation to amend English law and temporarily limit the ability of private creditors to sue for debt recovery for 73 of the world’s poorest countries?

This would be a powerful show of UK leadership in the run up to the G7 and COP26, give us greater credibility to push bilateral and multilateral partners on debt relief and prove that the UK is committed to acting to find global solutions.

Promoting new, additional and transparent International Climate Finance

According to the latest data from the OECD, the 2009 commitment by high income countries to mobilize $100 billion in new and additional climate finance to support low income and climate vulnerable countries by 2020 is falling far short; delivering only $78.9bn.

Recent research by the Center for Global Development found that almost half of that money was simply repurposed and rebranded. Faced with a global climate emergency, the UK should lead by example and advocate for genuinely new and additional financing rather than taking the money from the world’s poorest and most vulnerable people.

With the vast majority of Climate Finance being in the form of loans, the meeting is an opportunity for the UK to push for more of it to be made up of grants rather than just creating greater debt burdens for low-income countries.

The Paris Agreement is clear that climate finance funded programmes must enhance adaptive capacity, strengthen resilience, and reduce vulnerability to climate change, with a view to contributing to sustainable development.

Will you set out the timetable and breakdown of the £11.6bn of International Climate Finance the government have committed to between 2021 and 2025 and what steps will you take to ensure there is public transparency and accountability for that money?

Stop funding overseas fossil fuel projects

Fossil fuel investments cause 1 in 5 deaths and climate breakdown disproportionately impacts fragile and poorer communities and is now one of the major factors driving humanitarian crises. Yet UK aid continues to be used to fund fossil fuel projects around the world.

Will you take a stand and ensure an end to all investments, and seek to divest and create new, sustainable opportunities for communities?

Reverse the aid cuts

At a time when all the expert and scientific advice highlights the exponential growth in climate related natural disasters and fuelling of humanitarian crises, the Conservative Government is cutting a lot of programmes which were designed to strengthen measures to reduce the vulnerability to climate disasters; are being cut. In the Sahel, one of the worst hit areas in the world by climate crisis, the government is reportedly cutting aid by 90%.

The government’s recent, politically motivated, choice to cut the aid budget will cause deaths. As the only G7 country to be cutting aid, the trust the UK has as president of COP26 to bring countries together to stand as one and tackle the global climate emergency is being eroded.

Cutting aid leaves us in a weaker position to help adaptation from and for a whole range of development outcomes including education, health and gender equality.

Will you reverse the cuts to the aid budget to continue providing lifesaving support for the very poorest and most vulnerable people?

The success of COP26 rests on global collaboration and cooperation to ensure a green recovery. That is why Labour have created an International Climate Justice Network to give space for voices of those experiencing the effects of the climate crisis to be heard and to work collaboratively to put in place green recovery plans to give us the best chance of tackling the global climate crisis.

The climate crisis and climate disasters do not respect borders and if we are to achieve ambitious progress towards reducing the threat of the climate emergency we must act together. Now.

Yours sincerely,

Preet Kaur Gill MP
Shadow Secretary of State for International Development