Tax (Developing Countries)

Baroness Featherstone Excerpts

Thursday 17th January 2013 Westminster Hall

[The Parliamentary Under-Secretary of State for International Development (Lynne Featherstone)]

It is a pleasure to serve under your chairmanship this afternoon, Sir Roger. I thank and congratulate my right hon. Friend the Member for Gordon (Sir Malcolm Bruce) on securing this important debate. I also thank him and the International Development Committee for providing a wide-ranging and thought-provoking report. Finally, I thank all those who provided evidence to the inquiry, which included representatives of business, leading academics and non-governmental organisations. Many points have been raised, and I will address as many as possible in the time left to me, but I want so make some general comments.

I agree with the Committee on the significant role that effective tax systems play in helping developing countries to increase their national prosperity and reducing aid dependency, so I welcome the broader parliamentary debate on the issue. Taxation is at the heart of what the Prime Minister described as the golden thread of development. As has been said, helping developing countries to mobilise domestic resources offers the only sustainable alternative to aid for the funding of public services. At the same time, taxation is an important part of governance and state building. It builds the relationship between citizens and the Government, making states more effective. Fair and transparent tax collection promotes social cohesion, shapes Government legitimacy, promotes accountability of Governments to tax-paying citizens, and stimulates effective state administration and good public financial management.

Taxation is a very important part of economic policy, for growth, trade, investment and private sector development, as well as for meeting environmental challenges. The coalition Government are committed to supporting developing countries to access sustainable sources of revenue and to collect the tax that they are due.

My right hon. Friend the Member for Hazel Grove (Andrew Stunell) asked if not this, what is the most fruitful way? That could be applied to many issues raised today. Apart from international negotiations and conferences, the most fruitful way this country can work with and help Governments across the developing world on this issue is through our world-respected and professional technical assistance on tax. We are lucky in this country, because we have Her Majesty’s Treasury to tell us how to do things. The rest of the world is not so fortunate and that expertise—[Interruption.] Why are people murmuring laughter at our being so fortunate? It is one of our principal talents and skills, and we can offer the world that expertise and really make a difference. I will come on to Zambia in a minute, because as my right hon. Friend the Member for Gordon said, there has been a huge achievement in terms of tax revenue collection, but there are also some holes in the system.

The IDC’s report acknowledged the value of support that the UK provides to revenue authorities. DFID’s work with partner countries on tax includes 48 tax programmes across 20 countries, totalling around £20 million a year. Our support is focused on where we can make the most difference and get the best results for our developing country partners. As several hon. Members have mentioned, we also need to deliver the best value for money for UK taxpayers. Most of DFID’s work on tax is at a country level. Projects are managed by staff who live and work in the country, which means that projects can be responsive and demand-led. Tax projects may focus specifically on strengthening revenue collection or on broader objectives, such as public financial management reform or public sector reform.

In Afghanistan, which my right hon. Friend touched on, from 2007 to 2012 we helped increase tax revenues from 4% of GDP to 11.6%, helping the Afghan Government to finance the delivery of basic services. Last month, the Secretary of State for International Development was in Afghanistan, extending that support to the Afghanistan Revenue Department until 2016 with the aim of increasing revenue collection to 15%. In Ethiopia, HMRC’s support to the Ethiopian Revenues and Customs Authority, together with other support, helped to reduce average customs clearance times: for example, low-risk imports went from seven days to 10 minutes, and exports from eight hours to 15 minutes. Those are huge barriers to have removed. In Rwanda, the UK helped to provide the laws and regulation under which the Rwanda Revenue Authority was established, and the office building and management systems. The authority reached a point at which it was collecting the full £24 million of DFID’s 10-year support programme every three weeks, and its effectiveness has been an important factor in Rwanda’s impressive record on development performance.

Building capacity of revenue authorities is important and, as other hon. Members have said, so is ensuring revenues are spent effectively. We do that in a number of ways. We recognise the importance and value of transparency in tackling tax evasion. The global issues referred to in the report have been getting more attention, and are rising up the agenda. Although not good, it has been helpful to see those corporate moves that meant that the large companies referred to in this debate paid so little in this country over a number of years. That has made the issue of how corporations use tax systems in different countries to move around their profits more understandable to the wider public, and that is a great motivator. The Prime Minister has put tax evasion and avoidance right at the top of the agenda for the G8 and is focusing on fixing the issue here, too.

I want to address some specific issues that have been raised. A number of hon. Members raised the issue of the EITI. In terms of our membership, the UK is a real supporter of the EITI, and first thought of it, but we did not implement it in the past because the IMF did not consider us resource rich. Greater transparency in the extractive sector will be an important focus of the UK’s G8 presidency in 2013. As others have said, the UK can hardly call on other countries to implement the EITI or live up to high standards if we are not prepared to do so ourselves. That is why the Prime Minister called for an urgent review of the UK’s position on EITI. We expect that review to be concluded by the end of January. We provide support to the EITI International Secretariat and the EITI multi-donor trust fund, which provides technical assistance to implementing countries and represents the UK on the EITI board. Our bilateral programmes support EITI candidacy and/or implementation: for example, in the Democratic Republic of the Congo, Nigeria, Afghanistan and Burma.

[Mr Charles Walker in the Chair]

At the moment, a decision has not been taken on the publication process of the EITI review, but the broadening of the scope was also raised. The Government welcome the review of the EITI that is under way to develop a broader standard for consideration by the EITI board, with a view to possible introduction in 2014. The UK is an active participant in the strategy review, which is a multi-stakeholder process, considering a wide range of proposals that could be included in a revised standard. As was raised by my hon. Friend the Member for Mid Derbyshire (Pauline Latham), the proposals include disclosure of contracts, more disaggregated reporting of data and background on the sector, among other things.

A number of hon. Members raised FATCA, or the US Foreign Account Tax Compliance Act. The Government are fully committed to tackling tax evasion. As we stated in the Government response to the Committee, we do not regard the unilateral introduction of a version of the US FATCA in all its glory—so to speak—in the UK as the means to achieve automatic information exchange, because FATCA is unilateral and extraterritorial in its approach. For example, it imposes severe withholding taxes on those that do not comply. While I cannot elaborate at this point on the significant difficulties that have been created for the US as well as the companies affected by its implementation, I am happy to undertake to write to my right hon. Friend the Member for Hazel Grove on that issue.

That said, as hon. Members may be aware, the Government have signed an agreement with the United States of America. It is the first of its kind and it will significantly increase the amount of information automatically exchanged between both countries. As announced at the autumn statement, the Government see that as testing a new international standard in tax transparency. Obviously, when we see how that goes, the Government will look to conclude similar agreements with other jurisdictions. The UK and the Isle of Man have jointly announced our intentions to conclude an enhanced automatic tax information exchange agreement, based on the UK-US FATCA agreement. We are also in similar discussions with the other Crown dependencies and the overseas territories. The Government commend the great leadership of the Isle of Man in this area. The G20, of course, is committed to strengthening tax transparency and the exchange of information.

[Richard Burden]

I am grateful to the Minister for giving way. If I understand her correctly—I hope she will tell me if I have got this wrong—in terms of the outline agreements that are being reached with the United States and the work that is being done in relation to overseas territories, are the Government saying that they see those as a kind of pilot scheme for a more extensive automatic transfer of information? If so, that sounds like a good thing. If not, there is still a gap. What about the wider application of automatic transfer of information?

[Lynne Featherstone]

I thank the hon. Gentleman for his intervention. I cannot give him the comfort that he seeks that it is the Government’s intention, if what he refers to works, to extend it right across the world, but we are extending it and looking at it. If it provides a good model, we will obviously look at it again to see what application it might have in which jurisdictions.

My right hon. Friend the Member for Gordon raised the issue of Pakistan. I believe that hon. Members may have taken representations or evidence this morning. I understand that that is a real issue, because Pakistan has one of the lowest rates of tax collection, averaging only 10% of GDP in recent years. An improved tax regime is the key priority for DFID in Pakistan. The importance of improving Pakistan’s tax-to-GDP ratio is raised regularly in our engagement with senior Government representatives there, as it is by the IMF and other donors. We raise it; the issue is trying to get an effect and a change in the circumstances there. DFID is involved in strategic dialogue about the World Bank’s support on revenue at federal level and also contributes analytical work—for example, on the political economy of tax reform. We are supporting wider public financial management reform in some provinces. That includes the strengthening of revenue policy. This is a major issue, on which we are putting a lot of emphasis.

There was frustration about the willingness of elites to pay tax in developing countries. It is true: the elites are very reluctant to pay. How can we expect everyone else to be paying tax in a country if the elites are not setting an example? As an example, I refer to what DFID has done in Burundi. As ever, I hear what my right hon. Friend says about the Select Committee’s view on Burundi. He has made that case both publicly and privately on many occasions. However, there is the recent example of DFID supporting the Office Burundais des Recettes. A public outcry has led to MPs and Ministers paying tax for the first time. It is something if one can raise the issue to the point at which there is a public voice about the accountability of the Government in terms of setting the prime example. My right hon. Friend made the point that if Prime Ministers and MPs do not pay their taxes, it is pretty hard to say to the rest of the country and to the elites, “You should be paying tax.”

I do not want to go on for too long. The Chair has changed—it is a great pleasure to speak under your chairmanship, Mr Walker—and my right hon. Friend the Member for Gordon must introduce the second debate. However, I want to address a couple of things. One issue that was raised quite often was the Starbucks effect and what we are doing in this country about that. The Government are taking significant steps to ensure that everyone, including multinational companies, pays their fair share of tax. The response is twofold. There is support for international action. Alongside France and Germany, we are providing additional resources to the OECD to speed up the international efforts on dealing with profit shifting by multinationals and erosion of the corporate tax base at global level. The OECD will deliver a progress report to the G20 in February 2013 on actions to tackle base erosion and profit shifting.

There is also further investment in HMRC. HMRC will expand its risk assessment capability across the large business sector and increase its specialist transfer pricing resources to speed up its work to identify and challenge multinationals’ transfer pricing arrangements. The Government relentlessly challenge those that persist in avoiding tax and have recovered £29 billion of additional revenues from large businesses in the last six years, including £4.1 billion in the last four years from transfer inquiries alone.

A number of hon. Members raised the issues brought up by Christian Aid and ActionAid in relation to the costs of evasion and avoidance. As has been discussed, the estimates are numerically disputed, but the bigger point is that, despite suggestions that the estimates of tax evasion and avoidance have been agreed by the OECD, the figures have not been endorsed by any of the OECD’s committees. The key point is that evasion and avoidance are undoubtedly significant challenges for developing countries and that the Government are committed to providing support, but as I have said, tax capacity building and technical assistance are the primary issues.

I want to deal with the country-to-country reporting model or rather the broader one, not the one that is being considered for the EU directive, which is for the smaller view. The big ask is the model whereby all multinationals disclose information that goes beyond payments to Governments. This model has been discussed in the OECD task force on tax and development without any consensus being reached on its merits. The Government believe that the case has not been made for the effectiveness of this model in achieving its objectives while minimising costs to business. It is not being called for by developing countries, but the Government do agree that many developing countries do need to improve their ability to assess transfer pricing risk and detect abusive profit shifting and that other options, such as the transfer pricing transaction schedule described in recommendation 7, could offer more proportionate and effective help.

A number of hon. Members raised the issue of a DFID Minister for tax. I have to say, as my right hon. Friend the Member for Hazel Grove rightly predicted I would, that the development impact of UK tax and fiscal policy is a collective responsibility for all members of Government. DFID, the Treasury and HMRC all work together. [Laughter.] Did my right hon. Friend read my brief? However, the UK is committed to helping developing countries to build robust, fair and sustainable domestic taxation systems and, having listened to what was said, I propose to consider the proposal that was made for an inter-ministerial group. I will take that away with me. I am not promising anything, but I want to look at how that is referenced. There are many discussions across Government. Her Majesty’s Treasury is everywhere across Government, as I am sure hon. Members in this room are well aware, but if what was proposed would be a productive way forward, I am certainly prepared to look at it in the future.

The last issue that I will address, because I have gone over my time slightly, is the request by the International Development Committee on scaling up. The report acknowledges the value of technical assistance provided by DFID and HMRC to national revenue authorities in developing countries and recommends that work in this area is scaled up. I agree completely. I have been in post for four months now and have been looking at this issue. Tax is high on the agenda. It is high on the agenda for the G8. It seems to me that the most successful and most useful thing that we have done as a Government in terms of enabling developing countries to operate is to enable them to be the masters of their tax collection and their tax systems.

I was in Zambia, too, and Zambia did fail some of the tests set by the IDC in terms of the provision of information. We are looking at that. But in Zambia, I did meet representatives of the audit committee, the public accounts committee and the Office of Public Prosecutions. All of them are taking on this agenda in a way that I have not seen in many places. There really is a desire for them to collect the revenue and for us to help them—enable them—to do that and do it well.

I am sorry that I have not addressed all the points that were made. There is unanimity across this room and, indeed, everywhere that it is important to deal with tax avoidance and tax evasion not just because that would enable countries to fund their own public services and to begin to achieve separation in terms of aid dependency, but because there is moral rectitude in paying one’s fair share. In this country, as others have said, we stand proudly on our commitment to 0.7% of GDP in a political environment that is challenging; there have been attacks on us for that. We have to show that every penny counts and every taxpayer pound is spent wisely. One of the ways in which we do that best is by helping to ensure that tax revenues can be collected across the world. Those who travel across the world and talk to the Governments of the world and civil society across the world will know that the position is variable across the world. We are making progress, but there is still progress to be made.

I thank all Members for their contributions. I thank the Committee again for drawing attention to this subject and for recognising the valuable work the UK is doing. The IDC has made a valuable contribution to the new shape of our programme for tax.

[Mr Charles Walker (in the Chair)]

Order. May I ask Sir Malcolm Bruce to respond briefly to this debate and then to move seamlessly into his opening remarks for the next debate?

HIV (Developing Countries)

Baroness Featherstone Excerpts

Wednesday 19th December 2012 Westminster Hall

[The Parliamentary Under-Secretary of State for International Development (Lynne Featherstone)]

Thank you, Mr Bayley, for calling me to speak. It is a pleasure to serve under your chairmanship this afternoon.

First, I thank the hon. Member for Mid Derbyshire (Pauline Latham) for calling a debate on such an important topic so soon after world AIDS day. I also thank hon. Members from all parties for their thoughtful and important contributions to this debate on what I still regard as one of the priorities for all of us in this day and age. I sometimes feel that, with the advent of drugs that mean people can live with AIDS rather than it being a death sentence, a complacency has begun that somehow the situation is not as bad as it was. With the tantalising prospect of zero infections and zero transmissions just out of reach, we know that success can be achieved, but if any of us let up on our commitment to tackling the disease it will not happen. We must translate our commitment in Westminster Hall today to those around the world who have the power to take the fight forward, and we must keep going in that regard.

As many Members have said, there is much to celebrate. The latest UNAIDS report shows an unprecedented pace of progress in the global AIDS response, with 700,000 fewer new HIV infections each year across the world than a decade ago, especially among newborn children. The work to eliminate HIV transmission from mother to child is clearly delivering results. More than 8 million people now have access to treatment and, for the first time, countries are investing more money in HIV than is received from global giving, which shows that we are moving forward to a sustainable response. That is really good news.

Many people, including me just now, have raised the possibility of seeing an end to transmission—zero infections—but so much is still to be done, and there are risks that could seriously jeopardise the incredible progress we have made. Too many people are still getting infected, with 2.5 million new infections last year. Women remain disproportionately affected, accounting for 58% of people living with HIV in Africa, and I will come on to specific points raised about that in a moment. Some 7 million people still do not receive the treatment they need, and in low and middle-income countries work to address HIV in key populations—sex workers, men who have sex with men, injecting drug users and prisoners—is still almost entirely funded by international sources, which is an inadequate human rights response and is not sustainable. I will come on to some of the issues relating to human rights and homosexuality.

The context in which we work is changing; the dynamics of the HIV epidemic are changing and the patterns of resources are shifting. We must continue to adapt our ways of working to overcome those challenges, and we need a global HIV response that is fit for purpose. DFID supports, therefore, the strategic investment approach, which allows countries to make decisions about how to allocate resources most effectively and efficiently on the basis of national evidence. I am pleased that through the approach DFID and other members of the HIV community are embedding the principles of effectiveness, efficiency and equity. The focus will help to drive more and better results and improve value for money.

The decisions taken at the recent board meeting of the Global Fund to Fight AIDS, Tuberculosis and Malaria demonstrate that efforts are being made to find new and more efficient approaches. The new funding model should better align with country processes, reduce transaction costs, and make a greater impact with investments. DFID is closely following its implementation to ensure that it achieves those aims.

Many Members have mentioned the issue of the global fund. We have committed £1 billion between 2008 and 2015, and that time scale has not been delayed but rather brought forward by one year. Regarding increasing our funding, we have stated that future funding increases are contingent on the global fund’s progress with reforms. I hear the exasperated, “But hasn’t it done enough?” We have committed to reviewing our position paper, and we will have the multilateral aid review update, which is due in the first half of next year. That will provide us with the evidence, but the intention is to make the increase. The global fund has moved a long way from the days when there were issues in round 11 and we had to suspend payments to the fund. With the fund’s replenishment planned for September 2013, the UK is committed to working with others to ensure that reforms succeed and, as has been mentioned, to using our influence with other donors to draw in more overall financing to raise the final total.

One of the deepest ironies of the HIV epidemic is that the people most in need of prevention and services are from communities that are most neglected and discriminated against. A human rights approach is, therefore, essential, and through our bilateral aid review process DFID’s country offices have been updating their HIV programmes, based on the latest evidence and on national responses. In Zimbabwe and other parts of southern Africa, where there is evidence of growing epidemics in key populations, we are exploring how we can pilot innovative approaches to prevention with sex workers, adolescents and prisoners. We have also given new funding for the Robert Carr Civil Society Networks Fund to support global and regional networks to improve HIV responses for key populations.

We also recognise that addressing gender inequality and ensuring women’s rights is also essential to achieve universal access. The Prime Minister appointed me as international champion for tackling violence against women and girls across the world, and that issue is a key part of my agenda. Violence against women and girls is one of the most systematic and widespread human rights violations in the world, and it materially and significantly increases the risks of maternal death and vulnerability to HIV and AIDS.

The issue of sex education has been raised. I recently returned from Zambia, and I was shocked to find that no one talks about sex there. Not only is sex education not taught in school, sex is simply not spoken about. One of DFID’s programmes there is about girls’ empowerment, and I went to visit the girls and asked them which of their life lessons—that is almost what they are—they liked the most. They had had only three lessons so they did not have many to choose from, but it was heartbreaking that they said that what they most liked was finding out about their own bodies. They had absolutely no idea about the changes that were happening to them.

[Pamela Nash]

I want to reassure the Minister that I witnessed a similar DFID-funded programme in Rwanda that was much further forward than the three lessons. I witnessed young girls being fantastically confident in talking about their own health issues. They had much stronger and brighter futures as a result of the programme.

[Lynne Featherstone]

That is the key point: education is vital. The girls were saying that the boys were already very jealous because they were not allowed to go to the girls’ meetings. The initiative was empowering them to feel confidence in their bodies and about their rights over their bodies, and the boys were beginning to be a bit more wary of them. It is a long process, and negotiating such relationships, even in this country, is not always easy.

Having said that about boys, there is also a lot of work to do with boys and men. I went to a gender-based violence clinic—a one-stop shop—where remarkable work was being done with bringing the men along. Where there had been violence, the men had to come in for counselling. They were invited in, and if they did not come they were invited again, by the police. If they still did not come the police went and got them—quite extraordinary. Of the 10 survivor women I talked to, five said that they were still with their husbands, who had changed. One of the men had joined a men’s network. Men who have multiple partners are a real threat, where the spread of HIV is concerned.

Many Members raised issues about Uganda and the homosexuality Bill. I went to Uganda before I moved to DFID, in my violence against women role. Where women are oppressed, there are often hideous homosexuality laws. I raised the issue with the Speaker of the House in Uganda. I would not say that what I said was taken in the best way, but I raised the issue politely, but firmly. It is important to be able to discuss matters, even when people disagree. The discussion was private and appropriate. The issue is a really serious one, and it is not uncommon in many countries across Africa and Asia. I am looking closely at what is possible and at how we move forward on the agenda. One thing we do is to support civil society and Ugandan groups. I met with groups when I was in the country, and there is a lot of fear of a backlash, so how we move forward is a delicate matter.

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

The Minister mentioned Uganda. Has she had any discussions with any of her Foreign and Commonwealth Office colleagues about making the case in other Commonwealth countries about more legal reform, so that people are not persecuted? I firmly believe we should be doing that.

[Lynne Featherstone]

The hon. Gentleman raises an important point. He may be aware that the Prime Minister raised the issue at the Commonwealth Heads of Government meeting. I have spoken to Foreign and Commonwealth Office Ministers about the issue, and in my international champion role I have developed key messages. Three of those messages are on women, and they address: leadership; rights and laws; and impunity, access, justice and enforcement. There are two messages on homosexuality, and it has been agreed that all travelling Ministers will raise the issue when appropriate. That must be done appropriately as it is easy to raise feelings that the issue is a western construct. The issue, therefore, has to be worked out with the countries not in a preaching way, but in a way in which we can discuss our differences and move the agenda forwards. Human rights are a priority, and we have all made that clear on many occasions. Nevertheless, we work across many countries that come from a different place from us.

In parallel, the UK Government complement grass-roots demand for change through our diplomacy on human rights overseas. We are committed to ending religious intolerance and persecution and discrimination against individuals on the basis of their sexuality. We regularly review the commitment to and respect for all human rights in other countries, including the likely direction of travel over the coming years. Where we have specific concerns about a Government’s failure to protect their citizens’ rights, we raise those concerns directly at the highest levels of the Government concerned.

I will now answer some of the other points that were raised by Members and try to finish ahead of time—we are running over because of the Division.

The hon. Member for Airdrie and Shotts (Pamela Nash) asked about direct budget support payments to Uganda and the condition of renewed payments. Aid to the Government of Uganda is predicated on fundamental commitments and agreed principles, so any renewal of general budget support depends on those conditions being met. The route is always open, and there is nothing we would wish more than for countries to want to come back to the same table as us. I am hopeful that that will be the case one day, but it is very early days as we try to address the diplomacy and geopolitics on the Democratic Republic of the Congo, Rwanda and Uganda.

We support Ugandan civil society groups, including the Civil Society Coalition on Human Rights and Constitutional Law, which trains in advocacy and covers the costs of legal cases to protect LGBT communities. That is just one example. Where we cannot give directly to Governments, we find other ways to help people in countries where possible.

My hon. Friend the Member for Mid Derbyshire specifically raised a number of points. Under the global fund’s new funding model, there will be a targeted band for countries, such as Ukraine, with higher incomes and a lower disease burden that remain at risk from rising epidemics. That allocation band includes countries that should focus resources on most-at-risk populations, which are the groups that we have discussed. The UK has consistently argued that such groups should be prioritised in that context. That was the argument I used in Ethiopia when then Prime Minister Meles and I discussed public health, transmission and other such issues.

My hon. Friend is right that Gilead has shown leadership in joining the medicines patent pool, which we strongly support. We are encouraging other companies with patents for new first-line treatments for HIV/AIDS to consider beginning formal negotiations to enter that pool.

On the G8 and the post-millennium development goals, we will use our influence with the international system to deliver our global commitments. As part of our G8 presidency, we will be reporting on progress against existing commitments and holding members to account. There is definitely a view that we need to finish the job. As exciting as it is to think about post-2015 MDGs, there is still much work to be done on the goals we are in the middle of right now.

Several Members raised the issue of the Why Stop Now? UK blueprint, which is where we slightly part company. Our review of progress on the UK’s position paper will happen in the early part of next year, and it is there that we will make our next decisions based on evidence. We think that just spending a lot of our resources to create another blueprint will be just that—using a lot of our resources—when we basically know what we need to do. We want to get on with working with international partners on implementation, rather than having to stop and bring all our resources back to create another plan. We want to work with stakeholders to ensure a robust and accountable analysis of DFID’s HIV results. We are still discussing the time frame because our review of our position paper needs to align with a number of other international processes. I am aware of the call for a blueprint, but I do not think it is necessarily the way we want to go. I apologise if that disappoints anyone. Indeed, I see the AIDS Consortium sitting in the Public Gallery, and I think I have shown my commitment. My first speech as a Minister was an address to the annual general meeting of the AIDS Consortium, which I have since met to discuss all the issues.

I must be quick, but a number of Members raised the issue of the relationship between HIV and tuberculosis. My right hon. Friend the Member for Arundel and South Downs (Nick Herbert), whom I used to work with at the Home Office, specifically raised that issue. TB is the leading cause of death for people living with HIV. DFID supports leadership among countries on integrated responses rooted in knowledge of local epidemics, with donor support harmonised in line with national plans to deliver quality integrated HIV, TB and reproductive health services, which was a call across the Chamber.

I acknowledge the two issues raised by my right hon. Friend on the TB REACH programme and on vaccination, both of which I will consider further. At the moment, DFID’s support for TB research includes £205 million to the Global Alliance for TB Drug Development and £14 million to the tropical disease research programme.

The hon. Member for Strangford (Jim Shannon) mentioned how condom use and circumcision have helped HIV prevention work in Swaziland and the rest of the world. I thank him for highlighting the challenges in Swaziland, and DFID agrees that a combination prevention approach, including condoms, male circumcision and education, is essential to an effective response.

[Jim Shannon]

I also mentioned how pharmaceutical companies in India are able to produce the same anti-HIV drugs more cheaply than companies in America. Without promoting any company over any other, does the Minister agree that, if cheap medication is available in India that is every bit as effective as other medication, we should be sourcing medication from India, given our DFID contribution to countries across the world?

[Lynne Featherstone]

I thank the hon. Gentleman. We have heard the point that he has made so well.

I thank all hon. Members who have spoken, particularly my hon. Friend the Member for Mid Derbyshire, who secured this important debate. It is heartening to see so many Members who genuinely hold HIV as a priority and will pursue the wonderful goal of zero infections.

Oral Answers to Questions

Baroness Featherstone Excerpts

Wednesday 12th December 2012 Commons Chamber

[Simon Wright (Norwich South) (LD)]

5. What progress her Department has made on developing sustainable development goals.

[The Parliamentary Under-Secretary of State for International Development (Lynne Featherstone)]

We are working internationally to secure a single set of development goals for the period after 2015. We want to build on the millennium development goals, finishing the job by eliminating poverty but also incorporating the sustainable development priorities that were agreed at Rio+20 in June.

[Simon Wright]

Will the Department support the Prime Minister in his role as co-chair of the high-level panel on the post-2015 development framework in order to guarantee integration and coherence between this process and the sustainable development goals, with the aim of putting environmental sustainability at the heart of the framework?

[Lynne Featherstone]

My hon. Friend raises a critical issue, that of ensuring that coherence and integration exist between the sustainable development goals and the post-2015 millennium development goals. I assure him that my Department is doing just that. Across Government, we have a single structure and approach to managing our engagement with both the high-level panel and the SDGs. The Prime Minister’s envoy is a senior DFID official, and is responsible for both those things.

[Mr George Howarth (Knowsley) (Lab)]

Will the Minister tell us what part conflict analysis and sensitivity play in the approach to the sustainable development goals?

[Lynne Featherstone]

Conflict plays a big part, and the sustainable development goals are incredibly important to ensuring that we reduce poverty. Poverty is at its highest where conflict is at its greatest.

[Mr Graham Stuart (Beverley and Holderness) (Con)]

The GLOBE climate legislation initiative will be launched in the Foreign Office on 14 and 15 January, and will bring together legislators from 33 countries to discuss national action on climate change. Does the Minister agree that further national action is necessary, and that we should follow the example of countries such as Mexico, which has passed legislation, and China, which plans to do so, in order to establish the conditions that will allow international agreement in 2015?

[Lynne Featherstone]

We already have legislation in the form of the Climate Change Act 2008, but it is crucial for all of us, in all countries, to work together in moving towards sustainable development goals. As I said earlier, climate change is absolutely critical to the reduction of poverty, and all countries need to ensure that they are working on that.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

In Copenhagen the developed world agreed to establish a $100 billion fund to help developing countries to cope with the effects of climate change, but, despite further calls for urgent action at the Doha summit, only a fraction of that funding has been delivered. What progress does the Minister think the United Kingdom Government have made in showing international leadership on this important issue?

[Lynne Featherstone]

That is obviously one of our priorities, and we have taken a lead. I think that DFID is a world leader in terms of its development agenda. Doha was not a complete failure, although the outcome was disappointing; some small steps forward were made. Climate change is critical, and it is a priority for the Government.

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

6. What her Department’s strategy is on tackling HIV and supporting the Global Fund to fight AIDS, Tuberculosis and Malaria.

[The Parliamentary Under-Secretary of State for International Development (Lynne Featherstone)]

The Government’s policy is set out in our position paper called “Towards zero infections”. We will continue to support the fund as it implements key reforms. It is critical to achieving the millennium development goals, we have invested heavily in it, and we want it to succeed.

[Mr Thomas]

I welcome the Government’s support for the election of the excellent Mark Dybul as new executive director of the global fund. Given that next year will be a replenishment year for the global fund, will the Minister use her G8 discussions to leverage additional funding from other countries and announce further UK funding for the fund?

[Lynne Featherstone]

I certainly hope that will be the case. One of our roles is, indeed, to leverage more funds across the board into the global fund. As the hon. Gentleman says, a replenishment year is coming up, and we will do all we can to make sure funds are replenished from everyone.

[George Freeman (Mid Norfolk) (Con)]

Does the Minister agree that Britain’s agricultural science and our leadership in plant and animal genetics offer huge opportunities for us to help the developing world to deal with its emerging food nutrition challenges? I welcome the Government’s launch last month of an agricultural science strategy.

[Lynne Featherstone]

I agree that advancement in science will help to take this agenda forward. That is crucial in developing agriculture.

[Karl MᶜCartney (Lincoln) (Con)]

8. What steps she is taking to ensure value for money in her Department.

--- Later in debate ---

[Dr Julian Huppert (Cambridge) (LD)]

9. What steps she is taking to provide aid for economic development in the Gambia.

[The Parliamentary Under-Secretary of State for International Development (Lynne Featherstone)]

Although DFID does not have a bilateral aid programme in the Gambia, the UK continues to support the Gambia through our share of contributions to multilateral organisations. The European Development Fund disbursed €27.69 million in 2011, of which €25.36 million was spent in the sector of “economic infrastructure and services”.

[Dr Huppert]

I thank the Minister for that answer. The shape of the Gambia is a colonial relic based on how far a boat could travel up the river and how far shots could be fired from each side. There is very little significant river traffic at present. Will the Minister look at investing and providing a boat that will enable the up-country areas to develop at the same rate as the coastal areas?

[Lynne Featherstone]

I thank my hon. Friend for that question. He rightly says that the Gambia’s shape is such that the river is the main road, if I may put it like that. The UK has supported the Gambia groundnut river transport fleet through the EU funding. Between 2008 and 2010, £1.1 million was spent on rehabilitating three tugboats to enable the river fleet to operate effectively and efficiently. Since 2010, EU funding has been going towards a road infrastructure to assist the boat. [Interruption]

[Mr Speaker]

Order. Far too many noisy private conversations are taking place in the Chamber. I happen to know that Members of Parliament from other countries are observing our proceedings, and we ought to set a good example. Let us have a bit of order for Mr James Gray.

Overseas Aid (UK-based Consultants)

Baroness Featherstone Excerpts

Tuesday 20th November 2012 Westminster Hall

[The Parliamentary Under-Secretary of State for International Development (Lynne Featherstone)]

It is a pleasure to serve under your chairmanship, Mr Howarth. I thank the hon. Member for Hackney North and Stoke Newington (Ms Abbott) for calling a debate on such an important topic. As she and the hon. Member for Workington (Sir Tony Cunningham) said, it is important that we deliver effective aid and get value for money—something the Government have made their watchword in relation to development aid. I was a little disappointed in a way to hear terms such as trousering money, creaming off the aid budget, lords of poverty and hardship tycoons.

I think that the hon. Lady did her case a disservice, because the real test is whether there is value for money. As to what those lords of poverty get, if the sum delivers the aid and it is effective, the quantity is not the issue. The issue is whether it is effective and whether we get value for money, as both Opposition Members who spoke said.

[Ms Abbott]

The Minister may think that I sound a little harsh about the lords of poverty, but she needs to hear a rising class of intellectuals in Africa, the Caribbean and the far east talking about those same people. They are more than harsh; they are scathing. They query the value of aid altogether. If the Minister is concerned about my tone, she needs, on her travels abroad, to meet some of those rising young intellectuals and hear their critique.

[Lynne Featherstone]

I assure the hon. Lady that I do meet and will meet members of the rising intellectual classes, or whatever she termed them, and that I would give them the same answer: the point is whether aid is effective and whether the British taxpayer gets value for money. That is important.

The good part of what the hon. Lady said was that the Opposition are committed to the 0.7% aid target, or are glad that the coalition have made that commitment. We will be the first country to deliver that, as set out in our manifesto and the coalition agreement, in 2013. She is right in what she says, in the sense that that is the percentage that we as a first-world developed country should give, not just because it is right, but because it is smart. It is a wise and good thing to do because it helps us and others. I am glad that both sides agree about that. The hon. Lady spoke of safety for all, and that is part of it.

There have been political shenanigans to do with aid recently, and as the hon. Lady has taken to reading The Daily Telegraph, she will have noticed that it often levels a salvo or two at the 0.7% target, and not only at the consultants. However, the whole point of a percentage is that it is geared to the fortunes of the country as they go up or down. We can maintain our commitment to the figure, because it is geared to our economic fortunes.

I want to put the debate in context. When the coalition Government came to power in 2010 we made it clear that we would ensure maximum development impact on the ground, and full accountability to British taxpayers, so that their money would be well spent. We have done much to improve value for money for UK taxpayers, and for the poor people who receive our aid and development assistance. As the hon. Lady mentioned, that has included, through the bilateral and multilateral aid reviews—which are revered across the development spectrum throughout the world for the work they have done in examining value for money, a full assessment and analysis of where and how we spend the aid budget to ensure that it gives maximum value for money. That has adjusted the focus so that it is now on a smaller number of countries, and funding to some poorly performing international agencies has been cut, in a move that gets life-saving help to many more people.

I prefer the term “suppliers” for those to whom the hon. Lady refers as consultants, because, as she said, while a global figure is given to them, only a percentage of it is administration, and the vast majority of it is for delivering the programme in-country. It is important to recognise that the direct engagement of contractors, or suppliers, is only one of a number of channels that we use to deliver development assistance on the ground. We strengthened the business case process in January 2011, to ensure that there would be good decision making about when and how to use contractors in our programmes, and we must also acknowledge that the suppliers engaged by DFID undertake a wide range of activities to support the delivery of the development programme. The majority of those suppliers’ contracts are managing the delivery of programmes, or managing the distribution of funds to deliver programmes on behalf of DFID. Those were some of the examples that the hon. Lady raised.

[Sir Tony Cunningham]

I understand the point that the Minister makes, but I wonder how she can justify salaries of £1 million or £1.5 million to some of those people.

[Lynne Featherstone]

The proof of the pudding is in the eating: it is a question of what they delivered, whether it was value for money, whether it could have been got cheaper elsewhere, what the processes were, whether they were rigorous and whether the arrangement delivered, on the ground, the enormous programmes that we are carrying out throughout the world, in-country, across Africa and Asia. As to the suppliers we use, yes, UK firms win a significant proportion of our work, and the vast majority—90%—of the larger contracts. Technical capacity is one of the major deficits in the poorest countries, and the market for professional services and technical assistance in developing countries runs to tens of billions of pounds a year. British firms have strong expertise in the area and compete effectively in that big, global market—including for contracts awarded by DFID, but also right across the world.

UK aid is, as the hon. Member for Workington said, untied, and almost all our contracts are subject to competitive tender. When UK firms win contracts from DFID it is because they have offered value-for-money solutions to the requirements in the contract. We encourage firms from developing countries to compete for DFID business. However, local markets often lack the capacity, especially for programmes where specialist skills and experience are required to maximise results. That is particularly relevant as we have increased our focus on working in fragile and conflict-affected states. However, it is important to note that local firms and staff benefit from DFID contracts when our suppliers establish local teams in-country to deliver the programmes and to advise, just as we employ members of the local community to work in DFID offices, for the very reasons that the hon. Lady gave: they have local knowledge and experience. However, often it is not possible for local firms to mount the sorts of applications that can deliver.

[Ms Abbott]

The reason the firms in question can compete is their size, which is due to the bloated DFID contracts. The Minister seems to imply that the work goes to UK-based consultancies because the skills and knowledge are not available locally. I remind her that there are in her constituency, as in mine, thousands of people from the same areas of the world to which she dispatches UK-based consultants, and that they have the relevant skills, knowledge and potential; but nothing in DFID policies encourages them to go home and set up the consultancies that could meaningfully bid for the contracts.

[Lynne Featherstone]

The contracts and tenders are open and anyone can compete for them. If there is a fair process that encourages local employment I do not see how the hon. Lady can argue that it is not a fair and due process. However, it is true that 90% of the larger contracts go to UK contractors, who have a lot of experience in the field. That is not to say that others could not make a bid that would beat them; but the percentages are the way it is. That is the result of the tenders.

Suppliers such as Population Services International can deliver significant results and value for money. In the Democratic Republic of the Congo—and not everyone knows how to work and deliver in such fragile states—97% of the population live in areas with high rates of malaria, and the prevalence is as high as 80%. The hon. Lady raised the question of bed nets: a supplier contracted by DFID is providing and distributing bed nets. That will provide more than 4 million bed nets to people in remote locations and educate the recipients to ensure that they are used effectively. Such programmes, although a British company may contract them, will be delivered locally.

The challenge for us and our suppliers is to ensure that we maximise the results achieved and the overall return on investment from each contract, and on every programme. With that in mind, we want our suppliers, in some priority areas, to do more to support our goals. We want them to reflect our objective of building local capacity by ensuring that programmes develop sustainable solutions and encourage self-sufficiency, and we are looking for that in those bids. Given our change in focus towards fragile and conflict-affected states, we increasingly look to our contractors to develop the capability to deliver effectively in more challenging environments.

The hon. Lady raised the question of transparency. It is of course hugely important to us. We want contractors to operate transparently and to reflect that important principle in the programmes that they run for us.

[Ms Abbott]

The Minister has admitted, or confirmed, that 90% of the contracts go to UK-based consultancies.

[Lynne Featherstone]

The larger contracts.

[Ms Abbott]

To avoid doubt, is the Minister saying that she is happy with that high proportion, and that she has no plans over time to try to bring it down? I want to be clear about that.

[Lynne Featherstone]

I have the ambition of delivering value for British taxpayers’ money. That is the objective. Within that, we want more of our contractors to show us how they will use local people, and we want that to be encouraged and embedded. DFID is a great skills educator, in terms of the work that it does in-country to educate and train people to take on roles and become more experienced, so that in time, they will be able to win a larger proportion of those contracts.

On improving value for money overall, we want our contractors to recognise more explicitly and to reflect more clearly our common objective of reducing poverty. We want them to take action to demonstrate that: for example, by focusing on value for money and by sharing with others their learning and knowledge of what works, in order to improve the effectiveness of our development work. It is an iterative process.

I want to try to answer some of the hon. Lady’s specific points. I agree that the British public are generous. They are proud of both our record on international aid and development and the work that we do, and they look to support us. That is why in DFID, and as a coalition Government, we make such strenuous efforts to deliver value for money and aid effectiveness. As she said, there are political and dark forces out there that might wish to destabilise that commitment, but only by delivering effectively and ensuring that we provide value for money for the British taxpayer can we defend ourselves and the work that we do.

The hon. Lady said that she was not going to raise issues about decisions being ideologically driven—I think she was implying that there was a switch to private contractors. I want to ask, however, whether she and perhaps more directly, the hon. Member for Workington, were ideologically opposed to the use of contractors, because in my book, it is about whoever delivers the best results.

The hon. Lady asked about Triple Line Consulting’s assessment of the application for £250,000. Triple Line manages the global poverty action fund on behalf of DFID. Applications are reviewed in accordance with criteria set by DFID to maximise the effectiveness and value for money from the budget, in line with the Department’s policy priority. Most of the money that goes to Triple Line is passed through to fund projects, as we have said. It was interesting that the hon. Member for Workington said, in questioning whether we have value for money, that poverty reduction should be looked at as one of the criteria. However, one reason for rejecting WellFound’s application was that it made no mention of poverty reduction; it did not demonstrate to Triple Line’s satisfaction that poverty reduction could be delivered.

I actually thought that the argument that clean water and sinking wells should be enough, and that we should not seek anything to do with innovation or new thinking, was quite poor. The sum of £250,000 is a lot of money, and in any contract that DFID lets, or that goes through any funds that are managed for us, we want to see how that thinking can develop and how it can be scaled up. It may not be a matter of just doubling wells, as the hon. Lady suggests. It is dangerous to go into the detail of how or why things were rejected and whether they should have been, when neither she nor I have the details of the bid in front of us. We cannot just look at the broad picture—“We will sink wells”—and then criticise the bid’s rejection, because three things were asked for, one of which was how poverty demonstrably would be reduced. If that was not in the bid, I cannot see why that should not be a reason to reject it, when the hon. Gentleman made such a point of its being a critical criterion for DFID to consider.

[Ms Abbott]

For clarity, I am not saying that digging wells and innovation are mutually exclusive. My point was simply that DFID refused to dig the wells, which would have cost a mere £250,000, but the people who managed that refusal process took a profit of £1.9 million. The public cannot understand that.

[Lynne Featherstone]

As I said, Triple Line is in charge of the whole global poverty action fund, and an administration fee is not that unusual. The real question, as both Opposition Members said, is whether effective aid is delivered.

The hon. Lady raised the issue of the scale and size of projects excluding small firms from competing, and asked whether we wanted to reduce the current 90% of large contracts that are contracted to the UK. We would like to use local staff and firms more, but we need to recognise that some of that will be achieved through contracts directly awarded by DFID. We also need our large suppliers to do that down their supply chain, and we are pressing them to do so. I shall move on to what we are looking at in future in due course.

The hon. Lady asked about transparency. Future contracts are all published on the Her Majesty’s Government’s Contracts Finder website to provide suppliers with the opportunity to bid. I asked about that the other day, as I was inquiring how people anywhere would know that a contract was out that could be bid for. They are all published on that website. All payments over £500 are published, as are business cases for the programmes and the details of the contracts awarded. We want to use it to improve the way we do things, and transparency is very important to us.

The hon. Lady also raised the issue of former DFID staff becoming contractors or suppliers. The Department’s staff are loyal, passionate and committed, and they develop massive expertise, so it is not surprising that after five, 10, 15 or 20 years with DFID, they then move on within the industry or market. Some movement between staff and organisations is to be expected and salary levels are determined by the labour market. I do not seriously think that she would say that someone who worked in DFID for 10 or 20 years, and is committed and passionate, should not then go on to use that expertise in the industry. The Department has business rules in place covering the appointment of civil servants when they leave, and there are controls on conflicts of interest. New controls have been introduced to ensure the appropriate tax treatment of interim staff, and the new PEAKS framework—professional evidence and applied knowledge services—will strengthen controls on the engagement of short-term specialist contractors. If I have misinterpreted what the hon. Lady said, I am sure that she will tell me.

[Ms Abbott]

I do not doubt that many people in DFID are committed and passionate. Years ago, when I was a graduate trainee with the civil service, the most committed and passionate people chose DFID, for example, over the Treasury. I would argue, however, that in the countries that we are trying to help, there are committed, passionate and knowledgeable people, some of whom have to migrate overseas in order to gain employment opportunities. We could do so much more for those countries if we were committed to a policy of developing the capacity of local people, rather than shovelling money at Adam Smith International.

I have listened carefully to what the Minister said about transparency, but how does she explain that the International Development Committee raised concerns about DFID’s use of contractors and external partners and that it has complained about the lack of publicly available information? If the information is available, clearly the Committee does not know about it.

[Lynne Featherstone]

I will return to that issue in due course. The hon. Lady keeps returning to the point about local employment and local opportunities, but we agree about that. It is a question of making it happen and encouraging that, but I have explained to her how that is being done.

On the implication that somehow a tsunami of contracts is now going to management consultants, there is an increase, but there is an increase to what we are doing in all our areas. There is an increase in what we are doing through budget support. There is an increase through sector support. There is an increase to NGOs and there is an increase in the use of suppliers. That is because, as we build towards the 0.7% figure, we are having to scale up and ensure that we deliver. Having different channels through which we deliver is probably the best way forward. A mixed economy of development assistance ensures that we are working and firing on all guns.

Of course DFID’s use of suppliers has grown in recent years. That is because our overall programme has grown and because we are doing more in fragile and conflict-affected states, where the risks are such that we have to retain more control ourselves, rather than channelling money through Governments. In some places, it is just not possible to work through the Government system, and NGOs are not always in place, so we have to work through those with specialist expertise, who can work in these very difficult circumstances. We do that by using suppliers who are accountable to us; it is to us that they are accountable.

We have asked ICAI to review the use of consultants. It is in the early stages of conducting a review of DFID’s use of suppliers to deliver programmes. The report is due in May 2013. The scope of the review is such that it will examine how DFID uses contractors. I am referring to the make-or-buy decision in relation to the business case: how do we decide whether we are going to do something ourselves or whether we need to buy in the service? The review will examine how we select contractors and secure value for money in the procurement process and how we hold them accountable—the contract and supplier management. The ICAI methodology for the study is to select and review a sample of five or six contracts as case studies to identify whether DFID is achieving impact and value for money in its use of contractors.

[Sir Tony Cunningham]

Will the Minister commit to publishing the report in full?

[Lynne Featherstone]

I am coming back to that report. The ICAI report will be published in May 2013.

In terms of the response to the IDC, I do not have the information to hand. I shall have to write to the hon. Member for Hackney North and Stoke Newington on that point.

The hon. Lady referred to the lack of clarity about outputs from DFID programmes. In terms of how we ensure that UK aid money is spent effectively, the main tools are the new business case process, which has brought value for money and results up front in the design of all programmes; annual reviews, which enable us to monitor the value for money of programmes during implementation; and research and evaluation to identify what works best and to learn lessons both from our own projects and from those of others.

In terms of measuring value for money, the value-for-money framework ensures that the value for money of a programme is assessed at various stages of the programme cycle, from business case to DFID’s annual review process, and projects are then scored on whether they are achieving value for money. DFID has also invested heavily in building the evidence base and conducting research and evaluations of programmes to learn lessons about impact and drive greater value for money in future programmes. That is one of the biggest changes in aid and development assistance since the days of the Government whom the hon. Lady supported. There has been a shift in focus on to the evidence base and an insistence that almost everything can be measured and we can look to outputs. The evidence base is critical to evaluating what works, so that when we spend more money, we ensure that we spend it in the most effective way.

There was an assertion from the hon. Lady that consultants add little real value and do not do real work. Contractors actually perform a very wide role. Most of the supplier contracts are buying people and services that support delivery, either by managing the implementation of programmes or by managing the distribution of funds. Sometimes that includes in-kind aid distributed by suppliers. Examples include bed nets and cash—the 40p or 50p a week given to extremely poor people by suppliers contracted by DFID. We also use contractors to provide technical assistance to country Governments to support them in the development of local capacity. Others are used to undertake monitoring and evaluation of programmes or to conduct research to help to improve the effectiveness of our aid. Many of these suppliers play a key role in DFID delivering tangible development outcomes in the world’s poorest countries. I have made clear the importance that we attach to value for money, but also the importance of delivering for the poorest.

I do not have a date for when the report commissioned by the Secretary of State will be finished. I know that the Secretary of State has announced the details of the actions being taken as a result of the review. The recommendations of the report—so it must have been finished—are still being considered, and work is ongoing to plan for implementation. The reason why the report is not in the public domain is that it comes under advice for Ministers and it includes commercially sensitive information, but what the Secretary of State is doing as a result of the report will be published; in fact, I think it has been published already.

The hon. Member for Hackney North and Stoke Newington asked why some of the suppliers working for DFID do not appear to pay enough UK tax.

[Sir Tony Cunningham]

The hon. Lady suggests that the report cannot be published because it contains sensitive material. Is she prepared to produce and provide this information? She can redact the delicate, sensitive information. We want information that is as full as it can be in order to prove that the Department is as transparent as it should be.

[Lynne Featherstone]

I am afraid I have forgotten the point that I was addressing to the hon. Member for Hackney North and Stoke Newington, because the intervention came then.

[Ms Abbott]

Tax.

--- Later in debate ---

[Lynne Featherstone]

I shall come back to tax. I am coming to the response to the report. There was a freedom of information request, which was answered in the same way—that advice to Ministers is exempt from FOI. However, I will come on to what the Secretary of State is proposing to do, in due course.

In terms of tax, which I have now lost the sheet about—I shall come back to that as well. I am sorry; I have managed to juggle the sheets and where I have put down that one I do not know.

[Ms Abbott]

Will the hon. Lady give way?

[Lynne Featherstone]

Let me progress, because as hon. Members have seen, it is better to let me speak all in one go.

The information on tax has come to hand. Almost all large supplier contracts are awarded following an open and competitive tender process under standard HMG rules. DFID clearly states in the invitation to tender terms and the contract terms that the supplier is responsible for meeting its requirements for Government tax. If a company is found not to be meeting its tax requirements, it will be excluded from tendering for future DFID contracts. The amount of tax that an individual supplier pays will depend on its corporate structure. For example, one of our suppliers has advised that it is set up so that it pays tax in the countries where it operates. That is an argument that it has made, but as I said, if a company is found not to be meeting its tax requirements, it will be excluded from tendering for DFID contracts. Right now, we are looking at the way in which a number of corporations pay tax—not particularly in DFID but across the board. That is at the top of everyone’s agenda because we all think that it is unfair and inappropriate.

The questions raised by the Opposition were mainly about value for money and whether the money going to suppliers where there is an administration fee is well spent or is creamed off. That was the inappropriate—I hope—language used by the hon. Member for Hackney North and Stoke Newington. Our new Secretary of State has made it clear that this is a top priority and has further increased the focus on it in the Department. As well as lowering the threshold at which projects come to Ministers for approval from £40 million to £5 million, the Secretary of State is reviewing DFID’s use of contractors to see how we can improve value for money. She has taken action, further to having brought down from £40 million to £5 million the threshold at which projects must have ministerial approval, by introducing new controls so that ministerial approval is now needed for all supplier contracts worth more than £1 million. She is writing to our top suppliers to reinforce to them the importance of ensuring value for money in their work for DFID. She will also meet them to tell them that the Department will look for even better value for money when deciding to award new contracts in future. Our suppliers will have to show that they are not in it only for the money; we want evidence of their commitment to poverty reduction and to the cause of development assistance.

The Secretary of State is also taking steps to introduce tougher monitoring of the performance of supplier contracts, to enable us to review value for money throughout contract delivery and take action accordingly. Instead of having wide gaps in the contract, we will be able to bring up issues at any point and as often as necessary. We will look carefully at our future outsourcing strategy, including the choice of delivery channels and our make-or-buy decisions. The hon. Lady asked about what we do in-house as opposed to what we contract out.

[Ms Abbott]

The Minister has been generous in giving way. I want to remind her of a point I made: concerns about the efficacy of aid are not confined only to the TaxPayers Alliance in the UK. A New York Times bestseller by Dambisa Moyo, a Kenyan former Goldman Sachs trader, called “Why Aid is Not Working and How There is a Better Way for Africa”, points to £1 trillion of development-related aid over 50 years and little to show for it. I am pleased to hear about what the Secretary of State is planning, but if she does not move forward as the Minister indicates, there is a danger that scepticism here will be matched by scepticism abroad and the weakening of the international commitment to aid.

[Lynne Featherstone]

There is no weakening of our commitment to aid. It is important to send that message loud and clear. I do not agree that there is little to show for aid; the hon. Lady prays in aid a book. Even Opposition Members will agree that since the coalition came in, a vast amount has been done to ensure value for money, such as the multilateral and bilateral aid reports and the review work we are doing now.

The hon. Lady mentioned the report on schools programmes in Nigeria. In a sense, the report seems to demonstrate that we spent all this money and have very little to show for it—that is the link I am making—but it was a very limited inquiry. The team visited only 1% of the schools, most of which were in only one state, and they did not take into account the most recent evidence of the projects’ progress. We will obviously review the report’s recommendations and respond in due course.

On that point, I want to say something more generally about the millennium development goals, one of which was about getting children, particularly girls, into primary education. It was a simplistic goal, but it sure focused the world’s attention. Of course, enrolment has been successful, but development is more sophisticated and complicated than that, because it also requires completion, and it requires us to ensure that children learn while they are in school. When the millennium development goals came in, we all said, “We will put a proportion of our money into that.” The programmes are now much more sophisticated and we look at development more broadly. We will obviously look at the report and at what happened in Nigeria.

The whole world has grown up in terms of aid; it is no longer about giving money in the traditional, old-fashioned way to starving poor people, but about working in countries to enable them to become sustainable and look after themselves. That is the point of development aid. To say that we have little to show for the work we are doing is an insult.

[Ms Abbott]

I did not say that, the writer said it.

[Lynne Featherstone]

Whoever said it, it is an insult to the work going on to change people’s lives, deliver on the ground and make future prosperity sustainable.

The private sector is part of the solution. A growing economy that can lift its people out of poverty, as well as the technical assistance that more developed countries can offer, is important.

[Sir Tony Cunningham]

rose—

[Lynne Featherstone]

I will not give way, because I am coming to my peroration.

In conclusion, contractors can perform an important role supporting the delivery of programmes that make a difference on the ground. They can, and do, deliver impressive results, often in incredibly challenging environments, but we look to them to do more. If they read the debate, they will know that they need to think about how they bid, knowing that our focus will be even sharper and our demand for value for money even greater. Our demand that they put more emphasis on how they will encourage local people along their supply chain to bid for work for them and for us is important. I am adamant that we will strive to maximise value for money, results and impact in every possible way. I am acutely aware of how important that is to those whose lives we seek to improve, as well as to UK taxpayers.

Oral Answers to Questions

Baroness Featherstone Excerpts

Wednesday 31st October 2012 Commons Chamber

[Richard Fuller (Bedford) (Con)]

2. What steps she is taking to encourage private capital investment in the Economic Community of West African States.

[The Parliamentary Under-Secretary of State for International Development (Lynne Featherstone)]

Through DFID offices and international programmes, we are helping west African countries to build infrastructure, reform laws and institutions that govern business, strengthen financial services and develop sound projects, to make them more attractive to private investors and stronger trading partners for the United Kingdom.

[Richard Fuller]

I thank the Minister for that response. I am sure that, like me, she recognises the critical role that small and medium-sized enterprises can play in west African states in ensuring development. We welcome the global SME finance facility that the Government have put in place. Will the Minister keep an open mind about expanding that facility, particularly for west African states, and will she join me in welcoming the steps that Governor Fashola has taken in Lagos state to improve the ease of doing business in Nigeria?

[Lynne Featherstone]

I thank my hon. Friend and pay tribute to his work in Nigeria. I know of his interest in development in west Africa. Small and medium-sized enterprises—in fact, all businesses—are most important. Nigeria—and, as he mentions, Lagos in particular—is the growth hub of Africa, as the Prime Minister highlighted when he visited it last year. UK aid will continue to help to create an even better climate for business by supporting better regulation, better infrastructure and more efficient and productive markets.

[Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)]

Does the Minister agree that, should the United Nations Security Council agree to the deployment of troops in north Mali, it will be essential that we do our best to look after the civilian population there and to ensure that humanitarian aid can be delivered?

[Lynne Featherstone]

The right hon. Gentleman raises a really important point. Whatever the military action, our responsibility is to ensure that humanitarian aid is delivered as fast as possible.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

3. What recent assessment she has made of the humanitarian situation in Syria.

--- Later in debate ---

[Jane Ellison (Battersea) (Con)]

T2. I congratulate my hon. Friend the Under-Secretary on being appointed not only to her new post, but as international champion against violence against women. Will she demand more action from Governments in areas where there is a high prevalence of female genital mutilation, and give support to the brave local campaigners doing amazing work on the ground to combat such human rights abuse?

[The Parliamentary Under-Secretary of State for International Development (Lynne Featherstone)]

I thank my hon. Friend, and pay tribute to her for taking such a passionate interest in this issue. Tackling female genital cutting is a priority for me, and there is now a rising desire in Africa to tackle it. Senegal, Burkina Faso, Uganda and the African Union have all indicated that they want to take this forward. We are currently designing an ambitious programme to help end FGC, and supporting civil society organisations working on the ground is likely to be a key component of our work.

[Mr Ivan Lewis (Bury South) (Lab)]

This week in London the Prime Minister will co-chair the first meeting of the UN high-level panel on post-2015 development goals. In this important week, does the Secretary of State accept that we will end the grotesque inequality that continues to scar our planet only through new, responsible capitalism—where ethics and profit are no longer competing options, Governments are active in support of sustainable growth, there is zero tolerance of tax-dodging and corruption, and unfair trade barriers are removed? Does the Secretary of State accept that this radical aid-plus agenda, combining responsible capitalism with social justice, will require a major shift in her Government’s approach to international development?