Oral Answers to Questions

Debate between Baroness Featherstone and Steve McCabe

Monday 17th November 2014 Commons Chamber

[Lynne Featherstone]

The national crime agency for banking fraud has been set up and people are, of course, coming forward to report crime when they previously did not.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

16. What assessment she has made of recent turnout in the police and crime commissioners by-elections.

Bost Project (Afghanistan)

Debate between Baroness Featherstone and Steve McCabe

Tuesday 18th March 2014 Westminster Hall

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

It is a pleasure to serve under your chairmanship this afternoon, Mr Streeter. I am glad to attend this debate and discuss DFID’s involvement in the Bost airfield and agricultural business park project.

I will repeat some of the information that the hon. Member for Birmingham, Selly Oak (Steve McCabe) has already been given and is dissatisfied with, but I hope that the timeline I give him will help to explain why and when decisions were made. He knows that the Bost airfield and agricultural business park project was approved in 2009, under the previous Government, and that Ministers did not authorise the project. At that time, Ministers had delegated authority for routine project spending to officials, up to a maximum value of £40 million. However, approval for the project followed a commitment in March 2009 by the then Secretary of State for International Development to provide £32 million for infrastructure in Helmand over the following four years.

The hon. Gentleman will be aware that DFID was present in Helmand as part of the British-led provincial reconstruction team in Lashkar Gah, the joint civilian-military team working to support the local Afghan government to bring governance and development to the province, alongside the security delivered by NATO and Afghan troops. I am sure the hon. Gentleman would agree that a simple military solution is never the answer; there will always be political considerations, and development and jobs are also required.

The Bost airfield and agricultural business park was approved as part of the provincial reconstruction team’s development plan for Helmand. Both major components of the project—the business park and the airfield—were designed to bolster Helmand’s economy by supporting local businesses and providing secure facilities. Helmand is not the easiest environment in which to work, and the situation was extremely fragile when the project was being planned. The provision of secure facilities was designed to allow local businesses to operate and to increase access to markets and commercial opportunities, which in turn would provide much needed jobs and economic growth for the province.

DFID also agreed to improve infrastructure and provide essential facilities at Bost airfield to connect Helmand businesses to the wider Afghan economy. That included building a fire station, a police station and five security towers, to make the airfield secure and fully operational, as well as an access road and car park. DFID officials met with local businesses to discuss the business park in 2009, in advance of the project being approved. That included regular consultation with the Helmand Business Association—now the Helmand National Investors Association—which represents local businesses. The group confirmed local demand for facilities of the kind planned.

DFID’s financial analysis showed that UK funding would result in a positive return for our investment—at that point. DFID therefore agreed to fund the Bost project in partnership with the Afghanistan Investment Support Agency, which agreed to take on a range of commitments, including finding a regular power supplier, land ownership issues—as the hon. Gentleman has mentioned—and environmental clearance for the park.

In 2011, following some delays in project implementation by our Afghan partners, DFID’s new financial analysis showed a potential negative rate of return on the agricultural business park. DFID’s team in Afghanistan took action based on that evidence. The project was redesigned, separating the business park and the airfield to ensure that progress on the airfield would not be hampered by the problems and setbacks with the business park. It was also agreed that the business park project would be taken forward in phases, meaning that funding could be withdrawn if it became clear that further investment would not be sustainable.

In 2012, DFID—

[Steve McCabe]

Will the Minister give way?

[Lynne Featherstone]

I will, although I might lose my thread.

[Steve McCabe]

My question is very simple. The Minister said earlier that she could give a ballpark figure of £32 million for the project. Can she tell us how much has been spent on the various phases, reshuffles and re-designations? How much British taxpayers’ money has been spent overall?

[Lynne Featherstone]

As I go through, I will set out the sums involved, but the critical point is what sum was not spent because of the non-continuation of the business park, which cost £3.1 million. As the hon. Gentleman rightly said, the plans were then handed over to the Afghan authorities so that the work would not be wasted and the whole thing could be rescheduled. That was not achievable within the original conception, which is why the plan was cancelled. Rather than waste a further £6 million, the Secretary of State decided to stop the project at that point, hand over the plans and let the project continue at a pace that would be more achievable by the Afghan authorities, without involving the British Government or the British taxpayer in further expense.

In 2012, DFID gave our in-country partners a fixed deadline to deliver the commitments that they had previously agreed in relation to the business park. Towards the end of 2012, it became apparent that our Afghan partners would not meet those commitments; they simply were not forthcoming. It was clear, therefore, that the business park could not be completed within the original time frame and that further UK investment in the work would be poor value for money.

On the £32 million, I want to clarify that it was not £32 million for Bost; £32 million was the total commitment to infrastructure in Helmand. Project approval followed the commitment by the then International Development Secretary.

Towards the end of 2012, as I said, it became apparent that the commitments would not be delivered, the business park would not be completed in time and more UK money would be at risk if we pursued it further. The Secretary of State agreed to cancel further investment in the business park in January 2013, to prevent any further waste of taxpayers’ money. However, the completed park designs were handed over to the Afghan authorities to enable them to pursue the project over a revised time frame. Personally, my view is that that was a sensible way to deal with an unfortunate situation, while saying that the project was still a good idea. However, it had to be deliverable in time and on budget, and that is now up to the Afghan authorities.

On the monitoring of projects, Afghanistan is an inherently risky country, as I am sure the hon. Gentleman understands. Development projects, particularly those in insecure and conflict-ridden areas such as Helmand, will always include an element of risk. He might have got hold of a copy of the report to which he referred—as he quoted from it, I think that my assumption is probably correct. As I understand it, the report was unfinished and high-risk, as one would expect for Helmand. That is acknowledged explicitly in the Government’s building stability overseas strategy, which endorses

“taking risks…in order to secure transformational results”.

As a DFID Minister, I am always saying to DFID officials, “I want to know as much as I can about a risk, but I don’t want you not to suggest taking risks if we are to get transformational results.”

[Steve McCabe]

I accept that there is an element of risk, certainly for the money, but now that DFID’s involvement in the project has finished, what is the purpose of keeping all the reports hidden from Members of this House? Would it not be better for us to understand the thinking and the decision-making processes? What is the Minister protecting now?

[Lynne Featherstone]

I am not protecting anything. It is not our practice to publish either unfinished reports or internal reports. I am sure that the hon. Gentleman understands that what is most appropriate is to have checks in place to monitor projects and ensure that they are proceeding as planned. That is what we do with UK taxpayers’ money: we put in milestones so we can check that we are not going off-track. We must ensure that things proceed as planned and take action when that is not the case.

In that respect, the Bost project is a good example of DFID acting on the basis of changing circumstances in Afghanistan. If we saw a project that was beginning to fail, and did not stop it, we would be criticised for not terminating it even though it was not going to provide the return that we expected.

Work continued on the successful upgrades to Bost airfield and was completed in November 2013. There are now two return flights each week from Kabul to Bost, as the hon. Gentleman said, cutting the journey time from two days to one and a half hours.

In recent weeks, the hon. Gentleman has asked a lot of questions. Consequently, I have asked a lot of questions about why he has been asking a lot of questions. As I was responding to this debate, I wanted to understand the basis of the issue. Nothing has been covered up; it was simply that the project was not achievable on the proposed timeline, and the partners involved were not delivering. By separating out the two projects, we ensured that the good part of the project could be finished. He has said that it is a cover-up, but I reject that. There is no cover-up—simply a project, or half a project, that was not going to deliver.

As the hon. Gentleman knows, most of the answers have been set out in departmental responses to his questions. [Interruption.] I am answering one of the questions that he asked. When we responded to his questions in October 2013, a total of £8.42 million had been spent on the Bost airfield and agricultural business park programme, of which, as I said, £3.1 million had been invested in the business park side of the project. The business park was not completed because commitments given by DFID by Afghan partners were not fulfilled. I am sure that he would want us to have Afghan partners. Part of the work that we do on development is growing local business and local capacity.

It was not possible to complete the business park as planned or in a way that would provide value for money for UK taxpayers. As I have said, that part of the programme was cancelled once that became clear. DFID Ministers have taken steps to increase their oversight of programmes approved by the Department—to be frank, we are always doing that. Under the previous Government, Ministers did not approve anything under £40 million. I know, because I now have to go through all the business cases under £40 million with a fine-toothed comb, that Ministers now approve all spending on projects over £5 million.

In conclusion, we have been clear about how much money was spent on the project; how the decision was arrived at; why the decision was made to cancel further funding; the role of Ministers and officials in making those decisions; and what has happened subsequently. That has all been set out in parliamentary answers. I am sorry that the hon. Gentleman thinks that something remains unrevealed after all that I have said. As far as I am aware, we have been completely open and honest about all our decisions and the money that was spent. I hope that he finds those answers sufficient.

Question put and agreed to.