Commonwealth Development Corporation Bill

Debate between Gareth Thomas and Rory Stewart

Programme motion: House of Commons & 3rd reading: House of Commons & Report stage: House of Commons
Tuesday 10th January 2017 Commons Chamber

[The Minister of State, Department for International Development (Rory Stewart)]

I begin by thanking right hon. and hon. Members. This has been a very instructive process. The new clauses and amendments tabled reflect what was a really good Bill Committee stage. The Government have huge respect for the intelligence, focus and precision of these amendments, and we hope that Members will see that all the concerns that have been expressed are going to be addressed through the strategy that is produced.

Before I address the new clauses and amendments in turn, I pay tribute very strongly to the Members on both sides of the House who have demonstrated their support for international development. I pay particular tribute to the hon. Member for Edinburgh East (Tommy Sheppard), who gave an extremely powerful speech in support of international development and about the importance of standing up and having the courage to defend complex and innovative projects.

[Mr Gareth Thomas]

At the outset of his remarks, will the Minister explain why the legislation has preceded the strategy?

[Rory Stewart]

I shall deal with that when discussing the second set of amendments, which relate to that directly, but first I want to continue to pay tribute to other Members of Parliament, from both sides of the House, for their support for CDC. I was struck by the support of the hon. Member for Liverpool, West Derby (Stephen Twigg) for the Virunga project in the Democratic Republic of the Congo, by the in-principle support of the hon. Member for Glasgow North (Patrick Grady), and particularly by the phrase produced by the hon. Member for Edmonton (Kate Osamor) that is absolutely right in guiding us as we go forward: we need to get the right balance between long-term investment and short-term need.

I should just recapitulate the extraordinary work that CDC has done and echo the thanks of the hon. Member for Bedford (Richard Fuller). It has been a really tough time. As Members of Parliament, we are used to being under full public scrutiny and attack. CDC works very hard and has delivered some high-quality projects, and this has been a very tough period for it.

Three types of amendments have been tabled. The first set basically says yes, we should be giving money to CDC, but we should be giving slightly less money to CDC; the second set says that there should be restrictions on the Government’s ability to give money to CDC; and the third set would restrict what CDC itself can do with the money. Essentially, the Government’s position is that these are all good points, but they are better dealt with through the governance mechanisms and the strategy than through statutory, primary legislation.

I shall deal first with amendments 1 to 5 and new clause 10, which essentially say yes, we should give money to CDC, but we should give less money to CDC. Why do we disagree with what was essentially the argument put forward by the hon. Member for Cardiff South and Penarth (Stephen Doughty)? First, because, with respect, I still believe that the hon. Member for Glasgow North is confusing the stock and the flow. The fact is that the money put into CDC will be recycled. For the sake of argument, if an investment was 10 to 12 years in length and CDC had $12 billion in the pot, it would be in a position to maintain the current rate of investment of around $1 billion a year—the money would come back and go bounce again at around $1 billion a year. It is not fair to compare what happens in a capital stock used for equity debt investment with the annual expenditure of a Department.

Secondly, there is the question of demand, which the hon. Member for Cardiff South and Penarth referred to. The demand is almost limitless. It is calculated that $2.5 trillion is going to be required annually by 2030 to meet the sustainable development goals, which is why the relevant question is not the demand for the money but the question of the absorptive capacity, which the hon. Gentleman raised.

Thirdly, the Bill is enabling legislation that sets a ceiling—a maximum limit; it is not saying, “This is the amount of money we are going to give.” Fourthly, the design is for the money to go into patient, long-term investment. The three-year review proposed in one of the amendments simply will not work for investments that are intended to be, on average, 10 years in length.

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[Rory Stewart]

Let me clarify this. The £6 billion represents an additional £4.5 billion, because CDC already has £1.5 billion. We anticipate that that would cover the next five-year period to enable CDC, at maximum—we do not expect it to draw down the maximum amount—to be able to make the kinds of levels of investment that it made last year. The next £6 billion—it is not an additional £12 billion, but an additional £6 billion—would apply to the next five-year period. We are looking at a steady state allocation, which might, at maximum, allow CDC to meet the kind of expenditure levels that it gets next year.

Let me move on now to new clauses 2, 5 and 6 and amendment 6. Essentially, these are a series of measures that restrict the power of the Government to give money to CDC. They do that either by saying that they should not be able to boost the amount of money that CDC has through delegated legislation, or through asking for a strategy to be put in place before the money is disbursed. Again, these measures are not appropriate. The role of Parliament as specified for CDC in the Overseas Resources Development Act 1948 and the Commonwealth Development Corporation Act 1999 quite correctly relates to two things: the setting up of this body and the creation of a cap on the amount of money that this body is given.

However, it is not normal for Parliament to get involved in the detailed implementation of specialist business cases. That is true in everything that the legislature does in its relationship to the Executive. The money allocated to our Department in general through the Budget, which this House votes on, is then delegated to civil servants and to the Government to determine how it is spent. The same will be true here, but the strategy that will come forward will reflect very closely the arguments that have been made at the Committee stage and on Report. We will continue to remain in very close touch with Members of Parliament, and we will be judged by our ability to deliver, through that strategy, something that will address those concerns—above all, through the development impact grid and the development impact assessments on the individual business cases, which will address these particular issues.

[Mr Gareth Thomas]

Will the Minister specifically comment on the use of tax havens by CDC, and will he and other Ministers in his Department echo previous statements by the Secretary of State and instruct CDC to desist from using tax havens for future investments?

[Rory Stewart]

That is an invitation to move on to the last group of amendments, which comprises new clauses 8, 9, 3 and 7, one of which relates to the issue of offshore financial centres. These are restrictions on what CDC itself can do. There is a suggestion that there should be an annual obligation on ICAI to produce reports on CDC. Then there are restrictions on the routes through which CDC can put its money, and there are attempts through the new clauses to restrict the sectors and the countries in which CDC can invest. Let me take them in turn.

On ICAI, we are very open to scrutiny. The CDC has been scrutinised by the International Development Committee, the National Audit Office and the Public Accounts Committee. We expect it to be scrutinised in that way and to be scrutinised by ICAI. We welcome scrutiny from ICAI. However, we do not think it is for the Government to impose obligations on an independent regulator. It should be for ICAI to determine its priorities and where it thinks the problems are, and to be able to apply its scrutiny accordingly. It may determine that an annual scrutiny of 10-year investments does not make sense and decide to do it more frequently, but that should be for ICAI, not for statutory legislation of this House.