Oral Answers to Questions

Lord Bruce of Bennachie Excerpts

Wednesday 31st October 2012 Commons Chamber

[Justine Greening]

My predecessor set out in his written ministerial statement the basis on which the Government’s decision was taken. My understanding is that it was based on officials’ advice.

[Sir Malcolm Bruce (Gordon) (LD)]

May I, too, welcome the Secretary of State to her position and say on behalf of the Select Committee on International Development that we look forward to engaging with her? She will be aware that we produced a report on conflict in the DRC, and we are undertaking one on the situation in Rwanda in the light of budget support being reinstated. Does she accept that the dilemma we face is that Rwanda is a country where development money delivers real results for poor people, but where issues such as freedom of speech and plurality are compromised? That is a dilemma we have to resolve.

International Development Committee Report (Afghanistan)

Lord Bruce of Bennachie Excerpts

Thursday 25th October 2012 Commons Chamber

[Sir Malcolm Bruce (Gordon) (LD)]

I beg to move,

That this House has considered the matter of the publication of the Sixth Report from the International Development Committee, on Afghanistan: Development progress and prospects after 2014, HC 403.

I am happy to accept interventions, while taking Mr Speaker’s restrictions into account.

It is worth recording that, since 2001, approximately $30 billion has been spent on development and humanitarian assistance to Afghanistan and $243 billion on security. Our own Department for International Development has spent over £1 billion since 2001 and currently spends £178 million a year in Afghanistan.

Sadly, the report has been published on a day on which two more British service personnel have been killed. A total of 435 men and women from our forces have lost their lives in Afghanistan—along with thousands of Afghan people—to enable the country to reach its current position, and the main thrust of our report is that we must not abandon it now.

The Committee visited Afghanistan in June. We thank our adviser, Ashley Jackson—who is a research fellow at the Overseas Development Institute—and we commend the dedication of DFID’s staff, including those recruited locally, on their commitment in difficult and challenging circumstances.

[Pauline Latham (Mid Derbyshire) (Con)]

My right hon. Friend will recall our visit to the hospital of the International Committee of the Red Cross, which was doing incredible, innovative work with amputees who had been injured in land mine and other accidents. He will also recall the workshop next to the hospital, where false limbs were being manufactured. All the people working there were amputees, demonstrating very effectively the possibility of returning to work. Does my right hon. Friend agree that that was a really good example of part-funding by DFID and that we should encourage the Department to increase its funding to ensure that more people are helped?

[Sir Malcolm Bruce]

I agree with my hon. Friend. Contrary to what Members might think, our visit was truly inspirational in terms of what it told us about amputees’ recovery and recuperation. The Red Cross runs seven such centres throughout Afghanistan, and its valuable work is supported very effectively by DFID, but it could indeed benefit from further support.

Our main concern is that we cannot predetermine where Afghanistan will go after 2014. There will be elections, but we do not know who will be elected. There will also be security challenges. Threats to security and development potential will vary and may fluctuate across the country. We recommend that DFID’s engagement should be flexible according to the prevailing circumstances at any given time. That may mean acknowledging that delivering development assistance may be more achievable in some provinces than in others. There are provinces in which virtually no violence has occurred, but not all of them are receiving the aid and support that they need.

[Hugh Bayley (York Central) (Lab)]

Given the current security situation, especially in Helmand province, it is much harder for DFID officials to get out and about and supervise and quality-control DFID projects than it was during the Committee’s earlier visits. Does the right hon. Gentleman agree that it is important for us to maintain the ability to carry out development work in that province—particularly given the loss of so many British lives in Helmand—and that it might be sensible to appoint more Afghan staff to manage DFID projects in the more conflicted areas of the country, given that they have less difficulty in getting out and about for security reasons?

[Sir Malcolm Bruce]

The hon. Gentleman puts his finger on a very important point. We acknowledge that Helmand will present difficulties, and we accept that DFID has decided that it will not be able to maintain an office there once the troops have been withdrawn. However, I agree with him that, given that the British forces’ engagement in Afghanistan has focused on Helmand, it would be a total negation of that if we could not deliver projects in that province. As he says, we need to find local partners who can probably operate much more effectively than armed foreigners.

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

I congratulate the right hon. Gentleman on the Committee’s report. What role does he see for non-governmental organisations in the delivery of DFID’s aid in Afghanistan?

[Sir Malcolm Bruce]

NGOs will have a substantial role. We recognise that a limited number of very effective NGOs—some international and some local—can operate in circumstances in which foreign Government agencies cannot. The fundamental reason for that is their ability to reach an accommodation with local leaders and to defuse situations that international organisations would sometimes appear to provoke. We argue that we need to develop links of that kind much more effectively in the future.

[Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)]

The British public are owed honesty, and the media have rightly reported today on whether the development efforts in Afghanistan are worth the sacrifices that are being made. Does the Select Committee Chairman agree that when Committee members visited Afghanistan we witnessed the problems that our aid efforts were having with full military support, so logic dictates that when that military support is drawn down the current problems will, at best, remain the same, and at worst there is the potential for the situation to deteriorate further?

[Sir Malcolm Bruce]

The hon. Gentleman is absolutely right, but the point is that we do not know what the situation will be. Our argument is that we need to be flexible. We should make a fundamental commitment to continue to provide support where we can, although we might have to find different ways and mechanisms.

[The Minister of State, Department for International Development (Mr Alan Duncan)]

May I begin by joining in the expressions of sadness about the deaths of the two British service personnel? We value enormously the role played by our military in Afghanistan. We simply would not be able to operate without the support that they provide.

I assure the right hon. Gentleman that we welcome his Committee’s valuable report, to which we will reply formally in due course. No one is suggesting that Afghanistan is a fully viable state yet, but, as his report says, DFID’s efforts have made a big difference to a lot of people by helping to improve basic services and support economic growth. We completely agree that our focus should be on the position of women and girls, and that will remain a key focus of our development work in Afghanistan, so the report’s recommendations in this critical area are very welcome. I assure the House that our commitment to that desperately poor country will continue for many years to come.

[Sir Malcolm Bruce]

I thank my right hon. Friend for that very constructive intervention. Although we are suggesting changes in priorities, our main point is that the UK Government and DFID need to be flexible in what is a very challenging situation.

Of course the Committee would wish to see Afghanistan functioning as a normal state in due course—we certainly do not want it to be a rogue state—but we are a little sceptical about whether a British Government fund of £178 million a year can itself achieve a viable state. The danger is that if that aim becomes the overriding focus, it might be at the expense of delivering material, practical progress in terms of livelihoods, the rights of women and health and education. We are asking the Department to balance those aspects in a way that does not compromise what has been achieved.

We have articulated the view that the post-2014 litmus test on the extent of the changes in Afghanistan and whether improvements have been secured and are progressing will be the status of women. It is about the worst country in the world in which to be a woman, but progress has been made. If that progress is reversed, we will be able to assume that the condition of all Afghans is deteriorating—and if that progress is continued, we can assume that the situation of all Afghans has improved further. The status of women will be the best indicator of whether everyone’s quality of life is improving.

[Paul Flynn (Newport West) (Lab)]

The entire House is grateful to the right hon. Gentleman and his Committee for adding a dose of reality to the myths that have surrounded this topic. Our efforts have been well-intentioned but ludicrously over-ambitious in that we have tried to change a 13th century society into a modern state. Is not the message of the report that we cannot win hearts and minds with bombs and bullets and that we must do our best not to raise hopes—particularly for women—that will be sadly and cruelly dashed in the future? We should see what we can do not as soldiers and a military force, but as people offering aid, to rescue what we can from the wreckage of the past 11 years of failed policies.

[Sir Malcolm Bruce]

I accept part of what the hon. Gentleman says, but I do not entirely accept his apocalyptic version of events. Real progress has been made; we should not underestimate that. Although Committee members’ opportunities to travel and engage were limited, we were impressed that people, especially women, told us, “Please be in no doubt that what you’ve done has dramatically improved the quality of our lives, and please don’t abandon us when your troops withdraw.” That is a crucial point.

[Mr Tobias Ellwood (Bournemouth East) (Con)]

As co-chair of the all-party group on Afghanistan, may I welcome the report and the Minister’s comments? I have been visiting the country regularly since 2005 and am worried that the improvements to security that we have seen have not been matched by advances in sustainable economic development and governance. Afghan fatigue seems to be setting in. Does my right hon. Friend agree that, once the US elections are over, the international community must redouble its efforts to assist Afghanistan in preparing for the situation post-2014, when the international security assistance force finally withdraws?

[Sir Malcolm Bruce]

I absolutely agree. It is important that we say to our taxpayers and to the people of Afghanistan that we have no intention of seeing a curtain come down in 2014, which means that we have withdrawn. There will be a transition, a change and something different.

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

I congratulate the right hon. Gentleman and the International Development Committee on this excellent report. I wish to pick up on his point about the UK Government talking a great deal about women’s rights in Afghanistan but not following up with substantial action. Does he agree that the UK Government need to place a much greater emphasis on women’s empowerment and human rights? Those things need to be at the heart of the development agenda. There are concerns that the idea of development and poverty eradication is too narrow in the Minister’s mind and that rights and women’s empowerment are not fully understood.

[Sir Malcolm Bruce]

We argue that there is not enough evidence in DFID’s programme that the rights of women are central to its objective, and we suggest that DFID should prioritise those. I am sure that Ministers will say that a lot of what they are doing is beneficial to women, but it is not clearly focused in that direction. ActionAid, which I cite merely because it is an evidence base that we had, said that only one out of 92 listed DFID projects had

“an explicit commitment to gender or women’s issues.”

Of course we do have a female Secretary of State for International Development, whom we met yesterday, and a female Under-Secretary—I say that with no disrespect to the Minister of State, who I am sure will share their commitment. I think that we can be assured that women’s rights will be central to the future commitment.

[Margot James (Stourbridge) (Con)]

I congratulate my right hon. Friend’s Committee on making the central point that, unless a significant part of our aid budget is devoted to projects designed to empower women, women will lag behind and the whole development effort will suffer. What assessment did the Committee make on its visit of the capacity of the NGOs that represent women, such as Humanitarian Assistance for the Women and Children of Afghanistan? How strong is the women’s NGO sector’s capability to deliver on some of the DFID programmes in the future?

[Sir Malcolm Bruce]

A number of NGOs have a strong commitment, and there are some powerful female voices in Afghan society that speak out for women. However, there is real fear that they will be pushed back after 2014, and they need continued support. There is also a recognition that international NGOs are sometimes compromised because they are seen to be interfering in a traditional culture. So it is important that we develop civil society in Afghanistan, and support those women in Afghanistan who can fight for themselves and ensure that they know that they have extra support outside. I take the view that not only in Afghanistan but across the world the key to development—the single most important thing—is the development of women’s rights. That is the most transformational thing that we can do.

[Jack Lopresti (Filton and Bradley Stoke) (Con)]

There is no question but that corruption is a real problem in relation to the international community’s efforts in Afghanistan and other places. Is my right hon. Friend satisfied that the UK has put in place enough safeguards to ensure that UK taxpayers’ money is being used for the purposes for which it was intended?

[Sir Malcolm Bruce]

The answer is no, it has not. There is no evidence that money has been misspent, but the Independent Commission for Aid Impact has said that the proactive mechanisms are not strong enough. The Department is taking strong action to deal with that, and rightly so. Afghanistan is an extremely difficult place in which to operate. As David Loyn of the BBC said in evidence, it is a rentier society, and where a lot of foreign money is swilling around, all kinds of people try to get in on the action, by whatever means they can. We have to be aware of that and be rigorous, but we also have to recognise that we can spend the money effectively. We can make a change, and the job of the Committee, the independent commission and the Department is to ensure that that is precisely what we do.

[Sir Robert Smith (West Aberdeenshire and Kincardine) (LD)]

I welcome this valuable report, which comes at a crucial time in the run-up to 2014. On maximising the effort as regards the money going into Afghanistan, what role is DFID taking in ensuring that the other donor nations recognise the need to work beyond 2014?

[Sir Malcolm Bruce]

DFID has played an active part in the Chicago and Tokyo conferences, and we have of course made our own commitments beyond that period, so we set an example. Ironically, DFID’s ability to provide leadership might be strengthened post-2014, when we are freed from engagement in military activity, as it will become apparent that the UK Government’s overwhelming priority is to provide development support. That will help the leadership provided by DFID across the world.

[Richard Burden (Birmingham, Northfield) (Lab)]

Does the right hon. Gentleman agree that because the Committee tries to be realistic and pretty sober about the situation in Afghanistan, we sometimes receive the response that we are suggesting that nothing has been achieved? After our last visit, the front cover of our report featured a picture of some girls who would not have been in school were it not, in part, for the efforts that have been made. It is important that we focus our activity where we can have an impact. That does not mean that we should focus on areas that are easy; empowering women is not easy in Afghanistan. It is important that we do not oversell or over-claim and that we target our efforts on crucial areas where we can make an impact.

[Sir Malcolm Bruce]

I absolutely agree, although I would add a word of caution. We visited the same school in June as we did five years ago and we were unable to visit a girls’ class, because that was thought to be inappropriate. That shows the negative changes, but at least the girls were still being taught, which is important. We also visited Bamyan, where we were told that there was a rising number of undergraduate women at the university and that fathers were actively pushing their daughters to take university education. That demonstrates that the situation is patchy, with progress in some areas and push-back in others. The job of DFID and the international community is to support the progress and to help resist the push-back, in co-operation with Afghans themselves.

In conclusion, it is important that people understand that the evidence that we have received shows that most Afghans do not want the Taliban back. They want a better Afghanistan that they have some ability to determine, and people need livelihoods and to be free from violence and extortion. Our report says that now that we have gone so far, walking away prematurely, as some people suggest, would be a betrayal of the sacrifice of our armed forces, as well as of the Afghan people. Having intervened, we have a moral and practical obligation to walk beside the ordinary people of Afghanistan, as long as we can improve their quality of life on their terms.

Question put and agreed to.

Oral Answers to Questions

Lord Bruce of Bennachie Excerpts

Wednesday 11th July 2012 Commons Chamber

[Mr Duncan]

Discussions between Departments take place in the normal way. The prime responsibility of the Department for International Development is for the humanitarian need of people in Syria, but we will continue to work with other Departments to see what it might be possible to do to alleviate the suffering and plight of those who face such difficulty.

[Sir Malcolm Bruce (Gordon) (LD)]

It is right that the international community and the UK respond to people in need at a time of crisis, but does the Minister accept that, as the crisis intensifies, Syria will get poorer and the people’s needs will become greater? Does he agree with Kofi Annan that anybody who has an interest in the future of the region and the well-being of its people, including Russia, China and Iran, should have an interest in ending the conflict?

[Mr Duncan]

We are working with all organisations in all countries in any way we can to put pressure on the Syrian regime, in whose principal gift ending the conflict rests.

Oral Answers to Questions

Lord Bruce of Bennachie Excerpts

Wednesday 1st February 2012 Commons Chamber

[Mr O’Brien]

My right hon. Friend the Secretary of State has just returned from the African Union summit that was held in Addis Ababa last weekend, and he is fully seized of that issue. He had direct discussions on this matter with the chairman of the commission, with President Mbeki and with Prime Minister Meles. People are focused on the question of an appropriate mandate, but the current position is that it is better to deploy into the right places the troops who have been mandated, rather than distract ourselves with a review of the mandate itself.

[Malcolm Bruce (Gordon) (LD)]

The Select Committee is looking forward to having an extended exchange with the Secretary of State on South Sudan this afternoon. In the light of the disruption of oil supplies, and the fact that the South Sudan Government are 98% dependent on oil revenues, will the Minister tell us what steps our Government and the international community are taking to resolve the dispute and to support the South Sudan Government in regard to that financial constraint?

[Mr O’Brien]

Extensive meetings took place in Addis Ababa over the weekend, in which my right hon. Friend the Secretary of State was involved at the highest level. The straight fact is that, while the oil dispute is outstanding, progress is going to be impeded. We call on all parties to acknowledge that it is in their mutual interest to pull back from the brink and reach an agreement, with the north getting the ships to sail and the south to release oil from the wells again.

International Development (India)

Lord Bruce of Bennachie Excerpts

Thursday 26th January 2012 Westminster Hall

[Malcolm Bruce (Gordon) (LD)]

It is good to initiate this debate under your chairmanship, Mr Davies, and to have the opportunity to debate the United Kingdom’s important relationship with India across a range of areas, of which development is just one key facet.

I am pleased to see one current and one former Select Committee member present. Our Committee decided to undertake a review of the UK development relationship with India against a background of critics of aid—those who either do not believe in it at all or want it cut—homing in on the India dimension as a target for demonstrating that, somehow, it was not justified. Those critics used various arguments saying that, for example, “India is a middle-income country”, “India has significant economic growth”, “India has more billionaires than the UK” and “India has a space programme”. Those are true facts, but they need to be qualified. I hope and believe that the Committee dealt with these issues constructively.

The range of income for middle-income countries is from a little more than $1,000 to $13,000. India is right at the bottom end of that spectrum and in reality Britons are 20 times richer than Indians or, put the other way round, Indians are 20 times poorer than Britons.

[Mr Virendra Sharma (Ealing, Southall) (Lab)]

The right hon. Gentleman may agree that although India is middle-income—quite high and rising every day—at the same time it still has as many people below the poverty line as the whole of Africa. Poverty is also a major factor.

[Malcolm Bruce]

The Committee addressed that argument head-on. It is worth putting on record that the implication of their criticism is that some critics resent the fact that India has billionaires, success and growth. That is what we hope development will bring; that is the whole idea of promoting development. In reality, the UK has partnered India in a constructive way throughout a lot of different dimensions.

It is worth dwelling on the question of space for a minute. India’s supposedly extravagant space programme has absorbed $6 billion in total over 50 years, which has been used mostly to give India the capacity to launch its own satellites. A country that is a subcontinent in itself, with a border dispute with China and in Kashmir, a Maoist uprising over many years in Nepal, a civil war in Sri Lanka and problems across the region, has every reason to want information to protect its own national interest. Indeed, there are many socio-economic benefits, such as being able to monitor the path of monsoons and the impact of development. One Minister said, “If somebody comes to me and says that we have completed a school in X or Y, I can check whether that school has been built without leaving my office, because we have the benefit of these things.” That is perfectly legitimate, proper and proportionate. Developing countries should not be denied aspirations because they have to deal with poverty.

More to the point, it is a fact that in spite of this success India faces substantial challenges in terms of poverty reduction. As the hon. Member for Ealing, Southall (Mr Sharma), a former Committee member, said, there are still 350 million people in India living on less than $2 a day, which is more people in that degree of poverty than in the whole of sub-Saharan Africa.

The focus of the UK’s development programme across the piece is poverty reduction and achievement of the millennium development goals. India needs to be able to deal with those issues in spades, in a sense. It is off-track on MDG 1 on reduction of poverty and on MDG 4 on infant mortality, and badly off-track on MDG 5 on maternal mortality. In these circumstances it is, in the Committee’s view, right and proper that we determine whether the UK’s development assistance can help resolve those issues.

The Department for International Development’s operation report, drawn up since we completed our report, makes it clear that the UK regards development as part of its strategic relationship with India. We should acknowledge that we have a shared history with India, which is contentious but is a fact that has engaged both our countries for several hundred years and, if one parks the fact that they have not all been good and that there have been mistakes and memories that we would rather not have to recall, it is also true that we have achieved a depth of understanding in that relationship about culture, a common language, the same sense of humour and a shared interest in cricket.

There is a natural affinity between the two countries, which is borne out by the scale of the diaspora in the UK and the scale of trade and investment. It is interesting to note that investment between India and the UK is greater than between India and the rest of the European Union put together. These significant, positive benefits reinforce the case made by many hon. Members, who believe that the purpose of development is to deliver poverty reduction and the MDGs and, in the long term, also to create viable states that can develop economically and can and will become development, trade and investment partners. That is precisely what is happening between the UK and India.

In the press release accompanying the publication of the report, which focused on the key issue—I do not often quote myself—I said:

“The test of whether the UK should continue to give aid to India is whether that aid makes a distinct, value-added contribution to poverty reduction which would not otherwise happen. We believe most UK aid does this.”

The other issue that critics raise is that India has a responsibility, as its income rises and economic performance improves, to deliver its own poverty reduction. That is true. The fact is that India is doing a huge amount to achieve that. The transfer of wealth from the rich to the poor and the programmes on health, education and work, which are raising people out of poverty, cost tens of billions of dollars and are funded by internal resources managed through the Indian Government. By comparison, the £230 million a year of UK aid is a small amount. Is it so small that it does not matter? We concluded that, qualitatively, that aid was able to help Indian authorities and agencies achieve a faster reduction in poverty and an aspiration to deliver off-track MDGs faster than would otherwise be so and that it was, therefore, beneficial. That is also the view of the Indian Government, which is why they welcome the UK as a partner. It is clear that in these circumstances the relationship is right and proper and should continue.

We looked at DFID’s priorities to try to assess whether we believe that it matched the needs as the evidence presented to us suggested. We found, first, from objective evidence, that India is an unequal society—tackling that inequality is clearly a challenge and a responsibility for Indian politicians and Ministers—and that the contrast between the richest and poorest states is huge. Some of the poorest states in India are poorer than some of the poorest states in Africa. In that context, DFID had identified that it would concentrate a high proportion of the development in four of the poorest states in India: Bihar, which the Committee visited, Madhya Pradesh, which the Committee also visited, Orissa and West Bengal, which has changed its name to one that I cannot now recall. Those are the poorest states, where a relationship has already been established and where there is evidence that DFID’s engagement can accelerate the action to meet the challenge of reducing poverty.

One thing that shocked the Committee, although perhaps those of us who know India well should not be so shocked, was the appalling state of sanitation across large parts of India and, indeed, the acceptance of the appalling state of sanitation. Committee members were genuinely shocked by the figures: 500 million or 600 million people are practising open defecation every day, without any access to the basics of hygiene. That is one of the most fundamental problems that India has to face and one of the reasons why it is off-track on some MDGs.

[Jeremy Corbyn (Islington North) (Lab)]

I compliment the right hon. Gentleman on the report and his speech. During the Committee’s deliberations, was it aware of the disproportionate use of bad sanitation by the Dalit peoples and the discrimination against the Dalit peoples throughout the country? That leads to lower life expectancy and worse health outcomes for them than for the rest of the population.

[Malcolm Bruce]

We were, and I will come to precisely that point. I am grateful for the intervention.

Let me give hon. Members the example of a meeting that Committee members had in a village in Bihar. There was a discussion about sanitation. It was about the extent to which people there had a problem because the surface water was so badly polluted that they could not use it, so they had started drinking from wells polluted with arsenic and iron. When we got into the discussion, it became apparent that there was no shortage of surface water, but it was heavily polluted because there was no orderly way of managing sanitation. People just went to the toilet wherever they wanted to go—anywhere, anytime—and were polluting their own water supply. Indeed, some of them said, “We’re killing ourselves and one another by the way we behave.”

There was a huge divide, I have to say, between the attitude of men and the attitude of women. The women said, “The least we should do is designate certain areas for sanitation and manage them. That will enable us to have clean areas.” The men said that that was sissy, namby-pamby nonsense, that they had always done it wherever they wanted to and that that was what they should always do. It is very difficult for outsiders to get involved in that, but we did watch the argument and concluded that it showed that community-led health and education programmes were as vital as anything.

As a result, the Committee recommended that DFID give a higher priority in its programme to sanitation. We very much welcome the Government agreeing to double the resource that they will put into sanitation in the programme. To be honest, the Committee might want to go even further, but we appreciate the fact that the Government have done that. We welcome it entirely. I will not detain hon. Members by looking for the exact quote in the operational report because I do not have it to hand, but I think that I am right in saying that the expectation is that DFID’s programme will give 5.5 million or 6 million people access to proper sanitation. Proper sanitation usually means pit latrines and associated things. That is 5 million or 6 million people who do have not such sanitation now, but it still leaves about 550 million people who will not have been reached. Of course, there are other people engaged in that work, but the provision is a long way short of what is needed.

The second issue that we were especially concerned about was malnutrition. Those who follow the progress of developing countries will know that as poverty falls and incomes rise, there is a correlation with a reduction in malnutrition, especially in children. However, in India, that is not happening. There, malnutrition is decreasing at only a quarter of the normal rate. Again, there appear to be quite a lot of social awareness problems. It is customary, for example, for women to diet during pregnancy in order to have small babies, which are easier to deliver. No one points out to them that they may be small babies, but they are likely to be severely malnourished and, indeed, at risk of not surviving. It is said that the word “nutrition” and the concept of nutrition do not even translate into quite a number of indigenous local languages. We welcome the fact not only that nutrition is a target area for DFID, but that the particular target is the first 1,000 days of a child’s life, because all the evidence is that that is critical to whether children survive beyond the age of five and grow up.

The connection between the issues that I have mentioned and maternal and child health is pretty self-evident. That is clearly an important priority, because the maternal health MDG is the one that is most off-track in India. The fact that that is an area where DFID can make a contribution is extremely welcome.

I will now deal with the intervention by the hon. Member for Islington North (Jeremy Corbyn). Social exclusion was an issue on which there absolutely was focus. It is a slightly delicate issue, but one on which DFID and the Indian Government can to some extent work to reinforce each other. It is evident that the poorest people, the people whose communities are furthest off-track in relation to MDGs, are those who are socially excluded: the Dalits and other low castes, the hill tribes and minority religious groups. When one talks to the Indian Government, they say, “Our constitution and our political drive is to include these people,” but given that, culturally, they have been excluded from the community, it is very difficult to enforce that. Sometimes it is helpful for a development partner to identify with statistics and information why the problems persist and the practical measures that could be taken to tackle them. I think that DFID has said that it will prioritise that.

The final issue, on which we would welcome an update from the Minister, was the commitment by the Government, which is entirely consistent with the idea that India is in transition out of being a development recipient to becoming perhaps a development partner, that 50% of the UK programme in India should, by the end of the programme, be targeted on private sector development. In principle, the Committee wholly supported that, because ultimately development is about generating a viable private sector that can generate a tax base, wealth and everything else to sustain the public services.

However, we were not entirely convinced as to whether DFID had any idea about how it would deliver on the target and with what partners. That is not to say that it was an illegitimate target, but I think that we are entitled to say to DFID that it needs to flesh out what it intends to do. I therefore ask the Minister these questions. How can the Government ensure that that private sector development reaches the poorest states and the poorest communities, rather than the low-hanging fruit, which are easier to reach and for which the market might deliver anyway? What might be the role of CDC in its newly revamped format; will it be part of that? What about the role of UK Trade & Investment? We discovered that it is very active in places such as Mumbai, Hyderabad and so on, but does not get to Bihar, Orissa and so on. The question is whether that needs to change.

We accepted, once we had discounted the critics, who simply want to discredit aid and development altogether, that there were legitimate issues about a country such as India, which is developing and creating substantial wealth, technology and innovation of its own, as well as having an aid and development programme. However, when we look inside that, there are two things that absolutely justify the maintenance of the partnership. What I am talking about is entirely in the spirit of the International Development Act 2002, which is focused on poverty and the MDGs.

First, the Indian Government are putting very substantial resources into redistribution and raising taxes to fund their own poverty reduction programme; and they are lifting millions of people out of poverty each year. However, the pace at which they are doing that needs to be accelerated. The UK is important as a partner less because of the resource that we are putting behind that and more because of the expertise and technical help and support, backed by resources, that we can put in. That will help to achieve a situation whereby hopefully by 2015 India will have made material progress towards eradicating poverty, the off-track MDGs will be coming back on-track and we can move from a relationship whereby India is a client state for development to one whereby we are states that are co-operating on partnership and development. Indeed, that is already happening in third countries—for example, in parts of Africa.

The Committee’s conclusion was that to have terminated the aid programme in India prematurely would have deprived millions of people in India of an opportunity to be lifted out of poverty, and Britain and India of developing a relationship that could be mutually beneficial to the poor people not just in India but in Asia, Africa and elsewhere in the world.

On that basis, I am happy to say that the Government are fundamentally right to stay in India. We have made some constructive suggestions about what the priorities should be, some of which they have accepted. We also have some questions which the Government will need to answer over time if they are to fulfil their own stated ambitious objectives.

--- Later in debate ---

[Martin Horwood (Cheltenham) (LD)]

It is a pleasure to serve under your chairmanship, Mr Davies, to follow the hon. Member for East Kilbride, Strathaven and Lesmahagow (Mr McCann), and to talk in a debate initiated by my right hon. Friend the Member for Gordon (Malcolm Bruce), whose expertise in this field is second to none in this Parliament. Moreover, he has been an enormous help to me in my role as chair of the Liberal Democrat committee on international affairs, although I realise that today he is speaking in a less partisan role.

I also bring a little bit of personal experience to this debate. I worked for a development agency in India during the 1990s. I was seconded by Oxfam in the UK to the fledgling organisation, Oxfam India, which already had a locally registered charity and an overwhelmingly Indian staff force. Indeed, we had a Hindi slogan, milka hum garibe per pa sekte heh vijay; if my Hindi is not too rusty, that means that together we can overcome poverty. It was an important message that that was not a western import, but something that mattered to all the citizens of India. With your indulgence, Mr Davies, and because I am sure that it is within the terms of the debate, as Oxfam is a DFID partner, perhaps I may congratulate Oxfam on the 60th anniversary this year of its presence in India, and congratulate Oxfam India on its admission as a full member of Oxfam International with an Indian board and a completely Indian staff. That changing relationship is, in microcosm, an illustration of the changing relationship between Britain and India.

Traditionally, India has been the largest recipient of UK aid, and the Select Committee and many other people, as my right hon. Friend said, have raised questions about the continuing nature of Britain’s aid programme with India. India is now a middle-income country, but it still has more people living below the notional poverty line of $1.25 a day than the whole of sub-Saharan Africa. The future DFID programme will focus on many of the poorest states in India. States such as Bihar and Orissa are among the poorest in the world, and would certainly be low-income countries if they were separate nations.

On nutrition, the Select Committee’s report draws attention to some remaining alarming facts. India scored 23.7 in the 2009 global hunger index, putting it in a category where levels of hunger are considered to be alarming; it is at a level comparable to that in Burkina Faso and Zimbabwe. Almost half of Indian children are undernourished, which amounts to one third of the world’s undernourished children. As my right hon. Friend the Member for Gordon said, India is far from on track to achieve some of the millennium development goals.

Recent research by Andy Sumner of the Institute of Development Studies shows that 70% of people around the world who live below the poverty line live in middle-income countries, where income may be badly distributed, and there may be issues of equality as well as development and superficial growth. It may be attractive superficially to withdraw aid from middle-income countries, but it must be done carefully and gradually, because there are existing commitments to anti-poverty programmes, many of them involving, as my right hon. Friend said, public health, education and empowerment, and not simply providing goods and structures.

The Select Committee’s report rightly noted the scale of the Indian Government’s expenditure on things such as nuclear and space programmes, which have been controversial, but they identified them, rightly in many cases, as an essential part of India’s development. They are fundamental to India’s development of energy infrastructure, and to telecommunications infrastructure, and flood monitoring, which is a direct benefit to some of the poorest people in India. Without a satellite system and the so-called space programme, it would be difficult for India accurately to monitor the impact of flooding, and to map flood-risk areas. It may as well be criticised for developing a telephone system or solar energy. I am glad that the Select Committee agrees.

There seems to have been a large measure of agreement between the Select Committee and DFID; not only does the Committee support many of the emerging priorities for DFID, but the Government, in their response to the report, agreed with a large number of the Committee’s recommendations—the focus on poorer states, sanitation, nutrition, and the priority given to maternal and child health, social exclusion, and working with the private sector.

I heard the comments of the hon. Member for East Kilbride, Strathaven and Lesmahagow on the relationship with the private sector, but when I lived in India and worked for a development agency there, I became aware that the contribution that organisations such as Oxfam, and even Government programmes the size of DFID’s, make to poverty on a grand scale was dwarfed by the potential for the private sector to impact on people’s lives, for good or ill. There are good examples of Indian corporations such as Tata pursuing effective social responsibility programmes that are much more developed than anything we in this country tend to call corporate social responsibility. The reality of poverty is often staring them in the face every day, and the Indian corporate sector has a proud record of poverty alleviation.

At the same time, other companies go in recklessly, especially to the poorest states, and exploit natural resources without properly consulting local populations, causing immense damage, sometimes environmental, often social and often costing many lives. The biggest and most famous example is Bhopal, but there have been others on a smaller scale since. Wearing my hat as chair of the all-party group on tribal peoples, I know that some of those examples involve tribal people in states such as Orissa, where companies such as Vedanta Resources were exploiting aluminium potential through bauxite mining, and could easily have trashed the local environment that was precious to the tribal people there.

We must be cautious in our approach to the private sector, but DFID’s instincts are absolutely right, and the private sector can sometimes bring light-footedness, flexibility and imagination to development, with an overall potential that is much greater than simple Government-to-Government development aid. That high level of agreement between the Select Committee and the Government is very welcome.

[Malcolm Bruce]

It is important to note that the Committee is responsible for holding DFID to account for Parliament, and I want to make it clear to my hon. Friend that we take evidence, and we are prepared to address criticism, but that includes backing a Department—particularly when it is under attack for what it is doing—addressing some of the critics, and helping to confront some of the arguments the other way. It is not that we instinctively want the Department to work, but we have a constructively critical approach. The agreement is based on a thorough analysis of the evidence, not some sycophantic, cosy relationship. It is important that that is understood.

[Martin Horwood]

My right hon. Friend makes an important point. I did not mean to imply even that the Committee had not found fault with DFID’s programme. It has given a clear direction on things that in many cases must change, but it is welcome that the Government have accepted many of the Committee’s recommendations straightforwardly.

The Secretary of State has said that the UK is in the final mile of its aid relationship with India, and that represents an honest assessment of Britain’s maturing relationship with one of the world’s leading new powers. Increasingly, the way in which countries such as Britain will help to alleviate poverty in India is not necessarily through aid, but through fair and open trade. The European Union’s proposed free trade agreement with India—it might even be mentioned at the forthcoming European Council if we are lucky—is important.

India and Britain are allies on climate change and the ongoing United Nations framework convention on climate change, and I think both appreciate the risk to the poorest people in the world, including those in India, and the need to emphasise adaptation to climate change as well as mitigation in the international climate finance fund, and Britain’s climate finance programme. They are collaborators on international peace and security, and they have shared experience on development issues, which could be valuable to countries around the world.

The time is coming when the last vestiges of a colonial relationship should be laid gently to rest and handed over to the historians. India and the United Kingdom now need to stand side by side in the world, standing up for shared values of democracy, respect for the rule of law, and human rights, and with deep concern for the world’s poor and how to help them in practical and cost-effective ways through development assistance. Both countries have an enormous amount to teach the rest of the world about development. The eventual end of Britain’s aid programme to India, when it comes, will be a proud moment to be celebrated by both parties, but it should not be the end of the story.

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[The Parliamentary Under-Secretary of State for International Development (Mr Stephen O'Brien)]

I congratulate the Chairman of the International Development Committee, the right hon. Member for Gordon (Malcolm Bruce), on securing this important debate, and I thank him for his excellent speech, which reflected the combined work of him and his Committee members. It not only focused on the India programme, but set it in a context that had a huge read-across to the justification and principles that underlie where we should place our UK effort to be partners in aid, and then to graduate to development and to securing a better future for people who have many disadvantages. His comprehensive, thorough, thoughtful and evidence-based speech got the debate off to a most respectful and useful start. Our timing happily coincides with the Foreign Secretary making, as we speak, a keynote speech to launch the King’s India Institute at King’s College, on what is India’s republic day and the 62nd anniversary of the signing of its constitution, so there is some poignancy to the debate.

Let me put the debate into context. When the coalition Government came into office in 2010, we made it clear that we wanted to build a different style of international development, one based on dynamic partnerships that reflected our networked world and focused on a relentless pursuit of results and value for money in the Department for International Development’s work. Our vision acknowledges the prominence and value of Britain’s involvement in the alliances on development that were so important in the past, but also looks to the relationships and international forces that will shape the future.

Engagement with the emerging powers is a cornerstone of the policy, as the Secretary of State for International Development set out in a speech at Chatham House in February last year. I am sure that Members will have noted, as did the Secretary of State in that speech, that in the space of a few short decades the world has become a very different place. Whether we are talking about the BRIC countries—Brazil, Russia, India and China—the Asian dragons, the tiger economies or the gulf giants, the new powers will influence world affairs in the future, and it is therefore in our interests to engage with them now.

Of all the emerging powers, it is India with which we will have the most multidimensional relationship and partnership. Our shared history, and political and personal links, all mean that India is important to the United Kingdom, and the Prime Minister’s visit so soon after the election in 2010 reflected the importance we attach to the relationship.

As the right hon. Member for Gordon is aware, in the last year we have completed a root-and-branch review of the aid programme to ensure that our spend is targeted where it can achieve the greatest results. The review made it clear that we can achieve real results for poor people in India. Why? Because the Indian Government are ploughing record tax revenues into poverty reduction programmes, and in that environment, our development expertise can ensure that the impact of those resources is maximised for the benefit of the poorest in Indian society. Indeed, we estimate that the United Kingdom’s aid has lifted 2.3 million people out of poverty in rural India in the past five years and put an additional 1.2 million Indian children into primary school since 2003, demonstrating that there has been a succession of Administrations with a shared responsibility.

The value of these efforts received cross-party endorsement when the International Development Committee completed its assessment of the UK’s development programme in India and concurred with our decision to continue our funding until 2015. I recognise the right hon. Gentleman’s perfectly legitimate, well-articulated and constructive criticism, and his constructive approach to holding a Department of State to account—through his Select Committee, in this case—and I hope it is noted that DFID delayed finalising the 2011 to 2015 operational plan for India until after his Committee had made its recommendations. We were then able to take the recommendations into account before publishing the operational plan on the DFID website in October 2011.

The pace of India’s transformation to date has been remarkable, as hon. Members have noted. Although economic growth has slowed in recent months, India is still achieving enviable rates of growth—rates we would give our eye teeth for—lifting 15 million people out of poverty every year. But we know that the benefits of the growth are not being shared equally and the scale of Indian poverty remains massive. India’s poorest states—each of them larger than most African countries, as has been well noted—still face huge development challenges. More than half the girls in Madhya Pradesh do not yet go to secondary school, more than half the young children in Bihar are undernourished, and one quarter of all pregnancies are unwanted or mistimed.

Our decision to maintain our programme in India was coupled with a very clear conviction, well picked up by the Select Committee, that the programme should also be radically different. Because of India’s economic growth and its own increasing resources, we are bringing the development partnership up to date. Since the publication of the International Development Committee’s report on the future of aid to India, we have agreed a new approach with the Government of India, and I think that the right hon. Member for Gordon importantly wanted to ensure that that had happened.

The approach has three main pillars. The first is an innovative new private sector programme, using returnable capital to promote pro-poor private investment in India’s poorest states. Rather than just read out the bullet points, I will give a bit more detail, to pick up on some of the points raised, particularly by the hon. Members for East Kilbride, Strathaven and Lesmahagow (Mr McCann) and for Brent North (Barry Gardiner). It is in the interests of the poor and the UK taxpayer that resources are used sparingly and only where most needed, attracting private capital where possible, but it makes good value-for-money sense, and it is certainly good for poverty reduction, to use our resources over and over again if we can. So the answer is yes, the resources will be reapplied for India. I say “if we can,” because we must ensure that we preserve at all times the ability to apply rigour.

[Malcolm Bruce]

Is my hon. Friend able to say what the CDC’s role will be? The CDC is being revamped, and it seems that some of this returnable kind of capital would be appropriately delivered through that body. Is there an active dialogue between DFID and the CDC about how the private sector funding will develop in India?

[Mr O'Brien]

The right hon. Gentleman makes a very important point. In many degrees, this is a question of a stratified approach. It is really to do with the risk appetites and the profile of the funding instruments that lie behind it. I can certainly confirm that we hope that the revamped CDC will be able to take a greater interest in applying its patient capital approach, particularly to some of the infrastructure support that lies behind economic development, not least in the poorest states. But let us be absolutely clear, with the DFID instruments, we are able to put forward the funding that we do because our capital can take bigger risks in riskier places than even that of the CDC. We have to recognise that there is a connection, but not necessarily an overlap.

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[Mr O'Brien]

I hope that I will have enough time to answer that question. I have a great slug of information to add on the private sector but, given the topic of the debate, I want specifically to cover the recommendations of the IDC’s report. The IDC has made a valuable contribution to the new shape of our programme in India and its recommendations encompass the points highlighted by the Opposition spokesman, the hon. Member for Bethnal Green and Bow (Rushanara Ali).

As the Committee noted, UK aid matters in the poorest states, where there are the fewest donors and where growth has not yet made a significant impact on poverty. We are therefore focusing on those poorest states, and we will help states access India’s own resources, improve the environment for business and investment, make sure that the public get a better deal from public services, improve financial procedures and reduce corruption.

We have taken note of the Committee’s recommendation to concentrate more resources on needy sectors, and we plan to double our support—this is an important point, first raised by the Chairman of the Committee—for water and sanitation over the next four years, giving 5 million people access to better sanitation. We want to increase the amount of burden-share that others may assist us with, but let us be clear that, through community approaches, for every pound we spend on sanitation, we expect Government partners to spend approximately £20. We are piloting community-led total sanitation in Bihar and, assuming that it proves effective, will roll it out.

The Prime Minister of India recently described child malnutrition—another point raised by the Committee Chairman—as a national shame. Over the next four years, DFID aims to reach more than 3 million children through nutrition programmes, including—not least over the first 1,000 days and with the Governments of Madhya Pradesh, Bihar and Odisha—a programme on child-feeding, micronutrient supplements and diarrhoea management. Trained community health workers are very much part of that programme. Our energies are focused on delivering the results expected of our programmes. For instance, 447,000 births between 2011 and 2015 will be delivered with the help of nurses, midwives and doctors in those three states, but it is too early to finalise our plans for post-2015.

I appreciate the interest of the Committee, but let us be clear that we will not be in India in a development relationship for ever. Our aim over time is to move from an aid-based relationship to one based on shared contributions to global development issues, not least climate change.

[Malcolm Bruce]

Will the Minister acknowledge that, according to our discussions with the Indian Government, they themselves see the relationship changing and coming to an end? It is not just a decision for the United Kingdom Government; it will be a joint decision between the UK and the Indian Government.

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[Malcolm Bruce]

I thank all hon. Members who have contributed to the debate, which has been extremely positive and constructive. The Committee’s mood and the Minister’s response is that we are working in partnership with the Government and the people of India. Indeed, what we are doing, we are doing together and in full participation. The fundamental concern and objective is to ensure that the poorest of the poor people in India get the support that they need to stop being poor as fast as possible. The UK’s ability to accelerate that process will be the most positive measure and judgment of our engagement.

Oral Answers to Questions

Lord Bruce of Bennachie Excerpts

Wednesday 26th October 2011 Commons Chamber

[Mr Mitchell]

The hon. Lady is right to mention early marriage, which we are seeking to tackle in particular. We have conducted a pilot study with the Nike Foundation, with which we work closely, on preventing early marriage in the Amhara part of Ethiopia. The results of that pilot are excellent, and I can assure her that we are including in all our programmes, as a fundamental pillar of our work with girls and women, the point that she accurately made about stopping early marriage.

[Malcolm Bruce (Gordon) (LD)]

The Secretary of State is right to stress the rights of women to choose when to have children and how many to have, but does he also agree that the evidence is that if we can promote sustainable development the necessity for large families diminishes and population pressures tend to reduce, and that that ought to be at the heart of the Government’s objectives in partnership with our development partners?

[Mr Mitchell]

My right hon. Friend is absolutely right. A classic example is the work that the Government are doing and the priority that we accord to getting girls into school. We know that girls who are educated get married later and have fewer children. That is a good example of what he is saying.

Food Security and Famine Prevention (Africa)

Lord Bruce of Bennachie Excerpts

Thursday 15th September 2011 Commons Chamber

[The Secretary of State for International Development (Mr Andrew Mitchell)]

I congratulate the hon. Member for Lewisham East (Heidi Alexander) and my hon. Friend the Member for Hastings and Rye (Amber Rudd) on two extremely good speeches on the vital subject that the House is debating.

The motion has three specific points. I want to say a few words about all three, but I start by acknowledging that the motion mentions the generosity of the British public through the Disasters Emergency Committee appeal. Throughout the country, people have supported that, and nearly £60 million has been raised. That, together with the efforts of the British Government and other Governments around the world, seeks to address the crisis in the horn of Africa and to stop a disaster becoming a catastrophe.

The House will be aware of what is happening in the horn of Africa. The rains have failed. Enormous numbers of people are moving first from the centre of Somalia down to Mogadishu and then from Somalia out across the borders into Kenya and Ethiopia. The Dollo-Ado camps in Ethiopia now contain 120,000 Somalis, 80,000 of whom have arrived there in the last few weeks. In Mogadishu, which I visited just three weeks ago, camps have sprung up all over that city. The World Food Programme is today feeding some 327,000 refugees there, in particular in therapeutic feeding.

In Dadaab, which I visited earlier in the summer—I know that the right hon. and learned Member for Camberwell and Peckham (Ms Harman) has been there recently, too—huge numbers of people have come across the border into Kenya. I saw a sight that one rarely sees in Africa—large numbers of mothers and their children waiting in the early morning in complete silence. I was able to talk to some of them; they told awful stories about being attacked and beaten as they came with their children out of Somalia. Many had lost children on that march, and their feet were cut to pieces by that long march. I pay tribute to the Kenyan Government who are housing 430,000 people in Dadaab, the largest refugee camp in the world, which was built originally for 90,000.

I also visited Wajir, where I was able to see the brilliant work that has been done by British non-governmental organisations—in particular Save the Children, but many others—in trying to cope with the crisis. I acknowledge and pay tribute to my shadow, the right hon. and learned Lady, for the way in which she, too, has emphasised the importance of placing help for girls and women at the centre of what we are doing—they are in the forefront of the crisis—and for the work that she has done in ensuring that this issue stays at the top of our international agenda.

The people in those camps are in many ways the lucky ones. Inside Somalia we are probably reaching about 1.2 million of the 3 million people who are in serious jeopardy at this time. Those who have followed these things will have seen that the global acute malnutrition and the serious acute malnutrition rates in Somalia are horrific. We have not seen such rates since the 1992 famine. As my hon. Friend the Member for Hastings and Rye made clear, it is not often starvation that kills people who are caught up in famines, for the reasons that she eloquently set out; it is disease. When the rains come, the immune systems of large numbers of people, already shredded by hunger, will not be able to withstand the waterborne diseases that will cut like a knife through that very vulnerable population. Cholera is already endemic in Somalia and Mogadishu, and measles and malaria will also affect huge numbers of very vulnerable people when the rains come.

[Malcolm Bruce (Gordon) (LD)]

Will my right hon. Friend use his considerable leadership in his capacity as Secretary of State, within the international community, to get to the root of this issue? We want to deliver humanitarian relief now, but if we had spent half the money that we will now have to spend in advance, we would have avoided the problem and people would not have been in stress and dying. Spending money in advance rather than waiting for the crisis is surely the way we will have to deal with this in future.

[Mr Mitchell]

My right hon. Friend makes a good point, which I am coming to directly.

Britain has engaged vigorously over recent months in addressing all these issues, and I pay tribute to the outstanding team that Britain has in Nairobi, across Departments of the British Government, working with our partners and providing real leadership and advice across the international system.

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[Ms Harman]

I absolutely agree, and that was going to be my very next point. Not only should everybody who gives to the DEC feel proud of what their money contributes to, but so should every one of the many members of the African diaspora, from Uganda, Kenya, Ethiopia and Somalia, who not only work hard in this country and support their families here, but send remittances back to their country of origin. We should be proud of what they do, too; it makes an enormous difference.

[Malcolm Bruce]

The right hon. and learned Lady is making an important point. Does she agree that the huge contribution that individuals have made to the disaster relief fund, plus the actions of her own Government, give the lie to those who say that the British people do not want their aid budget maintained or their commitment to the UN target achieved?

[Ms Harman]

Absolutely. Everyone should be proud of the work that our Government, through DFID, are doing, and that is why I support so strongly their promise to maintain our commitment to increase aid to 0.7% of gross national income by 2013. I know that they will do everything they can to step up their efforts to get other countries to do the same. We are doing our bit; so must other countries.

The drought has hit a wide area of the horn of Africa, but its impact on people is dramatically different in different areas. For example, in Ethiopia—and I underline the points that the Secretary of State made—for a number of years our aid and the work of our aid agencies with the Government of Ethiopia has put in place measures to protect against the impact of drought. They have prepared systems of what they call cash transfers—systems to give money to people whose crops have failed and cannot feed themselves; they have stockpiled food ready for such people; and they have built roads so that remote areas can be reached even when there is drought. Although those people are suffering hardship, they are not starving. They are able to stay on their land and in their villages, and they are not forced to abandon them and flee, but work will have to go on, and, as the Secretary of State said, the danger is not over when the rains come, because they can bring with them cholera and malaria.

Ethiopia shows that aid works, but it is a tragically different story for Somalia, which shows that, because of conflict, when people do not have access to aid and there is no preparation for drought, people are left totally at the mercy of drought. The best that they can hope for is to flee their lands and become refugees; the worst is to see their children die of starvation. With preparation and with humanitarian aid, people can cope with drought, but they cannot cope with drought and conflict, and that has caused hundreds of thousands of people to flee Somalia for the Dadaab camp in north-east Kenya. The numbers are absolutely overwhelming. A camp that was built for no more than 90,000 people now has more than 430,000 and is growing by 30,000 a month. Every single day, there are more and more people: between 1,000 and 1,300 arrive every day, and each day those who come are more dehydrated, more undernourished, more exhausted and more traumatised.

Some people, in order to avoid the effect of the searing heat on their children as they walk from the Somali border, travel at night through a no-man’s land, but that makes them even more vulnerable to attack. Aid agencies are organising buses from the Somali border, but although they are putting on more and more buses, they cannot keep pace with the flood of refugees. The accommodation in the camp cannot keep pace, either. When people arrive, they have to stay under makeshift cover outside the site. They wait in makeshift shelters until they are registered, and then they join the other—soon to be half a million—people in this camp in the middle of nowhere.

It is hard to describe how bleak the camp is. When we came into land on the small landing strip, we flew over terrain that looks like the surface of the moon. It is so barren, there is just nothing, and then suddenly we saw hundreds of thousands of tents in the middle of nowhere. It is just desperate. For all the work of the camp staff and of the aid agencies, it is not a safe place, either. Of the group of women whom I met in the camp, which is 80% women and children, all said that they wanted to go back to their homes in Somalia—that, if only there was peace, they would go back to their land there. They said that they had fled not the drought, but the conflict.

The camp director said that he wanted me to take back to this country just one message: “Whatever you do, please do what you can to sort out the situation in Somalia.” Of course there have to be high-level meetings at the UN and the EU to ensure that the wider international community plays its part, but the deep and long-standing conflict in Somalia will not be solved just by summits in Brussels and New York. We need to support the work of organisations such as the Organisation of Islamic Cooperation, the Governments of Muslim states, who can help, and the African Union. We need to draw not only on the diaspora in Canada, America and continental Europe, but on the Somali diaspora in this country—on their advice, support and wisdom.

Future of CDC

Lord Bruce of Bennachie Excerpts

Thursday 14th July 2011 Westminster Hall

[Malcolm Bruce (Gordon) (LD)]

I am glad to have the opportunity to open this debate on the future of CDC, and I appreciate the fact that the Secretary of State for International Development has undertaken to respond to it.

CDC is a remarkably important part of our development armoury and it is likely to undergo substantial changes in the coming years, as our Committee recommended in its report. I need not detain hon. Members long by saying that CDC—originally the Colonial Development Corporation, subsequently the Commonwealth Development Corporation, and now just the CDC—is the Government’s development finance institution and the fourth largest in the world. On its own terms, it has been a success, in the sense that it has grown its assets from £1.2 billion to £2.7 billion since 2004. In 2009, which is the last year for which I have figures, it contributed £222 million towards the UK’s official overseas development assistance.

From a personal point of view, I would say that CDC has done well in terms of what it was asked to do, but it needs to do more and differently, and that is certainly the recommendation of the Committee’s report. The Government have reviewed CDC. The Secretary of State said to me that as a fund of funds it is fine, but it needs to be something more—I agree. Indeed, it has been my view for a number of years that CDC is too distant from the Department for International Development and that its full potential for helping to achieve private sector growth and development in our priority areas has not been realised. I welcome the Secretary of State’s statement that he wants CDC to be

“more pro-poor focused than any other development finance institution, doing the hardest things in the hardest places.”

If I may say so, that quote is characteristic of him.

I have often said that the International Development Committee is not the overseas aid Committee. If we are to provide sustainable development that will lift poor people out of poverty and keep them out, we must strengthen the private sector’s ability to support them. As a fund of funds, CDC has levered additional finance, and there is clearly a role for that to continue—indeed, that will probably be its predominant role—but we have suggested that CDC should consider whether it can, for example, attract more capital from diaspora funds. Diaspora finance far outweighs our overseas development assistance to many developing countries, but it is fair to acknowledge that, understandably, much of that money goes back to the families and communities from which the diaspora has come. However, the Committee took the view that there must be scope for a significant part of that finance to be channelled into wealth-focused, pro-poor development funds. We certainly believe that a well-targeted, well-managed fund could unlock a lot more for pro-poor development.

[Anas Sarwar (Glasgow Central) (Lab)]

As a fellow member of the Committee, I praise the Chair and his draft, which we accepted without any amendments. He rightly says that diaspora communities want to invest in their mother countries. One example is the Pakistani community, which invests heavily in Pakistan. However, one regular problem is that the investments are risky and do not give the returns sought. If CDC reformed itself to appeal to diaspora communities, that could lead to much more effective aid and development in their countries.

[Malcolm Bruce]

I thank the hon. Gentleman for that intervention. CDC opens up the opportunity to do a lot of things differently in the future that could unlock funding from a variety of different sources. That will be a mark of its success.

We also recommend that CDC should try to invest funds where private capital otherwise might not go—or not on a scale or on terms that would meet the needs of the poor. There is plenty of evidence throughout the world that some market opportunities do not always attract adequate investment because they are regarded as unfashionable or remote, or because their benefits are counter-intuitive. One example from the not-too-distant past, and from quite close to home for me, is the Highlands and Islands Development Board. An interesting thing about the board is that it invested in its heyday in stimulating new companies and initiatives across the highlands and islands region.

I remember the chairman of the board giving evidence to a Select Committee. When he was asked what return the board made on its investment, how many losses and bad debts it had and how that compared with the private sector, he answered, in summary, “Actually, our rate of return and bad debt is almost exactly the same as in the private sector.” That prompted the question, “Well, why do we need you, then?” and he answered, “Because the private sector wouldn’t go where we went.” That is classically the case with CDC. It will and can go to places where investment might not otherwise be made, but where genuinely positive economic returns can be secured. [Interruption.] I am glad that my hon. Friend the Member for East Surrey (Mr Gyimah) has found his right place in the Chamber. I hope that he might catch your eye in due course, Mr Walker.

It is right that a development finance initiative such as CDC should have, in addition to such priorities, an investment code that meets the Department’s environmental, social and governance standards. That code should be used not as a barrier to attracting funds, but as a means of effectively certifying the quality of investment and attracting money from investors who want to meet certain high standards. There are examples of ethical investment funds in the UK. People with such investments want to invest their money in ways that have particularly beneficial social outcomes. I am certain that people will want to invest in ways that deliver benefits to the poor, but they will also want to know that it is being done in a businesslike and commercial way—not through a charity, but through an organisation designed to create sustainable economic development.

One problem with and criticism of a fund of funds is that, by definition, it creates long lines of communication and limited direct control. Many transactions are happening at a long remove. Given that it is a development finance institution, it is therefore necessary, first of all, to ensure that the impact is properly assessed and measured. We have called on the Government to ensure that that is done more effectively than in the past. A proper assessment should be made of what jobs were created, whether they were quality, permanent jobs, and whether those jobs were adequately paid. That is the essence of sustainability as well as of the pro-poor benefit of the investment. The same applies to transparency. People need to know where the money is being invested and whether it is being invested in appropriate things with which people feel comfortable. They need the assurance that the primary outcome is benefiting poor people.

That point raised a debate in the Committee about what people should be paid. It is somewhat embarrassing that the CDC has suffered criticism for that in the past. Given that its primary purpose is to help the poorest people in the world, high rates of remuneration and bonuses for its executives create an uncomfortable anomaly that needs to be addressed.

[Mr Sam Gyimah (East Surrey) (Con)]

Does the right hon. Gentleman agree that it is not just about the absolute level of salaries and bonuses, but about the time horizon within which they are paid? If we are to do serious development work or to make investments with a development impact, people should be thinking about the long term, rather than about short-term gains.

[Malcolm Bruce]

I absolutely agree. My view is that that is a good criterion for every form of investment, but especially in this context.

The Committee received interesting evidence on remuneration, which we debated. The standard response on CDC has been, “It has been set up as a market-based model competing for funds in the marketplace, so we have to pay people market-based salaries.” I am not saying that there is no connection between those things, but we received significant evidence that there were people who would be prepared to work for considerably less than the market rate, although not necessarily for peanuts, given that, in the peak year, the chief executive’s package totalled £1 million, which included a salary of several hundred thousand pounds. However, there are people who will work not for £20 a week, but perhaps for £50,000, £100,000 or £150,000 a year, on the grounds that they have an opportunity to give something back from their own career by contributing their experience at a time when they do not need the money. We asked the Government to look at that. I appreciate that that can create tensions, but as long as the process is done openly, the model would draw some of the sting out of the criticism that has been levelled in the past.

Similarly, the Committee had an interesting discussion about the use and role of tax havens. We recognised that things were not as simple as we had thought when we started to look into the situation. The argument for their use is that they create financial efficiency that attracts more money than would otherwise be the case, and that that does not, in fact, mean that taxes are not being paid. Unattached—orphan—money that was not directly related to a particular geographical area or activity could be reinvested in the fund and, in effect, the tax not paid on the tax haven funds represented money available for reinvestment. The Norwegian development finance institution recently took a policy decision to pull out of tax havens, and doing so dramatically reduced the attraction of additional finance. Our view is that we should look at the situation clearly. There should be transparency and institutions should always pay taxes appropriately and properly, but we have asked the Government to consider whether they should provide a rule about the correct role of tax havens. To be frank, the Committee did not feel that there was enough authoritative evidence to make a definitive recommendation.

[Anas Sarwar]

In the spirit of transparency, does the right hon. Gentleman agree that it might be a good idea for the Government to consider whether they should request that CDC publishes what taxes it pays and what profits it makes for every country it works in?

[Malcolm Bruce]

Absolutely, and I obviously hope the Secretary of State can give us that assurance.

In a sense, the organisation needs to be a trailblazer for what an investment model in developing countries ought to be, and a role model not only for other DFIs, but for the well-intentioned private sector. We have concluded that there is scope for clarification at the very least and for the maximum transparency.

We were as shocked as the Secretary of State that despite the sale of Actis, the fund manager, for £373,000 and the fact that the Government were apparently entitled to 80% of the proceeds, not a penny had been paid by the time the Committee took evidence. I know that he was anxious to vent his spleen about that when he gave evidence to us. I do not know whether he will be able to give any indication today of whether the Government can sell their share and, if they do so, whether we will get a fair rate of return—after all, that will be reinvested for the benefit of poor people.

Perhaps the Committee’s most significant recommendation was that the investment model for CDC should be changed. I know that the Government have not entirely accepted our recommendations, but I think that they acknowledge the strength of their principle and the spirit. We recognise that the fund of funds model could unlock a substantial amount and that it does attract investment. Particularly if the report’s recommendations are taken on board, that could be focused in a way that gives real, sustainable, long-term benefits to poor people in poor countries.

We felt that some of the money needed to go into more direct, riskier and more pro-poor investment. That means not that it should be thrown away or invested irresponsibly, but that lower rates of return should be acceptable or that a mix of grants and loans should be applied. We suggested the name “CDC Frontier” to indicate that the body would be operating slightly more experimentally.

One point about our recommendation of having two separate businesses was that because the fund of funds has been very successful at attracting and unlocking substantial extra funding—it has provided very good leverage—we were concerned that a more risk-associated set of investments in the same fund might frighten off some investors who have contributed. I hope that the Secretary of State will reassure us and that his response shows that he has taken our concern on board. As long as the Department and the way in which CDC is established are able to reassure those people, the Committee will be content if our specific model is not adopted. I hope that the Secretary of State understands that the proposal was not a gimmick, but a genuine attempt to ensure that we had the balance of the changing nature of the business right and that we did not have a higher-risk aspect undermining the area with a proven track record.

The Committee felt that there should be some agreement on the sort of sectors within which CDC should operate, but the Government did not entirely accept that recommendation. I appreciate the reason behind the absence of the hon. Member for Stafford (Jeremy Lefroy). He is a valued member of our Committee and has real expertise in agricultural development in east Africa. He was rightly exercised by the view that most countries in which we have the greatest commitment to pro-poor development are rural, and agricultural productivity is a major cause of poverty. The Committee accepts that the world is changing. We have produced a report on urban poverty and increasing urbanisation, so we do not see development as something that happens just in remote parts of rural Africa, which is sometimes the public image. However, it is true that in both the sub-continent and Africa, a high proportion of the poorest people depend on agriculture for their livelihoods, yet the productivity of agriculture is frankly abysmal in many cases.

When the Committee recently visited east Africa, some of us spent a night in a village in the heart of rural Burundi—

[Richard Burden (Birmingham, Northfield) (Lab)]

rose—

[Malcolm Bruce]

I will not take any interventions on that point. There is an internal issue in the Committee.

In Burundi, we witnessed for ourselves some of the poorest of the planet’s poor people struggling. I was going to say that they were on the edge, but they were beyond the edge—they were not operating at survival levels. If it were not for the intervention of non-governmental organisations, I do not think that they would have survived. It was estimated that their per-capita income was 20p a day. Apart from very basic and poor living conditions—no electricity, one tap for 4,000 people and pit latrines, although not for everybody—we saw exhausted soil, diseased plants and minimal yields that were inadequate even for self-sufficient farming, never mind cash-cropping.

The hon. Member for Stafford, as someone who knew a little more about agriculture than other Committee members, said that it should be possible to perform a soil analysis, to work out nutritional benefits and to advise on disease-resistant plants, and possibly to increase the yield of the agricultural holdings by up to eight to 10 times. That would be a massive return, so we felt that CDC should be part of the process of tackling that problem. We would like to think that it would consider investing in improving agricultural outputs in such poor countries.

[Pauline Latham (Mid Derbyshire) (Con)]

Is it not true that CDC could help not only with productivity and increasing yield, but by working with farmers with very small plots of land to enable them to join together as a co-operative, because that would give them a greater income overall? When the Committee went to India, we saw a diversity of products compared with the sorts of crops grown in Burundi, Rwanda and, indeed, the Democratic Republic of the Congo. It would be better if people could diversify and have larger plots so that they can make more money, which would come back to CDC and benefit all those incredibly poor people we saw when we stayed in Burundi.

[Malcolm Bruce]

I certainly agree that we want a partnership that looks at the best way of optimising and maximising production from which the community can benefit. I know that the Government have said that they are unwilling to direct CDC into particular sectors, but I hope that the Secretary of State will indicate that he will also not be telling it not to go into particular sectors. I hope that the Government will listen to the Committee’s view that CDC should try to explore such an area because that approach would give it an expertise that would be beneficial and could be replicated elsewhere.

Although today might not be the appropriate time for the Secretary of State to comment on this, he will be aware of the engagement that we have all had in our development programme in India. He has set a target of 50% for the level of Indian overseas development assistance going into private sector development by the end of 2014-15. For absolute clarity, I should say that the Committee did not dissent from that as a principle, but we were concerned about whether the mechanisms existed, or would exist, to achieve that figure. It will be interesting to see the role of CDC and equivalent partners in relation to that, particularly because the Government of India have made it clear that they are not keen on the UK Government’s aid programme being used to subsidise private sector investment.

To return to the example I cited with regard to the Highlands and Islands Development Board, there were projects in the states that we went to—Bihar and Andhra Pradesh—that probably would yield a return, but are unable to attract investment because they are off the sexy horizon of where people want to invest in India. It is possible for the Secretary of State’s objectives to be achieved, but the revamped CDC and the equivalent model may have to be worked up to a point where that can deliver. That is not possible at present and, to be fair, the Secretary of State has not said that it should happen as of today. However, a lot needs to be done in the next three or four years if that is to be delivered.

I can summarise things with a slightly personal view. I have been Chair of the Committee for six years, including throughout the previous Parliament. As I have said before, the creation of DFID was a considerable achievement of which the previous Labour Government had every justification to be proud. I have no hesitation in saying that. However, after that length of time and with a new Government in office, it is also right and proper to review, reprioritise and reassess.

Until recently, DFID was not comfortable with the role of interacting with the private sector. What people in DFID do in development terms is brilliant and world class. Indeed, I am not criticising the people involved because they did what they were asked to do. However, whenever there was a discussion about private sector co-operation and partnership, there was a tendency to say, “Well, that’s what CDC does. We’ll park that and get on with our development job.” In future, there needs to be more of a mingling of the two. When one role is more risky, complicated and difficult, there is always a worry that it could compromise the other. I understand those concerns, but the relationship between the Department and CDC as it changes needs to be slightly more hands on. There needs to be more parallel working between CDC in country and DFID programmes in country, and a greater understanding about them between the two.

My final example about that comes from a briefing the Committee enjoyed—my hon. Friend the Member for Mid Derbyshire (Pauline Latham) was there in Aberdeen—from the Wood Family Trust, which I hope will give evidence to us in the autumn on a different inquiry. The trust was engaged in a project in east Africa on making markets work for the poor. It is a private family foundation, and it started off by saying, “We’re going to give the money we’ve made”—predominately out of the oil and gas industry—“and put it into development in Africa, because that’s about putting something back. We’re business people and we’ll do the business thing.” Indeed, that was precisely what it was doing. However, it rapidly realised that it could not do what it wanted without being in partnership with the public sector. It is interesting to note that the public sector needs to partner the private sector and the reverse is also true. It is the working together that delivers the best results.

I commend to the Secretary of State the fact that, when the Committee is visiting any bilateral partner in the future, we are likely to get a briefing about what is happening between the development programme and CDC in that country. We have not had that in the past—CDC has almost been a different organisation.

I commend our report to hon. Members. I am very grateful to the Secretary of State for attending the debate and, indeed, for his constructive response to the report. I look forward to him updating us because I am aware that since our report was published, things have moved on a bit with regard to initiatives to revamp and reinvigorate CDC. The Committee is very much looking forward to hearing about that.

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[Caroline Lucas (Brighton, Pavilion) (Green)]

I am grateful for the opportunity to speak in the debate, particularly because I am not a member of the International Development Committee, although I follow its work closely. I welcome the Committee’s report on CDC, which has operated in the shadows for too long and which is increasingly a subject of public concern.

I am pleased to note that the issue of compliance by CDC fund managers with the Department for International Development-sponsored CDC investment code has been raised in the report, because it is an important issue. I have followed the issue at first hand after one of my constituents, Mr Dotun Oloko, came to see me about the investments of two CDC-backed funds in Nigeria, Ethos and Emerging Capital Partners. Mr Oloko’s concerns have been set out in written evidence received by the Committee, so I will not detail them here. Suffice to say that Nigeria’s Economic and Financial Crimes Commission reports that four of the companies in which CDC-backed funds have been invested are fronts for laundering money. That money is said to have been corruptly obtained by James Ibori, the ex-Governor of Nigeria’s Delta state. Mr Ibori, who has previously been convicted twice in the UK, is on trial here again, this time for alleged money-laundering offences involving CDC investee companies.

CDC’s investment in such companies raises many concerns. As hon. Members will recall, CDC’s investment code requires that all businesses in which CDC’s capital is invested must

“comply with all applicable laws and international standards intended to prevent bribery and financial crime.”

Under these rules, companies with links to a politically exposed person, such as Mr Ibori, his relatives and close associates, should have been subject to an enhanced due diligence process. Why did the funds fail to pick up on these links, even after they had been brought before a Nigerian court and were widely publicised in print and in the electronic media? A simple internet search would have revealed the details of corruption associated with these CDC investee companies.

I also want to know whether procedures were in place, both within the funds and within CDC, to ensure compliance with money laundering laws in the UK, the US, Jersey, South Africa and Mauritius—all countries where the funds and CDC are variously registered. For example, here in the UK, the Money Laundering Regulations 2003 require CDC to implement procedures to forestall and prevent money laundering. If, as the evidence from this case suggests, CDC has failed in that respect, will there now be a broader review of CDC’s portfolio with regard to money laundering risks?

My constituent Mr Oloko’s own investigations revealed another stunning fact: a discrepancy of several million pounds between the amount one of CDC-backed funds claims was paid for its investment in a Nigerian fertiliser company, and what was actually received for the shares in Nigeria. The fertiliser company is reported—alleged—to be a front for Mr Ibori. Yet this appears to have gone unnoticed by CDC and, once it was informed, unreported too. In future, will CDC be required to report such information, if there are reasonable grounds to suspect that a crime has been committed?

There are other causes for concern. CDC continues to be an investor in a bank whose director has been jailed and in other indicted investee companies. Those companies include one where a former chief executive officer is facing criminal charges in Nigeria as well as civil action in the UK, and another which Private Eye magazine has accused of tax evasion and corruption. DFID’s response has been equally worrying. When concerns were raised, did it seek further information from Mr Oloko? No, it did not. Did it bring in independent investigators? No, it did not. All it has done is to ask the funds and CDC—the very institutions whose actions need investigation—to give assurances that no wrongdoing occurred. That is not sufficient to reassure the public.

A key question, still to be answered, is whether CDC passed on the information that it received from Mr Oloko to the police, as required under the Proceeds of Crime Act 2002. We do not know, because CDC refuses to say. When I met the director of the Serious Fraud Office earlier this year, he told me that he learned about the concerns directly from my constituent, Mr Oloko.

CDC’s Nigerian investments are not the only causes for concern. CDC also invested in funds that have backed companies accused of human rights abuses, such as Anvil Mining, and of profiting at the expense of the poor. For example, in Uganda the CDC-backed power distributor Umeme has hiked electricity prices to the point where many poorer Ugandans have been forced to steal electricity from the grid; Umeme’s manager is reported to have called for their execution.

DFID officials have argued that the measure of CDC’s contribution to relieving poverty is the profitability of the companies backed by its funds, which is not a serious argument. While investment is certainly needed to relieve poverty, it is both simplistic and irrational to assume that any investment, even if conditioned by environmental and social safeguards, automatically translates into positive impacts on poverty reduction simply because that investment generates growth.

Before I was elected to this House, I worked for Oxfam for more than 10 years. I have seen some of these development questions at first hand. Many of the funds in which CDC invests make extensive use of tax havens. I listened with interest to the right hon. Member for Gordon (Malcolm Bruce) on the complications and issues around tax havens, which is a matter of concern. Those funds are using tax havens, and although the right hon. Gentleman explained that that is not always to avoid paying taxes, it still raises concerns.

[Malcolm Bruce]

I want to reassure the hon. Lady that we share those concerns. We did not dispel them; we just felt that the matter was more complicated than we had appreciated. In a wider inquiry, we did not have time to come to a definitive conclusion. The concerns exist and we need assurances, but she should accept the danger that investment may be driven away if the matter is handled wrongly.

[Caroline Lucas]

I hope that the issue can be looked at in greater detail. I appreciate that it is complex, but none the less there are real causes for concern.

The Government have acknowledged many of the concerns about CDC. I am encouraged that that has strengthened CDC’s environmental, social and governance procedures. CDC is also committed to introducing new development impact indicators and to developing new investment instruments, so that it no longer operates exclusively as a fund-of-funds investor. By 2015, 20% of its investments will be loans and 20% of them will be direct equity investments. However, that still leaves 60% of its investments being delivered through private equity funds. I question whether such turbo-charged profit seekers are always the appropriate development finance vehicles. Indeed, fund managers themselves are sceptical about the compatibility of the fund-of-funds approach with DFID’s development objectives, particularly in addressing poverty.

There are some important lessons to be learned, most notably about the need for proper scrutiny of development projects and for CDC’s investments to be properly monitored on a regular basis. My constituent has looked at a relatively small proportion of CDC-backed funds, but what he has already discovered makes me extremely concerned that there deep-seated problems that needed to be addressed as a matter of urgency.

Profiting from development at the expense of the poor is easy; history is, unfortunately, replete with examples of that. The more difficult challenge is to assist poorer people in designing and developing programmes for their own benefit, rather than that of their financial backers. I very much hope that CDC can rise to that challenge in the future.

Finally, I sincerely apologise for the fact that I cannot be present for the whole debate, although I will be here for some time. I understand that it goes on until 5.30 pm.

[Malcolm Bruce]

It can do.

[Caroline Lucas]

If it does, I cannot be here until then. I hope that the Secretary of State will forgive me, and none the less address some of the issues that I have raised. I will avidly look at his response in Hansard.

--- Later in debate ---

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

It is a pleasure to speak today from the Labour Front Bench about CDC. I thank the Chair of the International Development Committee, the right hon. Member for Gordon (Malcolm Bruce), and the rest of the Committee for their work. It is vital that CDC should play its part in promoting investment in developing countries to promote economic development and poverty alleviation.

In 2009 development finance institutions contributed about $33 billion of new private sector investment in developing countries. The contribution made by institutions such as CDC to developing countries has the potential to make an even more significant impact on economic development and poverty alleviation, as part of the UK’s continuing work in international development. As the right hon. Member for Gordon pointed out, it is vital to build on its work and to focus on areas where improvements can be made. With a mandate to boost economic growth by investing in private sector development and more than £2 billion of planned investment in the next five years, there is, as I have said, a great opportunity.

I want to focus on some of the issues raised by right hon. and hon. Members in the debate. The right hon. Member for Gordon highlighted the importance of CDC’s acting as a fund of funds, and of the need to focus on pro-poor development and the connection between investment and development. Economic growth in its own right will not bring about development if we do not use our investments appropriately, as many hon. Members have pointed out.

[Malcolm Bruce]

The hon. Lady has made an important point. A World Bank report on sub-Saharan Africa will often give an annual figure showing rates of growth that most of Europe would envy, but it does not show that the distribution of that wealth is not helping to alleviate poverty. Wealth by itself is no use, if it does not get to the people who need it.

[Rushanara Ali]

I welcome that comment. As we have seen recently, in many middle-income countries, economic inequality coupled with injustice are a devastating combination and can lead to conflict. Economic development is vital. Growth is vital, but it must go hand in hand with tackling global inequality. We must be mindful of that responsibility in our investments through CDC and in our other investments.

The right hon. Member for Gordon also discussed the linked matter of ethical investment and the need for social outcomes and sustainable economic growth, and other hon. Members have reinforced those points. Historically, while CDC’s role has been important and has often been positive, it has had a mixed history. This is a great opportunity for us to look ahead at how it can play a bigger and more significant role.

My hon. Friend the Member for Birmingham, Northfield (Richard Burden) raised the important question of about 50% of the international development budget to India being channelled through private sector investments. He sought clarification from the Secretary of State whether that figure is accurate and whether that investment will be channelled through CDC or some other route. I will appreciate that being clarified in the Secretary of State’s response.

The hon. Member for Brighton, Pavilion (Caroline Lucas) raised some important issues about compliance with the spirit and letter of international law and about tax, transparency and money laundering laws, among others. She reiterated the role of ethical investment and the need to be mindful of human rights, in particular when investing in mining companies and others. Many organisations have expressed concern about the impact that particular kinds of investment can have and the need for greater care to ensure that such investments are ethical and that human rights violations do not take place.

--- Later in debate ---

[Mr Mitchell]

The hon. Lady is nodding assent, and I will write to her on that basis.

The point I seek to make is that by helping the world’s poorest people to create wealth and build up their own assets, we will help them to pull themselves out of poverty, and become less reliant on aid and more resilient in the face of natural disasters. During her excellent speech, the hon. Member for Bethnal Green and Bow (Rushanara Ali) underlined the point that development finance institutions such as CDC should do more to reduce poverty. I completely agree with her. We need to see the new CDC leading the way and demonstrating how other international financial institutions, including the International Finance Corporation, can set a good example. We are pressing the IFC to do more in lower-income countries and particularly fragile states, and to be more demonstrably pro-poor in middle-income countries. There is no difference of opinion between the Front-Bench spokespeople on that point.

At the heart of the approach that we are discussing is a reformed and revitalised CDC that will be a catalyst for change in the most challenging environments where the transforming power of successful financial investment is most needed. In that context, the previous six months have seen an enormous amount of activity, and if I may, I will remind the Committee of what the Government have been doing. In October 2010, I informed the House of the Government’s decision to reconfigure CDC to boost its development impact, and a public consultation was set up as part of that process. In March this year, the Committee published its report on CDC. The Government responded on 4 May, welcoming that report and agreeing with the vast majority of its recommendations. On 7 June, I reported to the House that the Government and CDC had agreed on and published a new high-level business plan.

In his opening remarks, the Chairman of the International Development Committee stated how important it was that the Department should not be too distant from CDC. He expressed the view that the Department had previously seemed distant, although the two buildings are only about 300 yards apart. I completely agree with the right hon. Gentleman, and we are intent on rectifying that within the important confines that Ministers and civil servants should not pick winners or make decisions on individual investments. They are, however, entitled as the 100% shareholder in CDC to express a clear understanding of the direction in which CDC should be moving. That is what we are doing.

[Malcolm Bruce]

I take the Secretary of State’s point about Ministers, but what about departmental staff and CDC staff who work together, particularly in bilateral areas? Our experience in the past is that CDC is never mentioned during programmes of visits to other countries. I hope that that will not be the case in the future.

[Mr Mitchell]

The right hon. Gentleman is absolutely right. We will, I hope, see secondments between the Department and CDC in the future, and we are intent on promoting much closer involvement, including at country level. When I first visited India, I, too, was struck by the distance between the Department and CDC, although it is fair to say that, such is the quality of the staff that we are fortunate enough to have in India, that is rapidly being rectified. The Chairman of the Select Committee will agree that that is a most important matter.

In the early part of his remarks, the Chairman mentioned the importance that the Committee attached to the role of the diaspora and, in particular, to remittancing and related matters. On page 2 of the Government response to the Committee’s report, we are clear that making intelligent and innovative use of that should be something that we progress, and we have every intention of doing that.

I do not want to waste the valuable opportunity presented by today’s debate by repeating the details that I have already given the House. Instead, I want to remind hon. Members of the broad thrust of the changes that we have made to CDC—changes that reflect the responses to the consultation and many of the comments made in the Committee.

Under its new business plan, CDC will become a pioneering investor—the most pro-poor investor in the world. As members of the Committee made clear, there have been too many examples of CDC behaving like any other emerging market private equity fund. I noticed that on one occasion CDC was the seventh investor in a fund, which does not suggest a great deal of pioneering. What CDC has that the market does not have is the ability to deploy patient capital, which does not require the same returns as are returned by the market. It can take a much longer view. That is one of CDC’s unique selling points, and it is extremely important that it is deployed.

CDC’s focus will be on development impact rather than corporate profitability. It will channel all its new investments into the poorer countries in sub-Saharan Africa and Asia, where more than 70% of the world’s poorest people live. It will become bolder in its approach to innovation and risk, accepting higher financial risks where those are justified by greater development benefits. In other words, as I said, it will be a patient investor.

--- Later in debate ---

[Malcolm Bruce]

I thank the Secretary of State for his full response to the debate and also all hon. Members who have participated. I thank my Committee for its work in producing the report.

I do not wish to detain the Chamber, other than to wish the Secretary of State well in reforming CDC. On behalf of the Committee, we look forward to an early meeting with the new chief executive officer, albeit not necessarily formally. The Committee will be anxious to have an exchange of views with the new CEO and the executive staff so that we can interact in a mutually beneficial way. I hope that the Secretary of State regards that as a perfectly reasonable wish for the Committee. CDC has the potential, together with DFID, to become one of the most innovative pro-poor investment opportunities in developing countries. We very much look forward to seeing that development.

I thank the Secretary of State personally for the energy with which he is driving things forward, for his vision for maintaining the successes and advantages that are built into CDC, and for enabling it to be innovative and flexible in ways that I hope will be of great benefit to poor people throughout the world.

Question put and agreed to.

Oral Answers to Questions

Lord Bruce of Bennachie Excerpts

Wednesday 13th July 2011 Commons Chamber

[Malcolm Bruce (Gordon) (LD)]

Will my right hon. Friend accept the International Development Committee recommendation to put more resources into sanitation and nutrition, as they have been shown to be the prime cause of poverty? Half the population of India has no access to sanitation and malnutrition rates among Indian children are among the worst in the world.

[Mr Mitchell]

My right hon. Friend is absolutely right. Half the children in the state of Bihar are suffering from malnutrition. His point about the programme is a good one. We are looking at increasing the amount we spend on water and sanitation, and all of us are extremely grateful for the strong all-party support his Committee gave to the Government policy on aid and development in India.

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[The Prime Minister]

The short answer is that we were following precedent, but the long answer is that if the right hon. Lady wants me to come to her Committee and explain what an appalling set of decisions the last Government made on aircraft carriers, I will. The delay alone by the Government whom she worked for added £1.6 billion to the cost of the aircraft carriers. So if she wants me to turn up and not just tell her what we discussed in Cabinet but lay out the full detail of the waste that her Government were responsible for, name the day.

[Malcolm Bruce (Gordon) (LD)]

Q11. Following a question from me to the Prime Minister’s predecessor three and a half years ago, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) set up pilot schemes to provide sign language support for deaf parents and their children in Devon and Merseyside. Those have now been completed, and they were a huge success. Will the Prime Minister meet a delegation of deaf parents, their children and their representatives to discuss how that sign language support can be extended to all children and their parents across the UK?

[The Prime Minister]

My right hon. Friend makes a very good point. We do a lot to support different languages throughout the UK. Signing is an incredibly valuable language for many people in our country. Those pilot schemes were successful. I looked at what the previous Prime Minister said to him when he asked that question, and I will certainly arrange a meeting for him with the Department for Education to see how we can take this forward.

Humanitarian Emergency Response Review

Lord Bruce of Bennachie Excerpts

Wednesday 15th June 2011 Commons Chamber

[Mr Mitchell]

I thank the hon. Gentleman for his welcome and for his words about the team who constructed the Ashdown report under Lord Ashdown, and about the response from my team, particularly those in DFID’s conflict, humanitarian and security department.

The hon. Gentleman is right that there is a huge amount of common ground on this matter. In opposition, we long realised that there was a necessity not to be complacent, but to accept that we could do some things better. That is why my right hon. Friend the present Prime Minister, some two years before the election, called for a report such as this, and why we have carried it out.

The hon. Gentleman was right to underline that all serious research suggests that the number of disasters will increase by as much as 50% over the next 15 years. That adds additional urgency to the work that we are doing. He was right to make it clear that the right way to lead in these disasters is through the multilateral system. That is why we are determined to play our part in making that system better. The cluster system that operates within it, in which Britain takes a leading role, is the right approach and we will do everything we can to see that it improves.

The central emergency response fund was set up by the right hon. Member for Leeds Central (Hilary Benn), who is sitting alongside the hon. Member for Edinburgh North and Leith (Mark Lazarowicz), and we supported it strongly in opposition. We think that it works extremely well and that it provides additional and immediate money in the event of a disaster. That is why we have significantly increased resources to the CERF. The additional fund that I announced today for help in the first 72 hours from pre-qualified charities and NGOs will enable us to carry on the principle of that work in, I believe, a more effective way.

The hon. Gentleman was right to make the point that building in resilience from day one is vital in all the work we do, and that is now happening. He was equally correct about the importance of gaining access for humanitarian relief, which we have called for consistently in Libya and will continue to call for in Syria and South Kordofan in Sudan. He was right that women should always be involved in such work. The role of women as people who suffer from humanitarian disasters on the front line is well understood. We give that issue our strong support through this work.

I agree with the hon. Gentleman’s point about remittancing and that there must be transparency in all that we do. As he pointed out, the money that we spend is taxpayers’ money. We are committed to recognising that. That is why we published the transparency guarantee early in the lifetime of the Government. When taxpayers’ money was used to alleviate the results of the floods in Pakistan last year, we had a floods monitor online so that people could see how hard-earned British taxpayers’ money was being spent and what relief it was securing.

In respect of these proposals, I believe that the International Development Committee has announced that it will consider in about a year’s time whether we have enacted what we have said we will do.

[Malcolm Bruce (Gordon) (LD)]

I thank the Secretary of State for his statement and Lord Ashdown for his excellent report. On behalf of the International Development Committee, I thank Lord Ashdown for his active engagement with us on two separate occasions when we were preparing our report on the Pakistan floods. I note that the Secretary of State said that he will publish more detail than he could put in the statement on the steps that are being taken to improve the UK response.

Will the Secretary of State say what role the UK can play in getting UN leadership, not least to ensure that in the most vulnerable countries the UN co-ordinator has both the competence and the line-management authority to execute effective rescue operations? He spoke about the co-ordination of NGOs and lead NGOs. Will he ensure that that is not just a UK response, but that such co-ordination will happen internationally so that NGOs do not get in each other’s way and have the opposite effect to helping in the disaster?

[Mr Mitchell]

My right hon. Friend is entirely right about those dangers, which he and his Select Committee have identified in their work, not least on the crisis in Haiti and the international response to it, particularly in the early hours.

On co-ordination, I did not answer the question from the hon. Member for Edinburgh North and Leith (Mark Lazarowicz) about the high-level panel. It is important to make it clear that Baroness Amos is leading an effective reform programme as the emergency relief co-ordinator. We back her strongly in that role, as do the heads of the UN agencies. I continue to talk to her and others at the UN about the findings of the multilateral aid review and the humanitarian emergency response review. That is the right way to take this agenda forward, so let us see how we get on with that.