Commonwealth Development Corporation Bill (First sitting)

Debate between Alison McGovern and James Duddridge

Committee Debate: 1st sitting: House of Commons
Tuesday 6th December 2016 Public Bill Committees

[James Duddridge]

Q Should not we be encouraging it to give more than £1 billion a year?

Sir Paul Collier: Yes, of course. The future of aid is to get decent firms to go to places where they will not make much money until there are lots more of them.

[Alison McGovern]

Q Very briefly, obviously there is a massive need for capital in Africa, and the question is how we should spend UK taxpayers’ money. I would like to come back to you, Tom. As we heard in the previous session, we are asking CDC to take increased risks with quite a lot of increased capital, but we do not yet have its strategy. Do you think that that approach is probably the wrong way round?

Tom McDonald: There is a cart-and-horse problem here, is there not? One of the things that we saw in the 2015 recapitalisation business case was that the Department did go through a thorough process of assessing, in collaboration with CDC, the art of the possible. There are good foundations on which the Department can build.

One of our worries, which we set out in the report, is that CDC has to be comfortable that it can absorb this money in two ways. One is internally: does it have the capacity to grow, still be agile and make decisions in the way it has done in the past? That is its internal operating model, if you like. The other is whether it has access to all the opportunities for investment. Now that it is again in the business of direct investment, that requires a lot more effort from the teams that are putting together these deals. There needs to be a discussion between the two bodies over the remainder of the spending review period, or the Parliament, about whether DFID is clear about what it wants from CDC, where it wants CDC to operate, and the principles on which it wants it to work. From CDC’s perspective, can it cope with the volume of money and can it, in good faith, invest all that in a portfolio of deals that will still allow it to meet its targets?

Gideon Rabinowitz: I have a very quick point to follow up on that. As well as our mission to tackle the injustice of poverty around the world, we are very keen in our work and our engagement with the development community to push for adequate public scrutiny and trust in the work that the British Government and institutions such as CDC do. We think that needs to be central to this debate, so these are really good issues that we are discussing. The absence of this investment strategy is making it a little difficult to get a fuller perspective. There is clearly a dynamic situation around CDC. I have looked at the business case for the last capitalisation last year, which said,

“CDC has previously determined that given investment needs, it could productively deploy up to £1bn of additional capital.”

We heard from this morning’s witnesses that that situation seems to have changed. An additional point was made in the business case that, of the £735 million that DFID allocated to CDC last year, it would need to go beyond that only in 2019. It is a very fluid situation, and the lack of clarity over that investment strategy and how the situation on the ground with CDC is changing poses challenges. It is important to get that clarity.

Oral Answers to Questions

Debate between Alison McGovern and James Duddridge

Tuesday 24th November 2015 Commons Chamber

[The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (James Duddridge)]

My hon. Friend is absolutely right that economic development is central to everything that we do. Ahead of the global African investment summit I will be meeting a collection of Presidents, Prime Ministers and Foreign Ministers at Lancaster House, to look at economic development and at working with those countries to develop their businesses alongside British business, to grow Africa out of poverty.

[Alison McGovern (Wirral South) (Lab)]

The Foreign Secretary has several times today mentioned the need for a comprehensive strategy. We have heard before about financial sanctions. Will he update the House on what conversations he has had with counterparts in the US and the EU about stopping the supply of cash and financial services to Daesh?