Oral Answers to Questions

Anas Sarwar Excerpts

Wednesday 12th June 2013 Commons Chamber

[Justine Greening]

My hon. Friend is absolutely right. If we are to have sustainable development and developing countries are to have the tax revenues to fund and invest in their own public services, we need a thriving economy that creates those revenues. That is why economic development is such a key part of what my Department is now focusing on. Along with Her Majesty’s Revenue and Customs, we are investing to ensure that developing countries have the tax expertise they need to collect the taxes that are due.

[Anas Sarwar (Glasgow Central) (Lab)]

I back the call from my hon. Friend the Member for North Ayrshire and Arran (Katy Clark) for country-by-country reporting by all multinational companies. Can the Secretary of State guarantee that no money from DFID goes to any organisation or company that is not fully tax transparent?

[Justine Greening]

We are very clear that we want companies to behave responsibly across the board, including on tax, and I can assure the hon. Gentleman that there is such due diligence. We cannot simply ignore those problems, and if we are to shape private sector investment in the developing world so that it can help drive development, as I think we should, we will have to engage with the private sector more in the future than we have in the past.

Oral Answers to Questions

Anas Sarwar Excerpts

Wednesday 13th March 2013 Commons Chamber

[Mr Duncan]

We rigorously monitor any danger there might be that the Palestinian Authority in any way incites violence, but it is committed to doing exactly the opposite, and it is right that we support it, the potential Government of a Palestinian state. We wish to see further progress towards the peace process over the months ahead.

[Anas Sarwar (Glasgow Central) (Lab)]

We all support the creation of a viable two-state solution in the middle east, but that will come about only if the Palestinians are able to run an effective country. What assessment have the Government made of the structures available in the Palestinian Authority to make that happen?

[Mr Duncan]

The structures are sorely stretched, which is why we continue to support the Palestinian Authority, and of course we also urge other donors, particularly the Arab states, to carry their fair share of commitment, because if the Palestinian Authority were to collapse there is a serious danger that all prospects of proper peace negotiations would collapse as well.

Global Hunger

Anas Sarwar Excerpts

Wednesday 23rd January 2013 Westminster Hall

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

I thank the Labour Front-Bench spokesman, the hon. Member for Workington (Sir Tony Cunningham), and hon. Members for their restraint in speaking, so as to give me adequate time to answer the right hon. Member for Coatbridge, Chryston and Bellshill (Mr Clarke). Indeed, I also thank him for securing this important debate, which is very timely, because today UK NGOs will launch their IF campaign, which highlights the precise issue that we are debating this afternoon—global hunger. In fact, my right hon. Friend the Secretary of State for International Development is looking forward to speaking at the launch of the IF campaign this evening.

The Government recognise that global hunger represents a human tragedy that happens every day on a massive scale. Around 870 million people simply do not have enough food to eat, 165 million children are chronically malnourished and 2 million children die needlessly every year from malnutrition. So I am pleased to have this opportunity to set out the ways the Government are addressing the problem in 2013, a year in which the UK can play a transformative role in helping to end hunger.

The UK has a good, strong track record of taking action to prevent hunger. By 2012, the UK had met in full its commitments, made at the G8 L’Aquila summit in 2009, to provide resources to improve global food security. That has helped millions of people to fight chronic hunger and malnutrition in more than 20 countries. We expect to continue to provide a similar level of resources for the foreseeable future.

Looking to the future, the Government have committed to reach 20 million pregnant women and children under the age of five through our nutrition programmes; to help to ensure that 6 million of the world’s poorest people escape extreme poverty; and to ensure that by 2015 another 4 million people have enough food throughout the year.

Tackling hunger and malnutrition involves increasing the availability of food by boosting agricultural productivity. The UK Government support the agricultural research network—CGIAR—with resources for research to improve agricultural productivity, which will help to feed millions of people.

On the issue of land and its increasing attraction to investors, the Government believe that private sector investment in poor countries is key to achieving global food security and economic growth. We also believe that responsible commercial investment in small and large-scale agriculture has the potential to be transformational. However, it is vital that the rights and interests of people living and working on that land are taken fully into account.

[Anas Sarwar (Glasgow Central) (Lab)]

I congratulate my right hon. Friend the Member for Coatbridge, Chryston and Bellshill (Mr Clarke) on securing the debate, and the organisations that have put together the IF campaign. By 2025, nearly 1 billion young people will face poverty because of malnutrition and hunger during their youth. The Minister rightly mentioned agriculture and the use of land. What work are the Government doing to ensure that Governments in developing countries and large corporations are actively working with an effective and ethical tax system to ensure that money stays in those countries for sustainable development?

[Mr Duncan]

Let me complete what I was saying about land, and I will then turn to tax. On the land issue, the key point is that we welcome the successful negotiation of the voluntary guidelines on responsible governance of tenure, which were concluded by the Committee on World Food Security last year.

The UK Government absolutely recognise the importance of tax transparency in development. As the Prime Minister said at Question Time today, the UK will use its G8 presidency this year to tackle tax evasion and aggressive avoidance.

Millennium Development Goals

Anas Sarwar Excerpts

Tuesday 3rd July 2012 Westminster Hall

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

It is a pleasure to serve under your chairmanship on this important issue, Mr Bone. I thank the Minister in advance for responding to my concerns, and I thank hon. Members for attending the debate.

An estimated 24 million children worldwide grow up without parental care. In some regions, as many as 30% live apart from their parents, and research suggests that that figure is increasing. Every child deserves to grow up, to go to school and to live their childhood free from hunger and disease, exploitation, abuse and violence. Experience has shown that this happens best when children are loved and cared for in a family setting.

The millennium development goals have focused global efforts to improve the lives of the world’s poorest people, yet many of the crucial targets are in danger of not being reached by 2015. That would have a devastating impact on the well-being of children throughout the world. Failure to provide proper care and protection for children is hindering progress in achieving many MDGs. Future development goals, which are currently being developed, need to recognise and eradicate those mistakes.

There are huge gaps in child protection systems around the world. Such systems are crucial to ensuring the protection of children who are without parental care. Therefore, addressing child protection in the MDGs and the successor framework is key in supporting the rights of such children. I will outline how children’s rights to care and protection are the missing link in achieving the MDGs. Children without the care and protection of their family are particularly vulnerable and hard to reach.

I want to cover two issues related to the MDGs: the importance of including protection and care concerns in efforts to monitor the MDGs; and the need to address the absence of an explicit reference to child protection and care in the current MDGs, if the post-MDG framework is to be effective in improving children’s well-being in the future.

MDG 1 aims to end poverty and hunger. Children who are in the care of the state, either in residential care or in detention, may fail to receive adequate food, despite the obligation on Governments to provide it, while children who are not in conventional households, such as those living on the streets, in migrant families, or in child-only households, are often excluded from social protection schemes. Poorly designed social protection systems are, at best, failing to reach children who are without adequate care and protection, and, at worst, actively encouraging family separation or child labour. In South Africa and Ukraine, payments to foster or extended family carers mean that children will be in better resourced households if parents give them up to other forms of care.

[Anas Sarwar (Glasgow Central) (Lab)]

I congratulate my hon. Friend on securing this important debate. In an answer to a parliamentary question I tabled, I was surprised to discover that the Department for International Development does not have a dedicated child protection policy. Does my hon. Friend think that that is something DFID should have, signalling post-MDG intentions?

Food Crisis (The Sahel)

Anas Sarwar Excerpts

Tuesday 12th June 2012 Westminster Hall

[Anas Sarwar (Glasgow Central) (Lab)]

I congratulate my hon. Friend on securing this debate. Following on from the hon. Lady’s point about global leadership, does he agree that it was disappointing that the G8 leaders did not take a stance similar to the one taken in L’Aguila in 2009? We need a global response to food security, ensuring that we tackle not only the urgent crisis in Sahel but future crises in other parts of the world.

[Tony Cunningham]

I very much agree with my hon. Friend. The UK Government can do their bit and provide support and additional funding, but unless we get a global commitment and involve multilateral institutions, we will not solve the problem.

As I have already said, I urge the Government to act swiftly, not only to provide crisis funding but to invest in the future of the Sahel communities. The long-term investment should include investment to build capacity and resilience within those communities. The region’s long-term problems must be tackled before a crisis emerges; it is so important to deal with crises before they happen, rather than wait until they happen to act. Not only do we risk lives if we wait but the cost of the delay will also be huge; that was another point that I made before.

Recent humanitarian disasters have shown the importance of heeding early warning systems and not delaying before taking action. “A Dangerous Delay”, the report produced by Oxfam and Save the Children, highlighted the mistakes that were made in the response to the east African crisis. The report said that national Governments, donors, NGOs and the UN needed to

“act decisively on information from early warning systems and not wait for certainty before responding”

and

“actively seek to reduce drought risk in all activities, ensuring that long-term development interventions increase resilience and adapt to the changing context”.

I am sure that the Minister has been waiting to hear my next point: I very much welcome the news that the Department for International Development has increased funding. However, what I am saying is that the Sahel crisis is so huge that we need even more money, and we also need the UK Government to make sure that everyone else is pulling their weight too. The extra £10 million from DFID could not have come at a more important time, but the UN states that we are still missing £300 million to fight the worst of the crisis. Food security is no longer just about the human imperative of having enough to eat; it also impacts on government and on the very structures of the societies in which these people live.

I will conclude as quickly as I can, because I want to give the Minister ample opportunity to tell us what he is doing—not only what he is doing as part of the UK Government’s efforts, but what he is doing in relation to the actions of international organisations, other donors and other countries. I hope that he will paint a picture of the UK being hugely active in trying to deal with an incredibly difficult crisis.

As I have said, Oxfam has warned that 400,000 children may need life-saving treatment for malnutrition. A donor-pledging conference is crucial. Can the Minister comment on the possibility of having such a conference? Is a conference feasible? I would very much welcome one as soon as possible, because the crisis is getting worse as we speak. We need a donor-pledging conference to minimise the risk that the crisis poses to children and severely affected communities.

The UK is respected worldwide for its commitment to aid and for the difference that it makes globally. That was the case under the last Labour Government and I hope that it will be the case under this Government too. I hope that they will make a commitment to do the best they can for some of the most vulnerable people in the world. I hope that this Government will continue the UK’s work in this area and, as I have already said, that they will encourage as many other individuals and organisations as possible to get involved. What role can the UK play to encourage more funding? That is the key question for the Minister. The Government must increase their own funding, but they must also encourage more funding from other organisations. That additional funding is desperately needed.

I thank Members for being here in Westminster Hall today and I thank the Minister for coming along. I am sure that we are all hugely concerned about the growing crisis in the Sahel, but this is a debate. We have uttered warm words; we have all said how vital it is to act and how desperate the crisis is, but those are simply words. What we need now is action, and I hope that action is what we get.

Future of CDC

Anas Sarwar 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.

[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—

--- Later in debate ---

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

I endorse and congratulate the right hon. Member for Gordon (Malcolm Bruce), the Chair of the Committee, on the way in which he has introduced the report. As I am a Committee member, it would be rather surprising if I said that I disagreed with the report, so I will say that I agree with it, having participated in its compilation. In addition, my life on the Committee would not be worth living if I said anything else.

I would like to ask the Secretary of State a couple of questions. In a sense, this picks up where the right hon. Gentleman finished. He talked about the join between the Department’s private sector activities and those of CDC. I am still a bit uncertain about where that join is and how the Secretary of State sees it. When we visited India, that issue came home to me when we came across a target of 50% for how much of the Department’s budget should be spent in the private sector. I had not heard of that before. It is obviously very well known that the Government felt that more of the Department’s activities should be channelled through the private sector—I do not necessarily demur from that—but it was the first time I had heard that there was actually a target of 50%. A number of my colleagues and I found that a bit surprising because, if DFID is about doing what is right to combat poverty, the private sector should be utilised where it is appropriate, and what in some places might be called the third sector and the public sector should be utilised where that is appropriate. The objective should determine the percentage. That is not what seems to be happening here, where the percentage is in danger of determining the objective.

As we asked more questions about that, I got more confused about exactly what the policy was. When the Secretary of State winds up, will he clarify where the 50% figure comes from, rather than 40%, 30%, 60% or 80%? Why 50%? If such a target is appropriate for India, is there a 50% target for other areas where the Department is operating? If so, what is that based on? Is it based on the same criteria as for India or is it based on different criteria? If the figure is not 50% for other areas, how did he arrive at the different percentages? I am genuinely confused about how that works.

I would also like to know what the join is between that figure and the role of CDC. Certainly there was an uneasiness among some of our interlocutors in India about DFID saying that it wished to devote 50% of its activities to the private sector. That was not because the people we spoke to considered private sector investment to be unimportant. Indeed, a number of the most creative projects that we saw there could go under the heading of private sector projects, and they were often very small scale and very pro-poor. As the right hon. Member for Gordon mentioned, the people concerned were questioning whether, if this is going to be done on an industrial scale and on the basis of a particular percentage, it should be a private sector-led activity—the private sector investing—rather than something done by DFID directly.

[Anas Sarwar]

Does my hon. Friend recall the conversation that the Committee had with representatives of the Indian Government, who said that they would not see direct private investments by the Department for International Development as aid assistance? They recommended that DFID create a private sector wing, or arm, of its organisation to make those investments. In this case, it could be argued that that wing is CDC. If that 50% of funding does not go through CDC, does that not highlight the failures of CDC?

[Richard Burden]

My hon. Friend makes a good point. In a sense, that is what I am getting at. I well remember that discussion. There was unease about the percentage. There was certainly a view that there was a need for vehicles specifically attuned to that, rather than simply a percentage of the aid assistance programme. Does the Secretary of State see CDC as the vehicle for delivering that percentage, or do CDC’s activities somehow sit on top of that? If he does see it as the vehicle, has he communicated that down to his officials in the field, so that they are not necessarily structuring their budgets in a way that might not be what he wants to achieve? If he does not see it as the role of CDC to take that role—back to my original question—where is the join between what the Department itself does directly and what CDC does, particularly in regard to its direct investments, rather than its role as a fund of funds?

--- Later in debate ---

[Anas Sarwar]

As the hon. Gentleman has rightly said, he was not a member of the Committee during our inquiry. Having immersed himself in our work since he joined the Committee, however, he will agree that it was bizarre that when CDC’s managing director, chief executive and chair came before us to give evidence, they could not, between the three of them, answer basic questions such as how many staff they employed, what the total wage bill was and what the total bonuses paid to their 46 members of staff were. Is that not an indication that we need improved transparency, so that we can show those things to the British people and get their trust in the process?

[Mr Gyimah]

I thank the hon. Gentleman for his point. I totally agree that the British public need transparency about how the organisation is run. However, the success or failure of the fund’s operations also depends on such details.

I want the Secretary of State to clarify the points that I have raised. Let me say once again what a pleasure it is to serve under your chairmanship, Mr Walker.

--- Later in debate ---

[Anas Sarwar]

I wholeheartedly agree with the case that the Secretary of State makes for aid to India, and there was strong cross-party support for the report on India by the International Development Committee. I want to follow on from the question asked by my hon. Friend the Member for Birmingham, Northfield (Richard Burden). The issue is not about whether the private sector has a role to play in development—that is a given; the private sector is crucial if we are to develop underdeveloped nations. However, if the Department for International Development aims for 50% of its money to be spent in the private sector—as in India, for example—what percentage of that money will go through CDC? If the Department is making direct investment and not using a third-party organisation such as CDC, will that risk the integrity of DFID, which makes untied, direct grants and investments in a bilateral sense, rather than direct investments from which it looks for a return?

[Mr Mitchell]

I will come directly to that point. CDC investments in India will be in addition to the 50% of the programme funding that we expect to be spent on pro-poor private sector development over the next four years. If the hon. Gentleman will allow me, I will come in a moment to some of the other points that he has raised.

--- Later in debate ---

[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.

[Anas Sarwar]

I agree wholeheartedly with the suggested reforms for CDC. The Secretary of State rightly mentions the fact that CDC will have to make more risky investments. If CDC made more risky investments and did not get the returns that it hoped to get, would the Department be willing to put further funds into CDC to protect it?

[Mr Mitchell]

The hon. Gentleman asks an important question. We have taken nothing off the table in that respect. I will come on to why the time to deal with that point is when the new chief executive has been appointed and the business plan for CDC under his or her direction has been set out.

A number of members of the Select Committee raised the overuse of private equity funds by CDC in the past. However, ManoCap, for example, which is a brilliant organisation and fund in Sierra Leone, run by Tom Cairnes and his colleagues, is highly developmental. Under its new approach, CDC will support pioneering equity investment and will increasingly also deploy other tools, including lending, guarantees and co-investment, but they will be introduced carefully and over time.

In addition, my hon. Friend the Member for Stafford (Jeremy Lefroy) and the hon. Member for Bethnal Green and Bow mentioned the position of CDC in relation to SMEs. It is worth making it clear that CDC is already one of the major backers of SME funds, such as ManoCap and GroFin, and it will do more. Last November, it committed €8 million to a new SME fund based in west Africa. I hope that the hon. Lady will feel that the direction of travel in that respect is also a good one.

Following the changes, CDC will no longer work exclusively through private equity funds managed by others and, as I have said, it will offer loans as well as equity financing. It will become more transparent in its dealings, so that taxpayers and the people whom we are trying to help can see where and how the money is being spent. It is already publishing more corporate and investment data on its website, and more of its evaluations will be carried out independently.

As I mentioned, DFID will work more closely with CDC, not only at country level but at the centre. CDC’s business plan will be kept under regular review, and it will report annually to my Department against published targets. DFID will not interfere in CDC’s investment decisions, for the reasons that I explained, but it can offer valuable information and expertise from a development perspective.

The issue of remuneration was raised. Pay and bonuses will be brought down to a level that is fair and appropriate but not excessive. I am pleased to be able to tell members of the Select Committee that the CDC board has already cut bonus levels by 50% this year.

[Anas Sarwar]

I thank the Secretary of State for giving way again; I am sorry to be a nuisance. He rightly mentions that CDC will report every year to the Department. Will that process include transparency about what profits are made, and what taxes are paid, in each country?

[Mr Mitchell]

The hon. Gentleman, despite his comment, is never a nuisance. If he bides his time, I will come directly to the point that he has raised.

Once the new chief executive is in place, the Government will decide how to restructure pay. We will ensure that the new remuneration framework links performance to development results rather than simply profit. I was asked a number of questions about how CDC would deliver that new agenda. I expect CDC to start to make rapid progress in a huge number of different directions once the new chief executive is appointed. The head-hunters charged with finding the person for what I have described—accurately, I hope—as one of the most interesting and exciting jobs anywhere in the financial world have advised me that they have been overwhelmed by an incredible response from highly talented people. We all look forward to seeing the result of that process.

In addition, we have already reinforced and strengthened the board of CDC, which has managed in the past to attract a very high calibre of expertise. Once the new chief executive is appointed, he or she will be able to take the wider remit that we have agreed with the board for the work that CDC will carry out in the future and ground it with much more detail. He or she will also be able to start to recruit the team who will carry out that important activity.

We want CDC to become the most successful and the best development finance institution in the world and to blaze a trail and set an example that others will follow. As the Chair of the Select Committee said, the organisation is extraordinarily attractive both to those who are coming to the latter stages of their business life, who perhaps have been successful and made a great deal of money and want to put something back—they can bring huge expertise to the work of CDC—and to younger people who perhaps do not want to work on a production line in the City of London but want to leave a footprint in the sand and to make their contribution at this time when so much can be done to alleviate poverty—to make their contribution to the workings of CDC and to the exciting propositions that will undoubtedly come forward for them through the work that CDC is doing. Getting together that team, developing the resources required by CDC and motivating and leading the team is one of the key jobs that I hope the new chief executive will take forward.

The CDC board has responded willingly and constructively to the changes. The reforms answer directly the criticisms that have been made of CDC and the concerns voiced by the Government and the Select Committee. They make CDC a far more effective tool in the Government’s development armoury. I need to make it clear that quite a significant chunk of CDC’s capital is locked up in binding legal contracts for a number of years to come, so reform in that respect will take place over time, but I and the board are committed to making it happen.

I now pick up on a couple of other points made during the debate. The Committee Chair and my hon. Friends the Members for East Surrey (Mr Gyimah) and for Stafford made important points about CDC’s role in developing agriculture. I completely agree with what they said. Agriculture is crucial to our efforts. DFID is highly active in supporting agriculture through research and development and value-change development, and in many other ways. I think particularly of the work that we are doing with the World Food Programme in Karamoja in northern Uganda, a food-stressed part of the world where people have regularly needed support and food aid; we hope that it will become self-sustaining so that they will not need such aid in future.

When investing in agricultural enterprises is the best way to generate sustainable jobs and income for poor people, CDC will certainly consider doing so more than it has in the past. In many parts of the world, one of the best ways of helping people in rural areas is to generate employment in non-agricultural sectors. Although CDC will consider investing in agriculture, it will also be helping to create off-farm enterprises and businesses in other sectors.

I turn to the important question on transparency asked by the hon. Member for Glasgow Central (Anas Sarwar). He wanted to know whether the Government would ask CDC to publish data on all countries in which it works. CDC will shortly be publishing a new disclosure policy. It will be substantially more transparent, publishing significantly more data on the businesses in which it invests, on its fund managers, on the impact of investment country by country and on taxes paid. If, for some reason, it cannot disclose the information that it is asked for—perhaps for reasons of commercial confidentiality—it will be incumbent on CDC to explain why.

--- Later in debate ---

[Anas Sarwar]

I thank the Secretary of State for giving way again. Paragraph 60 of the report recommends that

“CDC should follow standards of best practice. By doing so, CDC could raise standards across all DFIs. The tax payments made by CDC’s fund managers and investee companies should be transparent. They should be published annually on a country-by-country basis.”

Does the Secretary of State broadly agree with that statement? Will the code that he mentioned include other investee companies?

[Mr Mitchell]

We should wait for the code to be published, but when the hon. Gentleman sees it he will realise that we are at precisely the same place. I hope that it will win his approval.

The hon. Member for Bethnal Green and Bow asked me about the monitoring of CDC’s development impact. As I indicated earlier, it is important that CDC’s work should be judged by both its development impact and its financial returns. No one is in the business of wanting it to support unprofitable enterprises. Monitoring CDC’s achievements will show why it is of such great importance that it makes a profit, but I hope that the hon. Lady will agree that we are becoming better at demonstrating both aspects. We are pressing hard for CDC to come up with proposals on this, and it is being supported with strong advice from development experts in my Department. CDC is committed to more than 50% of evaluations of its investments being done by independent evaluators.

I have answered my hon. Friend the Member for East Surrey on getting the right skills in CDC, but I would like to add that we have appointed someone to head CDC Innovation, a new CDC team, to consider frontier pioneering opportunities. However, as I have indicated, the real momentum on that front will come after the appointment of the new CEO.

I hope that I have covered most of the points raised in this debate. I again acknowledge the important role played by the Committee in the development of CDC. Its thinking has helped shape CDC’s new business plan, and I greatly value the expertise that the Committee has deployed in helping us all to take these developments forward to the best possible effect.

Oral Answers to Questions

Anas Sarwar Excerpts

Wednesday 13th July 2011 Commons Chamber

[Mr Duncan]

Thank you, Mr Speaker; we are halfway there, perhaps.

My hon. Friend is right to say that much more comes in through the tunnels than through Israeli-approved access points. Perversely, that is assisting Hamas, which is something we would like to reverse.

[Anas Sarwar (Glasgow Central) (Lab)]

Six months after the Arab spring, what discussions has the Minister had with the Egyptian authorities about relaxing the restrictions at the Rafah border crossing to ensure that essential humanitarian assistance can get into Gaza?

[Mr Duncan]

That is primarily a matter for the Foreign and Commonwealth Office. I have not had any such discussions, but I have had discussions with Israeli Ministers. As I said a moment ago, I hope that the representations made by the Quartet representative, Tony Blair, to Prime Minister Netanyahu can ease many of the restrictions that the Israelis are currently imposing.

Great Lakes (Africa)

Anas Sarwar Excerpts

Tuesday 5th July 2011 Westminster Hall

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

I thank the hon. Member for Falkirk (Eric Joyce) for securing this debate and for giving me the opportunity to reply. I am glad that DFID has been chosen to reply, because it will give me a chance to cover some of the development issues. Much of what is relevant to the DRC is Foreign and Commonwealth Office business, but hopefully I will be able to cover both areas.

The hon. Members who have recently returned from their visit to the region will have had a rewarding and informative visit, as indeed I did when I went with the Minister with responsibility for Africa on a joint visit to the DRC. I went to Rwanda last year. Great challenges remain in all the areas that we visited. The overriding priority is to continue to bring sustainable peace and prosperity to the great lakes region.

There are also an enormous number of potential opportunities, but many of them are choked off, because the conditions for them to be usefully explored are simply not yet in place. Much of the potential is still largely untapped. Let me address the points that have been raised by setting them in the appropriate context. I want to take this opportunity to explain how her Majesty’s Government, through DFID in particular, are trying to help to unlock the potential in the DRC and the great lakes region.

The DRC is still recovering from the shock of Africa’s first inter-state war in the modern age, which was laid on top of decades of corruption and misrule. Recovery is hampered by continuing lawlessness and armed violence, particularly in the east. The country is physically disconnected, and politically highly disjointed. The hon. Members for Falkirk and for Liverpool, West Derby (Stephen Twigg) have mentioned that the elections must be seriously monitored. That monitoring process will be welcome, because it will encourage independent verifiability At the same time, we must work with civil society organisations to enable them to use their voice and express the various views across the DRC. We all welcome the broad sentiments that were expressed. We hope that the elections go well, and we will do everything that we can to assist the country at this time. It is important for the credibility of the Government that the elections go well. At the same time, though, we must not rush to judgment, and we must enable the process to go through rather than assuming the worst.

The DRC has some of the worst social indicators in the world, and it is far from achieving any of the millennium development goals, which is one of the questions that I have been asked. Violence against women is endemic and horrifying. The country is second to the bottom of the “doing business” league table. Although growth has been sustained through the past decade, the public purse is still far too small to meet basic needs, so there may well be a very small tax take on taxable transactions of value even under normal regulatory conditions. Clearly, there is a lot of work to be done there.

We must all recognise that the MDGs are way off track. That is true whether we consider the number of children being enrolled at school or the number of girls staying on at school. All of us who care about development issues need to consider how we can meet the MDGs and how the UK, through DFID, can make a transformative difference and help to deliver on those MDGs, The DRC has to be our main focus, which is something that we are determined to do.

There are signs of hope, and our new country programme in the DRC aims to build on those signs. Macro-economic management has improved, which led to international debt relief being granted last year, as I am sure hon. Members know. In addition, levels of violence are slowly dropping, although the amount of violence in the DRC is still extremely high as measured against all comparators. Nevertheless, we must recognise that there has at least been progress in terms of the trend rate. And the DRC Government are showing a greater will—the practice is a long way behind, but there is a greater will—to get the minerals sector under control. I do not mean “control” along the lines of one unfortunate recent incident, which actually amounted to sequestration. What I mean by “control” is appropriate regulation, whereby there is an appropriate opportunity for businesses to take a risk in a predictable environment and for there to be a yield to the country’s exchequer under a system of democratic and transparent accountability, which will then be used for the benefit of the people of the DRC rather than to reward any form of elite.

[Anas Sarwar (Glasgow Central) (Lab)]

I am sure that the Minister is sick of the sight of me, after he spent two hours in front of the Select Committee on International Development this morning discussing this very region and specifically Burundi. I want to make a point about mineral extraction. As he knows, members of the International Development Committee have recently returned from visiting the DRC and one of the most shocking statistics that we heard while we were there is that $400 million of gold is extracted each month in the DRC, but only $28,000 is paid in tax each month for that gold. What is his Department doing to try to get greater transparency and hopefully some binding agreements along the lines of the extractive industries transparency initiative and the Dodd-Frank Act?

[Mr O'Brien]

The hon. Gentleman is entirely right to make that observation. There are various estimates about the DRC, but what he has just said is broadly what we all understand to be the case. Part of the answer lies with what the hon. Member for Falkirk hinted at earlier. He suggested that the lack of confidence among foreign direct investors—confidence they can take the risk of going into the DRC and using their world-class skills to extract the unique assets that the DRC is particularly blessed with—means that 80% or more of all the gold that is mined in the DRC is extracted by artisan extraction, as is the case with the other valuable minerals found in the DRC that are sought on world markets. Of course, that makes it almost impossible to capture the revenue from that activity within any kind of regulatory environment.

That is why we are putting such emphasis in the design of the DFID programme on considering what will create the conditions for private sector development. By that, I mean not just foreign direct investment, which is important, but measures that will help regional economic integration. That economic integration is important not only in the east of the region, which we discussed extensively in the International Development Committee this morning, but across the various corridors in the region, particularly the north-south corridor that includes the copper belt in Zambia and the Katanga region of the DRC. That corridor will be vital for the future of many countries in southern and eastern Africa as trade passes up and down it.

The hon. Member for Glasgow Central (Anas Sarwar) referred to the extractive industries transparency initiative. As he knows, we are a strong supporter of that initiative for resource-rich countries. It is absolutely the right way to ensure that, as part of the measures to build confidence and credibility, people are genuine in both countries—both the UK and the country from which the materials are being extracted—and companies must sign up to it. Both the hon. Gentleman and I welcome the DRC’s efforts fully to implement the EITI.

On the Dodd-Frank issue, I hope that the hon. Gentleman knows that my right hon. Friend the Chancellor made it clear at the G20 Finance Ministers meeting in February that the British Government support the development of new international rules that, to some degree, are prompted by the Dodd-Frank Act in the US. Such rules would require oil, gas and mining companies to report payments that they make to Governments. The UK seeks to make progress on that issue in both the G20 and, very importantly, within the EU. This process will work if we move together, so that both a combined, common purpose and combined, common standards and values are reflected in the way those reporting mechanisms are developed.

While I am discussing minerals, perhaps I should talk about PROMINES, which the hon. Member for Falkirk referred to. As he knows, the British Government are co-funding that project with the World Bank, and I was grateful for his complimentary remarks about it. It is a major minerals sector reform programme. A PROMINES agreement is about to be signed with the DRC Government, and it will tighten up regulation in the DRC’s minerals sector. Obviously, we hope that it will improve conditions for mine workers and increase tax revenues from mining, which is another issue that we have discussed. That agreement has been cleared by the World Bank’s executive board, and we expect the DRC Government to sign it within the next few weeks. That is progress.

If the hon. Gentleman will forgive me, I will not comment on the particular case of First Quantum Minerals, because it is the subject of an ongoing dispute.

In recent years, we have gathered a lot of evidence about how to work effectively in war-torn and fragile states, and the key issue is ensuring that we learn from that evidence. Learning from such evidence, alongside a renewed emphasis on results and value for money, has helped us to develop the new country programme that we have now put in place for the DRC. Through that programme, we believe that we can deliver fantastic results in what is, by any test, one of the world’s most difficult aid environments. We believe that we can combine major improvements in basic services, which are much needed, with new efforts to promote trade and investment and, of course, new efforts to create wealth. If we can find ways to create wealth for the broader population, that would be the biggest reliever of poverty.

Over the four-year period of the spending review, we have a total aid budget for the DRC. For the two inner years of that four-year period, we have settled on a budget of about £147 million and £165 million respectively. We will review the progress that is made in the DRC, because we want to ensure that milestones are being identified and that we are achieving results. If progress is made, we have signalled that we want to have a total aid budget for the DRC over the four-year period of about £790 million. That would obviously mean a significant increase in the two outer years of that four-year period.

Without wanting in any sense to undo the absolutely essential element of being in a partnership with the DRC Government in this work, the modalities of delivery have to take place. Often that means that we are unable to use Government systems—for no other reason than that the Government systems do not exist. We must ensure that there is a sense of “earned increase” because progress has been banked and secured, because it is real and sustainable, because it is pro-poor and because it does not benefit those for whom aid might be regarded as being unjustified.

That aid programme will allow us to address the point that was made very forcefully by my hon. Friend the Member for Wolverhampton South West (Paul Uppal) about women in the DRC who are subject to appalling violence, including sexual violence such as rape and female genital mutilation, and who lack access to economic opportunities, including any form of land registration, which would give them the incentive to move into the economic sphere. We hope that we learn the lessons about all those factors.

Humanitarian Emergency Response Review

Anas Sarwar Excerpts

Wednesday 15th June 2011 Commons Chamber

[Mr Mitchell]

I think my hon. Friend is referring to a particular incident involving a Scottish charity. I have looked at that incident in detail, and I am happy that what he says about it is not actually correct. However, it is extremely important that there should be really good co-ordination. We should not have the situation that we saw all too frequently in Haiti, which was a huge number of people heading towards a disaster target without the co-ordination to ensure that they could be effective on the ground.

[Anas Sarwar (Glasgow Central) (Lab)]

May I add my own voice to the welcome for the report of the noble Lord Ashdown and the Government’s response to it? As part of its inquiry into the humanitarian response to the Pakistan floods, the International Development Committee found that some eight months after the disaster, and with millions still in need of assistance, only one third of the $2 billion UN appeal funds had been disbursed in Pakistan. The noble Lord’s report states that that was disappointing, maybe even inadequate, and adds that it cost money, opportunities and perhaps even lives. What leadership will the Government show at UN level to ensure that that does not happen again?

[Mr Mitchell]

The hon. Gentleman identifies one of the problems with the relief effort that the international community mounted in Pakistan. Indeed, the Select Committee on which he serves has produced a most valuable report, from which the international system will learn relevant lessons. I think it would be fair to say that Britain was concerned, we were the first country to come in great scale to give strong support to the people of Pakistan in their hours of greatest need. Britain also continually pushed and prodded the international system to up its game. That was what we did at the time, and those are also the tactics that we are using now. The report will be helpful in achieving them.

Ivory Coast (Humanitarian Situation)

Anas Sarwar Excerpts

Thursday 31st March 2011 Commons Chamber

[Mr O’Brien]

The hon. Gentleman raises an important issue. We believe that about 80 British citizens would be involved, and there are, indeed, contingency plans in place for their safe return if that becomes necessary.

[Anas Sarwar (Glasgow Central) (Lab)]

I welcome the Government’s actions in providing humanitarian assistance to the region. Comparisons will inevitably be drawn with the situation in Libya. What assessment has been made of the number of civilian lives that have been lost in Ivory Coast, and what efforts are we and our international partners making to ensure we protect civilians from another brutal leader refusing to leave?

[Mr O'Brien]

The latest information we have is that about 500 civilians have so far lost their lives in Côte d’Ivoire, but that is very much an estimate—as the hon. Gentleman can imagine, reliable information is extremely hard to come by. All possible political and diplomatic processes are under way, and have been under way—we have been deeply engaged in trying to help and co-ordinate efforts to support that since the leadership crisis first arose in December. It is vital that we work down that track. Of course we do not want to have to take other measures, and it is extremely helpful that the UN Security Council passed resolution 1975 last night.