Easter Adjournment

Eric Joyce Excerpts

Thursday 10th April 2014 Commons Chamber

[Eric Joyce (Falkirk) (Ind)]

It is a pleasure to follow the hon. Member for Cleethorpes (Martin Vickers), who like you, Madam Deputy Speaker, I and every other Member is on a permanent quest for knowledge and self-improvement. I thought I would help that along by saying a few words about the extractive industries transparency initiative, for which I sit on the multi-stakeholder group in the UK.

I am happy to say that the Government signed up to the initiative last year, which will mean that in three years or so the UK will be a member of it. All the extractive industries companies based in the UK that operate here and elsewhere will have to declare to the Government the payments that they have made to the UK and to any country that signs up to the EITI. The Government will then make a statement of the payments they have received. That will not solve every problem of money going astray in developing countries, but it will move us a little way towards ensuring that the money that Governments receive from contracts and licences to exploit oil, gas and minerals, particularly in Africa but all over the world, does indeed find its way to those Governments and that they can account for it in their public expenditure.

The initiative is chaired by Clare Short, a former Member of this House, who also co-founded an all-party group called “Trade Out of Poverty”, now chaired by the right hon. Member for Hitchin and Harpenden (Mr Lilley), who is not in his place at the moment but who I believe will be coming back into the Chamber. The emphasis of that group, along with the all-party extractive industries group, of which I am a member, is to help developing nations encourage investment despite sometimes potentially risky contexts, particularly in minerals and mining, rather than having to rely on aid, as we often imagine they do—wrongly, actually.

I digress slightly from the EITI, but it sometimes feels as if political and public dialogue in the UK about developing nations is always about aid—the spending of 0.7% of gross national income and so on. I sometimes think that the bar for investment in those countries is set too high. Some worthy non-governmental organisations make the wrong judgment in being too critical of where Department for International Development expenditure goes, such as when it makes it more feasible for companies to overcome substantial risk and invest in developing nations.

There was a demonstration outside DFID a couple of weeks ago involving a couple of people in black tie and a waiter with a bottle of champagne and glasses. It was all about DFID paying money to various projects in the developing world. My first instinct was that the protest might have been by someone such as the Daily Mail—I do not necessarily want to be critical of it, but that would be consistent with its normal editorial line. However, it turned out to be a protest by the World Development Movement. It struck me that it was shooting itself in the foot by helping to bring DFID expenditure into unjustified disrepute. Its concern was that money was being spent to help companies operate in risky countries. However, there is great potential benefit to those countries in future, and I thought it was a great shame that that NGO had missed the point and wanted to discourage companies from the UK and across the world from examining prospects in some countries.

To return to the EITI, in many ways its role is similar to the one that will be played by the EU accounting directive, about which the Government have just issued a consultation document, although it is a little different and certainly has a different purpose. The US is currently going through legal proceedings that have held up its own equivalent, but importantly, it has signed up in the past week as a candidate country for the EITI. The relevant part of the Dodd-Frank Act is being held up because some extractive industry companies are concerned about the emphasis being placed on the Democratic Republic of the Congo, or Congo-Kinshasa to some. The concern is that it will effectively encourage people who want to get certain products from the earth to go to Australia and other countries, so the effect of legislation designed to make things more transparent could be to discourage investment and development in the DRC. I do not know whether that is right, but the process is being held up in the United States. It is really important that we carry on with our own process in Europe, which is the accounting directive—as I said, I am pleased that the Government have launched the consultation document—and the EITI.

I do not want to bore Members for too long about the EITI, although it is an important matter that quite a few Members will know little about. However, I wish to add that the tendency until recently was to encourage developing countries to sign up to the EITI. We have Her Majesty’s Revenue and Customs, which is pretty effective—some people might argue about that sometimes—and we pretty much know who is paying tax on what, so it is hard for money to go astray. We can just to go HMRC and it tells us companies’ tax figures. It is therefore hard to get involved in corrupt practices in the UK. Developed countries have tended to say, “The EITI is not really for us. It is only for developing countries where money tends to disappear.” The effect has been that big developing countries, and middle-income countries that are wealthy in gross terms, such as Brazil and India, have said, “We’re not going to sign up to it, because none of the developed nations has. It is a bit patronising expecting only developing nations to sign up and not the US or UK”. Only recently have developed nations begun to sign up. It might seem a bit strange that we have not signed up to it before, but it is essentially because the context was different. We have now accepted the point that it is difficult to ask developing nations to sign up to a transparency project without signing up ourselves.

The EITI has been going on quietly in the background, but it is important to get it on the record because it will be important when it comes to fruition in about three years. Officials at the Department for Business, Innovation and Skills and the Minister in charge, the hon. Member for East Dunbartonshire (Jo Swinson)—she ostensibly chairs the meetings, but of course she is on maternity leave at the moment—have put a lot of time into it, as have the businesses that have signed up to the multi-stakeholder group, on which the relevant NGOs and the Government are also represented. A lot of work is going on to ensure that we achieve candidacy status in about 18 months. It is a commendable, broad cross-party effort, and there is no dispute about the objective. As I said, the EITI is chaired by Clare Short, who obviously has a particular political perspective, but has a sound perspective on the extractive industries.

From time to time we have had some difficulties, with a degree of purism creeping in—I am trying to choose my words carefully—from NGOs with substantial control over interests in developing nations. It sometimes feels as though strings are being pulled and wires being tugged to get certain outcomes. For example, it was very difficult to get Ethiopia made a candidate country. It finally happened a week or two ago, but there was enormous lobbying against it. That was a great shame, because Ethiopia was very keen to sign up, and so were the Ethiopian NGOs. Everyone agreed, but western-based NGOs were keen to stop it happening, for various reasons. I understand the human rights issues, but I think that Ethiopia will eventually qualify for membership.

It is a shame when western-based NGOs in very developed countries—whether they are based in London, Washington or New York—sometimes seem to look past the interests of nations that we want to help to develop economically and reflect their own interests in getting stories or increasing their membership and funding. I know that that is contentious, but that is how it seems to me. The stewardship of the EITI has been very sound in dealing with that in the last few weeks. People who know about the EITI will know that Ethiopia has been a contentious issue, but I am pleased to say that it is now a candidate country.

Various things are going on quietly in the background, although full agreement has not been reached. The UK Government are actually leading on the issue of beneficial ownership transparency. That is part of the EITI and we hope that the outcome in three years’ time will be that the UK signs up. We do not think that there is corruption in the UK, but if we sign up to a strong, gold standard EITI—without unnecessary bells and whistles—it would set a good example for all the other nations we would like to see sign up to it.

I shall conclude by wishing you, Madam Deputy Speaker, and all Members and officials of the House a nice Easter.