Extractive Industries (Developing Nations)

Eric Joyce Excerpts

Friday 29th November 2013 Commons Chamber

[Eric Joyce (Falkirk) (Ind)]

I want to take this opportunity to say a few things about the extractive industries, particularly those across the world. Many of our constituencies have an interest in such industries, but it is not necessarily the biggest interest across the whole of our country. In Scotland, of course, most Members have some interest in the oil and gas industries, because of assets in the north or the people who work in the industries. The Grangemouth refinery is on my doorstep. It rarely makes the news, but employs many people. My own family have worked in the oil and gas industries for many years, as have many of my constituents and people who live around the area. Such involvement gives us an interest in the broader extractive industries.

Naturally, our primary concern is for our constituents and our local areas in the UK. However, over the years, my interest has increasingly focused on the impact of large—they are often, although not always, large—companies in the extractive sectors on the economic development of countries across the world. Those companies also have a big impact on the UK because they often pay tax here. They might have their headquarters in the UK, and they employ people in the UK. I am thinking not just of oil and gas—that is what we tend to think about in the UK when we talk about domestic issues—or of small operations that have open-cast mining or deal in aggregates, but large operators that might be headquartered in the UK and that operate in parts of the developing world.

It seems to me—I hope that this does not appear tangential—that when we think about the UK industrial and commercial effort and how it impacts on the developing world, it tends to be almost as a secondary line of debate in the discussion of how the Department for International Development and aid impact on the developing world. What I am saying is that when we think about the economies of the developing world it tends to be about the great good that we do with our munificent and generous taxpayer donations that go through various projects involving European institutions or non-governmental organisations.

It is increasingly important, particularly in the current economic context, that we start to tilt the debate. When we think about developing world economies, we should not simply think about DFID, aid and how fantastically generous we are. Of course DFID does great work, and the Government spend a great deal in this area. Our constituents often say that perhaps that money should be spent at home. The Government are committed to a high level of DFID expenditure, as were the Labour Government, who, one might say, kicked off the whole thing. That is the issue and the figure that people are keen to discuss instead of the figure of inward investment that goes into economies from companies that are either based or headquartered in the UK. I appreciate that for some people there is a significant distinction. It is perhaps worth being up front from the start about the fact that for some people there is a difference between companies that are seen to be truly British or truly operating in the UK and that employ people in the UK—I am talking about companies that operate around major assets, such as refineries in the North sea—and companies that are based, headquartered or listed in London, either on the London stock exchange or the alternative investment markets. People often fail to grasp the scale of economic activity that is created through the potential of the extractive industries sector that is headquartered in the UK. What is or is not a British company is a moot point. In many ways, it is not helpful to reflect on that quite deep theological question.

The fact is that many companies that are attracted to investing in the developing world on an enormous scale have chosen to have their headquarters in London. That has sometimes created issues for the extractive industries sector, most notably mining. There have been problems with the listing of particular companies, and their practices before they listed, their management practices, the assumptions owners might have made about how governance should operate and so on are often very different from those that are the culture in the UK. There is an ongoing negotiation, to put it at its mildest, that lays down rules for companies so that when they list in the UK they have to change their culture to fit the high standards of London listing.

There have been one or two well-publicised issues, and I might refer to one of them in a short while, but the standards are generally very high. For companies that list in London and operate elsewhere in the world, there is a large amount of transparency and accountability. The standards in those industries have traditionally been quite high. When new companies come in from elsewhere in the world with different cultural backgrounds, those standards become even more important.

There are two or three initiatives that I want to mention that augment and bolster the standards that already apply in the City of London. One is the extractive industries transparency initiative, which was created just over 10 years ago by the Labour Government and has been carried on by this Government. Oddly, we never actually signed up to it, although I think I understand why. It is a fairly straightforward worldwide initiative signed up to by 25 countries that aims to lay down a standard by which countries agree that all the companies operating out of those countries, or which are listed in those countries, are required to declare what payments they make to Governments, often and usually in the developing world, and the Governments agree to say what payments they have received, as well as other conditions and criteria. That leads to a standard of accountability and transparency that was not there before. The purpose is to de-risk and to make things more realistic and practical for companies that are nervous about relative insecurity or uncertainty about what happens to cash that is paid to Governments. Historically, we know that a lot of cash has gone missing in the developing world. Instead of paying for infrastructure, education or health, it has paid for mansions in Paris or Brussels, or wherever the taste of the person receiving the cash might have led them.

There are other Members in the Chamber who have as much or probably more experience than I have in this, but as we travel across Africa we often end up talking to the people who run young democracies. Companies that are often listed in London come in and try to operate in their countries, and those people are keen to show that the cash is being distributed and used appropriately for Government works. Transparency helps them. It also helps companies, which are often wrongly accused of spreading cash around to get contracts when that is simply not true. The idea of greater transparency helps everyone.

Many organisations lobbied for the EITI, but one of my favourites is Global Witness, which George Soros had an important role in creating. In the first two or three years of its existence, most of the heavy work involved encouraging people to sign up to a voluntary arrangement. Now the EU accounting transparency directive and other directives are, in effect, essentially embedding that arrangement into EU law. My understanding is—I could be wrong—that it will be embedded in UK law by 2015. That will not supplant the functions of the EITI, but it will augment them and there will still be a strong purpose in signing up to the initiative.

There is a similar piece of legislation in the States. The Dodd-Frank Bill has an amendment called the Cardin-Lugar amendment, which is still being argued about. It was passed, but there were some issues with how the Securities and Exchange Commission implemented it—perhaps not enough resources were put into it. Some people will say that such legislation does not exist in the US, but it does, it has just not been fully implemented. It will be in due course.

The standards of transparency, which in many ways are above the basic EITI standard, are increasingly high. Within a couple of years, they will be embedded everywhere in all the major markets. The EITI has played an important role in all of that.

[Bob Stewart (Beckenham) (Con)]

I presume the hon. Gentleman gives full recognition to the fact that companies from other countries operating in Africa do not operate under the same rules as British companies, which often gives us a competitive disadvantage. Will he comment on that?

[Eric Joyce]

The hon. Gentleman makes a good point. We often fail to make a distinction between the developing world of China, Russia and the former Soviet states, and the developing world of impoverished states in Africa and elsewhere. Without wishing to digress—you would pull me up for doing so, Madam Deputy Speaker—it is true that China and Russia have different cultural and transparency assumptions. Most importantly, they have different sovereignty assumptions. They tend to say, “It’s entirely up to a country what it does with its cash. It is not for us to ask.” Chinese companies therefore often operate to a different standard. Many in London are concerned that, if that standard is lower, the small number of people who want to make dodgy deals—they are small in number, but of a significant scale—will do their deals with companies that are not regulated in the UK. That is unquestionably a problem. We must continuously work to have those countries understand that they are major world players and have major responsibilities to ensure that corruption does not once again run amok in Africa. I recognise the hon. Gentleman’s point—he has experience in the field—which is frequently made. I would not want to regulate UK companies in a way that damages them in the context of international competition.

Currently, the EITI voluntary arrangement has worked well, but statutory underpinning in the UK and US within the next two years will bolster standards in Africa, which is my interest, and in developing countries throughout the world. That is what the countries and the companies want.

The UK Government have agreed to sign up to the EITI, which is great. They were concerned in the first instance that the initiative would lay unnecessary costs on small UK operators, which, frankly, one would not expect to be in the ambit of this discussion. The UK must lead the way and sign up if it wants other countries, such as Angola, which wants to sign up, to do so. Other countries would also like to sign up.

It is a two-year process. By good fortune, I am on the multi-stakeholder group in the UK. The process, which is currently happening, is put in place by a multi-stakeholder group of relevant interested companies from the various industrial sectors, including from the oil, gas, minerals and mining extractive industries; civilian organisations with an interest, such as green and transparency organisations; and the Government—it is led by the Department for Business, Innovation and Skills. It puts the UK in a position to help to lead the world in high standards for the extractive industries.

I want to make one more point. The Government have stressed the importance of beneficial ownership. In the next year or two, legislation will emphasise the importance of beneficial ownership throughout the developing world. That means that we will know where the cash ends up. It is currently possible to construct a series of layers of ownership. We can say that people must declare where the money is going, but they can say, “It goes to company X in the British Virgin Isles,” and we will have no idea who that is. If the Government introduce legislation, which I believe they will, we need to know who beneficial owners are. When companies trade and invest enormous amounts of money in developing countries, the money should go to the appropriate place. From my point of view, that would draw the eye towards the good that enormous and small companies do when they invest in countries that otherwise have very little in the way of revenue.

I shall now conclude, and I do not intend for this to be on a depressing note. The Select Committee on Business, Innovation and Skills is undertaking an excellent inquiry into this whole issue. I have noticed that some people who care passionately about economic development in the developing world seem to set the theoretical principle of the standard so high that they make it almost impossible for companies to invest in the developing world. It seems from the World Development Movement’s submission to the Committee that it does not want any extractive industries to operate in any part of Africa. The reality is that without those industries many countries will simply never develop their economies, and the extractive industries, operating transparently in the way that I have described, are the primary potential driver of economic development. I am talking not about aid, but about proper investment by very large companies that want to carry out extraction that is good for them and their shareholders, and good for the taxpayers of these countries. Such companies are often the biggest taxpayer in these countries and they often represent the only way in which these countries can get good tax revenue and move their economies forward as we want to see them moving forward.

Careers Service (Young People)

Eric Joyce Excerpts

Tuesday 13th September 2011 Commons Chamber

[Eric Joyce (Falkirk) (Lab)]

On the subject of complementary services, my hon. Friend will be aware that the Labour Government and my hon. Friend the Member for Huddersfield (Mr Sheerman) explored the possibility of using social media as a complementary way of introducing kids at school to people who have the same interests. Does he think that we might take that idea forward in the future?

[Stephen Twigg]

Absolutely; my hon. Friend makes an important point. Face-to-face advice is vital, and that is why the motion is about that, but it is not enough on its own. We need other initiatives, whether they use information technology or networks of alumni, as Future First does.

Future First started as a project in London state secondary schools. It was founded by a team of graduates from state schools, who were motivated by their own experience. It seeks to improve the support offered to young people at school as soon as they start considering their future. It is now supported by a wide range of organisations, including the Sutton Trust. It is looking to extend its excellent practice beyond London to other parts of the country. Recently, I had the opportunity to introduce Future First to Liverpool Vision, with a view to opening opportunities for it to take its programmes to Liverpool. It will be meeting shortly with head teachers and business leaders in the city of Liverpool.

Future First’s study, “Social Mobility, Careers Advice and Alumni Networks”, to which my right hon. Friend the shadow Secretary of State referred, makes the point that was made earlier by my hon. Friend the Member for Huddersfield (Mr Sheerman) about the contrast between what happens in private schools and state schools. When asked how they rated their careers service, just 31% of young people in state schools said “good” or “very good”, yet in private schools the figure was almost double that at 57%. The figures from the independent sector and those from the state sector show a very significant contrast, which highlights the scale of the challenges that we face.

In-school services must get better. Schools need to improve them, but they cannot do that on their own; they need partners, and organisations such as Future First provide ideal partners for that excellent work. I therefore urge the Government, following tonight’s debate, not only to guarantee face-to-face careers advice as set out in the motion, but to go beyond that, and support and encourage excellent programmes such as the one at Cardinal Heenan school in my constituency and the ones that Future First has promoted in London. As my right hon. Friend the shadow Education Secretary said, Opposition Members will work with the Government if they genuinely seek to advance that vital instrument in the fight for a more socially mobile country.

Intellectual Property (Hargreaves Report)

Eric Joyce Excerpts

Thursday 7th July 2011 Westminster Hall

[Eric Joyce (Falkirk) (Lab)]

I apologise for not being here at the start of the debate, Mr Chope. I was at another event, which I shall mention briefly in a moment.

I congratulate the hon. Member for Perth and North Perthshire (Pete Wishart)—his constituency was the place of my birth—on securing the debate, which is incredibly timely. He has committed himself to this subject for some time, and he regularly makes important contributions, as have many others here today.

Before coming here, I was chatting to Prime Minister Odinga of Kenya, and we spoke about this very matter. In the developing world, mobiles are being used much more and new services are becoming available. Those countries are looking to us to see how we deal with the emerging issues, and they are likely to follow the same principles, tenets or philosophical underpinnings, if that does not sound too grand. It is very much a current issue in Kenya—aside from piracy of the other type, which he is also particularly keen to address. These issues are at the forefront for countries in the developing world, especially in countries such as Rwanda. That country has mobile coverage across the country—it is better than in London. It also has fibre-optic cable, surprisingly good services and lots of new possibilities for creators. We must not forget that what we say now will have a powerful influence on people across the world, particularly those in the developing world.

I listened to the hon. Member for Northampton South (Mr Binley) with great interest. I thought that he struck exactly the right balance. On such matters, from the Digital Economy Act 2010 to the Hargreaves report, there tends to be a bit of polarisation, with the creators on one side and the distributors on the other. It is a false dichotomy, because one could easily argue that record labels are both creators and distributors. We tend falsely to put people in particular boxes. The hon. Gentleman was absolutely right to point out, as Hargreaves did, that our copyright law is elderly. It was intended for an entirely different purpose from how it is used today, and the way that people live now—I wish that I could remember exactly what he said, so I paraphrase—is very different from what the copyright law assumes.

The review is timely. Although no study undertaken on behalf of the Government, or of anyone else, is perfect, Hargreaves suggests some intelligent incremental steps. In broad terms, I think that we should support it. I listened carefully to the hon. Member for Hove (Mike Weatherley), and I completely understand his concerns. He is a champion of creators, and I do not pooh-pooh the important concerns that he expressed. However, it is important to realise that Hargreaves has attempted to pull together two disparate positions and has created a reasonably consensual outcome, which is difficult. When the Minister, and more significantly the Government, decide what to do, I hope that the changes to corporate law will reflect the general spirit of what Hargreaves has been trying to achieve.

We all agree with the hon. Member for Hove on format shifting—it is common sense that we should do something about it. Most people—probably most of us—have format shifted without realising that it was unlawful. That is a point of some consensus. For my own part, however, when I listen to debates on this subject, I still get the sense that some people are defending one position and others are defending a position on the other side. However, when we to talk to people in the industry, we find much more intelligent discussion and debate.

If we talk to record labels, we hear something different from what is said by the BPI. Much as I love, respect and admire the BPI—this is not to say that we should give in wholesale to what we have already heard happens in China—record labels will say, “Well, three or four years down the line things will be shifting a little bit; business models will shift a little bit.”

At the centre of Hargreaves is the recognition that creatives not only create the things they do, but create new solutions to problems. The hon. Member for Solihull (Lorely Burt) mentioned small and medium-sized businesses. Small software companies are less concerned about patenting and are more interested in keeping people with good ideas. They are sometimes more reluctant to patent specific things, because it can give away their secrets, but the secret in parts of the software industry is hanging on to those clever creative minds. It is much like the House of Commons.

I will briefly jump to the digital copyright exchange, which is potentially contentious. It looks like a common-sense idea—it is a common-sense idea—but how will it work? As soon as the recommendation is made, people in different industries will say, “This looks fine, but what is the meat of it? How should it work?”

One line that I have not heard mentioned—it may have been mentioned before I arrived—which one hears reflected outside this place is the almost theological point that when someone creates something it is theirs for good and theirs to control. Some would say that that is not the case and that, as the hon. Member for Northampton South said about the Chinese view of knowledge, it is out there for people to use and manipulate. We should certainly give the benefit to the original creators. At the extreme, one way to interpret the possible function of the digital copyright exchange is that it should be compulsory, because if the creation is not registered, the creator will not receive the cash, which would be tough on the creators. On the other hand, I am not completely convinced that those who create things should necessarily be able to control them.

[Damian Collins]

One observation from my time in the advertising industry, based on the hon. Gentleman’s remarks, is that that could work against younger creative people. They do not have experience of the industry or the muscle to demand a higher price for their work at the initial point of sale and will therefore lose control of it for the future. Does the hon. Gentleman share that concern?

[Eric Joyce]

I absolutely agree. Indeed, the advertising industry is one of our more successful creative industries. I know a number of people who work in it or who have done so. The hon. Gentleman said earlier that the advertising industry often takes something that looks like an original idea from elsewhere, uses it imaginatively and creates something new, adding value to it.

The hon. Gentleman said something about orphan works that struck me; I had not reflected on the matter before. I do not have a great problem with orphan works. I was lobbied on the subject by photographers during the passage of the 2010 Act. It could be the case that something has been forgotten by the creator and is long-gone but is used in an advertising campaign, such as that famous kiss picture by Robert Doisneau. Such things could be completely forgotten, but if they are used in advertising campaigns and seen all over the place, the creator will not benefit from it. I see the logic of revisiting that aspect.

[Damian Collins]

I am grateful to the hon. Gentleman for giving way again. I might be wrong, but I cast my mind back to the 1997 general election campaign and the famous demonised poster of Tony Blair. The original photograph was an orphan work.

[Eric Joyce]

That is absolutely fascinating. I think Tony Blair might have put the original up in one of his many houses. Perhaps he has put one up in each. I will not continue to wax rhapsodic, as I was late for the start of the debate.

Let me turn briefly to the internet service providers. There are hundreds of thousands of ISPs, many of which are small and fill a niche. In the UK, there are lots of ISPs serving local geographical areas. That may seem counter-intuitive, but that is the way it is. They provide a good service in their niche market. I am not saying, “Yah-boo sucks to all the creators and the ISPs are all fabulous.” However, we tend to forget that ISPs have to invest a great deal of money in infrastructure. We all want superfast broadband, but if we are not careful we could end up loading costs on to ISPs and slow down the superfast future that we all want. It is not the case that Google commands everybody and fair use will be next. As the hon. Member for Hove has said, fair use has essentially been rejected by Hargreaves, but I am sure that that will not happen in the UK. I understand that it was primarily a legal argument that did not fit terribly well into the European legal structure.

Let me just blow the trumpet for ISPs. The sector is not terribly big or sexy, and we understandably tend to speak a lot about our success in the music industry. However, the corporate debate goes much wider than the music industry. For instance, it involves software, as I have mentioned. There are all sorts of creative responses in the movie industry. We can see release dates being brought closer together, so that people are less likely to pirate. Often, if new technological solutions, creative ideas or new ways of selling a product are found, problems can be solved.

In his report, Hargreaves emphasises that enforcement and education have a limited effect. Instead, he says we need to find new ways of facilitating new creative ideas. He recommends the creation of a digital copyright exchange. I am not sure exactly how it will work and do not think that it will necessarily involve compulsion, but there are some interesting debates around it. The report states:

“Government should pursue an integrated approach based upon enforcement, education and, crucially, measures to strengthen and grow legitimate markets in copyright and other IP protected fields.”

That goes to the heart of what Hargreaves has tried to do. It is not perfect, but it recognises that we can make incremental steps at this stage. I hope that the idea does not get knocked off track for some technical reason that we cannot get round.

Hon. Members spoke at length with Professor Hargreaves, who made himself and his team available to them. I deduce that he and his team are a little concerned that the whole thing will be knocked off track by heavy lobbying. The hon. Member for Northampton South perfectly captured the problem. We recognise that we need to change; we accept what Hargreaves recommends as sound common sense; and we can get the copyright laws that we need not only now but for things that might be coming along in the future.

[Dr Coffey]

I hear what the hon. Gentleman has said about Professor Hargreaves and about his concern that everything might be put to one side. As my hon. Friend the Member for Solihull (Lorely Burt) said earlier, if he had broadened the panel to include not only academics and intellectual property officers but people from the industry, he might have had a more willing audience.

[Eric Joyce]

The hon. Lady makes a good point. I am always up for broadening the membership of panels. I did not select the panel. She may well be right. I do not deny that it was a tightly focused group. We all have small and medium-sized businesses in our communities, and we all get lobbied by the Federation of Small Businesses. I often get lobbied by small businesses that say that the corporate holders are too aggressive in pursuing their rights and interests. I am not sure what I feel about that, but the hon. Lady is right in what she says.

In conclusion—I was almost at my peroration before the hon. Lady intervened—Professor Hargreaves has produced a pretty good piece of work. It is not perfect, but it recommends good incremental steps forward. We need to reflect on the fact that ISPs are being relied on to contribute greatly to the roll-out of superfast broadband. We all want that. It is coming. When is it going to come? We will see what it looks like when it comes. This report is a small but significant part of the chain.