Draft Commonwealth Development Corporation (Limit on Government Assistance) Regulations 2023

Kevin Brennan Excerpts

Wednesday 5th July 2023 General Committees

[Kevin Brennan (Cardiff West) (Lab)]

I tend to come to these Committees and only contribute when I am invited to do so. This measure is the sort of thing that conforms to what I would call the inverse rule of public finance: the greater the sum of money involved, the less discussion there is and the more disinterest shown by Members in what the money is being spent on. With this statutory instrument, we are talking about an extension of £3.5 billion in the money that the Government are making available.

I take that back after listening to the contribution from my hon. Friend the Member for Birmingham, Edgbaston, who has done exactly what should be done on these occasions, despite the grumbling of Government Members, who obviously have other things they would rather be doing than scrutinising the expenditure of £3.5 billion of public money this afternoon.

[Gareth Bacon (Orpington) (Con)]

Get on with it.

[Kevin Brennan]

If the hon. Member wants to intervene and make his points to the Committee on the record, I am very happy to give way, because he has been grumbling all the way through this whole Committee.

[Gareth Bacon (Orpington) (Con)]

Stop showboating.

[Kevin Brennan]

I think I heard him sey I am showboating. I am in fact doing what the—[Interruption.]

[The Chair]

Order.

[Kevin Brennan]

Thank you, Mr Stringer. I hope I remain in order throughout my contribution, unlike the hon. Member for Orpington.

My hon. Friend the Member for Birmingham, Edgbaston did her job admirably. I just have a couple of questions for the Minister, who will be relieved to know that I am not going to rebel against my own Front Bench and force a Division—they can never be sure, but I can confirm that is the case today.

What is the Minister’s assessment of the impact of using some of the assistance in order to assist reconstruction in Ukraine? What impact would that have on other projects around the globe that the investments are intended to support? One thing that I am not sure about, despite having read the briefing in an attempt to educate myself, is the position on social enterprise with these kind of investments. I know that it is principally designed to target private sector investment, but does social enterprise, which comes in a variety of forms as the Minister is aware, have a chance to benefit from BII investment?

[Mr Mitchell]

I am grateful to the hon. Members who have contributed to today’s debate, and I will try and address the questions and points that they have raised. First, I am grateful to the hon. Member for East Renfrewshire for her support; she raised exactly the right questions.

The hon. Member for Cardiff West and I have been in this House for quite a long time; no one would ever criticise him for lack of diligence and hard work, and he sort of explained his attendance in the Committee today. I want to make it clear that none of us on Government Benches would ever accuse him of showboating—apart from my hon. Friend the Member for Orpington, of course.

I have four points to make in response to the debate. First, the hon. Member for Cardiff West talked about spending in Ukraine. He will know that at the Ukraine Recovery Conference it was made clear that BII would play a modest part further down the track, putting its shoulder to the wheel of our national interests, which I think is the right thing to do. Ukraine is not an area that it would normally invest in, but by co-investing with organisations such as the European Bank for Reconstruction and Development, it can help to move forward a policy that both the UK and the Ukrainians want to see realised.

BII has a role in respect of social enterprises, which I will explain later in my response to the hon. Member for Birmingham, Edgbaston. She raised four points, and was very supportive of the concept of BII. She appreciates the all-party basis on which the reforms that I enacted 10 years ago were carried out. We were careful to ensure that we carried the sector and the Opposition with us on those reforms. That is a very valuable consensus, which has propelled BII into a position where it is viewed with enormous respect and is widely regarded as the most effective and best development finance institution in the world. It is not a coincidence that that has happened on the back of the all-party support it has received.

The hon. Lady mentioned the difficulty of allocating ODA money in a very constrained environment, and asked if we should spend it in another area and not on BII. As she knows, under the Act we could have said that BII should receive an extra £6 billion, rather than an extra £3.5 billion—that is what the Act says. We are not doing that; we have reined it right back so that it is taking the same haircut as much else in the ODA budget is taking. I hope she accepts that we have exercised constraint and not just given the BII what it the Act as originally passed entitled it to. In trying to slice the cake with a very constrained ODA budget, we require maximum effectiveness and results for the British taxpayer, and for the aims and aspirations that she and I both want this country to pursue in international development.

Think what BII has achieved: it has directly employed 1 million people, and it is working in the most difficult, pioneering countries for the private sector. Putting food on the tables of, effectively, 1 million people and families is a remarkable result. Look at the massive increase in off-grid and grid electricity and the amount of money paid in tax by BII investments into the treasuries and exchequers of poor countries. Not all that money will necessarily be used well, and another part of that budget tries to ensure that it is used more transparently and better. Nevertheless, raising £10,000 million in tax predominantly in poor or very poor countries is a significant development achievement. I want to make that point to the hon. Member for Birmingham, Edgbaston.

Secondly, the hon. Lady made the point that BII does not, by definition, engage in the most egregious extent of poverty; other parts of the development budget do that. If we take a holistic view across the piece of where we should put our taxpayers’ money for maximum effect in achieving the SDGs and driving forward our climate financing and climate result objectives, we must make that allocation. We do not expect BII to address some of the most egregious effects of poverty; we use grant funding and co-financing, and we do it bilaterally and multilaterally through other mechanisms.

Thirdly, the hon. Lady said that she had read my speech at Chatham House—I am grateful to her for doing that—and pointed to the importance of transparency. On that, she, I and the International Development Committee, which is conducting an inquiry and has done so much good work in this area, are more or less agreed. We want greater transparency, partly because if there is not transparency, people think that something is being hidden when perhaps it is not being hidden at all. BII has a vested interest in greater transparency too, and we are talking to the board. We are waiting to see the advice of the International Development Committee on the issue, but we will then be driving forward on transparency as the hon. Lady suggested.

The hon. Lady mentioned that BII scored poorly on Publish What You Fund; actually, it came 12th out of the 21 non-sovereign development finance institutions. I emphasise to the Committee that that resulted partly from a technical issue on the website that prevented data from being unloaded, which has now been resolved. Publish What You Fund has indicated that BII, if it were to remark it now, would be towards the top end of the league table. I am completely with the hon. Lady on her overall point about the importance of transparency, and I hope that we will be able to move forward on that agenda after the International Development Committee has published its report.

The hon. Lady’s final point was about the Kenya hospital and the upsetting circumstances that she described. I should make it clear that BII takes all allegations of this sort extremely seriously, and the Foreign, Commonwealth and Development Office is working closely with BII on the matter. We encourage Oxfam to share any further evidence it holds of the alleged cases so that we can accelerate those investigations. I should also make clear that BII has already taken steps at Nairobi Women’s Hospital. A new fund manager was put in place in 2019. The new fund manager has put in a new management team at the hospital, including a new CEO, and strengthened procedures. The next five years will see BII prioritise investing in the manufacturing of medicines, vaccines, devices and equipment, pharmacy and early stage funding for health technology.

[Kevin Brennan]

I think the Minister said that he would say a few more words on social enterprise. I apologise if I missed those in his remarks.