Oral Answers to Questions
Richard Fuller Excerpts(7 years, 7 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Prime Minister
I return to the point, Mr Speaker. Decisions about services in the local area are rightly taken by the local national health service, because we believe that it is local clinicians, and also local patients and leaders, who know what is best for their areas. So it is about trying to tailor the services to provide the best possible services for the needs of local people, modernising the care and facilities and making services appropriate to the local area. This trust has an extensive improvement plan to ensure that both hospitals within it can care for patients attending accident and emergency in as timely a way as possible.
Richard Fuller (Bedford) (Con)
The Prime Minister
I can absolutely give my hon. Friend that commitment. What is important is that the industrial strategy will be looking to the economy of the future—what sort of economy we want in this country. Crucial to that will be the growth that is generated by entrepreneurs and by small businesses—by the very passion that he has spoken about. We want to see an environment in which those who can grow can emerge and develop to provide future jobs for people and contribute to the strength of our economy. That is what the industrial strategy is about; I absolutely agree with my hon. Friend.
Commonwealth Development Corporation Bill
Richard Fuller ExcerptsTuesday 10th January 2017
(7 years, 7 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Commons Consideration of Lords Amendments as at 10 January 2017 - (10 Jan 2017)
Kate Osamor
Labour Members are unswerving in our belief that the UK must continue to spend 0.7% of gross national income on overseas aid. It is imperative, however, that the Government deliver this aid in a way that is accountable, ensures value for money, and delivers on the UK’s development objectives.
Although we support the aims of the Bill—it has reached Report without amendment—we remain concerned about the lack of safeguards. In new clause 2, we ask that no increase in the limit be granted without a report or business case. New clauses 3 and 9 are at the heart of the work of the Department for International Development, which leads the UK’s work to end extreme poverty. We on the Front Bench ask the Government to make sure that the Minister is satisfied that any new investment enabled by a proposed increase in the limit will have a significant impact in reducing poverty.
The Department must be at the forefront of tackling global poverty reduction. It is vital that the bolstering of CDC’s resources does not mean a reduction in funds for emergency and humanitarian aid in places such as northern Nigeria, Yemen and Syria, and in other parts of the world that face grave humanitarian crises. Will the Minister commit to ring-fencing such funds so that those in the direst need of help are able to receive it? Long-term investment and the establishment of a sustainable economy in order to kick-start jobs and growth are, of course, crucial to any credible development programme, but a development programme should, at its core, be a coalition of long-term investment and short-term relief. The consequences of losing sight of the latter element would be grave indeed. Just as the UK has a duty to help to lay the foundations for secure, sustainable economies in the poorest areas, where investment is a risk that few are willing to take, the UK also has a duty to assist those who bear the full force of conflict, climate change and food insecurity.
As was laid out on Second Reading, transparency should be the driving force behind any shift in the focus of the aid budget. I now speak to new clauses 4 and 8. It is vital that taxpayers’ money is spent not only effectively, but as transparently as possible. To that end, it is incumbent on the Government to put in place mechanisms that ensure maximum visibility regarding where aid money is being spent, and that minimise public scepticism. We all know that transparency is something that DFID does very well indeed.
Richard Fuller (Bedford) (Con)
Before the hon. Lady moved on to the important issue of transparency, she was talking about balance. It is fair to make the point, is it not, that CDC’s proportion of our development budget for its type, as foreign direct investment, is lower, at 4%, than comparables such as the French FDI of 12% and the Dutch at 30%? For the sake of proportion, it is fair to say that even with that increase, the UK will still spend more on development aid than most of our European peers do, and the proportion of FDI will be smaller than it is for many of those peers.
Kate Osamor
The hon. Gentleman makes a valuable point, but the Bill still needs scrutiny. That is what I am laying out.
We all know that transparency is something that DFID does very well indeed. Its performance in the aid transparency index demonstrates an international gold standard in that regard. Historically, however, the same cannot be said for CDC. It is of the utmost importance that the proportion of the ODA budget that is channelled through CDC be subject to the same checks on outcomes and value for money to which DFID holds itself. New clause 4 lays down conditions that would guarantee transparent governance through an agreed framework reached with the Independent Commission for Aid Impact and CDC. Proper annual measurements of outcome would be a welcome addition to the Bill.
In relation to new clauses 1 and 8 and the issue of CDC use of separate financial centres where countries do not have sufficiently robust regulatory environments, now is the time to put on record the Government’s commitment to strengthening financial service centres in developing countries. The Opposition know that the importance of addressing and tackling CDC’s use of tax havens cannot be overstated. Although we heard assurances in Committee from Diana Noble, the chief executive of CDC, that using offshore financial centres ensures legal certainty and lessens risk for investors, far more than reassurance is needed to ensure transparency on that point. We need clear legislative safeguards, which is why the Front-Bench team will press new clause 1 to a vote. New clause 1 requires any proposal to increase the limit by secondary legislation to be accompanied by a thorough analysis of CDCs use of such centres. Where the countries in question do not have sufficiently robust regulatory environments, it is the UK’s job to ensure that those centres are made more robust.
Richard Fuller
Thank you very much, Madam Deputy Speaker. I am taking absolutely to heart your suggestion that, this being the new year, we have to stand up to get the chance to speak.
I would like to start by thanking all the members of staff at the CDC for the work they do on behalf of British taxpayers and, more importantly, for the people who depend on the CDC for their employment in many of the most troubled and difficult countries in the world. Over the past few weeks, the CDC has been the subject of much ill-founded and hostile criticism, and that must make its job much, much harder, so it is important to put on record our support for the work they do in helping to achieve our country’s development goals.
I would also like to thank the Front-Bench spokesman for the Labour party, the hon. Member for Edmonton (Kate Osamor). She did a very good job in putting forward some points of scrutiny and in holding back on some of the wilder suggestions that might have been foisted on her in order to batter the Bill. The fact that historically there has been a cross-party consensus—given what she has said, it continues—on the valuable role of the CDC in achieving our development goals is important. It is a long-standing institution in our country; it is part of the British brand internationally, and she has done a great service today by focusing on the one amendment she wishes to press to a vote but pushing back on other ideas, which other Opposition Members might have asked her to press.
Pauline Latham
I am sure my hon. Friend is aware that the CDC last year upped its investment rate to $1.5 billion, which is the level projected for the next five years. Does that investment rate show that recapitalisation is not about some supposed new direction for the CDC but about allowing the good work it has done under its management to continue?
Richard Fuller
My hon. Friend is absolutely right. We have to be clear what is being proposed today. The proposal is not to do more than is being done now, but to enable the CDC to continue to do what it is doing now. If we were to take some of the suggestions from the SNP and others, that might imply that that support should be reduced in the future, and that would be to the detriment of the countries affected and the British taxpayer.
Patrick Grady
ODA flows and gross national income can go up or down, so if, for some reason, GNI were to contract, and the ODA budget were to contract, surely it would make sense for the amount of overall capital investment in the CDC to contract so that more money was available for the traditional aid flows.
Richard Fuller
That is the hon. Gentleman’s point of view, but it is not my point of view, and I will come to the point about balance in a minute.
A general view of the amendments is that they seek to solve problems that do not exist, but that may exist. Statute is not the right way to approach such circumstances; that is a matter for oversight and scrutiny by the departmental Ministers and by us here in Parliament on behalf of our taxpayers—it is not about putting things into Bills. On that basis, I will oppose every amendment that has been proposed today.
There would be some validity to the amendments if there was a question about this aspect of foreign direct investment being unusually large. There might be something to them if the CDC had a poor investment record because it was losing shed loads of taxpayers’ money by making poor investments, if it was clearly ignoring development goals and was being held to account in reports for doing that, or if a problem in reporting oversight was evident and explained in various reports. However, not a single one of those conditions pertains to the circumstances of the CDC, so there is no a priori reason to put these amendments in place.
As I mentioned earlier, the proportion of our development budget that goes to our development finance institution—the CDC—is 4% if taken over five years, which is the usual investment period for a fund. That compares to PROPARCO of France, which has 12% of the development budget; DEG in Germany, which has 8% of the budget; and FMO in Holland, which is a very successful DFI, and which has 30% of the budget. So we are not unusually large—we are actually unusually small. In terms of such initiatives, we should be looking for a measured and slow increase in our ability to invest, so that we can play a fuller role. So I do not think that the point about that really holds.
The point about the poor investment record does not hold either. I have the numbers here, and the truth of the matter is that in terms of its annual return—this is a commercial return, and we have to understand that there are commercial returns for funds—the CDC was set a target of 3.5%, and it achieved 7.8% over the past five years. So there are not really grounds for saying that it is a poor performer in terms of its core function of investing on a commercial basis or that it is doing something untoward.
On the missing development goals, I understand that there is a bit of a laundry list of sectors that the hon. Member for Cardiff South and Penarth (Stephen Doughty) wishes to turn his nose up to. I have no idea whether the list in his new clause is a full list or whether it just contains things he does not like. One of my hon. Friends made a good point about why there are good reasons to support parts of them. We will hear from the hon. Gentleman in a minute, and I am sure he will make an excellent case for that laundry list. However, in the meantime, I would say that there is not really any evidence of the CDC missing its development goals. Even the National Audit Office report mentioned that the CDC had met the targets for its financial performance, which was point 11 in its summary. In point 12, it said that the
“CDC has exceeded the target for prospective development impact it agreed with the Department.”
So there is no basis in that respect for the amendments.
Are there concerns about reporting for CDC? There may be, but I have not heard them. I cannot point to something that says there are concerns. I do not think that we have heard concerns about reporting on Second Reading, in the evidence stages or today. There may be additional pieces of information we wish to have, and they are listed in some of the amendments, but no real concerns have been raised that these things have not been provided in the past and that we should therefore ensure that the CDC provides them. Therefore, on the issue of whether there is a problem at the CDC that the amendments are needed to correct, there is no justification for the amendments whatever.
We have to be clear about what the role of tax havens has been. The hon. Member for Edmonton was very fair in pointing out that the CDC’s chief executive had made it clear that the CDC does not use tax havens in its policies, and the chief executive explained where those are used and why they are used. I am perfectly happy to rest on the judgment of the CDC, on its governance structures and on the oversight by the Department to make sure that that continues. I do not need to put a statutory underpinning on that. I also do not see that there is a problem at the moment in terms of the CDC having wandered off from what it said it would do. If there was such a problem, I would say, “Okay, maybe it is time for statute,” but the hon. Lady has not presented—maybe others will—a recent concern where that has happened. Therefore, I cannot see a reason for supporting new clause 1, although I understand that she wants to put it to a vote. I think we broadly accept—from that point of view, having a discussion about this is perhaps valuable—that there should be a strong message from Parliament about the use of tax havens and about what is and is not appropriate. If that is her intention, that is a perfectly reasonable point for her to make.
The CDC is a valuable institution. It has support from both sides of the House. I look forward to having further discussion on the amendments and then supporting the Bill on Third Reading.
Stephen Twigg (Liverpool, West Derby) (Lab/Co-op)
In July last year, as part of our ongoing inquiry, the International Development Committee visited the Democratic Republic of the Congo. As part of that, we went to see a hydroelectric power plant in the Virunga national park, which has been part-funded by the CDC. It is reinvesting a proportion of its earnings into community development projects and protecting the environment. The plant is bringing electricity to a region in which only 15% of the population has previously had access to power, and it has the potential to generate millions of dollars each year and thousands of jobs for local communities. I cite that because such projects are impressive and demonstrate the positive impact that the CDC is already having.
Richard Fuller
Is not the level of investment now consistent with this increase? For CDC’s current level of activity to be maintained, it requires this level of increase, so cannot concerns about too rapid growth perhaps be overstated?
Stephen Doughty
I do not believe that that case has been made; there has been no justification at any point for the actual figures. To maintain CDC at its current level of activity, we need to realise that it has managed perfectly well with £1.5 billion since 1999 and has recycled it within its own budgets. If it was going up by £1.5 billion or £2 billion, I could understand it with a view to creating space for the next 10 years, but £6 billion and £12 billion seem to me to be well out of the appropriate range.
Commonwealth Development Corporation Bill (First sitting)
Richard Fuller ExcerptsTuesday 6th December 2016
(7 years, 8 months ago)
Public Bill CommitteesRead Full debate Commonwealth Development Corporation Act 2017 View all Commonwealth Development Corporation Act 2017 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 6 December 2016 - (6 Dec 2016)
Richard Fuller (Bedford) (Con)
Q I apologise, Mr Streeter, for being slightly late. Graham, can I ask you a little about the potential for the CDC to attract investment from other investors? Diana was just talking about the fund of funds drawing funds in, but at the top level of the CDC are there opportunities to get sovereign wealth or other enlightened investors, perhaps high net worth individuals, to put their money alongside the increasing capital of the CDC?
Graham Wrigley: That is an interesting question. The other day someone asked us whether it would be possible to turn the CDC into an ISA or a PEP. Looking at how other DFIs are funded, the IFC has created a vehicle whereby people have invested alongside the IFC; the FMO is owned partly by some banks as well as—
The Chair
Q Do you want to explain some of those acronyms for the record?
Graham Wrigley: Yes. I am sorry. The IFC, which is the International Finance Corporation and is part of the World Bank, has created a programme called the AMC, which has mobilised other capital. The FMO is the Dutch equivalent of the CDC and it is partly owned by some banks. The CDC’s business model, though, is one whereby we are 100% owned by the UK Government, and that is how we see ourselves. We see ourselves as we are, as the world’s oldest development finance institution.
We have mobilised other capital mostly through the fund structures, and we are now looking at permanent capital vehicles whereby we will get investors who are interested at the project level. It has not been on our agenda for the past five years to look at raising capital at the CDC level because, as I said, we see ourselves as 100% owned—
Richard Fuller
Q Are you open to putting that on your agenda? If the British taxpayer is being asked to put more money in—Diana was talking about how well we are leveraging in at the project level—surely we should have a strategy. Loads of people, not only in the UK but around the world, may be willing to put their money alongside the expertise of the CDC, so will you look at that?
Rory Stewart: May I come in on that? Technically that would be a call for the Department for International Development rather than for the CDC, and it would be set out in the five-year forward business strategy produced at the end of this year. It is certainly something we can consider. Among the things that we would have to consider is the fact that we are driving the CDC very hard to make high-risk investments in some of the most difficult countries in the world. We have dropped our expectation of the level of financial return because our primary objective is development, so the type of investor who would co-invest with the CDC would have to be a specialised one, engaged, essentially, in some form of philanthropic investing. But we can certainly look at that.
Richard Fuller
Q I am intrigued by Mr Wrigley’s suggestion about an ISA or a PEP, which are much more about individual investors. Every day on the television we see requests for people to put money—£2 a week, £3 a week—into those sorts of things. There is a tremendous interest in this country in development work, and pride in the public support for it. Would you be interested, Minister, in taking up the indication from Mr Wrigley about an ISA/PEP model to galvanise individuals in this country to put some of their money alongside the CDC?
Graham Wrigley: May I be clear that that was not my suggestion? The CDC, as the Minister said, provides incredibly high-risk, development-driven, impact investment in the hardest countries in the world, and it is the last place I would recommend anyone put their pension—
Richard Fuller
Thank you for the clarification, Graham. I did not mean to misinterpret you. It was something you said. But, on the principle, Minister?
Rory Stewart: Perhaps, Mr Fuller, we can sit down and explore your idea in more detail. It is an interesting idea.
Rory Stewart
Q Just as a quick follow-up, Sir Paul, you have used the phrase “public risk capital”; would you expand a little bit on what you are saying about the need for public involvement?
Sir Paul Collier: Yes. These environments are risky environments, in which there are not great amounts of money to be made by private enterprise. That is why so few firms go there. So one of the purposes of public money is to bear some of the risk. I believe we should be prepared to lose some public money in incentivising firms to go to places where there is a public interest. Parliament has not, and DFID has not, authorised CDC to go that step—yet. I very much hope that that will happen. In the negotiations for the latest International Development Association round—IDA 18, which is being signed this month—the World Bank’s aid arm is authorised to lose money in International Finance Corporation investments, to get firms to go to places where there is big public interest. We are on a journey, and scaling up CDC is part of that journey.
Richard Fuller
Q Just on the issue of low-tax environments and tax havens, and their use by CDC, I am not sure if you were all present for the earlier evidence session, in which a question was asked about that, but essentially the point was that in a number of the locations in which CDC operates they do not have the financial infrastructure or probity to encourage either CDC or other investors around that. Do you think that CDC makes effective and good use of tax havens in its investing, and do you have any concerns about that?
Sir Paul Collier: I should say that I was instrumental in the British G8 trying to clamp down on secrecy havens and get the compulsory register of beneficial ownership, so I had a lot of fight to push this agenda forward. The use of the overseas territories for registering companies has a triple function: sometimes it is a tax haven, which is bad; sometimes it is a secrecy haven for banking, which is worse; and sometimes it is a neutral administrative centre for a lot of third-party investments. If a company from the middle east wants to invest, along with a company from India and a company from Singapore, along with CDC, they try to find a neutral territory.
Richard Fuller
Q So CDC is the third of those.
Sir Paul Collier: Yes, where CDC is a party in it, and often it will be—
Richard Fuller
Q I think we understand, but I appreciate you clarifying. Mr McDonald, from the point of view of the NAO?
Tom McDonald: We did not actually look at that in our reports—
Richard Fuller
Q Do you have any concerns about it?
Tom McDonald: I am aware of the CDC’s position, but we have no view as to—
Richard Fuller
Q If you had a concern about it, would you have looked at it?
Tom McDonald: [Pause.] I suppose—
Richard Fuller
Q I think one can infer that you did not have a concern, as you have done an extensive review of CDC and you did not even think about it as a topic to look at.
Tom McDonald: We did consider it at the beginning. It didn’t—
Richard Fuller
Oh, you did consider it. But it wasn’t a priority.
Tom McDonald: It didn’t emerge as a priority.
Richard Fuller
You are quite evasive, Mr McDonald, in your answers. I mean, just in the answers to the Minister you were quite evasive.
Richard Fuller
Q Specifically on this, Mr McDonald, you should have told the Committee right at the start, yes, you thought about it, but you didn’t think it of concern to look at in your inquiry, shouldn’t you?
Tom McDonald: When we start a value-for-money audit, we have to consider a huge number of issues. This was one of the ones that we considered at the beginning but didn’t undertake any detailed field work on. Apologies.
Stephen Doughty
Q I have a follow-up question for Oxfam or War on Want. I do not agree with everything War on Want says, but a good point it made was about the differing standards that appear to be applied to the CDC as opposed to non-governmental organisations, other multilaterals and so on. The multilateral aid review is pretty robust on how we should deal with multilaterals—publish every item of spending over £500 and so on. Gideon, perhaps you could say a little more about where a double standard might be going on here in expectations.
Gideon Rabinowitz: I have made the point already: it is clear and on the record that the CDC has a bit of catching up to do on transparency. One of the reasons why it would be helpful for it to make progress on transparency is that everyone would then know a lot more about where it is investing, what it is investing in, what the justifications for those investments are, and why it thinks it is providing financial and value additionality in those investments. We would all be starting this debate from a different position if there was greater awareness of what the CDC was doing and how it is working.
The other point that we are keen to emphasise is that if there is some way in which the Bill can leverage that additional transparency to include encouragement of reporting around a wider range of development impacts and indicators to help secure our confidence that the CDC is focused on the right investments, that would be very valuable. The type of indicators that we have to report against in our programmes could be rolled out more broadly in some of those investments.
Richard Fuller
On a point of order, Mr Streeter. In some comments earlier about Mr McDonald, I used the word “evasive”, which on reflection I think was overly strong. I would not like those to remain without correction.
The Chair
Thank you—much appreciated, and I did notice.
Thank you, witnesses, for all your expert evidence, which has been greatly appreciated by the Committee.
Ordered, That further consideration be now adjourned. —(Andrew Griffiths.)
Commonwealth Development Corporation Bill (Second sitting)
Richard Fuller ExcerptsTuesday 6th December 2016
(7 years, 8 months ago)
Public Bill CommitteesRead Full debate Commonwealth Development Corporation Act 2017 View all Commonwealth Development Corporation Act 2017 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 6 December 2016 - (6 Dec 2016)
Stephen Doughty
The hon. Gentleman clearly did not listen to what I said either on Second Reading or in Committee this morning. He knows full well that I do not support the views of War on Want on the role of business and private capital in supporting developments, jobs and job creation. I made it clear that I did not support that part of its views. What I did support was the suggestion that the CDC is being given a different set of rules to play by from other development finance institutions and indeed other routes on which we can put our valuable aid money, for which we should demand the highest levels of scrutiny, transparency and effectiveness, and coherence with the rest of our programme.
I do not want to stray too far from the terms of the amendment, but in the new clauses we will discuss some of those issues of coherence. Without additional safeguards and caveats on where that money is spent, the transparency arrangements, the business case that should be presented and so on, whatever number we put in, whether it is £1 million less that the hon. Member for Rochford and Southend East suggests, the £3 billion less that I suggest or indeed any other figure, or a proportion as suggested by SNP Members, we could see multiple distortive effects. For example, the value of investments currently going into middle-income countries is still significantly higher than into lower-income countries. The value of investments going into Africa has gone down and the value of investments going into south Asia—mostly to India, a country to which we were supposed to end giving aid—has in fact gone up. The reality is, if we boost the CDC’s budget further without any change in that overall strategy, we will see a multiplication of that effect.
Richard Fuller (Bedford) (Con)
On a point of clarity, when the hon. Gentleman talks about the value of investments, does he mean the valuation of investments made historically, and therefore revalued on the balance sheet, or is he talking about new disbursements?
Stephen Doughty
I am talking about the issue before us today, which is about new investment and new disbursements. The figures I am referring to about those shifts relate to new disbursements by CDC—new investments made in recent years. We can have a lengthy debate about what went on in CDC before 2012 and the legacy investments that are still part of the portfolio—
Patrick Grady
I share many of the concerns outlined by the hon. Member for Cardiff South and Penarth. Amendment 5, tabled in my name, would apply the same formula to the upper cap as my previous amendment, and I have obviously heard the Committee’s view on that. I heard the Minister’s view as well and I appreciate the fact that he has given it some consideration. Even if that particular formula would not meet the standards that DFID would like it to meet, it would be interesting to see whether there was a way of coming up with a proportionate formula. That would answer a number of points that have been made today.
We have heard from a number of witnesses and in other evidence to the Bill, as well as from other hon. Members on Second Reading and since, that the £12 billion figure is particularly high, especially as it might theoretically be some years down the line before that maximum is reached or a need for it is felt. In that case, the points made by the hon. Member for Cardiff South and Penarth about the use of a statutory instrument are correct; it would perhaps be better if the Government were to come back with primary legislation in due course. We may come on to some of these issues in the debates on the new clauses, but the hon. Gentleman made a point earlier about the number of other arm’s length bodies that have the potential to receive an 800% increase in their funding from the Government with so little scrutiny. We should bear that in mind.
Richard Fuller
It is a great pleasure to serve under your chairmanship, Ms Ryan. I speak against amendment 7 —that will be no surprise—and in favour of clause 1(3). I would like to use the opportunity to probe the Minister a little, without straying too much into strategies, about the general thinking on direct versus indirect investing and how that relates to the figures, particularly the figure of £12 billion.
It is my view that the CDC has had unparalleled success in identifying and stimulating people in a variety of countries to set up first-time funds that then contribute to economic development in countries around the world. That role is, in itself, a tremendous aspect of British development policy—finding people in new countries who can then assist in the economic development of their countries.
We heard on Second Reading from the former Secretary of State about why getting the CDC to focus a bit more on direct investing had an advantage, in that people would then recognise that the CDC was there—it was good branding for us, developed a deeper understanding of countries and we were less stand-offish—but there is a value in indirect investing. As the Minister will know, the UK budget is only part of the money in that role. There is a multiplier effect from the CDC providing its money into first-time funds, because those funds then attract third-party funds as well. Does the Minister feel there is the right balance between direct and indirect investing? Can he reassure me that the CDC will continue to focus on the identification and creation of first-time funds in developing countries and that he shares the view of its role in the development agenda for the United Kingdom?
Commonwealth Development Corporation Bill
Richard Fuller ExcerptsTuesday 29th November 2016
(7 years, 9 months ago)
Commons ChamberRead Full debate Commonwealth Development Corporation Act 2017 View all Commonwealth Development Corporation Act 2017 Debates Read Hansard Text Read Debate Ministerial Extracts
Priti Patel
I thank the right hon. Gentleman for his comments. It is right that the focus is on development impact and on outcomes. That has been shown by many of the reforms that the CDC has undertaken since 2010. Yesterday, a National Audit Office report was published which showed exactly that.
Richard Fuller (Bedford) (Con)
Will my right hon. Friend please be reassured that her efforts to ensure that we have accountability and transparency in all aspects of public expenditure, but particularly in the area of international development, are a key part of maintaining public confidence behind the 0.7% target?
Priti Patel
My hon. Friend is absolutely right. We owe that to those who contribute to the taxes that enable the Government to make these important decisions about international development, and in particular our humanitarian responses and how we spend and invest that money. As I will go on to say, there are many examples around the world of lives being transformed, and that is something that our country can be very proud of.
Priti Patel
No, I will not give way.
Under its new leadership, the CDC has transformed itself. As I said, it operated a financial-return-first strategy before 2011. It has now introduced dual objectives to deliver development impact and financial return. It has developed completely new ways of assessing and measuring development through job creation and of screening prospective investments for development impact. It is an innovative and intelligent investor with a core mission of fighting poverty. That was recognised in yesterday’s NAO report, which stresses that DFID’s oversight of the CDC led to
“important, positive changes...a significant departure from the previous strategy”.
Following new objectives agreed with the UK Government, the CDC now invests only in Africa and south Asia, where 80% of the world’s poorest live, and where private capital is scarce. The CDC focuses now on the sectors that create the most jobs and on sectors that create environments for other businesses to thrive, such as infrastructure and financial services. In the last year, CDC-backed businesses have helped to create over 1 million new jobs, and they have paid over $7 billion in local taxes in the last three years. That is money that Governments can use to invest in vital services, such as health and education.
As yesterday’s NAO report recognised, the CDC has addressed Parliament’s concerns about pay, and salaries have been cut, as I have just outlined. The whole ethos of the organisation has changed and, importantly, strengthened, with oversight from DFID. The CDC of today is a different, and much improved, organisation from the one it was many years ago. Some of the media coverage in recent days has not properly reflected that important shift, and I urge all Members to look carefully at the facts rather than some of the reporting.
Of course, there is more to do. Therefore, as part of the Bill, my Department will work to improve the transparency of the organisation further and to strengthen further the assessment of its development impact. As the NAO recognised, my Department has commissioned several independent evaluations of the CDC’s impact. Just last year, a team from Harvard, reviewing the CDC’s investments from 2008 to 2012, concluded that they had been “transformational”, creating hundreds of thousands of new direct jobs and billions of pounds in increased earnings. We are currently in the design stages of a complex new study to generate even more detailed data on the wider market impacts of CDC investments. We are the first Government ever to conduct such an in-depth study into their development finance institution.
There is no question but that the CDC offers value for money. Over the last five years, we have seen significant returns from it. Every penny of profit generated by the CDC is reinvested into businesses across the world’s poorest and most fragile regions, making every taxpayer pound invested in the CDC go further. The NAO further concluded that the CDC now has
“an efficient and economic operating model”
with low costs, compared with other development finance institutions. CDC salaries are covered by the returns the CDC makes on investments, not from development budgets.
Wherever possible, the CDC invests in countries, and it uses neutral jurisdictions only when it is absolutely necessary to do so, to protect taxpayer moneys from being lost to weak legal systems and to bring confidence to other global investors in the hardest-to-reach markets. However, the CDC uses only financial centres that are compliant with international tax transparency standards, as monitored by the OECD’s global forum on transparency and exchange of tax information. There are no exemptions.
Far from hiding investments, the CDC was one of the first development finance institutions to make public investment information about every single investment. In fact, with DFID’s support, the CDC is now a global leader on transparency. It has signed up to the international aid transparency initiative and has an online searchable database on its website, allowing users to access information on every investment and fund in the CDC’s portfolio. I can assure the House that my Department will continue to be an active and engaged shareholder in the CDC, ensuring that it continues to deliver for the world’s poorest and the UK taxpayer.
Richard Fuller
My right hon. Friend is outlining a strong case for what she proposes for the CDC. However, on the issue of probity, there are tremendous resources in the City of London, which could provide support for some of the businesses the CDC invests in as they look to get to the next stage of growth capital. Is there any element in the Bill, or are there any DFID proposals, to encourage City of London firms to provide that support for DFID goals?
Priti Patel
It is important to acknowledge the City of London and the great expertise that exists there when it comes to not only investment in some of the most challenging parts of the world but transparency. Through the work the Government have done on tax and transparency, the City of London has moved incredibly far. My Department is working across the City of London on a range of issues, such as insurance. We are also looking at how we can do more on transparency and accountability, and that is absolutely right.
We will shortly be setting out a new investment policy for the CDC, covering the next five years. That will include a new reporting framework to better capture the broader impact of investments on development, beyond job creation and the tax revenue generated. We will ensure there is maximum transparency, so that CDC investments can be scrutinised and, importantly, so that their impact on combatting poverty is made clear. As I stated, the CDC has a strong and transparent track record on which to build. With our support and oversight, we want the CDC to do more, and that is why we need the Bill.
The Commonwealth Development Corporation Act 1999 set a £1.5 billion limit on the overall amount of Government financial assistance that can be provided to the CDC. That limit was reached in 2015. The need to raise the CDC’s capital limit was clearly signalled in the UK aid strategy back in 2015. The Bill builds on the economic development objectives of Clare Short’s 1999 Act and should be seen not as a new political direction, but as a logical continuation of the cross-party approach that has been in place for decades.
Any money given to CDC will meet the internationally agreed rules about which spending counts as aid. Raising the limit by £4.5 billion to £6 billion and introducing a delegated power to raise the limit further via statutory instrument to £12 billion over time will enable the UK to accelerate the CDC’s growth, so that the UK can deliver on its international development objectives. Let me stress that this £6 billion is not an annual spend; it is a cumulative figure and a limit placed on the total amount of financial assistance that a Government could provide to the CDC over a period of time before coming back to the House to seek a further increase via statutory instrument.
Richard Fuller (Bedford) (Con)
Sitting through the debate and listening to so many informed contributions has been informative, even the speech from the hon. Member for Cardiff South and Penarth (Stephen Doughty). Perhaps it was a little overlong in duration and repetitive in argument, but none the less it was a valuable contribution to the overall debate. Many of us welcome his general support for the direction of travel in the Bill and his points about oversight were well made.
Although I fully support the 0.7% commitment to aid, I do not agree with its statutory underpinning, which I believe will lead to unintended consequences. One reason why I welcome the Bill is that it helps in that respect. I fully and wholeheartedly welcome the Secretary of State’s introduction of the Bill for three principal reasons: it is modern; it will prove to be effective; and most importantly, it sets a tone of mutual respect between the United Kingdom and those countries and peoples who are the recipients of our DFID budget. The Bill will do that by harnessing the power of entrepreneurs around the world. It is those people who hold the key to so much in terms of the improvement of lives in less developed countries.
The CDC is an institution in which taxpayers can trust. We have talked about oversight and past concerns—as my hon. Friend the Member for Portsmouth South (Mrs Drummond) said, they are in the past. We should also recognise that the CDC has been around for 60 or 70 years. My right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) spoke of his experience as Secretary of State, when he saw people’s recognition of the brand’s strength. My hon. Friend the Member for Rochford and Southend East (James Duddridge), who is no longer in his place, spoke of his ministerial experience. Trust in our DFID budget is important. It is not enough for hon. Members to say, “It doesn’t matter. Everything’s fine. We all agree.” Out there in the country, there is tremendous scepticism—it is fuelled not only by the press—about the amount of money, whether it is being spent in the right way, and whether we should continue with the 0.7% commitment. Having institutions that we can trust to spend the money wisely is important. The Bill gives us that and is a big step forward in restoring trust.
The Bill is modern. As I have said, I am not knowledgeable about DFID issues in general, but I was drawn to the 2015 speech by Bono at Georgetown University, when he said:
“Aid is just a stop-gap. Commerce, entrepreneurial capitalism takes more people out of poverty than aid…of course, we know that.”
He was correct. Through the Bill, we must counter some of the pre-scepticism about the role of the private sector in developing countries in achieving some of our development goals. We must put our foot down on the accelerator of supporting the private sector through institutions such as the CDC.
I am tempted to quote Sir Angus Deaton from Bloomberg—he is the Scottish-American economist who won the Nobel prize last year. He said:
“Aid funded projects have understandably done much good…but the negative forces are always present: even in good environments, aid compromises institutions, it contaminates local politics and undermines democracy”.
The greatest bulwark against the corruption of political institutions, and one of the greatest defenders of democracy, is the opportunity for people to have a stake in something. People having a stake in a small business can preserve and protect freedoms, as well as enhance economic wellbeing. Human happiness is not solely a matter of one’s GDP; once one gets above a minimum, other issues start to matter, such as freedom and social environment.
Having that stake is also effective. The CDC and its work as a fund of funds created a distinctive expertise in investing in first-time funds in some of the most challenging investment environments across the world. We should be proud of that track record. I am grateful to my right hon. Friend the Member for Sutton Coldfield for explaining the move to direct investment. I had been sceptical, thinking it was drawing the CDC away from a pivotal part of its success, but I now better appreciate the role of direct investment, thanks to his contribution. The CDC nurtures investment talent. Growing entrepreneurship and private enterprise is not just about entrepreneurs; it is about developing people to spot the talented entrepreneurs from the less talented, and in that the CDC does a tremendous job.
That said, I have some questions and concerns about the Bill. Will the Minister explain how, if we are to give more money to the CDC, the skills within it can be developed and monitored? As many hon. Members have said, the worst thing is to pile money in if the team investing the money does not have the skillset, capacity or capability to invest it. What will we do about the investment focus areas? Contrary to other comments, perhaps, I am keen to see the investment focus move into more modern areas that provide opportunities for companies in developing countries to trade with the UK, as well as provide domestic support. Will the CDC be able to lever investors from other countries into its fund to develop further its capital for international development? Will he comment on the likely value of the CDC in the near term, given the comments by President-elect Trump on international development and the likely impact of the rising dollar on turbulence in local currencies in many developing countries?
Finally, I support the Bill because it will create mutual respect. It is time for us to recognise that development in developing countries is a matter for many UK citizens through the diaspora. There is no imbalance in that relationship: a British Nigerian sees themselves as a British subject and, on an equivalent basis, looks to their heritage in Nigeria. The work of DFID should reflect that equivalence in its treatments. The Bill is perhaps a first step towards promoting mutual respect. Other possible measures are turning back protectionist intellectual property restrictions between developed and developing worlds, using the opportunity of Brexit to lower trade barriers, and creating more and effective ways to harness remittances between ourselves and developing countries.
This is a small but important Bill because it sets the tone in the right direction. It sends a message that this organisation, which had a long history of effectiveness, went through a period of turbulence and is now back on the right course, can have the confidence of the British people as it continues to pursue its development goal for people in the poorest countries of the world.
Sub-Saharan Africa (Corruption and the Economy)
Richard Fuller Excerpts(9 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Stephen Phillips
My hon. Friend is right. I cannot speak specifically about Rwanda, but unless and until all countries bear down on corruption, this will be a problem that endures.
Very little progress has been made since the Secretary-General made those remarks two years ago. Still the procurement managers sit in their air-conditioned offices marking the passage of time on their gold Rolexes; still corporate interests buy their way out of laws designed to protect the environment and to ensure that they pay proper amounts of taxation; still wealthy individuals and businesses ease their passage through difficult lawsuits by ensuring that the judiciary across Africa knows which side is more likely to pay more for the “right” result.
Let us take but one area. In its report “Making a Killing”, published this year, Save the Children estimated that the lost tax revenues to developing countries in sub-Saharan Africa due to illicit financial flows was in the order of $15 billion—a figure that dwarfs this country’s annual aid budget and would pay for 1.8 million healthcare workers. That is a loss of revenue to sub-Saharan Africa in just one area, which is largely made possible by a corruption that allows the maintaining of tax laws and treaties that favour rich corporations which are prepared to bribe Governments and parliamentarians to secure their favoured status. The report fails to take account of perhaps even larger revenues that are lost because a blind eye is turned—once it has been paid for—to direct tax evasion. That is morally wrong. It sustains endemic poverty, and, as I have said, it threatens our own security.
We are not without an international framework within which to deal with the issue. In 2003, the United Nations opened for signature the international anti-corruption convention, which the majority of countries in the world have now ratified. It established some common standards in relation to, for example, criminalisation and law enforcement in chapter III, and international co-operation in chapter IV. However, although monitoring finally began in about 2010, it has been patchy and inconsistent. It also suffers from the major failing that review takes place principally “in region”, thus opening up a whole new field to corruption as non-compliant countries with mutual interests are able to score one another for compliance. One issue that the Minister could usefully discuss with his counterparts in the Foreign and Commonwealth Office is how the convention can be updated to ensure proper monitoring.
I believe that the OECD anti-bribery convention has been ratified by only 41 countries. What efforts are the Government making to ensure not only that it is more broadly adopted, but that it is actually enforced by those who have signed it? In its most recent report on the implementation of the convention in 2015, Transparency International found that there was “little or no enforcement” of it in many states, including the Republic of Ireland. There was “active enforcement” only in the United Kingdom, the United States, Germany and Switzerland.
The conventions are, however, only part of the solution. They assist in establishing common international standards, but without enforcement—or, for that matter, the institutions that are necessary to ensure enforcement—they are essentially meaningless.
Richard Fuller (Bedford) (Con)
My hon. and learned Friend has mentioned the Foreign Office and other Departments. Is he satisfied with the current position, or does he believe there is an opportunity for greater understanding and co-operation between the Foreign Office and the Department for International Development when it comes to tackling some of the problems that he is outlining?
Stephen Phillips
Co-operation between the two Departments is obviously critical. Indeed, the Government as a whole must focus on the need to bear down on corruption where it exists, whether here or anywhere else in the world.
One of the problems is that very little effort appears to have been devoted to ensuring that institution building is carried out by donors who too often prefer to focus on the sexier aspects of development, such as education and health—funding areas that are, in any event, losing more money than they are receiving because of the corruption that pervades the region. So it is, although he may not know it, that the Minister is funding education programmes which pay teachers who do not exist; so it is that he is paying for the planting of crops which cannot grow in soil that cannot be maintained; and so it is that he funds programmes as a result of which money routinely finds itself in the hands of the governing class, despite the best efforts of those in his Department who work so hard to ensure that that does not happen.
Unless and until there is an unrelenting focus on changing the institutional environment throughout sub-Saharan Africa, which at present there is not, very little will change. As Dr John Mukum Mbaku argued in his 2007 book on corruption in Africa,
“the institutional environment, not cultural norms, determine a society’s propensity to engage in corruption and other forms of opportunism ...The incentive structures that a country’s market participants face—which are determined by the country’s institutional arrangements, may create opportunities for corruption and provide an environment in which even honest and highly ethical individuals may be forced to engage in corrupt activities in order to survive. Such perverse incentive structures can be changed or modified through democratic constitutional reforms.”
Oral Answers to Questions
Richard Fuller Excerpts(9 years, 8 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Richard Fuller (Bedford) (Con)
5. What projects her Department is supporting in Nigeria to counter the effects of Boko Haram.
The Minister of State, Department for International Development (Mr Desmond Swayne)
My recollection is that we take this matter very seriously indeed with respect to—sorry, I have misappropriated the question. [Interruption.] I apologise, Mr Speaker
Boko Haram can only be defeated by action by the Nigerian Government on a security front and on a development front and by provision of leadership. We in DFID have doubled our programme of investment in the north-east of Nigeria and are working to that end.
Richard Fuller
I thank the Minister for that reply. The active targeting of schools by Boko Haram, and also in Peshawar this week, shows that there is no limit to the barbarism and depravity of such extremists. In tackling such extremists it is important that the security forces maintain civilised standards. Is my right hon. Friend aware of the investigations by Amnesty International and can he assure the House that no DFID projects inadvertently or indirectly harm people by lowering the standards of the security forces?
Mr Swayne
We take that report very seriously indeed. Human rights abuses exacerbate insurgencies. I can give my hon. Friend that assurance that we do not fund or support in any way the security forces that are responsible for those actions. Indeed, our programme of Justice for All—J4A—ensures that all Nigerians can have access to better justice and human rights.
The Prime Minister
Let me join the right hon. Gentleman in welcoming the fall in unemployment; it has fallen in every region of the country over the past year. In the north-east over the past year, unemployment is down by 11,000, and that is welcome. In terms of addressing the costs of welfare, I think we should be very frank about this, as I was discussing, calmly, earlier with the Leader of the Opposition. Whoever is Prime Minister after the next election is going to have to make public spending reductions. We have a choice: whether we leave the welfare bill as it is, or whether, like Labour Members, we vote this afternoon to add £2 billion to the welfare bill—that is what they are talking about this afternoon: £2 billion on welfare—and then have to take that money out of the Education Department, or the Health Department, or policing. We think we should not do that; we think, yes, there are reductions in welfare that can be made. We will make them, and that will keep taxes down and make sure that we can have good public services.
Richard Fuller (Bedford) (Con)
Q6. For people starting their careers, newly married couples or others, the prospect of owning their first home is a much desired but very difficult step. What are the Government doing to help young people in my constituency make that positive move?
The Prime Minister
There are two vital steps that we can take. The first is to go on backing the Help to Buy scheme, which has helped thousands of people in our country—I think over 70,000 people now. It enables people who are working hard, who earn a decent salary and who can afford the mortgage payments to take out that mortgage and buy that home because they do not need such a big deposit. That is the first thing we should do, and we shall continue with that.
The second, as I announced on Monday, is that we want to build starter homes that are 20% below the market price. These should be homes not for rent, but that young people can buy. They will be reserved for people under the age of 40. Again, this is for people who work hard, and who want to get on and do the right thing for themselves and their families. Under a Conservative Government, they will have homes they can buy.
International Development (Official Development Assistance Target) Bill (Money)
Richard Fuller Excerpts(9 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Richard Fuller (Bedford) (Con)
Will the Minister explain the process behind this particular money resolution? In an era in which the country knows that the Government have no money to throw around, what process did he go through to determine that there should be expenditure on progressing this Bill, which, if it is passed, would have serious implications for public expenditure?
Mr Swayne
The process is simple. We discussed it a great deal on Second Reading, but my hon. Friend is now effectively attempting to reopen that debate. The Bill was approved according to the clearly expressed will of the House, but it concerns a pledge that was in every party’s manifesto.
Gavin Shuker
It is hugely important to ensure that aid gets to the right people. Indeed, the reports to which the hon. Lady referred in an earlier intervention make it clear that those who lose out the most are the poorest people in the poorest parts of the world where there is the most corruption. It is up to the Government to defend those people. I want to be generous and say that this challenge is faced by all developed nations when rolling out their aid programmes. I also agree with the hon. Lady about spending the money effectively, which is why I believe we can do much more to make the Department for International Development a real force for good in the world in relation to global institutional reform. It should not simply be the charitable arm of the UK Government. That should be our focus as we take the Bill through Parliament.
We live in a global community, yet every 10 seconds a child dies from hunger and malnutrition. A population more than three times the size of Birmingham dies each year from water-related diseases, and 1 million children die on their first and only day of life.
Richard Fuller
The hon. Gentleman just mentioned the charitable arm of the Government. Will he explain how that is different from the charitable feelings that we have as individuals?
Gavin Shuker
The hon. Gentleman has set me up nicely to explain the dualism involved. There is a belief among those who have latterly signed up to the cause that we have a responsibility to spend a significant proportion of our GDP on aid, but that that action represents the end of the process. They believe, for example, that we are getting value for money by buying a certain number of mosquito nets or toilets, or by digging a certain number of wells. In fact, we have to tackle the institutions that reinforce inequality in the first place. We should not therefore view DFID as the charitable arm of the UK Government; quite the opposite—it needs to be a force for transformation.
Oral Answers to Questions
Richard Fuller Excerpts(10 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Justine Greening
The hon. Gentleman is absolutely right. One of the most important aspects is to help shape the economic growth that takes place so that, through work, it lifts the largest number of people possible out of poverty. That is precisely the agenda the Department is pursuing.
Richard Fuller (Bedford) (Con)
In every economy across the globe, small businesses are the most secure way to create jobs. What is my right hon. Friend’s Department doing to enhance the provision of finance to small businesses in developing countries?
Justine Greening
We are working with a fund for small and medium-sized enterprises that can do precisely that. We have also, with the London stock exchange, focused on the issue of capital markets improving finance more broadly in developing countries—particularly, most recently, in Tanzania.
Typhoon Haiyan
Richard Fuller Excerpts(10 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Justine Greening
I hope that I can provide my hon. Friend with some assurance. Where International Development spend and effort takes place in other Departments, it is classified as official development assistance and is part of the UK’s 0.7% commitment, which this year for the first time this Government are reaching. Part of our just over £50 million response is the money that we have spent sending HMS Daring and HMS Illustrious. We will fund the marginal costs that the MOD has incurred to get those vessels into the area and do the work that they have done, which I think is quite right.
Richard Fuller (Bedford) (Con)
My question builds on that asked by my hon. Friend the Member for The Wrekin (Mark Pritchard), while the British public have been responding generously to the appeals for the victims of Typhoon Haiyan, China has been seeking to extend its air right, raising concerns in the Philippines about its claim over the Spratly Islands. As the Prime Minister is shortly to visit China, will my right hon. Friend the Secretary of State put a note in his bag outlining the United Kingdom’s outstanding and selfless response to the tragedy as an example of how China should respond in future?
Justine Greening
My hon. Friend makes his point clearly. I am sure that is something the Prime Minister will take on board when he visits China shortly.