International Development
Rory Stewart Excerpts(5 years ago)
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Rory Stewart
We have worked out how to use the fact that Britain is the global leader in Gavi. Britain puts in 25% of the funds for this extraordinary global programme of vaccination. The second biggest contributor is the Bill & Melinda Gates Foundation, and the third biggest is the Government of the United States.
[Official Report, 2 May 2019, Vol. 659, c. 387.]
Letter of correction from the Secretary of State for International Development:
An error has been identified in my speech during the debate.
The correct information should have been:
Rory Stewart
We have worked out how to use the fact that Britain is the global leader in Gavi. Britain puts in 25% of the funds for this extraordinary global programme of vaccination. The second biggest contributor is the Bill & Melinda Gates Foundation, the third biggest is the Government of Norway, and the United States is fourth.
World Immunisation Week
Rory Stewart Excerpts(5 years ago)
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The Secretary of State for International Development (Rory Stewart)
I beg to move,
That this House has considered World Immunisation Week.
It is an enormous privilege and pleasure to stand here for the first time as Secretary of State, but it is a deeper pleasure to be in the Chamber talking about immunisation. Immunisation is an extraordinary story that illustrates why international development really matters, how complicated it can be, in public policy terms, to pull off, and how important it is to be able to communicate to the public and others how, in the end, preventing the terrible loss of a child from polio can be connected right the way back to scientific research, businesses, international co-operation, and very brave doctors and health workers on the ground.
Chris Bryant (Rhondda) (Lab)
May I be the first person in the Chamber to warmly welcome the Secretary of State to his new post? It is a delight sometimes to see a square peg in a square hole—if that does not sound rude, somehow or other. I warmly congratulate him on his new job.
Is not one of the most disturbing developments of recent years the fact that there are politicians around the world, in some of the most advanced societies, who preach an anti-immunisation message, which will lead to the unnecessary death of children?
Rory Stewart
Absolutely. It is grossly irresponsible and, I am afraid, profoundly and disturbingly misleading, and even ignorant, to go around doing that. It ends up stoking public paranoia and fear, and leads to the unnecessary loss of life. From the beginning, the story of immunisation—and, indeed, the story of international development—has often been about challenging public perceptions and irrational fears, and following through. There are reasons for that. The heart of what immunisation is carries within it the seeds of that challenge. The basic idea of immunisation is, of course, to make somebody sick to make them better. From the very beginning, that has involved not only challenging public fears, but something that Governments find quite difficult: taking risks and working, genuinely and collaboratively, internationally.
Although we tend to pat ourselves on the back a great deal in this country, immunisation was, of course, not a European discovery at all. It was a Chinese discovery of the early 16th century. Chinese public health officials, or their 16th century equivalents, went into villages and sneezed into people’s mouths, which rapidly reduced the mortality rate by tenfold or twentyfold. The normal mortality rate for smallpox was 20% to 30%, but remember that that reduced mortality rate under the new technique was still between 0.5% and 2%, so the procedure was very risky. Moving on with my international point, this immunisation practice arrived in Britain in about 1700.
Dr Whitford
I, too, welcome the Secretary of State and congratulate him on his new post. It was actually a bit more dramatic than that: variolation involved cutting into veins and putting in smallpox scabs. That did indeed make people ill, and then they were immune. However, modern vaccines do not do that—they are no longer based on making someone ill. There is a fallacy that the flu vaccine will give people flu, but it does not. Modern vaccination is no longer based on giving someone an illness to protect them from worse.
Rory Stewart
Moving rapidly forward, the key to this is scientific advances whereby things become safer all the time. Immunisation moved from China to Britain, and in 1799 in Britain, there was the development of vaccination—in other words, the use of cows to do this. There were then the developments of Louis Pasteur in the 1880s in France, and then of course the amazing developments in the post-war period.
Throughout all that, we see something that really matters for the Department for International Development, a Department that co-operates with other countries and puts science at its heart. This story, which in its early history links China to Britain, Britain to France and France to the United States, continues today with Gavi, the global alliance. In all this work, the same themes occur at an accelerated rate. We have, remarkably, achieved the eradication of smallpox, and we are close to a 99% success rate on wild polio. But it is on Ebola that we see most clearly today the security risks, the scientific advances, the complexity and the international co-operation.
In 2015-16, DFID, working with other international partners, began to develop—initially in Guinea, and then, through academic partnerships, in the United States and Canada—the first attempts at inoculation against Ebola. Ebola, like all such diseases, finds no borders, and that has a direct connection with justifying the international aid budget here in the United Kingdom. Perhaps the easiest way of explaining to people why we have an international development budget is to point out that had that disease taken off in Liberia and Sierra Leone, given modern transport mechanisms it would have found its way rapidly to Europe and ultimately to the United Kingdom, and people would have been dying here.
That investment, which seems quite complex, and which often—particularly in the case of diseases such as wild polio—involves spending a surprising amount of money on tracking down the last few cases, is the kind of investment that only a Government can make and only an international aid budget can provide. Why? Because this is not a normal economic case. If an individual were asked whether they wanted to spend a lot of money on inoculating themselves, they might say no, and on the basis of a traditional cost-benefit analysis, one might ask, in relation to that individual, “Why are you spending so much money?” The point is, however, that that individual is part of a community, and that community is part of a broader nation. If the disease takes off, it will begin to infect hundreds of millions of people. At that stage, significant investment in preventing someone from getting polio, for example in rural Afghanistan or Pakistan—there can be quite surprising investments, ending up with the spending of hundreds of thousands of dollars on tracking down the last few cases—is critical if it actually prevents millions of people from getting the disease.
The same applies to Ebola. The issue raised by the hon. Member for Rhondda (Chris Bryant) about how we deal with fears is central to the tragic death of a very courageous doctor, who was killed when bringing a vaccine and treatment to people in the eastern part of the Democratic Republic of the Congo. He originally came from Cameroon. Part of the same story is the killing of public health nurses on the Afghanistan-Pakistan border when they were trying to inoculate people against polio.
In the solution to this, then, is human courage, and in the driver of this is human suffering, but in the broader story are things that we have to communicate. Pharmaceutical companies, which we are often nervous about, can play an incredibly positive role if properly harnessed. Merck, which is developing some of this vaccination, has a structured contract with Gavi to deliver 350,000 vaccinations, on hold, at any one time. We have reduced the price of vital drugs from $4 to $2, which means that we have access to twice as many people. We have worked out how to use the fact that Britain is the global leader in Gavi. Britain puts in 25% of the funds for this extraordinary global programme of vaccination. The second biggest contributor is the Bill and Melinda Gates Foundation, and the third biggest is the Government of the United States.[Official Report, 7 May 2019, Vol. 659, c. 6MC.] All that makes our money go much further, and tied into it are the World Health Organisation and some of the best universities and researchers in the world.
In telling the story of immunisation, we are telling the story of international development, and in telling the story of international development, we are telling the story of international co-operation: the fact that researchers from China and Europe can come together; the fact that brave health workers on the ground in eastern DRC risk their lives delivering vaccines; and the fact that a single child in eastern DRC who was saved from death, with their family saved from the horror that they would have experienced, can be traced back to money spent by British taxpayers, alongside people from other countries. It has meant bringing in the private sector, the best academics in the world and, above all, brutal, bruising practicality: how do we make sure that the refrigeration is right in eastern DRC so that the vaccines survive in transport; how do we get the electricity to ensure that the vaccination works; how do we deal with communities, politics and conflict to get to the front line; and how do we understand the political and economic structures on the ground so that we can make sure that the local mullah or village chief in Afghanistan will not block the arrival of the polio vaccine in that community?
Get all those things right and we protect Britain from dying from Ebola. Get all those things right in the world of climate change and we can potentially save the planet. Get all those things right and we can show how our international aid budget can touch everyone in this country, re-energise a younger generation, and prove that if we can sometimes do less than we hope, we can do much more than we fear.
Dan Carden (Liverpool, Walton) (Lab)
I genuinely welcome the new Secretary of State to his role. In his first two weeks as Prisons Minister he visited both the prisons in my constituency, which I thought showed a great sense of responsiveness to what was needed at the time. I hope that something along the same lines, and a close working relationship, will feature in his new role. I am also delighted that he used his first speech as Secretary of State to advance a robust intellectual defence of our aid spending, and I congratulate him on that.
We know why immunisations matter and why today’s debate is so important. Vaccines are, quite simply, a matter of life and death. Between 2 million and 3 million lives are saved every year thanks to immunisations, and in recent decades they have drastically reduced suffering caused by infectious diseases that were once commonplace. Smallpox was completely eradicated in 1977 through a global vaccination programme, and the world is now close to eradicating a second disease, polio. My own grandad contracted polio and lived with it for 27 years, and when I was growing up I heard a great deal about the impact of a disease that paralyses the people affected by it. I pay tribute to one of my constituents, Andy Gilliland, a polio survivor who has lobbied alongside the One Last Push campaigners; I am delighted to have become one of the campaign’s polio champions since he lobbied me.
Thanks to successful vaccination schemes the world over, today’s generation and our children do not have to suffer from the diseases that were all too commonplace for our grandparents. Immunisations are not only saving lives, but are a cornerstone of global health security. They are vital to the achievement of several of the United Nations sustainable development goals and to ensuring that no one is left behind. They also provide a vital gateway to wider public health services. If you are a child or parent being given a vaccination, this may be the first time that you interact with the public health system. The simple act of being immunised can boost your chances of going on to access important services such as family planning, birth registration, testing and screening, and regular healthcare. For the hardest to reach, immunisation can be the start of proper inclusion in the public health system.
I am proud that the UK’s Department for International Development is a world leader in global health. That has been possible only because of the House’s commitment to spending 0.7% of our country’s income on overseas aid and to maintaining an independent DFID. However, I want us to do more. Twenty million children around the world are still under-vaccinated. Fewer than 10% of children in the world’s poorest countries receive all the vaccinations that they need. In Africa alone, more than 30 million children under five suffer from vaccine-preventable diseases every year, and more than half a million of those cases result in death.
Sadly, in recent years global immunisation rates have stalled, and in some places have even decreased. Key barriers to full immunisation include the high prices of vaccines, and a growing movement of vaccine hesitancy. It is clear that we still have our work cut out if we are to reach all children, across the world, with the essential vaccinations that they need and deserve.
As the Secretary of State said, next year Gavi, the global vaccine alliance, will be up for replenishment at a conference hosted by the Government here in London, and this year the Global Polio Eradication Initiative is being replenished at a conference in Abu Dhabi. The UK should make significant pledges to make sure both are fully funded, and should make the pledges promptly enough to encourage other donors to do likewise. I therefore hope the Minister will use today’s debate to update the House on the Government’s replenishment plans for both of these funds.
Let me be clear, however, that replenishing funds is only one step to ensuring all children are vaccinated; we can and must do more. Gavi is leaving millions of under-vaccinated children in middle-income countries without all the vaccinations they need. That is because the scheme uses a country’s GDP to determine whether it is eligible for support. This is a crude way to assess need: a country’s GDP does not take into account the specific needs of that country and its population’s health needs. It fails to take into account the state of its health system, and, crucially, GDP measures do not take into account in-country inequalities.
Dan Carden
The Secretary of State is nodding, and I appreciate that.
This means many of the world’s poorest children are in fact living in middle-income countries with a GDP that makes them ineligible for either official development assistance or Gavi support. I hope the Secretary of State will listen to the all-party group on vaccines for all, which has called for Gavi to bring about new criteria beyond a country’s GDP.
Let me now turn to another major threat to universal immunisation coverage. It is a threat that we face both here in the UK and right across the world: vaccine hesitancy, a phenomenon that the World Health Organisation has not only warned is on the rise but has now identified as one of the top 10 major threats to global health for 2019. This year’s theme of “Protected together: vaccines work!” also points to the difficulties in this area.
Since 2014, the number of countries reporting hesitancy has steadily increased, and in 2017 only 14 countries out of 194 reported no vaccine hesitancy. In England, dangerous false stories about immunisations are routinely spread on social media. The likes of YouTube and Facebook are failing to clamp down properly on those who peddle these lies. We must take tougher action and tell the truth about immunisations because the increasing refusal of vaccines has been described by the head of NHS England as a “growing public health timebomb.”
Oral Answers to Questions
Rory Stewart Excerpts(6 years, 10 months ago)
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Kerry McCarthy (Bristol East) (Lab)
6. What discussions she has had with Cabinet colleagues on the implementation of the Government’s report, “Agenda 2030: Delivering the Global Goals”, published in March 2017.
The Minister of State, Department for International Development (Rory Stewart)
As the hon. Lady knows, the UK was at the forefront of drafting those goals and is leading a great deal of the implementation. We published our report on 28 March. DFID leads on international implementation, and the Cabinet Office is ensuring that the single departmental plans drive it through domestically.
Kerry McCarthy
The Minister will know of my interest in food waste, which is addressed by sustainable development goal 12.3. Does he agree that it is not enough just to have a DFID-led approach? We will not be able to help farmers in developing countries unless we also tackle the relationship with supermarkets in this country.
Rory Stewart
The hon. Lady has been a leader in this House on addressing food waste, which fundamentally needs to be driven by the Department for Environment, Food and Rural Affairs and its Secretary of State, monitored by the Cabinet Office through the single departmental plan. DFID’s role is then to ensure that, internationally, we are consistent by showing exactly the kind of leadership on food waste that the hon. Lady has provided.
Mrs Maria Miller (Basingstoke) (Con)
I know that the commitment to implementing the sustainable development goals comes right from the top of Government. By when did my hon. Friend ask the Office for National Statistics to report on the UK’s progress?
Rory Stewart
The Office for National Statistics is compiling a report for the UN, and we will be submitting ourselves to a voluntary assessment of the UK’s performance on the sustainable development goals at home and abroad.
Several hon. Members rose—
David Hanson (Delyn) (Lab)
15. Does not President Trump’s declaration on the Paris agreement blow a hole in the UK’s objectives on the climate change agreement as part of the millennium development goals?
Rory Stewart
The UK’s obligation under the sustainable development goals is to remain committed to our own performance. We are sticking with the Paris agreement, and we will demonstrate at home and abroad that we really care about clean, renewable energy and the future of this planet.
Neil Gray (Airdrie and Shotts) (SNP)
T1. If she will make a statement on her departmental responsibilities.
Oral Answers to Questions
Rory Stewart Excerpts(7 years, 1 month ago)
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Richard Arkless (Dumfries and Galloway) (SNP)
The Minister of State, Department for International Development (Rory Stewart)
Discussions with the United Nations are central to the Department’s work. The Secretary of State speaks regularly to the Secretary-General, and I am lucky enough to be able to speak regularly to the heads of UN agencies such as UNICEF and the World Food Programme, and the International Committee of the Red Cross. Our focus is not just on funding, but on reform, in particular making sure that we have better co-ordination in humanitarian crises.
Richard Arkless
UN aid programmes are an investment on behalf of all citizens, so, given their importance, I was surprised to read some of the sweeping statements in the multilateral review. Does the Secretary of State accept that if institutions are to be reformed, perhaps that should be done with the co-operation of all member states, not at the unilateral discretion of her Department?
Rory Stewart
We believe very strongly that reform should be done with other member states and as part of a coalition. As the hon. Gentleman has pointed out, the multilateral development review has pointed to issues where we think further reform is needed, but the United Nations is central to Britain’s response around the world. In fact, we are contributing £1.6 billion this year in our work with the United Nations, addressing some of the most vulnerable people on the planet.
Sir Desmond Swayne (New Forest West) (Con)
What success has been had in recruiting Gulf states to work through the UN system and in encouraging them to support our UN reform agenda?
Rory Stewart
Clearly, Gulf states, which are increasingly large parts of the economy of the world, are central to humanitarian response. There have been significant contributions from the Gulf—from Saudi, UAE and Qatar—and the Secretary of State continues to encourage those contributions, particularly those that address the famines in the horn of Africa.
Imran Hussain (Bradford East) (Lab)
As President Trump slashes aid spending, it is more important than ever that global, outward-looking nations live up to their responsibilities, not shirk them, to fill the aid funding gaps. Will the Minister commit to working with our partners on increasing their aid spending, to show that despite Brexit the UK can still be a global leader embracing its global responsibilities?
Rory Stewart
We agree absolutely with that. It is central that other countries meet their targets. We are very proud to be able to stand tall in the world, particularly at a time when children are starving to death. That is why the Secretary of State is leading international coalitions to increase the international commitment to these desperate issues.
Alan Brown (Kilmarnock and Loudoun) (SNP)
Oral Answers to Questions
Rory Stewart Excerpts(7 years, 2 months ago)
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Ms Tasmina Ahmed-Sheikh (Ochil and South Perthshire) (SNP)
The Minister of State, Department for International Development (Rory Stewart)
Prompted by the question, I spoke to Alasdair Allan yesterday and we have a date firmly in the diary for a future meeting.
Ms Ahmed-Sheikh
I am grateful to the Minister for his answer. Does he agree that Scottish international development organisations, while often smaller than their English counterparts, can offer as much or more in terms of value for money and impact, as well as continuing to contribute to the preservation of positive public opinion in relation to international development? What steps can he take to ensure that DFID-funded programmes are made more accessible to smaller funded international non-governmental organisations based in Scotland as well as their counterparts in NIDOS—the Network of International Development Organisations in Scotland?
Rory Stewart
There are two separate questions there. First, I pay tribute to Scottish charities, ranging from major charities such as the HALO Trust through to smaller charities working with the Scottish Government on the ground in Malawi. Secondly, our Department is very much committed to working with smaller NGOs and civil society organisations which often know more, can do more, and care more than bigger organisations.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
The Minister of State, Department for International Development (Rory Stewart)
The United Nations assesses that more than 3 million people are currently victims of the ongoing violence in Ukraine. Our particular concern is about the 800,000 people living along the line of contact, suffering continual violence over the past three years.
Tom Blenkinsop
Russian aggression in the east of Ukraine has resulted in the internal displacement of 1.6 million Ukrainians. Russian aggression is now heightening in the east of Ukraine. Apart from seeking a resumption of the ceasefire in the east of Ukraine, will the Government commit to providing additional support to the Ukrainian Government to deal with such numbers of internally displaced people?
Rory Stewart
The British Government currently provide support to Ukraine in two ways. First, we provide support directly to the Ukrainian Government and governance programmes. Secondly, through the International Committee of the Red Cross and People in Need, which is a Czech organisation, we provide humanitarian assistance. We must be clear that this conflict in Ukraine was caused and is sustained by Russian aggression.
Henry Smith (Crawley) (Con)
Imran Hussain (Bradford East) (Lab)
The Rohingya are among the most persecuted people in the world today. In recent weeks and months, they have faced new waves of violence perpetrated by the Burmese Government. How much of the £95 million budget for the Burma project will go towards much-needed assistance for the Rohingya, and what steps are the Government taking to ensure that that happens?
The Minister of State, Department for International Development (Rory Stewart)
We absolutely agree that the situation for the Rohingya is deeply troubling. We are dealing with it in different ways. I raised it personally on my last visit to Burma with the Minister of Home Affairs and Aung San Suu Kyi. DFID staff are accessing the Rohingya areas and we continue to work with Kofi Annan and the UN system, but the hon. Gentleman is absolutely right to say that it is vital that we get humanitarian access and support to the Rohingya population.
Nigel Huddleston (Mid Worcestershire) (Con)
Rory Stewart
This is an issue that the hon. Gentleman and I have discussed on a number of occasions. We remain absolutely clear, as the British Government, that it is necessary both to protect the security of the Government of Israel and to ensure that the legitimate rights of the Palestinian people are protected. We will continue to work carefully to monitor illegal demolitions.
Fiona Bruce (Congleton) (Con)
The Independent Commission for Aid Impact is a unique body created to scrutinise DFID. What assurances can Ministers give that the forthcoming review of ICAI’s own performance will be conducted independently of the Department that it scrutinises?
International Development
Rory Stewart Excerpts(7 years, 3 months ago)
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Rory Stewart
The British taxpayer has not funded any structures that have been demolished by the Israeli Government. The European Union has funded structures that have been demolished by the Israeli Government, but so far it has not decided to seek compensation. [Official Report, 11 January 2017, Vol. 619, c. 297.]
Letter of correction from Rory Stewart.
An error has been identified in the answer I gave to the hon. Member for Edinburgh East (Tommy Sheppard) during Questions to the Secretary of State for International Development.
The correct answer should have been:
Rory Stewart
The British taxpayer has not directly funded any structures in recent years that have been demolished by the Israeli Government. The European Union has funded structures that have been demolished by the Israeli Government, but so far it has not decided to seek compensation.
Oral Answers to Questions
Rory Stewart Excerpts(7 years, 4 months ago)
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Simon Danczuk (Rochdale) (Ind)
The Minister of State, Department for International Development (Rory Stewart)
The Department’s assessment, in line with long-standing British Government policy, is that demolitions are illegal under international humanitarian law, and that they undermine the credibility and viability of a two-state solution.
Louise Haigh
The Bedouin village of Umm-al-Hiran remains under threat from a demolition that would cast out 800 villagers, and the number of demolitions in the occupied territories in the first two weeks of January is almost four times greater than the number at this point last year. What support is being given to the people who are being driven out of their homes, and what message is being sent to the Israeli Government that such demolitions are completely unjustifiable?
Rory Stewart
The hon. Lady raises two important issues, the first of which is long standing. Along with our international partners, we continue to lobby the Israeli Government, who are undertaking the demolitions, to stop doing so, both because they are illegal and because they undermine the two-state solution.
The Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for Bournemouth East (Mr Ellwood), had a meeting with the Israeli Defence Minister, Mr Lieberman, just before Christmas and raised the issue of demolitions with him directly.
Simon Danczuk
Will the Minister ensure that human rights non-governmental organisations operating on the west bank continue to receive support from the British Government?
Rory Stewart
We are absolutely focused on supporting NGOs, but above all we are focused on investment in health and education. It is getting the natural capital right, and providing opportunities and hope for the Palestinians, that will lead to security and stability for both sides in the conflict.
Mark Pawsey (Rugby) (Con)
Many of the demolitions occur because it is virtually impossible for Palestinians to obtain building permits. What legal support can the Department give to those who are contesting the process?
Rory Stewart
As I have said, DFID is focusing on health and education, but the Foreign Office has legal support programmes. This issue goes to the heart of the Israeli planning system and involves controversies with the Israeli Attorney General. As my hon. Friend says, it is very difficult to obtain planning permission, which is one of the reasons why settlements are built and demolitions then take place.
Tommy Sheppard (Edinburgh East) (SNP)
[Official Report, 8 February 2017, Vol. 621, c. 2MC.]Rory Stewart
The British taxpayer has not funded any structures that have been demolished by the Israeli Government. The European Union has funded structures that have been demolished by the Israeli Government, but so far it has not decided to seek compensation.
Tom Brake (Carshalton and Wallington) (LD)
Will the Minister confirm that DFID, notwithstanding the efforts of a senior Israeli diplomat to “take down” a Minister, will continue to fight against collective punishment, demolitions in the OPTs and the expansion of the illegal settlements?
Rory Stewart
We are conflating two different issues here. As the Foreign Secretary said yesterday, the Israeli ambassador has already apologised for that incident, and the diplomat concerned has been removed from his post and sent home. I think I have dealt with the overall questions of settlements and demolitions in my answers to the other questions.
Kate Osamor (Edmonton) (Lab/Co-op)
I thank the Minister for his responses, but I would like him to be a bit clearer and tell us how DFID has supported those people who are now homeless due to the systematic policy of settlement expansion.
Rory Stewart
The central story is that DFID is doing three types of things for Palestinian people. First, we are supporting Palestinian state structures, in particular health and education—doctors, teachers and nurses. Secondly, we are working on making sure that we can create a viable economy and employment, particularly through support to small businesses. Thirdly, we invest in human capital; in other words, we invest in making sure that the Palestinian people are educated, healthy and have opportunities for security and stability in the region in the short term. But in the long term there cannot be a two-state solution unless we address the needs of the Palestinian people.
Craig Williams (Cardiff North) (Con)
Danny Kinahan (South Antrim) (UUP)
The Minister of State, Department for International Development (Rory Stewart)
The hon. Gentleman makes a fundamental point. We have talked a great deal about demolitions and settlements, but the only long-term stability in that region requires protecting the security of Israel as an absolutely essential plank, along with guaranteeing an autonomous, independent Palestinian state.
Mr Christopher Chope (Christchurch) (Con)
Pauline Latham (Mid Derbyshire) (Con)
I am here. Thank you very much, Mr Speaker. The Select Committee visited the Democratic Republic of the Congo last year and saw the amazing work done by the CDC, which is creating not only more energy for millions of people, but a lot of jobs. May we encourage the CDC to do even more schemes like that?
Rory Stewart
I thank my hon. Friend very much for paying tribute to the incredibly important role of the CDC. By bringing the rigour of the private sector with the genuine values of the public sector, we have demonstrated in the DRC the ability to provide hydro power that benefits thousands of people. I also wish to pay testament to the Chair of the International Development Committee for his tribute to that project in particular.
Ian Austin (Dudley North) (Lab)
Commonwealth Development Corporation Bill
Rory Stewart ExcerptsTuesday 10th January 2017
(7 years, 4 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)
The Minister of State, Department for International Development (Rory Stewart)
I begin by thanking right hon. and hon. Members. This has been a very instructive process. The new clauses and amendments tabled reflect what was a really good Bill Committee stage. The Government have huge respect for the intelligence, focus and precision of these amendments, and we hope that Members will see that all the concerns that have been expressed are going to be addressed through the strategy that is produced.
Before I address the new clauses and amendments in turn, I pay tribute very strongly to the Members on both sides of the House who have demonstrated their support for international development. I pay particular tribute to the hon. Member for Edinburgh East (Tommy Sheppard), who gave an extremely powerful speech in support of international development and about the importance of standing up and having the courage to defend complex and innovative projects.
Mr Gareth Thomas
At the outset of his remarks, will the Minister explain why the legislation has preceded the strategy?
Rory Stewart
I shall deal with that when discussing the second set of amendments, which relate to that directly, but first I want to continue to pay tribute to other Members of Parliament, from both sides of the House, for their support for CDC. I was struck by the support of the hon. Member for Liverpool, West Derby (Stephen Twigg) for the Virunga project in the Democratic Republic of the Congo, by the in-principle support of the hon. Member for Glasgow North (Patrick Grady), and particularly by the phrase produced by the hon. Member for Edmonton (Kate Osamor) that is absolutely right in guiding us as we go forward: we need to get the right balance between long-term investment and short-term need.
I should just recapitulate the extraordinary work that CDC has done and echo the thanks of the hon. Member for Bedford (Richard Fuller). It has been a really tough time. As Members of Parliament, we are used to being under full public scrutiny and attack. CDC works very hard and has delivered some high-quality projects, and this has been a very tough period for it.
Three types of amendments have been tabled. The first set basically says yes, we should be giving money to CDC, but we should be giving slightly less money to CDC; the second set says that there should be restrictions on the Government’s ability to give money to CDC; and the third set would restrict what CDC itself can do with the money. Essentially, the Government’s position is that these are all good points, but they are better dealt with through the governance mechanisms and the strategy than through statutory, primary legislation.
I shall deal first with amendments 1 to 5 and new clause 10, which essentially say yes, we should give money to CDC, but we should give less money to CDC. Why do we disagree with what was essentially the argument put forward by the hon. Member for Cardiff South and Penarth (Stephen Doughty)? First, because, with respect, I still believe that the hon. Member for Glasgow North is confusing the stock and the flow. The fact is that the money put into CDC will be recycled. For the sake of argument, if an investment was 10 to 12 years in length and CDC had $12 billion in the pot, it would be in a position to maintain the current rate of investment of around $1 billion a year—the money would come back and go bounce again at around $1 billion a year. It is not fair to compare what happens in a capital stock used for equity debt investment with the annual expenditure of a Department.
Secondly, there is the question of demand, which the hon. Member for Cardiff South and Penarth referred to. The demand is almost limitless. It is calculated that $2.5 trillion is going to be required annually by 2030 to meet the sustainable development goals, which is why the relevant question is not the demand for the money but the question of the absorptive capacity, which the hon. Gentleman raised.
Thirdly, the Bill is enabling legislation that sets a ceiling—a maximum limit; it is not saying, “This is the amount of money we are going to give.” Fourthly, the design is for the money to go into patient, long-term investment. The three-year review proposed in one of the amendments simply will not work for investments that are intended to be, on average, 10 years in length.
Mr Ivan Lewis
If the Bill is passed and its consequences are added to the fact that more than 25% of DFID’s spending currently goes through other Government Departments, the result will be that more than 50% of our aid will no longer be spent through DFID. Does it not raise serious questions about the Government’s intentions for DFID to remain as a stand-alone Department with a place at the Cabinet table if more than 50% of its spending will be spent by CDC and other Departments? No other Government Department would come to the House and ask for more than 50% of its resources to be spent via other means.
Rory Stewart
There are two distinct points there: DFID’s spending and the proportion of the spending. The first thing to understand is that CDC is 100% owned by the Department for International Development, which is one reason why a number of these amendments are not appropriate. On the proportion of money spent, as my hon. Friend the Member for Bedford (Richard Fuller) eloquently pointed out, the small increase that we are talking about in terms of the annual amount that CDC will be able to invest will still be much smaller than comparable organisations in Holland, Germany and France. It will be about a third of the amount that the Overseas Private Investment Corporation can invest—OPIC is just one of the US’s development finance institutions that is able to invest—and only about a sixth of what the International Finance Corporation puts out a year. We are not talking—comparatively, globally—about a large amount of money. We are talking about something in the region of 8% at maximum—even if we hit the maximum of official development assistance—and the other 92% will continue to go in the normal way through non-governmental organisations and organisations such as UNICEF for the objectives that we pursue.
Stephen Doughty
It would be helpful if the Minister clarified the time period over which this increase, if it was granted, would be played out with CDC. The explanatory notes to the Bill say very clearly that the £6 billion is intended to be used in this spending review to accelerate CDC’s growth. Is that his view, and what about the £12 billion? Is that spread over a 10-year period, a 20-year period or a five-year period? Can he give us a ballpark figure?
Rory Stewart
Let me clarify this. The £6 billion represents an additional £4.5 billion, because CDC already has £1.5 billion. We anticipate that that would cover the next five-year period to enable CDC, at maximum—we do not expect it to draw down the maximum amount—to be able to make the kinds of levels of investment that it made last year. The next £6 billion—it is not an additional £12 billion, but an additional £6 billion—would apply to the next five-year period. We are looking at a steady state allocation, which might, at maximum, allow CDC to meet the kind of expenditure levels that it gets next year.
Let me move on now to new clauses 2, 5 and 6 and amendment 6. Essentially, these are a series of measures that restrict the power of the Government to give money to CDC. They do that either by saying that they should not be able to boost the amount of money that CDC has through delegated legislation, or through asking for a strategy to be put in place before the money is disbursed. Again, these measures are not appropriate. The role of Parliament as specified for CDC in the Overseas Resources Development Act 1948 and the Commonwealth Development Corporation Act 1999 quite correctly relates to two things: the setting up of this body and the creation of a cap on the amount of money that this body is given.
However, it is not normal for Parliament to get involved in the detailed implementation of specialist business cases. That is true in everything that the legislature does in its relationship to the Executive. The money allocated to our Department in general through the Budget, which this House votes on, is then delegated to civil servants and to the Government to determine how it is spent. The same will be true here, but the strategy that will come forward will reflect very closely the arguments that have been made at the Committee stage and on Report. We will continue to remain in very close touch with Members of Parliament, and we will be judged by our ability to deliver, through that strategy, something that will address those concerns—above all, through the development impact grid and the development impact assessments on the individual business cases, which will address these particular issues.
Mr Gareth Thomas
Will the Minister specifically comment on the use of tax havens by CDC, and will he and other Ministers in his Department echo previous statements by the Secretary of State and instruct CDC to desist from using tax havens for future investments?
Rory Stewart
That is an invitation to move on to the last group of amendments, which comprises new clauses 8, 9, 3 and 7, one of which relates to the issue of offshore financial centres. These are restrictions on what CDC itself can do. There is a suggestion that there should be an annual obligation on ICAI to produce reports on CDC. Then there are restrictions on the routes through which CDC can put its money, and there are attempts through the new clauses to restrict the sectors and the countries in which CDC can invest. Let me take them in turn.
On ICAI, we are very open to scrutiny. The CDC has been scrutinised by the International Development Committee, the National Audit Office and the Public Accounts Committee. We expect it to be scrutinised in that way and to be scrutinised by ICAI. We welcome scrutiny from ICAI. However, we do not think it is for the Government to impose obligations on an independent regulator. It should be for ICAI to determine its priorities and where it thinks the problems are, and to be able to apply its scrutiny accordingly. It may determine that an annual scrutiny of 10-year investments does not make sense and decide to do it more frequently, but that should be for ICAI, not for statutory legislation of this House.
Rory Stewart
I beg to move, That the Bill be now read a Third time.
I would like to begin by reiterating my thanks and the tribute we owe to right hon. and hon. Members on both sides of the House for their shared belief in the importance of international development. At the absolute core of the Bill is our moral obligation to some of the very poorest and most vulnerable people in the world. I pay tribute to right hon. and hon. Members for the important points raised, which will be reflected in the new strategy as it comes forward.
I will briefly lay out once more why believe that this is a good Bill. At its core is our understanding that there is extreme poverty and suffering in the world and that economic development will play an important part in addressing it. There is enormous demand in the poorest countries of the world for well-paid jobs. It is one of the first things that any of us discover when we go to Africa and other developing regions. As the Chairman of the International Development Committee, the hon. Member for Halton (Derek Twigg) said, 90% of the growth and employment in the poorest countries of the world is currently driven by the private sector. As he also said, Africa requires 15 million more jobs a year. Every one of those well-paid jobs is an opportunity for a family to deliver the stuff we all care about—for parents to provide education for their children and the healthcare their families need. Above all, it is through the revenue these jobs generate for Governments that a long-term sustainable future can be maintained. That is what allows a Government to pay for their education and healthcare systems and, if there is an earthquake or some other natural disaster, to access the resources to address it. In the end, the only long-term sustainable path is through the generation of that economic development and growth.
Why CDC? We have chosen CDC because it brings together two important things: on the one hand, the rigour of the private sector and its ability to work out whether investments make sense—are there genuine markets for these goods; can these jobs really be sustained? —and, on the other hand, the values of the public sector. The latter are what ensure we go into the hardest countries in the world—for example, that we do renewable energy in Burundi or the Central African Republic or get into Sierra Leone when Ebola happens—and, above all, ensure that investments are not about short-term commercial returns but are patient, long-term investments of the kind that the commercial sector will often not deliver.
Why CDC? Well, having been established in 1948, it is the longest-serving, as well as the best, development finance institution in the world. It proved it in the 1960s, through its investments in Kenya, and, much more recently, since 2012, with its fantastic reforms, which we have talked about at all stages of the Bill, on salaries, transparency, offshore financial centres, the geography of investments and the sectors in which we invest, all of which is summed up in the development impact grid. That is what answers a lot of the points made in the discussion today, and that is what allows us to make sure that every investment focuses on the areas that generate the most jobs and on the countries where investment is most difficult, where the least capital is available and where GDP per capita is lowest.
We can see this in the real world: in the 17 million indirect jobs created by CDC; in its investments in places such as Burundi and the Central African Republic; in the hydroelectric investment in eastern Democratic Republic of the Congo—not an easy place to invest in—which the Chairman of the International Development Committee referred to; and, actually, in the Globeleq investment, where CDC’s investment will help to generate 5,000 MW of power in Africa over the next decade. To put the latter in context, Africa managed only 6,000 MW over the previous decade, so that is almost the entire generation of Africa over the previous decade being driven by a single company supported by CDC. Moreover, there is value for money for the taxpayer because the money is recycled, and the need is absolutely there, as we can see from the fact that we need $2.5 trillion of investment by 2030.
In conclusion, our Department will do many other things besides CDC. Much of the money will continue to flow through NGOs such as Save the Children, CARE and Oxfam. Many of our investments will be with valued partners such as UNICEF. More than 90% of the money we will spend through overseas development assistance will continue to go to health, education and humanitarian assistance. Within that, not all the money in economic development will go through CDC. It will also go through our investments that will take place through support to Governments and technical assistance. However, that CDC investment, combining the rigour of the private sector, the focus on markets and the values of the public sector, reflects the values of the British public who care about poverty and show in their own philanthropic giving how much they care about some of the most vulnerable people in the world. We are showing our respect for the British people by pushing forward with a proven model that will provide the sustainable growth required to address some of the most vulnerable and poorest people in the world. This is our moral obligation.
Commonwealth Development Corporation Bill (First sitting)
Rory Stewart ExcerptsTuesday 6th December 2016
(7 years, 5 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)
Rory Stewart
Q Very quickly, for Tom McDonald and Sir Paul Collier, Saranel has just said that CDC exists for the UK to make a profit in the global south, and the countries are not really benefiting from those investments. Do you agree with that?
Tom McDonald: We did not assess the whole portfolio, in terms of the impact that it was having. We have to rely to some extent on the prospective assessment of impact that CDC is now doing on a regularised basis for all its investments. I honestly cannot give a yes or no answer as to the impact on the south.
Rory Stewart
Q Do you agree that the prime purpose of CDC is for the British Government to make a profit in the global south, and that our investments are not benefiting the people in those countries, which is Saranel’s claim?
Tom McDonald: From what we saw when we visited the projects in east Africa and India, there is a clear desire to benefit the people of those countries, as well as for CDC to achieve its own targets.
The Chair
Well, just answer the question, if you will.
Sir Paul Collier: I am sorry. It is self-evident that the path out of poverty involves business. It is also self-evident that not enough modern business is going to these very poor countries. So it is a very strong public interest to use public money to try and encourage firms to go to areas where they are needed but where they will not make much money. That is the rationale for the whole of the development finance institution enterprises. Clearly, CDC is controlled by DFID; DFID is controlled by Parliament; and the objective of getting people out of poverty runs right through both organisations.
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.
Commonwealth Development Corporation Bill (Second sitting)
Rory Stewart ExcerptsTuesday 6th December 2016
(7 years, 5 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
It is a pleasure to serve under your chairmanship, Ms Ryan, and for the first time, I think. I know you take a keen interest in these matters, so it is particularly delightful to serve under you, as it was to serve under Mr Streeter this morning—I know he is equally interested in the Bill. We had a wide-ranging debate on Second Reading and a wide range of issues were also explored by all members of the Committee during some excellent scrutiny of the witnesses who were before us this morning.
Amendment 6 stands in my name and those of my hon. Friends the Members for Edmonton and for Bradford East. It regards the nub of the matter, which is the amount of money—aid money; taxpayers’ money—that the Bill intends to allow the CDC to receive. It is a very large sum: up to £6 billion, leading up to £12 billion, which I know we will come to discuss in due course.
As I said on Second Reading, I am not opposed to the existence of the CDC and I am not opposed to much of the important work that it does; I recognise that it does some excellent work. Indeed, the National Audit Office is clear that the CDC is largely meeting its own standards and the strategy that was set for it in 2012. However, that is not the issue before the House or, indeed, the Committee; rather it is whether we should grant such large sums of money to CDC as opposed to directing that important aid money to other uses.
Despite having listened carefully to the Minister and the CDC itself—I have met its representatives—and reading much of the documentation about the Bill, I am still at a loss as to where the £6 billion and £12 billion figures have come from; I do not believe that the case has been made for that expenditure. There may be a case for increasing capital for the CDC, and I am sure we will hear many of those arguments today, but I have certainly not seen the case to justify the expenditure of a potential extra £4.5 billion over this spending round, as implied by the Minister’s earlier comments and the contents of the explanatory notes to the Bill, nor do I see the rationale for potentially expanding that sum to £12 billion.
The information we have before us is very vague. Paragraph 10 of the explanatory notes to the Bill says:
“Increasing the limit on government assistance to £6,000 million will enable the Secretary of State to accelerate CDC’s growth over the current Spending Round in response to forecast market demand—”
which is not actually explained anywhere, nor has it been explained in answers to questions I have put to Ministers—
“over CDC’s next strategy cycle and in order for CDC—”
this, again, is very vague—
“to play a fuller role in the delivery of the UK’s international development objectives.”
Those are very short sentences and paragraphs to justify the potential spending of £6 billion, rising to £12 billion. Let us remember that the CDC only required capitalisation from the UK Government of £1.5 billion over the entire period between 1999 and 2016. We understand that the bulk of that has come at the CDC’s request, although I know that there are a variety of views out there on that. In recent years, we have seen the big recapitalisation of £735 million in two tranches, which I am glad to say was accompanied by a business case. Not all of that case was met, but at least there was some rationale for it—whether it should have gone through is not relevant now—whereas there is no rationale for the proposed increase.
I think it was the NAO that said that there is a cart-and-horse problem here. This is a huge potential uplift and we have not seen any kind of rationale for it, any clear statistics, analysis of markets or suggested project sectors, just a vague assurance that it will all be all right on the night and that Parliament should therefore go ahead and approve large sums of money on the nod. We have also heard doubts expressed by the NAO and others about whether the CDC even has the absorptive capacity to accept that sort of uplift in such a short space of time.
We had reassurances from the Minister that the uplift would only come in response to clear demand and with the clear ability to take it on, but the reality is that the NAO has criticised the CDC for risks in its staffing and for its organisation. Even regardless of that criticism, I question whether any organisation could take such an uplift in such a short space of time, whether it was a non-governmental organisation, the World Bank or a UN agency. We ought to treat our scrutiny of development finance institutions and multilateral agencies with the same brush, whether they are close to the Department for International Development or slightly further away; I will come back to that point in due course.
The other issue is that there is an opportunity cost here that I hope we will be able to explore in the debate. The Minister earlier seemed to suggest that if we do not give the money to the CDC, we will inevitably have to give it to a development finance institution that is performing less well or is perhaps even less focused than the CDC, but I do not think that he has made that case very clearly.
I have read in detail the multilateral aid review that the Minister published last week and that we scrutinised in an urgent question on Friday. It does a lot of good things; it gets into the meat of what some agencies are doing and it points out agencies that are not performing well. Has the CDC been put through that level of rigour? Is it subject to the same expectations of transparency, poverty focus, effectiveness and accountability to beneficiaries, taxpayers and the Government? I am not sure that it is. Where would it appear in the multilateral aid review’s graph of agencies? Undoubtedly it would do well in some areas but in others I suspect it would not, particularly given the NAO’s commentary.
Given what DFID expects not only of multilaterals but of its bilateral partnerships and its partnerships with civil society organisations, there seems to be a double standard. One example is that DFID now expects multilateral agencies to publish details of everything they spend over £500. That is a good thing, but we clearly do not have the same transparency from the CDC. Yet we are planning to give it extra billions of taxpayers’ money via the Bill—initially up to £6 billion and later up to £12 billion. At the very least, we ought to provide a level playing field for assessment and expectation, so that we are absolutely sure we are investing our money in the routes that will lead to the greatest reduction in poverty, that align with our wider development objectives, that are coherent and that meet the wider objectives of the Government and the Department.
Conversations with the CDC and comments from the Minister have revealed a crucial issue: the CDC has not requested this capital increase. The Minister told me that in a written answer last night and confirmed it in this morning’s Committee sitting, and the CDC itself has also confirmed it to me. That seems a very odd situation. I can understand a generic conversation—“Well, if x were y and y were z, we might be able to take a bit more money or do this or that”. But not even to have a request, never mind a clear rationale or expectation of what could be done with £6 billion of taxpayer funding—let alone £12 billion—is extremely concerning. Is the tail wagging the dog? Is this Ministers putting pressure on an organisation to accept significant increases in money, perhaps for some other purpose which I will come on to, rather than it being based on a real set of demands and a real set of expectations of what could be delivered? I am concerned when I hear that from the Minister or from the CDC, and I am concerned when it is confirmed in writing. It is in contrast to the situation in which it made a request for recapitalisation in the last year. It was perfectly reasonable for there to have been a request—I do not know about the value—but the CDC put forward a business plan which was discussed over a period and the Department agreed the £735 million.
The Minister of State, Department for International Development (Rory Stewart)
indicated dissent.
Stephen Doughty
The Minister is shaking his head but the CDC did request £735 million; it told me so. Perhaps the Minister wants to intervene? The Minister’s own written answer to me last night, when I had asked him specifically what recapitalisations had been requested by the CDC in each of the past six years, told me that it had requested £735 million. So I am confused as to why he is shaking his head; perhaps he would like to intervene?
Rory Stewart
Thank you. It is a great pleasure, Ms Ryan, to serve under your chairmanship. I will try not to intervene too much, since this is not really my responsibility, but as a point of information, I think there are two separate issues here. The first is the question of the CDC calling on a promissory note, which is what would happen in the future. In terms of the £735 million request the hon. Gentleman is talking about, when the Government have funds available and have legislative authority to allow money to go into the CDC, the CDC will then make a request. That would be true in the future too, so if the Bill gets through Parliament and the money is available, so the option is available, and the promissory note and the business case from DFID are in place, at that point the request would come from the CDC. One would not anticipate the request coming from the CDC at this stage. That has not happened in the past and it would not happen in the future.
Stephen Doughty
I find that a very odd suggestion when we are talking about such large sums. One would expect there to be the architecture of a request, or the basic bare bones of a request, even if the specific details were not there. We are not talking here about £100 million or £200 million, large sums as those are, we are talking about £6 billion and £12 billion. These are huge sums as a proportion of the overall aid budget and in terms of our commitments to other multilateral development finance institutions. Now the Minister suggests that we just accept these back-of-a-fag-packet calculations— £6 billion, £12 billion—without any kind of rationale for what they are. He said earlier that the department had come up with those figures, that he had come up with those figures, and they had been presented to the CDC, rather than the other way around. One would expect the CDC, as the expert in the markets and sectors it is investing in, to be suggesting to Ministers, perhaps, where potential investments could be made, where returns could be achieved and where poverty eradication could be delivered.
Rory Stewart
I am contradicting myself by intervening again. There is an important distinction here. This is a piece of enabling legislation. The CDC is in a very unusual position. Unlike our normal relationship, where we can, for an NGO such as Oxfam, give money without coming to Parliament, or for a multilateral organisation such as the World Bank, go through secondary legislation, a statutory instrument, this is unusual. This is one of the only organisations we deal with where Parliament had imposed a cap. So what we are asking for is enabling legislation which would allow DFID, if it had a request from the CDC, to give it the money. This is not our giving it the money, it is creating an option and a ceiling against which, in the future, the CDC would be able to present a business case.
Stephen Doughty
The Minister suggests we should not be sceptical of the Government and their intents. It is the role of this House to be sceptical of the Government and their intents. To suggest that Ministers are going to take powers but might not use them is a slightly curious argument: I have not seen many cases of that in the past. The timing of this is very odd, given some of the other circumstances, which I will come on to.
Stephen Doughty
We are not here to discuss the Dutch DFI, but I do know a reasonable amount about it. It provides only marginally more than us. It does do interesting work; it does not do exactly the same work as us. I do not know its history of recapitalisations and how much additional ODA money it has received recently. It would be interesting to look at that. However, the question here is this. What is the best use of our money? Are we not investing or have we reduced investment in other sectors where we could be using our aid in order to do this, and is that the right choice? That is the question before us, and when we look at, for example, DFID’s closures of bilateral programmes in places such as Burundi, we do not have clarity from the bilateral aid review on whether there will be further closures or changes.
We have heard worrying things about cuts in bilateral funding for HIV/AIDS programmes, despite the good money that is going into the global fund. We have seen a shift away from certain sectors and from budget support. We have seen a shift away from investing in free healthcare and education, and in teacher salaries, and with removing user fees for healthcare, for example. When the CDC invests in private healthcare and private school systems, we might have a debate about the role that voluntary and private play in healthcare and schools, but again it is an opportunity cost—it is a choice about where we invest these things.
I accept the hon. Gentleman’s wider point about the importance of jobs, investing and crowding in capital into some of these sectors, but we have to question what we should be doing with our money and whether that is right versus other potential sources. I contend that the Government simply have not come forward with a case that justifies this level of cap. Some increase in the CDC’s budget might be justified, but certainly not at this level.
Stephen Doughty
I will give way in a moment, once I have made another point.
All that needs to be seen in line with some of the other issues. I mentioned the diversion of aid and the shifting of aid between priorities, but by 2019 26% of ODA will be spent by Departments other than DFID. That is a significant shift from where it was. As the hon. Member for Rochford and Southend East knows, I am not opposed to cross-Government working or other Departments spending ODA, but that level of it is concerning. With the CDC on top of that, as well as the prosperity fund, which we discover was given £1.3 billion of ODA in September this year—much of it spent through other Departments and yet ending up in India, China, Malaysia, Mexico and other locations—the picture of where our aid spending is shifting to gets worrying. Is it shifting away from the poorest countries and the poorest people, and from the core services that I believe we should be supporting?
Rory Stewart
Given that the hon. Gentleman seems to have such fundamental concerns about the CDC—its accounting practices, the role of Government, its strategy, its spending—will he clarify why he is proposing to give it £3 billion in his amendment?
Stephen Doughty
As the Minister knows, in this House we have a thing called probing amendments and, like the Minister, I have drawn up a suggested figure—
Stephen Doughty
Indeed. We can put any figure down and, without the rationale, we can have a debate—the Minister might criticise me for a £3 billion figure, I can criticise the Minister for a £6 billion figure. The fact, however, is that the Minister has not provided a clear rationale or business case for £6 billion—nor has he for £12 billion—and there are some interesting suggestions from the SNP Members about proportions. Those are all issues that we ought to discuss. I made it clear earlier, I am not opposed to the CDC getting more money, but I am concerned about the period over which it gets it, the total amount and the caveats that we might then place on the CDC to receive it.
Stephen Doughty
I will happily give way, although the Minister said that he would not intervene all the time.
Rory Stewart
I am just trying to understand. The hon. Gentleman is seriously proposing an amendment to this House which we will vote on to give £3 billion to the CDC. Will he justify why he wishes to give it £3 billion? This is a real amendment, to a real piece of legislation before this Committee.
Stephen Doughty
It is not Question Time for me; it is Question Time for the Minister—[Interruption.] It is Question Time for the Minister proposing the legislation. He must explain the rationale—[Interruption.]
Imran Hussain
It is a pleasure to serve under your chairpersonship today, Ms Ryan.
I will sum up the points that we are making. My hon. Friend the Member for Cardiff South and Penarth has gone into some detail, as always, on where we stand. I want to place the Labour Front Bench firmly in line with his views, to answer the point made by the hon. Member for Rochford and Southend East.
The issue here is the Government’s intention. We are not in any way, shape or form anti-DFI or against the spirit of the corporation. It was brought in by a Labour Government many years ago and we accept, on the record, that the CDC has been improved since 2011, as I said on Second Reading. As my hon. Friend the Member for Cardiff South and Penarth set out, we want to be satisfied on the rationale behind the level of increase; the lack of strategies and investment policies—the phrase “cart before horse” has been mentioned on many occasions and I will not go into it further—the CDC’s capacity; and the fact that it has not requested this money. Those are all pertinent points. Finally, regarding the concern about where and how this money is currently being spent, I agree with Members on both sides of the Committee on the logical point of view that has been put forward. Nevertheless, that concern remains.
The Minister’s earlier intervention was most helpful, when he set out his reason for why the business case, the strategy and the investment policy were not forthcoming. He gave the guarantee, which I want to press him on, that no money would go to the CDC unless it was requested by the CDC. Even so, it has to be done in the light of a proper business case, a strategy and an investment policy. Secondly, I press him to give some indication as to when those important strategies and policies will come forward. They are central to these proposals and I hope he genuinely gives us dates and assurances in that regard.
Rory Stewart
It is a great pleasure to serve under your chairmanship, Ms Ryan.
I will begin by saying that I have a lot of sympathy with the points that the hon. Member for Cardiff South and Penarth is making; they are all incredibly important. He has an encyclopaedic knowledge of CDC and has identified a number of issues in relation to CDC that we take very seriously. They range across its accounting principles, its reporting framework, the scope of the countries in which it operates, its overall effectiveness, its absorptive capacity, the strategy and business case systems, theories of change and types of investment. I think these are all good concerns and there is nothing mentioned by the hon. Gentleman that I would disagree with in principle. These are the kinds of questions we would expect DFID and Parliament to ask, as well as CDC to ask of itself before it makes an investment.
The real question is what is appropriate to put in the Bill, what is appropriate to be done through Parliament, what is appropriate to be done through the Department and what is appropriate to be done through CDC. That is where I hope I can provide a bit of assurance to right hon. and hon. Members of all parties.
I think we can take it as read that there is an overall agreement that we should give some more money to CDC. There is some disagreement about how much more money—the different amendments suggest different views on how much money and how that money is calculated—but the basic principle is that CDC is a good thing, that economic development is a good thing, that DFIs are a good thing and that, particularly at this moment, as Sir Paul Collier pointed out strongly in this morning’s evidence session, we should be investing more in economic development and jobs in Africa. That is something we all agree. The question is how we do it and how we ensure that it is done in the right way.
The hon. Member for Glasgow North proposed a quite detailed amendment, but there is a small technical issue. He suggested that we aim at a 5% ODA amount, but there are two issues with that. We considered looking at that in the Bill, but the reasons we rejected it were twofold. There is an issue with confusing a stock with a flow. In other words, the measure is designed to create the capital that is invested and reinvested over time— that initial investment made by the Attlee Government continues to be recycled nearly 70 years later—whereas the ODA allocation is an annual allocation and an annual spend.
There is an issue around trying to compare a stock and a flow, and we can go on to that. In fact, rather good graphs have been produced, comparing stock and flow investments of Germany, France and the Netherlands, showing that, in proportional terms, Germany is spending nearly three times as much and France is spending nearly twice as much as we are. The reason I have not deployed those kinds of arguments is that I just do not think that that stock and flow comparison is good.
However, there is a more technical reason why we would reject the exact amendment. The way in which the amendment is written—at least on the basis of the analysis by our in-house lawyers—is that it would refer to the entire cap for the entire sum available to CDC. In other words, that 5% would not be 5% of future money. The way in which the amendment is drafted means that it would incorporate the £1.5 billion of its existing money. That would therefore limit us to only a further £1.5 billion over a five-year period. That would not be 5% of ODA. It would be about 2.5% of ODA, which we think would be considerably lower. The £3 billion number, which is what right hon. and hon. Members have been getting at, is a more plausible figure as an additional amount to the £1.5 billion. We can talk about that over time.
Very quickly, I will deal with the question of additional responsibilities, which is at the core of the questions asked by the shadow Secretary of State—the hon. Member for Edmonton—and the shadow Minister, the hon. Member for Bradford East. The basic questions are: are we are putting the cart before the horse, why are we using taxpayers’ money for this kind of investment, when will we present our strategy, what are our real intentions, and what kind of guarantees are taking place? The answer is that, in effect, we have a whole series of procedures. What we are asking Parliament to do is only the first stage of a whole series of checks and balances.
We are asking this Committee, and we are asking Parliament, to agree to the principle of lifting the existing cap on CDC—in other words, putting CDC more into the type of arrangement that we would have with any of our other donors. It is very unusual that CDC has a capped amount. That is not true for the amount of money we give to an NGO or to the World Bank. In fact, we are actually giving more to the World Bank than we would envisage giving to CDC. We are asking Parliament to lift the cap.
The next bit—the question of how the business strategy, the business case and individual investment decisions are written—would then be taken forward by the Department, in line with the UK aid strategy, and debated in Parliament. Directly to answer the question of the hon. Member for Bradford East, who wanted dates, in December 2016 we will complete our business strategy, which will lay out the strategy for the next five years for CDC. It is the strategy that the hon. Member for Cardiff South and Penarth was referring to as our last strategy. We will have a new strategy of that sort. That strategy will do a number of things that will address concerns raised in many of the amendments as the Bill passes through the House. It will, for example, tighten our impact assessments, put more focus on gender and set a cap on India. The next thing that will happen is that in summer 2017—this is quite a slow process—we will bring together a business case to draw down a promissory note of money; in other words, to say, “This is the amount of money we believe is the kind of money that CDC may need to call up.”
Stephen Doughty
It is very helpful of the Minister to set out this process. Did I hear him correctly a moment ago when he said there would be a cap on India?
Rory Stewart
Indeed. I am happy to repeat that for the record. The intention is that, in our forthcoming business strategy, there will be a cap on the amount that CDC can spend on India.
As we move forward to the summer, we will produce the business case. The business case will define the amount of money, whatever that is. It could be, for example, £3 billion, which is roughly in line with some of the amendments that have come forward, but we would have the option to go up to £4.5 billion. I do not honestly believe that that business case will be going up to £4.5 billion, but we would have the option to do that.
The next stage is that CDCs needs to make very detailed investment decisions, which take a long time. A lot of these investment decisions take two to three years. Let us say that CDC was going into solar power in Burundi. It would have to get in on the ground. It would have to ensure that it had a viable business and then it would have to go through our development grid, which is the next stage of the process. That means ensuring that it had checked GDP per capita, it had checked the amount of capital available, it had checked the business environment and it had checked that this is a sector that creates jobs. That is just the first stage.
The next stage CDC needs to go through is to present a development impact theory. That individual investment needs to have a theory: exactly what contribution is this going to make to jobs, economic development and poverty alleviation? Within our strategy, at the end of this year, DFID will ask CDC to publish that development impact theory, so that the theory can be seen case by case with every investment and it will be possible to challenge that theory.
At that stage, CDC would then come back and call down on the promissory note to call down that money. Then other forms of monitoring come on. We are a 100% shareholder of CDC, which is why some of the analogies with giving money to NGOs or World Bank institutions are slightly different. This is us giving money to a wholly owned DFID institution. Every quarter, we as DFID shareholders meet the board and assess its performance. We have an annual review process. On top of that we have all the other processes: NAO, Public Accounts Committee and the International Development Committee. Independent Commission for Aid Impact reports would also be able to get into the business of CDC. It is that and, finally, it is our basic confidence in our institution that allows us to even begin the process. We would not come to the Committee asking for permission to make more money available unless we were confident that we had a good management team in place with a strong history and a strong track record of development; otherwise, we would be wasting hon. Members’ time.
We believe that this is a good institution that will be in a position for us to produce the business case, and that it will be in a position to find investments. I absolutely guarantee—
Imran Hussain
Is the Minister giving an absolute assurance that no further investment will go to CDC before the full, thorough business case and investment policy comes before the House again?
Rory Stewart
I am giving an absolute assurance to the hon. Gentleman that no money will be given to CDC until a full strategy is developed and published, which can be debated in the House—that is a strategy coming in December—and no money will go to CDC until a full business case is written in huge detail, which will be prepared in the summer of 2017. Following on from that, there will be the individual investment decisions. I am happy to give that assurance. On that, I would ask the hon. Gentleman kindly to withdraw the amendment.
Stephen Doughty
This has been a helpful debate and we have covered some useful issues. I am still not convinced but I appreciate the steps the Minister has taken to explain some of the process and his assurances that issues that I and others have raised are being taken seriously. I welcome that; the Minister said nothing in principle that I would disagree with. I will record that and remember that as the Bill passes through its remaining stages.
I am intrigued by the Minister’s admission that there would be a cap on India. I would certainly like to know more about that. Is he able to give us a specific value or percentage? Given some of the wider points I have made, and no doubt will make with regard to other amendments, it would help if he would explain whether the Department has thinking on that on other countries. On the subject of middle-income countries versus lower-income countries, there are some odd situations where CDC seems to be putting money into places like Egypt. That country is not without its problems and not without poverty, but is not exactly a focus country for DFID. I would say there is a huge divergence between where DFID is operating bilaterally and where CDC is.
It would help if the Minister explained where CDC sits in relation to the transparency that is expected of other development finance institutions. It is all very well to go through the scrutiny and the checks and balances, because it is clear what those are, but it appears to me —I am not satisfied on this point—that CDC is being held to a different standard. We might not be a 100% shareholder in the World Bank, but we hold significant shareholdings as a major donor, and we take those very seriously. We use our influence there as a voting board member to take decisions, whether on individual loans or overall strategies.
Imran Hussain
For the sake of avoiding repetition, I will cite the case I previously outlined, because I think the arguments are exactly the same. The only additional point is that I agree with my hon. Friend the Member for Cardiff South and Penarth, who makes the point that using a statutory instrument to double the increase, if not more, is something that MPs will be uncomfortable with, for obvious reasons.
Rory Stewart
Ms Ryan, thank you very much for chairing this debate. I will deal with these issues very quickly, because I do not wish to detain people very long. A few issues of fact: first, this will not be an additional £12 billion on top of the £6 billion. We are talking about lifting the ceiling, so it will be an additional £6 billion. Essentially, the whole debate—we keep coming back to it in different ways—is about the fact that the CDC, through an accident in history, is governed by completely different rules from any other body to which we can give money. In the initial legislation, from 1948 onwards, a cap was put on the amount of money that the Government could put in. An additional cap was put in during the early 2000s when the Government were proposing to sell off CDC. The cap was put in there simply so that the Government did not pump more money into this organisation before it was sold off. That was a perfectly legitimate intention of primary legislation, but it puts us in an eccentric position in that it is possible for us to give, theoretically, unlimited money to an NGO, to a research council or any other body, to the World Bank and to other financial institutions, whereas the CDC is the only institution for which we have to return to primary legislation every time we wish to give it money.
The point about this ability to go up to £12 billion in the future would be that it would try to put the CDC into a similar position to the other recipients. In other words, on the basis of Parliament, the Minister and the Department, a decision would be made on the strategy on how the money was to be allocated. Money could be allocated to an NGO, it could be allocated to CDC, and we would do that through the normal departmental process.
The hon. Member for Cardiff South and Penarth asked about time. My strong belief, which I am happy to put on the record, is that the money we are asking for—that first ability to increase by £4.5 billion—would be the absolute maximum over the next five-year period up to 2021. We do not intend to come back for the next money until at least after 2021-22. At that point a new Government—it could be a Government, theoretically, of the Labour party—would have the option to come, through secondary legislation, and ask for the ability to increase the cap up to £12 billion. That, again, I would anticipate being for continuous, steady state investment. That £12 billion simply reflects, again, about £1 billion a year from the 2021 period going forward to 2026. That is the kind of money we are talking about and that is the kind of plan that is in place.
To conclude, we have heard very detailed, powerful and encyclopaedic speeches from the hon. Member for Cardiff South and Penarth. He has already made enormous arguments about the sectors and countries in which we should be investing. I request, if possible, that we do not return to those when the amendments are discussed, because they have already been made in enormous detail during the debate so far.
Stephen Doughty
Ms Ryan, I am sure that you, rather than the Minister, will decide what is in order. I have no doubt that we will want to explore some of those issues in further detail. I am sure the Minister does not want to, but I hope we can prevail on you. The fundamental issue here concerns my outstanding question: why £12 billion? Where has this figure come from? What is it based on? It seems to have been arbitrarily picked out of the air. It is an 800% potential increase, as the hon. Member for Glasgow North pointed out along the way.
It is helpful that the Minister talked about the timescale. He says that it goes up to 2021 and that he does not intend to come back before 2022. My question is, why give this power now at all? Why not just require another simple, one-clause Bill to increase the cap if CDC is shown to be performing, to be reforming, to be diverting its focus more to poverty eradication, more to some of the countries we want to work in, or some of the sectors we would like to see it working in? Why not come back? This happens with other legislation. An armed forces Bill comes through regularly to maintain funding for our standing armed forces, and there are many other instances where simple pieces of legislation are proposed and receive the required level of scrutiny—indeed, this has happened with the CDC in its lifetime. My concern is why we would give such extensive powers at this stage. I take in good faith the assurance of the Minister, but obviously, as I have said before, that does not apply to future Ministers. The Minister mentioned the issue of selling off CDC; what if a Minister wanted to do that in the future? This would allow a Government to pump money into it before a sell-off. That is concerning and should concern all of us in this Committee.
I was interested in the point made by the hon. Member for Stafford about gradual increases. Will the Minister reflect on the possibility of considering an India cap of a certain amount beyond which CDC could not increase, whether it be £1 billion or less, at a time, whether that was a year or a two-year period, and coming back with secondary legislation to do that? That might give a lot more assurance as to the scale of the increase and it would not be prey to the sorts of pressures that I know exist within the Department in terms of overspending more generally. We have a 0.7% target that we need to meet. As the CDC contributes to that, it is incredibly tempting, if there has been underspending in one Department or another, to suddenly pump a load of new capital into it, record it as official development assistance for that year, as has happened, and have it contribute to the overall figure.
However, I think the Minister has said some important things. I want to hear more about the caveats and strategy for CDC going forward and while I wholly object to the suggestion of giving statutory instrument powers, secondary legislation powers, I am sure that this will be an issue that those at the other end of the building will look at in great detail in due course. At this stage I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 1 ordered to stand part of the Bill.
Clause 2
Short title, extent and commencement
Question proposed, That the clause stand part of the Bill.
Rory Stewart
As hon. Members will be aware, clause 2 is entirely standard. The only point of any note is that in this case, the Bill will come into force on Royal Assent. As we have discussed, this is an enabling Bill. The amendment made by the Bill to the cap and the introduction of the delegated power have no immediate effect and nothing is gained by subjecting them to delay or later commencement by Ministers, so it is appropriate that they come into force on the day the Bill is passed.
Question put and agreed to.
Clause 2 accordingly ordered to stand part of the Bill.
New Clause 1
Condition for exercise of power to increase limit: poverty reduction
“After section 15 of the Commonwealth Development Corporation Act 1999 (limit on government assistance), insert—
‘15A Condition for exercise of power to increase limit: poverty reduction
(1) The Secretary of State may only lay a draft of regulations under section 15(4) before the House of Commons if he has also laid before the House of Commons a review in accordance with subsection (2).
(2) A review under this subsection must provide the Secretary of State’s assessment of the extent to which the increase in the limit on the Crown’s assistance to the Corporation is likely to contribute to a reduction in poverty.
(3) In this section, “reduction in poverty” shall have the same meaning as in section 1(1) of the International Development Act 2002.’” —(Patrick Grady.)
This new clause would require any draft regulations to increase the limit on government assistance under section 15(4) to be preceded by a review, also to be laid before the House of Commons, of the extent to which the increase in the limit will contribute to a reduction in poverty, the aim of development assistance.
Brought up, and read the First time.
Patrick Grady
I beg to move, That the clause be read a Second time.
I mentioned during the evidence session that nowhere in the Commonwealth Development Corporation Act 1999 do we find the words “poverty” or “impact,” or even the phrase “international development”. We have heard much on Second Reading and in Committee—in evidence and during our debates—about the robust business cases, policies and decision-making procedures that are in place in DFID and CDC, but at the end of the day, that is all they are: policies and procedures. New clause 1—and perhaps some of the other new clauses—attempts to make it much clearer in the legislation that governs the CDC that it must meet the same high standards set for DFID and all the other Departments that spend money towards the ODA target. The new clause would require any proposal by the Government to raise the limit on Government assistance to CDC to be accompanied by a report to the House about how such an increase in investment was expected to lead to a reduction in poverty, as defined by the International Development Act 2002.
As we have just heard, the Government are asking for authority to increase their investment in CDC to up to £12 billion by statutory instrument. That is both a significant amount in itself and nearly 10 times the current investment cap. As I said a minute ago, I wonder how many other arm’s length bodies have received or have the potential to receive such an increase—800%—in their funding from the Government by statutory instrument without any additional information justifying that being required to be laid before Parliament.
If Parliament is to be asked to increase the funding cap, it should have information at its disposal to help it make that decision. Ministers keep telling us that robust business cases will be presented, but—
Stephen Doughty
I am interested in this new clause. I think it will be very helpful to have the CDC more tightly linked to the terms of the International Development Act 2002. That set an important legal framework, which has guided the use of our ODA aid over the past 14 years, and therefore there are important safeguards within it that need to be closely looked at as regards the CDC. One of the issues is with the transparency around the CDC. Perhaps the Minister can clarify some of these, but when someone delves into the detail of some of the projects, organisations and programmes that we are funding, although there are a significant number of projects that are clearly focused on poverty reduction and are in some of the poorest countries in the world, there are others where it is questionable as to what the poverty-focused role is.
We heard this morning about the private healthcare provider in India. We could, but will not at this stage, get into a lengthy debate about the merits of private and voluntary healthcare versus public funded healthcare in developing countries, the role in transition and so on. It concerns me that CDC appears to be investing in a private fee-paying hospital without a focus on access for some of the poorest patients, for example, or some explanation as to why that money is focused on poverty eradication rather than as just a generalised investment.
I looked into one of the others called Qiming Venture Partners, which is a Chinese-based entrepreneurial fund. It describes itself as one of the top funders of entrepreneurs in the internet and consumer products; I struggle to see how that relates to poverty reduction. It has some very interesting pictures on its website of its staff sitting on tanks in Mongolia. I am happy for the Minister to clarify the nature of that investment, and if it is something completely different I will happily withdraw my comments about it, but it is very odd.
Another one we heard about this morning was Feronia. Clearly that is an investment in agribusiness, and we can see links there to poverty reduction and jobs in the agribusiness sector. However, there are also questions about the potential negative effects on livelihoods and poverty eradication because the investment is in palm oil. There are questions about land grabs, the rights of people living in the area and whether that is even a sustainable product to be investing in. Again, it seems odd that we are investing in fossil fuel projects when we are told that climate change is one of the biggest threats to developing countries and people in the poorest countries. I know that that is not just a problem to CDC; it applies to some of our investments through other development finance institutions, and is something we ought to look at much more closely.
I feel that tying CDC more closely to the wider terms under which DFID operates, and the wider terms in which our ODA is spent, would be helpful. Otherwise we might get some very interesting challenges and could even have legal challenges—judicial reviews—on some of these projects, particularly if we were to put in large sums of new money. I am sure that some of the campaigning organisations would take great interest in seeing whether some of these projects actually adhere to the principles that we set out for the Department and the spending of our ODA. I am encouraged by the new clause, and am certainly interested in the Minister’s comments on it.
Rory Stewart
This is an important principle—we should be focused on poverty reduction and the particular aspect of poverty reduction through job creation and economic development. I absolutely agree, and that is central to the mission of the CDC and its investment policy, but we are circling around a bigger issue: where is the appropriate place for this to happen?
I think that the only disagreement between myself and the hon. Member for Glasgow North is that this is a straightforward Bill, which is designed to lift the cap. We believe that the appropriate place to determine spending decisions and exactly how strategy works is through the normal departmental process. That would be true for our investments in the World Bank and in Unicef, money we would give to Oxfam or Save the Children, or anybody. We have procedures and processes to do that, which do not happen through primary legislation. We will continue to present that five-year strategy in December for the hon. Member for Glasgow North and other right hon. Members to interrogate. We will continue to present the business cases. We will be held absolutely accountable in law. In 2015 we passed a law that we would spend 0.7% on overseas development assistance as defined by the OECD. The money we are giving is governed by that legislation, which commits us legally to make sure that that money is driven precisely in the directions that the hon. Member has raised.
The hon. Member for Cardiff South and Penarth continues to raise many different issues. I am struggling to work out in which sequence to answer them, because many of them are things I thought the hon. Gentleman was attempting to raise in later amendments. I hope that we are not going to keep hearing again and again about the same caseloads.
Richard Graham
It seems to me that the hon. Member for Cardiff South and Penarth has raised interesting points about individual investments by the CDC. He is concerned about where the geographic spend is. The figures probably suggest that it has been 48% in Africa over the last few years, but there is an interesting question there, on which the Minister might want to comment: if one invests in a business that is, for the sake of argument, based in Mumbai but investing in east Africa, is that geographically described as an Indian investment or an east African investment? The hon. Member then had questions about sectoral investment. There are interesting questions there, because if someone is building hospitals, they are also in construction, and therefore there are jobs for people building the hospital. Is that classified as an investment in health, in construction, or both?
The Chair
I think it is for me to decide where the best place for the questions is, and I have allowed them.
Rory Stewart
To conclude, and to follow up from my hon. Friend the Member for Gloucester, the questions about poverty and the impacts of our investments need to be asked again and again, right through the process. They need to be asked in Parliament; they can be asked through urgent questions; they can be asked through this process. They also need to be asked primarily in details about the CDC’s mission, its investment policy, the ex ante decision making based on the development impact grid, through the development impact theory on each individual investment, and we have to do it in a way that gets a very difficult balance right, because the National Audit Office has been very clear that it does not want the Department micromanaging and interfering in individual business cases and decisions. We are supposed to be setting the overall strategy, driving where the money is meant to be and driving it towards exactly the kind of indicators that right hon. and hon. Members have raised. Given the number of measures that the Government will be taking to address exactly the issues raised, not in the Bill but through all the existing other processes, within both the CDC and the Department and the wider parliamentary and public accountability process, I ask politely that the new clause be withdrawn.
Patrick Grady
That was an interesting and helpful response from the Minister. He has repeatedly said throughout this process that the CDC is different from all the organisations that DFID disburses funds to, precisely because of the way it is constituted in statute and the historical legacy, going back 70 years. This is an important opportunity to include in the Bill some of the assurances that the Minister continues to give us, to make it clear that poverty reduction is one of the purposes of the CDC. I hear what the Minister says about withdrawing the new clause at this stage. If I do so, I hope that he will understand if we choose to come back at a later stage with more detail. Perhaps the Government would indicate that they are willing to work on how we can build into the legislation some of the reassurances that we keep asking for and they say they are going to give us. On that basis, I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 2
Condition for exercise of power to increase limit: Sustainable Development Goals
After section 15 of the Commonwealth Development Corporation Act 1999 (limit on government assistance), insert—
“15A Condition for exercise of power to increase limit: Sustainable Development Goals
(1) The Secretary of State may only lay a draft of regulations under section 15(4) before the House of Commons if he has also laid before the House of Commons a review in accordance with subsection (2).
(2) A review under this subsection must provide the Secretary of State’s assessment of the extent to which the increase in the limit on the Crown’s assistance to the Corporation is likely to contribute to achievement of the Sustainable Development Goals.
(3) In this section, “the Sustainable Development Goals” means the Goals adopted at the United Nations on 25 September 2015.””—(Patrick Grady.)
This new clause would require any draft regulations to increase the limit on government assistance under section 15(4) to be preceded by a review, also to be laid before the House of Commons, of the extent to which the increase in the limit will contribute to achievement of the Sustainable Development Goals.
Brought up, and read the First time.
Imran Hussain
I associate myself with comments made by the SNP Front Bench team and, indeed, my hon. Friend the Member for Cardiff South and Penarth. I am not going to repeat what has been said, but I will make two additional points. The CDC should work towards the SDGs as much as possible, but as we stand, there is some confusion around their overall monitoring. Those criteria have not been released and I urge the Minister to consider that.
The other option, not the least option open to the Minister—and I am sure he will give assurances—is a matter that can also be dealt with through the business case and the strategies enshrined in that, to make sure the most effective way of contributing to the SDGs is laid out before Parliament.
Rory Stewart
This is an example of a clause where we strongly agree that SDGs are central to what the CDC should be doing. We are already delivering on these things. In 2015 alone, 326 women received jobs through the CDC investments; that is SDG 5. We provided 56,000 GW of electricity; that is SDG 7. SDG 8 on economic growth is, of course, central to everything the CDC does.
The bigger argument is that, as the SDGs were presented, people talked about a $2.5 trillion demand per annum for investment in the world’s poorest countries. The CDC is the major instrument that will be used by the British Government to deliver that kind of investment into the private sector.
However, to respond to the shadow Minister’s point, I think this is a good way of focusing the Department’s mind and making sure that, as we develop the strategy for the CDC going forward over the next five years, the SDGs are baked into that process. We take the SNP spokesman’s suggestion that it is important to understand the SDGs as a holistic set: that we do not simply look at them goal by goal, but that we group them together.
Stephen Doughty
The Minister made helpful comments earlier on about capping aid to India. Is he willing to consider looking at restricting, for example, the CDC’s ability to invest in fossil fuels, as this seems at odds with the global goals?
Rory Stewart
It is a good challenge. We invest enormously in renewable energy. We have just made a difficult investment in solar energy in Burundi and the Central African Republic—not a place where most people want to go into investment. Unfortunately, Africa’s need for energy is extraordinary. We do not invest in coal, for example, that is not something we go into, but we support some gas-powered stations through Globeleq. That is a difficult trade-off, but we believe Africa is currently falling behind. As I have mentioned before, China has been building about 8 GW of power in a two-month period, with Africa delivering 6 GW of power over a decade.
I feel that we have to get the balance of our investments right and I respectfully disagree with the argument put. I do not think it would be responsible for economic development in Africa to put us into a position where we cannot invest at all in any conventional energy source. With that, I would ask that new clause 2 be withdrawn.
Patrick Grady
What the Minister said at the end was disappointing, because, in fact, there is an opportunity for Africa and many parts of the developing world to leapfrog the technologies that have polluted our skies and buildings and all the rest of it over so many years. Surely, if the CDC’s investment is for anything, it should be in innovative, clean technologies. That is what we are trying to get to with the various amendments and new clauses we have been tabling, to make it clear in statute that this is its duty and not to allow it space to make excuses such as “Well, it’s difficult” and “We have to do this” and that jobs are more important than the longer-term viability of the planet. I am not convinced that is the case.
That is why we continue to seek assurances. Again, if we withdraw this new clause, we hope the Minister will reflect on the points made over the course of the debate in Committee. When the Bill comes back to the House on Report there might yet be ways in which it can be strengthened to take some of the points on board and reflect them going forward. On that basis, however, I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 3
Condition for exercise of power to increase limit: prior bilateral programme
After section 15 of the Commonwealth Development Corporation Act 1999 (limit on government assistance), insert—
“15A Condition for exercise of power to increase limit: prior bilateral programme
(1) The Secretary of State may only lay a draft of regulations under section 15(4) before the House of Commons if he is satisfied that the condition in subsection (2) is met.
(2) That condition is that any new investment in a country enabled by the proposed increase in the current limit at the time is in a country to which the Secretary of State provides assistance through a bilateral programme at the time.
(3) In this section—
“country” has the same meaning as in section 17 of the International Development Act 2002;
“the current limit at the time” means—
(a) prior to the making of any regulations under section 15(4), £6,000 million,
(b) thereafter, the limit set in regulations made under section 15(4) then in force;
“assistance” has the same meaning as in section 5 of the International Development Act 2002.””—(Stephen Doughty.)
This new clause would limit any new investment arising from any increase in the limit on government assistance under regulations under section 15(4) to countries where the United Kingdom maintains a bilateral programme at the time.
Brought up, and read the First time.
Imran Hussain
Again, I associate myself with the comments made by my hon. Friend the Member for Cardiff South and Penarth. I have two additional general points. We have to look at the 2011 review. There were clear purposes behind it, one of which was that the CDC had lost its focus. As a result of the review, we saw the new universe of countries and, as I said earlier, have ended up in a better place today than we were in four or five years ago.
My hon. Friend is absolutely right that we must not lose our focus on development impact and where it can be greatest, and nor must CDC. We must continue to focus on the poorest countries, where the impact will be felt the most and where it is most needed. The CDC’s ultimate goal must be to alleviate poverty, and that goal is not best achieved in some of the countries that have been used as examples.
Rory Stewart
If I may, I will focus not on particular sectors but on the issues addressed by the new clauses: the type of countries in which CDC should be working.
I wish to make four arguments. First, there are significant technical problems with the amendments, but I do not wish to take up too much of the Committee’s time with them, so I will move on.
Secondly, there is a conceptual difference between DFIs and the bilateral programmes at DFID. It is perfectly reasonable for a Government looking at their overseas development programme not to limit themselves to where they happen to have a bilateral programme. A bilateral programme traditionally means somewhere where we happen to have a DFID office and are running our own bilateral programmes through our own staff. There might be an argument that we do not wish to have a bilateral programme in a country because we already have CDC operations taking place in that country.
The third argument, which I again do not wish to rehearse because it covers a lot of the issues that we have talked about today, is how to get the balance right between Parliament—it is absolutely right that Parliament should have the job of determining the overall financial allocation—and the discretion given to the Secretary of State and the Department to determine country programmes. It would be unfortunate if we ended up specifying in primary legislation a specific list of countries where we would and would not operate, as a result of the judgment calls that a Secretary of State or Department, from any party, has to make—the world changes very quickly.
Right hon. and hon. Members have raised some difficult judgment calls. India has 35% of the world’s population who exist on $1.25 a day, which is more, in absolute numbers, than the number of poor people in sub-Saharan Africa. That is a difficult philosophical discussion, and different people on different sides of the House will have different views on whether we wish to focus on that, but whether we focus on those people or not seems reasonably to be a judgment call for the Department and perfectly in accordance with the International Development Act 2002. It is also true that it may be necessary to make investments in a wealthier state in order to help a poorer state. It may be necessary to use South Africa’s financial institutions in order to support poverty alleviation in other African countries.
Finally, it may be necessary to respond to quickly changing events in the world. For example, nobody predicted the conflagration in Syria. We are suddenly having to put bilateral programmes into middle income countries—Syria, Iraq, Jordan, Lebanon—where we never had bilateral programmes four years ago, in order to deal with 3.5 million refugees, horrendous killing, an extreme humanitarian disaster and a UN tier 3 emergency. The International Development Committee has been asking us to get the CDC to invest in exactly those situations. The new clause would prohibit us in primary legislation from doing that. With respect, I believe that these things are best left to the discretion of the Department. We are very happy to share all our thinking on how those decisions are made with Parliament in the normal fashion. With that, I hope that the new clause will be withdrawn.
Stephen Doughty
I thank the Minister and the hon. Members who have taken part in the debate for their comments. In response to the hon. Member for Stafford, I should point out that the fact that some of the other DFIs are focused in some of those other middle income countries is all the more reason for the CDC to have a different focus. We have less control in those organisations, by being a part-shareholder and part-donor. We have 100% control over what the CDC does. If we are contributing in that way to some particular important niche project that the World Bank is funding, for example, why do we need to add to that with an organisation over which we have a greater degree of strategic control? We are supposed to be leading—that is the mantra—and setting an example. We should perhaps be going to some of those more difficult locations that Professor Collier was talking about and addressing some of the innovative solutions that the hon. Member for Glasgow North was talking about on green energy. We ought to be leading, not just matching what other development finance institutions are doing.
The Minister makes a good point about not limiting the provisions to the bilateral programme in strictly defined terms, as the new clause—a probing amendment—would do. The example that he gave of Syria was a good one. There is also a very good argument to be made about francophone Africa, where CDC and our bilateral programme could play a bigger role and we could perhaps come alongside other investors. The Minister had a fair point on tight definitions and on listing countries.
I would ask the Minister to look again at the issue of the rankings of countries. In terms of CDC’s total disbursements in Africa and south Asia over the past seven years, the lion’s share has gone to India and South Africa, with £760.5 million and £194 million respectively. Money has also been disbursed to some very odd locations —these are not small amounts. Some £27.6 million has gone to Mauritius, £12.6 million to Morocco, £53.6 million to Egypt and £9.8 million to Algeria. That does not seem to fit into the categories that the Minister alluded to.
There is a debate to be had about India. I accept the point that he made, but it is not the argument that has been used in the past by advisers in his Department. In fact, the special adviser to the Department when he was at the TaxPayers’ Alliance resoundingly criticised DFID for continuing aid to India which, he argued, had a space programme and everything else. He said that all aid should be stopped. The Government, including his Government, have made a big fanfare to the public and to this House about aid to India ending, and yet it continues. I think there is an inconsistency there, and it would be useful to know where we stand and where we are heading, because it is not what is being said.
Rory Stewart
Just to clarify the position on the record. The Government intend to stop all conventional bilateral grant aid to India. Support in India will then be targeted through technical assistance and through the CDC instrument of financial investment in private sector companies.
So the distinction that the Government are making is between traditional bilateral grant aid and instruments such as the CDC. Specifically on the question of balance, I absolutely take these points on board—60% of the investments since 2012 have been made in Africa, only 40% in south Asia, including Pakistan and Bangladesh. I absolutely understand the importance of keeping a rigorous development grid and development impact theory to make sure that CDC focuses on the countries that need aid most.
Stephen Doughty
I thank the Minister for his point. It was not the impression that was given by the Government at the time about aid to India. The clarification is helpful, but again we get into the value and the total amount that is going to India rather than other locations. For me, and for many others who contributed to this debate, it is simply too high. That is why I welcome what the Minister has said about a cap. However, I urge him to look at a cap in some of these other countries. There are some very odd outlier examples here which do not really fit in any way with our wider objectives, our strategic interests, or our poverty reduction objectives. There does not seem to be any clear explanation, and I think we ought to be bearing down more tightly on that.
It would be helpful for the Minister to explain, as we go through the next few days on the Bill, whether he would consider tough stretch targets.
Jeremy Lefroy
That is true from whatever point of view we approach the matter. Why can we not set up the kind of structure, based in the UK, that would be perfectly reasonable for funds to see as an acceptable basis for making their investment alongside the CDC?
Rory Stewart
I shall try, for the sake of right hon. and hon. Members who are under time pressure, to be quite short in answering. Of course, I agree strongly with points made about the absolute importance of this. The CDC never invests in any of these locations in order to save tax or to avoid scrutiny. There are only two reasons why we would do it, and those are the reasons that were raised by the hon. Member for Cardiff South and Penarth; which is to say either because the regulatory environment in the country in which we are investing is not sufficiently robust for us to be able to trust UK taxpayers’ money to that location, or because we are attempting to accumulate a larger fund where we are trying to get co-investors. We are very proud of that. We have brought in, at times, £1 billion of investment and have managed to bring in £30 billion behind it, so that is a multiplier effect of 30 which might not have been possible had we not been able to ensure that we were able to go through certain offshore centres.
However, we are very focused on this issue. The Labour Government made great progress in focusing on the white list. The hon. Gentleman mentioned Anguilla and the British Virgin Islands. To be absolutely clear, as I think he is aware, we do not, nor would ever, invest in those locations, nor would we invest in Panama. We only invest in the places that have been put through the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes as compliant locations.
Nevertheless, I agree that in the long run we need to develop financial sectors within Africa to ensure we can make secure investments through African locations, rather than having to go through offshore centres. DFID is now running a big programme on that, which is something the CDC can learn from. To respond to my hon. Friend the Member for Stafford, we absolutely should be taking the lead on this. On that basis, I ask that the motion be withdrawn.
Stephen Doughty
Moving swiftly on. I hope that the Whip can report my comments to him.
My concern—obviously I have been through some of the examples before—is the percentage investment in different sectors. We have heard the presentations, whether from the Secretary of State, or the chief executive and chair today, about how wonderful the CDC is, and all the wonderful work that it does; but they tend to draw on specific projects, which I do not doubt do excellent work on poverty eradication, and make a difference. However, those reflect only part of the picture.
From an overview of the CDC’s portfolio, 40% is invested in what, I think, according to the House of Commons Library, is designated as “other”; 16% is in the financial sector; 8% is in power; 9% is in industry and manufacturing; 12% is in other infrastructure; 6% is in agribusiness; and 9% is in services. When we look at new CDC investments by sector from 2012 to 2015, according to the Library the share of new investment seems heavily focused on the financial services industry.
I know that the CDC makes many important investments that the Government promote, including access to microfinance, technological solutions or enhancing banking services for the poor. I have nothing against the financial services industry. Indeed, I have many financial services industries in my constituency. I am well aware of the important work that has been done under many Governments on investing in mobile phone banking technology, for example; again, that work began under a Labour Government but has continued to a great fruition in recent years.
There seems, however, to have been a very heavy focus on the financial services sector and very little on anything else, whether industry, healthcare, education or other sectors. Of the investment in education and healthcare, for example, as we saw from the example of India, a significant proportion seems to be going to the for-profit sector. I do not want to reiterate statistics that we heard earlier, but that seems to me to be of great concern. It does not seem to be in line with DFID’s previous objectives of expanding free healthcare and investing in health systems.
I worry—and this is where we come to the issue of opportunity costs of investment in the CDC versus other potential routes—that the Department has started to skew significantly away from some of the work that was done to support the development of strong, national, public, free-at-point-of-use healthcare and education systems. We know how much of a deterrent user fees are to the poorest and to other excluded groups in accessing healthcare.
We also know from DFID’s past how strategic catalytic investment in those sectors has resulted in massive uptake. Importantly, there is also a secondary effect—citizens demanding from their Governments that public health and education services should be provided. That creates the virtuous circle, the social contract, and has much wider benefits for governance, relationships between citizens and the state, and the promotion of democracy and stability. I am therefore concerned that CDC is investing in private solutions, that money still appears to be going into things such as real estate, and that there are questionable investments in such things as palm oil.
I mentioned South Africa earlier, but did not talk about specific sectors. We can see that the bulk of investments in South Africa went into the financial sector, and then agribusiness and food. That is surprising. I have visited South Africa many times and, if we are investing in some of the poorest people there, the issues are often food security and access to HIV treatments, among others. Yes, financial services are important, but the skewing that appears to be happening in the projects seems odd. Again, without being able to access detailed information on the nature of individual investments, we cannot necessarily create aggregates for whether the investments in healthcare or education, for example, are to help more vulnerable and more excluded people to get services, albeit at a low cost, or whether we just see a generalised investment, as in the Rainbow Hospitals in India.
Can the Minister explain the plans the Department has for pushing the CDC and why he thinks the split is so geared towards financial services as opposed to other sectors? Can he also specifically comment on the investments in the for-profit education and health sectors and the other ones I mentioned in this new clause?
Rory Stewart
These are a very good set of questions. Indeed, we are concerned—as is the hon. Gentleman—about which sectors we invest in. To reveal a little of the thinking in the forthcoming strategy, we are likely to put more of an emphasis on agriculture. The biggest element for investment is infrastructure and energy and I spoke at length on Second Reading about why we take electricity generation so seriously. I am not going to rehearse those arguments now. The hon. Gentleman will be aware of why that is an important sector for Africa.
Financial services is also a vital sector, for the reasons laid out by Sir Paul Collier in the evidence session, which we all had the privilege to hear today. Poverty alleviation in Africa will have to be driven by much more productive, specialised businesses. In addition to energy, the fundamental constraint on the development of those business at the moment is the availability of capital. Foreign direct investment levels in Africa are at an all-time low. We see this in livelihoods and supporting these lower income groups, through the support we provide through microfinance. Indeed, microfinance and all that kind of activity is included within financial services.
Large sums of capital available for medium and larger-sized enterprise, however, are going to be central. To pin down what we mean by this with an example, in Sierra Leone after the Ebola crisis, a number of serious investments were possible but were stopped because of people’s fear about the Ebola crisis. It was our ability to take a more patient, long-term view as a public investor that allowed us to provide the capital investment that generates those jobs. A lot of these economic development opportunities and jobs we are talking about are driven by financial services.
To return to the shadow Minister’s challenge, this is assessed by us in the individual development impact theory attached to each case. With regards to the new clause under consideration, we would oppose the idea of limiting in the Bill the sectors in which someone could invest, because sectors are very country-specific. To take an example from Afghanistan, I can completely understand why the hon. Member for Cardiff South and Penarth wishes to say there should be no investment in the mineral sector. However, in a country such as Afghanistan, the mineral sector is almost the only credible possibility for macroeconomic growth and therefore for the country as a whole. Supporting marble, jewellery extraction and other exploitation of natural resources in Afghanistan is a lifeline for that country in a place where they are struggling to generate private-sector investment and have a huge effect on revenue.
We will not get drawn into a difficult discussion about the position of private health and education, except to say again, from an Afghan context, I have seen directly how some of the poorest people who have been unable to access healthcare manage to access it through affordable, low-cost health clinics. This is in Kabul, where wealthier people are giving about $1 or $1.50 a day to be able to go to a health clinic. That money is then often recycled to allow a proportion of people to access the clinic at a more affordable rate.
Even without that cross-subsidy, in many countries, the only way we can get health and education to people in the short term, unfortunately, is by supporting these structures. There is a disagreement that we are not going to be able to resolve today, where we believe the private provision of education and healthcare can be a good way of delivering those kinds of service. With that, I ask that the new clause be withdrawn.
Stephen Doughty
I thank the Minister for his comments. I was pleased to hear that he thinks there might be more of a focus on agriculture and a strategy for it. That is an important step forward. As I made clear, I think that financial services are important, and I agree with many of the points he made. My question is, is there too much going into them to the exclusion of other sectors? I and other Members want there to be a clearer rationale for why that is happening at the expense of other things.
I do not think there is much disagreement about the importance of investing in infrastructure and energy, with the exception of the point about fossil fuels, which we discussed earlier. I wish we had done more of that in this country—that is what the previous Labour shadow team argued for, and we continue to do so. However, there remains an outstanding question about why so much of the new investment is going into just that one sector and why small amounts are going into others.
The point that the Minister made about the mineral sector in Afghanistan is fair, but I am sure he understands why there is a lot of scepticism, given the history of exploitation and poverty creation through the extractive industries, particularly in Africa and elsewhere. The UK led on the extractive industries transparency initiative, the Kimberley process and other measures for bearing down on the negative side effects. I hope that, if CDC invests in those potentially highly controversial sectors in the future, it will have a very clear public rationale for why it is doing so and will set out what the benefits are and what safeguards have been put in place; otherwise, there is the risk of creating a different impression.
The Minister is right that we do not agree on the issue of health and education. I do not think that the UK Government should be investing in private healthcare and education in developing countries. There is a role for the private health and education sectors in those countries—I am not opposed to the existence of a private health and education sector in this country, although I would not choose to use it myself—but should we be helping to expand them? Should we be bankrolling them by investing taxpayers’ capital into, for example, private hospitals, when it is not clear how those services will be made more accessible to the poorest? I urge the Minister to look more closely at that issue.
I came across the example—perhaps the Minister can write to me about it—of an investment we are making in an education programme called GEMS Africa, which appears to be running a series of private schools in what it describes as leafy residential suburbs in Nairobi and charging up to £10,000 a year. That does not sound like low-cost education—it is certainly not no-cost. It would be good to have some clarity about the type and nature of some of these investments, because that does not seem to be right. I think the Department should focus its resources on supporting the development of strong public health and education systems that are free at the point of use. We did excellent work on that previously, and it is a shame that we have moved away from that. I hope the Department will rethink that. I am sure we will debate this issue further, so I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 8
Condition for exercise of power to increase limit: adherence to DFID partnership principles
After section 15 of the Commonwealth Development Corporation Act 1999 (limit on government assistance), insert—
“15A Condition for exercise of power to increase limit: adherence to DFID partnership principles
(1) The Secretary of State may only lay a draft of regulations under section 15(4) before the House of Commons if he is satisfied that the condition in subsection (2) is met.
(2) That condition is that any new investment enabled by the proposed increase in the current limit at the time will be an entity which has agreed to adhere to the DFID partnership principles.
(3) In this section—
‘the current limit at the time’ means—
(a) prior to the making of any regulations under section 15(4), £6,000 million,
(b) thereafter, the limit set in regulations made under section 15(4) then in force;
‘the DFID partnership principles’ means—
(a) the principles set out in the DFID guidance note of March 2014 entitled ‘the Partnership Principles’, or
(b) any DFID guidance note of the same title issued with the approval of the Secretary of State.”—(Stephen Doughty.)
This new clause would require any new investment arising from any increase in the limit on government assistance under regulations under section 15(4) to go only to entities which agree to adhere to the DFID partnership principles.
Brought up, and read the First time.
Rory Stewart
Again, I shall endeavour to be short, before we move on to the final new clause, because Members need to go.
I am very pleased with the tone of the debate. As a result of the Opposition challenges, we will take their proposed measures seriously. The Opposition will hold us to account when they see the strategy and how we plan to address things. Unfortunately, however, there is a technical reason why we are reluctant to accept the new clause, which is that partnership principles are primarily addressed to Governments. At the core of our partnership principles is the intention to strengthen
“the management of public finances”
and to enable
“people to hold the government and public authorities to account”,
so we would be reluctant to extend them for technical reasons.
The basic theme behind the new clause, however, is correct, and we shall deal with that through internal processes. We now have a team in CDC who focus on issues of ethics, and they look exactly at business integrity. Until about three weeks ago, in fact, we had a larger team looking at such issues than the International Finance Corporation itself has.
We touched on Feronia, and I am happy to talk about it in more detail—perhaps we can even visit it. The case is a difficult one. The company has been around in various forms for 100 years. It is trying to sustain jobs three weeks upriver in the Democratic Republic of the Congo. We are really serious about improving standards there and, since we increased our investment, we have been pushing up wage rates and improving safety standards, but there are huge challenges. We have inherited some 19th-century boilers and other challenges, and we have to work closely, but it is a classic example of the challenges of CDC going into a real frontier market, in a difficult and sometimes dangerous place, where 9,000 people depend on us directly and 30,000 indirectly for their jobs. We are trying to get the balance right as we gradually increase standards while maintaining that important part of the economy of the area.
With that, I ask politely for the amendment to be withdrawn.
Stephen Doughty
I appreciate the spirit in which the Minister took the new clause. I accept the technical reason. Obviously, the partnership principles apply to partner Governments, but it seems they could be transposed quite easily. It is quite clear that the headline standards CDC would be expected to adhere to would be the same as the Department’s bilateral programme as a whole.
I appreciate the Minister’s comments about Feronia. It would be good to have more information in writing about that and what steps are being taken. I accept his point that there are sometimes difficult examples and situations. Professor Collier made the point this morning that we should be taking more risk, and we do not expect everything to be perfect or right from day one, particularly when we are operating in difficult environments. However, when repeated concerns are raised about a particular case but there appears to not be the clearest response, we risk going back to the darker days of CDC’s past and some of the other investments. There were serious issues, which I do not want to dwell on, off the coast of west Africa and so on that enjoyed a great deal of scrutiny and criticism at the time.
A key point we have been debating is that if we expand CDC’s resources at a huge pace and by such a significant amount, without safeguards, particularly if we are increasing the appetite for risk, there is a risk that more will go wrong. Without a clear caveat, clear standards and transparency, so that we here in Parliament and citizens of developing countries can scrutinise fully these investments and whether they hold to principles of human rights and ethics, we will potentially get ourselves into very serious difficulties. That is why I am so worried about the quantum of increase, despite the Minister’s welcome statement about his intentions. I hope he will look seriously at the possibility of ensuring CDC adheres in that way. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 9
Condition for exercise of power to increase limit: report and business case
After section 15 of the Commonwealth Development Corporation Act 1999 (limit on government assistance), insert—
“15A Condition for exercise of power to increase limit: report and business case
(1) The Secretary of State may only lay a draft of regulations under section 15(4) before the House of Commons if he has also laid before the House of Commons the documents specified in subsections (2) and (3).
(2) The document specified in this subsection is a report submitted by the CDC to the Secretary of State giving an account, in respect of the most recently completed financial year, of—
(a) the investment activities of the CDC by country and sector, and
(b) the remuneration of staff, including anonymised information on individuals receiving a salary during the financial year in question in excess of £150,000.
(3) The document specified in this subsection is a business case for the proposed use of the new investment enabled by the proposed increase in the current limit at the time which includes information on—
(a) the expected market demand,
(b) the proposed sectors,
(c) the proposed locations, and
(d) the prospective development returns.
(4) In this section, ‘the current limit at the time’ means—
(a) prior to the making of any regulations under section 15(4), £6,000 million,
(b) thereafter, the limit set in regulations made under section 15(4) then in force.”—(Stephen Doughty.)
This new clause would require any draft regulations to increase the limit on government assistance under section 15(4) to be preceded by the laying before the House of Commons of an annual report for the preceding financial year giving information on investment activities and remuneration and a detailed business case for the proposed additional investment.
Brought up, and read the First time.
Stephen Doughty
I beg to move, That the clause be read a Second time.
I will not dwell on this new clause too long, because it simply states some of the arguments I made earlier about the sort of business case and rationale that my hon. Friends and I feel should be provided before significant increases in CDC’s capital receipts go ahead.
The new clause mentions expected market demand, proposed sectors, proposed locations and prospective development returns, as well as clear and transparent information on the investment activities of CDC and on remuneration. I have not dwelled too much on remuneration, but it bears looking at. Although the headline salaries of CDC’s chief executive and others have come down significantly, which I welcome, they are still substantial. The number of staff within CDC who are in the higher income brackets concerns me. I realise there is a trade-off here, and it is not a debate we will conclude today, but we should set out all that information clearly before Parliament authorises such significant increases of money.
I feel we have had a productive debate today on many of the issues. I welcome the new information that the Minister provided. It would be good to see some of that in writing, and perhaps through further amendments, but I still fundamentally feel that the increase is too big, with too much power being given to Secretaries of State. Who knows if the Minister will be in his place in the future? It is too much of a temptation, without clear safeguards.
I hope that other Members who join us on Report will look carefully at these issues. I have no doubt that my hon. Friends will table amendments for the whole House to vote on, in the light of information we have heard today from the Minister. Serious concerns remain. I do not think the Minister has made the case yet, and certainly not for this level of increase, but I do not intend to press the new clause to a vote.
Rory Stewart
With your permission, Ms Ryan, I hope to thank people more formally on a point of order, but this has been an excellent and testing debate. I will try to come back to that point.
We take the issues that the hon. Member for Cardiff South and Penarth has raised seriously. We have an online searchable database in which is contained all the remuneration, every investment decision and every fund, including the name, description, location and sector. The annual reports and accounts are now published with that information. We are pushing—he will see this in the new strategy coming forward—for even more transparency.
We already feel that CDC is a real leader among DFIs in the world, but that is not good enough. It is not good enough for us to be better than other DFIs. We can keep improving. After the evidence session, I had a conversation with Oxfam about the concrete proposals it has for more that we could do internally. We are very open to those kind of challenges. There are absolutely no issues from us or from CDC in trying to prove again and again that we are a world leader on transparency. I thank the hon. Gentleman for saying that he will withdraw the new clause.
Stephen Doughty
I thank the Minister for his remarks. I think it would be helpful and more likely to gain support across the House were he to come back with a lower level of increase over a defined period and were he not to give those secondary powers. I do not think anyone is suggesting that there is not the potential for more good work to be done through CDC, but it is the question of the value and the caveats that need to be put in place before that goes forward. I do not think that the Government have made that business case yet. I look forward to hearing more from the Minister in due course, and I thank everyone who has taken part in today’s debate. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
Rory Stewart
On a point of order, Ms Ryan. I put on record my enormous thanks to the Bill team, to the Doorkeepers, to Hansard, to the Clerks and to you for your chairmanship. Please put on record that we have explored all the amendments at great length and are finishing the Committee half a day early. In particular, I give huge thanks to all the Members—the hon. Member for Coatbridge, Chryston and Bellshill, my hon. Friend the Member for Congleton, the hon. Member for Cardiff South and Penarth, my hon. Friends the Members for Rochford and Southend East and for Bedford, the hon. Member for Glasgow North, my hon. Friend the Member for Gloucester, the hon. Member for Bradford East, my hon. Friend the Member for Stafford and the hon. Member for Edmonton—who contributed greatly to our debates. I also thank my hon. Friends the Members for Rochester and Strood and for Sutton and Cheam, the hon. Member for Wirral South, my hon. Friend the Member for Burton and the hon. Member for Ogmore for their attendance.
I will conclude with a personal note. I pay huge tribute to the level of scrutiny I have received from the hon. Members for Cardiff South and Penarth and for Glasgow North. I am extremely pleased, to be honest, that I am defending an institution that I am genuinely proud of and that does a genuinely good job. If I was not confident about the institution I am defending, it would have been extremely uncomfortable to be subjected to that level of expertise and scrutiny. I thank them so much for doing such a good job of holding us to account. I again thank the Clerks, the Doorkeepers, Hansard and everybody for allowing us to conclude half a day early.
Kate Osamor
Further to that point of order, Ms Ryan. I want to tag on to the Minister’s remarks and thank everyone who contributed today. My hon. Friend the Member for Cardiff South and Penarth has worked tremendously hard, and I wanted to thank him for all his work and the scrutiny he has put the Minister under. I appreciate it, and it has helped the debate no end.
Bill to be reported, without amendment.