Oral Answers to Questions

Debate between Stephen Doughty and Rory Stewart

Wednesday 17th July 2019 Commons Chamber

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

T1. If he will make a statement on his departmental responsibilities.

[The Secretary of State for International Development (Rory Stewart)]

The central challenge in international development going forward will be the quality, expertise and number of our permanent staff on the ground. As international development becomes more complex, with conflict and climate, as we have to work more closely with other Departments and, above all, in a world in which developing countries are looking not for money, but for expertise, over the next 15 years we will have to increase the expertise, the quality and, above all, the number of civil servants, moving away from short-term consultants to having British experts on the ground.

[Stephen Doughty]

I am sure the Secretary of State will be aware that Birmingham this week joined Cardiff, Sheffield and Tower Hamlets in calling for the recognition of Somaliland. Does he agree that diaspora communities here in the UK play a crucial role, not only in Somaliland, but in many other contexts, in providing not only direct assistance, but the type of trading, business and expert links that can help development in so many countries?

[Rory Stewart]

We are immensely fortunate in the UK with our diaspora communities because they provide both powerful advocacy, for example, with Somaliland on female genital mutilation, and expertise—linguistic, deep country expertise—to ensure that our programmes on the ground are of the requisite quality.

Oral Answers to Questions

Debate between Stephen Doughty and Rory Stewart

Thursday 6th June 2019 Commons Chamber

[The Secretary of State for International Development (Rory Stewart)]

There is one big issue at the centre of everything that we do in development, which is climate and the environment. This is a global problem—it is not just a domestic problem—and it needs a global response, which is why the Department for International Development is central to that response. That is why I would like to double the amount that this Department spends on climate and the environment, and why I would make sure that every policy in our Department is properly assessed for its impact on climate and the environment, and it is on that that we will be judged over the next generation as a Department and as a nation.

[Stephen Doughty]

I welcome the Secretary of State to his role and wholeheartedly agree with what he just said on climate change. Indeed, climate change has affected Somaliland. As he will know, I am secretary to the all-party Parliamentary group on Somaliland and we recently welcomed the Finance Minister. Can he say what steps his Department is taking to support the upcoming parliamentary elections in Somaliland and also the talks between Somaliland and Somalia? Will he meet the all-party parliamentary group to discuss what we can do to support that fantastic country?

[Rory Stewart]

First, I pay huge tribute to the work of the APPG on Somaliland. As all Members of the House will know, Somaliland is a remarkable success story. Somalia itself has been through a very difficult situation, and Somaliland is a small miracle in a sea of difficulty. We worked very closely with Somaliland on the last presidential elections and we will be supporting the new parliamentary elections. On my last visit to Somaliland, I was lucky enough to meet the gentleman who is now President. There is much more we can do and I would be delighted to sit down with the hon. Gentleman to discuss all those issues.

Yemen: Political and Humanitarian Situation

Debate between Stephen Doughty and Rory Stewart

Wednesday 5th July 2017 Westminster Hall

[Rory Stewart]

That is a challenge for me, and I would love to take it on. Let me try to touch on some things in the remaining five minutes. The one thing that I unfortunately cannot touch on—the elephant in the room—is arms sales. There is a serious legal proceeding looking exactly at the question that has been posed by everybody here: whether the UK Government were, as we believe, in compliance with our international humanitarian obligations. A judge and some expert lawyers will very soon be able to resolve whether Philippe Sands is correct or we as the British Government are correct.

[Stephen Doughty]

The Minister rightly states that he cannot do that, and I do not disagree with his wider analysis of the roots of this conflict and the wider dynamics in the region. However, can he explain why we are not using the full width of our diplomatic apparatus to put pressure on the Saudis and other parties in the conflict? Why did the Prime Minister not raise it in her call with the new Crown Prince, and why have we not called Saudi Arabia out on its repeated failure to give answers to the investigations into the allegations that have been made? The Minister said that they were running out of time and that we are getting frustrated, but we have not called them out on it.

[Rory Stewart]

The Prime Minister raised it directly on her April visit to Saudi Arabia, Ministers have raised it repeatedly and we have had senior military staff on the ground.

The overall picture, which I will try to touch on, is how we combine those political levers and our influence on Saudi Arabia with the influence that can be exercised by others. What influence could we exercise on, for example, the United Arab Emirates, in order to influence Saudi Arabia? What influence can we exercise on the United States? The hon. Member for Glasgow Central raised the issue of the Hodeidah port. One of the most important things that happened in changing our fears around that port was General Mattis’s intervention on the question of a military intervention there, which made a huge difference.

It is really important to understand that, along with those political and diplomatic approaches, we have to combine our humanitarian approach, which I do not think we have talked about enough, and we have to think about a long-term political solution. In terms of that humanitarian approach, we are doing an enormous amount. We are putting in people to focus on cholera and we have a huge focus on food delivery and shelter.

We are also doing an enormous number of smaller things, for which we are not getting credit. We are working with the UN specifically on the crane issue, on funding UN Humanitarian Air Service flights and on specifically funding the office of Ismail Ould Cheikh Ahmed, who is the UN envoy to Yemen. Those are smaller, million-pound projects that are all trying to identify weaknesses in the system that we can then plug. We are also working on financial flows and on trying to make sure that wheat gets in.

However, the overall solution to this situation has to be political. That is where we need to get to—but what does it look like? It is fine for me to stand up here and spout jargon. In theory, that political solution involves a genuinely inclusive answer. It has to include not only the regional powers but, above all, without fear or favour —as identified by Simon Shercliff, our really good ambassador to Yemen—all the warring parties. It cannot be a military solution, and it must include other people.

The solution must include people in Hadramaut, who have not been included in conversations to date, and it must also really think about how we include women. That is not a trivial point. One of the real strengths of what happened in 2013-14 was the genuine inclusion of Yemeni civil society. That made a huge difference, because although Yemen is now being presented to us as though it is nothing but some medieval tribal cockpit of violence, it is in fact a highly sophisticated society with a very active civil society, and the inclusion of women in civil society groups will be central to getting a lasting solution. It will also mean that we, the British Government, will have to be honest with Parliament about the real problems that we face.

There is a huge emphasis on the security side, huge diplomatic pressure and a lot of humanitarian spending. However, above all, these are the questions I will pose to finish on: first, where is the UN going to go on this? One problem is that it will be extremely difficult, in the current context, to get a new UN Security Council resolution through, because some members of the Security Council will oppose it. Secondly, what is the current relationship between Ismail Ould Cheikh Ahmed and the Houthi? He was shot at when he last went into Sana’a. Thirdly, what is the UAE’s position? Fourthly, how will it be possible to integrate other groups? Finally, what is the long-term position of President Hadi? Those critical, detailed questions will determine our success or failure.

Commonwealth Development Corporation Bill

Debate between Stephen Doughty and Rory Stewart

Programme motion: House of Commons & 3rd reading: House of Commons & Report stage: House of Commons
Tuesday 10th January 2017 Commons Chamber

[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.

Commonwealth Development Corporation Bill (Second sitting)

Debate between Stephen Doughty and Rory Stewart

Committee Debate: 2nd sitting: House of Commons
Tuesday 6th December 2016 Public Bill Committees

[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.

--- Later in debate ---

[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.

[Rory Stewart]

Will the hon. Gentleman give way?

[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—

[Rory Stewart]

On the back of a fag packet?

[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.

[Rory Stewart]

rose—

[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.]

--- Later in debate ---

[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—

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.

Commonwealth Development Corporation Bill

Debate between Stephen Doughty and Rory Stewart

2nd reading: House of Commons & Money resolution: House of Commons & Programme motion: House of Commons
Tuesday 29th November 2016 Commons Chamber

[The Minister of State, Department for International Development (Rory Stewart)]

I want to say a great thank you to all the hon. and right hon. Members who have taken part in the debate. I particularly praise the tone set by the hon. Member for Edinburgh East (Tommy Sheppard) and the way in which he picked up on the good atmosphere in the Chamber. I also pay tribute to the tone set by the shadow Secretary of State, the hon. Member for Edmonton (Kate Osamor) and by the shadow Minister, the hon. Member for Bradford East (Imran Hussain), and to the constructive way in which they have approached this short but quite technical piece of legislation.

Four major types of concern seem to have been raised today, and I will try to deal with them briefly, with the aim of stopping at exactly 5.20 pm. Those questions were as follows. Why are we focusing on private sector-led economic development? How do we balance the private and public inclusion in that development? Why are we using development finance institutions and, in particular, what quantity of money are we putting into them? Why are we specifically putting money into the CDC? That last question relates to concerns that have been expressed about the governance and transparency of the CDC. I shall try to deal with those four types of challenge in turn.

The first is a general concern about the weight that we place on the private sector’s role in economic development in general. That concern was expressed by a number of people today, particularly Members on the Opposition Benches. The shadow Secretary of State used the word “profiteering”, and the hon. Member for Edinburgh East talked about international capitalism. The right hon. Member for Leicester East (Keith Vaz) spoke of distracting our attention away from humanitarian concerns, and the hon. Member for Glasgow North (Patrick Grady) was worried that some of the investments might be made at the cost of other potential investments. The hon. Member for Kilmarnock and Loudoun (Alan Brown) emphasised the fact that aid is needed as well, and the hon. Member for Cardiff South and Penarth (Stephen Doughty) emphasised the importance of health and education.

The way in which to deal with these generic concerns about the role played by the private sector in economic development—and with all the matters in the general portfolio of the Department for International Development —is to state that what we are talking about today is just a part, not the whole, of what DFID does. Economic development is absolutely vital—I will come on to that—but it is currently less than 20% of the Department’s overall portfolio. The shadow Secretary of State quite rightly raised water and sanitation as important elements of our Department’s strategy—they are—but they are not primarily delivered through development finance institutions. The £204 million that we spent in 2015-16 came from other parts of the Department’s budget. As for the humanitarian concerns mentioned by the right hon. Member for Leicester East, the £2 billion that we are spending over this period on Syria alone comes from other parts of the departmental budget.

However, as pointed out by the hon. Member for Yeovil (Marcus Fysh), poverty alleviation cannot happen without economic growth, and that relies on the private sector. It relies on the private sector for jobs, for Government revenues and for the services that the sector provides. It is not a zero-sum game. The hon. Member for Glasgow North issued a challenge when he talked about investments coming at the cost of others, but it is not that kind of zero-sum game. To take a specific example, we were criticised by one Member for some of our investments in electricity, as opposed to other forms of infrastructure, as though that was somehow at the expense of other developmental objectives. However, that electricity not only delivers jobs through the business side, but allows us to deliver our objectives in health and education. We cannot have a decent education service and get children into school if there is no electricity and they have to go 10 miles to pick up firewood. We cannot deliver decent healthcare in Africa unless there is refrigeration for immunisation drugs and unless we have the electric lighting that allows doctors to perform surgery in the clinics.

We are delivering on the STGs, particularly goals 7 and 8 on energy and economic growth. Ellen Johnson Sirleaf, who is both a distinguished international civil servant and a President of an African state, has said that poverty in Africa cannot be eliminated without private sector growth. That also reflects the demands of Africans themselves. I was taken by the statements of my hon. Friend the Member for Bedford (Richard Fuller) about mutual respect. Recent surveys conducted in sub-Saharan Africa show that sub-Saharan Africans identify energy and jobs as two of their top three priorities at a level of 80% or 90%. We should respect their wisdom and desires when we talk about the kind of development investments that we make.

The next question is how to balance the roles of the public and private sectors in delivering development. I do not want to talk about this too much, but it is clear that there are serious constraints on the public sector’s ability to deliver all forms of commercial activity, partly because it often lacks the skills to ensure that those things happen. It lacks the skills to understand the market dynamics, the logistics, the productivity and the efficiency. We have all seen well-intentioned charitable and Government development projects attempt to set up businesses that have not worked. However, as Opposition Members have pointed out, the private sector cannot do it on its own—there are clear market failures. Returning to electricity in Africa as a good example, the private sector has clearly failed. If the private sector had been able to do things on its own, we would not be in a position where only 6 GW of power generating capacity has been built in Africa over the past decade. In China, 8 GW of capacity is built every one to two months.

That brings us to the question why we are putting money into DFIs, which was the particular challenge of the shadow Minister. The shadow Minister and the hon. Members for Glasgow North, for Cardiff South and Penarth and for Edinburgh East focused on the quantity of investment. The response is that I am afraid that some people still confuse stock and flow—in other words, the annual overseas development spend and the creation of a capital fund. The second response is that it is an option, not a commitment. What we are doing is raising the ceiling for what CDC, through rigorous business cases, can request; we are not imposing this on CDC. Over a five-year period, even if the maximum were drawn down, we would be talking about 8% of the total anticipated ODA spend, which is smaller than the amount I calculate the Scottish Government appear to be putting into a similar instrument in proportional terms.

There have been challenges on strategy. The strategy will be produced in line with departmental practice at the end of this year, but this Bill is enabling legislation, so we are putting the horse before the cart. We need the enabling legislation in place—we need the ceilings to be lifted—before we can look at individual business cases that wish to draw down on that money.

That brings us to the overall question why use DFIs at all, and I wish to pay a huge tribute to my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell), who provided perhaps the most powerful explanation of why we go into these mechanisms in the first place. The answer of course is that they bring together the very best of the private sector and the very best of the public sector. They provide the discipline of the private sector in insisting on returns that produce sustainable enterprises and sustainable revenues; and they provide freedom from political interference and they provide leverage. To respond to my hon. Friend the Member for Bedford, let me say that they also allow us, as my hon. Friend the Member for Portsmouth South (Mrs Drummond) pointed out, to draw in other forms of capital behind. Some £4 billion of investment from the CDC has drawn an extra £26 billion into our investments in Asia and Africa. In addition, this approach provides good value for money for the taxpayer.

[Stephen Doughty]

The Minister is talking about the capital that this approach has brought in, but that has not always been in areas where capital has not been available—I think of places such as India. Given that he is about to publish the bilateral aid strategy, will he consider forcing the CDC to look more closely at the lower-income countries in Africa and elsewhere that need the investment the most?

[Rory Stewart]

I am trying to move towards my 5.20 pm conclusion, but let me deal with that quickly. As I was saying—and this partly answers the point—we are combining the best of the private sector incentives with the best of the public sector, because we are exactly able to prioritise maximising development impact. That is where our development impact grid, which, with respect, the hon. Gentleman is not providing enough focus on, answers his question. Members on both sides of the House should be aware that that grid targets explicitly countries with the lowest GDP per capita, countries where investment capital is not available and countries where the business environment is worse—that is the Y axis of the grid. On the X axis of the grid, we have sectors in which the maximum employment is generated. Every business case since 2012 has been assessed exactly against those criteria, which is why, as my right hon. Friend the Member for Sutton Coldfield has pointed out, many of the criticisms made today—the idea that somehow the CDC has lost its way—are not appropriate for the CDC of 2106; they are appropriate for the CDC of 2012 or 2010.

Let me deal with a few of the objections. An investment in Guatemala was mentioned, but all investments in Latin America stopped in 2012. An investment in Xiabu Xiabu in China was mentioned, but all investments in China were stopped in 2012. The issue of pay was raised, but, as has been pointed out again and again, the pay of the chief executive has been reduced by two thirds, to a third of its predecessor. Tax havens were mentioned, but we no longer, in any way, ever invest for reasons of tax or secrecy; we invest only to find secure bases for investment and to pool other forms of capital. All our investment goes simply into locations that meet the highest OECD transparency standards. On development impact, our DFID chief economist, Stefan Dercon, has worked with some of the most distinguished academics in the world, from Harvard and elsewhere, to create exactly the kind of impact that people are pushing for.

That is why right hon. and hon. Members should support this Bill. It is not only because of the history of the CDC, to which the shadow Secretary of State paid such good tribute to in her opening remarks: its experience of 70 years; the culture it has developed; the extraordinary brand that the institution has in Africa and south Asia; and the focus that my right hon. Friend has brought to this institution since 2010—its rigour and its narrowness of focus, which makes it very unusual among DFIs. It is one of the only DFIs in the world to be spending so much in conflict-affected states. It is accountable directly to DFID, which owns 100% of its shares. The examples of its performance today can be seen in the DRC; in places such as Burundi, where off-grid power would not be built without the CDC; and in its investment in energy through Global in Africa.

In conclusion, we should take pride in this institution; it is a very great British institution. In its historic evolution it has gone from a past where it was dominated in the 1950s by ex-military officers interested in building rafts and going into jungles to its current leadership under Diana Noble, a chief executive who exemplifies much of the best in development thinking and some of most progressive intuition in the British Government. She ensures that we are delivering in Pakistan gender-based programming that affects workers’ rights and that we have an institution that is today highly relevant and that faces and solves some of the greatest development challenges in this century.

Question put and agreed to.

Bill accordingly read a Second time.

Commonwealth Development Corporation Bill: Programme

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Commonwealth Development Corporation Bill:

Committal

(1) The Bill shall be committed to a Public Bill Committee.

Proceedings in Public Bill Committee

(2) Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Thursday 8 December 2016.

(3) The Public Bill Committee shall have leave to sit twice on the first day on which it meets.

Proceedings on Consideration and up to and including Third Reading

(4) Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion three hours after the commencement of proceedings on Consideration.

(5) Any proceedings in legislative grand committee and proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion four hours after the commencement of proceedings on Consideration.

(6) Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and up to and including Third Reading.

Other proceedings

(7) Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further messages from the Lords) may be programmed.—(Andrew Griffiths.)

Question agreed to.

Commonwealth Development Corporation Bill: Money

Queen’s recommendation signified.

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Commonwealth Development Corporation Bill, it is expedient to authorise:

(1) any increase in payments out of the National Loans Fund or money provided by Parliament resulting from provisions of the Act—

(a) increasing the limit in section 15(1) of the Commonwealth Development Corporation Act 1999 to £6,000 million; and

(b) conferring power to increase that limit to an amount not exceeding £12,000 million;

(2) any increase attributable to those provisions in the extinguishing of liabilities in respect of guarantees under the Commonwealth Development Corporation Act 1999; and

(3) any increase attributable to those provisions in payments into the National Loans Fund or the Consolidated Fund.—(Andrew Griffiths.)

Question agreed to.

Yemen

Debate between Stephen Doughty and Rory Stewart

Tuesday 18th October 2016 Commons Chamber

[Rory Stewart]

I pay tribute to Jane Marriott, our ambassador at the time, to the work done by her predecessor, John Wilkes, and to the DFID work that took place behind the scenes. Such things are difficult and I am not in the business of second guessing officials, but the lesson we should draw from all these conflicts is the one that I pointed to earlier: the international community must be cautious not to become over-optimistic and to be aware of the ways in which talking to an elite in the capital and engaging with the civil society in Sana’a misled us about the real resentment that existed in the countryside.

How do we address the situation now? Central to that is understanding that decades of ex-President Saleh’s policies lie underneath the problems we face today. He deliberately exacerbated those tribal divisions, and deliberately created that culture of corruption and impunity, which he is now so expertly exploiting in order to maintain instability in that country. But we cannot be naive here: simply removing ex-President Saleh is not going to solve this problem on its own. The problems in Yemen go much deeper than that and need to be addressed systematically, from politics through to the humanitarian dimension.

Let me touch on those two things. As the right hon. Gentleman pointed out, politics is at the centre of this—politics, politics, politics. Characteristically, he asked 10 questions, which I have to deal with in less than 10 minutes, but I will try to deal with them quickly before moving on. Hon. Members will notice that his 10 questions have largely focused on what I would call the high politics and diplomacy, and I will try to address them one by one and then take this into the bigger issue of the solution to the Yemeni conflict. First, he asked what the UK’s position is in relation to the Kuwait talks. The answer is that those talks were held between the parties in the conflict—the regional players and the Yemenis themselves. The UK ambassador to Yemen was present and was in the room, but in a diplomatic capacity and not as a party to the conflict.

Secondly, the right hon. Gentleman asked what support we are providing to Saudi Arabia. The current operations are, of course, Saudi-led, and the United Kingdom is not embedded in the Saudi military operations. As the Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for Bournemouth East (Mr Ellwood) pointed out in his statement today, we are very clear that the investigation needs to be led, in the first instance, by the Saudi Government, just as similar investigations of the United States or the United Kingdom Governments for actions taking place in Afghanistan and Iraq were led first and foremost by those Governments. He has said, however, that if that investigation is not adequate, he will look at this again.

[Stephen Doughty]

The Saudi Foreign Minister told us yesterday that the UK had provided both technical and personnel support to investigations for the past six to eight months, and that advice had been provided on targeting. As one of the guardians of the humanitarian principle, will the Minister be clear about what support has been provided by the Department for International Development specifically in relation to investigating violations of humanitarian law?

[Rory Stewart]

I am happy to provide more detail, but, in essence, we currently provide two forms of support and I will elaborate on this in a written answer. We provide training and capacity support, which includes statements about international humanitarian law, but that is not about this military operation—that is in general for the royal Saudi air force. Secondly, my Department and the Foreign Office have worked together through the UN process on international humanitarian law, particularly in a meeting in Geneva last month—this is partly in response to the question raised by the right hon. Member for Leicester East—where we are pushing for more staffing for the independent UN investigation on human rights through the Office of the UN High Commissioner for Human Rights and, in particular, its Yemen office.

The right hon. Gentleman asked a question about arms sales. We take those sales very seriously. As Members from both sides of the House are aware, the report by the Committees on Arms Export Controls was divided, but we continue to monitor carefully all actions of international humanitarian law, although this is not a prime responsibility of my Department. He asked whether we would be in the room for peace talks, and we absolutely will. Our current ambassador, Edmund Fitton-Brown, is very close to the UN representative, and so long as these are not talks taking place between the parties to the conflict, the UK is present in a diplomatic capacity.

The right hon. Gentleman asked whether the Prime Minister would be prepared to call King Salman of Saudi Arabia and President Hadi. Of course, as the right hon. Gentleman is aware, on Sunday the Foreign Secretary met the Saudi Foreign Minister, but more than that the Saudi Foreign Minister came to this House of Commons yesterday to be directly accountable to this Parliament. Indeed, the Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for Bournemouth East spoke to President Hadi in a visit to Saudi Arabia last week. The right hon. Gentleman asked about sanctions. Of course we will continue to put pressure on all parties to this conflict to support the current peace. He asked whether we are providing support for the special envoy, and the answer is that the UK Government are providing more than £1 million of direct support for the staff of Ismail Ould Cheikh Ahmed, the UN special envoy to Yemen.

In the remaining minutes, I hope to talk about the broader context, in addition to all the good 10 points the right hon. Gentleman raised. We need to look at politics at local and regional level.