Bost Project (Afghanistan)

Steve McCabe Excerpts

Tuesday 18th March 2014 Westminster Hall

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

I am grateful for the opportunity to raise my concerns regarding the Bost agri-park and airfield project. I would not normally seek an Adjournment debate on such an issue, but since January 2013 I have been seeking answers through parliamentary questions on the role of the Department for International Development in this project: how much it cost the taxpayer, what went wrong and what lessons have been learned. I feel as if I have hit a brick wall and have had to prise out any information that I have received from the Secretary of State and her officials. That culminated in a question to the Secretary of State on the Floor of the House on 5 March this year, when she told me that this project was all the fault of the previous Administration and that the biggest waste of money was the £5,000 that she claims it has cost to answer my parliamentary questions. If it really costs in excess of £140 to cut and paste previous answers, perhaps the biggest efficiency saving in DFID might come from the Secretary of State and her Ministers reviewing their approach to answering questions from Members of this House. That is simply not good enough, so today I want to probe whether the public are being kept in the dark over this scheme, and how exactly their money was used. I hope that the Minister will be more forthcoming than others in the Department have been to date.

In January 2013, I discovered that the project was abandoned after a considerable amount of expenditure from DFID, but that a consultant’s report—the Coffey report—had been prepared on the project in July 2010. I asked whether the report was available, which Minister had received it and which Minister had authorised the project. I was told that it was not available and that it had been received not by the Minister but by an official, because at the time officials had the delegated authority to approve expenditure of up to £40 million. The Secretary of State told me that it had been received by DFID’s senior representative in the Helmand provincial reconstruction team and that a DFID deputy director had authorised the project.

Since the Secretary of State would not let me see the Coffey report, I made a freedom of information request to see a report that had been prepared by the Mott MacDonald consultancy firm. I was told that the information was being withheld because individuals have the right to the protection of their personal information, although I am not sure what personal information there could be in a report that is essentially an impact assessment of the project’s viability. It is not right to disguise the key decision makers from public view. I was also told that the public authority has the right to refuse to disclose information containing unfinished material. However, by the time I submitted the FOI request, DFID had already closed down the project.

I reverted to asking parliamentary questions. I asked whether DFID had considered any independent or external reports on the viability of the project, and if it had, whether they might be placed in the Library. By that time, I was aware of the earlier involvement of USAID, and that there were at least three reports querying the viability of the project. I asked whether there had been discussions with US counterparts on the project prior to DFID’s taking it over, and whether the minutes of those discussions were available. The Secretary of State confirmed that DFID worked closely with USAID on a range of projects, including Bost, but refused to make the details available.

To satisfy myself that aid money had not simply been squandered, on 11 September 2013 I asked how much money in total had been spent on the project and what the original budget was. The reply was that in 2009 a total of £8.42 million had been spent on the project and that the money had come partly through the Helmand growth fund and partly through other budgets for which DFID was responsible. There was no reply about the size of the overall budget, but I was told that in 2010 Ministers reached the conclusion that the programme did not represent value for money for the taxpayer, and it was discontinued. The Secretary of State confirmed that £200,000 had been spent on improving local capacity and training costs, including sending Afghan nationals to training workshops in Dubai.

Another cost was the need for fluent Pashto speakers, and I was naturally curious to know how many were employed and at what cost. In a typically helpful answer, the Secretary of State told me that DFID Afghanistan employs local staff and fluent Pashto speakers on all projects as appropriate. I mention that because the Coffey International consultancy group’s 2010 report for DFID specifically recommended hiring a fluent Pashto speaker to negotiate with locals on the issue of leaseholding, which it saw as a major problem with the main economic proposals in the plan.

Given that I knew that Ministers had closed the project after assessing that it would not provide value for money, I asked which Minister had overall responsibility and therefore presumably had made the decision. The Secretary of State replied that the programme had not been approved by a Minister, but that she had personally decided to pull the plug after her visit to Afghanistan in December 2012—two years after the date on which she previously claimed DFID had ended the project.

I thought it might be helpful to try another FOI request, so I asked to see the economic appraisal of the project produced by the Upper Quartile consultancy firm, dated 2010. I was told that DFID did indeed hold information relevant to my request but that it was being withheld on the grounds that it was unfinished material. That was February 2014—at least two or four years after DFID halted the project, depending on which parliamentary answer one relies on.

Although I could not establish exactly when the project ended, what advice Ministers relied on when they made the decision or how much had been spent, I thought it might be worth while trying to work out how much other agencies had contributed, so I asked who had paid for the road-building programme. Helpful as ever, the Secretary of State told me that it had been funded by both the US and the UK. It has been suggested that several million pounds was spent on roads and access to the park. That appears to have involved laying roads, digging them up and relaying them. A journalist was told by locals that many of the roads had been dug and relaid so many times that they could not accommodate the transport used by the local people and that some of the access areas were too small to allow vehicles on to the site.

It seemed obvious that the Department was being less than helpful. I was not asking about national security, issues affecting the safety of our troops or negotiations with the Taliban, but a project on which a considerable amount of British taxpayers’ money was spent by our aid Department. It appears the project was originally intended to assist local traders and businessmen in the Lashkar Gar region, perhaps to divert them from growing poppies. It was envisaged that they could be encouraged to grow crops and develop other products on a safe site with a reliable source of energy and easy access, and then transport their produce to other parts of Afghanistan from the airfield—hardly earth-shattering stuff. But not enough homework was done and not enough attention was paid to concerns before lots of our taxpayers’ money was spent. Apparently, virtually no work was done to identify potential numbers of interested parties who might lease or buy plots of land on the agri-park, a key feature of the plan. As it turned out, people in the region had little knowledge of the concept of leasehold and were hostile to the idea.

I know from the report prepared by the Coffey consultancy group that DFID was told:

“The Bost Park represents a high risk investment that has a high risk of financial failure.”

When I asked about the return on the investment, I was told that the completion of phase 1 enabled three commercial flights per week to Bost airfield, connecting Helmand to the rest of the country and cutting journey times between Kabul and Helmand from two days to a one-and-a-half-hour flight. Naturally, I wondered whether there was evidence that local businesses were using the flights, but when I asked about that, the Secretary of State replied once more that the project had been approved by an official in 2009 who approved projects of less than £40 million, and that she had discontinued it in 2012. I also found out something new: having ended DFID’s involvement, she had handed the completed park designs over to the Afghan authorities.

I also discovered that the first commercial flight to Bost airfield was actually in June 2009, but that although the Department did not hold any information on businesses using such flights, it could confirm that the airfield was not used for any air freight. The Coffey report stated that the consultants were sceptical that local businesses would use the airfield because of the high cost of air freight and the low return local farmers would receive for produce such as flour and maize.

The Secretary of State’s first answer on finance told me that in 2009 a total of £8.42 million was spent on the project. She said in a subsequent answer that £8.8 million was spent prior to 2010, and in a further answer in November 2013 that £4.56 million had been spent between 2009 and 2013. That seems slightly curious if DFID involvement ended in 2010, or even 2012. It appears that, at the very least, £12.76 million has been spent by faceless bureaucrats on a scheme that did not succeed in stimulating local business, leasing or selling plots of land on the agri-park, or transporting goods via flights from the airfield. The Coffey report suggests that there are many additional costs—including salaries, land acquisition, environmental facilities, waste disposal and training—that are not part of the original estimates.

We know that there are a lot of corrupt officials in Afghanistan. The Secretary of State has shown her irritation at being asked to explain the events I have outlined. We are now on the third Secretary of State since the issue started, and I am extremely irritated that the Secretary of State claims to have wasted £5,000 on bland, repetitive, cut-and-paste, often non-answers that seek to obscure rather than reveal the truth about the project.

I am a supporter of aid, but my constituents and I have a right to know what our money is being spent on. There is a funny smell about the Bost agricultural park and airfield project, and nothing that the Secretary of State has done so far has helped to clear it up.

[The Parliamentary Under-Secretary of State for International Development (Lynne Featherstone)]

It is a pleasure to serve under your chairmanship this afternoon, Mr Streeter. I am glad to attend this debate and discuss DFID’s involvement in the Bost airfield and agricultural business park project.

I will repeat some of the information that the hon. Member for Birmingham, Selly Oak (Steve McCabe) has already been given and is dissatisfied with, but I hope that the timeline I give him will help to explain why and when decisions were made. He knows that the Bost airfield and agricultural business park project was approved in 2009, under the previous Government, and that Ministers did not authorise the project. At that time, Ministers had delegated authority for routine project spending to officials, up to a maximum value of £40 million. However, approval for the project followed a commitment in March 2009 by the then Secretary of State for International Development to provide £32 million for infrastructure in Helmand over the following four years.

The hon. Gentleman will be aware that DFID was present in Helmand as part of the British-led provincial reconstruction team in Lashkar Gah, the joint civilian-military team working to support the local Afghan government to bring governance and development to the province, alongside the security delivered by NATO and Afghan troops. I am sure the hon. Gentleman would agree that a simple military solution is never the answer; there will always be political considerations, and development and jobs are also required.

The Bost airfield and agricultural business park was approved as part of the provincial reconstruction team’s development plan for Helmand. Both major components of the project—the business park and the airfield—were designed to bolster Helmand’s economy by supporting local businesses and providing secure facilities. Helmand is not the easiest environment in which to work, and the situation was extremely fragile when the project was being planned. The provision of secure facilities was designed to allow local businesses to operate and to increase access to markets and commercial opportunities, which in turn would provide much needed jobs and economic growth for the province.

DFID also agreed to improve infrastructure and provide essential facilities at Bost airfield to connect Helmand businesses to the wider Afghan economy. That included building a fire station, a police station and five security towers, to make the airfield secure and fully operational, as well as an access road and car park. DFID officials met with local businesses to discuss the business park in 2009, in advance of the project being approved. That included regular consultation with the Helmand Business Association—now the Helmand National Investors Association—which represents local businesses. The group confirmed local demand for facilities of the kind planned.

DFID’s financial analysis showed that UK funding would result in a positive return for our investment—at that point. DFID therefore agreed to fund the Bost project in partnership with the Afghanistan Investment Support Agency, which agreed to take on a range of commitments, including finding a regular power supplier, land ownership issues—as the hon. Gentleman has mentioned—and environmental clearance for the park.

In 2011, following some delays in project implementation by our Afghan partners, DFID’s new financial analysis showed a potential negative rate of return on the agricultural business park. DFID’s team in Afghanistan took action based on that evidence. The project was redesigned, separating the business park and the airfield to ensure that progress on the airfield would not be hampered by the problems and setbacks with the business park. It was also agreed that the business park project would be taken forward in phases, meaning that funding could be withdrawn if it became clear that further investment would not be sustainable.

In 2012, DFID—

[Steve McCabe]

Will the Minister give way?

[Lynne Featherstone]

I will, although I might lose my thread.

[Steve McCabe]

My question is very simple. The Minister said earlier that she could give a ballpark figure of £32 million for the project. Can she tell us how much has been spent on the various phases, reshuffles and re-designations? How much British taxpayers’ money has been spent overall?

[Lynne Featherstone]

As I go through, I will set out the sums involved, but the critical point is what sum was not spent because of the non-continuation of the business park, which cost £3.1 million. As the hon. Gentleman rightly said, the plans were then handed over to the Afghan authorities so that the work would not be wasted and the whole thing could be rescheduled. That was not achievable within the original conception, which is why the plan was cancelled. Rather than waste a further £6 million, the Secretary of State decided to stop the project at that point, hand over the plans and let the project continue at a pace that would be more achievable by the Afghan authorities, without involving the British Government or the British taxpayer in further expense.

In 2012, DFID gave our in-country partners a fixed deadline to deliver the commitments that they had previously agreed in relation to the business park. Towards the end of 2012, it became apparent that our Afghan partners would not meet those commitments; they simply were not forthcoming. It was clear, therefore, that the business park could not be completed within the original time frame and that further UK investment in the work would be poor value for money.

On the £32 million, I want to clarify that it was not £32 million for Bost; £32 million was the total commitment to infrastructure in Helmand. Project approval followed the commitment by the then International Development Secretary.

Towards the end of 2012, as I said, it became apparent that the commitments would not be delivered, the business park would not be completed in time and more UK money would be at risk if we pursued it further. The Secretary of State agreed to cancel further investment in the business park in January 2013, to prevent any further waste of taxpayers’ money. However, the completed park designs were handed over to the Afghan authorities to enable them to pursue the project over a revised time frame. Personally, my view is that that was a sensible way to deal with an unfortunate situation, while saying that the project was still a good idea. However, it had to be deliverable in time and on budget, and that is now up to the Afghan authorities.

On the monitoring of projects, Afghanistan is an inherently risky country, as I am sure the hon. Gentleman understands. Development projects, particularly those in insecure and conflict-ridden areas such as Helmand, will always include an element of risk. He might have got hold of a copy of the report to which he referred—as he quoted from it, I think that my assumption is probably correct. As I understand it, the report was unfinished and high-risk, as one would expect for Helmand. That is acknowledged explicitly in the Government’s building stability overseas strategy, which endorses

“taking risks…in order to secure transformational results”.

As a DFID Minister, I am always saying to DFID officials, “I want to know as much as I can about a risk, but I don’t want you not to suggest taking risks if we are to get transformational results.”

[Steve McCabe]

I accept that there is an element of risk, certainly for the money, but now that DFID’s involvement in the project has finished, what is the purpose of keeping all the reports hidden from Members of this House? Would it not be better for us to understand the thinking and the decision-making processes? What is the Minister protecting now?

[Lynne Featherstone]

I am not protecting anything. It is not our practice to publish either unfinished reports or internal reports. I am sure that the hon. Gentleman understands that what is most appropriate is to have checks in place to monitor projects and ensure that they are proceeding as planned. That is what we do with UK taxpayers’ money: we put in milestones so we can check that we are not going off-track. We must ensure that things proceed as planned and take action when that is not the case.

In that respect, the Bost project is a good example of DFID acting on the basis of changing circumstances in Afghanistan. If we saw a project that was beginning to fail, and did not stop it, we would be criticised for not terminating it even though it was not going to provide the return that we expected.

Work continued on the successful upgrades to Bost airfield and was completed in November 2013. There are now two return flights each week from Kabul to Bost, as the hon. Gentleman said, cutting the journey time from two days to one and a half hours.

In recent weeks, the hon. Gentleman has asked a lot of questions. Consequently, I have asked a lot of questions about why he has been asking a lot of questions. As I was responding to this debate, I wanted to understand the basis of the issue. Nothing has been covered up; it was simply that the project was not achievable on the proposed timeline, and the partners involved were not delivering. By separating out the two projects, we ensured that the good part of the project could be finished. He has said that it is a cover-up, but I reject that. There is no cover-up—simply a project, or half a project, that was not going to deliver.

As the hon. Gentleman knows, most of the answers have been set out in departmental responses to his questions. [Interruption.] I am answering one of the questions that he asked. When we responded to his questions in October 2013, a total of £8.42 million had been spent on the Bost airfield and agricultural business park programme, of which, as I said, £3.1 million had been invested in the business park side of the project. The business park was not completed because commitments given by DFID by Afghan partners were not fulfilled. I am sure that he would want us to have Afghan partners. Part of the work that we do on development is growing local business and local capacity.

It was not possible to complete the business park as planned or in a way that would provide value for money for UK taxpayers. As I have said, that part of the programme was cancelled once that became clear. DFID Ministers have taken steps to increase their oversight of programmes approved by the Department—to be frank, we are always doing that. Under the previous Government, Ministers did not approve anything under £40 million. I know, because I now have to go through all the business cases under £40 million with a fine-toothed comb, that Ministers now approve all spending on projects over £5 million.

In conclusion, we have been clear about how much money was spent on the project; how the decision was arrived at; why the decision was made to cancel further funding; the role of Ministers and officials in making those decisions; and what has happened subsequently. That has all been set out in parliamentary answers. I am sorry that the hon. Gentleman thinks that something remains unrevealed after all that I have said. As far as I am aware, we have been completely open and honest about all our decisions and the money that was spent. I hope that he finds those answers sufficient.

Question put and agreed to.