Third Delegated Legislation Committee
Tuesday 1st September 2026
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16:30
Speaker 1
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Speaker 1
Also known as IDB invest, which is the private sector arm of the Inter-American development Bank Group. The draft order. The order permits the UK government to make further payments to the Inter-American Investment Corporation. The Inter-American development Bank Group, or IDB, is the largest source of development finance for Latin American and Latin America and the Caribbean, with the group's overall financing reaching about $35 billion in 2025 alone. IDB is a trusted partner and is instrumental to the achievement of regional objectives on sustainable development, action on climate change, biodiversity protection and pandemic and disaster preparedness.
The G20 has called upon multilateral development banks to adopt new business models to stretch balance sheets, increasing lending, and take on more risk to support smaller businesses. In response, IDB invest has committed to implementing a new business model. IDB invest will shift to an originate to share approach to transfer its investments to the private sector, recycling funds and enabling greater impact through increased scale. IDB invests innovative approach to development is why, together with other shareholders, the UK agreed to a $3.5 billion capitalisation package to allow IDB invest to more than double the support it provides the region, from around $8 billion to more than $20 billion annually.
The UK is a strong proponent of this new model, and the leadership and innovation showcased by IDB invest. In 2025, the UK authorized an increase in its shareholding in the corporation from 0.22% up to 1.5%, subject to shares being available for a total value of up to $106 million. When IDB invests invests sorry when IDB invest shares subscription period closed in March 2026, more shares became available than initially anticipated. This presents the UK with a strategic opportunity to further increase our shareholding in IDB .
Invest beyond the level previously authorised. By investing an additional $25 million, the UK can deepen its influence with the institution and strengthen its overall position. Let me highlight just a few outcomes IDB invest has committed to delivering by 2030 through its new business model and capital increase. It will finance 2.5 million micro, small and medium enterprises, which would in turn support 9.5 million jobs. It would directly support over 300 000 women with gaining access to finance, jobs, training and entrepreneurship opportunities.
It would support 1.6 million of the region's poor and vulnerable populations with gaining access to services, opportunities and resources. It would improve access to agricultural services and investments for 44,000 farmers. Dedicate at least 60% of investments to climate and green finance, reduce 3.9 million tonnes of CO2 emissions and generate 1.4 thousand megawatts from renewable sources for new clean energy projects. In addition to this, IDB invest will continue to share lessons learned on the implementation of its business model with other development finance institutions to encourage more investment into the private sector globally.
This represents excellent value for money for every pound that the UK invests, £5 of development related assets are generated, taking us a step closer to achieving the regional region's Sustainable Development Goals. To conclude, IDB invest is instrumental in achieving UK objectives in Latin America and the Caribbean and is amongst our closest and most important development partners. The financial contribution covered by this order will support UK's development and foreign policy objectives in Latin America and the Caribbean, promoting private sector development and sustainable economic growth.
So I commend this order to the Committee.
The G20 has called upon multilateral development banks to adopt new business models to stretch balance sheets, increasing lending, and take on more risk to support smaller businesses. In response, IDB invest has committed to implementing a new business model. IDB invest will shift to an originate to share approach to transfer its investments to the private sector, recycling funds and enabling greater impact through increased scale. IDB invests innovative approach to development is why, together with other shareholders, the UK agreed to a $3.5 billion capitalisation package to allow IDB invest to more than double the support it provides the region, from around $8 billion to more than $20 billion annually.
The UK is a strong proponent of this new model, and the leadership and innovation showcased by IDB invest. In 2025, the UK authorized an increase in its shareholding in the corporation from 0.22% up to 1.5%, subject to shares being available for a total value of up to $106 million. When IDB invests invests sorry when IDB invest shares subscription period closed in March 2026, more shares became available than initially anticipated. This presents the UK with a strategic opportunity to further increase our shareholding in IDB .
Invest beyond the level previously authorised. By investing an additional $25 million, the UK can deepen its influence with the institution and strengthen its overall position. Let me highlight just a few outcomes IDB invest has committed to delivering by 2030 through its new business model and capital increase. It will finance 2.5 million micro, small and medium enterprises, which would in turn support 9.5 million jobs. It would directly support over 300 000 women with gaining access to finance, jobs, training and entrepreneurship opportunities.
It would support 1.6 million of the region's poor and vulnerable populations with gaining access to services, opportunities and resources. It would improve access to agricultural services and investments for 44,000 farmers. Dedicate at least 60% of investments to climate and green finance, reduce 3.9 million tonnes of CO2 emissions and generate 1.4 thousand megawatts from renewable sources for new clean energy projects. In addition to this, IDB invest will continue to share lessons learned on the implementation of its business model with other development finance institutions to encourage more investment into the private sector globally.
This represents excellent value for money for every pound that the UK invests, £5 of development related assets are generated, taking us a step closer to achieving the regional region's Sustainable Development Goals. To conclude, IDB invest is instrumental in achieving UK objectives in Latin America and the Caribbean and is amongst our closest and most important development partners. The financial contribution covered by this order will support UK's development and foreign policy objectives in Latin America and the Caribbean, promoting private sector development and sustainable economic growth.
So I commend this order to the Committee.
16:33
16:34
Speaker 3
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Speaker 3
Thank you, Doctor Morrison, and it's a pleasure to serve under your chairmanship today. And let me first of all, start by welcoming the new minister to her position. The Inter-American development Bank Group is an important source of development finance across Latin America and the Caribbean, and its private sector arm has an important role to play in mobilising investment and supporting private sector led growth. This order, however, authorizes a further $25 million of UK taxpayers money, taking the UK's total investment in the Inter-American Investment Corporation to approximately $131 million.
It would increase the UK's shareholding from 0.22% to 1.83%. So for the benefit of the committee, I'd like to ask the Minister if she can confirm to which financial year this relates and given the pressures on the aid budget, it's therefore right that Parliament seeks clarity about what additional influence and outcomes that investment will secure. So my first question is about the decision to provide this additional funding. So can she set out precisely what the additional $25 million will be used for, and if any conditions have been attached to it, what assessment has the Fcdo made of the additional development impact that this investment will deliver compared with alternative uses of that funding? And secondly, what has the UK sought to achieve through the corporation's new strategy and capital increase? The government says that the increased shareholding will strengthen UK influence and representation at board level, so it would be very helpful to understand a little more about this.
And can the Minister set out what priorities the UK has pressed for, how far those priorities have been reflected in the corporation's plans, and how the government intends to use that greater influence? I will just turn briefly to the matter of reform, because the corporation is implementing a substantial programme of reform, including its new originate to share model intended to mobilise significantly greater levels of private capital. And we welcome efforts by multilateral development banks to use their balance sheets more effectively and to crowd in private investment, rather than relying continually on additional taxpayer funding.
So can the minister update the committee on the progress of those reforms, and, in particular, what improvements does the government still believe are required on efficiency, on accountability and on value for money? And what assurances has it received that the increase in the corporation's capital will genuinely leverage additional private finance, rather than simply expanding the institution itself? And finally, there must be clear accountability for results. The explanatory memorandum refers to a new impact framework and institutional scorecard alongside Fcdo annual reviews.
So what specific measures will the government use to judge whether this additional investment has been successful, and how will Parliament be able to scrutinise those results if the corporation falls short of its targets? What mechanisms does the UK have to press for change? So His Majesty's official opposition recognised the importance of mobilising private investment to support growth and development in Latin America and the Caribbean. But additional contributions to multilateral institutions must demonstrate clear value for money, measurable outcomes and alignment with the UK's strategic interests.
We're not going to be opposing this delegated legislation today, but the government must provide clear answers to the questions I've raised and justify and explain further the reason for this contribution, and I look forward to hearing the minister's response. Thank you.
It would increase the UK's shareholding from 0.22% to 1.83%. So for the benefit of the committee, I'd like to ask the Minister if she can confirm to which financial year this relates and given the pressures on the aid budget, it's therefore right that Parliament seeks clarity about what additional influence and outcomes that investment will secure. So my first question is about the decision to provide this additional funding. So can she set out precisely what the additional $25 million will be used for, and if any conditions have been attached to it, what assessment has the Fcdo made of the additional development impact that this investment will deliver compared with alternative uses of that funding? And secondly, what has the UK sought to achieve through the corporation's new strategy and capital increase? The government says that the increased shareholding will strengthen UK influence and representation at board level, so it would be very helpful to understand a little more about this.
And can the Minister set out what priorities the UK has pressed for, how far those priorities have been reflected in the corporation's plans, and how the government intends to use that greater influence? I will just turn briefly to the matter of reform, because the corporation is implementing a substantial programme of reform, including its new originate to share model intended to mobilise significantly greater levels of private capital. And we welcome efforts by multilateral development banks to use their balance sheets more effectively and to crowd in private investment, rather than relying continually on additional taxpayer funding.
So can the minister update the committee on the progress of those reforms, and, in particular, what improvements does the government still believe are required on efficiency, on accountability and on value for money? And what assurances has it received that the increase in the corporation's capital will genuinely leverage additional private finance, rather than simply expanding the institution itself? And finally, there must be clear accountability for results. The explanatory memorandum refers to a new impact framework and institutional scorecard alongside Fcdo annual reviews.
So what specific measures will the government use to judge whether this additional investment has been successful, and how will Parliament be able to scrutinise those results if the corporation falls short of its targets? What mechanisms does the UK have to press for change? So His Majesty's official opposition recognised the importance of mobilising private investment to support growth and development in Latin America and the Caribbean. But additional contributions to multilateral institutions must demonstrate clear value for money, measurable outcomes and alignment with the UK's strategic interests.
We're not going to be opposing this delegated legislation today, but the government must provide clear answers to the questions I've raised and justify and explain further the reason for this contribution, and I look forward to hearing the minister's response. Thank you.
16:37
Speaker 1
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Speaker 1
Thank you very much, chair, and I'm grateful for the comments and reflections from the honourable lady. To begin with, the question that she's raised around financial years, the new capital that will be paid in will be spread across seven years starting in 2020 526. She also raised a question about conditions that are attached to it, and I'll reflect on them when I talk about what areas we've pressed on, in particular for prioritisation, but I should say, and reflect, as I did in my opening, that this institution has already innovated in response to pressure from and reflections from the G20, and we were delighted to have had that influence at the outset.
We have pressed on a new focus on climate, on supporting Caribbean small island developing states, including the OTS and on vulnerable populations. She asked about some in reflections on the development impacts that we are anticipating. I reflected on them in my opener, so I won't repeat them here. And in terms of increasing and securing the UK's influence, we have secured greater board representation for the UK, which is always something that we are seeking to do.
In conclusion, IDB invest is a unique institution at the forefront of private sector investment in Latin America and the Caribbean. IDB invest aims to dedicate 60% of its investments to climate and green finance, and is also supporting micro, small and medium enterprises, empowering women, expanding access to essential services and driving innovation. Through its new business model, IDB invest is scaling up its impact, mobilising capital at unprecedented levels and helping to deliver sustainable growth across the region. And I hope and trust that the committee will support this order.
We have pressed on a new focus on climate, on supporting Caribbean small island developing states, including the OTS and on vulnerable populations. She asked about some in reflections on the development impacts that we are anticipating. I reflected on them in my opener, so I won't repeat them here. And in terms of increasing and securing the UK's influence, we have secured greater board representation for the UK, which is always something that we are seeking to do.
In conclusion, IDB invest is a unique institution at the forefront of private sector investment in Latin America and the Caribbean. IDB invest aims to dedicate 60% of its investments to climate and green finance, and is also supporting micro, small and medium enterprises, empowering women, expanding access to essential services and driving innovation. Through its new business model, IDB invest is scaling up its impact, mobilising capital at unprecedented levels and helping to deliver sustainable growth across the region. And I hope and trust that the committee will support this order.
16:39