Overseas Development Aid

Baroness Sheehan Excerpts

Tuesday 9th October 2018 Lords Chamber

[Lord Bates]

The noble Lord is right to say that the development assistance community works by consensus. That is how it arrives at its conclusions. Regarding this debate, I feel that a few issues are being conflated. One is the SDGs, to which we are all committed and which we discussed earlier today. The second is the realisation—I readily accept that the noble Lord has regularly made a point of it—that that cannot be achieved by public flows alone. It has to be catalytic to leverage in private sector investment. Then there was the question about impact investing, and whether something else could be done in the future so that more private citizens could leverage in capital.

The final issue comes to the heart of the noble Lord’s question, about CDC funding. This is where we have had a lot of debate. If, for example, your £1 billion is put into CDC and over time the investments make a profit which is then returned into the fund—it is 100% UK-owned, so it is public sector in that sense—and then that profit is reinvested, should that reinvestment score? It is a debate that has to be had. We believe there is a case for doing that, but we have to do it by working with our partners and discussing it with them. This is one of a range of points on this issue. I hope that that has been helpful.

[Baroness Sheehan (LD)]

My Lords, I confess to being a little confused. In her speech to the CDC today, the Secretary of State says we should be open to using profits from UK development finance instruments,

“to count towards the 0.7%”,

and as we have heard, the current ODA rules do not allow this. However, earlier in her speech, the Secretary of State outlined why it was important to get private investment into developing countries, given that $150 billion of annual aid will never measure up to the $2.5 trillion needed to achieve the SDGs. Like the noble Lord, Lord Collins, I agree wholeheartedly with that. However, the fact is that unless profits from DFIs and any other development funds that may in future be raised in the City of London are powered back into developing countries we will lose the advantage of any leverage gained, as well as the opportunity to power back profits to help developing countries, and in the process compromise efforts to achieve the SDGs.

In my view, the Secretary of State is being disingenuous. This is an attempt to undermine the 0.7%, breaking the Conservative manifesto commitment. Does the Minister agree?

[Lord Bates]

The noble Baroness will not be surprised to hear that I do not agree, and neither do I agree with the suggestion that the Secretary of State is being disingenuous. Far from it—I think she was very clear, although how those remarks have been interpreted is clearly another matter. So this is a good opportunity for us to make it absolutely clear that we are committed to the SDGs and to 0.7%. The DAC element counts only public sector investment, so it cannot count private sector investment towards the 0.7% target to which we are committed. But, as the noble Baroness and the noble Lord said, we are at one in recognising that you will not provide the 18 million jobs that Africa needs every year between now and 2050 without the private sector engaging with this. You will not bridge the $2.5 trillion gap in meeting the SDGs without getting the private sector involved. That is why the Secretary of State was absolutely right to say that we need to do more to leverage and catalyse that investment which the UK has an expertise in.