Commonwealth Development Corporation Bill
Rory Stewart ExcerptsTuesday 29th November 2016
(7 years, 5 months ago)
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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.
Oral Answers to Questions
Rory Stewart Excerpts(7 years, 6 months ago)
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John Mann (Bassetlaw) (Lab)
The Minister of State, Department for International Development (Rory Stewart)
As the hon. Gentleman will be aware, almost all our Department’s work is done in partnership with third-party providers. Our Department provides the policy and the monitoring. In a humanitarian situation, it will be UN agencies delivering on the ground, and in a development situation, NGOs and partner Governments will work alongside us.
Rory Stewart
I absolutely agree that we need to make sure that when UK taxpayers are contributing, that is clear to the people receiving the money. That is also why the Secretary of State has focused hard, with all these third-party providers, on securing value for money and ensuring that the UK national interest is served and UK taxpayers get the credit.
Mr Gary Streeter (South West Devon) (Con)
Isn’t it great that we have so many excellent NGOs in the UK to help us to deliver our aid programme? Does the Minister agree, however, that there is still too much competition, overlap and duplication between some of our NGOs, and that a measure of streamlining and collaboration would be most welcome?
Rory Stewart
That is absolutely right. Co-ordination is vital, particularly in an extreme humanitarian situation. It is terrible when people require assistance if we are wasting money duplicating effort. That is why DFID staff and UN staff are working so closely together, and that is why co-ordination is central to our multilateral aid review.
Patrick Grady (Glasgow North) (SNP)
Does the Minister recognise the role of civil society organisations in delivering the sustainable development goals, which the former Prime Minister helped to draft? If so, why do the sustainable development goals not even appear in the recent civil society partnership review?
Rory Stewart
The sustainable development goals are central, and the UK Government played a very important role in bringing them forward, but this is a cross-Government effort and we will be bringing forward a cross-Government response.
Andrew Bridgen (North West Leicestershire) (Con)
Mrs Theresa Villiers (Chipping Barnet) (Con)
The Minister of State, Department for International Development (Rory Stewart)
We have made it clear that our focus will be very much targeted on health, education and co-existence projects. We ensure that any support going in is carefully vetted, with an independent auditor, and directed to what will provide value for money; and, above all, that it will benefit the Palestinian people.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
Tommy Sheppard (Edinburgh East) (SNP)
Rory Stewart
The Department remains entirely committed to the following principles. First, anything we do must encourage a two-state solution by ensuring that the Palestinian people are served with proper services. Secondly, we must make sure that the money goes in the right way to the right people. That is all about auditing, vetting and making sure that the real beneficiaries are there. Of course we will ensure that the review is done as efficiently as possible to serve the interests of the Palestinian people and the stability of the region.
Yemen
Rory Stewart Excerpts(7 years, 7 months ago)
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The Minister of State, Department for International Development (Rory Stewart)
I begin by paying huge tribute to the right hon. Member for Leicester East (Keith Vaz). For as long as I have been in the House and long before I entered the House, he has been a great champion of the interests of Yemen. He understands Yemen, as he pointed out, from his early childhood and brings to the issue a level of knowledge and passion that is important in the House. Everyone on both sides of House has emphasised that the situation is a horrible tragedy—nearly 80% of the population currently face a humanitarian crisis. More than 1 million children face food shortages and almost 400,000 literally struggle to know where the next meal will come from.
I will take a couple of moments to talk about the causes and origins of the conflict, because it is important to consider them when addressing it. When I last visited Yemen in the spring of 2014, despite all the underlying fragility—the considerable south-north divides, the sectarian splits between the Houthis and other members of Yemeni society, and the extreme poverty—we were looking at a situation in which the national dialogue seemed to be working. There was a remarkable period of relative stability between 2011 and 2014. I pay tribute to Benomar, who was the UN special envoy at the time, and to the extraordinary work of the ambassadors from the Gulf Co-operation Council, the EU ambassador, who had served in Afghanistan and spoke fluent Arabic, the US ambassador, who was a fluent Arabist, and the French ambassador, who also spoke fluent Arabic. Unfortunately, however, despite all the work done in 2014, the situation deteriorated rapidly so that by the beginning of 2015 we found ourselves facing the horror that we see today. There are certain lessons that we need to draw from that to understand how we went wrong and to solve future conflicts.
The first and central thing is to apportion blame. We cannot shy away from the fact that the actions of ex-President Saleh and the Houthis are at the core of the conflict. They attacked the legitimate Government in Sana’a and propagated this conflict. There is also a broader context that the international community must recognise and take responsibility for. The national dialogue that I saw in 2014 did not do what it was supposed to do. In retrospect, it focused too much on an elite in Sana’a and did not reach out enough to the rural populations. It was not genuinely inclusive and left a situation in which the Houthis in particular felt that the federal deal offered to them was unfair and that the area that they had been allocated was too small and without access to the sea.
Partly through pressure on President Hadi to reduce fuel subsidies, international development actors helped to create a situation in which instability was encouraged by the cutting of those fuel subsidies—although much of the responsibility must lie with President Hadi and how he implemented the cuts. Corruption in Sana’a and Yemen was also a huge mobiliser of popular resentment against the Government and that was not adequately addressed.
Keith Vaz
I thank the Minister for his kind comments. He is giving an impressive exposition of what went wrong. We, like the Americans, are great supporters of Yemen, so should we have done more at the time to monitor the situation and to move the dialogue in the right direction? Did we withdraw far too early?
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.
Keith Vaz
This must be a first—a Minister is given a set of questions and he replies to every one of them. I do not think that I have ever come across that in my 29 years in this House—well done. Will the hon. Gentleman address the issue of the ceasefire? We know that we have 72 hours. Can we please try to ensure that it is longer, because 72 hours is not enough? I know that there are many other things to talk about, but that ceasefire is critical.
Rory Stewart
We absolutely agree that the ceasefire is critical and that 72 hours in and of itself is not enough, but as the right hon. Gentleman is so aware the only way in which we can do any kind of peace or conflict resolution all the way from sub-Saharan Africa right the way through to Cambodia is to start with small steps. It is vital to begin with those 72-hour moves. That is why the UN special envoy has done it and why we and the United States are strongly supportive of it. We will of course do all we can to extend that ceasefire, because we do need longer. Indeed, what we want is a permanent political settlement in place, which brings me to the broader question of politics. There are two dimensions to that: we need to acknowledge that this is taking place in a broader peninsula context, and that lasting peace will come only if we address the local-level conflicts taking place on the ground in Yemen. Our humanitarian response—this is a debate about the humanitarian crisis—needs to take that into account.
I wish to make some brief observations on the nature of DFID’s humanitarian response. First, we need to approach this with some degree of humility. The right hon. Gentleman has quite rightly pointed to the important role that the United Kingdom plays. We do indeed hold the pen at the Security Council. We have put £100 million into this, and it is true that we play an important role in the Quad, but we are not the only people here and we cannot act as though we are. We have to make sure that we acknowledge the role of the United States, Saudi Arabia, and other states such as Oman, but above all we must acknowledge the role of the Yemeni people themselves. The only real solution here will come from the Yemeni people. We need to acknowledge again that, although the United Kingdom has put in £100 million, the current UN appeal is only 47% met. We were very pleased at the UN General Assembly to raise another £50 million from other partners, but we still need to do much more.
We cannot at the moment, as an international community, adequately address all the 21 million people who are currently at risk, so we need to prioritise. We need to make sure that we focus on the most vulnerable people. First, we need to protect civilians; secondly, we need to make absolutely sure that we focus on food security—it is an absolute tragedy that we are seeing extremes of malnutrition and we must make sure that that does not turn into a famine; and thirdly, we need to make it absolutely certain that, whenever we are dealing with anyone in Yemen, we look at preventable disease. It is a tragedy that cholera is now breaking out in Sana’a.
Commerce and shipping will be absolutely central. We need to get the markets working, get the ships into Yemen, and understand that this is not just a development and a humanitarian response.
I will finish by paying tribute to the right hon. Gentleman, to the very strong work both of the UK Government and of the UN special envoy Ismail Ould Cheikh Ahmed, and to the extraordinary work of the humanitarian organisations, which work in very difficult circumstances. I am talking about the suffering that has been experienced by Mercy Corps, the International Committee of the Red Cross and Médecins Sans Frontières. Above all, it is the Yemenis—not just internationals—who are bearing the burden of this, who are out in those field offices, and who are delivering aid in some of the most testing conditions on earth. If we can plan now for the medium to long term, think hard about the stabilisation and the politics that are at the root of this, and ensure that we get the economic framework in place so that if we are lucky enough to have a ceasefire, we are really able to move to a situation in which we have a sustainable economy in Yemen for the future. If we can sometimes do less than we pretend, we can do much more than we fear.
Question put and agreed to.
Oral Answers to Questions
Rory Stewart Excerpts(7 years, 8 months ago)
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Yasmin Qureshi (Bolton South East) (Lab)
The Minister of State, Department for International Development (Rory Stewart)
On behalf of the Department, I express our great condolences on the impact of the earthquake. Some 700,000 people lost their homes and 9,000 people were killed. Specifically in relation to Dolakha, we have provided a great deal of support, including housing grants for 40,000 houses, and cooking equipment, blankets and tarpaulins for 7,000 people.
Yasmin Qureshi
I warmly welcome the Minister to his place. A Must for Dolakha is a charity based in Farnworth in my constituency. Mr Heslop, who represents the charity, visited the region recently and found that a number of people did not have any food or shelter. There was a feeling that aid had not reached a number of people in need. Will the Minister meet me and representatives of the charity to discuss how we can best help the people affected in those areas?
Rory Stewart
I pay tribute to the hon. Lady and to her constituent for the work he does. We need to understand the scale of this catastrophe. DFID is spending £100 million this year. Even so, with 700,000 people having lost their homes, the situation is extremely challenging. The response in Dolakha is led by USAID and the World Bank. I am very happy to sit down with the hon. Lady and her constituent to discuss our forthcoming work on roads, police stations and health clinics in Dolakha itself.
Draft International Development Association (Seventeenth Replenishment: Additional Payments) Order 2016
Rory Stewart Excerpts(7 years, 8 months ago)
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The Minister of State, Department for International Development (Rory Stewart)
I beg to move,
That the Committee has considered the draft International Development Association (Seventeenth Replenishment: Additional Payments) Order 2016.
It is a great pleasure to serve under your chairmanship, Mr Bone. I am here to ask the Committee to support an additional £350 million loan to the International Development Association which, as colleagues know, is the part of the World Bank that was set up in 1960 particularly to target the world’s poorest nations. I imagine that Committee members will have three questions: first, why have we chosen IDA; secondly, why have we chosen £350 million; and, thirdly, why are we making the payment now as opposed to at any other point?
Why the IDA? As hon. Members will be aware, the World Bank has been a partner of the British Government since we helped to establish it in the 1940s. It is a very well established development organisation. It is not perfect, and the Committee may have an opportunity to discuss some of the bank’s challenges, but in practice, having had a long relationship with it and conducted some serious audits, we are convinced that its 12,000 people, working in 127 offices, have a critical mass of expertise and a proven record of delivery. We saw that in Vietnam in the 1970s and 1980s, in Yugoslavia in the 1990s, and most recently during the global financial crisis of 2008-09.
Why are we giving this money now? We have put a great deal of pressure on the World Bank—as, indeed, has the world—during recent humanitarian crises. We have seen the Ebola crisis and the earthquake in Nepal, and of course most recently we have been dealing with Syrian refugees and in particular education provision in Lebanon and Jordan. In every regard, we have put a lot of pressure on the World Bank to deliver.
Why this amount? The loan will support the World Bank’s projects in a range of countries. IDA works right across the 77 poorest countries in the world, and its programmes are tailored to individual countries. For example, it has done a great deal of work in Nepal on reconstruction since the earthquake. In Bangladesh, it focuses on extreme poverty, while in Burma it is doing good work on public financial management. It has been able to increase from 8% to 10% the tax revenue that the Government of Burma raise, which equates to around £2.5 billion a year of additional income for the Burmese Government, and that can be spent on development. We are focused in particular on concrete outcomes, however. The money that we will put in will allow us to provide life-saving vaccines for around 200 million more children, microfinance loans for around 1 million more women, and access to clean water for around 32 million people.
Although the World Bank is a capable institution, as I said at the start of my speech, it is not perfect, so along with this money, we will push ahead with reforms in three key areas. First, we will encourage the bank to work much more in fragile and conflict-afflicted states, which is Department for International Development jargon for countries teetering on the edge of war or those in which there is an active conflict. In the past, we have had to put pressure on the bank to work in Burundi and Mali. We believe that more could have been done in South Sudan and Yemen, and we are working closely with the bank to ensure that it keeps country offices on the ground and really delivers in those locations.
Secondly, we believe that more could be done on responsiveness and efficiency, and that loans could be more quickly disbursed. Getting below the two-year timeframe that the bank is currently pursuing would really help in addressing urgent issues in fragile states.
Finally, we believe that private sector investment could be better mobilised. We have been proud to work with the private sector on, for example, port developments in east Africa—in places such as Dar es Salaam—and power generation projects in Nigeria, but we think that more could be done in that regard.
However, in sum, with those provisos, having looked closely with our team at this particular loan, we believe that it is a good, sensible use of UK taxpayers’ money that will contribute to the global goals we all hold dear. I commend the order to the Committee.
Rory Stewart
How foolish of me to think that there were only three questions, given that I have just been hit by five very good additional questions. I thank the Scottish National party and the whole Committee for their support for this order and for moving ahead with this important work in international development.
With your permission, Mr Bone, I will take each of the five questions in turn. The shadow Minister asked the very important question of why we are making a loan, because this actually is not a grant, but a loan. IDA itself is a loan-making body that makes a range of concessional loans and grants. We feel it is right, given that the association will in turn be lending this money and receiving the principal back, that the British taxpayer should also be able to lend this money and receive the principal back in 20 years’ time. That will not affect the results. Results will still be achieved by the loan, but the principal will come back to us.
My hon. Friend the Member for South Thanet asked how many of the loans are written off. We often make concessional loans to very fragile countries, and some of them do not come right. That is why we have a combination of loans and grants. We would expect our loans to be repaid, but this £350 million that we are putting in is within the context of a total package of about £2 billion of UK support, of which the overwhelming majority is in the form of grants.
One reason why this happens is that we encourage IDA to go into areas where the private sector will not wish to invest, so we expect that a certain number of the loans will not come good, but that relates to the question asked by my hon. Friend the Member for Tonbridge and Malling. We have to be hugely careful about fraud because the sums that we are talking about are enormous. The state capacity in some of the countries in which we operate is limited, and there are also other problems, such as security problems, which can make it quite difficult for our staff to get out on the ground and directly see projects.
Seema Malhotra
The Minister is responding to an important point. May I add to the list of concerns those states where there might be corruption, human rights abuses or dictatorships that could be supported by our funding? We need to be mindful of how we handle such difficult situations.
Rory Stewart
The questions asked by the hon. Lady and my hon. Friend the Member for Tonbridge and Malling are central to this subject. This is, in the end, UK taxpayers’ money that comes from hard-working people. Those people believe in trying to deal with humanitarian crises and in helping the world’s poorest people, but they have an absolute right to expect that their hard-won money is being used in the right way.
We have a series of different mechanisms in place to try to deal with that. A multilateral aid review happens every three years and the independent commission reports directly to Parliament. We have our own internal audit team, and we also do annual reviews. It is possible to look at the development tracker on our website and to see our annual review, published in April, specifically of the IDA programme. We gave the programme an alpha-plus in the previous review, but note three particular areas of gender, climate change and the issue of fragile and conflict states regarding which we think it could be better. One reason why we work so closely with and are one of the larger contributors to the World Bank is that it has a very good track record—better than that of almost anyone else—in trying to address issues of corruption, transparency and predictability in the management of its financial processes.
Toby Perkins (Chesterfield) (Lab)
I support entirely the contributions that we are making to support some of the world’s poorest. Given that this is a loan, will the Minister clarify whether the amount that we are lending comes out of the spending of 0.7% of gross domestic product to which the Government and we are committed? If so, when that money comes back in, does it effectively increase the amount that has been spent, because we are counting money as a loan, rather than grant spending?
Rory Stewart
The hon. Gentleman asks a very important question. The answer is that the sum absolutely does count against the 0.7%. This is agreed with OECD Development Assistance Committee rules, which allow for this because the impact of our loan is immediate in terms of our development effect. However, two complicated accounting techniques are used—one by the World Bank and one by us—to allow for the difference between our concessional loan and the amount that we would be able to get on the open market. The Treasury will then lay off against our own budgets the gap between what we anticipate that we will receive back in 20 years’ time and the costs at the moment. To be clear, the amount does come directly out against the 0.7%.
We are not the only country doing this. In fact, the practice is increasingly the norm, particularly with loan-making bodies such as IDA. The French, Japanese and Chinese do the same thing. When we loan to an organisation that is going to make a loan on, it makes sense in development terms, and also for the UK taxpayer, to make sure that something comes back to us in 20 years’ time.
I will finish on the question posed by my hon. Friend the Member for Stratford-on-Avon. He asked what percentage of the overall budget this contribution represents, and the answer is that it is a relatively modest amount. It will be about 1.3% of IDA’s total spend over what is called the IDA 17 period. The UK contributes about 13% to the IDA budget, which is roughly in line with the overall scale of our contributions to development activities worldwide. The contribution is larger than that to something such as the Asian Development Bank, where we put in about 5%, and that reflects our respect for and our greater confidence in the World Bank, and also the fact that in return for the money, we intend to get the reforms and the leverage that the taxpayer requires. I commend the statutory instrument to the House.
Question put and agreed to.