I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Act: Investigatory Powers Act 2016.
1. What steps he is taking to encourage economic growth in coastal areas.
The Government are committed to helping coastal communities unlock barriers to economic growth. For example, we have invested more than £125 million in more than 200 projects across the United Kingdom through the coastal communities fund. That investment is forecast to deliver more than 18,000 jobs and help to attract more than £240 million of additional funds to coastal areas. Last week, in the autumn statement, I announced the allocation of £1.8 billion from the local growth fund to all regions in England.
Coastal areas face specific challenges because they do not have 360° access to trade with neighbouring areas, and the Isle of Wight faces additional challenges because we have no physical link with the mainland. Does my right hon. Friend regard the Isle of Wight as a special case that deserves extra support from the Government?
I know that every single one of my right hon. and hon. Friends will regard his or her own constituency as a special case, but I can tell my hon. Friend that the Government recognise the specific barriers to economic growth experienced by coastal areas such as the Isle of Wight. That is why we are extending the coastal communities fund by at least a further £90 million across the United Kingdom over the current Parliament. In addition, as my hon. Friend will know, through the Solent growth deal the Isle of Wight has benefited from nearly £15 million of investment to expand the skills base, support business growth and improve transport links.
Coastal areas in the north of England have been left behind for too long. We now know that the cost of Brexit to our economy will be the best part of 60 billion quid. Will the Chancellor commit himself to replacing the EU structural funding that gives coastal areas such as New Ferry, in my constituency, half a chance to make economic progress?
We have already made announcements about EU funding during the transition period, giving a Treasury guarantee to underwrite funding that is allocated to projects in the UK, so that people who bid for that funding can do so with confidence. However, as the hon. Lady suggests, after we leave the European Union we will need to review for England, and discuss with the devolved Administrations for Scotland, Wales and Northern Ireland, how we are to replace the streams of EU funding to which many regions have become accustomed. We need to have a debate in the House to ensure that that funding is used in a way that reflects the UK’s priority in the future, not the priority of the wider European Union.
Selsey Bill, in my constituency, is a special case, but the best thing that can be done for coastal areas is to secure stronger growth throughout the economy. Mario Draghi has suggested that UK growth would be lower if, as a consequence of Brexit, the UK economy were less open to trade and investment. Does the Chancellor agree that both the UK and the EU benefit from an open economy, and that, if the European Central Bank is worried about a Brexit shock to the eurozone, he can and should be lobbying EU leaders to press for a high degree of mutual market access in the Brexit negotiations?
Order. We are discussing concern for coastal areas.
Absolutely, Mr Speaker. I agree with Mario Draghi that a reduction in openness would be very bad for the economy of Selsey Bill, and my right hon. Friend is right to draw attention to that. I entirely agree that the best way for the Government to protect the UK’s economy is to argue for the most open possible trading relationship with the European Union after we leave.
The coastal communities of Cumbria were deeply affected by Storm Desmond last December. The River Kent, which meets the sea at Morecambe bay, is one of Britain’s fastest-flowing and shortest rivers, and when it flooded last December, untold damage was caused to communities and the economy throughout the county. In last week’s autumn statement, the Government went back on their word from last December to fund the resilience of bridges to help prevent future flooding. Will the Chancellor apologise to the flood-hit communities of Cumbria for that betrayal, and, even at this late stage, will he change his mind?
We did announce funds for flood resilience in the autumn statement, distributed from money that had already been set aside for that purpose in the spending review. I did not mention Cumbria specifically in the autumn statement, but I will look at the case that the hon. Gentleman has raised, and will write to him.
I welcome my right hon. Friend’s announcements of the various sums, and may I suggest that the sums the Government have put aside for coastal defence are critical for places such as Whitstable, in my constituency, for generating economic as well as social confidence among the people who live there?
My hon. Friend is absolutely right and of course flood defences are categorised as economic infrastructure precisely because they are a critical enabler of business activity and are critical to protect transport, communications, infrastructure and so on, and we will continue to invest in them.
It is about time we heard from this Government about support for our coastal economies because we have just seen, in last week’s autumn statement, a catalogue of six and a half years of abject failure, whether on infrastructure, skills or support for businesses. The coastal communities of Formby and Crosby in my constituency need to hear a lot more from the Chancellor. They need support now and in the future.
If the hon. Gentleman had been listening, what he would have heard last week was a catalogue of 2.7 million new jobs created over the last six and a half years, a deficit inherited from Labour at a peacetime record high slashed by two-thirds, a million new jobs created in the UK, record employment levels and 865,000 fewer workless households, all of which will have made an important contribution to improving living standards and prospects in coastal communities throughout the UK.
2. What fiscal steps he is taking to increase housing supply.
The Government are committed to supporting housing supply and ensuring that the housing market works for everyone. Good progress has been made since 2010, with housing supply now at an eight-year high. In October, my right hon. Friend the Communities and Local Government Secretary launched a £3 billion home building fund to provide loans to house builders to unlock over 200,000 homes. However, the scale of the challenge requires us to go further, which is why my right hon. Friend the Chancellor announced that the Government will invest £2.3 billion in a new housing infrastructure fund that will deliver up to 100,000 homes, and will invest an additional £1.4 billion to deliver 40,000 new affordable homes.
Will the autumn statement’s £3.15 billion boost for London housing be flexible enough to meet the aspirations of both Londoners wanting a home they can afford to rent or buy and London’s homeless, whose complex needs include the need for supported housing?
I can provide that reassurance to my hon. Friend. The Government are committed to supporting housing supply and ensuring that the housing market works for everyone, including Londoners. London’s £3.15 billion affordable housing settlement will deliver over 90,000 affordable housing starts by 2020-21 across a range of tenures, including homes for low-cost home ownership and submarket rent, as well as supporting housing for Londoners with particular needs, and of course London will also benefit from the housing infrastructure fund.
More people in my constituency rent privately than own their own homes and for most of them ownership is a distant or impossible dream. Are the Government considering looking at the supply of private rented housing on longer tenures, perhaps with rent guarantees, and possibly using tax reliefs or other mechanisms the Treasury has in its armoury, to encourage landlords to provide those longer-term tenancies and better security for the many private rented sector tenants?
The Government are taking action to ensure that we build more homes. There is a need for flexibility in terms of tenure, which was at the heart of my answer to my hon. Friend the Member for Enfield, Southgate (Mr Burrowes), but last week’s autumn statement included a series of measures that will help to ensure that we are building more homes in this country, which is what we need.
Why is there such a large gap between the number of planning permissions and the number of housing starts, and what specifically can the Government do to close that gap?
There has consistently been a gap. What is important is that there is certainty of supply. We need to ensure that we have the right planning system in place and the right fiscal support, and that is what the Government are determined to deliver.
In last week’s autumn statement, the Chancellor raised the tax on house insurance by 20%. How is that supposed to help first-time home buyers to get access to housing?
We were very clear that the 2% increase in insurance premium tax was a revenue-raiser that enabled us to introduce the measure on changing the taper for universal credit, which increases the incentives to work. We believe that was the right course of action, but if we look at the autumn statement, and indeed the announcement made at the Conservative party conference, what is very clear is that this Government are committed to ensuring that we build more homes, which is what the public rightly expect.
3. If the Government will establish a public inquiry into Her Majesty’s Revenue and Customs’ contract with Concentrix.
9. If the Government will establish a public inquiry into Her Majesty’s Revenue and Customs’ contract with Concentrix.
The independent National Audit Office is carrying out an inquiry into the Concentrix contract and it plans to publish its report in early 2017. That is in addition to Select Committee and Public Accounts Committee scrutiny, which has been extensive to date and will no doubt be extensive in the future.
I should like to take this opportunity to congratulate my hon. Friend the Member for Sheffield, Heeley (Louise Haigh), who is not in her place, whose hard work got this issue on to the agenda and forced HMRC to act. In July, the independent Social Security Advisory Committee said that the Concentrix contract was a “major departure for HMRC, as decisions about a claimant’s past eligibility to a benefit are being made by a commercial organisation”, and that “this same organisation is then performing mandatory reconsiderations when a claimant challenges the initial decision.” What are the Government going to do to prevent this situation from happening again?
The chief executive of HMRC addressed that particular issue in one of his evidence sessions to a Select Committee. I hope the House will be pleased to hear that HMRC has taken back and completed all 181,000 cases from Concentrix and has now cleared most of the mandatory reconsiderations. [Interruption.] There are of course issues to consider. That is why the National Audit Office is carrying out its inquiry, which is already under way, and the Government will of course respond to its report in due course.
The Concentrix scandal left huge numbers of people in hardship, and some of them are still paying off the debts to loan sharks that they took out to see them through. Ministers must have seen the complaints letters, and they must have seen what was in the media. Were they asleep at their desks? Were they just caught napping? Concentrix, HMRC and the Minister at the time need to be held responsible for this, and we need a proper inquiry.
I would make the point to the hon. Gentleman that a proper inquiry is exactly what the National Audit Office will be undertaking, and I am sure that the hon. Member for Hackney South and Shoreditch (Meg Hillier) and her Committee will have that report in front of them in due course. This matter will be properly looked at in some detail. Over the course of the contract, considerable savings were made for the taxpayer in relation to fraud and error, but it is true that things went badly wrong towards the end of the contract, which is why swift action was taken.
While recognising the points made by the hon. Members for Great Grimsby (Melanie Onn) and for Stoke-on-Trent South (Robert Flello) on the Concentrix contract, which will be covered in the Select Committee’s report, I would like to congratulate Treasury Ministers on responding very fast when these issues really came to a climax in August and on being extremely prompt in looking after constituents who contacted their MPs about this matter.
I thank my hon. Friend for those words. Having looked carefully at the profile of complaints from Members over the period of the contract, it is clear that there was sharp increase in their number right at the end of the contract, when it became apparent that a number of Members were contacting us on behalf of their constituents. As I have said, it was the sharp decline in service that led to the actions that we took. It is also worth noting that all the 181,000 cases that were taken back have now been resolved and that, where appropriate, compensation has been paid. Most importantly, when claims have needed to be renewed and reinstated, this has been done.
Given the issues in my constituency that I have raised, I am pleased that the Concentrix contract has now been brought to an end. Does the Minister agree that an inquiry by the National Audit Office, which works for and answers to this House, will be far more effective in getting lessons learned than a long-winded public inquiry that could become a lawyer-fest?
My hon. Friend is exactly right to say that the National Audit Office inquiry is the way to go. This is an area in which it is deeply experienced and the work is already under way. The report will be produced in the new year. In order to draw conclusions and to find these reports helpful, that speed of inquiry is important. We will have the report early in the new year, and the House will have further chances to scrutinise it at that time.
4. What steps he is taking to reduce the effect on small businesses of penalty surcharges levied by HM Revenue and Customs.
Ultimately, the Government want to collect the right tax at the right time, not charge penalties. As it happens, we are currently reviewing ideas for how we charge penalties. A discussion document was published last year, and we recently consulted on a new approach to sanctions for late submissions of returns and late payment of taxes. We are currently considering all the comments received and if my hon. Friend wants to contribute to that process, I will be happy to look at any detailed points.
I am more than happy to contribute. A small building company in my constituency has paid large VAT bills on time since 1972. However, on one occasion, because of a mistake by a member of staff, the company’s VAT return was one day late and the company was hit with a totally unfair £12,000 penalty charge. During the review, will Ministers consider changing the penalty charge system so that they are levied only on businesses that repeatedly fail to pay their VAT on time? “Three strikes and you’re fined” might be a good system.
I note what my hon. Friend says with interest. It is worth clarifying that the VAT default surcharge system already contains safeguards to help businesses avoid penalties and that no business incurs a surcharge the first time it makes a late payment. My hon. Friend may want to write to me about that individual case because I cannot address it here in the House. The current system of surcharges is structured in a way that allows the smallest businesses up to four late payments without incurring a surcharge, so I suggest that he writes to me with the details, which I will pass on to HMRC.
The new “Making tax digital” arrangements, which will require businesses to submit quarterly returns, increase the likelihood of sanctions being imposed following late returns or non-submission. How does that fit in with the Government’s promises to make it easier to start a business, to cut red tape and to make businesses more competitive?
I do not recognise the hon. Gentleman’s description of “Making tax digital”—an important reform that we will consider carefully. We said in the autumn statement that we will respond in the new year, but it is not right to say that there will be four returns; information will be digitally uploaded to the system more regularly. It is also the case that one of the driving forces behind “Making tax digital” is to help small businesses to get things right first time, because there is an awful lot of error that often costs businesses money that they would otherwise be owed.
I must press the Financial Secretary on that point. I appreciate that the “Making tax digital” programme does have advantages, but many small businesses are worried about quarterly reporting. Will she consider making it voluntary rather than mandatory?
I reiterate to my right hon. Friend that it is envisaged that people will upload information quarterly, but that is not the same as four tax returns a year, something which got some currency at the time. Several significant concessions regarding the number of small businesses that were exempt from the system were announced over the summer, but I am listening carefully to the points being made both by colleagues in the House and by some of the important stakeholders with whom we have been engaging. That is why we said that we will respond in the new year. We do not want to rush our response; we want to consider all the points carefully.
5. What steps he is taking to improve productivity in the south-west.
Investment and skills are front and centre in our plans to raise productivity across the country, including in the south-west. The autumn statement announced a new £23 billion national productivity investment fund that will be targeted at four areas that are critical to improving productivity: housing; transport; digital communications; and research and development. We also announced in the autumn statement that the south-west will receive £191 million from the local growth fund to back local priorities and support new jobs and £19.5 million extra investment to bolster the area’s resilience to flooding.
I welcome the Chancellor’s words and appreciate that he is keen for funding to be granted and attached to infrastructure projects that will bring a positive economic effect. With that in mind, will he consider supporting road improvements on the Toneway-Creech Castle corridor that leads into Somerset’s county town of Taunton, which will unlock 3,000 housing units?
I understand that the Heart of the South West local enterprise partnership bid for this scheme is part of its local growth fund submission; as I said, £191 million has been allocated to the south-west, and details of the individual LEP allocations will be announced in the near future. The Government are very supportive of using infrastructure to open up house building and employment opportunities, and from what she has said about this road, it sounds as though the project in question would fit very well with Government priorities.
As the Chancellor will know, Bristol is making a real contribution to productive growth, not just in the south-west, but across the country. But as the mayor of Bristol said in his response to the autumn statement, “if the government wants a ‘watertight’ UK economy it needs to stop punching holes in local government’s hull.” Will the Government commit to giving Bristol and cities like it the devolved powers, infrastructure investment and funding they need to deliver on productive growth locally?
The Government remain committed to the devolution agenda and, in particular, to supporting mayoral authorities, to ensure that economic growth and productivity are driven from the bottom up. We will continue to work with those authorities to make sure we deliver the funding available in the most effective way to get the result the national economy needs.
I very much welcome the Chancellor’s commitment to road, rail and broadband. Openreach should be broken away from BT to deliver proper competition, because in the hardest-to-reach areas for broadband in my constituency and across the west country, we need some greater players and greater competition.
I appreciate what my hon. Friend is saying. He will know that there has been a long and heated debate about the best way of delivering our broadband infrastructure in the future, and Ofcom is at the heart of reviewing this issue. I shall continue to have meetings with Ofcom, and with representatives of BT and others, over the coming days, as will my right hon. Friend the Culture Secretary.
The south-west’s productivity has drifted down since 2010 and, according to the House of Commons Library, the UK overall has seen the widest productivity gap with the G7 since 1991, when the data series began. What plans, if any, does the Chancellor have to pursue his predecessor’s so-called “Fixing the foundations” productivity plan? Or is that another failed policy that this Chancellor is trying quietly to jettison?
No, and if the hon. Gentleman looks at the document we published last Wednesday, he will see that it contained a specific reference to “Fixing the foundations”, which is the base document setting out the Government’s agenda for addressing productivity issues. Of course, the key announcement in last week’s autumn statement was an additional £23 billion of borrowing specifically targeted at the highest-return investment projects; this is designed to raise Britain’s productivity by raising the productivity performance of our regional cities, in particular, and our regions more generally, to that of London and the south-west.
It is six years late. The productivity gap has widened for both the south-west and the country, and so has the gap in earnings and wages. According to the Institute for Fiscal Studies, the outlook for wages is “dreadful”, with workers likely to earn less in real terms in 2021 than they did in 2008, and with the biggest losers being lower-income families, with the poorest third likely to see incomes drop. So in tandem with action on the productivity crisis, what are the Chancellor’s plans for action on the wages crisis?
First, if the hon. Gentleman that if he looks at real household disposable incomes, he will see that the picture is rather brighter, and they present a much more real picture of what people in the economy are experiencing. He is right to say that real wages are a reflection of productivity performance, and the only way sustainably to raise real wages is to raise the productivity performance of this economy. So rather than whinging about whether something was done this year, last year or six years ago, and perhaps with a careful eye on the performance of the previous Labour Government in this area, he might care to welcome the announcement made last week as an appropriate initiative to try to raise the UK’s productivity performance, and raise real wages and living standards over the long term.
6. What steps he is taking to encourage business investment in (a) the UK and (b) East Anglia.
The Government are taking significant steps to encourage business investment in East Anglia and in all regions of the UK by cutting corporation tax to the lowest rate in the G20, delivering a £6.7 billion business rates package and allocating the £23 billion of public investment through the national productivity investment fund to ensure increasing and improved productivity. The autumn statement also announced £27 million for the Oxford to Cambridge expressway road link, as well as funding for the east-west rail link, and local enterprise partnerships in the east of England will also receive up to £151 million of local growth funding.
I welcome the Chancellor’s reply and the announcement of investment in the Oxford to Cambridge corridor and the transformational effect that that could have. Will he also ensure that other schemes to the east of Cambridge, such as the vital Ely North rail junction and improvements to the A47, also go ahead on time? He will be aware that they are crucial to the future economy of west Norfolk and other parts of Norfolk.
I will certainly pass on my hon. Friend’s comments about that particular rail scheme to my right hon. Friend the Transport Secretary. My hon. Friend will know that we have a large programme of rail infrastructure in place and that the additional funding for the east-west rail link that was announced last week was outside that core rail programme. I hope that he will agree that the Oxford to Cambridge corridor represents a real growth opportunity for the south and the east of England to exploit Britain’s two best known universities and their world-class research reputations to enhance the productive capacity of our economy.
Since 23 June, there has been a significant depreciation of sterling and two announcements of major investments in UK motor manufacturing. The prospects for investment in UK manufacturing more widely are now much improved. Will the Chancellor be seeking to ensure that the more sensible exchange rate welcomed by Lord Mervyn King, among others, is sustained?
No. It is not the Government’s business to sustain or manage the exchange rate in any way, as the hon. Gentleman very well knows. We have an inflation target, but exchange rates are set by markets and reflect market views about the economy and expectations of the trajectory of the economy in the future. He is absolutely right to observe that, over the past six months, we have seen some remarkable endorsements of the British economy through large inward investment decisions made by foreign inward investors.
May I congratulate the Chancellor on the £23 billion of extra money for this national productivity investment fund, which will confer huge benefits on the whole of the United Kingdom? Although I do not expect him to comment on the considerable merits of the A610 growth corridor and the improvements to the road at Giltbrook, I am very happy to meet him to persuade him of them. On a serious note, will he do everything he can to ensure that excellent schemes such as those are expedited and not caught up in what can sometimes be bureaucratic tangles?
It is an excellent scheme indeed. My right hon. Friend will know that it is not only the £23 billion of additional funding for economically productive infrastructure that was announced on Wednesday last week, but a core £150 billion of funding for the same defined purposes over the remainder of this Parliament and the Government’s commitment, repeated last Wednesday, to move to a roads fund from 2020, funded by the revenues from vehicle excise duty, all of which adds up to a sustained commitment to investment in our roads.
Brexit is putting business investment on hold at the expense of job losses. This comes after a long period of escalating debt and slumping growth. Furthermore, quantitative easing has failed to raise confidence and stimulate business investment in the real economy. The autumn statement measures announced are simply insufficient. What else will the Chancellor do?
I simply do not recognise the picture that the hon. Gentleman paints. The Bank of England’s monetary actions have undoubtedly had a positive effect in stimulating the economy. The performance of consumer demand over the past few weeks has demonstrated that very clearly. We have the key elements in place, both monetary and fiscal, for our current circumstance, which is the potential for a more difficult period ahead. We need to muster our resources, make sure that we are able to support the economy through this period, and, at the same time, address the fundamental challenges, such as the productivity problem, to ensure that Britain is match fit to meet the challenges that it will face as it leaves the European Union.
In that regard, I am sure that the Chancellor would agree that research and development investment is critical to obtaining a high skill, high wage economy and one that increases productivity, as he has recognised. It is therefore disappointing that the autumn statement has failed to match R and D investment as a percentage of GDP in line with other major economies. What will the Chancellor do to fill that gap?
What I will do over the medium to long term is get the British economy back on to a firm footing, so that we can fund all those investment needs—which we do have, as the hon. Gentleman points out. Let me turn the question around. Scotland will receive £800 million of additional capital funding through Barnett consequentials as a result of the announcement made last week. From the tone of the hon. Gentleman’s question, I feel sure that the Scottish National party will want to confirm that that money will be used in Scotland, as it will in England, to target productivity-raising capital investment, so that the Scottish economy can perform more strongly in the future.
7. What assessment he has made of the potential effect on the ability of small and medium-sized businesses to raise capital of the UK leaving the EU.
The UK remains very much open for business and the Government are committed to supporting SMEs to access the capital they need to grow, as demonstrated by the £400 million increase in funding for the British Business Bank announced at the autumn statement, unlocking £1 billion of funding.
The Minister will be aware that more than £10 billion of EU structural funds is invested annually in the UK, particularly in Wales. Indeed, in my constituency of Ogmore, many small and medium-sized businesses have benefited from Jobs Growth Wales, which is a success of the Welsh Labour Government. Will the Minister give a cast-iron guarantee to the people of Wales that structural funding will continue, pound for pound, after we leave the European Union?
We want to see the economy benefit every part of the UK. It is interesting to note that there are almost 1 million new businesses in our country since 2010, and I note the Prime Minister’s announcement at the CBI conference about the new patient capital review, which will be interesting, I am sure.
Does my hon. Friend agree that Brexit is essentially a red herring for SMEs in this context, that what matters is that the Government create the right conditions for businesses to do business and that the banks are in a sufficiently capitalised position to lend money?
I agree absolutely with my hon. Friend. It is about creating an economic environment in which businesses can grow and thrive. The British economy is strong and will continue to be strong as we prepare for our departure from the EU.
What would be the impact on SMEs, particularly those in the supply chain of big manufacturing firms such as Jaguar Land Rover or Airbus, if we were to leave the EU without full access to the single market or a free trade deal with the rest of the EU and if we were forced to fall back on World Trade Organisation rules and tariffs?
The Government have been clear that we will not comment on every turn of the negotiations. Indeed, the negotiations have yet to start. However, we are absolutely committed to getting the best possible deal we can.
Does the Minister agree that the City of London plays a very important part in helping businesses to raise capital and that maintaining clearing in euros in the City of London will be an important way to ensure that the City retains that status?
The City of London is a very important financial centre and we fully intend it to remain as such. Clearing is an important element of the negotiations, and we will do all we can to retain London and the UK as a financial centre of excellence.
8. What steps he is taking to support regional infrastructure development.
In the autumn statement, we prioritised additional high-value investments, specifically in infrastructure and innovation, that will directly contribute to raising Britain’s productivity. The Chancellor announced a new national productivity investment fund of £23 billion to be spent on housing, transport, digital communications and research and development over the next five years. Local enterprise partnerships will receive £1.8 billion of growth deal funding. This will go towards the projects needed to bring about economic growth in local areas, including new homes, transport improvements and supporting businesses and people to access the skills they need.
I welcome all those measures to boost productivity and particularly to turn attention to infrastructure and the specifics for the east of England given yesterday. However, given the strategic importance of the A14 trunk road linking Felixstowe port with Cambridge and the rest of the country, as well as its significance to 80% of businesses in Suffolk, does the Minister agree that further improvements to a road that he knows well are vital to productivity?
My hon. Friend is right—it is a road that I know well. We certainly agree that the A14 is a critically important part of the network. We are investing £1.5 billion for a major upgrade to cut congestion on the A14, including a new 21-mile road between Huntingdon and Cambridge, and only yesterday my right hon. Friend the Transport Secretary was able to go there to witness the start of the work.
24. Is not the simple truth that more than half the money announced for England will go to projects in London and the south-east and that, despite a £50 million shortfall in NHS funding by 2017 and a £130 million shortfall in social care funding by 2020, the Chancellor, like his predecessor, has short-changed Birmingham and the west midlands?
No, that is not true. There is a balanced package and all parts of England will benefit from the transport measures. The Barnett consequentials should mean that Scotland, Wales and Northern Ireland can also benefit in this area. A specific announcement about the midlands hub was made in the autumn statement and there is more to be said about the midlands engine. This is a Government who are determined to ensure that the whole country benefits from economic growth.
17. Can the Minister assure me that digital infrastructure is as important as road infrastructure and that part of the £1 billion broadband fund will be allocated to address the productivity gap in rural areas—in particular, to help shops such as the hollies farm shop in my constituency, which has three business lines and 2 megabits of speed?
My hon. Friend highlights the fact that digital must be key to improving productivity. That is why a £1 billion package was announced in the autumn statement. There was also specific help for rural areas through rural rates relief. Our ambition is clear: to provide the best digital infrastructure we can for urban and rural areas.
In table 4.21 of the report Office for Budget Responsibility’s it forecast that the Government will underspend on infrastructure by £15 billion in the next five years—two thirds of the additional money announced by the Chancellor last week. Why should the public have any confidence in the ability of the Government to deliver on their promises when their own watchdog clearly does not?
The OBR has always taken a cautious view on delivery of infrastructure, but let us remember that we have already delivered 3,000 projects. We have set out an ambitious plan for delivery of infrastructure improvements in the course of this Parliament, and that is exactly what we will deliver.
10. What fiscal steps he has taken to help increase levels of UK exports since the UK’s decision to leave the EU.
The Government are committed to ensuring that exporters receive world-class support. That is why the autumn statement announced the doubling of UK export finance capacity.
Last week, the OBR reduced its trade forecast, stating that this is “due to the loss of trade that the OBR judges will result from the UK leaving the EU.” We all know that this Government would like to have their cake and eat it, but changes to export finance alone will not bridge the gap between ambition and reality. Do the Government seriously expect to meet their own target of doubling exports without continued membership of the single market and without a comprehensive plan to do so? Do the Government stand by their exports target?
We do, and it is interesting to note that the Federation of Small Businesses, for example, welcomed the doubling of export finance because it felt that it would help small and medium-sized enterprises reach new markets. It is also interesting to note that the Scotch Whisky Association highlights the importance of exports, and it has seen an increase of 3.1%, to 531 million bottles. Perhaps the hon. Lady might remove uncertainty in Scotland by stopping banging on about a second referendum.
Does my hon. Friend agree that the best thing the Treasury can do to help British business export is to allow it to keep more of the profits it earns by continuing to cut corporation tax?
We have legislated for corporation tax to be reduced to 17% by the end of this Parliament—one of the lowest rates in the G7—and we will do all we can to help businesses grow and thrive in this country.
Last week’s autumn statement should have been about providing answers to meet the challenges of Brexit and at least information on the options available. Instead, it appears that the only information we can glean is from photos snatched of the notes of a senior Conservative official in Downing Street. We know now, in the light of that leak, that many of the Chancellor’s senior colleagues in the Government are reluctant to pursue the transitional deal being called for by businesses when we leave the EU. Will the Minister now provide some clarity by inviting the Treasury and the Office for Budget Responsibility to undertake a full assessment of the public finance implications of the range of policy options associated with Brexit, including access—or not—to the single market, being in or out of the customs union and the potential for transitional arrangements?
I have to tell the right hon. Gentleman that that is a normal part of what we do on a very regular basis, and he really should not believe all he reads in newspapers from researchers or Back Benchers—it is hardly Government policy.
I take that as a no Last week, we learned in the OBR report that the OBR was denied any information in respect of assurances provided to Nissan. The OBR said: “On this occasion we asked specifically whether any contingent liabilities had been created in respect of assurances provided to Nissan and the Treasury declined to say.” This level of opaqueness on an existing deal undermines the certainty businesses need to invest in any future deals. Will the Chancellor now provide the OBR with the information it has requested, so that it can provide a more accurate forecast, rather than being left in the dark or, as it put it, “none the wiser”?
Perhaps we should welcome the jobs to start with. However, in answer to the right hon. Gentleman’s question, it was, unfortunately, not possible to confirm this to the OBR in time to feed into the drafting process. Her Majesty’s Treasury therefore provided the same answer as it would to any query on contingent liability.
11. What steps he is taking to increase the level of public infrastructure spending.
In the autumn statement, as I have said already, I announced the creation of a new national productivity investment fund to provide £23 billion of additional investment. That is on top of the £150 billion that is already baked into the baseline, and it is focused on the key areas for boosting productivity—housing, infrastructure and research and development.
I welcome the £800 million in Barnett consequentials, which the Scottish Government will invest on top of the £100 million they have already announced for capital projects, but what further steps will the Chancellor take to address the almost 10% cut to the Scottish capital budget since the Tories came to office?
The Scottish Government will have a full share of infrastructure spending through the Barnett formula, and we will work with the Scottish Government and all other devolved Administrations and regional entities, as we work to raise the UK’s productivity game. That is about infrastructure investment—both public and private. It is about raising skills. It is about raising management capability, and we announced that we would fund the Charlie Mayfield initiative to disseminate best management practice across small and medium-sized enterprises. It is about doing all these things to ensure the UK is match fit to prosper in the global economy in the future.
May I ask the Chancellor not to blindly hand over any extra infrastructure spending in West Yorkshire to the Labour-dominated West Yorkshire Combined Authority for it just to pump money into the Labour heartlands, and instead make sure that money can be spent in other parts of West Yorkshire, including on a Shipley eastern bypass, which would benefit the local economy and the economies of my hon. Friends the Members for Pudsey (Stuart Andrew) and for Keighley (Kris Hopkins), too?
I am grateful to my hon. Friend. I did not know that Labour had any heartlands left, so that is an interesting comment. I will pass on his concerns to my right hon. Friend the Transport Secretary and ask him to take them into consideration when he makes his allocations.
Order. I remind colleagues that topical questions are supposed to be sharply shorter, and the same goes for the replies. We made remarkably slow progress in the first session this morning, and we really need to do rather better.
T3. If he will make a statement on his departmental responsibilities.
My principal responsibility is to ensure the stability and prosperity of the economy. In the current circumstances, I judge that that requires a combination of near-term measures to ensure resilience and longer-term measures to manage the structural adjustment, as the UK transitions out of the EU, and to address the UK’s long-term productivity challenge. The package announced in the autumn statement last week delivered on both requirements.
So far the Chancellor has disregarded Members’ requests to give justice to the WASPI—Women Against State Pension Inequality Campaign—women. Will he now listen to bodies such as North Tyneside Council, which, under our elected mayor, Norma Redfearn, has written to the Government to ask for a fair transition of the state pension right for all these women?
I understand the concerns, but this issue was debated extensively during the passage of the Pensions Act 2011, when the Government made concessions to this group of individuals worth £1.1 billion.
T4. As the Chancellor will know, this Saturday marks Small Business Saturday across the country. I will be heading out in Bath to do some Christmas shopping at some of the small businesses and encouraging them to join my Best of Bath business awards. Will he join me in encouraging my constituents, and hopefully my neighbours’ constituents, to come into Bath and shop local?
I am sure the hon. Gentleman will be wearing that excellent pullover as he does so.
This is year four of Small Business Saturday, and the campaign continues to get bigger each year. Small businesses and entrepreneurs are the backbone of the British economy. The Government will continue to support Small Business Saturday this year with events across the country. I encourage right hon. and hon. Members in all parts of the House to be in touch with their local enterprise partnerships and their local branch of the Federation of Small Businesses to find out what is going on locally and to get out there and support it.
Last week, we saw the accumulation of six wasted years of failed economic policies supported by both the Chancellor and the Prime Minister. Following last week’s autumn statement and the publication of the Office for Budget Responsibility forecasts, can the Chancellor confirm how much worse off a pensioner on the state pension will be by 2019-20 as a result of the OBR’s downgrades to wage forecasts?
I am slightly mystified by the hon. Lady’s question, because the downgrades to wage forecasts will not be the driver of the circumstances of a pensioner on the state pension, given that we have introduced a triple lock that guarantees pensioners an increase in line with inflation, in line with earnings, or 2.5% as a minimum. However, I am happy to look at the specific question and to write to the hon. Lady with a calculation.
Let me inform the House that the forecast is this: a pensioner on the state pension will be £429 worse off by 2019-20, with only the triple lock preventing an even worse decline. After claiming in the autumn statement that the triple lock will now be subject to review, will the Chancellor end the uncertainty and worry he has caused older people and join me in committing to preserve the triple lock throughout the lifetime of the next Parliament?
Well, this was worth waiting for: we have a firm commitment by the Opposition to run the triple lock through the lifetime of the next Parliament. I wonder whether the hon. Lady knows how much money she has just spent, without knowing the fiscal circumstances the country will face. What we have said, and the only responsible thing to say, is that all the commitments we have made for the duration of this Parliament we will review at the spending review before the end of the Parliament, and we will decide then which ones we can afford to renew and which ones are appropriate to renew. I think this tells us everything we need to know about the Opposition: three and a half years out, they are willing to spray around commitments without any idea of what it is going to cost them.
T9. Casework in Wycombe continues to illustrate calculation and communication errors around tax credit payments. What steps will the Government take to reduce those errors?
My hon. Friend is right to point to the fact that we inherited a complex system in that regard. Her Majesty’s Revenue and Customs has enhanced its online services. There will be an online service, for example, for people making new claims for tax credits starting in April 2017. The use of real time information through pay-as-you-earn has really helped to pick up potential errors in claimants’ income, and it is making a difference.
T5. Chester’s status as a centre for the financial services industry, particularly FinTech, is under threat from continuing problems with retention by businesses, which cannot get staff to come to the area. Staff cannot get there, because our infrastructure is not good enough. Instead of gloating about the Oxford to Cambridge corridor, can we have some news about when money will be spent on the M56 to upgrade it to a smart motorway?
I will take that as a representation and make sure that my right hon. Friend the Transport Secretary is aware of it. The hon. Gentleman will be aware that we are already setting out an ambitious programme for road spending over this Parliament. In addition, my right hon. Friend the Chancellor of the Exchequer made announcements last week about putting in more funding to improve our road network across the country. I am happy to look at the case that the hon. Gentleman raises.
I recently visited ASV Global in Portchester, an innovator in unmanned and autonomous marine technologies. In just six years, ASV has designed 70 new products, which it has delivered to 10 countries and 40 customers. What further support for research and development is available to companies such as ASV to boost job creation and wealth?
We have done two things. Within the £23 billion that I announced last week to raise the UK’s productivity game is a significant increase in public R and D investment. We also said—we will do this before the Budget—that we would carry out a review of the way that tax support for privately funded R and D works, with the objective of ensuring that the UK is the most attractive place in Europe to do private R and D work. I will report at Budget 2017.
T6. The autumn statement shows that, as gross national income falls, so will the total projected official development assistance budget. Can the Chancellor assure us that, within that, the Department for International Development budget will be maintained as much as possible and that, if ODA has to contract, cuts will have to fall on other spending Departments before DFID?
No, not necessarily at all. We spend our ODA in different ways, and different Departments have relatively small pools of ODA. Of course, the great majority of it goes through DFID. Where GNI contracts and the ODA budget needs to be trimmed accordingly, we will look to take away the lowest-value ODA spending. I think that that is the way the taxpayer would expect it to be done.
Further to the Chancellor’s answer to my hon. Friend the Member for Fareham (Suella Fernandes), could he set out how QuestUAV in Amble, a manufacturer of mapping and survey drones, and other high-tech north-east businesses will be able to access the R and D funding that he talks about?
Public R and D funding will take two principal forms. There will be further funding to the science base in our universities, and there will be funding through Innovate UK, which is accessible by companies to support innovation. We already have an excellent base in basic science. What we need to do now is to up our game in innovation and the application of that science.
T7. A feature of the modern gig economy is that more and more people are sticking together mini jobs, in most of which they earn below the national insurance threshold. HMRC manages to add together that money to tax it, but it does not manage to add together that money to make sure that those people have pensions. What is the Treasury going to do to make sure that older women, in particular, get access to pensions when they have mini jobs?
The right hon. Lady and I have recently spoken about this issue, and as she knows, there has been some work done to look at the broader issue. It is complicated, but I undertake to look at it again and respond to her. Of course, some of the broader aspects of the gig economy will be covered during the Taylor review.
According to the Library, infrastructure spending per head is 2.5 times greater in London and the south-east than in the regions. Does the Chancellor agree that now is the time for a fairer distribution of investment spending across the UK?
The Government are committed to investment in all the regions of the UK. We have delivered more than 500 infrastructure schemes in the north since 2010, and more than £13 billion of spending is planned on transport in the north during this Parliament. In Yorkshire, this includes new trains on the east coast main line, the trans-Pennine railway upgrade and bringing the A1(M) up to motorway standard for its full length. I would just say to my hon. Friend that figures for London and the south-east are distorted by the effect of the strategic Crossrail project, with a cost of £14.8 billion.
T8. I am pleased to note that the Chancellor has finally scrapped the arbitrary target for a budget surplus, which would have cut billions more than necessary, but concerns remain about his attitude towards borrowing and debt. Will the Chancellor tell us on what date his charter will come before the House, so that it can be fully scrutinised properly?
I cannot give the hon. Gentleman a precise date, but I have discussed this with the business managers. The rules of the House mean that 28 days must elapse before the charter is laid. I think that that will put it in the second half of January, but we will have the debate as soon as we can after the statutory period.
As other Members have mentioned, there is growing alarm about the impact of making tax digital on small business people, of whom I am one. Will the Chancellor confirm that, in time, quarterly tax returns will also apply to Members of Parliament?
As my hon. Friend mentioned, we touched on this earlier. Making tax digital is an important reform. I have mentioned already that some important concessions were made during the summer, by taking many very small businesses out of making tax digital, but it has much to offer small businesses. I am looking carefully at all the responses that have been made, and as he knows, I have listened carefully to the points that he has made on a number of occasions.
T10. Will the Chancellor confirm that the devolution of corporation tax, which is conditional on the Northern Ireland Executive’s finances being on a sustainable footing, is not a vehicle for the Treasury to interfere in Northern Ireland’s devolved policies?
It is not a vehicle to interfere, but we have been clear from the very beginning that if the Northern Ireland Executive wish to reduce corporation tax rates in Northern Ireland, they need to do so in an environment in which we can be confident that the public finances are on a sound footing in Northern Ireland.
When I met the leader of North East Lincolnshire Council yesterday, he emphasised to me that one of the major challenges facing our coastal community is that many people retire there and put additional strains on the adult social care budget. Will Ministers assure me that that will be considered when allocating departmental budgets?
Yes, demographic trends are of course at the heart of our considerations when budgets are allocated.
With just one in six people with autism in employment, would it not have been better to invest in improving the Work and Health programme, rather than cutting it, to assist people to gain employment and thereby save on benefits? They want to work.
The reforms that we have announced will enable us to spend £330 million on practical support to ensure that people in the work-related activity group can work. May I point out that, over the past three years, the number of disabled people in employment has increased by nearly 600,000?
The key insight of the Government’s productivity plan is that value can be unlocked through more timely implementation, so will the Chancellor have a word with the Transport Secretary to see how he can speed up the completion of the final part of the Oxford to Cambridge link from Bedford to Cambridge?
I will certainly have a word with my right hon. Friend. This is partly about smart delivery, but it is also about having certainty and a pipeline that allows contractors in the supply chain to plan ahead.
Does the Chancellor realise that if he tries to push the funding gap in social care on to local councils, it will be grossly unfair for areas such as Doncaster, where a 1% increase in council tax would raise 21% less than it would for the council in the Prime Minister’s constituency? Will he commit to funding social care fully?
As I said on Wednesday, with the additional social care precept and the better care fund, we have measures in place that will make £3.5 billion of additional funding per annum available for social care by the end of this Parliament. But we recognise that local authorities have a challenge in the profiling of that money. My right hon. Friends the Health Secretary and the Communities Secretary are very much aware of that and are in discussions about it with health bodies and local authorities.
I welcome my right hon. Friend’s announcement in the autumn statement of £1.7 million of LIBOR money going to Sea Sanctuary to help with mental health provision in Cornwall. Does he agree that that will be a huge help for people all over Cornwall who in the past have had to travel many hundreds of miles to access such services?
I am very pleased that the money will deliver that effect in Cornwall. It is always good to see fines levied on the appalling behaviour of the few making such a positive difference to the many.
To follow on from the question from my right hon. Friend the Member for Doncaster Central (Dame Rosie Winterton), the demand for social care services in my constituency is set to rise by 10% in just one year, so will the Chancellor take the opportunity today to commit to additional funding for social care?
No, these are not the occasions when we commit to additional funding. We have a funding settlement in place and substantial increases in social care funding will become available by the end of the Parliament. But as I have said, we recognise that some authorities are facing some challenges on the profiling of that funding, and my right hon. Friends the Health Secretary and Communities Secretary are discussing that issue with local authority leaders.
Does the Chancellor agree that one way to improve productivity in the west midlands economy is to agree a more ambitious second devolution settlement, building on the success of the devolved settlement agreed with the West Midlands Combined Authority?
I agree with my hon. Friend. As I said on Wednesday, the Government continue to discuss with west midlands authorities the possibilities for further devolution in the west midlands. The other way to get the west midlands economy motoring is to elect a mayor with genuine business experience, like Andy Street.
The Scotch whisky industry is the largest net contributor to the UK’s balance of trade and goods. In the light of Brexit, what options is the Chancellor examining to make sure the industry can keep that privileged position of exporting?
We will have discussions with the Scotch Whisky Association, as we do with many trade associations. Without getting into a technical discussion, I should say that dutiable goods are less likely to be adversely affected by a change in the way we trade with our European neighbours than many other goods, because there is already a specific regime for dealing with them that is unlikely to have to change as a result of Brexit.
Order. I am sorry to disappoint remaining colleagues, but I have extended the envelope as far as I felt it in any way reasonable to extend it.
(Urgent Question): To ask the Secretary of State for Culture, Media and Sport what the Government are doing to support victims of historical sexual abuse in football, and what steps are being taken to help to ensure that there is no repeat of it.
Nothing is more important than keeping children safe. Child sex abuse is an exceptionally vile crime, and all of Government take it very seriously indeed, as I know this House does Children up and down the country are able to play football thanks to the dedication of thousands of adults, many of them volunteers. The vast majority have no stain on their character. However, where people who work with children betray their trust, the effect is devastating I pay tribute to those who have summoned up the courage to speak out. It is vital that they know that their voices will be heard, whether they are speaking about historical crimes or about anything that is happening currently. Coaches and parents have a duty of care to children—indeed, everyone does—and must also speak out where they suspect abuse My Department, the Home Office, the Department for Education and the Ministry of Justice all have responsibilities in this area. Recent allegations of sex abuse are currently an operational police matter, so Members will understand that I cannot comment in detail As soon as this news broke, I spoke to the chair of the Football Association, Greg Clarke, and the chief executive of the Professional Footballers Association, Gordon Taylor. I made it very clear that the Government will support them in addressing these issues head-on The National Society for the Prevention of Cruelty to Children has set up a hotline, supported by the FA, which anyone can call if they want to talk to someone in confidence. That will help to build a picture of the potential scale of both historical and more recent abuse to inform next steps. The number is 0800 0232642 The FA has instructed independent leading counsel Kate Gallafent QC, an expert in child protection, to deal with its review of the allegations. The internal review will look at what the FA and clubs knew, and when, and what action was or should have been taken. Alongside that, the child protection in sport unit, which assists the FA in relation to its safeguarding procedures, will carry out an independent audit of the FA’s practices. Today, the Minister with responsibility for sport, the Under-Secretary of State for Culture, Media and Sport, my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch), will write to all national governing bodies to ask them to redouble their efforts to protect children who play their sports. Additionally, I have spoken to Chief Constable Simon Bailey this morning, the national police lead on child abuse. We have agreed that I will convene a meeting with him, the FA and others to discuss the situation It is important to say what measures we have in place today to prevent abuse. The child protection in sport unit was founded in 2001 to work with UK Sports Councils, national governing bodies, county sports partnerships and other organisations to help them to minimise the risk of child abuse during sporting activities. The unit helps organisations to identify adults who are a threat to children and young people, and to develop safeguarding knowledge and skills among all staff and volunteers. Since 2002, the Disclosure and Barring Service, previously the Criminal Records Bureau, has provided a mechanism to request criminal record information relating to people working or volunteering with children The first duty of any Government is to protect its citizens, and the first duty of all of us is to protect children.
I thank the Secretary of State for her response. I begin by paying tribute to the members of the Chapecoense football team and all those who lost their lives in the tragic plane crash earlier today. Our thoughts and prayers are with them and their families We must pay tribute today to former footballers who have shown unparalleled bravery in sharing their stories and in bringing this issue into the public light. I met some of them on Friday morning and expressed that in person. In the light of recent allegations of historical sexual abuse in football, the Professional Footballers Association has said that six football clubs have been named by victims; that more than 20 former players have now come forward; that five police forces across the country are opening up investigations; and that FIFA is monitoring the situation closely I welcome the NSPCC opening up its hotline. It received more than 50 phone calls in the first two hours of opening. What else are the Government doing to ensure that victims have a safe place where they can speak out confidentially, which is vital The FA, in conjunction with regional associations, needs to ensure that the message goes right through our game, from Sunday league to premier league. What are the Government doing to reassure parents, who will no doubt be worried about these claims? This situation has the potential to seriously damage the reputation of football in our country. I welcome the FA announcement that Kate Gallafent QC will lead the investigation. Let us remember that 99.9% of coaches and volunteers have children’s best interests at heart—an overwhelming majority want the best for them We need representatives from the FA, the Government, schools and relevant organisations to work with the police not only to ensure that any historical claims are fully investigated, but to ensure that abuse is stamped out and that our young players have a safe and confidential way to report incidents. Will the Secretary of State tell the House what steps the Government are taking to ensure that all the relevant bodies work in conjunction to ensure that victims are supported? As more victims come forward, and as the number of named clubs grows, the police investigation will undoubtedly get bigger. Is there a plan in place to ensure that the police have all the resources they need, and how is the DCMS team looking across the sports sector to ensure that such cases do not happen again in any sporting environment? We have a cross-party duty to protect our children and young adults. Upon this I am sure we can all agree.
I join the hon. Lady in sending my condolences to the victims of the plane crash today. Such events remind us how fragile human life is and how important sport is to people. This tragedy has affected people greatly I concur with what the hon. Lady said about the unparalleled bravery of the victims and survivors. In my previous role in the Home Office, I met many survivors of child sexual abuse, as the Under-Secretary of State for the Home Department, my hon. Friend the Member for Truro and Falmouth (Sarah Newton), who is here today, continues to do. It never ceases to amaze me how brave and profound somebody is who comes forward and talks with such honesty about their experiences The hon. Lady asked about the support available, and of course we have talked about the NSPCC helpline. The NSPCC and its helplines stand ready to support any victims of child abuse from whatever walk of life. The PFA also reassured me last week that it stood ready to support victims. It is happy to take calls from victims of historical and non-recent abuse, so that it can support them and make sure that appropriate measures are taken The hon. Lady is right that the vast majority of coaches and volunteers are honourable and working in the best interests of children, but it is true that parents and others must remain vigilant, as in any walk of life, and make sure that our children are not left vulnerable to abuse. We must take those necessary steps and remain vigilant, no matter what the activity, be it sport, music, dance, creativity or anywhere children might be with people who might wish to hurt them The hon. Lady is right that we need to work together, and I welcome her cross-party support for what we are doing. As I said, I spoke to Chief Constable Simon Bailey prior to coming to the Chamber, and he reassured me about the work of Operation Hydrant, the long-standing cross-force police investigation into all allegations of non-recent abuse. He has assured me that there will be a single policing lead for each of the investigations to make sure that all the information coming in is treated appropriately and that all intelligence is shared. It is incredibly important that we bring perpetrators to justice Finally, the hon. Lady asked about other sports. As I said, my hon. Friend the sports Minister is writing today to all national governing bodies and regularly meets them, as do I, to make sure that the safeguarding measures in place are as robust as possible. We need to learn all lessons and continue to be vigilant.
Does the Secretary of State agree that the FA’s internal review must be a properly resourced investigation looking at the culture within football that allowed abuse to take place for so long and to go unreported and un-investigated for so long? Furthermore, does she agree that if the report is to have credibility, it must be published in full and in public, so that we can all learn the lessons of football’s problems and make sure that children are safeguarded properly in the future?
My hon. Friend is right that the review needs to be properly resourced, and the FA has assured me that that will be the case. When I spoke to Greg Clarke, he made it absolutely clear that it would be transparent in every way. No good will come from anybody trying to cover anything up. We need to know exactly what happened, how it happened and what went wrong, and to make sure that those mistakes are not made again.
On my behalf and that of the SNP, I echo the comments by the Secretary of State and the shadow Minister about the tragic plane crash in Colombia this morning The allegations of sexual abuse are abhorrent and deeply tragic. Anyone who abuses a position of trust to prey on young people and children must be brought to justice. Stereotypes of masculinity in football and society in general can make it extremely difficult for men and boys to come forward and speak out as victims of abuse. The players that have come forward have shown immense courage in doing so, and we hope any other victims will be able to do the same The Scottish Football Association has backed the dedicated NSPCC helpline, and remains in contact with the NSPCC and is working with it to respond appropriately if more victims come forward. The SFA has also set up a dedicated email address—childrenswellbeing@scottishfa. co.uk—for people to get in touch confidentially. If anyone in Scotland has been affected, we urge victims to come forward and seek help and support using this email address or the NSPCC helpline. May I ask the Secretary of State what structures her Department will put in place to ensure a joined-up approach across the UK in supporting any victims who come forward?
I start by congratulating the Scottish Football Association, which has done joint safeguarding work with UNICEF. I believe that to be a very positive step and I offer my congratulations on it. My hon. Friend the Minister for Sport has been in contact with the SFA this morning, as she has been with other football governing bodies from other parts of the United Kingdom. We want to make sure that we work together on this matter. I congratulate the hon. Gentleman on wearing his white ribbon. I am fiddling in my pocket, but I do not seem to have mine there. The white ribbon campaign is a fantastic one, demonstrating that we all stand against abuse. I appreciate that the white ribbon campaign deals specifically with violence against women and girls, but the fact that men are standing up against that abuse as well is incredibly important The hon. Gentleman mentioned the bravery of the individuals coming forward in a very masculine world, and I think we live in a changed environment in this respect. I think there is more opportunity for people to come forward nowadays. I listened to an interview on Radio 5 “Sportsweek” on Sunday, and I was impressed by the honesty with which an individual victim spoke. It was incredibly brave. It is very difficult, but I urge all victims and survivors to come forward.
The revelations about football are shocking, and I applaud the fact that the Minister for Sport is going to write to the governing bodies of other sports. When it comes to the monsters who perpetrate these disgusting acts, in times gone by there was a chance that they would have looked at the possibilities in other sports as well. What else, then, are we going to do, other than write to the governing bodies, to ensure that there is a proper investigation into other sports to make sure that this was not going on elsewhere?
I understand that my hon. Friend is particularly concerned about this issue. He, like me, represents a constituency that is close to where the allegations took place. As a constituency MP, I pay particular attention to what has happened to my constituents. I urge both my and my hon. Friend’s constituents to come forward in this respect. The Minister for Sport will write to all governing bodies, as I have said, but this is an ongoing process, and we continue to work with all sports to make sure that safeguarding efforts are as robust as they possibly can be.
We have to pay tribute to Andy Woodward for starting this process. He took an extremely brave step. I concur with the Secretary of State that we need to encourage others to come forward and speak in confidence in the first instance to the helplines that are available. Simon Bailey has said that he expects other institutions to be brought into this, which might result in other sports’ governing bodies having in effect to investigate themselves. There must be some sort of independent oversight, so will the right hon. Lady tell us what discussions she has had with colleagues in other Departments? What are the Government going to do to ensure that this House and the public can be reassured that there is independent oversight of the investigations into these sports’ governing bodies?
I agree with the hon. Gentleman about the bravery of Andy Woodward. I understand that during the time I have been on my feet, over 250 reports have been made to the NSPCC helpline, of which 51 are in Cheshire alone.[Official Report, 30 November 2016, Vol. 617, c. 5-6MC.] It is also important to make sure that the police have the time and space they need to carry out proper investigations and inquiries, ensuring that they obtain all the evidence. We want to see perpetrators brought to justice wherever possible, and we need to make sure that the police have time to do that. I understand from the Under-Secretary of State for the Home Department, my hon. Friend the Member for Truro and Falmouth, who has safeguarding responsibilities, that the independent inquiry into child sexual abuse will look to establish whether it is appropriate for this issue to be covered as part of its overarching work to understand what happened with historical child abuse and the failings in the system.
Before I was elected to this place, I worked as a criminal barrister for 16 years, so I have defended more than my fair share of paedophiles. It undoubtedly takes huge courage for someone to come forward and explain how they were abused as a child. It is also an unfortunate part of the particular wicked perversion of a paedophile that they should be cunning and deceitful. Does my right hon. Friend agree that, although we do not want a witch hunt, we do need to be sure that everybody involved with children in sport understands the nature of these wicked, horrible people? That is why it is so important to put in place rigorous measures to safeguard our children and keep them safe.
I agree absolutely with my right hon. Friend, who has huge experience of the criminal law and of this particular area. In my previous Home Office role, I met a number of sporting bodies regarding DBS and other checks, and this included the FA, which I know takes this matter incredibly seriously.
I associate myself with the remarks of others about the hideous and tragic crash in Colombia earlier today I pay tribute to those who have come forward and initiated the national discussion that we are now having. It takes immense courage, but the impact on others who might have suffered is huge, encouraging them and strengthening their resolve to come forward. Last weekend, I stood on the touchline watching my son play for Milnthorpe Corinthians against Kendal Wattsfield. Tens or even hundreds of thousands of children play football every weekend. It is our national game. I thoroughly respect what the FA is doing with its investigation. What I am saying is in no way an attempt to undermine or criticise the FA, but given that this is the national game and the potential scale of the problem, will the Secretary of State ensure that there is independence in the investigation and that resources are put into it? We must not simply allow the sport to investigate itself.
The hon. Gentleman speaks about the huge enjoyment that children get from grassroots sport. In common with him, I enjoy seeing my children play in grassroots sport. I do not think any of us should ever forget the massive benefits that come from children’s involvement in sport—being part of a team, being outdoors, getting into the routine of turning up for practice and the general camaraderie of it all. That is incredibly important. When it comes to grassroots sport, we should take the same approach as parents as we do with any other situation that we put our children into. We make sure that we are confident that we trust the people whom we allow to make contact with our children. We must trust and respect them, and ensure that they go through the appropriate safeguarding checks On the issue of an independent inquiry, it is important to remember that the inquiry led by Professor Alexis Jay is looking at a variety of matters. For example, it has taken the reports of Dame Janet Smith from the BBC, and it is important that the inquiry is given the time to look at institutional failings. Even more importantly, we must allow the police the time and space they need to carry out their investigation.
All Members share a sense of horror about what we have heard in recent days. Will the Secretary of State thus confirm that all the appropriate resources are in place, so that these matters can be thoroughly investigated. Will she also undertake to ensure that this will be kept under constant review?
Yes, and I think our record as a Government stands firm. We could look at Rotherham, for example, and the extra resources that were put in there to make sure that the survivors of child abuse had the confidence to come forward, so that cases could be brought. Yes, the Government stand ready to provide support.
Many parents might be shocked to know that, under changes brought in by the previous coalition Government, there is no requirement for volunteers, such as a football coach, to have a Disclosure and Barring Service check if they are being supervised by someone in regulated activity. This was raised many times when the Bill went through the last Parliament. Will the Secretary of State consider looking further at that to give the reassurance to parents that their children will be kept as safe as possible?
I think the hon. Lady should recognise the need to ensure that safeguarding takes place in an effective way. DBS checks are required for people who may be left alone with children. We must ensure that those checks are maintained and that the DBS is allowed to do its job. Of course, if failings are found as a result of these inquiries, I will stand ready to work with other Departments to ensure that safeguarding takes place as robustly and appropriately as possible.
These really are shocking allegations, but do not many of us here know inspirational coaches in our communities who inspire our children to play sport not just for the sake of achievement and winning medals, but to get fit and to experience that sense of team spirit, togetherness and camaraderie? I fear for the volunteers who give up their time, come rain or shine, to work with young people and encourage them to become involved in sport. Will the Secretary of State work with all sports governing bodies, including the Professional Footballers Association and the Football Association, to ensure that those who give up their time to volunteer will continue to do so?
My hon. Friend has made a point that I have been attempting to make. We must ensure that those inspirational coaches—volunteers who give up their time because they genuinely want to help and work with young people and who have no intent to hurt those young people—are allowed to do their job. We must ensure that we have appropriate, robust safeguarding that gives parents the comfort that they need and protects our children, but we must also ensure that volunteers come forward and those inspirational coaches are allowed to do their fantastic work.
I have had extended conversations with the right hon. Lady’s Department, with the Department for Education and with Sport England. What my hon. Friend the Member for Kingston upon Hull North (Diana Johnson) said is true: there is a big loophole. Indeed, there is a loophole when sports do not have governing bodies, and there is also a loophole when the people involved are self-employed. Will the Secretary of State undertake to look into that, given that it will also be affecting music tuition?
I invite the hon. Lady to meet my colleague the Minister for Sport, who would be happy to discuss those matters with her.
I congratulate the hon. Member for Tooting (Dr Allin-Khan) on tabling the urgent question and my right hon. Friend on the way in which she has responded to it. In a place like Kettering, football is 95% a voluntary activity for the players and coaches. Basically, the dads are the coaches and the mums wash the team kit. [Interruption.] In the vast majority of cases, the dads are the coaches and the mums wash the team kit: that is what life is like in middle England. I think that they would want me to ask the Secretary of State to ensure that the judges get the message that, when these people are caught, exemplary sentences must be handed out to make clear that such behaviour is totally unacceptable.
I think I ought to put on the record that it is quite clear that not all coaches are male. My hon. Friend the Minister for Sport is a grassroots football coach, and an extremely competent one at that. I also know of many husbands who are very good at washing the dishes and making the food. I am sure that my husband, if he is watching the debate, would be concerned if I did not put that on the record. However, my hon. Friend’s point about the sentencing of offenders is very important, and I can tell him that I work with the Ministry of Justice to ensure that appropriate sentences are available.
Given the growing number of professional clubs that are allegedly accused of being somehow involved in this affair, is it not time that the Government concentrated on football governance again? For six years we as a Parliament have dragged our feet, and the coalition and this Government have done nothing about it. Corporate governance and the “fit and proper persons” test should be involved in deciding who runs football clubs, so that those at the bottom, our children, can be assured that they are being looked after by those at the top and that there is responsibility.
As the hon. Gentleman will know, the Government published the new governance codes for sport on 31 October, and I hope that he welcomes the work we have done to ensure that all sport is subject to proper and appropriate governance. It is important for us to be certain that we can have confidence in our sports governing bodies.
I pay tribute to the courage and bravery of those who have exposed this dreadful act. I know that we are talking about historical football abuse, but will the Secretary of State tell us what strategy she has to work with the Department for Education, the devolved Administrations and, indeed, all the governing bodies of all sports to reassure parents that their children are safe when playing sports, and also to reassure the coaches who give up their time, mainly voluntarily, to provide the sporting infrastructure that enables children to participate?
I hope the hon. Gentleman will be reassured to know that that is exactly what we are doing. We are writing to the governing bodies of all sports and working across Government to ensure that we have a co-ordinated response.
What is being done to ensure that those who are under suspicion in relation to the 1980s and 1990s are no longer involved in our national game, or indeed in any other sport?
I can reassure the hon. Lady that the police are making inquiries and that the DBS checks would ensure that those with criminal convictions would not be given disclosure certificates allowing them to work with children. They would also probably be barred from working with children.
Football, by its very nature, is a transient sport. Children move from club to club, and, obviously, professional football players move from club to club and even from country to country. Can the Secretary of State confirm that enough resources will be made available to ensure that victims are positively identified, rather than our relying on self-referral to the helpline? We need to understand how many victims there are if we are to assess the scale of the problem and offer support where it is needed.
It is important to look at patterns of behaviour to establish whether players may have been exposed to perpetrators, as would happen in any other investigation of this nature, regardless of what the background of the contact between the perpetrator and the victim might have been. It is also important for victims to come forward. While I accept the hon. Gentleman’s point about the need to go out and actively seek those victims, we will not find any unless some are prepared to come forward. Once again, I pay tribute to the bravery of the victims and survivors who have come forward and told their stories in such an honest way, allowing the police to obtain the evidence that they need, so that we can bring the perpetrators to justice.
With permission, Mr Speaker, I shall make a statement about the Government’s corporate governance Green Paper, which we are publishing today Successful businesses are the backbone of our society and our economy. They are the reason why ours is the fifth largest economy in the world. They create employment opportunities, and they contribute significantly to the funding of our country’s public services. There are many reasons why Britain is a reliable place in which to do business: for instance, our legal system and framework of company law have long been admired around the world. The Government are proud of our thriving industries, and we want to build on those strengths and enhance our competitiveness even further One of our biggest strengths is our record on corporate governance. It is already highly regarded around the world, especially for its combination of flexibility and high standards. Despite that record, however, our strong reputation can only be maintained if the Government and business regularly review and upgrade those standards. We want to guarantee not only that Britain is an excellent place in which to do business, but that it is where business is done best I am privileged, in my position as Secretary of State, to meet regularly not just those who run successful businesses, but their employees and customers. I have discussed with company heads the way in which their corporate governance is an integral part of their success. It inspires confidence among investors, loyalty among employees and trust among customers. Ordinary working people who work hard for their living deserve to feel confident that businesses act responsibly and fairly. When an individual business or businesses lose the confidence of the public, faith in business generally diminishes, to the detriment of us all There is no conflict between good corporate governance and profitability; indeed, poor corporate governance is a prelude to financial disaster. This Government are unequivocally and unashamedly pro-business, but we also hold business to a high standard. It is right to ask business to play its part in building an economy that works for everyone. Over the last few years, there have been a number of proposals, from both the Government and those representing business, to update our corporate governance framework. In some cases these have been made in response to concerns about the actions of a very small number of businesses which have undermined the reputation of British business generally, whose standards are among the highest in the world. Today, we are launching a discussion paper on how corporate governance could be reformed. I will, as is usual, be placing a copy of the Green Paper in the Library The paper considers three aspects. First, it asks for opinions on shareholder influence on executive pay. Members of the House will be aware that executive pay has grown much faster over the last two decades than pay generally and at times is not in line with corporate performance. The document seeks views on this issue, and in particular on strengthening shareholder voting rights with a view to making them binding, encouraging shareholder engagement with executive pay, and promoting greater transparency over pay Secondly, the document asks whether there are measures that could increase the connection between boards of directors of companies and their employees and customers. It asks whether the establishment of advisory panels and the appointment of designated non-executive directors to take formal responsibility for articulating employee, customer and other perspectives is the right way to proceed. We are not prescribing how this should be done; it would be whatever is most appropriate for the business Thirdly, our discussion paper asks for views on whether some of the features of corporate governance that have served us well in our listed companies should be extended to the largest privately held companies These are issues about competitiveness, and creating the right conditions for investment, as much as they are, importantly, also about fairness. This Green Paper is designed to frame that discussion, so that we can move quickly to consider which changes are appropriate at this time. We want to hear from as many people as possible about how best we can increase confidence in big business and achieve better outcomes for our economy. This does not mean the imposition of regulation when other avenues are open. One of the strengths of our system of corporate governance has been the use of non-legislative standards adopted by business itself We are determined to make Britain one of the best places in the world to work and carry out business. This review will help us achieve that aim and the views of businesses, investors, employees, consumers and others with an interest in successful business are warmly welcomed. I commend the statement to the House.
It is a shame that the Secretary of State did not share the statement with us in advance; presumably we are now expected to get first sight of Government policy through a long lens on Whitehall. But after weeks of press briefings, at least they have finally decided to come to this Chamber, because we have heard a lot about the Prime Minister’s policy on corporate governance, but the more they said, the less we have actually known When the Prime Minister launched her leadership, she said she wanted a change in the way big business is governed. She said: “later this year we will publish our plans to have not just consumers represented on company boards, but workers as well. Because we are the party of workers.” But it seems there has been a change of mind because just weeks ago we heard it was not about putting workers on boards but about finding a model that works for everyone. Perhaps it is the same model as for Brexit: to have their cake and eat it When we debated in the Chamber last month the fate of Sir Philip Green, I said that the most shocking thing about the whole affair is that everything he did was legal. A key question today is whether anything that has been proposed would change that: do these proposals pass the BHS test Bringing private companies into the plc rule book is a move so targeted at a particular series of events that I expect it will come to be known as the BHS law, but had the proposals outlined today by the Secretary of State been in place six months ago, I am not wholly convinced we would have avoided the corporate governance scandals that have plagued the last summer. To force private companies to abide by the corporate governance code will do little unless the code is tightened. BHS may have been a private company, but Sports Direct is not, and we all know what has gone on there Similarly, to strengthen the power of boards to give oversight on how companies are run or their remuneration structures will change little unless the make-up of those boards is also shaken up, yet we all know what has happened to the Government’s commitment to put a diversity of voices on boards. It is a weakness of too many discussions of corporate governance, and a weakness reflected in this Green Paper, that they are dominated by high-profile scandals For too long our economy has suffered from an inherent short-termism—a short-termism that sees the long-term health of a company being sacrificed for a quick buck, and that all too often obscures the link between rewards and long-term performance. In 1970, £10 in every £100 went on dividends; now, it is between £60 and £70. It is employees and investment that have lost out from this shift. We see that in our pitiful investment and productivity rates. Britain now languishes 33rd out of the 35 OECD countries on investment rates. Seen in this light, it is no surprise that it takes British workers five days to produce what German workers produce in four—and we see this in the yawning gap between top pay and average pay: in the 10% increase in executive pay when workers are suffering 10 years of stagnant wages Our damaging short-termism is also seen in corporate takeovers that occur against the public interest and the company’s interest—takeovers that have instead served as a means to asset-strip, as when Kraft took over Cadbury with hedge funds buying up 31% of the shares and selling Cadbury short When the unacceptable face of capitalism surfaces, as it has in the last few months with the scandals in BHS and Sports Direct, what we are witnessing is the extreme manifestation of these broader problems, and that is what makes today so particularly disappointing. Corporate governance reform is not just about improving the image of our corporate sector or placating our innate sense of injustice at the lack of proportionality between the salaries of directors and their employees; nor is it just about fulfilling the wishes of the six out of 10 members of the public who, as TUC figures show, want to see workers on boards. These things matter, of course, but corporate governance reform is also about changing the way our companies, and therefore our economy, work The recasting of how our economy works is key to Britain’s success. Without more long-termism in our corporate practices, we will not be able to address the problems—
Order. The hon. Gentleman has had his five minutes. I do not know whether he was then proposing to put questions, but I gently say to Members that in these matters there is a form to be followed—a procedure to be adhered to—and although I have listened to the hon. Gentleman with great care and attention, he has contributed in the manner of a debate rather than a response to a statement. Ordinarily, I would be very happy to hear his questions, but Members cannot make a long preamble and exceed their time, and then almost as an afterthought get around to some questioning. So I think we will for now have to conclude that the hon. Gentleman has concluded his contribution. But I am sure the Secretary of State will find in the commentary some implied questions, using the great intellectual dexterity for which he is renowned in all parts of the House.
I am grateful to you, Mr Speaker, and I apologise to the hon. Member for Norwich South (Clive Lewis) for not getting the statement to him earlier; we started a bit sooner than we were expecting, but—
Order. As I have mildly castigated the hon. Member for Norwich South (Clive Lewis), I should say that it must be admitted that that would have been helpful.
You are absolutely right, Mr Speaker, and I apologise I hope the hon. Gentleman will contribute to the consultation. It is clear that he shares an interest in improving the standards of corporate governance, which we have done from time to time in this country over many decades. We have a good reputation for corporate governance, and it is important to record that the rest of the world looks, and has looked, with admiration at the British economy, the rule of law and the non-legislative aspects involved. I hope he will agree that the examples of poor corporate governance he mentioned are blemishes on a very strong overall record of responsible corporate behaviour in this country. We should put on record our recognition of the importance of business and our support for the job creators, the risk takers, the innovators and the investors—the people who, through their profits, generate the taxes that sustain our public services It is reasonable to have a constructive discussion on this matter through the consultation, and that is what we intend to do. The hon. Gentleman said that executive pay had been escalating. Perhaps he would like to reflect on the fact that the biggest rise in chief executive pay was actually in the period from 1998 to 2010, when the average rose from £1 million to £4.3 million a year and the ratio of chief executive pay to full-time employees’ pay rose from 47:1 to 132:1. He is a reasonable and generous man and I know that he will concede that, under the years of Conservative leadership, the average pay for chief executives has fallen from £4.3 million to £4.25 million a year and that that ratio has fallen from 132:1 to 128:1. So we are moving in the right direction and these further reforms will take us further The hon. Gentleman mentioned the proposals to have workers and consumers on boards. The Prime Minister has been very clear on this, and it is testament to her leadership that she set out her intentions right at the beginning of her term of office and that we are now coming forward with these proposals. She made it clear that we would have not just consumers but employees represented on company boards, and these proposals will allow that to happen and encourage the practice to be taken up. The hon. Gentleman mentioned the relevance of our reforms to the more high-profile sources of controversy. Of course, one option is to extend the good provisions for public companies to our very largest private companies. He will know that the Financial Reporting Council’s governance code requires extensive monitoring of risk levels for plcs over and above the requirements placed on limited companies. He mentioned cases involving listed companies, and I hope he will agree that having a greater connection between employees and directors is a step in the right direction. Conservative Members are unashamedly and unequivocally pro-well-run business, and I hope that he shares our view. Consistent with that, it is important to work with business, employees and other groups from time to time, to look at what we can do to stay ahead of the pack. That is what this consultation does.
Will any of these proposals result in a diminution of the pile of cash on which corporate Britain is sitting, and of the practice of companies buying up their own shares?
We are encouraging a greater role for shareholders in driving behaviour in the boardroom, because this is a matter of concern. It is connected to the point that—to be fair to him—the hon. Member for Norwich South made about long-termism. We want to see a more patient form of capital sustaining businesses that have the capacity to grow, and I hope that this will come out as part of the consultation.
May I start by giving a cautious welcome to the Secretary of State’s announcement? It represents some progress, but there are aspects missing and more clarity is required in some areas. There is general consensus that the pay gap between executives and employees is too large, and we firmly believe that addressing that by properly valuing and investing in employees is a key part of addressing the productivity problem. Companies need to be transparent about pay. If their pay for executives is justifiable, they must justify it to their staff and to their shareholders. In particular, the move to give shareholders greater control and a binding vote on executives’ pay is welcome. Indeed, it is incredible that such a situation does not already exist. What is the timescale for the entire process, and when will the changes be implemented More needs to be done about boardroom diversity. I was given very short notice of the statement, and it remains unclear what is to be done about diversity in the boardroom. Will the Secretary of State expand on that aspect of the proposals? I think we would all like to see boardrooms reflecting society more completely. That would be good for business and it would send a clear message to everyone across the country that business is a place for them Let me turn finally to the question of workers on boards. In the Prime Minister’s party conference speech, she said: “Too often the people who are supposed to hold big business accountable are drawn from the same, narrow social and professional circles as the executive team.” From my reading of the proposals and from what the Secretary of State has said, it appears that that will remain the case, but with one person from those same narrow social and professional circles designated to speak to the employees or consumers. That does not go far enough; it is a missed opportunity. When the Prime Minister said, “We are the party of workers,” was that post-truth or was it never true at all?
I am grateful for the way in which the hon. Gentleman started his remarks, at least. He struck the right tone in welcoming the proposals as a sensible way to proceed, as I believe all business organisations, consumer groups and others have done. I hope that he will contribute to the consultation. He made a point about the value of transparency, and that is very much what we are proposing. We do not want to specify the appropriate pay for a chief executive—I do not think he does either—but it is right that companies should justify their decisions to shareholders and to employees. They should make their case for the pay and the package that they are choosing to offer The hon. Gentleman asked about the timing of the consultation. It will close in three months’ time, in February, and we will respond as soon as possible after that, depending on the number of responses. He also asked about diversity on boards and remuneration committees, and he will see that both questions are addressed in the Green Paper. It is important that remuneration committees are advised by and have a greater connection with the workforce, and that they should be less insular in their approach. There has been some criticism that the overlap of remuneration committees in public companies has excluded outside voices. The consultation refers to particular reviews of gender and ethnic diversity on boards, and it is important that we continue to make progress in that regard. We have further to go. Finally, the Prime Minister was very clear that we should have consumers and workers represented on company boards and that is what the proposals will do. This is a big advance and it has been warmly welcomed. I hope that the hon. Gentleman will support it too, when he makes his response to the consultation.
Order. I would like to accommodate the substantial interest in the statement, but if I am to do so, given that there are two notable pieces of business to follow, pithiness will be required from those on the Back and Front Benches alike. That pithiness is first to be exemplified by Mr Michael Gove.
I congratulate my right hon. Friend on his statement today. We all know that the dynamic growth on which our future depends will be secured only if there is public support for the free market system that generates such growth. To that end, what more can he say about ensuring that we have working-class representatives at the heart of decision making in our great companies, and about effective curbs on executive pay when pay follows failure?
As ever, my right hon. Friend makes his points powerfully. It is important that all the talents are represented in our boardrooms, for that is how we will achieve corporate and industrial success in this country. It forms part of the case we make in the Green Paper. Pay is appropriate when it is to attract the best talent and to reward success, but what is not in the interests of the company or confidence in industry is when pay does not reflect performance.
The pay of top executives, bosses in particular, has been scandalous, and some of these people are not keen to pay their taxes and use tax havens. The most effective way for working people to defend themselves in their place of work is to belong to a trade union and for that union to be recognised. Time and again, when the worst exploitation is exposed, the cause is often a lack of trade union representation.
I hope that the hon. Gentleman will congratulate the Government on their reforms over the past five years that have increased the scrutiny and moderation of executive pay. I hope that the trade unions will contribute to the consultation. I met Frances O’Grady last week, and trade unions have an important role to play in our economy.
I observe in passing that there is an undiluted sea of men seeking to catch the eye of the Chair. If a female Member were to stand, she would be called, but at the moment she is not, so she will not.
rose—
If that was a serious bid, I call Victoria Atkins.
Hear, hear!
I welcome this statement. Will my right hon. Friend assist the House by saying how the plans tie in with the need to ensure that business owners comply with not only the letter of the law, but the spirit? I am thinking in particular of the Companies Act 2006 and corporate governance failures that have led to prosecutions—something that may be relevant when the hon. Member for Norwich South (Clive Lewis) talks about BHS.
She is not a barrister for nothing.
My hon. Friend makes an excellent point. There are two complementary elements of corporate governance. One is the law and statutory requirements—it is important that they are enforced with vigour—but it is also true that the culture and practices of companies should reflect the high standards that we enjoy in this country and that contribute to business’s high reputation. I hope that we can further increase that through the measures that we are proposing.
I thank the Secretary of State for his statement, and we welcome many of its suggestions. Does he accept that fairness in salaries must also sit alongside fairness in opportunity? Would he therefore consider going further and requiring companies to report on the training and opportunities available to employees for career progression? Would he also accept that alongside the bad practice, on which we must clamp down, there is much good practice in governance to learn from? I commend to the Secretary of State the innovative forms of employee participation in so many small and medium-sized enterprises, particularly in new start-up companies and particularly, of course, in Cumbria.
The hon. Gentleman makes an important point. Outside of family and education, work offers some of the principal opportunities for progress and making use of people’s talents. The best businesses recognise that spotting and promoting talent is a sure way to corporate success. That is not part of the consultation, but he makes a reasonable point and will have the opportunity to respond to the section that asks whether other areas should be considered.
I welcome today’s statement. At a time of uncertainty, it is vital that we have greater confidence not only in free enterprise as a principle, but in the listed businesses and privately held companies that operate in our free market. What support has my right hon. Friend received from the business community in favour of the Green Paper, in particular the concept of greater shareholder scrutiny of a company’s activities?
Business wants to enhance its reputation and it is much in its interest collectively to do so. This morning, the Institute of Directors, the CBI and the Investment Association, which represents those who invest the funds that the pension funds of ordinary working people put into British business, all welcomed not only the content, but the approach that is being taken. I am pleased and grateful for that support.
Last week, the Chancellor adopted Labour policy on fiscal investment to stimulate the economy. This week, the Secretary of State is adopting Labour policy on worker representation on boards—[Interruption.]
Come over!
No, you’re coming over here I’m afraid We need consistency from the Government. I have been advocating for years that football supporters should be represented on the boards of professional football clubs, but the Government have consistently said that that is not appropriate, so what has changed the Secretary of State’s mind?
There are two Labour Back Benchers here. If one compares that with the number of my hon. Friends who are in the Chamber, there is scant evidence of Labour’s enthusiasm for these reforms. The hon. Member for Norwich South (Clive Lewis) tried to imply that Labour is the party of working people, but the difference in interest in this statement between the parties shows the opposite. I hope that the hon. Member for Eltham (Clive Efford) welcomes the measures that the Prime Minister and I are proposing to give not only employees but customers a voice in the boardroom. The hon. Gentleman is a big football fan and a fan of greater involvement of enthusiasts in football, and I hope that he will contribute positively to the consultation and back our proposals.
Good pay structures encourage wealth creation, but the financial crisis showed that poorly constructed remuneration schemes contribute to catastrophic failures in corporate governance. In response, the Parliamentary Commission on Banking Standards recommended, among other things, longer deferral for bonuses and clawback for serious misconduct in some cases. Has the Minister examined whether those recommendations have any relevance to his Green Paper and whether they may, with particular regard to large firms, have a bearing on ways to militate against serious harm to customers, employees and the wider public?
My right hon. Friend is right that good corporate governance can stop corporate failure and the effects of contamination that his commission was set up to investigate. The commission made some valuable recommendations, many of which have been enacted. When he comes to look at the Green Paper, he will see further proposals for how incentive schemes for executives can be better aligned with the long-term interests of the company and made more transparent.
The statement represents a welcome step forward, but if the UK Government are serious about tackling income inequality in companies, they should go a step further and introduce fair pay structures whereby the remuneration of those at the top and bottom are linked. That would be a way of ensuring that the economy works for all.
I do not agree with that approach. It is right to have transparency and right that companies engage with their employees and make the case both to shareholders and to the workforce for the choices that they make. However, given our diverse range of companies and industries, it would be a mistake that would be bound to hamper their success if we, in the Government or in this House, were to specify precisely what people should be paid.
The second question that the welcome document asks relates to improving links between workers and boards. One possible route would be to encourage more employee share ownership. The evidence shows that that encourages productivity and, at a time of pension and housing crises, it would give people a stake in the future and a saving. Above all, it would make them feel that they are part of the business for which they are working.
I completely agree with my hon. Friend. The times when we had very high levels of shareholder participation were ones when there was an enhanced understanding of the importance and role of business. I will take his recommendation seriously and take it forward.
I urge the Minister to consider that corporate governance leans too much in support of shareholders and dividend, and the protection thereof. The focus of any good corporate governance initiative should be: supporting workers’ rights; driving towards a fairer pay distribution, an issue much covered by colleagues here, and away from inflated corporate management remuneration; and the reinvesting of any funding in research and development, and good protective governance for employees and management, as well as job creation and job security.
When the hon. Gentleman reads the Green Paper, I think he will welcome our proposals, which address some of the points he is making to ensure that the pay of the top management is aligned with the long-term success of the company, and to require a greater connection between the workforce and the management, as well as customers and other groups. That is a step in the right direction, and as my colleagues have pointed out, business has warmly welcomed it. This is a timely and useful upgrade in the standard of corporate governance in this country.
Untrammelled corporate greed is no more one of our party’s values than untrammelled trade union power is, so this is an authentically Conservative statement, which I welcome. May I press my right hon. Friend specifically on how he will ensure adequate scrutiny of institutional investors who are discharging their role in respect of corporate governance?
My hon. Friend is absolutely right; Conservative Members believe in competition and that it provides the best possible environment, which has benefits to consumers, employees and taxpayers. That is very much our watchword. The Green Paper contains proposals on how we can encourage institutional investors, who, as I said, invest the money from pension funds to which many people in this country contribute, to be more active in exercising their stewardship of the companies in which they invest.
The Secretary of State is right to point out that British corporate governance is already admired around the world, but will he be looking in this consultation at best practice from around the world, particularly in those countries where women have better representation on boards?
I will indeed. It is important that we maintain and extend our reputation for being the place in the world where business is done best. We have been able to make that proud boast over the years. The representation of women on boards is of great importance, and we are looking at how we can best encourage companies to move in that direction.
I welcome this report on corporate governance, but is not one way of improving corporate governance on boards to encourage more women to get on to those boards?
Yes, it is, and I hope my hon. Friend will welcome the proposals we are making.
The Minister must give credit to some of the Opposition parties today, as one eighth of the Liberal Democrats are here, one third of Plaid Cymru are here and one 50th of the Scottish National party are seeking to take part, so people are taking this seriously. Does he agree that the whole House should be available to take part, and it is unfortunate that now only one Labour parliamentarian who took part in this statement is in the Chamber?
I share my hon. Friend’s surprise and dismay that there is so little interest in the Labour party in extending the rights for working people to have a say in the way companies are run. My disappointment with the Opposition is only matched by my pleasure at seeing so many of my Conservative colleagues, including my hon. Friend.
Alongside other hon. Members, I investigated BHS, a company where corporate governance went seriously awry, so I warmly welcome the extension of stronger corporate governance to large private companies. However, I also hope that as part of the consultation there will be no risk of any ambivalence or questioning about what private company directors are expected to do in those roles and where their obligations lie. There are a range of stakeholders to whom they owe those obligations.
There are indeed, and the range of stakeholders has long been recognised in company law, as my hon. Friend knows. The question is: in a world in which there are now more very large privately held businesses that do not have a full stock market listing than was the case in the past, is this the appropriate time to extend this measure to those businesses?
Will the Secretary of State join me in acknowledging the good point made by the hon. Member for Walsall North (Mr Winnick) about trade unions? A decade ago, as a union representative, I led industrial action against our then fat cat boss, who was making poor business decisions, cutting jobs and having a pay freeze, while still getting his multimillion-pound bonuses. Of course I am now a Conservative MP, and he is now a Labour peer.
That is a useful parable, which just goes to illustrate further the point I was making about the commitment we have on the Conservative side of the House. I know that my right hon. Friend the Member for Surrey Heath (Michael Gove) is also a veteran of industrial action, showing that my hon. Friend the Member for Colne Valley (Jason McCartney) is not alone in this shared history.
The self-serving practices of many executives have done much to undermine popular capitalism in this country, but does my right hon. Friend agree that, although it is important to review company law in this fashion, that is no substitute for basic morality, which has been sadly lacking in many recent cases?
My hon. Friend is right in what he says, and I think Conservative Members would not regard legislation as being the way to cure all ills. I would take issue with him to this extent only: in general, the standards of both governance and behaviour are very high in this country, and most employees have good jobs in successful businesses. We should be proud of the standards that we have, while taking action against those who depart from them.
Does the Secretary of State agree that giving shareholders more power has a good chance of curbing corporate excess, including excessive pay, and that in Sweden the use of a shareholder committee to control both the appointment and removal of directors, and to approve executive pay, has had extremely positive effects in both those areas?
I am delighted to see my hon. Friend in this place. When he reads the Green Paper, he will see that the proposal he made in a very well-written paper for a think tank to suggest a shareholder committee in this way is one option we are consulting on. I congratulate him on his influence on this debate and look forward to the responses to it.
Family-run businesses, and small and medium-sized enterprises, are well-known for their good governance and values, so will my right hon. Friend join me in encouraging more of them to come forward in the review and the consultation so that we can get the complete picture of corporate opinion?
I will indeed. I would like to thank the Federation of Small Businesses, which has helped contribute to the shaping of these proposals, through some work it has been doing on corporate governance. Small businesses are very important. Small Business Saturday is coming up, and I think Members on both sides of the House will be paying tribute to and celebrating the vital contribution that small businesses make to this country.
People in Kettering will be pleased that after years of Labour excess the gap between the highest-paid executive and the lowest-paid employee is narrowing under Conservative leadership. May I suggest to the Secretary of State that he go further, because a big problem is taxpayer subsidy for low-paid employees who are working in companies that make big profits and have big executive pay? May I suggest the use of a ratio: the profit after tax, before dividends, per employee, to the proportion of the workforce on working-age benefits? That would wheedle out the fat cats who are exploiting employees.
I will look at my hon. Friend’s proposal carefully. It is in all our interests, including those of our constituents, that people should be able to have jobs in which what they contribute and what they produce is of sufficiently high value that they are able to have a prosperous future. Part of our reforms, which have come through the industrial strategy and what the Chancellor said in his statement last week, were to raise the earning potential of people right across the country.
We all know that small and medium-sized enterprises are, in essence, the backbone of British employability and our corporate world. In welcoming the Green Paper, may I invite my right hon. Friend to confirm this afternoon that, throughout the whole of this process, he and his ministerial team will ensure that we do not add to any burdens of either reporting or officialdom for those vital SMEs?
I can confirm that. We had it in mind that small businesses will be the beneficiary of these reforms, because, as suppliers to big companies, they are a group whose important voice should be reflected. That point was made in our conversations with small business organisations, which is why small suppliers are specifically referenced in the proposals on which we are consulting.
A common theme at British Home Stores and Sports Direct was that someone who was directly or indirectly a dominant shareholder also acted as chief executive officer. In the corporate world, Mike Ashley and Philip Green are outliers-become-outcasts, but the risk remains in those situations. Will my right hon. Friend, in his review, pay careful attention to that combination of dominant shareholding and chief executive powers?
I will indeed. The Green Paper considers such matters. The responsibility that companies have through the privilege of limited liability status extends to employees, customers, pensioners and others, and that is part of the understanding under which good businesses operate to ensure that they are good for all those groups.
Wider community engagement is often very important in relation to these matters. Does the Secretary of State agree that one contribution that businesses can make is to try to help provide more role models for our young people, as, obviously, we want to see them go into business in greater numbers?
My hon. Friend is absolutely right. One reason why Government Members are unambiguously pro-business is that the opportunities that that gives to people not only to earn a good living, so that they can support themselves, but to achieve their potential and go on to make full use of their talents is an incredibly inspiring way in which people can blossom. That is why we want to see flourishing businesses in this country.
The Secretary of State has already referred to the important role of small businesses in which the relationship between owners and their employees is very different from that in larger organisations. Will he say a little more about the level at which the proposals he has announced today will be introduced?
In the consultation, we asked what the cut-off should be. Clearly, there is no intention to capture small businesses in the disclosure requirements that are more appropriate to large businesses. That is something that we will consider as part of the consultation, and I hope that my hon. Friend will contribute to it.
May I first declare my interest as a non-executive chair of a listed public company before I offer warm support for these proposals? I also echo the comments of my hon. Friend the Member for South Suffolk (James Cartlidge) that employee share ownership schemes have had a transformative effect both in our workplace and on our business success. I ask the Secretary of State to look even closer at those schemes, with the aim of making them easier for businesses to implement.
I will indeed. I am delighted that we have had two suggestions from my hon. Friends for this route. I will take them up, and take them seriously. I hope to make further statements to the House in the future Bill Presented Access to Radiotherapy Bill Presentation and First Reading (Standing Order No. 57) Tim Farron presented a Bill to make provision to improve access to radiotherapy treatment in England; to define access in terms of the time that patients are required to travel to places providing treatment; to specify 45 minutes as the maximum time patients are to travel; and for connected purposes Bill read the First time; to be read a Second time on Friday 24 March, and to be printed (Bill 102).
I beg to move, That leave be given to bring in a Bill to amend Part 3 of the Environmental Protection Act 1990 to make noise caused by aircraft a statutory nuisance; and for connected purposes When I talk about noise caused by aircraft, I am not talking about the level of noise that some Members of this House would have heard this morning walking over Westminster Bridge. If they were walking over the bridge and saw and heard an aircraft, doubtless they would have been able to hear the busker also on the bridge and their companion’s conversation. I am not talking about that level of noise. I am talking about the level of noise that would have prevented Members from hearing the busker on the bridge and their companion’s conversation. That is the level of noise experienced by residents in my constituency—and by residents in other constituencies judging by the cross-party support that I have for this Bill Such is the level of noise that residents are unable to hear the television in their own living rooms when aircraft go over. They cannot hear the radio or have a conversation when aircraft go over. Indeed, I have residents who are unable to go to sleep at 11 o’clock at night when aircraft operate at this level of noise. I also have residents contacting me at—yes—4.30 in the morning because they have been woken up by aircraft making this level of noise. Babies cry and pet animals even show fear Official data from the airport near my constituency—it is called Heathrow airport—put the noise level at 83 dB. A food mixer operates at around 80 dB and an electric drill at 95 dB. That is why this level of aircraft noise should be considered a statutory nuisance. There are playgrounds in some schools in Greater London where, to try to alleviate some of the medical problems that come from this level of aircraft noise, the children go into what are called “adobe” huts If Members look at part 3 of the Environmental Protection Act 1990, they will find a list of statutory nuisances—they have to be a nuisance or prejudicial to health—which include fumes, smells, dust, artificial light and model aircraft. If Members then look at Government websites about noise from model aircraft, they will find that it is considered a nuisance, especially if it takes place outside the hours of 9am and 7pm on a weekday and 10am and 7pm on a Sunday. Residents in my constituency are experiencing aircraft noise—not model aircraft noise—within and outside of those times. Aircraft noise is not only a nuisance, but prejudicial to health Since the 1990 Act, we have compiled more medical evidence. I am sure that Members are aware of many of the studies on aircraft noise and health. There is the well-known RANCH study—road traffic and aircraft noise exposure and children’s cognition and health: exposure-effect relationships and combined effects—which looked at 2,844 children around Heathrow, Amsterdam and Madrid. It found that children’s memory and reading comprehension is affected by aircraft noise—there is a linear relationship. Members might also be aware of the HYENA study—hypertension and exposure to noise under airports —which looked at 6,000 people between the ages of 45 and 70 and found a relationship between hypertension and aircraft noise. Just a few years ago, The BMJ reported an American retrospective study of 6 million people over the age of 65 that showed a relationship between hospital admissions for blood pressure and cardiovascular problems such as ischaemic heart disease and heart attacks, and, yes, aircraft noise Now that we have evidence, we also need better monitoring, more data and more meaningful penalties, so that if aircraft noise becomes a statutory nuisance we have best practice. The Secretary of State for Transport admits already that some planes flying over my constituency fly lower than others and there are records of the so-called quieter aeroplanes reaching 83 dB levels around homes and school playgrounds I am asking through this Bill for us to update the 1990 Act. The World Health Organisation gives levels for noise that is considered to be moderate and severe; Members will notice that they are well below the levels encountered by my residents. We have the medical evidence. Many of us have evidence from our residents that this is causing a serious nuisance, so I suggest that we amend part 3 of the Act to take notice of medical and nuisance problems caused by noise from aircraft Question put and agreed to. Ordered, That Dr Tania Mathias, Tom Tugendhat, Andy Slaughter, Sir Alan Haselhurst, Jim Shannon, Ruth Cadbury, Dame Caroline Spelman, John Cryer, Caroline Lucas, Adam Afriyie, Paul Scully and William Wragg present the Bill Dr Tania Mathias accordingly presented the Bill Bill read the First time; to be read a Second time on 20 January 2017 and to be printed (Bill 101).
I beg to move, That the Bill be now read a Second time The Bill will raise the limit on the total cumulative level of financial support that can be provided to the CDC, the UK’s development finance institution. The CDC was founded by Clement Attlee’s Labour Government in 1948 and is the world’s oldest development finance institution. It is wholly owned by the UK Government and does not have private shareholders. Its mission is to tackle poverty by creating jobs and driving inclusive economic development for people in the poorest countries in Africa and South Asia The CDC exists to help to address what economists call a “market failure”: the desperate shortage of investment in the world’s poorest countries because, in part, of a misperception of the risks of doing business there. It addresses that market failure by providing investment capital to support the building of businesses throughout Africa and South Asia. Its explicit mandate is to drive labour-intensive growth by creating jobs and opportunities for working people. Since its creation, the CDC has been supported by all successive Governments—Labour, coalition and Conservative—because of its core purpose of tackling poverty through sustainable economic growth. I present the Bill in the hope that that spirit of cross-party support will continue. I look forward to colleagues across the House offering the fullest possible scrutiny, and I welcome the opportunity to constructively address any points that Members raise In recent years the UK has led the world in efforts to eliminate extreme poverty. The previous Labour Government made an important contribution, for example, in relieving the unpayable debts of the world’s poorest countries. Under David Cameron’s leadership, the UK become the first G7 country to meet its promise to spend 0.7% of our gross national income on international development. The current Prime Minister has made it clear that the Government will honour that commitment and intensify our leadership on key global issues such as tackling modern slavery The Government have also rightly made clear and bold manifesto commitments to tackle poverty directly.
I warmly congratulate the Secretary of State on her appointment to the Cabinet in this very important job—I know that she has been doing it for a while, but this is my first opportunity to do so. Later, she will meet the officers of the all-party group on Yemen. Will she confirm that the refocusing of funds in support of the CDC will not affect the Government’s commitment to the provision of emergency and humanitarian aid that she and her Minister of State have spoken of and given to Yemen over the past few years, as did her predecessor, the right hon. Member for Sutton Coldfield (Mr Mitchell), who is also in the Chamber?
I thank the right hon. Gentleman for that welcome and for his remarks. He is right: successive British Governments have been very clear not just about their commitment to the CDC but about our collective focus on humanitarian need at times of crisis. I look forward to seeing the delegation from the all-party group later today, when I will of course speak more about the work that the Government are doing in Yemen, where we are seeing the most awful and horrendous catastrophe. I will speak to the right hon. Gentleman later in more detail about the type of interventions and the support we are providing to those trapped in that dreadful conflict By 2020, we will save 1.4 million children’s lives by immunising 76 million children against killer diseases. We will help at least 11 million children in the poorest countries to gain a decent education, improve nutrition for at least 50 million people who would otherwise go hungry, and help at least 60 million people get access to clean water and sanitation. We will lead the response to humanitarian emergencies. We will lead a major new global programme to accelerate the development of vaccines and drugs to eliminate the world’s deadliest infectious diseases, while investing to save lives from malaria and working to end preventable child and maternal deaths. We will also continue the inspirational leadership of my predecessor, my right hon. Friend the Member for Putney (Justine Greening), on women and girls Those commitments stand, along with our commitment to human development and directly meeting the needs of the world’s poorest, which is absolute and unwavering. Indeed, the first major decision I took in my role as Secretary of State for International Development was to increase the UK’s contribution to the Global Fund to Fight AIDS, TB and Malaria from £800 million to £1.1 billion. That will help to save millions of lives in the years ahead.
The Secretary of State is outlining a long list of the Department for International Development’s achievements and her plans for the future, and she is praising her predecessors. Can she explain what has happened since she called for the Department to be scrapped and since she told the Daily Mail this year that most of our aid budget was being “stolen” and “squandered”? Those are her words.
The hon. Gentleman has just heard not only what DFID has done in the past under two outstanding Secretaries of State—my predecessors, my right hon. Friends the Members for Sutton Coldfield (Mr Mitchell) and for Putney—which is a legacy that we will stand by in our manifesto commitments, but—[Interruption.] If the hon. Gentleman wants an answer, he should listen to my response I have already said that we will lead on major global programmes to accelerate the development of vaccines and drugs to eliminate many of the world’s diseases. The hon. Gentleman has also heard me respond to the right hon. Member for Leicester East (Keith Vaz) on the question of humanitarian crises and many of the immediate needs to which we are responding. Indeed, the hon. Gentleman will be aware that the very Select Committee of which he is a member is witnessing at first hand how aid is being spent in crisis situations, in refugee camps, and providing opportunities and, frankly, a lifeline to people around the world who are suffering. That is exactly what my Department is doing and what I am doing as Secretary of State, and I am disappointed that the hon. Gentleman—[Interruption.] This is not about briefing the press, and, if I may say so, I think the hon. Gentleman’s remarks do a huge disservice to the international development community. He is sitting there smugly smiling, but it is an international community that comes together—[Interruption.]
Order. The hon. Gentleman knows that he should not make remarks from a sedentary position, but if he is going to make remarks from a sedentary position, he should not use the word “you” because he should not be accusing me of anything.
It is not just in times of crisis that the international development community comes together. My Department is championing economic development and investing in people and human capital. I appreciate that the hon. Gentleman may not like that and may disagree with it, but that is the core purpose of the Department.
The Secretary of State is making some very strong statements. Of course I do not deride the work of the Department; I think it is doing a fantastic job. She has outlined many of the positive things it is doing and the humanitarian aid it is providing to refugees, but why did she say that most of the Department’s budget was being stolen and squandered, without any justification?
As the hon. Gentleman knows from my appearances at the Select Committee, I have clearly stated that I will drive transparency and accountability in the Department. There have been examples. I am sorry that on an issue as important as not only saving lives but transforming lives and investing in people, he chooses to take such a narrow focus.
On the subject of the Bill, does the Secretary of State recognise that there are concerns that the CDC is not in fact targeting the poorest countries? Although private sector investment is very welcome, surely it needs to be just as targeted and as effectively monitored as investment in non-governmental organisations and other ways of boosting aid.
I thank the right hon. Gentleman for his comments. It is right that the focus is on development impact and on outcomes. That has been shown by many of the reforms that the CDC has undertaken since 2010. Yesterday, a National Audit Office report was published which showed exactly that.
Will my right hon. Friend please be reassured that her efforts to ensure that we have accountability and transparency in all aspects of public expenditure, but particularly in the area of international development, are a key part of maintaining public confidence behind the 0.7% target?
My hon. Friend is absolutely right. We owe that to those who contribute to the taxes that enable the Government to make these important decisions about international development, and in particular our humanitarian responses and how we spend and invest that money. As I will go on to say, there are many examples around the world of lives being transformed, and that is something that our country can be very proud of.
Does my right hon. Friend agree that with regard to the concerns expressed about the CDC, the gravest relate to the period when the Opposition were in government—for example, the excessive levels of pay to CDC staff? Has the Conservative Government not got a grip of that, and is the CDC not much more efficient following the review in 2012 by the then Secretary of State?
I thank my hon. Friend for her comments and observation. As I outlined at the beginning, the CDC is an established organisation that we should all be proud of. Clearly, there was a period before 2010 when the management of the CDC was, to put it mildly, not doing what it should have been doing. There were concerns about excessive pay and the lack of focus on development outcomes. Since 2010, when DFID led the way forward in working with the CDC, we have seen great progress.
Will the Secretary of State give way?
I must make progress As I mentioned earlier, contrary to some of the reports that we have seen in the past week, the future of the CDC will absolutely not come at the expense of DFID’s existing work on humanitarian support, human development and directly tackling what might be called the symptoms of poverty—disease, hunger and preventable suffering We all have a deep responsibility to tackle the underlying causes of poverty. That is why successive Governments have rightly focused increasingly on helping countries to grow, lifting the poorest out of poverty forever. That means creating jobs for the world’s poorest people, and driving the structural economic change that will end poverty permanently. To do this, we need to build the broadest possible coalition to fight poverty That includes NGOs and civil society organisations from the UK and from developing countries, which do such vital work. DFID’s recent civil society partnership review clearly stated the Government’s desire to work even more collaboratively with them in pursuit of these objectives Eliminating poverty also means working in partnership with multilateral agencies such as the Global Fund, with other bilateral development agencies, and directly with Governments in developing countries.
An example of that was the event that I and the Minister of State, Department for International Development, my hon. Friend the Member for Penrith and The Border (Rory Stewart) went to last week with His Royal Highness the ambassador of Saudi Arabia. DFID is working with wealthy donor countries to unlock enormous potential across the middle east. If not for the leadership shown by DFID, some of that work would be undone.
I thank my hon. Friend for his comments. As he knows, a great deal of work is taking place with other Governments, helping them to develop their own capacity for aid, so that they can work more effectively bilaterally and with multilateral agencies. At a time when we see a great deal of conflict in that region, we are working on an agreement with some countries in the Gulf and the middle east on what their own development bodies and agencies can do to support humanitarian relief as a result of crises taking place on their doorstep Today I want to explain why CDC is a vital partner in our efforts to end poverty, for it is widely recognised that aid on its own will not eliminate poverty. No country can defeat poverty and leave aid dependency behind without the prospect of a functioning economy, sustainable economic growth, jobs, trade and investment. Development investments via CDC complement our other work and allow us to fight the scourge of poverty on all fronts. In the world today, faltering economic growth and rising young populations have exposed the chronic need for jobs and better opportunities. At present, most developing countries are not growing fast enough or industrialising fast enough to leave poverty behind The additional financing needed to achieve the UN sustainable development goals by 2030 is estimated at $2.5 trillion every year, but current investment levels are less than half that. As the UN and many international development banks have made clear, much of this finance will need to come from the private sector. The chair of the OECD’s development assistance committee, Erik Solheim, has stated: “There is no longer a dispute about the need for private sector involvement in development. The role of DFIs”— that is, development finance institutions— “is to connect development aid with private investment, and explore how we can employ market forces in the world’s most challenging places.” Dr Dirk Willem te Velde, head of the international economic development group at the Overseas Development Institute, writing in the Financial Times yesterday, said: “Statistical evidence to be published by the Overseas Development Institute soon suggests that a £10bn increase in exposure of DFIs in Africa would raise average incomes and labour productivity by a quarter of a per cent, which is actually slightly above the average impact of aid overall. Most jobs are created by the private sector, and working with the private sector to create jobs is vital for inclusive growth.” We know that that will be difficult in the poorest, most fragile and conflict-affected states. These are the hardest markets, where businesses will not go on their own because it is perceived as too risky, yet it is in those very places that jobs and economic opportunities are so desperately needed. CDC does exactly that by creating jobs, stimulating growth and supporting local business There are currently only a few investors in the world with the skills and risk appetite to create jobs and opportunities in the most difficult frontier markets. CDC is one of those investors. CDC uses its expertise and capital to support over 1,200 businesses in more than 70 developing countries to grow and create jobs. It is a great British success story that has a long history of creating jobs in the developing world This is not just about abstract numbers; importantly, it is about investing in people. The life-changing impact of CDC’s investments can be seen in countries such as Sierra Leone, where the UK has supported businesses to get up and running to drive forward the country’s recovery following the devastating Ebola crisis, which killed thousands and damaged the economy. In the words of Henry Macauley, Sierra Leone’s Energy Minister, whom I met just three weeks ago: “CDC has played an important role in supporting key businesses during the Ebola crisis and continues to do so in Sierra Leone as the economy now recovers. They are an increasingly important investor in the nation’s power sector and I’ve found them to be a great and promising private sector partner.” The life-changing impact of the CDC’s investment can also be seen through people such as Yvonne, in Uganda. Thanks to a CDC-supported loan, she could buy a vehicle, a scrubbing machine and a vacuum cleaner for her cleaning business and attend training courses. In just 10 years, she had expanded her business from one person to providing jobs for 175 people. It is people such as Yvonne who we should have in our minds as we debate the Bill In the past, legitimate concerns were raised about some aspects of the CDC’s performance. That is why, in recent years, the CDC has modernised and transformed its approach. In 2010, DFID undertook a public consultation and an extensive review of the CDC, and began moving the CDC in a new direction, including by bringing in a new board and chair and hiring a new chief executive. Under its new leadership, the CDC has transformed itself. Before 2011, it operated a financial-return-first strategy, with no screening tool to help filter out insufficiently developmental investments.
The Secretary of State may have answered this question, or she may be coming on to answer it, but there were concerns about some of the salaries paid to senior officials at the CDC and about the monitoring of administrative costs. Given that we support this organisation, which is moving in the right direction, is she satisfied that there is proper monitoring of that aspect of its work?
That is an important point. Back in 2009, the CDC’s then chief executive was criticised quite extensively for the level of their salary and other pay, which stood at £970,000. The current chief exec’s total remuneration is now limited to a maximum of £300,000, and that is because the remuneration policies have changed dramatically since 2012. It is also important to reflect on the fact not only that pay across the organisation has been reduced by over 40%, but that compensation is no longer benchmarked, as it was prior to the changes in 2012, against the private equity industry. This is not a private equity firm at all. The CDC is now benchmarked against other development finance institutions, and any bonuses are based on the CDC’s development performance and returns, whereas, previously, they were based solely on financial performance. That has now changed.
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No, I will not give way Under its new leadership, the CDC has transformed itself. As I said, it operated a financial-return-first strategy before 2011. It has now introduced dual objectives to deliver development impact and financial return. It has developed completely new ways of assessing and measuring development through job creation and of screening prospective investments for development impact. It is an innovative and intelligent investor with a core mission of fighting poverty. That was recognised in yesterday’s NAO report, which stresses that DFID’s oversight of the CDC led to “important, positive changes...a significant departure from the previous strategy” Following new objectives agreed with the UK Government, the CDC now invests only in Africa and south Asia, where 80% of the world’s poorest live, and where private capital is scarce. The CDC focuses now on the sectors that create the most jobs and on sectors that create environments for other businesses to thrive, such as infrastructure and financial services. In the last year, CDC-backed businesses have helped to create over 1 million new jobs, and they have paid over $7 billion in local taxes in the last three years. That is money that Governments can use to invest in vital services, such as health and education As yesterday’s NAO report recognised, the CDC has addressed Parliament’s concerns about pay, and salaries have been cut, as I have just outlined. The whole ethos of the organisation has changed and, importantly, strengthened, with oversight from DFID. The CDC of today is a different, and much improved, organisation from the one it was many years ago. Some of the media coverage in recent days has not properly reflected that important shift, and I urge all Members to look carefully at the facts rather than some of the reporting Of course, there is more to do. Therefore, as part of the Bill, my Department will work to improve the transparency of the organisation further and to strengthen further the assessment of its development impact. As the NAO recognised, my Department has commissioned several independent evaluations of the CDC’s impact. Just last year, a team from Harvard, reviewing the CDC’s investments from 2008 to 2012, concluded that they had been “transformational”, creating hundreds of thousands of new direct jobs and billions of pounds in increased earnings. We are currently in the design stages of a complex new study to generate even more detailed data on the wider market impacts of CDC investments. We are the first Government ever to conduct such an in-depth study into their development finance institution There is no question but that the CDC offers value for money. Over the last five years, we have seen significant returns from it. Every penny of profit generated by the CDC is reinvested into businesses across the world’s poorest and most fragile regions, making every taxpayer pound invested in the CDC go further. The NAO further concluded that the CDC now has “an efficient and economic operating model” with low costs, compared with other development finance institutions. CDC salaries are covered by the returns the CDC makes on investments, not from development budgets Wherever possible, the CDC invests in countries, and it uses neutral jurisdictions only when it is absolutely necessary to do so, to protect taxpayer moneys from being lost to weak legal systems and to bring confidence to other global investors in the hardest-to-reach markets. However, the CDC uses only financial centres that are compliant with international tax transparency standards, as monitored by the OECD’s global forum on transparency and exchange of tax information. There are no exemptions Far from hiding investments, the CDC was one of the first development finance institutions to make public investment information about every single investment. In fact, with DFID’s support, the CDC is now a global leader on transparency. It has signed up to the international aid transparency initiative and has an online searchable database on its website, allowing users to access information on every investment and fund in the CDC’s portfolio. I can assure the House that my Department will continue to be an active and engaged shareholder in the CDC, ensuring that it continues to deliver for the world’s poorest and the UK taxpayer.
My right hon. Friend is outlining a strong case for what she proposes for the CDC. However, on the issue of probity, there are tremendous resources in the City of London, which could provide support for some of the businesses the CDC invests in as they look to get to the next stage of growth capital. Is there any element in the Bill, or are there any DFID proposals, to encourage City of London firms to provide that support for DFID goals?
It is important to acknowledge the City of London and the great expertise that exists there when it comes to not only investment in some of the most challenging parts of the world but transparency. Through the work the Government have done on tax and transparency, the City of London has moved incredibly far. My Department is working across the City of London on a range of issues, such as insurance. We are also looking at how we can do more on transparency and accountability, and that is absolutely right We will shortly be setting out a new investment policy for the CDC, covering the next five years. That will include a new reporting framework to better capture the broader impact of investments on development, beyond job creation and the tax revenue generated. We will ensure there is maximum transparency, so that CDC investments can be scrutinised and, importantly, so that their impact on combatting poverty is made clear. As I stated, the CDC has a strong and transparent track record on which to build. With our support and oversight, we want the CDC to do more, and that is why we need the Bill The Commonwealth Development Corporation Act 1999 set a £1.5 billion limit on the overall amount of Government financial assistance that can be provided to the CDC. That limit was reached in 2015. The need to raise the CDC’s capital limit was clearly signalled in the UK aid strategy back in 2015. The Bill builds on the economic development objectives of Clare Short’s 1999 Act and should be seen not as a new political direction, but as a logical continuation of the cross-party approach that has been in place for decades Any money given to CDC will meet the internationally agreed rules about which spending counts as aid. Raising the limit by £4.5 billion to £6 billion and introducing a delegated power to raise the limit further via statutory instrument to £12 billion over time will enable the UK to accelerate the CDC’s growth, so that the UK can deliver on its international development objectives. Let me stress that this £6 billion is not an annual spend; it is a cumulative figure and a limit placed on the total amount of financial assistance that a Government could provide to the CDC over a period of time before coming back to the House to seek a further increase via statutory instrument.
I fully support what my right hon. Friend is saying. This is a progressive, cross-party movement, and this is not a radical piece of legislation. Decisions have not been made to spend the full £6 billion straight away, but if the Department did commit to spend right up to that limit and fund it each year up to 2020, it would still represent only 8% of the Secretary of State’s budget, so 92% of aid would be spent in a more traditional way. This is a progressive move, not a radical change.
I thank my hon. Friend for his comments. He is absolutely right about the 8% figure. It is also worth pointing out, putting this into context, that total aid spending over the course of this Parliament is likely to be £60 billion Some inaccurate reports have suggested that this Bill somehow paves the way for the entire aid budget to be given to the CDC in perpetuity. That is clearly not the case. Increasing the capital limit does not guarantee that we will use our resources in this manner, or commit us to any increases in capital. My priority is to ensure that we achieve maximum value for money with UK aid. The provision of any new capital to the CDC will require a full and detailed business case that will show how further investment will continue to achieve value for money, have a clear development impact for the poorest, and deliver in the UK’s national interests. Furthermore, it is worth noting that because CDC investments generate a return, any additional money we give to the CDC is not spent once and then lost; it contributes to the CDC’s capital, which is continually reinvested now and in future years. Importantly, therefore, it remains an asset that ultimately belongs to the UK taxpayer This Bill is fundamentally about people: improving life prospects by helping individuals to find work and earn money, so that they can feed their families, send their children to school and put clothes on their backs; empowering girls and women to determine their own future; and giving people in the poorest and most marginalised places hope, so that they do not feel the pressures to migrate or turn to some of the extreme causes that we see around the world. The CDC is just one part—a relatively small part in the context of overall development spending—of our crucial investment in developing countries. We will continue to invest in our life-saving, life-changing health, education and sanitation programmes, meeting our manifesto commitments. Ultimately, though, this is about jobs, growth and enterprise that will defeat poverty for good. It is right that Britain leads the world to tackle poverty across the world given that we still have more than 1 billion people living on less than a dollar a day. The UK Government are playing a leading role in building a more prosperous world. This Bill is the right thing to do for the poorest people in the world and for British taxpayers, and I commend it to the House.
The vast majority of Members of this House support the UK’s guarantee to spend 0.7% of gross national income on international development. This view is supported by the people of this country, who understand that our aid programme makes a significant contribution to creating peace and economic sustainability around the world and to building a more secure and stable international community. Our aid budget makes a huge difference to the lives of hundreds of thousands of the world’s poorest people. Underpinning the faith that the British people have in our aid programme is the knowledge that the money that is spent in developing countries—taxpayers’ money—is transparent; that the funds are provided for projects that have clear objectives and tangible outcomes; and that the money goes directly to source, with no middlemen, no creaming off the top, and no profiteering from people’s poverty We will always welcome any measures that aim to improve the quality of life of those less fortunate than ourselves. This Bill, with the right safeguards, could achieve that. The job of Opposition Members, and of the whole House, is to ensure that some of the previous excesses and failures of the Commonwealth Development Corporation are not repeated. I say that as a friend of the CDC. It was the post-war Labour Government of Clement Attlee who created the forerunner of the CDC. Much of the work of the CDC is vital, and we should of course work to strengthen its ability to support businesses and create jobs around the world However, we have a number of serious reservations about this Bill. Since the Government are proposing up to an eightfold increase in the amount it can contribute to the CDC, it is right that we ask questions. Let me begin with executive pay at the CDC. While we would all acknowledge the steps that have been taken to curtail the excesses of the past, what guarantees have the Government received that we will see no repetition of the eye-watering salary hikes that people awarded themselves in the past? It would be fundamentally wrong for the extra money proposed in this Bill to be used to fill the bank accounts of the executives of the CDC instead of going to those who need it the most.
Does the hon. Lady accept that no one is considering going back to those bad old days? While I do not want this to be a partisan issue, because I think there is a wide degree of consensus, the original deal with the chief executive was signed off by Clare Short, and the new deal, which reduced the salary by a third and placed a cap on the maximum, was signed off by my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) when he was Secretary of State. There is no going back to those bad old days; this is about working together on the new framework.
I thank the hon. Gentleman for his intervention. I am concerned that we learn from the past. I am not here to pull punches: this is about learning from the past and ensuring that we move forward in the correct, transparent way The second question the Government must answer is on the priorities of the CDC. Recent history is not kind to the CDC and the decisions it has made on the allocation of its funds—UK taxpayers’ money. In recent years, the CDC has become a more commercial organisation. In 2004, the CDC created the private equity arm, Actis. In a deal that raised serious concerns on the governance of the corporation, 60% of the equity firm was sold to managers at the CDC at a bargain basement price. In the space of a few years, they had turned the CDC from an aid agency into a cash machine. With the focus turned to maximising profits, mainly for those who worked at the CDC, the traditional areas of financial support that the CDC had focused on for nearly 60 years were being abandoned. Food security through agriculture programmes went, safe and clean water projects were cancelled, and transport and infrastructure projects were abandoned. Poverty reduction—surely key to any development objectives—withered on the vine of self-interest and, I am afraid to say, earning a fast buck It is worth comparing the principles and values on which the CDC was founded to achieve its aims with the realities of its present-day operation. In 1998, the CDC spent 50% of its budget on agribusiness in Africa. That investment had two virtues: first, it helped to feed people in those countries, where starvation and hunger were rife; and, secondly, it enabled communities to become more self-sufficient, created jobs, and was a step on the ladder out of poverty. Today, funding for agribusiness has dropped to just 5% We see similar patterns in the CDC’s infrastructure programme. For people to live healthy lives, and to enable communities to thrive, not simply survive, we need to help create a solid infrastructure as part of our development priorities. Dirty water and poor sanitation robs the lives of over 300,000 people each year. Infants and young children are especially susceptible to diseases because of their immature immune systems. Their young bodies simply do not have the right immune system to cope with waterborne diseases. According to UNICEF, over 40% of medical facilities in Africa do not have access to clean water. Dirty water and a lack of good sanitation do not just rob people of their lives; they make a country less productive. A recent study estimated that there was a $150 million shortfall for water and sanitation projects in sub-Saharan countries, while the World Health Organisation estimates that we need £535 billion in investment to achieve universal access. I accept that those are huge sums of money, but look at the benefits. It is estimated that every dollar spent on improving water quality and sanitation delivers $4 in increased productivity. With such overwhelming evidence for the health and economic benefits, the case for investing in infrastructure programmes should be beyond doubt.
Another dimension, when we are talking about health, is the pharmaceutical industry and the products that it sells to some African countries. Surely, the Government should be looking at this area and trying to make pharmaceuticals a lot cheaper for those countries.
I totally agree with my hon. Friend. We need not only to look at the health of poorer people but to make sure that they can access water and sanitation It is surprising, if not shocking, that the CDC reduced infrastructure support for water, sanitation and roads from 35% of its budget in 1999 to just 8% a decade later. If the money is no longer going to support agribusiness or infrastructure, where is the CDC spending it? Let us begin by looking at some of its recent investments, such as Xiabu. I do not know about you, Madam Deputy Speaker, but I am partial to a takeaway on a Friday night—so, it seems, is the CDC, because it has provided thousands of dollars to the Chinese fast food chain Xiabu. That may be a good commercial investment, but is it the best use of the CDC’s resources? Can the Secretary of State set out what guarantees she has obtained that the UK’s increased contribution to the CDC will not go towards such projects While the Secretary of State is here, I would like to hear from her that the Government will seek assurances that in Africa the CDC will put more emphasis on food security than it puts into funding the building of new shopping malls at present. I have no doubt that the people of Accra are grateful for their brand new shopping mall, but what strategic role it plays in increasing life expectancy in Ghana is a mystery to me.
The people who were employed in the construction of those shopping malls in Accra—I have seen them recently—would disagree with the suggestion that that has not helped families in Accra and in nearby villages. Less than 1% of the CDC budget has gone on shopping and infrastructure, which provide a lot of jobs. Agriculture, which the hon. Lady talked about earlier, is incredibly important, but it is less important than it used to be in the modern economy in Africa, where there is a greater degree of diversification and urbanisation.
I thank the hon. Gentleman for his intervention. I know that he went around Africa in his previous role as a Minister, so he knows a lot about Africa, but there are parts of Ghana where there is no electricity and parts of Ghana where there is no water. Yes, middle-income families may enjoy going to malls, but while many people are living in poverty I do not think that a mall is the best use of CDC resources and money The examples that I have given lead me to my third and fourth questions for the Secretary of State. The Government propose to increase funding from £1.5 billion to £6 billion, with the option for the Secretary of State to raise it to £12 billion at a future date. But it seems she is putting the cart before the horse. As yet, the CDC has not published its investment strategy for 2017 to 2021. In the absence of an investment strategy outlining how the additional resources would be spent by the CDC, the Government are essentially proposing that we provide the CDC with a multibillion-pound blank cheque. In 2015, the coalition Government gave the CDC a cash injection of £735 million, and the Secretary of State published the business case for that increased funding at the time. Will the Secretary of State place in the House of Commons Library the full business case for the increase to £6 billion of funding to the CDC? Will she assure the House that if the Government wish to extend that to £12 billion, a business case will be brought to the House?
My hon. Friend was in the House when the Secretary of State gave me a very welcome assurance concerning Yemen, which we appreciate. Does my hon. Friend agree that it is so important that emergency and humanitarian aid should be ring-fenced and that any resources to the CDC—whatever they may be, after the business case has been prepared—should not take money away from that emergency and humanitarian aid, which is important in Yemen and in other parts of the world?
I thank my right hon. Friend for his intervention. Yes, humanitarian aid is paramount. In times of crisis, we need to know that that money will be ring-fenced to ensure that those who need it most will be able to get it During proceedings on the Bill, we will be setting the Government six questions, which we hope they will be able to address and gain our support. I began my response to the Secretary of State’s opening speech on Second Reading today by setting out the key principle that should guide us on international development funding—transparency. Indeed, the lack of transparency over the CDC’s work has created considerable scepticism about its activities and some of its investments. When spending taxpayers’ money on international development in an age of austerity, it behoves the Government to do all in their power to reassure everyone that their money is being spent properly and effectively. The Secretary of State would alleviate some of the concerns felt by Opposition Members—and, I am sure, in the country at large—if she were to insert a transparency clause into the Bill, which would meet the Government’s stated aim and their commitment to transparency, value for money and tracking development results That is particularly important when it comes to the CDC’s use of tax havens for its investments. It is extraordinary that the CDC has routed its investments through tax havens. The CDC and DFID have a moral duty to adopt the highest ethical standards if they are to have moral authority as the UK’s leading development actors. We should not be rewarding tax havens with UK taxpayers’ money, and the Government could and should lever the CDC away from the use of tax havens. Not a penny of the proposed £6 billion should find its way to a tax haven, and the Bill should be explicit in enshrining that principle Providing any organisation with £6 billion—and potentially £12 billon—is a significant step, and that is particularly true of an organisation with such a chequered recent past. The House would welcome a clear sense from the Secretary of State of how her Department has evaluated the costs and benefits of providing the CDC with such a significant sum of public money. There is a clear need for the Minister to set out how DFID’s investment plans for CDC have been informed. Has that been achieved by assessing other options for investing these resources. Has it been achieved by comparing their value for money and the potential for development impact There are two issues that the Secretary of State should address to demonstrate the Government’s commitment to transparency. At present the CDC is not subject to the scrutiny of the Independent Commission for Aid Impact. That is an anomaly, and it should be rectified immediately. Will the Secretary of State insert into the Bill a provision to enable ICAI to scrutinise and audit the effectiveness of the CDC, particularly given the significant increase in the CDC’s funding proposed in this Bill? Secondly, I would like an assurance from the Government that the CDC will not be sold off or privatised during this Parliament. It would, surely, be wrong for this House to provide billions of pounds of taxpayers’ money, only for the CDC to be handed over to a private equity firm or suchlike company When the Colonial Development Corporation was established in 1948, it had bold ambitions. For much of its life, the CDC has achieved those ambitions, first as the Colonial Development Corporation and then as the Commonwealth Development Corporation. Lives have been saved and lives have been improved as a direct result of the CDC. Sadly, the CDC has lost its way in recent years. The ethos and values that drove its inception six decades ago have been lost, sacrificed on the altar of fast-buck economics. We are beginning to see some welcome reforms to the CDC, but history has taught us that we must remain vigilant As I set out at the beginning of my speech, the Opposition firmly believe in the principle of aid as a vehicle for improving the life chances of millions of people. The question the Government must answer before they gain our full support for the Bill is: will they provide the assurance and the guarantee to deliver what we all seek, which is a CDC that truly lives up to its mission “to support the building of businesses throughout Africa and South Asia, to create jobs and make a lasting difference to people’s lives in some of the world’s poorest places” To achieve this, the Government must place the right safeguards in the Bill in Committee. If they do, and the Bill achieves the twin objectives of supporting the people who need it the most and of making the funding fully transparent, the Government will have our support.
I draw the House’s attention to my outside interests, which are listed in the Register of Members’ Financial Interests This is an extremely good Bill, and I hope it will be welcomed in all corners of the House. During my brief remarks, I very much hope to be able to satisfy the hon. Member for Edmonton (Kate Osamor), who leads for the Opposition, on the perfectly fair questions that she posed. The fact that the Government are able to bring the Bill before the House today shows the success of Britain’s development policies in general, and specifically the success of the CDC reforms that we introduced in 2010 and 2011. Today’s Bill is the fruit of those reforms It is worth reflecting a little further on the history of the CDC. As has been said, it was founded in 1948. It was the first development finance institution— another British lead—and an early example of Britain’s generosity and of recognising the importance of the private sector and of job creation. The CDC made a huge contribution in the years after the war to agricultural development in the poorest parts of the world with which Britain had a close connection. By 1997, the formula had become a little tired, and the Commonwealth Development Corporation, as it had become, was losing money, which was hardly a good example of private sector entrepreneurialism for poorer countries to emulate In 1997, the Blair Government considered privatising the whole CDC. That would have been a huge mistake, since the whole point of the organisation is to complement the private sector, not to compete with it. In the end, the Labour Government privatised the management, while leaving the capital in the public sector. The then Government turned it into a fund of funds: it invested in other people’s funding vehicles, while the private sector did what it is supposed to do, which is focusing on making money When I travelled as the shadow International Development spokesman, other countries’ development finance institutions would say to me that the transformation of the CDC after 1997 was a warning to other development finance institutions of what not to do. When I travelled in countries where in the past the CDC had generated enormous good will, people used to say to me, “Whatever happened to the CDC? It has simply disappeared.” Of course, that was right. As the CDC was investing in other people’s funds, it had simply disappeared In 2010, the coalition Government said that the CDC, this former great development finance institution, had lost its way. The CDC was under regular attack in the press—particularly in Private Eye—and my judgment, as the Secretary of State, was that the attacks were largely valid. It had been turned from a somewhat sleepy development corporation that was losing money into a city slickers private equity business. It was mostly staffed by the same people, who saw their civil service salaries soar to the exotic levels normally populated by very successful hedge fund managers and private equity investors. The central aim of the coalition was to re-inject the CDC once again with its distinguished development roots without losing the ability to earn a commercial return. Our aspiration on entering government in 2010 was that just as DFID is undoubtedly the leading development ministry in the world, so the CDC should become the envy of all other development finance institutions—the best Government-owned DFI anywhere We had three key aims. First, we wanted to regain control of investment expertise by bringing the responsibility for investment back into the CDC. In other words—Labour Members may care to take note—we decided to reverse the Blair Government’s privatisation by bringing the expertise back into the public sector. Secondly, we wanted to broaden the toolkit of financial instruments by which the CDC could achieve this. Thirdly, we wanted to shift the geographical focus of the CDC on to the poorest and most difficult parts of the world—Africa and south Asia. The CDC had previously focused on a loose collection of geographical locations in a very undifferentiated way. Of course, capital in such circumstances naturally gravitates to the areas of lower risk and higher return. That was exactly what we did not want it to do, because for the CDC and development, those are the areas of least value It was with dismay that I read in the Financial Times of all newspapers—it has a reputation for outstanding financial journalism, and should therefore know better—a rehash of a past that the CDC has long left behind completely. A moment of research would have shown Financial Times journalists that they were completely out of date. The Financial Times said that “the government should place the CDC under the same broader level of public scrutiny as DfID.” The CDC is overseen by DFID, the Treasury, the shareholder executive, the International Development Committee, the Public Accounts Committee and, as yesterday’s report shows, by the NAO. Perhaps in a rather better researched piece, those Financial Times journalists could explain who might be added to this already extensive list. Contrary to the Financial Times view, the CDC is now well on its way to achieving a reputation as the best DFI in the world. The reforms that we introduced inevitably confronted vested interests, and involved an area of expertise that we did not of course have any right to expect within the civil service. We wanted the CDC to provide both pioneer and patient capital. We wanted pioneer capital because we wanted to show the reach of the private sector at its best in promoting economic activity, jobs, decent working practices, and the provision of key goods and services to the poorest in the most difficult places in the world. We wanted patient capital because it can take a longer view of the financial return and can therefore complement the private sector by adding what is often the key ingredient to the mix—funding that would not otherwise be available to generate jobs, whether in the power sector or in infrastructure—in, once again, the poorest places. All of that had the additional benefit of delivering value for money and a return for the British taxpayer, while having a substantial impact on poverty alleviation The Bill is part of the proof that these reforms have worked and that this new approach is succeeding. I do not think it is fanciful to believe that in 50 years’ time, the CDC rather than DFID will be seen as the embodiment of the UK’s strong support and success in helping the world’s poorest and most excluded people. The flow of CDC-type investments made by the developed world in the poor world is now overtaking, in quantum, the level of aid. I believe that the work the CDC is carrying out should command everyone’s support from the far left of the Labour party to the development-sceptic press To achieve this position, the CDC has faced the need for and delivered radical change. This would not have been accomplished without the high quality of leadership at the top that has prevailed throughout. We were successful in hiring Diana Noble as the chief executive. Diana Noble will retire next year, and the taxpayer and the development community owe her a great debt of gratitude. She has changed a passive organisation by recruiting outstanding new talent. People tell me that the spirit in the CDC has been transformed. She inherited an organisation of 50 people, a figure that was subsequently reduced to 40 but now stands at approximately 220 Those extraordinary changes would not have been accomplished, either, without the skills and commitment of Mr Jeremy Sillem, a senior and experienced City financier who served as an adviser to DFID and was subsequently a non-executive director of the CDC while the reforms were implemented, and of Graham Wrigley, who now provides his expertise as the CDC’s chairman. That team, above all, has delivered those changes and deserves the gratitude and thanks of Parliament and the taxpayer. Their personal reward will be the transformation of the lives of very large numbers of extremely poor people Our reforms turned the CDC from a one-product business—a fund of funds—into a multi-product one. I am not a golfer, but if I may use a golfing analogy, the CDC was traversing the golf course of international development with only one golf club, that of investing in other people’s funds. We have now equipped it with a full variety of golf clubs, including equity and debt, direct investments, trade finance and infrastructure lending. We have also regained control of the golf swing rather than delegating it to others—I have probably pushed the metaphor as far as I should Inevitably, operating in markets such as Afghanistan, Pakistan, Sierra Leone, the Democratic Republic of the Congo and Ethiopia is accompanied by considerable risk. Along with development impact, the CDC considers whether it is truly bringing additional funds that are unavailable elsewhere to each investment. It always seeks to avoid the lurking dangers of corruption that are ever present in development. It is a young business that will not always get it right, but for a young banker starting out in the financial world, as I did in 1979, there are few more exciting places to aspire to work across the financial world than the CDC, whose employees deploy their financial skills in an area where they have the power greatly to elevate the social condition of some of the poorest people in the poorest areas of the world. By the way, salaries have been sharply reduced and are well below what the staff at the CDC would earn in the commercial world.
I am just being slightly mischievous, but will my right hon. Friend confirm that all those interested in a career in the CDC cannot expect to spend too much time on the golf course, either on a Friday afternoon or on any other day of the week?
Order. Before the right hon. Member for Sutton Coldfield (Mr Mitchell) replies to that intervention, may I just say to him that those of us who do not understand cricket are absolutely delighted to have had a golfing metaphor? It is so much simpler.
I do not play golf, but I assure my right hon. Friend the Member for Cities of London and Westminster (Mark Field) that the staff in the CDC work phenomenally hard, including on Friday afternoons There are only a few investors in the world with the skills and risk appetite to undertake such difficult but vital investments, doing the hardest things in the hardest places. In 2014, in response to the Ebola crisis in Sierra Leone, the CDC partnered with Standard Chartered bank to support lending to local businesses and help the country’s economic delivery. In 2013, the CDC made an investment in Feronia, an agricultural production and processing company in the DRC, which is one of the most difficult countries in the world in which to invest. That investment would help people to lift themselves and their families out of poverty and provide much needed support to local agriculture, a sector that the hon. Member for Edmonton quite rightly mentioned. It should never be forgotten that the overwhelming majority of jobs are created by the private sector, not by Government, and having a job—being economically active—is how people all around the world lift themselves out of poverty. Of course, inevitably, not all those investments will succeed Since 2011 the CDC has focused its attention intensively on quantifying development impact. For example, this year it invested in a power plant at Virunga park in Matebe that is providing 96 MW of clean energy, creating around 100,000 jobs and boosting economic development. It is the first investment by a DFI in that region of the DRC since the 1980s. In 2015, the CDC invested in the largest independent power producer on the continent, Globeleq Africa, also bringing in Norfund, Norway’s development finance institution. That will add thousands of megawatts of electricity generating capacity over the next 10 years, addressing a massive gap. In my view, the CDC is the only DFI with the vision or appetite to undertake that type of work, including changing the whole strategic direction of the company and replacing the senior team and board The Bill ensures that the CDC can receive from the taxpayer the capital injection it will require to carry out the development work with which it is tasked. Many Governments are channelling development funding through DFIs such as the CDC because they use capital injection to address market failure, as the Secretary of State pointed out, and invest funds on a revolving basis in business in developing countries. The extent of the success of the CDC’s development investment means the Bill is required In its report published yesterday, the National Audit Office said: “Through tighter cost control, strengthened corporate governance and closer alignment with the Department’s objectives, CDC now has an efficient and economic operating model” with “thorough” governance arrangements. It also said that the CDC’s “current portfolio of investments reflects the strategy it agreed with the Department in 2012…CDC has met the target for financial performance it agreed with the Department.” Finally, the report made it clear that the CDC measures its effectiveness through financial return and development impact targets—targets that it has met. Measuring development impact is extremely difficult, partly because it is so long term. But above all it is about job creation. It is likely that the CDC is currently involved in investments that will create more than 1 million jobs. In any event, it is to be congratulated for the steps it has taken to quantify development impact and to be encouraged to go further For now, my advice to my successors in the Government is to leave the CDC to grow and deliver on the objectives we have set it and to hold it to account for what it does. However, probably the most anxiety-inducing statement the CDC team ever has to face is, “Government officials are coming round to interfere today in what you are doing.” When we hired the current CEO, Diana Noble, who has done such a brilliant job, I remember promising her that Ministers and officials would set the course for the CDC—as the shareholder properly should—but would then leave her to get on with the job and to deliver. I trust my promise is being honoured.
I hope, Madam Deputy Speaker, that before I begin my remarks on the Bill, you and the House will allow me to note that today marks the third anniversary of the Clutha tragedy, when a police helicopter crashed into the Clutha bar in Glasgow, killing 10 people. We remember them and pay tribute to them and to the first responders on the scene that night. We hope that, in due time, families and friends will get the closure they require and the answers they seek through a fatal accident inquiry process.
Order. I am sure that the whole House joins the hon. Gentleman in remembering those who lost their lives that day, and their families and friends.
Thank you very much, Madam Deputy Speaker The Bill is a rare piece of DFID-led legislation—the first in this Parliament, I believe—so I take this opportunity to welcome the new Ministers to the Government Front Bench and the shadow Ministers on the Opposition Front Bench. Lots of Scottish National party spokespeople seem to have been doing that in recent weeks and months, so at least there is consistency from our Benches Today’s debate gives us the opportunity to look in detail at the Government’s specific proposals on increasing the funding they can provide to what was the Commonwealth Development Corporation, now more regularly known as CDC Group or the CDC. In doing so, it is worth exploring how the Bill fits into the broader context of the UK’s aid spending and the direction the Secretary of State is setting, and how those fit with the global framework and consensus on poverty reduction Aid works. It has saved and transformed countless lives around the world. I have had the privilege of witnessing that with my own eyes in places such as Malawi and Zambia, and of meeting people from all over the world whose lives have been transformed by aid, when they have travelled to Scotland and the rest of the UK to share their testimony SNP Members happily give credit to the UK Government for meeting, in recent years and after 40 years of delay, the 0.7% of gross national income target for overseas development assistance spending. Despite the progress made in recent years, the need for aid spending has not gone away. As many analysts and institutions have said, including the International Development Committee, aid flows will need to continue to grow from the billions to the trillions if we are to meet the sustainable development goals—they are also known as the global goals—that have been agreed at the United Nations and if we are to tackle the challenge of climate change. The Secretary of State spoke about market failure. Lord Stern once upon a time described climate change as the biggest market failure of all, and that must be at the forefront of our minds I give credit to the Government for their leadership in negotiating and building consensus on the sustainable development goals, but the task is to continue to show leadership as the world works towards meeting them to end poverty and hunger, achieve universal education and gender equality, eliminate preventable disease and empower communities around the world. The first and most important question we must ask of the Bill is how it will help to meet those goals. What assurances can the Government give us that, in their agreements with the CDC and in setting policy direction, the investments that the CDC makes will be geared to the achievement of the global goals As a number of hon. Members have said, the Bill is tightly focused, which is perhaps a missed opportunity, because there is a chance to make more explicit in the Bill or the Commonwealth Corporation Act 1999 that poverty reduction is as much a duty of the CDC as it is of the Department for International Development. It is not clear in the Bill how much scope there is for amendments, but who knows how creative hon. Members will be in Committee Such a reassurance from the Government would help to make a stronger and clearer case for the role of development finance and for that specific development finance institution. The CDC is rightly proud of being the oldest such institution in the world. As a pioneer, it has had numerous successes, as we have heard, but it has also learned a number hard lessons over the years. To maintain support in the House, it will need to continue to do so. Stories of lavish expenses and inflated salaries, of channelling funds through tax havens, and of investing in luxury hotels and shopping malls, will not inspire confidence among the aid community or the public at large. As we have heard, the National Audit Office yesterday raised a number of concerns about transparency and impact measurement. Despite the progress and reforms of recent years, in 2013 still only 12% of new investments were made in the least developed countries of the world Since the Secretary of State’s appointment, she has made great play of seeking value for money for the taxpayer and increasing aid spending transparency. Will she commit to holding the CDC to the same standards as other stakeholders and recipients of DFID funding? She said in her speech that transparency would happen as part of the Bill, but I do not see it in the Bill, so how can we have those transparency guarantees? The right hon. Member for Sutton Coldfield (Mr Mitchell) asked who else could scrutinise the work of the CDC. The hon. Member for Edmonton (Kate Osamor) rightly suggested that the Independent Commission for Aid Impact could continue to have a role. Perhaps that provision should be in the Bill.
The hon. Gentleman is right that ICAI should have a role, which it has because it can follow all official development assistance expenditure. He can rest assured that I should have added ICAI to my list.
I am happy to take that reassurance from the former Secretary of State, but I hope to hear it from current Ministers.
As chair of the sub-committee of the International Development Committee that scrutinises the work of ICAI, perhaps our sub-committee could be added to that list.
DFID and the other bodies rightly face considerable scrutiny, which is as it should be, but we must ensure that it is extended and applied equally to all DFID stakeholders and all the resource that is spent. Perhaps there was an opportunity for the Bill to go further and to place statutory duties on the CDC to report on all its spending to the standards set by the international aid transparency initiative. I wonder what creative amendments might appear in that respect Let me be clear that I am not objecting in principle to the concept of development finance. There is a role for the private sector to play in stimulating the economies of developing countries and helping people into work—if carefully managed, it can support innovation and diversification. The Secretary of State’s letter to Members in advance of the Bill gave the example of the CDC’s early investment in the African mobile phone operator that eventually became Celtel. The investment was made when the technology was unproven and the market barely existed. I have seen first hand the impact that mobile phone technology makes in improving people’s lives across sub-Saharan Africa. Indeed, I have been a customer and user of Celtel services on many occasions The Scottish Government recently launched their own development finance initiative as part of their international development strategy. The Minister for International Development and Europe, Dr Alasdair Allan, announced in October £1 million of Scottish Government funding to help Malawian businesses over a three year period, which will be match-funded by private investors, providing £2 million in total to invest in Malawi. Those investments will be managed by a new Scottish company, the African Lakes Company Ltd, which has been registered as a limited company for that purpose. The African Lakes Corporation was originally established in Glasgow in 1878 to develop trade as an effective way of displacing slavery in Malawi. More than a century on, that mission has been revived with a contemporary view to investing in Malawi’s future. Through their support for that venture, the Scottish Government aim to show that responsible investment can help Malawi and similar countries to reduce dependence on aid, support the growth of existing businesses and create sustainable livelihoods The question is therefore less about the principle of development finance and more about how it is managed and how it fits within the overall picture of aid spending. The Scottish Government commitment of £l million over three years represents just under 4% of their annual development fund budget. The figures proposed in the Bill are of a far greater order—the Bill proposes the quadrupling of the funding cap from £1.5 billion to £6 billion, which would take the total amount that DFID can invest to the equivalent of around half the annual aid budget. I take the Secretary of State’s point that that will not necessarily be invested in one go, but if my understanding of the Bill is correct, it could be invested in one go in principle, which is a concern to some of us. The new maximum, which will be decided by statutory instrument, could be £12 billion, which is approximately the total annual aid budget. It is therefore worth asking, as the hon. Member for Edmonton did, where those figures came from and how they were arrived at. Why £6 billion and not £5 billion or £7 billion? Where is the needs analysis behind that figure As we heard in Treasury questions today, total aid spending is very likely to fall as a result of a slowing economy. The 0.7% target is by definition a proportion of total GNI. With further economic uncertainty on the horizon, there is no guarantee that the current figures will remain stable, let alone increase. Would it have been more sensible for Ministers to express the funding limits in the Bill as a percentage, or through some kind of formula that relates to the total amount of aid funding, to make investment in the CDC relate more clearly to the total aid budget at any one time? Although making the cap a proportion recognises the importance of development finance, it also recognises that it is only one small tool in a box, as the Secretary of State said. We have been presented with the Bill, which incidentally was not mentioned in the Queen’s Speech, without seeing the long-promised policy statements in the shape of the bilateral and multilateral aid reviews. We therefore have no real idea exactly how the increase in the investment cap fits with DFID’s broader policy direction and goals. The Secretary of State has said that no disbursements will be made to the CDC without a robust business case. Will she assure us today that such business cases will have poverty reduction and the sustainable development goals, and people rather than profit, at their heart? As I asked earlier, has she given any consideration to the opportunity for building that into the Bill as a statutory duty on the CDC? [Interruption.] If the Secretary of State is not here, I hope that at least one DFID Minister can answer those questions at the end of the debate I and many other Members are keen to explore in Committee and other stages the question of how that significant scaling-up of DFID finance to the CDC fits into its broader policy goals and the wider global aid agenda. If satisfactory answers are not forthcoming, and if the Government are not willing to offer the reassurances and amendments we suggest, we reserve the right to oppose the Bill in its entirety on Third Reading Greater clarity is urgently needed from DFID and the Government as a whole on the purpose of their aid budget and how they will achieve that purpose. A global consensus framework exists, which this Government, or at least the Government elected in May 2015, helped to negotiate and write in the shape of the sustainable development goals. I said last week in Westminster Hall that, despite what may be read in some of the gutter and right-wing press, there is still public and political consensus in the UK on the importance of aid and the need to tackle global poverty The Secretary of State talks increasingly about making aid work in the national interest, but that raises the question: what is the national interest and how is it different from the goal of poverty eradication? Surely meeting the global goals in and of themselves is in the national interest, otherwise there is the implication that previously aid did not work in the national interest or that we have a deeper interest in its effectiveness beyond what the SDGs aim to achieve. If that is the case, what is that interest? What better or more noble purpose is there than the eradication of poverty and disease and the building of peace and equality for all? Surely a global community where everyone’s basic needs are met, where education allows people to thrive and where health and wellbeing contribute to more peaceful societies is by definition in our own interests, as well as the interests of those we are seeking to help That is why the goals must be at the heart of the work of the CDC. Ending poverty should not be a happy or convenient by-product of profitable investments; it should be the other way around. If investments that create jobs and provide services that lift people out of poverty go on to make surpluses that can be reinvested in more of the same, all to the good, but it should not be assumed, especially in the context of fragile and developing countries and economies, that generating a return on investment will of itself provide a rising tide that floats all boats. Old-style aid-for-trade and trickle-down investment have left us with a world where we still need a 15-year timetable to meet the global goals, after 15 years working towards their predecessors, the millennium development goals; yet we live in a world of plenty with the knowledge, resources and capacity to meet and exceed all the targets in the goals. What is lacking is the political will. The Government must show they understand that and that their support for the CDC is but one small and proportionate intervention in the struggle for a fairer, more just and more peaceful world Every penny that the Government invest in the CDC is a penny not invested in traditional, proven methods of aid delivery, so they have to show why each of those pennies is not better spent on gender empowerment, nutrition, farming, education or any of the other programmes working in partnership, on a non-profit basis, with specialist and grassroots organisations on the ground in developing countries. If they want to maintain the consensus in the House on the use and purpose of aid, the Government must show willingness in the coming stages of the Bill to engage on the points that I and others have raised. I look forward to continuing that debate in the coming days.
I draw the House’s attention to my outside interests, among which are some financial interests in developing nations The scale of the development problem facing us is largely to do with the projected world population growth over the coming years, so it is right that the CDC focus on Africa and south Asia, as they are key areas of population growth. Twenty African nations are posting fertility rates in excess of five children per woman, and in some that figure is over seven. Africa is predicted to account for 80% of world population growth, quintupling its 1.2 billion population to add around 5 billion to the global population this century, while the number of Africans aged 15 to 24 is expected to nearly double by 2050 to 452 million These facts present some of the most outstanding challenges of our time: the impact on global warming, which we heard about earlier; environmental degradation; the impact on biodiversity and access to resources; and the potential consequences of war and migration, all of which can also have a big impact here at home. The only way to meet these immense challenges is to give people opportunities close to where they live, and that is what the CDC is helping to deliver: more job opportunities; better education so that people can take advantage of those opportunities; better health and reproductive care; and the involvement of women in the workforce. We should be helping other people to invest in these sorts of things The difference between the CDC and other kinds of aid is that these funds can be used to create businesses that can go on and have their own life and be recycled. Yes, some of the capital can come back to us, for us to reinvest, but, more importantly, these businesses can have a life of their own. If they are doing something well, they will be asked to do it again and again with their own capital, personnel and creativity. If we are to tackle these almost insurmountable challenges, they have to have their own life. The CDC can deliver that potential for scalability into the future and help us to cope with those challenges. The CDC is also great because it presents an example of good governance and an opportunity for us to lead by example—to inspire entrepreneurs, to build capital and expertise in local markets, and to develop companies and structures capable of stewarding their own capital into the future. This is about building trust in the future in nations where often a pound tomorrow is worth a lot more than a pound in just a few years, because they do not have the necessary confidence in local structures, in the enforceability of contracts or in their politics. If we can build that trust into the future through these methods, we can help to create a virtuous circle that has a great impact This investment can also bring us opportunities in terms of commercial information and so on. My right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) made some great points about the way the CDC works and about some of the great people involved with it. This is about creating human connections and using this country’s abilities to help nations develop in a positive way, to break down the barriers to development, to tackle crony capitalism, to reduce regulation, taxes and subsidies and licences, which often favour particular operators, and to enable more rapid growth and greater flexibility in those economies. That will also give stable politics a better chance in these places. I will happily support the Bill, and I commend it to the House.
I have clearly touched a nerve with some of my comments about the Bill, which I am afraid I will not be giving the wholehearted support that some in the House have given it today The Government have attempted to portray the Bill as a minor technical matter, which should go through on the nod with minimal scrutiny and to which we should all give a big hurrah. What appears to be a minor technical two-clause Bill, however, is in fact far more significant and controversial. As we have heard, it proposes an immediate quadrupling of the limits on taxpayer funding of the CDC and then suggests a further doubling at the whim of the Secretary of State and without further primary legislation Now the CDC expansion, which has been significant from 1999 to the present day, has required only £1.5 billion of taxpayers’ money, a large amount of it in the recapitalisation that took place last year. By stark contrast, the Bill will permit an increase of up to £12 billion over an as yet undefined period, although the explanatory notes make it clear that the Secretary of State intends to “accelerate CDC’s growth over the current Spending Round” That could imply giving three times extra to the CDC— £4.5 billion—in three to four years’ time than it has needed in the last 17 years. According to the explanatory notes, this is justified as a response to an as yet undefined or evidenced “forecast market demand over CDC’s next strategy cycle and in order for the CDC to play a fuller role in the delivery of the UK’s international development objectives.” Ministers rarely take powers without the intent to use them fully, and the transfer of powers to use secondary legislation should always be subject to robust scrutiny. I will explore in due course whether I believe this Bill, and the proposed increase for the CDC, meets three key tests. It is not whether it has met its plans as defined in 2012, but whether, first, it has demonstrated enough effectiveness to justify such a huge increase; secondly, whether it ensures an adequate focus on tackling poverty in the poorest countries; and thirdly, whether it acts in a coherent way with respect to the rest of DFID and indeed wider HMG policy Let me first suggest my own answer as to why such a huge increase has been proposed, and why now. One of the primary reasons may lie in a little noticed change to the reporting of our aid spending—official development assistance or ODA—last year, which saw the CDC’s contribution to meeting the 0.7% aid target dramatically altered. Until 2015, the investment activities of the CDC could either add to or subtract from our total aid spending. Simply put, we used to look at the net benefit of the CDC to developing countries by subtracting money flowing back to the CDC from the new investments it was making. In fact, this resulted in a positive contribution to our aid spending of £228 million in 2010; £91 million in 2011; £103 million in 2012; £100 million in 2013; and £42 million in 2014 In 2015, however, there was a significant change. Instead of reporting with the same measure, which incidentally would, according to the House of Commons Library, have resulted in a negative contribution to the aid budget of minus £9 million, DFID changed its reporting so that the capital flow from the UK Government to the CDC is scored as ODA by DFID rather than the CDC scoring its own net disbursements as ODA. Instead of a negative impact on aid last year, the UK reported the capital increase reported to the CDC as aid, which was £450 million—a stark difference. We now looking at the total money DFID puts into the CDC counting as aid, regardless of which country or sector it ends up in, let alone whether it resulted in a net flow of resources to the poorest countries Why does this matter and how does it relate to the Bill? It matters because it would allow the Secretary of State to classify the entirety of future capital increases to the CDC as ODA or aid, potentially diverting, and effectively privatising, up to £12 billion of our future aid via the CDC, yet continuing to count it towards the 0.7% target. This is particularly important, given the different focuses and priorities of the CDC. I acknowledge that the differences have narrowed in recent years, and I shall come on to praise the work undertaken by the right hon. Member for Sutton Coldfield (Mr Mitchell) in this area. However, the differences between the CDC and DFID’s objectives, and indeed its stated aims, are still significant, not least over whether our aid is focused on the very poorest countries that most need our support or on higher-income countries where we can more easily achieve quicker and bigger returns on investment. I shall return to this point.
The hon. Gentleman suggests that the aims are significantly different, yet 83% of the new CDC investments are in DFID partner countries and 56% of new investments are now in fragile and conflict-affected countries. Is that not in line with DFID’s objectives?
As I shall come on to explain more fully, there has been a significant change and there has been a narrowing, but there is still a significant difference. If we look at the bulk of the spending still being in India, we see a significant divergence from DFID’s priorities, as I shall come on to show. We were told that aid to India had ended, but apparently it has not This is also significant when coupled with an answer I received to a parliamentary question. I discovered that the amount of aid—ODA—to be spent by Departments other than DFID is set to increase from 18% this year to 26% in 2019. That is over a quarter of our aid spending going through Departments other than DFID. Even if we focus on the lower end of the implied proposal to spend billions extra via the CDC by the end of the spending review—let alone the £12 billion—we could be looking at anywhere from 35% to 45% of the DFID budget being spent, but not by DFID in the traditional sense. If the Secretary of State used her full power and more quickly than expected, it could be even higher. It is particularly ironic that the Secretary of State who promised us greater effectiveness, transparency and accountability in our aid spending appears to be willing to hand over billions of our aid funding to less transparent and less accountable parts of government.
The hon. Gentleman seems to be implying that aid spent through other Departments is a bad thing. He is shaking his head, which is good, because far from being a bad thing, I would view it as a good thing. If we are helping education institutions in developing countries, we should use the expertise in our Department for Education. If we are looking at tackling local government, it should not be looked at through the DFID lens, but should involve our expertise. The key thing is having the same standards across those Departments and meeting the high quality that DFID deploys.
I was shaking my head because I agreed with much of what the hon. Gentleman was saying, but my question is about the volume—the amount—and the fact that it is increasing so rapidly. It is well known that many other Departments have looked enviously at DFID’s budget and have attempted to take parts of its cash for many years. My questions are these. Is the aid being spent effectively; is it being used in accordance with the correct principles; and is it coherent across Government policy? As the hon. Gentleman will know, there are some fantastic examples of joint units involving the Foreign Office and DFID, but over a quarter of our aid budget is being spent on a massive increase, and that is a big issue.
Surely the hon. Gentleman can be reassured by the fact that the Government have a double commitment, applying not just to the 0.7% but to the way in which it is spent under strict rules. Of course, any money that is spent by another Department is subject to the full investigation and rigour of the Independent Commission for Aid Impact, which is a very important part of the equation. All ODA expenditure is subject to review and analysis by the development watchdog.
It is indeed. I am a member of the ICAI sub-committee, and I hope that we will look into these matters in due course, as, I understand, will the National Audit Office. That scrutiny is very important.
I have seen the NAO’s report, and what concerns me is the fact that it states: “It remains a significant challenge for CDC to demonstrate its ultimate objective of creating jobs and making a lasting difference to people’s lives in some of the world’s poorest places. Given the Department’s plans to invest further in CDC, a clearer picture of actual development impact would help to demonstrate…value for money” Is that not the central problem? Does it not lie at the heart of the Bill?
Absolutely. I shall return shortly to what the NAO report actually said, as opposed to the slightly glossed-over version that we heard from the Secretary of State.
The hon. Gentleman is a member of the International Development Committee. He will therefore be aware that the Committee has committed itself to scrutinising ODA whichever Department it is spent through and that the Secretary of State has confirmed that we should have full authority, and her backing, to do so. If he had attended the ICAI sub-committee meeting last week, he would have seen that, for the first time, we had before us a witness from another Department who was scrutinising its spending of ODA.
Indeed. I apologise for not being present at that meeting, but, as you will know, Madam Deputy Speaker, I had other commitments at the time. Obviously, the hon. Lady cannot attend all the meetings of all the groups in the House at any time either; she and I are both busy people. I hope that the Committees will investigate those matters, not least because of the volumes that we are talking about, but also because of the lack of transparency when it comes to documentation and the ability to scrutinise CDC’s spending, not least through its use of tax havens These dramatic shifts—under the cover of a “minor technical change” that we should all rush through in the House—must always set the alarm bells ringing for those of us who seek to scrutinise the Government and their decisions. I do not want to spend long on this, but we must feel additional alarm when we look at the agenda of the Secretary of State and consider what she has said about the Department being scrapped and about money being “stolen” and squandered. She does not like some of the headlines that have appeared in the Daily Mail. Obviously, she does not like the headlines that have appeared in newspapers such as the Financial Times. However, we are now seeing wild claims and accusations in the right-wing press which are clearly coming from her Department. Indeed, her special adviser has previously called for the 0.7% target to be abandoned, and in 2013 in The Sun described aid as an “unaccountable, bureaucratic and wasteful industry” Why does all this matter to the Bill? I believe that, faced with the legislative and political constraints of the cross-party support for the 0.7% aid target, the Secretary of State has opted for a stealthier route and has chosen to undermine the Department by diverting and reclassifying aid. I appreciate that others may not share my sense of scepticism, so let me now deal with three practical objections to the Bill. The Secretary of State said that she wanted facts, so let us have some I should make it clear at the outset that I am not opposed to the existence of a development finance institution of the CDC’s nature, or to its playing its part in our portfolio of international development efforts. Nor, obviously, do I oppose the funding of private sector projects. The development of a vibrant private sector, key infrastructure and the support of new and emerging businesses in the world’s poorest countries should be a key part of any balanced portfolio of development assistance, alongside investments in basic public services such as health, education, water, and support for agricultural improvement to tackle hunger and nutritional challenges The Secretary of State likes to give us the impression that she is the only person ever to have realised the importance of private sector development and trade to tackling poverty and promoting economic development, but the fact is that both have been at the heart of DFID’s work since it came into being, under Governments of all political persuasions. Supporting trade is crucial to international development.
I totally agree with the hon. Gentleman’s point that economic development has been important to DFID, but does he agree with me that successive Governments have been wholly unresponsive to co-ordinated work on economic development, whether we call it prosperity or trade? Successive Governments have not pulled that together and grabbed the opportunity, which could really help to grow continents such as Africa out of poverty. Much more should be done, and this House should be holding the Government and future Governments to account on this, and ask them to do more, not less, with the private sector.
It is a mixed record. We had a joint DFID-DTI—as I think the Department was called then—Trade Minister, my hon. Friend the Member for Harrow West (Mr Thomas), who did a lot of good work in trying to bring those things together, ensuring investment went to key infrastructure projects, different corridors in Africa and elsewhere, but it is a mixed record and the hon. Gentleman makes an important point There are many CDC investments that I and others welcome, which are well run and have delivered poverty-reducing outcomes in the poorest countries. We have heard about some of them today, such as those in Sierra Leone and Uganda. Indeed we were with the National Audit Office earlier today talking about some of the projects it had visited which clearly do justify our investment But where is the robust business case for such a large increase of billions of pounds of taxpayer spending? Why has this Bill been published before a CDC investment strategy? In the explanatory notes, the Secretary of State describes forecast market demand as the justification for the Bill. However, she has not explained this at all there; neither has she done so today, and nor did she in answer to a parliamentary question I put to her. I asked her to explain this concept of forecast market demand, but instead of an assessment that might justify this spending of up to £12 billion of taxpayers’ money, I was given some classic development waffle, such as: “As set out in the UN’s Global Goals, urgent action is needed to mobilise” The answer did not go into any level of detail that we would expect on the spending of such a considerable sum of money Let me also be clear that, as Members may have gathered earlier, I am also critical of a whole series of actions and policies at the CDC that I am sorry to say occurred under the previous Labour Government; the sell-off of Actis was mentioned, and there was also excessive remuneration, and massive investments made in markets that already attracted foreign investors—which incidentally is still going on. These are just some of the issues that should have inspired tougher intervention. To give credit where it is due, many of the actions that the right hon. Member for Sutton Coldfield (Mr Mitchell) took in agreeing that new strategy took us away from some of the mistakes made in the past, but my question is whether they have gone far enough in justifying such a huge increase in the funding We should look at what the NAO said. Yesterday’s report noted: “Our previous scrutiny of the Department’s oversight of CDC led to important, positive changes.” It points to improvements in financial performance, organisation and prospective—let us return to that issue in a moment—development impact, as well as the clamping down on executive remuneration. The NAO also agrees that the strategy set by the Department in 2012 has been met However, as my hon. Friend the Member for Bridgend (Mrs Moon) pointed out, the question for the House today is not merely whether the CDC has made improvements on a previous record deeply mired in controversy, or whether it is now adhering to the strategy set for it—which we can argue was right or wrong—in 2012; the question before us is whether a good enough case has been made that the CDC is performing so well and so effectively that it should receive that volume of increase in funding versus other potential outlets for that development spending It is common sense that asking any institution, let alone one with a history of recent problems, to take on a significant increase in its funding over a short space of time may lead to less optimal outcomes and, at worst, failure. Were we proposing an additional £12 billion for those dangerous campaigning NGOs or the dastardly World Bank, or worse still the EU development funds, I have no doubt that the Government Benches would be crewed by the anti-aid brigade warning of the risk of our aid being “stolen” or squandered. But because it is for a more obscure part of our development finance architecture and has the words “private equity” and “private sector” associated with it, we seem to be willing to accept a lower level of assuredness.
Did the hon. Gentleman also read the bit of the report that says: “Through tighter cost control, strengthened corporate governance and closer alignment with the Department’s objectives, CDC now has an efficient and economic operating model”, and DFID’s “governance arrangements of CDC are thorough”?
I did; I have read the whole report. It also states: “It remains a significant challenge for CDC to demonstrate its ultimate objective of creating jobs and making a lasting difference to people’s lives in some of the world’s poorest places.” It goes on to make other serious criticisms. On reporting impact, the NAO says: “Changes in reporting development impact over the last four years have made it difficult for CDC and the Department to set out a consistent picture of what has been achieved.” It criticises the CDC’s failure to deliver on the evaluation contract, which was a key part of the business case for the last recapitalisation involving more than £700 million. It criticises the CDC’s claim to have created 1 million jobs, stating that “in 2015 it reported that more than one million direct and indirect jobs had been created…CDC does not attribute these jobs directly to the investment it makes in the company. Since 2012 it has been considering how to measure job quality but has not yet established an overall methodology to do so…its progress has been slow” Worryingly, the NAO warned that “recruitment and retention challenges remain a significant risk to CDC’s operations.” That is crucial for an organisation planning a massive financial expansion The CDC has indeed clamped down on excessive pay, although the CEO still takes home more than £300,000 a year, which is significantly more than the Prime Minister. However, the NAO also reports that “the Department and CDC will shortly be negotiating a new remuneration framework” Could we expect salaries to go back up? Particularly worrying, one would think, for a Secretary of State who thinks that most of our aid is being “stolen” or squandered is some of the NAO commentary on the CDC’s efforts to tackle fraud and corruption. The NAO tells us that the CDC has “only recently established systems to consolidate records of all the allegations it receives…This made it harder for it to provide comprehensive reporting to the Department. ” The NAO report states that DFID’s own internal audit team concluded that the figure of just four allegations of fraud and corruption at the CDC in the entire period from 2009 to 2016 was “surprisingly low”. At the very least, the CDC is worthy of the same level of robust scrutiny and criticism that is levelled at other development funding outlets.
The hon. Gentleman asks where the business case is. Has he seen the letter of 23 November from the Secretary of State? In it, she says: “No new capital to CDC would be released without a business case subject to full Ministerial scrutiny and approval and the agreement of CDC’s board.”
That might be reassuring to the hon. Lady, but it does not reassure me, not least because the CDC has not even let the evaluation contract that was a key part of the last business case Let me turn to the disjoint between DFID’s priority countries and those in which the CDC operates. That disjoint is likely to grow even larger with such a significant uplift in funding. Even with the refocus in 2012, the list of 63 countries in which the CDC is allowed to invest is significantly larger than the approximately 35 countries on which DFID normally focuses its efforts. The list includes many countries to which DFID has ended its bilateral funding. The CDC can invest in India, South Africa—albeit with caveats—the luxury Indian ocean islands of the Seychelles, the Maldives and Mauritius, and many countries across north Africa including Egypt. Despite their problems and challenges, those countries would not normally be regarded as among the poorest in the world According to the House of Commons Library, the CDC spends more in gross aid and official development assistance than DFID does in certain—often middle income—countries and regions, including some rather odd examples such as Algeria, Costa Rica, Mauritius, Morocco, South Africa and Thailand, as well as the more expected locations such as Cameroon, Niger and Côte d’Ivoire. Even if we discount the pre-2012 legacy investments in Latin America, the CDC is still investing the largest amounts in higher-income countries, according to data released to me in another parliamentary question At the top of the CDC investment list are India, which has received £760.5 million since 2009, South Africa with £194 million and, oddly, Egypt with £53.6 million. If we include the pre-2012 legacy investments, we find even more odd examples. India, South Africa—with caveats, as I said—and Egypt remain on the list of eligible countries for CDC investments, which is rather remarkable, given the fact that the last three Conservative Secretaries of State have made a huge meal of the fact that aid to India was ending. I find this strange. I took a long time to be convinced of the need to end our aid programme in India. There is clearly severe poverty in a whole series of Indian states. It is odd that a lion’s share of the CDC’s investments continue to go into a country that is not exactly the kind of frontier place for investment that the Secretary of State was talking about earlier. Is she really saying that India struggles to attract private investment capital and that we should be there at the forefront of those giving aid? I would find that hard to believe The House of Commons Library has found that the share of new investments in the poorest least-developed countries increased, but from just 4% to 12%, and the increase was from less than 1% to just 4% in the lower-income countries. The lion’s share of the CDC’s investments remained in the lower middle-income countries. The CDC’s own annual report for 2015 admits that its top four highest country exposures are India with 23%; China with 14%; Nigeria with 7%; and South Africa with 6%. It also tells us that just 6% of its investment goes into agriculture and just 6% into education. Bizarrely, those are not far ahead of real estate and mineral extraction. Focus has clearly improved, but the easiest and quickest returns for the CDC remain in certain sectors that are far removed from traditional, vital development impacts and in huge markets such as India and South Africa, not the world’s poorest countries. If the Secretary of State’s agenda is all about building a bilateral trading relationship with India in the post-Brexit environment and if we need to push our aid that way to sweeten deals, we should come clean about that. Many people feel that things are headed that way. Funds are not going towards the Department’s original development objectives. Why does the CDC require such a potentially massive capital injection of taxpayers’ money when it managed perfectly well without one until last year? It recycles 100% of its profits and has total net assets of £4 billion, which rose by 16% in the last year, and an investment portfolio of £3 billion. Why does it need additional money in such large volumes Turning to tax havens and coherence, the Chancellor told us in last week’s autumn statement that the Government are committed to tackling tax evasion, avoidance and aggressive tax planning, and today the Business Secretary told us all about Government plans to crack down on corporate governance. The Government have repeatedly claimed that they have attempted to crack down on tax havens—not least in the aftermath of the Panama papers. Yet we find the CDC’s investment vehicles in those very papers. No less than 11 CDC subsidiaries are located in the Cayman Islands, 40 in Mauritius, and five in the Channel Islands. Oxfam points that three quarters of CDC investments in 2013 were routed through jurisdictions that feature in the top 20 of the Tax Justice Network’s financial secrecy index. Christian Aid has also been critical of the CDC, stating that it “has been shown to be a heavy user of secretive tax havens, which serve both to obscure what is really going on with its investments and can also reduce the amount of tax its investee companies pay in poor countries” Even if Ministers, the International Development Committee or others wanted to scrutinise properly what is going on, the lack of transparency and detail provided by the CDC and the fancy shell companies make it incredibly difficult Our wider development and sustainability policies might also be incoherent. Many CDC projects are clearly coherent with DFID objectives and the sustainable development goals. We heard about electricity in Uganda and other excellent examples of investment in micro-finance, so there are clearly many high-quality projects, but there are some odd inconsistencies. The CDC apparently invests £29.2 million in GEMS Education Africa, the website of which describes a network of private fee-paying schools and education providers in “leafy, residential” locations that charge anything from around 582,000 to 1,287,000 Kenyan shillings a year—up to £10,000. The CDC also holds a 22.8% share in Rainbow Children’s Medicare Private Ltd, a fee-paying private hospital group in India that the NAO visited as part of its inquiry, saying that the investment was apparently in the whole company and not even focused on improving access for the poorest, for example. The former Secretary of State, the right hon. Member for Sutton Coldfield (Mr Mitchell), mentioned Feronia Inc. in which the CDC has invested £15.1 million. The main boast on its website is of replanting 13,000 hectares of palm oil, a commodity which is linked to deforestation, habitat degradation and climate change Without being able to get more detail from the CDC’s documents, it is difficult to know where the money is going and what it is being used for, but those are odd examples of spending going towards wonderful development objectives. The CDC continues to operate free from day-to-day policy guidance and intervention from Ministers. Oxfam points out that the CDC was assessed as poor in the aid transparency index in 2012, but there have been few improvements since then. All who support the cause of international development and poverty eradication face a tough task in justifying that spending to the public—however small a proportion of overall Government spending it remains. I am sorry to say that the task is not helped in any way by the misleading spin put out weekly in tabloid newspapers by the current Secretary of State, which was not a hallmark of her Conservative or Labour predecessors I am normally able to make a case for our development spending by appealing to moral duty and our national interest, not least when it comes to dealing with countries of conflict or instability, or with the huge migration flows we see. I am heartened by those among the younger generations who care about the prospects of our fellow humans around the world. I recently visited Moorland Primary School, in one of the more deprived areas of my constituency, where children told me that they wanted me to speak to Ministers to get more money provided for education in the poorest countries and to ensure that children are able to go to school and that they have healthcare and clean water. I will struggle to explain to those children why the Secretary of State wants to spend billions of our taxes handing money to what is, in effect, a privatised firm that does not need this amount of money; that gives large portions of it to countries that do not need it; that pays its chief executive officer more than £300,000 a year; and that invests through tax havens. It has some laudable aims, but it is not proving its effectiveness In conclusion, the Bill massively increases that funding to CDC and it fails three crucial tests. The first of those is the effectiveness test; the NAO assessment simply does not provide the evidence needed to back up such a huge increase in funding—has CDC even requested it? Secondly, it fails the poverty-focus test, as CDC remains massively focused on higher-income countries and high-return sectors, rather than on those that we should be pushing our efforts into. Thirdly, it fails the coherence test, given the continued use of tax havens and projects that simply do not sit comfortably with our wider development objectives. In its current form, this is a bad Bill. That does not mean that I do not support the continuation of the CDC and that I do not recognise that much of its work is good, but this level of increase is a stealthy way of diverting money away from our work in DFID, alongside the diversion to other Departments. We ought to scrutinise the Bill very carefully in Committee.
I suspect I am going to have the privilege of serving on the Committee with the hon. Member for Cardiff South and Penarth (Stephen Doughty). I will not go into this at the same length as he did, but he should beware: we are both supporters of DFID and of the 0.7% budget, but our enemies out there will use his comments and his narrative to criticise the fundamentals we believe in. I do not want to stand in the way of proper scrutiny, but hon. Members on both sides of the House should be very careful about the tone of the language we use, because we do now have consensus going forward I draw attention to my entry in the Register of Members’ Financial Interests and say from the outset that I am incredibly proud of our 0.7% commitment and of the work that the CDC does. I would find it strange to find any Conservative MP standing to support the work of Clement Attlee and Clare Short in one sentence, let alone one debate, but we do stand united in this work, despite the blips over the years, many of which my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) has resolved or has at least been able to point in the right direction My experience of the CDC has been substantive over time. I was a young banker in a small place called Nhlangano, one of the poorest places in Swaziland. It was CDC investment in the Shiselweni Forestry Company, my main client, that really generated wealth for that area. It put food on the table for the thousands of citizens and the hundreds of other clients that I had as a banker in that country. Over the years, Swaziland has been helped by 16 different CDC projects. The one for which I was the banker has now moved on—it is profitable and continuing, but not under a CDC auspice—but the CDC is still in the forestry sector in Pigg’s Peak, Swaziland In the Ivory Coast, I was interested in delving into a francophone country, looking beyond the Commonwealth, to see what we were doing in developing middle-income countries that can provide inspiration and trade throughout the geography of west Africa. Although I did not have any clients from the the CDC, I used to work for Banque Atlantique Côte d’Ivoire, now part of the Atlantic Bank Group, in which the CDC has invested. The small bank I was a member of had only about 30 employees. I am not sure exactly what has happened subsequently, but during that investment period that small bank has become much larger, with banks in Benin, Niger, Burkina Faso, Mali, Togo, Senegal and Cameroon. Those countries—a real mix of countries—are hard for British development aid to reach, but are a really good example of where the CDC can assist I wish to mention, as other colleagues have, the great work of Diana Noble, who took on the job at a difficult time and who has transformed the organisation and led a very strong team. I wish her well in her future beyond the CDC To those who work at the CDC, I say thank you, because in many ways they are between a rock and a hard place. People involved in African private equity feel that those at the CDC are putting development before profit and are not earning lots of money. The non-governmental organisations think that they are putting profit before development. In truth, they are in a sweet spot in the middle, and they do exactly what Clement Attlee wanted: to do good without losing money. In many ways, this is the gift that keeps on giving. Comparison has been made between a pound that goes into traditional aid and a pound that goes into the CDC. The main difference is that the pound that goes into aid is spent immediately, which is very positive, but the pound that goes into the CDC is retained—it is an investment that grows, whether that is by the 7.8% that we have seen over the past five years, or by a slightly more modest investment target of 3%, which focuses more on the development aspect As a former banker, I am perhaps the only Member in the House who can get thoroughly excited about compound interest, but, over time, this is a growing pool of money. There are those who will wonder why we are talking about £1.5 billion, when the assets of the CDC are nearly £3.9 billion. That shows the power of investment—of retaining the money. It is the gift that keeps on giving I, too, have looked at the investment in palm oil in the Democratic Republic of the Congo, where 9,000 workers are employed. I have dealt with places such as the DRC and Burundi—other colleagues have interacted with them—and they are horrendously difficult places in which to work. They are also politically difficult for the UK Government, but the CDC, through its intermediaries, provides inspiration in those places The CDC also actively targets countries that are low on the World Bank’s ease of doing business index, of which I am a great advocate, as a way of proving that business can be conducted more effectively if one can speed up the ease of doing business Celtel has been mentioned. Indorama in Nigeria is fantastic. Like Sir Paul Collier, I very much believe that the real benefits and advantages of economic development in Nigeria will come through Port Harcourt and not through the oil industry This is, to reiterate a point I made in an intervention, a progressive Bill. I do not share the concerns of the hon. Member for Cardiff South and Penarth that it is a Machiavellian way of diverting money. A business case will come. I do not believe that the Secretary of State will bring forward a business case to spend the full £6 billion over the course of this Parliament. Even if she does, it will still only be 8% of the overall DFID budget for those years. Obviously, the £12 billion of investment is compounded over time. It should not be compared with the slightly larger figure, which is our annual investment in the budget. We need to be careful that our enemies do not take advantage of our criticisms and use the similarity of the figures to make it look like there has been a sea-change on this Bill. If this Bill was about taking money from the poor and making money for the sake of it in India and South Africa, I would not support it.
rose—
I will not take the intervention, because I want to conclude I strongly support the CDC. It is the right move and it is a progressive move. I hope that Members from both sides of the House will agree to have a proper debate in Committee and to support the Bill on Third Reading to start to grow Africa in particular but also Asia out of poverty.
It is a pleasure to follow the hon. Member for Rochford and Southend East (James Duddridge). The hon. Gentleman was very robust in saying that the CDC is a gift that keeps on giving, as the aid keeps getting recirculated, but I would gently suggest that if it was as simple as that we would not need international aid at all, because we could just have that gift keeping on giving. It is quite clear that we still need international aid and we need to protect international aid budgets It is clear that there is consensus across the House that the principle of the CDC is a good one; a not-for-profit private sector company that encourages growth and additional investment in developing countries is very welcome. We have heard that it has stimulated growth and investment with varying degrees of success over a long period of time. We have also heard that it is not infallible; it has had issues and is starting to address them in a welcome way. Yesterday’s National Audit Office report shows that there are still further issues to address, so I agree we need a robust debate in Committee to try to pick up on them We have heard about salaries, and excessive salaries have clearly hit the news in the past. Yesterday’s report welcomes progress on reducing average annual salary costs from a high of £154,000 in 2009 to £90,000 in 2015. That is still quite a decent average salary; I think most people could live off that. The report acknowledges that the CDC has expressed concern about staff attrition and difficulties in recruitment as a consequence of lower salaries, but the report also notes that the staff attrition rate has plateaued at about half of its peak in 2012. I also note that salaries have increased again year on year from 2013. That suggests that a balance has been reached between staff attrition and salaries, but we need to watch that salary levels do not keep on increasing year on year. As we have heard elsewhere, £300,000 for a chief executive is a good salary. It is higher than that of the Prime Minister or of the Secretary of State for International Development. That chief executive’s salary has exceeded £300,000 for two years running now.
Although £300,000 is a large salary, will the hon. Gentleman at least accept that in coming to take this job Diana Noble took a massive salary reduction? He should bear that in mind when considering these salaries.
I note the right hon. Gentleman’s comments and, yes, if she took a massive reduction in salary that is clearly welcome, and the overall salaries have reduced, which sets a marker for the future if Diana Noble chooses to move on. At least there is a lower salary peg, and she has led the way with that. I accept that, but we need to recognise that it is a substantial salary. That cannot be forgotten The NAO report also states that there is now a greater focus on investing in poorer countries rather than markets that already attract foreign investors. That is welcome, but according to a Library paper investment in the poorest countries has increased from 4% to only 12%, with 4% of investment in the next income tier countries. Investment in the upper middle income countries exceeds the combined total of 16% in the lower two tiers. More work needs to be done and a measurable target should be put in place to encourage investment in the lowest income countries The NAO report also confirms that, as regards its financial performance, the CDC’s annual return on its portfolio ranges from 4% to 18% against a target of 3.5%. Normally, when a target is massively exceeded that suggests that it is too low or, as seems to be the case here, the returns are too high. If the returns are too high, either more money is being returned from the countries that have been invested in than is necessary or not enough marginal projects are being invested in. That needs to be considered. I accept that some of the historical returns are due to legacy projects that were invested in and had much higher returns because of the hedge fund system, so I hope that that will continue to be addressed and that we will see lower returns and the right investment in projects Although the NAO report says that there is a robust cost basis and that the CDC is in a good place to go forward, as has been mentioned by some hon. Members, what stands out is the need for better assessment and reporting of outcomes and the planned impact of investment. A more accurate assessment of the jobs created is required, as well as “a clearer picture of actual development impact” That is crucial. To this end, it is clear that the NAO recommendations on performance targets and an evaluation contract must be implemented as soon as possible The NAO believes that the absence of a measure of additionality is a flaw, as additionality is a core principle of the investment strategy. That needs to be remedied. The Department should consider making it mandatory for the CDC to report on the four indicators outlined in paragraph 2.23 of the NAO report, which correlate to the CDC business case As has been mentioned, several organisations have expressed concern about the CDC’s tax transparency. “Transparency” is a buzzword that has been used by both the Prime Minister and the Secretary of State. If the CDC does not lead by example, it does not encourage other investors to avoid the use of tax havens. Worse still, the use of tax havens reduces the tax take of developing countries, preventing their Governments from generating additional revenue that they could invest in capital schemes, services or revenue support schemes. As long as the CDC has a model whereby it re-invests profit, it cannot adopt the “profit at any cost” ethos of the worst of the private sector. That becomes self-defeating, and smaller returns resulting from paying its full tax dues should not be a matter for debate It is clear that the use of tax havens takes away from the sustainability of developing countries. It is some five years on since the International Development Committee advised that transparency is essential for the public to hold the CDC to account. At present, the CDC is still some way off best practice and the transparency that the Government aspire to. The CDC scored “poor” in the 2012 aid transparency index, so for the Government to commit huge amounts of extra funding before improvements are made is not consistent with the Secretary of State’s stated aim of improving transparency across the aid budget. Aid cannot work in the national interest if three quarters of the CDC’s investments are routed through jurisdictions that feature in the top 20 of the Tax Justice Network’s financial secrecy index. That cannot be in the long-term national interest Oxfam has highlighted this issue, as well as other concerns about transparency, suitable investment and the use of tax havens. In addition, Christian Aid, which is a member of the ACT Alliance, a global coalition of more than 130 Churches and organisations engaged in humanitarian assistance, has called for an end to the use of tax havens. It is clear that the practice must be ended The founding principles of the CDC are good. Some of its working needs to be fine-tuned, and it is important that this happens before any more Government money is funnelled in. It needs to be explained what share of the overall aid budget this increase constitutes and what other types of aid might be reduced to make way for this investment. As others have asked, why have the Government introduced this Bill before publication of the CDC’s investment strategy for 2017-21? I note that the autumn statement last week shows a net decrease in overseas development assistance of some £80 million next year and a further £210 million the following year. It is crucial, therefore, that an arm’s-length company is not funded at the expense of other required aid. As the NAO report states, “It remains a significant challenge for CDC to demonstrate its ultimate objective of creating jobs and making a lasting difference to people’s lives in some of the world’s poorest places.” We must not forget that. We need put in place everything that is necessary to allow that to happen.
Although this is a relatively straightforward Bill, which I had hoped would have the support of all Members of the House, it is worth examining some aspects of the strategic background to our DFID commitments I associate myself wholeheartedly with the wise and experienced words of my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) and my hon. Friend the Member for Rochford and Southend East (James Duddridge) when they touched on the transformation of the CDC’s work over the past half-decade or so. I must confess that I did not recognise some of the rather more jaundiced views of its work, as set out in the rather long contribution from the hon. Member for Cardiff South and Penarth (Stephen Doughty).
Does my right hon. Friend agree that the selective quoting of the NAO report by the hon. Member for Cardiff South and Penarth, who is no longer in his place, did not do justice to its conclusion that, overall, DFID’s grip on the CDC is strong and that the CDC has made radical improvements since the NAO’s last report in 2008?
I agree with everything my hon. Friend has to say I am glad that the Secretary of State is now back in her place, and I wholeheartedly support her somewhat expansive approach, which has been criticised in certain quarters during the debate. She appears determined to ensure that the UK utilises all its assets, including the DFID budget, to secure an optimal deal for the nation, not just as we extricate ourselves from the EU, but in the years to come That must mean extending DFID’s reach beyond the traditional aid referred to in the debate to broader development and infrastructure and to things such as security, but also to community sustainability and resilience across the globe. That change is long overdue, and I should like briefly to set out some of the somewhat negative ways in which DFID’s culture has developed since the Department was established in 1997, which I sincerely trust the Bill will help to address DFID was originally seen as a key component of an ethical foreign policy, centralising in a single Department overseas aid moneys that were previously in the budgets of the Ministry of Defence and the Foreign Office. The result was that those major Departments of State were left at that time with little or no financial autonomy on key international projects—regrettably, in my view Instead, a new culture of programming took hold in DFID, which managed out what was seen as inappropriate spending that could cause presentational problems for the Government of the day. Cautious mandarins became more risk averse, and DFID project money was routinely awarded to known international bodies, such as the World Bank or UNICEF, rather than to smaller, nimbler UK organisations and businesses That ensured that the Government would not be seen to be promoting corporate Britain abroad under the cloak of humanitarian assistance, but it also left those recognised brands to deal with any fallout, should questions be raised about the success of particular programmes. Indeed, the very respectability of those organisations tended to mute any testing questioning about the effectiveness and impact of what has become an ever-larger amount of British aid money. That shift, I fear, went hand in hand with the emergence of increasingly professional bidders, who learned to speak the language of DFID programmers to win contracts Too often, the result has been ponderous, expensive and wasteful programming, and I know that that culture is very much in the sights of the Secretary of State, who wants to eradicate it. In part, DFID programmers have often been overloaded with cash, which has been increasingly bundled off to the international bodies I mentioned. I am therefore absolutely delighted that the Bill increases the scope for money to be used by domestic bodies that are within the Government’s control and able to enact the Government’s priorities in the new world rapidly unfolding before us My right hon. Friend the Member for Sutton Coldfield laid out the way in which the CDC rightly operates. There is rightly oversight from not just the Government but a range of Select Committees, but we ultimately leave the organisation to get on and do the job that it is best able to achieve We need, above all, to ensure that DFID is not as process driven as it has perhaps been in the past, which has reduced our agility in this field and risked the benchmark for the success of our development aid being simply the amount spent, rather than the added value delivered, as has been referred to. That does not make our ongoing 0.7% commitment to overseas aid wrong—some of my right hon. and hon. Friends would probably disagree with that—and I am absolutely supportive of it, as is my hon. Friend the Member for Rochford and Southend East. Indeed, the case for extending Britain’s reach in this field grows stronger every day as we are confronted domestically with problems whose roots start many thousands of miles away I do, though, question whether, particularly as we leave the EU, large parts of DFID’s budget should not now be made available to the Foreign Office, the Ministry of Defence or the Department for International Trade, all of which should, necessarily and rightly, come under some scrutiny and oversight from DFID, but there should, none the less, be that sense of joined-up co-operation within the Government. That would enable and authorise those on the ground, whether in overseas embassies, military bases, or part and parcel of our intelligence services, to spend sensibly, carefully and locally against agreed objectives rather than within the rather ham-fisted DFID programming process.
I am listening very carefully to my right hon. Friend and agree with everything he has said so far. Does he agree that there are still some savings to be made by bringing all those agents and representatives of Her Majesty’s Government abroad under one umbrella? Too often we see competing officials from the different Departments who, to save money, should all come under the umbrella of, probably, the Foreign and Commonwealth Office.
You can take the boy out of the Foreign Office but obviously, when it comes down to it, you can’t take the Foreign Office out of the boy. I suspect that this will be a live debate going forward. I know that my right hon. Friend feels very strongly about such matters.
My right hon. Friend is quite right to slap down the former Foreign Office Minister, my right hon. Friend the Member for East Devon (Sir Hugo Swire), on his implied suggestion that we should go back rather than forwards and put DFID under the Foreign Office: that is basically what he was saying. We have long ago said that that is the wrong way to proceed. Let me point out that there are already pooled funds of the type that he describes. In my day at DFID—I have every reason to believe that this continues—whenever there was eligible funding under the ODA rules that the Ministry of Defence or the Foreign Office wanted to spend, they would always have access to those funds. The huge amount of DFID money that goes through the Foreign Office now bears testament to that.
I would like to think that I am much too diplomatic to slap anyone down, although he knows where we are all coming from.
Just to clarify this, I am not sure that my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) was correct in saying what I was proposing. I was certainly not suggesting that the Department should come back within the Foreign Office. I was merely saying that I saw huge synergies to be achieved overseas where we have representatives from many Departments, including the Ministry of Defence, DFID and the former Department of Energy and Climate Change and that we should look towards making greater savings so that we can spend the money where it is needed.
I am sure that my right hon. Friend the Member for Sutton Coldfield was not wilfully misleading anyone on these matters. I am going to be slapped down myself by the Whips if I am not careful, because I need to make a little progress I hope that in further empowering the CDC, which, as has been pointed out, is 100% owned by Her Majesty’s Government, we are now making way for a more cross-departmental approach, with the DIT and indeed the FCO able to access CDC funds for projects within the key Commonwealth states, particularly in Africa and South Asia. In this very dangerous and uncertain world, the importance of integrating our foreign aid with military, diplomatic and trade commitments cannot be overstated. To prevent crime, to curb new waves of immigration and to stop the spread of disease, our efforts can be made more effective by concentrating on the source of an issue. Hunger relief and health programmes may of course be laudable in their own right, but British people want urgently to understand how DFID money benefits them personally, and so there will no doubt be widespread support for more money being channelled through bodies such as the CDC rather than—dare I say it?—virtually unaccountable international organisations that have previously received millions of pounds in UK aid. We should also, as a matter of course, communicate how strengthening our ties with developing countries will be of huge benefit in terms of our trade, energy and security interests in this post-Brexit era. By moving away from a situation where too much of DFID’s budget and powers has been placed in the hands of international non-governmental organisations, I firmly believe that we will be able better to fulfil many more of our nation’s broader strategic interests.
It is a pleasure to follow the right hon. Member for Cities of London and Westminster (Mark Field). It is quite pleasant to be in the Chamber listening to the debate, because even though we appear to have differences over tactics and policies, there does seem to be some agreement on the overall objectives that we are trying to achieve, and I very much welcome that As far as I can recall this is, as my hon. Friend the Member for Glasgow North (Patrick Grady) said, the first opportunity we have had in this Parliament to discuss the wider strategic direction of the Department. I welcome the fact that the Government have achieved the 0.7% target. I commend them for doing so and providing an example to the rest of the world, particularly to our partner nations, to encourage them to do better with their aid budgets. Now that the Secretary of State is back in her place, I congratulate her and welcome her conversion to supporting her Department’s aims, rather than continuing with her previous attitude I was first exposed to the idea of international development as a kid at school in the late ’60s and early ’70s, when my mum was an enthusiastic participant in Christian Aid Week. I remember her spending a lot of time trying to raise money for Christian Aid to support projects in southern and eastern Africa. That was a long time ago, when I was very young, but I thought it was remarkable that, despite the fact that many people in my community lived in straitened circumstances, there was a common decency—people understood that there were always others who were worse off and that they had a common humanitarian responsibility to make some effort to assist, no matter how small Even in those days, there were critics of aid—of Christian Aid, Oxfam and all the others—who took a less selfless and more parsimonious attitude. Their criticism was twofold. They questioned whether the aid was actually going to the people in the destination countries who needed it most, and there was a continual suggestion that the people working in aid and organising the efforts were lining their own pockets. Many of our NGOs—Christian Aid, Oxfam and others—have had to work for the last 40 years under the veil of those accusations. They make quite sure that they can counter those accusations and demonstrate that they are directly involved in projects in the countries that need it and that they work with the people in those countries to achieve sustainable development. They have also had to make public details of their organisation and cut their administrative costs to the core, so that they can demonstrate that they are delivering the maximum number of pennies per pound for the purposes for which that money was given I commend all those NGOs for doing so, but here is the problem with the CDC that we need to address. This does not apply to the majority of the projects in which the CDC is engaged, and it is not the CDC’s objective, but in quite a few cases, and not just occasional instances, public money—taxpayers’ money—has been used for purposes that people such as my mum would have difficulty comprehending. How can we justify, for example, the use of $3.5 million to support the development of a gated community in El Salvador for the super-rich? How can we justify the development in Nairobi of the Garden City Village and the shopping malls—$24 million, in that instance? How can we justify the development in Mauritius of the ocean village, with apartments costing a minimum of half a million dollars? It is difficult to hold those examples up and say that we are doing the right thing We need to make sure that that does not happen again. I have had arguments with people who justify such projects on the basis of the trickle-down theory. They say, “It may be a five-star hotel in an area of desperate deprivation, but look at the jobs that are being created.” Anyone who seriously thinks that an investment of $20 million or $30 million to create 50 low-paid service jobs in a hotel is an efficient use of aid money needs to re-examine their priorities. Let us assume that we do not have to engage with that neo-con argument I am not simply talking about things not being achieved; the situation is worse than that. By spending money on such projects and making mistakes with them, we may replicate and ingrain some of the structural problems that prevent us from raising the lot of the mass of the population in the first place. We need to be absolutely clear that such projects should not be some sort of international welfare scheme for capitalism, where we allow people to get super-rich while the poorest stay where they are or, in relative terms, possibly become even worse off In that context, I want to mention the whole question of salaries and remuneration within the CDC. This is not to criticise or castigate any individual in any way, but I thought the Secretary of State did well to keep a straight face earlier in the debate when she talked about the chief executive’s salary being reduced to just £300,000 per year. Most people would question whether it is right that someone leading an organisation whose ostensible role is to combat global poverty should get that level of reward in that job. I accept that part of the game is to play the private equity markets and to try to lever in funds, and we need to let people play such games. However, I welcome the education from the right hon. Member for Sutton Coldfield (Mr Mitchell), who described the renationalisation of a part of government that was privatised under the Blair Administration. That was right because, while these people are engaged in private equity schemes and trying to play capitalism at its highest level, they should remain public servants. Their ethos and their remuneration—how they are rewarded—should be as part of the Government operation that is working for such people on behalf of this Parliament. They should not be cut loose and allowed to pretend that they can operate like private bankers. I very much hope that we can have a solid look at the level of remuneration that operates in the CDC As my hon. Friend the Member for Kilmarnock and Loudoun (Alan Brown) has mentioned, yesterday’s National Audit Office report says a number of things. I was struck by the fact that it says—the right hon. Member for Sutton Coldfield remarked that people working in the organisation looked over their shoulder with some apprehension when the Department’s officers came to call—there is a need to clarify that the Department should not be involved in individual project decisions and should distance itself. I agree: you do not own a dog and then bark yourself. If we are to hire people to do the job, particularly where it entails taking risks, we should let them get on and do it. I accept that, but the corollary is that we need to be much more hands-on in determining the strategy within which they operate and about the objectives that they are trying to achieve with their individual decisions. I therefore think it is probably putting the cart before the horse to have a discussion on this Bill before we have seen the CDC’s strategy for 2017 to 2021, which I presume is in preparation somewhere. Will the Minister tell us in his response whether we will be able to look at the strategy when it comes to the House The other point I want to make is about transparency. In 2013, three quarters of all the money going through the CDC’s accounts went to fund projects in the top 20 least transparent countries, where we are trying to improve things. Back when we discussed the Panama papers earlier in the year, the then Prime Minister and Government were very explicit about how we would try to clean up this mess and about how Britain would lead a campaign for financial transparency throughout the world. The absence of such transparency of course creates the conditions for illegality and for corruption in many of the target countries that we are trying to get aid to. I presume that that attitude has not changed and that we are still trying to lead a campaign for financial transparency. I therefore think it is very important, through the realm of the CDC, to make sure that when we try to lever in deals in these countries, we do so in a completely transparent way. We could start by making a commitment that the CDC will pay all the taxes due on projects in the countries in which it operates. We should also make sure that we use whatever pressure we can apply through third parties to advance the campaign for transparency That is pretty much all I have to say, except that we still live in a world where we have tremendous challenges and problems of extreme poverty, malnutrition, disease and illiteracy. I accept the need to play international capitalism at its own game and to try to lever in funds—to operate in the way that the CDC has been doing—but the end objectives must always be to make that situation better: eradicating poverty, combating illiteracy, eradicating disease. When we come back to look at the strategy document, we must set ourselves the challenge of making sure that everything the CDC does—every project it gets involved in—can, at the end of the day, be justified by attaining those objectives.
It is a pleasure to speak in support of a Bill that will strengthen one of the world’s oldest and most respected development organisations. The Commonwealth Development Corporation has always enjoyed cross-party support and has been an important part of the transition of Britain from colonial power to leader of international development. The Bill is a sign of the focus this Government have given to the CDC and to our overseas development programmes across the board. We can be proud of our commitment to supporting overseas development in all its forms As my hon. Friend the Member for Congleton (Fiona Bruce) said, when this Government took office in 2010 the CDC was a byword for strategic confusion and mismanagement. Everyone from the National Audit Office to Private Eye could find something to object to in either its structure or its activities. Thanks to the work of this Government, initiated by my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) and followed up by his successors, the CDC and the way DFID manages it have evolved and improved. The CDC has radically transformed its approach over the past five years, following new objectives agreed with the UK Government. It targets investment where it is most needed, has the greatest impact for the poorest and delivers value for money for the UK taxpayer Many of the fears about the Bill and criticisms of the CDC that have been aired today belong to a different era. Some of my constituents have raised the issue of the amount of money that we spend on foreign aid. It is important that that money is spent wisely and transparently in helping countries to develop economically. A strong country will provide for its citizens, meaning that there will not be the economic migration that we have seen over the past few years By channelling money through the CDC, we can clearly see where it is going and where it is working. Although the National Audit Office report published yesterday identified some further room for improvement, it was very positive about the work done by DFID and the CDC, as the Secretary of State laid out. I am pleased that Members recognise the great improvements made since the 2008 NAO report and the criticisms of the CDC made by Select Committees in the 2005 Parliament I will focus on the reality of the CDC, the future of its work and the potential we will create with the passing of the Bill. The long-term aim of overseas development policy is to build economies and societies like our own—educated, free, and politically and economically stable. The philosophy behind the CDC has always been the same: give someone a fish and we feed them today; teach them to fish and they will eat for a lifetime. In particular, investing in women, where much of our aid is targeted, is investment in a generation, as every mother puts money towards educating their children The CDC currently invests in more than 1,200 businesses in more than 70 countries. Those investments supported more than 1 million jobs in Africa and Asia in 2015, almost 25,000 of which were created directly last year. As my hon. Friend the Member for Yeovil (Marcus Fysh) said, there is a virtuous circle of investment, job creation, tax revenue generation for the host Government, creation of sustainable businesses and reinvestment by the CDC at the end of the cycle. The CDC has reached the ceiling of current Government backing—the Government’s investment of £735 million last year took it up to the limit of £1.5 billion. Through the reinvestment of past profit, it has built up a bigger portfolio, standing at just under £4 billion. It is therefore clear that the CDC is able to support development and recycle the returns to support further investment. We should not be reluctant to enable the CDC to do more and unlock potential. The NAO is clear that the CDC now has an efficient and economic operating model that is working and has improved its procedures for recording allegations of fraud and corruption With the clear investment strategy agreed under this Government, the aim is to make the great majority of new investment directly into businesses. If we want to achieve the global goals for sustainable development by 2030, we need to mobilise the private sector and work together. That helps the CDC in two ways. It allows it to help target its involvement at areas that genuinely meet the remit of supporting businesses that struggle to attract private sector investment. It also helps it to meet one of the goals set out in yesterday’s NAO report, namely better tracking of the success rate of the CDC’s investments. The CDC now concentrates on the poorest countries in Africa and Asia, where business finds it hard to attract stable and responsible investment from the private sector. It is right that the development finance institutions lead the way in those countries, and we should not be shy about it We invest more in aid overall than our European partners and invest less through development finance institutions. The CDC estimates the investment gap of unmet demand for capital investment in Africa to be more than $100 billion. If we want to bring jobs and growth to the poor, we must help them to help themselves. This simple and, I hope uncontroversial Bill does that. It is not an approval or a commitment to give the CDC access to £6 billion immediately, but to give it when there is a strong, robust, accountable and transparent business case that will provide the best value that aid can provide. I hope the House supports the Bill.
Sitting through the debate and listening to so many informed contributions has been informative, even the speech from the hon. Member for Cardiff South and Penarth (Stephen Doughty). Perhaps it was a little overlong in duration and repetitive in argument, but none the less it was a valuable contribution to the overall debate. Many of us welcome his general support for the direction of travel in the Bill and his points about oversight were well made Although I fully support the 0.7% commitment to aid, I do not agree with its statutory underpinning, which I believe will lead to unintended consequences. One reason why I welcome the Bill is that it helps in that respect. I fully and wholeheartedly welcome the Secretary of State’s introduction of the Bill for three principal reasons: it is modern; it will prove to be effective; and most importantly, it sets a tone of mutual respect between the United Kingdom and those countries and peoples who are the recipients of our DFID budget. The Bill will do that by harnessing the power of entrepreneurs around the world. It is those people who hold the key to so much in terms of the improvement of lives in less developed countries. The CDC is an institution in which taxpayers can trust. We have talked about oversight and past concerns—as my hon. Friend the Member for Portsmouth South (Mrs Drummond) said, they are in the past. We should also recognise that the CDC has been around for 60 or 70 years. My right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) spoke of his experience as Secretary of State, when he saw people’s recognition of the brand’s strength. My hon. Friend the Member for Rochford and Southend East (James Duddridge), who is no longer in his place, spoke of his ministerial experience. Trust in our DFID budget is important. It is not enough for hon. Members to say, “It doesn’t matter. Everything’s fine. We all agree.” Out there in the country, there is tremendous scepticism—it is fuelled not only by the press—about the amount of money, whether it is being spent in the right way, and whether we should continue with the 0.7% commitment. Having institutions that we can trust to spend the money wisely is important. The Bill gives us that and is a big step forward in restoring trust The Bill is modern. As I have said, I am not knowledgeable about DFID issues in general, but I was drawn to the 2015 speech by Bono at Georgetown University, when he said: “Aid is just a stop-gap. Commerce, entrepreneurial capitalism takes more people out of poverty than aid…of course, we know that.” He was correct. Through the Bill, we must counter some of the pre-scepticism about the role of the private sector in developing countries in achieving some of our development goals. We must put our foot down on the accelerator of supporting the private sector through institutions such as the CDC I am tempted to quote Sir Angus Deaton from Bloomberg—he is the Scottish-American economist who won the Nobel prize last year. He said: “Aid funded projects have understandably done much good…but the negative forces are always present: even in good environments, aid compromises institutions, it contaminates local politics and undermines democracy” The greatest bulwark against the corruption of political institutions, and one of the greatest defenders of democracy, is the opportunity for people to have a stake in something. People having a stake in a small business can preserve and protect freedoms, as well as enhance economic wellbeing. Human happiness is not solely a matter of one’s GDP; once one gets above a minimum, other issues start to matter, such as freedom and social environment Having that stake is also effective. The CDC and its work as a fund of funds created a distinctive expertise in investing in first-time funds in some of the most challenging investment environments across the world. We should be proud of that track record. I am grateful to my right hon. Friend the Member for Sutton Coldfield for explaining the move to direct investment. I had been sceptical, thinking it was drawing the CDC away from a pivotal part of its success, but I now better appreciate the role of direct investment, thanks to his contribution. The CDC nurtures investment talent. Growing entrepreneurship and private enterprise is not just about entrepreneurs; it is about developing people to spot the talented entrepreneurs from the less talented, and in that the CDC does a tremendous job. That said, I have some questions and concerns about the Bill. Will the Minister explain how, if we are to give more money to the CDC, the skills within it can be developed and monitored? As many hon. Members have said, the worst thing is to pile money in if the team investing the money does not have the skillset, capacity or capability to invest it. What will we do about the investment focus areas? Contrary to other comments, perhaps, I am keen to see the investment focus move into more modern areas that provide opportunities for companies in developing countries to trade with the UK, as well as provide domestic support. Will the CDC be able to lever investors from other countries into its fund to develop further its capital for international development? Will he comment on the likely value of the CDC in the near term, given the comments by President-elect Trump on international development and the likely impact of the rising dollar on turbulence in local currencies in many developing countries Finally, I support the Bill because it will create mutual respect. It is time for us to recognise that development in developing countries is a matter for many UK citizens through the diaspora. There is no imbalance in that relationship: a British Nigerian sees themselves as a British subject and, on an equivalent basis, looks to their heritage in Nigeria. The work of DFID should reflect that equivalence in its treatments. The Bill is perhaps a first step towards promoting mutual respect. Other possible measures are turning back protectionist intellectual property restrictions between developed and developing worlds, using the opportunity of Brexit to lower trade barriers, and creating more and effective ways to harness remittances between ourselves and developing countries This is a small but important Bill because it sets the tone in the right direction. It sends a message that this organisation, which had a long history of effectiveness, went through a period of turbulence and is now back on the right course, can have the confidence of the British people as it continues to pursue its development goal for people in the poorest countries of the world.
On behalf of other members of the Select Committee, I inform the House that many of them are abroad on a visit to the middle east but would have spoken in the debate had they been here. It would be wrong for me to indicate how they would have spoken or whether, like me, they support the Bill, but I will put on the record one or two comments previously made by members of the Committee. As long ago as 2011, my hon. Friend the Member for Stafford (Jeremy Lefroy) said in a debate on the CDC: “It is extremely important that the Government should continue to support CDC.”—[Official Report, 14 July 2011; Vol. 531, c. 169WH.] An IDC report on jobs and livelihood in the last Parliament stated: “We are encouraged that CDC has followed our recommendations and has refocused on job creation.” A final Select Committee example is a recent report on the sustainable development goals, which stated: “The Government must ensure that the work it carries out to encourage private sector investment, through CDC…is focused on developing and fragile states”. It went on to mention “a positive impact on the achievement of the SDGs”, which the CDC had the potential to achieve. It was interesting to note that in response the Government stated: “CDC’s mandate is aligned with achievement of the Goals” Before I touch on a few of my prepared remarks, I would like to deal with some of comments made by another member of our Select Committee, the hon. Member for Cardiff South and Penarth (Stephen Doughty). He mentioned his concerns about the effectiveness, the poverty focus and the coherence of the CDC’s work, and I would like to respond to these The hon. Gentleman said that there should be more emphasis on health and education. However, the CDC’s development impact is amplified by the billions of pounds in local taxes that are generated by the companies it invests in. These help to support the public services such as health and education in developing countries. Over the past three years alone, these companies have generated over £7 billion-worth of local tax revenue. It is important to remember the impact that these taxes can have on those kinds of essential services The hon. Gentleman spoke about coherence, and he and others have mentioned transparency, but DFID works very closely with the CDC to ensure that it is at the forefront of global standards of transparency in development impact. Information about all the CDC’s investments is available on a comprehensive database on its website, with details of the name and location of every investment in the portfolio. I am sure that further information would be made available if members of the Select Committee requested it. If DFID is working, as we know it is, with the CDC on a new results framework, this will result in an even better capture of the broader impact of investments on development—even beyond job creation and tax revenue generated Finally, the hon. Gentleman raised his concerns about investment by the CDC in a private, fee-paying hospital in India, stating that this might be at odds with DFID’s general approach towards the expenditure of UK aid. However, I clearly remember the Select Committee visiting a private, fee-paying school in Africa not so long ago, and Committee members agreed that DFID’s support for that school was, in fact, well spent, particularly when there was no other option for children in that area to obtain an education. I believe these issues need to be looked at in context, and I am not so sure that support for this hospital is so out of line with DFID’s general approach.
The hon. Lady raises the issue of private fee-paying education and health. The issue is about where we focus our efforts. Does she not accept that if we continue to support the expansion of private healthcare and education as opposed to supporting public systems that enable free access to healthcare and education, we will effectively supplant countries’ ability to provide national healthcare and education systems that support all their citizens, including the poorest?
As with so many of these cases, it is not an either/or. It is often both when the need is clearly there and the money can be well spent. I shall move on to my few prepared remarks about the Bill. I absolutely support the Bill and speak in favour of it. It is essential to look at how to support capital investment in countries where there is a paucity of it. A 2014 report from the UN Conference on Trade and Development calculated a £2.5 trillion annual investment gap in key sustainable development sectors, so the CDC has a very important role to play. It is important to remember that the Bill will allow DFID and the British people, as the CDC’s motto states, “to do good without losing money” on an even greater scale than hitherto. I cannot believe that anyone, even aid sceptics, could really object to that The NAO report, published yesterday, chronicles the many positive steps that the CDC has taken and the many improvements that it has made. We have heard many references to the report. It says that through “tighter cost control, strengthened corporate governance and closer alignment with the Department’s objectives, CDC now has an efficient and economic operating model.” This morning I spoke to NAO officers who had produced the report over eight months and had visited many projects, including some in Africa. They said that DFID now had a really good grip on the CDC’s work, that there were good lines of communication between the CDC and DFID, and that DIFD’s in-country know-how was being utilised, while it was rightly not interfering in day-to-day management. They identified several cases of CDC investments in areas where the private sector would not have initially dared to go, but three years later private sector money had come in. Indeed, in several instances they saw the results of what they described as “catalytic” investments. They said of the 13 or 14 funds they had inspected in Africa that, with one exception, they were “transformational”. I think that we have a really positive report on which to act Of course, there are views about previous investments, but I think it encouraging that 98% of investments are now in Africa and south-east Asia and 82% are in one of the seven priority sectors identified in DFID’s key objectives, which were devised in 2012, following the excellent review conducted by my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) Without further ado, I shall end my speech, although there is much more that I would like to say in praise of the CDC.
It is a pleasure to follow so many distinguished speakers in all parts of the House. I thank them all for their contributions Let me begin by paying tribute, like many others, to the right hon. Member for Sutton Coldfield (Mr Mitchell), the former Secretary of State for International Development, for the good work that he has done. He gave us an eloquent history lesson, explaining how the CDC began. I accept much of what he said, but I think the whole House is united in accepting that his important reviews of the CDC back in 2011, and the strategies and policies that developed as a result, have left the CDC in a better place than it was in four years ago The hon. Member for Glasgow North (Patrick Grady) rightly reinforced the House’s commitment to the 0.7% target. He also made an important point, which has not been made enough today, about the implications for our strategic development goals. He welcomed the National Audit Office report, as do I, but urged caution in respect of its findings on transparency and the impact of monitoring, about which I shall say more later. He rightly pointed out that we are still awaiting the important multilateral and bilateral aid reports. However, the Secretary of State has assured me that they will be published on Thursday, and I am grateful for that speedy response I think the whole House agrees that my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) is a passionate advocate, and he demonstrated that again today. He made some very important points about the sheer level of funding, another issue about which I shall say more later. He also drew attention to three boxes that needed to be ticked. I agree with him that the case has yet to be made The hon. Member for Edinburgh East (Tommy Sheppard), as always, made a passionate speech in his own style. He made an important point about the strategy and policy investment that was not forthcoming, and, like many Members, suggested that we were virtually putting the cart before the horse We on this side of the House want to reaffirm our commitment to poverty alleviation, which should be at the centre of DFID’s work. We recognise that the development of businesses around the world has a strong role to play in international development, through building economies by improving infrastructure and helping to put money into people’s pockets at the end of a hard day’s work, which is one of the surest ways of alleviating poverty. We also recognise that it has a strong role to play in the achievement of the eighth sustainable development goal: promoting economic growth, productive employment and decent work. It is therefore right that during the passage of the Bill we scrutinise both the Bill itself and what it will do, or will not do, for developing countries and the ability of the CDC to deliver for them Despite the Bill’s small size, it will have huge ramifications for the developing world and the UK’s development agenda. As previously outlined by my hon. Friend the shadow Secretary of State, we have several important points that we would like to see addressed The first is the worrying concern about the sheer size of the increase in assistance that DFID will be able to give to the CDC. In 2015, the previous International Development Secretary committed an additional £0.7 billion of funding to the CDC, but the Bill seeks to dwarf that by a large measure, by increasing the assistance to £6 billion. Moreover, the Secretary of State seeks the power to increase the limit to £12 billion through a statutory instrument, creating unease on the Opposition Benches that the Secretary of State will easily be able to extend the limit by £6 billion just through an SI, a move we believe to be wrong in principle We acknowledge that the assistance limit may have been reached—a substantial limit that has stood for just as substantial a period of time—but increasing assistance to this level has the potential to result in a considerable movement of ODA spending away from DFID in the traditional sense. That is particularly troubling given that the answer provided to my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) stated that 25% of ODA will be spent outside DFID and that the Secretary of State repeatedly states an intention to move DFID’s focus towards trade over traditional aid and development. If the Government want to move so much of DFID funding through the CDC, we need assurances that it is not a mechanism through which they can effectively privatise development, placing more money in the hands of investment funds whose main focus at the end of the day is not poverty but profit, while at the same time moving it out of the hands of development NGOs This takes us on to the next issue that we have raised today: for what purpose does the CDC require further assistance? After all, the current £1.5 billion assistance limit has stood a strong test of time and the CDC’s business model sees it largely self-financing, with healthy profits reinvested in projects. Therefore, if we are to support this Bill throughout its passage, we need to see updated documents provided and published by the CDC—namely, a new strategy for 2017 onwards, alongside a new investment policy for the next five years, both of which must set out what the CDC intends to do with such massive assistance being made available to it. Essentially, we must avoid a situation in which we would be putting the cart before the horse by granting funding assistance before actually seeing what purpose it will be used for Another area of concern raised is the scrutiny and oversight of the CDC’s development impact. On this issue, we note the findings of yesterday’s NAO report. The accuracy of the CDC’s self-assessment through its development grid and its declaration of the development impact of its investments cannot be guaranteed, because it assesses their prospective impact rather than the actual impact. Consequently, the CDC might believe that it is having a positive impact, but the actual impact could be very different. If DFID wants to increase its assistance to the CDC, it must carry out full, frequent and regular assessments of the development impact, beyond the CDC’s own measuring criteria We on this side of the House have raised concerns over the use of tax havens by the CDC, and our concerns are well founded. In 2013, £180 million of the £375 million given to investment funds by the CDC went to funds domiciled in notorious tax havens such as the Cayman Islands, Guernsey and Jersey. That is almost 50%. This use of tax havens denies tax revenue to developing countries, avoids capital gains tax and deepens existing governance and corruption issues in developing countries. This is happening despite the Prime Minister’s recent announcement of a crackdown on the use of offshore tax havens in the wake of the BHS scandal, and it is exactly the opposite of the kind of work that the CDC has a duty to carry out We have outlined our substantial and genuine concerns about the Bill, and we hope that the Government will give us a genuine response to those concerns and to the six questions that the shadow Secretary of State set out earlier. We look forward to hearing their response. We will not oppose the Bill’s Second Reading this afternoon, but if we do not receive adequate assurances or see positive steps being taken by the Government to address our concerns, we reserve the right to withhold our support for the Bill on Third Reading. Facilitating economic growth is of course important in the developing world, but development should always be the focus, and we on this side of the House will work to ensure that it remains so.
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.
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?
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.
I beg to move, That the Bill be now read a Second time This Bill relates to New Southgate cemetery, which serves local residents in my constituency and that of my right hon. Friend the Member for Chipping Barnet (Mrs Villiers). The cemetery is sited in my right hon. Friend’s constituency. She supports the Bill, but she told me that she had a long-standing commitment and could not guarantee her attendance here at a particular time. It is excellent to see her in her place now along with other hon. Friends who have neighbouring constituencies The cemetery serves constituencies in the north London area. In particular, it serves the religious communities in the area, including the Greek Cypriot, Roman Catholic and Caribbean communities. It also has a unique section, which is administered and owned by the Baha’i community for their loved ones The cemetery was opened in the 1850s by the Great Northern Railway Company as a more cost-effective north London alternative to the better known London Necropolis Railway, which carried corpses and mourners to the cemetery. Indeed, in 1854, the largest cemetery in the world was designed to accommodate all the deaths in London for centuries to come. That has not come to pass, which is why there is a need now for this Bill. In eight or nine years’ time, there will not be sufficient space in this cemetery to deal with the demand There is a history behind the railway company’s involvement. At the time, it set different charges for first class, second class and third class burials. In fact, I am due to go to a public meeting involving Govia, which will address issues of space that will affect the railway, and it is that issue of space that we are concerned about in this Bill. I am sure that, with support from across the House, we can make good progress tonight, which will enable me to get to my public meeting and to see this Bill on its safe passage The larger part of the cemetery is administered and owned by the private company, New Southgate Cemetery and Crematorium Ltd, which is the promoter of the Bill. The remaining part, which is administered and owned by the National Spiritual Assembly of the Baha’is of the United Kingdom, has particular cultural importance for the Baha’is as their spiritual leader, Shoghi Effendi, is buried there. The cemetery was near the place of his death in 1957, and it therefore has particular importance for the Baha’i community. The cemetery as a whole extends over 60 acres, with well-tended sections dedicated to different faiths The issue at the heart of the Bill is simple: there are roughly 44,000 grave spaces in all, and 180,000 interments have been carried out in the 160 years for which the cemetery has been open, which means that there are now only 1,700 available spaces in the main part of the cemetery and a maximum of 100 spaces left in the Baha’i section. There is, however, demand for about 175 burials a year in the main part of the cemetery and about 10 a year in the Baha’i section. Space in both sections is likely to run out in nine or 10 years’ time, which causes problems for the local community and for the Baha’is and other groups that use the cemetery. Attempts have been made to address the issue, and the local authority has not been willing to go down the route of acquiring additional land, which is why there is a problem. The Bill seeks to deal with the problem by allowing the reuse of areas of the cemetery where a burial has not taken place for at least 75 years, enabling the promoters to extinguish existing rights of burial and reclaim graves that have not been used for 75 years. In addition, a method to create extra space known as lift and deepen—that is fairly graphic, but it is the term used in the trade—would also be allowed, through which graves are excavated to their deepest depth, with all the remains placed in a casket and re-interred at the bottom of the deeper grave. That creates additional space above the re-interred remains.
In the last Parliament, I asked the then Minister about the number of graves for which permission had been considered for lift and deepen. He replied that local authorities were able to do that, but none had. Will my hon. Friend please explain why we need to do this now when we have the London Local Authorities Act 2007, which permits lift and deepen?
My hon. Friend is right. Parliament granted local authority-run cemeteries in London the power to reclaim graves in the 1970s and the power to lift and deepen in 2007. I understand that the City of London has made good use of the powers to reclaim and to lift and deepen in a cemetery in Newham without adverse reaction, while providing a sustainable future. In reality, the powers are available to cemeteries run by local authorities, but not cemeteries in the private sector. This Bill would seek to put the promoters on an equal footing with municipal cemeteries, which I would hope that Government Members supported.
I am grateful to my hon. Friend for giving way, and I am sorry that I was not in the Chamber for the beginning of his speech. Is it not right that the 2007 legislation has not been used by any local authority other than the City of London and that the cemetery in Newham is on consecrated land, where special rules apply? As I understand it, this Bill will not apply to consecrated land.
I am grateful to my hon. Friend for his interest. Time will tell how many will take up this opportunity; this is a particular issue that affects London, and although successive Governments have not said that it needs to be a universal power across the country, there has been recognition of its critical importance in London. Newham has taken up the power and I understand that Kensal Rise is looking at the progress of this Bill and considering taking the powers further My understanding is that most of the land in New Southgate cemetery’s ownership is consecrated and that the safeguards that ensure proper consultation with the diocese will apply. They will be particularly pertinent to this Bill. The difference with municipal land is not whether the land is consecrated but the fact that it is in different ownership, and we want an even hand The Bill is critical because the communities that the New Southgate cemetery serves do not generally choose cremation. For the Greek Cypriots, it is not allowed, and in the Caribbean communities burial is the preference of 99%. Burial is also the strong preference of Roman Catholics, who are strongly represented around the area served by the cemetery. The Baha’i community also has a requirement to bury and not to embalm or cremate The Bill will enable the creation of more spaces in existing graves and ensure a sustainable future. It provides adequate safeguards; it ensures that there will be notices, that objections from relatives or owners will be heard, and that Historic England and the Commonwealth War Graves Commission will be involved as regards proper respect for the heritage of those sites.
The Bill does not specify the means by which old graves may be reused. My hon. Friend referred to a process called lift and deepen; is that the specific and only process that the promoters of the Bill have in mind?
Unused graves can be reclaimed by allowing the exclusive right of burial to be properly extinguished. The alternative is through lift and deepen. If there are alternative directions from the Secretary of State, we will no doubt hear them from the Minister. It will reassure my hon. Friend to know that there are powers in clause 4(10) for the Secretary of State to provide additional direction in relation to the powers, if that is considered appropriate.
My hon. Friend may have addressed this at the beginning of his remarks. The predecessors in title of the present company that owns the cemetery sold off vast areas of land that were attached to the original Victorian cemetery. If all that land had not been sold off, the issue would not have arisen. Is this not a case of a commercial organisation, having sold off a lot of its surplus land for housing, trying to use the land it has in a different way, arguing that it has not got enough space?
My hon. Friend is trying to reach into the motivations and the history. At the beginning of my remarks I referred to the history and the involvement of the Great Northern Railway. The original aspiration was that the cemetery would serve the interests of Londoners for centuries, but that did not happen. We can go as far back in history as my hon. Friend wants, but we are where we are now. Although there is inevitably some commercial motivation for a sustainable commercial future, it is undeniably the fact that for the communities that the cemetery serves, there is an interest in ensuring that there are adequate graves available for their burials The consultations that have taken place have not led to any petitions. They have led to understanding and support for the in-principle situation. There needs to be a level playing field between the powers available for municipal cemeteries, which have also taken an interest in how much land is available as municipal land, and for privately owned cemeteries, which should have the proper powers available to them. I therefore commend the Bill to the House.
It is great that we are having a debate about the Bill. If I had not tabled a blocking motion, it would have gone through Second Reading on the nod. It is undesirable that issues such as this are not open to debate and discussion in this House The Bill touches on an area that successive Governments have long avoided. In 2004, the Labour Government held a consultation on the possible re-use of graves. The consultation lasted six months, and after about three years there was a response from the Government in which they said that they were definitely going to do something about it, and quickly. Nothing has happened since. A Minister in the coalition Government, the former Member for Bermondsey and Old Southwark, Simon Hughes, said that they were definitely going to do something about it, but, again, nothing has happened. Perhaps the Minister on the Front Bench today will seize the moment to tell the House what the Government’s plans are in respect of the cemetery The issue is much bigger than is reflected in the terms of the Bill. I do not intend to divide the House on it, but in such a debate it is important to be able to ask a few questions. When my hon. Friend the Member for Enfield, Southgate (Mr Burrowes) comes to sum up, I hope he will be able to respond to them The cemetery has a long and interesting history. It was originally some 200 acres. Over a period of time—this is the ninth Bill relating to this land to come before the House, and there have been eight Acts of Parliament since 1855 covering New Southgate cemetery—more and more of the cemetery has been sold off. In 1976, the Great Northern transferred the ownership and management of the remaining parts of the cemetery to New Southgate. Since then, part of the cemetery has been sold off and part has been transferred to the Baha’is.
Is it really unreasonable for land set aside to accommodate the dead to occasionally be sold off to accommodate the living? That does not seem an unreasonable thing for the cemetery to have done, and it is not really a reason to oppose the Bill.
As I said, I am not opposing the Bill. What is unreasonable is that land retained to bury the dead was disposed of, and now the owners of that land, who profited from the sale of it, are saying, “We have not got enough space. We need special powers to reuse graves.” There is a difference between reusing graves in a municipal burial ground, where a local authority is accountable to local people, and reusing graves in a private burial ground, where there is no such accountability What worries me is that the local authority has apparently been unhelpful in allowing an extension to this area so that there is more space for the burial of the dead. More land has been sold than is needed now, but as soon as this organisation seeks to purchase a bit more land, all sorts of problems are apparently put in its way by the local authority—the very local authority that, I suspect, developed the houses on the land that was sold to it originally.
I would gently urge my hon. Friend to recognise that my right hon. Friend the Member for Chipping Barnet (Mrs Villiers), my hon. Friend the Member for Enfield, Southgate (Mr Burrowes) and I have areas with great religious diversity, and the pattern of burial and cremation has changed in our constituencies over the years. Between 1997 and 2009, the number of cremations in London fell from 48,275 to 36,736, and the nature of our constituencies means that many people, for religious reasons, cannot be cremated, as people would have been previously, when the land was disposed of.
I take very much the point my hon. Friend makes, and it is symptomatic of the change in the character of large parts of our country and particularly, for the purposes of this debate, of London. There is now a much increased number of members of the Muslim faith, for example, living in the United Kingdom. However, that is surely an argument for the local authority to facilitate the making available of more land to meet the religious needs of this very important part of the community, rather than an argument for saying, “We are so short of land that we are going to reuse the graves of those who were previously buried in the New Southgate cemetery.” I can understand why the Bill is being promoted, but I cannot understand why a sensitive local authority would not help to provide more land.
I appreciate my hon. Friend’s interest in the Bill, but the crucial point is that the promoters are not the company that sold the land before 1976, but the company that bought the cemetery to run it, as set out in the recital. The only sale that has taken place in relation to that company is to the Baha’is.
As I understand it, part of the cemetery was sold to the Baha’is because one of their religious leaders died while he was visiting London in 1957, and he was buried in the cemetery. That is why it is a place of particular pilgrimage and interest to people of the Baha’i faith. However, as my hon. Friend may have said earlier, it is not just Baha’is who are buried there. Our great hero Ross McWhirter is buried in the cemetery—it is some 40 years since he was cruelly murdered by the IRA. A lot of distinguished people have been buried in this cemetery. If Ross McWhirter has now been buried there for some 50 years, under the proposals in this Bill it will be only another 25 years before his remains can be disinterred. That puts these issues into perspective. I expect that members of the Freedom Association, which was founded by his twin brother, with whom he established the “Guinness Book of Records”, will still be going there for a lot longer than 25 years. It may well be that the grave of Ross McWhirter becomes a place to which people would wish to conduct pilgrimages, in the same way as, I think, many years ago, Ross McWhirter discovered in deepest France the burial site of the person who made the first rugby ball, and following that discovery, that grave itself is now visited by rugby enthusiasts We must not deal with these things lightly—I am not suggesting that my hon. Friend the Member for Enfield, Southgate is doing that—but there is a potential solution to this if there was more co-operation from the local authority.
One of the reasons I support this Bill is that using our existing burial space more efficiently will relieve the pressure to create new cemeteries elsewhere in my constituency—something that is likely to encroach on green-belt land, substantially detracting from and damaging the local environment.
My right hon. Friend makes a very important point. Not only in her constituency or in this area of London, but throughout the country where there is pressure on land, it is important that we have a properly worked-out policy for whether, and if so in what circumstances, graves can be reused As my hon. Friend the Member for Enfield, Southgate said, the London local authorities gave themselves powers in this respect that they have hardly used. With the exception of the cemetery in Newham, no local authority has started to use the powers given to them because of the sensitivity around them. That was indeed the conclusion that the Government reached when they went out to consultation on this issue more than 10 years ago. They accepted that it was a very sensitive issue and there was a lot of public concern about it, but no conclusions were reached. It was said that about 30 years’ worth of land was available for burials, and more than 10 years have gone by since then, yet nothing is being done. I hope that my hon. Friend the Minister will put this in the wider context of what proposals there are to address this problem, particularly in the light of the very significant changes in the character of much of our population and the very significant increase in the number of Muslims, for whom burial is a religious requirement that cannot be substituted with cremation Like all these things, when one starts to lift the stones and look at a bit more of the detail, one becomes aware of gaps in the proposed legislation. This Bill is defective in that it does not specify the means by which the graves may be reused. As I said, lift and deepen is one method, but there are others that could be much less sensitive Under lift and deepen, the remains are removed from the existing grave and put further down in the same grave; in other words, they remain in the same location. Less sensitive methods might be the cause of some offence. Once the decision has been made in a private cemetery, there is limited opportunity for public opinion or any individual to influence what happens The problem does not arise with consecrated land, because such land is subject to control by the Church of England authorities. Clause 4(11) and (12) give particular recognition to the status of consecrated land. Quite rightly, the Bill also makes exceptions in relation to Commonwealth war memorials It seems to me that a Bill such as this should be tightly drawn and subject to a lot of proper parliamentary scrutiny. My final point is that a commercial organisation is running the process, so how can we be sure that it will comply with all the requirements in the Bill to record the details of the graves that will be disturbed and the memorials that will be removed? Why has the company promoting the Bill not already recorded those details for posterity? Where will those records be kept, and who will maintain them? If this was a publicly owned activity, we might have a bit more control over it. That is why I have concerns about it The fact that there have been no petitions against the Bill suggests that people in the locality are content. Perhaps they are content in their ignorance; I do not know whether that is a fair comment. We should cherish the opportunity to debate the matter. The Government have always said that there was no time available to discuss it more generally, but I hope that they will be inspired by this evening’s proceedings to think about the public interest in public policy making on the matter. In the meantime, I thank my hon. Friend the Member for Enfield, Southgate for his great courtesy in dealing with the issue and for keeping me in touch with what has been going on. I hope that some of the concerns that I have expressed will be taken on board.
I rise to urge the House to support this Bill to give new powers to the owners of New Southgate cemetery in my constituency. As things stand, within 10 years we will run out of burial space there, or we will come close to doing so. There is now a widely held view that the only way in which the public can continue to have affordable, accessible cemeteries is if we make better use of existing burial space As we have heard, public burial authorities in London already have some powers to lift and deepen existing graves that were last used 75 years ago, to create more space. The Bill would simply give to New Southgate cemetery broadly the same rights as those already afforded by Parliament to public burial authorities in London.
Can my right hon. Friend surmise why those powers have, with one exception, not been exercised?
I surmise that it is because the pressure on burial space is not so great as to require the use of such powers, but it is important that we equip cemeteries for the pressure that they will experience in the future.
I may be able to help my right hon. Friend because when I was a councillor in the London Borough of Barnet, I was responsible for cemeteries, particularly the one in Hendon. The reason why the legislation was not used when I was the responsible cabinet member is that alternative locations were used. The Victorian planners of the cemetery originally decided that that land would not be used for burial, so we used those alternative locations, as well as other parts of the cemetery that were not originally intended for burials.
I am grateful to my hon. Friend and constituency neighbour for supplying that information from his experience in the cemetery arena The powers conferred by the Bill would create new space for bereaved families. They would mean that a viable and sustainable burial ground could be preserved for the long term in the heart of the community it serves in my constituency. I am sure that the owners of the cemetery would, if they could, deal with the problem by acquiring additional land. However, the adjoining space is already built up with houses or is recreational land. Rightly, Barnet council wishes to preserve its recreational spaces and would be very reluctant for such land to be sold and used for cemetery purposes To return to the key point I made in my intervention, unless we reuse cemetery space and use the cemeteries we have more effectively, pressure will rise for the creation of new cemeteries. I have a particular concern about the pressure for new cemeteries in the green belt. There is already a proposal to create a natural burial ground in Arkley in my constituency, which is strongly opposed by the residents. The Bill would be helpful in creating sustainable burial space in pre-existing cemeteries. It will be important in helping to protect the green belt and our local natural environment. I urge the House to support the Bill this evening. I thank my hon. Friend the Member for Enfield, Southgate (Mr Burrowes) for his great work on this legislation.
I congratulate my hon. Friend the Member for Enfield, Southgate (Mr Burrowes) on moving the Second Reading of this private Bill Building on the historical tone of the speech of my hon. Friend the Member for Christchurch (Mr Chope), I am pleased to participate in what is nowadays one of Parliament’s less-used procedures. Historically, this procedure has played an important role. Indeed, I understand that more than 37,000 private Acts have been passed since 1539. In the 19th century, most legislation was private business, which typically addressed issues as diverse as transport schemes, public works, permissions for divorce and the settlement of estates. These days, there is little need to use private Bills for such purposes. Like the Bill we are addressing, private Bills are promoted by organisations wishing to disapply or modify the general law in relation to their own powers The New Southgate Cemetery Bill does so to address an identified need for additional burial space in the cemetery. I should it make it clear from the outset that the Government do not oppose the Bill. As has already been explained, in addition to doing so for the cemetery company, the Bill provides powers for the National Spiritual Assembly of the Baha’is of the United Kingdom. The cemetery, part of which is owned by the National Spiritual Assembly, is an important Baha’i spiritual centre, so it is appropriate that the Bill will facilitate its continued availability as a burial place for Baha’is Before I address the Bill in more detail, I want to mention the issue of burial space more generally. There is increasing interest in this issue in the media, in the burial sector and, indeed, among parliamentary colleagues. Burial space is running out in parts of our towns, cities and countryside, but this is not a concern in other areas. Even within Greater London, the picture is not consistent. A 2013 York University cemetery research group audit indicated that there is acute pressure on burial space in parts of London, but that is not true across all of London There is already private legislation that, for almost 10 years now, has enabled public burial authorities in London to reuse graves, yet very few have done so. It is therefore not yet clear that pressure on burial space is a national issue requiring central Government intervention. Successive Administrations have kept the situation under review; I and my ministerial colleagues are considering whether that position should continue. Where there is local pressure, however, it is right for local solutions to address it. The Bill addresses the needs of New Southgate cemetery, and the Government do not wish to prevent the cemetery from remaining viable and continuing to serve its communities into the future I move on now to Government scrutiny of the Bill. As lead policy Department, the Ministry of Justice wants to ensure that the legislation is fit for purpose, with appropriate safeguards, and that the views of those most affected by it have been fully considered. We have therefore consulted other Departments and arm’s length bodies. I am grateful to the New Southgate burial authority for agreeing amendments arising from that process, including requirements for Historic England to be notified of any proposals and a requirement for remains to be reburied in an earthen grave as opposed to a structure above ground. I am pleased to note that the burial authorities have fully engaged with faith groups using the cemetery. I am grateful for the information provided on that, and having reviewed it am satisfied that the issue has been properly addressed.
Is the information to which my hon. Friend referred on the public record—is it part of the Bill—and if not, how will it be put on the public record, so that people can be held to account for what they have said?
As I understand it, the relevant religious groups have all been consulted, where those groups have an obvious representative to consult. I am happy to write to my hon. Friend with further details I have written to the Chairman of Ways and Means confirming that in my opinion the Bill’s promoters have fully assessed its compatibility with the European convention on human rights and that I see no reason to dispute their conclusions. However, I have noted two points: first, that the burial authorities will be required to act compatibly with convention rights in carrying out functions of a public nature within the meaning of the Human Rights Act 1998; and secondly that I am satisfied that other methods of developing burial space have been implemented as far as is possible. I therefore agree that the Bill’s powers are both justified and proportionate I turn now to the series of questions that my hon. Friend the Member for Christchurch raised. First, existing burial space can be maximised by something called mounding, which involves new soil being placed over existing graves to allow additional graves to be excavated; by cramming, which is where new graves are created in available spaces such as pathways; and by reclaiming unused space in existing graves. The latter can be applied only to private graves, unless under Church of England authority—so-called faculty. Outside London, only unused graves can be reclaimed. In 2007, the then Government endorsed the principle of reusing existing graves by the lift and deepen method, which saves on the cost on new land, avoids competition for new land, keeps burial local, represents a sustainable use of resources and provides a new income stream for burial authorities, in turn reducing local authorities’ financial liability My hon. Friend mentioned the cemetery’s selling off of land. We have dealt with the cemetery as it currently stands throughout. There is a need for additional space now and the Bill proposes all appropriate means of addressing that need My hon. Friend asked whether the 75-year period was long enough, referring in particular to the grave of Ross McWhirter. The Bill provides that graves can only be considered for reuse 75 years after the most recent interment. It also provides that relatives of the deceased can object; if they do so, the grave cannot be reused for at least another 25 years. In practice, therefore, a grave in which living relatives have an interest can be protected for 100 years. My hon. Friend also mentioned accountability. As private providers, the NSC burial authorities are not subject to the same degree of statutory regulation as local authority providers. However, that is already the case regarding their existing management of the cemetery. There is no reason to expect that, as a subsidiary of one of the UK’s leading providers of cremation and burial services, NSC’s standards of operation and service would not continue to be upheld.
Will the Minister confirm that private cemeteries are regulated and have obligations under the technical guidance on the reuse and reclamation of graves in London local authority cemeteries, as well as in municipal cemeteries?
I need to consult before I can respond appropriately and will write to my hon. Friend accordingly.
Do the Government encourage the creation of more private cemeteries, and to what extent are they committed to what was said by the right hon. and learned Member for Camberwell and Peckham (Ms Harman) in a ministerial statement following the consultation? She said that it was the intention of the then Government to use powers under the Deregulation and Contracting Out Act 1994 to enable all parts of the country to have reused graves.
The Government are conscious of the need to ensure that appropriate burial space is available across the country. My understanding is that need differs from region to region. We continue to consult and I expect to receive further information in the coming weeks On NSC accountability, the Bill provides significant recourse to users. NSC must give notice of proposals to extinguish burial rights, disturb human remains or remove memorials. Objection from the owner of burial rights amounts to a veto, and an objection from a third party is subject to directions by the Secretary of State as an independent third party. Objections from relatives to the disturbance of remains amounts to a 25-year veto. An objection from a third party is subject to directions by the Secretary of State as an independent third party. In addition, NSC has a published complaints scheme. I can confirm that the Government secured an amendment to require record keeping on the disturbance of remains and the removal of memorials Finally, I thank my hon. Friend the Member for Christchurch for securing the debate. I am grateful to all who have contributed to today’s proceedings.
With the leave of the House, I thank everyone for their involvement in the debate, and my hon. Friend the Member for Christchurch (Mr Chope) for ensuring that the Bill is scrutinised. I very much value and support that. As he said, it is inspirational, as always, to look at things in such detail The Bill deals with a sensitive matter with far-reaching effects, but it is particularly pertinent, as my hon. Friend the Minister said, that we have a local solution. I am grateful for my hon. Friend’s support and for the support of my right hon. Friend the Member for Chipping Barnet (Mrs Villiers) and my hon. Friend the Member for Hendon (Dr Offord). It is proportionate and in line with other legal powers, and will be of great benefit to residents of the local area and to many religious and cultural communities, particularly the Baha’is, who will require the availability of burial sites at the cemetery. The Bill and its powers are required, as will no doubt need to be proved in the Select Committee. I commend the Bill to the House Question put and agreed to. Bill accordingly read a Second time and committed.
I present the petition on behalf of my constituents from the coastal town of Newcastle who are deeply concerned by the humanitarian crisis in Syria. The petition is supported by the hon. Member for Strangford (Jim Shannon) The petition states: The petition of residents of Newcastle, County Down, Declares that the humanitarian crisis in Syria has already resulted in thousands of deaths and shows no sign of a resolution; further that men, women and children are targeted by air strikes and, if lucky to survive, are being forced to leave their homes, tearing families apart and often resulting in further deaths; further that these people do not ask and do not deserve to be in this situation; and further that a peaceful means to end the war should be sought, rather than the continuation of air strikes The petitioners therefore request that the House of Commons urges the Government to help protect the rights and lives of those affected by the war in Syria through the administration of aid, food and medical care to those who remain in the country as well as those who have been displaced; and further that the Government is encouraged to find a peaceful means to end the war rather than the continuation of air strikes And the petitioners remain, etc [P001985]
I rise to present a petition signed by local residents. The signatures were collected by a volunteer in Leicester East, Sayeed Askari. Hajj is the fifth pillar of Islam, and travelling to participate is a vital tenet of the Islamic faith. Furthermore, Umrah is a holy passage of Muslims across to Mecca and has immense religious value. Mecca is regarded as the holiest city in the religion of Islam and is of course in Saudi Arabia. Travelling to Saudi Arabia for Hajj or Umrah for the first time is free, but visitors will now have to pay an additional surcharge of 2,000 Saudi riyals, equivalent to £450, for any subsequent visit. This represents a very large increase. Quite simply, any restriction to participating in either pilgrimages is of great concern to the Muslim community in my constituency and elsewhere, and I hope that the Saudi Arabian Government will reconsider the increase The petition states: The petition of residents of Leicester East, Declares that the Ministry of Hajj of Saudi Arabia has decided to increase the visa fees for foreign visitors to visit the country in order to complete the Islamic pilgrimage for a second time. Hajj is one the Pillars of Islam that every Muslim must complete once in their life time by visiting Mecca in Saudi Arabia. The increase in visa fees will cause hardship to many people who wish to perform this pilgrimage for a second time, which is sometimes carried out on behalf of a family member who is unable to carry out the pilgrimage due to ill health or age The petitioners therefore request that Her Majesty’s Government makes representations to the Council of Ministers of Saudi Arabia which is chaired by the Crown Prince Mohammad Bin Naif to reconsider the decision to increase the visa fees And the petitioners remain, etc [P001984]
I am delighted to see the Minister in her place, and I am sure that she is delighted to be here—or at least she is trying to smile under the circumstances. She has probably been made aware of my long-term interest in, and deep concern about, this subject. I am sorry to inflict it on her this evening, but she is bearing up. I also declare a potential interest, as a very part-time dentist Variant CJD is a fatal neurodegenerative disease originating from exposure to bovine spongiform encephalopathy-like prions, prions being small particles of protein. Variant CJD prion infections are associated with a very long and clinically silent incubation, but when the disease strikes, it causes a fast, spongy degeneration of the brain, followed by a horrible and untimely death. It is probable, but not certain, that carriers might not produce the disease themselves, but it appears to have a potentially decades-long incubation. The long incubation period means that some will die of other causes first, but, as we live longer, we cannot be certain that in time —after decades—the disease might not strike all carriers, if they survive long enough. Carriers might also unwittingly pass on the prion through blood transfusion and via surgical instruments Variant CJD is an appalling disease with no cure. The number of asymptomatic individuals with variant CJD prion infection is unknown, but recent research estimates that the carriers number about one in 2,000 adults, which is a staggering number. The disease poses a risk to others, via blood transfusions, blood products, organ or tissue grafts and contaminated medical or dental instruments. The response of this and previous Governments has been bipolar. To give an exaggerated simplification, the first position of this bipolar response is that as we have not had many recent cases, there is no problem—but considering the long incubation period and some recent changes, this is a dangerous assumption. The second position is that there might be a problem so we should apply the precautionary principle in some areas. We cannot have both. I believe that waiting and an occasional application of the precautionary principle really do not hit the problem. If the Minister takes no action, I hope she will recognise that the absence of evidence is not evidence of absence As I have said, research says that one person in 2,000 is a carrier. The incubation period may well be decades, and some individuals appear to be more susceptible and some less so, although in time this could be proven wrong. A death from variant CJD in Edinburgh in January this year showed a potentially deeply worrying change. People are of various genotypes: they can be VV homozygotic, or MM homozygotic or MV homozygotic—and for the sake of Mr Deputy Speaker, I will not explain that. Until this case of the Edinburgh patient, all cases of variant CJD had been MM. The Edinburgh patient was the first MV patient that we have seen. It was thought that being MV or VV might offer some resistance, but this does not seem to be the case. We should bear it in mind that about 45% of the population are MV. There is still no conclusive evidence, but there is a possibility that patients with the MV genotype may have a longer incubation period, which could lead to a second wave of variant CJD. The real point is that until recently it was hoped that MV patients might not show clinical signs, but in these early days this appears to have been put in deep doubt Research also shows that prions are transmissible by blood products and contaminated surgical instruments, and as the prions resist decontamination from stainless steel, we have a problem. Over the years, a precautionary principle has been applied—it is still being applied, but only partially. Much has been done slowly over many years. Leucodepletion was introduced, and synthesised clotting factors have been provided for haemophiliacs. A prion unit was set up at Queen Square. Single-patient use of stainless steel endodontic reamers was made mandatory, which I find quite interesting and will return to in a few moments. Non-UK blood supplies were sourced for those born after 1 January 1996 What I found curious about the endodontic reamers is that if a patient requires endodontics, it is possible to use the stainless steel reamer but singly; but if the patient for some reason does not have endodontics, the tooth will have to be extracted using a stainless steel instrument that is used repeatedly, called a pair of forceps Very early on the Government established, through Medical Research Council funding, a prion unit at Queen Square under Professor Collinge. This unit was tasked with finding a test, finding ways of stopping or reducing transmission and hopefully even finding a cure. The prion unit with DuPont has produced a RelyOn soak, which deactivates the prion on stainless steel surgical instruments. Following the soak, there is then decontamination and a washing machine—a dishwasher-type machine—and then a full-blown steriliser, particularly a vacuum-based one. These instruments will bring about total sterilisation, from which the prion will be lost DuPont is no longer producing the soak, because there is no market. And there is no market simply because hospitals, clinics and surgeries in this country are not required to use it; if they were, there would be a market. That is quite extraordinary considering that this country has the greatest deposit, if I may use that term, of people carrying the prion In a surgery washer, the disinfectant would do the job. Recently, Professor Collinge became aware that the Department of Health had announced funds for research into prion-disinfecting stainless steel instruments. I believe the prion unit has applied and will hopefully get a grant. The problem with the wash was that it meant an extra stage, which slowed everything down in the hospital, but if DuPont or another manufacturer could produce it in the form of a tablet, a powder or a liquid that would go into the dishwasher without frothing, that step would be taken away, we would get rid of the prion and there would be no time wasted. Those instruments would be prion-free Incidentally, the Minister may be aware that there is some evidence that a protein may—and I stress the word “may”—be responsible for the occasional transmission of Alzheimer’s disease. If she wants a little bit of help on moving with RelyOn, I can tell her that RelyOn would disinfect instruments with this protein as well. Another major failure relates to the sourcing of blood products. People born after 1 January 1996 who needed blood products—for instance, a transfusion—could get non-UK-sourced plasma that was almost certainly prion-free. Those born before that date would get UK plasma, and would have to pray earnestly that the donor was not the one in 2,000. As a parent, I can imagine having two children born on either side of that date. If for some horrible reason they both needed blood transfusions, one child would get the prion-free plasma and the other would take the risk, as would elderly people like us With a test, we could be fairly sure of excluding that one in 2,000. Professor Collinge and his prion unit team have developed such a test. They tried it out in this country and subsequently went to the United States, where they checked it with an extensive research programme to make sure that it produced no false positives. They were successful. They then returned to this country. The final stage of the research needs to be tested on a large batch of anonymised UK blood samples, but the Medical Research Council will not fund it. At least, that is the case so far If we had that test, blood donors who were carriers would be sorted out and their blood not used, and special measures could be taken for surgery patients who proved to be carriers. In respect of the latter line, the Minister’s Department introduced new guidance in July this year. I understand that it requires separate instruments to be used on high-risk tissues in the case of patients born before and after 1 January 1997 respectively. That is sensible reasoning, because it is thought that people born since 1 January 1997—I thought that it was 1996—have had less exposure to prions via the food chain. Those people form a group who are at lower risk of prion diseases, and thus less likely to contaminate surgical instruments with prions The instruction from the National Institute for Health and Clinical Excellence on a risk-reduction strategy requires every hospital and clinic to have separate pools of instruments to be used for high-risk surgery. It distinguishes between patients who were born before 1 January 1997 and those who were born on or after that date. The instruments must be kept separately, and notated. Although I consider that instruction to be eminently sensible, it will add greatly to the costs to hospitals of instrument provision, storage, and the required regular re-sterilisation. Tracing and tracking of instruments has also proved costly, and some hospitals are etching all instruments with identification numbers to ensure that they can carry out the process properly I have only been able to obtain one figure, but I understand that since, I think, July, observing the new guidance has cost the National Hospital for Neurology and Neurosurgery in Queen Square an extra £120,000. A little further down the road, the cost to a hospital specialising in children will be considerably higher. If RelyOn were developed so that it could be used, that difficulty would be removed I have three small asks of the Minister. First, we must recognise that all patients need to be treated equally in respect of blood products. As one person in 2,000 is thought to be a carrier, until we have a variant CJD test everyone should receive non-UK plasma. Secondly, rather than chasing a new product for sterilisation, the Department of Health, through whatever means, should fund the manufacturer of RelyOn to produce it in a more user-friendly form. If NICE or the Care Quality Commission made the use of such a product mandatory, there would be a market potential, which might be sufficient to persuade DuPont or some other manufacturer to produce such a user-friendly product without the need for funding, because it would be sold and used every time sterilisation pouches went through the dishwasher. Thirdly, funding the last stage of the testing of the prion unit system for prion detection would enable carriers to be taken out of the blood transfusion pool, and would also ensure a more sensible separation of surgical instruments. The cost savings would be vast.
I congratulate the hon. Gentleman on making such a compelling case for those with CJD. In 2001, the Government set some money aside for a compensation scheme for UK victims of variant CJD. A trust fund was set up in April 2001 and compensation payments of £25,000 were made to the most affected families. Does the hon. Gentleman feel the Government should reconsider the compensation scheme and upgrade it for 2016 for those who, clearly from what he says, will probably fall into that category—although I hope not—in years to come?
The hon. Gentleman makes a good point, but what I would really like to do is get the Government to take some action that is sitting, waiting, readily available to prevent it; otherwise, in time to come I believe we are going to have a chance of a considerable flood of variant CJD disease, but we do not know, and if this test was there we would know if the figure of one in 2,000 is right or wrong, or if we can separate patients out, so that those who have it have special instruments and the rest of us are all right, and we can also start using blood products in this country, because we will only be using products that do not have the prion on board In effect, the Minister needs to think about this: I do not want my grandchildren to be the generation that sees the re-emergence of variant CJD and for them to turn to me, if I am still around, and say, “Why didn’t we do something about it?” That is not a very big ask.
I congratulate my hon. Friend the Member for Mole Valley (Sir Paul Beresford) on securing this important debate on variant CJD and surgery. It is clearly an area on which he has a great deal of knowledge. I recognise that prion disease is the causative agent of transmissible spongiform encephalopathies such as variant CJD. It remains in many ways obscure and there are many aspects of these rare diseases that we are still in the early stages of researching. However, one thing I am confident about is that the UK system for ascertaining CJD case numbers has been for the past 20 years reliable and accurate. Our national CJD research and surveillance unit, which is based in Edinburgh and funded by the Department and the Scottish Government, leads pan-European work and has leadership from expert clinicians and scientists who, in 1996 following BSE, were the first to identify variant CJD as a separate form of the condition. The Department recognises the potential seriousness of secondary—person-to-person—transmissions of vCJD and has since the late 1990s introduced a series of measures to reduce the risk of such spread, whether by blood transmission or by surgery. We are reassured that there have to date been no cases attributable to surgical transmission and only three cases of clinical disease attributable to blood transfusions, all of which occurred in or before 1999. However, our risk assessment models, which we use in our impact assessments of potential risk reduction measures, continue to take into account the potential for secondary—person-to-person—transmissions by both routes, in people with all genotypes and over potentially very long incubation periods, which my hon. Friend mentioned. This is why the scientific advice we have is that the surgical instrument measures in place are sufficient irrespective of the genotype My hon. Friend was right to mention the recent case. It was always anticipated on the basis of a wide body of published scientific work that, following the BSE epidemic, further cases of vCJD, including MV cases, might arise from time to time. We have seen that with similar diseases, such as kuru in Papua New Guinea, and studies suggest MV cases could be seen in small numbers for more than 30 years after exposure. Having reviewed the information about the case of vCJD in a patient with MV genotype, the Advisory Committee on Dangerous Pathogens has advised that no changes in the current risk reduction measures are needed at present. It advises that the measures in place are sufficient, irrespective of genotype, although of course the matter will remain under review It is important to stress that modern surgical equipment in the UK is very safe and that robust guidance is in place for the NHS on procedures and practices to reduce the risk of contamination of any kind, including the use of single-use instruments where possible and of decontamination practices. Where it is not possible to use single-use instruments in higher-risk procedures, there are processes in place to track the use of specialist equipment. As my hon. Friend will know far better than I do, there is a potential risk of vCJD transmission via dental surgery, and this has been recognised by the UK’s chief dental officers. In 2007, they issued letters to all dentists to advise that endodontic root canal reamers and files should be used as single-patient or single-use instruments.
I am a little worried that the Minister appears to accept that surgical procedures are as good as they can be, given that the Department is inviting research to find a RelyOn equivalent, to improve the situation. The Department must therefore see a flaw in what we have at present.
My hon. Friend anticipates my next words as only an experienced Member of Parliament can do. I think it is right to say that there has so far been no evidence of any secondary, person-to-person, vCJD transmissions via surgery or dentistry. Nevertheless, we are maintaining and updating our precautionary approach. Surgical instruments guidance has recently been refreshed to support health organisations in delivering the required standard of decontamination of surgical instruments and to build on existing good practice to ensure that high standards of infection prevention and control are developed and maintained. My hon. Friend mentioned a number of these points. The major change in this latest revision takes account of recent changes to the Advisory Committee on Dangerous Pathogens transmissible spongiform encephalopathy subgroup’s general principles of decontamination. This establishes a move towards in-situ testing for residual proteins on instruments. Residual protein is important because of the potential risk of the transmission of prions, though vCJD has not been shown to have been transmitted person-to-person in this way. The guidance provides information on how sterile services departments can mitigate the patient safety risk from residual protein with the objective of reductions in protein contamination levels through the optimisation of decontamination processes The ambition is that all healthcare providers engaged in the management and decontamination of surgical instruments used in acute care will have implemented this guidance by 1 July 2018. However, providers whose instruments are likely to come into contact with higher-risk tissues—for example, neurological tissue—are expected to give the guidance higher priority and to move to in-situ protein detection methodologies by 1 July 2017 The chief medical officer has also recently written to NICE supporting the need to update its guidance on patient safety and the reduction of risk of transmission of CJD via interventional procedures, to ensure that it is fit for purpose, appropriately targeted, and can command the confidence of those who use it. We would expect this to take account of available evidence, including decontamination methods that are safe and effective against human prions; the epidemiology of CJD, including data on the prevalence of vCJD infectivity in the UK population from the appendix prevalence studies; and the availability and performance of single-use instruments in high-risk specialties. We would also expect the guidance review to be considered in the context of the latest research on prevalence, particularly for those born after 1996, who are currently considered unlikely to have been exposed to the BSE agent My hon. Friend is right, however, to say that adopting the precautionary principle alone is not sufficient. That is why successive UK Governments have been supportive of the development of new measures that might help in vCJD risk reduction. The Department of Health has provided over £70 million for CJD-related research in the last 15 years. That research has focused on infectivity, pathogenesis and transmission risk; decontamination of surgical instruments and the development of more sensitive methods to detect residual proteins to improve instrument cleaning; test development, treatment and diagnosis; and surveillance, screening, epidemiology and case finding.
I accept everything that my hon. Friend says. However, a test solution is on the market and waiting to come through. The prion unit test has reached the point at which it just needs a final run to ensure that it does come through. I hope that I can count on the Minister to back me in persuading the MRC to support that last round of testing. If we could test blood, we would not have to import blood products from overseas. We could separate out the one in 2,000 or whatever the figure is and cut down on the costs of instrument storage.
That is one reason why the Department has continued in difficult financial times to ring-fence £5.5 million a year for CJD-related research. We are keen to see safe, evidence-based, cost-effective measures to reduce the risk of vCJD. At the moment, however, there is no validated diagnostic blood test that can be used before the onset of CJD symptoms to diagnose whether someone is infected or incubating the disease. We will of course take advice from the ACDP and the Advisory Committee on the Safety of Blood, Tissues and Organs on the use of any potential test in any proposed Department of Health-funded research study or deployment by UK blood services, but there are established systems for applying for research funds. We have put such funds out there, and any applications for those funds must go through the standard processes. To do otherwise would be to undermine the reputation for research excellence that the UK scientific community has fought hard to establish To that end, we recently launched an open competition, inviting proposals for research to further inform our risk-management and health-protection measures, including our understanding of vCJD infection in the UK population, the development of a test able to detect pre-clinical levels of infection in blood, and the development of decontamination technologies for reusable medical instruments. I understand that Professor Collinge’s RelyOn is one application that is currently going though that process, so it would be inappropriate for me to intervene I assure the House that the Department recognises the fatal consequences of all forms of clinical CJD and the devastating cost to individual patients, their families and carers, which my hon. Friend described movingly. That is why we set up the vCJD Trust in 2001 in recognition of their wholly exceptional situation and the fact that the Government are their last resort for help. The trust provides a no-fault compensation scheme for vCJD patients and their families, providing payments to be made in respect of 250 cases from a trust fund of £67.5 million. Over £41 million has been paid out by the trust to date.
In my intervention on the hon. Member for Mole Valley (Sir Paul Beresford), I asked whether compensation should be increased because of the number of years since the agreement was first made. With great respect and humbleness, I ask the Minister whether the Government would consider that.
The scheme is considered to be particularly effective. I shall look at it in the light of the hon. Gentleman’s comments, but it seems to be meeting current concerns. It is also important not to overstate the risks of CJD compared with other disease threats we face. The incidence is now low, with only two new cases in the UK since 2012. While every death is an individual tragedy and we must be alert, we need to ensure that finite resources—research funding, policy development or committee activities—are applied proportionately and are appropriately evidence based The ACDP continues to provide independent risk assessment advice on prion disease, informing both research priorities and public health measures to mitigate against risks from healthcare interventions, including the surgical, medical and dental procedures issues that were raised today. The ACDP is clear that risk to both patients and the general public is extremely low. Nevertheless, the current robust systems of active surveillance for CJD continue, and our experts maintain a close watch on new evidence, reviewing it as it becomes available. I assure the House that neither the Government nor the NHS has drawn back from our responsibilities to ensure that precautionary and proportionate measures are in place to protect patients from the risk of acquiring infection with prion agents during their healthcare. We have put in place robust research investment to ensure that the situation can only improve Question put and agreed to.