Commonwealth Development Corporation Bill — House of Lords, 2017-02-09
Topic: International Affairs
Raymond Collins (Labour, Centre-left): My Lords, in this House there has been strong support for the 0.7% aid target and Britain’s role in international development. There is also a broad consensus around the role of the CDC, as we have heard in this debate Job creation is one of the best ways to reduce poverty; it is important that the Government have a development investment arm that will help poorer countries to create new and innovative jobs. However, the focus for such work must be on the poorest, least developed and lowest-income countries, and on ensuring that the work is consistent with the sustainable development goals agreed by the UN As we have heard, the CDC made significant changes following the 2008 National Audit Office report and—as the noble Lord, Lord Bruce, reminded us—following the 2011 International Development Committee report, in line with recommendations to move towards a focus on the alleviation of poverty. This shift in focus is a major achievement of Diana Noble. She has done a terrific job and will be sorely missed. The changes were reviewed recently by a further NAO report released just before the Second Reading of the Bill in the House of Commons in November 2016 The report was mostly positive. It noted that the 2012 to 2016 investment strategy shifted the CDC’s investment focus, which is clearly welcome. It noted that the CDC had exceeded the targets agreed with DfID relating to financial performance and development impact. However, it also said that the CDC should do more to measure the development impact of its investments. This would not only provide a better basis for investment decisions, but increase the transparency of the CDC Poverty alleviation is absolutely central if we are to make a success of the SDGs and Agenda 2030. As the noble Lord, Lord St John of Bletso, said, the adoption of SDGs has resulted in an international consensus that the private sector needs to play an even greater role in delivering a sustainable future for everyone, by integrating the aims of the goals into its business practices Developing countries currently face an annual investment gap of $2.5 trillion to achieve the global goals by 2030. The goals can be achieved only by working with the private sector, including with DFI organisations such as the CDC. The CDC states that it is committed to helping to achieve the global goals by focusing on those where it can have most impact: goal 7 on affordable and clean energy—as we have heard, we know there is an infrastructure need, particularly in Africa—as well as goal 9 on industry, innovation and infrastructure, and goal 8 on decent work and economic growth. Noble Lords have made the point that the CDC is investing in areas where labour standards are a key issue for its investment. In the most difficult countries, I know it has even built in proper workplace representation, which is vital in terms of delivering on our SDG objectives We are told that the ending of extreme poverty by 2030 is central to the CDC strategy. The 2012 to 2016 investment plan has, as we have heard, expired and we are yet to see the 2017 to 2021 investment plan. Like many noble Lords, I am disappointed that Parliament is being asked to raise the investment threshold before seeing the plans for the next four years of investment In terms of measuring the development impact of its investments, I ask the Minister whether he can assure the House that in the new investment strategy a more robust approach to measuring development impact will be implemented. Like my noble friend Lord Boateng, I also hope the Minister will be able to reassure us that Parliament—this House in particular—will have the opportunity to debate and consider the new investment strategy. There is no doubt that the CDC has become more transparent, but more can still be done to ensure that money is being spent as well as possible. One way this could be achieved is to allow the Independent Commission for Aid Impact to play a bigger role—for example, by carrying out a regular assessment of CDC investments, allowing scrutiny so that we can ensure the full effectiveness and value for money of the programmes in which the CDC invests We should be proud. The CDC has been a world leader among development finance institutions in publishing details of its investments since 2012 under the International Aid Transparency Initiative. But it would improve transparency further if it published similar details on its entire active investment portfolio, including those investments made prior to 2012. That would enable greater scrutiny of the CDC’s entire portfolio and hopefully provide assurances to the public that all CDC investments are focused where they need to be—on the goal of poverty reduction My noble friend Lord Judd and the noble Baroness, Lady Northover, as well as other noble Lords, highlighted two particular areas of concern: first, the volume of the Government’s proposed new investment for the CDC and, secondly, the CDC’s continued use of tax havens. Regarding volume, a critical issue, which noble Lords have raised, is whether the CDC can absorb this funding—does it have the capacity to deal with it? I hope the Minister will be clear today about the schedule for this spending. What is his idea of the number of years over which the increase would be spent before we might require another Act to increase it even further On tax havens, it is disappointing that, despite the Government’s stated objective in cracking down on tax evasion, the CDC continues to use them, including the Cayman Islands and Mauritius. I met the chair and the chief executive of the CDC recently and raised this concern with them. They responded in the way that we have heard about in this debate, by stressing the importance of stable financial arrangements for investments. In some countries—this is pretty obvious—it is clearly not possible to set up arrangements within their legal structures to ensure that the right duties and controls are in place. Surely a way for the Government to address legitimate concerns would have been to include on the face of the Bill standards for the CDC to meet, in terms of the commitment to transparency, value for money and tracking development results. Since this opportunity has been missed, I ask the Minister whether the CDC will be asked—in the strategy that I hope your Lordships’ House will have the opportunity to debate—to improve its transparency and reduce the volume of investments it routes through tax havens While I believe that it makes sense to increase the CDC’s investment threshold, we need to ensure, as with any area of government spending, that every penny is going where it can have the greatest effect—the right places and the right people delivering value for money for the taxpayer. One way in which to achieve that would be to ensure that we could have regular scrutiny and proper debates in Parliament on the CDC’s activities.