Disclaimer In this beta version data has been captured from the initial report of proceedings (Hansard) which can be subsequently corrected, therefore it cannot be guaranteed to be 100% accurate. At this time deferred divisions are not included in the data sets. We use cookies to give you the best possible experience on our site. By continuing to use the site you agree to our use of cookies.
Thank you for you feedback!

Commonwealth Development Corporation Bill

Second Reading (and remaining stages)

  1. Lord Bates

    Moved by

    That the Bill be now read a second time.

    Read more

    (Money Bill) Relevant documents: 14th and 15th Reports from the Delegated Powers Committee

  2. The Minister of State, Department for International Development (Lord Bates) (Con)

    My Lords, this is a short, two-clause Bill. It is a necessary piece of enabling legislation to ensure that the CDC is able to continue investing in the world’s poorest countries to create jobs, support local businesses and stimulate economic development. No country can defeat poverty and end aid dependency without sustained economic growth and a thriving private sector. Strong profitable businesses are needed to create better jobs and generate the tax revenues required to deliver improved public services.

    There is, however, a huge unmet demand for capital in developing countries. In the poorest and most fragile countries, there is a long way to go to create the right conditions for investors to have the confidence to meet and fill this gap.

    Read more

    In 2015, the UN agreed the sustainable development goals, which are the focus of the Department for International Development through its UK aid strategy. The financing required to achieve these goals is estimated to be $2.5 trillion dollars a year through to 2030. This far outstrips what can be funded through traditional aid-funded programmes and public finance. This is where the CDC comes in.

    The CDC was founded back in 1948 and has enjoyed support from successive Governments. It is wholly owned by the UK Government and is a development finance institution, deploying patient public capital to achieve an objective of doing good while not losing money.

    The CDC has a portfolio of £4 billion invested in more than 1,200 businesses in more than 70 countries. In 2015, businesses backed by the CDC helped to create 1,030,000 new jobs in Africa and southern Asia. Over three years, these businesses have generated more than $7 billion in tax revenues to the countries in which CDC has invested.

    The CDC invests long term to achieve development impact. It has a higher risk appetite and can take a more patient view of financial returns than private investors, but by demonstrating that responsible investing in difficult markets can be commercially viable, it helps to crowd in the private finance that the poorest countries desperately need.

    In 2015, the CDC helped to mobilise an additional $832 million of capital from private investors. Over the years, it has made ground-breaking investments in unproven markets, planting the first seeds for industries that have since become mainstream, such as tea exports in Kenya and mobile telecoms in Africa. As an investor, the CDC sees the potential of the people of a country rather than its problems.

    The NAO completed a value-for-money study of the CDC last year. Its report highlights the transformation that the CDC has undergone over the past five years, following the agreement of a new strategy and investment policy with DfID in 2012. The CDC now invests only in Africa and south Asia—two regions that account for 80% of the world’s poor. It is the only development financial institution to have this narrow a geographical focus. It now targets the sectors that create the most jobs in an economy. CDC investments in the energy sector are providing the investment needed to improve access and power economic growth in Africa. In the financial sector, the CDC has enabled microfinance institutions and retail banks to advance loans to support small businesses in agriculture and manufacturing in south Asia.

    While the CDC continues to invest through funds, it has now built up its capacity to make direct investments and do debt deals alongside equity. It has also tightened controls on costs and cut average salaries by over 25% over five years. It has become a leader among its peers in transparency: it was the first development financial institution to sign up to the International Aid Transparency Initiative and provide full information on the name and location of all its investments.

    The Bill is focused on one issue only: raising the limit on the level of financial support that we can provide to the CDC under the CDC Act. The Bill is needed because the current limit, set 17 years ago, has been reached. The Bill will raise the cumulative financial limit by £4.5 billion to £6 billion. It also introduces a delegated power to raise the limit further via statutory instrument, to an upper limit of £12 billion.

    To be clear, the Bill is not a commitment to provide this level of financial support to the CDC, nor is it a target to be achieved in a set timeframe. No new capital will be provided to the CDC without a new strategy and business case setting out the market demand, value for money and how development impacts are to be achieved. Both will be published and Ministers held to account in the usual way. Furthermore, after ministerial approval the CDC would be able to draw down the capital only when needed in response to market demand.

    The Bill passed its stages in the other place unopposed, reflecting the cross-party nature of its objectives, but not without careful scrutiny. In Committee in the other place, expert witnesses gave oral evidence and several noble Lords—including the noble Lords, Lord Boateng and Lord Stern—provided helpful written submissions which have been taken into account.

    There was a healthy debate in the other place, responded to by my honourable friend Rory Stewart, but I would argue that that genuine interest and concern is best addressed through the CDC’s strategy rather than via primary legislation. Work is under way to finalise the CDC’s new 5-year strategy. It is critically important to get this right and address the issues raised during the Bill’s passage by NGOs, Members of both Houses and the National Audit Office.

    We need to capture better the full development impact of the CDC’s investments. We need to ensure that the CDC’s policy on the use of offshore financial centres is reviewed regularly and meets the OECD’s high standards in this area, and that it pilots new approaches to deepen development impact still further.

    The passage of the Bill is an important step to enable the CDC to continue playing a central role in the delivery of the UK’s international development objectives: to boost economic growth and eradicate extreme poverty by 2030. It complements other approaches through which the UK is playing a leading role in the international development market, including in our responses to humanitarian disasters, global epidemics and pandemics.

    The CDC is a great British organisation with a proven track record and a clear development focus. The Bill will help the CDC to continue its pioneering work, creating opportunities and bringing hope and opportunity to the poorest people in the world. It is an institution of which British taxpayers can be rightly proud. I beg to move.

  1. Lord Judd (Lab)

    My Lords, I thank the Minister for that clear introduction to the Bill. I am glad he is in the post that he is in, because he is a man who has taken our responsibilities in this sphere very seriously during his life. I am also very glad indeed that the noble Viscount, Lord Eccles, will be speaking in the debate, as he made a distinguished contribution to the history of the CDC when he was leading it.

    I declare an interest because, for a short while in the mid-1970s, I was the sponsoring Minister for the CDC and I took great interest in it. What I liked about the CDC in those days was that it took very seriously the issue of the development of human capacity. When I visited, the staff took great pleasure in telling me how they were developing hands-on capacity.

    Read more

    That was important to see in the context of the Conservative Party’s own record. I was frankly rather impressed in the 1960s, when the Conservative Government took the initiative in setting up government machinery to meet third-world commitments. They called the department the Department of Technical Cooperation. Indeed, I do not mind telling the House that I spent a certain amount of time at our party headquarters trying to argue that it was a good title; if we were going to have a great emphasis—as we did, thank God—on the central role of overseas development in our programmes, then we ought to look seriously at the title the Conservatives had used. I never felt that the Ministry of Overseas Development quite got to the heart of the concept as the notion of technical co-operation did. I saw the CDC as fulfilling the spirit that says, “Nothing will succeed unless we are developing human capacity”.

    I am therefore rather sad that, given the history of the CDC, it has now gone down the road of becoming, in effect, just another merchant bank. It seems to me that the emphasis, originality and creativity that was there has been lost. I do not believe that responsibility for this development can be laid entirely at the feet of the party opposite. Whether it was inadvertent, or however it happened, we were not as vigilant on this point as we should have been.

    The Minister has explained the origins of the Bill. It is true that in the informed constituency in this country—a very real and good one on these matters—there is and has been a certain amount of concern. Here I declare an interest as a former director of Oxfam. We are well blessed to have the quality of NGOs we have operating in this sphere, and we should take their concerns very seriously.

    What are those concerns? Some are centred on the real development impact of the CDC as it is today and whether recent reforms have adequately improved its effectiveness. It continues to face challenges relating to transparency, monitoring and reporting on its development impact, as well as on routing its investments through tax havens. The Bill provides us with our first opportunity since 1999 to shape the legislative framework for government oversight of the CDC and update it to clarify the purpose of public funding for the CDC, a suitable level for future public funding and the conditions under which it is to be provided and utilised; how the CDC will address the UK Government’s priorities for aid, such as transparency, value for money and achieving development results; and how the CDC can improve its investment standards—for example, on the use of tax havens.

    More specifically, concerns have been centred on an overconcentration on the higher rates of returns on its investments. A focus on large formal enterprises, the use of narrowly defined impact indicators, and minimal investment in sectors such as agriculture and manufacturing raise concerns about its development impact for ordinary human beings. The National Audit Office’s recent review of the CDC reported that 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”.

    That observation cannot be cast lightly aside.

    As for transparency, the CDC was assessed as poor, with 22.5%, in the Aid Transparency Index, and there have been no major improvements in its transparency since then—or none that I can detect. I acknowledge that the Government and the CDC itself take these concerns seriously but, as late as 2013, 75% of the CDC’s investments were routed through jurisdictions that feature in the top 20 of Tax Justice Network’s financial secrecy index.

    During deliberations on the Bill in the other place, Ministers failed to provide a clear and robust case for why the CDC required the level of additional funding and whether it had the capacity and opportunities to invest it effectively. This therefore remains a major question, especially as in DfID’s business case for the £735 million in funding committed to the CDC in 2015 it stated that the CDC had assessed that it had the capacity to invest an additional £1 billion and would require additional funding from DfID only in 2019.

    I conclude by putting specific questions to the Minister. I do not want to overdo it, but I repeat the points because I have very great respect for the present Minister and I am sure he will take these questions seriously. First, why have the Government introduced the Bill before publishing the CDC’s investment strategy for 2017-21? Why does the Bill allow the Government to utilise the ceiling of £6 billion to £12 billion for funding the CDC, given that in 2015 it assessed it could invest an additional £1 billion for the Government? Why have the Government not included in the proposed Bill standards that the CDC should meet in order to address the Government’s commitment to transparency, value for money and tracking development results, as well as on issues such as the CDC’s use of tax havens for its investments? How will the CDC be asked to improve its functioning and contribution to development results as a condition of future funding increases? How will the CDC be asked to improve its transparency and reduce the volume of investments it routes through tax havens as a condition of future funding? Finally, how have DfID’s investment plans for the CDC been informed by assessing other options for investing these resources and comparing their value for money and potential for development impact?

    As somebody who worked in this sphere for a good deal of my life and who continues to work in an honorary capacity in many ways since becoming a Member of this House, I have difficulty with the term “development impact”. I believe the real heart of the challenge of our co-operation with communities across the world is their empowerment. It is about their taking control themselves. It is about enhancing their capacity. “Impact” suggests it is us bringing something to the country, which we are then evaluating. Our evaluation needs to concentrate far more on how the local community appreciates and benefits from what happens.

    My other point, and it is not a popular one in the age of the market, is that in real human terms very often the real effect of this co-operation will not be judged until perhaps decades later. The constant pressure to produce immediate evidence of impact sometimes distorts lasting effective development. I ask the Minister to consider these matters seriously and I look forward greatly to his reply.

  1. Baroness Northover (LD)

    My Lords, I, too, thank the Minister for introducing this Bill. It is a privilege, as ever, to follow the noble Lord, Lord Judd, with his long commitment to development and huge experience in this area. The CDC has, of course, played an important part in our development efforts in recent years, particularly since its remit was redrawn in the early days of the coalition and under the stewardship of its current CEO, Diana Noble. It is vital that we promote economic development. That is what will transform societies and pull people out of poverty. We have seen that around the world. Investment in the green revolution in agriculture in India was later to underpin India’s growth in other parts of its economy. The CDC, refocused on poorer countries and frontier markets, has helped in that regard.

    Even before that refocusing, it has been a significant contributor. A key investment, of course, was that in M-Pesa in Kenya, to which the Minister referred, kick-starting a transformative method of ensuring that the un-banked were brought within the financial sector. I know that the CDC later regretted that it had no equity stake in the project given the profits now flowing in Kenya and elsewhere, which is a shame. When it is criticised for supporting some developments, it is important to look behind that work and see what skills are being imparted or jobs created. I have seen what it looked to do in Nepal and northern Nigeria in very difficult markets, but finding markets elsewhere easier. Where the CDC leads, it is often then easier to secure other private investment, which is especially important where it is operating in the truly difficult frontier markets.

    Read more

    But we are looking at the CDC as it is now, and even here there have been criticisms as to whether it is sufficiently poverty-focused, for example. I recall the concern in the 2000s about where its focus was. Was it any different, it was asked, from other private equity businesses as it invested in the growing markets of China and India? Andrew Mitchell and Alan Duncan, with their experience in both development and banking, did much to refocus what the CDC did. Diana Noble, as its chief executive, has transformed the organisation most impressively and there is a constant check on how transformative it is in some of the most challenging places. But, of course, she is standing down.

    When I was DfID Minister, I was impressed that the CDC had not had its funds topped up in decades because it had so successfully reinvested what it was earning. There was then a relatively small top-up, certainly small compared with what we are looking at here. Did the CDC ask for this increase, and what does it plan to do in terms of attracting staff to manage such increases? What we see here causes me considerable concern, especially as the Bill enables the Secretary of State to increase the amount yet further by secondary legislation. That does not seem wise because I also remember the controversy when there were moves to sell the CDC off, early in Labour’s years in government, and Actis was spun off. Those involved, largely employed by the CDC, profited enormously. Suppose that down the track the Government decided to sell off the CDC. Would we not regret having filled its coffers? It would certainly make it more saleable.

    Suppose we were to have a Secretary of State who thinks that this should be the main vehicle for aid money? There is plenty of scope for that. What about all the vital areas that DfID needs to support if we are to improve human development in the poorest countries? Human development underpins the ability of all economies to grow. To meet the SDG of eradicating extreme poverty by 2030, leaving no one behind, that growth needs to be underpinned and to be equitable, including women and girls as well as men and boys.

    Suppose the Secretary of State altered the terms on which the CDC invested? What then? It is not at all clear that its funds would be used for addressing the SDGs as the ODA commitment surely means we must do. The Minister will know as well as I do how widely drawn the ODA is, but up until now DfID has been commendably focused on the poorest. Suppose that changed? It is all very well saying that the CDC would have to produce a robust business case, but suppose in the future the need for business cases was dispensed with? They have existed in their present extended form only for less than five years, and even then, having gone through a number of them when I was a DfID Minister, I can say that they are labour intensive and not always as useful as one might want them to be.

    Suppose the business case continued, but the parameters that the Secretary of State laid down changed. For example, although in order to count as ODA, benefit needed to be seen in developing countries, it was decided that a close second must be to benefit British investors. The Minister will know exactly what I mean. What then?

    This Bill hugely increases the potential capital for the CDC to £6 billion, with the Secretary of State able to increase it further to £12 billion by regulations alone. This is quite an increase from £1.5 billion.

    I realise that we have no chance to amend this Bill, as it will go through all its stages here today. Much as I admire what the CDC is doing, I do not think that issuing this relatively blank cheque for a Secretary of State or for a future CDC under a new CEO is wise. The noble Lord says that the CDC will have a new strategy. Surely those in the Commons and the noble Lord, Lord Judd, are right in saying that we should have seen that first.

    I know that the Minister will have the situation of the poorest people in the world in his mind. I look forward, therefore, to hearing what he has to say in response to my concerns and what safeguards will be built in, in terms of scrutiny of what the CDC does.

  1. Lord St John of Bletso (CB)

    My Lords, I, too, warmly welcome this Bill. When the new world order appears to be more disorder and one of the key themes of the World Economic Forum in Davos is rising inequality and the threat this poses to economic and political stability, the Bill comes at an opportune time.

    Clearly, addressing poverty is critical to addressing global inequality. We have moved from the millennium development goals to the sustainable development goals and the role of the private sector has been recognised as a central part of achieving this agenda. Many of the major development initiatives in Africa have come from foreign aid agencies, local and international NGOs and publicly funded multilateral financial institutions. So I wish to focus my few remarks in support of this Bill on the key role that the CDC has played and continues to play in some of the most challenging countries in Africa.

    Read more

    During the last 15 years, the growing Africa-focused private equity community has had a unique opportunity to play its role in what is becoming a development relationship. Private equity has been good for African economic development. It has helped to promote a healthy business sector, as well as creating jobs and alleviating political instability, while taking pressure off Governments to be universal problem solvers. Here, certainly, the CDC has played its role in the development of the private equity industry, particularly in the last two decades. It was an early investor in the 1990s, while the DFIs still focused on debt. Since then, the number of private equity funds has grown from around a dozen Africa-focused funds managing some $1 billion, to well over 200 firms managing over $30 billion. The CDC has played an incredibly important role in poverty reduction, working with these private sector companies and investors to create sustainable growth in its target countries.

    As the Minister mentioned in his introductory comments, the CDC is now a transformed institution. From 2012, when the CDC invested some £200 million a year in a broad geography from Latin America to south Asia to Africa, with a staff complement of 50, it has now well over 250 staff. It is investing and will continue to invest more than £1.2 billion a year, focused on Africa and south Asia.

    I do not agree with the noble Lord, Lord Judd, that the CDC has become just another investment bank. There have been some notable success stories. While the humanitarian response to tackling the Ebola crisis in Sierra Leone, Liberia and Guinea was very successful and essential, the CDC made a valuable contribution in rebuilding many affected businesses by providing much-needed SME loans. As the Brookings Institution rightly mentioned in its recent Foresight Africa report, with many millions of young Africans entering the labour market every year, job creation remains a top agenda item. Here I agree entirely with the noble Baroness, Lady Northover, that human resource development must be a core focus.

    The potential threat of climate change has put many parts of Africa at risk of disasters such as floods and droughts. Many Governments continue to face corruption and violence, and global political uncertainty has complicated peacekeeping efforts, aid disbursement and overall investment. Among the many challenges facing sub-Saharan Africa are not just unemployment but lack of infrastructure, food insecurity, inadequate access to education and healthcare and, of course, to clean water, in all of which the CDC is playing a key role. Often the public sector is ill equipped to tackle these challenges, and this is where the private sector can play a critical role. The CDC, with its well-respected 70-year track record, has made a very important contribution in identifying and nurturing management teams and companies that have provided and continue to provide solutions to many of these problems.

    Sub-Saharan Africa suffered one of its worst years in terms of foreign direct investment last year. This was due partly to the fall in commodity prices, particularly the oil price, as well to other concerns, including those of international investors about collapsing local currencies, and was exacerbated by high levels of corruption and lack of accountability. Although technology has continued to transform the continent with the introduction of broadband and many other innovative, transformational technologies, the many challenges that Africa faces are unlikely to be solved in the short to medium term. This will obviously impact negatively on the lives of millions of the poorest people. That is why it is important that the CDC continue to provide much-needed capital and mobilise other international private capital to co-invest in well-run businesses with high levels of integrity and high social and environmental standards. I stress the importance of long-term capital in this regard. These projects can range from building schools to the establishment of hospitals, agribusinesses, renewable energy, ports and logistical infrastructure. While these are all needed in most countries in sub-Saharan Africa, the CDC has not shied away from going to some of the most challenging areas. Here I mention some of the agribusinesses in which the CDC has invested in northern Nigeria, which have had a transformational impact on many of the people there.

    A good example of the CDC’s work is the development in Virunga in Eastern Congo. The CDC has helped to construct a hydropower plant that has already transformed the lives of many of those in the area who were living in desperate conditions, through providing jobs and training to former child soldiers who became socially excluded adults. This will in all likelihood have an added benefit of reducing the erosion of natural resources in the parks, which includes the rampant problem of wildlife poaching.

    I warmly support the Bill, which provides much-needed long-term additional funding to the CDC, but as it is a money Bill that will not be deliberated on further in your Lordships’ House, it is important that a firm business plan is in place outlining the medium and long-term road map for the CDC, with appropriate checks and balances. In this regard I was reassured by the Minister’s comments in introducing the Bill.

    Finally, I acknowledge the leadership, commitment, dedication and vision of the CDC’s chief executive, Diana Noble, who will sadly retire in June this year, and pay tribute to the able chairmanship of Graham Wrigley.

  1. Lord Flight (Con)

    My Lords, I congratulate the noble Lord, Lord Bates, on his excellent introduction to the Bill. I declare my interests as set out in the register. I greatly welcome the Bill and wish to speak out in support of it and the CDC. What it has done over the last five years or so is no mean achievement, making successful investments in parts of the world that are difficult to operate in. It has been a civilised and professional body; references to merchant banks are not entirely fair, because it has focused on need just as much as on commercial attractions.

    The CDC has also become very capable of investing and managing third-party funds in Africa and India. I hope that that may develop as a new part of its business. As I understand it, it operates in three separate parts. There has been private equity investment, largely in east Asia and Africa, amounting to some $3 billion. A professional fee of, I think, 0.25% is paid for the management of those assets. The Bill will significantly increase the scope here. The second area has been direct equity investment, again in south Asia and Africa, of the order of $1.2 billion, and thirdly debt investment of some $400 million. As has been pointed out, the increase in the size of those investments over the last five years has arisen from their success rather than from additional funding.

    Read more

    The Bill is about significant increases in funding for the CDC—an initial increase from £1.5 billion to £6 billion, and then a route is provided with delegated powers for the Secretary of State to go up to £12 billion. That is a substantial increase, but it is not widely realised that the CDC and its associates are wholly government-owned. This is not the Government funding third-party entities; they are funding another limb of government to operate effectively on a commercial basis. It is still a government entity.

    I am a member of the Delegated Powers and Regulatory Reform Committee, which, as noble Lords will be aware, has opined that the Bill inappropriately delegates power without demonstrating the need for it. Personally, I have mixed views. I understand the point but I repeat my own: that this is government advancing funds to another part of itself. I tend to think that is justifiable, and that the case for increasing the funding has also proven itself, so I do not see the need for primary legislation to authorise the additional funding.

    The key point is that the CDC’s record, particularly over the last five years, stands for itself. I remember times when there was criticism of it, and it is extremely heartening to see how successful it has been, in very difficult territory.

  1. Lord Boateng (Lab)

    My Lords, I declare my interest as chair of the Africa Enterprise Challenge Fund. As such, I have had the opportunity to see the work of the CDC in support of agribusiness in Africa and renewable energy. I am bound to say that I welcome this Bill; I welcome, too, the Minister’s championing of the CDC within the department. I think that it will benefit from his attention. Frankly, if truth be told, the CDC has not in the past benefited from any ministerial champion at all, which has been part of its problem. The noble Baroness, Lady Northover, happily gave it some of her attention but, certainly in my time in government, it must be said that it did not have any champions.

    We must also recognise that, at one time under the Labour Government, the CDC was being fattened up to be privatised—that was the reality. It was therefore given a mandate of making as much money as it could, but no target at all in relation to its contribution to the eradication of poverty or to development. We have to be frank: we need to learn the lessons of the past in order to ensure that we do not repeat the mistakes of the past in the future. The good news is that, for the past five years, a process of reform of the CDC has been under way, which has seen a renewed focus on the reduction of poverty and is to be warmly welcomed.

    Read more

    My noble friend Lord Judd, whose knowledge of these matters is, in my experience, unparalleled, was exactly on point when he suggested that, going forward, it is absolutely vital that the CDC continues to focus on empowerment and enablement on the African continent; ensuring that small and medium-sized business can grow and link to global markets; and improving value chains across the continent. This is about saying that we will stand alongside Africa as it develops its own agribusinesses and manufacturing capacity, because it is in these areas that there is currently a marked deficit on that continent.

    Real gains have made in the past decades in terms of economic growth—six or seven of the top 10 fastest-growing economies in the world now are to be found in Africa, which is a tribute to entrepreneurs there. There have been vast improvements in terms of governance—the recent successful transitions of power in both Nigeria and Ghana are examples. Across the continent, there has also been a renewed focus on the part of African Governments on creating enabling environments in which it is possible for business to flourish.

    This creates a real opportunity for the CDC to get alongside those businesses. One particular aspect of Africa’s development on which I seek to concentrate—including the potential role of the CDC—is the role that small and medium-sized enterprises can and must play in the continent’s development. In Africa, they contribute to around 40% of GDP and to some 50% of employment overall. In some sectors, their level of job creation can be even higher. For example, informal and formal SMEs together account for about three-quarters of total employment in manufacturing. However, the reality is that it is very difficult indeed for small and medium-sized enterprises in Africa to obtain funding from the banks. That is because in the main the banks are risk-averse and do not understand the sectors—the agrisector in particular—in which SMEs are emerging. Significantly, SMEs also suffer from very high interest rates. That is the fact of the matter on the ground, on the continent.

    To address that, the CDC has seen it as part of its mission to support those businesses through supporting banks. So, taking the example of a recent investment it has made, it has supported the dfcu Bank in Uganda, which focuses on tackling the lack of long-term funding for SMEs in a country—Uganda—where they contribute around 70% of GDP. A bank such as that could not hope to obtain on the open market the sort of funding that the CDC can give it, on the terms that the CDC can give it. If you were simply applying market judgments and the bottom line to support for banks that work with SMEs, you would not be able to raise capital. The CDC, with its focus, is able to do so.

    The CDC needs to be encouraged to focus on and address market failure. That, after all, is the justification for putting public money into it—I cannot think of any other. We are putting public money into something that addresses the failures of the market so that markets can work better for the poor, and to support development. As all sides of the House agree, the long-term and medium-term solution to Africa’s problems does not lie in overseas development assistance but in the development of a sustainable private sector and the capacity within Africa to generate, through tax revenues, sufficient money to do all the things that we expect the state to do in our own country. We want enabling states; we certainly want states that encourage and support a private sector that can create wealth and provide employment. That ought to be the focus of the CDC in the future.

    I ask the Minister to ensure that this House has an opportunity to discuss the future strategy of the CDC—that an investment strategy is not adopted without consideration of views from all sides of this House—because, as today’s speakers list shows, there is real expertise in the Chamber. That expertise can encourage, support and spread the word about the importance of investment in this area, and all that investment can do.

    I end on this note: we are in a challenging time for global security, and the best protection for any of us in the world is job creation. Africa has the fastest-growing population of young people in the world, and if there are young people in Africa who do not really have an opportunity to gain sustainable livelihoods, whether in urban or rural areas—Africa also has the fastest rate of urbanisation in the world—they will fall prey to those who would exploit them for their own purposes.

    In northern Nigeria we see a classic example of this. Boko Haram exists because young people feel disaffected, cut off from relevant educational opportunities and the prospect of getting sustainable livelihoods. The great work that the CDC is doing in that area—creating real job opportunities with real employment and providing real added value—is a classic example of the sort of response that we ought to be making to today’s challenges. I wish the CDC all the very best with its task and hope that the Minister will continue to champion it in his department.

  1. Lord Bruce of Bennachie (LD)

    My Lords, I am very pleased to follow the noble Lord, Lord Boateng, and I agree with much of what he said. I draw the House’s attention to my entry in the register of Members’ interests. I have a particular interest because when I chaired the International Development Committee in the House of Commons, we carried out an inquiry published in 2011, before the change in strategy. The noble Lord anticipated some criticisms of the Labour Government, which I did not want to make too forcefully, but he was right that the corporation was being looked at for privatisation. Douglas Alexander got it focused more on poverty but it really took Andrew Mitchell and a wholesale review to come to a strategic change.

    One recommendation in our report was to split the fund. The Government did not agree, but did split the corporation’s objectives from being just a fund of funds to separating funds and direct investment and going back to some of the traditions of the early days of the CDC when it invested directly in companies and enterprises, not just through funds. That has obviously had an impact over the last few years and is becoming a more significant part of the portfolio, but it is still very small. I hope that the new strategy will help to explain how we can achieve more of that and find ways to fill the market failures in those gaps to make the transformation. The reality is that I do not believe that any country has significantly lifted its people out of poverty without having a vibrant private sector. The role of development finance funds of the CDC’s kind is extremely important in helping that to happen.

    Read more

    My noble friend Lady Northover identified a number of concerns, which I hope that the Minister will directly address. There have been reservations expressed that we are going for a quadrupling, and then a further doubling, when we do not have a strategy nor yet a clear indication of how that money will be spent. The Minister rightly says that there is a huge demand for a huge amount of money; the question is how much of that would be more appropriately met by an organisation such as CDC, as opposed to the wider market. Given the sort of criticisms that the sector currently faces, the Government need to be careful about putting substantial additional funds into CDC—although I would not put it in these terms—without being absolutely clear that there will be proper accountability, proper results and a proper strategy. If they are not, they will find the sort of heat that they have experienced in the popular press being turned on them for exactly this. It would be extremely unfortunate if that were to happen and we must make sure that it does not.

    The reality is that we need to invest in projects that are riskier and offer a poorer return, because those are precisely the projects that the private sector, and by definition the market, will not address. The CDC has shown that they are there and can generate a return. The question is whether there will really be £12 billion of that kind of investment available over the next few years.

    The Secretary of State has said that she wants the focus of UK aid to be on trade and investment. That is a kind of mantra across the Government, who are desperate to demonstrate that we can get agreements on trade and investment. But there is a consensus in this House, which I hope is not under challenge, that our aid and development focus should be on poverty reduction. That is our fundamental objective. The noble Lord, Lord Boateng, mentioned the importance of creating jobs and livelihoods. Quite terrifyingly, the forecast of job requirements in Africa alone is not in the millions or even the tens of millions. Hundreds of millions of jobs will have to be found in a relatively short time, which is really quite a scary thought because, if those jobs cannot be found, there will be an awful lot of idle hands looking for something to do—and I fear that those things may not always be positive and constructive. There is no doubt at all that we need to do that.

    The other thing I will talk about is the mix of our aid budget and focus, because this is a big increase in one particular component of DfID’s spending. The Minister gave me a reply earlier this week relating to the Government’s humanitarian response. He said that our spend over the last three years has gone from £826 million to £1,266 million—that is, from 12% of total ODA to 17%. Everybody understands why that has happened and there is clear public support for that. Nevertheless that is an increasing proportion of the budget which, by definition, is not available for other aspects of development spending. There have been indications of cutbacks in some development programmes, partly because of that pressure.

    The second thing is that the depreciation in the value of the pound—on average 20%—means that the purchasing power of our aid budget has been correspondingly reduced and so there is less scope. Those people who seem to think, because of our commitment of 0.7%, that somehow DfID and our development budget is awash with funds are not really facing up to the pressures of impending famines as well as of traditional development.

    There is a clear synergy between the role of development and the role of private sector investment. Clearly investors, whether they are indigenous to a country or outside it or in partnership, benefit from having an educated, healthy workforce and decent infrastructure investment. The two things fit together. Indeed, one of the reasons that many enterprises are reluctant to invest in developing countries is a lack of those things, coupled with problems of governance and corruption that make them difficult places to do business. If the CDC and development can work together to make that environment more conducive, the private sector will be able to take more of the burden on itself and help to address the development needs. We can look to countries such as China, India and Vietnam that have demonstrated how that kind of partnership can lift millions of people out of poverty over a relatively short period of time.

    There is a clear need to ensure that extra money going into the CDC is not at the expense of development programmes. I completely agree that the objective in the end is for countries to have the capacity and the resources to run their own services and be free of aid, but we should not cut off that aid prematurely before they have actually established that degree of viability. That would be a point of concern for me. I know it is unpredictable but it would be helpful if the Government and DfID gave us a little bit more guidance on their strategic objectives in terms of how much they feel is reasonable for humanitarian support, how much is going into development and how much is going into the private sector. It would help us to get a clearer idea of the strategy behind it.

    Just as a general comment, the people in the sector whom I meet, whether they work for private contractors, NGOs or organisations generally working with development, feel very beleaguered at the moment. They feel under sustained attack—not all of it justified or even accurate—not only from the popular press but also from the more serious media with an inadequately robust response and defence from DfID as well as across the Government. Much more can be done to explain how transformational UK aid is and how effective we are at delivering real results, giving people the good-news stories that are out there of how, thanks to our intervention and the partnerships we build both from our own expertise and that of the country we are operating in, we are helping to make a real difference.

    People who say aid does not work are simply ignoring the facts. We have reduced poverty, we have massively delivered on health objectives, we have got more children into education and we are beginning to raise the quality of these services. We have set ourselves an ambition of ending absolute poverty by 2030—no mean commitment—and to do that we will have to maintain our level of commitment but we also have to explain it much more fully and clearly.

    Therefore, while the CDC has a role to play, its changed focus over the past five or six years makes it better equipped to spend more fully. I still have reservations about whether there are enough of the right kind of projects to absorb this extra spending, and I would be interested to see the strategies around how that could be done. I support what we are trying to do, but it is important that we show how the CDC fits in with the strategy of development, humanitarian response, building resilience and capacity and helping, as the second-largest bilateral donor in the world, to lead the way to end absolute poverty by 2030. This has to be a contribution to that.

  1. The Earl of Sandwich (CB)

    My Lords, it is a pleasure to follow the noble Lords, Lord Bruce and Lord Boateng, with their historical experience of the CDC, and I am much looking forward to the speech of my old noble friend Lord Eccles, who has seen the CDC almost from the beginning.

    I was surprised that this Bill was made a money Bill, considering the huge questions raised by the expansion of the DfID programme. I know we have limited powers in this House, but I tried to complain. I went to the Chief Whip, who agreed to talk to the Lord Speaker, but I decided I could not take it any further. A central issue in the Bill seems to me whether, in handing over such a large proportion of our aid to the private sector and to one particular body, we may be bypassing some of the core principles that have governed the aid programme over many years.

    Read more

    I know that CDC has changed considerably under new management. I have discussed this directly with the CEO, Diana Noble, quite recently. My noble friend Lord St John made a very strong case for the CDC. I accept that it has responded to radical change. To take only one example, in 2015 more than 1 million jobs were indirectly created by CDC in Africa and Asia alone. I also have great admiration for the Minister of State in another place, Rory Stewart, whose work with the voluntary sector is well known, as is the experience of our own Minister, but having read Mr Stewart’s replies to the debate in the Commons, I am not yet convinced that the CDC has embraced poverty reduction, which, incidentally, is not quite the same as job creation.

    The Minister used the words “doing good while not losing money”. That does not seem to be an adequate description of our international development programme, because poverty reduction has been the focus of our aid programme for some time. We abolished tied aid a generation ago, and the failures of huge projects such as Pergau and Narmada marked the end of large-scale UK investments during the 1980s. Since then, successive Aid Ministers have listened to criticism and have won public support for more programmes which demonstrate people’s participation, meet the needs of the very poorest in society, create partnerships and bring non-governmental organisations directly into the planning and execution of projects. The noble Lord, Lord Judd, mentioned that. I was encouraged to hear the Minister say that there is still room for improvement, presumably in the direction of the very poorest. That is precisely the dilemma the CDC faces.

    As someone familiar with some of the UK’s best NGOs which are working alongside the poorest and in partnership with DfID, I have seen this work at first hand and I know that it brings real benefits to society. I do not need persuading that the private sector, and CDC in particular, can be an effective channel to the poor. In fact, business is a good route for the voluntary sector to follow. For instance, the business model in which women create their own credit and loan scheme, originated with the Grameen Bank and other microcredit organisations, is still widely respected. The noble Lord, Lord Boateng, mentioned SMEs in Africa, which are another important channel.

    When it comes to investment decisions, which are not risk free, and due diligence at a higher level of management, there comes a point when must priorities change. Pay scales rise and the interests of the corporation itself may take over from those of the beneficiary. This is a built-in dilemma which was discussed in some detail yesterday in the Public Accounts Committee which I attended. Investment really belongs to a different tradition, and this is why the CDC is being kept separate from the mainstream aid programme. One might be forgiven for asking whether it needs to focus on the poor at all.

    Additionally, there is the issue of accountability. Does the CDC really know how its funds are being used on the ground and where they are directed and, even more importantly, can it monitor progress and impact at a later date? Fortunately, we now have really good watchdogs in the form of ICAI, the NAO and DfID itself, not forgetting the IDC, other Select Committees and occasionally our own EU Select Committees which have occasionally covered the EU aid programme. The CDC is very closely scrutinised.

    On the whole, the CDC comes out well from various reports and audits. It has responded to recommendations and its transformation is much admired. There are some criticisms worth mentioning, some of them highly technical, which were examined, inevitably in much more detail, in the Commons debates, and I am sorry that we cannot do that today. For example, the NAO found that the development impact target measures prospective impact rather than actual impact. The noble Lord, Lord Judd, raised this point. There are also recruitment and retention challenges. The CDC may be on the right track, but it still has to demonstrate that it can make a lasting difference to the lives of the poorest. ICAI reports have come out with similar comments, although they recognise the growing role of foreign direct investment in development. My noble friend Lord St John made that point.

    Finally, there is also a problem of public information. Far too little is known about the CDC programme, while DfID projects are much more visible, and this creates discrepancies. ICAI last year pointed out the anomaly that the CDC is moving DfID back to BRICs and middle-income countries. While DfID has scaled down its aid programme in India, the CDC’s investment there amounts to one-quarter of its portfolio. Is the tail wagging the dog? Does this mean that India suddenly again becomes a developing country and not a middle-income country? Should not the public be aware of this, because many people have argued that the poorest in India should always be a priority? I also believe that the CDC should arrange visits, perhaps through the CPA as well as the IDC, so that more MPs and others can go out to see the work it is doing because it is so important.

    I am sorry to strike a discordant note during the passage of this Bill, but while I recognise the value of the CDC’s work, I shall need more convincing that it is really about poverty. The noble Baroness, Lady Northover, mentioned the CDC’s effect on DfID, which is important. The SNP and others put down several amendments on these matters, but I think Her Majesty’s Government have still skilfully avoided the answer. The CDC apart, with the future loss of EU channels of funding and the fall in growth rates and commodity prices in Africa, DfID already faces a considerable challenge in rethinking its responsibilities to the developing world.

  1. Viscount Eccles (Con)

    My Lords, I worked for the CDC from 1981 to 1994. As the noble Lord, Lord Judd, said, for nine of those years, I was its chief executive. There is one other coincidence: my noble friend Lord Flight now lives in a house in which I lived for a while and in which Lord Reith, who was a most successful chairman of the CDC in the 1950s and 1960s, had also lived. I do not know whether there is any message in that coincidence, but it is interesting.

    I would like to concentrate on the period from 2010, on which the debate is concentrating. My period is irrelevant, except that I endorse what the noble Lord, Lord Judd, said about technology transfer and capacity building. A development finance institution such as CDC does not have a role unless it is involved in both technology transfer and capacity building and, therefore, the creation of greater human capacity for people to do things that they did not know how to do before. I could tell your Lordships many stories about how CDC has achieved that in the past, but I would like to concentrate on the period form 2010.

    Read more

    Before doing that, I want to refer to some comments made by the noble Lord, Lord Boateng, about the period before 2010. We are all talking about CDC, but that is inaccurate. It is, in fact, the CDC Group. In 1997, the decision was made in the manifesto that a Bill would be put before Parliament which would have the purpose of changing CDC from being a loan-financed public corporation to becoming an institution with share capital which would then become 75% private and 25% continuing to be owned by the Government.

    That is the 1999 Act that we are talking about amending today. It set up the possibility of CDC, then renamed the CDC Group with a shareholding, becoming 75% private owned and 25% retained by the Government. That did not happen. I will not go into the story of why it did not happen, although I am pretty familiar with it. I will just say that I believe that the 1999 Bill was a mistake and that there should never have been a campaign to take any part of the CDC out of public ownership. It should always have remained in public ownership. Although I sit on this side of the House, I can assure your Lordships that, when I was chief executive of CDC in the days of Margaret Thatcher, I was completely consistent with my board that it would be wrong for CDC to seek to be privatised; it should stay in public ownership.

    That is where CDC is today and that is why what has happened since 2010 is of very great interest to Parliament. It is a great pleasure to find that Parliament is again debating CDC. Although years ago, CDC was quite frequently debated in Parliament, there was a big gap from about 2004 until 2010 when, frankly, the general opinion was, “Sweep it under the carpet and don’t talk about it”.

    From 2010, under the Secretary of State, Andrew Mitchell, a decision was made by the coalition Government to see if they could put CDC back on track. It had become, as I think a noble Lord mentioned, a fund of funds. As a fund of funds it was no longer a development finance institution. The chain of accountability to Parliament was broken by CDC becoming a fund of funds and that needed to be restored. That was spotted by the coalition Government and, as has been said, they made arrangements to appoint a new chief executive, Diana Noble, who has done an extremely fine job, and a chairman, Graham Wrigley, who, in my opinion, has also done an extremely fine job. They have been getting the CDC back on track.

    While the Bill is extremely welcome, we need to keep close attention on the business plans of CDC. It is a very important duty not only of DfID but also of Parliament to understand where CDC is going. As your Lordships will understand, it takes a very long time for the things that have been brought into CDC’s portfolio to work out. The usual time before a CDC investment is realised may be about 10 years. We are still living with a great deal of what CDC invested in as a fund of funds before 2010, which is going to take quite a long time to work its way out.

    In the strategic future, the question which has been raised by many noble Lords is what proportion of the CDC portfolio is going to be directly invested. Only a direct investor can encompass innovation and going to places where the private sector will not naturally go. Several of those places have been mentioned, including northern Nigeria and the Congo. We can all think of many places in Africa where the fully private sector will hesitate to go. These are the places into which CDC in—it is true—70 years has always been willing to go and had the capacity to go without making serious mistakes.

    With a small exception in the period between 1999 and 2010, CDC always made a surplus of income over expenditure throughout the years. When we authorise this increase in capital, we should not worry that CDC will lose that money. If it is true to its past, it will not. It will keep that money and use it as a revolving fund which will enable it to do more and more economic development.

    As a condition of that economic development, I come back to the transfer of the knowledge of technologies such as from—I do not know—a generic pill manufacturer. That would be a very beneficial thing to be happening to a greater extent in Africa. However, anyone investing in that would need to know about pharmaceuticals and how to set up and manage a factory. It is very important that, when a strategic plan comes, we can see that CDC has proprietary technology of its own. It has always had some and still has—power generation and mobile telephones are two examples of where CDC has had technology and has deployed it.

    The people in CDC are also very important. The staff has been built up recently from, I think, 50 when it was just a finance house to about 250 today. Within the capacity of staff employed by CDC, we need people who understand businesses and how to set up and manage them, as well as people who know how to finance them.

    I welcome the Bill and believe very strongly in economic development, not only in financial rates of return but also in what I would call, not development impact, but economic rates of return, in which the social as well as other effects are measured. CDC going forward in that way, rebuilding itself as it has already done with very considerable success, will get even more into the forefront of being out there, doing things that the fully private sector is not in a position or not ready to do. As it goes forward, it will leverage in money from less certain people, because they know that if they come in alongside CDC, it is likely to work and to work well.

  1. Lord Shutt of Greetland (LD)

    My Lords, it is a great pleasure to follow so many noble Lords who have had experience of these matters over very many years and particularly of the splendid historical context in which we see the CDC. This short Bill is twice as long as another little Bill that we will have when we return after the recess. We may have a couple of hours now, but of course there are five whole days so far in the weeks that follow, although there could be more. We have no opportunity to amend this Bill, as money is at stake.

    We know that there are two basic aims: to quadruple the resources available to the CDC and then, by order, to double them on top of that. Because we cannot amend the Bill at all, it is an act of faith as far as we in this place are concerned. We have to have faith that the funds will be properly used. I do not wish to detract at all from the concerns that have been expressed by so many noble Lords, and look forward to hearing about a sound business plan and strategy.

    Read more

    I have only two points to raise. First, when the resources available are increased, will the CDC, where appropriate, have the opportunity to invest beyond the continent of Africa and the countries of south Asia? I do not think there are any legal constraints on this. It is not in the text of the Bill, and the title says “Commonwealth”, but it certainly seems that investment goes beyond Commonwealth countries. Will the new resources allow investment elsewhere?

    The second point, which may not come as any surprise to the Minister, is about the British Overseas Territories. It is government policy that their reasonable needs are the first call on the UK aid programme. For each aided territory, DfID’s objective is to assist it in reaching self-sufficiency. The extension of the potential CDC resources would be but a pinprick for the CDC but could be highly significant for dependent territories such as Montserrat and the St Helena group of islands. I have a particular interest in St Helena, having made two visits there. Even with the delays, the availability of the airport there for mainstream use is keenly awaited, which we hope will happen during this summer. We know that there are detractors around, so it is important just to mention that there have now been several medivac flights of small aeroplanes, and six people are alive now who might not be had they had to wait three weeks to get a boat to Cape Town.

    However, St Helena still needs the infrastructure to cater for airborne visitors. When I was there three and a half years ago, two very significant developments were about to happen, but they have not taken place. It would be a proper use of CDC resources to assist with some of these developments in order to take St Helena away from DfID dependency, whether by investment, loan or even guaranteed support.

  1. Baroness Flather (CB)

    My Lords, I have no personal relationship with the CDC, although not for want of trying. I went to see Diana Noble but was dismissed—metaphorically, not literally—because she left after 20 minutes. I was trying to find out what it does and how it works, but got nothing. However, that is not the reason why I am speaking today. I was not pleased, but that is not the important part.

    I wrote to the noble Baroness, Lady Verma, when she dealt with DfID issues to ask her some questions about the CDC. She did not answer them, but just repeated what the CDC had told her to say. I then wrote to the noble Lord, Lord Bates, and I must thank him, in front of all your Lordships, for writing to me properly and giving me a lot more information. But there are some issues which worry me. The noble Baroness, Lady Northover, and my noble friend Lord Sandwich made the point about poverty reduction. It is difficult to see how some of the investments I have found out about through research, which I will talk about, fulfil the objective of reducing poverty.

    Read more

    The other point which worries me very much is the need for a proper independent review of the CDC’s work. I think most of your Lordships have taken on board what it says, and may know more about its work in depth than I do, but since the Harvard review, which looked at 2008 to 2012, there has not been a proper independent review. Any organisation which receives government money should have regular independent reviews. Some of the things said about the CDC have not been very encouraging. The shadow Minister for Development, Mary Creagh, has said that,

    “the government’s own aid watchdog gave their private sector aid spending an amber-red rating and warned that ministers lack targets and a clear focus on reducing poverty”.

    Maybe that will be dealt with in the new measures we will read about. She went on:

    “Ministers must ensure this new investment in the CDC is transparent, focused on helping the poorest people in the world and delivers value for money for British taxpayers.”

    I think it does, but I do not know how much it does for the poorest people. There was also a certain amount of criticism about gated communities, shopping centres and luxury properties in poor countries. According to the Global Justice Now advocacy group:

    “CDC have a track record of ploughing money into dubious ‘aid’ projects like the Garden City luxury housing and shopping complex in Kenya and a luxury hotel in Lagos, Nigeria”.

    There are issues about the work of the CDC because we do not get outside reviewers to look at it. The noble Lord, Lord Bates, said that the National Audit Office looks at it but that is not quite what I had in mind. It has to be looked at by people who are involved in development, not national audit. Even if it spends its money properly, I doubt whether it manages to keep all of it clean, because I am sure it has to grease some palms in some of the countries it is working in—although the less said about that, the better.

    It worries me that there is no real review of the CDC’s work. Let me go through some of its current investments. It has now invested $6 million in Bridge International Academies, a company that runs fee-paying schools in Kenya. That is all very well, but why does it have to invest that much money in fee-paying schools? What people need instead is non-fee-paying schools, or schools where the fees are so small that they can manage to pay them. This deeply concerns me.

    Rainbow Children’s Hospitals is a corporate hospital chain in India that provides mother-and-baby care and fertility treatment. The question was asked whether India is a middle-income country or a poor country. India has more poor people than many other countries, but there is so much money that Christine Lagarde said in her lecture two years ago that the Indian billionaires could remove poverty overnight. I do not see why the CDC has to invest in the corporate sector in India. There is a lot of money for money-making in India. People do not give money for the poor or for poverty reduction, but they are very happy to invest in the corporate sector.

    Finally—and the worst of all—there is Narayana Health, a corporate multi-speciality hospital chainI have made some enquiries about Narayana. It is not just a hospital chain but one of the biggest conglomerates, and does all sorts of things. Its hub is in southern India and is almost like a small town. Why are we giving it money? I do not understand why we are giving money to Narayana Health, which is one of the richest organisations. I do not want my tax money—if it is my tax money—to go to Narayana Health. It has been given $48 million. It does not need money. It has more money than it can spend.

    To me, these things are very worrying. I would like somebody to take a much stronger interest in the CDC’s investment policies: which countries it is investing in and what the return is. It invested in another chain of fee-paying schools, saying, “This is very good because you only pay $6 a month to get your child in there”. Although $6 seems nothing to noble Lords sitting here, it could mean a lot to a really poor person in Africa. Will they be able to find $6 to send their child do school? So I ask the Minister please to make sure that the money is being spent for poverty reduction as well as job creation. Just creating jobs will not change a country entirely. Poverty reduction has to be a priority.

  1. Baroness Sheehan (LD)

    My Lords, I add my thanks to the Minister for introducing this Bill to your Lordships’ House. Having listened to the speeches of other noble Lords, I am also reminded—if I needed reminding—yet again about the wealth of experience, and the breadth and depth of geographical knowledge, that exists in this House. I thank everybody who has contributed to my knowledge in this area.

    This is a Bill that seeks to divert the policy of a government department quite significantly. It is a Bill that was neither trailed in the Conservative Party manifesto, nor mentioned in the Queen’s Speech. Moreover, it has been hastened with unseemly speed to its place on the statute book. Indeed, the passage of the Bill through the Commons gave rise to a good number of complaints from NGOs and think tanks that they had not been able to meet the very tight timescales made available to them and had had their submissions to the International Development Committee’s inquiry committee rejected. The Bill has been designated as a money Bill, so we in your Lordships’ House have no means by which to amend it or add conditions and safeguards—in short, no means to carry out our responsibility to give it proper scrutiny and make refinements which the Government may in time have come to appreciate. This is a pity, because taxpayers’ money—quite a lot of taxpayers’ money—is being moved from under the jurisdiction solely of Governments to an organisation which is not wholly accountable, given that it invests through funds of funds, as the noble Viscount, Lord Eccles, pointed out. That money is then outside of accountability through the Government and through DfID.

    Read more

    I am not the only one who thinks that the Bill’s designation as a money Bill is inappropriate. The noble Earl, Lord Sandwich, agreed with me, as did the report of the Delegated Powers and Regulatory Reform Committee, which said:

    “We consider that the Bill contains an inappropriate delegation of power unless the Government can provide a convincing explanation of the need for this Henry VIII power”.

    The Government did respond, but not convincingly. The need for development aid confronts us daily on our screens. Surely this is not the time to open up another line of attack for the vitriolic campaign that the Daily Mail and other rags are waging against the Department for International Development. That is what I fear this Bill will encourage. As we have seen, the CDC is vulnerable to attacks. In making this momentous and generous increase in the budget of the CDC, the Secretary of State risks exposing the entire 0.7% of GNI available for aid, yet again, to another round of attacks from parts of the media. She could have given herself some ammunition to rebut the attacks by putting some safeguards into the Bill, but then she has hardly been beforehand in rebutting any of the attacks levelled at her department. I know to his credit that the Minister is supportive of the 0.7% ODA, but will he convey to his boss that her history of attacks on DfID during the EU referendum campaign and her record of failing to defend the department on becoming its head are not reassuring?

    I move on to why I think this Bill would have benefited from some refinements. It seeks to allow the CDC a massive increase of £4.5 billion to its overall spend to raise the ceiling to £6 billion, with an option to increase it further by another £6 billion by secondary legislation to a total of £12 billion. This raises eyebrows as the CDC has a chequered past—historically coming under heavy criticism in the really bad old days. Before 2012, the CDC spent 100% of its budget through funds of funds in projects that could hardly be described as pro-poor, including as they did, the arms trade. Nowadays, one-third of the CDC’s investments are made in other intermediary funds—funds of funds—a third are syndicated with other funds, co-invested; and a third are direct investments. We hope that the proportion of direct investments which give greater accountability to taxpayers will increase under the new strategy, once that is published.

    First, let me address the problems posed with respect to transparency in the reporting of data. This is important because we need to be sure that ODA invested in the CDC can be traceable and accountable to taxpayers, in line with DfID’s international commitment on aid transparency. It is true that reporting has improved; however, a full two-thirds of the CDC’s investments remain opaque.

    The CDC needs to take this on board and push for greater transparency in the deals it does with intermediaries, be they co-investees or other funds. These deals are rarely published with clarity, giving rise to allegations of secrecy and nefarious goings-on. It must publish what it funds. This has become even more imperative given that, since 2014, all capital transfer to the CDC is now reported as ODA by DfID to the OECD credit reporting system, but not all CDC investments are eligible as ODA.

    The International Aid Transparency Initiative standard in 2012 rated the CDC as poor—a point mentioned by the noble Lord, Lord Judd—and asked it to publish what it funds. Why can it not publish country-by-country data? Neither DfID nor the CDC publishes data that give us a complete picture of how public money is invested. We do not know who is accountable: DfID or the CDC. This is unsatisfactory, and some clarity from the Minister on this question would be appreciated.

    Given that 100% of the capital transfer from DfID to the CDC will now count as ODA, it is essential, to avoid controversy, that CDC projects demonstrate that they are focused on ending poverty. Closely linking its performance framework, evaluation and reporting, strategies and policies to the International Development Act 2002, the International Development (Gender Equality) Act 2014 and the UN sustainable development goals would go some way to countering media attacks. However, the recent NAO report on the CDC’s development impact framework does not include indicators for development impact achieved. Moreover, the CDC is not formally required to report on that. Why not?

    Will the Government change their current reporting structure so that the CDC is subject to and compliant with the International Development Act 2002—surely not a big ask? Measuring impact is so important, and a really hot topic in the sector. The CDC has £5 million put aside to invest in a research project to develop a methodology to measure impact, yet that money lies unused. That is inexcusable.

    The CDC’s preference for using job creation as a measure of impact is crude. Nor is it readily verifiable, as its intermediaries and co-investees can choose to provide no back-up data for their assertions. The CDC itself must not remain silent when it is attacked in the press. It is imperative that it defends itself, and to do so it must have facts and figures at its fingertips. It is no longer enough to say that it is in the business of job creation: that is only one indicator and is, moreover, unqualified. To be more meaningful, we need to know the quality of the jobs, pay and working conditions of employees, gender and age of the workforce and whether any training or education is delivered.

    I move on to the criticism that the CDC has come under because of its use of tax havens. I hear what Diana Noble, the CDC’s CEO—for whom I have great regard, incidentally—says in defence of their use: that it is sometimes unavoidable when co-investees will not commit to a project where they believe there are not sufficient safeguards for the money or to avoid double taxation. My response is that the use of tax havens leads to the diversion of tax revenues from the poorest nations in the world—revenues that could be spent on health, education, clean water and so on—and all efforts must be made to put in place extra precautions and lend expertise to develop more robust financial practices that agenda forward. Development is, after all, the key word. These precautions may eat into profit margins, but profits at the CDC are still well above the 3.5% agreed with Ministers—for example, last year’s profits were 16%. The Prime Minister cannot on the one hand promise a crackdown on companies’ use of tax havens and at the same time sanction their use by a government-owned company.

    The CDC must be careful to guard against scandal. It must not appear in the press for the wrong reasons. Every deal must meet the Daily Mail resilience test. Will it stand up to allegations of propping up corrupt leaders? Can a luxury mall be justified—for example, would the project struggle to attract investment elsewhere if the CDC were not to invest in it? Can the project withstand allegations of “public money, private profit”? The CDC’s remit is to invest in private enterprises that would typically struggle to attract investment elsewhere, as stated in its mission statement. Does it really need to invest in high-end private education or for-profit private health? These highly profitable enterprises, targeted at the well-off, usually in middle-income parts of a country, are justified, the CDC says, because the country is overall a low-income country. The CDC would do itself a favour if it were to cease investing in such businesses and stick to its objective: invest to contribute to economic growth for the benefit of the poor.

    That is not to say that investing in health is wrong—far from it. The health sector is a key area where the impact of aid is clear and one that the public can connect with—very important—so the economic benefits of spending on health are strong, estimated to exceed cost by a factor of 20 in lower or middle-income countries. However, recently published figures for UK bilateral aid show that health has dropped from being the largest area of spending to fourth place. There is a trend of moving away from social development sectors into areas such as economic development and infrastructure, which may not always be pro-poor. That is something we must guard against. Each has its place, but we must ensure that one important sector does not lose out in place of another—a point my noble friend Lord Bruce made far more ably than I can. The CDC’s investment in health can be targeted so that it is demonstrably pro-poor.

    In drawing my remarks to a close, I highlight the lack of strategy. The current strategy ended last year. During the Bill’s passage through the Commons, the Minister, Rory Stewart, said in his response that the amendment addressing the points I have highlighted were all valid, but that they were best addressed through internal governance and the forthcoming investment strategy rather than primary legislation. We were told by the Minister that this already much-delayed strategy would be with us by last December. It is now February, and we have had no sight of the new strategy which will guide the investments under which up to £12 billion of taxpayers’ money will be spent. This is unsatisfactory.

    We must add to that the fact that the current CEO, Diana Noble, is due to leave shortly and the CDC will be under new leadership. I congratulate Ms Noble on her work for the CDC over the past five years. It cannot have been easy. The changes she has wrought have moved the organisation in the right direction. However, as I have outlined, this is very much work in progress. The appointment of a new head of the organisation will inevitably mean a different way of doing things but, without knowing who the new head will be or what the CDC’s vision for 2017-22 will look like, we are being asked to give our consent to a blank cheque.

    I confess that I feel uncomfortable about doing that. However, the Bill’s passage is assured. I hope that the Government and the CDC will take on board not only my comments but those made by others in your Lordships’ House, and ensure that the CDC does not become the weak underbelly of DfID and leave itself open to attacks from those elements in the media which have never understood the imperative for the 0.7% commitment of GNI towards international aid.

    UN figures tell us that more than 65 million people across the world have had to leave their homes to seek safety and to try to meet basic human needs for both themselves and their families. If we are to deter even more of them, in their desperation, from exposing themselves to the risks of dangerous journeys across continents, then we must work to ease their misery in their own countries. This is a moral imperative that benefits us as much as them.

  1. Lord Collins of Highbury (Lab)

    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.

    Read more

    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.

  1. Lord Bates

    My Lords, I begin by thanking all noble Lords for their contributions in what has been a thoughtful and fascinating debate that has ranged quite widely over a number of different headings. Broadly, I have categorised those—although there is a significant overlap—into: the CDC’s role in the private sector, which the noble Lord, Lord Boateng, referred to with practical examples, as did my noble friend Lord Flight with other examples, and it was also referred to by the noble Lord, Lord St John of Bletso, and my noble friend Lord Eccles; the CDC development strategy and where this Bill fits into that, which was focused on by the noble Lord, Lord Collins, along with the noble Lords, Lord Shutt and Lord Judd, the noble Baroness, Lady Northover, and the noble Lord, Lord Bruce; and, finally, the question of parliamentary scrutiny that should rightly be afforded to such an important area of public expenditure and investment, which was the focus of the noble Earl, Lord Sandwich, and the noble Baronesses, Lady Flather and Lady Sheehan. I shall take that as my rough template to draw some strands out of the initial remarks.

    The first point to make, however, is that, obviously, I echo the comments made by a number of Members during the debate recognising the significant level of expertise resident in this House that can be brought to bear in scrutinising and helping to shape strategies in future.

    Read more

    On the strategy, the noble Lord, Lord Collins, was absolutely right to take us back to the sustainable development goals and Agenda 2030. When we look at a Bill, we look at a particular strategy in isolation, and I want to try to place this Bill in the wider context, which is that of the sustainable development goals. Goal 8 has been mentioned, but essentially it is goal 1 that we are after, the eradication of poverty, which is the mission of DfID. The noble Baroness, Lady Northover, and the noble Lord, Lord Bruce, referred to that. We have made good progress on that goal. In 1990, those living in extreme poverty numbered some 2 billion; as of 2015, that number had reduced down to 705 million—almost to one-third, at a time when global population had gone up. In many ways, that heartened and strengthened the view—because a significant proportion was drawn from the commitment to the millennium goals—that global concerted action and focus could deliver significant change, if it was co-ordinated. That was why the UN Secretary-General set up the high-level panel of which the former Prime Minister David Cameron was a co-chair, which then led to the sustainable development goals.

    The sustainable development goals, which have as their target eradicating extreme poverty by 2030, with a number of successor goals to that, are very much at the heart of what we do. Because we now view development activity through the lens of the UN sustainable development goals and have our commitment—which continues to be reiterated, as perhaps it needs to be—to the 0.7%, which has been secured through legislation and our manifesto commitment, we seek to match the 0.7% with the goals. Our strategy across government for implementing the goals will be set out in a new Agenda 2030 strategy document, which will be published in the next couple of months.

    I am providing a protracted introduction because my opening remarks perhaps did not quite cover the context that this Bill fits into. We have the sustainable development goals as a focus, we have a plan which is coming and we have a UK aid strategy, which sets out the importance of economic development and of jobs, which are sustainable goal 8, as well as the eradication of poverty, which, rightly, was number one. It talks about partnerships and working together. The UK aid strategy then fits into and drives the single departmental plan of the Department for International Development as the prime lever for doing this.

    The noble Baroness, Lady Flather raised a point on data, and one of the most important elements in the sustainable development goals is, to the delight of mathematicians and statisticians, the incredibly complex data that will be required to track progress towards those goals. That is set by the United Nations Statistical Commission, and the Office for National Statistics will have responsibility for collating data from across government—including the Government Statistical Service and many other sources—and uploading those so that we can better track our progress. That rests in the single departmental plan, which is published.

    Off the back of that, last week we published our economic development plan, which recognises the importance of private sector investment in infrastructure. Gradually, this has all been built together. All of that is then scrutinised and overseen by the Independent Commission for Aid Impact, ICAI, by the Select Committee on International Development, by the NAO, whose report has been referred to, and by the Public Accounts Committee—the noble Earl, Lord Sandwich, referred to attending the PAC meeting yesterday, where the Permanent Secretary gave evidence.

    So that is the context in which this Bill needs to be set. We are arguing that it is not all about economic development; economic development is part of what DfID does—in the current year, economic development sits in an envelope of roughly £1.8 billion out of a £12 billion spend. So we are talking about funding within that envelope on economic development.

    Then we come to the question of the CDC Bill itself. The argument was that, because several years had elapsed since the Act had been passed and the cap had not been moved during that time, it was right that, given that economic development was going to play a more significant role in addressing the sustainable development goals, we look at raising that cap.

    Of course, the UK Government are the shareholder, so when we talk about hiving off funds, as my noble friend Lord Flight said, we are hiving off funds to ourselves. It is taxpayers—it is ourselves—who are the owner and shareholder, and we have the ultimate power as the shareholder, without wishing to worry current holders of posts, to appoint the board and appoint the chief executive. We can have a quite significant impact. I want to reassure noble Lords on that, because there was some concern in that regard.

    On the CDC and its strategy, I took on board the point that was made. We are now drilling down: we have gone through the sustainable development goals and the cross-government approach to delivering on aid; we are now into economic development and we have the economic development strategy; and now we are saying that it is right that there should be an investment strategy for CDC, which should be published and discussed initially with the shareholder—namely, Her Majesty's Government.

    When that was being discussed, we felt there were two alternatives: to publish the strategy alongside the Bill, or to allow the Bill to make its progress through the House and do the House the courtesy of listening to its scrutiny of the Bill. Some comments, such as the ones mentioned by the noble Lord, Lord St John of Bletso, have made a profound difference, and others, such as those brought to our attention by the noble Baroness, Lady Flather, perhaps less so. We chose to let it go through the House and for the wisdom and expertise that exists in this House to be incorporated into the final strategy that is published.

    At the same time, when agreeing our process on this, we had a couple of choices regarding parliamentary scrutiny, and I want to address this quite directly. There was a debate about whether we put in £12 billion, which was what we assessed looking forward. The noble Lord, Lord Collins, referred to the estimated $2.5 trillion funding gap, so this is significant but, in terms of the need, it is not vast. It is also fair to say that the amount we allocate, as a percentage of overseas development assistance, to capital in financial institutions is significantly less than countries such as the Netherlands, Germany, France and the USA. We asked whether we should go straight to £12 billion or have an interim stage. I suppose the conclusion was that we could take this in cycles, so the initial plan will be for the next four years and then there will be a successor plan for the following five years, which will be published and discussed. Off the back of that, there will then have to be an affirmative resolution, before your Lordships’ House and the other place, to give permission for that investment to occur. We considered that point very carefully and came to the conclusion to do it in two steps. That was the rationale behind that.

    The noble Baroness, Lady Sheehan, and the noble Earl, Lord Sandwich, asked about the CDC Bill being certified as a money Bill. I would like to say it was part of a strategy, but of course we have no control over that. The certification of a money Bill is the preserve of Mr Speaker in the other place, and I do not think he would take any advice from Her Majesty’s Government on this or probably any other matter. He certifies it and it is what it is, and we must work within that.

    I was struck by the points made and the quality of the debate. Noble Lords suggested it would be useful to have a debate on the strategy when it is published. There will be a number of other strategies around at a similar time on a sustainable development goals—sorry, let me just clarify that there will be an affirmative resolution before the House of Commons only, which will have the opportunity to comment on this second step. On whether there should there be an opportunity for your Lordships’ House to discuss this, that would be for the usual channels to agree, but I will be very sympathetic to it on the basis of the discussion we have had this morning.

    I have set out the broad headings, so let me turn in the time that remains to some brief responses to specific questions that I have not covered in my general remarks. The noble Lord, Lord Collins, asked whether there would be full disclosure of the CDC’s investments on its website. I can reassure him that a full list of investments, including the legacy investments, can be viewed on the website.

    The noble Baroness, Lady Flather, and the noble Earl, Lord Sandwich, raised the point about measuring the CDC’s contribution to poverty reduction. The contribution is clear, as it is made through jobs, local taxes and infrastructure.

    However, this economic development and investment have to be seen alongside the work we are doing with our multilateral partners in the development banks. The World Bank operates in a lot of these countries and international finance institutions in some regions have been mentioned, such as the Caribbean Development Bank. We also have a UK Caribbean Infrastructure Fund partnership. We use many different vehicles and direct investment is just one.

    We also have a huge commitment, rightly so, in education—which the noble Baroness, Lady Northover, oversaw as well during her time as Minister. It is true that no one has ever got out of poverty by aid alone and therefore trade is required, but it is equally true that, as well as economic development, you need education. Without the skills and the workforce, then I am afraid it is not going to happen. We have a major programme in education, which then feeds into economic development and our work with our international partners in respect of that.

    In terms of independent evaluations, there was an evaluation commissioned in 2015 by a team from Harvard. It reviewed the CDC’s investment for the period 2008 to 2012 and concluded that the CDC’s investments had been transformational—a point made by my noble friends Lord Flight and Lord Eccles and the noble Lords, Lord St John of Bletso and Lord Boateng—such as in the work of the Africa Enterprise Challenge Fund particularly with small and medium-size enterprises.

    The noble Viscount, Lord Eccles, asked about the proportion of the CDC portfolio that is now direct. The noble Lord, Lord Bruce, referred to the report on this from when he chaired the Select Committee. The CDC has built up its capacity and moved significantly from operating as a fund of funds to operating more directly where it could exert greater control and measure the results. In 2015, 67% of new commitments by value were direct investments, and we expect this ratio of about two-thirds direct to one-third through funds to continue.

    The CDC was set a great challenge, and many noble Lords rightly paid tribute to the work of the current chair and current—and outgoing—chief executive, Diana Noble. I certainly echo that. The CDC’s staff are immensely high-quality and combine private sector expertise with a compassion for the world and a determination to ensure that we improve our performance in relation to the poor.

    There was a criticism that the CDC has gone for easy wins. Perhaps that applies to a bygone era, as the noble Lord, Lord Boateng, referred to, when it was perhaps being “fattened up” for privatisation. When we decided during the coalition Government, when Andrew Mitchell was Secretary of State, that we wanted this to be a long-term public vehicle as part of our economic development strategy, we narrowed the focus. We said, “Where are the poor people?”. The answer is that 80% of that 700 million-plus that I mentioned still living in extreme poverty are in Africa and south Asia. Therefore, that should be the focus of our attention.

    What is the greatest need in those areas? Is it for financial sector instruments? That may be part of it, but I agree with the noble Lord, Lord Collins, that the greatest need is for jobs and better jobs in those areas. So we said that the focus should be on the areas of greatest poverty and on job creation as being the objective. That is a fair area to head for.

  2. Baroness Flather

    I was trying to say, with some of the examples that I gave, that they do not need money: they are already very wealthy and they have jobs that they are giving to people. There has to be something focused on the areas where there is not enough money.

  3. Lord Bates

    That is right. The noble Baroness refers specifically to India, which is of course itself a signatory to the sustainable development goals and the eradication of poverty by 2030. That will have to be its focus.

    A number of other questions and particular points were raised. I will review the record, particularly with reference to the points made by the noble Lord, Lord Judd, at the beginning, and where there are gaps or I can add anything, if it will be convenient for the House, I will write to noble Lords. I reiterate my commitment to continue to engage with the House as the CDC progresses with its strategy and we finalise the new business case.

  4. Lord Judd

    I am grateful to the Minister for what he has said and the fact that he will write to me, although it is a pity that, because this is a money Bill, we do not have the opportunity to go into these things in Committee. However, will he agree with what has been said by quite a number of noble Lords in this debate, that the CDC, which of course has a lot of admiration, must remember that job creation and the eradication of poverty are not synonymous? Job creation can play an important part, but the eradication of poverty is a greater issue. We must not let one become a substitute for the other.

  5. Lord Bates

    I defer to the noble Lord’s great experience in this area. He is right. He is also right to say that it must not be perceived as an imposition. This must be something that comes from the ground up. It must be about strengthening capacity within the countries. That is why education, healthcare and all the other things that we are doing in terms of infrastructure are so critical to the overall success. I accept that.

    The CDC is the oldest development finance institution in the world. It is a great British institution that reflects the values of the British public, who consistently demonstrate their concern for and generosity towards the poorest. We will make sure that we can all continue to be proud of the life-changing, pioneering work that this institution does. With that, I ask the House to give the Bill a Second Reading.

    Read more

    Bill read a second time. Committee negatived. Standing Order 46 having been dispensed with, the Bill was read a third time and passed.