House of Commons
Tuesday 29 November 2016
The House met at half-past Eleven o’clock
[Mr Speaker in the Chair]
Business before Questions
I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Act:
Investigatory Powers Act 2016.
Oral Answers to Questions
The Chancellor of the Exchequer was asked—
Economic Growth: Coastal Areas
The Government are committed to helping coastal communities unlock barriers to economic growth. For example, we have invested more than £125 million in more than 200 projects across the United Kingdom through the coastal communities fund. That investment is forecast to deliver more than 18,000 jobs and help to attract more than £240 million of additional funds to coastal areas. Last week, in the autumn statement, I announced the allocation of £1.8 billion from the local growth fund to all regions in England.
Coastal areas face specific challenges because they do not have 360° access to trade with neighbouring areas, and the Isle of Wight faces additional challenges because we have no physical link with the mainland. Does my right hon. Friend regard the Isle of Wight as a special case that deserves extra support from the Government?
I know that every single one of my right hon. and hon. Friends will regard his or her own constituency as a special case, but I can tell my hon. Friend that the Government recognise the specific barriers to economic growth experienced by coastal areas such as the Isle of Wight. That is why we are extending the coastal communities fund by at least a further £90 million across the United Kingdom over the current Parliament. In addition, as my hon. Friend will know, through the Solent growth deal the Isle of Wight has benefited from nearly £15 million of investment to expand the skills base, support business growth and improve transport links.
Coastal areas in the north of England have been left behind for too long. We now know that the cost of Brexit to our economy will be the best part of 60 billion quid. Will the Chancellor commit himself to replacing the EU structural funding that gives coastal areas such as New Ferry, in my constituency, half a chance to make economic progress?
We have already made announcements about EU funding during the transition period, giving a Treasury guarantee to underwrite funding that is allocated to projects in the UK, so that people who bid for that funding can do so with confidence. However, as the hon. Lady suggests, after we leave the European Union we will need to review for England, and discuss with the devolved Administrations for Scotland, Wales and Northern Ireland, how we are to replace the streams of EU funding to which many regions have become accustomed. We need to have a debate in the House to ensure that that funding is used in a way that reflects the UK’s priority in the future, not the priority of the wider European Union.
Selsey Bill, in my constituency, is a special case, but the best thing that can be done for coastal areas is to secure stronger growth throughout the economy. Mario Draghi has suggested that UK growth would be lower if, as a consequence of Brexit, the UK economy were less open to trade and investment. Does the Chancellor agree that both the UK and the EU benefit from an open economy, and that, if the European Central Bank is worried about a Brexit shock to the eurozone, he can and should be lobbying EU leaders to press for a high degree of mutual market access in the Brexit negotiations?
Order. We are discussing concern for coastal areas.
Absolutely, Mr Speaker. I agree with Mario Draghi that a reduction in openness would be very bad for the economy of Selsey Bill, and my right hon. Friend is right to draw attention to that. I entirely agree that the best way for the Government to protect the UK’s economy is to argue for the most open possible trading relationship with the European Union after we leave.
The coastal communities of Cumbria were deeply affected by Storm Desmond last December. The River Kent, which meets the sea at Morecambe bay, is one of Britain’s fastest-flowing and shortest rivers, and when it flooded last December, untold damage was caused to communities and the economy throughout the county. In last week’s autumn statement, the Government went back on their word from last December to fund the resilience of bridges to help prevent future flooding. Will the Chancellor apologise to the flood-hit communities of Cumbria for that betrayal, and, even at this late stage, will he change his mind?
We did announce funds for flood resilience in the autumn statement, distributed from money that had already been set aside for that purpose in the spending review. I did not mention Cumbria specifically in the autumn statement, but I will look at the case that the hon. Gentleman has raised, and will write to him.
I welcome my right hon. Friend’s announcements of the various sums, and may I suggest that the sums the Government have put aside for coastal defence are critical for places such as Whitstable, in my constituency, for generating economic as well as social confidence among the people who live there?
My hon. Friend is absolutely right and of course flood defences are categorised as economic infrastructure precisely because they are a critical enabler of business activity and are critical to protect transport, communications, infrastructure and so on, and we will continue to invest in them.
It is about time we heard from this Government about support for our coastal economies because we have just seen, in last week’s autumn statement, a catalogue of six and a half years of abject failure, whether on infrastructure, skills or support for businesses. The coastal communities of Formby and Crosby in my constituency need to hear a lot more from the Chancellor. They need support now and in the future.
If the hon. Gentleman had been listening, what he would have heard last week was a catalogue of 2.7 million new jobs created over the last six and a half years, a deficit inherited from Labour at a peacetime record high slashed by two-thirds, a million new jobs created in the UK, record employment levels and 865,000 fewer workless households, all of which will have made an important contribution to improving living standards and prospects in coastal communities throughout the UK.
The Government are committed to supporting housing supply and ensuring that the housing market works for everyone. Good progress has been made since 2010, with housing supply now at an eight-year high. In October, my right hon. Friend the Communities and Local Government Secretary launched a £3 billion home building fund to provide loans to house builders to unlock over 200,000 homes. However, the scale of the challenge requires us to go further, which is why my right hon. Friend the Chancellor announced that the Government will invest £2.3 billion in a new housing infrastructure fund that will deliver up to 100,000 homes, and will invest an additional £1.4 billion to deliver 40,000 new affordable homes.
Will the autumn statement’s £3.15 billion boost for London housing be flexible enough to meet the aspirations of both Londoners wanting a home they can afford to rent or buy and London’s homeless, whose complex needs include the need for supported housing?
I can provide that reassurance to my hon. Friend. The Government are committed to supporting housing supply and ensuring that the housing market works for everyone, including Londoners. London’s £3.15 billion affordable housing settlement will deliver over 90,000 affordable housing starts by 2020-21 across a range of tenures, including homes for low-cost home ownership and submarket rent, as well as supporting housing for Londoners with particular needs, and of course London will also benefit from the housing infrastructure fund.
More people in my constituency rent privately than own their own homes and for most of them ownership is a distant or impossible dream. Are the Government considering looking at the supply of private rented housing on longer tenures, perhaps with rent guarantees, and possibly using tax reliefs or other mechanisms the Treasury has in its armoury, to encourage landlords to provide those longer-term tenancies and better security for the many private rented sector tenants?
The Government are taking action to ensure that we build more homes. There is a need for flexibility in terms of tenure, which was at the heart of my answer to my hon. Friend the Member for Enfield, Southgate (Mr Burrowes), but last week’s autumn statement included a series of measures that will help to ensure that we are building more homes in this country, which is what we need.
Why is there such a large gap between the number of planning permissions and the number of housing starts, and what specifically can the Government do to close that gap?
There has consistently been a gap. What is important is that there is certainty of supply. We need to ensure that we have the right planning system in place and the right fiscal support, and that is what the Government are determined to deliver.
In last week’s autumn statement, the Chancellor raised the tax on house insurance by 20%. How is that supposed to help first-time home buyers to get access to housing?
We were very clear that the 2% increase in insurance premium tax was a revenue-raiser that enabled us to introduce the measure on changing the taper for universal credit, which increases the incentives to work. We believe that was the right course of action, but if we look at the autumn statement, and indeed the announcement made at the Conservative party conference, what is very clear is that this Government are committed to ensuring that we build more homes, which is what the public rightly expect.
The independent National Audit Office is carrying out an inquiry into the Concentrix contract and it plans to publish its report in early 2017. That is in addition to Select Committee and Public Accounts Committee scrutiny, which has been extensive to date and will no doubt be extensive in the future.
I should like to take this opportunity to congratulate my hon. Friend the Member for Sheffield, Heeley (Louise Haigh), who is not in her place, whose hard work got this issue on to the agenda and forced HMRC to act. In July, the independent Social Security Advisory Committee said that the Concentrix contract was a
“major departure for HMRC, as decisions about a claimant’s past eligibility to a benefit are being made by a commercial organisation”,
“this same organisation is then performing mandatory reconsiderations when a claimant challenges the initial decision.”
What are the Government going to do to prevent this situation from happening again?
The chief executive of HMRC addressed that particular issue in one of his evidence sessions to a Select Committee. I hope the House will be pleased to hear that HMRC has taken back and completed all 181,000 cases from Concentrix and has now cleared most of the mandatory reconsiderations. [Interruption.] There are of course issues to consider. That is why the National Audit Office is carrying out its inquiry, which is already under way, and the Government will of course respond to its report in due course.
The Concentrix scandal left huge numbers of people in hardship, and some of them are still paying off the debts to loan sharks that they took out to see them through. Ministers must have seen the complaints letters, and they must have seen what was in the media. Were they asleep at their desks? Were they just caught napping? Concentrix, HMRC and the Minister at the time need to be held responsible for this, and we need a proper inquiry.
I would make the point to the hon. Gentleman that a proper inquiry is exactly what the National Audit Office will be undertaking, and I am sure that the hon. Member for Hackney South and Shoreditch (Meg Hillier) and her Committee will have that report in front of them in due course. This matter will be properly looked at in some detail. Over the course of the contract, considerable savings were made for the taxpayer in relation to fraud and error, but it is true that things went badly wrong towards the end of the contract, which is why swift action was taken.
While recognising the points made by the hon. Members for Great Grimsby (Melanie Onn) and for Stoke-on-Trent South (Robert Flello) on the Concentrix contract, which will be covered in the Select Committee’s report, I would like to congratulate Treasury Ministers on responding very fast when these issues really came to a climax in August and on being extremely prompt in looking after constituents who contacted their MPs about this matter.
I thank my hon. Friend for those words. Having looked carefully at the profile of complaints from Members over the period of the contract, it is clear that there was sharp increase in their number right at the end of the contract, when it became apparent that a number of Members were contacting us on behalf of their constituents. As I have said, it was the sharp decline in service that led to the actions that we took. It is also worth noting that all the 181,000 cases that were taken back have now been resolved and that, where appropriate, compensation has been paid. Most importantly, when claims have needed to be renewed and reinstated, this has been done.
Given the issues in my constituency that I have raised, I am pleased that the Concentrix contract has now been brought to an end. Does the Minister agree that an inquiry by the National Audit Office, which works for and answers to this House, will be far more effective in getting lessons learned than a long-winded public inquiry that could become a lawyer-fest?
My hon. Friend is exactly right to say that the National Audit Office inquiry is the way to go. This is an area in which it is deeply experienced and the work is already under way. The report will be produced in the new year. In order to draw conclusions and to find these reports helpful, that speed of inquiry is important. We will have the report early in the new year, and the House will have further chances to scrutinise it at that time.
HMRC Penalty Surcharges
Ultimately, the Government want to collect the right tax at the right time, not charge penalties. As it happens, we are currently reviewing ideas for how we charge penalties. A discussion document was published last year, and we recently consulted on a new approach to sanctions for late submissions of returns and late payment of taxes. We are currently considering all the comments received and if my hon. Friend wants to contribute to that process, I will be happy to look at any detailed points.
I am more than happy to contribute. A small building company in my constituency has paid large VAT bills on time since 1972. However, on one occasion, because of a mistake by a member of staff, the company’s VAT return was one day late and the company was hit with a totally unfair £12,000 penalty charge. During the review, will Ministers consider changing the penalty charge system so that they are levied only on businesses that repeatedly fail to pay their VAT on time? “Three strikes and you’re fined” might be a good system.
I note what my hon. Friend says with interest. It is worth clarifying that the VAT default surcharge system already contains safeguards to help businesses avoid penalties and that no business incurs a surcharge the first time it makes a late payment. My hon. Friend may want to write to me about that individual case because I cannot address it here in the House. The current system of surcharges is structured in a way that allows the smallest businesses up to four late payments without incurring a surcharge, so I suggest that he writes to me with the details, which I will pass on to HMRC.
The new “Making tax digital” arrangements, which will require businesses to submit quarterly returns, increase the likelihood of sanctions being imposed following late returns or non-submission. How does that fit in with the Government’s promises to make it easier to start a business, to cut red tape and to make businesses more competitive?
I do not recognise the hon. Gentleman’s description of “Making tax digital”—an important reform that we will consider carefully. We said in the autumn statement that we will respond in the new year, but it is not right to say that there will be four returns; information will be digitally uploaded to the system more regularly. It is also the case that one of the driving forces behind “Making tax digital” is to help small businesses to get things right first time, because there is an awful lot of error that often costs businesses money that they would otherwise be owed.
I must press the Financial Secretary on that point. I appreciate that the “Making tax digital” programme does have advantages, but many small businesses are worried about quarterly reporting. Will she consider making it voluntary rather than mandatory?
I reiterate to my right hon. Friend that it is envisaged that people will upload information quarterly, but that is not the same as four tax returns a year, something which got some currency at the time. Several significant concessions regarding the number of small businesses that were exempt from the system were announced over the summer, but I am listening carefully to the points being made both by colleagues in the House and by some of the important stakeholders with whom we have been engaging. That is why we said that we will respond in the new year. We do not want to rush our response; we want to consider all the points carefully.
Investment and skills are front and centre in our plans to raise productivity across the country, including in the south-west. The autumn statement announced a new £23 billion national productivity investment fund that will be targeted at four areas that are critical to improving productivity: housing; transport; digital communications; and research and development. We also announced in the autumn statement that the south-west will receive £191 million from the local growth fund to back local priorities and support new jobs and £19.5 million extra investment to bolster the area’s resilience to flooding.
I welcome the Chancellor’s words and appreciate that he is keen for funding to be granted and attached to infrastructure projects that will bring a positive economic effect. With that in mind, will he consider supporting road improvements on the Toneway-Creech Castle corridor that leads into Somerset’s county town of Taunton, which will unlock 3,000 housing units?
I understand that the Heart of the South West local enterprise partnership bid for this scheme is part of its local growth fund submission; as I said, £191 million has been allocated to the south-west, and details of the individual LEP allocations will be announced in the near future. The Government are very supportive of using infrastructure to open up house building and employment opportunities, and from what she has said about this road, it sounds as though the project in question would fit very well with Government priorities.
As the Chancellor will know, Bristol is making a real contribution to productive growth, not just in the south-west, but across the country. But as the mayor of Bristol said in his response to the autumn statement,
“if the government wants a ‘watertight’ UK economy it needs to stop punching holes in local government’s hull.”
Will the Government commit to giving Bristol and cities like it the devolved powers, infrastructure investment and funding they need to deliver on productive growth locally?
The Government remain committed to the devolution agenda and, in particular, to supporting mayoral authorities, to ensure that economic growth and productivity are driven from the bottom up. We will continue to work with those authorities to make sure we deliver the funding available in the most effective way to get the result the national economy needs.
I very much welcome the Chancellor’s commitment to road, rail and broadband. Openreach should be broken away from BT to deliver proper competition, because in the hardest-to-reach areas for broadband in my constituency and across the west country, we need some greater players and greater competition.
I appreciate what my hon. Friend is saying. He will know that there has been a long and heated debate about the best way of delivering our broadband infrastructure in the future, and Ofcom is at the heart of reviewing this issue. I shall continue to have meetings with Ofcom, and with representatives of BT and others, over the coming days, as will my right hon. Friend the Culture Secretary.
The south-west’s productivity has drifted down since 2010 and, according to the House of Commons Library, the UK overall has seen the widest productivity gap with the G7 since 1991, when the data series began. What plans, if any, does the Chancellor have to pursue his predecessor’s so-called “Fixing the foundations” productivity plan? Or is that another failed policy that this Chancellor is trying quietly to jettison?
No, and if the hon. Gentleman looks at the document we published last Wednesday, he will see that it contained a specific reference to “Fixing the foundations”, which is the base document setting out the Government’s agenda for addressing productivity issues. Of course, the key announcement in last week’s autumn statement was an additional £23 billion of borrowing specifically targeted at the highest-return investment projects; this is designed to raise Britain’s productivity by raising the productivity performance of our regional cities, in particular, and our regions more generally, to that of London and the south-west.
It is six years late. The productivity gap has widened for both the south-west and the country, and so has the gap in earnings and wages. According to the Institute for Fiscal Studies, the outlook for wages is “dreadful”, with workers likely to earn less in real terms in 2021 than they did in 2008, and with the biggest losers being lower-income families, with the poorest third likely to see incomes drop. So in tandem with action on the productivity crisis, what are the Chancellor’s plans for action on the wages crisis?
First, if the hon. Gentleman that if he looks at real household disposable incomes, he will see that the picture is rather brighter, and they present a much more real picture of what people in the economy are experiencing. He is right to say that real wages are a reflection of productivity performance, and the only way sustainably to raise real wages is to raise the productivity performance of this economy. So rather than whinging about whether something was done this year, last year or six years ago, and perhaps with a careful eye on the performance of the previous Labour Government in this area, he might care to welcome the announcement made last week as an appropriate initiative to try to raise the UK’s productivity performance, and raise real wages and living standards over the long term.
Business Investment: UK and East Anglia
The Government are taking significant steps to encourage business investment in East Anglia and in all regions of the UK by cutting corporation tax to the lowest rate in the G20, delivering a £6.7 billion business rates package and allocating the £23 billion of public investment through the national productivity investment fund to ensure increasing and improved productivity. The autumn statement also announced £27 million for the Oxford to Cambridge expressway road link, as well as funding for the east-west rail link, and local enterprise partnerships in the east of England will also receive up to £151 million of local growth funding.
I welcome the Chancellor’s reply and the announcement of investment in the Oxford to Cambridge corridor and the transformational effect that that could have. Will he also ensure that other schemes to the east of Cambridge, such as the vital Ely North rail junction and improvements to the A47, also go ahead on time? He will be aware that they are crucial to the future economy of west Norfolk and other parts of Norfolk.
I will certainly pass on my hon. Friend’s comments about that particular rail scheme to my right hon. Friend the Transport Secretary. My hon. Friend will know that we have a large programme of rail infrastructure in place and that the additional funding for the east-west rail link that was announced last week was outside that core rail programme. I hope that he will agree that the Oxford to Cambridge corridor represents a real growth opportunity for the south and the east of England to exploit Britain’s two best known universities and their world-class research reputations to enhance the productive capacity of our economy.
Since 23 June, there has been a significant depreciation of sterling and two announcements of major investments in UK motor manufacturing. The prospects for investment in UK manufacturing more widely are now much improved. Will the Chancellor be seeking to ensure that the more sensible exchange rate welcomed by Lord Mervyn King, among others, is sustained?
No. It is not the Government’s business to sustain or manage the exchange rate in any way, as the hon. Gentleman very well knows. We have an inflation target, but exchange rates are set by markets and reflect market views about the economy and expectations of the trajectory of the economy in the future. He is absolutely right to observe that, over the past six months, we have seen some remarkable endorsements of the British economy through large inward investment decisions made by foreign inward investors.
May I congratulate the Chancellor on the £23 billion of extra money for this national productivity investment fund, which will confer huge benefits on the whole of the United Kingdom? Although I do not expect him to comment on the considerable merits of the A610 growth corridor and the improvements to the road at Giltbrook, I am very happy to meet him to persuade him of them. On a serious note, will he do everything he can to ensure that excellent schemes such as those are expedited and not caught up in what can sometimes be bureaucratic tangles?
It is an excellent scheme indeed. My right hon. Friend will know that it is not only the £23 billion of additional funding for economically productive infrastructure that was announced on Wednesday last week, but a core £150 billion of funding for the same defined purposes over the remainder of this Parliament and the Government’s commitment, repeated last Wednesday, to move to a roads fund from 2020, funded by the revenues from vehicle excise duty, all of which adds up to a sustained commitment to investment in our roads.
Brexit is putting business investment on hold at the expense of job losses. This comes after a long period of escalating debt and slumping growth. Furthermore, quantitative easing has failed to raise confidence and stimulate business investment in the real economy. The autumn statement measures announced are simply insufficient. What else will the Chancellor do?
I simply do not recognise the picture that the hon. Gentleman paints. The Bank of England’s monetary actions have undoubtedly had a positive effect in stimulating the economy. The performance of consumer demand over the past few weeks has demonstrated that very clearly. We have the key elements in place, both monetary and fiscal, for our current circumstance, which is the potential for a more difficult period ahead. We need to muster our resources, make sure that we are able to support the economy through this period, and, at the same time, address the fundamental challenges, such as the productivity problem, to ensure that Britain is match fit to meet the challenges that it will face as it leaves the European Union.
In that regard, I am sure that the Chancellor would agree that research and development investment is critical to obtaining a high skill, high wage economy and one that increases productivity, as he has recognised. It is therefore disappointing that the autumn statement has failed to match R and D investment as a percentage of GDP in line with other major economies. What will the Chancellor do to fill that gap?
What I will do over the medium to long term is get the British economy back on to a firm footing, so that we can fund all those investment needs—which we do have, as the hon. Gentleman points out. Let me turn the question around. Scotland will receive £800 million of additional capital funding through Barnett consequentials as a result of the announcement made last week. From the tone of the hon. Gentleman’s question, I feel sure that the Scottish National party will want to confirm that that money will be used in Scotland, as it will in England, to target productivity-raising capital investment, so that the Scottish economy can perform more strongly in the future.
Leaving the EU: SMEs
The UK remains very much open for business and the Government are committed to supporting SMEs to access the capital they need to grow, as demonstrated by the £400 million increase in funding for the British Business Bank announced at the autumn statement, unlocking £1 billion of funding.
The Minister will be aware that more than £10 billion of EU structural funds is invested annually in the UK, particularly in Wales. Indeed, in my constituency of Ogmore, many small and medium-sized businesses have benefited from Jobs Growth Wales, which is a success of the Welsh Labour Government. Will the Minister give a cast-iron guarantee to the people of Wales that structural funding will continue, pound for pound, after we leave the European Union?
We want to see the economy benefit every part of the UK. It is interesting to note that there are almost 1 million new businesses in our country since 2010, and I note the Prime Minister’s announcement at the CBI conference about the new patient capital review, which will be interesting, I am sure.
Does my hon. Friend agree that Brexit is essentially a red herring for SMEs in this context, that what matters is that the Government create the right conditions for businesses to do business and that the banks are in a sufficiently capitalised position to lend money?
I agree absolutely with my hon. Friend. It is about creating an economic environment in which businesses can grow and thrive. The British economy is strong and will continue to be strong as we prepare for our departure from the EU.
What would be the impact on SMEs, particularly those in the supply chain of big manufacturing firms such as Jaguar Land Rover or Airbus, if we were to leave the EU without full access to the single market or a free trade deal with the rest of the EU and if we were forced to fall back on World Trade Organisation rules and tariffs?
The Government have been clear that we will not comment on every turn of the negotiations. Indeed, the negotiations have yet to start. However, we are absolutely committed to getting the best possible deal we can.
Does the Minister agree that the City of London plays a very important part in helping businesses to raise capital and that maintaining clearing in euros in the City of London will be an important way to ensure that the City retains that status?
The City of London is a very important financial centre and we fully intend it to remain as such. Clearing is an important element of the negotiations, and we will do all we can to retain London and the UK as a financial centre of excellence.
In the autumn statement, we prioritised additional high-value investments, specifically in infrastructure and innovation, that will directly contribute to raising Britain’s productivity. The Chancellor announced a new national productivity investment fund of £23 billion to be spent on housing, transport, digital communications and research and development over the next five years. Local enterprise partnerships will receive £1.8 billion of growth deal funding. This will go towards the projects needed to bring about economic growth in local areas, including new homes, transport improvements and supporting businesses and people to access the skills they need.
I welcome all those measures to boost productivity and particularly to turn attention to infrastructure and the specifics for the east of England given yesterday. However, given the strategic importance of the A14 trunk road linking Felixstowe port with Cambridge and the rest of the country, as well as its significance to 80% of businesses in Suffolk, does the Minister agree that further improvements to a road that he knows well are vital to productivity?
My hon. Friend is right—it is a road that I know well. We certainly agree that the A14 is a critically important part of the network. We are investing £1.5 billion for a major upgrade to cut congestion on the A14, including a new 21-mile road between Huntingdon and Cambridge, and only yesterday my right hon. Friend the Transport Secretary was able to go there to witness the start of the work.
No, that is not true. There is a balanced package and all parts of England will benefit from the transport measures. The Barnett consequentials should mean that Scotland, Wales and Northern Ireland can also benefit in this area. A specific announcement about the midlands hub was made in the autumn statement and there is more to be said about the midlands engine. This is a Government who are determined to ensure that the whole country benefits from economic growth.
My hon. Friend highlights the fact that digital must be key to improving productivity. That is why a £1 billion package was announced in the autumn statement. There was also specific help for rural areas through rural rates relief. Our ambition is clear: to provide the best digital infrastructure we can for urban and rural areas.
In table 4.21 of the report Office for Budget Responsibility’s it forecast that the Government will underspend on infrastructure by £15 billion in the next five years—two thirds of the additional money announced by the Chancellor last week. Why should the public have any confidence in the ability of the Government to deliver on their promises when their own watchdog clearly does not?
The OBR has always taken a cautious view on delivery of infrastructure, but let us remember that we have already delivered 3,000 projects. We have set out an ambitious plan for delivery of infrastructure improvements in the course of this Parliament, and that is exactly what we will deliver.
The Government are committed to ensuring that exporters receive world-class support. That is why the autumn statement announced the doubling of UK export finance capacity.
Last week, the OBR reduced its trade forecast, stating that this is
“due to the loss of trade that the OBR judges will result from the UK leaving the EU.”
We all know that this Government would like to have their cake and eat it, but changes to export finance alone will not bridge the gap between ambition and reality. Do the Government seriously expect to meet their own target of doubling exports without continued membership of the single market and without a comprehensive plan to do so? Do the Government stand by their exports target?
We do, and it is interesting to note that the Federation of Small Businesses, for example, welcomed the doubling of export finance because it felt that it would help small and medium-sized enterprises reach new markets. It is also interesting to note that the Scotch Whisky Association highlights the importance of exports, and it has seen an increase of 3.1%, to 531 million bottles. Perhaps the hon. Lady might remove uncertainty in Scotland by stopping banging on about a second referendum.
Does my hon. Friend agree that the best thing the Treasury can do to help British business export is to allow it to keep more of the profits it earns by continuing to cut corporation tax?
We have legislated for corporation tax to be reduced to 17% by the end of this Parliament—one of the lowest rates in the G7—and we will do all we can to help businesses grow and thrive in this country.
Last week’s autumn statement should have been about providing answers to meet the challenges of Brexit and at least information on the options available. Instead, it appears that the only information we can glean is from photos snatched of the notes of a senior Conservative official in Downing Street. We know now, in the light of that leak, that many of the Chancellor’s senior colleagues in the Government are reluctant to pursue the transitional deal being called for by businesses when we leave the EU. Will the Minister now provide some clarity by inviting the Treasury and the Office for Budget Responsibility to undertake a full assessment of the public finance implications of the range of policy options associated with Brexit, including access—or not—to the single market, being in or out of the customs union and the potential for transitional arrangements?
I have to tell the right hon. Gentleman that that is a normal part of what we do on a very regular basis, and he really should not believe all he reads in newspapers from researchers or Back Benchers—it is hardly Government policy.
I take that as a no.
Last week, we learned in the OBR report that the OBR was denied any information in respect of assurances provided to Nissan. The OBR said:
“On this occasion we asked specifically whether any contingent liabilities had been created in respect of assurances provided to Nissan and the Treasury declined to say.”
This level of opaqueness on an existing deal undermines the certainty businesses need to invest in any future deals. Will the Chancellor now provide the OBR with the information it has requested, so that it can provide a more accurate forecast, rather than being left in the dark or, as it put it, “none the wiser”?
Perhaps we should welcome the jobs to start with. However, in answer to the right hon. Gentleman’s question, it was, unfortunately, not possible to confirm this to the OBR in time to feed into the drafting process. Her Majesty’s Treasury therefore provided the same answer as it would to any query on contingent liability.
Public Infrastructure Spending
In the autumn statement, as I have said already, I announced the creation of a new national productivity investment fund to provide £23 billion of additional investment. That is on top of the £150 billion that is already baked into the baseline, and it is focused on the key areas for boosting productivity—housing, infrastructure and research and development.
I welcome the £800 million in Barnett consequentials, which the Scottish Government will invest on top of the £100 million they have already announced for capital projects, but what further steps will the Chancellor take to address the almost 10% cut to the Scottish capital budget since the Tories came to office?
The Scottish Government will have a full share of infrastructure spending through the Barnett formula, and we will work with the Scottish Government and all other devolved Administrations and regional entities, as we work to raise the UK’s productivity game. That is about infrastructure investment—both public and private. It is about raising skills. It is about raising management capability, and we announced that we would fund the Charlie Mayfield initiative to disseminate best management practice across small and medium-sized enterprises. It is about doing all these things to ensure the UK is match fit to prosper in the global economy in the future.
May I ask the Chancellor not to blindly hand over any extra infrastructure spending in West Yorkshire to the Labour-dominated West Yorkshire Combined Authority for it just to pump money into the Labour heartlands, and instead make sure that money can be spent in other parts of West Yorkshire, including on a Shipley eastern bypass, which would benefit the local economy and the economies of my hon. Friends the Members for Pudsey (Stuart Andrew) and for Keighley (Kris Hopkins), too?
I am grateful to my hon. Friend. I did not know that Labour had any heartlands left, so that is an interesting comment. I will pass on his concerns to my right hon. Friend the Transport Secretary and ask him to take them into consideration when he makes his allocations.
Order. I remind colleagues that topical questions are supposed to be sharply shorter, and the same goes for the replies. We made remarkably slow progress in the first session this morning, and we really need to do rather better.
My principal responsibility is to ensure the stability and prosperity of the economy. In the current circumstances, I judge that that requires a combination of near-term measures to ensure resilience and longer-term measures to manage the structural adjustment, as the UK transitions out of the EU, and to address the UK’s long-term productivity challenge. The package announced in the autumn statement last week delivered on both requirements.
So far the Chancellor has disregarded Members’ requests to give justice to the WASPI—Women Against State Pension Inequality Campaign—women. Will he now listen to bodies such as North Tyneside Council, which, under our elected mayor, Norma Redfearn, has written to the Government to ask for a fair transition of the state pension right for all these women?
I understand the concerns, but this issue was debated extensively during the passage of the Pensions Act 2011, when the Government made concessions to this group of individuals worth £1.1 billion.
I am sure the hon. Gentleman will be wearing that excellent pullover as he does so.
This is year four of Small Business Saturday, and the campaign continues to get bigger each year. Small businesses and entrepreneurs are the backbone of the British economy. The Government will continue to support Small Business Saturday this year with events across the country. I encourage right hon. and hon. Members in all parts of the House to be in touch with their local enterprise partnerships and their local branch of the Federation of Small Businesses to find out what is going on locally and to get out there and support it.
Last week, we saw the accumulation of six wasted years of failed economic policies supported by both the Chancellor and the Prime Minister. Following last week’s autumn statement and the publication of the Office for Budget Responsibility forecasts, can the Chancellor confirm how much worse off a pensioner on the state pension will be by 2019-20 as a result of the OBR’s downgrades to wage forecasts?
I am slightly mystified by the hon. Lady’s question, because the downgrades to wage forecasts will not be the driver of the circumstances of a pensioner on the state pension, given that we have introduced a triple lock that guarantees pensioners an increase in line with inflation, in line with earnings, or 2.5% as a minimum. However, I am happy to look at the specific question and to write to the hon. Lady with a calculation.
Let me inform the House that the forecast is this: a pensioner on the state pension will be £429 worse off by 2019-20, with only the triple lock preventing an even worse decline. After claiming in the autumn statement that the triple lock will now be subject to review, will the Chancellor end the uncertainty and worry he has caused older people and join me in committing to preserve the triple lock throughout the lifetime of the next Parliament?
Well, this was worth waiting for: we have a firm commitment by the Opposition to run the triple lock through the lifetime of the next Parliament. I wonder whether the hon. Lady knows how much money she has just spent, without knowing the fiscal circumstances the country will face. What we have said, and the only responsible thing to say, is that all the commitments we have made for the duration of this Parliament we will review at the spending review before the end of the Parliament, and we will decide then which ones we can afford to renew and which ones are appropriate to renew. I think this tells us everything we need to know about the Opposition: three and a half years out, they are willing to spray around commitments without any idea of what it is going to cost them.
My hon. Friend is right to point to the fact that we inherited a complex system in that regard. Her Majesty’s Revenue and Customs has enhanced its online services. There will be an online service, for example, for people making new claims for tax credits starting in April 2017. The use of real time information through pay-as-you-earn has really helped to pick up potential errors in claimants’ income, and it is making a difference.
I will take that as a representation and make sure that my right hon. Friend the Transport Secretary is aware of it. The hon. Gentleman will be aware that we are already setting out an ambitious programme for road spending over this Parliament. In addition, my right hon. Friend the Chancellor of the Exchequer made announcements last week about putting in more funding to improve our road network across the country. I am happy to look at the case that the hon. Gentleman raises.
I recently visited ASV Global in Portchester, an innovator in unmanned and autonomous marine technologies. In just six years, ASV has designed 70 new products, which it has delivered to 10 countries and 40 customers. What further support for research and development is available to companies such as ASV to boost job creation and wealth?
We have done two things. Within the £23 billion that I announced last week to raise the UK’s productivity game is a significant increase in public R and D investment. We also said—we will do this before the Budget—that we would carry out a review of the way that tax support for privately funded R and D works, with the objective of ensuring that the UK is the most attractive place in Europe to do private R and D work. I will report at Budget 2017.
No, not necessarily at all. We spend our ODA in different ways, and different Departments have relatively small pools of ODA. Of course, the great majority of it goes through DFID. Where GNI contracts and the ODA budget needs to be trimmed accordingly, we will look to take away the lowest-value ODA spending. I think that that is the way the taxpayer would expect it to be done.
Further to the Chancellor’s answer to my hon. Friend the Member for Fareham (Suella Fernandes), could he set out how QuestUAV in Amble, a manufacturer of mapping and survey drones, and other high-tech north-east businesses will be able to access the R and D funding that he talks about?
Public R and D funding will take two principal forms. There will be further funding to the science base in our universities, and there will be funding through Innovate UK, which is accessible by companies to support innovation. We already have an excellent base in basic science. What we need to do now is to up our game in innovation and the application of that science.
The right hon. Lady and I have recently spoken about this issue, and as she knows, there has been some work done to look at the broader issue. It is complicated, but I undertake to look at it again and respond to her. Of course, some of the broader aspects of the gig economy will be covered during the Taylor review.
According to the Library, infrastructure spending per head is 2.5 times greater in London and the south-east than in the regions. Does the Chancellor agree that now is the time for a fairer distribution of investment spending across the UK?
The Government are committed to investment in all the regions of the UK. We have delivered more than 500 infrastructure schemes in the north since 2010, and more than £13 billion of spending is planned on transport in the north during this Parliament. In Yorkshire, this includes new trains on the east coast main line, the trans-Pennine railway upgrade and bringing the A1(M) up to motorway standard for its full length. I would just say to my hon. Friend that figures for London and the south-east are distorted by the effect of the strategic Crossrail project, with a cost of £14.8 billion.
I cannot give the hon. Gentleman a precise date, but I have discussed this with the business managers. The rules of the House mean that 28 days must elapse before the charter is laid. I think that that will put it in the second half of January, but we will have the debate as soon as we can after the statutory period.
As other Members have mentioned, there is growing alarm about the impact of making tax digital on small business people, of whom I am one. Will the Chancellor confirm that, in time, quarterly tax returns will also apply to Members of Parliament?
As my hon. Friend mentioned, we touched on this earlier. Making tax digital is an important reform. I have mentioned already that some important concessions were made during the summer, by taking many very small businesses out of making tax digital, but it has much to offer small businesses. I am looking carefully at all the responses that have been made, and as he knows, I have listened carefully to the points that he has made on a number of occasions.
It is not a vehicle to interfere, but we have been clear from the very beginning that if the Northern Ireland Executive wish to reduce corporation tax rates in Northern Ireland, they need to do so in an environment in which we can be confident that the public finances are on a sound footing in Northern Ireland.
When I met the leader of North East Lincolnshire Council yesterday, he emphasised to me that one of the major challenges facing our coastal community is that many people retire there and put additional strains on the adult social care budget. Will Ministers assure me that that will be considered when allocating departmental budgets?
Yes, demographic trends are of course at the heart of our considerations when budgets are allocated.
With just one in six people with autism in employment, would it not have been better to invest in improving the Work and Health programme, rather than cutting it, to assist people to gain employment and thereby save on benefits? They want to work.
The reforms that we have announced will enable us to spend £330 million on practical support to ensure that people in the work-related activity group can work. May I point out that, over the past three years, the number of disabled people in employment has increased by nearly 600,000?
The key insight of the Government’s productivity plan is that value can be unlocked through more timely implementation, so will the Chancellor have a word with the Transport Secretary to see how he can speed up the completion of the final part of the Oxford to Cambridge link from Bedford to Cambridge?
I will certainly have a word with my right hon. Friend. This is partly about smart delivery, but it is also about having certainty and a pipeline that allows contractors in the supply chain to plan ahead.
Does the Chancellor realise that if he tries to push the funding gap in social care on to local councils, it will be grossly unfair for areas such as Doncaster, where a 1% increase in council tax would raise 21% less than it would for the council in the Prime Minister’s constituency? Will he commit to funding social care fully?
As I said on Wednesday, with the additional social care precept and the better care fund, we have measures in place that will make £3.5 billion of additional funding per annum available for social care by the end of this Parliament. But we recognise that local authorities have a challenge in the profiling of that money. My right hon. Friends the Health Secretary and the Communities Secretary are very much aware of that and are in discussions about it with health bodies and local authorities.
I welcome my right hon. Friend’s announcement in the autumn statement of £1.7 million of LIBOR money going to Sea Sanctuary to help with mental health provision in Cornwall. Does he agree that that will be a huge help for people all over Cornwall who in the past have had to travel many hundreds of miles to access such services?
I am very pleased that the money will deliver that effect in Cornwall. It is always good to see fines levied on the appalling behaviour of the few making such a positive difference to the many.
To follow on from the question from my right hon. Friend the Member for Doncaster Central (Dame Rosie Winterton), the demand for social care services in my constituency is set to rise by 10% in just one year, so will the Chancellor take the opportunity today to commit to additional funding for social care?
No, these are not the occasions when we commit to additional funding. We have a funding settlement in place and substantial increases in social care funding will become available by the end of the Parliament. But as I have said, we recognise that some authorities are facing some challenges on the profiling of that funding, and my right hon. Friends the Health Secretary and Communities Secretary are discussing that issue with local authority leaders.
Does the Chancellor agree that one way to improve productivity in the west midlands economy is to agree a more ambitious second devolution settlement, building on the success of the devolved settlement agreed with the West Midlands Combined Authority?
I agree with my hon. Friend. As I said on Wednesday, the Government continue to discuss with west midlands authorities the possibilities for further devolution in the west midlands. The other way to get the west midlands economy motoring is to elect a mayor with genuine business experience, like Andy Street.
The Scotch whisky industry is the largest net contributor to the UK’s balance of trade and goods. In the light of Brexit, what options is the Chancellor examining to make sure the industry can keep that privileged position of exporting?
We will have discussions with the Scotch Whisky Association, as we do with many trade associations. Without getting into a technical discussion, I should say that dutiable goods are less likely to be adversely affected by a change in the way we trade with our European neighbours than many other goods, because there is already a specific regime for dealing with them that is unlikely to have to change as a result of Brexit.
Order. I am sorry to disappoint remaining colleagues, but I have extended the envelope as far as I felt it in any way reasonable to extend it.
Historical Sexual Abuse (Football)
(Urgent Question): To ask the Secretary of State for Culture, Media and Sport what the Government are doing to support victims of historical sexual abuse in football, and what steps are being taken to help to ensure that there is no repeat of it.
Nothing is more important than keeping children safe. Child sex abuse is an exceptionally vile crime, and all of Government take it very seriously indeed, as I know this House does.
Children up and down the country are able to play football thanks to the dedication of thousands of adults, many of them volunteers. The vast majority have no stain on their character. However, where people who work with children betray their trust, the effect is devastating.
I pay tribute to those who have summoned up the courage to speak out. It is vital that they know that their voices will be heard, whether they are speaking about historical crimes or about anything that is happening currently. Coaches and parents have a duty of care to children—indeed, everyone does—and must also speak out where they suspect abuse.
My Department, the Home Office, the Department for Education and the Ministry of Justice all have responsibilities in this area. Recent allegations of sex abuse are currently an operational police matter, so Members will understand that I cannot comment in detail.
As soon as this news broke, I spoke to the chair of the Football Association, Greg Clarke, and the chief executive of the Professional Footballers Association, Gordon Taylor. I made it very clear that the Government will support them in addressing these issues head-on.
The National Society for the Prevention of Cruelty to Children has set up a hotline, supported by the FA, which anyone can call if they want to talk to someone in confidence. That will help to build a picture of the potential scale of both historical and more recent abuse to inform next steps. The number is 0800 0232642.
The FA has instructed independent leading counsel Kate Gallafent QC, an expert in child protection, to deal with its review of the allegations. The internal review will look at what the FA and clubs knew, and when, and what action was or should have been taken. Alongside that, the child protection in sport unit, which assists the FA in relation to its safeguarding procedures, will carry out an independent audit of the FA’s practices. Today, the Minister with responsibility for sport, the Under-Secretary of State for Culture, Media and Sport, my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch), will write to all national governing bodies to ask them to redouble their efforts to protect children who play their sports. Additionally, I have spoken to Chief Constable Simon Bailey this morning, the national police lead on child abuse. We have agreed that I will convene a meeting with him, the FA and others to discuss the situation.
It is important to say what measures we have in place today to prevent abuse. The child protection in sport unit was founded in 2001 to work with UK Sports Councils, national governing bodies, county sports partnerships and other organisations to help them to minimise the risk of child abuse during sporting activities. The unit helps organisations to identify adults who are a threat to children and young people, and to develop safeguarding knowledge and skills among all staff and volunteers. Since 2002, the Disclosure and Barring Service, previously the Criminal Records Bureau, has provided a mechanism to request criminal record information relating to people working or volunteering with children.
The first duty of any Government is to protect its citizens, and the first duty of all of us is to protect children.
I thank the Secretary of State for her response. I begin by paying tribute to the members of the Chapecoense football team and all those who lost their lives in the tragic plane crash earlier today. Our thoughts and prayers are with them and their families.
We must pay tribute today to former footballers who have shown unparalleled bravery in sharing their stories and in bringing this issue into the public light. I met some of them on Friday morning and expressed that in person. In the light of recent allegations of historical sexual abuse in football, the Professional Footballers Association has said that six football clubs have been named by victims; that more than 20 former players have now come forward; that five police forces across the country are opening up investigations; and that FIFA is monitoring the situation closely.
I welcome the NSPCC opening up its hotline. It received more than 50 phone calls in the first two hours of opening. What else are the Government doing to ensure that victims have a safe place where they can speak out confidentially, which is vital?
The FA, in conjunction with regional associations, needs to ensure that the message goes right through our game, from Sunday league to premier league. What are the Government doing to reassure parents, who will no doubt be worried about these claims? This situation has the potential to seriously damage the reputation of football in our country. I welcome the FA announcement that Kate Gallafent QC will lead the investigation. Let us remember that 99.9% of coaches and volunteers have children’s best interests at heart—an overwhelming majority want the best for them.
We need representatives from the FA, the Government, schools and relevant organisations to work with the police not only to ensure that any historical claims are fully investigated, but to ensure that abuse is stamped out and that our young players have a safe and confidential way to report incidents. Will the Secretary of State tell the House what steps the Government are taking to ensure that all the relevant bodies work in conjunction to ensure that victims are supported? As more victims come forward, and as the number of named clubs grows, the police investigation will undoubtedly get bigger. Is there a plan in place to ensure that the police have all the resources they need, and how is the DCMS team looking across the sports sector to ensure that such cases do not happen again in any sporting environment? We have a cross-party duty to protect our children and young adults. Upon this I am sure we can all agree.
I join the hon. Lady in sending my condolences to the victims of the plane crash today. Such events remind us how fragile human life is and how important sport is to people. This tragedy has affected people greatly.
I concur with what the hon. Lady said about the unparalleled bravery of the victims and survivors. In my previous role in the Home Office, I met many survivors of child sexual abuse, as the Under-Secretary of State for the Home Department, my hon. Friend the Member for Truro and Falmouth (Sarah Newton), who is here today, continues to do. It never ceases to amaze me how brave and profound somebody is who comes forward and talks with such honesty about their experiences.
The hon. Lady asked about the support available, and of course we have talked about the NSPCC helpline. The NSPCC and its helplines stand ready to support any victims of child abuse from whatever walk of life. The PFA also reassured me last week that it stood ready to support victims. It is happy to take calls from victims of historical and non-recent abuse, so that it can support them and make sure that appropriate measures are taken.
The hon. Lady is right that the vast majority of coaches and volunteers are honourable and working in the best interests of children, but it is true that parents and others must remain vigilant, as in any walk of life, and make sure that our children are not left vulnerable to abuse. We must take those necessary steps and remain vigilant, no matter what the activity, be it sport, music, dance, creativity or anywhere children might be with people who might wish to hurt them.
The hon. Lady is right that we need to work together, and I welcome her cross-party support for what we are doing. As I said, I spoke to Chief Constable Simon Bailey prior to coming to the Chamber, and he reassured me about the work of Operation Hydrant, the long-standing cross-force police investigation into all allegations of non-recent abuse. He has assured me that there will be a single policing lead for each of the investigations to make sure that all the information coming in is treated appropriately and that all intelligence is shared. It is incredibly important that we bring perpetrators to justice.
Finally, the hon. Lady asked about other sports. As I said, my hon. Friend the sports Minister is writing today to all national governing bodies and regularly meets them, as do I, to make sure that the safeguarding measures in place are as robust as possible. We need to learn all lessons and continue to be vigilant.
Does the Secretary of State agree that the FA’s internal review must be a properly resourced investigation looking at the culture within football that allowed abuse to take place for so long and to go unreported and un-investigated for so long? Furthermore, does she agree that if the report is to have credibility, it must be published in full and in public, so that we can all learn the lessons of football’s problems and make sure that children are safeguarded properly in the future?
My hon. Friend is right that the review needs to be properly resourced, and the FA has assured me that that will be the case. When I spoke to Greg Clarke, he made it absolutely clear that it would be transparent in every way. No good will come from anybody trying to cover anything up. We need to know exactly what happened, how it happened and what went wrong, and to make sure that those mistakes are not made again.
On my behalf and that of the SNP, I echo the comments by the Secretary of State and the shadow Minister about the tragic plane crash in Colombia this morning.
The allegations of sexual abuse are abhorrent and deeply tragic. Anyone who abuses a position of trust to prey on young people and children must be brought to justice. Stereotypes of masculinity in football and society in general can make it extremely difficult for men and boys to come forward and speak out as victims of abuse. The players that have come forward have shown immense courage in doing so, and we hope any other victims will be able to do the same.
The Scottish Football Association has backed the dedicated NSPCC helpline, and remains in contact with the NSPCC and is working with it to respond appropriately if more victims come forward. The SFA has also set up a dedicated email address—childrenswellbeing@scottishfa. co.uk—for people to get in touch confidentially. If anyone in Scotland has been affected, we urge victims to come forward and seek help and support using this email address or the NSPCC helpline. May I ask the Secretary of State what structures her Department will put in place to ensure a joined-up approach across the UK in supporting any victims who come forward?
I start by congratulating the Scottish Football Association, which has done joint safeguarding work with UNICEF. I believe that to be a very positive step and I offer my congratulations on it. My hon. Friend the Minister for Sport has been in contact with the SFA this morning, as she has been with other football governing bodies from other parts of the United Kingdom. We want to make sure that we work together on this matter. I congratulate the hon. Gentleman on wearing his white ribbon. I am fiddling in my pocket, but I do not seem to have mine there. The white ribbon campaign is a fantastic one, demonstrating that we all stand against abuse. I appreciate that the white ribbon campaign deals specifically with violence against women and girls, but the fact that men are standing up against that abuse as well is incredibly important.
The hon. Gentleman mentioned the bravery of the individuals coming forward in a very masculine world, and I think we live in a changed environment in this respect. I think there is more opportunity for people to come forward nowadays. I listened to an interview on Radio 5 “Sportsweek” on Sunday, and I was impressed by the honesty with which an individual victim spoke. It was incredibly brave. It is very difficult, but I urge all victims and survivors to come forward.
The revelations about football are shocking, and I applaud the fact that the Minister for Sport is going to write to the governing bodies of other sports. When it comes to the monsters who perpetrate these disgusting acts, in times gone by there was a chance that they would have looked at the possibilities in other sports as well. What else, then, are we going to do, other than write to the governing bodies, to ensure that there is a proper investigation into other sports to make sure that this was not going on elsewhere?
I understand that my hon. Friend is particularly concerned about this issue. He, like me, represents a constituency that is close to where the allegations took place. As a constituency MP, I pay particular attention to what has happened to my constituents. I urge both my and my hon. Friend’s constituents to come forward in this respect. The Minister for Sport will write to all governing bodies, as I have said, but this is an ongoing process, and we continue to work with all sports to make sure that safeguarding efforts are as robust as they possibly can be.
We have to pay tribute to Andy Woodward for starting this process. He took an extremely brave step. I concur with the Secretary of State that we need to encourage others to come forward and speak in confidence in the first instance to the helplines that are available. Simon Bailey has said that he expects other institutions to be brought into this, which might result in other sports’ governing bodies having in effect to investigate themselves. There must be some sort of independent oversight, so will the right hon. Lady tell us what discussions she has had with colleagues in other Departments? What are the Government going to do to ensure that this House and the public can be reassured that there is independent oversight of the investigations into these sports’ governing bodies?
I agree with the hon. Gentleman about the bravery of Andy Woodward. I understand that during the time I have been on my feet, over 250 reports have been made to the NSPCC helpline, of which 51 are in Cheshire alone.[Official Report, 30 November 2016, Vol. 617, c. 5-6MC.] It is also important to make sure that the police have the time and space they need to carry out proper investigations and inquiries, ensuring that they obtain all the evidence. We want to see perpetrators brought to justice wherever possible, and we need to make sure that the police have time to do that. I understand from the Under-Secretary of State for the Home Department, my hon. Friend the Member for Truro and Falmouth, who has safeguarding responsibilities, that the independent inquiry into child sexual abuse will look to establish whether it is appropriate for this issue to be covered as part of its overarching work to understand what happened with historical child abuse and the failings in the system.
Before I was elected to this place, I worked as a criminal barrister for 16 years, so I have defended more than my fair share of paedophiles. It undoubtedly takes huge courage for someone to come forward and explain how they were abused as a child. It is also an unfortunate part of the particular wicked perversion of a paedophile that they should be cunning and deceitful. Does my right hon. Friend agree that, although we do not want a witch hunt, we do need to be sure that everybody involved with children in sport understands the nature of these wicked, horrible people? That is why it is so important to put in place rigorous measures to safeguard our children and keep them safe.
I agree absolutely with my right hon. Friend, who has huge experience of the criminal law and of this particular area. In my previous Home Office role, I met a number of sporting bodies regarding DBS and other checks, and this included the FA, which I know takes this matter incredibly seriously.
I associate myself with the remarks of others about the hideous and tragic crash in Colombia earlier today.
I pay tribute to those who have come forward and initiated the national discussion that we are now having. It takes immense courage, but the impact on others who might have suffered is huge, encouraging them and strengthening their resolve to come forward. Last weekend, I stood on the touchline watching my son play for Milnthorpe Corinthians against Kendal Wattsfield. Tens or even hundreds of thousands of children play football every weekend. It is our national game. I thoroughly respect what the FA is doing with its investigation. What I am saying is in no way an attempt to undermine or criticise the FA, but given that this is the national game and the potential scale of the problem, will the Secretary of State ensure that there is independence in the investigation and that resources are put into it? We must not simply allow the sport to investigate itself.
The hon. Gentleman speaks about the huge enjoyment that children get from grassroots sport. In common with him, I enjoy seeing my children play in grassroots sport. I do not think any of us should ever forget the massive benefits that come from children’s involvement in sport—being part of a team, being outdoors, getting into the routine of turning up for practice and the general camaraderie of it all. That is incredibly important. When it comes to grassroots sport, we should take the same approach as parents as we do with any other situation that we put our children into. We make sure that we are confident that we trust the people whom we allow to make contact with our children. We must trust and respect them, and ensure that they go through the appropriate safeguarding checks.
On the issue of an independent inquiry, it is important to remember that the inquiry led by Professor Alexis Jay is looking at a variety of matters. For example, it has taken the reports of Dame Janet Smith from the BBC, and it is important that the inquiry is given the time to look at institutional failings. Even more importantly, we must allow the police the time and space they need to carry out their investigation.
All Members share a sense of horror about what we have heard in recent days. Will the Secretary of State thus confirm that all the appropriate resources are in place, so that these matters can be thoroughly investigated. Will she also undertake to ensure that this will be kept under constant review?
Yes, and I think our record as a Government stands firm. We could look at Rotherham, for example, and the extra resources that were put in there to make sure that the survivors of child abuse had the confidence to come forward, so that cases could be brought. Yes, the Government stand ready to provide support.
Many parents might be shocked to know that, under changes brought in by the previous coalition Government, there is no requirement for volunteers, such as a football coach, to have a Disclosure and Barring Service check if they are being supervised by someone in regulated activity. This was raised many times when the Bill went through the last Parliament. Will the Secretary of State consider looking further at that to give the reassurance to parents that their children will be kept as safe as possible?
I think the hon. Lady should recognise the need to ensure that safeguarding takes place in an effective way. DBS checks are required for people who may be left alone with children. We must ensure that those checks are maintained and that the DBS is allowed to do its job. Of course, if failings are found as a result of these inquiries, I will stand ready to work with other Departments to ensure that safeguarding takes place as robustly and appropriately as possible.
These really are shocking allegations, but do not many of us here know inspirational coaches in our communities who inspire our children to play sport not just for the sake of achievement and winning medals, but to get fit and to experience that sense of team spirit, togetherness and camaraderie? I fear for the volunteers who give up their time, come rain or shine, to work with young people and encourage them to become involved in sport. Will the Secretary of State work with all sports governing bodies, including the Professional Footballers Association and the Football Association, to ensure that those who give up their time to volunteer will continue to do so?
My hon. Friend has made a point that I have been attempting to make. We must ensure that those inspirational coaches—volunteers who give up their time because they genuinely want to help and work with young people and who have no intent to hurt those young people—are allowed to do their job. We must ensure that we have appropriate, robust safeguarding that gives parents the comfort that they need and protects our children, but we must also ensure that volunteers come forward and those inspirational coaches are allowed to do their fantastic work.
I have had extended conversations with the right hon. Lady’s Department, with the Department for Education and with Sport England. What my hon. Friend the Member for Kingston upon Hull North (Diana Johnson) said is true: there is a big loophole. Indeed, there is a loophole when sports do not have governing bodies, and there is also a loophole when the people involved are self-employed. Will the Secretary of State undertake to look into that, given that it will also be affecting music tuition?
I invite the hon. Lady to meet my colleague the Minister for Sport, who would be happy to discuss those matters with her.
I congratulate the hon. Member for Tooting (Dr Allin-Khan) on tabling the urgent question and my right hon. Friend on the way in which she has responded to it. In a place like Kettering, football is 95% a voluntary activity for the players and coaches. Basically, the dads are the coaches and the mums wash the team kit. [Interruption.] In the vast majority of cases, the dads are the coaches and the mums wash the team kit: that is what life is like in middle England. I think that they would want me to ask the Secretary of State to ensure that the judges get the message that, when these people are caught, exemplary sentences must be handed out to make clear that such behaviour is totally unacceptable.
I think I ought to put on the record that it is quite clear that not all coaches are male. My hon. Friend the Minister for Sport is a grassroots football coach, and an extremely competent one at that. I also know of many husbands who are very good at washing the dishes and making the food. I am sure that my husband, if he is watching the debate, would be concerned if I did not put that on the record. However, my hon. Friend’s point about the sentencing of offenders is very important, and I can tell him that I work with the Ministry of Justice to ensure that appropriate sentences are available.
Given the growing number of professional clubs that are allegedly accused of being somehow involved in this affair, is it not time that the Government concentrated on football governance again? For six years we as a Parliament have dragged our feet, and the coalition and this Government have done nothing about it. Corporate governance and the “fit and proper persons” test should be involved in deciding who runs football clubs, so that those at the bottom, our children, can be assured that they are being looked after by those at the top and that there is responsibility.
As the hon. Gentleman will know, the Government published the new governance codes for sport on 31 October, and I hope that he welcomes the work we have done to ensure that all sport is subject to proper and appropriate governance. It is important for us to be certain that we can have confidence in our sports governing bodies.
I pay tribute to the courage and bravery of those who have exposed this dreadful act. I know that we are talking about historical football abuse, but will the Secretary of State tell us what strategy she has to work with the Department for Education, the devolved Administrations and, indeed, all the governing bodies of all sports to reassure parents that their children are safe when playing sports, and also to reassure the coaches who give up their time, mainly voluntarily, to provide the sporting infrastructure that enables children to participate?
I hope the hon. Gentleman will be reassured to know that that is exactly what we are doing. We are writing to the governing bodies of all sports and working across Government to ensure that we have a co-ordinated response.
What is being done to ensure that those who are under suspicion in relation to the 1980s and 1990s are no longer involved in our national game, or indeed in any other sport?
I can reassure the hon. Lady that the police are making inquiries and that the DBS checks would ensure that those with criminal convictions would not be given disclosure certificates allowing them to work with children. They would also probably be barred from working with children.
Football, by its very nature, is a transient sport. Children move from club to club, and, obviously, professional football players move from club to club and even from country to country. Can the Secretary of State confirm that enough resources will be made available to ensure that victims are positively identified, rather than our relying on self-referral to the helpline? We need to understand how many victims there are if we are to assess the scale of the problem and offer support where it is needed.
It is important to look at patterns of behaviour to establish whether players may have been exposed to perpetrators, as would happen in any other investigation of this nature, regardless of what the background of the contact between the perpetrator and the victim might have been. It is also important for victims to come forward. While I accept the hon. Gentleman’s point about the need to go out and actively seek those victims, we will not find any unless some are prepared to come forward. Once again, I pay tribute to the bravery of the victims and survivors who have come forward and told their stories in such an honest way, allowing the police to obtain the evidence that they need, so that we can bring the perpetrators to justice.
With permission, Mr Speaker, I shall make a statement about the Government’s corporate governance Green Paper, which we are publishing today.
Successful businesses are the backbone of our society and our economy. They are the reason why ours is the fifth largest economy in the world. They create employment opportunities, and they contribute significantly to the funding of our country’s public services. There are many reasons why Britain is a reliable place in which to do business: for instance, our legal system and framework of company law have long been admired around the world. The Government are proud of our thriving industries, and we want to build on those strengths and enhance our competitiveness even further.
One of our biggest strengths is our record on corporate governance. It is already highly regarded around the world, especially for its combination of flexibility and high standards. Despite that record, however, our strong reputation can only be maintained if the Government and business regularly review and upgrade those standards. We want to guarantee not only that Britain is an excellent place in which to do business, but that it is where business is done best.
I am privileged, in my position as Secretary of State, to meet regularly not just those who run successful businesses, but their employees and customers. I have discussed with company heads the way in which their corporate governance is an integral part of their success. It inspires confidence among investors, loyalty among employees and trust among customers. Ordinary working people who work hard for their living deserve to feel confident that businesses act responsibly and fairly. When an individual business or businesses lose the confidence of the public, faith in business generally diminishes, to the detriment of us all.
There is no conflict between good corporate governance and profitability; indeed, poor corporate governance is a prelude to financial disaster. This Government are unequivocally and unashamedly pro-business, but we also hold business to a high standard. It is right to ask business to play its part in building an economy that works for everyone. Over the last few years, there have been a number of proposals, from both the Government and those representing business, to update our corporate governance framework. In some cases these have been made in response to concerns about the actions of a very small number of businesses which have undermined the reputation of British business generally, whose standards are among the highest in the world. Today, we are launching a discussion paper on how corporate governance could be reformed. I will, as is usual, be placing a copy of the Green Paper in the Library.
The paper considers three aspects. First, it asks for opinions on shareholder influence on executive pay. Members of the House will be aware that executive pay has grown much faster over the last two decades than pay generally and at times is not in line with corporate performance. The document seeks views on this issue, and in particular on strengthening shareholder voting rights with a view to making them binding, encouraging shareholder engagement with executive pay, and promoting greater transparency over pay.
Secondly, the document asks whether there are measures that could increase the connection between boards of directors of companies and their employees and customers. It asks whether the establishment of advisory panels and the appointment of designated non-executive directors to take formal responsibility for articulating employee, customer and other perspectives is the right way to proceed. We are not prescribing how this should be done; it would be whatever is most appropriate for the business.
Thirdly, our discussion paper asks for views on whether some of the features of corporate governance that have served us well in our listed companies should be extended to the largest privately held companies.
These are issues about competitiveness, and creating the right conditions for investment, as much as they are, importantly, also about fairness. This Green Paper is designed to frame that discussion, so that we can move quickly to consider which changes are appropriate at this time. We want to hear from as many people as possible about how best we can increase confidence in big business and achieve better outcomes for our economy. This does not mean the imposition of regulation when other avenues are open. One of the strengths of our system of corporate governance has been the use of non-legislative standards adopted by business itself.
We are determined to make Britain one of the best places in the world to work and carry out business. This review will help us achieve that aim and the views of businesses, investors, employees, consumers and others with an interest in successful business are warmly welcomed. I commend the statement to the House.
It is a shame that the Secretary of State did not share the statement with us in advance; presumably we are now expected to get first sight of Government policy through a long lens on Whitehall. But after weeks of press briefings, at least they have finally decided to come to this Chamber, because we have heard a lot about the Prime Minister’s policy on corporate governance, but the more they said, the less we have actually known.
When the Prime Minister launched her leadership, she said she wanted a change in the way big business is governed. She said:
“later this year we will publish our plans to have not just consumers represented on company boards, but workers as well. Because we are the party of workers.”
But it seems there has been a change of mind because just weeks ago we heard it was not about putting workers on boards but about finding a model that works for everyone. Perhaps it is the same model as for Brexit: to have their cake and eat it.
When we debated in the Chamber last month the fate of Sir Philip Green, I said that the most shocking thing about the whole affair is that everything he did was legal. A key question today is whether anything that has been proposed would change that: do these proposals pass the BHS test?
Bringing private companies into the plc rule book is a move so targeted at a particular series of events that I expect it will come to be known as the BHS law, but had the proposals outlined today by the Secretary of State been in place six months ago, I am not wholly convinced we would have avoided the corporate governance scandals that have plagued the last summer. To force private companies to abide by the corporate governance code will do little unless the code is tightened. BHS may have been a private company, but Sports Direct is not, and we all know what has gone on there.
Similarly, to strengthen the power of boards to give oversight on how companies are run or their remuneration structures will change little unless the make-up of those boards is also shaken up, yet we all know what has happened to the Government’s commitment to put a diversity of voices on boards. It is a weakness of too many discussions of corporate governance, and a weakness reflected in this Green Paper, that they are dominated by high-profile scandals.
For too long our economy has suffered from an inherent short-termism—a short-termism that sees the long-term health of a company being sacrificed for a quick buck, and that all too often obscures the link between rewards and long-term performance. In 1970, £10 in every £100 went on dividends; now, it is between £60 and £70. It is employees and investment that have lost out from this shift. We see that in our pitiful investment and productivity rates. Britain now languishes 33rd out of the 35 OECD countries on investment rates. Seen in this light, it is no surprise that it takes British workers five days to produce what German workers produce in four—and we see this in the yawning gap between top pay and average pay: in the 10% increase in executive pay when workers are suffering 10 years of stagnant wages.
Our damaging short-termism is also seen in corporate takeovers that occur against the public interest and the company’s interest—takeovers that have instead served as a means to asset-strip, as when Kraft took over Cadbury with hedge funds buying up 31% of the shares and selling Cadbury short.
When the unacceptable face of capitalism surfaces, as it has in the last few months with the scandals in BHS and Sports Direct, what we are witnessing is the extreme manifestation of these broader problems, and that is what makes today so particularly disappointing. Corporate governance reform is not just about improving the image of our corporate sector or placating our innate sense of injustice at the lack of proportionality between the salaries of directors and their employees; nor is it just about fulfilling the wishes of the six out of 10 members of the public who, as TUC figures show, want to see workers on boards. These things matter, of course, but corporate governance reform is also about changing the way our companies, and therefore our economy, work.
The recasting of how our economy works is key to Britain’s success. Without more long-termism in our corporate practices, we will not be able to address the problems—
Order. The hon. Gentleman has had his five minutes. I do not know whether he was then proposing to put questions, but I gently say to Members that in these matters there is a form to be followed—a procedure to be adhered to—and although I have listened to the hon. Gentleman with great care and attention, he has contributed in the manner of a debate rather than a response to a statement. Ordinarily, I would be very happy to hear his questions, but Members cannot make a long preamble and exceed their time, and then almost as an afterthought get around to some questioning. So I think we will for now have to conclude that the hon. Gentleman has concluded his contribution. But I am sure the Secretary of State will find in the commentary some implied questions, using the great intellectual dexterity for which he is renowned in all parts of the House.
I am grateful to you, Mr Speaker, and I apologise to the hon. Member for Norwich South (Clive Lewis) for not getting the statement to him earlier; we started a bit sooner than we were expecting, but—
Order. As I have mildly castigated the hon. Member for Norwich South (Clive Lewis), I should say that it must be admitted that that would have been helpful.
You are absolutely right, Mr Speaker, and I apologise.
I hope the hon. Gentleman will contribute to the consultation. It is clear that he shares an interest in improving the standards of corporate governance, which we have done from time to time in this country over many decades. We have a good reputation for corporate governance, and it is important to record that the rest of the world looks, and has looked, with admiration at the British economy, the rule of law and the non-legislative aspects involved. I hope he will agree that the examples of poor corporate governance he mentioned are blemishes on a very strong overall record of responsible corporate behaviour in this country. We should put on record our recognition of the importance of business and our support for the job creators, the risk takers, the innovators and the investors—the people who, through their profits, generate the taxes that sustain our public services.
It is reasonable to have a constructive discussion on this matter through the consultation, and that is what we intend to do. The hon. Gentleman said that executive pay had been escalating. Perhaps he would like to reflect on the fact that the biggest rise in chief executive pay was actually in the period from 1998 to 2010, when the average rose from £1 million to £4.3 million a year and the ratio of chief executive pay to full-time employees’ pay rose from 47:1 to 132:1. He is a reasonable and generous man and I know that he will concede that, under the years of Conservative leadership, the average pay for chief executives has fallen from £4.3 million to £4.25 million a year and that that ratio has fallen from 132:1 to 128:1. So we are moving in the right direction and these further reforms will take us further.
The hon. Gentleman mentioned the proposals to have workers and consumers on boards. The Prime Minister has been very clear on this, and it is testament to her leadership that she set out her intentions right at the beginning of her term of office and that we are now coming forward with these proposals. She made it clear that we would have not just consumers but employees represented on company boards, and these proposals will allow that to happen and encourage the practice to be taken up.
The hon. Gentleman mentioned the relevance of our reforms to the more high-profile sources of controversy. Of course, one option is to extend the good provisions for public companies to our very largest private companies. He will know that the Financial Reporting Council’s governance code requires extensive monitoring of risk levels for plcs over and above the requirements placed on limited companies. He mentioned cases involving listed companies, and I hope he will agree that having a greater connection between employees and directors is a step in the right direction. Conservative Members are unashamedly and unequivocally pro-well-run business, and I hope that he shares our view. Consistent with that, it is important to work with business, employees and other groups from time to time, to look at what we can do to stay ahead of the pack. That is what this consultation does.
Will any of these proposals result in a diminution of the pile of cash on which corporate Britain is sitting, and of the practice of companies buying up their own shares?
We are encouraging a greater role for shareholders in driving behaviour in the boardroom, because this is a matter of concern. It is connected to the point that—to be fair to him—the hon. Member for Norwich South made about long-termism. We want to see a more patient form of capital sustaining businesses that have the capacity to grow, and I hope that this will come out as part of the consultation.
May I start by giving a cautious welcome to the Secretary of State’s announcement? It represents some progress, but there are aspects missing and more clarity is required in some areas. There is general consensus that the pay gap between executives and employees is too large, and we firmly believe that addressing that by properly valuing and investing in employees is a key part of addressing the productivity problem. Companies need to be transparent about pay. If their pay for executives is justifiable, they must justify it to their staff and to their shareholders. In particular, the move to give shareholders greater control and a binding vote on executives’ pay is welcome. Indeed, it is incredible that such a situation does not already exist. What is the timescale for the entire process, and when will the changes be implemented?
More needs to be done about boardroom diversity. I was given very short notice of the statement, and it remains unclear what is to be done about diversity in the boardroom. Will the Secretary of State expand on that aspect of the proposals? I think we would all like to see boardrooms reflecting society more completely. That would be good for business and it would send a clear message to everyone across the country that business is a place for them.
Let me turn finally to the question of workers on boards. In the Prime Minister’s party conference speech, she said:
“Too often the people who are supposed to hold big business accountable are drawn from the same, narrow social and professional circles as the executive team.”
From my reading of the proposals and from what the Secretary of State has said, it appears that that will remain the case, but with one person from those same narrow social and professional circles designated to speak to the employees or consumers. That does not go far enough; it is a missed opportunity. When the Prime Minister said, “We are the party of workers,” was that post-truth or was it never true at all?
I am grateful for the way in which the hon. Gentleman started his remarks, at least. He struck the right tone in welcoming the proposals as a sensible way to proceed, as I believe all business organisations, consumer groups and others have done. I hope that he will contribute to the consultation. He made a point about the value of transparency, and that is very much what we are proposing. We do not want to specify the appropriate pay for a chief executive—I do not think he does either—but it is right that companies should justify their decisions to shareholders and to employees. They should make their case for the pay and the package that they are choosing to offer.
The hon. Gentleman asked about the timing of the consultation. It will close in three months’ time, in February, and we will respond as soon as possible after that, depending on the number of responses. He also asked about diversity on boards and remuneration committees, and he will see that both questions are addressed in the Green Paper. It is important that remuneration committees are advised by and have a greater connection with the workforce, and that they should be less insular in their approach. There has been some criticism that the overlap of remuneration committees in public companies has excluded outside voices. The consultation refers to particular reviews of gender and ethnic diversity on boards, and it is important that we continue to make progress in that regard. We have further to go. Finally, the Prime Minister was very clear that we should have consumers and workers represented on company boards and that is what the proposals will do. This is a big advance and it has been warmly welcomed. I hope that the hon. Gentleman will support it too, when he makes his response to the consultation.
Order. I would like to accommodate the substantial interest in the statement, but if I am to do so, given that there are two notable pieces of business to follow, pithiness will be required from those on the Back and Front Benches alike. That pithiness is first to be exemplified by Mr Michael Gove.
I congratulate my right hon. Friend on his statement today. We all know that the dynamic growth on which our future depends will be secured only if there is public support for the free market system that generates such growth. To that end, what more can he say about ensuring that we have working-class representatives at the heart of decision making in our great companies, and about effective curbs on executive pay when pay follows failure?
As ever, my right hon. Friend makes his points powerfully. It is important that all the talents are represented in our boardrooms, for that is how we will achieve corporate and industrial success in this country. It forms part of the case we make in the Green Paper. Pay is appropriate when it is to attract the best talent and to reward success, but what is not in the interests of the company or confidence in industry is when pay does not reflect performance.
The pay of top executives, bosses in particular, has been scandalous, and some of these people are not keen to pay their taxes and use tax havens. The most effective way for working people to defend themselves in their place of work is to belong to a trade union and for that union to be recognised. Time and again, when the worst exploitation is exposed, the cause is often a lack of trade union representation.
I hope that the hon. Gentleman will congratulate the Government on their reforms over the past five years that have increased the scrutiny and moderation of executive pay. I hope that the trade unions will contribute to the consultation. I met Frances O’Grady last week, and trade unions have an important role to play in our economy.
I observe in passing that there is an undiluted sea of men seeking to catch the eye of the Chair. If a female Member were to stand, she would be called, but at the moment she is not, so she will not.
If that was a serious bid, I call Victoria Atkins.
I welcome this statement. Will my right hon. Friend assist the House by saying how the plans tie in with the need to ensure that business owners comply with not only the letter of the law, but the spirit? I am thinking in particular of the Companies Act 2006 and corporate governance failures that have led to prosecutions—something that may be relevant when the hon. Member for Norwich South (Clive Lewis) talks about BHS.
She is not a barrister for nothing.
My hon. Friend makes an excellent point. There are two complementary elements of corporate governance. One is the law and statutory requirements—it is important that they are enforced with vigour—but it is also true that the culture and practices of companies should reflect the high standards that we enjoy in this country and that contribute to business’s high reputation. I hope that we can further increase that through the measures that we are proposing.
I thank the Secretary of State for his statement, and we welcome many of its suggestions. Does he accept that fairness in salaries must also sit alongside fairness in opportunity? Would he therefore consider going further and requiring companies to report on the training and opportunities available to employees for career progression? Would he also accept that alongside the bad practice, on which we must clamp down, there is much good practice in governance to learn from? I commend to the Secretary of State the innovative forms of employee participation in so many small and medium-sized enterprises, particularly in new start-up companies and particularly, of course, in Cumbria.
The hon. Gentleman makes an important point. Outside of family and education, work offers some of the principal opportunities for progress and making use of people’s talents. The best businesses recognise that spotting and promoting talent is a sure way to corporate success. That is not part of the consultation, but he makes a reasonable point and will have the opportunity to respond to the section that asks whether other areas should be considered.
I welcome today’s statement. At a time of uncertainty, it is vital that we have greater confidence not only in free enterprise as a principle, but in the listed businesses and privately held companies that operate in our free market. What support has my right hon. Friend received from the business community in favour of the Green Paper, in particular the concept of greater shareholder scrutiny of a company’s activities?
Business wants to enhance its reputation and it is much in its interest collectively to do so. This morning, the Institute of Directors, the CBI and the Investment Association, which represents those who invest the funds that the pension funds of ordinary working people put into British business, all welcomed not only the content, but the approach that is being taken. I am pleased and grateful for that support.
Last week, the Chancellor adopted Labour policy on fiscal investment to stimulate the economy. This week, the Secretary of State is adopting Labour policy on worker representation on boards—[Interruption.]
No, you’re coming over here I’m afraid.
We need consistency from the Government. I have been advocating for years that football supporters should be represented on the boards of professional football clubs, but the Government have consistently said that that is not appropriate, so what has changed the Secretary of State’s mind?
There are two Labour Back Benchers here. If one compares that with the number of my hon. Friends who are in the Chamber, there is scant evidence of Labour’s enthusiasm for these reforms. The hon. Member for Norwich South (Clive Lewis) tried to imply that Labour is the party of working people, but the difference in interest in this statement between the parties shows the opposite. I hope that the hon. Member for Eltham (Clive Efford) welcomes the measures that the Prime Minister and I are proposing to give not only employees but customers a voice in the boardroom. The hon. Gentleman is a big football fan and a fan of greater involvement of enthusiasts in football, and I hope that he will contribute positively to the consultation and back our proposals.
Good pay structures encourage wealth creation, but the financial crisis showed that poorly constructed remuneration schemes contribute to catastrophic failures in corporate governance. In response, the Parliamentary Commission on Banking Standards recommended, among other things, longer deferral for bonuses and clawback for serious misconduct in some cases. Has the Minister examined whether those recommendations have any relevance to his Green Paper and whether they may, with particular regard to large firms, have a bearing on ways to militate against serious harm to customers, employees and the wider public?
My right hon. Friend is right that good corporate governance can stop corporate failure and the effects of contamination that his commission was set up to investigate. The commission made some valuable recommendations, many of which have been enacted. When he comes to look at the Green Paper, he will see further proposals for how incentive schemes for executives can be better aligned with the long-term interests of the company and made more transparent.
The statement represents a welcome step forward, but if the UK Government are serious about tackling income inequality in companies, they should go a step further and introduce fair pay structures whereby the remuneration of those at the top and bottom are linked. That would be a way of ensuring that the economy works for all.
I do not agree with that approach. It is right to have transparency and right that companies engage with their employees and make the case both to shareholders and to the workforce for the choices that they make. However, given our diverse range of companies and industries, it would be a mistake that would be bound to hamper their success if we, in the Government or in this House, were to specify precisely what people should be paid.
The second question that the welcome document asks relates to improving links between workers and boards. One possible route would be to encourage more employee share ownership. The evidence shows that that encourages productivity and, at a time of pension and housing crises, it would give people a stake in the future and a saving. Above all, it would make them feel that they are part of the business for which they are working.
I completely agree with my hon. Friend. The times when we had very high levels of shareholder participation were ones when there was an enhanced understanding of the importance and role of business. I will take his recommendation seriously and take it forward.
I urge the Minister to consider that corporate governance leans too much in support of shareholders and dividend, and the protection thereof. The focus of any good corporate governance initiative should be: supporting workers’ rights; driving towards a fairer pay distribution, an issue much covered by colleagues here, and away from inflated corporate management remuneration; and the reinvesting of any funding in research and development, and good protective governance for employees and management, as well as job creation and job security.
When the hon. Gentleman reads the Green Paper, I think he will welcome our proposals, which address some of the points he is making to ensure that the pay of the top management is aligned with the long-term success of the company, and to require a greater connection between the workforce and the management, as well as customers and other groups. That is a step in the right direction, and as my colleagues have pointed out, business has warmly welcomed it. This is a timely and useful upgrade in the standard of corporate governance in this country.
Untrammelled corporate greed is no more one of our party’s values than untrammelled trade union power is, so this is an authentically Conservative statement, which I welcome. May I press my right hon. Friend specifically on how he will ensure adequate scrutiny of institutional investors who are discharging their role in respect of corporate governance?
My hon. Friend is absolutely right; Conservative Members believe in competition and that it provides the best possible environment, which has benefits to consumers, employees and taxpayers. That is very much our watchword. The Green Paper contains proposals on how we can encourage institutional investors, who, as I said, invest the money from pension funds to which many people in this country contribute, to be more active in exercising their stewardship of the companies in which they invest.
The Secretary of State is right to point out that British corporate governance is already admired around the world, but will he be looking in this consultation at best practice from around the world, particularly in those countries where women have better representation on boards?
I will indeed. It is important that we maintain and extend our reputation for being the place in the world where business is done best. We have been able to make that proud boast over the years. The representation of women on boards is of great importance, and we are looking at how we can best encourage companies to move in that direction.
I welcome this report on corporate governance, but is not one way of improving corporate governance on boards to encourage more women to get on to those boards?
Yes, it is, and I hope my hon. Friend will welcome the proposals we are making.
The Minister must give credit to some of the Opposition parties today, as one eighth of the Liberal Democrats are here, one third of Plaid Cymru are here and one 50th of the Scottish National party are seeking to take part, so people are taking this seriously. Does he agree that the whole House should be available to take part, and it is unfortunate that now only one Labour parliamentarian who took part in this statement is in the Chamber?
I share my hon. Friend’s surprise and dismay that there is so little interest in the Labour party in extending the rights for working people to have a say in the way companies are run. My disappointment with the Opposition is only matched by my pleasure at seeing so many of my Conservative colleagues, including my hon. Friend.
Alongside other hon. Members, I investigated BHS, a company where corporate governance went seriously awry, so I warmly welcome the extension of stronger corporate governance to large private companies. However, I also hope that as part of the consultation there will be no risk of any ambivalence or questioning about what private company directors are expected to do in those roles and where their obligations lie. There are a range of stakeholders to whom they owe those obligations.
There are indeed, and the range of stakeholders has long been recognised in company law, as my hon. Friend knows. The question is: in a world in which there are now more very large privately held businesses that do not have a full stock market listing than was the case in the past, is this the appropriate time to extend this measure to those businesses?
Will the Secretary of State join me in acknowledging the good point made by the hon. Member for Walsall North (Mr Winnick) about trade unions? A decade ago, as a union representative, I led industrial action against our then fat cat boss, who was making poor business decisions, cutting jobs and having a pay freeze, while still getting his multimillion-pound bonuses. Of course I am now a Conservative MP, and he is now a Labour peer.
That is a useful parable, which just goes to illustrate further the point I was making about the commitment we have on the Conservative side of the House. I know that my right hon. Friend the Member for Surrey Heath (Michael Gove) is also a veteran of industrial action, showing that my hon. Friend the Member for Colne Valley (Jason McCartney) is not alone in this shared history.
The self-serving practices of many executives have done much to undermine popular capitalism in this country, but does my right hon. Friend agree that, although it is important to review company law in this fashion, that is no substitute for basic morality, which has been sadly lacking in many recent cases?
My hon. Friend is right in what he says, and I think Conservative Members would not regard legislation as being the way to cure all ills. I would take issue with him to this extent only: in general, the standards of both governance and behaviour are very high in this country, and most employees have good jobs in successful businesses. We should be proud of the standards that we have, while taking action against those who depart from them.
Does the Secretary of State agree that giving shareholders more power has a good chance of curbing corporate excess, including excessive pay, and that in Sweden the use of a shareholder committee to control both the appointment and removal of directors, and to approve executive pay, has had extremely positive effects in both those areas?
I am delighted to see my hon. Friend in this place. When he reads the Green Paper, he will see that the proposal he made in a very well-written paper for a think tank to suggest a shareholder committee in this way is one option we are consulting on. I congratulate him on his influence on this debate and look forward to the responses to it.
Family-run businesses, and small and medium-sized enterprises, are well-known for their good governance and values, so will my right hon. Friend join me in encouraging more of them to come forward in the review and the consultation so that we can get the complete picture of corporate opinion?
I will indeed. I would like to thank the Federation of Small Businesses, which has helped contribute to the shaping of these proposals, through some work it has been doing on corporate governance. Small businesses are very important. Small Business Saturday is coming up, and I think Members on both sides of the House will be paying tribute to and celebrating the vital contribution that small businesses make to this country.
People in Kettering will be pleased that after years of Labour excess the gap between the highest-paid executive and the lowest-paid employee is narrowing under Conservative leadership. May I suggest to the Secretary of State that he go further, because a big problem is taxpayer subsidy for low-paid employees who are working in companies that make big profits and have big executive pay? May I suggest the use of a ratio: the profit after tax, before dividends, per employee, to the proportion of the workforce on working-age benefits? That would wheedle out the fat cats who are exploiting employees.
I will look at my hon. Friend’s proposal carefully. It is in all our interests, including those of our constituents, that people should be able to have jobs in which what they contribute and what they produce is of sufficiently high value that they are able to have a prosperous future. Part of our reforms, which have come through the industrial strategy and what the Chancellor said in his statement last week, were to raise the earning potential of people right across the country.
We all know that small and medium-sized enterprises are, in essence, the backbone of British employability and our corporate world. In welcoming the Green Paper, may I invite my right hon. Friend to confirm this afternoon that, throughout the whole of this process, he and his ministerial team will ensure that we do not add to any burdens of either reporting or officialdom for those vital SMEs?
I can confirm that. We had it in mind that small businesses will be the beneficiary of these reforms, because, as suppliers to big companies, they are a group whose important voice should be reflected. That point was made in our conversations with small business organisations, which is why small suppliers are specifically referenced in the proposals on which we are consulting.
A common theme at British Home Stores and Sports Direct was that someone who was directly or indirectly a dominant shareholder also acted as chief executive officer. In the corporate world, Mike Ashley and Philip Green are outliers-become-outcasts, but the risk remains in those situations. Will my right hon. Friend, in his review, pay careful attention to that combination of dominant shareholding and chief executive powers?
I will indeed. The Green Paper considers such matters. The responsibility that companies have through the privilege of limited liability status extends to employees, customers, pensioners and others, and that is part of the understanding under which good businesses operate to ensure that they are good for all those groups.
Wider community engagement is often very important in relation to these matters. Does the Secretary of State agree that one contribution that businesses can make is to try to help provide more role models for our young people, as, obviously, we want to see them go into business in greater numbers?
My hon. Friend is absolutely right. One reason why Government Members are unambiguously pro-business is that the opportunities that that gives to people not only to earn a good living, so that they can support themselves, but to achieve their potential and go on to make full use of their talents is an incredibly inspiring way in which people can blossom. That is why we want to see flourishing businesses in this country.
The Secretary of State has already referred to the important role of small businesses in which the relationship between owners and their employees is very different from that in larger organisations. Will he say a little more about the level at which the proposals he has announced today will be introduced?
In the consultation, we asked what the cut-off should be. Clearly, there is no intention to capture small businesses in the disclosure requirements that are more appropriate to large businesses. That is something that we will consider as part of the consultation, and I hope that my hon. Friend will contribute to it.
May I first declare my interest as a non-executive chair of a listed public company before I offer warm support for these proposals? I also echo the comments of my hon. Friend the Member for South Suffolk (James Cartlidge) that employee share ownership schemes have had a transformative effect both in our workplace and on our business success. I ask the Secretary of State to look even closer at those schemes, with the aim of making them easier for businesses to implement.
I will indeed. I am delighted that we have had two suggestions from my hon. Friends for this route. I will take them up, and take them seriously. I hope to make further statements to the House in the future.
Access to Radiotherapy Bill
Presentation and First Reading (Standing Order No. 57)
Tim Farron presented a Bill to make provision to improve access to radiotherapy treatment in England; to define access in terms of the time that patients are required to travel to places providing treatment; to specify 45 minutes as the maximum time patients are to travel; and for connected purposes.
Bill read the First time; to be read a Second time on Friday 24 March, and to be printed (Bill 102).
Statutory Nuisance (Aircraft Noise)
Motion for leave to bring in a Bill (Standing Order No. 23)
I beg to move,
That leave be given to bring in a Bill to amend Part 3 of the Environmental Protection Act 1990 to make noise caused by aircraft a statutory nuisance; and for connected purposes.
When I talk about noise caused by aircraft, I am not talking about the level of noise that some Members of this House would have heard this morning walking over Westminster Bridge. If they were walking over the bridge and saw and heard an aircraft, doubtless they would have been able to hear the busker also on the bridge and their companion’s conversation. I am not talking about that level of noise. I am talking about the level of noise that would have prevented Members from hearing the busker on the bridge and their companion’s conversation. That is the level of noise experienced by residents in my constituency—and by residents in other constituencies judging by the cross-party support that I have for this Bill.
Such is the level of noise that residents are unable to hear the television in their own living rooms when aircraft go over. They cannot hear the radio or have a conversation when aircraft go over. Indeed, I have residents who are unable to go to sleep at 11 o’clock at night when aircraft operate at this level of noise. I also have residents contacting me at—yes—4.30 in the morning because they have been woken up by aircraft making this level of noise. Babies cry and pet animals even show fear.
Official data from the airport near my constituency—it is called Heathrow airport—put the noise level at 83 dB. A food mixer operates at around 80 dB and an electric drill at 95 dB. That is why this level of aircraft noise should be considered a statutory nuisance. There are playgrounds in some schools in Greater London where, to try to alleviate some of the medical problems that come from this level of aircraft noise, the children go into what are called “adobe” huts.
If Members look at part 3 of the Environmental Protection Act 1990, they will find a list of statutory nuisances—they have to be a nuisance or prejudicial to health—which include fumes, smells, dust, artificial light and model aircraft. If Members then look at Government websites about noise from model aircraft, they will find that it is considered a nuisance, especially if it takes place outside the hours of 9am and 7pm on a weekday and 10am and 7pm on a Sunday. Residents in my constituency are experiencing aircraft noise—not model aircraft noise—within and outside of those times. Aircraft noise is not only a nuisance, but prejudicial to health.
Since the 1990 Act, we have compiled more medical evidence. I am sure that Members are aware of many of the studies on aircraft noise and health. There is the well-known RANCH study—road traffic and aircraft noise exposure and children’s cognition and health: exposure-effect relationships and combined effects—which looked at 2,844 children around Heathrow, Amsterdam and Madrid. It found that children’s memory and reading comprehension is affected by aircraft noise—there is a linear relationship.
Members might also be aware of the HYENA study—hypertension and exposure to noise under airports —which looked at 6,000 people between the ages of 45 and 70 and found a relationship between hypertension and aircraft noise. Just a few years ago, The BMJ reported an American retrospective study of 6 million people over the age of 65 that showed a relationship between hospital admissions for blood pressure and cardiovascular problems such as ischaemic heart disease and heart attacks, and, yes, aircraft noise.
Now that we have evidence, we also need better monitoring, more data and more meaningful penalties, so that if aircraft noise becomes a statutory nuisance we have best practice. The Secretary of State for Transport admits already that some planes flying over my constituency fly lower than others and there are records of the so-called quieter aeroplanes reaching 83 dB levels around homes and school playgrounds.
I am asking through this Bill for us to update the 1990 Act. The World Health Organisation gives levels for noise that is considered to be moderate and severe; Members will notice that they are well below the levels encountered by my residents. We have the medical evidence. Many of us have evidence from our residents that this is causing a serious nuisance, so I suggest that we amend part 3 of the Act to take notice of medical and nuisance problems caused by noise from aircraft.
Question put and agreed to.
That Dr Tania Mathias, Tom Tugendhat, Andy Slaughter, Sir Alan Haselhurst, Jim Shannon, Ruth Cadbury, Dame Caroline Spelman, John Cryer, Caroline Lucas, Adam Afriyie, Paul Scully and William Wragg present the Bill.
Dr Tania Mathias accordingly presented the Bill.
Bill read the First time; to be read a Second time on 20 January 2017 and to be printed (Bill 101).
Commonwealth Development Corporation Bill
I beg to move, That the Bill be now read a Second time.
The Bill will raise the limit on the total cumulative level of financial support that can be provided to the CDC, the UK’s development finance institution. The CDC was founded by Clement Attlee’s Labour Government in 1948 and is the world’s oldest development finance institution. It is wholly owned by the UK Government and does not have private shareholders. Its mission is to tackle poverty by creating jobs and driving inclusive economic development for people in the poorest countries in Africa and South Asia.
The CDC exists to help to address what economists call a “market failure”: the desperate shortage of investment in the world’s poorest countries because, in part, of a misperception of the risks of doing business there. It addresses that market failure by providing investment capital to support the building of businesses throughout Africa and South Asia. Its explicit mandate is to drive labour-intensive growth by creating jobs and opportunities for working people. Since its creation, the CDC has been supported by all successive Governments—Labour, coalition and Conservative—because of its core purpose of tackling poverty through sustainable economic growth. I present the Bill in the hope that that spirit of cross-party support will continue. I look forward to colleagues across the House offering the fullest possible scrutiny, and I welcome the opportunity to constructively address any points that Members raise.
In recent years the UK has led the world in efforts to eliminate extreme poverty. The previous Labour Government made an important contribution, for example, in relieving the unpayable debts of the world’s poorest countries. Under David Cameron’s leadership, the UK become the first G7 country to meet its promise to spend 0.7% of our gross national income on international development. The current Prime Minister has made it clear that the Government will honour that commitment and intensify our leadership on key global issues such as tackling modern slavery.
The Government have also rightly made clear and bold manifesto commitments to tackle poverty directly.
I warmly congratulate the Secretary of State on her appointment to the Cabinet in this very important job—I know that she has been doing it for a while, but this is my first opportunity to do so. Later, she will meet the officers of the all-party group on Yemen. Will she confirm that the refocusing of funds in support of the CDC will not affect the Government’s commitment to the provision of emergency and humanitarian aid that she and her Minister of State have spoken of and given to Yemen over the past few years, as did her predecessor, the right hon. Member for Sutton Coldfield (Mr Mitchell), who is also in the Chamber?
I thank the right hon. Gentleman for that welcome and for his remarks. He is right: successive British Governments have been very clear not just about their commitment to the CDC but about our collective focus on humanitarian need at times of crisis. I look forward to seeing the delegation from the all-party group later today, when I will of course speak more about the work that the Government are doing in Yemen, where we are seeing the most awful and horrendous catastrophe. I will speak to the right hon. Gentleman later in more detail about the type of interventions and the support we are providing to those trapped in that dreadful conflict.
By 2020, we will save 1.4 million children’s lives by immunising 76 million children against killer diseases. We will help at least 11 million children in the poorest countries to gain a decent education, improve nutrition for at least 50 million people who would otherwise go hungry, and help at least 60 million people get access to clean water and sanitation. We will lead the response to humanitarian emergencies. We will lead a major new global programme to accelerate the development of vaccines and drugs to eliminate the world’s deadliest infectious diseases, while investing to save lives from malaria and working to end preventable child and maternal deaths. We will also continue the inspirational leadership of my predecessor, my right hon. Friend the Member for Putney (Justine Greening), on women and girls.
Those commitments stand, along with our commitment to human development and directly meeting the needs of the world’s poorest, which is absolute and unwavering. Indeed, the first major decision I took in my role as Secretary of State for International Development was to increase the UK’s contribution to the Global Fund to Fight AIDS, TB and Malaria from £800 million to £1.1 billion. That will help to save millions of lives in the years ahead.
The Secretary of State is outlining a long list of the Department for International Development’s achievements and her plans for the future, and she is praising her predecessors. Can she explain what has happened since she called for the Department to be scrapped and since she told the Daily Mail this year that most of our aid budget was being “stolen” and “squandered”? Those are her words.
The hon. Gentleman has just heard not only what DFID has done in the past under two outstanding Secretaries of State—my predecessors, my right hon. Friends the Members for Sutton Coldfield (Mr Mitchell) and for Putney—which is a legacy that we will stand by in our manifesto commitments, but—[Interruption.] If the hon. Gentleman wants an answer, he should listen to my response.
I have already said that we will lead on major global programmes to accelerate the development of vaccines and drugs to eliminate many of the world’s diseases. The hon. Gentleman has also heard me respond to the right hon. Member for Leicester East (Keith Vaz) on the question of humanitarian crises and many of the immediate needs to which we are responding. Indeed, the hon. Gentleman will be aware that the very Select Committee of which he is a member is witnessing at first hand how aid is being spent in crisis situations, in refugee camps, and providing opportunities and, frankly, a lifeline to people around the world who are suffering. That is exactly what my Department is doing and what I am doing as Secretary of State, and I am disappointed that the hon. Gentleman—[Interruption.] This is not about briefing the press, and, if I may say so, I think the hon. Gentleman’s remarks do a huge disservice to the international development community. He is sitting there smugly smiling, but it is an international community that comes together—[Interruption.]
Order. The hon. Gentleman knows that he should not make remarks from a sedentary position, but if he is going to make remarks from a sedentary position, he should not use the word “you” because he should not be accusing me of anything.
It is not just in times of crisis that the international development community comes together. My Department is championing economic development and investing in people and human capital. I appreciate that the hon. Gentleman may not like that and may disagree with it, but that is the core purpose of the Department.
The Secretary of State is making some very strong statements. Of course I do not deride the work of the Department; I think it is doing a fantastic job. She has outlined many of the positive things it is doing and the humanitarian aid it is providing to refugees, but why did she say that most of the Department’s budget was being stolen and squandered, without any justification?
As the hon. Gentleman knows from my appearances at the Select Committee, I have clearly stated that I will drive transparency and accountability in the Department. There have been examples. I am sorry that on an issue as important as not only saving lives but transforming lives and investing in people, he chooses to take such a narrow focus.
On the subject of the Bill, does the Secretary of State recognise that there are concerns that the CDC is not in fact targeting the poorest countries? Although private sector investment is very welcome, surely it needs to be just as targeted and as effectively monitored as investment in non-governmental organisations and other ways of boosting aid.
I thank the right hon. Gentleman for his comments. It is right that the focus is on development impact and on outcomes. That has been shown by many of the reforms that the CDC has undertaken since 2010. Yesterday, a National Audit Office report was published which showed exactly that.
Will my right hon. Friend please be reassured that her efforts to ensure that we have accountability and transparency in all aspects of public expenditure, but particularly in the area of international development, are a key part of maintaining public confidence behind the 0.7% target?
My hon. Friend is absolutely right. We owe that to those who contribute to the taxes that enable the Government to make these important decisions about international development, and in particular our humanitarian responses and how we spend and invest that money. As I will go on to say, there are many examples around the world of lives being transformed, and that is something that our country can be very proud of.
Does my right hon. Friend agree that with regard to the concerns expressed about the CDC, the gravest relate to the period when the Opposition were in government—for example, the excessive levels of pay to CDC staff? Has the Conservative Government not got a grip of that, and is the CDC not much more efficient following the review in 2012 by the then Secretary of State?
I thank my hon. Friend for her comments and observation. As I outlined at the beginning, the CDC is an established organisation that we should all be proud of. Clearly, there was a period before 2010 when the management of the CDC was, to put it mildly, not doing what it should have been doing. There were concerns about excessive pay and the lack of focus on development outcomes. Since 2010, when DFID led the way forward in working with the CDC, we have seen great progress.
Will the Secretary of State give way?
I must make progress.
As I mentioned earlier, contrary to some of the reports that we have seen in the past week, the future of the CDC will absolutely not come at the expense of DFID’s existing work on humanitarian support, human development and directly tackling what might be called the symptoms of poverty—disease, hunger and preventable suffering.
We all have a deep responsibility to tackle the underlying causes of poverty. That is why successive Governments have rightly focused increasingly on helping countries to grow, lifting the poorest out of poverty forever. That means creating jobs for the world’s poorest people, and driving the structural economic change that will end poverty permanently. To do this, we need to build the broadest possible coalition to fight poverty.
That includes NGOs and civil society organisations from the UK and from developing countries, which do such vital work. DFID’s recent civil society partnership review clearly stated the Government’s desire to work even more collaboratively with them in pursuit of these objectives.
Eliminating poverty also means working in partnership with multilateral agencies such as the Global Fund, with other bilateral development agencies, and directly with Governments in developing countries.
An example of that was the event that I and the Minister of State, Department for International Development, my hon. Friend the Member for Penrith and The Border (Rory Stewart) went to last week with His Royal Highness the ambassador of Saudi Arabia. DFID is working with wealthy donor countries to unlock enormous potential across the middle east. If not for the leadership shown by DFID, some of that work would be undone.
I thank my hon. Friend for his comments. As he knows, a great deal of work is taking place with other Governments, helping them to develop their own capacity for aid, so that they can work more effectively bilaterally and with multilateral agencies. At a time when we see a great deal of conflict in that region, we are working on an agreement with some countries in the Gulf and the middle east on what their own development bodies and agencies can do to support humanitarian relief as a result of crises taking place on their doorstep.
Today I want to explain why CDC is a vital partner in our efforts to end poverty, for it is widely recognised that aid on its own will not eliminate poverty. No country can defeat poverty and leave aid dependency behind without the prospect of a functioning economy, sustainable economic growth, jobs, trade and investment. Development investments via CDC complement our other work and allow us to fight the scourge of poverty on all fronts. In the world today, faltering economic growth and rising young populations have exposed the chronic need for jobs and better opportunities. At present, most developing countries are not growing fast enough or industrialising fast enough to leave poverty behind.
The additional financing needed to achieve the UN sustainable development goals by 2030 is estimated at $2.5 trillion every year, but current investment levels are less than half that. As the UN and many international development banks have made clear, much of this finance will need to come from the private sector. The chair of the OECD’s development assistance committee, Erik Solheim, has stated:
“There is no longer a dispute about the need for private sector involvement in development. The role of DFIs”—
that is, development finance institutions—
“is to connect development aid with private investment, and explore how we can employ market forces in the world’s most challenging places.”
Dr Dirk Willem te Velde, head of the international economic development group at the Overseas Development Institute, writing in the Financial Times yesterday, said:
“Statistical evidence to be published by the Overseas Development Institute soon suggests that a £10bn increase in exposure of DFIs in Africa would raise average incomes and labour productivity by a quarter of a per cent, which is actually slightly above the average impact of aid overall. Most jobs are created by the private sector, and working with the private sector to create jobs is vital for inclusive growth.”
We know that that will be difficult in the poorest, most fragile and conflict-affected states. These are the hardest markets, where businesses will not go on their own because it is perceived as too risky, yet it is in those very places that jobs and economic opportunities are so desperately needed. CDC does exactly that by creating jobs, stimulating growth and supporting local business.
There are currently only a few investors in the world with the skills and risk appetite to create jobs and opportunities in the most difficult frontier markets. CDC is one of those investors. CDC uses its expertise and capital to support over 1,200 businesses in more than 70 developing countries to grow and create jobs. It is a great British success story that has a long history of creating jobs in the developing world.
This is not just about abstract numbers; importantly, it is about investing in people. The life-changing impact of CDC’s investments can be seen in countries such as Sierra Leone, where the UK has supported businesses to get up and running to drive forward the country’s recovery following the devastating Ebola crisis, which killed thousands and damaged the economy. In the words of Henry Macauley, Sierra Leone’s Energy Minister, whom I met just three weeks ago:
“CDC has played an important role in supporting key businesses during the Ebola crisis and continues to do so in Sierra Leone as the economy now recovers. They are an increasingly important investor in the nation’s power sector and I’ve found them to be a great and promising private sector partner.”
The life-changing impact of the CDC’s investment can also be seen through people such as Yvonne, in Uganda. Thanks to a CDC-supported loan, she could buy a vehicle, a scrubbing machine and a vacuum cleaner for her cleaning business and attend training courses. In just 10 years, she had expanded her business from one person to providing jobs for 175 people. It is people such as Yvonne who we should have in our minds as we debate the Bill.
In the past, legitimate concerns were raised about some aspects of the CDC’s performance. That is why, in recent years, the CDC has modernised and transformed its approach. In 2010, DFID undertook a public consultation and an extensive review of the CDC, and began moving the CDC in a new direction, including by bringing in a new board and chair and hiring a new chief executive. Under its new leadership, the CDC has transformed itself. Before 2011, it operated a financial-return-first strategy, with no screening tool to help filter out insufficiently developmental investments.
The Secretary of State may have answered this question, or she may be coming on to answer it, but there were concerns about some of the salaries paid to senior officials at the CDC and about the monitoring of administrative costs. Given that we support this organisation, which is moving in the right direction, is she satisfied that there is proper monitoring of that aspect of its work?
That is an important point. Back in 2009, the CDC’s then chief executive was criticised quite extensively for the level of their salary and other pay, which stood at £970,000. The current chief exec’s total remuneration is now limited to a maximum of £300,000, and that is because the remuneration policies have changed dramatically since 2012. It is also important to reflect on the fact not only that pay across the organisation has been reduced by over 40%, but that compensation is no longer benchmarked, as it was prior to the changes in 2012, against the private equity industry. This is not a private equity firm at all. The CDC is now benchmarked against other development finance institutions, and any bonuses are based on the CDC’s development performance and returns, whereas, previously, they were based solely on financial performance. That has now changed.
No, I will not give way.
Under its new leadership, the CDC has transformed itself. As I said, it operated a financial-return-first strategy before 2011. It has now introduced dual objectives to deliver development impact and financial return. It has developed completely new ways of assessing and measuring development through job creation and of screening prospective investments for development impact. It is an innovative and intelligent investor with a core mission of fighting poverty. That was recognised in yesterday’s NAO report, which stresses that DFID’s oversight of the CDC led to
“important, positive changes...a significant departure from the previous strategy”.
Following new objectives agreed with the UK Government, the CDC now invests only in Africa and south Asia, where 80% of the world’s poorest live, and where private capital is scarce. The CDC focuses now on the sectors that create the most jobs and on sectors that create environments for other businesses to thrive, such as infrastructure and financial services. In the last year, CDC-backed businesses have helped to create over 1 million new jobs, and they have paid over $7 billion in local taxes in the last three years. That is money that Governments can use to invest in vital services, such as health and education.
As yesterday’s NAO report recognised, the CDC has addressed Parliament’s concerns about pay, and salaries have been cut, as I have just outlined. The whole ethos of the organisation has changed and, importantly, strengthened, with oversight from DFID. The CDC of today is a different, and much improved, organisation from the one it was many years ago. Some of the media coverage in recent days has not properly reflected that important shift, and I urge all Members to look carefully at the facts rather than some of the reporting.
Of course, there is more to do. Therefore, as part of the Bill, my Department will work to improve the transparency of the organisation further and to strengthen further the assessment of its development impact. As the NAO recognised, my Department has commissioned several independent evaluations of the CDC’s impact. Just last year, a team from Harvard, reviewing the CDC’s investments from 2008 to 2012, concluded that they had been “transformational”, creating hundreds of thousands of new direct jobs and billions of pounds in increased earnings. We are currently in the design stages of a complex new study to generate even more detailed data on the wider market impacts of CDC investments. We are the first Government ever to conduct such an in-depth study into their development finance institution.
There is no question but that the CDC offers value for money. Over the last five years, we have seen significant returns from it. Every penny of profit generated by the CDC is reinvested into businesses across the world’s poorest and most fragile regions, making every taxpayer pound invested in the CDC go further. The NAO further concluded that the CDC now has
“an efficient and economic operating model”
with low costs, compared with other development finance institutions. CDC salaries are covered by the returns the CDC makes on investments, not from development budgets.
Wherever possible, the CDC invests in countries, and it uses neutral jurisdictions only when it is absolutely necessary to do so, to protect taxpayer moneys from being lost to weak legal systems and to bring confidence to other global investors in the hardest-to-reach markets. However, the CDC uses only financial centres that are compliant with international tax transparency standards, as monitored by the OECD’s global forum on transparency and exchange of tax information. There are no exemptions.
Far from hiding investments, the CDC was one of the first development finance institutions to make public investment information about every single investment. In fact, with DFID’s support, the CDC is now a global leader on transparency. It has signed up to the international aid transparency initiative and has an online searchable database on its website, allowing users to access information on every investment and fund in the CDC’s portfolio. I can assure the House that my Department will continue to be an active and engaged shareholder in the CDC, ensuring that it continues to deliver for the world’s poorest and the UK taxpayer.
My right hon. Friend is outlining a strong case for what she proposes for the CDC. However, on the issue of probity, there are tremendous resources in the City of London, which could provide support for some of the businesses the CDC invests in as they look to get to the next stage of growth capital. Is there any element in the Bill, or are there any DFID proposals, to encourage City of London firms to provide that support for DFID goals?
It is important to acknowledge the City of London and the great expertise that exists there when it comes to not only investment in some of the most challenging parts of the world but transparency. Through the work the Government have done on tax and transparency, the City of London has moved incredibly far. My Department is working across the City of London on a range of issues, such as insurance. We are also looking at how we can do more on transparency and accountability, and that is absolutely right.
We will shortly be setting out a new investment policy for the CDC, covering the next five years. That will include a new reporting framework to better capture the broader impact of investments on development, beyond job creation and the tax revenue generated. We will ensure there is maximum transparency, so that CDC investments can be scrutinised and, importantly, so that their impact on combatting poverty is made clear. As I stated, the CDC has a strong and transparent track record on which to build. With our support and oversight, we want the CDC to do more, and that is why we need the Bill.
The Commonwealth Development Corporation Act 1999 set a £1.5 billion limit on the overall amount of Government financial assistance that can be provided to the CDC. That limit was reached in 2015. The need to raise the CDC’s capital limit was clearly signalled in the UK aid strategy back in 2015. The Bill builds on the economic development objectives of Clare Short’s 1999 Act and should be seen not as a new political direction, but as a logical continuation of the cross-party approach that has been in place for decades.
Any money given to CDC will meet the internationally agreed rules about which spending counts as aid. Raising the limit by £4.5 billion to £6 billion and introducing a delegated power to raise the limit further via statutory instrument to £12 billion over time will enable the UK to accelerate the CDC’s growth, so that the UK can deliver on its international development objectives. Let me stress that this £6 billion is not an annual spend; it is a cumulative figure and a limit placed on the total amount of financial assistance that a Government could provide to the CDC over a period of time before coming back to the House to seek a further increase via statutory instrument.
I fully support what my right hon. Friend is saying. This is a progressive, cross-party movement, and this is not a radical piece of legislation. Decisions have not been made to spend the full £6 billion straight away, but if the Department did commit to spend right up to that limit and fund it each year up to 2020, it would still represent only 8% of the Secretary of State’s budget, so 92% of aid would be spent in a more traditional way. This is a progressive move, not a radical change.
I thank my hon. Friend for his comments. He is absolutely right about the 8% figure. It is also worth pointing out, putting this into context, that total aid spending over the course of this Parliament is likely to be £60 billion.
Some inaccurate reports have suggested that this Bill somehow paves the way for the entire aid budget to be given to the CDC in perpetuity. That is clearly not the case. Increasing the capital limit does not guarantee that we will use our resources in this manner, or commit us to any increases in capital. My priority is to ensure that we achieve maximum value for money with UK aid. The provision of any new capital to the CDC will require a full and detailed business case that will show how further investment will continue to achieve value for money, have a clear development impact for the poorest, and deliver in the UK’s national interests. Furthermore, it is worth noting that because CDC investments generate a return, any additional money we give to the CDC is not spent once and then lost; it contributes to the CDC’s capital, which is continually reinvested now and in future years. Importantly, therefore, it remains an asset that ultimately belongs to the UK taxpayer.
This Bill is fundamentally about people: improving life prospects by helping individuals to find work and earn money, so that they can feed their families, send their children to school and put clothes on their backs; empowering girls and women to determine their own future; and giving people in the poorest and most marginalised places hope, so that they do not feel the pressures to migrate or turn to some of the extreme causes that we see around the world. The CDC is just one part—a relatively small part in the context of overall development spending—of our crucial investment in developing countries. We will continue to invest in our life-saving, life-changing health, education and sanitation programmes, meeting our manifesto commitments. Ultimately, though, this is about jobs, growth and enterprise that will defeat poverty for good. It is right that Britain leads the world to tackle poverty across the world given that we still have more than 1 billion people living on less than a dollar a day. The UK Government are playing a leading role in building a more prosperous world. This Bill is the right thing to do for the poorest people in the world and for British taxpayers, and I commend it to the House.
The vast majority of Members of this House support the UK’s guarantee to spend 0.7% of gross national income on international development. This view is supported by the people of this country, who understand that our aid programme makes a significant contribution to creating peace and economic sustainability around the world and to building a more secure and stable international community. Our aid budget makes a huge difference to the lives of hundreds of thousands of the world’s poorest people. Underpinning the faith that the British people have in our aid programme is the knowledge that the money that is spent in developing countries—taxpayers’ money—is transparent; that the funds are provided for projects that have clear objectives and tangible outcomes; and that the money goes directly to source, with no middlemen, no creaming off the top, and no profiteering from people’s poverty.
We will always welcome any measures that aim to improve the quality of life of those less fortunate than ourselves. This Bill, with the right safeguards, could achieve that. The job of Opposition Members, and of the whole House, is to ensure that some of the previous excesses and failures of the Commonwealth Development Corporation are not repeated. I say that as a friend of the CDC. It was the post-war Labour Government of Clement Attlee who created the forerunner of the CDC. Much of the work of the CDC is vital, and we should of course work to strengthen its ability to support businesses and create jobs around the world.
However, we have a number of serious reservations about this Bill. Since the Government are proposing up to an eightfold increase in the amount it can contribute to the CDC, it is right that we ask questions. Let me begin with executive pay at the CDC. While we would all acknowledge the steps that have been taken to curtail the excesses of the past, what guarantees have the Government received that we will see no repetition of the eye-watering salary hikes that people awarded themselves in the past? It would be fundamentally wrong for the extra money proposed in this Bill to be used to fill the bank accounts of the executives of the CDC instead of going to those who need it the most.
Does the hon. Lady accept that no one is considering going back to those bad old days? While I do not want this to be a partisan issue, because I think there is a wide degree of consensus, the original deal with the chief executive was signed off by Clare Short, and the new deal, which reduced the salary by a third and placed a cap on the maximum, was signed off by my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) when he was Secretary of State. There is no going back to those bad old days; this is about working together on the new framework.
I thank the hon. Gentleman for his intervention. I am concerned that we learn from the past. I am not here to pull punches: this is about learning from the past and ensuring that we move forward in the correct, transparent way.
The second question the Government must answer is on the priorities of the CDC. Recent history is not kind to the CDC and the decisions it has made on the allocation of its funds—UK taxpayers’ money. In recent years, the CDC has become a more commercial organisation. In 2004, the CDC created the private equity arm, Actis. In a deal that raised serious concerns on the governance of the corporation, 60% of the equity firm was sold to managers at the CDC at a bargain basement price. In the space of a few years, they had turned the CDC from an aid agency into a cash machine. With the focus turned to maximising profits, mainly for those who worked at the CDC, the traditional areas of financial support that the CDC had focused on for nearly 60 years were being abandoned. Food security through agriculture programmes went, safe and clean water projects were cancelled, and transport and infrastructure projects were abandoned. Poverty reduction—surely key to any development objectives—withered on the vine of self-interest and, I am afraid to say, earning a fast buck.
It is worth comparing the principles and values on which the CDC was founded to achieve its aims with the realities of its present-day operation. In 1998, the CDC spent 50% of its budget on agribusiness in Africa. That investment had two virtues: first, it helped to feed people in those countries, where starvation and hunger were rife; and, secondly, it enabled communities to become more self-sufficient, created jobs, and was a step on the ladder out of poverty. Today, funding for agribusiness has dropped to just 5%.
We see similar patterns in the CDC’s infrastructure programme. For people to live healthy lives, and to enable communities to thrive, not simply survive, we need to help create a solid infrastructure as part of our development priorities. Dirty water and poor sanitation robs the lives of over 300,000 people each year. Infants and young children are especially susceptible to diseases because of their immature immune systems. Their young bodies simply do not have the right immune system to cope with waterborne diseases. According to UNICEF, over 40% of medical facilities in Africa do not have access to clean water. Dirty water and a lack of good sanitation do not just rob people of their lives; they make a country less productive. A recent study estimated that there was a $150 million shortfall for water and sanitation projects in sub-Saharan countries, while the World Health Organisation estimates that we need £535 billion in investment to achieve universal access. I accept that those are huge sums of money, but look at the benefits. It is estimated that every dollar spent on improving water quality and sanitation delivers $4 in increased productivity. With such overwhelming evidence for the health and economic benefits, the case for investing in infrastructure programmes should be beyond doubt.
Another dimension, when we are talking about health, is the pharmaceutical industry and the products that it sells to some African countries. Surely, the Government should be looking at this area and trying to make pharmaceuticals a lot cheaper for those countries.
I totally agree with my hon. Friend. We need not only to look at the health of poorer people but to make sure that they can access water and sanitation.
It is surprising, if not shocking, that the CDC reduced infrastructure support for water, sanitation and roads from 35% of its budget in 1999 to just 8% a decade later. If the money is no longer going to support agribusiness or infrastructure, where is the CDC spending it? Let us begin by looking at some of its recent investments, such as Xiabu. I do not know about you, Madam Deputy Speaker, but I am partial to a takeaway on a Friday night—so, it seems, is the CDC, because it has provided thousands of dollars to the Chinese fast food chain Xiabu. That may be a good commercial investment, but is it the best use of the CDC’s resources? Can the Secretary of State set out what guarantees she has obtained that the UK’s increased contribution to the CDC will not go towards such projects?
While the Secretary of State is here, I would like to hear from her that the Government will seek assurances that in Africa the CDC will put more emphasis on food security than it puts into funding the building of new shopping malls at present. I have no doubt that the people of Accra are grateful for their brand new shopping mall, but what strategic role it plays in increasing life expectancy in Ghana is a mystery to me.
The people who were employed in the construction of those shopping malls in Accra—I have seen them recently—would disagree with the suggestion that that has not helped families in Accra and in nearby villages. Less than 1% of the CDC budget has gone on shopping and infrastructure, which provide a lot of jobs. Agriculture, which the hon. Lady talked about earlier, is incredibly important, but it is less important than it used to be in the modern economy in Africa, where there is a greater degree of diversification and urbanisation.
I thank the hon. Gentleman for his intervention. I know that he went around Africa in his previous role as a Minister, so he knows a lot about Africa, but there are parts of Ghana where there is no electricity and parts of Ghana where there is no water. Yes, middle-income families may enjoy going to malls, but while many people are living in poverty I do not think that a mall is the best use of CDC resources and money.
The examples that I have given lead me to my third and fourth questions for the Secretary of State. The Government propose to increase funding from £1.5 billion to £6 billion, with the option for the Secretary of State to raise it to £12 billion at a future date. But it seems she is putting the cart before the horse. As yet, the CDC has not published its investment strategy for 2017 to 2021. In the absence of an investment strategy outlining how the additional resources would be spent by the CDC, the Government are essentially proposing that we provide the CDC with a multibillion-pound blank cheque. In 2015, the coalition Government gave the CDC a cash injection of £735 million, and the Secretary of State published the business case for that increased funding at the time. Will the Secretary of State place in the House of Commons Library the full business case for the increase to £6 billion of funding to the CDC? Will she assure the House that if the Government wish to extend that to £12 billion, a business case will be brought to the House?
My hon. Friend was in the House when the Secretary of State gave me a very welcome assurance concerning Yemen, which we appreciate. Does my hon. Friend agree that it is so important that emergency and humanitarian aid should be ring-fenced and that any resources to the CDC—whatever they may be, after the business case has been prepared—should not take money away from that emergency and humanitarian aid, which is important in Yemen and in other parts of the world?
I thank my right hon. Friend for his intervention. Yes, humanitarian aid is paramount. In times of crisis, we need to know that that money will be ring-fenced to ensure that those who need it most will be able to get it.
During proceedings on the Bill, we will be setting the Government six questions, which we hope they will be able to address and gain our support. I began my response to the Secretary of State’s opening speech on Second Reading today by setting out the key principle that should guide us on international development funding—transparency. Indeed, the lack of transparency over the CDC’s work has created considerable scepticism about its activities and some of its investments. When spending taxpayers’ money on international development in an age of austerity, it behoves the Government to do all in their power to reassure everyone that their money is being spent properly and effectively. The Secretary of State would alleviate some of the concerns felt by Opposition Members—and, I am sure, in the country at large—if she were to insert a transparency clause into the Bill, which would meet the Government’s stated aim and their commitment to transparency, value for money and tracking development results.
That is particularly important when it comes to the CDC’s use of tax havens for its investments. It is extraordinary that the CDC has routed its investments through tax havens. The CDC and DFID have a moral duty to adopt the highest ethical standards if they are to have moral authority as the UK’s leading development actors. We should not be rewarding tax havens with UK taxpayers’ money, and the Government could and should lever the CDC away from the use of tax havens. Not a penny of the proposed £6 billion should find its way to a tax haven, and the Bill should be explicit in enshrining that principle.
Providing any organisation with £6 billion—and potentially £12 billon—is a significant step, and that is particularly true of an organisation with such a chequered recent past. The House would welcome a clear sense from the Secretary of State of how her Department has evaluated the costs and benefits of providing the CDC with such a significant sum of public money. There is a clear need for the Minister to set out how DFID’s investment plans for CDC have been informed. Has that been achieved by assessing other options for investing these resources. Has it been achieved by comparing their value for money and the potential for development impact?
There are two issues that the Secretary of State should address to demonstrate the Government’s commitment to transparency. At present the CDC is not subject to the scrutiny of the Independent Commission for Aid Impact. That is an anomaly, and it should be rectified immediately. Will the Secretary of State insert into the Bill a provision to enable ICAI to scrutinise and audit the effectiveness of the CDC, particularly given the significant increase in the CDC’s funding proposed in this Bill? Secondly, I would like an assurance from the Government that the CDC will not be sold off or privatised during this Parliament. It would, surely, be wrong for this House to provide billions of pounds of taxpayers’ money, only for the CDC to be handed over to a private equity firm or suchlike company.
When the Colonial Development Corporation was established in 1948, it had bold ambitions. For much of its life, the CDC has achieved those ambitions, first as the Colonial Development Corporation and then as the Commonwealth Development Corporation. Lives have been saved and lives have been improved as a direct result of the CDC. Sadly, the CDC has lost its way in recent years. The ethos and values that drove its inception six decades ago have been lost, sacrificed on the altar of fast-buck economics. We are beginning to see some welcome reforms to the CDC, but history has taught us that we must remain vigilant.
As I set out at the beginning of my speech, the Opposition firmly believe in the principle of aid as a vehicle for improving the life chances of millions of people. The question the Government must answer before they gain our full support for the Bill is: will they provide the assurance and the guarantee to deliver what we all seek, which is a CDC that truly lives up to its mission
“to support the building of businesses throughout Africa and South Asia, to create jobs and make a lasting difference to people’s lives in some of the world’s poorest places”?
To achieve this, the Government must place the right safeguards in the Bill in Committee. If they do, and the Bill achieves the twin objectives of supporting the people who need it the most and of making the funding fully transparent, the Government will have our support.
I draw the House’s attention to my outside interests, which are listed in the Register of Members’ Financial Interests.
This is an extremely good Bill, and I hope it will be welcomed in all corners of the House. During my brief remarks, I very much hope to be able to satisfy the hon. Member for Edmonton (Kate Osamor), who leads for the Opposition, on the perfectly fair questions that she posed. The fact that the Government are able to bring the Bill before the House today shows the success of Britain’s development policies in general, and specifically the success of the CDC reforms that we introduced in 2010 and 2011. Today’s Bill is the fruit of those reforms.
It is worth reflecting a little further on the history of the CDC. As has been said, it was founded in 1948. It was the first development finance institution— another British lead—and an early example of Britain’s generosity and of recognising the importance of the private sector and of job creation. The CDC made a huge contribution in the years after the war to agricultural development in the poorest parts of the world with which Britain had a close connection. By 1997, the formula had become a little tired, and the Commonwealth Development Corporation, as it had become, was losing money, which was hardly a good example of private sector entrepreneurialism for poorer countries to emulate.
In 1997, the Blair Government considered privatising the whole CDC. That would have been a huge mistake, since the whole point of the organisation is to complement the private sector, not to compete with it. In the end, the Labour Government privatised the management, while leaving the capital in the public sector. The then Government turned it into a fund of funds: it invested in other people’s funding vehicles, while the private sector did what it is supposed to do, which is focusing on making money.
When I travelled as the shadow International Development spokesman, other countries’ development finance institutions would say to me that the transformation of the CDC after 1997 was a warning to other development finance institutions of what not to do. When I travelled in countries where in the past the CDC had generated enormous good will, people used to say to me, “Whatever happened to the CDC? It has simply disappeared.” Of course, that was right. As the CDC was investing in other people’s funds, it had simply disappeared.
In 2010, the coalition Government said that the CDC, this former great development finance institution, had lost its way. The CDC was under regular attack in the press—particularly in Private Eye—and my judgment, as the Secretary of State, was that the attacks were largely valid. It had been turned from a somewhat sleepy development corporation that was losing money into a city slickers private equity business. It was mostly staffed by the same people, who saw their civil service salaries soar to the exotic levels normally populated by very successful hedge fund managers and private equity investors. The central aim of the coalition was to re-inject the CDC once again with its distinguished development roots without losing the ability to earn a commercial return. Our aspiration on entering government in 2010 was that just as DFID is undoubtedly the leading development ministry in the world, so the CDC should become the envy of all other development finance institutions—the best Government-owned DFI anywhere.
We had three key aims. First, we wanted to regain control of investment expertise by bringing the responsibility for investment back into the CDC. In other words—Labour Members may care to take note—we decided to reverse the Blair Government’s privatisation by bringing the expertise back into the public sector. Secondly, we wanted to broaden the toolkit of financial instruments by which the CDC could achieve this. Thirdly, we wanted to shift the geographical focus of the CDC on to the poorest and most difficult parts of the world—Africa and south Asia. The CDC had previously focused on a loose collection of geographical locations in a very undifferentiated way. Of course, capital in such circumstances naturally gravitates to the areas of lower risk and higher return. That was exactly what we did not want it to do, because for the CDC and development, those are the areas of least value.
It was with dismay that I read in the Financial Times of all newspapers—it has a reputation for outstanding financial journalism, and should therefore know better—a rehash of a past that the CDC has long left behind completely. A moment of research would have shown Financial Times journalists that they were completely out of date. The Financial Times said that
“the government should place the CDC under the same broader level of public scrutiny as DfID.”
The CDC is overseen by DFID, the Treasury, the shareholder executive, the International Development Committee, the Public Accounts Committee and, as yesterday’s report shows, by the NAO. Perhaps in a rather better researched piece, those Financial Times journalists could explain who might be added to this already extensive list.
Contrary to the Financial Times view, the CDC is now well on its way to achieving a reputation as the best DFI in the world. The reforms that we introduced inevitably confronted vested interests, and involved an area of expertise that we did not of course have any right to expect within the civil service. We wanted the CDC to provide both pioneer and patient capital. We wanted pioneer capital because we wanted to show the reach of the private sector at its best in promoting economic activity, jobs, decent working practices, and the provision of key goods and services to the poorest in the most difficult places in the world. We wanted patient capital because it can take a longer view of the financial return and can therefore complement the private sector by adding what is often the key ingredient to the mix—funding that would not otherwise be available to generate jobs, whether in the power sector or in infrastructure—in, once again