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General Committees

Debated on Monday 20 November 2017

Delegated Legislation Committee

Draft International Headquarters and Defence Organisations (Designation and Privileges) Order 2017

The Committee consisted of the following Members:

Chair: Phil Wilson

† Baron, Mr John (Basildon and Billericay) (Con)

Coffey, Ann (Stockport) (Lab)

Flint, Caroline (Don Valley) (Lab)

† Hayes, Helen (Dulwich and West Norwood) (Lab)

† Jones, Mr David (Clwyd West) (Con)

† Jones, Gerald (Merthyr Tydfil and Rhymney) (Lab)

† Lancaster, Mark (Minister for the Armed Forces)

† Lopresti, Jack (Filton and Bradley Stoke) (Con)

† Mackinlay, Craig (South Thanet) (Con)

† Monaghan, Carol (Glasgow North West) (SNP)

† Murray, Mrs Sheryll (South East Cornwall) (Con)

Onasanya, Fiona (Peterborough) (Lab)

† Smith, Jeff (Manchester, Withington) (Lab)

† Spellar, John (Warley) (Lab)

† Stuart, Graham (Beverley and Holderness) (Con)

† Trevelyan, Mrs Anne-Marie (Berwick-upon-Tweed) (Con)

† Warburton, David (Somerton and Frome) (Con)

Adam Evans, Committee Clerk

† attended the Committee

First Delegated Legislation Committee

Monday 20 November 2017

[Phil Wilson in the Chair]

Draft International Headquarters and Defence Organisations (Designation and Privileges) Order 2017

I beg to move,

That the Committee has considered the draft International Headquarters and Defence Organisations (Designation and Privileges) Order 2017.

The draft order relates to NATO headquarters and units in the United Kingdom. The UK follows a dualist approach to international law. Therefore, when we make international commitments to our NATO partners, we may need mechanisms in our domestic law to honour those commitments. The mechanism in this case is the International Headquarters and Defence Organisations Act 1964, the purpose of which is to recognise that headquarters have certain legal capacities and immunities such as the inviolability of their archives; to recognise the status of military and civilian personnel working in those headquarters, and the jurisdiction arrangements that apply to them; and to make provision for coroners’ arrangements.

The scope of the draft order is narrow. It amends the application of the 1964 Act, which covers NATO’s headquarters and other international headquarters in the UK. The amendment is required because some of their titles have changed over time. We are simply taking this opportunity to ensure that the list of headquarters is up to date. I refer the Committee to part 2 of the schedule. The names of the Allied Maritime Command—MARCOM—and the NATO Intelligence Fusion Centre have changed, and there are two new units based in the UK: the NATO Centralised Targeting Capacity and the 1st NATO Signal Battalion, which has moved back from Germany.

As the Minister said, this is a straightforward piece of legislation that merely updates the list of international headquarters and defence organisations in the 1964 Act to reflect name changes and additions. However, while the Minister is here, I would like to press him on two of the headquarters named in the draft order: Headquarters United Kingdom-Netherlands Amphibious Force and Headquarters United Kingdom-Netherlands Landing Force.

As the Minister will be aware, the UK-Netherlands Amphibious Force is seen as a prime example in NATO of what can be achieved through military integration and co-operation. Bilateral partnerships with countries such as the Netherlands and our role in international organisations could be diminished if our amphibious capabilities are reduced—namely, if HMS Bulwark and HMS Albion are scrapped as part of the national security capability review. The Minister may say that no decisions have yet been made about that review, but will he tell us whether there have been any discussions with the Dutch and with other allies and institutions?

In June, when signing a joint vision statement with the Netherlands, the former Secretary of State for Defence, the right hon. Member for Sevenoaks (Sir Michael Fallon), said:

“The UK is stepping forward not back from the global stage and will continue to defend our continent”—

Order. The hon. Gentleman is getting a little out of the scope of the motion before the Committee.

I thought I would take the opportunity to ask the Minister about that subject while he was here, but in closing I will just ask him whether he will update us in his response.

We were gently straying from the scope of the motion. The most helpful thing I can do is probably to refer the hon. Gentleman to the debate about that subject tomorrow in Westminster Hall. I am sure that it will be discussed at length then.

Question put and agreed to.

Committee rose.

Draft Greater Manchester Combined Authority (Public Health Functions) Order 2017

The Committee consisted of the following Members:

Chair: Siobhain McDonagh

† Bradley, Ben (Mansfield) (Con)

† Brine, Steve (Parliamentary Under-Secretary of State for Health)

† Cartlidge, James (South Suffolk) (Con)

† Cummins, Judith (Bradford South) (Lab)

† Docherty, Leo (Aldershot) (Con)

† Glindon, Mary (North Tyneside) (Lab)

† Green, Chris (Bolton West) (Con)

† Hodgson, Mrs Sharon (Washington and Sunderland West) (Lab)

† Lewer, Andrew (Northampton South) (Con)

† Menzies, Mark (Fylde) (Con)

† Norris, Alex (Nottingham North) (Lab/Co-op)

† Rutley, David (Lord Commissioner of Her Majesty's Treasury)

† Snell, Gareth (Stoke-on-Trent Central) (Lab/Co-op)

† Sobel, Alex (Leeds North West) (Lab/Co-op)

† Stevenson, John (Carlisle) (Con)

† Streeting, Wes (Ilford North) (Lab)

Gail Bartlett, Committee Clerk

† attended the Committee

Fourth Delegated Legislation Committee

Monday 20 November 2017

[Siobhain McDonagh in the Chair]

Draft Greater Manchester Combined Authority (Public Health Functions) Order 2017

I beg to move,

That the Committee has considered the draft Greater Manchester Combined Authority (Public Health Functions) Order 2017.

It is a pleasure to work with you, Ms McDonagh. This important order will confer local authority public health functions on the Greater Manchester combined authority, as agreed in the devolution deals, and support Manchester’s wider programme of public sector reform.

The Government have already made good progress in delivering their commitment to implement the historic devolution deal with Greater Manchester. Since agreeing the first deal in November 2014, we have passed the Cities and Local Government Devolution Act 2016, followed by a considerable amount of secondary legislation for Greater Manchester. That includes legislation to establish the position of elected Mayor— and, as this is my first chance to do so, I congratulate Andy Burnham; I have worked very closely with him in the House, and I know he will do a good job—and to confer new powers on housing, planning, transport, education and skills, to transfer fire and rescue functions and assets, and to set out the operation of the police and crime commissioner function, with the transfer to the Mayor on 8 May.

The order provides a further significant step for Greater Manchester, which has rightly identified public sector reform and population health improvement as priorities. The order provides for the conferral of certain local authority public health functions on the combined authority. If the order is agreed to, the combined authority will be able to exercise those public health functions concurrently with the 10 metropolitan district councils in its area.

The main new function is a conferral of a local authority’s duty to take such steps as it considers appropriate to improve the health of the people in its area. The effect of the order will be to treat the combined authority as if it were a local authority, with the same duty to improve population health, the same consequential requirements to comply with guidance and the NHS constitution and the ability to enter into partnership arrangements with local authorities and NHS bodies.

The conferral of local authority public health functions will primarily do four things. First, it will enable a Greater Manchester-wide strategic leadership approach to the delivery of agreed public health functions and commissioning responsibility—for example, public health intelligence, health needs assessments and health protection measures. Secondly, it will support a Greater Manchester-wide strategic approach to tackling variation in health inequalities, quality and service improvement to promote fair and equitable access, and achieving an upgrade to health outcomes for the population of the wider Greater Manchester area. Thirdly, it will support strengthened collaborative decision making for population health through the identification of Greater Manchester-wide commissioning priorities and intentions underpinned by shared principles and common commissioning standards—for example, commissioning for whole-system sexual health and substance misuse services. Finally, it will enable population health to be embedded across Greater Manchester’s health, social care and wider public services through the Greater Manchester strategy and the population health plan.

The statutory origin of the draft order is the governance review and scheme prepared by the combined authority in accordance with the requirement in the Local Democracy, Economic Development and Construction Act 2009. Greater Manchester published that scheme in March 2016 and, as provided for by the Act, the combined authority consulted on proposals in the scheme. The combined authority ran that consultation from March 2016 to May 2016 in conjunction with the 10 local authorities in its area. The consultation was primarily conducted digitally, including promotion through social media. In addition, of course, respondents were able to provide responses on paper, and posters and consultation leaflets were available in prime locations across Greater Manchester. As statute also requires, the combined authority provided the Secretary of State with a summary of the responses to the consultation in June, and the Secretary of State concluded that Greater Manchester’s consultation was sufficient and no further consultation was necessary.

Before laying the draft order before Parliament, the Secretary of State considered the other statutory requirements in the 2009 Act. The Secretary of State considers that conferring these functions on the Greater Manchester combined authority is likely to improve the exercise of statutory functions in the area, and he has had regard to the impact on local government and communities, as he is required to do. Also, importantly, the 10 constituent local authorities and the combined authority have all consented to the draft order being made, as is required by statute.

The draft order, if approved, will confer local authority public health functions on Greater Manchester combined authority and enable it to play a key role in improving the health of the population of Greater Manchester. I commend the draft order to the Committee.

It is a pleasure to serve under your chairmanship, Ms McDonagh. I thank the Minister for setting out the draft order in such detail. Let me say at the outset that the Opposition welcome it and do not oppose it, so I do not think we will be here much longer. I think everyone will be happy about that. [Hon. Members: “Hear, hear!”] How to win friends and influence people.

Over the years, there has been much movement in Manchester towards a new style of local government, with a combined authority and now a metro Mayor, and it makes sense for public health duties to be undertaken by that new local government structure. I, for one, have no doubt that the former right hon. Member for Leigh, Andy Burnham, will do excellent work alongside his combined authority colleagues to champion the improvement of public health in communities across Greater Manchester.

We have already seen visionary planning and passion with the creation of plans to improve the health and quality of life of people in Manchester, but I cannot miss an opportunity to remind the Minister of his responsibilities on public health—responsibilities that I know he takes seriously. He knows that severe cuts to public health budgets—there is expected to be an £800 million cut over the five years leading up to 2021—are having serious ramifications for public health services across the country, including in Manchester. The placement of duties on a new body as part of the new landscape of local government is to be welcomed, but the funding to provide for those duties must not be ignored and left out of the picture. The Government must get to grips with the wider public health agenda and not let it be sidelined in any way.

Question put and agreed to.

Committee rose.

Draft International Development Association (Multilateral Debt Relief Initiative) (Amendment) Order 2017 Draft African Development Fund (Multilateral Debt Relief Initiative) (Amendment) Order 2017 Draft International Development Association (Eighteenth Replenishment) Order 2017

The Committee consisted of the following Members:

Chair: Mr Nigel Evans

† Bardell, Hannah (Livingston) (SNP)

† Blackman-Woods, Dr Roberta (City of Durham) (Lab)

† Bruce, Fiona (Congleton) (Con)

† Elmore, Chris (Ogmore) (Lab)

† Evennett, David (Lord Commissioner of Her Majesty's Treasury)

† Godsiff, Mr Roger (Birmingham, Hall Green) (Lab)

† Keegan, Gillian (Chichester) (Con)

Mahmood, Shabana (Birmingham, Ladywood) (Lab)

Robinson, Mr Geoffrey (Coventry North West) (Lab)

† Spelman, Dame Caroline (Meriden) (Con)

† Stewart, Rory (Minister of State, Department for International Development)

† Throup, Maggie (Erewash) (Con)

† Tomlinson, Michael (Mid Dorset and North Poole) (Con)

Twigg, Derek (Halton) (Lab)

† Vara, Mr Shailesh (North West Cambridgeshire) (Con)

Yasin, Mohammad (Bedford) (Lab)

† Zahawi, Nadhim (Stratford-on-Avon) (Con)

Lauren Boyer, Sean Kinsey, Committee Clerks

† attended the Committee

Second Delegated Legislation Committee

Monday 20 November 2017

[Mr Nigel Evans in the Chair]

Draft International Development Association (Multilateral Debt Relief Initiative) (Amendment) Order 2017

I beg to move,

That the Committee has considered the draft International Development Association (Multilateral Debt Relief Initiative) (Amendment) Order 2017.

With this it will be convenient to consider the draft African Development Fund (Multilateral Debt Relief Initiative) (Amendment) Order 2017 and the draft International Development Association (Eighteenth Replenishment) Order 2017.

It is a great pleasure to serve under your chairmanship, Mr Evans. The orders address two separate matters: a replenishment for the IDA—the International Development Association, which is part of the World Bank—and ensuring we deal with debt. With your permission, I shall deal with the two separately.

On the first matter, the draft International Development Association (Eighteenth Replenishment) Order 2017 will put £3.865 billion into the IDA. As right hon. and hon. Members will be aware, the World Bank is effectively divided into four parts. It was begun in the 1940s as an institution for lending to places such as France after the second world war, but different sections of it developed over time. The IDA was established to make concessional loans and grants to poorer countries, after it was discovered in the 1950s that the old instruments of the International Bank for Reconstruction and Development, which gave loans at commercial rates, were not suitable for the poorest countries in the world.

It is the IDA that the draft order will replenish. The World Bank Group includes two other institutions that the Committee is not debating today: the Multilateral Investment Guarantee Agency, which helps to make loans in the private sector; and the International Finance Corporation, a development bank that lends money, much as CDC does, and makes debt and equity investments in the private sector.

Why are we proposing an IDA replenishment, and why have we specified this sum of money? We believe strongly—I hope there is cross-party consensus on this—that the World Bank is a very serious and impressive institution. We are proud to have been a founder member of it, and to have partnered with it over the past 70 years. It is not a perfect institution—it has flaws, like any other—but anyone looking for an organisation with a critical mass of technical expertise and real understanding of some of the toughest development challenges in the world, particularly relating to infrastructure, public financial management and tax receipts, cannot do better than the World Bank. That is not just a claim; it is sustained by my Department’s multilateral development review, which marked the IDA very highly.

Let me give some examples of what the IDA does, and what we hope it will do, with the money. A single investment in public financial management in Burma increased the Burmese Government’s tax take by 2%, bringing in nearly £1.5 billion more a year for the Burmese Exchequer. That dwarfs what we put in through development aid, and is a really good example of how technical assistance can transform things.

We have specified this sum of money because it equates to approximately 13% of the IDA replenishment. That is roughly the same proportion that we have contributed over the past 15 years; almost every replenishment is at that level. That is the replenishment that we feel is appropriate, given the size of the British economy, and it is the amount of money we feel we should put in, as a founder member of the IDA. That does not mean, however, that we are not asking tough questions and using our money, leverage and position on the board to demand improvements. Recently, we have particularly focused on improvements and on encouraging the IDA to go to fragile, conflict-affected states that it has been reluctant to get into. We have encouraged it to focus on refugees and migrants.

My hon. Friend has raised an important point, but I want some clarification. I accept that the money has to be given, and is used for good purposes, but to what extent is there monitoring of funds once they have left the bank? That is ever more important for us, given our local funding challenges, and media scrutiny of where the money ends up. If we are to increase our contribution, it is important that how the money is used is monitored much more carefully as well. What assurances can the Minister give me that that is being done?

The answer is that we focus very hard on this and improve all the time. As my hon. Friend points out, every year we realise more and more the complexities and risks in such investment. In the case of the IDA and the World Bank, there is often a very complex chain of intermediaries before the investment hits the ground. That means we need to look at everything: the tenders; the way that contracts are let; and implementation on the ground. We need to go beyond the numbers to look at the quality on the ground. The figures that the IDA and the World Bank have achieved on the ground are absolutely staggering. They are responsible for providing a water supply to nearly 100 million people, and for providing education to nearly 200 million children. The numbers that they are able to achieve are absolutely astonishing.

Where we need to get better, and what we are working on much more closely with the bank, is making sure that we focus on quality. What are the children actually learning in school? Do they emerge fully literate? Do they have the skills we want, rather than us just getting somebody into a seat? Secondly, can we get the bank to be more innovative? Can we get it to think more about economic development, or how to work for the private sector? Getting the right relationship between public risk capital and the private sector is critical, because it is the private sector that is likely to know whether the business that is being invested in is genuinely sustainable. Will those jobs be there in five or 10 years’ time? Are people being trained in a skill for which there is a market, as opposed to what has often happened in the past, whereby vocational training programmes and investments have been directed towards an idea of where the market is, without a real understanding of the business environment?

Encouragingly, the Minister has talked about investing more funds in fragile and conflict-affected states. Can he tell us the five top countries in which the most funds are invested, if not the specific amount?

I cannot promise to do that off the top of my head. The broad answer is that the World Bank divides into two halves. With regard to the IBRD and non-concessional loans, which are not what we are talking about today, some of those go to middle-income countries; we would expect them to be the larger middle-income countries. The IDA, which we are talking about, and which is the concessional arm, will focus on the lower-income countries. We would expect large amounts of that money to go to Nigeria, Ethiopia and Pakistan; they are very large examples of non-middle income country recipients. That is where we want to direct increasing amounts of the IDA’s funds.

The other two statutory instruments are about multilateral debt relief. I remind everybody that many of the poorest countries in the world ended up in huge amounts of debt—very heavily indebted. By the 1990s, many of the poorest countries of the world were spending most of their taxation revenue on trying to pay off debts accumulated by previous Governments. By the late 1990s, we realised that probably the most useful thing the developed world could do was forgive that debt, giving countries the chance to get off the ground again and to start to spend money on the provision of services—education and heath in particular. It was the former right hon. Member for Kirkcaldy and Cowdenbeath who drove that process through, and at the Gleneagles summit in 2005 we, along with other countries, committed to playing our role in debt relief.

The Committee will not be surprised to hear that the amount we have put into debt relief in the international community is again around the 13% to 14% margin; that represents both our commitment to aid and the size of our economy. These statutory instruments are part of ongoing obligations determined by a previous Government in 2005, but continued by that Labour Government and by the coalition Government. Now, our Government continue to fulfil these long-standing obligations that a British Government took on, with the rest of the international community, to forgive the debt of these states.

That is not enough in and of itself. We have also put new processes in place to ensure that as those countries get money again, it is invested back in education and health, rather than going to building up more debts. We need to be particularly careful, because since the 1970s and 1980s when they accumulated the debts, the nature of international finance has changed. Increasing numbers of private sector actors in China, India and the City of London could be lending large amounts of money—there could be eurobond offers, for example, from the City of London—without the kind of conditionality that would have come with the previous debts. That could lead to countries again accumulating a large debt burden that it would be difficult for us to deal with.

The Minister mentioned that our contribution to the IDA is about 13%. Will he put that into perspective? Are we top five? Top three? Who is No. 1?

The answer is that we are currently No. 1. That does not mean that we are the No. 1 international development donor in the world—countries such as the United States and Germany give more development aid than us—but in terms of our contribution to this mechanism, and our focus on the poorest countries in the world, Britain is leading the way in the world, and that gives us a very special influence over the use of the funding.

There are three statutory instruments before us. The first is about replenishing the World Bank’s IDA instrument, in line with the House’s practice for nearly 15 years. That money is directed towards some of the poorest people in the world, through probably the most effective multilateral development institution in the world. The multilateral debt relief instruments come out of the 2005 Gleneagles agreement, in line with the actions of the Labour Government, the coalition Government and this Conservative Government, to ensure that some of the most heavily indebted, poorest countries in the world are able to get a clean start.

It is a pleasure to serve again under your chairmanship, Mr Evans. I thank the Minister for so clearly outlining the nature of the orders, and the overall purpose of the funds. I will go through the orders, taking the International Development Association (Multilateral Debt Relief Initiative) (Amendment) Order 2017 first, the African Development Fund (Multilateral Debt Relief Initiative) (Amendment) Order 2017 second, and the International Development Association (Eighteenth Replenishment) Order 2017 third.

I am grateful to the Minister for outlining the IDA order. We all agree with the policy background to these funds. At their heart, they are about trying to help the poorest countries to reduce poverty by providing grants and concessional loans. The policy framework focuses on economic growth, social sector support and protecting the environment—supporting sustainable development, forestry recovery and the like. That is a policy agenda we can all sign up to.

The explanatory note says that the final amount, which may be up to the limit of an additional £462.46 million, was

“reached in agreement with the board of governors of the IDA.”

I ask the Minister for further information—he can give it to us today, or I am happy to put this request in writing—about the nature of those negotiations. How was that amount agreed, and with whom? Who are the other donors who are contributing to the cost of the multilateral debt relief initiative? We also need clarification about the extent of the UK’s burden share, and whether it is likely to increase with the amount that has been given. We do not want to divide the Committee on any of these orders, but it would be good to have that additional information.

Moving on to the African Development Bank multilateral debt relief initiative, I am extremely grateful to the Minister for outlining the order to the Committee and for allowing us to scrutinise it in detail. The additional £66.8 million that the order allows is to be disbursed through to 2029. It is clearly an important part of the multilateral debt relief initiative and the overall African Development Bank strategy. The Labour Opposition welcome the ongoing support for the bank. Again, I would like to request further information from the Minister about the relationship and strategy with the African Development Bank. DFID’s latest multilateral aid review in 2016 noted that, despite many strengths within the African Development Bank, its capacity constraints are preventing it from achieving its full potential. In several areas—“leave no one behind”, “performance in fragile states”, “human resources” and “accountability”—the bank scored only adequate. It was noted that the bank’s move of headquarters to Abidjan led to a particular set of challenges. First, will the Minister assure the Committee that he is confident that, since 2016, the bank has been headed in the right direction to overcome those challenges?

Secondly, the order notes that, although the UK is only a 1.753% shareholder in the bank, it contributes 10.467% of the burden share for the upcoming replenishment, which the Committee will discuss later. I also note that the 2016 multilateral aid review says that, in 2016, the UK contributed 14% of the burden share for replenishment. What opportunities do the MDRI and the replenishment offer give the UK to push for further progress on reforming the bank as an institution? If our share of replenishment is going up each time, is that giving us more power to press the bank to improve? Again, we are not going to divide the Committee on that issue.

I am grateful to the Minister for outlining the International Development Association (Eighteenth Replenishment) Order 2017. Again, I have a request for more information, either today or subsequently. How will the association use this contribution as leverage to borrow from the market, especially as this can happen for the first time under this replenishment? It has been suggested that market borrowing will constitute a third of the IDA’s overall financing in IDA18, and that for each £1 of grant finance that the UK and other donors put in, the association is now able to deliver £3 to its clients. How will that market borrowing work in practice? How can we be sure that it will not impact on, or divert from, the central mission of the IDA, which is, as I said earlier, to help the world’s poorest countries? Is it possible to say how much of the UK contribution will be leveraged in such a way?

Are the Government seeking reform of and improvement to the IDA or the wider World Bank Group as part of this replenishment? I note DFID’s growing approach of making multilateral funding contributions conditional on reform progress, and that the most recent multilateral aid review scored the World Bank as good, rather than very good, in the areas of “partnership”, “leave no one behind”, “performance in fragile states” and “accountability”, where there is certainly room for improvement. Given that we are increasing the amount of funding through the orders, it would be useful to know that the Government are pressing the World Bank on these matters. Again, I do not intend to divide the Committee on the order.

The hon. Lady raised three specific questions: first, on the multilateral debt relief to the IDA; secondly, on the multilateral debt relief to the African Development Bank; and thirdly, on leverage of, and improvements to, the IDA. I very much welcome the decision not to divide the Committee. For 15 or 20 years, this has been a cross-party, consensual issue on which we have worked together. It is a rarity in politics when both sides of the House agree on what we are trying to do—in this case, to tackle challenges in some of the poorest and most fragile countries in the world. Although we may occasionally have discussions about how best to achieve that end, I think we agree on the end, and broadly agree that the World Bank, with which we are generally proud to be partnered, is a good partner in an imperfect world.

On the first question, about how we set the amount of money that goes into the IDA through the MDRI, that calculation was made at the G7 summit in Gleneagles in 2005. The UK agreed to a 13.82% imputed burden share on the total amount of debt that was owed to the International Development Association. The variation that the Opposition have noted in the statutory instrument represents an attempt to calculate shifts in the exchange rate and shifts in interest rates, but there will be no change—and there has been no change since 2005—to the UK’s 13.82% imputed burden share.

The second question was about improvements to the African Development Bank. We absolutely agree that there are some challenges within the African Development Bank; our multilateral development review pointed that out. Those challenges will perhaps be more relevant to the next Statutory Instrument Committee, in which we will talk about the replenishment of the bank, rather than the debt—the more technical process of simply wiping off past debt that these heavily indebted poor countries ran up.

It is true that we have identified particular problems in moving from Tunis to Abidjan, which has affected recruitment. That is why, when we come to that statutory instrument, the Opposition will discover that we are not putting the same amount of money into the African Development Bank that we did in the last replenishment; we will in fact be reducing it by 25%. That is one of the ways in which we are attempting to reflect some of our concerns around its performance. Provided it meets the performance indicators, we hope that we will be able to increase that funding in future years, but there is a reduction, representing the fact that we feel that there have been some challenges recently.

That brings us to the IDA. We are absolutely focused on making sure that the IDA focuses on the world’s very poorest. Generally speaking, the IDA has a good record on that. In answer to the question of my hon. Friend the Member for Congleton, it is true that alongside Pakistan, Bangladesh, Nigeria and Ethiopia, which I mentioned as major recipients, there is an outlier: Vietnam. We expect increasingly to take money out of lower-middle-income countries and put it towards the poorest countries in the world. That is a very good challenge for us.

Our current leverage in the bank’s structure is about 1:8—in other words, we put in about 15% of the total 100%. The £1 to £3 market borrowing will be a small, experimental part of the IDA’s innovative funding. Obviously, in so far as we can crowd in private sector money, that is a good idea, but as the shadow Minister pointed out, that cannot be at the cost of the bank’s mission. The point of the IDA is concessional lending to the world’s poorest people. If the money can come in purely from the private sector, there is no point to the IDA at all, and we cannot allow an attempt to drag in private sector money to distort the bank’s objectives towards what the private sector would be doing in the first place. We are very focused on global public goods—in particular, bringing them more firmly into the poorest countries of the world—and on fragile and conflict-affected states and reform that focuses more on economic development.

I have one, brief follow-up question for the Minister. Will he keep the House updated on leverage, how it is working and the outcome of that leveraged income? That would be helpful.

We would be absolutely delighted to do that, and the shadow Minister put her finger on a critical issue: we have to make absolutely sure that any additional leveraged money fulfils our global public goods purposes, and does not distort the prime objective of the fund.

Question put and agreed to.



That the Committee has considered the draft African Development Fund (Multilateral Debt Relief Initiative) (Amendment) Order 2017.—(Mr Rory Stewart.)



That the Committee has considered the draft International Development Association (Eighteenth Replenishment) Order 2017.—(Mr Rory Stewart.)

Committee rose.

Draft African Development Bank (Fourteenth Replenishment of the African Development Fund) Order 2017 Draft Asian Development Bank (Eleventh Replenishment of the Asian Development Fund) Order 2017 Draft Caribbean Development Bank (Ninth Replenishment of the Unified Special Development Fund) Order 2017

The Committee consisted of the following Members:

Chair: Albert Owen

† Blackman-Woods, Dr Roberta (City of Durham) (Lab)

† Burghart, Alex (Brentwood and Ongar) (Con)

† Cameron, Dr Lisa (East Kilbride, Strathaven and Lesmahagow) (SNP)

† Elmore, Chris (Ogmore) (Lab)

† Evennett, David (Lord Commissioner of Her Majesty's Treasury)

† Harrison, Trudy (Copeland) (Con)

† Hughes, Eddie (Walsall North) (Con)

† Pincher, Christopher (Comptroller of Her Majesty's Household)

† Selous, Andrew (South West Bedfordshire) (Con)

† Stewart, Rory (Minister for Africa)

† Swire, Sir Hugo (East Devon) (Con)

† Thomas, Gareth (Harrow West) (Lab/Co-op)

† Timms, Stephen (East Ham) (Lab)

† Tomlinson, Michael (Mid Dorset and North Poole) (Con)

† Umunna, Chuka (Streatham) (Lab)

† Whitfield, Martin (East Lothian) (Lab)

† Williams, Dr Paul (Stockton South) (Lab)

Clementine Brown, Committee Clerk

† attended the Committee

The following also attended, pursuant to Standing Order No. 118(2):

Duddridge, James (Rochford and Southend East) (Con)

Third Delegated Legislation Committee

Monday 20 November 2017

[Albert Owen in the Chair]

Draft African Development Bank (Fourteenth Replenishment of the African Development Fund) Order 2017

I beg to move,

That the Committee has considered the draft African Development Bank (Fourteenth Replenishment of the African Development Fund) Order 2017.

With this it will be convenient to consider the draft Asian Development Bank (Eleventh Replenishment of the Asian Development Fund) Order 2017 and the draft Caribbean Development Bank (Ninth Replenishment of the Unified Special Development Fund) Order 2017.

It is a great pleasure to serve under your chairmanship, Mr Owen. I will speak to all three draft orders in a single speech: the first pertains to the African Development Bank, the second to the Asian Development Bank and the third to the Caribbean Development Bank. Right hon. and hon. Members will be aware of our relationship with multinational development banks in general and why we work with them, so I will not waste too much time talking about that, but will focus instead on these specific banks and the money that we are giving them.

The overall argument is clear: the United Kingdom and other development partners give money to these banks because they allow us to do three things that would be difficult to do if we did not work with them. First, they give us a specialist reach into geographies in which the Department for International Development might not otherwise operate. For example, the Caribbean Development Bank specialises in small island states, and some of our work with the African Development Bank is in places such as the Central African Republic, where we do not have a permanent office. That is the geographical point.

Secondly, the banks allow us to leverage larger amounts of money than we would be able to provide on our own.

The last correspondence with the Caribbean Development Bank was conducted by the new Secretary of State, whose letter to Dr Smith I have here. It is about an improvement plan. I am responsible for Africa, not directly for the Caribbean; work for the Caribbean is conducted by my colleague, Lord Bates.

If I can proceed, there are three types of argument for working with the three banks. The first is geographic; the second is about leveraging larger amounts of funds. We typically contribute 10%, 13% or 14% of the funds, particularly the concessional loan facilities for the banks, which allows us to leverage additional money. The third argument is the sector speciality and expertise provided by these banks. For example, the Asian Development Bank has expertise in energy and transport infrastructure in places such as Pakistan, which DFID would not have on its own.

Why these particular amounts of money? The first amount is £460 million, which will be given to the African Development Bank. The bank is run by a very distinguished Nigerian civil servant, Mr Adesina. It was set up in 1964 as part of a general development with regional banks that emerged from the first Bretton Woods institutions, which were set up in the 1940s to specialise in different regions. The African Development Bank allows us to work in some of the poorest countries in the world; as Members will be aware, 36 of the poorest countries in the world are in Africa.

Some 80% of the African Development Bank’s staff are themselves African, including very distinguished former senior Ministers from those countries. Its particular expertise is in both infrastructure and regional work between different countries. We have a new opportunity, working with the African Development Bank, and we believe that DFID can play an important role with the bank in convening the flows of new capital into Africa. There is a big push to get from the current billions of pounds of investment going into Africa to the potential trillions that could come in from the private sectors of China, India and the City of London.

The challenge, of course, is around the rules for the loans. There have been examples—Mozambique is probably the most flagrant—of private sector loans going into national Governments without proper concern or regulation. The African Development Bank is the perfect partner, we believe, for DFID to work with in trying for a really good multinational understanding as to how private sector flows, and in particular flows from new donors, can go into African countries without creating a new crisis of heavily indebted poor countries.

Although £460 million is a substantial amount of money, it is a 24% reduction on the amount that we gave at the previous replenishment. That represents some of our existing concerns about the African Development Bank. Perhaps I shall be able to expand in detail on some of those concerns, and how we might address them, in response to questions from right hon. and hon. Members; they will have seen them set out in the multilateral development review.

Why does not the Minister expand on his concerns now? Do they relate to significant levels of corruption in the African Development Bank, or some other lack of sufficient rigour in its internal processes?

I should be delighted to expand on that now, but the shadow Minister has questions about it and I agreed with her that I would give the more detailed answers in responding to her speech.

Essentially, six areas have been identified, through the multilateral development review, in which the African Development Bank requires improvement. The first is in its delivery programme; we feel that there have been substantial delays in the processing of key bits of paperwork, so we have set a series of time limits. I will perhaps provide more details on those targets in response to the shadow Minister.

The second area is efficiency and value for money. That is particularly about keeping administrative costs below 2.5%. The third is to do with recruitment, and we have set recruitment targets. Along with the movement of the headquarters from Tunis to Abidjan, there has been a recruitment crisis. The fourth area is anti-corruption, including the processing of anti-corruption claims and ensuring that 75% of those are complete within a year. The final two areas of concern relate to countries in transition—making sure that the country offices are properly staffed, and that a duty of care for staff in those offices is observed.

Given the serious concerns that the Minister has outlined on all those fronts, is it intended that the £460 million that he is talking about will be transferred over as one block, or will it be drawn down conditionally on some of the criteria being met—particularly those on corruption, accountability and transparency?

I think the first thing is to set things in context. The African Development Bank scored well in the multilateral development review; it was in the top third of our assessment of beneficiary partners and implementing partners. That means that we would not think it appropriate in its case to set aside money on a performance basis. We think we struck the right balance by reducing the overall amount, agreeing key performance indicators, and managing through the normal process.

The basic answer to my right hon. Friend’s question is that the money will be transferred in a single amount, and our concerns about performance are reflected in the performance indicator agreement and the reduced total amount.

Further to the question of the right hon. Member for East Devon, why did not the Minister decide to make some of the money conditional? Given the scale of his concerns, he might have said that £50 million of the £460 million was conditional on the bank’s meeting the objectives, or making sufficient progress with them. Surely holding back some money would be much more effective than a bit of sweet-talking in a committee, or over the phone to the head of the bank or its officials in-country.

I agree, and it is indeed a distinguished predecessor of mine who is mounting this barrage of questions against me.

Perhaps if the hon. Gentleman did not interrupt I could answer him more clearly. The answer is that we need to distinguish clearly between two separate things. One is performance indicators; I understood my right hon. Friend the Member for East Devon to be raising that question. The other is the question of contribution payment schedules.

As to performance indicators, in banks with poorer performance—the Caribbean Development Bank would be an example—we would indeed, out of the £18 million allocated, set £4.5 million as a performance reward. However, in the case of the African Development Bank, the tranche payment allows us to hold back 25% of the 2018 payment. If it did not meet the performance indicators, that 25% would not be delivered. It is therefore a question of performance schedules rather than performance indicators.

I move on to the Asian Development Bank and the second of the statutory instruments. The amount proposed to go to the Asian Development Bank is £110 million. That bank is, of course, a larger institution than the African Development Bank, so right hon. and hon. Members may be surprised that we are giving it a smaller amount of money. The answer, of course, is that because of the development of Asian countries and DFID’s focus on lower income countries, most of which tend to be in Africa, we end up giving more to the facilities of the African Development Bank. These are concessional loan facilities, designed to work in poorer countries.

We have many fewer concerns with the Asian Development Bank than with the African Development Bank. The Asian Development Bank performed extremely well in the multilateral development review—it was right up there with the World Bank. Questions could be raised about some areas of its programme, but they are not directly relevant to the concessional loan financing that we are providing. We might have a chance to discuss them later.

That brings me to the smallest and perhaps most controversial element of our concessional loan finance, which is to the Caribbean Development Bank. We approach that bank with a degree of caution, but it is still an institution that we want to support and keep alive because it has a particular niche speciality in smaller island states. In particular, it will be our key partner through its main balance sheet in working through vital reconstruction after the hurricanes in places such as the British Virgin Islands and Anguilla, and, through the concessional funds, on the Leeward Islands and Montserrat. We believe we are justified in giving a small amount of money—relatively small compared with the other funds—of £18 million to the bank, to focus on its particular areas of expertise. However, as I said, we have laid aside £4.5 million out of that £18 million as a performance incentive. Only £13.5 million will be disbursed immediately, with £4.5 million to be held back to ensure that the bank delivers against our targets.

The targets, set out in the Secretary of State’s letter to the Caribbean Development Bank, are: publishing project information to international aid transparency initiative standards; 100,000 beneficiaries—100,000 students at school; and that project completion reports are completed at 90% within two years.

With that, I commend the orders to the Committee. I look forward to a longer discussion in response to speeches from the shadow Minister and other right hon and hon. Members.

May I ask those people using digital instruments to put them on silent? We do not want pings. I would expect the Government Whip to lead by example.

It is a pleasure to serve again under your chairmanship, Mr Owen. Like the Minister, I will deal with the three statutory instruments together. I thank him for going through them for us. As I said earlier today, the official Opposition’s position is to support the transfer of funds to the African, Asian and Caribbean development banks, but, as the Minister would expect, we have a couple of questions and points to put to him.

We welcome the funds going to the African Development Bank. The explanatory memorandum to the order tells us helpfully and powerfully what the sums of money will do. It says that 21 million people will have improved electricity connections, 14.8 million will have improved access to transport, 11.9 million will have access to water and sanitation and 20.7 million will benefit from improvements to agriculture. The sorts of things the fund does are incredibly important. Of course, the point of having additional money is to see improvements. It would be quite useful if the Minister told us what he thinks some of those improvements might be.

As my hon. Friend the Member for Harrow West said, and as I mentioned earlier to the Minister, we are very keen to hear from the Government whether the additional funds will be used to press the bank to reform further. I was pleased to see that paragraph 7.7 of the explanatory note outlines what reforms have been asked for. They are really helpful. The Government want an increase in the number of country strategy papers with gender-informed design—we all want to see that; a decrease in the time of procurement of goods and works; a decrease in the time between project approval and the first disbursement of project funds; a reduction in the amount of administration costs as a proportion of total spending on projects; and an improved presence in insecure environments.

Those improvements are very specific asks of the bank. We have not had a great deal of detail on how the Government will ensure that those reforms come forward or what support the bank will get to ensure that it can deliver them. The areas in which there have been improvements, such as transport and water and sanitation, are incredibly important. We want to ensure that the bank can continue to deliver on those objectives but also continue to reform. That is really important.

We know that the bank scored only adequate against the “leave no one behind” criterion in DFID’s 2016 multilateral aid review. It is important that the UK uses its influence to ensure that those impressive development outcomes of the bank are not only carried forward to future years but improve and are directed towards the world’s most marginalised. Hearing a bit more from the Minister on that would be incredibly helpful.

I move on to the Asian Development Bank (Eleventh Replenishment of the Asian Development Fund) Order 2017. I listened carefully to what the Minister had to say about the reduction in funding for the Asian Development Bank, and I have a few questions. It seems that the UK’s burden share will remain at around the 5% mark. That implies a degree of continuity from the previous replenishment. The Minister can correct me if I am wrong, but the reduction is explained in paragraph 7.7 of the explanatory note, which says:

“The United Kingdom’s contribution to the eleventh replenishment is lower than the contribution to the tenth replenishment because, as referred to in paragraph 7.4, donors are only contributing to grant resources at ADF 12 whereas at previous replenishments donors contributed to grants and concessional lending resources.”

We need a bit of clarification about the reduction and where it will fall. That is extremely important.

Again, when we look at what the Asian Development Fund is expected to deliver between 2017 and 2020, they are very laudable objectives. One is energy for 117,000 new households. Another addresses climate change and renewable energy. Anybody who has been to any Asian country knows what a huge issue climate change is there and of the need to develop renewable energy, as well as infrastructure, in terms of roads and railways, water and sanitation, education and finance. If any of those areas are to be affected by the reduction, we want to understand that a bit further and to understand where the Government think the additional funding will come from to ensure that those objectives and areas for investment, which we all think are really important, are continued.

I think the Minister said that the Government feel that the bank perhaps operates in a fairly robust way, but the multilateral aid review that DFID carried out in 2016 identified a couple of areas of concern—particularly the quality of some of its projects in conflict-affected states. I should be grateful to hear from the Minister what pressure the Government will put on the bank to try to improve it in those areas where it fell short in the 2016 review.

The draft Caribbean Development Bank (Ninth Replenishment of the Unified Special Development Fund) Order 2017 authorises an additional £18 million of funding for the Caribbean, as the Minister says. We have questioned the Minister around this area of funding before, but I have a few questions to put to him today.

First—again, we might have the figures wrong; it is a very technical order—is it correct that the UK’s contribution is effectively falling from £33 million in the eighth replenishment in 2013 to just £18 million in this ninth replenishment in 2017? If so, that represents a marked decline, and is close to our halving our contribution to the Caribbean Development Bank special development fund, although I acknowledge that the separate UK Caribbean Infrastructure Fund is significantly larger. It will be helpful to have more of an explanation for the shift in funding—if is a shift in funding.

That is particularly important in the wake of Hurricanes Irma and Maria. It has been widely documented that the long-term recovery of islands such as Antigua and Barbuda and Dominica depends to a great extent on their being able to access financing at concessional rates. They are struggling to access that financing from other global banks at manageable interest rates. The Labour party has argued extensively for the UK Government to do more than they are already doing to ensure that the least of the world’s polluters do not bear the brunt of climate injustice. It is not clear how the private sector taskforce announced by the former Secretary of State for the region will actually help to unlock useful financing. I am aware that the order was laid before the hurricanes struck, but I would like the Minister to tell us whether there are any plans beyond the remit of the order to now step up support to the Caribbean Development Bank.

Secondly, I am aware that the multilateral aid review in 2016 scored the bank as unsatisfactory in its transparency and as adequate or requiring improvement in a number of other areas, and that £4.5 million of the £18 million will only be paid subject to improvements in various criteria. That is a helpful way forward, but we want to hear from the Minister on how the Government will help the bank to reform and in what areas, so that all of the money, which is very much needed—particularly after the hurricanes—can be given to the bank.

I shall make only a few brief comments. First, within about half an hour’s debate, a small group of Members of Parliament will be responsible for authorising a total of £588 million of British taxpayers’ money. I speak as a Member who is supportive of UK aid. I think that giving aid is morally the right thing to do and that there is a strong enlightened self-interest argument for what we are doing, in terms of reducing terrorism and immigration and providing the markets with which British companies can trade in the future.

That said, will my hon. Friend the Minister please give us some assurance as to how the money is being spent? It is being spent at one remove from Her Majesty’s Government, because we are handing it over to the three development banks. The National Audit Office recently raised some concerns about the ability of officials in the Minister’s Department to ensure that there is always value for money as far as British taxpayers’ money is concerned. Concerns have also been raised about the need to rush to spend money before the financial year ends. Given that the sums are quite large and that all of us as constituency Members of Parliament probably have in our areas public services with specific needs—in my own area, Bedfordshire police need an extra £10 million to function—it is right and proper that we ask the Minister to go through in a little more detail why it is right for the British taxpayer to be spending £588 million in this way. As I have said, I speak as one who is generally supportive of what the Minister’s Department does.

I would like to follow up some of the interventions that I made earlier. It would be good to hear from the Minister some examples of projects that he has discussed with his officials that have given him continued confidence in the work of the three multilateral development banks. I express, in passing, disappointment that we have not had the opportunity to consider each of the orders separately. Certainly in the past that has been the practice, but a decision has been made and I accept that decision.

I stand to be corrected by you, Mr Owen, but I believe that we were offered that chance and the Committee made its decision. We would have been very happy to consider the orders separately, had the hon. Member for City of Durham wished to do so.

I am suitably chastised by the Minister and the Committee; I should have been awake at that point. There has, though, been a long-running concern on both sides of the House about corruption, and it would be good to hear a little more about what has given the Minister confidence that corruption or the concern about the potential for corruption is being properly addressed by all three banks.

My last point is linked to Brexit. When we leave the European Union, we will presumably be withdrawing from the European development efforts. As I understand it, the Minister and the rest of the current Government remain committed to the 0.7% target being maintained, so one would think, if money is being pulled back from the European development efforts, that the Minister will need to look at multilateral development banks as a potential place for increasing spending further down the line, unless it is all going to go to the World Bank or one or two of the other multilateral development bank institutions.

As I understand it, the current Government do not want to increase the number of countries in which we have a direct presence and footfall and our own individual development programmes, so it would be good to hear from the Minister how he sees the future relationship between the UK and the multilateral development banks after we have withdrawn from the European development efforts. It is a significant sum of money that we are putting in and a significant signal of confidence, notwithstanding the Minister’s concerns, that we are giving the multilateral development banks. They are potentially likely to be tools for development spending that we will have to use even more going forward, so it would be good to hear how the Minister thinks we will spend our money post Brexit and whether these banks will see bigger tranches of money coming to them.

The numbers we are talking about this evening, in terms of the scale of Department for International Development spend, are relatively small, although none the less very important, and we should ensure they are spent as well as possible. We have heard a lot about some of the concerns about corruption and the deliverable mechanisms that some of the banks employ, but will my hon. Friend the Minister say something about the administration costs of these banks? My experience is that many of these large international organisations grow at an exponential rate. I would be interested to know what percentage of the money we give over is spent in administration.

Secondly, I am all for paying this money over and having a light hand on where the money goes, but can the Minister reassure me, particularly in terms of the African Development Bank, that there is some in-built flexibility. We hope that Robert Mugabe will shortly exit Zimbabwe, once the grain engine of Africa, which he has reduced because of his years and years of oppression. It is important that we put in money there very quickly to help raise the standards of living when that opportunity presents itself. On that subject, I hope he will say a bit more—I know there is a difficult balance between aid and trade—about the opportunities for British businesses all over: in Asia, the Caribbean and Africa. I was hoping that one of the reasons we were giving rather less to the African Development Bank was because so many commercial companies are now in Africa doing these jobs on a commercial basis, particularly in renewable energy and so forth.

The point about the EU is well made. The hon. Member for Harrow West was pressing the Minister on that. I think we contribute 11% or 12% of the EU aid budget. That money will be coming back to the United Kingdom. It will be interesting to know whether we will spend that money through the development banks or through other mechanisms as well.

The hon. Member for City of Durham, who speaks for the Opposition, asked about the private sector task force, which is being set up by the Government to look at the Caribbean. I know that she was questioning the Minister, not me, but in my capacity as the deputy chairman of the Commonwealth Enterprise and Investment Council, I have been asked to attend one of their first meetings, alternating with the chairman Lord Marland. I hope that is somewhere where we can marry the private sector with the Government’s objectives in the Caribbean, which we do not discuss nearly enough in this House. Vast areas of the Caribbean are still completely ruined and much in need of trade, aid and anything else we can give them.

These are all incredibly important points and questions, which go to the heart of our international development operations. The key questions here are about why we work through multilateral development banks and, of course, the fundamental question raised by my hon. Friend the Member for South West Bedfordshire: why we do any of this in the first place and whether it is a good use of money.

The fundamental thing is that we are working with concessional loan facilities in some of the very poorest countries on earth. These are countries, in some cases, where one in five children dies before the age of five, where adult life expectancy is 37, where rates of HIV/AIDS can be 30% or 40%, where unemployment rates can be 85%, where even relatively prosperous people in a community will still not have access to mains electricity or water, and where 85% of children emerging from school are still functionally illiterate.

The needs are desperate. People are living lives which are beyond imagining. Indeed, it is worse than that: in some of the countries where the African Development Bank operates, there are currently children dying because they do not have enough food to eat. There are currently children turning up at UNICEF emergency nutrition centres in Somalia who are having emergency tubes put in their nose because they have not been able to eat for two weeks, and of those a number are dying.

It is very important to stick to the fundamental basics here. We are talking about instruments and ways of moving money around, but in the end we are talking about some of the poorest and most vulnerable people on earth. Things that seem a little bit boring—moving £100 million here and there or building road and electricity networks—are absolutely vital, because those electricity networks allow clinics to refrigerate vaccines to keep the children alive. Those roads allow the child dying of malnutrition to make it to the emergency nutrition centre. Those investments, hopefully, ultimately allow those countries to stand on their own feet and generate the taxation revenue to pay for their own health and education systems, and allow the developed world to disengage.

I appreciate what the Minister is saying about reaching the most vulnerable. I would be interested to find out what level of detail we have to show that the most vulnerable, and leaving no one behind, are at the crux of all the projects, and that projects and programmes reach out to rural communities, for instance by getting disabled children into school.

That is a very good challenge. It is absolutely right that there is always a tension in the work of multilateral development banks between their traditional primary focus of infrastructure and economic growth, and making sure at the same time that we leave no one behind. That is something DFID has been doing since the hon. Member for Harrow West was a Minister in the Department; it has been leading on ensuring that we focus on the very poorest people, on rural communities and on equality. That is now central to the missions of the multilateral development banks, but it remains a challenge and it is something that we have to keep challenging them on again and again.

Of the three banks we are discussing in these statutory instruments, perhaps it is with the Asian Development Bank that we have had some of the most difficult conversations about ensuring that its successful track record on infrastructure investment focuses on the people at the very poorest levels of society who need it, rather than simply benefiting urban dwellers.

I will respond to the individual speeches made, starting with my right hon. Friend the Member for East Devon, who began with the question of administration costs. The administration costs are perhaps less of a challenge in multilateral development banks; it is a good question, but it would probably be more of a challenge if we were talking about non-government organisations. Most of the multilateral development banks have rather large equity portfolios, so their administration costs are relatively small. The target we are focused on, taking the African Development Bank as an example, is about 2.5% administration against equity, which we believe is reasonably competitive. It is roughly in line with where DFID itself sits in its ratio of staff to portfolio.

The second question was on flexibility, particularly relating to Zimbabwe. There is another challenge there, to be honest. The banks tend to make very long-term investments. Big road infrastructure and energy projects can take eight to 10 years to come to fruition, and by their very nature, it is difficult to suddenly shift money, in two weeks, from one place to another. If we are looking for rapid response to an emerging situation such as Zimbabwe, it is not to the multilateral development banks that we would look. However, my right hon. Friend’s question is absolutely bang on the money, because we are hoping that the situation in Zimbabwe could be an extraordinary opportunity.

That opportunity is not only about Commonwealth membership and the United Nations, but about all the instruments that the international community can bring to help the Zimbabwean people, if the reform comes through and we go into a transition where there are free, fair and credible elections. For that, there needs to be an independent electoral commission, and we need to ensure there is proper voter registration, as there are currently one million “ghost voters”. We must ensure that Zimbabweans outside the country get their constitutional right to vote. If those things come into place, there is a great deal that we ought to be able to do, one aspect of which relates to multilateral institutions and ensuring that IMF loans are able to come in to save the Zimbabwean economy, which is in a difficult situation at the moment.

My right hon. Friend’s final question was about British business, and he is absolutely right that certain sectors where DFID invests, particularly green energy, financial services and insurance, are sectors where British companies can have a competitive advantage. The City of London has a strong advantage in financial services. Edinburgh, for example, also has strong advantages in financial services and insurance, and we have some impressive and innovative companies in green energy and city development.

Our aid is, of course, not tied, so it is about allowing British companies to compete fairly against other international companies for those contracts. The greatest thing that we can do for British companies is the longer term work of economic development. The reality in Africa at the moment is that there are only 17 million people who earn over £200 a month. That means that the middle class consumer population of Africa is currently about the size of Belgium, in a continent that is 100 times the size of Belgium and with considerably more externalities. The real opportunity for British business will only come when we really get the economic development off the ground and we can build that consumer base.

That brings me to the specific questions on the three banks raised by the shadow Minister, the hon. Member for City of Durham, and then I will conclude with the questions of my predecessor, the hon. Member for Harrow West. To go through the banks one by one, regarding the African Development Bank, the answer is that we have set very detailed performance indicators. Each one of these priorities that we have set around recruitment, value for money, efficiency and anti-corruption then breaks down into sub-performance indicators.

To give an example, we are not simply talking about recruitment. We have set a number: we are demanding that they recruit an additional 298 people by March. That would be an example of a recruitment indicator. I am not going to go through every one of the performance indicators, but I would be very happy to share them with the shadow Minister. In delivery and values, we are focusing on ensuring that 90% of the performance completion reports are completed in a year, and we will monitor that. In relation to countries in transition, we are making sure that all the 16 country offices are fully staffed.

We do have leverage over this. It is not just the nuclear option, which as I said is that 25% of this will not be disbursed immediately; 75% will be disbursed, but 25% will be held back. That is the nuclear option, but apart from that we are about to enter 2018 general capital negotiations, and if we find that it is not meeting the performance indicators, that will affect the general capital contribution we make. In the next statutory instrument, which I hope we will both have the pleasure of debating here in three years’ time, we will perhaps have an opportunity to set exactly the kind of performance rewards that we have set for the Caribbean Development Bank. However, we do not think that we need to do that yet with the African Development Bank; we think that the performance indicator framework is the correct way to approach it.

There were two questions in relation to the Asian Development Bank. The first question was, is it enough money? The answer is yes, it is enough money. The Asian Development Bank is a smaller bank than the World Bank. While the International Development Association is disbursing about £75 billion a year, the Asian Development Bank will disburse only about £3.3 billion. As the shadow Minister pointed out, it now self-finances its concessional lending, which means that the amount of money it needs from us is reduced, and we are now in a situation in which the AIDB, the Asian Infrastructure Development Bank, is now stepping in to some of the areas in which the Asian Development Bank used to operate. The merger of its balance sheet has also given it much more flexibility in the way that it deals with moneys—it has merged the concessional and non-concessional parts of its balance sheet.

That brings me to the Caribbean Development Bank. The question was, is it correct that the amount of money that we have given it has been reduced from £33 million last time to £18 million this time? It is absolutely correct: we have reduced the amount of money that we are giving the Caribbean Development Bank by 50%. That is directly because in the multilateral development review we found that there were a number of serious problems in the way that the Caribbean Development Bank operated. Our view as Ministers—I am sure this would be the same on the other Benches—is that if we find there are serious performance problems, that has to have consequences.

We cannot be comfortable saying that there are serious performance problems and simply signing off the same amount of money, so we have halved the amount of money that we are giving. However, as the shadow Minister pointed out, there are still key tasks that the Caribbean Development Bank, and only the Caribbean Development Bank, can perform, particularly in the light of the hurricane. That is particularly its speciality in small island states and is why, notwithstanding our problems, we will, in a very carefully monitored way, be providing some money to it for that, but holding back £4.5 million for a performance bonus if it manages to meet the targets that we have provided. We will be looking in particular at ensuring that it delivers education. We have set this education target of 100,000 children in school, and we will be looking at that very carefully.

That brings me to the comments of the hon. Member for Harrow West. He began with the question of corruption and fraud, which is a big issue. It is a big issue because the countries in which one is operating are particularly fragile, conflict-affected states. It is extremely difficult in Afghanistan or Somalia—in somewhere like Mogadishu, people can barely leave the airport—to have a direct idea of what is happening on the ground.

We have an increasing number of sophisticated methods to try to ensure we do monitoring and evaluation in an imperfect world. For example, when it comes to humanitarian delivery, we are relying on people using mobile telephones, so that we can track where the trucks are going and have photographs of beneficiaries receiving deliveries. An increasing amount of money goes into employing local monitoring and evaluation partners, who are completely independent of the projects. They go out to visit the projects, produce documentation and challenge directly what is being done on the ground.

We found in the multilateral development review that, in fact, these organisations are among the best for controlling fraud. They probably perform better, on average, than general NGOs in terms of their financial management systems and the fraud mechanisms they have in place. However, we supplement that with our own auditors and with new DFID approaches, where we go all the way down the chain, through every beneficiary and sub-beneficiary, to the ground. If we visit a DFID country office now, that entire map, which is often very complex, is up from the ground. That is supplemented by the work of the National Audit Office, the Independent Commission for Aid Impact and the International Development Committee.

We are never complacent about this problem, and if we find any cases of fraud and corruption, we come down on it very firmly and will take our money back. There was a case recently where we had to be reimbursed because we discovered that something of that sort had happened; it was not with these banks, but another NGO implementing partner.

That brings me to the final question from the hon. Member for Harrow West, which was about what happens after we leave the European Union. It is absolutely correct that as we leave the EU, there will probably and potentially be more development money to spend. I say probably and potentially because it is still an open question as to whether we might continue to put money through European institutions after we leave the EU. That is something for the Brexit negotiators to determine.

Some of these European institutions are highly professional and very competent. In particular, ECHO—the Directorate-General for European Civil Protection and Humanitarian Aid Operations—does an enormous amount of good work in the humanitarian sphere. We may be tempted to look at this on a case-by-case basis and continue to partner with them, but that is above my pay grade; it is a question for the negotiators.

If we were to reduce the amount of money we put through European institutions and had money coming back, my instinct is that it would be worth looking at the question raised by the hon. Member for Harrow West. That is to say, we may want to increase the number of our staff. We may want to look at the possibility of having larger footprints, because as we worry more and more about risk and implementation, we may need to get more people into the field and into schools and those clinics to check what they are doing. Those people need to be able to speak local languages well and they need to understand the context well.

We need to be able to ensure that when we are spending money in a country, we have highly expert professional British civil servants on the ground to monitor those projects. My instinct—again, this is a broader discussion within the Department that would have to take place after Brexit—is that we would, as the hon. Gentleman implies, need more staff on the ground to ensure that implementation happened.

Before the Minister concludes, I want to say that I agree with him; I hope we are all still here in three years’ time, but I hope our roles are reversed. I thank him for his response, but it would be really helpful if he could tell us where to find the key performance indicators, what the timescale is, how they will be measured, who will measure them and so on.

I hope I am not going to get stabbed by my officials. The key performance indicators certainly exist. I have read most of them. I therefore hope they are not some classified document that I am not in a position to share. If they are a public document, as I hope they are and as they should be, we will of course be delighted to share all the KPIs with all the dates and timelines, so that the hon. Lady can monitor them, along with us, to ensure that they are met.

I commend these three orders to the Committee.

Question put and agreed to.


That the Committee has considered the draft African Development Bank (Fourteenth Replenishment of the African Development Fund) Order 2017.

Draft Asian Development Bank (Eleventh Replenishment of the Asian Development Fund) Order 2017


That the Committee has considered the draft Asian Development Bank (Eleventh Replenishment of the Asian Development Fund) Order 2017.

Draft Caribbean Development Bank (Ninth Replenishment of the Unified Special Development Fund) Order 2017


That the Committee has considered the draft Caribbean Development Bank (Ninth Replenishment of the Unified Special Development Fund) Order 2017.

Committee rose.