Sir Andrew Mitchell
MP for Sutton Coldfield · Conservative · United Kingdom
“I urge Labour Members to rise up now and say that the historical interest and support of the Labour party have been for international development. People might expect the beastly Tories to cut aid and development, but they do not expect the Labour party to do that. Now is a chance to have a real reset, which should include three things.”
“As we get older, we tend to look back at the past through rose-tinted spectacles, but I acknowledge at the outset that British development policy is at its best by far when it is conducted on an all-party basis. It is not a Labour, Conservative or Liberal policy; it is a British policy. That was one of its great glories in the past.”
“Friend the Member for Dumfriesshire, Clydesdale and Tweeddale about the importance of saving the Independent Commission for Aid Impact, but we have to accept that we will not get a major boost in public support unless it comes from the top. We had an era of huge support, led by Tony Blair, Gordon Brown, David Cameron and Theresa May.”
“The Government are the 100% shareholder in BII and are therefore able to set out very clearly what its priorities should be, but they should then leave an organisation like BII to get on with following that mandate. I argue that there have been three great losses from the Johnson and Starmer premierships.”
“I argue that, since the Suez crisis, international development has been the only area of indisputable British international leadership—and we have lost that.”
“I do not really agree with that because, while the hon. Gentleman cites a number of areas where Britain makes a big contribution, there is a big black hole where we have cut off our legs in respect to international development. I will say a word or two about that in a moment.”
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“The coalition Government have been determined to refocus the development programme so that the aid programme is fuelled by the engine of development—the private sector. Here, I turn to some of the comments made by the hon. Member for Birmingham, Northfield (Richard Burden), who is my hon. Friend in Birmingham, where our constituencies are close together. He asked about the 50% figure for the amount that will be spent through private sector development in India, and for which other countries we were minded to adopt that policy. He also asked me to explain why I saw the private sector as a key means of development, and we had some exchanges on that when I appeared before the Select Committee. I suspect that, although the hon.”
“Indeed—I hope that this does not cause Labour Members to blush—the then Prime Minister, Tony Blair, was minded to privatise CDC, but that did not proceed. The pendulum has now swung to the other extent, and it is a very strong, financially driven organisation that is not much different from many other organisations that operate in emerging markets. It seems to have lost some of its development DNA, and we need to put that back in the centre so that it has both rigorous financial control DNA, as well as strong development DNA. That is our intention, and I am pleased that it was strongly endorsed by the Committee in its response to our proposals. It is worth emphasising the point that was made by the Committee’s Chair, my right hon. Friend the Member for Gordon, that aid is a means to an end, not an end in itself.”
“The Department and its Ministers draw huge strength from the way in which the Committee goes about its business, and I am extremely grateful to all its members for that. This has been an excellent debate on many of the key issues that the Government are trying to address in connection with CDC. Let me start by emphasising the point that several hon. Members made—that CDC, given the terms of reference under which it has operated in recent years, has done an extremely good job. It has provided an excellent return to taxpayers, and it has increased substantially the funds under management, but my submission is that in development terms it is a greatly under-utilised asset, and needs to be changed. It is fair to say that some years ago, CDC perhaps had too much development DNA in its work, and not enough financial rigour.”
“It is a pleasure to appear under your benign chairmanship, Mr Walker, for the first time. I congratulate my right hon. Friend the Member for Gordon (Malcolm Bruce), who launched this debate today, and his Committee on its work not only on CDC, which has been enormously helpful to my Department, but on a range of other matters to which it brought extraordinary expertise and experience as well as energy, when considering difficult and intractable development problems. Secretaries of State do not always agree with Committees on every issue, and that is true of the International Development Committee and this Secretary of State. However, for the record, it is a pleasure to work with such an expert Committee.”
“For that reason, we decided to freeze the programme, focus on work in the poorest states and redirect a significant part of the budget—up to approximately 50% by the end of the next four years—to pro-poor private sector development. That will create the jobs and prosperity that are essential for India.”
“We must explain that, yes, India is roaring out of poverty, but there are more poor people in India than in the whole of sub-Saharan Africa. Seven and a half times the total population of the United Kingdom live on less than 80p a day, and it is right to walk the last mile with India on development. The aid and development programme is important, and makes up part of the rich tapestry of Britain’s relations with India that were so singularly reinvigorated by the Prime Minister’s visit last year. Those relations are important and we all—not only people in India but those in Britain as well—have a huge amount to gain from Indian prosperity.”
“As I made clear to the Committee, the figure of 50% feels right in the context of India. I suspect that in many bilateral programmes over the years, there will be an increasing role for the work of the private sector as countries move down the path of lifting themselves out of poverty. In Vietnam, for example, we can see how that engine has driven the alleviation of poverty. There is no science to the figure of 50%, but it feels right in the case of India. As I said when I gave evidence to the Committee, it is not an arbitrary target but an aim. As the hon. Gentleman will be aware, in defending our decision to continue with an aid and development programme in India, it is important to respond to public concern.”
“I will come directly to that point. CDC investments in India will be in addition to the 50% of the programme funding that we expect to be spent on pro-poor private sector development over the next four years. If the hon. Gentleman will allow me, I will come in a moment to some of the other points that he has raised.”
“I hope that she will forgive me if I draw her attention to the fact that some of those matters are before the courts and I must therefore be careful about what I say in my response. I can tell her, however, that the Department and CDC take allegations of corruption extremely seriously. We have looked at the allegations in exhaustive detail, and I have written in great detail on the matter to the chief executive—I think—of the Jubilee Debt Campaign. I would be happy to share the contents of that correspondence with the hon. Lady, and if she would like me to do that, she has only to say.”
“At the moment, the target exists only in India. I can only repeat what I said to the hon. Lady: the figure feels right; it is not a science and I am not setting an arbitrary target in that sense. It is an aim and as long as we move down that course over the next four years—which I am sure we will—we will see the benefits in terms of what is happening in India and of the effectiveness of our programme. I know that the hon. Lady has an urgent constituency matter to attend to and may leave before the end of my speech, so I will address the point she raised. She made a number of detailed comments about the nature of the operation of CDC’s investment in Nigerian companies against which corruption allegations have been made.”
“They are, however, entitled as the 100% shareholder in CDC to express a clear understanding of the direction in which CDC should be moving. That is what we are doing.”
“In March this year, the Committee published its report on CDC. The Government responded on 4 May, welcoming that report and agreeing with the vast majority of its recommendations. On 7 June, I reported to the House that the Government and CDC had agreed on and published a new high-level business plan. In his opening remarks, the Chairman of the International Development Committee stated how important it was that the Department should not be too distant from CDC. He expressed the view that the Department had previously seemed distant, although the two buildings are only about 300 yards apart. I completely agree with the right hon. Gentleman, and we are intent on rectifying that within the important confines that Ministers and civil servants should not pick winners or make decisions on individual investments.”
“We are pressing the IFC to do more in lower-income countries and particularly fragile states, and to be more demonstrably pro-poor in middle-income countries. There is no difference of opinion between the Front-Bench spokespeople on that point. At the heart of the approach that we are discussing is a reformed and revitalised CDC that will be a catalyst for change in the most challenging environments where the transforming power of successful financial investment is most needed. In that context, the previous six months have seen an enormous amount of activity, and if I may, I will remind the Committee of what the Government have been doing. In October 2010, I informed the House of the Government’s decision to reconfigure CDC to boost its development impact, and a public consultation was set up as part of that process.”
“The hon. Lady is nodding assent, and I will write to her on that basis. The point I seek to make is that by helping the world’s poorest people to create wealth and build up their own assets, we will help them to pull themselves out of poverty, and become less reliant on aid and more resilient in the face of natural disasters. During her excellent speech, the hon. Member for Bethnal Green and Bow (Rushanara Ali) underlined the point that development finance institutions such as CDC should do more to reduce poverty. I completely agree with her. We need to see the new CDC leading the way and demonstrating how other international financial institutions, including the International Finance Corporation, can set a good example.”
“I noticed that on one occasion CDC was the seventh investor in a fund, which does not suggest a great deal of pioneering. What CDC has that the market does not have is the ability to deploy patient capital, which does not require the same returns as are returned by the market. It can take a much longer view. That is one of CDC’s unique selling points, and it is extremely important that it is deployed. CDC’s focus will be on development impact rather than corporate profitability. It will channel all its new investments into the poorer countries in sub-Saharan Africa and Asia, where more than 70% of the world’s poorest people live. It will become bolder in its approach to innovation and risk, accepting higher financial risks where those are justified by greater development benefits. In other words, as I said, it will be a patient investor.”
“On page 2 of the Government response to the Committee’s report, we are clear that making intelligent and innovative use of that should be something that we progress, and we have every intention of doing that. I do not want to waste the valuable opportunity presented by today’s debate by repeating the details that I have already given the House. Instead, I want to remind hon. Members of the broad thrust of the changes that we have made to CDC—changes that reflect the responses to the consultation and many of the comments made in the Committee. Under its new business plan, CDC will become a pioneering investor—the most pro-poor investor in the world. As members of the Committee made clear, there have been too many examples of CDC behaving like any other emerging market private equity fund.”
“The right hon. Gentleman is absolutely right. We will, I hope, see secondments between the Department and CDC in the future, and we are intent on promoting much closer involvement, including at country level. When I first visited India, I, too, was struck by the distance between the Department and CDC, although it is fair to say that, such is the quality of the staff that we are fortunate enough to have in India, that is rapidly being rectified. The Chairman of the Select Committee will agree that that is a most important matter. In the early part of his remarks, the Chairman mentioned the importance that the Committee attached to the role of the diaspora and, in particular, to remittancing and related matters.”
“It is already publishing more corporate and investment data on its website, and more of its evaluations will be carried out independently. As I mentioned, DFID will work more closely with CDC, not only at country level but at the centre. CDC’s business plan will be kept under regular review, and it will report annually to my Department against published targets. DFID will not interfere in CDC’s investment decisions, for the reasons that I explained, but it can offer valuable information and expertise from a development perspective. The issue of remuneration was raised. Pay and bonuses will be brought down to a level that is fair and appropriate but not excessive. I am pleased to be able to tell members of the Select Committee that the CDC board has already cut bonus levels by 50% this year.”
“Member for Bethnal Green and Bow mentioned the position of CDC in relation to SMEs. It is worth making it clear that CDC is already one of the major backers of SME funds, such as ManoCap and GroFin, and it will do more. Last November, it committed €8 million to a new SME fund based in west Africa. I hope that the hon. Lady will feel that the direction of travel in that respect is also a good one. Following the changes, CDC will no longer work exclusively through private equity funds managed by others and, as I have said, it will offer loans as well as equity financing. It will become more transparent in its dealings, so that taxpayers and the people whom we are trying to help can see where and how the money is being spent.”
“The hon. Gentleman asks an important question. We have taken nothing off the table in that respect. I will come on to why the time to deal with that point is when the new chief executive has been appointed and the business plan for CDC under his or her direction has been set out. A number of members of the Select Committee raised the overuse of private equity funds by CDC in the past. However, ManoCap, for example, which is a brilliant organisation and fund in Sierra Leone, run by Tom Cairnes and his colleagues, is highly developmental. Under its new approach, CDC will support pioneering equity investment and will increasingly also deploy other tools, including lending, guarantees and co-investment, but they will be introduced carefully and over time. In addition, my hon. Friend the Member for Stafford (Jeremy Lefroy) and the hon.”
“If, for some reason, it cannot disclose the information that it is asked for—perhaps for reasons of commercial confidentiality—it will be incumbent on CDC to explain why.”
“In many parts of the world, one of the best ways of helping people in rural areas is to generate employment in non-agricultural sectors. Although CDC will consider investing in agriculture, it will also be helping to create off-farm enterprises and businesses in other sectors. I turn to the important question on transparency asked by the hon. Member for Glasgow Central (Anas Sarwar). He wanted to know whether the Government would ask CDC to publish data on all countries in which it works. CDC will shortly be publishing a new disclosure policy. It will be substantially more transparent, publishing significantly more data on the businesses in which it invests, on its fund managers, on the impact of investment country by country and on taxes paid.”
“Friends the Members for East Surrey (Mr Gyimah) and for Stafford made important points about CDC’s role in developing agriculture. I completely agree with what they said. Agriculture is crucial to our efforts. DFID is highly active in supporting agriculture through research and development and value-change development, and in many other ways. I think particularly of the work that we are doing with the World Food Programme in Karamoja in northern Uganda, a food-stressed part of the world where people have regularly needed support and food aid; we hope that it will become self-sustaining so that they will not need such aid in future. When investing in agricultural enterprises is the best way to generate sustainable jobs and income for poor people, CDC will certainly consider doing so more than it has in the past.”
“Getting together that team, developing the resources required by CDC and motivating and leading the team is one of the key jobs that I hope the new chief executive will take forward. The CDC board has responded willingly and constructively to the changes. The reforms answer directly the criticisms that have been made of CDC and the concerns voiced by the Government and the Select Committee. They make CDC a far more effective tool in the Government’s development armoury. I need to make it clear that quite a significant chunk of CDC’s capital is locked up in binding legal contracts for a number of years to come, so reform in that respect will take place over time, but I and the board are committed to making it happen. I now pick up on a couple of other points made during the debate. The Committee Chair and my hon.”
“As the Chair of the Select Committee said, the organisation is extraordinarily attractive both to those who are coming to the latter stages of their business life, who perhaps have been successful and made a great deal of money and want to put something back—they can bring huge expertise to the work of CDC—and to younger people who perhaps do not want to work on a production line in the City of London but want to leave a footprint in the sand and to make their contribution at this time when so much can be done to alleviate poverty—to make their contribution to the workings of CDC and to the exciting propositions that will undoubtedly come forward for them through the work that CDC is doing.”
“We all look forward to seeing the result of that process. In addition, we have already reinforced and strengthened the board of CDC, which has managed in the past to attract a very high calibre of expertise. Once the new chief executive is appointed, he or she will be able to take the wider remit that we have agreed with the board for the work that CDC will carry out in the future and ground it with much more detail. He or she will also be able to start to recruit the team who will carry out that important activity. We want CDC to become the most successful and the best development finance institution in the world and to blaze a trail and set an example that others will follow.”
“The hon. Gentleman, despite his comment, is never a nuisance. If he bides his time, I will come directly to the point that he has raised. Once the new chief executive is in place, the Government will decide how to restructure pay. We will ensure that the new remuneration framework links performance to development results rather than simply profit. I was asked a number of questions about how CDC would deliver that new agenda. I expect CDC to start to make rapid progress in a huge number of different directions once the new chief executive is appointed. The head-hunters charged with finding the person for what I have described—accurately, I hope—as one of the most interesting and exciting jobs anywhere in the financial world have advised me that they have been overwhelmed by an incredible response from highly talented people.”
“CDC is committed to more than 50% of evaluations of its investments being done by independent evaluators. I have answered my hon. Friend the Member for East Surrey on getting the right skills in CDC, but I would like to add that we have appointed someone to head CDC Innovation, a new CDC team, to consider frontier pioneering opportunities. However, as I have indicated, the real momentum on that front will come after the appointment of the new CEO. I hope that I have covered most of the points raised in this debate. I again acknowledge the important role played by the Committee in the development of CDC. Its thinking has helped shape CDC’s new business plan, and I greatly value the expertise that the Committee has deployed in helping us all to take these developments forward to the best possible effect.”
“We should wait for the code to be published, but when the hon. Gentleman sees it he will realise that we are at precisely the same place. I hope that it will win his approval. The hon. Member for Bethnal Green and Bow asked me about the monitoring of CDC’s development impact. As I indicated earlier, it is important that CDC’s work should be judged by both its development impact and its financial returns. No one is in the business of wanting it to support unprofitable enterprises. Monitoring CDC’s achievements will show why it is of such great importance that it makes a profit, but I hope that the hon. Lady will agree that we are becoming better at demonstrating both aspects. We are pressing hard for CDC to come up with proposals on this, and it is being supported with strong advice from development experts in my Department.”
“From 2012, DFID’s work in Burundi will focus on supporting regional integration into the east African community through the British-led organisation TradeMark East Africa, which has opened an office in Burundi which DFID is funding. That is the right way for us to help the people of Burundi, rather than aid being provided through a small, expensive and duplicatory bilateral programme.”
“My hon. Friend has made a good point. I believe that I met the vicar during a visit at the time of the general election, but I, or one of my fellow Ministers, would be happy to meet him and some of my hon. Friend’s constituents to discuss this important matter.”
“The hon. Gentleman will be aware that Germany, Belgium and France have much larger bilateral programmes in Burundi than Britain. We are providing only 3.6% of the funding through our bilateral programme, but we have to make tough decisions about how we spend our budget. It is, after all, hard-earned taxpayers’ money, and we do not think it provides good value for money to have such a small programme with such high administrative expenses. I can tell the hon. Gentleman, however, that through multilateral support over the next few years Britain will spend about double the sum of the old bilateral programme.”
“The bilateral aid review demonstrates that DFID’s programmes with Indian states yield strong development results with good value for money. The Independent Commission for Aid Impact will evaluate the India programme as part of its work in 2011.”
“The hon. Gentleman is right: India is a development paradox, as I have said before, and we are right to continue the programme for now. We have frozen the figure for the next four years, and we are moving to work only in the poorest states in India. As the hon. Gentleman has implied, there are more poor people in India than in the whole of sub-Saharan Africa.”
“My right hon. Friend is absolutely right. Half the children in the state of Bihar are suffering from malnutrition. His point about the programme is a good one. We are looking at increasing the amount we spend on water and sanitation, and all of us are extremely grateful for the strong all-party support his Committee gave to the Government policy on aid and development in India.”
“The coalition Government have set out in the comprehensive spending review how we will meet our commitment to spend 0.7% of national income as overseas aid from 2013. We have made it clear that we will enshrine that commitment in law as soon as the parliamentary timetable allows.”
“The hon. Gentleman, who is enormously experienced in the ways of Parliament, will know that that is not a matter for me as the Secretary of State for International Development; it is a matter for the business managers and the usual channels. I suggest that he refers his question, on an appropriate occasion, to one of them.”
“My hon. Friend is right to this extent: we could spend this hard-earned budget twice over, because there is need that we could satisfactorily address. But the world, many years ago, settled on a figure of 0.7%, and all of us have made a promise to stand by that commitment and the Government are absolutely right, even in these difficult economic circumstances, not to seek to balance the books on the backs of the poorest people in the world.”
“I thank the right hon. and learned Lady for her support. We are looking very carefully at how we can assist in Somalia, particularly in the south-central region where there is a weight of people crossing the border into northern Kenya. I expect to visit the region shortly to see what additional assistance can be given. The right hon. and learned Lady is also right that although there has been strong British leadership in all this, it is essential that other countries that can help put their shoulders to the wheel, too. We spend a lot of our time ensuring that others do precisely that.”
“Up to 10 million people need emergency relief, especially in south-east Ethiopia, southern central Somalia and northern Kenya. We are seeing acute malnutrition in all these places. The crisis is provoked by the failure of the rains for two consecutive years and is characterised by the loss of crops and livestock, exacerbated by high food prices. The situation is unlikely to improve before the October rains.”
“My hon. Friend is right to make it clear that food security over the longer term is the key way to tackle such disasters. It is also true, however, that it is no fault of the horn of Africa that there have been no rains for the past two years and that a serious situation has been exacerbated by that. I can tell him that there has been significant progress and over the past 20 years, for example, the incidence of acute malnutrition in Ethiopia has gone down by some 50%.”
“I can reassure the right hon. Lady. We were the first people to make it clear that we would give strong support, helping 1.3 million people in Ethiopia and ensuring that mothers with babies and children—330,000 of them—would receive rapid support. The Disasters Emergency Committee appeal has kicked into play and we are considering additional support to that which we are already giving to take account of the situation that she described in southern Somalia and particularly in Dadaab, which is now the biggest refugee camp in the world.”
“My hon. Friend has eloquently made the case for the world taking urgent action to ensure that what is currently a crisis does not develop into a disaster. He has my assurance that the British Government are doing everything they can to help and I will, as I say, be going to Dadaab at the weekend with the head of the Disasters Emergency Committee appeal. Together, we will look to see what additional work Britain and the international community can do to help.”
“We are delivering the results agenda through our 27 bilateral programmes and we are working to tackle the emergency unfolding in the horn of Africa. We are acting quickly and decisively, as I have said, to prevent this crisis from becoming a catastrophe. We are also continuing to co-ordinate Britain’s contribution to post-conflict stabilisation in Libya for the time when the fighting is over. Since our last Question Time, Britain has chaired and led the drive to fund the next stage of the Global Alliance for Vaccines and Immunisation for the poor world.”
“My hon. Friend is right that the conference was an extraordinary success—exceeding the pledge target of $3.7 billion by some $600 million. As a result, the world will be able to vaccinate a quarter of a billion children over the next five years. Britain will vaccinate a child every two seconds and save a child’s life every two minutes as a result of this initiative.”
“The hon. Gentleman is right that that country has just been born and has $1.7 billion of revenues, and it is essential that the money is used transparently. Britain is a very strong leader on the extractive industries transparency initiative and my right hon. Friend the Chancellor of the Exchequer has made it clear that he expects the European Union to look at how it can develop its own version of the Dodd-Frank legislation that has been laid in the United States.”
“My hon. Friend will have had a chance to read the detailed plan that has been set out. Britain is committed, over the next five years, to ensuring that the prevalence of malaria in the most affected countries is reduced by 50%. We believe that tackling malaria, which kills so many children needlessly every day, should be towards the top of our list of initiatives.”
“The hon. Lady is absolutely right. The tackling of sexual violence and violence against women is now embedded in all our bilateral programmes. In the DRC, the International Rescue Committee is doing outstanding work on this specific agenda, as I hope she will have seen during her visit. She has our commitment that the coalition Government have always said that putting girls and women at the forefront of our international development efforts is essential.”
“My hon. Friend is right. The $800 million is part of the US military budget. All of Britain’s aid that is spent in Pakistan, which is particularly focused on trying to get 4 million children, especially girls, into school, is not spent through the Government. We are very anxious to ensure that there is always accountability to the British public and that aid is transparently used. Those policies will continue.”
“The hon. Lady is right that the floods had a devastating effect in Pakistan as I have seen for myself on my frequent visits there. Britain was at the forefront of the countries coming to support Pakistan when the floods struck and we have been very strongly engaged, not least in helping people to continue their livelihoods and in getting children back into school in the aftermath of, and recovery from, those floods.”