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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 1014-vi House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE ENVIRONMENTAL AUDIT COMMITTEE (TRADE, DEVELOPMENT AND ENVIRONMENT SUB-COMMITTEE)
TRADE, DEVELOPMENT AND ENVIRONMENT: THE ROLE OF DfID
Thursday 25 May 2006 MR GARETH THOMAS, MP, PROFESSOR SIR GORDON CONWAY and MR JIM HARVEY Evidence heard in Public Questions 304 - 366
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Environmental Audit Committee on Thursday 25 May 2006 Members present Colin Challen, in the Chair Ms Celia Barlow Mr Martin Caton Mr Edward Vaizey ________________ Memorandum submitted by Department for International Development
Examination of Witnesses
Witnesses: Mr Gareth Thomas, a Member of the House, Parliamentary Under Secretary of State, Professor Sir Gordon Conway, Chief Scientific Advisor, and Mr Jim Harvey, Head of Profession, Livelihoods Group, gave evidence. Q304 Chairman: Can I just welcome you all to the inquiry. It is our final session of this inquiry, which has featured very heavily on DfID. I particularly welcome the Minister, who was an original member of the Environmental Audit Committee back in 1997 for a couple of years, I think. So you will be familiar with our ways and hopefully we will have a very good session. I think we have you until about half past 12 at the latest this morning. Could I start by asking you just how the environment fits in with the work of DfID? Mr Thomas: Mr Chairman, I wonder if, just before I come to that, I can give a brief opening statement to you, and then I will answer your question. Firstly, can I just introduce the two officials who are accompanying me: Gordon Conway, who is our Chief Scientist, and Jim Harvey, who I know the Committee has already met, who is our Head of Livelihoods and Environment functions. Let me be clear: I welcome the Select Committee's inquiry, not least because my honourable friend the Secretary of State and I both recognise and indeed want to do more on the challenges of supporting developing countries to address the issues of sustainability, particularly climate change, but also natural resources management. I think, Mr Chairman, your Committee will be aware that we have been consulting on a third White Paper for the Department, which we hope to publish some time in the summer. I believe that White Paper will demonstrate further the Department's intent in the areas of sustainability which I have mentioned. At the same time, we are also considering what further staffing and organisational challenges we have to address to support the further work that we expect to do as a result of the White Paper. I should say that, as Ministers, we specifically asked the Permanent Secretary and his management team to look at environmental capacity across the Department. They have set in train two reviews: firstly, one on senior structure across the Department, and a second one on advisory skills. Both are due to report shortly, and I expect there to be an increase in our capacity in this area. In terms of the specific answer to your question, where does environment fit within the Department, I believe that environment has a huge role within the Department's work, not least because, if we are to achieve a substantial reduction in poverty, we have to recognise the impact that environmental change has on the very poor. In many parts of Africa, where they do not have access to, for example, oil or other mineral resources, the natural environmental resources are just forests, things such as the fishing facilities available through lakes or coastal waters. Uses of land in terms of agriculture are fundamental to helping to begin to develop pathways out of poverty for our very poorest people. Some of the work that we have done in Ghana with the World Bank has sought to try to place a value on the contribution of natural resources to economic growth, and we reckon that about 50 per cent of the growth that is taking place in Ghana is directly attributable to the use of natural resources. What is also clear is that environmental degradation is having a significant impact on economic growth, about a 5-10 per cent reduction in the economic growth that could be achieved. So that is obviously beginning to have a substantial impact on the way in which we are thinking about our programmes, both in Ghana and more generally across the Department, and I am happy to give examples of some of the projects that we work. But if we are to achieve the economic growth that we believe is fundamental to helping to lift people out of poverty, we need to make sure that that economic growth is done firstly in a pro-poor, sustainable way, otherwise future generations as well as current generations are going to be, in a sense, confirmed to a life in poverty. Q305 Chairman: Clearly, natural resources provide the means to economic growth, but is that all the environment represents? Mr Thomas: We need to recognise, I think, as a Department that we have a specific legislative mandate to concentrate on the issue of poverty, and therefore how we help achieve the Millennium Development Goals, how we help to lift people out of poverty. So you are right in the implication that environment is obviously hugely significant in terms of its contribution to global public goods, and we work with other government departments who focus in particular on that global public goods dimension of environment. The specific comparative advantage that we, as a Department, bring to the table is the way in which the environment impacts on the needs of the very poorest, and similarly, how the needs of the very poorest impact on the environment. So, for example, we work with DEFRA extremely closely through an inter-departmental group on bio-diversity. They obviously focus very much on the global public goods dimension; we feed into their work, as they do into ours. Similarly, we work very closely with the Foreign Office, who again have a role in arguing the case internationally around protection of the environment. Again, what we bring to their role is the specific comparative advantage in terms of the impact on the very poorest. Q306 Chairman: This paper, DfID's Approach to the Environment, published in February, I thought was a fairly honest assessment of the impact of climate change on your pro-poor policies, and it seems to me that there are great gaps revealed in that document in terms of MDG7, for example. Our ability to make progress in dealing with poverty seems to be greatly threatened by the environmental damage that the impact of growth is causing. Is this thinking going to be reflected in DfID's new approach stemming from the White Paper review? Mr Thomas: Perhaps I can give a specific country example by way of answer to your question, Mr Challen. Let me take the example of Malawi, where the government has a total budget of some US $730 million. Donors contribute another $500 million. That simply is not enough money to help Malawi's very poorest people address the health and education challenges, for example, that they face in-country. Economic growth is going to be crucial if we are going to lift the very poorest in Malawi out of poverty, but if we do not make sure that that economic growth takes place in a sustainable way, then the reality is the environmental degradation which will follow in the wake will ensure that the vast majority of the population of Malawi stay in poverty or in very poor circumstances. I think the key is to recognise that economic growth on its own per se is not going to lead to protection of the environment and help for the very poorest. What we have to do is to make sure that the growth is sustainable and that we look at the distribution of the benefits of that economic growth, because obviously, if the benefits are spread in a more equitable way, that helps to prevent damage to the environment; the pressure on the environment is lifted to some extent, and that will be reflected in our increasing work, which I hope the White Paper will signal. Q307 Chairman: We are going to return to growth very shortly. I wonder if I could direct a question to Professor Conway and ask you if you want to add anything to that particular debate about the interaction between environment and development, whether there is a detached scientific view which tells us anything about how to proceed and how this White Paper should be structured. Professor Conway: I have just been to Malawi and let me just give you examples there. There is a role for science and technology in creating sustainable economic growth. Just to take one example in Malawi, the land is deteriorating incredibly rapidly. They lose about 60 kg of NPK per hectare per year; we put on about 100 and something kilograms per year, so you have got to build up that soil nutrient. You have to do it with inorganic fertiliser but you also have to do it by better soil management. One of the things that we are doing actually in neighbouring Zimbabwe, but we are hoping we can extend it to Malawi, is what they call zero tillage... (Fault in sound recording for approximately two minutes. Log shows there is missing the rest of that answer, a question from Chairman, and the beginning of the answer from Mr Thomas) Mr Thomas: ...both in-country and from Head Office, our ability to support our country offices and internationally in negotiations the work that we need to do on environment. One example, Mr Challen, that I would offer up as an area where I think the Department has done a very strong job but where further work is necessary is around forestry, where I think we have helped through the European Union to ensure that there is a very strong and robust forest governance process taking place internationally. We have supported regulations within Europe to help control better the sourcing of timber for sale in the European Union, which has required a combination of ministerial lobbying and active support from our policy division teams at head office. Then we are working, if you like, in-country with both country office staff and with other donors to develop the capacity of countries such as Ghana, Tanzania, Indonesia, to look at their ability to control their own timber industry, to control the illegal logging which strips away forest cover and, if you like, the global public goods side of things, but which also means that the poor suffer if they depend on forests for a living. So we have set aside some £24 million over the coming years to fund our work at country level, and we are working very closely with other donors to make sure that other donors pick up the lead in other countries that need to do work in this area. Q308 Chairman: Do you feel that the lessons of this document are now beginning to really seep into the organisation? It is only three months old, I realise, but do you have any evidence that this is really making an impact? Mr Thomas: The document is a publication reflecting what we are doing, in that sense. The White Paper will signal our intent in terms of what else we want to do on top of what we are already doing. I think in the evidence session with officials it was brought home, I hope, to the Committee that there is more capacity than perhaps some of your other witnesses indicated in terms of our work on the environment, both in terms of what our Livelihoods advisers do, what our Infrastructure advisors do, indeed, what the contribution of the Chief Scientist is to that process. So I think there are many examples of where the Department is working on the environment, but, as I say, I accept that we need to do more, not least because there is the opportunity to do more internationally because countries are beginning to seek donor assistance to do more, and also because Ministers have signalled that it is a political priority for us. Q309 Chairman: Just to press you a little bit further on this then, you would say that you have moved on a great deal since the DfID evaluation report in 2000 concluded that "there is a gap between the policy priority attached by DfID to environmental issues and what has actually been delivered in terms of positive environmental impact", and it went on that "the environment as a potential development opportunity - rather than a risk to be minimised and mitigated - has not been mainstreamed across DfID's bilateral funding." That was six years ago. You are saying that that has now completely changed and that DfID has really adopted this new approach? Mr Thomas: What I would say is that we have more to do, Mr Challen, not least because the nature of the debate about environment and poverty has changed substantially since 2000. There is evidence of poverty reduction strategy papers beginning slowly to take greater account of the environment, but I would not want to give an impression to the Committee that there has been the type of dramatic change that I think we all recognise is going to be necessary in the long term. Q310 Chairman: You could be confident that a future evaluation report would not then repeat those criticisms? Mr Thomas: I would be disappointed if a future evaluation report did not recognise that there has been substantial progress. I expect if that evaluation report were to take place now, they would point us in the direction of a series of other things that we should do and, as I say, Ministers recognise that and that is why I think the White Paper will signal our intention to do more in this area and why we have set up the reviews of our staffing. Q311 Chairman: Are there any particular things you think that will appear in the White Paper that will show that these concerns have been addressed and that it will be transformed into meaningful action within the workings of DfID? Mr Thomas: I am not going to tell you the detail of the White Paper now, not least because we are finalising our thinking on it but, as I said in my opening remarks, we recognise that there is an opportunity and a need to do more in terms of climate change and in terms of natural resources management, and I expect the White Paper to signal our intention to do more in those areas. Q312 Chairman: So if we were to ask you for an environmental strategy and an implementation plan that incorporated all the lessons from these diverse and some very successful projects that you have been involved with, is something that you would consider favourably? Mr Thomas: It is something that we would consider. I would like to think that the environment paper that we published in February is an indication of the way in which the Department is addressing the environmental linkages to poverty reduction. We have an implementation paper explaining and in a sense setting out the steps that officials and Ministers are going to take to continue to implement what we are doing on the environment. Inevitably, that will require updating in time. It is a relatively fresh document at the moment. So I would hope to persuade you that a new document is not necessary immediately, but I recognise we will need to keep it under review, particularly if, as I believe it will, the White Paper takes us forward in a number of areas that are reflected in the paper so far. Q313 Mr Caton: Minister, you have already mentioned the role of economic growth in achieving poverty reduction and the issue of making sure the forests benefit from that. Has the Department a definition of "pro-poor growth"? Mr Thomas: Essentially, it is growth that allows the very poorest to benefit, in a sense, from the economic growth that takes place, that recognises the need for growth to deliver livelihoods, to deliver effective support to fund health and education and other facilities, to recognise that pro-poor growth is sustainable growth. In that sense, we recognise as a Department that we need to do more, and I hope I have given a sense of confidence that the White Paper will address the specific issue of what else as a Department we are going to do in future. Q314 Mr Caton: On growth, and particularly on growth in terms of GDP, we were given evidence by the New Economics Foundation of how the proportion of economic growth in the last ten years benefiting the most poor has actually been shrinking down to only 60 cents of every $100. With your focus on poverty reduction, surely that sort of figure is totally unsatisfactory. Mr Thomas: It is unsatisfactory. However, I would suggest that there are other elements you could look to, Mr Caton, which would paint a somewhat different picture. If you look at the story of Vietnam, for example, in terms of poverty reduction, we have seen in the last decade a doubling in the size of its economy and over roughly the same period a fall in poverty from three-quarters of the population in the late 1980s to under a third now. So substantial economic growth has taken place in Vietnam and at the same time has helped to deliver substantial poverty reduction. We know, for example, as well that in recent decades, at the same time as Africa has been growing poorer, as economic growth has been contracting, the numbers of very poor people have been increasing too, and there are examples from East Asia as a region again charting the economic growth that has taken place and also at the same time charting the very substantial pull in poverty that has taken place in the region too. What I think those examples and the New Economics Foundation study demonstrate is that economic growth on its own simply is not enough. It is how you make sure that the poor benefit, and are part of that economic growth, and also that you make sure that that economic growth is sustainable in an environmental sense. Q315 Mr Caton: Is not the dilemma, if the New Economics Foundation are anywhere near right, that you have the option of relying on trickle-down from growth but growth has to be so huge that the consequences for the natural environment would be appalling, or you forget about ever getting those people out of poverty? Mr Thomas: I am not sure I see it in those terms. I think the idea that developing countries are not going to want economic growth to take place would be an illusion. What I think we have a responsibility as a country to do and through my Department I believe we are beginning to do it very effectively in a number of countries, albeit we have to do more, is to support those countries in making sure that that economic growth does help the very poorest people to be lifted out of poverty and it is done in a sustainable way, because that is the only way in the long term large numbers of poor people are going to be lifted out of poverty. So I do not see it as a dilemma as such; I see it as a fundamental challenge. We have to give the developing countries the support they need to make sure the very poorest people in their countries benefit from the economic growth that they need. Q316 Mr Caton: Can we move on to looking at DfID's Management Board? At the moment it is overwhelmingly dominated by people with a World Bank or economic background. Do you believe there is a need for greater diversity within the Board so that all aspects of development are covered rather than just the economic side? Mr Thomas: In terms of the Management Board, I would expect the Management Board to be able to focus in on all the challenges that the Department faces, not just the specifically economic challenges that the Department has to look at, and I believe they do that. I think we have a very strong management team. It is one of the reasons why I think the Department has the strong international reputation it does. So I do not think we need a radical change to the Management Board. I do think we need to look at our senior civil service structure and at the number of advisers who work on environment issues, and that is why Hilary and myself have asked the Permanent Secretary and that Management Board to review our senior structure and our advisory skills so that we can increase our environmental capacity in the future. Q317 Mr Caton: I hear what you say about the Management Board, but if you look at the focus of this Committee's interests and you look at the minutes of the Management Board and the Development Committee for the last two years, environment, sustainability and climate change hardly feature: once, I believe, in the last year. Nor do these issues appear high on the Committee's agenda. What does this say about the commitment to these issues within the higher echelons of the Board? Mr Thomas: I think it is a little unfair to pick out just the Management Board to arrive at that conclusion. I think if you were to look at the work of the Secretary of State and myself as well as the Management Board and as well as the broader Department, I think you would actually see a very substantial work stream on the environment. One asks the Management Board to look at problems and do some broad strategic thinking for us. They do that extremely well. As I say, I think the Department will signal its intent to do more on the environment in the White Paper that is coming. Q318 Chairman: Can I just ask, have you met any resistance in the Department to this new agenda? Mr Thomas: You have within the Department on all sorts of issues pretty robust discussions, but I think there is a recognition across the Department... Q319 Chairman: Not shouting matches though? Mr Thomas: Certainly not shouting matches. Neither Hilary nor I have that type of personality. I think there is a recognition across the Department, and indeed across the Management Board and the senior civil service as a whole, that the Department does need to do more on climate and natural resources, and I think people are beginning to recognise that there are a growing number of international opportunities to do that, and that there is a growing recognition from the developing country governments with whom they work that they also need to be asking donors for greater support in these issues. What has been quite interesting just by way of example is that a couple of developing countries with whom we work have asked us to work on a strategic environmental assessment of their poverty reduction strategy papers. That is a very positive move. It is, if you like, a start. It is not something we have yet had the opportunity to extend across every poverty reduction strategy paper with which we engage. It may well be that there is a place for a number of other donors to take a lead in particular countries, but it is those types of opportunities that are beginning to open up, which is one of the reasons why we think we need to do more and why we think we need to look at our capacity within the Department to support us taking advantage of those opportunities. Q320 Mr Vaizey: Is there an opportunity for you to out-source some of the work to other existing government agencies? We had the Environment Agency in, and while they did not explicitly say "Can we have the work?" they gave the impression they are doing a little and had the capacity to do more. Mr Thomas: I think the answer to that is maybe, because we already use and receive advice and support from a whole range of other organisations, be they civil society organisations, be they research institutes, etc. In the wake of the Commission for Africa, a number of government departments have looked at how they can contribute to the Government's agenda on trying to support Africa better, so it may well be that there is a role for more organisations to support us in that way. We have these reviews under way. I think it is important for us to address first the question of environment capacity within the Department, and perhaps as part of that we may need to look elsewhere at what other expertise we can bring in. I think you will be aware that we have a relationship with the IIED to take advantage of some of the expertise that they have available to us. In future, other partnerships like that might potentially be quite attractive. Q321 Mr Caton: Professor Conway, you were appointed as Chief Scientific Adviser to the Department in 2004. How easy have you found it to influence policy as an outsider and what do you think you have achieved? Professor Conway: I will be appearing before the House of Commons Select Committee on Science and Technology in June. Obviously, that is where I shall make a full answer to that question, but I can say in all honesty that I have been very well received within the Department. I have excellent relationships with the Permanent Secretary, with the Management Board and with the Ministers. I meet them on a really regular basis. I have had considerable influence in whole range of areas, some of which are environmental, some of which are not. I have been involved in issues over Tsunami with the Minister. I have been involved with the funding of avian flu work. Most recently, I have been working a great deal on climate change. I have spent the last year travelling; I have been to eight or nine countries in the last six months. I was in Ethiopia and Malawi just recently and in Tanzania just before that. So I have worked on the ground with people in the offices. I have been to see many projects which are in the broadest sense environmental: the watersheds in Orissa, the forest work in the Sunderbands, I have been up to the lowest plateau in China, I was recently in Tanzania on Mount Kilimanjaro, and so on. So I have seen a lot that goes on on the ground, and I have to say that much of this work you would not narrowly define as environmental, but it has a great deal of environmental content to it. I have been able to advise, and I find that in particular the heads of the offices overseas want me to come back. They say, "Please come back soon. We benefit from your words." I think we will have to wait and see the White Paper and what will come out of the White Paper and also when I give fuller evidence before the Select Committee on Science and Technology, but I have been very pleased with the progress. Q322 Mr Caton: Until April you did not have responsibility for environment and climate change. Is that right? Professor Conway: No, that is not true. I have responsibility across the whole board in terms of science and technology; anything that has a science and technology component to it I have responsibility for. Agriculture, environment, water, climate change is part of the work plan and has been all along. I am probably going to be spending rather more time over the next few months on the inter-relationship between agriculture, environment, livelihoods and climate change than I have in the past, but that is what the shift is. Q323 Mr Caton: So that shift happened in April, did it? We have information from officials that up until April your remit did not cover environment and climate change. Professor Conway: There is a distinction between the job description and the work plan. The work plan was agreed about a month ago and the work plan has a high emphasis on agriculture, environment and livelihoods. Mr Thomas: What we have done is to formalise what has become clear in terms of the nature of Gordon's work by formally including in the work plan that we have agreed with Gordon for 2006 a greater focus on environment and climate change in particular within that work plan. That is not a dramatic change; it is more a reflection of the nature of the work stream that Gordon has been doing and how it has been evolving. Q324 Mr Caton: How is that work plan put together? Who draws it up? Professor Conway: It is basically a dialogue between myself and the Permanent Secretary, with inputs from others. But, just to go back, I was giving speeches on climate change last August and was working on climate change in Bangladesh last August. Q325 Mr Caton: Does DfID have, in your view, firstly, the expertise, and secondly, the institutional capacity to give the environment the priority that it needs and deserves? Professor Conway: My answer is the same as the Minister's. I think we are looking towards expanding our capacity and expanding our work. That is what the White Paper will signal. I think the biggest challenge, if you want me to put it more clearly, is that when we think about the environment, we have to think about environment in the broadest sense. We have to think about environment being land and water and forests and fish, and about how people utilise those. So it involves environment in the narrow sense, it involves livelihoods, it involves agriculture, it involves water resources, and of course, it involves governance; you cannot actually manage the environment and natural resources unless you have decent governance. The challenge is really to get all those to work together, to get joined-up government but within DfID, across the Department. Q326 Mr Caton: Thinking about that, and from your experience, do you perceive a willingness in DfID's country offices to mainstream the environment, or is the picture varied? Professor Conway: It obviously varies from country to country. It is not so much about mainstreaming the environment; it is about mainstreaming the different components of an environmental approach within a development approach. It is about sustainable development, if you like. That is a crude shorthand term for something that is much more complicated. Mr Thomas: If I could in a sense as well, Mr Caton, just challenge the premise behind the question, and if I may crudely suggest that the premise behind the question is that the work, in a sense, that our countries do is the only part of the equation. One of the reasons why, when we made our changes to policy division, we set up a dedicated sustainable development group within the policy division with a number of dedicated teams on specific aspects of the environment there was because we recognised that not only did we need to support our country offices better but also that there were a whole series of international opportunities to make progress on environmental issues, be they influencing other donors such as the World Bank or other bilateral donors with whom we work, but also in international negotiations, the biggest of which that has made most progress most recently has been around forestry. There are opportunities opening up for similar work on fisheries. There is a dialogue taking place with the World Bank around a clean energy framework and indeed similarly with regional development banks. So I suppose one of the differences over the last five years or so has been the growth in those global opportunities to influence the development community as a whole as opposed to just what we do as a Department at country level ourselves. Q327 Chairman: Professor Conway, when David King said, I think last year, that concentration of greenhouse gases in the atmosphere at 550 parts per million would be politically acceptable, he was criticised by environmentalists for confusing his detached scientific opinion with what he thought was politically expedient. Have you had any kind of experience of that in your role as the Department's Chief Scientific Adviser? Professor Conway: No, I do not think I have. I cannot recall any situation like that. Q328 Chairman: So you would give advice, purely detached scientific advice, which may or may not be acceptable to Ministers? Professor Conway: Yes. Q329 Chairman: When the Government's Chief Scientific Adviser said, "This is what I think is politically expedient," he was criticised for that. Do you think that is a thing that chief scientific advisers should be involved in? Professor Conway: I do not want to comment on him or on what he said but, in answer to your question, within DfID I have been very free to have a challenging role. In fact, it has been said quite explicitly to me that I have a challenging role within DfID, and the Chief Economist has the same role. We use that in Development Committee, for example, and elsewhere we frequently challenge what people are saying and that is accepted and, I think, welcomed. Q330 Mr Vaizey: Is there a recent example of you challenging DfID? Mr Thomas: Let me just be clear. I would expect all our officials in a sense where they think strong advice is needed on a particular course Ministers want to pursue, either where they have concerns or where they have suggestions, to offer that advice. We try as Ministers to encourage that advice to be offered. We do not always accept it but that is the job of Ministers, to in a sense take a view about the advice that we are getting. One of the advantages that we have as a Department is the quality of our staff and frankly, if they were shrinking violets, it would not be very helpful to us as Ministers. I welcome the fact that they are not. Q331 Ms Barlow: I will move now to environmental screening. The Department is committed to environmental screening, which of course is welcome, and you published guidance notes in 2003, but it is only recently that you started assessing the effectiveness of this process. Do you feel it fits in with the ethos you have stated today, which is that the environment has a high priority in your projects? Mr Thomas: I think environmental screening does fit in with the ethos of the Department, but one of the reasons why a review is taking place is because we want to make sure that our performance across all our programmes where environmental screening takes place is of the same high quality. If I am honest, I think some of it is patchy, and I think there are examples where environmental screening has been done extremely well, and I am sure we will find examples where it has not been done as well as it can be. That is the reason for the review. What we are clear on is that we want to improve the quality of the screening that we are doing. That is one of the outcomes I expect to come from the review. Q332 Ms Barlow: Why not earlier? That is really what I am asking. Mr Thomas: We need to give time for processes to take place. We need to give time for projects or for programmes to have been tested. There are training programmes that take place across departments in the use of environmental screening techniques. I think the three-year review point which we are now at is a reasonable time frame. I suppose we could have done it earlier. Some, I am sure, could argue we should have done it later. The review is taking place, I think it is the right thing that it is taking place, and I hope and I believe it will help us to improve the quality of our performance. Q333 Ms Barlow: We have been told that the review is being undertaken by untrained staff and that there is no requirement for these staff to consult the DfID special advisers. Is this correct, and if it is correct, is this satisfactory? Mr Thomas: The special advisers who work to the Secretary of State I would not expect to be consulted in a review of environmental screening. No. They are political appointments, they are designed to give political advice to the Secretary of State, and I do not think they should be involved in a review of environmental screening. I think it is quite appropriate that they are not being asked in that way. We will see the outcome of the review and we as a Department will need to make some changes, I am sure, to make sure that we learn the lessons from that review, and I welcome that. Q334 Ms Barlow: But who is actually carrying out the review? Mr Harvey: We have brought in a consultant under our enabling agreement with the company that provide back-up environmental advice, and this person is doing an in-depth review based on a sample survey approach across a whole range of ESMs, using our system, sampling from different types of projects, different divisions, and looking at the results, actually looking at every process. This person has also visited one country office, DfID India, which is one of the larger programmes, to talk in depth about how these procedures are used and to find out exactly what are the pitfalls, what is going well, what is not going so well. That report is due next month, in June, and I think it is going to give us a lot of really in-depth information on how to improve the system. Q335 Ms Barlow: Do they have an environmental background? Mr Harvey: From a specialist environmental consulting, one of the largest companies in Britain. They are also very familiar with DfID procedures, having once worked as an implanted contracted-in person in the Department. Mr Thomas: Let me just be clear. Our special advisers may well want to comment and give advice to Ministers on the basis of what comes out in both the skills reviews that are taking place and the review of environmental screening, but the review as such is not going to report to them. Q336 Ms Barlow: You say the review may have a challenging outcome. If it feels that the screening process is not satisfactory, will you be able to put in more specialist staff at regional level, for example, and at country level to implement a changed screening process, and how will this fit in with the Gershon review? Mr Thomas: If the review is not satisfactory, then we will have to make some changes to improve the environmental screening processes that we have within the Department. On the question about additional staff to support that, I think that will be something that we look at in the context of the review of advisory skill staff that is taking place at the moment to support the implementation of the White Paper. As I indicated in my opening remarks, I expect there to be an increase in environmental capacity ultimately as a result of that process. Q337 Ms Barlow: Your officials told us that they are doing their best to bring the attention of the heads of office programmes to the importance of environment so they can spot opportunities. Is this not rather a haphazard approach? Could it not be improved? Mr Thomas: Let me, if I may, return to the example of forestry, where we have had a very clear ambition in terms of the international agreements that we wanted to see, both at European level and in a series of regions of the world, and then at country level supporting those international agreements being implemented at ground level. We expect our staff at country level as well as our staff in policy division to look for the opportunities with Ministers to move those processes forward. On forestry, we have had a series of very positive outcomes, both at European level, where we do now have a regulation - we got that agreed during our presidency - to better control the sourcing of the timber that comes into Europe, and now at country level we have committed money. The European Community has committed money, a number of other donors have committed money, and we are dividing up the responsibility for working with the developing countries that want a voluntary partnership agreement in forestry and supporting them in that process. The other example that I would give you to demonstrate that we are taking a strategic look as well at the opportunities around environment is that we are currently doing a mapping exercise across Africa to look at which donors work on environmental issues to help guide us in terms of where we need to put potentially additional support into our country offices to enable them to plug the gap within the donor community. What we seek to do is more closely align our support and our work plans in-country with those of other donors so that we have a joined-up approach from the international community to support the developing country. Other countries do do work on environment. On occasion it is appropriate for them to take the lead on the environment, and for us to take the lead in other areas. On other occasions it is the reverse. That is why we are doing the mapping exercise, and that will obviously help to inform the skills mix reviews that are taking place. Q338 Ms Barlow: You just mentioned that the environmental screening you felt in some cases was good and in some cases you expected would not be. By chance, we had here a couple of screening notes, one on Tanzania, which is five pages long, and one on Zambia, which is seven lines long, and which states merely, "There are no direct adverse or beneficial environmental impacts resulting from this project" despite the fact that there is a national environment action plan drawn up for the country. These two examples I think do show in some cases the process is working, in others it absolutely is not. Have you confidence that this review and other measures that you have mentioned will actually improve the process in the future, particularly if, as you say, the consultancy is only making one overseas check? Mr Thomas: I have confidence that the process that we have started to learn the lessons from the environmental screening process is the right way forward, yes. What we will have to do is obviously look at what conclusions the review draws and make sure that we take on board those conclusions properly. At this stage, until I see the recommendations of the review, I am not clear what else as a Department we would need to do. There may well be issues around staffing, in which case I hope they will be picked up by the staffing reviews that are in train. There may be issues around training and other support that is necessary, and we will have to look at those conclusions to make sure that they are acted upon. But I think we have done the right thing by commissioning a review and I believe we have the right people in place to do that review. We will have to make a judgment, or you as a Committee may want to make a judgment a year, two years on from here as to whether or not the lessons from the review have been properly learned but I believe there is the appetite to learn the lessons from that review and to put in place improvements. Q339 Ms Barlow: Will that review be completed before all the additional staffing decisions are made? Mr Thomas: I am expecting it to be completed by the end of June. Q340 Ms Barlow: The staffing reviews continue? Mr Thomas: The staffing reviews are taking place at the moment as well, so it will be able to feed into the decisions we make on the basis of the advice we are given on the staffing reviews. Q341 Ms Barlow: Can I move on then to climate change and adaptation? Obviously, development is inextricably linked to the impact of climate, as you yourself stated, yet in your memorandum you say that international and global environment is in the main the responsibility of other government departments. We obviously put this to your officials, who said a lot of environmental issues are led by DEFRA. Obviously, climate change is going to have a huge impact both on the department and your constituents. Is this not a somewhat relaxed approach, that it is someone else's problem? Mr Thomas: It feels anything but relaxed. Our job is to feed into the international leadership that DEFRA initiates, the poverty dimension, the developing countries' angle of climate change, and to help developing countries themselves take the decisions they need to put in place the adaptation and mitigation measures that they want to. So we are not sitting back and relaxing while climate change is taking place. Absolutely not. We feed into the work that DEFRA does. Our approach to climate change negotiations are decisions that are taken at Cabinet level, and the Secretary of State is an active participant in Cabinet discussions. So we feed into those processes. What my officials were saying and what we have said in the memorandum is right; you have to divide up responsibility across government, and DEFRA has this specific lead on the climate change negotiations but we feed in and support them in that process. Q342 Ms Barlow: In the negotiations, yes, but in terms of international development, should not your role be louder, more strident? Should you not be one of the leading voices in preventing climate change rather than seeing your role as more advisory and supportive? Mr Thomas: I think we have the lead within government in terms of helping developing countries to adapt to climate change. Absolutely. We have put in place a series of measures to try to help build up, for example, African capacity in this area but, as I say, on the international negotiations work I think it is right that it is DEFRA's lead. We have a specific responsibility in terms of making sure the developing country angle is fed into those negotiations and we have specific responsibilities in terms of helping developing countries to make the adaptation measures that Britain can help them with. As I say, we are not sitting back and doing nothing. Absolutely not. It is a very active process that we are engaged in, but we do work very closely with other government departments. Q343 Ms Barlow: The presentation that DfID gave to HMT on 17 November last year set out very clearly the impact climate change would have: increasing numbers at risk of flood in Africa from one million in 1990 to 70 million in 2080; up to 53 per cent of Overseas Development Aid in Bangladesh at risk from climate change; serious detrimental impact on the ability to achieve all the Millennium Development Goals; and in India increases in temperature could reduce farm revenues by up to a quarter. Yet India's Country Assistance Plan, as one example, says "Slow onset disasters, particularly drought, are also common and environmental degradation is a long-term constraint to livelihoods. However, disasters are unlikely to have a major impact on India's overall progress on the Millennium Development Goals", which goes against your own presentation. Which is correct? Is it really DfID's belief that India's progress generally towards the Millennium Development Goals in particular is not going to be affected by any of this? Mr Thomas: I think in terms of India, when a huge natural disaster takes place, then clearly, there are impacts on economic growth and on making progress towards the Millennium Development Goals, and we have seen that in terms of the impact of the Tsunami on the people of Ache. Did the Tsunami have a massive impact on economic growth and progress towards the Millennium Development Goals in Indonesia as a whole? I do not think it did. It clearly had an enormous impact on the people of Ache and on progress towards the Millennium Development Goals in that part of Indonesia but more generally across the country I do not think it did. On India, India is a country that is making very rapid progress with a very strong system of government and considerable capacity at federal level to respond to disasters, so it did not need anything like the level of international aid or support which had gone to the Tsunami by way of comparison to countries like Indonesia or some of the countries in Africa that were affected. So I think that general statement is correct. What I would say though, as I said in my opening remarks, is that we recognise as a Department that we need to do more on the issues of climate change and natural resources management, and that is both in countries like India but in a whole variety of other developing countries too, precisely because one of the reasons why climate change is important is because of the impact it has on the very poorest people. Q344 Ms Barlow: What about drought in particular in the Indian context? Mr Thomas: We have a number of programmes that seek to address issues around drought, that help to develop livelihoods programmes, be they programmes in Orissa or in other of the focal states that we have. I think the White Paper will provide an opportunity for us to look at doing more in a number of countries. I think the judgment that we will also need to make, Ms Barlow, is what other donors are doing in developing countries. It may well be that there are other donors already actively working on environment and that we might want to concentrate on other areas. The reverse might be the case. So the type of mapping exercise that is taking place in Africa in that sense I think is very important. We do need to work much more closely with other donors to look at where the gaps in support to a developing country are, and that is what we are trying to do. Q345 Ms Barlow: Do you feel that the country offices are sufficiently aware of the impact of climate change, particularly in terms of areas such as drought; slow-moving disasters, in other words? Mr Thomas: I do not think you can ever have enough information and support in these areas, and if we thought we were in that situation, we would not have set in train the two reviews of staffing need that we have. So I would say that our country offices, and indeed the Department as a whole, do need more environment capacity and that is why we have taken the decisions that we have around the staffing reviews. One of the other things that we have done to try and take forward the dialogue between the UK and a number of key developing countries is a series of sustainable development dialogues which again DEFRA are leading on but to which we are a key contributor, so there is a sustainable dialogue between the UK and India, there is between the UK and China, and indeed a number of other of these very significant emerging nations, with considerable appetite for economic growth but recognising that that economic growth needs to be done in a sustainable way. What we are seeking to do as a Government through sustainable development dialogues is to provide advice and support for their growth to be done in as environmentally friendly and sustainable way as is possible. Gordon, would you like to add anything on the sustainable development dialogue in India? Professor Conway: The part of it that I saw was around the Orissa watershed, which is actually an excellent example of where you bring a range of expertise together to look at a very large area in a place that is prone to disaster. A cyclone hit Orissa in 1998, and DfID is still helping to rebuild schools today, seven, eight years on. That is the scale of the damage that can occur. So this watershed programme is one which brings together agriculturalists, soil conservation people, and water conservation people. It has over a dozen different agencies, both government NGOs and international NGOs, all working together to help villages produce a more sustainable life within those large watersheds. That is the practical example of what these dialogues are about. We do try and work at all these different levels. Obviously, we work at the international level on agreements, we work at national level on producing policies and strategies, and then we also work in many countries on the ground, working with local agencies and with local people. Q346 Ms Barlow: I know that you have just set up five departments to look at how to climate-proof development - is that right? But it is quite a long way into the life of DfID, quite a long time since Kyoto, ten years since Kyoto. Can you explain why this has been done now rather than several years ago? Mr Thomas: I think what you are referring to is our commitment to climate-proof our programmes in the six pilots that we are committed to, the first of which is going to start very shortly in Bangladesh, I believe. I think it is simply a recognition that, as part of making sure that economic growth is sustainable, we need to take a much more focused look at the climate change dimension, the risks of programmes, what potential impact they might have on climate change, and what we can do to mitigate those risks. I think it is important that we go down that route. We have had environmental screening for some time, as you know from your earlier questions, which has been in place and we think climate-proofing, if you like, takes that environmental screening on to a new level by specifically focusing on one particular issue of the environmental challenge that developing countries face. Q347 Ms Barlow: Have you any idea when these pilots will be finished? Mr Harvey: No. I can tell you when they are starting. Basically, we are starting during this year and I cannot tell you, actually, what the time frame is but I suspect these are going to be an ongoing dialogue. This is not something which is going to be dealt with quickly. Q348 Ms Barlow: If they are successful, as one hopes they will be, you would see a rolling programme where it might be rolled out across all your areas, all your projects eventually? Mr Thomas: Indeed, and we would also want to try and encourage other international institutions to climate-proof their work too. There is a dialogue beginning with the World Bank to look at climate-proofing too. I think we need to see how that dialogue goes but there is clearly an issue about regional development banks and indeed about other donors ultimately being persuaded to climate-proof their programmes. This is a process of work that is relatively young; it is only just getting going but we recognise its potential importance. Q349 Ms Barlow: Will it also look at emissions? Mr Harvey: We hope to have procedures in place by 2008 for climate screening of programmes. Q350 Ms Barlow: Will they also look at emissions as part of their brief? Mr Thomas: By definition they will have to. Q351 Ms Barlow: Finally, would you welcome a PSA on climate change to help you focus your work in that area? Mr Thomas: Would I welcome a PSA on climate change to focus our work? We are still at the very early stage of discussions with the Treasury about the Comprehensive Spending Review and therefore about what our PSA targets should be. PSA targets do not capture the full range of what a Department does but they do help. We have a series of Directors' delivery plans which seek to give specific responsibility to specific staff for the way in which the Department divides up work across its divisions, so each Director's delivery plan will focus on, for example, meeting the Millennium Development Goals in their particular part of the world. So that is one of the ways in which we try and capture the need to make progress on environment. As I said earlier on, we recognise the need to go further but I do think we have a substantial body of work that we have already been doing and which should, I hope, give the Committee confidence that, as a Department, we have not forgotten or not done anything like enough on the environment to date. I think there are a series of opportunities opening up for us to do more and, as I say, that is why I believe the White Paper will signal our intent to do more. Q352 Mr Vaizey: I am going to talk about aid and trade. The aid budget is obviously going to rise very dramatically over the next six or seven years. How easy is it going to be for the Department to manage that increase and ensure that it is effectively spent? Mr Thomas: That is the biggest challenge facing the Department. There is no question about that. That is the biggest issue which the two staffing reviews are going to look at because, as the Committee will be familiar with the Gershon inquiry and the requirement on all the departments to make some staffing savings, so we have to look extremely carefully at how we effectively can spend more money and spend more more effectively. That is something we are very alive to. We have a particular responsibility, we operate in some difficult environments, where corruption is a challenge, for example, so we do have a particular responsibility to make sure our procedures are right. That is, as I say, one of the key things that the two reviews are looking at: what additional capacity we need, and how we need to change our staffing mix to give us the skills to enable us to spend more, albeit with a reduced total head count. Q353 Mr Vaizey: You get it through basically channelling the money through multilateral donors and through direct budgetary support. Is that right? Mr Thomas: They are both obvious ways for us to spend more money: budget support where we have confidence in the systems that are in place in country and international institutions where we have confidence in the way in which those international institutions operate. But again, it depends on us having a good relationship with those institutions. We will need to track what those institutions do. Again, part of the skills mix review is to make sure that we will have the right people in place at a senior enough level to be able to influence what those... Q354 Mr Vaizey: You are happy you are going to have robust procedures in place to... Mr Thomas: It is always risky for a Minister to say absolutely. Let me say at this stage that I am confident that we are seized of the problem that we face and the need to have in place robust systems. Bear in mind that budget support is not a new concept and neither is working through multilateral institutions. So we are familiar with the challenges, but you are right: the rising budget is, if you like, going to throw those challenges into even starker relief. Q355 Mr Vaizey: Both you and Professor Conway have mentioned in a sense that it is very difficult to talk about the environment as a separate issue given its effect on so much of the work you do. Is it possible to say how much of the additional aid budget will go on environmental measures? Mr Thomas: Not at this stage, no. The White Paper, if you like, will serve as a guide for our discussions with the Treasury and across Government about the outcomes we are going to get from the Comprehensive Spending Review. I cannot give you an indication of figures at this stage but I do think we will be doing more. Q356 Mr Vaizey: Do you think people are right when they say giving money through direct budgetary support means that the environment gets pushed down the agenda, and do you think they are right to say that one way to ensure that it maintains its place on the agenda is to do more work through project funding? Mr Thomas: I do not think it is as simple as that. There are a number of advantages to budget support. One of the problems that developing countries face often is the huge number of individual projects that there are and the huge number of donors that they have to deal with, and these are countries that often do not have the civil service capacity that we take for granted in the UK and therefore we do need to try and reduce the burden on those developing countries of having to negotiate and talk to donors. It is better to try and build up the developing countries' own systems rather than have discrete projects which often have parallel systems, and on occasions, sadly, can lead to the loss of key staff from within developing country governments into those discrete projects. I think the danger of budget support or the concern about budget support would be justified if there was not also dialogue between our country offices and the developing country government. What we recognise is the need to strengthen that dialogue on the environment. We do not necessarily think it is just our responsibility as a government to do that. Again, this is why I say we need to look at what the rest of the international community is doing in the country, to take the lead on occasion ourselves and where others have taken the lead, to come in behind them. Sometimes our staff will have particular expertise in the environment, and it is right that they take a lead. Sometimes our country offices will have particular expertise in other aspects of the development agenda, and they are better placed to take the lead in that area. What I think is clear is that poverty reduction strategy papers, which are the key tool in countries for setting the priorities which budget support then comes in behind, have not focused as much as they could do on environment. We have a sense that that is beginning to change but clearly there is a need for the international community, in the dialogue with developing countries, to support them to do more. Q357 Mr Vaizey: Do you find they are willing to be pushed? Mr Thomas: For example, in a couple of countries, we have worked with them on a strategic environmental assessment of their poverty reduction strategy papers. Ghana and I believe Tanzania are two examples. There are two developing countries that do want to be supported and encouraged to do more on environment, and I think it is about using our experience there and rolling that experience out to our relationship with other developing countries, but also to other donors so that other donors can take the lead perhaps rather than just the UK all the time. Q358 Mr Vaizey: Just talking about trade, what is your current assessment of the Doha Round? It is quite a big question. Most people think it is grinding to a terrible dead end. Mr Thomas: I think we are coming to a crisis point. I think by the summer we do need to have made significant progress. What is clear is that all the key participants recognise that they need to give more ground, and I think most have recognised that and signalled that they want to do that. What we need to get right is the sequencing by which people show their hand so that we can move the negotiations forward. What is clear from the discussions the Prime Minister has had is that there is a willingness from both within the Americas, I think within the European Community - although there are some particular difficulties within the European Community - but also with key developing countries like Brazil and with India that they do want to give ground in a number of areas. You are right: we are running out of time to get right the sequencing of that, but it is something that not only the DTI, who have the UK lead, but also Peter Mandelson, the Commissioner in Brussels who leads for the EU, are already seized of and it is something the Prime Minister is very much trying to support through his conversations with other leaders. Q359 Mr Vaizey: Do you think in terms of implementation of things like Namas and the service agreements and also in terms of proposals on agriculture, and what you see in trade benefits, that you might see corresponding detriment to the environment, that there would be increasing stress on developing countries? Mr Thomas: Nothing else would have happened in terms of developing countries' capacity to ensure that that trade is sustainable. Nothing was done to improve the ability of developing countries to regulate that trade effectively, then yes, you are right, that could damage the environment. So as trade gradually grows, we as an international community need to support the developing countries to improve their ability to regulate what happens in their country, to make sure it is done in a sustainable way, and through, for example, the sustainable development dialogues we have got going with key developing countries but also through tools such as the strategic environmental assessment, through the environmental screening, the climate-proofing, etc, they do provide us with a series of opportunities to have those discussions and to support the developing countries in that way. Q360 Mr Vaizey: Can I ask you about the Ghanaian chicken? This is a well-known story of the Ghanaian chicken that was defeated by subsidised European frozen chickens. The Ghanaians tried to put tariffs on foreign chickens and then, apparently under pressure from the World Bank, removed those tariffs. Does DfID have a view on that sort of issue, where developing countries are trying to protect their basic agricultural industries but in the interests of trade liberalisation are forced to... Mr Thomas: We do, and our view is that in any sort of negotiations, be they the negotiations around economic partnership agreements or be they the negotiations around the Doha Round, we have to make sure that developing countries can sequence for themselves the opening up of their markets, and we need to recognise that their markets will need to be opened up at a slower pace than developed country markets to them. So part of the dialogue and part of the contribution that DfID is making to the international negotiations around the Doha Round is looking at what support we can give to developing countries to negotiate their positions on special and differential treatment, on what constitutes a special product, what the special safeguard mechanism might look like. So we have funded a number of institutions, including UNCTAD and ActionAid, to do work in this area, which the negotiators in Geneva for developing countries can use to argue their position more effectively around S&DT, market opening etc. Q361 Mr Vaizey: Do you think there is a wider environmental issue in the sense that more and more developing countries are becoming more dependent on foreign food imports and less able to sustain their own agricultural industries? Mr Thomas: I think that the developing countries' capacity to allow their people to grow their own crops and to develop their own agriculture in order to give them enough food to survive is a huge issue. It is one that the international community needs to do more work on and the number of famines that take place and the regularity of famine in Africa is proof of that point. We do have a substantial programme that looks at how we can support agriculture in a number of countries, and I think it is right that we have that focus. The focus is on pro-poor agriculture, how we can help the individual household grow the food they need to keep themselves alive. Q362 Mr Vaizey: Finally, just in terms of DfID's relationship with the World Bank and the IMF, you have far less emphasis on things like conditionality and so on. Is there a tension between you and those two organisations? Are you seeking to persuade them that DfID's way is a better way? Mr Thomas: One, when Hilary Benn published our paper on conditionality in March last year we made clear that we were going to try to encourage the World Bank to change its approach to conditionality too. We have had a series of discussions with the World Bank. They have put in place a number of principles which are going to guide them in the conditions that they set. It is a bit too early to say what difference those principles have made but it is something that we are going to continue to keep a very close eye on. I think, Mr Vaizey, if I can say, what the Committee would need to recognise is that we are one of a number of nations on the board of the World Bank, and not every other nation shares our view on conditionality, so we have a job of work to continue to persuade other players on the board that our view is the right way. I think the World Bank has moved in a positive direction in terms of the principles that it sets. We have a continued selling job to do to other board members that it is the right way to go. Q363 Chairman: The Public-Private Infrastructure Advisory Facility seems to get involved in a number of activities which perhaps go beyond providing advice. They seem to be trying to train local journalists or even trade unions to come to the view that things like water privatisation, for example, are very good things. Do you think it is going a bit beyond its brief, using public money, £15 million, I think, to engage in some of these activities? Mr Thomas: Mr Challen, what I have to do is to look at the specific remit of the programme. On water privatisation more generally, let me be clear about what the Department's position is on that, because I think there have been a number of misunderstandings about the nature of our approach. We are very clear that more needs to be done to give good access to water and sanitation, where the level of investment that is going in to develop people's ability to get access to water and sanitation is nothing like what it needs to be if we are to achieve the Millennium Development Goals. Hilary Benn has announced our commitment to double our spend on water and sanitation and roughly 95 per cent of our spend is not on private and private-related projects. The gap between what donors and developing country governments need to be spending on water and sanitation is not being filled by the private sector at the moment and I think the international community as a whole faces a real challenge about how we can get that investment... Q364 Chairman: If I may interrupt, I appreciate all that and that is not really the point of the question. We are providing taxpayers' money for the Public-Private Infrastructure Advisory Facility, which provides free seminars for journalists and trade unions in the recipient countries, which no doubt espouse the virtues of privatisation. I am not commenting on the value of that. Is it balanced with a similar activity with free seminars for journalists and local trade unions espousing the virtues of public sector investment? Mr Thomas: I will have to get back to you on the specifics, Mr Challen, of the particular programme that you are referring to. What the Department is clear about is that there are good examples of water privatisation and there are bad examples of water privatisation, and it is for developing countries to take the lead themselves as to whether or not they want to privatise their water industries or not. If they come and ask for our assistance, then I think we have a responsibility to consider whether we should provide support or not, but I come back to Mr Vaizey's question: we have a clear policy on additionality, we think developing countries should take the lead in these types of questions, and we will support them to do so. Where we are asked to give specific help, we do give that help, and I make no apology for doing that. You have asked me a very specific question about a particular programme, and I will take that away and write to the Committee. Q365 Ms Barlow: The Commonwealth Development Corporation, which is wholly owned by you: the Chief Executive, Richard Laing, recently wrote an article defending the role of the private sector and wealth in development, in which he said, "The rich get richer but so do the poor." A question in two halves really: how does this tie in with your commitment to poverty reduction when you think that some of the investments made by the CDC include shopping centres in Nigeria, large-scale mining, energy, smelting projects, etc? How also does it tie in with the environmental agenda, partly in specific areas such as investing in palm oil in New Guinea, but I am particularly concerned about the overall environmental impact of these large-scale investments made by the CDC, and have you ever assessed the carbon footprint of their investments? Mr Thomas: The mission of the CDC is to try and help developing countries facilitate the growth of viable businesses in their countries through responsible investment, through mobilising private finance to help achieve economic growth and to help lift poor people out of poverty. They do have a responsible investment policy, which we have looked at and agreed with them and which their fund mangers apply. If a business in a developing country wants to set up a shopping centre, then frankly, that is a decision for that business to take and for the developing country to decide through its land use planning policies whether or not it wants that shopping centre to be built in a particular way. Q366 Ms Barlow: Why should CDC invest in it? That is what I am saying. I think Mr Laing said an economy such as Nigeria has middle classes, which is going to be key to the growth of any country, so why should they not have a decent shopping mall to invest in? Exactly, in building the infrastructure, but in building the infrastructure for the middle classes? Due to your commitment to poverty reduction, what exactly is the relationship that you have with CDC? Can you influence them to put more money into poverty reduction, investments which will directly affect poverty reduction? Mr Thomas: In terms of the specific example you used of a shopping centre, if that shopping centre creates jobs for the very poorest people in Nigeria to benefit from, then I would see that as a good thing. We do not intervene in every commercial decision which the CDC takes, nor do I think we should. The CDC does have a clear environmental policy, it follows the World Bank's environmental standards, unless there are more stringent local standards in place, so it has a clear environmental policy in that way, and if its investments help to create jobs, which I believe they do, then I welcome that and I believe developing countries welcome that. I come back to the point about what we have to do, I think, is to support the developing countries to develop their ability to better regulate what happens in their country, to improve the environmental and a variety of other standards, health and safety standards, etc, to develop the laws and develop their capacity to implement those laws and follow through on those laws. Through a variety of projects we do support a range of ministries in a range of developing countries to increase their capacity to regulate what is happening in their own countries, and that is the way I think we have influence on a better environment. Chairman: I think we will have to draw the session to a close now. There are one or two outstanding questions, if we could write to you perhaps on that point in terms of the infrastructure issue that I raised earlier. I would just like to thank all three of you very much for very generously giving your time this morning. It has been a very long session but a very deep and interesting one too. It has been very helpful. Thank you again. |