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This weekend, leaders of the G20 will gather to tackle some of the pressing issues. The reform agenda of the Bretton Woods institutions will be central to those discussions—and not before time—although we must hope that that is not where the discussions end. Already, countries around the world are resiling from their aid commitments. The UK must help to stop that trend in its tracks. It has been made explicit this afternoon that all hon. Members on both sides of the House support the UN target of 0.7 per cent. of GNI in overseas development assistance. We have to push everyone else to continue in that direction and not to move backwards.
Malcolm Bruce: Does my hon. Friend share my concern that Italy is likely to take over the leadership of the G8 at a time when it has effectively dismantled its aid programme and abandoned its commitment to aspire to even half of the GDP target that others are working towards? Should the European Union take that up with Italy if it is to have the responsibility of leading the world on the issue?
Mr. Moore: I agree. This country works in close partnership with Italy, and it is a great shame that it has taken those backward steps, especially as it is to take that key leadership position. It is important that we do not allow that to distract us from our global efforts towards what is, frankly speaking, only a modest target. It is only a very small amount of money.
Anyone who doubts the scale of the challenges that we face need only cast their minds back to the debate in New York at the summit on the millennium development goals. The right hon. Member for Coatbridge, Chryston and Bellshill was right to celebrate the optimistic elements of that summit, and I do not wish to be a naysayer. However, the MDG report by the United Nations highlighted the fact that the proportion of people living on less than $1 a day in sub-Saharan Africa is unlikely to be reduced by the target of 50 per cent. A quarter of all children in developing countries are considered to be underweight and at risk of their future being blighted by the long-term effects of under-nourishment.
This debate is not primarily about the MDGs. The global meltdown in the financial markets almost completely overshadowed the summit at the time, but we need to bring back the issues considered to the forefront of public debate. Renewed efforts must be made to try to ensure that we regain some of the momentum that we had towards reaching those targets and our broader development goals.
As both Front Benchers have so far indicated, there is a strong appetite among the public to try to understand our development objectives. High standards are always demanded when we spend taxpayers’ money. Some people are even questioning our commitment to the level of support we give. Some do so directly, because they think we should spend the money here at home, and some do so indirectly, because they do not support the specific goals being funded. On the first point, as I said a moment ago, at the moment we offer a tiny proportion of our wealth as a country. On the second, I do not believe that anybody should tolerate corruption and we must be rigorous in tackling it.
Like the hon. Member for Sutton Coldfield (Mr. Mitchell), I hope that at some point we can have some clear answers from the Government about the two different reports this year that have set out some criticisms of the Department. I hope that the Department will take them as challenges to improve. On balance, I think we would all accept that DFID always seeks to tackle overseas development and to eradicate corruption, but it would be presenting a false picture if we were to suggest that there was not still a major problem.
In our debates, we often focus on how much assistance we give. Equally, we know the costs of delivering development assistance in an inefficient or ineffective way. There are real perils if we turn a blind eye to corruption. Progress might indeed be grindingly slow, but the debate about the “How?” rather than just the “How much?” of international development is not new. The Paris declaration, followed up in Accra a few months ago, put the spotlight on that. The subheading of the declaration in 2005 illustrated the size of the challenge facing donors and recipients. Seeking to increase the effectiveness of our aid, the signatories highlighted their commitment to promoting ownership, harmonisation, alignment, results and mutual accountability. Transparency is the theme that runs through each of those ideas.
At Paris, both donors and recipients committed to a range of improvements to the respective aid management and disbursement systems, which ranged from increased use of local procurement systems by donors to broad overhauls of budgetary and public financial management systems on the part of recipient states.
The Accra conference this year offered the international community a second opportunity to iterate its commitment to positive action on improving the effectiveness of aid and assessing progress towards a series of medium-term goals outlined in Paris that are due to be achieved in less than two years’ time. What emerged from Accra was a picture of partial successes and piecemeal progress towards the 2010 goals. Although the Accra agenda for action welcomed the improvements that we have seen in areas such as the co-ordination of donor funding, it outlined the need for urgent action on country ownership, increased efforts to build more inclusive partnerships for development and a more results-oriented and accountable approach to aid, all to help to ensure that we meet our commitments on aid effectiveness within the agreed time frame.
The Secretary of State spent some time talking about the international aid transparency initiative, as we would expect. The benefits of transparency within the development process are hardly controversial. However, I would like to understand the extent to which the new initiative offers something different and adds value to what already exists. Some measures repeat commitments that have already been made by the signatories of the high-level conference in Accra.
For instance, the commitment of the signatories to the new initiative to provide more reliable and detailed information about intended future aid does not appear to differ from the commitment set out in the agenda for action to provide full and timely information on aid commitments and actual disbursements. The initiative’s commitment to be transparent about the conditions attached to aid similarly differs little from the Accra commitment regularly to make public all conditions attached to aid disbursements. Any new initiative is welcome, and I appreciate that that initiative was as
much as anything probably born out of frustration at the pace at which change happened, but the Government will have to make a much stronger case about what it is adding that is different.
In previous exchanges, we have also explored the extractive industries transparency initiative. Hon Members have rightly mentioned the many different economic factors that contribute to conflicts in places such as the DRC. In particular, they have pointed to the impact that the extractive industries and the illicit trade in such commodities have in generating revenue for militias and others.
We strongly support the aims of the EITI, which has been endorsed by the World Bank and the International Monetary Fund, but its impact has been too limited so far. As Global Witness has said:
“The EITI is a groundbreaking effort to remedy the lack of transparency and enable better public oversight of these industries. But six years after its launch the EITI remains a promising but highly fragile initiative.”
We have yet to see any country complete the implementation process officially, so the greater transparency that has been promised is nowhere near as full as we would hope.
A recent report from the Bank Information Centre has shown how the World Bank and the IMF are falling short in promoting and implementing the EITI. If even those bodies, which are supposed to protect the interests of vulnerable countries, are failing on this issue, it is hard to see why the industries themselves should be performing any better.
The initiative is approaching a “crunch” moment between now and March 2010, when candidate countries must complete the process to become EITI compliant. That process will need enormous support and encouragement from Britain, which is the initiative’s founder and oldest supporter. I hope that the Minister will set out the steps that the Government are taking to ensure that candidate countries receive all the support that they need to make progress towards EITI compliance on time. In addition, what steps are the Government taking to support civil society groups in those countries, so that they can participate freely and actively in the moves towards compliance?
Critical producers and importers such as India, China and Russia are not involved with the EITI, and other countries think it is some kind of developed-world plot to undermine their industry. Surely that is where a lot more of our efforts need to be focused, at the same time as we ensure that our own house is in order.
We in this country must lead by example if we are to reach the objectives that we have set for the development assistance that we give, and for the countries that we support. One area where we have yet to show that lead is that of tax transparency. The international community will gather in Doha later this month, as the Secretary of State noted, to take the next steps towards financing the gaps in international development. We support the Government’s agenda in that respect, but The Observer reported recently that the UK seems to be lobbying to remove paragraph 10 from the draft Doha outcome document.
The offending paragraph states:
“We will strengthen efforts to increase tax revenues through more effective tax collection and modernisation of tax legislation including through simplification of the tax system, broadening of
the tax base and strongly combating tax evasion. To support individual country efforts in these areas, it will be important to enhance international cooperation in tax matters and broaden participation in the development of international tax norms and rules. We will consider strengthening the UN Committee of Experts on International Cooperation on Tax Matters by upgrading it to an intergovernmental body.”
According to The Observer, the Treasury is blocking the whole paragraph and a spokesman was quoted as saying:
“The UK makes an active contribution to the existing UN tax committee. It is not clear that an upgrade to the existing committee...would deliver any additional benefit.”
I want to know whether the newspaper is correct. If it is, how on earth have we found ourselves in the position of lobbying against something that looks pretty inoffensive and is perhaps just basic common sense? Indeed, should we not be actively lobbying for the inclusion of that paragraph? I hope we can get reassurance on that, because if we do not show a lead on the issue, how can we expect to be followed on much of our agenda?
All of us in the House support wealth creation as a crucial element of long-term sustainable development. Private companies have an absolutely fundamental role to play in that, but it would undermine support for a fundamental tool of international development if we sent out any signals that we were less than wholly committed to appropriate tax behaviour.
The Government have taken a welcome lead on many aspects of transparency. They are open about their own expenditure, in large part as a result of the International Development (Reporting and Transparency) Act 2006, introduced by the right hon. Member for Coatbridge, Chryston and Bellshill, which has been referred to a few times. However, there is one area where I remain perplexed about the apparent reluctance of DFID to ensure the transparency of its activities.
CDC is a significant player in the world of development investment. It invests public money in companies in the developing world. Indeed, its spending contributes directly towards the UK’s development spending figures, and forms part of our progress towards the UN 0.7 per cent. official development assistance commitment. The Under-Secretary of State, the hon. Member for Bury, South (Mr. Lewis), will be aware that I have raised various issues relating to the accounts of CDC’s subsidiary companies and its investment funds in recent months. There is a real issue there to do with tax transparency. Why is CDC using tax structures to shelter its investment?
Christian Aid recently produced an important report entitled “Death and taxes: the true toll of tax dodging”. It quoted a senior adviser to the Tax Justice Network, who said that the tax rates enjoyed by CDC
“are just about the lowest I have ever seen. They make the most advanced tax planners look like amateurs.
They are the result of statutory tax exemption for CDC in the UK and negotiated exemptions overseas. It sets the most appalling precedent that companies investing in developing countries should not expect to pay tax.”
I understand the exemption from UK tax, as it allows the re-investment of profits earned on investments overseas; what I do not get is the avoidance of tax elsewhere. A cynic might wonder whether a public body should strictly follow the best practice of the private equity world. Someone even more cynical might wonder whether the agenda is to position CDC in a way that makes
future privatisation look as attractive as possible. The Department has to rethink the guidance that it gives to CDC. There was very little about that in the new investment guide, policy and code published just last week. The issue is undermining Britain’s position as a leader on such issues. I hope that we will see a change of policy.
Amid all the current world crises we must not forget the developing world. We must not lose sight of the broader battles to achieve the millennium development goals. Transparency is a fundamental issue at the heart of every aspect of our debates. If we are to take a lead, we must also set an example. Although the Government have much to take credit for, they still have a great deal of scope for improvement.
4.38 pm
David T.C. Davies (Monmouth) (Con): Like some of the previous speakers, I have visited Uganda with the Commonwealth Parliamentary Association on a cross-party visit. Like others speakers, I came back with vivid memories of the country. Yes, there was an enormous amount of poverty there, which I will come to in a moment, but surprisingly, in parts of Kampala, and on the road between the airport and the capital city, there were obvious examples of large amounts of wealth. One day, a number of us flew to a refugee camp in the Gulu province. As has been mentioned, we sat around a mud hut where there were people suffering the effects of malnutrition. There was very little food, and people were getting what they could from the UN agencies. People faced the constant threat of being robbed or raped at gunpoint by the Lord’s Resistance Army and other terrorist organisations. There was something particularly surprising about that scene because when one sees such images on the television, one naturally assumes that they are of refugee camps out in the middle of nowhere, but just a few miles down the road, we were able to drive into a fully functioning town with paved roads, its own radio station, and a bustling market. We were treated to a banquet, which all the local dignitaries attended, at which we discussed the fact that not enough aid was getting through and that there was not enough transparency.
Another day, back in Kampala, we were treated to an official dinner by the Ugandan Government—another great big banquet, with course after course in the Sheraton or perhaps the Hilton. Once again, we nodded over coffee and ice cream, and agreed that there was not enough aid coming through to African countries, and that there was not enough transparency. Afterwards, I wandered outside for some reason, and I saw a long line of sleek, black Mercedes-Benz with chauffeurs. Doubtless, if I had been able to go over and talk to them—they were there to collect Members of Parliament and Ministers who attended the dinner—and if they were minded to exchange small-talk, they, too, would have agreed that there was not enough aid coming through to central Africa and that there was not enough transparency.
I wanted to discuss those issues with DFID in Uganda, and I was looking forward to meeting its officials when we visited the British embassy, but there was no sign of DFID there. The British embassy has been heavily upgraded in Uganda, as I am sure many other embassies
in that part of Africa have been. Millions of pounds have been spent on it, because it is a huge security risk and terrorist target. It is quite right that the money has been spent, but there was no sign of DFID in the embassy. It did not like being there, and wanted to be elsewhere, so it had rooms on the other side of Kampala in a luxury suite of offices—a first-world building in a third-world country for which, I am sure, the British taxpayer paid first-world prices. I looked forward to speaking to the head of DFID in Uganda and asking him about transparency and why we were not saving money by locating the Department in the British embassy. However, I could not do so, because he was busy doing something else. He was doing important things—too important to speak to a cross-party group of Members of Parliament representing the taxpayers who paid his salary. We were not told what he was doing, but it was made quite clear to us by his deputy that our appearance in Kampala was somewhat inconvenient. Perhaps the Minister will pass on our apologies for troubling them when he next visits the place. However, I never found out much when I was in Uganda.
Mr. Ivan Lewis: Does the hon. Gentleman realise the offence he has caused to the remarkable men and women who work in incredibly difficult circumstances, not usually motivated by financial or material gain, often risking their lives on behalf of this country? Will he apologise for giving a misleading, out-of-context impression about the contribution of our amazing staff on the ground in many of the most challenging countries of the world?
David T.C. Davies: No. If the Minister cares to look at what I just said, I made a factual comment. [ Interruption. ] Hang on, will the Minister listen to me for a moment? I made a factual comment about the head of DFID in Uganda who was not able to see us on a cross-party visit with the Commonwealth Parliamentary Association in 2006. If he wants to check his facts, I am more than happy for him to do so. What I am giving is a factual statement, and I am not making any comment about DFID members of staff in other parts of the world. The Minister had better check the record, and perhaps he will apologise to me when he has done so and realises that his comments were a complete misrepresentation of what I said. I do not believe, however, that members of DFID are risking their lives in Kampala. They would do so if they went to northern Uganda and Gulu province, but they are based in a first-world office block in Kampala. No doubt, they go to that province on occasion, but it is not where they are based, and Kampala is not a particularly dangerous place. If it was, I was risking my life, along with other Members of Parliament, many of them in the Chamber today, who have been there.
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