Mr.
Thomas: Perhaps I can set the hon. Gentleman’s mind
at rest. He may have missed it when I said in my opening comments that
the Caribbean Development Bank has, in effect, two lending elements.
One refers to ordinary capital resources, where lending is generally at
market rates, and the other is the special development fund, which we
are discussing now and which is financed primarily by
donors.
Mr.
Hollobone: That is very helpful, but I would like to know
how much of the actual resources of the bank are being invested in a
nest egg to provide for future development
investment.
Mr.
Thomas: The straight answer is none; that is why we have a
replenishment process. A nest egg does not come into the equation,
because in four years’ time, donors will reconvene specifically
to consider the eighth replenishment. As I said, the other part of the
Caribbean Development Bank does lend at market rates and is
self-financing, so its lending generates resources for the Caribbean
Development Bank. However, because the fund focuses on the needs of the
poorest in the Caribbean, by definition its projects are grant-financed
in the main, or lending is provided at very concessionary rates. As a
result, it has to be donor-financed, because it does not generate that
nest egg element. To the extent that there is a nest egg involved in
the Caribbean Development Bank, it relates to the other lending window,
which we are not discussing specifically
today.
Mr.
Hollobone: I am most grateful for that helpful
explanation.
My final
point is this. It is a good thing that United Kingdom taxpayers are
investing in development projects in and around the Caribbean, but
surely there is also an obligation on those countries to play fair by
us. When I read the explanatory notes, the one name that leapt out from
the page for me was Jamaica. We have a problem with Jamaica, because
there are many Jamaicans in British jails who have been convicted of
drug offences. Time after time, Home Office Ministers have told me and
others that we are negotiating with such countries so that offenders
can be repatriated to serve their sentences in their country of origin.
As far as I am aware, that has not happened with regard to Jamaica.
There are far too many prison places taken up in this country with
people who should be serving time in Jamaican jails. Are Her
Majesty’s Government, through the Department for International
Development or the Home Office or a combination of the two, actually
applying pressure on the Jamaicans to honour their obligations in that
respect? It is all very well giving them 17 per cent. of £35
million, but they have to play fair by us as
well. 4.51
pm Jim
Cousins (Newcastle upon Tyne, Central) (Lab):
Mr. Weir, let me address that last point. One of the most
significant grants from the special development fund in the last period
of its work was made to Jamaica for restoring the drainage system of
the capital, Kingston, after Hurricane Gustav. I would have thought
that that project would commend itself to every member of the
Committee, without exception. If there are hon. Members here who nurse
the vision of repatriating people to
Jamaica, perhaps they might consider it helpful to have the drainage
system in the capital city in full working order. We would not want to
repatriate people to a place without drains, would we? We all, from our
various points of view, can take some comfort from the fact that we
have made our contribution to the restoration of the drainage system in
Jamaica’s capital city after the hurricane, which as the hon.
Member for Berwickshire, Roxburgh and Selkirk has rightly said, is one
of the problems relating to climate change that is at the heart of our
concerns about the
Caribbean. I
have another piece of good news for the hon. Member for Kettering. One
country in central America is included in support from the special
development fund: Belize. Is not that a piece of good news? There might
be Conservative Members who are more used to getting grants from Belize
than to making grants to it, but I suspect that the source of the
grants from Belize and the targets of our grants to it are rather
different. The hon. Gentleman will be pleased to know that Belize is
covered by the work of the special development fund.
What my hon.
Friend the Minister has set out strikes me as commendable in almost
every respect, including the narrowing focus of the work of the special
development fund on the objectives set out to the Committee, which all
seem to me to be wholly right and helpful. There are, however,
a couple of points that I would like to put to him.
Two areas
covered by the special development fund are the Cayman Islands and the
British Virgin Islands. It is fair to say that they are not big
beneficiaries of the fund, but they are beneficiaries. Where grants are
given, the rate of grant given to them is rather less than that given
to Jamaica, Haiti or Guyana, for example. However, it is of concern
that among the targets—the areas of support from the special
development fund—are places that figure in our discussions in
quite different contexts. I would like to know, for example, what the
grants we have given the Cayman Islands for technological consultancy
are for. I would like to be reassured that that is the sort of thing
that we will scale back on in our other
activities. The
proposals for the next period that the Minister has brought to our
attention seem wholly commendable and should be supported by Committee
members. 4.56
pm Mr.
Fabian Hamilton (Leeds, North-East) (Lab): The hon. Member
for Kettering spoke about the repatriation of Jamaican prisoners. He
said that few of the people that he has been concerned with have been
repatriated, but the constituents that I have been involved with, who
have mostly been held in Armley jail in Leeds, have been repatriated. I
have concrete evidence that the Home Office has fulfilled that
intention to repatriate. I hope that sets his mind at
ease.
Jim
Cousins: Can I be assured that the drains in Armley gaol
work?
Mr.
Hamilton: It is not in my constituency, but I think that
they are better than the drains in
Kingston. I represent
many people of Caribbean origin. Two weeks ago, I had the privilege of
hosting a joint meeting with the Prime Minister of St. Kitts and Nevis.
Apparently the largest diaspora of St. Kitts and Nevis people outside
that wonderful island is in my constituency in Chapeltown in north-east
Leeds. The proposal in the draft order is welcome and timely. From my
conversations with constituents with Jamaican, Barbadian or St. Kitts
and Nevis origins, I understand that the investment from the
development bank is most welcome. I commend the draft order and thank
the Minister for introducing
it. 4.57
pm
Mr.
Thomas: I knew I should never have agreed to the swap
suggested by my hon. Friend the Under-Secretary of State for
International Development, which has brought me before the Committee
today.
There has
been a range of interesting questions from hon. Members of all parties.
The hon. Member for North-East Milton Keynes asked why there is such a
large increase in our contribution. I hope he accepts that I
part-answered that in my intervention on the hon. Member for
Berwickshire, Roxburgh and Selkirk. The hon. Member for North-East
Milton Keynes challenged me specifically on whether we are financing
the Caribbean through the Caribbean Development Bank special
development fund only because we do not want to do so in other ways.
That is not the case. We continue to have a strong bilateral programme
that focuses predominantly on regional issues in the Caribbean. For
example, we have important bilateral programmes in Jamaica and Guyana
to help to tackle some of the security and order problems at which the
hon. Member for Kettering hinted in his
speech. We
think that the Caribbean Development Bank is an effective organisation.
We were able to secure an agreement that focused on economic growth and
climate change. Given the needs of the region, we thought it
appropriate to use a development player that is well respected in the
region as the vehicle to provide further
assistance. The
hon. Member for North-East Milton Keynes asked about the objectives for
SDF 6. One of the most essential objectives of SDF 6 was that our aid
should help to achieve direct poverty reduction. One of the funds that
is part of the SDF is a basic needs trust fund. Among other things,
that has helped to provide basic infrastructure to more than 150,000
people in 130 very poor communities in Jamaica. That is one small
example of the difference that SDF 6
made. Another
focus of the SDF 6 objectives was on enhancing the capacity of the
region to help itself. For example, the basic needs trust fund has
helped to fund a series of education projects in St. Lucia, helping to
ensure that students have access to the quality of education that they
need. Those are just some examples, and I would be happy to give
others.
Mr.
Lancaster: On the region’s ability to help itself,
that relates to a point that my hon. Friend the Member for Kettering
made and that I want to clarify with the Minister. My understanding is
that, in other regional banks, there is an internal mechanism whereby
profits from lending at normal interest rates from the bank arm can be
used to replenish the fund. The Minister specifically said that that
does not happen at the Caribbean Development Bank. I am not sure if
that was an inadvertent
mistake, because, to be fair to my hon. Friend, that is what he was
getting at, and I believe that that mechanism does actually exist.
Could the Minister clarify
that?
Mr.
Thomas: I shall come to that point. I was trying to be
more specific about the difference between the SDF, as one lending arm
of the Caribbean Development Bank, and the ordinary capital resources
of the other arm of the bank, which aims to be much more self-financing
and does not, in general, seek donor funds. I shall come to the set of
questions from the hon. Member for Kettering in due
course. The
hon. Member for North-East Milton Keynes asked me about the
conditionality attached to the seventh replenishment. Before each
formal replenishment starts, our staff and the staff of other board
members sit down and review progress on the objectives of the previous
replenishment. We decided in advance a set of policy asks that we
wanted for the Caribbean Development Bank and were able to secure
agreement on each of them. I set out in my opening remarks what they
were. There
will be a formal mid-term review involving the whole of the board to
see what progress has been made to achieve the targets, but it is not
as though our staff and Ministers just sit back and do not continue to
focus on what is happening on a day-to-day basis in the bank. There is
regular engagement with the bank’s senior staff on each of the
programmes and funds that they have available to them, so we are able
to track the effectiveness of the individual operations and, crucially,
whether the policy objectives are being addressed. When we have
concerns, we raise them at board level. We can also use the mid-term
review as a formal point to challenge the bank, if
necessary. On
the composition of the board and our voice on it, our voice is far less
of an problem in the Caribbean Development Bank, which, in effect, is
owned by the region as a whole already. The problems of trying to get
more African representation on the World Bank, for example, do not
apply to the same extent in the Caribbean. The CDB is majority owned
and controlled by countries from the
region. The
hon. Member for Berwickshire, Roxburgh and Selkirk asked me about a
more flexible response being needed as a result of the financial
crisis. At an initial stage, that partly involved making sure further
funds were available in the SDF, so that as projects relating to
economic growth relevant to the crisis were identified, there would be
resources available to draw down. In addition—this is happening
in other parts of the multilateral banking sector—the bank is
examining its capital needs and whether it needs further capital in the
longer term to respond to the needs of countries in its region. We do
not yet know the answer, and nor do other board members, to the
question whether the Caribbean Development Bank thinks that it needs
more capital resources, but we expect to hear that soon, and we will
then decide whether to respond to or to challenge the CDB’s
assessment. That discussion is live at the
moment. We
must report to Parliament and DFID in the usual way, in debates and our
annual report, and when hon. Members write to us about the CDB’s
activities, we respond in the usual way. I and my hon. Friend the
Under-Secretary will be happy to answer further questions from hon.
Members at any stage about the SDF or other parts of the bank’s
operation. The
hon. Gentleman also asked whether spending under the SDF has been
ring-fenced. Special funds have been set aside to target key challenges
such as climate change and regional integration. I alluded to the basic
needs trust fund, which deals with projects to develop capacity
in-country to help the region to help itself, and to target other
specific provision that poor communities identify as being necessary.
The CDB already has flexibility to reallocate funds as necessary. I
return to the point that I made in exchanges with the hon. Members for
Kettering and for North-East Milton Keynes. The other arm of the CDB,
which we are not discussing, has also increased its lending to try to
respond to the needs of the Caribbean, but we are focusing primarily on
the SDF’s capacity to
help. The
hon. Member for Berwickshire, Roxburgh and Selkirk asked about our
share of the replenishment and whether it is consistent with our
previous shares. The bank proposed three scenarios to donors and set
out what it could achieve with each. We believe that the level of
increase was appropriate, given the challenges of climate change and
the financial crisis, but our share is broadly
similar. The
hon. Member for Kettering asked about non-regional participating
countries and which countries have shares in the CDB. Mexico, Colombia
and Venezuela are the three non-regional, non-borrowing countries that
are shareholders. The US is not a shareholder of the bank, but it has a
regional development programme in the area through USAID, and we work
with it in some
countries. The
hon. Gentleman also asked about Haiti, and whether investment
increasing there means that we are decreasing it in other areas. We are
increasing the amount of money in the SDF, which will enable
us—the board of the CDB—to do more in Haiti. Some
countries in the region are not borrowing as much as they have in the
past because of their economic growth and the taxation revenue that
they can generate. Trinidad and Tobago, Barbados and the Bahamas are
among the
examples. My
hon. Friend the Member for Newcastle upon Tyne, Central asked about
consultancies in the Cayman Islands. I hope that he will forgive me if
I consider his question in more detail, and drop him a formal note.
I also hope that he will forgive me if I gently encourage
him not to view spending in the Cayman Islands—I am sure that he
does not—simply through the prism of the wealth of some people
who live there. It is necessary to help the poorest communities there.
I am sure that he recognises that, and that that was not the nature of
his comments. I will write to him specifically about
that.
Jim
Cousins: I put it to my hon. Friend that wealthy
communities with the capacity to redistribute—I believe that
redistribution is very much back on the agenda—should do so,
particularly where, as in the Cayman Islands and the Virgin Islands,
there seems to be little
taxation.
Mr.
Thomas: Let me clarify. The Cayman Islands and the British
Virgin Islands are not eligible for grants under the SDF, but they are
eligible for some technical
assistance. The CDP recognises the level of collective income in those
parts of the Caribbean, and is trying to focus the bulk of its
resources on the needs of the poorest, while still being able to
provide technical help where
necessary. Finally,
I come to the most provocative point, which was made by the hon. Member
for Kettering. If he will forgive me, I will not answer directly his
question about prisoners from Jamaica in UK jails. A concern on both
sides of the House is that the Caribbean is a stopping-off point for
the flow of drugs from some Latin American countries to the UK and
Europe. We have provided bilateral assistance support to help to reform
and improve the effectiveness of the Jamaican constabulary force.
That is one way in which we are trying to help the Jamaicans to help
themselves, and recognises that it is in our interest to have a
stronger and more effective system of law and order in the Caribbean so
that we can better protect our
citizens. Question
put and agreed
to. Resolved, That
the Committee has considered the draft Caribbean Development Bank
(Seventh Replenishment of the Unified Special Development Fund) Order
2009. 5.12
pm Committee
rose.
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