The Future of DFID's Programme in India - International Development Committee Contents

Examination of Witness (Questions 185-266)

Chair: Good afternoon, Secretary of State, and thank you for coming in. I appreciate that it is not ideal timing, given the Prime Minister's statement on Libya and your own involvement in what is going on in Libya. However, I hope that you appreciate that when we have set these evidence sessions, it is very difficult for us to change them at short notice, so thank you very much indeed for being here. I am sure that your mind is slightly divided, but I am sure that your attention will be fully focused. Before we get on to India, there is a point arising out of the Budget that we just wanted to clarify.

Q185 Anas Sarwar: Secretary of State, thank you very much for joining us. I will just ask a quick question with regard to the Red Book of the Budget Statement. The CSR states that £6.3 billion will be spent in the year 2010­11 for the Department for International Development. The Red Book has revised that figure down to £5.9 billion. I was wondering whether you could provide an explanation.

Andrew Mitchell: Yes. This will be an accounting matter, Mr Chairman, and it probably results from money being passed out to the conflict pools and to other joint-Department funding mechanisms. I will write to the Committee to confirm this point. I am pretty sure that that is what it is, but just to be absolutely clear I will write with a full explanation.

Q186 Chair: That would be helpful. You will appreciate that some of the NGOs have commented on it, and it would be helpful to know what the reason was. However, I think we will wait for your reply.

Andrew Mitchell: That is the reason. There is nothing untoward in the difference between the two figures.

Q187 Chair: No, no. I think it would be helpful to have an explanation, however. On the issue of India, firstly I would like to acknowledge the presence of your India staff behind you, not least because we spent quite a lot of time particularly with Sam and Ian while we were in India. We appreciated both the support and the company that they gave us. Of course this means that we will still make a totally independent evaluation of what we saw and heard, but we do appreciate the fact that they are here.

Andrew Mitchell: They are an outstanding team, Mr Chairman.

Q188 Chair: We appreciate that; we saw them in action. I wonder if I could start the process. When you set up the Bilateral Review, it appears that you actually decided the countries in advance, and it was then up to them to put in bids. I wanted first of all to clarify whether that was the case, or whether countries were able to bid to be included or not.

Andrew Mitchell: Sorry?

Q189 Chair: We have been led to believe that at the start of the Bilateral Review, the framework that was given to country programmes was that the countries that would continue to have a programme were already identified. That was a central decision, and the review was of what the programmes would be, rather than an invitation to countries to bid. Perhaps you could clarify that. The specific point on India was that you did announce the India outcome before the general Bilateral Review. Was there a reason for this? How did you come to the view that there would be a continuing programme in India at the level that you did, in the context of the Bilateral Review? It is not entirely clear which came first and what the process was.

Andrew Mitchell: Thank you, Mr Chairman. I am extremely grateful to the Committee for conducting this enquiry on India. We are delaying the publication of our operational plan on India until we have a chance to see and take into account the views of the Committee, so I am extremely grateful for that. I understand that we may get the Report in June, and it would obviously be helpful if it was no further than that, because we need to operationalise our plans.

The Bilateral Aid Review did not start with a firm view on which countries we should be in. The way in which we conducted the Bilateral Review was to let the evidence take us to a conclusion on which countries we should remain in. As a result of that, the number of countries is reducing from 43 to 27. There are 16 countries where, for a variety of reasons, we feel we should no longer have a bilateral programme. That does not, of course, mean that there are not other British monies through the multilateral system going into some countries, such as, for example, Burundi. Indeed, our programme of humanitarian support in West Africa has been significant. I have announced today that we will be spending quite a lot of money on specific outcomes on Côte d'Ivoire and Liberia, where there is a neglected humanitarian crisis building. There are very large numbers of people on the move, with very few structures available to handle that. It was led by the evidence, and the Bilateral Aid Review reached its conclusions on where the footprint should be.

On your second point about India, we realised that this was a difficult decision. We looked very carefully at the evidence. We talked extensively to the Government of India. I went to have discussions as long ago as last November. We talked, obviously, to those who are experts in development in India. We talked to those who are sceptical about our development programme in India. Then we reached our conclusions, and those conclusions were the ones we announced in the speech that I made about development partnerships earlier this spring.

Q190 Chair: But you made that announcement in advance of the general Bilateral Review.

Andrew Mitchell: Yes, I did. That was because I was making a speech about how DFID's approach to working in partnership with the emerging powers should be structured. I did not think that you could make a speech like that without taking head-on the nature of that partnership with India. That is why we announced it ahead of the rest of the Bilateral Aid Review.

Q191 Anas Sarwar: I was part of the group that visited Bihar, and some of the key areas that we will be focusing on are governance, water, sanitation, maternal health and nutrition. Given the size of the budget in cash terms, is there a risk that we are spreading ourselves too thinly, and that we could have more impact if we focused on just one of those areas?

Andrew Mitchell: I am very happy, Mr Chairman, to expand at whatever length you want on why it is right to continue to have a development programme in India. However, we are changing the nature of the programme in order to zero in on three of the poorest states. Some of our programme will zero in on the eight poorest states, but, by and large, around two­thirds or 67% will in future be focused on those three of the poorest states. We think that that is the right balance, bearing in mind that the programme is also increasingly reflecting the importance of pro­poor private sector investment. Over the period of four years, we hope that around half of it will be spent. We have frozen the headline amount at £280 million. Around half of it will be spent on traditional programmes, particularly focussed on health and education, and the other half will increasingly focus on pro­poor private sector investment.

Q192 Chris White: You talk about the three poorest states, where the aid will be specifically targeted. Has this been decided and agreed with the Indian Government?

Andrew Mitchell: Yes. Not all of the final details are nailed down yet, particularly on how we will do the private sector work. We are still in discussions about that. The fact that we are going to focus in the poorest areas going forward was, however, something I discussed with the Indian Government when I was there last November. I think that the Indian Government understand why that is what we want to do, and, by and large, approve of it. Obviously if you are talking to the Indian Government, and officials and so forth, you will get a variety of views. However, the reflection that I took away from my visit was first of all that the Indian Government very much approve of, and support, the work that my Department has done in India. They recognise the very strong development genes and excellence of that programme, and they understand why we want to move to focus it more tightly on the poorest areas in India.

Q193 Alison McGovern: Secretary of State, Prime Minister Manmohan Singh and Prime Minister Cameron had a conversation during Prime Minister Cameron's visit to India. What reference was made to the aid programme, and how did that influence the decision that was taken through the Bilateral Aid Review?

Andrew Mitchell: The Prime Minister, in a press conference quite recently, made it clear that he was very supportive of Britain's development programme in India. Although I was not in the room when the conversation between the two Prime Ministers took place, I know that the Prime Minister of India emphasised to our Prime Minister the fact that he greatly valued the work that Britain was doing in development, and was very supportive of it.

Q194 Alison McGovern: Why do you think the discussion happened at that level?

Andrew Mitchell: I think that it was a general discussion. You will recall that the Prime Minister took a very large group with him, with the intention of rejuvenating and invigorating the British partnership with India. During the course of widespread discussions about partnership, the issues of development came up. I emphasise that when they came up, as part of that wider partnership, the Prime Minister of India indicated very strong support for our development work.

Q195 Alison McGovern: In terms of Britain's foreign policy relationship with India and our trade relationship with India, where is our development role in that picture? Is it something that assists in the foreign policy or trade relationship, or is it something that is totally separate and has no influence at all?

Andrew Mitchell: All of these things, I suppose, are interrelated. It is part of a very significant partnership with India, which goes back for many, many years. That relationship covers all aspects of life. You mentioned trade, which is extremely important. It is one of the reasons why the new Partnership Secretariat approach that my Department is taking in dealing with the emerging powers is so important. It focuses on climate change and trade issues, and on many other issues as well. That is the context of the partnership with India. It is rooted in history. It is a very deep and close partnership between our two countries, and it covers all of these different areas.

Q196 Hugh Bayley: How does DFID make sure, when it is deciding which projects to support, that the things that it supports are not things that would have happened anyway, if there had not been the DFID money?

Andrew Mitchell: That is down to the discussions that take place. We make sure that we are genuinely having an incremental effect on what is happening in India. After all, the nature of this programme now is increasingly not supporting steady state development, but showing, through piloting and technical assistance, how programmes that we help through our expertise development can be scaled up very significantly. That has increasingly been the nature of the development work that we are doing.

I will give some examples of that. Let us look at the three states upon which we are seeking to focus much more now. In Bihar, £500,000 of British taxpayers' money to the state Government, intended to strengthen the quality of its infrastructure proposals, has helped it to access an extra £140 million to improve urban infrastructure. In Madhya Pradesh—another very good example—£55,000 from British taxpayers unlocked funds of £21 million from the Government of India's central scheme that provides employment opportunities to the poor. A third example, in Orissa, is DFID's support of £150,000 for tax system reform, including, for example, computerising tax files, which has increased VAT collection by about £55 million between 2005 and 2009. £1.5 million, given to help the Government design their public­private partnership policy, has attracted investments worth £400 million. That is a very good example of how British Government development technical assistance, showing how to make progress, helps the much wider development policies, behind which come very significant amounts of Indian taxpayers' funding. That is one of the reasons, although not the only reason, why the Indian Government values the development work that we are doing so highly.

Q197 Hugh Bayley: The difficulty I see is that for every example of added value there are examples where you question why aid was contributed, often in the field of technical assistance. In Madhya Pradesh, we saw British money being invested in supporting a vehicle tracking scheme in Bhopal, which yielded very substantial savings. The question is: if the scheme yielded savings, why did it need a top­up of funding from the UK? The power sector reform is another example, which has yielded savings to the Government of £100 million and prospects of greater savings still. Why is £18 million of British aid needed, or £1.6 million of that needed for technical assistance?

Andrew Mitchell: I will go back to my point about the focus on demonstrating and helping the development in different programmes. On the work in the power sector—I do not have the figures at my fingertips—certainly British development expertise has been extremely successful. It has not only succeeded in limiting the number of power outages that take place, but also in making life much safer for very poor people, who have been trying to access power, shall I say, informally. Again, this is an area where British expertise has made a big contribution to a wider Indian effort. I emphasise, however, that going forward, as we walk this last mile with India on development, as part of a much wider partnership between Britain and India, we increasingly focus in on providing technical assistance. We focus on the demonstrative power of the interventions that we make, so that they can be significantly scaled up afterwards by the Indian Government Indian taxpayer.

Q198 Chair: There is a certain irony, however, is there not, in the British Government money being used to help the Indian Government spend its money more effectively? It is a slightly odd situation.

Andrew Mitchell: That is a core part of the development work that we do around the world. A lot of the work that has been done, for example, in building up revenue­raising structures in the poor world, where we try to assist people in raising their own taxation, results from a small amount of British taxpayers' money making a very significant contribution to the revenue-raising powers of a poor-country government. This enables them in turn, increasingly quickly, to stand on their own two feet. It is a very good example of British expertise contributing, I would say significantly, to development.

Q199 Hugh Bayley: Doesn't your answer make the case for a different type of partnership? If we are investing a small sum of money to trigger savings, either from Government efficiencies or from the ability of the state to draw down resources from the Government of India, would it not make sense to put in the pump­priming money in effect as a loan, to be repaid when the savings or the dividend comes good? Should we not therefore have, for emerging economies such as India, a loan window, and not just rely on a "one club fits all" approach, whereby if we provide aid it is in the form of a gift?

Andrew Mitchell: It is a mixture, isn't it? Clearly the private sector investment that we will be seeking to promote may be loans, guarantees or equity. The dividend to which you refer comes back to Britain in terms of greater prosperity for India in the future. We all benefit from prosperity rising around the world. After all, the model of development is a glide path up away from the welfare model of development to the private sector investment model, where countries have their own debt and infrastructure market. I think that the work that we are doing plays a valuable role in that glide path.

Q200 Richard Burden: The power sector reform investment, or assistance, is coming to an end, but I am a little confused about what you are saying about that. Are you saying that that is the kind of model you would like to see developed in the future, or are you saying that that was something that was good in its time, but is not the kind of thing that you are looking to for the future?

Andrew Mitchell: What I have said about the repositioning of the programme, which we will finally operationalise once we have heard from this Committee, and been able to take account of the views of the members of the Committee, focuses on three of the poorer states. It moves the programme much more towards working there. The role of technical assistance and of the private sector, and the power of demonstration that British taxpayers' money spent in this way provides, are all fundamental to the programme going forward. What I am trying to move away from is the funding of steady state development. I think that what are obviously, for us, significant sums of money, but in terms of the Indian pro­poor spend are quite small amounts of money, are no longer appropriate.

Q201 Richard Burden: I understand that. I am just trying to understand what the new approach actually means in practice. Is the kind of thing that was done before in the power sector reform the kind of thing that you are looking to do more of in the future?

Andrew Mitchell: I certainly would not rule it out. Bear in mind that we would be seeking to do it in the poorest parts of the country.

Q202 Richard Burden: In the poorest states, yes. Call a spade a spade, however. What happened there is that, partly through UK prodding—which is a good thing—and partly because they knew anyway that they were losing shed-loads of money in the power sector, they called in a British set of consultants, which we paid for. Why did we pay for it? Through the technical assistance, the advice and so on, we could have said, "We will put you in touch with these consultants who can help you." Why on earth would we pay for that? This goes back to Hugh's point, in a way. Are you sure that they would not have paid for it if we had pointed them in the right direction?

Andrew Mitchell: That will have been our judgment at the time: that they would not pay for it, and that we could make a real contribution by demonstrating the effectiveness of this intervention. That is why we will have done it. Can I speak for every instance under the last Government? No, but that is certainly what will be happening on my watch. I would not rule out doing the same thing in the future, but I would need to be satisfied on behalf of the British taxpayer, that this was making a really good development intervention as a result.

Q203 Mr McCann: Good afternoon, Secretary of State. This touches on the point that Chris made at the start of our discussion this afternoon. We know that DFID's focus will be on what we view to be the three poorest states. However, I travelled to Madhya Pradesh, and then we had meetings with Government officials in New Delhi. There came across to us a strong view that they were either unhappy with the concept, or it had not been discussed with them, or indeed, in some cases, they just disagreed with it because they believed that the three states that we had chosen were not the poorest. Does that give you any cause for concern, given your explanation provided earlier, that you did have discussions at a high level with the Indian Government? Does your plan have enough flexibility in it that you could change course at some point in the period between now and 2015, if you so decided?

Andrew Mitchell: I want to emphasise that this is a partnership. We do not bounce the Indian Government with our plans. We develop them together with them. For example, the approach on climate change spending is something that we are developing together with the Indian Government. On the private sector, like us, they would not want to be involved in individual decisions. You should never allow Ministers, or indeed civil servants, to make specific market­related investment decisions. That should be left to the private sector and those who specialise in that. Of the six senior people who I think you saw, I have met most of them. Five of those six are extremely supportive of our programme and what we are seeking to do. I think that there was a slightly difficult meeting with the Chief Minister of Madhya Pradesh. I think that the nature of the meeting may not have been clearly understood to be the same by both sides. However, all I can say is that when I saw him, he made it clear that he was extremely supportive of our plans, and grateful for our intervention.

Q204 Chair: Just to summarise that point, there was a sensitivity in the Indian Government on this. They did not want to be in a situation where they are seen to have agreed with the British Government that just three states would be in receipt of UK aid. Their argument was that there were more than three states that were poor, and they would wish the Indian people, poor people in other states, to feel that we had some engagement with them. I think it is fair to say that that was a point of concern.

Andrew Mitchell: Yes, absolutely, Mr Chairman. Let us be clear: some of our work, for example on secondary education for girls, would not be focused just on three of the poorest states, but on eight of the poorest states. Again, we are trying, by demonstrating how this can be done, to assist in the wider education of secondary schooling. It is about 67% of the budget that will be spent in three of the poorest states. Wider than that, however, of course there is an acceptance that there are eight particular states that are extremely poor, and we want to try to assist more widely to some extent.

Q205 Mr McCann: You did not really quite answer this point. Would you consider changing course? I know that that is language that we have been using over the last few weeks, but in a different context. If you felt that you needed to, do you feel that you have enough flexibility in your plan to shift and put more emphasis on one or more of the poorer states, or indeed in the other eight that we are targeting, for other specific reasons?

Andrew Mitchell: We do have the flexibility, and we must, because we have set out very clearly the results that we are seeking to achieve. If we decide that there are better ways of achieving those results, or that the need for particular results has changed, then we will reflect that. We are very driven now by trying to secure specific development results on the ground, so we could change. I make the point that in general we should not be too widely spread. I think that someone else made that point earlier. That is why we seek to try to narrow down the focus to three states in general, although some of our programmes will be wider than that.

Q206 Pauline Latham: You have announced four years of spending over there. Obviously that brings us more or less to the end of this Government term. You have also mentioned "the final mile", which is what a lot of people are talking about. Are you thinking that that four years is the final mile? If so, how do you see yourself tailing it off and coming out? What stages do you see in walking the final mile with India?

Andrew Mitchell: It is a very important question. The four years that you identify are the four years of the Spending Round. India has been Britain's largest development programme for many years. Next year it will probably be Ethiopia, and the year after that, subject to the agenda for macroeconomic reform taking place there, it will be Pakistan. This is a big change. Freezing and refocussing the money, and increasing the element of that funding that is pro­poor private sector investment, is a very big change. I cannot see beyond those four years at the moment. I do not think that it would be right to do so. We need to operationalise the programme, make sure that it is really effective and secures the results that we want to see secured, and see how it goes. It may be that in two years' time we can start to take a view on what comes after 2015. I think that today it is too early to say. What we can say is that India is developing extremely successfully. They are lifting, as I have said before, hundreds of millions of people out of poverty. The scale of the poverty is immense in India. The scale of the challenge is immense. That is why we walk this last mile with them. I think that what India is doing, in terms of its pro­poor policies, is extraordinary, and highly effective. We were able to reach the conclusion that now would not be the time to end our programme, but in four years' time the position will be different again. I hope that the Committee will give us the benefit of their advice as we come towards the end of that four­year period, so that we can have a real debate on what comes next.

Q207 Pauline Latham: You are saying that everything is changing so dramatically over there, and they are becoming a much wealthier country. Of course, one of the criticisms that we always hear is, "They have a space programme, which we do not have. We cannot afford to have one." Having been over there, I was struck by the fact that, although a space programme sounds great, they are doing it in order to have satellites, mapping, weather patterns and flooding patterns, rather than putting a man on Mars. Do you think that they might escalate that space programme as they become wealthier, or do you think that they will keep it at approximately the level that it is now? They have been in space for a long time. Will they take back the money that is in excess, so that they can then put it into the pro­poor areas, and make the big difference for them? Do you think that space will increase, or that they will genuinely try to help their poor?

Andrew Mitchell: First of all, I am very grateful to you for eloquently explaining why the space programme does genuinely have developmental aspects. It is not an argument that I have chosen to advance myself, but what you say is true. How does the Minister for Education identify whether a school has been built for which he is about to pay? The answer is that the satellite programme assists him in that. Thank you for making that point. I think that, as India has become wealthier, the extent to which they have sought to use their own resources in tackling poverty is awesome. While income tax has increased every year for the last four years by 25%, they are now putting 30% of their budget into health and education and rural development. Their spend on health and education has doubled in the last six years. The statistic that I find most striking is that over the last six years, India has got 60 million children into school. It is an absolutely remarkable achievement.

It is the scale of the poverty in India that is so very striking. There are seven-and-a-half times the total population of the United Kingdom, who are living in India on under 80 pence a day. I think that it is a statistic that I have used in the Chamber of the Commons. It does underline the extent to which, if you are seeking to tackle poverty around the world, India is central to that. If you want to achieve the MDGs, India is absolutely central to getting anywhere near doing so. I would just like to make that point. When asked why they robbed banks, someone once said that it was because that was where the money was. In poverty terms, we are tackling poverty in India because India is where the poverty is. There are more poor people in India than in the whole of sub­Saharan Africa.

Q208 Chair: A slightly inverted metaphor, if I may, Secretary of State. However, I think it is clear that you are desperate to articulate the case for aid for India. It is perhaps just worth reinforcing the brief that we did receive on the space programme. The cumulative cost is apparently $6 billion over 45 years, whereas what you have described is many, many times that, year on year, in terms of what the Government is trying to do. It is useful to put it into context, but it is an issue that confuses people as to why we should be giving aid.

Andrew Mitchell: I am very grateful to the Committee for identifying the nature of the space programme.

Q209 Anas Sarwar: On the space programme argument, which Pauline has summarised very effectively, I wonder why it has not been part of the case that you have put when explaining what the programme is. I wonder what discussions you may have had with your counterpart, Mr Willetts, who has recently signed a Memorandum of Understanding with India on the space programme? Have any discussions taken place between yourself and him?

Andrew Mitchell: Yes. He and I have had some discussions about the nature of the space programme quite recently. He is producing a paper and some work to identify the effectiveness of that in development terms, which I am very much looking forward to receiving. Why have I not articulated this? I think that the arguments that I have used as to why it is right to maintain the programme are the right arguments, otherwise I would not have used them. For me, confronting these arguments and focussing too much on the space programme would probably be a mistake. The point that Miss Latham has made about why it does have development overtones is a very valuable contribution to the debate.

Q210 Chair: It is a problem, isn't it? Why should a developing country not have aspirations while it still has poverty? That is the real implication of some of the critics: that if you have poor people, you have no right to spend money on other aspirations. The issue is surely that you have the right, but it is whether or not you have the right proportion.

Andrew Mitchell: I think that that is exactly right, Mr Chairman. I tried to set out graphically the extent of poverty in India, to which, of course, the counterargument is, "That is all very well, but why does India not do more to tackle this?" My point is that India is doing a tremendous amount. I hope that the figures that I used gave the Committee some idea of the scale of what India is seeking to do, and why we should support them strongly in the very strong pro­poor development policies that are the very cornerstone of the approach that the Government of India is taking.

Q211 Richard Harrington: Good afternoon. I have been very quiet until now, listening very carefully to the arguments. I assume that everyone around this table would be very proud to say to you that we are in the pro­development group of people, and we feel that part of our job here is to promote the development that is done by this country, of which we should be very proud. However, when it comes to India, having been on a number of radio phone­ins and this kind of thing, one does feel like the punch bag. The space programme is only a part of it: there is an overall belief, as wound up by The Daily Mail and other newspapers, erroneously, that India does nothing itself other than billionaires spending money on Ferraris and space programmes. I do feel that either DFID should, or the Indian Government should, promote this side of the argument, showing what we saw in India, and how much the Indian Government is doing. This fits in very well with what you have said today, Secretary of State. I feel this message has not got across in the UK. Those of us who really believe very much, as you do, in our programme have to promote this side of it. Maybe the Indian Government should do it, but they should be proud of what they are doing. The general public here, our electorate, do not know this. I put that to one side, but I would ask you perhaps to comment or just listen to that point, which I think is an important one.

Andrew Mitchell: It is my ambition, and I hope that the Committee would share this, that over the next four years we can make people across the whole of Britain as proud of our development programme as they are, for example, of our armed forces. I think that that is an attainable ambition. The answer to your point about scepticism on India is to keep going on those phone­in programmes, and keep your tolerance high of the punch-bag approach that you expressed. We have to keep on getting these arguments across. There is no doubt that at the moment, given the economic and financial position of Britain, the environment in which to get these arguments across is tougher than it has been in the past, but we must persist. I am sure that I carry everyone on the Committee with me on this point, but if you believe that it is right, no matter how strong the headwind, one should persevere in getting the points across.

Q212 Richard Harrington: It is not for me to suggest an outlet for your perhaps frustrated journalistic career, but articles by yourself in these newspapers about what India is doing for itself might be very useful.

Andrew Mitchell: You may rest assured that I take advantage of all such opportunities.

Q213 Richard Harrington: Certainly for me, the visit itself proved beyond all reasonable doubt—not that I had very much doubt—that we should be in India, we should be in the poorest regions, and we are helping tremendously, particularly in areas such as governance. I must confess that I had not thought of governance very much before, but I saw in Bihar how useful it is, to do with tax collection, civil service reform, etc. I would like to move on, with this in mind, to the move, as announced by yourself, that has clearly been taken on by DFID in India, of the development of our programme through the private sector. I thought that it was just me, but I have checked with colleagues, and we are not very clear about it. I would 100% back what you said about the competence and efficiency of DFID's staff in India. However, this is such a new area that I felt that I did not really understand the DFID proposals. I cannot see personally, as someone who has had some experience in the private sector, how it is possible to do anything to move the private sector into in an economy as poor as Bihar's. With no basic infrastructure, and no basic form of capitalism, let alone PPIs and everything else, the economy is in a primitive state. I recall the figures that 83% of people defecate outdoors, and education and everything else are very primitive. I would ask you, if you could, just to explain to us very clearly what is meant by this private sector initiative, and where the figure of £140 million came from.

Andrew Mitchell: Mr Chairman, you will appreciate that this abuts onto the discussions we had about CDC, to some extent. I would like to point out that currently the eight poorest states of India have over half of India's population, but attract only 2.4% of the country's foreign direct investment, and one­fifth of investment overall. As members of the Committee will have seen in Madhya Pradesh and Bihar, these states face a shortage of infrastructure, and their economies have yet to generate sufficient low­skilled jobs to lift millions out of poverty. That is at the heart of the case for the private sector.

All of us have learned and know that it is the private sector that has the ability to have a real impact on infrastructure, energy, and the new green investment that we and the Indian Government want to see. Someone like yourself, who has spent a large part of your lifetime in the private sector, will be very aware of this. 90% of jobs around the world are created by the private sector, not by Governments. Therefore we will be trying to make sure, partly through CDC, no doubt, the demonstration effect of what you can achieve with private sector investment in very difficult places.

After all, we said that we wanted the private sector input to be in the hardest places to reach, and to accept the most difficult challenges, because we believe that the private sector has a huge ability to help people to lift themselves out of poverty. In India, we will develop these policies. The £140 million figure is by the fourth year. There is no direct line to it: we want to advance carefully and slowly towards that. I go back to my point about the glide path out of poverty. India, increasingly, in the richer states, is manifestly benefiting from the effects of pro­poor private sector investment. We need to take those lessons to the poorest states, because they too can benefit. As the figures that I have just given the Committee demonstrate, at the moment that is not the case.

Q214 Richard Harrington: So would you see, for example, some of the existing projects that we saw either sponsored by DFID or, indeed, by the World Bank—for example, the governance programmes, or setting up savings and loan cooperatives? I will just mention those two by way of example. Would you see taking products such as that and saying, "We will privatise them. We will put them out to tender and get a private company involved, because they can do it more efficiently than we can do it already"? Or would you say, "Some things will be direct investment from the UK Government to state Government, but we will come up with new ideas, such as new roads, etc., and they will be put out to private tender on some form of PFI"?

Andrew Mitchell: We will look at all of the relevant opportunities. We will try to bring our private sector­based skills to bear. We will use the expertise and role of CDC as it develops. You mentioned microfinance, and indeed you could add microinsurance. We will try to ensure that 5 million people, of whom 3.75 million are women, increase their income through training and microfinance. We will try to make sure, through the development of energy, particularly low­carbon energy, including solar lamps and cooking stoves, that we bring to bear what we all know to be the huge abilities of the private sector, through investment and work, to help people to lift themselves out of poverty and to provide these basic services.

Q215 Richard Harrington: Can I just ask one little question, leading on from that? Thank you for the answer. Do you feel, with your experience, which is also very much in the private sector as well as in Government, that there are some kinds of projects that are better done by the public sector? Is it the case there are some infrastructure projects or education projects that by nature would never be done on a private sector initiative, and some that are much more suited to the private sector? Or do you think that, in the end, everything can be done by the private sector?

Andrew Mitchell: No, I completely agree with that analysis. I take an absolutely un­ideological approach to this. What we want to do is to ensure that we get these gains to those whom we are seeking to help, and we should do it by whatever is the most effective method, regardless of whether it is private or public sector.

Q216 Richard Burden: I think we are adopting an un­ideological approach on this as well, but you will forgive me if I just test out a little bit what you are suggesting here. What you appeared to be saying was that private sector investment in development is absolutely critical to the development of India and tackling poverty in India. I doubt that there would be anybody who would disagree with that. However, with respect, that is not what we are discussing. What we are discussing is the use of DFID money and the most effective way of using it. The first thing to say, therefore, is that I still am not sure where the figure of £140 million came from. You have been very open that, globally, DFID should spend more money in the private sector. Was it that you, as the Secretary of State, said from here, "I want to see 50% of DFID spending in the private sector, now go and work out how to do it"? Or did you say, "I want to see more spent in the private sector. You come back to me and tell me how much you think would be the amount that you would spend in the private sector in order to achieve the objectives you want"?

Andrew Mitchell: The answer to Mr Burden's question is basically the first, in that the analysis of India was rooted in the Coalition Government's core principles of development. These are, firstly, that it is first and foremost conflict that condemns people to remain poor. Secondly, the key way that poor people lift themselves out of poverty is through wealth creation, economic development and growth. Thirdly, that aid spent well creates miracles. In looking at India, and realising where India is on the glide path that I described, it seems sensible that our contribution should go and do the most difficult things in the hardest places in private sector investment.

Bear in mind the figures that I gave the Committee about the extent to which pro­poor private sector investment and foreign direct investment is already assisting India in the states that are not amongst the poorest. In other words, there is no need at all for us to be doing that, because the market and the private sector is already engaging there. We should go to the poorest areas and demonstrate the power of private sector investment in these very difficult places. Having looked at the programme and the British contribution to it, it seemed that about 50% of the programme should be devoted to pro­poor private sector investment, given where India is on that flight path, and given the nature of the British programme.

Q217 Richard Burden: So what did you base the 50% on? Why 50%? Why not 40%? Why not say, "We want to do more in the private sector, we want to unlock the potential, tell us the programmes that would work and would involve the private sector"? Why 50%?

Andrew Mitchell: I can tell the Committee that I started out with a view that the figure should be higher than that, and then in careful discussion—

Q218 Richard Burden: That sounds a bit ideological. Why start off with a figure?

Andrew Mitchell: Because a judgment has to be made of where India is on the glide path that I described. I put it to my officials, and we discussed internally what that level should be. I started out by suggesting that the figure might be a bit higher than 50%. Having kicked it around, discussed it in detail, taken official advice, and talked to experts in this area, 50% seemed to us to be about the right level. That is why we settled on 50%.

Q219 Chair: Did you have this dialogue with other development programmes, or is India a special case?

Andrew Mitchell: The role of the private sector in Britain's bilateral programmes has been discussed in respect of every country we are in. That is right and as it should be, that you look at every single bilateral programme and work out at what the best way of tackling poverty in that country is, and what the best way that Britain can help is.

Q220 Richard Burden: You said earlier on, in response to Anas's question, I think, that you wanted to spend about half on what you described as traditional programmes, and half on pro­poor private sector. Why do you not see a number of the private sector interventions as traditional programmes? We were discussing the issue of the power sector reform. That was a private sector programme, in many ways. It was happening already. A microfinance scheme is presumably a good scheme to support, if you want to expand the preponderance of microfinance in the areas. Why you draw the distinction between what is private sector and what is traditional, rather than looking at what is right in those very poor states that you are talking about?

Andrew Mitchell: Let me try to help, Mr Burden, with this point. First of all, microfinance does not require funding. You may need structural funds to set it up, but the beauty of microfinance is that it is self­financing. Let me just park that on one side. The issue goes back to my glide path example, which I think is quite a good way of looking at the way in which countries progress on the development curve. You take a view on the role of the private sector. You see, for example, the difference between the more prosperous parts of India, where the private sector has ignited development, and is really driving it forward. You see the fact that that is not the case in some of the poorest states. You work out that, in a world where Britain has a niche position—our contribution is not enormous in terms of the development work that is going on—how Britain can best assist and drive forward the development for poor people there. Bear in mind that the 50% point is a target for the final year, but that the whole of this is driven by the results that we want to achieve. It is not set in concrete, but it seems to me to be a very good yardstick for making sure that our programme moves in the right direction, particularly bearing in mind the glide path that I have described.

Q221 Richard Burden: Talking about niches, and the UK's contribution, where we are good at things, I have no disagreement about the idea of the private, but rather about where our contribution is. One of the questions earlier on was about whether we are trying to do too much on what you would describe as traditional programmes: through sanitation, public health, education and so on. The point was made that perhaps we should focus down on a fewer number of those. In answer to that, you said that you felt that what we were doing was right, and that on some of those programmes, they would not even be in the poorest states. Education, I think you said, would be spread throughout different parts of India. What you appear to be saying is that because you see the private sector as important, you have a target of 50% of spend in the poorest states in the private sector. That immediately limits the amount that you would spend on things in which we might have a niche, but might not necessarily have that branding. Then you will dilute that money, potentially, beyond the poorest states. I do not see how that all adds up as a coherent strategy.

Andrew Mitchell: No, that is not quite right. For example, in the past, we have helped the primary sector for education across a much wider part of India. We are scaling that down. In two years' time that will not be taking place. We are now focussing particularly on secondary schooling, and particularly for women, with a number of specific interventions in the poorest areas. We are making sure that we specialise. In addition to this, not least because the Committee has pointed out the importance of work on sanitation and getting clean water to people who do not have it, we intend to scale up the work that we are doing in the poorest areas. The intention is for sanitation to reach 5 million people over the four­year period, who would not get it otherwise. A lot of that work is being done through technical assistance, through describing how programmes can be scaled up with Indian taxpayers' money. We are very clear, and I hope that the Committee got the feeling for this when they were in India that we are very clear about getting really good value for money for the British taxpayer.

Q222 Richard Burden: I totally understand. I think that you are misunderstanding what I am saying. What I am saying is: why do you cut the cake in half, so that half of it is in the private sector? That is a target before you decide what you are going to do with it. The rest of all these really good things that you are talking about has to come out of half of the cake. I do not understand why you have that as a starting point, unless it is ideological.

Andrew Mitchell: No. Having thought carefully about the programme, and having taken advice, we decided that that was the best way to structure the programme going forward, to ensure that British taxpayers got the best possible value for money. We also felt it was the way to ensure that we had the biggest impact in terms of overall development in India. That was a judgment that we took about the way to achieve those, I submit, highly desirable ends.

Q223 Anas Sarwar: I just wanted to pick up those points. I do not disagree in principle with a greater emphasis on the private sector, but I want to pick up some points that Mr Burden was making to you. Regarding the £140 million figure, I have some short and direct questions. What percentage of that will be direct investments being made? Will all of that be spent in the three poorest states? Is the focus on the private sector only in India, or is it more widely, in other countries? What percentage of those investments that are made will be through the CDC?

Andrew Mitchell: Those are very good questions, which have not yet been decided. Of course we will be led by the way in which we can achieve the best possible results. I have no doubt whatsoever that CDC will have an important role to play in this. Some of this work will undoubtedly be co­investment work. Some of it may be traditional CDC business. Some of it may be direct investment. Some of it may be working with others. Some of it might be, for example, possibly guaranteeing other parties. This is quite interesting and new stuff for us, but we must make sure that we work out how to dispense this taxpayers' money very carefully, and we must use all of the tools that are available to us. I cannot give you a blueprint. Indeed, it is the nature of this sort of work that there is not a blueprint available.

Q224 Anas Sarwar: Secretary of State, with all due respect, you have quite rightly said that it is very new for us. I find it bizarre that we have a target of 50% set from London about how much we will spend in the private sector in developing countries, but there is no answer about where we are going to focus it. What we are saying to the British public is that we can justify aid to India because we are going to spend it in the three poorest states. However, we cannot say that we are going to spend it in the three poorest states, because it has not been decided yet. We have accepted the need for reform of the CDC, but we cannot say that we are going to make those investments through the CDC, because it has not been decided yet. We have done a Multilateral and Bilateral Aid Review about the countries that we will focus in, and these are the countries that we are going to focus in, but we cannot decide whether we are only going to make private investments in India, or in every country.

I think that there needs to be a bit more clarity there. I think that there needs to be a complete rethink about the decision on the private sector. You are absolutely right, it is a new change. The reason that it is new is that DFID has always had a tremendous reputation of being a grants­giving body with no strings attached, giving grants to the poorest people in the world, lifting them out of poverty with no ties to that aid. If we are saying that we will be making investments, investment means that we are looking for a return, which means that there are ties to the aid that we are giving. It is a complete rebranding of what the Department for International Development is all about. I think that we do need some serious answers on those questions.

Andrew Mitchell: That is not correct. Under the last Government there was a very significant boost towards pro­poor private sector investment. The work of the PIDG, for example, in my Department—the Private Infrastructure Development Group—was developed under the last Government. This is an area that is not new to DFID, but it is an area that we are seeking to give monkey glands to. We are seeking to reform CDC so that CDC rediscovers some of its development DNA in the work that it does. You will have a sort of double bottom line of both financial and development results.

Q225 Anas Sarwar: Promoting the private sector is not new. DFID making direct investments is new, and that is what I am asking. If DFID going to make direct investments, and if it is, will all of those direct investments be through the CDC?

Andrew Mitchell: Not necessarily. We know the power of the private sector, in terms of its development potential. We know the ability to create jobs and provide goods and services that people want to buy. We are seeking to energise that sector in a part of the country where it has yet to reach in any significant sense, although there are other parts of the country where there is no need for us to help energise it because there is commercial capital available. That has huge potential and is enormously exciting. Are we being incredibly prescriptive about how it should be spent at this point? No, we are not. I think that that is exactly right. I think that the relationship with CDC, and the changes that we are implementing with CDC, will make a tremendous contribution. In a year's time we will be much clearer about how we will achieve these results. We do, after all, have four years to reach the 50% position that I described. As those four years go by, I think that you will see the huge development effect and the power of the use of the private sector in this area.

Q226 Anas Sarwar: Just to emphasise how Brand DFID is under threat, the Deputy Planning Commissioner of the Indian Government said to us, "If you make private sector investments we may not see this as external assistance." He went on to suggest, "If you do want to make investments, why do you not set up your own finance company and get them to do it?" We do have our own finance company—it is called the CDC. The problem is that the CDC is dysfunctional. It has only made a 4.8% return in six years of investments in India. Anyone who knows anything about South Asian business knows that that is a woeful return. What is really needed, Secretary of State, is a root-and-branch reform of the CDC, to get it working and fit for purpose. Let us do promote the private sector, but let us do it through the CDC rather than Brand DFID, which is well­respected right around the world. Why would we risk DFID's reputation?

Andrew Mitchell: I do not agree with Mr Sarwar's analysis. First of all, the money that CDC spends is ODA money. It is part of the ODA budget. The problem with CDC, under the Government of your Party, was that it was not properly gripped. I think that the Committee will be fair to me: I have gripped CDC.

Q227 Anas Sarwar: I accept that.

Andrew Mitchell: I have gripped CDC, and I am trying to make sure that it delivers pretty much in the way that Mr Sarwar is describing. The Committee has produced an extremely helpful Report to assist us in doing that, and we will do that. The Committee will then be able to judge whether we have done that effectively or not. This is absolutely not some sort of perversion of Brand DFID. We have been absolutely clear that DFID's function is to tackle poverty, and that it does so under the OECD DAC rules. To many of us it is axiomatic that the role of the private sector in poverty alleviation has been insufficiently prioritised in the past, and we are determined to put that right.

Chair: I will make one last point. It is worth putting on record that the Committee did produce a report on private sector development in the last Parliament, and we did conclude that DFID needed to do more than it was then doing. That was the thrust of our recommendation, so it is not as though the Committee has not engaged with this issue. Clearly, as you can see, Secretary of State, there is a lively discussion as to where the authority should settle. My concern is that there are a number of colleagues—

Anas Sarwar: This is my very, very last point, Mr Chairman.

Chair: I think that we may have difficulty getting to the end of our evidence session if everybody takes quite a long time. I am going to have to bring in your colleagues, if you don't mind, Anas.

Q228 Alison McGovern: Secretary of State, I trust you will be relieved that I have just one question. In 2003, I believe, your predecessor Hilary Benn made a written statement to the House of Commons, describing that British aid would have no conditionality attached to it. Do you agree with that statement?

Andrew Mitchell: It depends what you mean by conditionality. Certainly we have always made clear that we totally accept the decision of the last Government that aid should be untied. Indeed, I try very hard to persuade those countries that have not yet reached that conclusion of the case for it, which I think is tremendously strong. The days of tied aid are gone, in Britain. There are two forms of conditionality, however. The first, if you like, is that the money really goes for what it is intended. In other words, when you agree to fund 100 teachers, one of the oldest scams in the book would be that only 10 teachers were paid, and the rest of the money was pilfered. That form of conditionality, that money should go for the purpose for which it was intended, I am very strongly in favour of.

What I think Mr Benn may have been talking about was that conditionality at that stage was a big discussion with the World Bank. The discussion was about spending money, for example, on privatisation of water, where the condition of providing a loan to provide water to those who do not have it was that the water should be privatised. I make two comments on that. The first is that, as I said earlier, I am completely un-ideological about the approach to this. I want to make sure that water gets to the people at the end of the track in our world who do not have it. I do not mind how it gets there, provided that it gets there in a way that is effective and practical. The original debates on conditionality I think have now gone, and rightly so. If the IMF or the World Bank, as used to happen in the 1970s and 1980s, is highly prescriptive, and tries to enforce a regime in a poor country that that country does not want, then in the end that is counterproductive to development. You have to go with the grain of a country's pro­poor policy development. I think that we have learned that lesson, and if you look at the World Bank's loan book now, you will find virtually none of it is conditional in that sense. It is a rather full answer, but I hope that you can see the difference between those two forms of conditionality, which I have set out.

Q229 Alison McGovern: And you disagree with both of them? You are against both of those?

Andrew Mitchell: I agree strongly with the first. On the second, I think that it is a mistake not to recognise that you have to go with the grain of a poverty reduction strategy, which needs to be owned by the country that you are seeking to help. As I say, I take a completely un­ideological approach to the way in which we achieve these results, so long as we achieve them.

Q230 Hugh Bayley: My view is that any Government ought to take an ideological approach in this regard. We know from our own experience in the UK that when Governments try to pick winners, especially when they are trying to pick winners in areas of social deprivation, as a regional development strategy, civil servants tend to get it desperately wrong. We would not do it in this country, so why has this become such a big part of your approach in India?

Andrew Mitchell: It has not. I made it absolutely clear in answer to an earlier question that we must not seek to pick winners in terms of individual investment decisions that we make. That would be a serious mistake. History is littered with the failures of politicians and civil servants making investment decisions that should be left to the market and the private sector. It is no part of our agenda—

Q231 Hugh Bayley: Does that mean no equity investments?

Andrew Mitchell: Not with decisions made by individual civil servants, or even by the Civil Service corporately. We must will the ends without actually delivering them. We can set up structures that will enable private sector investment to take place, but we must not pick winners, for precisely the reasons that Mr Bayley has set out.

Q232 Hugh Bayley: Can I ask one other question? You rightly, Secretary of State, put a strong emphasis on delivering results. We know that there are some areas, such as governance or increasing tax collection, which we would not naturally think of as being led by the private sector. In what areas do you have strong evidence that private sector solutions deliver more, pound for pound, in terms of development gains than public sector investments? If they are not immediately to hand, which they may not be, could you write to us and give us the data on which the pro­private sector route is based?

Andrew Mitchell: First of all, there are two areas where I think that this is very clear. One is in infrastructure, and the other is in energy. Both are areas of great importance in India. By using private sector capital, you can achieve results in both of those areas much more quickly than without. After all, money is finite, and there is a limit to what governments, through the revenue that they themselves raise, can achieve. That is one area. Of course the other area is in stimulating private sector investment, which then creates jobs. It is the market that makes these decisions. After all, how is it that India and China, in particular, have lifted hundreds of millions of their citizens out of poverty? It is because they have embraced the market, and they have been able to make things that people want to buy and sell. That would be my wide­ranging answer to your question. If you would like more detail of specific models, as you have suggested, then we can certainly seek to give that to you. The answer to your question is that infrastructure, for example the work that PIDG is doing, in the provision of energy—particularly on climate change and the provision of greener energy—is an area where the role of the private sector is extremely significant.

Q233 Hugh Bayley: In the case of China and India's growing manufacturing and services sectors, the capital by and large has come from either local capital formation, or foreign direct investment from the private sector. Surely to goodness £140 million of British taxpayer investment is not going to make any difference to the volume?

Andrew Mitchell: You must judge this in four years' time, Mr Bayley. First of all, I gave some figures that I think are very graphic indeed, which show the extent to which FDI has reached some parts of India, but not the parts where we are seeking to work. I hope that the demonstrative power of what we are going to do will play a part in rectifying that. I think that if the Committee return to this matter in two or three years' time, they will see the way in which we have used this funding to extremely good effect for pro­poor private sector investment.

Q234 Mr McCann: Mr Bayley touched upon this, Secretary of State: you have used a phrase before that I think is appropriate: "Follow the money". The money starts with DFID and goes to the country, and you want to see how that manifests itself in helping poor people in poor countries. In Madhya Pradesh, we witnessed a microfinance project where a woman bought a buffalo. She was paying the money back, and she was selling the milk. I can understand how that project works. Regarding the £140 million, can you give me one example of a project, any project, on that higher scale and with that larger investment, that you hope would take place between now and two or three years hence? Obviously we can come back and look at these things again. What do you have in mind as a practical situation of a village or an area in Madhya Pradesh or Bihar that will give a practical example of how the money that the British taxpayer spends will be put to good use?

Andrew Mitchell: Regarding private sector investment, the great beauty of the private sector is that you do not have to have a prescriptive line on this. In my view, the answer is not to say: "This is the precise nature of the investment that should take place here. Who is going to get on with it?" It should be more demand­led than that. What we are trying to ensure is that supply of capital is able to address that demands, through a whole series of different approaches.

Q235 Mr McCann: One final thing: do you think that corruption will be an issue? That is something that we encountered when we were there, and it is still a problem across India. Do you think you have put the mechanisms in place to ensure that that investment will be protected?

Andrew Mitchell: As we have discussed in this Committee before, we have a zero tolerance approach to corruption. We are extremely alert to it, and we will always ensure that the interests of the British taxpayer, and indeed those we are seeking to help, are protected from corruption insofar as we can.

Q236 Chris White: I will change the subject slightly. You have raised the issue of sanitation in some of your previous answers. You clearly recognise that we need to raise the priority of how we improve sanitation. You have also said that you are hoping to give 5 million more people access to better sanitation. That does seem small, however, compared to the 575 million people who still use the practice of open defecation. Do you consider that the 1% that the budget is dedicated to in terms of sanitation issues is too small, and do you plan to change that?

Andrew Mitchell: We are certainly conscious of the view of the Committee about sanitation. I know that this is something that the Committee has spoken about in the past. We will specifically seek to give 5 million people better access to sanitation, piloting innovating community workers, hygiene education and better urban planning. However, you are right that that is a small number compared to the very large number that you mentioned. We also plan to try to get clean water to 2 million people who do not have it at the moment. That is our current plan. However, we are doubling the spend over the four years, and focussing particularly on technical assistance. The Government of India has money for clean water and sanitation, and we believe that for every £1 of British taxpayer's money that we put into this, the Government of India and partners will spend £20. This is a very good result. In addition to that, we will have some Challenge Funds available. One of the areas for the Challenge Funds will be water and sanitation over the next four years. If this is very successful and we think that scaling it up further would deliver significant results, then that is certainly something that we will look at.

Q237 Chris White: You mentioned that the Indian Government is giving 20 times the money that DFID is putting into this issue.

Andrew Mitchell: We think that £1 of British taxpayers' money will draw in behind it £20 of Indian Government money.

Q238 Chris White: Is that coincidental, do you think, or is it a result of our influence or our discussions?

Andrew Mitchell: It is the reality of what we think British development technical assistance and support, in the way I described, will deliver on the ground. It is very good value for money.

Q239 Pauline Latham: We went to visit a maternity hospital, which I will come on to later. One of the things that happened was that before we left, some of us needed to go to the loo. However, they would not let us use the toilet in the hospital, because it was not good enough. We had to go to the doctor's house to use her toilet: she had only moved in that week, and it still was not that good. I would have thought that, if we are looking to get better sanitation to 5 million people, we should be looking at places such as hospitals and schools as well. It is not only homes and communities: the hospitals desperately need proper toilets and proper running water. I would have thought that our expertise might be useful in those situations. Do you feel that that would be a good place for DFID to be putting its money?

Andrew Mitchell: I think that we do work there. It is not just in community water schemes, it is wider than that. That is an extremely good point, however, and we will make sure that it is borne in mind in our sanitation plans. Thank you for that.

Q240 Chair: I do not want to test the patience of the Committee by constant reference to the last Parliament, but we did do a report on sanitation and water. We looked at a project in Ethiopia, funded by DFID, the Ethiopian Government and the World Bank. This project set up rural extension workers, mostly young women, who were providing public health education and advice, not just on sanitation and washing, but also on other diseases and public health issues. That is not a cheap option, but it was a very successful one. Why could you not replicate that?

Andrew Mitchell: I am very much aware that the Committee conducted that report. The Ethiopian experience is one that we are absolutely incorporating into our work in India. The cross­Government nature of the work being done in Ethiopia, which was the particular lesson that the Committee singled out, is one that is absolutely incorporated in the work that we are now doing in India.

Chair: I think that we would only include that more resources might deliver a proportionately larger result.

Q241 Mr McCann: Staying on this point, Anas Sarwar told us that he went to a school in Bihar, and he asked the children in the class how many people had a toilet at their home. A forest of hands went up. He then asked the question: "How many people use the toilet?" and a forest of hands went down. How do you defeat the cultural issues in places like Bihar, where people believe that open defecation is normal and is not a bad thing?

Andrew Mitchell: It is a very good point. Clearly the short answer to your question is that it is not just about physically building loos and piping for clean water. It is also a cultural point. One of the best places that I have ever seen this, funnily enough, is in Eritrea, where about £3 million of British taxpayers' money was being spent through an international mechanism. I saw how, when they went into a community, the hygiene teaching before any loos were built, or clean water was provided, went in first to educate—I was going to say whet the appetite, Mr Chairman, but that is not quite the right word. It was a very important part of the work, so that people really appreciated the benefits of what came after. Mr McCann is absolutely right to stress the importance of the hygiene education going on as well as physical infrastructure.

Q242 Mr McCann: That leads on to the next area, which is about nutrition. It has been identified that the crucial window is the first two years of life. If there is under­nutrition during that period, it will lead to stunted growth and other problems later on. DFID has said that it wants to reach 3.8 million under­fives with nutrition programmes by 2015. However, should we not be focussing more on that crucial window of the first two years of life, rather than spreading it over the first five years?

Andrew Mitchell: Mr McCann is absolutely right.

Mr McCann: Words that I thought I would never hear you say.

Andrew Mitchell: All the evidence is that it is the first 1,000 days from conception to around the age of two that is the critical period. I have consistently spoken, since I took up this job, about the importance of nutrition being ratcheted up the development index. It was a big and significant part of the MDG Summit last September in New York, and we are conducting quite a lot of research into nutrition at the moment. In India, we are aiming to reach 3 million children through child feeding, micronutrients, managing diarrhoea, and community health workers. We are working with the Nutrition Mission to ensure that it all works. It is a very, very important part of our agenda, and it is absolutely critical to the life chances of a child. If they miss out on adequate nutrition in those first 1,000 days, their ability to concentrate at school is hobbled, their brain does not grow—it affects their whole life chances. I completely agree that the importance of nutrition, as part of agriculture as well, is fundamental.

Q243 Mr McCann: Therefore, under the game plan for hitting that number of children over that period of time, will the focus be on that zero-to-two as a significant part of that programme?

Andrew Mitchell: Yes, and the Committee will have noted, I think, when they were in Madhya Pradesh that half of the children in Madhya Pradesh are malnourished.

Mr McCann: Yes. Thank you.

Q244 Pauline Latham: I want to talk now about the maternity hospitals. There are many more women being persuaded, sometimes with payments, to go and give birth in hospital. However, infant mortality rates have not decreased as much as one would expect, given that they are giving birth in a safer environment. One of the reasons, I think, could be inadequate sanitation in these places because, as I explained earlier, we saw some examples of very poor hygiene in a hospital. If you cannot wash your hands in hospital, how can you possibly perform a caesarean, for instance?

There is also a cultural issue that seems to be preventing a lot of women from going to maternity hospitals. We were given the example of a lady who was expected back on the day that we were there, to have a caesarean. However, she had to go home to consult her husband and her family, and particularly her mother­in­law, and it seemed that the mother­in­law would determine not only whether she would have a caesarean, but also whether she would ever go back to that hospital. There seems to be an acceptance that, "If the baby dies, I can have another one in nine months." How are we going to increase education about that issue, and perhaps help with the cultural issues? How is DFID trying to address the fact that infant mortality has not reduced as more women are giving birth in slightly safer environments—though they are not as safe as they should be?

Andrew Mitchell: Mrs Latham puts her finger on a most important area. First of all, we need to make sure that we focus on the education of girls, because girls who are educated get married later, have fewer children, and have children later. This starts quite early. We need to make sure that there are more safe birth attendants, and easier access to hospitals. As Mrs Latham will know, there are some parts of the world now where there are motorbike ambulances, and easier ways of trying to make sure that people are able to access hospitals. There are also issues around family planning. We are trying to ensure that 500,000 mothers deliver more safely. That is our particular aim of a result to be achieved. As you will know, we are seeking to make sure that contraception is much more widely available in the poor world, for reasons with which we are all familiar. There are a whole series of issues, including the use of NGOs, both local and international, to spread that sort of learning, which we support.

Q245 Pauline Latham: There was a very good scheme there, with a vehicle that was bringing the mothers in. Obviously sometimes they did not quite make it, but usually they did make it to the hospital, and after they had given birth they would be taken back in this vehicle. That was a very good scheme.

However, the actual conditions in the hospital were poor. Behind the hospital, which had been built in 1947, there was a new hospital that had been built. It was supposed to be a 30­bedded hospital, but they had not finished it two years previously. Now all the electrics are useless, and there are no windows. They had done what we might call the "first fix" of electrics and plumbing, but it had just been left. I do not know whether it was the Government or the state Government, but they said that they did not have enough funding to finish it. That seems to me a complete waste of money.

The doctor, and the paediatrician, and the anaesthetist, were saying, "When we move into the 30­bedded hospital, it will be much better." It should be, but it is actually never going to be fit for purpose because it has been so degraded already, in the two years that it has been left empty and not even weatherproof. There are other issues as well as getting people to hospital. There are clearly issues that are not happening on the ground that should be happening. Perhaps we should be pushing, when we see things like that, to say, "You have to finish this building, it is ridiculous." Maybe that is where some of our funding could go, on the basis that it gets paid back.

Andrew Mitchell: Mrs Latham delivers a very depressing story, and if you give me the details I will investigate and see what can be done.

Pauline Latham: Sam knows where they are.

Q246 Hugh Bayley: I have a practical and modest proposal. Years ago, before I came to this place, I worked as a health economist. I think that one of the reasons why the infant and maternal mortality are still so high, despite much higher attendance, as Pauline has talked about, is because we are not looking at the 20% who still do not attend. 80% attend and give birth in a hospital or clinic, but 20% do not. My prejudice, or my guess, is that hugely disproportionately they will be people who are low caste, tribal people or Muslims. I asked the district doctor at the clinic we attended whether she had any evidence of caste or tribal origin or religion. She said no. I asked whether she thought it would be useful if they did. She said yes. Subsequently somebody brought me a copy of a delivery register. For a period of 12 months, the Government of India has collected this data. It has now stopped it, because it is quite controversial, but in clinics across the country you will have a data set. It may not be 100%, but it will be enough, I think, to give some really quite good statistics about the care given by caste, religion and tribal status, if it is collected fairly soon. I do not think that it would be a hugely costly job.

It would be very useful if your Department were to hire some Indian epidemiologists or other appropriate people to collect the data. We were told that the nutrition figures in Madhya Pradesh were ignored by the Government, because it was a reality that they did not want to confront. Eventually it was DFID putting the figures in their face that provoked what seems to be a very good nutrition programme in the state. You might, by producing data, be able to do the same in order to do more on social inclusion. Is this something that you might ask your officials to look seriously at?

Andrew Mitchell: I think I mentioned a few moments ago that half of the children in Madhya Pradesh suffer from malnutrition, and thank you for your comments about our programme seeking to tackle this. I think that you make a very good suggestion, which we will certainly look at. I, too, have seen around the world these ledgers with carefully tabulated records, but I agree with you that it is sporadic. Sometimes it takes place with great efficiency, and in other places it does not. On the point you make about caste discrimination, against which, of course, there are now laws in India. Our determination to try to contribute to a scholarship scheme for dalit girls is something that I am personally absolutely committed to. From my own visit to Madhya Pradesh, I have seen the way in which these children are disadvantaged from birth, and the appalling position that many of them are in. I think that trying to provide education, getting those children into school is enormously important. However, you rightly identity the dangers that start before school age—indeed, before day one, and your proposition is a very interesting one, which we will look at.

Q247 Anas Sarwar: I have a quick question, Secretary of State. One of the things about how we are going to sell the aid programme is by saying that we are measuring outcomes. It is something that you have been very strong on, in your own speeches on the issue. How will you be measuring the outcomes of the Indian aid programme, and how much will be spent on measuring the outcomes in the aid programme?

Andrew Mitchell: Of the whole programme in India?

Anas Sarwar: Yes.

Andrew Mitchell: We expect to be able to measure the outcomes without it costing an undue amount of money. I have seen research suggesting that overall measurements are somewhere up to 4% of the costs. Of course we have made it clear that where we use budget support, up to 5% will be available to enable people locally to monitor how that spending is taking place. However, our commitment to focussing on results, increasingly being able to measure and articulate what we do, is part of the way in which we seek to secure support from a sometimes sceptical British public. It is also a way to demonstrate to those whom we are trying to help the effectiveness of what we are doing. The focus on results is incredibly important, and we will pursue it in India just as we do in every other country where we are.

Q248 Anas Sarwar: One of the ways of doing that is by making sure that the results that are published, our planned outcomes, are realistic. Another is by making sure that they are not piggybacking on other aid programmes that may be happening, or making sure that they are real measurables, and that the DFID money has made a difference on something that would not have happened. One of the documents that we received when we were in India, for example, states that DFID's intention was to help 20 million hold the Government to account, of which 12 million will be women. I am just wondering how that is to be measured and delivered, and whether there have been discussions with the Indian Government about that.

Andrew Mitchell: You are entirely correct: that is on governance. 20 million people should be able to hold the Government to account, of which 12 million should be women. It is through citizen's groups, value for money, services of IT and so on. If I can give one example of that, which may be helpful to the Committee: in Bihar, thanks to a British­based idea and initiative, there is now SMS messaging to check that teachers are in school. It is a very good system that is now used, and is increasingly being used elsewhere in the world as well. That would be an example of what we are describing. You are entirely right, however, that the focus on results is essential for the reasons that I have set out. Clearly it is very easy to do in terms of the number of girls you get into school, or the people to whom you get clean water. Increasingly, we are able to articulate the reasons why we spend taxpayers' money, and the results they achieve in areas of conflict resolution and governance. That texting example is a good one.

Q249 Anas Sarwar: But the 20 million does seem slightly ambitious. The text messaging programme in Bihar was fantastic, making sure that there are rights to public services, which DFID is also helping with, and making sure that there is local accountability. However, the number of people using the texts was very low. I think the number was 300 to 400 within the last seven or eight months.

Andrew Mitchell: For all these results, you will hold us to account. It is important. We have a ring­fenced budget, which imposes on us a double duty to deliver value for money. I wrote to you at the time of the Bilateral Aid Review and the Multilateral Aid Review setting out the results that we were determined to achieve, how we would achieve them, and how we would be held to account for them. On a six­monthly or annual basis over the next four years we expect to be held to account for those results, and we expect to deliver them.

Q250 Richard Burden: The comments that you made a few moments ago on discrimination against dalit communities chimes very much with our experience. One of the visits we made was also in Madhya Pradesh, to a dalit community there, and we saw a project that DFID had a big role in assisting. It was clearly making a very big difference to people's lives. This was in relation to communities where things like manual scavenging were still very much on the agenda. It was very good to see that. I wonder how much resource is put into working with scheduled tribes and scheduled castes at the moment? Do you see that going up or going down? Also, what are the mechanisms through which you see that being disbursed—for example, through civil society organisations?

Andrew Mitchell: The example that I gave is quite a good example of a specific intervention designed to help some of the least well­off in the world, and that is the scholarships for dalit girls. I suspect that we will do this in conjunction with the Indian Government, although we have not yet quite agreed how we will do this. It will be an intervention by the British taxpayer, designed very specifically to help very large numbers of dalit girls. If I have understood your question correctly, it is both an example of targeting a particular group, and a measurable deliverable for which you will be able to hold us to account.

Q251 Richard Burden: One of the things that One World Action, for example, have said to us is that the initiative to get more girls into school, and particularly secondary school, are very good and welcome, particularly if they target discrimination or get more dalit girls into school. That has got to be good. However, one of the points that One World Action put to us in their evidence is that, whilst good, it does not necessarily tackle some of the discrimination that they will face at school. One of the examples that we saw in Madhya Pradesh was a girl who had faced huge discrimination at school, purely because she touched the salt at the school kitchen. One World Action are saying that it is important to put resource into empowerment activities as well as opportunity activities. I would just like your views on whether you see more resource going into that, and if so, what mechanism that would be.

Andrew Mitchell: I cannot give you a clear answer on this specific point, because I would need to see what you meant by empowerment. I am, as the Committee will recall, suspicious of using taxpayers' funds to support nebulous concepts. I have seen very similar examples to what you have described about touching the salt, and heard of other examples, and I recognise that tackling these cultural things, as well as empowering children to go to school, are very important. I think that getting children to school is an incredibly good start, and there may well be ways of tackling the specific problem that you have set out, which we should consider. As in all these matters we will be evidence­led.

Chair: There are a few questions that people would like to ask. I think that we may have time, provided that we can have equally crisp questions and answers. I will say that to you, Secretary of State.

Q252 Alison McGovern: I would like, Secretary of State, to follow up on what Richard just asked you. If you are born in a situation where you face historic discrimination, I can tell you that it takes more than the offer of a public service for you to feel the self­confidence to escape that historic discrimination. It takes a moment of empowerment. From what you have just said, do you think that DFID has little or no role to play in producing those moments of empowerment for people who face such awful discrimination in India?

Andrew Mitchell: I think that we have a huge role to play in that. We should always seek to work with the grain of the Government's programmes, and in tackling caste discrimination, clearly in India we should work very clearly with the Government. Providing those moments of empowerment that you described is incredibly important. What we have to be careful about is that our intervention is really effective, delivers value for money for British taxpayers who are providing the support, and really delivers on the ground. That is why, at the end of my answer to Mr Burden I emphasised the importance of being evidence­led. But do I recognise the importance of what you say? Absolutely.

Q253 Alison McGovern: With respect, Secretary of State, if I may, very briefly, you seem to have an instinctive response on the 50% for the public sector. Could I ask you, for example, if there was a project led by a trade union, would you have a response on whether or not DFID ought to be providing that?

Andrew Mitchell: Yes, indeed, and in connection with the Decent Work programme, we work closely with the TUC. I strongly expect us to be supporting specific programmes designed to promote the Decent Work agenda, and working very closely with trades unions. I have said this in the House in answer to similar questions on previous occasions.

Chair: There are a number of questions about how we go through this process, and beyond.

Q254 Anas Sarwar: I will move on, Secretary of State, to the post­2015 relationship with India. I would like to see what plans DFID has made for the post­2015 period. I also offer a thought. In one of our meetings that we had with other agencies, including USAID, a lady whose name escapes me now, the Director of the USAID programme in India, said: "India does not need the money, it needs our expertise, and our expertise costs money." I wonder, post­2015, whether the debate that we should be having is whether we donate our expertise to India, or sell it.

Andrew Mitchell: We probably do a combination of both. As I said in a no doubt over­long answer earlier on to the position post­2015, I think that it is too early to draw any specific conclusions yet. I do think, however, that in two years' time we will need to start to think very carefully about that. I do not think that this is the sort of development partnership that should ever be susceptible to sudden shocks. It is very important that it is rooted in cooperation with the Indian Government, and that any changes post­2015 are discussed in detail with them, and agreed between the British Government and the Indian Government. That is my view at the moment on how we should proceed post­2015. It is too early to say, but we should do it on the basis of a careful and continuing discussion with the Indian Government.

Q255 Chair: There were some sectors of the Government that rather liked the fact that Germany gave them lots of loans, rather than grants. Clearly there is a section of Government that sees that as a preferable way forward.

Andrew Mitchell: They would prefer loans to grants?

Chair: Yes.

Andrew Mitchell: India is a vibrant society with different views. As you can tell from what I have said, if I may refer once again to this glide path, there is a role for both, I think, as part of a sound development strategy.

Q256 Hugh Bayley: How much aid per year does India give to other countries?

Andrew Mitchell: The definitions of Indian aid are not the same as ours. For example, there is a programme that is classified by the Indians as aid to Afghanistan, for example, which basically is support for commercial enterprises. Often it comes in the form of guarantees. Therefore there is no direct comparison that enables me to give a direct answer to Mr Bayley's question.

Q257 Hugh Bayley: What is your assessment of the World Bank's strategy in India, and will DFID change the amount of funding that it provides through the World Bank when India graduates from IDA? When would you expect India to be a contributor to IDA?

Andrew Mitchell: Estimates vary on when India might be in a position to be a contributor to IDA. Those discussions continue. At the point where India graduates, that would not of itself suggest to me that we should change our approach to IDA. I think that I am right in saying that India will graduate from IDA during the course of IDA 17. The reason that we have been so supportive of IDA 16 is that under the Multilateral Aid Review, which looked at all 43 of the international bodies through which British taxpayers channel support, the World Bank performed extremely well. The IDA budget delivers very strong results. That is why we are such a significant supporter, at virtually the same level as the Americans, who are the lead supporter. I think that we are some $25 million behind. The reason for that is that the World Bank delivers very strong results. Therefore, India ceasing to receive IDA support would not change our strategic approach to IDA replenishment, and the work that IDA enables.

Q258 Chris White: Do you see civil society organisations playing a bigger role in the delivery of DFID's programme?

Andrew Mitchell: I have described the nature of DFID's programme in India. Above all, we hope that British expertise and technical assistance, the power of demonstration, the work of piloting, demonstrates on the ground something that really works and can then be significantly scaled up by Indian taxpayers. That is the heart of what we do, but we have an incredibly close relationship with civil society. Some of that work benefits from civil society involvement. I prefer to look at it through a different lens, that of the result that we are seeking to secure. Can civil society play a role in that? If so, then we should certainly use civil society mechanisms to that end.

Q259 Chair: We had a lively meeting with Jairam Ramesh, who is clearly a charismatic character. The issue of interest is where climate change fits in development as opposed to the wider relationship. In other words, are we going to be providing grant and loan assistance in the context of ODA on climate change, or do we see it as a trade, investment, technology transfer process? India wants to grow, needs energy—many people do not have any at all—and yet preferably needs low­carbon energy, but not at the expense, they would argue, of lifting people out of poverty. What is the nature of the relationship?

Andrew Mitchell: I heard, Mr Chairman, that you had a very good meeting with Jairam Ramesh. I think, if I am right, that he mentioned to you that there were two donors who really mattered in India. One was Britain and the other was Japan. He also mentioned that we were right to focus on the poorest states, and said that there was scope for expanded cooperation on climate change. I am obviously very pleased that he took that view. In terms of the climate change work, India has the second largest number of people vulnerable to climate change. 400 million lack access to modern energy, and we will focus on the resilience of poor people and low­carbon energy. We have done so under the settlement announced by the Chancellor of the Exchequer: an additional £2.9 billion to tackle climate change globally, including in India. When I met with Mr Ramesh, we talked about that. We talked about the importance of driving forward the climate­related funding to deliver on the ground, particularly in the area that I described, of green energy. I have no doubt at all that, in discussion with the Indian Government, we will identify a number of ways of ensuring that the common agenda that we both share is driven forward.

Q260 Chair: Does the UK have a role in brokering India's relationship with the climate change agenda? They have had some prickly moments in the past, although Mr Ramesh seems to have put India into a more constructive space. Is the UK a bridge­builder here?

Andrew Mitchell: Part of this partnership relationship with the emerging powers, which I sketched out in one of my earlier answers, is that we need to have a close relationship with India on climate change issues. This is true both within India, and in the larger climate change negotiations that are going on. That is extremely important. India not only stands to be a significant emitter of gases and so forth, and of carbon in the future, but also needs and has a huge requirement for pro­poor green energy provision. Britain has a tremendous role to play in that, more widely than just our development programme.

Q261 Pauline Latham: India is going to need hundreds of thousands of places at university once they have a secondary school programme. At the moment, countries from outside cannot open universities in India, but there is a Bill going through Parliament. Do you see that it would be advantageous for us to open universities, or for our universities to have one in India? How do you see a two­way relationship?

Andrew Mitchell: That is a very interesting point. DFID is a core member of the UK Education Coordination Group, which ensures a coherent cross­Government approach across the education spectrum, from primary to the highest levels of university research. We are engaged very much in this area. Our particular contribution as far as development is concerned has really been on primary education, and now increasingly on secondary education. That also will help to increase the flow and calibre of students through to the university sector. We have also established a research hub in Delhi, which works with the Foreign Office and the Research Councils UK to develop research opportunities with universities in India, and the UK, which will support development and action on climate change. This is a sector at which we are looking. Although, as I say, our current contribution has been more directly on primary and secondary education, we need to look at how that can develop.

Pauline Latham: Certainly the Minister that we saw, when we asked the question, seemed quite keen that some of our institutions should build a sister institution in India. There is no way that India has the capacity be able to build these hundreds of thousands of places that they need to have fairly quickly. At the moment, you have a missing secondary education for all but the very rich, so that needs to be put in place first.

Q262 Chair: I think he said that there was scope for joint ventures, perhaps, with the UK and Indian universities having a joint campus.

Andrew Mitchell: That, Mr Chairman, was one of the reasons why we fund the Development Partnerships in Higher Education programme, which supports collaborative activities between British and Indian higher education institutions. It is linked particularly to the global delivery of the Millennium Development Goals.

Q263 Alison McGovern: Secretary of State, I am pleased that you have had such a fulsome briefing on our visit. You may be aware that I am interested not just in what we are doing to alleviate poverty. I am also interested in how we are changing the way that the world economy works, or how I hope we are changing it, in favour of the poorest people who live in India. We have the G20 discussions coming up. We also have the EU­India Free Trade Agreement being negotiated. What is your role in those discussions? How are you making sure that there is a DFID lead, and making sure that UK trade policy benefits poor workers in India?

Andrew Mitchell: First of all, I always follow the work of the Select Committee, not least because my Department benefits hugely from the Reports that the Committee produces, never more so, I hope, than from this one. The answer is that the partnership with India on trade, to which you specifically referred, is one that I think will benefit from this new Partnership Secretariat that we are setting up. It will focus on these high­level partnerships with the emerging economies. We work closely with India, and will work increasingly closely, on issues affecting the Doha Round. This was founded, as you will remember, in the aftermath of 9/11 and was always meant to be a development round. Trying to get agreement to Doha, something that this Government has consistently emphasised and promoted, is very important for the sector that you are describing. In addition, the British paper that was produced, particularly by BIS but with extensive help from us, on growth, specifically has a section referring to the importance of international trade and making international trade easier. We have said that we will set up an Advocacy Fund, which will be launched this summer, designed to enable poorer countries to take part effectively in these negotiations too. One of the reasons why we have done this is because we think that everyone benefits from having good results to the negotiations, including the trade negotiations. Therefore it is an important agenda that you identify, and I agree with you about the importance of taking it forward.

Q264 Alison McGovern: If I may, Chair, briefly, that was a general response to a fairly specific question. Let us take the EU­India Free Trade Agreement, for example. What have you asked for on agriculture, for example?

Andrew Mitchell: These discussions go on all the time in Government. We ask for different things. We discuss amongst ourselves what our approach should be to all these international meetings before they take place. When the next meeting of that particular organisation takes place, I will consider what we should be seeking in the normal way, and I shall be very happy to answer questions from you on it thereafter. And indeed to receive input beforehand.

Chair: Do you want to be specific?

Q265 Alison McGovern: I was merely interested in what the Secretary of State's approach was, but clearly it has yet to be decided.

Andrew Mitchell: I think that I have been very clear, Mr Chairman, on our approach.

Q266 Chair: Secretary of State, can I thank you, and also thank colleagues for their questions. As you will probably gather, we had a very interesting visit. I think it is fair to say that the two groups had slightly different experiences between Bihar and Madhya Pradesh. That has helped to inform us. You will have gathered from the questions that there are many strands of thinking about your development of thinking, in which the Committee is actively engaged. I hope, on the basis of that, we will be able to provide you with a Report that has constructive suggestions and comments, as Mr Harrington said. I think it is fair to say that this Committee recognises that India has a huge challenge of poverty, and there is a role for the UK. The question, I think, is not so much whether we should be there, although there is scope for that debate. However, if we are there, how do we ensure that what we do really does make a difference in terms of bringing down poverty? What is the process by which we change the relationship over time to one of a development partnership, rather than a donor, which clearly is time­limited. I hope that that is a fair summary of some of the issues that we are wrestling with. Obviously the Committee has then got to put its heads together and come up with a recommendation. I think that we appreciate the fact that you have said that you will await our Report before you finalise your conclusions.

I think that you will see from the particular engagement on the private sector that the Committee absolutely recognises the role of the private sector, but perhaps has concerns and questions about how we get there, and by what mechanisms. Again, therefore, I would hope that we would have some useful and constructive things to say. I must say, however, as Chair of this Committee, I have not yet a clear idea of what they will be until we have really deliberated on this. I want to thank you very much indeed, and hope that the work of the Committee will be taken seriously by the Department. I hope that perhaps a combination of the Committee and the very excellent officials and yourself will produce a policy that might be considerably enhanced and have value added because of all the partners who have taken part in it. I hope that it will be better than it would have been without that full participation.

Andrew Mitchell: I am extremely grateful to the Committee for their thinking on this matter. I am very grateful indeed to the Committee for their kind words about my brilliant officials. I am glad that the visit to India was successful. We are indeed waiting to operationalise our plan until we have the benefit of being able to review the Committee's Report.

In connection with the private sector, I am absolutely convinced that this is the right way to proceed. I accept completely that we are at an early stage, not just in India but in other areas too, in the development of the private sector programme. That is perhaps not surprising. We have only recently set up the Private Sector Department inside DFID to bring together all our private sector­facing assets. We are in the process of discussing with CDC their plans going forward, and we have had the benefit of the Committee's Report on CDC in that respect as well. We have not yet agreed what the strategic plan for the CDC should be. We have consulted on it, and we are now making up our mind on how to proceed.

I hope that the Committee will accept that a lot of this work is ongoing. However, I have absolutely no doubt whatsoever that during the four­year period the work of the private sector that my Department is going to lead and effect in India will have a huge effect on the work that India is doing to make sure that we lift more people out of poverty. It is common cause, I think, amongst all of us that the role of the private sector in delivering that outcome is incredibly important.

Chair: We hope that it does achieve those outcomes. We will watch it closely, and we may even revisit it before the end of the Parliament. Thank you very much indeed.

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Prepared 14 June 2011