To be published as HC 848 - iv

House of COMMONS



International Development Committee

Infrastructure and Development

Tuesday 28 June 2011

Simon Howarth

Stephen O'Brien MP, Stephen Young and Terri Sarch

Evidence heard in Public Questions 149 - 232



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Oral Evidence

Taken before the International Development Committee

on Tuesday 28 June 2011

Members present:

Rt Hon Malcolm Bruce (Chair)

Hugh Bayley

Richard Burden

Mr Sam Gyimah

Richard Harrington

Pauline Latham

Alison McGovern

Chris White


Examination of Witness

Witness: Simon Howarth, Technical Director, Mott MacDonald, gave evidence.

Q149 Chair : Thank you very much, Mr Howarth, for coming in to give evidence on our inquiry into infrastructure, particularly in fragile and post-conflict states. For the record, could you just formally introduce yourself?

Simon Howarth: Yes. Thank you very much for inviting me. My name is Simon Howarth, I am a Technical Director at Mott MacDonald, which is a multi-disciplinary consulting firm, working across the world, mainly in engineering but also in education, health and other development-related sectors. I am also here on behalf of the ENGAGE consortium of firms, who hold a framework agreement with DFID for provision of infrastructure, mainly working in fragile and conflict-affected states.

Q150 Chair : You may also know that the Committee has just returned from three of those states, namely Rwanda, Congo and Burundi, and has had a look-not exclusively-at some infrastructure projects, notably roads and water. I suppose the opening question, if you are regularly engaged with DFID, is: how good do you think DFID is at approaching these infrastructure problems in fragile and post-conflict states? Are you impressed or otherwise by how they go about it?

Simon Howarth: Infrastructure in fragile states is an incredibly difficult thing to do. My impression is that DFID does it extremely well in very difficult circumstances. There is no single answer for the best way to work in these countries because they are all so different. Helmand and the Congo are both highly conflict-affected, but they are both very different in their context, so they need to work in a different way. The important feature in Helmand is to develop a very good working relationship with the military, so collaborate with the military, but also to maintain a degree of separation so that development objectives are not confused with military objectives, whereas in the Congo we are working much more independently; we are not working with the military at all. DFID is funding a multilateral programme of roads, and we are providing a small amount of technical assistance to advise on the way that money is spent, particularly to ensure that it is used in a sustainable way, and that there is provision for maintenance of the roads.

Q151 Chair : Whereabouts in the Congo are those roads?

Simon Howarth: In the east, close to Goma.

Q152 Chair : So are these the ones that we would have travelled on?

Simon Howarth: I am not sure exactly which ones you went to, but Ituri Bridge was one structure we built, and other roads around Bukavu.

Q153 Chair : It would just be of interest to us to know whether we are talking about the roads we drove on.

Simon Howarth: The roads within Bukavu-Shabunda, Bukavu-Hombo and Sake-Masisi.

Chair : That’s fine; we might come back with a few more questions related to those specifically.

Q154 Richard Harrington: Mr Howarth, if you could just explain so that we understand. For those roads that we have seen, which are I think exactly what you said just now, what actually would your firm do? Excuse my complete lack of knowledge, but is it the engineering side, is it the original mapping or is it awarding contracts to people to actually do the work supervision? How does it all work?

Simon Howarth: We are not directly supervising or awarding contracts, but we are providing advice and technical assistance to the implementing agency. I cannot give you very precise details because I have not personally been there, but we have one person who goes out there for about three weeks five or six times a year to advise on progress and generally make recommendations for improving the implementation.

Q155 Hugh Bayley: What are the relative strengths and weaknesses of military engineers and civilian contractors in conflict areas? Perhaps Afghanistan is a good example.

Simon Howarth: They have a very different way of working. The military tend to have a rather shortterm objective. They want to do small, quick impact projects in support of their military activities, so they would clear an area and then want to do a quick impact project to consolidate the sense of goodwill. DFID has a much longerterm objective, of several years as opposed to months. In Helmand we have been trying to combine the two to develop an overall strategy so that the military can then do projects that fit into that strategy that they can implement on a very quick timescale. But we are working very closely with a specialist team of Royal Engineers who have very good access because of their military connections, but they are working with us to meet long-term development objectives.

Q156 Hugh Bayley: In terms of costs, is there a difference if you were looking at roadbuilding cost per mile if you used military engineers as opposed to a civilian contractor?

Simon Howarth: We have not used them actually as contractors, but we have used them for supervising construction. The actual construction is done by local Afghan contractors, but with supervision by the military.

Q157 Hugh Bayley: One very longterm military project in Helmand was the Kajaki Dam, which consumed huge amounts of military resource. I don’t know how much it consumed in terms of engineering resource, but it seemed to me that that was a kind of military statement more than a development gain. Are there dangers that military engineering has to do with the projection of power rather than the development of economic capacity?

Simon Howarth: There is a risk of that, but that is something we are certainly striving to avoid. The Kajaki Dam was built some 50 years ago.

Q158 Hugh Bayley: I mean the rehabilitation of the generators and so on.

Simon Howarth: Yes, but it is an incredibly important structure. Helmand Province depends on it, both for electricity supply and for irrigation water. If that structure failed it would have an absolutely catastrophic impact, so I think it is very important that it should be well maintained.

Q159 Hugh Bayley: As the Chairman said, we have just returned from the Congo. One of the things that MONUSCO, the peacekeeping mission, told us was that they used military engineers-I forget whether Indian or Pakistani or both-to build roads when they had spare capacity, if I can put it like that. That strikes me as a rather poor and costly way of providing engineering skills. Would it not be better to give the military the security job and give civilian engineers the infrastructure-building job, in a situation as in the Congo, where you have residual problems rather than a hot war, as you have got in Helmand?

Simon Howarth: It is difficult for me to comment on that not having seen that particular situation. But military engineers do have very strong capabilities in getting things built in difficult circumstances. So I can imagine that if you’ve got the right resource there it might be an effective thing to do. As to comparative costs, it is very difficult to comment. One of the main problems in all of these countries is a lack of local capability. Whoever is building the road, I think it is important that it is done in a way that builds local capacity. So even if you have military engineers there, they need to work with the local private sector and also local government agencies to improve their capability, both for initial construction supervision and for long-term maintenance. Maintenance is really the crux of the matter. It is easy to build things quickly, but developing the maintenance capability is fundamental.

Q160 Hugh Bayley: Yes, we saw some work on that in the Congo. But do you do that within a contract, or should DFID-separately from the roadbuilding job, if I can use that as an example-be financing a civil engineering or construction division in a technical college in Bukavu in order to embed these skills in the local economy?

Simon Howarth: Thinking about maintenance and the arrangements for maintenance right at the outset, during the construction phase, is very important. It is a risky approach to have one agency responsible for building something and then hand it over to another for maintenance.

Q161 Pauline Latham: In your submission, you state that rebuilding infrastructure in conflict and fragile states can be very slow, and the political changes and changes in leadership within DFID can result in significant changes in priorities. Could you perhaps expand on that statement?

Simon Howarth: Yes, that was not necessarily in relation to conflict states, but in general, development is a very longterm process. You have programmes of 10, 15 or 20 years. In that time there is a lot of new thinking, a lot of research is done in DFID, so new ideas emerge. There are changes in leadership, different priorities and advisers at local level. So it is inevitable that there is a development in thinking, and this can be a bit confusing for people at field level who are trying to implement a project. A project has been set up with a five or 10-year timescale, and then halfway through that they find that priorities have changed a little bit, then a little bit of the momentum is lost because of that.

Q162 Pauline Latham: Do you think that is because there has been a change of Government here? Because they had had 13 years of stability with one Government running through. Inevitably at some point there is going to be a change of Government, and priorities will change. So is that just because it is the Government or did it happen with different Secretaries of State in the previous administration?

Simon Howarth: I think it happens at all levels.

Q163 Pauline Latham: Whenever somebody new comes in to take over.

Simon Howarth: Yes. It is a challenge that DFID faces in being a leading cuttingedge organisation. It is trying to push back the barriers and innovate. It is a conflict between being innovative and having the longterm stability.

Q164 Pauline Latham: You are obviously keen on the longterm stability, and the coalition Government has prioritised a results focus on the outcomes now. In your experience, does DFID take a sufficiently longterm view of infrastructure projects in fragile and conflicted-affected states? You are saying that it does not do that.

Simon Howarth: I think it does have a longterm view, but it has this conflict between objectives that change slightly during the course of implementation.

Q165 Pauline Latham: So not just because the Secretary of State has changed? You are saying that a Secretary of State might change their own priorities during the time that they are there.

Simon Howarth: They might do, yes. It might also be a change in adviser at country level, particularly if you have combined advisers where infrastructure is combined with livelihoods. Then you have a livelihoods adviser replaced by an infrastructure adviser, and then he will give much more focus to the infrastructure aspect.

Q166 Pauline Latham: I have got a question relating to Congo, and I hope you will be able to explain to me. We were told when we were there that to put a metalled road in would cost $1 million per kilometre. Now even the metalled roads are not up to the standard we have here, and it seems a huge sum of money to spend on a metalled road. Do you know how that could be broken down? It seems an astronomical sum for a metalled road that is not really high quality. It is better than a dirt road, but it does wear out quite quickly. So where do those sorts of costs come from?

Simon Howarth: I don't know the details of that figure at all, I am afraid. But the cost of metalled roads in tropical climates is very high. You have to deal with fairly extreme climates. You have to have very good drainage arrangements, otherwise the road will be damaged very quickly.

Q167 Pauline Latham: Is that from the rain?

Simon Howarth: Yes.

Q168 Pauline Latham: You say extreme climates. They do not ever have cold because they are nearly on the equator, or on it. So the temperature is obviously very hot and they get high rainfall. So is it the rainfall and the heat that damages it?

Simon Howarth: Yes, it is the rain and drainage across the road.

Q169 Pauline Latham: And that is a problem with the grit roads, that even when they grade them they have to keep the dishes on either side clear, which is what we saw. But it still seems an awful lot of money for a relatively poorquality road.

Simon Howarth: Construction is expensive. There is no getting away from the fact that good infrastructure is expensive. But also you do need to look at the whole-life costs, and sometimes lower capital cost/higher maintenance roads are better in the long run.

Q170 Pauline Latham: Are they? So you would say go for the cheap metalled road, but spend money on maintaining it?

Simon Howarth: Definitely, yes.

Pauline Latham: That is interesting. Thank you.

Q171 Chair : The other issue is the ability of local public agencies to enforce regulations on the roads. Those roads were only just being opened up, but you often see poorly maintained, overloaded vehicles. And too much weight on an axle on a mud road in the rain is going to destroy the road quite quickly. How do you ensure that there is anybody there to enforce it?

Simon Howarth: That is where DFID can help a lot, in developing the institutional capacity to develop appropriate regulations, and get these accepted and enforced. I think if local people understand the reasons for the regulations and the fact that it would protect the road and make it last longer, then there would be a greater willingness to comply with the regulations. There is a lot that can be done on public awareness and institution building.

Q172 Pauline Latham: I have to say I would disagree with you in that if you have got to walk 20 miles and there is a lorry going there and it will let all the people sit on top of it, and they can get there in an hour instead of several hours, and then they have got to walk back again, they will not worry about regulations, will they? They will get on that lorry.

Simon Howarth: No, I agree with you on that. But if you have a climate of compliance with regulations then there would be more alternative vehicles and they would not have to get on the single overloaded truck once a day there would be a better service.

Pauline Latham: Yes, it would be interesting to see.

Q173 Chris White: My question really revolves around staffing. In your submission you were critical of the lack of infrastructure skills within DFID. Can you expand on your comments, given your consortium works on the ground with DFID infrastructure advisers? Do DFID advisers have the right mix of skills to work on infrastructure, and do they have sufficient engineering knowledge?

Simon Howarth: As I mentioned, in the DRC they do not at the moment have a specialist infrastructure adviser there, although I believe someone is being deployed there in September. It would be better if there were more infrastructure advisers, particularly skilled in the relevant disciplines. I am a water specialist, and would not be the right person to supervise an earth road. If I was a livelihoods adviser I would be even further removed from the required skills. I think it is very tempting to think that the problems are too easy. You do not appreciate the subtleties if you do not have quite the right technical background. So I think a stronger cadre of infrastructure advisers would help, and I believe they are recruiting at the moment.

Q174 Chris White: I’m sure this is well below your pay grade, but do you know if there is a proper skills matrix somewhere with what we have got and what we need, and does anybody understand how that could be put together?

Simon Howarth: I don't know the details of that, but I am sure you will be able to ask that question in a moment.

Q175 Chris White: Because we are putting in an awful lot of investment, but if we are putting it in the wrong place-mechanical engineering and civil engineering are miles apart. Somebody needs to understand exactly what we need, and probably that point needs to be pushed home a bit harder.

Simon Howarth: Yes. I have seen competence frameworks for different categories of advisers, but that is in fairly broad terms of what is required. The other way is to draw on external resources for specialist skills. That is where the ENGAGE consortium has been useful to DFID in places like DLC. We have been able to provide a little bit of support at a time when there is no infrastructure adviser in the country.

Q176 Alison McGovern: Good morning. The ENGAGE submission said that DFID had been a "global pioneer in highly effective propoor methods" in its approach to design and construction. What did you mean by that?

Simon Howarth: DFID has done a lot of very good work on developing community participation in infrastructure. Programmes like the Rural Access Programme in Nepal have been very effective at getting communities involved in forming road user groups to build and maintain roads and so on. I have seen it in other sectors as well. I am from a water sector background, and I have seen some very good work done on water user groups for maintenance of rural water supplies.

Q177 Alison McGovern: How widespread would you say that practice was amongst DFID’s work?

Simon Howarth: I think it is very widespread and it goes across a lot of sectors, agriculture as well. Forest is very successful as well. It is a very good lesson. One of my interests is applying that experience that DFID has had to the UK. I think that is an opportunity that is slightly underexploited at the moment.

Q178 Chair : Some of us saw some of that work in Nepal. If it works so well in Nepal, why will it not work, or how could it work, in Congo?

Simon Howarth: It is very locally specific. I really do not know much about community structures in the Congo, so I cannot say why it does not work there. But I imagine it is a highly tribal, very fragmented society. It has had a very serious conflict for a very long time, and it takes a long time to recover from that. Nepal has been conflictaffected certainly, but it is much more recent and it has not been anywhere near as devastating as in the Congo. And I think that it is a relatively cohesive society, and with very determined effort it is possible to promote strong local organisations.

Q179 Chair : I don't know whether it is about corruption, mismanagement or lack of skill, but the point Mr Bayley made is that there is not really a lot of effort to create a caucus of people who are capable of building and maintaining roads within the area. Is that something that could or should be done to a greater extent?

Simon Howarth: Going back to the situation in Nepal, there has been a very intensive DFID programme there since the late 1960s. So for a relatively small area the programme has evolved and adapted to the situation very effectively. The Congo is a much larger country with a very much more scattered population. We are dealing with enormously long roads in a very hostile environment. I think it would take a much more intensive effort to achieve the same sort of impact there as has been achieved in Nepal.

Q180 Mr Gyimah: My questions relate to UK companies and infrastructure in developing countries. My understanding is that there are just four British companies operating in Africa with a market share of about 1.5%. Could you let us know what deters UK engineering firms from working in African countries, and what DFID could do to encourage UK companies to bid for more infrastructure projects in Africa?

Simon Howarth: We do quite a lot of work in Africa. There are a lot of constraints. Most of the big infrastructure projects are funded by multilateral banks. They are locally managed contracts, but with multilateral funding. As international companies, we find it very difficult to work with local governments. Corruption is an obvious problem. If you want the single biggest problem, it is corruption.

Q181 Mr Gyimah: It is corruption. And is there anything DFID could do to encourage UK companies to bid for more infrastructure projects?

Simon Howarth: I am sure it could. It would be something to do with the way projects are designed and managed to build capacity at government level to award projects in a way that is sound. Sometimes corruption is caused by deliberate malpractice, but at other times it is more a consequence of lack of capacity. Designing projects that are well set up and developing the capability to manage them would help enormously.

Q182 Mr Gyimah: The Chinese are quite active in Africa and they manage to build a lot of infrastructure projects at lower costs. Would you not say that that is a deterrent for UK companies as well?

Simon Howarth: As consultants we are not directly competing with Chinese contractors. We might design a project that is then built by Chinese contractors. That is a very common situation. We designed a dam recently in Ethiopia that was built by Chinese contractors. I think that is a deterrent for UK or European contractors; they would find it very difficult to compete with the Chinese. In the context of Chinese investment, it would be useful for us to work on issues like strengthening the local government in respect to enforcing land rights and water rights and so on, to protect against issues such as the land grab by Chinese and other East Asian countries.

Q183 Mr Gyimah: One witness we had expressed the view that DFID does not do enough collaboration with the private sector on infrastructure. Is that a view that you share?

Simon Howarth: It is something that is a very high priority now at DFID. I have not personally worked with the Private Sector Department, but it is new and it seems to be a high priority. I have seen signs that there is a lot more work coming out as a result of it. I think it is developing, but I am not really the person to answer that question.

Q184 Chair : The EU has stated its ambition: I think the word it used was to "electrify" Africa, and I think it meant literally, not metaphorically. I wondered whether you or your consortium has any view on whether it can actually do that. I put in parentheses, when the Committee visited Nigeria we saw a situation where even installed capacity was not capable of fulfilling its output and everybody was relying on generators. Indeed in pretty well every African country you go to, power cuts are the norm. In our hotel in Bukavu, the power went off every couple of hours, and they kicked the generator in. So that seems to be the core of the problem, a combination of corruption, incompetence-I don’t know. So do you believe that such an ambition is achievable? And if it is, is there a role for DFID or UK companies to do it?

Simon Howarth: Yes, there is definitely a role. It is an incredibly difficult challenge. Some of the really big projects in Africa would be hydroelectric schemes on transnational rivers, and that is always very difficult to manage because you are dealing with so many different countries. But I don’t think it is an insuperable problem; it is just an incredibly difficult one and one that DFID is already working on, and I think could usefully do a great deal more on. We are trying to look at some work on electrification in Helmand as well. That is a place where there is very small coverage of electricity, and there is a great need to do some very urgent work on that, which DFID is initiating now.

Q185 Chair : Thank you very much. As a final point to you, is there anything you think DFID is not doing that it could or should be doing that might improve its delivery on infrastructure?

Simon Howarth: One point that has occurred to me about working in fragile states is the way you work with multilateral banks. A lot of the infrastructure that DFID does is delivered via multilateral banks, but in highly fragile environments that is not as effective as it should be. Multilaterals are good for getting local ownership, but they can be rather bureaucratic and rather slow. There are situations where it is better for DFID to work directly or to provide more support to the multilaterals rather than delegate too much responsibility to the multilaterals. That is certainly our experience in Helmand.

Q186 Chair : Do you have a particular example in mind?

Simon Howarth: Yes. In Helmand we have been working on roads, power and water since 2009. DFID decided to implement the roads and power components directly, and we have designed, and construction has started on some of those projects. With the water sector, the DFID money was given to the ADB to manage, and the project still has not started for all sorts of very understandable and complicated reasons. But the net result is that project has taken two years longer to start than the others.

Q187 Chair : That is quite an important issue given how much money DFID does put through the multilateral banks. I think we might want to ask the Minister a little more about that. Thank you very much both for your written evidence and for coming in to answer our questions. It is much appreciated.

Simon Howarth: Thank you.

Examination of Witnesses

Witnesses: Stephen O’Brien MP, Parliamentary Under-Secretary of State for International Development, Stephen Young, DFID Infrastructure Head of Profession, and Terri Sarch, Wealth Creation Team Leader in Africa Regional Department, gave evidence

Q188 Chair : Good morning, Minister, and thank you very much for coming in to answer our questions. I wonder if, for the record, you could introduce your team.

Stephen O'Brien: Thank you very much indeed, Chairman, and good morning to you all. I am accompanied today by Stephen Young, who is the Infrastructure Head of Profession at the Department for International Development, and Terri Sarch, who is the Wealth Creation Team Leader, also at the Department for International Development in our Africa Regional Department.

Q189 Chair : As you will appreciate, we are doing a specific inquiry into the role of infrastructure, the needs for infrastructure and DFID’s particular role in delivering it. We have also, as you know, just returned from the Great Lakes region of Africa. We are obviously looking at the whole Government strategy on post-conflict fragile states, not exclusively infrastructure. But we did have the opportunity to look, drive along and experience a couple of roads and some water projects, so you might find some of the members of the Committee will pick that experience up.

But the fact remains that, as I understand it, the Department has not had a published strategy on infrastructure since 2002. Some of our witnesses say that , given the increasing importance of infrastructure , they do not think it has a high enough priority within the Department, and indeed the business plan for 2011 to 2015 does not mention the word once. So I just wonder, in that context, if you would say what you do think is the role of infrastructure- what is the strate gy? Specifically, does DFID ha ve a unique selling point or might it perhaps take the view that it is best left to other people?

Stephen O'Brien: Thank you very much indeed, Chairman. There is no question in our collective mind at DFID but that infrastructure is absolutely essential for growth and wealth creation, which as you know is one of the essential elements in the strategy that we are taking forward to ensure that we deliver, in partnership, development that will have the greatest impact and also establish the greatest sustainability going forward. The scale of the problem is well known but also very stark. There are at least 1 billion people who lack roads to connect them to anything, and 2.3 billion people who lack any kind of energy supplies that they can rely upon, and of course infrastructure is absolutely critical to the delivery of the Millennium Development Goals.

So in terms of the strategic context, we are very clear. Secondly, under the Bilateral Aid and Multilateral Aid Reviews we have been explicit in terms of seeking what are going to be the infrastructure implications of the various proposals that have been put to us, which we as Ministers have then evaluated and decided what offers to accept in terms of results. Many of those results are infrastructurebased, whether they are roads, energy, telecommunications, water, irrigation, or indeed schools, hospitals, clinics and the like. The essential element of infrastructure to delivery on the MDGs and also in stabilisation and helping the recovery of states that have either been in conflict or are fragile is equally important. The other thing to stress at the outset in terms of the strategic context is also how vital infrastructure is to our ability to address the climate change issues that arise in terms of the lowcarbon future that we hope to see in the developing economies. Infrastructure will play an enormous part.

I note the points you have made. I am somewhat surprised myself if the word "infrastructure" has not been used. We could perhaps claim that it is being used by implication in the word "PIDG" as the letter "I" in that does stand for "infrastructure", but I am sure you will come on to PIDG.

But infrastructure is a key strand of the UK/Africa Free Trade Initiative, which the Secretary of State launched on 9 February this year. We have a series of approaches in order to deliver on that strategy, but I would say that certainly on the Bilateral Aid Reviews of sub-Saharan Africa, for which I am particularly responsible and am particularly focused on, I am well aware that infrastructure is engaged in many of those offers that we have accepted, and I can also confirm that 22 of the 27 of our focus countries have got infrastructure spend within the bilaterals within the next four-year spending round. But the key point you made is that perhaps we should articulate this by aggregating this as an effort.

Q190 Chair : I might come up with a supplementary question, which is that over the next four years obviously it is the final push on the Millennium Development Goals. To what extent does the Department actively link infrastructure to the achievement of those goals? If we take, for example, the Shabunda Road that some of us travelled on in Congo, one of the benefits of having the road open was it enabled the construction of a health centre and a new school because of access improvements. You could see a direct connection between road improvements and the MDGs. Similarly in Goma, where the city has grown from 100,000 to 600,000 people, the whole expansion of the city is totally without water, but we saw the investment in providing that. So in that context there is a direct correlation. So does the Department actually look at its MDG strategy-you have these traffic lights in your Annual Report-and ask what infrastructure is needed to facilitate achieving or at least getting closer to the Millennium Development Goals in any given country?

Stephen O'Brien: Chairman, you make an absolutely vital point, one with which I wholeheartedly agree and which I endorse. You cannot hope to deliver on the MDGs without being absolutely clear what infrastructure is required in order to have the means by which so many of those are delivered and which are integral to them. I happen to know that in the briefing, and it has also just been passed to me, we have got a rather long list of examples of where we have attached infrastructure projects to the delivery of MDGs. Rather than take up the time of the Committee now-unless you would like me to-by just reading through the brief I think it would be perhaps useful to follow this session up with a letter from the Department to identify that linkage per project so you can see that has been thought through, and indeed to evaluate how much the infrastructure projects are critically linked to the MDGs. But perhaps by way of example, like you in the Committee, I had the benefit of going to see some of the programmes in the Democratic Republic of Congo myself last year, quite early on in terms of my office.

Chair : Your visit was well reported.

Stephen O'Brien: I have to say the area you drove down was an area where I was flown by helicopter back up from Goma to Walikale and beyond. The road that I did see, and the point that is coincident with your own experience, is from Kisangani down south past the rapids, so there was a connection. That is a good partnership working between DFID and the local authorities. I thought it was a particularly powerful example given that there was also quite good working alongside the Chinese, who have got a lot of financial clout, but are sometimes looking for partnerships in terms of the technical application.

But the particular point of that road, which is exactly the same the point you are making, was the cluster approach. If you have the road you are also then engaged in getting the health facility or the clinic where you will have training of community health workers and also a school building. That will also include latrines, which then enables girls to stay on at school, and teacher accommodation to try to avoid the absenteeism, to look after the people who you want to effectively be leaders of their community. Increasingly that, coupled with things like land tenure registration, will enable those who have an incentive to farm, rather than simply produce food for the family, to then demand that they can use that road to get their goods to market.

So you are absolutely right in terms of the MDGs, be it health, education or economic improvement. Without a road that gets you past the rapids towards where the market areas are, you would not be able to have that cluster approach, which is what delivers on the MDGS. So I would entirely endorse your own experience.

Chair : We certainly would appreciate that written information that you referred to.

Q191 Hugh Bayley: If you were running a business, you do not hope that a new product or service is going to fly. You produce a business plan and work out where your market is and what impact the investment will have. Do you have data that shows what impact on growth £1 million of investment in sub-Saharan Africa has if it goes into infrastructure on the one hand, or education or health on the other? And how do you use that kind of data to determine how much your Department spends on infrastructure, health and education respectively?

Stephen O'Brien: It is a very good question. As you will know, less from my ministerial experience but more from my own business experience in building materials, not least in building roads over many years, you are quite right. One would not approach any kind of road programme without looking at the multiplier effect on the economy. That leads to the other question as to whether you are going to have revenue streams out of that infrastructure, which then makes it possible to use a discounted cash flow analysis to get you back to what is the appropriate value for money capital cost, and who will effectively get an internal rate of return over the years to come. All those are normal calculations you would expect to have in business.

The difficulty with roads, as a public service, is very often that unless you choose to toll them-an approach which we have been neither encouraging nor advocating-there is no future revenue stream. It becomes a public good, which is available for people to use as a connection. That is the first set of decisions that need to be made: as to whether you will have just a capital project with a revenue stream that you can then use to pay it off, or whether it is effectively a social commitment through the public sector to enable both economic and social goods to be delivered.

The answer to your question is that I am not aware, I suspect through my own inadequacy rather than anybody else not briefing me, of the analysis that you referred to. I am aware of the reverse analysis. The absence of roads is leading to a cost of so much in percentage of GDP; that is an estimate, of course. One can calculate if nobody had malaria how much the GDP might be improved in any one of the subSaharan African countries, for instance, who are affected. Equally, you can do the same in terms of roads.

26 African Heads of State from sub-Saharan Africa in the Southern Africa area and East Africa came together as a tripartite the other day in Johannesburg and Pretoria, where I was the only non-African Government Minister represented. One of the big pressure points that persuaded them, very impressively, was that they came to realise that breaking down barriers to trade-not allowing border crossings to be so choked up, and allowing that North-South corridor and the ribs off it-meant one plus one could equal three. So it becomes worth growing an economically integrated market. So I have not seen the calculation that you specifically referred to, but I have seen the reverse calculation, which I think was something like 2% difference.

Q192 Hugh Bayley: 2% is the figure that I have heard. First of all, thank you for a thoughtful and reflective answer. I think there are some areas where revenue streams can be developed. I agree that tolling a road in sub-Saharan Africa would not make sense, I cannot think of any place it would make sense. But in Tanzania I think they are building an inland container port to free up a port. It might well be possible to recoup some or possibly all of the cost of that through port charges if you get your container through in 48 hours rather than four weeks. It could well be commercially possible, and one should look for those opportunities.

But for the state I can see benefits. I think this is what you mean by the opportunity cost, the reverse charge, that if you do not have a road you have greater policing and security costs. If you do have a road you generate economic growth and some revenues. If you have faster traffic you reduce transport times and costs, and therefore prices. So economically the state may benefit even if individual private customers do not.

I am glad you think it is an interesting question. Given your business background, could I cheekily ask you to ask your officials- perhaps a mixture of economists and infrastructure specialists- to write a short paper about this, and would you please send us a copy of it so we can look at it when we are writing our report? That was not the question I was meant to ask you.

Stephen O'Brien: I will say yes to that. In fact I would be very interested to see it, because it will be trying to project at a public social good what is effectively going to be the discounted cash-flow calculation of putting these in place for the state economy. That would then have to be coupled with a continuing drive down on corruption, and on improving the revenue collection through enhancing the revenue collection office. Those two combined would then enable you to get a yield from these for the state, into their Exchequer, and then through democratically accountable mechanisms to then decide where to use that for further pump-priming to get the multiplier effect to the national economy.

Q193 Hugh Bayley: I am very encouraged by what you are saying. Specifically on the infrastructure capacity within your Department, you tell us that you employ 39 infrastructure advisers. Are you happy that this is a sufficient number of staff with a sufficiently wideranging skill base? We have just heard evidence that you would not put a water engineer to supervise a roadbuilding project or vice versa.

Stephen O'Brien: The 39 that we have report to Stephen. As I understand it, 32 of them have engineering degrees and 26 are chartered engineers. And we have recently recruited an additional seven professionals to join the cadre, and the posts are all identified as ones which will be included in those for which we want the senior advisers to have chartered engineer status, and certainly to be part of a professional body and to undertake continuing professional development, which is of course, for anybody with professional qualifications, absolutely crucial. These advisers are in various parts of the organisation: in the country offices; in the centre as part of policy and research; in the Private Sector Department, where we are growing our DNA to ensure we have that link and advice; the Africa Regional Department, which Terri is in; the Water and Sanitation Policy Team, which is in the Human Development Division; this then goes back into some of the discussion we have had about public goods that come from these things.

So like all these things, of course one could make good use of many more. There is a balance between capacity and value for money and the good use and stewardship of the way that we run our Department as an efficient operation. But given in particular the Bilateral Aid Review, but also the Multilateral Aid Review where there are one or two advisers-Stephen will be able to confirm the number seconded into the multilaterals-it is clear that the country officers were not short of access to the quality of advice they needed to help them put forward their offers and bids for the programmes, which they could then take back and in partnership with the recipient partnership governance they could then design. Of course then the specification issues become very important, and commissioning quantity surveys and above all the specification of road-building to match to local conditions that can then be both good and best cost, is something of importance for instance on roads or indeed any of the other communications fields. I have no reason to believe that 39 is not sufficient, is the straight answer to your question. I believe we have 9 seconded into the multilaterals, so that gives you a sense of proportion.

Stephen Young: That 9 covers the multilaterals, the UN and the EU, right across that range of institutions.

Q194 Hugh Bayley: I would ask one further question in relation to the multilaterals. You spend about £500 million a year on infrastructure through the multilaterals. £50 million for a qualified engineer, is that enough supervision? Can I leave that question hanging just for a moment and ask another question?

One stunningly memorable bit of evidence from Claire CurtisThomas was about her visiting a police station being built in Sierra Leone. She is an engineer with lots of experience; she rubbed her fingers over a concrete block and found it disintegrating. She had a quick lick of a concrete block and it tasted salty. She immediately asked whether salt water or fresh water had been used to build the blocks. She was told that nothing in the specification said it had to be fresh water, and she had to explain to someone like me, who is not an engineer, that if you make a concrete block with salt water you have lots of salt in the concrete block and when it rains the salt washes out and the block crumbles. The point of the anecdote was that there were no people managing this particular infrastructure project who had the technical skills to check whether basic engineering good practice was being applied on the ground. So my second question is this. You are employing another 300 or 400 additional frontline staff. How many of those would you expect to be people with engineering qualifications?

Stephen O'Brien: I cannot give you a straight answer to that because I do not know the answer. Apart from the fact that I recognised immediately you do not use salt water for making anything out of concrete-

Hugh Bayley: You are way ahead of me.

Stephen O'Brien: -as somebody who made his living for 10 years out of building things out of concrete. Wherever we operate, and this is the same whether it is the DFID partners or indeed in the private sector, quality assurance and getting the specification right, and then getting the supervisory capacity to deliver that, either on behalf of the buyer, or to ensure that that is delivered in accordance with a contract by the provider, is absolutely fundamental to all contract delivery. I would expect there to be clear specifications. Particularly in countries where perhaps there isn’t a large skilled or experienced workforce, then the specifications and supervision are at a premium. You are quite right to observe that. As for the particular case that our former colleague Claire Curtis-Thomas mentioned, I do not know. But in Sierra Leona, for instance, where we have a large commitment as DFID, including infrastructure works, I am certainly aware, because I met him, that we do have somebody who is a qualified engineer, and he was advising on some of those works. So I would want to inquire into that one in particular because that would be unusual, to say the least.

Q195 Hugh Bayley: Could I possibly ask Stephen Young to comment on whether we have enough people in the multilaterals? And this is my absolutely final question: if we look at the pool of infrastructure advisers, apart from engineers, what other professional skills do we need to have within the team? And should they be within your own staff team or consultant advice that you buy in?

Stephen Young: As the Minister said, you could always do with more people in organisations. But those nine that we have seconded have gone to very specific aspects of a role that we play where we think we can work to influence them effectively, and to help deliver outcomes that will match and support those that we are trying to do. For instance we have someone in the African Development Bank, and at the moment, with the range of facilities that the African Development Bank is supporting, we think that is a very strategic secondment, so he is influencing the infrastructure consortium for Africa. In turn through that he is influencing all of the money that is going into infrastructure in Africa. So selectively we have placed these people into these posts. For instance, we are taking some of the work we have done on trans-boundary water. The World Bank have started a project now taking some of the lessons, and so we have seconded an adviser in there who is able, from experience working with us on those trans-boundary issues, to take them into the World Bank and therefore influence the way they approach them. So those nine people are working very strategically and are having influence certainly greater than £50 million, I would say, in the way that they are doing their jobs in those situations.

In terms of the advisers that we have within our team, the cadre I represent is the infrastructure cadre, predominantly engineers. But associated with them we have people with planning skills as well and people with a background in urban local authorities, and allied skills. We put people into the multidisciplinary teams that we have, so through that we then develop some of the skills that they have. So we have got people working within the private sector infrastructure team bringing their infrastructure knowledge into that team, and complementing that by developing their background in the whole private sector engagement, so placing them within the multi-disciplinary teams. Part of my role is to work very closely with the other heads of profession covering social development, health, education and the other cadres, so that we have a network of advisers who work well together to deliver the projects that we are looking at.

Stephen O'Brien: We will always keep this under review. And as we develop it in the Private Sector Department, I can well imagine that this will be an area where we can add value. So that is what we will grow in terms of that expertise in that Department to then ensure that is levered into the way programmes operate on the ground.

Q196 Richard Harrington: Amongst the many things I have learned on this Committee, I now know the next time I mix concrete not to use salt water, and I am very grateful for that. I would like to move the questioning over towards multilateral organisations in the context of infrastructure building. When we were in Africa we certainly saw a lot of roads that were funded by the World Bank. We saw some where DFID had taken a more direct responsibility. Given the Secretary of State’s view, which has been much repeated, in fact even before this Committee yesterday, in the different context of Libya, he repeated his view about this overriding duty to get the best value for taxpayer pounds, which obviously we all totally agree with. I would like to ask either the Minister or Mr Young for your view on how this is possible within the context of the money we give to multilateral organisations, where clearly we do not have quite the same control. As you will be aware, many observers, including Claire Curtis-Thomas who was mentioned before, have been quite critical on the question of accountability and how the money is spent. I wondered what controls DFID had, and whether you felt it was possible to have the same degree of taxpayer value for World Bank, as one example, but other multilaterals, given that we are spending £500 million through it. It would seem to me a natural way to increase our efforts within infrastructure, multilaterally rather than bilaterally.

Stephen O'Brien: I am grateful for the question. Just for the record, the last known figure for the multilateral spend on infrastructure was £412.9 million, so about 45% of our total infrastructure spend in that year, where the bilateral spend of those 22 out of the 27 countries going forward as well is about £514.4 million. I think you make an absolutely fundamental point. In my view, whether it is public money or private money, getting value for money is simply a requirement. I do not think it is something which anybody would wish to question. Therefore, do the multilaterals give us the chance to do that in the best possible way, or does going through the multilaterals actually have a price?

There is the scale argument, which of course is that if we are contributing something at scale that also gives you the chance to really think about the NorthSouth Corridor Strategy, for instance, in Southern and East Africa. It also gives one the chance to have a certain predictability going forward that will enable the infrastructure programmes to continue apace instead of being oneyear or twoyear projects, which then do not have the lifetime costed maintenance improvements, keeping the kit there, keeping the skills developed there. As is often the case in Africa, if it is an unmetalled road you will have times when there are washouts. That happens with any unmetalled road in any part of the world, but there are inevitably more extreme climatic variables in Africa given the length of road that has to be covered, so you will need repair and maintenance. Part of that is getting the predictability of funding in place, but I think the fundamental answer to your question is almost to turn it on its head. I would strongly urge and encourage as much as possible for road-building, for instance, to go through multilaterals; not because they are particularly better at it than some of the bilateral programmes-that is why we have the complementary approach-but because part of the visibility and see-through to how a UK taxpayer’s pound through DFID is reaching development good at the end is that if it is a piece of road you can measure it. If it is some of these infrastructure projects you can kick it and count it. It is a much better and easier way to actually ensure it has been delivered than some of the rather less tangible issues that we have to work on, but where we have to have even more sophisticated measures in place. So the question then becomes the intrinsic value within that rather than the demonstrable value.

Q197 Richard Harrington: So you are saying that it is possible for DFID to implement its policy, but again, the Secretary of State and you have all stated clearly that you need to measure outcomes. And you would know roughly how much per kilometre a road costs and you would work it back from that.

Stephen O'Brien: Per local conditions. The trouble is there isn’t a world price for a road. It is incredibly costly to do it in DRC.

Q198 Richard Harrington: I know, and I would like to press you on a bit on that. I do not know anything about roads or concrete; I certainly give way to you on that, Minister.

Stephen O'Brien: I fear I might know too much.

Richard Harrington: But I do know about bunging up buildings and how much that costs. I also earned a living in that field for too many years. I was amazed, and there are no allegations of corruption here or anything like that, and I do not know enough about it to say, but I was quite surprised in the DLC, for example, when I asked a question of the International Rescue Committee, who are an excellent NGO and I commend them for what they are doing, and DFID for supporting them. But when I asked the cost of building a basic building for a local health centre, which was about 1,500 square feet, the actual building cost was about two thirds of what you could build it for here. I know labour is hugely cheaper there. It is local labour. We know it is much cheaper because we all know about the standard of living, etc. I cannot speak for materials, but it was predominantly bricks, which seemed to have been made locally.

So I cannot understand how this can be. It may just be that it is fair game-the foreigners have a price and locals have a price, and the foreigners’ price is like buying something in a hotel. I know that is a crude way of looking at it, but going back to infrastructure, do we just accept the fact that we have to pay far more than people would locally, simply because the contracts load it up and it is just an inevitability of this kind of business or investment? Or am I just talking complete rubbish? I would be delighted to be told I was, but I do not know enough about it to comment.

Stephen O'Brien: I absolutely do not think that is an unjustified question. I think the complexity of this is something that means we have to recognise that every bit of road, every building, has to be looked at in its local context. And what are the local vernacular building materials available? From my own experience, and I daresay yours, the cost of a road and getting the materials to it in order to build the road, particularly if you are going through virgin territory and putting subbase in and making sure you have the drainage right so the road will not be washed out in two years’ time, is the huge cost. Getting those large quantities for a road build, it is the value-to-weight ratio that is actually your determinative factor. Because trying to get the materials there, when the road has not been built, is very difficult.

In the Eastern part of the Congo you have got huge amounts of volcanic igneous rock around, which is quite difficult to work with-it is extremely unpleasant and sharp-but it has great strength, not least because it was so often filled with holes. It has got the usual molecular strength factor so it is a very useful way to build roads. It is monumentally disastrous for building houses. The actual skin of a house is normally only 4% of its value. It is what you put in it that costs the money. So interestingly, whether or not it is cheaper labour, everything has to be very precisely specified for local conditions and the local vernacular. In particular, if we are trying to build roads that are arterial routes, every time we build one we have to make sure that the contractor and the partners have all recognised that this is not something that is in the old system of just getting from A to B, which in two years’ time we have to more-or-less rebuild. It is to try and get something which has got a long-term value, and therefore warrants building a base.

So I do accept that in the DRC the price of roads per kilometre so far does look extraordinarily high compared to some other areas. And whilst in parts of DRC there are already the available local materials that are sufficient to the task, equally there is a problem with ensuring they are done in a way that will be sustainable.

Q199 Richard Harrington: When we are giving money to, for example, to the African Development Bank, which we have also in our Multilateral Aid Review criticised-and we are big donors to it-does DFID effectively have an audit team to look at the way this money is spent? Does it calculate, given the information DFID has about prices in a particular area from its own roads it has done-DRC would be a good example-does it match these up in the same way that a business would be audited? Is there real accountability for the multilateral spend in the same way that we are very proud to say, and quite properly, that we are doing this with DFID’s direct expenditure?

Stephen O'Brien: I believe so, but this is all work in progress at all times. You will be aware of the Construction Sector Transparency Initiative, known as CoST. That is indeed designed to increase that very transparency and accountability that you urge. That has to be a multi-stakeholder involvement. We have designed and initiated CoST on the back of some pretty positive and growing evidence that is coming from the Extractive Industries Transparency Initiative. Now that we have piloted CoST, we are very supportive of the World Bank taking this on to scale up, precisely in order to get what I think you are driving at, which I think is not yet sufficiently developed, but that we ought to encourage. We need to get a much greater breakout from these silos of projects to the cross-fertilisation and cross-knowledge where it is not just sharing best practice, but it also will help drive that transparency and that cost efficiency. Because it will be possible to say, "We can build a road for x dollars per kilometre there; it is likely therefore you should be able to do it over here. Where are the differences in value? Are they being taken in an appropriate way, or is it because there is a deep inefficiency in the way that they have been handled, or is the specification wrong?" Those are the things about which we would have, as DFID, a discussion with our partners. And the World Bank, through the CoST initiative, is going to have a much greater vision across, which is precisely what I sought to do when I was an industrialist: that however many factories you had, you would have a lot of benchmarks, and instead of telling your managers that they had failed on the things that were low down on the list, you told them, "They are doing it really well over there. You go and see what they are doing there, bring it back and copy it and you will rise up the league table." That was a really motivating, positive experience, and if we can replicate that on road-building for developing countries that would be a very positive experience. That is what is intended to do.

Q200 Chair : How do you comment on our previous witness who, whilst not disputing the benefits of the multilaterals, did say on occasions they took longer and were more bureaucratic in delivering, and that there were occasions where the bilaterals could get things done more quickly?

Stephen O'Brien: I am afraid I would say "Hear, hear" to that, and we would like to see it sped up. There is a process delay often, because of the way that you are going through an extra layer and the way allocations then have to go through a process. It is part of the problem, whether we are talking about this or taking it to a wider field, such as the way the EDF is spent. It calls for projects, not least road projects, in the ACP countries to be presented to them per round. Then the money only gets disbursed when that project actually converts from being a concept proposal to a specified and agreed contractual opportunity, under very strict conditions. That is why so much of the EDF goes unspent. So many of them do not come forward, so we have ended up with four years’ delay, with a serious underspend on the very things we know matter, and that could have contributed to the growth of the economy and the wealth creation in those particular needy countries.

Q201 Chair : So is the Department proactively engaging with those multilaterals to try to improve it?

Stephen O'Brien: I think we are, and I hope that you will be picking up from some of the conversations that you as a Committee have had with some of the multilaterals that, somewhat to our collective ministerial surprise, they have taken a really serious interest in the BAR and MAR process. Not only as to how they particularly scored, but actually how we went about it, which was no more, to pick up Mr Harrington’s point, than a business approach to getting efficiency and value for money, and making sure we were aligning our strategy and resources so that we could deliver the greatest impact, as you would in any walk of life in the use of money. So there is a keen interest in the way we have approached it, part of which leads to these results. The multilaterals are very well placed to deliver on the infrastructure needs at a regional level, so that is another aspect that links to your question as to how we can push on the multilaterals. I was particularly made aware of this, as I daresay you were, through the very good progress being made by Trademark East Africa, the EAC, and also to some degree Trademark Southern Africa. We are trying to get those two much more synchronised to match the infrastructure application to the political will that has been demonstrated by the Tripartite Declaration.

Stephen Young: There is a little bit of a twosided argument here. One is about the robustness of procurement that we are looking for, and one is the speed. I think one of the things that the MAR has looked at in terms of the performance of the multilaterals is how they deliver value for money, the procedures they go through to try and secure value for money, and sometimes those are quite rigorous. Some of their safeguard procedures are quite rigorous, and inevitably there is a time factor that comes into that, and I think there is a balance there going forward in that way.

Q202 Alison McGovern: To shift from multilateral organisations up a level again to the global processes. We had the G20 meeting in November, which agreed a multiyear action plan on development. Can I ask who is leading on engaging with that process from the UK Government, and what are the strategic issues that we are progressing?

Stephen O'Brien: Which is the actual name of the plan you are referring to? Is this the High Level Panel?

Q203 Alison McGovern: Indeed, the G20 in November-the question is really, who is in the lead on our engagement with that High Level Panel, and what are the top three issues that we are trying to get progressed by it?

Stephen O'Brien: I would like to answer that with a more general point. Then I will ask Terri if she might add specifically to answer the question as to how, as Her Majesty’s Government, we are taking that forward. We are obviously seeking to influence to secure strong development outcomes, and that is giving a better voice to lowincome countries so that they are heard at G20 and all levels, of course. But on the infrastructure through the High Level Panel it is really to try and ensure that the conclusions from the Cannes Summit, and the upcoming summit in November this year, will deliver an increase in the volume and quantity of funding to infrastructure sectors in developing countries.

This is not in my brief, but I am also conscious it is relevant here: it is still a growing and developing initiative. You will be aware as a Committee that we have announced the setting up of an international advocacy fund. It is ensuring that those low-income countries who have such high needs for infrastructure also have the ability to make the case, show the economics and have the experts who can help make the case in all the activity that surrounds any of these G20 summits. So that is another area in which we are seeking to help to get that balance right. Terri, do you want to perhaps explain a little bit more about who is taking the lead and who is fully responsible for delivery?

Terri Sarch: Thank you. The Cabinet Office coordinates inputs from across Government, and particularly including inputs from DFID into the G20 process. Stephen has actually been coordinating our inputs into the G20 Infrastructure Pillar. One of our key asks of that process is that the High Level Panel recognises the ongoing Africanled prioritisation process. As I am sure you will be aware, funding for infrastructure is scarce. Choosing which projects actually get funded is quite often a political decision, and Africa itself is going through a process called the Programme for Infrastructure Development in Africa, PIDA, which is trying to get wide-scale political buy-in to the priority projects in the continent. Our key ask of the High Level Panel and the G20 is that they recognise the African process.

Another key ask is that they draw the links between infrastructure and trade, because there are huge links there. World Bank research shows that if you can cut the time it takes to transport goods from inland Africa to the ports, you can raise a country’s exports by 7%. So there are huge links between infrastructure and trade, and we are keen that the High Level Panel makes those links within the reports.

Stephen O'Brien: Partly in answer to Mr Bayley’s earlier question, there is 7% volume.

Q204 Alison McGovern: What about the links between infrastructure and employment? Is that on the agenda?

Terri Sarch: The High Level Panel has got three key work streams that it is working on: how to identify sources of funding, identifying priority needs, and creating an enabling environment for infrastructure, so it is not addressing the employment question specifically on the High Level Panel.

Q205 Alison McGovern: We have just seen in the Arab Spring in the North African states that the underlying employment situation was a key background factor in those trigger points. That has to be addressed, and the same is true for the rest of Africa, so that something that the UK Government would be willing to pursue and raise?

Stephen O'Brien: I can certainly answer that, because in my brief visit to Johannesburg and Pretoria for the Tripartite I also took the opportunity to look at our bilateral programme there, and I was very struck by the fact that whilst 40% of GDP of the whole of Southern Africa comes from the Gauteng Province, the Johannesburg/Pretoria province of South Africa, none the less in many parts of South Africa-now a middleincome country-you can have as much as 80%, even 90% of male youth unemployment, with a huge expected rise in the proportion that that represents within the population going forward. So you are absolutely right. I have been asking about what the pressure points are for any equivalent of, as you put it, the Arab Spring. Whilst that does not appear to have the political read-across, I think unquestionably your question is well made. Unless we do look for jobful growth, rather than jobless growth, in many of the countries who have growth rates that we would give our right arm for, that is one of the big challenges. So the way you could use some of these infrastructure projects to get a skill transfer is actually one of the things we want to see incorporated into the specifications.

But I would just caution one area. Take a country like Ghana, where they have just landed oil coming in now through a public listed European company, Tullow Oil, at Three Capes. One of the questions you get asked when you are travelling as a Minister and you meet your counterparts is, "How can you help us train us to be the people who extract the oil?" Actually history tells us that is not what happens. There are very few people around the world who have got the skills to get the oil out of a mile of sea and a mile of land. The issue is how do you set up the governance, regulatory and legal framework and context in the least inter-meddling, getting-in-the-way-of-business way, but sufficient so that the yield of the value of this one-off historic natural asset that belongs to that country is received by the Exchequer so that they can pump-prime. The skills development then comes in behind that rather than necessarily the expert oil contractor getting that and then doing a skill transfer. It is actually making sure the skills are ready to develop for the multiplier effect, which is what grows the economy. That is the answer to your question.

Q206 Alison McGovern: Indeed, I take the point entirely on oil, and I think that is very well made. But on the broader kind of infrastructure projects that we are talking about, we want to build more and more roads, or hopefully bits of railway or water and sanitation infrastructure, and that is an ever-increasing endeavour, and hopefully over time countries will do it in more efficient ways. So, for your jobful growth there, it is important to be distributing skills and for the UK Government to be looking for those multiplier effects in skills and employment, rather than oil, but in the wider-

Q207 Stephen O'Brien: I could not agree with you more. I think it is absolutely vital. Let me take two examples. When you build a road-I think it all goes back to the costing argument, and how much money is made available-it is not just the capital cost, it is also the lifetime cost, the revenue that is required to maintain it and ensure it is improved, and to make sure of the outfall on drainage and so forth. So you would expect to see two things when the roads are being built that will make a huge difference. First of all, that every 50 miles there is the capital equipment in a properly stored shed, with people who on a contract perhaps over three years have transferred the skills, so they are then taken locally so they can maintain that road. The other thing you would expect to see is a simple mitigation measure, which is to put a barrier up so that when the rains come down you do not have overloaded lorries getting stuck and then costing two years of cost to rebuild them. The other one would be when you build a railway, it is not just the capital cost of the track; it is also a matter of how you fund the rolling stock, how you make sure that people can service that, and how you have the loading and unloading points. Those are the skills that are more likely to be of importance. While you are building it, if you can train enough people to know how to not just lay ballast and all the rest of it for a railway, but also to supervise the quality of delivery of that railway then you will have the skill transfer you are looking for, to get then the internal capacity growing, which will ultimately lead to the jobful growth, rather than jobless growth.

Q208 Alison McGovern: So you need some civil servants as well as people who can put spades in the ground in the first place?

Stephen O'Brien: DFID does not do this directly; we organise that this gets done and make the funding available. So a lot of it is to do with making sure we have that assurance. We have not talked about it too much, but very often it is partnering with the private sector in the right way, and pump-priming that. For instance, on the whole corridor development, whether it is across Mozambique to Beira, you can see where the natural resource companies are wanting to get their goods to market. The question then is rather than it being an exclusive railway line, how do you make it available for all and get those skill transfers? So by having this question and answer, we have demonstrated that our expectations of how we would expect things to be reflected in the way contracts are let is absolutely what we believe to be the right way forward, and not to make it so specific and exclusive that we have no transfer.

That is one of the issues on the question about China. There is no question China has got humungous amounts of money, and we are not going to compete on that. We cannot. What we can do is offer-and we hope it will be accepted-some of our experience, technical expertise and ability to have these skill transfers to make the contract more holistic rather than come in, do the thing and go out again. That would be an added value that we can make to the way that these contracts are let and designed. So that is one of the ways we are moving towards seeking to have a partnership relationship with China in Africa, rather than at times in the past where it has even been seen to be a bit competitive. There is such an infrastructure need, I think we have to recognise that we would be better off partnering than seeking to compete. There is a big enough cake for us all to have a slice of.

Q209 Chair : I can say that there are programmes for transferring skills to African oilfield workers. I just might point out to you that there are issues about visas for short-term training programmes in the UK that are causing a problem. You might just want to take note in passing.

Stephen O'Brien: Noted, Chairman.

Q210 Pauline Latham: You talked about the PIDG, and for the record we ought to say that it is the Private Infrastructure Development Group, which you highly rated at DFID when you did the Multilateral Aid Review. Are you looking at increasing funding to the group as a result of that? Is there a tension between increasing the size of the PIDG and losing its lighttouch, informal approach?

Stephen O'Brien: I think I read that you have also taken evidence from people at the PIDG, which is the best source of your answers as to what will be the essential elements of their model that will ensure they continue to have success. But as DFID, both in terms of the professional and rigorous assessment that we have had under the BAR and MAR reviews, but also just looking at the results and the fact that on average every $1 of PIDG’s own funding has helped to lever, or is expected to lever, about $27 of private investment in infrastructure-this is obviously a success model that, provided it can accept the scale-up, and it certainly has the capacity to accept the scaleup, we should be looking to do that. So I think it is more a question for them than me whether that would affect their light-touch approach. I agree with you, it is a rather effective lighttouch approach.

At the moment we are discussing with them widening PIDG’s remit to cover agricultural infrastructure and enterprise, including early stage agricultural enterprises. You and I have travelled around a number of countries in sub-Saharan Africa. Even though it would be wonderful for this jobful growth to have much more industry and value added taking place, the vast majority of the populations are engaged on the land. That is where, as Paul Collier would put it, we want to move from being just very, very busy to profitable activity. That does force you to think about what will connect bits of land. How do you incentivise people to grow more than for family and community needs so that they need a market to trade? The PIDG’s expertise of really understanding how to get something that is an investable proposition is an expertise that we want to get behind as much as possible. There are various other parts of the PIDG family that we are keen to push on, but I think that gives you a flavour of why we would like to see it develop as much as possible.

Q211 Pauline Latham: It is interesting that you mentioned the possible agricultural model, because when we were on the visit to the three countries we found in Burundi it was particularly poor agriculture; in Rwanda, where they are doing the land registration, everyone has such a tiny piece of land that it is hard to see, unless they form cooperatives, how on earth they can make money out of their small plot, in terms of agriculture. So do you see an agricultural version of the PIDG helping in that instance to make it more intensive and more productive rather than rather poor subsistence farming-not just growing for their own, but more intense farming? Because it was very sparse and a very messy type of farming that we saw, particularly in Burundi, but it is everywhere.

Stephen O'Brien: That is a very important point because if we do not find ways of working with agriculture we will not be working with the majority-the warp and weft-of society. In Rwanda, a small geographic country, which I think is the most densely populated in Africa, a very hilly land-the country of 1,000 hills-it is not so much the availability of land. Given the pressure-we have seen this from other countries of the world-the enterprise and the energy of people, and the entrepreneurial spirit that lies within people is incredibly powerful, so I would point to the effort that goes into building these fantastic constructions, these terraces, to get crops growing. Nobody would think of trying to do it in the Lake District here, for instance; you just put hefty flocks of sheep on the hills. It was striking to see that enterprise and the way we encouraged that through our social protection programmes, so you have got incomes off the work that then produces that infrastructure that helps develop that. But with the land tenure regularisation process there, the by-product above all is that once you are clear that is your land-and very often it is the woman who gets the title-the productivity goes up massively. There is demand for an appropriate fertiliser to help make sure there is enough to throw off an income, because they then demand the road that gets them to market, and a regulation on the market so they have fair access to trade, so that all becomes a big multiplier effect.

In Burundi it is not at that stage, and you point out a very important aspect of that. Another country that immediately comes to mind is Mozambique. Only 11% of that country’s total land is under any form of use at all, productive or otherwise. When you think of the scale of what therefore is obtainable, it is quite eyewatering. But to get there you have to convert. And the PIDG model to get there is able to look at how you get behind what are quite atomised landholdings-but there is enough of each piece to get a productivity that will give you a surplus, therefore you want markets-and those where, recognising that there is quite a nervousness about this in many countries of Africa, you might have the larger collective approach, which gives you very large landholdings. That is also a possibility, but subject to local conditions.

The third point I would make is that there are other models as well. PIDG is not the only answer. It is well known within Parliament, because we had a presentation some years ago, that there is a brand called Good Coffee-I don’t know whether I should talk about brand names in the Committee-which you can buy off the Waitrose shelves here. Andrew Rugasira set that up by getting together up to 1,000 of the highest quality hill farmers in the Rwenzori Mountain area of Uganda, and he has put them into a cooperative, but it is a company where the company’s interest is from what they grow, his quality assurance-he is bringing it now to the valueadded factory, but initially it was just to supply the commodities-and taking it, and they are part of the enterprise all the way to the Waitrose shop. So once that had turned a profit, which I believe it did after about four years, they get 50% of the total net profit, which is fantastically incentivising. Then they obviously distribute that amongst themselves. So that is another model, which would marry the valueadded access to premium markets with the interest of a cooperative approach, which is therefore going to give them effectively a floor to their risk, which has often been the blight of agricultural production in many parts of Africa.

Q212 Pauline Latham: It is interesting that you talk about that project, because a lot of what we saw was that everybody was growing the same things; therefore there isn’t really a market because they have all got their own, small and poor though it is. When we were in India we saw a project where a farmer, albeit with much more land than the people in Rwanda and Burundi and places, was growing chillies. He had increased his income by 10 times by growing a niche market product, and he was able to sell it in the markets. So farmers, who are 98% or something of the population working on the land, really do need to look at how they can diversify, such as with the coffee. I have a personal friend who helps with vanilla in Uganda, although it has had a fair crop and nobody was buying vanilla. But if you can find those products, which I am sure PIDG and other private companies could help them do, it would help the farmers get a much more sustainable way of life, and then they would be able to educate their children and afford medicine, so it would help all the development goals as well. So we must look at how we can do that, and obviously PIDG is one answer.

Stephen O'Brien: A PIDG company is AgDevCo, which I am sure you have come across. They are looking to support smallscale farmers and link them to the commercial opportunities in Zambia and Mozambique. As it happens I spent my day yesterday in Brussels, not meeting at the High Level, but trying to get really into where development takes place in Europe, and speaking at quite technical levels. One of the presentations that I had was from those who are really looking at these corridor effects in Mozambique, and how to get the private sector to support that. A lot of it was to do with how you supply an incentive to smallscale farmers to be able to effectively load their premium goods on to trains that will get them to market, whether it is export or internal regional markets. That is something which AgDevCo absolutely has pulled together in a really robust, rigorous, nononsense, evidencebased way, which is the only way you can get-those of us who have memories of what it was like to be sitting round the board table deciding where to allocate your scarce capital will know-people incentivised to invest. You need that rigour in order to make sure that all the risks that can be managed have been managed, and then you will take your commercial risk.

Q213 Pauline Latham: But also you need the roads to get the things to market.

Stephen O'Brien: Absolutely, so this is an integrated approach.

Q214 Pauline Latham: When they have nothing it is very difficult. You talked about the PIDG and the fact that we had seen them. Andrew Reicher of the PIDG came and told the Committee that for the very fragile states, such as Somalia or Afghanistan, he thought it was a "forlorn hope to try to bring largescale international private sector investment in." They do not have a very large presence in fragile states. What do you think can be done to stimulate private sector investment in infrastructure in fragile states such as Somalia or Afghanistan or DRC or wherever?

Stephen O'Brien: In countries affected by long-term conflicts, such as Sudan and DRC, clearly you are right: investment in roads and so on is absolutely vital. In real conflict states such as Afghanistan and indeed looking back into Iraq, and Somalia today, a lot of this is done directly by us as part of stabilisation and it is very difficult at that point to tempt a lot of private sector investment. But part of that is the calculation that is made as part of doing what is valueformoney development. In order to help stabilise a conflict state, or one that is fragile, certain aspects of infrastructure are absolutely crucial and integral to that stabilisation process. So it would be the DFID Stabilisation Unit, and you can see that in Libya, and I daresay you had that discussion in part with the Secretary of State yesterday. That is one aspect to it.

If one gets that right, and subject to local conditions-that is the risk you take with conflict states, that despite your best efforts it may re-conflict: you hope it will not, but if it does that would keep you out-if it does move progressively forwards, there comes a point at which the confidence can be put in place that it is not going to be a risk that is too much for the private sector to then take a part in, particularly for those infrastructure projects where you can see a future revenue stream. So you can start seeing how the capital cost could be covered, such as telecommunications, ports and border crossings; bridges can often be tolled, such as the weighbridge. These are essential bits of infrastructure that enable the world economy to go round. We just want it to go round equally as much in these poor countries, and not least conflict countries. But you have to have a clear mind as to what is part of stabilisation recovery, and what then brings you, almost through a pump-priming process, to a point where you can then start partnering and levering in the private sector. Because the PIDG approach will be able to say, "Those are the commercial risks and those are the political risks"-what the London Business School, which used to teach us when we were looking at these things many years back, called the Beta risks-the risks over which a commercial person cannot have any control, so you expect and you look to Governments and public institutions to get those under control: governance, anti-corruption, and then the conditions for doing business, like repatriation of dividends, an independent judiciary and things that a company cannot deal with. But the minute those are in place, there is an investable proposition.

Q215 Chris White: If I may come in on the back of Pauline’s question about private sector engagement, I wondered if you were aware that there are just four British engineering contractors operating in Africa, with only 1.5% of market share. I know it is a bit of a self-interest question, but how are we going to help, or work with, some of our British engineering companies to increase the profile of Britain and our quality engineering firms in the infrastructure sector?

Stephen O'Brien: Like you, I would like every British company to have an opportunity and to do really well in what I do regard as being the potential continent of the future when it comes to growth rates and market opportunities. We are absolutely clear, and I think this Committee understands the reasons that there is no tie between what we do in terms of aid, and trade. That is a well established principle, not least because it is one of the better ways of giving assurance to recipient and partner countries that they are getting the best value for money and that we are not effectively stacking the cost of contracts in order to have that relationship. So over many years that has become a clear approach. The contracts awarded by DFID for construction and services are all advertised internationally. UK companies have indeed effectively targeted these contracts. You mentioned the number, but of course it is a relatively small percentage of the whole, reflecting that international competition.

As to the question whether we could do more, first of all, I do not think the process could change because we have to maintain that absolutely strict adherence to not tying trade and aid. I am very proud of the fact that, as many of you know, I was born in Mtwara, in southern Tanzania. British Gas is in partnership with another company, and looking very much at the opportunities for hydrocarbons off the coast of Mtwara, very close to the border with Mozambique at the River Ruvuma. That is an extremely exciting thing-that after all these decades, suddenly the Southern corridor of Tanzania, which has always conceptually been an amazingly good economic prospect, could come to fruition. But 70 years ago it was also the site of the failed famous groundnut scheme, which was another great economic concept. So naturally enough, people have been nervous because that was a bruising experience. But with a good wind behind them, I believe that will be a future success story. So whilst as a Minister I have to be very careful not to predict or take a commercial view, I think there are plenty of opportunities, and it is a question of finding where we are best placed to compete and to enter the ring and get that competition. But aid cannot be tied to trade. Therefore in many ways at DFID, for all its emphasis on wealth creation, although as part of Her Majesty’s Government, our role is not to engineer the trade, we do see the Foreign Secretary’s announcement to put trade at the heart of foreign policy as a very useful and complementary approach, but we have to be extremely rigorous in making sure we do not have that link.

Q216 Chris White: I think the Committee would agree with you regarding the principle of not tying trade to aid, and I think it is a very important principle to keep. But would you also be aware that other countries are slightly more relaxed about this principle than perhaps we are?

Stephen O'Brien: I do see that on certain evidence and analysis we could be regarded as putting ourselves at a competitive disadvantage on this. However, I am equally confident, particularly on the services and technical side, but also on the expertise and global experience, that we may be able to overcome some of those competitive disadvantages just by the very nature of our technical competence and our rigour in terms of efficiency of delivery and therefore being able to keep our costs down. At this point DFID does not have to worry about straying into any territory which does impeach the trade and aid division, but we are working closely with UKTI. If we as DFID can see conceptually there are growing trade opportunities then we have, as Her Majesty’s Government, the opportunity to make sure that that awareness is made available. We do not have to get engaged because that would be inappropriate, but it is perfectly possible. So we are working closely with UKTI, with my FCO colleagues, with BIS, often with DECC, sometimes with DEFRA because they have a read-across to some of the agricultural things. The Africa Business Forum, for instance, is a very useful area. As a Minister, going around these countries and talking within all the partnership arrangements we have, the talk of how you grow an economy, what gives business people the confidence to put their money, take their risk in areas where we are also strong development partners is therefore what fuels in the loop why we have an authority to talk with people at the highest levels about why governance matters. Any of these things can be a point where a business person, as I used to do for myself, would eliminate the chance of going to countries where you might see the opportunity for a market, but the reputational risk or the investment risk was too high. So in many ways the DFID role is more to do with helping the climate for investment and the governance issues, and that is business confidence building. Then it is up to commercial people to take the risk

Chris White: Thank you. I think that was a very reassuring answer.

Q217 Hugh Bayley: On the bilateral side, I am not quite sure whether we are into infrastructurebuilding or not. We have a small programme in a relatively small-

Stephen O'Brien: No, we have more infrastructurebuilding going on through our bilaterals than we do through the multilaterals.

Q218 Hugh Bayley: Yes, I heard your figures. So half a billion?

Stephen O'Brien: Just over half a billion, yes.

Q219 Hugh Bayley: But the number of countries is small, and I am not quite sure why we are in the countries that we are in and not in others. Would it not make more sense either to make infrastructure a major UK specialism and invest a lot more in it as we do with health and education, for instance, governance and some other areas, or to leave it to others, perhaps the multinationals? What is the compelling reason why we have an infrastructure programme in the DRC, for instance, rather than using others, such as the EU, the World Bank or the African Development Bank?

Stephen O'Brien: First of all, of course, each country in which we have a partnership will look very carefully at what the primary needs are, and what the critical path will be for development. So in some countries getting any form of communication between population centres becomes one of the key deliverables whereas in others, where you might have reasonably good communications, or very short distances, it is much more important to ensure that the water and sanitation systems are in place. It is at that point that we do look to what is either our unique selling proposition or our comparative advantage. Some of these are built just upon the experience we have had, because the relationships get put in place, and so long as the rigour or transparency is maintained, very often success can breed success. Or indeed where it has not been successful the lessonlearning can be applied. I am open to being advised, but I do not believe it would be an appropriate starting point to suggest either that we have an infrastructure comparative advantage, therefore we will try to become Mr Infrastructure in world development, and that somehow that will be something we do mainly through multilaterals. I think you have to look at each development need.

One of the greatest dangers-I know for a fact that you wholeheartedly agree with this-Africa is a series of 53 countries, soon to be 54. It is not sub-Saharan Africa. And one has to look at the needs per population, per economic development, and particularly how you balance the social needs, whether that is to do with disease and health issues or education, as much as looking at what is going to pump-prime wealth creation, and to ensure that economies can develop. Infrastructure is in the service of that, but I do accept that some of it is a lead rather than a lag. Some infrastructure comes in behind development, but a lot of infrastructure will help development take place, but it has to be right and there is a risk attached. So I do not think I would be open to persuasion at the moment that we would somehow put infrastructure into one big pillar, but I see it as being something that should be at the service of development per local conditions.

Stephen Young: I think it is something about national delivery mechanisms as well. When we look at some of the fragile states, and we have talked this morning about some of the conflictaffected countries-Iraq, those sorts of places-the mechanism to deliver nationally does not exist. In a sense I think we get involved in a little more infrastructure directly than we may do in some of the more developed countries. So I think that is one reason why we sometimes get more involved.

Q220 Hugh Bayley: That is the niche. We have a particular skill in working on infrastructure in fragile states.

Stephen Young: I think we do have quite a lot of experience now that helps us to work very well in some of these situations. I think where there are more established systems, and I am thinking of Nigeria particularly, where we have a Nigeria Infrastructure Advisory Facility, we are putting quite a lot of money in there, building technical capacity so that they themselves can procure and deliver. So I think when we look in those sorts of areas we can use our infrastructure skills to leverage the most. One of the examples we will give you is a road between Zambia and Tanzania, where we have put in £150,000, but that has brought in €5 million of EDF money, and has led to US $600 million to rehabilitate the road. To me that is exactly how we can use our funds strategically to bring in and to lever quite significant investments with huge effect.

Stephen O'Brien: That is the Serenge-Nkondo Road. We will include, in answer to your question, those examples in the letter that we are writing so that you get a flavour for the balance between where it is appropriate to be bilateral and multilateral. But it is easy to forget between multilateral and bilateral that, for sub-Saharan Africa in particular, not only do we have the sub-regions, which we are working strongly with, but we do have the Africa Regional Department, which in a sense is a bit like a big bilateral, as indeed the Committee has already looked at. But that is also where some of these infrastructure issues are worked through because they then help to force the cross-border issues, which is actually fundamental to so many of the infrastructure developments. And to promote African trade we need to use the bilateral infrastructure financing to leverage much larger amounts from other sources such as the World Bank, the European Investment Bank and so forth. So I think there is no absolute way of doing this. One has to work very hard at finding the appropriate methodology per need.

Q221 Richard Burden: You have been very clear in emphasising the importance of the road-building programme, for a whole range of reasons. One of the things you have not mentioned is the issue of road safety. And yet if you look at the data in the so-called developed world, road casualties are coming down fairly consistently. In the developing world it is going the other way. If you look at numbers of deaths and injuries on roads it is right up there with the three diseases, and often the main casualties are children. Could you tell us what DFID is doing to ensure both the multilaterals incorporate road safety into their road-building programmes, and as you have stressed the importance of Britain’s bilateral work on road-building, what are we doing on those projects where we have a bilateral involvement?

Stephen O'Brien: It is an excellent question. It is a very big issue and you are quite right. It is the No. 1 health burden for the over-5s-children-and clearly it has a significant effect on all parts of the population. You will be aware that on 11 May this year the Prime Minister also made a big emphasis of this particular point about the vulnerability of children on roads. We are implementing a very deliberate effort and programme to try to get safe road design, be it bilateral or through the multilaterals, as absolutely integral to letting any of these contracts and on best practice, and recognising again there are differences according to local conditions. And there are certain constraints in terms of just having some of the materials available. If it is Armco barrier, that is quite expensive to import so you have to look at other alternatives to ensure that there are safe crossing places in urban and suburban environments. However, I know from my own personal experience that designing the way a concrete kerb is made can actually contribute enormously to safety by stopping lorries mounting the kerb and then straying. So actually building a pavement with what in this country we call a Trief Kerb is a good way of stopping large vehicles mounting the pavement.

So those are areas where there is a lot of technical expertise and experience that we can bring to bear. I think we need to be really clear on things like road safety: I absolutely share with you the analysis and the concern; I also recognise that even with the best will in the world, and I recognise also that this Committee accepts, DFID cannot do it all. What we can do, however, is bring often a big focus and emphasis, not least into the multilaterals, and into the way other donors have to think about this as a priority-so to be as much a political advocate for the issue as much as necessarily always being the one that has to find the funds to support the programmes that might lead to the improvements that we would all seek.

Also road safety is an appropriate thing to place firmly on the agenda in our discussions with partner Governments. It is a responsibility of the domestic Government to find ways to encourage better driver behaviour, better road usage, pedestrian discipline, and particularly, right across many parts of Africa, the interrelationship between those who cycle and both pedestrian and vehicle users of road space. I think most of us in London will recognise the hazard of cycling, both as a cyclist, and those who have to avoid them. So those are the big, big challenges, as I see them, but there is an enormous amount through AFCAP.

We have not touched on this earlier, but I will just make the point in connection with this question. Through AFCAP we have got a continuing big commitment to research as DFID. There is about £7.5 million still going into that. So that is a big commitment, and it is trying to ensure that we do not lose the cumulative power of 30 years of experience building, to try and ensure that these are designed in. And just like any safety feature, whether you are building a factory or a road, somebody who has been a manufacturer, somebody who has built factories-it is amazing, but an enormous discipline when you come to the investment is to design the safety into the whole specification from day one. It is very difficult to add safety on after you have built the essential infrastructure. So you need to actually design it in. So in a factory it is to do with the caging system and the interlocks for making sure the electricity cannot supply for a machine to go. It is the same with a road, building kerbs, pavements, safety barriers, access points and traffic controls, separating cyclists from pedestrians, but making sure they have safe havens away from traffic, particularly when turning. So these are commonsense things, but the research can feed into the design and specification.

Q222 Richard Burden: That is very helpful. Given all that, and the fact that DFID cannot do everything on its own, the Commission for Global Road Safety has highlighted to us the multinational initiative of the World Bank’s Global Road Safety facility. Are you aware of that?

Stephen O'Brien: I am aware of it. I am also aware that there was an indication of some anticipation of some funding under the previous administration in 2009. We have had to go through the BAR and MAR, and indeed those aspects of our spend which are not covered by the BAR and MAR. We have obviously focused on what we think we have a particular strength on, and actually funding in that way does not come out as something that we would continue to do. But the big added value we can give is the benefit of our research, and the strength of our advocacy within the way these contracts are let and designed, and in particular within the multilateral field. It is potentially of much greater value than what I think was a £1.5 million indication some years ago.

Q223 Richard Burden: I think it was a bit more than an indication. It was a commitment to spend £1.5 million on the World Bank facility that the UK was involved in pushing for. Given the fact that you have said that road safety is a really high priority, and £1.5 million is hardly a great deal of money, particularly when DFID’s budget is being protected, doesn’t it send out some rather strange signals, that on the one hand we are saying this is a really high priority, and one of the main multinational initiatives that have been established to take that forward with support from Governments in Australia, the Netherlands, Sweden, etc, but we say we cannot even afford £1.5 million for it? How does that fit?

Stephen O'Brien: Yes, I certainly respect the way you put it. But I would turn it slightly differently. That is that in the same way as we cannot do everything, and in this area we both share your concern-but equally, we do have a strong added value through the research and so forth-but there is an important question that we as DFID have to address, which I know you, the Committee, are very focused on: that is not to put our money where others are prepared to put it. If there is already a reasonable support for something, to play to our strengths, very often we will have to say something has been well covered by others. I would hope that it would not therefore just be a question of what message and signal we are sending out; I think it is more to do with what substantively are we able to do, through expenditures, to help create the greatest impact. In this area, the Global Road Safety facility strikes me as being pretty well supported by a number of others, and it is an area in which we have come to the conclusion, after our reviews, that this is not one of the areas that we will support. We think there are better ways of enabling the focus on road safety, part of which is to be absolutely explicit in our dialogues with partnership Governments, because very often it is a topic that is not even covered or thought about, but secondly, to make sure that the design specification, through our research experience, is very much part of the dialogue we have with multilaterals.

Q224 Richard Burden: It is probably a discussion for another time, but one of the things that we picked up in our recent visit is that assumptions by DFID that if they pull out of a particular programme, it will inevitably be picked up by others are not always borne out by the impression given by others, and that sometimes the impact of DFID pulling out is to deter others from becoming involved, as DFID has such a high reputation. So could you perhaps let us have a note on the discussions that have taken place in respect of the World Bank’s facility, and discussions you have had with other donors, whether the support that DFID is withdrawing will be picked up by others, and if so by whom? And perhaps could you also let us have a note on the specifics of what DFID’s budget, broken down, is on road safety issues. You gave the example of the research. I was not clear whether that was all road safety research or it was research around road-building, of which road safety might be a bit.

Stephen O'Brien: Contribution-

Q225 Richard Burden: Could we know a little bit more about how far DFID is actually putting its money where its mouth is on road safety issues?

Stephen O'Brien: I am more than happy to ask my officials to amplify my answer for you.

Q226 Chair : I think at the point where we got evidence, the decision had not been formally announced. I think that is the first we heard of a confirmation that you are not funding it. They were expecting a review. So there is clearly disappointment, and I think it would be important to have some rationalisation, more than just what you said.

Stephen O'Brien: Of course. I am more than happy to do what I can to help.

Q227 Chair : You have already mentioned the Construction Sector Transparency Initiative, which I suppose one could say is another one of those areas where DFID has taken a lead, brought other people in, and then in a sense moved back and pushed it into a multilateral space. First of all, to what extent is CoST the definitive part of your zerotolerance approach to corruption? Secondly, in the process of handing it over, how are you ensuring what kind of engagement DFID will continue to have with it?

Stephen O'Brien: We were part of the pilot on CoST and very integrally involved. Even before all the final conclusions are drawn from that pilot it has become clear enough that this is something really worth pursuing as part of, as you elegantly put it, the architecture of our zero tolerance towards corruption. It very much grew out of the experience of the Extractives Industry Transparency Initiative, of which I attended a number of meetings, and which of course Claire Short now heads up. In order to get to scale up it became appropriate that if you were going to get any kind of real transparency and anti-corruption mechanism going there would need to be as best as possible an application of that process right across the board, across all countries, and across all projects, because otherwise you will always get someone who can pick out the holes. So the World Bank is clearly best placed to have that overarching position. So our contribution would be very much as a supportive partner. I am not sure I have the numbers; I am not sure if we have necessarily decided on the finances. But certainly the intention is to move from this pilot to making sure, following the High Level political CoST champion active in all the pilot countries, that this multistakeholder approach is working through disclosure. The World Bank is proposing to establish the Global CoST Programme using the bank’s governance partnership facility, as you know jointly funded by others, ourselves, Norway-

Q228 Chair : Our brief says that it was launched and funded by DFID. So it was not exclusively funded by DFID?

Stephen O'Brien: The pilot was exclusively funded by DFID. But what is now being taken forward by the World Bank is its Governance Partnership Facility, and it is jointly funded from here on by DFID, Norway and the Netherlands as the host. I think that is right. Do you want to add, Stephen?

Stephen Young: The Governance Partnership Facility, as the Minister has said, is jointly funded. If CoST was to go as part of that facility, which I think is the World Bank’s idea, they would open a new window within that Global Partnership Facility, which they would then have to seek funds for.

Q229 Chair : So what has been the funding contribution so far?

Stephen Young: I think we have funded to about £4 million, which was the cost of the pilot. I could check that number, but that is what I recollect from the last meeting I was at-about £4 million so far. So the Global Partnership Facility would need a new window, and that would need new funds.

Stephen O'Brien: I think it may be encouraging going forward that in addition to those countries, I see here that CoST is now supported by private companies and by prominent civil society organisations as well as by global initiatives. So that is including the grass-roots advocacy organisation ONE, with whom you are very familiar, and the International Business Leaders Forum. Among the private sector supporters are Balfour Beatty, Halcrow, Skanska, Ramboll and Strabag. And CoST UK has been embraced by Infrastructure UK, which is part of the UK Treasury. So I think from a pilot, whilst ensuring that DFID remains a key sponsor, it is now broadening it out and the World Bank is taking it on, and as much as possible I can see this is beginning to appear-it is becoming integrated into that very architecture you were hoping we could articulate.

Q230 Hugh Bayley: You will know that as part of the settlement of the British Aerospace Tanzania Air Traffic Control case in the courts, British Aerospace undertook to make a payment of a bit over £30 million for the benefit of people in Tanzania. I understand from my conversations with the Director of the SFO, and indeed from parliamentary answers from your Department, that there were some conversations between the SFO and your Department about how such a mechanism might work. Are you or your officials able to tell us how this British Aerospace money will be spent in Tanzania, and what safeguards will be in place to ensure that it produces real development benefits for the Tanzanian people?

Stephen O'Brien: I can fully understand why you ask the question, and indeed I had the opportunity to meet with a number of Tanzanian parliamentary representatives last week to discuss this very subject. It is a matter in which I have been personally very interested since very early days, long before the coalition Government was formed. It is £29.5 million, which is allocated under terms that were agreed between the defendant in the case, BAE, and the SFO, as the prosecuting authority, and was presented to the court for the Judge to decide how to allocate the amounts between the fine and that which he termed reparations. In that document it was approved by the Judge that it should be for the benefit of the people of Tanzania.

Since then there were contacts where DFID, in an advisory capacity-because we are not a party to that matter because it was in the criminal courts-was asked to assist and advise on what might be a programme which would therefore deliver for the people of Tanzania, and a programme that might best be described as an education package was put together. That is something that the Government of Tanzania has been attracted by, and feels would be an appropriate method to deliver on that. Since then there has not been the alacrity of takeup that perhaps one was expecting, and it is now a matter that is still subject to discussion. Because it pertains to a matter which has been before the courts, I think that to take you further along this line in an answer, I think I would be straying into territory where I had to be rather careful on the record before a parliamentary Committee, because it is a matter before the courts, and albeit it is a settlement, it is a settlement yet to be affirmed, I believe. That is the strict nature of it. Once the final package and the methodology by which this has delivered has been determined, as you will know, there is a proposal that Lord Cairns should preside over a Board to consider the best way forward, and as yet we have to hear whether the Government of Tanzania, which clearly has an interest, wishes to engage with that. I would certainly encourage them to do so, and to make sure that their point of view is heard. Equally, we are waiting to find out whether the SFO is intending to enter into the dialogue, or will wait for this to be decided by other parties. So as yet it remains an unresolved matter, and one in which both the Department and I as a Minister personally are taking a very close interest.

Q231 Chair : We are in any case pursuing this under a separate inquiry.

Stephen O'Brien: Yes, so I think probably it is appropriate for me to leave it at that point.

Q232 Chair : Thank you, and thank you very much to you and your team for coming to give evidence. This is the final session on this particular inquiry, but you are in front of us again next week.

Stephen O'Brien: So I see, yes.

Chair : Specifically on our visit to, and the evidence that we have taken and have been taking on Burundi.

Stephen O'Brien: I am very much looking forward to hearing about the visit.

Q233 Chair : We have had quite a lot of evidence, and you might find it quite a robust exchange.

Stephen O'Brien: I shall seek to prepare. Thank you.

Prepared 7th July 2011