House of Commons - The role and future of the Commonwealth

The role and future of the Commonwealth - Foreign Affairs Committee Contents

5 Developing and broadening opportunity

Losing credibility on development

85. We took considerable evidence on progress towards another of the Harare aspirations—"the promotion of sustainable development and the alleviation of poverty in the countries of the Commonwealth". It is clear to us that there are serious questions over the Commonwealth's credibility as a provider of development assistance. For example in 2011 the Multilateral Aid Review (MAR) conducted by the Department for International Development (DFID) found that the Commonwealth Secretariat had not fully delivered on its potential for contributing to international development objectives, and assessed it as offering poor value for money. UK Ministers placed the Secretariat under 'special measures', which means that DFID funding will only continue if the Secretariat's performance improves. DFID's future funding levels for Commonwealth Secretariat development programmes will be informed by progress made against key associated reforms.[121]

86. The Ramphal Institute, which describes itself as "an independent intellectual hub on policy issues for the Commonwealth and its 54 member states as well as for the wider world", told us that the Commonwealth was "no longer playing a significant role" in the provision of socio-economic development. DFID's doubts were shared by other agencies, such as the Canadian International Development Agency and AusAid, the Australian equivalent.[122] This view was not confined to development professionals. In several of the countries we visited, we were told by politicians of a growing perception that the Commonwealth provided no tangible benefits for its members and now needed to play a greater role in international development.

87. This critical judgement on the Commonwealth and development must however be slightly modified; we heard of some successful and well-targeted development projects arranged bilaterally between Commonwealth members. Professor Richard Crook, of the Institute of Development Studies, for instance told us of support for improvements to public procurement in the Pacific island states provided by Australia and New Zealand,[123] and Senator Segal drew attention to effective aid given by Canada to Commonwealth Caribbean states, especially for training of the military and police.[124]

88. The Commonwealth's performance as a provider of development aid has been disappointing in recent years, and needs to improve substantially if its reputation is to be restored. We look to the UK Government to keep the development performance of the Secretariat under close scrutiny and to keep to its stated intention to provide further funding only on convincing evidence of improvement.

Enabling trade and investment

89. In the last 20 years aid has been to some extent replaced by trade as an engine of development in the Commonwealth.[125] Underlying this are signs of a fundamental shift in the balance of the world economy from Europe and the United States to growing Asian economies, and parts of South America and Africa, bringing them not only economic success but growing global influence. Lord Howell, who chaired a previous Foreign Affairs Committee when it carried out the last inquiry into the Commonwealth in 1996, took pride in the fact that his Committee had foreseen rapid growth in several Commonwealth countries.[126]

90. The facts are impressive. The Commonwealth's membership includes two of the world's largest 10 economies (the UK and India), two members of the G7 (Canada and the UK) and five members of the G20 (the UK, India, Canada, Australia and South Africa). Ian Milne, representing Global Britain, observed that in the next 40 years the Commonwealth will be where much of global GDP growth, and hence of growth in propensity to import, will occur.[127] Dr Sriskandarajah argued that there was already in fact a "Commonwealth advantage" in trading. He observed that "the trading volume between two Commonwealth members is likely to be a third to a half more than trade between a Commonwealth member and a non-Commonwealth member." That figure, he said, was arrived at after correcting for similarities in terms of language, history, proximity and a whole range of other Commonwealth factors.[128] While accepting that "the role of the Commonwealth as a trading bloc has long passed", our predecessor Committee said in 1996 that "it remains an invaluable asset to all its members as an 'enabler' of contacts ..."[129]

91. On our visits to member countries we heard a number of times that the Commonwealth should do more to exploit this apparent advantage, encouraging trade and investment between its members and more widely.

92. The evidence for the existence of a special "Commonwealth factor" in trade and investment is not conclusive, despite the sustained and vigorous growth in many of the Commonwealth's emerging markets, but the potential for this to develop in the years ahead is enormous and should be given a high priority by H.M. Government.

The UK interest in trade and investment with the Commonwealth

93. There are clear implications for the UK in the changing balance of the world economy. Britain already does a great deal of trade with the Commonwealth; in 2010, total exports of goods and services to the major Commonwealth countries were nearly £37bn, over 8% of the total UK trade. However Ms Ruth Lea argued that much more could be achieved in Commonwealth trade, saying that exports to Commonwealth countries were "dwarfed" by exports to the US (£72bn) and in particular to the EU27 (£210bn). The equivalent figures for imports were £36bn from the Commonwealth, £46bn from the US and nearly £243bn from the EU27.[130] Ian Milne of Global Britain outlined the opportunities for the UK in coming decades, with the rest of the Commonwealth representing a market over nine times greater than that of the rest of the EU by 2050. He said that competition to export to and invest in the developing world will be "fierce". He concluded that the Commonwealth "has the potential to become a valuable component of British trade policy".[131]

94. Professor Philip Murphy said however that he was sceptical "about the value that the Commonwealth adds as a living, breathing organisation." He accepted that research suggested that there was "a kind of Commonwealth effect" but he observed that it tended to be more pronounced "among smaller, weaker nations." He told us that the proportion of trade that Commonwealth countries do with the rest of the Commonwealth, "varies wildly—from over 90% in some cases to less than 10% in the case of Britain, Canada and some other major economies. It is very difficult to extrapolate anything from an average".[132]

95. We heard evidence that the UK, and the Commonwealth as a whole, may be failing to make the most of the opportunities opened up by the Commonwealth connection.[133] Lord Howell considered some ways in which the Commonwealth connection could be put to better use by the UK, urging British business and Government to "think much more in our investment, project capital development and huge new development programmes of the Commonwealth connection." He urged British business to use Commonwealth connections to tap new sources of capital for infrastructure projects. Sovereign wealth funds of "these very prosperous Asian nations, and of course the oil-producing nations of the Middle East, are the wealth funds that we need to develop our dilapidated infrastructure".[134] Lord Howell told us that it would be wise to invest more UK time and effort in making use of the Commonwealth network and "the gateways it provides to other giant new markets, which are next door to the Commonwealth, like China and like Brazil".[135] Ms Kirsty Hayes, Head of the International Organisations Department in the FCO, noted that the Department was responding to Asian growth by opening a number of additional subordinate posts in India "to take advantage of the prosperity agenda there and also strengthening posts within south-east Asia".[136]

96. However, in the current climate of austerity the scope for increasing the diplomatic effort in this area must be limited. It is not surprising therefore that the FCO should stress the potential of greater contacts with the Commonwealth Business Council, which has many private sector members and is a self-funding part of the "unofficial Commonwealth". The CBC says that it "strives to provide a bridge between the private sector and governments, between emerging markets and developed markets, and between small businesses and the international private sector." Its goal is to "achieve economic empowerment for shared global prosperity through the enhancement of the private sector contribution to social and economic development." The Council's activities include the submission of papers on business issues to Commonwealth governments and the organisation of events (around 70 events per year). The CBC also provides some consultancy services to businesses. The CBC's largest event is the Commonwealth Business Forum which precedes each CHOGM; the 2011 Forum in Perth was the largest to date.

97. The FCO told us that it was hoping to use the forthcoming appointment of a new CBC director general as "the starting point for renewed dialogue on cooperation".[137] However there is clearly much work to be done; the FCO voiced doubts about whether the potential of the CBC was being fully exploited by UK businesses, telling us that "across the board, the value of the CBC's work to the UK has been seen by some as limited" although a number of large UK firms did "recognise the networking opportunities the CBC can offer and are active participants in their events".[138]

98. We are not convinced that member states are making the most of the economic and trading opportunities offered by the Commonwealth. There may not be a distinctive "Commonwealth factor" in trade and investment, but the Government should do more to help create such a factor. In particular, we agree with Lord Howell's remark that the UK should "concentrate ... very much more" on seeking finance for infrastructure projects in the UK from sovereign wealth funds, including those in fast-growing Commonwealth countries.

99. We also note with concern the doubts about the current value to the UK of the Commonwealth Business Council (CBC), and welcome the FCO's intention to take the opportunity of the appointment of a new Director General of the CBC to explore the possibility of a closer and more fruitful relationship. However, we do not believe that this limited initiative will make the most of the economic opportunities offered by the Commonwealth. We recommend that the Government should set out, by the end of 2012, a five-year strategy to increase the benefits to the UK of trade and investment with Commonwealth countries.

A Commonwealth Free Trade Area?

100. Ms Ruth Lea, representing the Arbuthnot Banking Group, urged the Government to take a radical step to make the best use of the potential advantages of our Commonwealth and other connections. She proposed that the UK should consider "having free trade areas with the growing parts of the world economy, including the Commonwealth".[139] Ms Lea described the hurdles which needed to be overcome if such free trade areas were to be established, especially the fact that at the moment, the UK cannot negotiate its own free trade agreements because of its membership of the EU customs union. To be able to develop those free trade agreements, the UK would have to withdraw from the EU customs union.[140] Ms Lea denied that leaving the EU customs union would lead to a loss of UK exports to the EU, arguing "of course they will trade with us. If they have a £30 billion surplus, they will trade".[141] She also told us that if the UK developed a free trade agreement with Canada, Australia or India, "there is no reason why we should not continue to trade fully with the EU countries, as indeed Switzerland does".[142]

101. On the other hand we heard evidence to suggest that the complexities of present-day international trade arrangements would make it difficult to set up a Commonwealth free trade area. Professor Murphy was sceptical of the idea of such an area, citing obstacles in the rules of the World Trade Organisation. He observed that "the Commonwealth as a great economic bloc was never a starter even in the heyday of the empire".[143] Although a free trade area might be possible, we also heard evidence that the political will might not be present across the Commonwealth to make it a reality. On our visit to the Caribbean it was observed that plans for a common market among Caricom countries[144] had not been realised; this was said to demonstrate the difficulties inherent in trade integration among Commonwealth countries. Lord Howell told us that the idea of a free trade area with Commonwealth countries was "a bit out of date, because the nature of world trade has changed totally." He said that the "drivers" of development and economic activity were instead increasingly investment and capital movements.[145]

102. There is currently much debate about a possible re-evaluation of the relationship between the UK and the EU, and the economic opportunities presented by the Commonwealth certainly play a part in that debate. However, many other considerations, including for instance economic relations with such countries as China and the United States, will undoubtedly play a bigger role. It is clear that the creation of a free trade area with Commonwealth countries would require a fundamental and potentially risky change in the UK's relationship with the European Union, and the benefits may not outweigh the disadvantages.

Education and Scholarships

103. The Commonwealth provides many opportunities for the education of the citizens of member states. In particular we took evidence illustrating the importance of the Commonwealth in supporting tertiary education. Of those countries listed as each receiving more than 5% of all foreign students worldwide, three are Commonwealth member states—Australia, Canada, and the UK. The Association of Commonwealth Universities (ACU) noted that some 77% of Indian citizens enrolled abroad study in just three countries—Australia, the UK, and the US. The Association identified the key motivating factors in this as the use of English, the quality of education, and cost.[146]

104. Commonwealth Scholarships play a major role in this exchange of students. Over 29,000 Commonwealth Scholars and Fellows across the Commonwealth have benefited from the Commonwealth Scholarship and Fellowship Plan (CSFP) since 1959. The ACU told us that "the substantial indirect impact" through the spread of values, sympathies, and cultural/intellectual exchange, as well as the direct benefits of individual career development, had been identified in a series of evaluation studies.[147]

105. The interests of the UK in this are clear. Many overseas students come to the UK on Commonwealth Scholarships. In 2008-09, the UK awarded the largest number of Scholarships, with Canada, New Zealand and India coming next. The Commonwealth Scholarship Commission in the United Kingdom (CSC) is responsible for managing Britain's contribution to the CSFP. Awards are funded by the Department for International Development (for developing Commonwealth countries), and the FCO, the Department for Business, Innovation and Skills and the Scottish Government (for developed Commonwealth countries), in conjunction with UK universities. CSC scholarships cover PhD research, including the Commonwealth Cambridge Scholarship; Masters programmes; academic fellowships; split-site Scholarships for PhD students to spend up to one year in the UK; professional Fellowships for mid-career professionals in developing countries; distance Learning Scholarships for developing country students to study UK Master's degree courses while living in their own countries; and shared scholarships.

106. The FCO told us in written evidence that in some cases, universities support Commonwealth Scholarships with joint funding.[148] Although the FCO said that it was too early to give a precise figure for the number of new Commonwealth Scholarship awards in the current financial year, this was estimated by the FCO to be approximately 800. The Department told us that "overall, funding for Commonwealth Scholarships has increased in the past two years, and a four year settlement has ensured that this trend will continue until 2015".[149] They said that, when compared on a like for like basis, Commonwealth Scholarship award numbers were increasing and that therefore funding would increase in real terms over the period 2011-15. The FCO also told us that about a third of Chevening Scholarships, which "support FCO objectives by creating lasting positive relationships with future leaders, influencers and decision makers," go to Commonwealth countries, with India among the top five recipient states.[150]

107. The FCO argued that while the "main purpose" of the Commonwealth Scholarship programme remains that of international development, it also brings more direct benefits to the UK. The results of recent evaluations, for example, show that Commonwealth Scholarships "contribute significantly to the public diplomacy activities of the FCO".[151] Many Commonwealth Scholars go on to great things, and could become crucial interlocutors with the UK in the future. Mr Mark Robinson, currently alternate Chair of the Commonwealth Consortium for Education (and a member of this Committee's predecessor from 1983 to 1985), told us that some former Commonwealth Scholars were playing highly influential roles, becoming Prime Ministers, Permanent Secretaries or Chief Executives in industry.[152] Successful alumni of the programme who were funded by the UK Government include Dr Kenny Anthony, Prime Minister of St Lucia, Asheesh Advani, former CEO of Virgin Money USA, Mark Carney, Governor of the Bank of Canada and Professor Crispus Kiamba, Permanent Secretary of the Kenya Ministry of Higher Education, Science and Technology.[153]

108. In 2008 the FCO cut funds for the Commonwealth Scholarship and Fellowships, but Mr Robinson told us that he was pleased that the gap had been bridged by additional Government support, along with funding from universities. The result was, according to Mr Robinson, that the Scholarship fund had "more or less held its own" in recent years.[154]

109. We note that part of the funding for Commonwealth Scholarships now comes from institutions of higher education. We are concerned that this could develop into an unsustainable burden on the limited funds available to those institutions. We recommend therefore that, recognising the importance of the Scholarships for the achievement of the UK's objectives, the Government should guarantee to maintain at least the current level of funding in real terms.

110. Proposals were put to us for an increased number of scholarships with a Commonwealth theme. For example Professor David Dilks recommended "a substantial number of 'Queen's Jubilee Scholarships'". These did not need to be fully-funded by the taxpayer, Professor Dilks told us; he believed there should be an opportunity for businesses and for individuals to contribute.[155] Frank Field MP agreed with Professor Dilks's suggested scheme, adding that for the scheme to have maximum impact, it would be important to engage the interest and enthusiasm of the younger members of the immediate Royal Family in this task, "and for them to take a personal responsibility for the scheme's success".[156]

111. We believe that Commonwealth Scholarships are a cost-effective way of widening opportunities for young people across much of the Commonwealth. They also help the UK to achieve some important diplomatic goals. If the Government's commitment to revitalising the UK's relationships with the Commonwealth is to mean anything, the numbers of Commonwealth scholarships should increase. A special new scholarship scheme would be a very fitting way to mark the Queen's Jubilee. The suggestions made for part-funding by the private sector are promising. We urge the Government to announce a competition for the first Queen's Jubilee Scholarships.

112. Professor David Dilks also made a number of other proposals for strengthening the educational activities of the Commonwealth. His suggestions included exchanges and short-term secondments of teachers, youth exchanges, medical collaborations such as short-term secondment of doctors in training and a place for the Commonwealth in school curricula.[157]

113. The suggestions made to us by Professor Dilks for strengthening the education and engagement work of the Commonwealth, through such means as medical, teacher and youth exchanges, and greater attention to the Commonwealth in school curricula, deserve serious consideration. They appear to be cost-effective ways of raising the public profile of the Commonwealth. The Government and the Commonwealth Secretariat should urgently examine their feasibility.

114. However several witnesses saw contradictions between some UK domestic policies and the Government's stated aim of strengthening links with the Commonwealth through education.[158] For instance, educational schemes could face an uphill struggle to make an impact in light of recent changes to the UK visa regime and high tuition fees. Mr Mark Robinson expressed concern that PhD fellows, who were making a contribution both in the UK and in their home countries, did not always find it easy to travel because of problems with their visas. He also said that Commonwealth participants in symposiums in the UK could run into problems because they could not get a visa in time.[159] Mr Field saw a need to correct what he described as the "bias" caused by the UK's differential fees and the immigration regime against students who are citizens from countries which "have loyally fought with this country through two world wars".[160] We were told by many of our hosts in Commonwealth countries that the UK visa regime was a cause for concern, for those in public life, for business people and for students.

115. Moreover, the UK is no longer regarded as the only Commonwealth country with first-class Universities.[161] The challenge to the UK's universities also comes from Europe, according to the Commonwealth Scholarship Commission in the United Kingdom, which pointed to a recent study demonstrating that other European countries, most notably France and Germany, are "significantly more generous than the UK" in encouraging international study amongst citizens from countries with which they share close historical ties.[162]

116. When considering its policy on immigration, the Government must bear in mind the possibly serious effects of a restrictive student visa policy on the wider interests of the UK, including the economic and diplomatic benefits brought to the country by Commonwealth students.

121 Ev 88. The National Audit Office largely endorsed the methodology and judgements of the MAR in a report published in September 2012. C&AG's Report The multilateral aid review, Session 2012-13, HC 594, pp. 27-29 Back

122 Ev 149 Back

123 Ev 122 Back

124 Q 18 Back

125 Q 53 Back

126 Q 143 Back

127 Ev 106 Back

128 Q 122 Back

129 Foreign Affairs Committee, First Report of Session 1995-96, para 82 Back

130 Ev 72 Back

131 Ev 106 Back

132 Q 42 Back