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Future of CDC

It is a pleasure to appear under your benign chairmanship, Mr Walker, for the first time. I congratulate my right hon. Friend the Member for Gordon (Malcolm Bruce), who launched this debate today, and his Committee on its work not only on CDC, which has been enormously helpful to my Department, but on a range of other matters to which it brought extraordinary expertise and experience as well as energy, when considering difficult and intractable development problems. Secretaries of State do not always agree with Committees on every issue, and that is true of the International Development Committee and this Secretary of State. However, for the record, it is a pleasure to work with such an expert Committee. The Department and its Ministers draw huge strength from the way in which the Committee goes about its business, and I am extremely grateful to all its members for that. This has been an excellent debate on many of the key issues that the Government are trying to address in connection with CDC. Let me start by emphasising the point that several hon. Members made—that CDC, given the terms of reference under which it has operated in recent years, has done an extremely good job. It has provided an excellent return to taxpayers, and it has increased substantially the funds under management, but my submission is that in development terms it is a greatly under-utilised asset, and needs to be changed. It is fair to say that some years ago, CDC perhaps had too much development DNA in its work, and not enough financial rigour. Indeed—I hope that this does not cause Labour Members to blush—the then Prime Minister, Tony Blair, was minded to privatise CDC, but that did not proceed. The pendulum has now swung to the other extent, and it is a very strong, financially driven organisation that is not much different from many other organisations that operate in emerging markets. It seems to have lost some of its development DNA, and we need to put that back in the centre so that it has both rigorous financial control DNA, as well as strong development DNA. That is our intention, and I am pleased that it was strongly endorsed by the Committee in its response to our proposals. It is worth emphasising the point that was made by the Committee's chairman, my right hon. Friend the Member for Gordon, that aid is a means to an end, not an end in itself. The coalition Government have been determined to refocus the development programme so that the aid programme is fuelled by the engine of development—the private sector. Here, I turn to some of the comments made by the hon. Member for Birmingham, Northfield (Richard Burden), who is my hon. Friend in Birmingham, where our constituencies are close together. He asked about the 50% figure for the amount that will be spent through private sector development in India, and for which other countries we were minded to adopt that policy. He also asked me to explain why I saw the private sector as a key means of development, and we had some exchanges on that when I appeared before the Select Committee. I suspect that, although the hon. Gentleman sees intellectually that the private sector is the engine of development, he may have residual reservations, and sometimes under the bedclothes late at night he may think that it is perhaps the enemy of development rather than its engine. The truth is that if one believes that the private sector is the engine of development, one wants to bring to bear all the available skills in the private sector to try to drive development forward. Some 90% of the world's jobs are created not by Governments but by the private sector. Wealth creation and economic growth empower societies and enable them to lift their citizens out of poverty.