Billions of aid money to go through DfID’s private equity arm following parliament vote

Date: 10 January 2017

MPs have today voted in favour of a controversial bill that development campaigners say would effectively privatise huge amounts of the UK’s overseas aid budget.

The Commonwealth Development Corporation Bill will enable DfID to quadruple the amount of money it channels through its private equity arm, the CDC group, from £1.5 billion to £6 billion. The bill would also allow the limit to raise to £12 billion without the need for further primary regulation.

The CDC Group is the contentious private equity arm of the British overseas aid programme. Wholly owned by DfID, CDC has been repeatedly criticised by various independent bodies for supporting projects with questionable development impacts for poor communities, such as luxury hotels, shopping malls and expensive fee-paying schools.

A briefing released by Global Justice Now in December 2016 argued that,

“DfID is essentially asking parliament to pre-approve increased funding for its controversial investment arm before presenting a worked through strategy or plan for how this money will be spent and how taxpayers will be assured that it helps meet the official mission of this spending: ending global poverty. This raises serious concerns as this bill could clear the path to a massive diversion of public aid money towards private businesses – without sufficient transparency, accountability, or proof of impact.”

Aisha Dodwell, an aid campaigner with Global Justice Now said:

“MPs have today voted for a massive diversion of public aid money towards private businesses – without sufficient transparency, accountability, or proof of impact. UK aid money is supposed to alleviate conditions of poverty and exclusion around the world, and a series of independent reports have raised questions about CDC Group’s ability to prove that it is doing that. So it’s grossly irresponsible for parliament to have approved a bill that would massively ramp up the amount of aid money that the CDC Group can play with, when there are such fundamental questions about its approach to development.

“Building shopping malls and luxury hotels across Asia and Africa might bring a good return on investment for the CDC Group, but it certainly isn’t meeting basic development goals like raising people out of poverty or providing access to basic public services like education and healthcare. There’s many vital roles that UK aid money should play, like supporting the development of robust public health and education systems in other parts of the world. But sliding billions of pounds of taxpayers money into the clutches of private equity operators is much more about the government’s obsession with free-market mania than it is about achieving important and beneficial development goals.”

For more info, see the briefing Inviting Scandal – DfID’s dangerous plans to expand its controversial private equity arm