Select committee: International Development Committee
Conclusion 2
Ninth Report - Investment for development: The UK’s strategy towards Development Finance Institutions
Published 15 Sep 2023
Paragraph 28
Addressed to Foreign, Commonwealth & Development Office
International Development Committee Investment for development: The UK’s strategy towards Development Finance Institutions All items in this report Report on parliament.uk ↗ Inquiry on parliament.uk ↗
Conclusion (the committee's words)
Under the current arm’s-length relationship, BII holds some investments that conflict with the UK Government’s policies, such as those relating to fossil fuels and there have been few attempts by BII to adapt its legacy investment portfolio to align with UK interests. The recent UK Government decision to expand BII’s remit to assist with the reconstruction of Ukraine demonstrates that the FCDO can intervene to steer BII’s investment activity, even where BII does not have necessary deep country knowledge and experience. The United States’ International Development Finance Corporation (DFC) demonstrates that public sector Board representation is not inherently damaging to a DFI’s commercial reputation given that, at the time of writing, this was the largest bilateral DFI. To ensure that BII’s strategy and operations are consistent with the International Development Strategy and FCDO objectives, to protect taxpayers’ interests and to ensure that BII’s investments help the world’s poorest people, FCDO should increase its oversight of BII and take a non-voting seat on the BII board.
From: International Development Committee, Ninth Report - Investment for development: The UK’s strategy towards Development Finance Institutions (HC 884), paragraph 28, 15 September 2023
Government response
The government responded to the whole report on 7 December 2023 (deadline 15 November 2023).
Summary written by Accountability Index from the government's response. It is not the government's own words.The Government states that it "accepts or partially accepts all recommendations" on British International Investment (BII) and will work with BII to implement relevant reforms, including in negotiations for the 2027 to 2031 strategy.
- On governance, it "partially accepts" Recommendation 1 but "does not agree" that a government official taking a non-voting seat on BII's Board would enhance governance, citing risks such as "blurring lines of responsibility".
- On the British Investment Partnerships strategy (Recommendation 6), it accepts, but notes that consultation "will take time" and says it "does feel able to commit to publishing by summer 2024".
- On targets for BII, it says it is "not appropriate" to introduce multiple additional SMART targets in this strategy period, but the FCDO "will also review its SMART targets for BII as part of the next strategy period from 2027".
- On auditing and annual impact assessments, it believes a full rolling audit "would be disproportionate" but says Ministers "will review in 2024 whether additional spot checks" by external experts "are required".