Source · Select Committees · International Development Committee
Recommendation 2
2
Deferred
Paragraph: 28
Increase FCDO oversight of BII by taking a non-voting seat on its board.
Conclusion
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.
Government Response Summary
The Government agrees on the need for effective collaboration between FCDO and BII, noting existing guidance and close work. Ministers will explore opportunities to strengthen this, including integrating collaboration into country business plans, but the response does not address the specific recommendation for a non-voting FCDO seat on the BII board.
Paragraph Reference:
28
Government Response
Deferred
HM Government
Deferred
The Government agrees that delivery on the International Development Strategy’s objective of “supporting countries to grow thriving economies” requires effective collaboration between FCDO and BII. Building effective collaboration between HMG and BII is an explicit aim in BII’s current 2022–26 strategy. The FCDO works closely with BII to ensure complementarity between the UK’s wider ODA portfolio and BII investments, with the FCDO shareholder team Session 2023–24 ensuring that BII’s work is effectively communicated across its network. The FCDO and BII have produced formal collaboration guidance to support overseas posts to effectively engage with BII and seek out synergies related to policy and programming. The Government also agrees that opportunities for collaboration and coordination with BII activities should be integrated into relevant FCDO Country Business Plans to ensure coherence. This practice is most relevant in countries where there are significant opportunities for BII investment. The FCDO shareholder team in London already works with posts to ensure BII’s activities are understood and opportunities for alignment and cooperation identified. This practice is prioritised in countries where there are significant opportunities for BII investment. Ministers will explore opportunities to strengthen this practice, including ensuring opportunities for collaboration are included in country business plans in posts where there is both a UK Government presence and a reasonable likelihood of BII making an investment in this strategy period. There will be some countries where BII operates where opportunities for collaboration are minimal (e.g. where the FCDO has limited presence) and therefore including detail on collaboration in the Country Business Plans would not be proportionate or useful. The FCDO has also developed strategies for British Investment Partnerships focus countries which integrate how BII will contribute to BIP objectives in these countries.