Mary Creagh on the right role of the private sector in development

Mary Creagh, Labour’s Next Development Secretary – speech on the role of the private sector in development


In nine weeks, voters here in Cambridge will have a clear choice over the future direction of international development.

Five more years of a Tory government that treats the aid budget as charity.

Or a Labour government that will fight for justice for the world’s poorest.

Labour’s plan for development has three clear priorities.

First, we will renew Britain’s commitment to fragile and conflict affected states.

This Government’s target-driven culture has failed to focus on the difficult tasks of peacebuilding and nation-building.

A Labour government would tackle these challenges through long-term partnerships with developing countries

Second, we will lead the global fight against inequality.

We will ensure that the Sustainable Development Goals tackle the growing gap between the haves and have nots.

Our focus is on healthcare, climate change and human rights.

Healthcare, because Ebola has shown that the best way to protect against disease is to build a resilient, government funded health service.

Climate change because we know it hits the poorest hardest.

Human rights because we want women and girls and the disabled to participate fully in society.

LGBT communities to be free to love and marry whom they wish; and protection for indigenous peoples

And third – my focus today – is to ensure the private sector fully contributes to the success of developing countries.

Because without a thriving economy, without small and medium sized enterprises, and without long-term investment by the private sector: there will never be a world without aid.

This government thinks there is a simple answer: throw hundreds of millions of pounds of taxpayers money into opaque private sector investment funds.

For example, the government increased its funding to the Private Infrastructure Development Group from £43m in 2010, to over £700m over the last three years.

This scale up has been criticised by the National Audit Office and the Public Accounts Committee.

In separate reports they slammed “weak oversight and a failure to achieve value for taxpayers money.”

Labour will work in a different way with businesses.

We know there are no quick fixes to create the conditions necessary for companies to thrive.

Economies are the result of the complex interaction of individuals, families, the state and firms.

Trust, traditions, institutions, rule of law, workers’ and consumers’ rights, banking all matter.

Businesses are vital to eradicating poverty and inequality.

But companies make choices about how they operate. We want to support them to make the right choices.

The right choice to treat workers with dignity and respect.

The right choice to ensure supply chains are ethical and sustainable.

And the right choice to pay tax where they operate.

First, workers’ rights.

One of the first acts of this Government was to cut DFID’s funding to the International Labour Organisation.

Labour will reverse this ideologically-driven decision – by reallocating within planned spending.

We will support trade unions to ensure the voice of workers is heard by government and companies alike.

There is no better route out of poverty than a job.

Labour. It’s our name.

But not just any job.

Not work that enslaves people.

Not work that keeps children out of school, trapped  in poverty.

Not work that is an affront to our common humanity and human dignity.

Every 15 seconds a worker dies from a work-related accident or disease

That’s over two million people a year.

168 million child workers.  A scar on the conscience of the world.

Some performing backbreaking work on family farms.

Some are sold into prostitution.

Others sew sequins onto clothes for pennies.

We cannot wait for another Rana Plaza disaster to clean up fashion’s dirty secret.

1,200 people killed – many making clothes for British shoppers.

And two years on the victims compensation fund is still nine million dollars short.

No more fashion victims.

Workers must have access to decent work, decent pay and rest breaks, and the freedom to join a trade union.

The right to negotiate pay and conditions, must be universal.

The last Labour government set up the Ethical Trading Initiative to encourage industry to work with unions and NGOs better to understand and address workers’ rights issues.

The ETI now has 84 members who employ over 10 million workers.

And in opposition, Labour MPs have strengthened the Modern Slavery bill.

We secured mandatory reporting by companies of what they are doing to eradicate slavery in their supply chains.

The public cares about how their food is made.

They need the tools to know about how their clothes and gadgets are made.

Labour will collaborate with governments, companies and NGOs to put an end to people working in lethal conditions and doing unacceptable work like manual cleaning of latrines.

Companies are often hesitant to be the first to make improvements which could leave them at a competitive disadvantage.

Governments – by setting clear standards – can ensure they all move together.

Governments can enact living wage legislation and inspect workplaces suspected of mistreating their workers.

And they will go a long way to tackle child labour if they make education compulsory.

Second, Labour will support sustainable supply chains.

The horse meat scandal showed us the scale and complexity of modern supply chains.

The desire for quick profits in the extractive and timber trades has left developing countries worse off.

Their natural resources forever depleted with little benefits to show.

In the worst cases resource extraction fuelled conflict

In government Labour established the Extractive Industries Transparency Initiative to shine a light onto companies’ oil, gas and mineral operations.

Because nobody wants a blood diamond on their engagement ring.

Companies know that they are responsible for the environmental and social sustainability of their activities.

And given 200 corporations account for around a tenth of the world’s output – their improvements can quickly have a large impact.

A national approach to supply chains is not enough in a globalised world.

We need an international approach that follows the supply chain across borders.

Businesses know that if they don’t have sustainability at the core of their business then they don’t have a sustainable business.

Labour will do more to champion sustainable supply chains.

We need to change market conditions and create market incentives for suppliers.

Fairtrade accounts for over £1.7bn of revenue each year in the UK alone.

We will work with the EU and others to extend such schemes and to incentivise companies that want to do the right thing.

DFID must use its existing budget to do more to help the bodies that certify good business behaviour.

I want to hear proposals to deepen and broaden their reach.

This might include improving production techniques or sustainability.

I also want government to look at how it can better fund tripartite groups in developing countries.

Companies, workers representatives and civil society groups should work together to shine a light on supply chains and how to improve them.

We will help those who already do this to communicate it to the public to give people a clearer choice over what they buy.

Finally, taxation.

Only when countries have a tax base that enables them to provide basic public goods – health, education and the rule of law – will the private sector thrive.

States need the capacity to enact and enforce modern tax laws and to collect tax revenues.

This government has not done enough in this area.

In government, Labour showed what is possible.

Working in partnership with the Government of Rwanda, we invested £20m to create the Rwandan Revenue Authority.

In its first year it collected £60 million pounds, three times our initial investment.

Last year it collected £713 million pounds – over £2m pounds a day.

Labour will at least double the funding for Britain’s support to such interventions.

DFID must do more to assist developing countries to ensure companies pay their taxes.

This means tackling corruption, and stopping race-to-the bottom tax competition.

In government Labour acted with cross party support to bring in the Bribery Act to tackle corruption.

We made it a crime to bribe, to be bribed and to bribe foreign public officials.

This has forced companies to audit their activities and has changed the way companies behave around the world.

Ed Miliband has made clear that tax dodging by UK based companies will be treated seriously  – unlike recent cases under this Government.

This costs both the British economy and developing countries billions of pounds.

Developing countries lose three times as much every year in tax receipts as they receive in combined global aid.

This scandal is why Thabo Mbeki, former president of South Africa, has led a High Level Panel on Illicit Financial Flows with the African Union and UN.

African leaders are sending a clear signal that they plan to clamp down on the loss of more than $50bn dollars of tax revenues a year from Africa.

Labour will clamp down on tax evasion and avoidance in our first Budget.

We will close loopholes, increase transparency and bring in tough deterrents.

We will work to secure a multilateral agreement to force companies to publish what taxes they pay, and where.

And if that is not possible, we will discuss with businesses the best way to introduce a public country-by-country reporting format on a unilateral basis.

The UK will lead by example by compelling the UK’s Overseas Territories and Crown Dependencies to stop companies hiding behind a wall of secrecy.

Ed Miliband has put them on notice: they will have six months to open their books or face being placed on an OECD blacklist.

We will ensure that changes to UK tax rules are assessed for their impact on the poor.

For too long, developing countries have been left out of discussions on tax evasion.

Labour will ensure that they have a seat at the table.

The private sector is essential to development.

It is time for companies to put corporate social responsibility at the heart of their boards, and to work in partnership with governments and donors.

Companies do well when countries do well, when people do well and when they have a secure sustainable supply chain.

Governments setting and enforcing the regulatory environment, and encouraging the private sector to make more sustainable investments.

It means a living wage, and end to child and bonded labour, and a dignified route out of poverty.

It means upholding the highest environmental standards.

And it means paying taxes when and where they are due.

A common aim for sustainable and inclusive growth.

A Labour vision for growth.

I hope that in 62 days time we will have a Labour government to make this a reality.

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