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Commonwealth Development Corporation Bill: Briefing for Lords Stages

Published Wednesday, January 18, 2017

This Lords Library briefing provides information on the Commonwealth Development Corporation Bill 2016-17 ahead of its second reading in the House of Lords on 25 January 2017.

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The Commonwealth Development Corporation Bill is focused on the work of CDC Group PLC (the CDC), the UK Government’s development finance institution. Wholly owned by the Department for International Development (DFID), the CDC invests in private enterprise in a select list of developing countries to support its mission statement of creating jobs, business growth and economic development in some of the world’s poorest regions.

The principal focus of the Commonwealth Development Corporation Bill is the amount of financial assistance that the Government can provide to the CDC in support of those aims. The previous Act governing its operation, the Commonwealth Development Corporation Act 1999, imposed a limit on that assistance of £1.5 billion; a limit which has now been reached following government investment of £735 million in the CDC in July 2015. The Bill would raise the investment limit to £6 billion, and allow for the Secretary of State to further increase the limit up to £12 billion without the need for further primary legislation.

Certified by the Speaker of the House of Commons as a money bill, the Commonwealth Development Corporation Bill received cross-party support during its scrutiny by MPs. However, a number of amendments were tabled during the Bill’s passage through the House, which fell into three broad categories: those which focused on the amount of funding being provided to the CDC; those which would impose restrictions or reporting requirements on that investment; or those which would impose conditions or restrictions on how the CDC was subsequently able to use those funds. Opposition parties focused particular attention on how the figures within the Bill had been arrived at, on issues such as transparency and the CDC’s use of tax havens, and whether there was sufficiently explicit focus on the goal of poverty reduction.

Lords Library notes LLN-2017-0004

Author: James Tobin

Topic: International development

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