THE BLOG

Why the 'Publish What You Pay' Bill Matters

27/11/2014 10:39 GMT | Updated 27/01/2015 10:59 GMT

Yesterday something big happened in Parliament. Not many people will have noticed it, and not many words have been spoken or written on it either.

The Publish What You Pay Bill or as it was formally called by government, The Reports on Payments to Governments Regulations 2014, was passed through a dele-gated committee with cross party support.

This is a legally binding requirement for large UK companies involved in natural resource extraction to provide in their annual reports details of the payments they have made to Governments across the world on a project-by-project basis.

It might not sound exciting but it is significant. I first brought this issue forward as a Private Members Bill, championed globally by a 800-strong group of non-governmental organisations and charities known as Publish What You Pay. At that time I was given reassurances by the Government that they would pursue it across the EU.

Let me explain why this matters.

Picture a country filled with vast areas of natural beauty and heritage - a country in which there is an abundance of natural resources. Now picture that very same country as being home to some of the most impoverished and poorest people in the world.

Sadly, there are many countries around the world where this is precisely the case - countries that have significant natural resource wealth in terms of oil, gas and precious metal reserves but for which this natural wealth has not translated into the economic prosperity that it should have. The so-called "resource curse".

For example, Nigeria has been in the midst of an oil boom for over 50 years, yet 84% of Nigerians live on less than $2 a day. An estimated $400billion has gone missing from oil revenues in the country. This was possible because the secrecy in which the oil, gas and mining deals are conducted allows corruption to flourish. If citizens, journalists and MPs don't know the details of natural resource deals and payments, they can't hold their governments to account.

In the absence of strong democratic institutions and strong governance, the people of these countries are unable to hold corrupt officials to account, as those officials can siphon off public money for their own benefit instead of using it for the public good.

Many of the countries most affected are also some of the largest recipients of inter-national aid. That is why as part of our development objectives we must promote stronger governance so as to allow an accountable state-citizen relationship.

This change does precisely that, and the potential benefits are huge. Improving access to their own wealth could lead many developing countries out of poverty, away from aid dependency, and into self-sufficiency and sustainable growth - the ultimate development goal.

Transparent, effective tax systems and the reduction of corruption could allow money otherwise lost to be spent on schools, doctors, clean water and infrastructure - exactly the kind of projects on which British aid money is spent now.

But this isn't just a move that is good for developing countries and their citizens. This is also good news for UK business. It will improve the environment for ethical practice, create stability and give investors the confidence to do more without any fears of reputational risk or accusations of wrongdoing or corruption.

Next Friday we will, I hope, be enshrining into law our pledge of 0.7% of GNI to be spent on international development. This is a big ask particularly in times of austerity and in the midst of spending cuts at home. That's why sustainable measures that don't cost us a thing, but build responsibility and accountability in the developing world are so important.

Because it is not just about cash and % commitment, it's about leading by example and setting global standards.

I've always believed in the power of a hand up, not a hand out. This bill has the potential to be the ultimate gamechanger in providing the transparency and the climate for resource rich countries to take their future into their own hands.