§ 1.1 p.m.
§ Mr. A. E. Cooper (Ilford, South)In the time available it is possible to touch only very lightly on this vital subject, a subject which is probably amongst the three or four questions which confront world statesmen today. Nevertheless, I am grateful for this opportunity of raising the matter.
The free world is grateful for the vast help which has been provided in the past by the United States of America, by Marshall Aid and by other means, but the time has come when it is both unrealistic and unfair to expect the United States of America alone to carry the main weight of this burden. Other countries with prosperous economies must make greater contributions than they are making at present.
There are three reasons why we should undertake this task. The first is moral, the second is economic, and the third is political.
On the moral side, it is very similar in the international field to the situation which has developed here, where by 1677 virtue of greater ease of communications we are able to appreciate one another's problems more easily than was possible before the war. The manner in which many of our people, and people from other countries, have travelled abroad and seen for themselves some of the appalling conditions in which probably half the world lives has struck at the conscience of Christian thinking people and demands that something be done to alleviate the troubles in which many people find themselves.
Economically—and this is a very realistic approach—we must recognise that expanding world trade means better times and better conditions for all of us who are taking part in activities of this sort.
§ Mr. Marcus Lipton (Brixton)We have never had it so good, some say.
§ Mr. CooperI am glad that the hon. Gentleman appreciates that. He is probably going to have the best spending Christmas that he has ever had.
On the political side, whilst we must recognise that in all-in aid there is a considerable political element, it would be dangerous to overstress that and create the impression that it is the end-all and be-all of the aid which we seek to provide. Marshall Aid was a great attempt to restore the economies of those countries which had their economies virtually destroyed because of the Second World War. It was a first-aid approach to the problem and largely succeeded in its objective, but what we are seeking to do today is to ensure a long-term, continuous effort to help countries whose resources and general standard of living do not permit them to make the advance in their general living standards which we think is necessary.
Aid follows three main patterns, loans and grants, capital goods and technical assistance. Loans and grants—and particularly loans—are largely on what one might call a banker's basis. They are given largely because of an appreciation of the ability of a country to repay over a long period of time.
It is interesting to read document No. R.4094 issued by the Central Office of Information. The document states that some countries have advanced at a rate faster than their resources could allow with the result that there has had to be a reappraisal of their programmes and 1678 a cutting back of their imports. We ought to be able to find ways and means of ensuring that once expansion is started it can continue.
Grants are often inadequate. I know that that is an easy thing to say, and that it depends entirely on the ability of countries to give the money or the goods and not to lend them.
Technical assistance is one of the greatest contributions that this country can make. Our record in the past—to use a phrase which is not always popular —in Empire building is outstanding. We have much to contribute in knowledge, "know-how" and technical assistance, perhaps even more than we have in finance.
Lastly in this sector comes private in vestment. We tend to overlook that. Can my hon. Friend give us any idea of the volume of private investment which has taken place in these countries over the past few years?
Private investment has this limiting factor about it. It is not the duty of private companies or private individuals to think beyond what one might call the commercial considerations. In putting money into a country it is their hope that industry will develop and pay dividends so that money can be brought back to the United Kingdom, but there are considerations when commercial reasons are not the answer, and in those circumstances the private sector will not be prepared to invest money as we would like to see it done.
To revert to the technical assistance side, I should like to put under this heading the facilities that we can provide in agriculture. Within the areas which we are discussing we find literally half the world's population. The standard of living of these people is far below what one might call even the subsistence level. It is also unfortunate that in these areas we have the fastest breeding sector of the world. Like the Red Queen in "Through the Looking Glass", they have to run very fast to keep in the same place. Notwithstanding that agricultural production has increased tremendously in these areas during the past few years. the growth of population means that living standards generally are roughly the same as they were before.
What must we do to solve this vital problem? An increase in agricultural 1679 productivity is one of the prime needs. We must not think only in terms of money. We must consider also whether it might be good for the countries participating in, for instance, the Colombo Plan, if tractors, farm implements, fertilisers and so forth were provided outright, because money can, perhaps, easily become lost in a Government Department of one sort or another in these various countries.
Even if all these things are provided, it is still necessary that people should have the skills required to use them adequately. The problem which must exercise us perhaps more than any other is the means whereby the right technical assistance and technical colleges can be provided, because it is this kind of assistance which can, perhaps, in due course, make a greater impact than anything else.
I suggest to the House that there are probably far too many organisations which are present exist to help. There is the Colombo Plan, probably the most successful in this respect. There is the British Council which, although it is openly derided by certain organs of the British Press, makes a contribution. There is the World Bank. There is the International Development Association, about which I hope my hon. Friend will tell us a little more today. There is the International Monetary Fund and the International Bank for Research and Development. There are probably others, particularly in health, which contribute in one way or another. Where there are so many organisations dealing with what is, by and large, the same problem, a great deal of money can well be lost in administration. Co-ordination of effort is something to which Governments must address their minds.
I have seen it suggested that coordination might best take place under the aegis of the United Nations, but I beg leave to doubt whether that is the right medium. Unfortunately, the United Nations is a political sounding board, and many plans might become lost in political controversy and their value disappear. Furthermore, we all know from bitter experience the delays which can take place within that body. I do not think that the weight of evidence is such that we can have any real confidence that it could operate effectively here. The most satisfactory 1680 approach to the problem probably lies along the lines of the Colombo Plan, in other words, on a regional basis. I should like my hon. Friend to tell us whether any discussions of that kind are taking place.
What can we do in this country to help? Can more funds be made available by us or by other countries? There is a feeling sometimes expressed that, because our shops may be full and we are enjoying a level of prosperity such as we have never had before, we can have substantial reductions of taxation and we can give away largesse to all parts of the world. It is not really as simple as that. It must be recognised in this country and in other countries participating in schemes of this sort that, in the final analysis, our ability to make funds available for other countries depends entirely on our balance of payments situation. If we can earn a substantial balance of payments surplus year by year, our ability to provide funds for under-developed territories and to provide funds for reducing taxation in our own country will be increased. If the situation be reversed, all the good intentions in the world will go for naught.
We are today in a very favourable position. I thing that we could possibly do more than we are doing. Without wishing to make a precise proposal this afternoon, I should like to hear from my hon. Friend what proposals the Government have about the International Development Association, the newest in a long line of institutions to improve standards in various parts of the world.
At this season, when good will permeates the hearts of all men throughout the Christian world, it would be a good time for us to give serious thought to the problem of seeing how we can make a better contribution than we are at present making for the least fortunate people of the world.
§ 1.16 p.m.
§ Mr. John Hall (Wycombe)I wish to stress two points which have been brought out by my hon. Friend the Member for Ilford, South (Mr. Cooper), first, the availability of capital, and, secondly, the provision of technical assistance. My hon. Friend was quite right in saying, at the conclusion of his speech, that it is quite impossible for 1681 us to provide adequate help for underdeveloped countries if we do not have a healthy balance of payments. We can invest only out of surpluses we earn and make available for investment from the proceeds of our trading and from savings.
There is today a general world shortage of capital—a great deal to be done and far too little capital with which to do it. For this country there are two possible sources of capital resources for development in the under-developed countries, one, the public purse and the other, private investment. If we are to help under-developed countries by Government loans or grants, we must do it either out of taxation or out of reduced Government expenditure. This means that the people of our country must be prepared to accept a rather lower standard of life than they are, apparently, at present prepared to accept, so that we may have a surplus available for investment overseas. If we do it out of private investment, it must be done out of savings and the result of our trading.
The taxation system under which we now work is clearly penal in its effect. Indeed, there are those who believe that the taxation system which we now enjoy—if that be the right word—tends to destroy real capital. Certainly, it makes it much more difficult for private enterprise to accumulate funds to invest abroad in the way it might wish. It is true that there is a great deal of investment now going on in other countries, but it tends to be directed, of course. very largely to those countries which are or which are likely to be economically viable and likely to give a return either in the short term or the long term to the private investor. Therefore, it does not meet altogether the point which has been brought up by my hon. Friend. Sometimes, one has to invest in countries from which one cannot expect a return or, if a return will come, not for a very long time. There should, therefore, be a combination of public and private investment.
I find it difficult to see how we shall have enough capital on our own to make very much of a contribution towards the needs of the world. We can operate only in conjunction with other countries through the organisations which now exist or which we are con- 1682 sidering setting up. We can certainly make a contribution but not, I suggest, a very large capital contribution at present. Where we can possibly make a contribution, I think, is in the provision of technical assistance.
It is not very much use providing for development in other countries unless, at the same time, one provides the technicians and, possibly, the teachers to train people to run their affairs eventually and provide all the administrative resources necessary to build up industrial enterprises or whatever form of development is required in the countries where we are considering investing. We in this country are now suffering to some extent from a shortage of technical and skilled labour. Possibly the Government could do a little to encourage the greater training of technicians for service overseas, particularly those sent overseas on Government service.
One of the ways of developing the ability of the inhabitants of other countries to look after themselves is that of setting up schools, technical colleges and universities, but the problem those countries are up against is the provision of sufficiently qualified teachers. We could get enough teachers to go from this country, short as we are, if the conditions of service were right. One of the problems is that service overseas does not rank for pension for them as teachers in this country. The Government could help by making it possible for teachers serving overseas to rank that service for pension when eventually they come back to teach here.
It is a difficult problem. It is easy to say that we must provide aid to these countries whose standard of living is grossly below ours, that it is wrong morally and politically to allow those conditions to continue to exist and that we as a very prosperous country ought to play a very full part in putting that position right. Theoretically, there is nothing wrong with that outlook, but, in practice, it is very difficult to put it into effect. It can be put into effect only if the Government are prepared to help private enterprise to a greater extent than it has been helped up to now to invest in countries where the risk of loss is considerable and to guarantee to some extent against indefinite loss. 1683 Secondly, if it is done by public money the Government can help by loans or grants, but that can only be done out of the increased prosperity of this country, given a big enough surplus, through greater taxation, or by the nation as a whole being prepared to accept a lower standard of living to make available more money for under-developed countries which probably would be unprofitable and unproductive from our point of view, but designed to raise the standard of living of those people.
Historically, it has never been found very valuable to put money into countries which are not likely to be economically viable. It may be that aid poured into such a country is like putting water into a sieve, that it is completely lost, with damage not only to the donor but to the recipient. I do not think that we could afford that kind of aid and we can do our part only through the existing world agencies in giving assistance to these countries. We as a nation should concentrate primarily on those countries where investment of capital is likely in the, end to produce a return and we should concentrate on building up resources of technical assistance to help them with their plans.
§ 1.24 p.m.
§ The Financial Secretary to the Treasury (Sir Edward Boyle)I wish to congratulate my hon. Friend the Member for Ilford, South (Mr. Cooper) on having initiated this debate and on the excellent speech he made. It is true that there is more interest taken in Britain and other Western countries in this vital question of helping the less developed territories than there has ever been before.
On a personal note, I wish to say how pleased I am that through the accident of my hon. Friend the Economic Secretary being in Paris I find myself returning to the Despatch Box to reply on this subject after an interval of three years. Certainly, no experience I ever had has made a bigger impact on me than that of being a member of the delegation to the Colombo Plan Conference in 1955. There is nothing to make one realise more that we are not only living in a nation in which everybody counts, but also living in a world in which all nations and all continents count.
1684 There is nothing like joining in a conference in Asia or Africa to make one realise the error of looking at politics from too exclusively a Western or European point of view. It is, happily, true that today all parties are united in their interest in this vital question. The Queen's Speech, on 27th October, stated:
The improvement of conditions of life in the less developed countries of the world will remain an urgent concern of my Government. They will promote economic co-operation between the nations and support plans for financial and technical assistance.I thought that it might be helpful, in reply to my hon. Friend the Member for Ilford, South if, first, I say a word on the subject of the total of United Kingdom aid. A great many figures have been quoted by Ministers in recent years, and my right hon. Friend the Chancellor of the Exchequer quoted the latest figures in his Mansion House speech. I have been at pains to try to obtain from my advisers still later figures before coming to the House this morning.Expenditure from United Kingdom public funds on economic and technical assistance to overseas countries and territories, according to the latest estimate. rose from roughly —75 million in the financial year 1957–58 to about£100 million in the financial year 1958–59. That was an increase of one-third. A further sharp rise is taking place this year.
It seems quite likely, from all the indications, that the out-turn of this expenditure for the current year may be round about£150 million, in which case expenditure from public funds will have doubled over two years, that is, comparing 1959–60 with 1957–58. The total for the current year is still subject to variation depending in part on the rate at which some of the recipients take advantage of the loan facilities which have been provided for them. If they do not draw the full amounts in respect of this year, the balance of the funds will be carried over to expenditure next year.
The total amounts I have referred to include funds channelled through the International Bank and through the technical assistance programmes of the United Nations. They do not include amounts provided for military assistance, emergency expenditure, relief measures 1685 and such like, which have amounted roughly to a further£30 million in each of the years in question. Relatively small amounts out of the totals I have quoted have gone to Australia and South Africa, mainly through contributions to International Bank loans to South Africa, but all the rest has gone to countries in the less developed category.
This very substantial increase in overseas aid has been made possible only by the improvement in the external financial provision of the United Kingdom. I very much welcome the emphasis which has been laid by both my hon. Friends on the point that a favourable balance of payments and a sufficient surplus is absolutely fundamental to what we can afford to do in this way. The Government certainly intend to maintain a substantial volume of overseas aid, as the figures I have quoted make clear, but it would be false to imagine that we can go on increasing the amount as we have done in the last few years, because no country can afford to put out aid without regard to her own financial position.
If we once again got ourselves into deficit we should not be able to hold the£ sterling at its present exchange value. The effect of that, as hon. Members appreciate, would be that we would have to send out more exports, including capital goods, for the same quantity of imports. Therefore, our ability to give technical assistance overseas and to help with capital developments is integrally bound up with our ability to maintain sterling at its exchange value.
§ Mr. H. A. Marquand (Middlesbrough, East)Before the hon. Gentleman leaves that point, would he relate it to the sterling balances? During those years when it is true that our balance of payments was not so good, there was a vast accumulation of sterling balances which helped us a great deal. Would he remind us and the country that when we are considering how much to invest in those countries, we should remember how much they invested—indirectly, it is true —by means of sterling balances in this country and that we owe them this debt as well as a moral debt?
§ Sir E. BoyleI am grateful to the right hon. Gentleman for making that point. It is true that particularly in the immediate post-war years, the volume of sterling balances involved a great deal of in- 1686 debtedness by Britain to other sterling area countries. I have always felt that in the whole of this question we must consider the different positions of different countries in the Commonwealth, both dependent and independent, who are closely hound with Britain through their sterling balances.
May I say a word about private investment? The figures which I have quoted exclude United Kingdom private investment overseas, and the total of this going to all countries has been averaging roughly –200 million a year, or over –300 million a year gross before taking account of inward investment into the United Kingdom. It is estimated that perhaps half the net outflow of private capital goes to less developed countries.
Of course, this flow of private capital is one of the factors which we have to take into account in considering how much of our resources and balance of payments we can afford to use for this purpose. I hope that we shall not underrate the importance of private investment in the more developed parts of the Commonwealth, because I do not believe that we can keep the Commonwealth together as a great political force for good in the world without this flow of private capital to the whole of it.
I turn, next, to Government bilateral and mutilateral aid. Our bilateral Government assistance goes mainly and normally to the Commonwealth and only in exceptional cases to other countries. Our contributions to multilateral organisations go in support of their programmes of assistance to their member countries, and the other main donor countries also provide their aid on both a bilateral and a multilateral basis. It would be unrealistic to expect that they would all agree to channel the whole of their effort through multilateral institutions. Indeed, I am not sure that that would necessarily be an ideal situation. For instance, it would hardly be an improvement if we put all our assistance to the Colonial Territories through some intermediary. At the same time, without any prejudice to our special relationships with the Commonwealth, there is scope for building up the international institutions in this field.
This leads me to say a word about international economic co-operation and international institutions. It is true that 1687 there does not exist any single comprehensive set of arrangements for coordinating the aid provided by the various donor countries, and I do not think that this would be practicable. But there is a good deal of consultation and joint activity. Some of this is of an ad hoc kind to meet particular situations. Some arrangements are on a regional basis. I am thinking especially of the Consultative Committee of the Colombo Plan, which has just held its eleventh conference in Jogjakarta.
The Colombo Plan is the sum of all the individual plans of the countries of South and South-East Asia, and of the contributions of the Western countries in assistance of these plans. I was glad only recently when going round a technical college in Bradford to meet a pharmacologist who had been providing assistance in Nepal. I think that these conferences and the whole work channelled through the Colombo Plan are felt by every one concerned to provide a valuable meeting of minds.
In addition, as a permanent focus for the joint efforts of the countries of the free world, we have the institutions which have their origin in the Bretton Woods Conference towards the end of the war. First, there is the International Monetary Fund, which provides assistance for countries in temporary balance of payment difficulties, and not development capital, but which is an essential part of this group of institutions. Next, there is the International Bank, drawing capital from both Government and private sources, and lending it for development in both public and private sectors. Next, there is the Bank's newer and smaller affiliate, the International Finance Corporation, which is concerned solely with encouraging private investment in less developed countries. I remember piloting through the House the Bill authorising the United Kingdom's subscription to that Institution.
Finally, there is the proposal for a further affiliate of the International Bank, to be called the International Development Association, which is to provide development finance for the less-developed countries on more flexible terms than the Bank itself is able to offer. On 20th July, my right hon. Friend the Minister of State, Board of Trade 1688 said that the Government were prepared to join in working out plans for an International Development Association and that if acceptable plans came to fruition, the United Kingdom would contribute to its proposed resources of 1,000 million dollars the same proportion, roughly 14 per cent. as we subscribe to the capital of the International Bank. On that basis, our subscription to the I.D.A. would be about£50 million.
Intensive work is proceeding in Washington, where the executive directors of the International Bank are formulating draft articles of agreement for the proposed new association, which will then be submitted to member Governments. There is a very good prospect that the I.D.A. may be brought into being before very long. In that case member countries would pay part of their contributions at the outset and the other part spaced over five years.
For the time being, they can hardly be expected to contemplate setting up any further machinery or contributing to yet another capital development fund, over and above the I.D.A. But if the I.D.A. gets going, and proves a success, then member countries could consider supplementing its initial resources, in the same way as the orginally authorised capital of the International Bank was doubled earlier this year.
I should also mention the two meetings held in Washington in August of last year and March of this year. At those meetings a consortium of leading industrialised countries came together under the aegis of the International Bank to concert their financial assistance towards India's Second Five-Year Plan. I do not believe that one can overrate the importance to the West of the success of India's second Five-Year Plan, for the very simple reason that a tremendous battle is taking place for prestige in South-East Asia between India and Communist China. With all respect to a certain part of the British Press, I believe that it is a vital Western interest that India should win this battle for prestige. Each of the industrialised countries concerned has made its contribution on a bilateral basis, but within the framework of a concerted agreement, and I think that this could possibly serve as a useful model for adding to the total of aid in the future. 1689 I am sorry to have spoken at rather a rapid rate, but we have an extremely good and varied list of subjects for debate today, and I do not want to detain the House for more than a moment or two longer. I greatly welcome what was said by my hon. Friend about agriculture. It is true that many underdeveloped countries have sometimes made the mistake of putting too much capital into heavy equipment before they have developed their agriculture sufficiently. It is perhaps worth remembering our own experience in Britain, for at the end of the seventeenth century, in the reign of King William III, half the population of this country were at hare subsistence level or below. We were able to have our own industrial revolution so successfully less than a century later only because we wisely had an agricultural revolution first and increased our food-producing capacity.
Moreover, however keen we may be on overseas aid, we can waste money in this sphere fully as much as in any other, and I am sure that we are right in the Treasury to adopt a stringent principle of scrutinising projects to make sure that the money is spent to the best advantage.
Finally, and most important, do not let us forget the significance of the fact that, at any rate, one country in the Western world, the United States, has now reached real affluence—and all the rest of the world know about it. I regard it as probably the most significant development of the twentieth century that in one part of our Western world we have reached so high a standard of living. Development is a concept which concerns the whole world. None of us can be indifferent to it. That is why I am extremely grateful to my hon. Friend for raising it today.