INTERNATIONAL DEVELOPMENT ASSOCIATION BILL

HC Deb 03 February 1964 vol 688 cc828-918

Order for Second Reading read.

3.47 p.m.

The Chief Secretary to the Treasury and Paymaster-General (Mr. John Boyd-Carpenter)

I beg to move, That the Bill be now read a Second time.

The purpose of the Bill is to obtain the authority of Parliament for a further United Kingdom contribution to the International Development Association. The details of the proposals were contained in the Report of the Executive Directors of the Association which I laid before this House last December. The sum involved is 96.6 million dollars, or £34½ million, over the three-year period covered by the Association's second plan. Of this sum, 32.2 million dollars—£11½ million—will be payable, if the House approves, on 8th November, 1965, with equal sums on the same dates in 1966 and 1967.

But it is necessary to seek the approval of Parliament now in order that the commitment should be made in accordance with the procedure followed by the Association. Following discussions last autumn, it was agreed that the provisional pledges then given would become binding when 12 countries, contributing in all 600 million dollars, had formally notified their intention to contribute. We are anxious to be able to take this step as soon as possible and hope very much that, if the House approves the Bill with reasonable despatch, we shall be able to notify our formal acceptance of the commitment by early March.

The House fully discussed the International Development Association during the debates on the International Development Association Act, 1960, and therefore it is only necessary for me today to add a little by way of background in describing the progress which has been made since then by the Association. It was established in 1960 and was and is affiliated closely to the International Bank for Reconstruction and Development. It uses—and this is one of its great advantages—the Bank's expert staff in judging particular proposals for investment, but its terms of lending are, of course, very different from those of the Bank.

It was, indeed, established mainly because it was felt that there were a number of countries with very sound development projects which could not obtain a loan from the Bank because they had not sufficient available foreign exchange to be regarded as creditworthy for the purposes of the Bank. Its rôle has been well summed up in the phrase, "It can make soft loans for hard projects".

The terms are very easy. Credits so far given run for 50 years with a 10-year grace period for the repayment of capital. They are strictly interest-free, though the Association charges ¾ of 1 per cent. by way of a service charge to cover its expenses. But the projects themselves have to be shown to be economically and technically sound and that is where the great advantage is obtained of the unrivalled knowledge of the Bank's staff. The Association is supported by the major industrial nations outside the Communist bloc for the benefit of the under-developed countries.

In 1960, at the starting of the Association, 750 million dollars was made available, spread over a five-year period. The idea was that expenditure should be maintained at about 150 million dollars a year, but the I.D.A. has had the same experience as most other bodies and individuals who grant aid, that is that expenditure has been much slower to mount than have been commitments. It has spent so far 130 million dollars but it has committed, and hence the need for further commitments, about 600 million dollars of the original 750 million dollars.

The proposal in which we shall play our part, if the House accepts the Bill, is to provide a further 750 million dollars, but that that sum shall be spread over only a three-year period compared with the five-year period of the previous instalment. The annual rate of contribution, therefore, will be 250 million dollars a year, instead of 150 million dollars, that is, an increase of about 66⅔ per cent., and it is intended to accelerate expenditure even more rapidly. In view of the carry-over from the first, five-year period it is very much hoped that it will be possible to step up expenditure, using also uncommitted funds, to 300 million dollars a year for the first year or two.

As for our own contribution, which the Bill will authorise, under the original arrangements in 1960 the United Kingdom contribution was fixed at 17 per cent. of the total. That figure was based on the scale of contribution originated with the Bretton Woods institutions, the International Monetary Fund, and so on, but it is, in fact, disproportionately high in relation to comparable countries. Under the first arrangement in 1960, for example, against our contribution of 17 per cent. of the total, the contribution of France and Germany was 7 per cent. each. This time our contribution is somewhat more in proportion, at 13 per cent. of the total, and compares with 8 per cent. from France and 9½ per cent. from Western Germany.

As the Association develops one would like to see a further levelling-up of contributions more in accordance and in proportion to the level of resources, but on this occasion we have at any rate made some advance in that direction which I think the House will approve. It still remains that our contribution as a proportion of our gross national product is the highest of the major contributors. It amounts to 0.04 per cent. of the gross national product for us compared with .033 per cent. for France and .027 per cent. for Germany.

Although the United States contribution is in absolute terms the largest, that contribution as a proportion of the United States gross national product is about half ours. Our proportion of the total contribution, therefore, is smaller and more in line with the relative size of our economy compared with the major contributors but it is actually bigger on a yearly basis than that provided for in the 1960 Act. The annual rate of expenditure under these proposals will be £11½ million a year against £9 million a year, to which we were committed under the 1960 proposals.

The House may be interested also to know a little about how the Association's work has gone since its institution and in particular how the resources so far used or committed have been employed. Taking the figures up to 30th September last, when 550 million dollars had been committed, 70 per cent. went to Asia and the Middle East, 12 per cent. to Latin America. 6 per cent. to Africa, and the remainder to the Far East and to Europe, which I take it in the case of Europe substantially means Turkey.

The same figure, 70 per cent. of the total, can be traced also as having gone to Commonwealth countries, a matter of considerable interest to us. This is largely accounted for by the fact that India has taken far the largest proportion of the amount so far committed—54 per cent. in all. Pakistan has been the next largest recipient. Money has also been made available so far to Swaziland and Tanganyika and proposals are being negotiated for Basutoland, Bechuanaland, Kenya, Nigeria, and Uganda.

The hon. Member for Birmingham, Northfield (Mr. Chapman) was courteous enough to let my hon. Friend know that he would be interested, during the course of the debate, to know of the position in respect of applications by the Leeward and Windward Islands and British Honduras. I have made inquiries and I understand that no applications have been made in respect of the Leeward and Windward Islands. Applications were, however, put forward on behalf of British Honduras. There has been some discussion of them, including discussion in London last July between my hon. Friend the Minister of State, Board of Trade, who was then Economic Secretary, and one of the British Honduras Ministers. As far as I have been able to check the facts in the time—and I ask the House to allow me to insert that proviso—the matter was then left to British Honduras to put forward, but I am inquiring what happened in that case.

The House may be interested also in the nature of the projects to which the money is put. Roughly 30 per cent. has gone on roads and, for the rest, about 20 per cent. on other forms of transport, 20 per cent. on irrigation and the remaining 30 per cent., or a little less, is divided between electric power, communications, industry, water and education. I think that the House will be glad to know that the Bank and the International Development Association are at present reviewing the scope of the direction in which these moneys are used with a view to possible widening. It is our own view that, in the next period, it ought to be possible—it would certainly be desirable—to give rather more support for both agricultural and educational projects.

The International Development Association is, I am sure the House will agree, a very good example of international co-operation under which the international "haves" of the free world help the international "have-nots". It represents only a very small proportion of the aid which we and other countries give under bilateral arrangements. Although these are outside the scope of the Bill, perhaps I might remind the House that I laid a White Paper, Cmnd. 2147, in September last, setting out the detail in that connection.

The Bill, though it represents only a fairly small part of our total aid effort, is particularly valuable because, first, it is based on international co-operation and, second, it is based on highly expert advice and assessment of projects. It is, perhaps, an odd rôle for a Treasury Minister to be urging on the House a Measure involving additional expenditure, but I make no apology for so doing. This money, if Parliament authorises it, will be very well spent.

4.1 p.m.

Mrs. Barbara Castle (Blackburn)

The Chief Secretary to the Treasury has introduced this important Bill in an astonishingly perfunctory way, as though it were a purely financial formality. He has not examined with the thoroughness which the House expected of him the reasons why the Bill is necessary. They are much more far-reaching than he seemed to suggest.

We on this side, of course, support the Bill. We welcome it. We welcome the rôle which Britain is playing in the International Development Association. But—let us face it—the Bill is only a stop-gap Measure which certainly will not deal with the crisis in overseas aid which is now developing, a crisis which the right hon. Gentleman showed no sign of recognising.

Mr. Boyd-Carpenter

I directed myself, as, I imagine, is the right thing to do in a speech moving the Second Reading, to describing the provisions of the Bill. Whether or not wider issues are in order is for you, Mr. Speaker. I hope that I can best serve the House by describing the Bill which I commend to it. If further points arise, my hon. Friend the Economic Secretary is available to answer them, and he will, I am sure, deal with them with his usual courtesy. I hope that the hon. Lady will now get on with the argument.

Mrs. Castle

I am about to advance an argument, to which, I hope, the Economic Secretary will reply. On previous Bills, as, for instance, in the debate on the Commonwealth Development Bill not long ago, the House showed that it had some appreciation of the fact that it was committing public money for the purpose of securing effective overseas aid. On that occasion, the House took the opportunity presented to it to analyse whether the aid to which we were subscribing was achieving the intended purpose.

I do not hold it against the right hon. Gentleman that he did not go into overseas aid strategy. Why should he? He is Chief Secretary to the Treasury, and his job is to minimise the need for expenditure, not to encourage more of it. Nevertheless, I suggest to the House that the fact that he is introducing the Bill is one indication of what is wrong. I assure the right hon. Gentleman that I intend nothing personal in that. Why should the Chief Secretary to the Treasury be an expert on overseas aid? He read a perfectly adequate brief, as a representative of the Treasury, and it is obvious that he has many other preoccupations. But let us look at some of the names on the back of the Bill. Several Government Departments are involved. We see the names of the Chief Secretary to the Treasury, the Economic Secretary, the Foreign Secretary, the Secretary of State for Commonwealth Relations and for the Colonies, the Central Africa Office and the Secretary for Technical Co-operation.

The only Ministers who are here to discuss this important matter are two representatives of the Treasury, the right hon. Gentleman who introduced the Bill and the Economic Secretary who is to wind up the debate. Even the Secretary for Technical Co-operation is not here. The reason is significant. The Secretary for Technical Co-operation has no responsibility whatever for financial aid.

The consequence is that we have two spokesmen present who will not attempt to fit the Bill into the wider strategy, or deal with the crucial situation—I emphasise that it is crucial—which is arising in regard to overseas aid. We are discussing the Bill against the astonishing background that, despite all the money we have spent in the past and the additional money we are now being asked to spend, the gap between the richer and the poorer countries is growing wider and wider.

This is a matter of great relevance, but, of course, the trouble in this country is that we have no Minister responsible for overseas aid as a whole. This is why we have these piecemeal Measures. This is why we get no co-ordination. This is why we have the Bill presented to us this afternoon without any background against which we can judge whether, in voting the money, we shall be sending good money after bad or whether we ought, as an important donor country, to be giving a lead to the world in an overall review of overseas aid strategy.

Why has the Bill come before us at all? I suggest that the reason is that existing forms of aid have failed in their major purpose. What is that purpose? It is not to make charitable hand-outs from time to time in order to salve our consciences. The purpose of aid, as it has evolved and as it has now been accepted by the world generally, is very far from that; it is to secure the adequate economic development of the poorer countries.

The fact that we are failing to do this is revealed in the very documents which form the background to this Bill and on the findings in which the need for the Bill is based. The documents show that bilateral aid, which forms an overwhelming proportion of all the aid being given in the world—I think that only about 12 per cent. of both United Kingdom aid and world aid is given on a multilateral basis—is going to the recipient countries on onerous lending terms which have added to their difficulties.

Page 4 of the Report of the Executive Directors of I.D.A. says: The conventional debt burdens of a number of Part II countries are building up as a result both of commercial export credits and of the terms on which aid is being provided under bilateral and multilateral assistance programmes, thus increasing the needs of these countries for external financing on lenient terms". Command 2147, which was introduced last September, suggests that the tying of aid often means that the borrowing countries find it financially onerous and that they cannot even accept it in some circumstances. That is why our expenditure on aid actually fell in 1962–63. Command 2147 points out that it fell because for one reason or another overseas Governments were unable to take full advantage of the funds which we had placed at their disposal. What is the use of our voting more money without examining whether it will be in the form in which overseas Government will be able to take advantage of it?

The same document points out another disquieting factor. It says that there has been a tendency in recent years for the flow of private capital to the developing countries to level off or even to decline. We know—the right hon. Gentleman hinted at this—that the work of the World Bank has also been held up because the terms of its loans are too limited in purpose and too narrow for the receiving countries to be able to take advantage of them. The World Bank lends at rates of interest which are absolutely crippling the poor countries—5 per cent. to 6¼ per cent. to be repaid over 15 years. The result has been that World Bank loans in total declined in 1961–62.

The Bank referred to this in its last report, when it said: …a number of the Bank's borrowing countries are nearing the limit of the amounts they can afford to borrow on the Bank's terms of interest and repayment, although their ability to absorb external finance remains high". Of course it remains high. Their need is absolutely desperate, but they have no alternative and they have had to borrow at these onerous rates, whether under bilateral agreements, or multilateral arrangements through the World Bank. Their growing indebtedness means that an intolerable proportion of the aid which they get from us and of their export revenue has to be earmarked just to service the interest and repayment of loans already made.

That is one of the purposes for which we are voting this money today. The World Bank made a little calculation and estimated that in 1962 developing countries received a total of £3,200 million worth of aid, while in 1963 the cost to them of the interest and amortisation of the debt which they had incurred up to that date was more than £1,000 million, or one-third of the total aid and investment which they had received in the previous year.

This means that we have to go on pouring out future aid just to enable the poor countries to pay for past aid. This is exactly why I.D.A. was created. It is also one of the reasons why its commitments already exceed its resources. It is one of the reasons why the freely convertible currency supplies at its disposal will run out at the end of the year. That is the background to the Bill and why it is needed. Even with this additional money, I.D.A. resources will remain totally inadequate to begin to deal with this situation, because it will bring the grand total of its resources, including initial resources voted before, to about £525 million, compared with £1,000 million which was the burden of interest and debt repayment due by these countries in 1963.

The House should face what this means. All we are managing to do by the Bill is to finance failure. Yet this is supposed to be the Development Decade. Heaven knows, this country has not had an exactly spectacular achievement in growth in the past years of Conservative administration, but even we have managed to increase our national income by an average of 2 per cent., and we were comfortably off to start with. In most developing countries there has been no increase in national income at all despite large increases in aid. In fairness to the taxpayers who will be finding this additional money, we must ask ourselves what has gone wrong. Surely we are failing in our duty of financial supervision unless we examine this situation more closely and deeply than the right hon. Gentleman did.

What has gone wrong? What is wrong with the world's provision for aid? What is wrong with this country's provision of overseas aid? One of the obvious things going wrong is the fantastic population explosion which is always overtaking resources, a problem with which the developing countries will have to deal and with which we shall have to help them to deal. However, there are other factors which are more immediately within our control.

First, aid is being given in the wrong form and much of it is being wrongly used. We need a fundamental review of the methods of financing aid and of the work of the various bodies supplying it. There is a proliferation of agencies, bilateral and multilateral and voluntary, all manned by devoted people, all inspired by the highest motives and all doing excellent work within the limits of the present strategy. But they are pouring out aid which is wasteful because it is not co-ordinated.

We are very fond of preaching planning to the developing countries. We have given money to international agencies to lecture our backward brothers on the need for planning their development, but the donors are not practising it themselves. That is one of the things that is wrong. Every country is giving its dollops of help for motives which have nothing to do with the prime purpose of securing the economic development of the recipient countries of the world. They are giving help for reasons of national prestige, or for political motives to sustain certain régimes as against others, or for reasons of rivalry in the cold war, or for reasons of their own internal economic self-interest. Because the motives are wrong, the help bears no relationship to the results in terms of maximum economic development.

Even where aid is multilateral—and as I have pointed out, it is a small fraction of the aid provided—it is unco-ordinated, and in the Bill we are dealing with one of the multilateral agencies which is clearly filling a gap. The International Development Association was created because some of the other multilateral agencies were not meeting the need. It is certainly going along much better and more sensible lines than some of the other international agencies, but, here again, its work is not co-ordinated with that being done by the other agencies.

We have specialised agencies which are pursuing schemes without any relationship to the overall development needs. We have the World Bank lending on these impossibly onerous terms, and lending not for a plan but often for just a string of isolated projects which no more set a model of planning than the Government Front Bench do. We have had the I.D.A. tacked on to eke out these difficulties. We have the Special Fund doing excellent work with its surveys, but it is working, in a vacuum. It is spending its money on projects which are not followed up, and the money is, therefore, largely wasted. We have an expanded programme of technical assistance going on in its own sweet way, often overlapping the work of the specialised agencies which may be giving technical assistance in various forms. The result is confusion and waste at the receiving end.

I have recently been on two tours to Africa. Before Christmas I visited East Africa: Kenya, Uganda, and Addis Ababa. Since Christmas I have visited North Africa: Tunisia, Algeria and Morocco. Everywhere I went I discussed overseas and, the forms it was taking, how it was meeting the needs, and what those receiving felt about it. Everywhere I went I found disillusionment and irritation.

Mr. Ben Sallah, the Economic Minister of Tunisia, told me how much of his energies had to be consumed in endless time-wasting negotiations with different countries and different agencies. One planning officer in Africa said to me, "We are sick of all these peripatetic experts coming and telling us what we are to do. What we need is more people to help us to do it." Another planning officer complained about the effect of tied loans. He said, "It means that we have to buy goods from the United Kingdom at higher prices than we have to pay in East Africa", and he quoted as an example the purchase of metal windows.

In Uganda, I found a glorious example of the failure to co-ordinate forms of assistance from this country. I found that they had been granted a Commonwealth assistance loan which was tied to the purchase of goods from the United Kingdom. But because of the low import element in their development plan they did not need these goods as urgently as they needed money for local costs, for example, for wages and materials, to build hospitals, veterinary dispensaries, a fisheries training school, and so on. The result was that they had £7,000 in hand to spend on equipment under the Commonwealth Assistance Loan, but they first had to find £33,000 for the local costs of projects which they could not afford to finance. When they came to this country for an untied loan of £5 million towards local costs they were told, "You have to spend your tied loan first". They are, therefore, sitting on money which they cannot spend because it is tied and unrelated to the planning that they are doing.

I went to Makerere College and talked to many experts both in the college and attached to research projects under various foundations and the proliferation of agencies that exist. I was given examples of the misuse of technical assistance, again due to a lack of co-ordination. For instance, I was told that difficulties often arose from the fact that students sent overseas for training—for example, pharmacists in Greece, and doctors in India—returned with qualifications which were not recognised in Uganda, which has adopted British standards. Government Ministers told me that it was very difficult for the Government not to finance a student who is offered training in a foreign country, even though they know that his qualifications will not be recognised when he returns home. What a glorious misuse of public money, raised with great difficulty.

I was given another instance while I was at Makerere College. I was told that a certain diploma course at the Royal College of Nairobi involved the mastery of London building codes because the Royal College used to be under London University. What a total waste of time and money.

I was also told that the medicine school at Makerere could concentrate its five-year training programme for doctors into four years by cutting down the vacation periods, but that if it did that the doctors would not be accredited by the B.M.A. I suggest to the House that in such cases it is unfair to our people to talk merely about giving more aid without a thorough review by the House of the uses to which the existing aid is being put.

We recognise the need to provide more aid, but I do not think that we ought to vote it until we have had a fundamental rethinking both of the purposes of the aid and the way in which it is raised. These points are closely linked. We recognise that bilateral aid—some of it tied—will be essential for a long time. It will be necessary until international aid has been better co-ordinated and is better administered, and until we have a better system of international credit to relieve the pressure on our balance of payments. Why is not this country giving a lead to both those ends? It is far more important to do that than to come to the House and ask for another instalment of aid which may prove as ineffective as previous instalments we have paid.

I recognise that this country is contributing a considerable amount of aid. We have done quite a lot in that direction. But it would be far more effective if we were to press much more urgently than anyone in this Government not only has done, but is authorised to do, first, for international monetary reform, without which we dare not be more generous, because of the balance of payments aspect of the question, and, secondly, for the creation of a world development authority to carry out genuine multilateral planning in consultation with the receiving countries.

Again, I turn to Africa for an example of the urgency of the need for this co-ordinated plan. We all dilate about the difficulties—and, heaven knows, they are immense; the amount of aid already voted is like a drop in the bucket of need, when we face it—but much more could be done. Revolutionary changes could be carried through if proper planning had been worked out at the top, and if proper concepts of economic planning were to infuse the work of all those who contribute aid.

Mr. Dudley Williams (Exeter)

I am fascinated by the hon. Lady's discourse. She has pretty well convinced me that all aid to under-developed countries is a waste of money. But how does she suggest that we should form her authority, which is to run the whole of the economic aid to under-developed countries? Could she enlarge upon that point?

Mrs. Castle

Yes, I shall certainly do that. But, first, let me answer the hon. Member's suggestion that I am convincing him that all aid is useless. That is the last thing that I want to do. That would, indeed, be a defeatist doctrine. I do not feel defeatist about the possibilities; I am merely highly critical of the methods that are being adopted now. Let me give the hon. Member an example of what could be done with a proper development plan.

In Africa, 80–95 per cent. of the population live in villages. They depend on agriculture, fishing and forestry. The extreme backwardness of their agricultural methods is the main reason for their appalling poverty and disease. Nobody in this House dares to talk about aid being useless when in many parts of the African continent the rural income per head is £10 per year, and 50 per cent. of the children die before reaching the age of 5, due to protein deficiency.

Than is not an insoluble problem. Technologically, agriculture provides the most hopeful field of all, because it is there that the biggest break-through can be achieved with the lowest effort and expenditure. We are in the middle of a tremendous biological revolution in agriculture, which has pushed up output in developed countries, such as America and Germany, almost to a point of crisis. The developing countries themselves have already discovered what could be done. The normal agricultural production of cocoa in Ghana provides a yield per acre of about 200 lb., but on Ghana's experimental farms the yield has been pushed up to 1,800 lb., and in certain research institutions to 3,500 lb. per acre by the introduction of improved strains, plant protection through spraying, and the use of fertilisers.

This means that Africa is crying out for an agricultural revolution just as urgently as this country needs a scientific one, and we should be facing the possibilities of carrying out that agricultural revolution in Africa just as, at home, we must get down to finding methods of applying the scientific revolution.

Mr. Dudley Williams

rose—

Mrs. Castle

Not again—until I have answered the hon. Member's point.

Mr. Dudley Williams

The hon. Lady has not begun to.

Mrs. Castle

I am coming to it, in my own way and in my own time. I am trying to show the hon. Member that the answer is not to be defeatist, but to get the priorities right. I am making a speech about priorities. Priorities are the basis of planning. The hon. Member would be unable to grasp that, because he belongs to a party that has never understood planning and has never applied it properly in this country—so how can he hope to plan world aid?

If we are to achieve these results in Africa, what we need is to link the educational effort in Africa to rural needs—to the acceptance of better techniques in raising crops, in choosing food and in developing rural industries, such as food processing. The last thing that we should be doing is spending money from sources of international aid on an educational effort that encourages the African to turn his back on rural life.

What we should be doing is stimulating an educational effort, centred round rural life in the villages. It should be an effort in which the school is linked to the farm, and becomes the centre of a community development, which is badly needed in these villages and in which the teacher plays a central rôle, so that he can be equipped to do more than merely to spread literacy, or to encourage one or two "go-ahead" young Africans to climb to the top of the educational column, put on white collars, become administrators, earn fantastic salaries, get out of touch with their own people, and leave their villages to rot.

That is a recipe for forcing African Governments into economic crises which will openly invite Chinese intervention, because the only alternative will be a kind of totalitarian revolution on Chinese lines, which centres the effort on the villages but in a form much more dictatorial than we want to see adopted in Africa.

Yet U.N.E.S.C.O., a specialised agency working in a vacuum, has produced a plan for African education development almost completely on Western lines, bringing Western standards and concepts into this African context, with the result that the plan will be so costly that it will leave no margin for adequate economic development. The plan visualises a payment of teachers' salaries at a level which, related to the average income per head in Africa, would be equivalent to paying our teachers £4,000 or £5,000 a year. This programme visualises the provision of university places—again taking the same basis of comparison—at a cost of £50,000 a place compared with £1,500 in an English University.

This shows the urgent need to integrate the work of the specialised agencies into development planning as a whole. At the United Nations there simply does not exist any central agency for doing this—any more than in this country there is a Minister for co-ordinating all aspects of development and who, whenever we have to vote any aid, of whatever kind and however limited a nature, can see that the House is able to consider that aid in the context of overall development planning. Nothing less will serve to meet our responsibilities to our own people and the urgent situation of world poverty.

This world development authority must be created by the United Nations. It is obvious what its powers should be. It should have power to co-ordinate all development work which at present falls under various headings. It should co-ordinate the work of the Special Fund and be responsible for it; and be responsible for the work of the Department of Technical Co-operation and all the development work done by the specialised agencies in various fields. Its task should be to encourage donor countries, at present giving much of their aid bilaterally, in future to give it through the world development authority or, until that is done, at any rate to meet the world development authority and recipient countries and to work out an overall strategy so that even the plans of bilateral aid from individual countries can be fitted into a central world development pattern.

To be effective, this world development authority needs a source of revenue, which I will call a world income tax, calculated on the basis of ability to pay. We are all agreed that the amount of aid which we give ought to be increased; 1 per cent. is no longer adequate and 2 per cent. ought to be the goal. Other countries, rich and poor, ought to contribute—because there are some rich people in poor countries, and it is intolerable that they should make no contribution.

This world income tax would be calculated as a percentage of the national income per head after the deduction of a basic income allowance per head to allow for the fact that poor taxpayers exist even in donor countries. The principle would be that all nations should contribute and that by such a system we should allow for the fact that there are poorer taxpayers even in the richer countries. That is why we feel that there should be the deduction of a basic income allowance for this purpose, just as in our own internal taxation system we have such an allowance. We should try by this method to see that our own old-age pensioners, who are too poor to pay tax in their own country, do not finance poor countries out of their own poverty.

I suggest to the House that we must start acting as though there were a world government. We should start reinforcing world solidarity in this way. We should challenge every nation in the world to play its part. When such a world development authority was set up, if the Russians refused to take part they would show that in giving their aid they were not serving the needs of the recipient countries but were merely playing politics.

There are responsibilities, too, among the recipient countries. I do not think that we are doing enough to ensure that the receiving countries fulfil their responsibilities. Aid should, therefore, be made conditional on the receiving countries working out socially just and economically sound development plans. Aid would not go to finance wasteful social expenditure in poor countries or prestige projects which have nothing to do with the purpose of the Development Decade, which is to launch these receiving countries on proper economic planning.

I found in Africa many examples of the need for receiving countries to be made to accept planning in a more effective way for the purposes of receiving aid. For example, I was astonished in Tunisia to discover that that country, with a population of 4 million, is planning to build its own steel plant, with overseas financial help. That is a country not even the size of the London County Council. The next-door country, Algeria, is already running the Acilar steel rolling mill, which it took over when the French abandoned it.

This is at a time when the experts of the Economic Commission for Africa have been working out regional development plans showing that to be economic a steel plant should serve a population of at least 50 million people. They have been evolving patterns of sub-regional development which would enable major industrial projects, such as in the steel or chemical industries, to be developed on a sound economic basis instead of on this absurd basis of narrow and uneconomic national prestige. A world development authority would be able to exercise this kind of discipline over the receiving countries in a way in which individual countries, giving bilateral aid, cannot do without being accused of neo-colonialism.

I tell the House that, while we accept the Bill, we do so under protest that Britain is not giving a lead in the direction of selling our overseas development policies—and it is not doing it because it cannot do so until we have put our own house in order first. We cannot talk about the need to co-ordinate other agencies until we have co-ordinated our own agencies for distributing aid.

Look at the situation which the Bill reveals. We have no fewer than Seven Departments with a finger in the pie, six of them with other responsibilities—the Treasury, the Board of Trade, the Colonial Office, the Commonwealth Relations Office, the Central Africa Office, the Foreign Office and the Department of Technical Co-operation, to say nothing of those Departments which have also a general oversight over the relationship with the work of the specialised agencies, such as the Ministry of Agriculture, which deals with the F.A.O. and with international commodity agreements in food, and the Ministry of Education, which deals with U.N.E.S.C.O.—and so we could go on. Our country is playing an important rôle in overseas aid.

To begin with, therefore, it would help to get the world development authority launched if we had a Ministry of Overseas Development in this country, with the same co-ordinating function as a Ministry of Planning and with Cabinet rank to show the importance which we in Britain attach to the challenge of the Development Decade. The job of this Ministry would be to come to the House with a co-ordinated strategy. It would also have the task of educating our own people in the vital rôle which overseas aid plays in the life of the world, in the struggle for peace, in the development of new markets and in our fight for full employment. Nothing effective is being done to educate our people in this vital matter. This country is full of warmhearted people. They have shown this by their response to various voluntary bodies—Oxfam, Voluntary Service Overseas, and others. I believe that they would respond to this challenge if it was put to them.

But I warn the House that when stories leak out in the Press of the wasteful use of overseas financial aid there is a reaction in this country. People resent it. They say, "Charity begins at home". We must prove to them that this country's representatives are doing battle against the waste of expenditure. We must also prove to them that overseas aid is no longer a form of charity: it has become a vital factor in our survival and in the world's survival.

We in this country are particularly well equipped to play a major rôle in the councils of the world in bringing about this exciting new change in attitude and in machinery. There is only one way in which we can hold our own against the richer Powers, and that is by being better organised. We should be better organised in this respect as well as in our own internal economic planning. The wind of change is not blowing only politically. It is blowing economically, too, and it is for this potentially influential country to give the lead.

4.51 p.m.

Mr. Charles Longbottom (York)

I am very pleased indeed to follow the hon. Lady the Member for Blackburn (Mrs. Castle). I share with her a great interest in the problems of overseas aid and assistance. I have visited many of the countries which I know she has visited. I expect that I have spoken to many of the people with whom she has spoken about aid from the point of view of the receiving country.

The hon. Lady made a very thoughtful speech and I agree with a great number of the suggestions she made. I was, however, a little shattered by the idea of world income tax. I should have thought that we already have enough Income Tax. I always wonder whether it would work. In view of the number of nations which do not even pay their contributions to the United Nations, I wonder to what extent they would be willing to pay world income tax.

Nevertheless, I share this great interest with the hon. Lady. I also admire the aim and purpose of the International Development Association. In sheer practical terms this is the way in which industrial countries can best help developing countries in their capital needs. Most developing countries—I cannot think of an exception—qualify for the aims of the International Development Association. I do not believe that there is one developing country which can afford development finance on conventional or commercial terms. The terms put forward by the I.D.A. are extremely fine. They are, as my right hon. Friend said, a 50-year period, with a 10-year grace period, with no interest charge, and with a service charge of only 0.75 per cent.

Like the hon. Lady, I have spoken to many people in receiving countries who know exactly the type of aid which will best help them to overcome their problems. In practically every case I have come across they have stressed the need for long-term loans without a crippling interest rate. I was also delighted to hear my right hon. Friend say that some of this I.D.A. money will perhaps be given over to capital projects in agriculture. As the hon. Lady said, in every African country there is the basic need to build up an agricultural economy. Virtually every African country is short of the money with which to do so. There is a need for large capital projects in all developing countries. This need will not diminish in the coming years. It will, if anything, increase. Yet already the debt burden on normal commercial loans is far too high for many of these countries.

I take India as an example. In her third five-year plan it is estimated that, of a total of £2,400 million official aid and private investment which is expected during the planned period, about £340 million, or 14 per cent., will be needed for loan repayments falling due within the period. This figure does not even include any payment of interest. This shows the grave problem with which developing countries are faced when taking loans in future. I go further and suggest that, unless the industrialised countries—here I applaud the International Development Association—think now of tackling the problem, the whole thing will become a vicious circle in which we shall have to generate aid to these countries so that they can fulfil their repayments without even taking interest into account.

Apart from the International Development Association loans, I wonder whether my right hon. Friend has carefully considered the need, fulfilled by many industrialised countries, for giving such long-term no interest or low interest loans bilaterally. One can envisage many large capital projects—electric power stations, oil refineries, roads and other communications—which are very much within the capacity and competitiveness of British industry. However, British industry alone, taking it as a single unit, can offer these countries credit terms only on normal commercial standards.

I suggest that the need of the developing countries and British industry goes together in this way. British industry should ask the Government to consider the granting of long-term low interest loans for capital projects to be built by British industries in developing countries. Other industrial countries do this. For instance, I believe that recently the United States Government have helped Westinghouse to produce a loan similar to an I.D.A. loan so as to build an electric power station in Egypt. I hope that the Treasury will examine my suggestion.

We all know what the first answer to the Treasury will be, namely, that there is a thing called the Berne Agreement, which stipulates such conditions as the period and the amount of interest under which such loans can be made. As in these days practically every other signatory to the Berne Agreement does not fulfil the terms of the agreement, I do not see why it is completely necessary for us to stand by them. Further, there could be a specific exception to the agreement where the developing country qualifies because it is unable to accept finance on normal conventional terms.

I agree very much with the hon. Lady that this country has not examined our aid techniques far enough. The period of colonial responsibility, which has been a major preoccupation of Members on both sides of the House, and of Governments in particular, over the last two decades, is now, with some large exceptions, drawing to a close. However, our responsibility as a country in aid and technical assistance to help these countries to make their independence worth while and to become economically independent of outside forces still continues to as great an extent as it was ever needed in the days of our colonial responsibility.

I do not believe that as a country we have examined the whole of our aid assistance programme as we should have done. Have we considered whether the aid we give is really effective? Have we noted, for instance, that the needs of these countries for long-term loans, such as we are now discussing, and for finding markets for their goods outside their territories, are equally as great as the need for any aid which we may be able to give them? How far, for instance, have we examined our attitude towards international agreement? It may not necessarily be on our side, because we are consumers, but there is certainly just as great a need to stabilise the economy of many of the developing countries as there is for aid to them.

I agree again with the hon. Lady the Member for Blackburn in asking how far we can possibly go towards examining these problems when we have a Foreign Office, a Commonwealth Relations Office, a Colonial Office, a Central Africa Office, a Treasury, a Board of Trade and a Department for Technical Co-operation, to go through the whole picture again, to look at these problems. How can we co-ordinate this aid programme?

Let us look at the position of the Secretary for Technical Co-operation. I feel very sorry for him when he travels abroad, because I am sure that when he arrives in a country the first thing for which the people there asked him is aid, because without the aid and the money that is generated by an aid programme there can be no need for technical assistance. Therefore, they wish to discuss this matter first. But, of course, aid does not come within this Minister's Department. He can only discuss technical assistance.

We need to co-ordinate all this effort in a Ministry of Aid and Development and see that all the sinews of British aid are brought together. I suggest to my right hon. Friend that we need to co-ordinate the very substantial effort which this country makes for two reasons. We want, first, to see that our aid is well spent, that we are making the maximum use of our resources in the countries to which this aid is going. Secondly, we also want to win public opinion on to our side. How many of the general public realise that the aid programme of this country is twice as big as that of all the Communist countries today in any one year and recognise that our aid programme is a substantial one? Equally, how many people realise the desperate needs of Asia, Africa and Latin America for assistance in a concrete form from the developed countries? How many people know the extent of the poverty and of disease in these countries? How many are aware of the abysmal, unhappy circumstances of the ignorance of mind in which so many have to live?

We have seen in this country the enormous efforts which have been made by individuals in their support for such things as the World Refugee Year and the Freedom from Hunger Campaign, at Oxford. There is a great deal of good will and a preparedness to do a lot of work in connection with these problems. What we need is to create a Ministry of Aid and Development and to win public opinion over to the idea of spending much larger sums on these matters. In supporting the Bill, I urge the Government to examine much more closely their aid and development programme and to co-ordinate it within the ambit of one Ministry.

5.4 p.m.

Mr. Donald Chapman (Birmingham, Northfield)

I welcome what the hon. Member for York (Mr. Longbottom) has just been staying, but I think that the House is a little tired of this sort of repentance on the part of hon. Members opposite.

The whole of the arguments that the hon. Gentleman has been deploying today were made from this side of the House in extenso when the Department for Technical Co-operation Bill was debated in the House. We moved Amendments to the Bill seeking to give the Department the powers to do the job which the hon. Gentleman wants it to do. They were all voted down by the hon. Gentleman and his hon. Friends. It is all too late to come along like this and espouse great causes as if they were something new. All these things have been said from this side of the House until we are tired of saying them. It is too late for hon. Members opposite to claim the credit for making these suggestions today.

Nevertheless, having said that in criticism—I hope fair criticism—of the hon. Gentleman, I welcome the idealism with which he spoke. I must say, too, that I welcome the lead given by my hon. Friend the Member for Blackburn (Mrs. Castle) in broadening this debate, in lifting it from the mere £ s. d. of a Treasury Bill to the problems of development generally in the world. In fact, we shall be in very great trouble in the coming years unless we get these problems right.

I do not want to go so far as did my hon. Friend the Member for Blackburn. I confess that I personally would not go so far as she did in talking about a world development authority. I think that most of the work that needs doing can be tackled by one of the agencies that already exist in the United Nations and elsewhere. What we need is to co-ordinate effort and to fill in the gaps rather than to create one new supra-agency above all others. Nevertheless, I am sure that my hon. Friend was on the right lines in saying that this work has grown up slowly and hesitantly and that it is now time to put the whole thing into a co-ordinated picture.

When I was thinking about this debate last week there were two rather interesting incidents which made me think even more about it. The first was in the middle, or perhaps at the beginning, of the week when we saw on television some of the first pictures to come out of Kenya and Tanganyika following the recent disturbances there. Although they did not seem quite related to the disturbances, one of the series of pictures on television was of men storming the Ministry of Labour in Kenya. The commentator said that in Kenya they had adopted, as we all know, the slogan "Uhuru"—freedom. What had happened in the immediate weeks of freedom was that the Africans had thought that freedom meant not only political freedom, but the absolute right to a job and a livelihood now.

This was the cause of great disturbance when the men streamed into—practically broke into—the Ministry of Labour demanding work. They simply shouted "Uhuru", thinking that this was enough to secure their millenium. Surely this must be in our minds as the background to this debate.

The second thing that happened to me was at the weekend in my constituency. I have an extremely intelligent constituency in the sense that it takes a good deal of interest in wider world subjects. It is a well known intelligent area of the Midlands. In the area there is a great concentration on things like the Freedom from Hunger Campaign—Oxfam—and there I can talk with many about these great idealistic objectives. I was talking to people in my constituency about these things, and most of them had no idea about I.D.A. They did not know that it existed. They did not know the extent of the British Government's contribution to these sort of bodies. They had no idea of the order of magnitude of British aid and no idea of what official machinery existed in this country to do anything about it.

I must say that these two incidents are a valuable background to the debate today, and I will come to them one by one. In the first place, let me emphasise what my hon. Friend said about the situation in this country. It really is deplorable that we should have a right hon. Gentleman from the Treasury to move a Bill of this kind. It is quite ridiculous in the sense that I challenge the right hon. Gentleman to tell me that in the Treasury today, with him as its spokesman, there is any section which is co-ordinating any set of officials—that there is any real brain-box, so to speak, which is co-ordinating what is happening to British aid overseas.

We know that such a co-ordinating Department does not exist. The Chief Secretary is put up to begin this debate because it is a money Bill and, after all, no one is supposed to be more immediately involved. Thus we have the absolutely ridiculous situation where we are voting money without having a Department consistently examining how it is spent. There is no co-ordination about the projects in mind, even in those parts of the world in which we still have some interest as the mother country. The Government are putting forward a Bill without having any idea of the great setting of our programme for overseas aid generally.

We are desperately in need of a Department of Overseas Development. In this connection, the Development Advisory Committee of O.E.C.D.—our partners in giving aid—has issued a report critical of the British Government in this matter. The Committee has said openly that the British system of evaluating projects and dispensing aid, even bilateral aid, towards helping other nations, particularly in the Commonwealth, is inadequate. That Committee has made the case for Britain to have a Ministry to do a proper job in this respect.

The problems of the developing countries are now extremely complex and the situation has changed radically in the last six years. Six years ago we were giving most of our aid to our colonial possessions. That was a mere case of being absolutely responsible for doling out money to countries for which we were responsible. About £150 million of our aid each year is now going to the independent countries. We therefore desperately need a Department which knows something about development planning, modern techniques, evaluating new systems of planning in the various countries applying for aid, able to help them formulate good projects, and, thereafter, to put them on the right road to proper economic development. In short, we need a Government Department which has experts working at home and overseas ensuring that we know where the money should be spent, that the projects on which it is spent are good, and that countries are being helped to formulate new projects on the basis of the previous ones which we have helped finance.

As my hon. Friend the Member for Blackburn said, we will be doling out money for years to come without having proper machinery for seeing that it is well spent. Even in Parliament today we cannot have a proper discussion—until my hon. Friend forced one today—on the respective merits of bilateral and multilateral aid. This is one of the crying needs. We must make up our minds on how and where the £150 million should be spent. Is it still to be bilateral, with only £10 million being spent on multilateral aid? I believe that it should be the other way round; but we have no means of discussing it because it is not a single Ministry's responsibility. There is, therefore, no real opportunity for hon. Members to challenge the decisions which are being made. The whole thing has grown into a complete muddle, and the attitude of the Government towards the matter is absolutely deplorable. A completely new attitude is needed.

I have previously given the Chief Secretary notice of one or two questions I intended to put to him. Why have the British Government made no application and done nothing actively to get the I.D.A. to help parts of the West Indies? These areas fit the requirements of I.D.A.—that countries should be so relatively badly off that they have difficulty in servicing loans, in paying annual interest charges and so on. This criterion applies above all to British Honduras, a small territory whose population is too small to finance the sort of development needs of a major country.

So small is the population of British Honduras that the country is unable to service the annual costs of a proper airfield. It is too poor to have much road development, to pay for a sewerage system in its capital—remembering that Belize, the capital of British Honduras, has a sewerage system which the Downie Report described as an "affront to humanity and a danger to public health". It is too poor to finance the £4 to £5 million needed to do any of these projects properly. Despite this, each one of these projects is of the type that I.D.A. has been financing in many other countries. I.D.A. has been concentrating mainly on roads, water supplies, schools, and so on. The requirements of British Honduras absolutely fit in with I.D.A.'s pattern.

There is an even bigger idealistic solution envisaged in the Downie Report on British Honduras. The idea is that British Honduras needs an inflow of population of about 7,000 a year—a number which other parts of the West Indies would be glad to export. British Honduras needs this inflow if it is to be able to become a viable economic unit with a population of about 300,000. What could be better for I.D.A. than to work on the idea of steering these people on to the land, with the agricultural capital that is needed—remembering that the land is plentiful there and that the capacity of the country to absorb additional population is undoubted? I gather, nevertheless—and I accept that I gave notice to the right hon. Gentleman only last Thursday that I would raise this subject—that all he has been able to tell me today is, in effect, "We talked about this in London a year ago when it was left for someone to see someone else". What a way to run a British Commonwealth. Here we have a country desperately in need of the help of this international agency and where we are still waiting for one member of the British Government to talk to someone else. This is deplorable. It is an example of the way we need the services of a Minister of Overseas Development to tackle this sort of problem.

Another example of the way in which I.D.A. help could be given—and I also gave the right hon. Gentleman notice that I would raise this matter—is the Leeward and Windward Islands. One of them, Montserrat, is a small island of terrible poverty. It has an average national income per head of the population of about £50 a year. I appreciate that it is somewhat better than Africa: I am not claiming to be the first in the queue. However, I am at least in the queue on behalf of the West Indies. This average income of £50 a year compares with our £500. This island is desperately in need of help because many of its inhabitants are living in abject poverty.

The fiscal commissioner whom we sent out to look at the Caribbean not long ago, Mrs. Hicks, the Oxford economist, and others like her, have reported that Montserrat is one of the poorest of our colonial possessions in the area. They have reported that the island could have a bigger banana production. Banana production could be on a scale great enough to make it worth while for a banana boat to call—thus saving the cost of transporting the bananas first to neighbouring Dominica—but only if the country is opened up with roads, electricity and water supplies, every one of which has been the sort of thing that I.D.A. has been concentrating on in other countries.

Mr. Boyd-Carpenter

In fairness to I.D.A., in the course of my speech I pointed out that there was no trace of any application in respect of these two islands. On the general point I think that the hon. Gentleman is giving I.D.A., from our angle, a little less than the credit to which it is entitled when one recalls that 70 per cent. of the commitments so far incurred by that body have been in countries of the British Commonwealth.

Mr. Chapman

The right hon. Gentleman is mistaken. I am not attacking I.D.A. I am attacking the British Government for not having made an application. How could I possibly be attacking I.D.A. when the British Government have made no application in respect of Montserrat? It is our duty as the mother country to formulate projects and put them up to I.D.A., and yet the right hon. Gentleman tells us that no such project has been put forward.

Mr. Boyd-Carpenter

It is not the case that it is for this country to put forward to I.D.A. applications in respect of projects in any part of the Commonwealth. These projects are put forward on their individual merit by the promoters of them; no doubt in this case by the local Governments. It would be a complete misuse of this very distinguished international body, on which we are represented by an executive director, if we were to handle them in this way. These projects are put forward by the promoters of each product on its merits.

Mr. G. M. Thomson (Dundee, East)

rose—

Mr. Deputy-Speaker (Sir William Anstruther-Gray)

Order. I am afraid that would be an interruption of an interruption.

Mr. Chapman

I would say to the Minister that he is totally misinformed on this matter. We have a British representative in I.D.A.'s Board and accredited British officials whose job it is to keep track of the work of I.D.A. We have Mr. Pitblado, who is the British representative. I am saying that in Montserrat, with its tiny resources and with only a portion of internal self-government, it is impossible to envisage that this tiny island could put forward a complete project to a body like the I.D.A. It needs the help of the British Government in formulating it, and as our overall responsibility remains for that island it is our job to present that project to the I.D.A.

Mr. G. M. Thomson

I merely wanted to support my hon. Friend and to point out to the Chief Secretary the point which he seems to be unaware of—that the territories which my hon. Friend is mentioning are Colonial Territories. The Secretary of State for the Colonies is the one person who could have made application to I.D.A. for a grant.

Mr. Boyd-Carpenter

That is entirely contrary to all procedure.

Mr. Chapman

If the right hon. Gentleman says that it is contrary to all procedure, what he is doing is in fact writing off whole parts of the British colonial empire because they are too small and too badly organised ever to put up projects on this scale. The Government are not doing their job as they ought to be doing it on their behalf.

Mr. Boyd-Carpenter

The procedure is that the projects should be examined, assessed and put together by the staff—as I explained in my earlier speech—of the International Bank, which is particularly skilled in these matters and qualified to do just the jobs which I quite agree with the hon. Gentleman are probably beyond the technical resources of small societies to do. It exists for that purpose. To try to turn the I.D.A. into a body in which this country acts as a sort of pressure group from outside would defeat its whole purpose.

Mr. Chapman

No one has said that we want this country to become a pressure group. We do not want it to press in the case of Tanganyika or other independent countries, but I regard it as a sacred duty to put forward the projects of our own colonial possessions to the I.D.A. This is quite intolerable. If our approaches to I.D.A. on behalf of our colonial possessions are nil we know exactly why no money is coming to us from I.D.A I am not attacking I.D.A. in the least I am attacking the British Government for not putting forward these ideas on behalf of our own possessions for which we have complete financial responsibility to this House.

I say in conclusion on these areas that Montserrat has a desperate need for electricity, water supplies and improvement of roads. Every one of these is the sort of thing for which I.D.A. has been giving money to other countries. I could make a similar case in respect of Dominica where again money is needed for communications particularly and highway development, the sort of project where I.D.A. has been pre-eminent in its work so far.

Despite what the right hon. Gentleman has said, I feel that the possibilities here are better than we have been led to believe from this lack of energy on behalf of this country before I.D.A. We now know that the World Bank has become worried about the failure of projects to come forward in sufficient number. We had a statement made only on 18th December last by Mr. George Woods, the President of the World Bank, saying: We are, becoming more and more concerned, however, that progress in both the formulation and execution of overall development programmes will be impeded by this lack of sufficient well-designed projects necessary to make these programmes a concrete reality. We have been trying to help this shortage by organising and bearing part of the cost of studies of studies of promising projects or of measures needed for the development of specific sections of the economy. We have now authorised eighteen of these projects and such studies. … He goes on to say that the Bank will—and this, of course, applies to I.D.A. which is an affiliate—increasingly help to bring forward the projects itself. I regard this as one of the best possible developments in the work of I.D.A. It means that it, too, like many hon. Members on this side of the House, is becoming worried that proper plans for the parts of the world needing development are not coming forward fast enough. All good luck to it; all the more power to its elbow in setting about the job itself, in provoking the projects and outlining them and getting them ready, where countries are not doing them fast enough to make their development plans into a reality.

It is a qualified welcome that we give to this Bill. It is qualified because we do not believe that the Bill has been discussed in its proper setting of overall British aid and because we are doubtful whether the British Government are organising themselves and working hard enough in these matters to gain as much money as possible for our own parts of the world and to urge the world on to being even more generous in these projects generally.

5.28 p.m.

Mr. Frederic Harris (Croydon, North-West)

I returned from Kenya and Tanganyika only one and a half weeks ago, and what has struck me today is that so far the point has not been made that, apart from the financial aid that must go all the time in increasing quantities to these overseas ountries—especially, to speak of my own case, to the East African territories—they also want all the technical assistance we can send them.

I should not like to be quoted too freely on this, but I believe that in Tanganyika, even at this very difficult time, quite a lot of finance is available but the technical people are not there to carry the plans forward. That is a very serious matter, and I appeal to my right hon. Friend the Chief Secretary to take it very fully into account in any Government approach. These developing overseas territories need every bit of technical aid they can get from people sent out to them.

The unemployment situation in Kenya is very serious, and we need to give all the assistance we can—and I appreciate that this Bill seeks to do so—to help the Government there to overcome what is their prime problem. Reference has been made to the demonstration made by the unemployed in Kenya. I was present when is occurred and fortunately, in some respects it did not appear to me as serious as had been made out. In typical African fashion, there was some very good humour present as well, and I did not get any idea of physical violence. That is not to understate what lay behind the trouble. I know that the Prime Minister and the other Ministers out there are very anxious to do all they can to tackle this problem.

Unfortunately, very legitimate trade union pressure has resulted in an increase in some forms of unemployment in Kenya because, as some workers are getting more money, their employers are having to try, by getting more and more efficiency from their employees and, in some respects, replacing manpower by machinery, to keep their wage bill in some kind of balance. This is a major problem in certain farming districts.

There is a very strong move afoot, and I think that it will come to something, to get a general understanding between the Kenya Government, the responsible trade union leaders—many of whom are very responsible—and the employers, to tackle the problem. I understand that they are trying to work on a kind of standstill for the time being, with the trade unions, who have made a good move forward for their workers, stopping putting on the pressure for a little while so as to give everyone a chance, with the Government responding by getting under way such work as they can, and for employers to increase their labour force by some 10 per cent.—mainly unskilled labour—on capital projects they had not intended to start for a year or two. An obvious project is development of communications. Many companies have their own railways which need to be reconstructed or otherwise put right.

If an arrangement like this can be made, such work can be started very quickly. This represents a great step forward, and I suggest to the Chief Secretary that the present seems to be a very appropriate time to help. I believe that in the near future there will be a real development in tackling unemployment in Kenya in a most dramatic way. This is the time when our Government should try their utmost, as I know they will, to step up their help to Kenya, and in that way, perhaps, avoid many other problems that will otherwise arise.

Communications, and roadways in general, are a problem in Kenya. Many hon. Members must have travelled the road from Nairobi to Mombasa, and will know what appalling conditions can arise, particularly in bad weather. Quick and energetic work on some of the roadways would not only provide a tremendous amount of additional employment but would, in the long run, assist very materially in the efficient running of industry in Kenya, and in East Africa generally.

I therefore appeal to my right hon. Friend on these two main points. I want the Government to remember that although financial assistance is vitally necessary to these countries, they also want as much technical assistance as possible from people going there to carry out the work and assist in spending the money on sound projects. Germany, for instance, does not give aid to these undeveloped, or developing countries—whichever way we may put it—without putting a lot of tags on the money, and sending experts to assist in spending it in a practical way. That is sheer common sense. Secondly, now is the time, when this move it afoot, particularly in Kenya, by firms, business houses, responsible trade union leaders and the Kenya Government, to step up our financial aid to its very maximum so as to assist in major projects. This will help the Kenya Government to tackle the very serious unemployment problem which faces them.

5.36 p.m.

Mr. Dick Taverne (Lincoln)

I hope that the hon. Member for Croydon, North-West (Mr. F. Harris) will not mind if I do not follow him in his argument. I was very interested in his remarks, but although direct aid to Kenya is very important, it is a little distance from the I.D.A.

My first point relates to the need for full discussion, debate, and most careful analysis. Here, I support what has been said by my hon. Friend the Member for Birmingham, Northfield (Mr. Chapman). We are now considering one of the really big things in world affairs, and this Bill is particularly concerned with the I.D.A., which is, potentially, one of the most important agencies in dealing with the problem facing us. Yet this question is very seldom publicly discussed. It is often treated as if it were only a question of how much money we are giving; we pride ourselves on the amount of aid we give, or criticise ourselves for not giving enough. This is an extremely complex, difficult and even controversial question.

First of all, how do we give the aid? A great deal has already been said about the relative merits of bilateral and multilateral aid. I think that we must all agree that, ideally, multilateral aid is the best form of help, but as it involves certain balance-of-payments difficulties we can with certain advantage explore certain forms of bilateral aid that do not give rise to the balance-of-payments problem and which, therefore, could make a material contribution, because the total amount matters, and not only the form in which it is given.

We seldom discuss the very difficult question of rivalry between various U.N. special agencies, the way in which different "empires" are built up, with each agency hanging on to its own interest and its particular share of total world aid, and with some of them sometimes refusing to read the reports of others in order to learn from the others' mistakes. We never discuss how the total amount of world aid should be shared between different countries. Should we concentrate the aid on those countries that are already considerably advanced and have reached the "take-off point," as it is sometimes called, or should we treat the total sum as essentially something to be given in equal shares? Is it a question of aid being shared evenly throughout the world and of all countries which need developing being assisted, or should we select specially those counties which can make the best use of aid?

Should we ourselves concentrate on the Commonwealth, or is there a danger that if we do that the United States will concentrate on Latin America and the Commonwealth might be worse off? How should we co-operate with other countries in giving aid? Are we satisfied with the present arrangements under the Development Assistance Committee of the O.E C.D.? Are not there proposals which we can put forward to the European Development Fund for co-operation and for preventing discrimination in aid as well as trade in Africa?

These are tremendously important problems which we never discuss. It is a failing in our democracy that opportunities do not arise for the House to discuss them. While the main speeches in the debates were being made, I think that there were three Members on the back benches opposite. There were more on the back benches on this side, but not many. There was not one Liberal Member here. These are problems which this House should be discussing. To a large extent, this is the fault of the Government because, as has been pointed out by my hon. Friends, the responsibility is completely divided. Since the Government have split the responsibility between so many Government Departments, it is regrettable that one Department which is not represented here is the Foreign Office. The part which aid plays in world problems as a whole is not a minor one.

My second point is to try to put the rôle which is played by the I.D.A. in some sort of perspective. We are congratulating ourselves that the amount which is now to be raised by the I.D.A., to which we make a valuable and substantial contribution, is to be increased by 66 per cent. Let us consider the part played by this Association. It started as an offshoot of the World Bank when it was realised that the assistance opportunities which the World Bank could give at commercial terms for its loans were extremely limited. The World Bank is approaching the point at which its net contribution will soon be nil. With the capital and interest being repaid, it will soon be receiving as much as it is handing out.

In setting up this new agency, the United Nations took the wrong view. It thought that most of the problems of the world could be dealt with in ordinary banking terms, with ordinary commercial terms for the loans, and that the remaining problems could be dealt with by another organisation which would give easier terms. The result is that the I.D.A. was set up as a body much smaller than the World Bank.

However, two facts must be remembered. First, if "soft" loans are to be given, far more capital is needed than in the case of "hard" loans. In the first place, repayment will take much longer and therefore less capital is being returned, and, secondly, the interest received is much less. Therefore, the money available is much less and more capital is needed proportionately.

Secondly, if one looks at the original size of the I.D.A.—and admittedly it is now expanding—the amount which it would be able to invest in the first five years was less than half the annual amount lent by the World Bank. I think that it was Andrew Shonfield who pointed out, on the creation of the I.D.A., that when we needed a giant we got a dwarf. We are boasting and congratulating ourselves that the dwarf has grown a few inches and that the amount of aid is not 150 million dollars but 250 million dollars a year.

It is to be applauded that the amount has increased by a considerable proportion, but in welcoming the Bill let us remember the background against which it must be considered. Let us remember that this is an organisation doing the sort of work which ought to be done on an infinitely larger scale. We are making a greater contribution, but it is still very inadequate. As my hon. Friend the Member for Blackburn (Mrs. Castle) pointed out, in viewing the matter against what we are trying to do in the world as a whole, we are failing in our job because we are failing to raise the standard of living of the underdeveloped countries. With the growth of population, their standard of living is rising by 1 per cent. a year. In those circumstances, we cannot really say that this great problem of the underdeveloped and developing nations is anywhere near solution.

5.45 p.m.

Sir Stephen McAdden (Southend, East)

It is a difficult world in which we live. I thought that this was a non-controversial Bill. I came to the House today under that impression only to find hon. Members engaged in a debate which seemed to range much further than the matters dealt with in the Bill. I am sure that all hon. Members heartily support the Measure, and I wish to seize the opportunity to range a bit wider than its narrow terms.

It may be argued that the sums of money mentioned in the Bill, although large, are not as large as we should like. In that we are in compliance with the view of the Executive Directors of the International Development Association. However, we are meeting our obligations and doing what they ask us to do, and that is a matter for congratulation. Hon. Members on both sides are always anxious that a great deal of money should be spent on various projects, all of them very praiseworthy. But it is not their own money. If it were, they might be a little more guarded about how they contributed and where it should go. It is the easiest thing in the world to vote money if somebody else has to find it.

I do not think it surprising that a Treasury Minister should introduce a Bill the purpose of which is to provide sums of money. That is the Treasury's job. It does not appear to me to be part of the Treasury's job to evaluate the various schemes which go before the I.D.A. I should have thought that that was the responsibility of the Association. I am sure that in their hearts hon. Members opposite realise that and that they are using this debate as an excuse to argue the larger question of general aid.

Mr. Chapman

Is it not the job of all of us, including Treasury Ministers, to ensure that the British contribution is being well spent?

Sir S. McAdden

I should have thought that, seeing we are members of the International Development Association, we would have believed that it was sufficiently circumspect in spending the sums which this country and other countries voted to it. If there were evidence that it was not doing the job properly, I should expect Her Majesty's Government to make representations about it.

The same argument applies to what was said by the hon. Member for Birmingham, Northfield (Mr. Chapman) about the responsibility which undoubtedly rests on the Government's shoulders to put forward projects for the development of those Colonial Territories which are our responsibility. We should encourage them to plan and develop schemes and, if they are thought worthy, to submit them to the I.D.A. I do not doubt that the Colonial Secretary does his best to put forward schemes of this kind to different Colonial Territories, although the responsibility for pressing their claims on the I.D.A. rests not with the Colonial Secretary but with the territory concerned.

If I understood the hon. Member for Northfield correctly, he was saying that this responsibility rests on the shoulders of the people responsible not only for the territories which are still Colonies but for the newly-independent countries as well.

Mr. Chapman

No.

Sir S. McAdden

I understood the hon. Member to say that it was our responsibility to look after the emergent independent nations. I am glad that he did not say that, because it would represent a gross interference with the rights of those countries to govern themselves.

I was glad that the hon. Member drew attention to the fact that in Kenya people have come to realise, perhaps a little too late, that merely having the vote does not guarantee them a job and a better standard of living. I am glad that we continue to give aid to Kenya on a fairly substantial scale in order that the progress which has been brought to Kenya in the last 60 years of British rule may continue.

It is right and proper that hon. Members should remember that the millions of pounds which we vote for this, that and the other are not ours but that they come from the pockets of the taxpayers of this country. They are contributing in substantial measure to aid all over the world, and that aid has to be related to the ability of this country to pay it.

5.50 p.m.

Mr. R. E. Prentice (East Ham, North)

Until the hon. Member for Southend, East (Sir S. McAdden) spoke, I was in agreement with the speeches from the other side of the House. Some of them, including the Minister's, were inadequate in some respects, but at least there was little with which to disagree. We have now listened to an extraordinary speech from the hon. Member for Southend, East. He seemed to suggest at one stage that our Commonwealth responsibility related only to the colonial countries and not to those who are now independent.

The hon. Member appeared to take a restricted view of the general problem of the relations between the richer one-third of the world, of which we are part, and the poorer two-thirds. My view is that, in terms of our economic future and in terms of the prospect of peace, those problems are among the greatest that this country faces. It is proper that we should evaluate in some detail what is being done by these institutions and not merely say rather casually that they have told us what they want, we will approve the sum to pay the bill and that is where the argument finishes.

I do not want to detain the House long, but I wish strongly to suggest some reasons why, in an expanded aid programme—and in my view it should expand—the International Development Association as an institution should play a much larger part than it is doing so far. My hon. Friend the Member for Lincoln (Mr. Taverne) said that it is potentially one of the most important institutions in the field. Unfortunately, it is still only potentially one of the most important and it has not taken on the larger rôle which it should have taken on in the last few years.

When the Minister replies to the debate, I should like him to clarify the extent to which the new programme involves an expansion of I.D.A. activities. When the Chief Secretary to the Treasury was speaking, he reminded the House that an original subscription of 750 million dollars had been appropriated in relation to the years 1960 to 1965. I understand that another 750 million dollars is to be payable in three instalments by the various countries concerned over the period from 1965 to 1967. Does this indicate, as I hope it does, that in that period there will be a renewal of a further contribution beyond 1967? In other words, is it clear that this is a three-year period of which we are speaking but that an expansion of activity is implied during the three years 1965 to 1967? This seemed to be implied in something which the Minister said, but it was not clear.

Mr. Boyd-Carpenter

The intention is that there should be a speeding up of activity from an annual basis of contribution of 150 million dollars a year over the original five-year period to a rate of 250 million dollars a year in the forthcoming three-year period, an increase of 66 per cent.

Mr. Prentice

I am grateful for that assurance. As I shall explain, I consider that the expansion should be much greater, but at least, the right hon. Gentleman has clarified the extent to which an expansion is envisaged.

I still feel disappointed on one of the detailed points. The first of the new subscriptions will be made in November 1965—in other words almost two years ahead. Paragraph 12 of the White Paper states that the Executive Directors consider that the payment of the remaining annual instalments under the original subscription will cover the period up to 1965. Presumably, however, that does not cover any expansion during 1964–65. In other words, the implication appears to be that the expansion of activity will begin in 1965. That, again, is a rather disappointing feature.

Mr. Boyd-Carpenter

I tried to explain this in my speech and I am sorry if I did not make it clear. There was a considerable shortfall in expenditure in the earlier years. There is, therefore, a substantial carryover. The hope is that taking that into account, plus any provision which is to be made, the rate of expenditure—not the rate of contribution—for the next two or three years will be near the 300 million dollars-a-year rate.

Mr. Prentice

I am grateful for that assurance. Elsewhere in the White Paper a number of reasons are given for this extra pressure. One of these, which has been mentioned several times in the debate, is the growing burden that the recipient countries are suffering in having to repay their original loans under stiffer terms.

There are, however, two other reasons which are mentioned in the White Paper. One is that there are now more members of the I.D.A. than there were originally and, therefore, more Part II countries which are able to call upon its resources. The other is the welcome reason that more attention is now being given by all the agencies to the laying down of development plans, making the kind of surveys which are made under the auspices of the Special Fund and, therefore, having the kind of development for which I.D.A. is particularly suitable. Therefore, the methods of aid now being used are particularly appropriate to I.D.A. loans rather than to the older type of loan from the World Bank or the type of aid which is so often given bilaterally.

Therefore, whereas those are reasons for the Bill, which we all welcome, they are also reasons for saying that all the countries concerned are taking too modest a view of the proposed expansion. This has been clear to a number of experts from the beginning. I was looking up recently the book by Mr. Paul Hoffman called One hundred countries and one quarter billion people, which was published in the early months of 1960, just before I.D.A. began its operations. One could not quote in this House an expert who would command more general respect than Mr. Paul Hoffman, both for the work he has done in this connection as Director of the Special Fund and also because of his practical experience as a successful American businessman before entering this field. He has in his book a chapter on the need for this kind of organisation—the need for loans on terms of long repayment with virtually no interest repayment.

Mr. Hoffman speaks of I.D.A. in these terms: There is a great deal to be said for creating I.D.A. more or less as planned so that it can start operations as soon as possible, even though on a small scale, and gain experience. But it is of great importance that we consider I.D.A. from the beginning as an institution that must expand its operations promptly to fill a substantial part of the investment gap. In my view there is urgent need for I.D.A. to expand operations rapidly after the first year. We should contemplate I.D.A. operations through most of the 1960s of no less than $1 billion in investment each year. If I.D.A. is not promptly expanded after a year or so of operations, then a new institution will have to be created. Even when we have translated a billion dollars from American into English terms, we see that Mr. Hoffman was contemplating investment on a much larger scale than has been taking place in the four years since he wrote those words and on a much greater scale than is contemplated in the future according to the White Paper and the Bill.

In 1962, Mr. Andrew Schonfield speaking at a conference in Cambridge, spoke in similar terms. He said: The conclusion is that another form of lending, the kind of lending which the International Development Association does, is the proper model for lending in the 1960s.… The only trouble with the 1.D.A, is that it is terribly small. I quote both Mr. Shonfield and Mr. Hoffman in support of the argument that what is being done through I.D.A. is precisely the kind of economic assistance that ought to be given to developing countries, and because it is precisely the kind of assistance which should be given it should play a much larger percentage rôle in the total volume of aid than is the case at present.

I believe, that our country and all the donor countries have to make three changes in the way that they regard these matters. First, they must move from bilateral to multilateral aid on a much larger scale. I do not suggest that we can be dogmatic about this. Obviously, there are certain instances in which bilateral aid is better. Particularly there are certain relationships built up between a colonial Power and its colonies, personal contacts, by which all the conditions in the recipient countries can beat be exploited and developed bilaterally. No one wants to suggest cutting off aid of that kind, but it does seem to me that the general argument which has been advanced on both sides of the House today is true, that the multilateral part of the world aid programme should be growing all the time.

Secondly, I think that, speaking of multilateral aid in general, the best form of multilateral aid, other things being equal, is multilateral aid through the agencies and associations of the United Nations. I say that partly because the United Nations can take a world view. It is not doing these things for reasons of national prestige, or to further a national foreign policy. I say that partly because the people who go from the U.N. agencies to a developing country go there on behalf of an organisation to which the developing country itself belongs. Therefore, it is a relationship which is the furthest possible removed from the imperial relationship. I also suggest it for the political reason that I believe it is in our interest and in the interest of mankind to build up the United Nations in every possible way, and where tile United Nations is doing successful work, as it is in all these fields, there should be built up the increased prestige and status of the United Nations itself.

There is a third shift we have to make, from the traditional forms of aid through loans given on normal banking terms, towards loans on easier terms such as those which are being administered by the I.D.A.

Some figures have recently become available about the British total aid programme in the current year. I would remind the House that as recently as December last year the Treasury White Paper, which was referred to by the right hon. Gentleman when he spoke, said that in 1963–64 our total aid commitment was expected to amount to between £180 million and £220 million. The figures which have become available for the first six months of this financial year show that only £74.8 million have in fact been spent in all our aid programmes, whether to Colonial Territories, independent Commonwealth countries, foreign countries, through the U.N., and every other method.

We are not spending what we intended to spend, and the reasons appear to be that some of the recipient countries, particularly independent countries of the Commonwealth, are unable to absorb the aid which is available to them. This leads us, I think, to look very closely at the terms of aid we are offering and the extent to which it is appropriate to the needs of those countries. Of course, this strengthens the argument which has been put forward in this debate for having in this country a single Minister and Department for overseas development. I think it strengthens that argument considerably, but it also points to the need for loans on favourable terms of the kind which the I.D.A. is administering.

Mr. F. Harris

It is also because of the lack of technical personnel that those countries cannot absorb the aid.

Mr. Prentice

Yes, I think that that in a way does strengthen the point. In one way or another all of us are saying that the first need is for better co-ordination between technical assistance and economic aid, co-ordination between the donor countries, co-ordination between what the donor countries are doing and what the recipient countries are doing for themselves. This all points to the need for this country to have one Department for this work, and, internationally, to have more multilateral effort. What the hon. Member has just said and what he said earlier in his speech goes towards supporting this argument.

I conclude by appealing to the Government to take all the initiative they can through their representative on I.D.A. for an expansion of this work, to see this in relation to the United Nations Development Decade, and to see it in relation to the need for increased aid programmes generally. When these points are raised on this side of the House, in debate or at Question Time, we are constantly told by Ministers at that Box that this country is giving more than many other countries. A comparison is often made with the Soviet bloc; one hon. Member opposite pointed out this afternoon that we are giving as much as all the Communist countries together. We are told that our contributions to the U.N. agencies are proportionately the biggest. For all these reasons, I do not think we need to apologise for what we are doing, but we do have to ask how that matches up to the need.

What really matters in this situation is not how the effort of one donor country compares with that of other donor countries. What matters is whether the effort of all the donor countries together matches up to the needs of the world in the situation with which we are faced. We committed ourselves as a country to supporting the United Nations Development Decade. I believe that that decade resolution of the United Nations represents the very least with which we can possibly be satisfied between now and 1970.

All that the Decade Resolution was saying was that by 1970 we ought to have a target by which the per capita income in the poorer countries was increased twice as fast as in 1960. In 1960, on the average—and averages are perhaps rather misleading—in the poorer two-thirds of the countries the living standards were going up by 1 per cent.; incomes by 3 per cent., population by 2 per cent.; leaving 1 per cent. as the per capita increase.

To double that rate of growth by 1970 is a very modest target indeed. Indeed, we have to improve that much more if we are ever going to stand a chance of winning the race with the explosion of world population which is going on at this moment and is going to increase in its intensity in the later years of the century. We could lose that race permanently in the nineteen-sixties if we do not make at least the progress envisaged in the Decade Resolution. If we are to do what is in the Decade Resolution, it means first of all that the poorer countries themselves in many cases have got to make much greater efforts on their own behalf, but it also means that the wealthier countries have to do much more to help them to help themselves. If we fail it will be a failure which will affect ups as well as it affects them.

I am afraid that we as a nation—and even some in the House—are still at the stage where aid programmes are regarded as a sort of charity, a sort of kind afterthought, as a sort of giving of crumbs from the rich man's table, a sort of flag-day approach. This does not need arguing with most of us who are in the House at the moment, but it does need arguing outside, that if this development programme fails it will affect us as a trading nation. We cannot expect to export to countries which are starving, or to import raw materials from them, and the prospects of peace in our time would be jeopardised, so that it is not only in the interests of those other countries, but also in our own interests to make certain that this progress matches the needs. I do not believe it does. There has been some improvement in recent years, but what is needed is a much more radical improvement, and particularly improvement in the developing organisations like I.D.A., which have opportunities for adjusting aid to the needs of the developing countries at the present time.

6.8 p.m.

Mr. Wilfred Proudfoot (Cleveland)

When I wandered into the Chamber some twenty minutes ago I had no intention of making a speech—

Mrs. Castle

The hon. Member has been roped in.

Mr. Proudfoot

I have not been roped in, but I should like to follow the hon. Member for East Ham, North (Mr. Prentice') in saying that we do not want a charitable approach to this and we do not want anything of the nature of a flag-clay approach. I regard this as one of the enlightened methods of stop- ping the spread of Communism. If we in the West really want to take our ideas to the rest of the world we have to back them with money.

Another thing which occurred to me while listening to the small portion of the debate I have listened to is that it is not just the Colonies, or the Commonwealth, which this Bill will help, but it is the whole of the backward nations of the world. When one looks at this one is forced to realise that it is a matter of putting money into these agencies so that loans may be available to do good things in the countries which might become occupied or even taken over by the Communists. When one looks at the newspapers and sees the advertisements for Oxfam and so on, it is easy to realise the need for this sort of thing.

I am a bit of a practical idealist and do-gooder, and I believe that the best way to help these people is for us to be more efficient at home. I think of the Beeching Report and all the noises in the House which followed it, but I also think of the greater efficiency that that Report will bring to us, and I think that we ought to try to match these sort of things in such a debate as this—they are connected.

Two weeks ago I was lucky enough for the fifth time to draw a place in the Ballot for Private Members' Motions, but I was not as lucky as usual, for I got only second place and was not called. But one of my themes that day would have been what I am talking about now. I want to cut some tariffs unilaterally. If we are to help these people, then as well as giving them loans to establish their industries, public works and road and rail communications, we trust be willing to trade with them.

Last week I was shocked when the Leader of the Opposition said that if he were returned to power and became Prime Minister he would go through our list of imports to ensure that anything we could make here was made here and not imported. I believe that if we do not allow the backward countries to make simple things and sell them to us, we shall not really be helping them. Looking through the list of tariffs has been a hobby of mine, and I find that we have a 15 per cent. tariff protection for the makers of pipe cleaners. Surely such things as pipe cleaners could easily be made by people from backward countries. If we believe in the sort of things that we are talking about we must look at the whole field at home where industry can be modernised and made more efficient and be willing to import such things that are simple to make.

It is no good doing one thing with the left hand and the opposite with the right hand. If we mean what we say about helping these backward nations, and I am a sincere believer in that, we must be wholehearted about it; it is the best defence against Communism.

6.12 p.m.

Mr. Philip Noel-Baker (Derby, South)

I shall not follow the hon. Member for Cleveland (Mr. Proudfoot) very far, except to say that I hope that developing countries will not take Dr. Beeching's advice about their transport systems. In practically every case where the International Bank makes an inquiry into the transport needs of a developing country it finds that more railways are the answer, as we shall find in this country as we raise our standard of living in the next 20 years under the Labour Government which will come to power in a few months' time.

Instead of following the hon. Member, I shall follow what has been said by my hon. Friends, without tedious repetition, I hope, but with new angles on the arguments which have been used. The Chief Secretary, in—I hope I may be forgiven for saying—what I thought was a perfunctory little speech, asked us to accept his Bill and add our contribution to I.D.A. of something under £12 million a year for three years to enable the Association to carry on what it has begun. I do not begrudge the money. I wish that it has been more, and that it had been done long ago.

I believe that the advanced countries now face a tremendous challenge, and, above all, the ex-colonial countries. It is at least possible—some people think it probable—that in the colonies to which the European Governments have given independence the whole fabric of law and public institutions may collapse. We saw it in the Congo three years ago. Hon. Members opposite criticise the United Nations, but without the United Nations action in the Congo we should have had death by starvation of millions of people, we should have had disease raging through the Continent of Africa—cholera and perhaps the plague—and we should have had terrible tribal wars which might have brought in other countries and brought back conditions of veritable barbarism.

One of my hon. Friends spoke about the situation in Tanganyika and elsewhere. We saw ten days ago how insubstantial may be the foundations on which the authority of the new Governments in Kenya, Tanganyika and Uganda have built up their power. Before the events in Tanganyika, but only a few weeks ago, President Nyerere, speaking in Rome to the Conference of the Food and Agriculture Organisation, said that the new Governments in the developing countries had to secure an improvement in the standards of living of their people so great that it demanded a complete social and economic revolution of their national systems. Not only in Africa, but perhaps elsewhere, our task may be to prevent peoples falling back into the misery and cruelties of the jungle life of long ago.

I think that the need for large-scale interest-free investment is far greater and far more urgent than the Government and perhaps many hon. Members opposite realise. Whatever we invest—if we avoid nuclear war—we shall get back in trade and peace in years to come. But if we do not invest, we shall lose the vast treasure of cash, goods and human effort which we have given to these countries in the past.

Of course, I agree with my hon. Friend the Member for Blackburn (Mrs. Castle), who spoke so admirably from the Opposition Front Bench, in what she said about the governmental reorganisation which is needed here. I agree with her on the broad proposition—I shall say another word about it—that greater co-ordination is needed in the international agencies as well.

But the main thing with which I want to deal is the scale of the help now given to the United Nations agencies, the need for a complete change in the way we look at the problem, and the kind of action which we think adequate to the need.

Six weeks ago, in reporting to the Economic and Social Council of the United Nations on the very plan which we are debating, Mr. George Woods, the new President of the International Bank, who was quoted by my hon. Friend the Member for Birmingham, Northfield (Mr. Chapman), said, after expressing his gratification that this new capital of 750 million dollars was to be given to I.D.A.: At the same time, we fully appreciate that the funds available to I.D.A., even on the increased scale contemplated, are not equal to the economically justified demand for very long-term, low-cost financing that I.D.A. offers. I repeat "are not equal". There is not enough money, even for the projects which have been vetted, re-vetted, passed through the prolonged and very cautious examination of the experts of the International Bank and finally approved. Those projects are only a small part of the projects which ought to be put up. It is not enough in spite of the urgency of the problems to be dealt with. I regret to say that I have the feeling that the Government are still in the state of mind which has meant in so many great national crises that what we have done has been too little and too late. And how much too late!

It is a dozen years since we on this side of the House were fighting for the United Nations General Assembly's scheme known as "S.U.N.F.E.D."—the Special United Nations Fund for Economic Development. The word "special" was added because, without it, the initials would have spelt "unfed". Alas, that title has been appropriate to what has happened since.

Month after month, year after year, the Government refused, when we pleaded with them, to pay their trifling quota towards the 250 million dollars which was then proposed for S.U.N.F.E.D. They said that they might do it when the Russians had agreed to a disarmament treaty, thereby giving the Russians the maximum inducement to obstruct disarmament, to create or prolong the conditions of grinding poverty on which the Communists hope that, in the end, they will win.

S.U.N.F.E.D. was designed precisely for the task that I.D.A. is asked to carry out—to assist with pre-development projects which do not bring in a return in cash but the problems of which have to be solved if solid economic progress is to be achieved. They are problems of illiteracy and of preventing disease; of building roads where none exist; of supplying trained administrators where they are lacking; of training mechanics and technicians.

It was very early days when that great man, Mr. Eugene Black, former President of the International Bank, said in an annual report that we could not start big industrial projects in developing countries, we could not build a power station or a dam, unless we had local clerks to keep the wages sheets, people who could read and write and add.

Just at that time, U.N.E.S.C.O. had a most distinguished Director-General, Mr. Torres Bodet. In Mexico, as Minister of Education, he carried through a, great campaign against illiteracy. Like Mustafa Kemal, in Turkey, 30 years before him, he set an example by taking classes himself and, in a very short period of years, tens of millions of Mexicans had been taught to read and write. If hon. Members read now of the rising standards in Mexico, and if the Olympic Games are to be taken to Mexico City in 1968, it is the result of Torres Bodet's campaign 15 years ago.

As Director-General of U.N.E.S.C.O., he proposed to start a world campaign against illiteracy. I am myself convinced that, with his drive and vision, there would have been a very optimum chance of success. But a British Tory Minister of Education went to the U.N.E.S.C.O. conference and drove him to resignation by proposing cuts in his budgets which he regarded as disastrous to his work. He resigned; and there are still 1,000 million people in the world who cannot read and write.

Mr. Black's successor, Mr. Woods, said in his splendid speech that not only the I.D.A. but the International Bank itself must start making loans to the developing countries for education, for primary, secondary and technical schools and the rest, as an essential preliminary to the development work they want to do. I think it useful to quote Mr. Woods' words, used only six weeks ago: I have also recommended to the Bank's Executive Directors that the Bank should follow I.D.A. into a field which is fundamental to economic growth in all sectors. I am referring to education, especially technical education at all levels, and, where necessary, general secondary education as well. This kind of schooling imparts the basic skills that are needed at every level of activity, from the effective use of planning techniques in business and Government right down to the proper use of tools in workshops and on farms. We helped powerfully to destroy S.U.N.F.E.D. We played a major part in getting rid of Mr. Bodet. We lost 10 years of education in the fight against illiteracy—10 years which the International Bank and the I.D.A. are now trying desperately to overtake.

The elimination of preventable disease is also a pre-condition of economic growth. The Panama Canal is in the news now. Before the United States could start its work on the canal, which is one of the engineering marvels of the world, it had to eliminate the scourge of yellow fever. It did so, at a cost of many scores of millions of pounds. It wiped out yellow fever; and that is something that the Panamanians might gratefully recall today.

Yellow fever still exists in some places on the West coast of Africa. But malaria is a much graver and much more widespread scourge. It exists in many of the countries which need the help of the I.D.A. During the last weekend I have been talking about Kenya with the noble Lord the Earl of Enniskillen, who has spent a lifetime farming out there and who speaks with cogency and authority in another place about Kenya. He said that in Kenya malaria still afflicts the older generation of Europeans, but that among the Africans its incidence is very much higher still.

Twelve years ago, the World Health Organisation set up a fund to exterminate malaria, which can quite easily be done and has been done in a considerable part of the world, in countries to which I often go. Her Majesty's present Government gave nothing to the Malaria Fund.

Year after year, despite pressure from this side of the House, they refused a farthing and I venture the assertion that, if Britain had given the lead in giving the W.H.O. the resources that it needed, malaria might already have been wiped out today. Yet it still kills 3 million people a year. It reduces the physical and mental strength of those who survive. It reduces their wealth-producing power. I think that we have paid very heavily indeed for our neglect.

There are lots of other diseases which, like malaria, are no longer clinical problems, but simply a question of £ s. d., of administration. They impede economic growth. In Africa, for instance, there are still worm diseases which are very common. Some Africans have 12 different kinds of worms in their bodies. Take one alone—hookworm. When hookworm is advanced, it palayses the mind. It makes a man so lethargic that he is virtually unemployable.

Hookworm used to be a grave scourge in the southern States of the United States when I was an undergraduate at an American university. But there is a drug that will expel the worms and it has also been discovered in the United States that if people are given houses with floors and shoes to wear they are immune from further assaults of hookworm. It is this kind of work that is so urgently needed and for which incomparably greater resources than this poor little sum of 750 million dollars are required.

Mr. Woods said in his speech to the Economic and Social Council that the I.D.A. and the Bank ought both to go in in a big way for agricultural research and development schemes of every kind. He said that four-fifths of the people in the developing countries now live by agriculture and that, by the application of relatively simple methods and the introduction of simple tools, they could greatly increase their output of food. I sometimes wonder whether we could have a pool of nations supplying second-hand agricultural implements, machines and tools with which the peoples of the developing countries could be taught new and better methods of food growing.

The Government have given us excuses over the years for not doing what we asked. They have talked about the loss of foreign exchange which we incur if we give help through the United Nations. I calculate from the reports of the International Bank that we have paid 11.5 per cent. of its capital. Its total loans to date have been 7,000 million dollars. If we have paid our contribution, that is about 730 million dollars. But in the Bank's report for the last year, I find that, of loans made by the Bank, 605 million dollars have been spent on purchases from Britain.

Nearly all our investment is covered in exports from Britain. It has been known for a long time that, under Technical Assistance and the Special Fund, many countries want British experts and, having their British experts, they take their advice and buy British goods. Moreover, having British experts, they take their advice and send their young men on fellowships to Britain to be trained. We have made a large profit in foreign exchange under these two Funds. We have contributed £2.8 million a year, and we have got much more back in foreign exchange. I do not doubt for a moment that the same will be true of I.D.A., and for the same reasons.

It is sometimes asked: why should Britain do it all? We do not do it all. We do a share. I wish it were bigger. For I believe that we have a special responsibility. We had the greatest Empire in the history of the world. We have given the nations in that Empire independence. We have more duties towards them than other nations which never were colonisers in the past.

It is said that we do a great deal in bilateral aid. Like my hon. Friend the Member for East Ham, North (Mr. Prentice), I wish that we could greatly increase the multilateral aid which we give through the institutions of the United Nations. Again, I refer to Mr. Woods. Mr. Woods was a banker, a businessman; he dealt in international finance in many capacities before taking the presidency of the Bank. I quote again from what he said to the Economic and Social Council: More strongly than ever, I am convinced of the immense advantages to be gained in the field of economic development by co-ordinating and combining the efforts of individual countries and institutions, and, if possible, channelling those efforts through international agencies. The virtues of the multilateral approach are well known in theory. Since I became Persident of the Bank, they have been forcefully brought home to me in practice. Mr. Woods said that he had visited a lot of the countries which are members of the Bank and that many Ministers of Finance had come to see him in his office in Washington. In each case", he said, I have been struck by the completely different approach made possible for both sides by the fact that I speak for a multilateral agency rather than for an individual Government. He said that, because the International Bank has no political or commercial axe to grind, he could speak completely frankly and tell the demanding nations where they were unreasonable or wrong. He could act as honest broker when difficulties arose. He went on: From the point of view of a member country, we represent an institution which need not be regarded either as patron or as supplicant". Bank loans are not tied to the purchase of the lending nation's goods, and this is all to the advantage of Britain, as I have tried to show.

Mr. Woods protested against the increasing tendency to tie aid to the procurement of goods produced in the lending country. He said that this was a form of protection whose effects run counter to the efforts now being made to liberalise the terms and increase the volume of international trade. He went on to say that multilateral aid helps to encourage the most effective and productive international division of effort. Above all, he said, the great advantage of the, multilateral approach,as the United Nations and the Specialised Agencies seek to practise it, is that it enables the participating nations to concentrate on their fundamental and long-range goal of improving the lot of mankind". My hon. Friend the Member for Blackburn spoke of the need for reorganisation among the international institutions. I read one sentence of Mr. Woods' speech with great hope. Until recently, until his advent to the Bank, the Bank was far above the United Nations. It wanted no connection. It must not be called a United Nations agency at all, because that would damage its position with the "Establishments" of the world which provide the large-scale funds.

In his speech to the Economic and Social Council, Mr. Woods said: If we broaden the scope of our interests in these ways"— education and health and agriculture, of which I have spoken— we shall be led inevitably into fields which already are the primary concern of other international bodies such as the F.A.O. and U.N.E.S.C.O. As I said to the Governors of the Bank at their Annual Meeting last September, I welcome this as offering new opportunities for collaborating with other members of the United Nations family and for strengthening the already close relationships we have established with them. I think that some reorganisation is needed. I think that the Technical Assistance Board and the Special Fund could usefully be amalgamated under Mr. Hoffman, and I am quite sure that Mr. David Owen could find the right place to carry on the admirable work which he has done for so long. But I say to my hon. Friends and to others that there is now much more co-ordination than many people believe. I ask them not to listen to every "grouse" they hear when they go to the receiving countries. After the war, I worked in U.N.R.R.A. I was flooded with stories of corruption, graft, inefficiency and waste, but, whenever I went into the details, and got the facts, I discovered that the stories were founded in almost every case on nothing at all.

I ask my hon. Friends not to underestimate the difficulties of this task. It is remarkable that the U.N. agencies have been able to do what they have done up to now in view of the inadequate support, as I think it is, which Governments have given.

I end by agreeing with my hon. Friend the Member for East Ham, North that this is not charity. This is common sense. This is work for the future of mankind. It is work to better the lot of people in this generation and in generations to come. It is powerfully influential, if it is rightly used, in preventing the nuclear war which would destroy us all. But it is, above all, a hard, concrete, material interest of this nation, of the Commonwealth and of mankind at large.

6.41 p.m.

Mr. John Stonehouse (Wednesbury)

I am very glad to follow my right hon. Friend the Member for Derby, South (Mr. P. Noel-Baker), who filled his speech with common sense, humanity and facts garnered in a lifetime of experience. As I followed his argument, I thought how wonderful for the world it would be if his work in attempting to obtain widespread disarmament could lead to the industrial countries, who now spend far too much on arms, spending more on the sort of practical, humanitarian development work which we are discussing.

Let us keep the matter in perspective. The hon. Member for Southend, East (Sir S. McAdden), in a short intervention, spoke of our responsibility to the taxpayers. The amount which we are proposing to vote is less than £12 million to be paid each year, but not until next year, so it will be nearly two years before the first payment is made. That amount is .75 per cent. of our annual expenditure on defence. How beneficial it would be if we could achieve real disarmament and allocate far more of the money which we waste on defence to constructive work such as the I.D.A. does!

How deplorable it is that the Government's representatives in the debate are only from the Treasury! We have not had a Minister from the Foreign Office, which is directly responsible for our relations with the United Nations, nor from the Department of Technical Co-operation, nor throughout three hours of debate have we had a visit from any of the Ministers connected with the Commonwealth Relations Office or the Colonial Office. What an appalling demonstration of Government apathy! What an appalling demonstration of their lack of interest in the work of the International Development Association!

I wholeheartedly agree with my hon. Friend the Member for East Ham, North (Mr. Prentice) that the work of I.D.A. should be expanded. It should be the most important agency in tackling the problem of world backwardness. Its objects are to promote economic development, increase productivity and thus raise standards of living in the less developed areas of the world. What an honourable aim that is! We are spending only a tiny amount through I.D.A., and I am appalled to learn that much of the money which we have voted for its work has not even been spent. There is a carry-over amount, and yet many of the projects which have been investigated and approved have not had money provided for them, although they have stood the examination of economic terms.

In September 1961, the World Bank held its annual meeting in Vienna, when Mr. Eugene Black spoke of the important work which the Association was doing. He said that there was a need for a greater proportion of development money to be invested on terms comparable with those of the I.D.A. He referred to the awful problems of countries like India and Pakistan in financing the capital aid which they had already received. As long ago as 1961 he gave examples of countries where the debt burden had been building up to an intolerable point.

He gave the example of a South American country where the debt burden outstanding to be paid in the following five years was 24 per cent. of the outstanding debt in 1953, but by 1959 the outstanding debt payable in the following five years was 56 per cent. of the total debt. He gave two examples of countries in Asia where the proportion had grown from 28 per cent. in 1952 to 50 per cent. in 1960 and from 8 per cent. in 1953 to 33 per cent. in 1959. What chance does a country have if it has to pay back 50 per cent. or more of its outstanding debt in a period as short as five years?

The industrial countries must meet these needs of the countries fighting to reach take-off point so that they can finance more of their own development themselves. The industrial countries must give them more assistance, not only in low interest loans spread over 50 years, but in direct grants for development projects for their infra-structures.

We speak against a background of incredible need. In a remarkable speech, my hon. Friend the Member for Blackburn (Mrs. Castle) spoke of many countries where 50 per cent. of the children died before they reached the age of 5. My hon. Friend the Member for East Ham, North spoke of the two-thirds of the world's population living on or below the poverty line. That is the problem as it now is, but I ask the House to consider the developing problems, the population explosion.

Every minute the world's population is increased by 100 souls and every day by 140,000 people, equal to the population of a town like Wolverhampton, and every year by 50 million, equal to the population of Great Britain. At this rate, within forty years the world's population will have at least doubled, so that the problem of poverty will be even worse. In many countries where the population pressure exists, particularly in India, the national income is going up more slowly than the increase in population. This shows how important it is that world aid should be channelled through institutions such as the I.D.A. which concentrate on developing long-term projects which can make the best contribution to improving standards.

I welcome the work which is being done and regret only that it is not being expanded faster. It is important that any aid should avoid two pitfalls. One is that the aid should not go to projects merely of a prestige character not really related to the problems of a particular economy and that it should not be wasted by bad local administration or corruption. That must be avoided, and I am glad that the I.D.A. avoids it by a proper investigation of projects and by co-operating with other United Nations agencies in investigating the background of the economies of these countries.

I agree with what was said earlier. It is very important to have technical assistance and proper advice so that these countries can develop themselves on the right lines. I am glad that part of the activities of the World Bank is to provide men with experience who can actually work with the local administration to make sure that these plans are carried out correctly.

There is another pitfall which is no less important, and that is to avoid what has been called neo-colonialism. That is the tying-up of economic development in a newly developing country with profitable investment by overseas countries and companies, with the result that most of the profit of that investment is taken out of the territory rather than being ploughed back into it. In many of the territories for which we have been responsible, the amount of aid that we have put in through colonial development and other funds has been completely vitiated by the amount of money that has come out of those countries in the form of dividends and profits which have gone to investors in this country and in the United States. An outstanding example is Northern Rhodesia, where the amount of wealth coming out from investments in the copper mines vastly exceeds the amount of wealth being ploughed back in internal development. I hope that Kenneth Kaunda, the new Prime Minister of Northern Rhodesia, will be able to do something about that.

I should like to refer to two examples in relation to the work of the World Bank and of the I.D.A. In June 1959, the World Bank made a loan of 35 million dollars to the Compagnie Minière de l'Ogoone—COMILOG—to develop mining 200 miles inland in the comparatively small territory of Gabon. The majority of the share capital in this company is held by various French interests, and the largest but minority shareholder is the United States Steel Corporation. The reserves in the Gabon are about 160 million tons of very high-grade iron ore. If that development goes ahead as planned, most of the value will go to investors from overseas. But it is important not only that such developments should go ahead, but that there should be other forms of development which will ensure that the development of the economy progresses and there is a real improvement in the standards of the people in the territory concerned.

Another example is that of Mauretania, where there is an outcrop of 100 million tons of high grade ore. This is being developed by a consortium of French, British and Italian steel producers and also French financial interests. The firm involved operates under the initials MIFERMA. A loan of 66 million dollars has been granted by the World Bank Group for this development. What guarantees is the World Bank Group asking for in terms of the re-investment of the profits of such schemes of development? I believe that it is very important not only to avoid the pitfalls of local corruption and maladministration, but to ensure that all the benefits of the investment made by the World Bank group do not go to overseas investors.

After all, there is not much value in economic development in these newly developing territories if most of the value of it goes overseas. The value comes in terms of the improvement of local wages and conditions, and if those are not improved many of the people who are participating in these schemes will think that the value to them is worthless. What is the good of a local peasant in the Gabon area going to work in an iron ore mine unless he can expect a reasonable increase in his standard of living? Unless there is a guarantee that the money is being ploughed back, I believe that the value to the newly developing country will be very limited.

I was struck by some of the new ideas put forward by my hon. Friend the Member for Blackburn. I do not follow her in them all, but I think that she has given us a stimulating introduction to this subject. I hope that the United Nations Conference on World Trade and Development, which is to take place in June, will consider some of those ideas and that the Ministers responsible from Britain will look at them and put them forward.

It is important not only that aid schemes should be developed through the I.D.A. and other institutions, but that we should have the right relationship between the industrial and newly developing countries so that the latter have an opportunity of paying their way in the long run. The appalling fact is that all the aid which the wealthier countries have given to the primary producing countries in the last ten years has been completely undermined by the drop in the value of primary products which those countries have sold to us. The relationship of the primary producers' products to manufactured goods has worsened and undermined the effect of the aid which we have given over the last ten years. It is important not only that we should turn our attention to the aid that we can give through the I.D.A., but that we should pay attention to developing world trade and giving guarantees to primary producers, and I hope that the forthcoming United Nations conference will see to it that these countries have an opportunity to pay their way in the long run.

We have had a very interesting, and, I hope, a useful debate, but we have not heard from the Government what they intend to do to make the work of the I.D.A. more effective. I hope that when the Minister replies he will tell us how Britain uses her influence—because she has a substantial vote within the World Bank group—to see that some of the ideas which have been put forward this afternoon are considered at meetings of the World Bank group.

May we also have a reply to the questions asked by my hon. Friend the Member for Birmingham, Northfield (Mr. Chapman)? May we have a little more information about the negotiations which were referred to briefly by the Chief Secretary in relation to aid to be given through the I.D.A. to Basutoland and Bechuanaland? We have noticed the good work done in Swaziland, but we regret that more has not been done to get assistance for some of the other territories for which we are responsible, particularly Basutoland and Bechuanaland, which have been fully covered by expert investigations and where there are a number of projects which are economically viable and good enough to have earned I.D.A. assistance. I hope that it will be possible for more of the smaller territories for which we are still responsible to receive assistance from the I.D.A., and that the excellent work which this Association is doing can be expanded in the near future.

7.0 p.m.

Mr. Francis Noel-Baker (Swindon)

It is not my intention to make a long speech on this Bill, because I am hoping to catch your eye on Thursday, Mr. Speaker, when other aspects of this subject are to be discussed.

I want briefly to refer to some of the things which have been said about voluntary efforts in this context. I am sure that my hon. Friend the Member for Blackburn (Mrs. Castle) and other hon. Members who made the point that voluntary work was no substitute for Government effort would not like it to be thought that the House of Commons did not appreciate the voluntary work that is being done.

I speak as a member of the National Committee of the Freedom from Hunger Campaign and as a member of its projects group. In that capacity I have to have close contact with various voluntary organisations—the Oxford Committee for Famine Relief, War on Want, Inter-Church Aid, and many others— which are doing valuable work in helping under developed countries. In the Freedom from Hunger Campaign we are hoping to allocate millions of pounds to projects all over the world, and within our slender resources we are doing our best to ensure that those projects are effective and efficient, and to see that the money is properly spent.

It should be made clear during the debate that whatever may be our views about the inadequacy of Her Majesty's Government's participation in this work, hon. Members on both sides of the House realise the value of the British voluntary effort, which will continue to play a great part in British assistance to developing countries and that, as the effort of the Government increases and expands, the work of voluntary bodies will become more valuable in the future.

7.2 p.m.

Mr. H. Rhodes (Ashton-under-Lyne)

First, I wait to apologise to the House. When I went home at the weekend I intended to be here in time for the beginning of today's debate, but, unfortunately, I could not get here earlier. I am a member of the Estimates Sub-Committee which is now investigating the Department of Technical Co-operation. When I see, in the Library, the copy of the accounts of the International Development Association, I am appalled at the fact that so little effort is made to put over to hon. Members the work that the Association is doing.

The acccunts that are presented each year are absolutely first-class. It is possible to tell, at the end of each financial year, what the Association is doing and what countries it is interested in helping. Everything is quite clearly laid out. Of all the amorphous types of accounts through which we have to wade in order to carry out our duties in the House, those which concern the money supplied by the Treasury to the United Nations Organisation, through our Department of Technical Co-operation, are about the most confused.

I am not criticising the Department. It started only a year after the I.D.A., but all that we have got is what is known as a progress report. We got that in April, 1962. In 1963, we got nothing at all. In September of that year an ominous report was issued by the Treasury about all the agencies and all the types of work to which we subscribed throughout the world.

If interest is to be intelligently maintained in what we are doing in overseas aid the Government must set their house in order and introduce a better system of accounting. My hon. Friend the Member for East Ham, North (Mr. Prentice) said that we regarded this sort of work as charity. I suppose that, of necessity, it was bound to be spurred on by generous impulses and through a quickening of conscience, on account of the disparity between the industrialised countries of the West and the developing countries.

I suppose that the cynics could complain that an enormous amount of money was being wasted somewhere between our making the contribution and its reception in the country concerned. I shall always remember a visit that I made to the mainland of China, not long ago. I visited a great camp of refugees, where one woman—a Canadian doctor—was in charge of the health of 8,000 people. No less than 26 per cent. of them had tuberculosis. Disease of all sorts was rife.

One of my colleagues, who is rather a cynic, remarked to this lady, "A tremendous lot of money is wasted between its being subscribed and its arrival here." I shall never forget the remark she made in reply. She said, "Ah, but look what we do with what we get." That was it. That was a complete answer. My colleague apologised straight away.

My next point concerns the multitude of agencies engaged in this business. The world situation is too confused. We have CENTO, S.E.A.T.O. and the Colombo Plan, all working towards similar ends, and then we have the I.D.A., incorporated with the International Bank.

The reasons for the supply of this aid can be grouped under a few headings—conscience, a determination to do something for people who, in turn, may do something for us, and the overriding political motive. I do not accuse the I.D.A. in this instance, but there is a curious trend in what the Association is doing. It seems to me that a Communist country, or one which is too friendly with Communist countries, is not included in the scheme, and is not encouraged.

Another system of aid is American direct aid, which has been criticised so much throughout the world in books like The Ugly American and upon which I do not want to elaborate.

But it is a pity when hon. Members, such as the hon. Member for York (Mr. Longbottom), say that this sort of work is one of the best bulwarks against Communism. That approach is utterly wrong. The approach should be on the intrinsic merits of the need. Until we can get everybody in the industrialised countries to work with the end in view that the strengthening and improvement of the economy of these under-developed countries is a matter of great intrinsic worth, and that through international trade they will be able to gain wealth, we shall not make the progress which is necessary.

I have pointed out that the agencies at work in this field are too many. My right hon. Friend the Member for Derby, South (Mr. P. Noel-Baker) spoke about the need for agricultural tools, for example. If I may say so, besides scratching the surface of the soil, that is only scratching the surface of the problem. If a multilateral agency of sufficient strength were created, we should be able to do what we need to do in terms of being able to give the right sort of opportunity for development in countries such as those of South-East Asia. Unless we are able to industrialise those countries to a large measure, we shall never get out of the present impasse, and we shall continue to see the industrialised nations getting wealthier while the other nations make no progress at all.

We speak in our debates about how much commodity price arrangements would do to help the underdeveloped countries. We read papers and hear lectures on the subject. But I sometimes think that we have our tongues in our cheeks, because we are not tackling this problem in the right way. In my lifetime—and I have had plenty of opportunity to observe this in dealing with wool—I have noticed that whenever the price is right for it, the selling country is very strongly disinclined to have anything to do with commodity price arrangements. When prices are high, the receiving country wishes to start a commodity arrangement. When the situation suits the producing country—whether of rubber or wool or any other commodity —it does not suit the receiving country. Alongside commodity price agreements there should be a world effort to get some industrialisation into areas such as South-East Asia and Malaysia.

This organisation has not spent the money allocated to it and I do not think that it is going forward fast enough. May I ask whether the increase being requested from us is paralleled in all the Part I countries on the Continent? Will this be the pattern for all time, that countries such as France and Germany will subscribe only 5.4 per cent. of the total? I understand that our contributions represent 13 per cent. of the total. including the Part II countries, and that the whole of the E.E.C. subscriptions are only 15 per cent. of the total.

If these matters were explained to the country and the explanations simplified, we should not have the kind of grumbling which we hear today in Lancashire, where voices are raised about the imports of cotton piece goods from abroad. We cannot blame people for raising their voices in protest, but if it were explained what is our rôle and what we are trying to do, there would be a better understanding and less grumbling. All they know at the moment is that we are subscribing millions of pounds to an agency such as the International Development Association which in 1962 subscribed millions of pounds to the Government of Pakistan for an industrialisation programme with, as its main object, the production of cotton goods. They see these goods being imported into Britain at a cheap rate. They know that Germany, France, Italy and all the E.E.C. countries, are contributing very little and have virtually closed the door to imports from countries such as Pakistan, Hong Kong and India. where a great deal of encouragement in trade is needed.

The hon. Member for York, in appealing for more imports from those countries, was quite right. I believe that people in this country would understand the situation if it were properly explained to them Unfortunately, it is done in a haphazard way. I hope that in the years to come there will be a proper explanation given to people in this country so that we can help to further the cause.

7.18 p.m.

Mr. G. M. Thomson (Dundee, East)

This is the point at which in this kind of debate it is usual for the speaker from the Opposition to say what an interesting debate it has been. I am afraid that this is a platitude perhaps not wholly appropriate to what has been happening in the Chamber for the last hour or so, in which we have had a succession of extremely interesting contributions from this side of the House but none from the other side of the House.

Apart from the speeches of the hon. Members for York (Mr. Longbottom) and Croydon, North-West (Mr. F. Harris), we have had no substantial contributions from the back benches opposite. It is true that the hon. Member for Cleveland (Mr. Proudfoot) blew in for a refreshing 20 minutes and then blew out having offered the rather bewildering idea that to help the developing countries we ought to carry out the Beeching Plan thoroughly in Britain. It seemed to me that what he was suggesting was that in order to help the under-developed world we should make Scotland one more under-developed country.

What has shocked us in the debate has been the complete absence during the whole three-and-a-half hours so far of any of the Ministers from any of the overseas Departments most directly involved in the use of these funds in the overseas countries. We have enjoyed the pleasure of the company of the two Treasury Ministers, who have stuck it out with the usual Treasury tenacity. We do not imply any personal discourtesy to them, but it is a shocking discourtesy to the House that none of the oversees Ministers has come here, and it is particularly unfortunate that the Secretary for Technical Co-operation, who is normally regarded as being the Minister in the Government with a special concern about aid, has not found it possible to be here on this occasion.

This has underlined for us on this side the case that we have been putting for a reorganiation of Government in order to have a new Ministry of Overseas Development, with a Minister of Cabinet rank who would be responsible in the Cabinet for putting the claims for overseas aid and trying to co-ordinate the sometimes conflicting pressures involved. The scale of the help we ought to be giving proves that this is the right way to go about it. If I may draw a parallel, it would be with the new arrangements which are now generally accepted for looking after the very large sums of money to be allocated for higher education. Until now this has been a Treasury responsibility, but it has been strongly argued, and now generally accepted, that in relation to the size of the money going to higher education it is unsuitable that the Treasury should be in the position of both making the claim and deciding it, that it should be put in the rôle of being the judge in its own case.

But this is still the position in regard to overseas aid. It is an unfortunate position. We regard the Chief Secretary as an admirable Treasury Minister, in the sense that he performs his duty of saying "No" as frequently as possible to various forms of expenditure that each enthusiast feels is desirable. This is one of the jobs of a Treasury Minister, but it is very unfortunate that an urgent priority in public expenditure like this should not have its own spokesman inside the Cabinet. With all respect to the right hon. Gentleman, this was emphasised for us by the Chief Secretary's apparent unawareness of the fact that in regard to the dependent Colonial Territories in the Caribbean approaches to the I.D.A. rest with the Secretary of State for the Colonies, who is responsible for their foreign relations and presumably for making their case to any international organisation. I see that the Minister is shaking his head. If I am wrong about this, it is important that it should be cleared up, and I hope that the Treasury Minister will address himself to it. If I am wrong, it leaves a problem, because, as my hon. Friend the Member for Birmingham, Northfield (Mr. Chapman) said in a very forceful and excellent speech, it is utterly unreasonable to expect a small Territory like British Honduras or a tiny island like Montserrat to have the kind of know-how and administrative equipment to enable it successfully to make an application to a body like the International Development Association.

The Ministers will have realised by now that the Opposition welcome the Bill so far as it goes but do not feel that it goes very far. Most people who are concerned about Britain's contribution to overseas aid regarded the setting up of the I.D.A. in 1960 as a very notable milestone in international aid policy. It has done excellent work, and a tribute is certainly due to the direction given to it by Mr. Eugene Black and now by his successor, Mr. Woods.

But its expansion certainly does not go far enough in the present Bill. The increased amount of funds which are to be available over the next three years, although as the Chief Secretary told us the annual allocation is stepped up from 150 million dollars a year to 250 million dollars a year, is still depressingly paltry in relation to the kind of needs that exist in the developing world. It would be extremely interesting for us to know, though I do not expect we shall be told, whether the Government tried to get these sights raised in the discussions which must have gone on to arrive at this target. In any case, we should like to have some indication from the Government that they use all the influence and pressure they can within the World Bank organisation to try to get this kind of programme expanded.

It is now beyond doubt, arising from the experience of the World Bank's operations over a number of years, that the I.D.A. approach is the one which is really relevant to the needs of those developing countries which have the greatest difficulties to face. Loans at about 6 per cent., whether they come from the British Treasury or whether they come from the World Bank, may be entitled sometimes to be called "development", but I do not see how they can seriously be called "aid". Loans at that sort of rate of interest are, as a number of hon. Members have pointed out in the debate, becoming a very great burden on the emergent nations. I saw some figures recently for the period 1956–61. They referred to thirty-four developing countries which had between them 75 per cent. of the population of the developing world. During this period their external indebtedness had doubled but their export earnings with which to meet that doubling of indebtedness had risen by only 15 per cent.

This gives some indication of the mounting scale of the interest problem for these new nations. They are asking in present circumstances for more and more loans simply to be able to pay off the interest and the amortisation on the loans they already have. This may be sound finance, but many people will feel that it is rather crazy international economics. The clear pattern has emerged from the World Bank's experience that priority in future ought to be given to the I.D.A. type of operation. I notice, for instance, that the World Bank itself in 1961–62 reached a peak in the loans that it made of 882 million dollars but that this dropped very sharply indeed last year—1962–63—to 449 million dollars. The ability of the developing countries to take advantage of the kind of finance offered by the normal World Bank loan is obviously decreasing sharply. Meantime, the reserves of the Bank are rising. They now seem to me to have reached the rather bloated figure of 813 million dollars.

There is now a case, which I hope that the British representative in the World Bank will urge, for using some of the World Bank's earnings on its conventional loans to increase the resources available to the I.D.A. This would be one practical way in which the figures included in the Bill could be augmented. Another point on the operations of the I.D.A. is that they still seem to be geographically very patchy. As the Chief Secretary indicated in his analysis, the main recipients are in fact in Asia and Latin America. Last year I had the opportunity to see at close quarters the kind of work that the I.D.A. and the World Bank have done in helping the development plans of India and Pakistan. They have undoubtedly made a most outstanding contribution to the economic development of two of the countries whose growth is perhaps more vital than most in terms of the developing world.

I would like to see the geographical spread of the I.D.A. operations greatly widened. Africa, for instance, has been a strangely slow starter, but the Chief Secretary, was good enough to tell us that plans were now in hand for a number of African countries, including Tanganyika and others. Until the last annual Report of 1962–153 Swaziland, as far as I could see, was the only country in Africa south of the Sahara which was receiving the benefit of the World Bank's operations.

I very much agree with my hon. Friend the Member for Northfield: if the I.D.A. is operating so successfully in Latin America, why on earth is not its assistance being sought in relation to our territories in the Caribbean where the need for I.D.A. operations is very great? I hope that the Government will urge our representatives at the World Bank to support the suggestions that Mr. Woods himself has been making for a more radical approach to the I.D.A.'s operation. He made these at the annual meeting of the International Monetary Fund last autumn. He suggested, for instance, that, soft as the I.D.A. loans are, they need to be softer if they are to meet the requirements of the developing countries. He urged that there ought to be a longer grave period and a longer repayment period.

I see the Chief Secretary looking at me a little sceptically. These are the views of Mr. Woods himself, and he is a conservative and orthodox banker of an orthodoxy sufficient to satisfy even the Chief Secretary to the Treasury. Mr. Woods has shown remarkable courage in indicating his desire to shift the balance of the allocation of I.D.A. resources away from what are really the big and in a sense relatively straightforward projects. I am thinking about power, railways and so on—difficult enough, but relatively straightforward by the standards of difficulty in the emerging countries. Mr. Woods has suggested that these should be shifted towards even more fundamental problems, particularly of agriculture.

I noticed with interest his suggestion that I.D.A. money might be used to finance agricultural credit banks, agricultural extension advisory services. which are fundamental to economic growth in emerging countries, and also agricultural marketing arrangements. There is already some evidence that the amount of money going to agriculture in I.D.A.'s budget has been increasing in the last year or two.

I have been similarly glad to see that for the first time last year I.D.A. went in for financing educational development in Tunis. The need for educational investment, and its almost immediate relationship with economic growth, is particularly true in Africa, apart from other areas. I hope that what has been done in Tunis can be extended to other parts of the developing world.

I cannot resist the temptation, having two Treasury Ministers in front of me—and I appreciate that the Chief Secretary is delaying a departure which is already overdue—to say a word to them about the advisability of Britain imitating the I.D.A.'s soft loans policy. As I understand it, the pure milk of Treasury orthodoxy, of which I have always regarded the Chief Secretary as the high priest, is that loans of about 6 per cent. are all right, that completely free gifts of grants are all right, but that any loan at an interest of between 6 per cent. and a free gift is all wrong.

I do not see the sense of that in relation to our overseas policies. The practical result of it is to do us an immense amount of unnecessary discredit in the world, because what happens, as the Chief Secretary should well know, is that among the recipient nations we find our 5 per cent. to 6 per cent. being compared with the Communist bloc's 2½ per cent. I appreciate that it is not an accurate comparison, because when one brings in the element of grant in our aid programme—and about half of our bilateral aid is represented in that way—one finds that our level of interest is a good deal less. We give aid a good deal more cheaply than we seem to, though in our view not cheaply enough. Despite this, it seems ridiculous that the Treasury should force us to put this sort of exaggerated price tag on our aid. The experience of the I.D.A. will, I hope, persuade the Treasury to reconsider the giving of aid along lines similar to that given by the I.D.A.

Today's debate has revealed some of the important implications raised by the Bill, and it is for this reason that the debate has ranged rather wide. It has brought out nothing less than the need for a global strategy for a war on poverty. This raises crucial questions for Britain, the West and for the developed world as a whole. That, nowadays, includes the Soviet Union and one or two other Communist countries.

It has been encouraging, but rather complicating, to see how in the last year or two the cold war has been beginning to take second place throughout the world to the war on poverty. Certainly I think that what has been called the north-south conflict between the rich and poor nations is now cutting right across the old east-west conflict between the Communist and non-Communist countries. This would be encouraging for us all, if it were not for the complication that it seems to have come at a moment when there is also evidence of what can reasonably be called an international crisis of aid among the donor countries.

This is already visibly happening in the United States. The Administration there is finding itself under severe Congressional pressure about the size of the aid programme and has had to cut it quite substantially. This is a serious matter for all concerned—the countries receiving aid and other countries helping to give aid—because the United States provides about one half of the aid which flows to the developing countries and a good deal of it goes on matching arrangements. This means that if there is a reduction in the amount of United States aid there tends to be a comparable drop in the aid coming from other developed countries.

There is also some evidence to show that there are similar doubts being expressed about the wisdom of a big aid policy growing in the Soviet Union. I had the opportunity, along with my right hon. Friend the Member for Derby, South (Mr. P. Noel-Baker), of going to a conference in Moscow a few months ago. We were there on the eve of the demonstrations by African students in Moscow. Because of my interest in these matters I tried my best to visit the Lumumba Friendship College. A great deal of difficulty was placed in my way and I was unable to visit the place. I suppose that I was prevented from going there because of the troubles being experienced with the students.

I do not want to exaggerate these difficulties, and it is not my purpose to make capital out of them. However, they are symptomatic of some of the problems which the Soviet Union is up against in terms of giving help to the developing countries. Russia has had some catastrophic experiences with some of her aid projects in Africa. There is the story of the snow ploughs in Guinea, which the late John Strachey saw with his own eyes a year or two ago. I am told that there is a refinery being built by the Communists in Ethiopia and that the building costs are running at twice those originally anticipated. These are the sort of difficulties one gets into in this sphere of transferring capital development from a richer to a poorer part of the world. But they indicate that there are doubts in the Soviet Union —about the aid programme.

Following recent events in both East and West Africa similar questions have been asked in certain quarters of the British Press—and in this House, although such doubts have not been vocal today—about whether we should engage in an even bigger aid programme. If these ideas in America, Britain or the Soviet Union were to gain momentum, it would be a disaster for the world in the most literal sense of the term. It would be a human disaster for the ordinary men, women and children of all the developing countries. It would be a moral catastrophe for the wealthy nations if they decided not to use the maximum ability at their command to help these other countries. And it would be a political disaster for the whole of mankind because it has been highly significant, particularly in the last year or two, that some of the danger points in the world have moved out of Europe and into Africa and Asia to places where political friction coincides with a high degree of human poverty. It is not a coincidence that the clash between China and India has taken place between two of the great countries of Asia, pursuing rival methods of development, one totalitarian and the other democratic.

This is the background which we must constantly bear in mind and we in this country must do everything we can to make the United Nations Development Decade a real success. There are signs that the Decade is seriously losing momentum. The British Government have a heavy share of the responsibility for this. In our view Britain has a crucial rôle to play in maintaining the impetus of aid and in assisting, for example, the new American President to convince his own public opinion about the desirability of it.

We should not get into the mood of thinking that we give aid to be popular or to win political allies. Nor should we get into the mood of giving aid and feeling unduly hurt at any ingratitude shown because a country receiving it behaves in a way that is not politically congenial to us.

My hon. Friend the Member for Blackburn (Mrs, Castle), in a splendid speech, spoke of the need for getting some form of international income tax to finance aid. That suggestion brought a number of raised eyebrows. My hon. Friend was absolutely right. When we pay Income Tax within our national community we do not expect that the people who get the net benefit from it should show any particular gratitude for what they are receiving. Nor do we expect when paying Income Tax to feel some sort of moral glow of righteousness by paying it. We pay it because, if we think about it, we see that it is a moral necessity—that it is essential if we are to have a decent civilised community in this country. We provide aid to the developing countries because we feel that we are members of a world community. We feel that we should pay our share towards equalising the wealth of that global community, just as naturally as we pay our Income Tax in this country. My hon. Friend was asking for some form of international income tax, which might be a useful method of assessing the ability of a nation to pay. If the ordinary citizen in Britain, America or the Soviet Union were to feel that when he paid his tax a part of it would go towards a world development authority, it would be a useful psychological device, if no more, to make us all feel that we are citizens of the world community and that we ought to be moving faster in the direction of creating a real world authority.

The question for us is what the United Kingdom and the British Government can do to advance towards these aims. My right hon. Friend the Leader of the Opposition, in a speech at Oxford a week or two ago, laid down in some detail steps that we could take in this country. I mention some of them in conclusion. First, we ought as a country to step up the total volume of our aid. At the moment, it is a disgrace that our share of the gross national product of this country is rather less than the average for the Development Assistance Committee members of O.E.C.D. A country like Britain should be better than average in a matter like this and setting an example.

Secondly, we ought to plan what aid we give a great deal better than we do. This is the case for having one Minister, which I have already mentioned. I should like to take up with the Minister the point made by my hon. Friend the Member for East Ham, North (Mr. Prentice) about the present flow of aid from this country. The Economic Secretary will remember that last year the British aid effort was supposed to be running at £160 million. We were assured of that in this House, and, indeed, we were assured at one point that it had actually been spent. Then it was discovered that a mistake had been made and that it would be £12 million less than the House of Commons had been told had been made available in aid. We were then assured in the White Paper published in the autumn that in the coming year the aid programme was to go up from the under-spent £160 million, which was planned for the previous year, to between £180 million and £220 million. Those of us who are enthusiasts for the aid programme were rather startled, but very pleased, to find that the sights had been raised by the Treasury in this way.

What did we discover? We discovered that during the first half of the financial year the actual outgoings in aid programmes were less than they were the year before, and all the evidence at the moment is that it is very unlikely that the Government will be able to get near the target laid down only a few months ago.

I hope that we shall have words from the Government tonight to make sure that this allocation of money is taken up. I realise that this is not entirely within their control, but I think that some of the things now outside could be brought inside the Government's control by more effective machinery here. Let us hear that something will be done about it. It is quite unsatisfactory that the House of Commons should be operating on figures so widely at variance with what is likely to happen.

Another important point that my right hon. Friend made in his Oxford speech which deserves some attention tonight were the steps he suggested to mobilise public opinion behind a massive aid programme. I am sure that this is vital. I have mentioned the kind of criticism there is about the whole question of overseas aid. If we are to get the backing of the nation for this, people have to have these things adequately explained to them.

I think that not least of the services that the Leader of the Opposition has done in recent weeks has been to raise this matter to the level of public debate. It is a great pity that there has not been more support for a debate on these issues from hon. Members opposite. There are a great many extremely difficult questions involved, and it is tremendously important that we should try to give a lead to public opinion on these matters. One way of doing this is to evolve the participation of as wide a range as possible of British people in the aid programme. This is the magnificent work that organisations like the Freedom From Hunger Campaign and Oxfam do. My hon. Friend the Member for Swindon (Mr. F. Noel-Baker) mentioned the work that they do, and I think that many of these campaigns are a good deal ahead of the Government in the lead that they give on these matters.

We ought to have all over the country systems of adoption and twinning between villages and towns in Britain and similar overseas communities. If we can do this at that level, we may make people see the human element, the direct personal factor, involved in these programmes. I should like to see Britain give a lead in establishing an international service corps. I do not think that it should consist only of young people, though obviously they would be a very important part of it. I should like to see the situation in this country where, for a very wide range of people of different ages and all walks of life, it would become part of the normal concern of citizenship to spend a year of two years or some form of secondment helping the developing countries to achieve a decent rate of economic growth.

Another matter which I hope the British Government will take up is to give a lead at O.E.D.C. and on its Development Assistance Committee with regard to an effective aid strategy within the West. My hon. Friend the Member for Lincoln (Mr. Taverne) made the point that one of the American resentments which was making them decrease their aid programmes was the feeling that they were rescuing the European Colonial Powers from some of the legacies of colonialism in Africa and that we were remarkably disinterested in the kind of economic growth that is taking place in Latin America. I think that there is substance in this American complaint. I confess an almost abysmal ignorance of what is happening in the great Latin American Continent, but the sooner that we as a nation become more aware of Latin America's place in the developing world and more willing to play our share there, the easier it will be to get some kind of planned aid strategy. Above all, I hope that this aid strategy will be planned at the United Nations and that Britain will take a leading part in the planning there. I hope that at the coming Trade and Development Conference a leading rôle will be played by the British delegates.

My hon. Friend the Member for Blackburn said that there was a tremendous amount of co-ordination to be done at the United Nations itself if the international aid programmes were to co-operate properly, avoid overlapping, avoid wastage, avoid empire building and concentrate on the needs of human beings which they are designed to meet. That is perhaps the most urgent thing of all. I should also like to see the trade conference achieve some progress on the problem of stabilising fluctuating com-modify prices. That, as much as anything, is a way in which we can give practical help to developing countries.

I apologise for keeping the House, but I believe this has been an important debate. I believe that if Britain is prepared to do the things that I have outlined, we can by our example have a very considerable influence on the way that the world tackles the aid programmes, and we can play a distinctive part in helping to save humanity from much needless suffering and the world from many preventable dangers of war.

7.50 p.m.

The Economic Secretary to the Treasury (Mr. Maurice Macmillan)

I hope that the House will forgive me if, instead of addressing myself to the Bill, I follow the debate, because it is quite clear that we have not spent more than a fraction of the time on the International Development Association Bill.

That fact makes nonsense of some of the remarks of the hon. Member for Wednesbury (Mr. Stonehouse), and other hon. Members, criticising the Government for not having present in the Chamber any Ministers other than Treasury Ministers. We are doing our best to be streamlined, modern and efficient, to deal with the matter in hand in this debate and not entirely on matters arising from it. This Bill is about our contribution to the International Development Association, and not about our general aid policy or specific Commonwealth matters.

I presume that, after its strictures on my right hon. Friend, the House will forgive me if I am not able to be as brief as I usually like to be, and I hope that in trying to answer the various points that have been raised I shall satisfy in quality, if not in quantity.

I am sure that when the hon. Member for Ashton-under-Lyne (Mr. Rhodes)—whom I am sorry not to see in his place —reads the OFFICIAL REPORT he will probably feel that my right hon. Friend answered him when he dealt with the proportion of the British contribution as compared with the contributions of other countries.

In getting across to the country the importance of these aid matters, there is the valid problem that the resources, even of the Government, are limited, and the general view of the Press is that the subject is not news. It is partly to meet such difficulties that the Government have decided to produce a sort of popular version of the White Paper on aid which will, I understand, be ready during the course of the next fortnight or so. I hope that hon. Members on both sides will do what they can in their corntituencies—if they have not already done so—to bring home to those whom they represent the importance of these matters.

The Bill has been timed to fit in with the arrangements for formal ratification and its substance deals with the amount and proportion of the United Kingdom contribution, both of which are the result of negotiation. As my right hon. Friend said, we have not got quite what we wished, but have gone some way towards doing so. No departure in principle and no new policy is involved. We are, so to speak, replenishing the coffers of the I.D.A. on terms that have been negotiated with our partners in it.

I shall have to disappoint the hon. Member for Dundee, East (Mr. G. M. Thomson) by telling him that those negotiations are confidential. There is nothing I can say about them in detail, except that his point about I.B.R.D. surpluses being used to reinforce the funds of the I.D.A. is at present being considered by the President of the Bank and the Executive Board. Again, these discussions are confidential. I hope that he will, therefore, forgive me for not saying more. I fully appreciate the point he made, as do our representatives at these discussions.

I cannot agree with the hon. Lady the Member for Blackburn (Mrs. Castle), who said that we are showing a perfunctory attitude. After all, we shall on Thursday be debating the Commonwealth aspect of trade and development. There is no discourtesy intended to the House, and there is nothing abstruse in there not being present today any but Treasury Ministers. It is only that we are discussing the replenishment of the I.D.A. funds.

There is no question of throwing good money after bad, to quote the hon. Lady's words. We are not voting more money on a matter of principle, as is our usual practice here, but continuing a commitment already made and accepted in principle by this House. The extent to which this aid, in particular, can be afforded by the countries concerned is irrelevant, because it is interest free, and the rate of interest on other loans can have no effect on the use made of I.D.A. funds.

The idea underlying the whole debate has been that not enough cheap aid is being provided by the United Kingdom and by the countries of the developed world as a whole. This argument can well be advanced and sustained and, whatever views anyone may have, nobody can deny, and Her Majesty's Government have never sought to deny, the importance of development aid in general. In this context, however, the amount of cheap aid that is being provided is not under the control of the British Government. Nor can there be attributed to us the sole responsibility for the shortfall, if that is what it is thought to be, in the total amount negotiated.

Let me turn to the problem of aid being taken up fast enough or not fast enough. Whatever may be the reasons for United Kingdom aid, and aid in general terms—both bilateral and multilateral—together with the loans of the Development Association, not being taken up quickly enough, it is quite clear that the rate of interest is not a critical factor. It cannot be a factor at all in the context in which I.D.A. capital is being used, because no question of interest is involved.

The hon. Member for Dundee, East referred to the total proportion of our aid and of total aid, that is not being used, but it is difficult for the donor countries to have any control at all over the rate at which the aid allocated is taken up. A certain amount of help can be given but, ultimately—and especially in the case of the independent countries—it is the receiving countries' responsibility. The position is complicated also by the fact that the commitments and allocations are deliberately planned a long way ahead in order to make a planned and properly co-ordinated approach between various activities of the I.D.A. more feasible, and the further ahead one is working the more likelihood there is of projects falling by the wayside—

Mr. G. M. Thomson

The Treasury has the job of giving as accurate estimates as it can. We accept that these things are not wholly under the Treasury's control, but this White Paper, giving a figure of between £180 million and £220 million, was published by the Chief Secretary to the Treasury in September, 1963. By that time, five months of the half year had already passed, and that half year shows a fall on the previous year in the otal amounts taken up. Why does the Treasury's economic intelligence about the way things are going have to be so badly at fault?

Mr. Macmillan

In general terms, it is difficult to estimate the out-turn of aid programmes—not only for the Treasury but for the International Bank, with all its experts. This is the subject of a detailed Question tomorrow to my right hon. Friend the Chancellor of the Exchequer, and I would prefer to leave it to him. However, it does not alter the general point that the aid is not taken up as fast as either the co-ordinating international bodies or Her Majesty's Treasury would like.

Mr. F. Noel-Baker

The capacity of developing countries to absorb aid is crucial to the success of the whole business of helping them. Surely the hon. Gentleman does not mean to brush aside any responsibility for the capacity of those countries to absorb our aid. Surely a proper interest in their arrangements for absorbing aid both in bilateral and multilateral schemes through the United Nations is fundamental to an intelligent British aid programme. Cannot the hon. Gentleman say something about what the Government are doing to improve the absorptive capacity of developing countries?

Mr. Macmillan

In so far as the hon. Gentleman is referring to what we are doing in the Development Assistance Committee, we are playing our part in the discussions now proceeding on this matter. The great difficulty is that we cannot have it both ways. We do not control international organisations like the I.D.A. It is not possible to sustain the position in which all the weaknesses in trying to deal with the imbalance between rich and poor countries are the sole responsibility of Her Majesty's Government.

I agree with the hon. Lady the Member for Blackburn that a sideline to this problem is the question of liquidity and international reserves and the strain which aid is apt to place on countries operating reserve currencies. That is one of the elements which comes into the negotiation of a proportionate contribution to I.D.A. funds. Clearly, the extent to which any country—the United Kingdom in particular—can afford to expand its contribution must depend to some extent on the contributions of the other countries concerned.

Mrs. Castle

Before the hon. Member leaves the point about failure to take up the sums voted, will he deal with the example which I gave? A Common- wealth assistance loan to Uganda was negotiated on such a basis that she is unable to take it up because of the pressure of local costs. Yet the request for a loan from Britain to enable her to meet these local costs has been turned down until she has exhausted the Commonwealth loan. This is a vicious circle deliberately created by the aid machinery in this country.

Mr. Chapman

The Trinidad Government would not accept a loan on independence because the rate of interest was so high. They refused to take it. This is our responsibility. The aid shortfall is partly because we are charging too high a rate of interest.

Mr. Macmillan

Perhaps the hon. Lady the Member for Blackburn will allow me to develop my argument. I will deal with the case of Trinidad in the next few minutes.

I think that some of the difficulties and muddle to which the hon. Lady the Member for Blackburn referred should be attributed to both sides. There were difficulties at the receiving end as well as at the giving end. I hope that the conference on trade and development in March and June this year will have some effect on this and also on the negotiation and discussions going on in the Group of Ten and the other I.M.F. organisations on the further point which the hon. Lady raised concerning liquidity and reserves. In all this, the question of co-ordination and integration does not necessarily mean action, and I think that the effort behind the I.D.A. shows this because this is a co-ordinated international body which has, achieved a great deal but not as much as it would have liked.

The hon. Member for Ashton-under-Lyne raised a point about the I.D.A. giving aid to Communist countries. The I.D.A. dells only with its members, and the Communist countries are not members under Part I or Part II of the Articles of Agreement because they were unwilling to pay their subscriptions in convertible currency.

It is fair to tell the House that a point about agriculture was raised by Mr. Woods al a meeting in September, 1963. He emphasised that the I.D.A. should extend its help to agriculture, education and technical assistance. In this, he had the full support of Her Majesty's Government. This was one of the things which we were extremely anxious should be done.

The hon. Lady the Member for Blackburn referred to priorities. I think that she put rather more emphasis than I should have done on what we want to see in Africa rather than on what the Africans want to see. It seemed to me that, although she mentioned it in a deprecating way, her views were getting very near to the neo-colonialism which one is anxious to avoid even appearing to advocate with regard to the ex-colonial territories. One hon. Member opposite made the point that this was one of the functions of the I.D.A. and quoted Mr. Eugene Black as saying that he could, as an internationalist and president of an independent body, make conditions which were harder, perhaps, than those of any private or national proposal.

Mrs. Castle

Does not the hon. Gentleman see that that is the whole case for channelling more aid through a multilateral body like a world development authority? If we continue to give 88 per cent. of our aid bilaterally, clearly we will not be able to see that it is used properly without being accused of being neo-colonialists.

Mr. Macmillan

The problem is that the I.D.A.'s lending policy is fairly strict. This has been the difficulty over British Honduras, for example. A delegation from British Honduras went to the International Bank in June, 1961, and the possibility of I.D.A. or Bank finance was discussed between that delegation and the I.D.A. representatives. The difficulty was that a number of projects which were discussed on that occasion were turned down by the I.D.A. because it did not consider them to be necessities in the economic development of British Honduras. Formal application was made only with regard to one project.

Although there has been no formal decision of the Board of Executive Directors, it is a matter of policy in general terms that, on the whole, the I.D.A.'s programmes are not envisaged in terms of less than $1 million or for countries or territories with less than about 250,000 people. This is not by any means a rule of thumb. The I.D.A. authorities were prepared to consider projects from British Honduras, which has a population of only about 90,000, on the ground that it was on the road to independence and, in due course, would become an I.D.A. member in its own right.

But, in fact, it was the I.D.A. which considered schemes for British Honduras. It sent an economic survey team to Honduras and was prepared to consider credits for that Colony if proposals were put forward. But, as I say, only one was put forward. On the point of principle, it is not the responsibility of the British representative at Washington on the Board of the Bank to push the claims of British territories, colonial or otherwise. He is a British representative on an independent body. It is not his function to try to get preferential treatment—

Mr. G. M. Thomson

Nobody on this side said that that was the function of the British representative on the Bank. We were concerned about the responsibility of the Colonial Secretary in putting forward claims to the bank on behalf of dependent territories. Can the hon. Gentleman clear up this point?

Mr. Macmillan

Honduras now has internal independence and puts forward its own claims. It is the function of the Colonial Office, as with all dependent territories, to advise and to help it. It is not, as I understand it, the function of the Colonial Office to put forward a claim on behalf of those territories to the I.D.A. It is up to those territories to do it with Colonial Office advice and support. The problem has been that under the policy which the I.D.A. has applied, many of these territories are considered to be too small for I.D.A. loans. That is a matter for discussion with the Bank authorities and not entirely one for decision by the United Kingdom or by Her Majesty's Government.

Mr. Chapman

This is too bad. The hon. Gentleman knows perfectly well that British Honduras became independent on 1st January this year. I was obviously raising the question of what has been happening during the last three years, when we had responsibility for British Honduras. Also, does the hon. Gentleman think that Montserrat, which I gave as an example, with a population of 57,000, can put up claims, send a delegation to Washington, and all the rest of it, without the proper help of the British Government in helping it to organise and place its case?

Mr. Macmillan

If the hon. Gentleman had listened earlier, he would have heard me say that part of the reason why British Honduras got special treatment from the I.D.A. was on account of the fact that it was about to become an independent country and, therefore, a member of the I.D.A. in its own right. That was one of the reasons why the I.D.A. economic team went to Honduras and why its economic problems were examined so closely. That was done with the full co-operation and support of Her Majesty's Government in the United Kingdom.

It is still not the responsibility of the Colonial Secretary to put claims to the I.D.A. on behalf of dependent territories. It is clearly the responsibility of the Colonial Office to all dependencies to do all it can to help and support their economic and other forms of development, and to help them when presenting a case to the I.D.A. As I have said, however, if a country is in a situation where its proposal is clearly contrary to the policy of the International Development Association, either because it has not been adjudged to be sufficiently big in terms of population, or because the relevant scheme does not lead to the economic development of the country, the I.D.A. may reject its application. The schemes which the I.D.A. turned down in the case of Honduras were those which would certainly, I should have thought, have helped its economic development, but they were not judged suitable on other criteria by the authorities of the I.D.A.

One hon. Member asked about "soft" loans from the United Kingdom and why we did not do more in the way of lending bilaterally on easy terms. We have pledged a certain amount: in India to the extent of £30 million; Pakistan, £8 million; and Turkey, £2 million. We have signed pledges or agreements for loans over 25 years at about 5½ per cent., but with a complete waiving of service charges, interest and repayments of capital for seven years, which, in effect, reduces the rate of interest to below 3 per cent. I have not checked the arithmetic.

The hon. Member for Wednesbury asked whether the ideas which were aired in this House could be put forward to the I.D.A. by the United Kingdom Executive Director. All the ideas put forward in the debate will be most carefully studied. Without checking, I cannot say whether they can all be properly taken up by the Executive Director at the I.D.A. I should not like to express an opinion on whether they are all within his competence. The hon. Member for Ashton-under-Lyne said the same kind of thing.

My hon. Friend the Member for Croydon, North-West (Mr. F. Harris) raised various points of detail, one of which was the need for technical assistance directed towards people, as well as capital aid, and I heartily agree with him. Again, however, some of the details that were raised about Tanganyika and Kenya can be raised during the debate on Thursday.

One of the suggestions, which, I hope, I heard wrongly, was that there was doubt whether the money which was applied to I.D.A. projects was being wisely spent. The Government have complete confidence in the capacity of the I.D.A. and in its lending policy. As my right hon. Friend the Chief Secretary said, there are the standard terms of the 50-year period and the 10-year period of grace for capital repayments, and no interest is charged except a ¾ per cent. annual service charge. Unlike the International Bank, the I.D.A. does not require loans to dependent territories to be guaranteed by the colonial Powers. In other words, we have not guaranteed any loans for Swaziland. In principle, the I.D.A. adopts the same policy as the I.B.R.D. on the types of project which it is prepared to assist, and applies the same standards of project appraisal.

For a number of reasons, particularly the differing stages of development, the distribution of loans by type of project has differed markedly between the I.D.A., on the one hand, and the International Bank for Reconstruction and Development, on the other. This reflects the capacity to pay interest of countries in different stages of development and correlates with the different types of aid programme which they require. This distribution will change over the course of years because some of the wider range of countries are now coming forward for I.D.A. credits, and also because of proposed changes in the Bank's and I.D.A.'s lending policy on agriculture and education.

The original fear, it is fair to remind the House, was that the I.D.A. would not consider applications from dependent territories. This is groundless, subject to the limitation which I explained concerning size. It has not been so, and a credit has been granted to Swaziland and others are under consideration for Bechuanaland and Basutoland. As my right hon. Friend pointed out, the whole Commonwealth has benefited considerably by the geographical incidence of I.D.A. loans, and notably India and Pakistan, India, in particular, having absorbed about 54 per cent. of the total I.D.A. credits.

Mr. P. Noel-Baker

India got 54 per cent., I think, and Pakistan 20 per cent.

Mr. Macmillan

Yes. I gave way because I thought there was some point of difference between the right hon. Gentleman and me. I apologise to him. I said that India got 54 per cent. I did not say anything about Pakistan.

I can assure the House that, contrary to what the hon. Lady and some of her colleagues believe, the Treasury does take these problems very seriously and, on the whole, I think, very constructively. She did herself enter a point about the Treasury's central interest and the Treasury's limitations, in speaking of the question, because of the balance of payments problems involved. The hon. Member for Lincoln (Mr. Taverne) also referred to it. It is an extremely interesting argument, particularly as put forward by the hon. Member for Lincoln, but it was not really entirely relevant to the Bill to talk about the relative claims of the Commonwealth and Latin America, and the whole status and standing of the various international bodies involved.

I would remind hon. Members who are most anxious for the creation of a special Ministry to deal with this that that would not remove the interest of other Ministries in the matter. However we look at it, however we try to plan the office side, the administrative side of it, the Colonial Office, the Commonwealth Relations Office, the Foreign Office and the Treasury will be involved, and the Secretary for Technical Co-operation, I suppose, would be absorbed in the new Ministry. The main need is for co-ordination and co-operation at the official and ministerial level, and it would remain so; and I think that we have got this by working in the approved technical and official committees.

My right hon. Friend the Prime Minister said earlier in the Session that he did not see the necessity for any further ministerial appointments. I do not myself. I think that there is a danger in the proliferation of appointments, in that they lead to confusion. There was an hon. Member who thought, speaking of I.D.A., that we wanted yet another body in the international field to co-ordinate multilateral aid, which I.D.A. was set up to co-ordinate. I think that there is a danger, if I may say so with respect to the hon. Lady, in relying too much on Ministers and not enough on policies.

Mrs. Castle

Is the hon. Gentleman really suggesting that the function of I.D.A. is to co-ordinate? Surely it was set up to be ancillary to the World Bank, to fill specifically a limited gap. It has no co-ordinating power over S.U.N.F.E.D. or the Technical Assistance Board, or the specialised agencies, surely?

Mr. Macmillan

It has certain co-ordinating functions in multilateral investment. S.U.N.F.E.D., as the hon. Lady knows, never came into being. It was opposed by the Western nations, and partly on the ground that it was not sensible to proliferate international organisations.

Mrs. Castle

I am sorry. I did not mean S.U.N.F.E.D. I meant the Special Fund.

Mr. Macmillan

It was set up in part for the purpose of exercising co-ordinating functions for this form of multilateral aid to developing countries. I think that it is clear that this function is being developed, subject to the difficulty, which it is hoped a short period will see resolved, of having funds taken up by developing countries.

I am sorry I cannot go further in helping the hon. Member for Dundee, East on the points of detail he raised about our future attitude to some of these negotiations with regard to the various techniques to which he referred. Within limitations I have tried to answer as best I can. I must apologise for the fact that I cannot go very much further in describing to him the exact negotiations, and attitude taken up, in deciding the total amount of the contribution. The Government are very much alive to the problems of aid, and are, therefore, likely to be very sympathetic to the various points of view which have been quoted—for instance, from the President of the organisation responsible. Beyond that, I do not think that I ought to go.

Personally—if I may end on a personal note—I hope that this debate and the debate on Thursday and the proposed short, popular White Paper will be seized by Members as a means of demonstrating throughout the country the importance of our aid to all the dependent territories.

Mr. P. Noel-Baker

Can the hon. Gentleman give us an assurance that the popular White Paper which is to come will be a little more objective and a little more complete in its historical outline and statement of the present position than the recent paper put out by the C.O.I., called A Key to Disarmament?

Mr. Macmillan

I am sorry, but I have not seen this, so I cannot comment on it. I have been a little inaccurate in talking of a popular White Paper. It will be a paper based on the White Paper rather than a popularisation if it. It will be as accurate as the Government can possibly make it—perhaps even more accurate than the White Paper, for it will set out all the latest facts, and I hope that it will satisfy the hon. Gentleman when he sees it.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Hugh Rees.]

Committee Tomorrow.