HC Deb 13 April 1965 vol 710 cc1132-3
3. Mr. Stratton Mills

asked the Minister of Overseas Development if she will make a statement of the net effect of Government aid on the balance of payments situation; and what studies she has instituted as to which forms of aid are least onerous in this respect.

Mrs. Castle

I am urgently studying this question with the Department of Economic Affairs, the Treasury, the Board of Trade and other interested Departments. The investigation is not yet complete but it is clear that the net effects are different for different forms of aid.

Mr. Stratton Mills

Can the right hon. Lady give us any idea when this review will reach finality? Secondly, is she aware of the dismay caused in the developing countries by the Chancellor's restrictions, for balance of payments reasons, on private investment? May we have an assurance that the same balance of payments reasons will not be extended to cut down Government aid to developing nations?

Mrs. Castle

We are pressing ahead with the review as quickly as possible and in any case I hope to be able to report to the House, in the White Paper which I shall introduce before the Summer Recess. The answer to the last question is that we certainly have no intention of cutting aid.

Mr. Sandys

Against the background of the Budget and the balance of payments problems, will the Minister bear in mind that commercial investment is often as valuable as, and sometimes more valuable than, direct Government aid?

Mrs. Castle

I am certainly aware of the râle which commercial investment plays in development, but, obviously, in considering all these forms of development we have to have regard to our own balance of payments problem.

Sir C. Mott-Radclyffe

Is the right hon. Lady aware that in his Budget statement the Chancellor of the Exchequer stated very clearly that those who invested money overseas would have to assess more accurately in future the advantage which they would get from overseas investment as compared with the advantage which they would get from investment at home? Is this guidance to be applied only to private or company investment, or is it to be applied also to the Government and, if so, at what stage?

Mrs. Castle

The criterion for assessing Government aid is its effectiveness in achieving the ends which we are seeking, namely, the development of the countries concerned to the utmost extent which our resources will allow.