HC Deb 01 June 1965 vol 713 cc1491-4
13. Sir G. Sinclair

asked the Minister of Overseas Development, as a considerable part of Great Britain's current invest- ment in developing countries is private investment, what further action she will take to create conditions favourable to the increase of such investment; and what progress has been made in reaching agreement with developing countries on bilateral or multilateral codes for the insurance of overseas investment against political risks.

26. Mr. John Harvey

asked the Minister of Overseas Development what action has been taken by Her Majesty's Government since October, 1964, to facilitate the adoption of proposals initiated by the Organisation for Economic Co-operation and Development for a multilateral investment insurance scheme; and on how many occasions since October, 1964, this matter has been discussed with the Organisation for Economic Co-operation and Development.

Mrs. Castle

Her Majesty's Government are taking a full part in the discussions in the O.E.C.D. on a multilateral scheme for the insurance of overseas investment which we shall also be able to discuss with developing countries in the United Nations Trade and Development Board later this year. As I hope the whole House will recognise, the United Kingdom's balance of payments position limits the scope at present for measures to increase private investment overseas.

Sir G. Sinclair

I welcome this statement, which is a reversal of the previous approach to insurance of this sort, but I hope that the Minister will press on with these arrangements, because American experience in this matter has been of considerable assistance to private investment from America in overseas territories.

Mrs. Castle

I should point out that the O.E.C.D. Council has not yet approved this scheme, and is to be asked to pass it to the World Bank for further study. We have no objection in principle to the establishment of a scheme of this sort in O.E.C.D., but the question whether we would accede to it must necessarily depend upon its exact terms and our own economic position.

Mr. Tilney

Does the right hon. Lady consider that her right hon. Friend the Chancellor of the Exchequer is doing everything he can to assist her in achieving these very desirable aims?

Mrs. Castle

The Chancellor of the Exchequer and I are at one in desiring to help the developing countries in every way possible, within the limits of our own resources.

Mr. Dell

Is my right hon. Friend aware that private investment in developing countries was declining year by year under the previous Administration, and that nothing was done to reverse this trend? Is she further aware that in the last few years, taking into account the new money invested in under-developed countries, the total sum was negligible?

Mrs. Castle

It is true that private investment in the developing countries has been declining in certain cases. It is further proof of the basic need of these countries for overseas aid in order to enable them to create the necessary economic conditions for development.

Mr. R. Carr

Is not the right hon. Lady aware that in saying what she has just said she is going right across the views of the Development Assistance Committee of O.E.C.D., in Paris, which lays great stress upon the need and value of private investment and the need to take steps to encourage it? Does not the very fact that it is declining prove that there is need to encourage it, and not to put further barriers in its way? [Laughter.] Hon. Members opposite may laugh, but is it not a fact that when something is declining there is a case for taking measures to stimulate it rather than stop it?

Mrs. Castle

The right hon. Gentleman must have misheard me. I was conveying facts to the House when I stated that private investment in developing countries has been declining. That does not cut across anybody's view. The answer to the second part of the supplementary question is that if we have a balance of payments problem and limited resources and cannot extend aid and private investment as much as we would like, we must get our priorities right, and the priority must be aid which lays the foundations upon which all other economic development takes place.

Mr. R. Carr

Is the hon. Lady aware that this is a very important matter to the development of the economies of these countries and that the D.A.C. in Paris takes the view that private investment is, in its way, as important as public aid?

Mrs. Castle

The right hon. Gentleman is making a mountain out of a molehill. I have never denied that private investment has a part to play, but we must decide which is right within the context of our own balance of payment difficulties.