HC Deb 14 June 1966 vol 729 cc1393-416
Mr. Henry Clark

I beg to move, in page 6, line 18, at the end to insert: (3) Regulations under subsection (1) shall not provide for the payment of any pension in respect of service with a local authority in an ex-colonial overseas territory. This is a much more serious Amendment with a much deeper point. Clause 7 enables us to maintain worth-while facililies for overseas pension schemes to officers serving in local authorities in ex-colonial territories. Without digressing too much, I would like to point out that during the 1940s and 1950s, when these countries were under colonial rule, it was the policy to encourage the development of British forms of local government there. A number of officers serving in the regular Colonial Service, H.M.O.C.S. officers were encouraged to transfer to the service of the local authorities and a cons derable number of them did so, severing their connections with Her Majesty's Colonial Service and the H.M.O.C.S. in doing so. It was thought that, under the local authorities and the municipalities, they had a full career.

When independence came to these territories these people were outside of any compensation schemes and almost without exception the employing local authorities gave very much less favourable terms when independence was granted and the posts were localised than was granted by the Colonial Government.

10.30 p.m.

Many men who transferred from the Colonial Service and entered the service of local authorities found themselves very much worse off than if they had stayed. Yet here we find ourselves giving direct financial assistance to the same local authorities which employ British officers.

Two courses are open to us. We could bargain with the local authorities concerned, such as the municipalities and capital cities in East and Central Africa, and persuade them to pay proper compensation to the officers who had to leave through localisation. If they pay this we could feel at liberty to give every possible assistance to them in employing British officers in the future.

The other course—and quite frankly the negotiations with the local authorities may not be successful-is to right the wrong that was done when we completely deserted the local government officers whom we had encouraged to take service with local authorities in Colonial Territories. The sum is not so great in terms of the £140 million concerned in the Bill. It would cost perhaps £15,000 or £20,000, and certainly not more than £50,000 would cover it.

A number of loyal British subjects who served the country overseas followed the recommendations of the Government, and their career and prospects have been considerably damaged because the local authorities overseas have not paid proper terms. The Treasury could step in in this case. A real injustice has been committed, and it is no less an injustice and no more difficult to put right because it is four or five years old. The officers who suffered would be ready to receive the money today, even if it is a little late.

It would be only too easy for the Minister to claim that these things were done under another Administration, but I hope that he will not use the party political argument. I am sure that he will not. As we all know in the House, the process of localisation and Africanisation of posts in the ex-Colonial Territories went differently and faster than was envisaged when various schemes in the early 'sixties were put down, and when we thought perhaps that a man had a full career ahead of him in local government. But it was found after a couple of years' independence that his post was localised.

Although it is late, it is time to put right the injustice to these officers or to come to terms with the local authorities. But under Clause 7 we are proposing to give considerable financial assistance in employing British officers to aid them in their very valuable work.

Sir Frederic Bennett (Torquay)

I shall say only a few words in support of what my hon. Friend the Member for Antrim, North (Mr. Henry Clark) said, because he has put the case extremely concisely and very fairly. I hope that the Secretary of State will not give a snap answer to this, but will say tonight that he will have another look at this question. I think that he would accept that over the years in our decolonisation there have been a number of individual casualties in these local authorities and in other cases.

Like my hon. Friend, I still think that there is a possibility at this stage to remedy it by one or other of the two methods he put forward. Therefore, I make a genuine plea that in refusing this Amendment, which may not be applicable tonight, the right hon. Gentleman should say whether something can be done to rectify the injustice done to quite a small body of people who have suffered, when others did rather better because of the pure coincidence of chance in which branch they performed service on behalf of the Crown.

Mr. Greenwood

I am grateful to the hon. Gentleman the Member for Antrim, North for tabling the Amendment, and also for the very fair way in which he put the case. I know that a number of people feel that they have had a rather raw deal in this respect. I promise the hon. Gentleman that I shall not try to attach the blame to any particular Government.

In the debate on the Second Reading the hon. Gentleman said that he hoped to have a chance to take up what he called the odd factor that we are now to legalise expatriate local government officers, though strangely enough we refused to compensate expatriate local government officers with pensionable service some years ago…"—[OFFICIAL REPORT, 17th May, 1966; Vol. 728, c. 1211.] It is in continuance of that that the hon. Gentleman tabled the Amendment.

The hon. Gentleman has tended to confuse two rather separate issues. Expatriate local government officers did not receive compensation for loss of career or a guarantee of their pensions when the territory they were serving became self-governing, because the British Government's undertakings about compensation and pensions related only to the members of Her Majesty's Overseas Civil Service who were serving the central Governments of those territories.

Here we come to the improvement which has been made, because it is now possible under Section 2 of the Overseas Development and Service Act, 1965, to make supplementary payments towards the salaries of expatriate local government officers, and some requests for this help are coming in. It is also likely that local government employment will be one of the kinds of employment that I shall approve for the purpose of membership of the Overseas Service Pensions Fund. So there are two ways in which we are trying to help in this direction.

However, the Amendment would exclude local government officers from membership of the fund and I think that the hon. Gentleman would regret that as much as I should. Although these men were ineligible for lump-sum compensation, the Government welcome their service overseas and we are prepared to consider requests for help towards their salaries under the Overseas Development and Service Act. They will certainly be taken into account in deciding eligibility for membership of the proposed pensions fund. As the Amendment would exclude them from membership of the fund, I hope that the hon. Gentleman will see fit to withdraw the Amendment.

Mr. Henry Clark

The Amendment is drafted in this form because I believe that it is quite inequitable to subsidise local authorities which failed to pay proper compensation terms when localisation took place. It is equally extremely hard on the men who left their posts at lower salaries than are being paid today but who received no compensation when they see men coming in today on much sounder terms. Before we extend these terms, we must do right by those who served these local authorities in the past. I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

10.37 p.m.

Mr. Greenwood

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

The main effect of the Bill, apart from legitimising myself, if hon. Members would concede that that is possible, is to provide me with the powers I need to sustain and administer our Aid Programme. It will give me powers to provide both financial and technical assistance to independent countries, on terms and conditions which I shall determine; it will enable me to undertake research relevant to the purposes of the aid programme; and, with what is in effect the complementary legislation under the Colonial Development and Welfare Acts, it will for the first time give a firm and comprehensive statutory basis for the programme. That is what I meant by my remark about legitimisation.

The Bill also deals with two parts of our programme of financial aid, empowering me to meet Britain's financial obligations under the Agreement establishing the Asian Development Bank, and to;make a further and final contribution to the Indus Basin Development Fund. Other provisions will enable me to apply in two particular and important areas of the programme the policy which my predecessor announced in June last year, the policy of granting development loans interest-free in appropriate cases. Clause (6) wiil remove the financial limits at present imposed on certain expenditures On Commonwealth Educational CoDperation, while also enabling persons from the Republic of Ireland to be employed for the purposes of education in the Commonwealth.

Clause 7, a most important Clause of the Bill, constitutes the essential statutory basis for the establishment and the administration of an Overseas Service Pension Scheme and Fund. The power which is proposed here is to make regulations to establish and administer the Scheme and Fund, and the general purpose of the measure is to encourage valuable men and women serving overseas on short-term contracts to serve for more than a single tour, by offering them some security for their future.

I am grateful for the encouraging way in which the Bill has been received in the House. I can assure right hon. and hon. Gentlemen that we are studying carefully the various issues which they have raised in our debates on the Bill, including those which have been raised tonight, particularly where they have been in any way critical of our present policies and practices.

I believe that there is general support in the House for the principles and level of our aid programme, for the capital aid and financial assistance which we are giving, for our encouragement of tropical research, for our help in enabling young people to serve overseas, and for the general contribution which we are making to stop the gap widening between the richer and poorer countries.

I hope that the House will now be prepared to give this very necessary Bill an unopposed Third Reading.

10.40 p.m.

Mr. Wood

I think that the right hon. Gentleman will agree that the Bill has had a relatively peaceful passage, both here and upstairs, and, in spite of any criticisms or suggestions that we may have had to offer, I myself still welcome it warmly, if only for the fact that it has the effect, as the right hon. Gentleman put it, of legitimising the right hon. Gentleman himself.

As he pointed out at an earlier stage, this is a machinery Bill. It is quite clear that what comes out will largely depend on what the right hon. Gentleman manages to persuade his colleagues in the Cabinet to feed into the machine. I am bound to say that some of us are inclined to be a little pessimistic about the future development of aid. Even the National Plan, which makes provision for only a small rise over the levels of the current financial year, was not over-optimistic. Since the National Plan was issued and even since the Second Reading debate, a number of us have begun to wonder exactly how seaworthy the Plan is at present.

A good many of us entertain forebodings that, by their own decisions and perhaps even more by their indecision, the Government are pushing further away the attainment of those levels of aid which were dangled seductively before the eyes of the electorate two years ago.

I have been encouraged by the attention which has been paid in our debates to the quality of aid as well as its quantity, and to obtaining value for money. The right hon. Gentleman will recall the denunciation by one of his hon. Friends, the hon. Member for Kingston upon Hull, West (Mr. James Johnson), at an earlier stage, of the constructive criticism of my hon. Friends as patronising and paternalistic.

Most if not all of us share the right hon. Gentleman's view about the noble possibilities of the relatively affluent nations giving help to the relatively poor. Most of us feel that Britain has the right to ask that the resources transferred shall be used to the best effect, because newly-independent countries will sometimes make choices which prove to be mistaken. As I pointed out at an earlier stage, those are not the sentiments of my hon. Friends, but the words of the right hon. Gentleman's own White Paper.

In saying goodbye to the Bill, I wish it well. I hope that the right hon. Gentleman will take seriously the points which my hon. and learned Friend the Member for Buckinghamshire, South (Mr. Ronald Bell) and I raised earlier in our debate when the Bill goes to another place, to see whether there is scope for amending it to take account of those points. While welcoming the Bill itself, we shall certainly continue to watch extremely carefully how it is used in the future.

10.45 p.m.

Mr. Cranky Onslow (Woking)

It is a matter of some regret to me that I was not fortunate enough to be a member of the Committee which considered the Bill. But perhaps I might still make it plain to the House that I still entertain the criticisms which I have voiced against it.

They concentrate most forcefully on Clauses 1 and 2. I have no objection to the fact that Clause 1 legitimises the Minister. What I object to is the effect that it has in carrying further a process of institutionalising the handling of aid in this country, progressively creating something approaching a Government monopoly. This is happening at a time when the climate of opinion in underdeveloped countries is probably becoming much more receptive than it has been recently towards private endeavours in economic investment.

The effect, therefore, that I see flowing from Clause 1 is that we shall be moving out of phase with developments taking place in the world at large and creating a situation in which aid from this country becomes something much more closely approaching protection money and we, the British, in the international comity of nations, will be relatively, in modern historical terms, in something like the position which the Italian or Jewish financiers held in mediaeval Europe. This is a bad thing.

Clause 2 also will have bad effects. I believe that the money that we put into the Asian Development Bank will be of much greater benefit to, say, the Japanese than to ourselves, because we will be unable to provide from private resources investment capital to take up the opportunities which will go to our competitors. The crowning irony of the situation is that we are, in effect, subsidising our competitors with money which we have borrowed.

This is a peculiar situation. I doubt whether the recipients of British aid understand its peculiarities. I doubt whether they are reconciled to the eccentricities of our behaviour by any belief which we may maintain that we are acting in some way on moral grounds. I believe that they regard these appeals to moral obligation as being in many respects bogus as, I think, they are.

There is, however, one point in the Clauses of the Bill which I commend. The Minister has power under Clause 1 to conduct research. I appeal to him to use this power to conduct some really fundamental research into the effects of economic aid, as at present administered and as administered over the past 15 years, upon the potential development prospects of the developing countries and upon our economy. I doubt very much whether any work in this direction has been undertaken. The Minister has carried out research into the detailed aspects of development aid, but this great fundamental question seems to me to be completely ignored.

I do not believe that the conspiracy of silence on this subject should be allowed indefinitely to continue. I make no apology for stating this point of view. I stated it on Second Reading and for my pains I was called a rogue elephant by the Parliamentary Secretary. I am sorry that the hon. Gentleman is not present; but I must say it needs a rogue elephant to operate in this jungle—and it is a jungle.

If we are searching for what my hon. Friend the Member for Torquay (Sir F. Bennett) called a national ethic in this context, we should apply to the administration of British money through public or private channels overseas the same sort of tests which hon. Members below the Gangway on the benches opposite are so eager to apply to the application of British money overseas for defence purposes. We should apply a cost-effectiveness test. By that test, taking into account the money which has been involved, I believe that history will show that we have wasted money, we are wasting money and we are making it progressively more difficult for us to achieve the real aims of prosperity and progress in the underdeveloped world, which I for one, and, I believe, the whole House, genuinely wish to see achieved.

10.49 p.m.

Mr. Peter Hordern (Horsham)

In echoing the words of my hon. Friend the Member for Woking (Mr. Onslow), I wish, first, to apologise to the House for not being in my place on Second Reading and to say how much I regret not being called upon to serve during the Committee stage of the Bill. Having said that, I must say that I found my thoughts going entirely along the lines of those of my hon. Friend the Member for Woking (Mr. Onslow).

I have merely three observations to make at this point. The first is that one has to consider in this Bill whether it is desirable that overseas aid should be provided in the form that the Bill provides. I think that there is altogether too much of an attitude of acceptance of overseas aid in the sense that it is bound to be right if we can simply dole out more.

I think that this attitude is becoming increasingly questioned, and most notably by the academic world. There is now considerable intellectual dispute about the merits of grants of overseas aid in the form that it is at present carried out. Professor Bauer of the London School of Economics thinks, as I understand him, that overseas aid in the way that it is at present doled out is altogether valueless. On the other hand, there is Professor Galbraith whose argument is that even on the most mundane level, on the most disinterested viewpoint, it must be sense to assist overseas territories and overseas countries that need it, to help them to buy our goods eventually.

I feel that the whole subject matter needs a great deal more discussion and careful examination than it has had. I also believe that there is far too much emphasis on the giving of national aid. Surely the point has now arrived at which we can increase international aid by strengthening the various international agencies? I think that the days in which national aid is given should be on the decline, because the fact of the matter is that the recipients of this aid so often regard it as a form of colonialism, and this, I feel, is something which even the Government would tend to regret.

But if it is agreed that we should provide aid, are we doing it in the correct way, and how is this aid being evaluated? As I understand it, 59 per cent. of aid given by this country is at present tied to purchases from this country. In a most exhaustive examination made by the Brookings Institute in the United States, it was found that no less than 90 per cent. of their aid was tied to purchases from the United States. I cannot for the life of me see why, on the subject of evaluating aid, we cannot follow more closely the pattern that occurs in the United States.

Are we sure that sufficient cost effectiveness techniques are used on the aid that we produce from this country? I am not clear that this is so. and, having read the Second Reading debate, I think that the right hon. Gentleman was not at all satisfactory in his answers on this point.

The third point that I wish to make is simply to ask whether we can afford this sum of £225 million. As I understand it, it represents a 12½ per cent. increase over the amount of aid given last year. I notice also that the National Plan, dealing with 1970, makes no provision for any great increase in the amount of aid, but the National Plan, of course, calls for an increase of 25 per cent. in the gross national product. What is to happen if, as seems all too likely under this Government, there is virtually no increase in the gross national product? Is the aid to be cut back, on the Government's own assumptions? Is that the position?

But it is not simply the fact that we are now having to spend £225 million on aid. That is not the cost to the country at the moment. The cost to this country is the cutting back of productive investment overseas by private organisations. This is the real cost that we are having to pay. Public and private companies are being forced to apply to the Treasury and to the Bank of England on every occasion on which they wish to invest more than £25,000. They have to show that they can show a reasonable return within two or three years of such an investment being made. Much of this desirable investment is being held up because of balance of payments difficulties, and yet the amount that we give away is being increased. I do not wish to object at this stage to the way in which we give this aid, but surely, if the Chancellor of the Exchequer is right to say that we cannot afford to invest a deficit, it is reasonable to ask, how can we conceivably afford to give it away?

I make no apology for introducing a discordant note into a thoroughly amiable debate. We cannot afford aid on this scale in our present situation, even if it were, which is doubtful, proved to be desirable.

10.55 p.m.

Mr. Biffen

I wish to join my hon. Friends the Members for Horsham (Mr. Hordern) and Woking (Mr. Onslow) in expressing some doubts about the Bill. Unlike them, I was privileged to take part in the discussions in Committee. I am sorry that they were not, otherwise the whole business might not have been expedited in the cosy way in which it was in one morning. I am extremely suspicious of any Bill dealing with sums of money of this magnitude which goes through the House in this fashion.

I am particularly suspicious when there appears to be that unholy coalition of Front Benchers and we are told that the only point to deplore about the Bill is that it would appear, particularly in the context of the National Plan, that it does not provide for accelerating sums. I find this a curious philosophy to come from a Tory Front Bencher.

The right hon. Gentleman told us that he was grateful for the encouraging way in which the Bill had been received. He was grateful for the way in which we were apparently prepared—at this of all times—to agree to public expenditure on the scale of £137 million, when we know what consequences are being wreaked upon our economy by our balance of payments situation.

The Minister went on to tell us that he was encouraged by the general acceptance of the principles and the level of the aid programme. It is upon the principles and the level that I should like to add my discordant voice to those of my hon. Friends. The principles are undoubtedly contained in Clause 1, because the effect of the principles is that Clause 1 provides for Government to Government aid. We are told that the functions of the Minister of Overseas Development …shall include power…for the purpose of promoting the development of, or maintaining the economy of, a country or territory outside the United Kingdom or the welfare"—of its people. As my hon. Friend the Member for Horsham has pointed out, we are not considering this matter in a vacuum, but at a time when overseas private investment is being restricted, when imports of manufactured goods from territories which are recipients of aid carry a surcharge, and when all those countries are fearful that this may be replaced by physical quotas. My fear was particularly underlined when I read in the Financial Times, for example, the story of one overseas country, namely the Ivory Coast, which enjoys one of the most rapidly rising standards of living in Africa. The Financial Times says of President Houphouet-Boigny: He has allowed the Ivory Coast to evolve along free enterprise lines— The economic results of his policy have been spectacular. It is precisely the principles contained in Clause 1 which will not allow this country to participate in that kind of assistance. I cannot believe that it is tolerable for this kind of principle to be enunciated as though it embraces both sides of the House. I do not believe that that is true. It is certainly not true to say that those who are opposed to this principle are indifferent to the challenge which is presented by the gap in the living standards of developed and under-developed countries This is not an argument between the hawks and the doves, but a question of philosophy as to how best an economically emergent territory can be developed.

I am not enamoured of national planning and the machinery of Governmentto-Government aid. I am not so ennamoured of national planning in this country that I think it is a suitable subject for export and, make no mistake, the philosophy and techniques that flow inevitably from Clause 1 necessitate national planning in the recipient countries. We have seen that only too well at work in India. Let us consider the experience of Hong Kong. The Times of 27th May reported that Hong Kong has the highest per capita income in Asia. This is a magnificent triumph for free enterprise, and this is essentially a free enterprise territory.

There might be muted laughter from the Liberal benches, but I suspect that the hon. Member for Cheadle (Dr. Winstanley) is merely enjoying the prospect of Scottish hon. Members having lost their sheep.

I now want to refer to the other principle to which I object. I asked a question of the Minister earlier this evening about the figure of £137 million which appears in paragraph 9 of the Financial Memorandum Bill. I asked a simple and charitable question of whether that figure had been affected by the Amendments which we passed to Clause 1. He gave no answer and I am assuming that it must have some effect. I am assuming that it must make the figure appear a somewhat modest estimate. Therefore, my plea is that, even if we were to condone this kind of Government-toGovernment aid we are contemplating levels which are far in excess of those which are dictated by our economic circumstances. I do not believe that this level of aid is good for this country or that this kind of Government to government aid is the most of productive for the commercial and industrial prosperity of recipient countries. To paraphrase the Merchant of Venice, I believe that it is twice cursed to both the donor and recipient.

Dr. Winstanley (Cheadle)

Before the hon. Member sits down——

Mr. Deputy Speaker

The hon. Member had sat down.

11.4 p.m.

Mr. Henry Clark

I am in considerable agreement with my hon. Friends who have spoken. My hon. Friend the Member for Woking (Mr. Onslow) has perhaps made the most valuable contribution to the discussions on the Bill. It is unfortunate that a Bill of this scope should be the second Order on a long day after having had only a short Committee stage because the House was about to go into recess. The Bill should have been discussed at greater length and had considerable thought devoted to it. There are a number of detailed points I would have liked to have raised reflecting the sentiments put forward by some of my hon. Friends.

We should say that the C.D.C. is a great financial corporation working on commercial lines and sticking to the sound commercial principle of making profitable investments. The C.D.C. is now to be allowed to carry out non-profitable investments and to milk its profitable investments to subsidise non-profitable schemes. This is exactly the kind of move which my hon. Friend the Member for Oswestry (Mr. Biffen) described as being retrograde. A scheme which is profitable, no matter how small, is 10 times as good as one which steadily loses money and which steadily strangles itself with its own debt.

Over the years the C.D.C. has built up considerable expertise in operating schemes in agriculture and industry overseas. I sincerely believe that it should stick to the principle—remembering that it publishes its balance sheet in the Financial Times and elsewhere—that it is a commercial organisation. When it does undertake non-profitable operations it should do so as the managing agent for the Ministry and should receive not only interest-free loans but a managing agent's fee so that it does not follow the thoroughly unsound commercial principle of taking money from the profitable concerns to try to bolster up the unprofitable ones. I suggest that the Minister looks at this problem and considers paying the C.D.C. an agent's fee when it goes in for non-commercial operations for seven years or whatever the period might be, although they will probably remain unprofitable for yet seven years after that.

On Second Reading I emphasised that the Bill was being introduced with no assurance that we will receive continuous information about how the money is being spent. The Parliamentary Secretary cheerfully said that it was a happy Ministry which always wanted everybody to know as much about the subject as possible. But there is a great difference between a Ministry which issues a White Paper when it has some splendid news to offer and a Ministry which is disciplined to produce reports on fixed dates each year and to show whether things are good or bad. In such circumstances the Ministry knows that on a certain date it will have to answer questions in Parliament.

We must have a fuller answer from the Minister to the questions which my hon. Friends and I have asked. We want to know just what information we shall be getting from the Ministry at regular dates and what opportunities we shall have to probe the spending of this £137 million at regular, stated intervals and not, as is suggested, when the Ministry happens to issue a White Paper, no doubt in the middle of the long Recess. We are entitled to answers to these questions to be sure that we will be able to probe the activities of the Ministry in this sphere.

11.8 p.m.

Mr. Ronald Bell (Buckinghamshire, South)

I wonder whether my hon. Friends who have spoken are really uttering a discordant note or whether the views which they have expressed are not widely reflected in the community—and, perhaps, on both sides of the House. Because overseas aid is altruistic in its purpose, it has become one of the golden calves which we all worship, and this has gone to the length that we no longer seem to bother to count the cost.

My hon. Friend the Member for Oswestry (Mr. Biffen) and others have said that the Bill has whistled through Parliament at a quite remarkable speed. It authorises the expenditure abroad of £140 million and it would be wrong to think that this is the total of our foreign aid programme. This is merely that part which comes under the responsibility of the right hon. Gentleman. And when one looks at our annual balance of payments statement, one can see clearly how large an element in our foreign expenditure is this question of aid in the form of grants and loans. If we had a vast surplus in our balance of payments it would be much easier to justify a Bill of this sort. But we all know that, yet again, a great rescue operation is being mounted for sterling. I have lost count now, but it is certainly not the first. Only last weekend, one saw cartoons in the Sunday newspapers showing Britannia being rescued from the waves, with the caption. "Isn't it time the lady learned to swim?"

This is the situation we are in. We seem to have a chronic deficit in our balance of payments, yet here we are giving away any number we can think of, doubling it, and carrying on still further. If there is trouble in, for example, Aden, all right—dole out a bit more money. Anywhere else in the world, the practice is the same: always the solution in the end, the compromise or face-saving formula, is at the expense of the British taxpayer. Now, we have almost stopped counting. Dare I point out, in the presence of my hon. Friend the Member for Antrim, North (Mr. Henry Clark), that it is proposed under this Bill to pay for Irish teachers to go from Ireland out into the Commonwealth and come back again, all to be at the expense of the British taxpayer, not the taxpayer of the Republic of Ireland?

I have been worried for some time, as some of my hon. Friends have been, by the effect of this sort of thing on this country and, in particular, on the level of interest rates in the United Kingdom. We are all worried about the level of interest rates, but, of course, it is not governed by Bank Rate primarily; it is governed by the supply and demand for money available for investment. This country has been pouring out over £200 million a year, I should say, in grants and loans and this money, therefore, is not available to satisfy the demand for new investment in the United Kingdom. In 1964, the year which we heard so much about during the recent election, on our commercial operations we had a surplus, but that surplus was turned into a large deficit by Government overseas expenditure. What we are discussing now is one of the main elements in Government overseas expenditure. If we did not hand out these vast sums, even though we had heavy defence commitments overseas and heavy expenditure in foreign currency, we should nevertheless. with those undiminished defence commitments, still have a large surplus on our balance of payments. Certainly we should have had in 1964.

Mr. Greenwood indicated dissent.

Mr. Bell

I accept that I am wrong there; we should not have had it in 1964. But it is about one-third for these purposes and about two-thirds for defence in Government overseas expenditure.

This withholding of money from the capital market in the United Kingdom has a double effect. It slows down the expansion of our economy directly because the money is not available here. It slows it down indirectly because it raises interest rates for everybody and for every purpose. Because we have such high interest rates compared with other countries in Europe and the world, our industrial development lags behind. Our growth rate is far too low. Yet we go on, year after year, with this process which, however well meant, in the end defeats the very purpose envisaged in a Bill of this kind because it diminishes our power, if we wish to help the rest of the world, so to help.

There is then the question of the effect of this aid on the recipients. It was very clear from the last Budget what the nature of the operation is. We stop our industrial firms investing in the Commonwealth in order to have available money for this sort of operation—though I hasten to point out to the right hon. Gentleman that, in fact, we still do not have it. Anyway, that appears to be the object of the exercise.

Investment in the developed sterling areas is now virtually forbidden, and investment in the undeveloped sterling areas is not exactly easy. As my hon. Friends the Members for Antrim, North and Oswestry have said, aid is being channelled from Government to Government. How much more beneficial it would be if this were commercial development by commercial firms, fitting in with the economy of the countries concerned! It is now something like 18 years since the groundnuts, the sunflowers, and the chicken farms, but the lesson is the same. That was all British Government development in overseas territories, whereas now we have British money going out to the overseas territories in ways which are thought fit; and we all know the sort of prestige projects on which this money tends to be spent.

One can envisage operations of a pump-priming kind, but unfortunately most of these commitments tend to be what one might call running commitments, all remaining a burden on the economy of this country. Furthermore, they debilitate the natural growth of the country to which they are directed, and I say that if the Minister is going to use all this money and at the same time send Dr. Kaldor into these developing countries, then I really think he would do less harm at home: although I agree that that is a controversial point of view.

Lastly, i question the legitimacy of using the law-making powers of this country for doing this kind of thing. If one takes money from people under the compulsory processes of the laws of taxation and give away the proceeds to foreign countries for some direct national advantage, then I think that can be justified. But if, in a spirit of benevolence and on the principle that the strong should aid the weak and the richer give some of their wealth to the poorer, then I do not think it is right that people should be generous at the expense of other people.

There should be nothing whatever to prevent those who think that funds, as distinct from commercial development, which is what I advocate, should be set aside. There should be nothing which prevents them from setting aside part of their worldly goods and sending them out. What they are not entitled to do is to use the law-making powers of this country to be generous with other people's goods. That is the wrong kind of gesture; but this Bill is just that kind of gesture. There is too much talk of duty to other people and too much disposition to apply the proceeds of other people's productive effort for these purposes with which we are concerned tonight.

I regret that we are not opposing this Bill. Some good may flow here and there from this kind of aid, but in principle this type of operation is wrong. We should do better if we left the money in people's pockets and left them to help commercially, applying the law of supply and demand. Malaysia is a country where that kind of operation has been going on, and let us compare it with a country where all the aid is from government to government. Malaysia is prosperous in its own right and to the extent of its own development, if it is prosperous, and not prosperous by the continual injection of money from the British taxpayer.

I am very glad that my hon. Friends have raised the subject tonight and I hope that never again will we slip a Bill of this magnitude and this significance through the House of Commons in the way that this Bill has slipped through.

11.20 p.m.

Sir F. Bennett

The Government are already aware of the fact that the Bill has received general support from both sides of the House, not only through an unholy alliance of the two Front Benches, if I can be so prematurely immodest, but also because it has achieved an unopposed Second Reading. The right hon. Gentleman, however, should take careful note of the remarks made in the last half an hour or so, for they have reflected what is a growing concern in the country which it would be wrong for him to neglect. It is happening quite widely throughout the Western world that, without neglecting what has been called the national ethic, people have started to query, almost for the first time, what this is all about, what it is intended to achieve and what in fact it is achieving. We do not do any good by ignoring the fact that there is this growing concern in public circles throughout the Western world about what our form of aid is intended to achieve and whether it is achieving it.

To my hon. and learned Friend the Member for Buckinghamshire, South (Mr. Ronald Bell) I shall say only one word in controversy. It is to assure him that there are some countries in some parts of the world where, while there are great potential investment possibilities for this country, they cannot possibly reach that stage through private investment. There are some parts of the world which simply do not have the ability and private enterprise in this country, certainly at present rates of taxation, does not have the ability, to create what is loosely referred to as the infrastructure. There is no money to be made by private enterprise today from building roads or ports in Africa and whether we like it or not, this infrastructure must be provided through some financial source. Unless we alter the whole system of taxation in the West, the days have gone when private enterprise could provide the platform on which more profitable forms of investment later on could be built.

Except for that, I repeat that we have every right on this side of the House, as have hon. Members opposite, to watch very closely, whatever party is in power, what has been referred to as cost effectiveness. It is not just cost effectiveness, but effectiveness as such, because there is effectiveness in political terms and in long-term economic terms. But we have the right and duty to press any Minister who administers sums of these sizes raised from the taxpayer much more closely than has been done in the past for details of how the money is being used and whether it is being used to the best purpose in the right places.

I hope that the right hon. Gentleman will take account of the feelings which have been expressed tonight and not imagine that because the Bill has received an unopposed passage, that means that this growing public concern has thereby been allayed. Obviously, everyone will be much more watchful in future and it is for the right hon. Gentleman as the Minister concerned to make sure that more information is given in future than has been given up to now.

11.25 p.m.

Mr. Greenwood

By leave of the House, I would like to reply to some of the points made in this extremely useful and interesting discussion. One of the most remarkable features of the debate has been the revelation that so many hon. Gentlemen have a passion for sitting on Standing Committees. Those who did not sit on the Standing Committee deeply regret it, and those who did look back upon it with a certain nostalgic pleasure. I have no doubt that the Whips on the Committee of Selection will have noticed the keen aspirants who have revealed themselves in this debate tonight, and bear them in mind for membership of future Committees.

I have listened very carefully to the criticisms, many of them constructive, which have been made, and I very much welcome the fact that the right hon. Gentleman the Member for Bridlington (Mr. Wood) and the hon. Gentleman the Member for Torquay (Sir F. Bennett) have stressed the need for getting value for money. I accept that it is an absolutely essential requirement of the aid-giving operation. I do not think that it is the only criterion that we have to meet, but we are entitled to see, when we are spending other people's money, as the Government are doing when national resources are diverted to provide aid for other countries, that the money is used in a way which will be conducive to the improvement of living conditions in those countries.

All of us have a great deal to learn in the field of aid, particularly in the management of aid. That is something with which the other principal donor countries would agree. But we are building up very valuable experience in this respect, not only among the donor countries but among the recipient countries as well. It is enormously encouraging to find that in the developing countries one is now getting a new, young class of civil servants, development economists and development engineers, who are coming from these countries and trying to help with a real understanding of the needs of the country.

I very much welcome the assurance given by right hon. Gentlemen and hon. Gentlemen opposite that they will watch very carefully how I use the powers given to me in this Bill, and that they will also watch the day-to-day workings of the Overseas Development Ministry. I can assure hon. Members on both sides of the House that if they want any information about what we are doing, either through Parliamentary Questions or through visiting my Parliamentary Secretary or myself, they will certainly be more than welcome. The hon. Gentleman the Member for Woking (Mr. Onslow) suggested that perhaps some of the research activities which we undertake might be into the effects of development aid. That is not quite the type of research envisaged in the Bill and I do not think that it is really necessary, because a review of the whole aid-giving process is being made continuously, not only by the specialists in my own Department, but also by organisations like the D.A.C. the World Bank, the O.E.C.D. and the other international organisations.

We are gradually building up experience into the best ways of giving aid and into the effects which the aid we give has in the countries that we want to benefit. The hon. Gentleman the Member for Horsham (Mr. Hordern) struck one responsive chord in my heart when he talked of the need for developing international aid and suggested that we should strengthen the international agencies. That is something that I would very much like to do. At the moment we are giving about 10 per cent. of the aid through international agencies, and I would like to see that amount gradually developed. In the long run this is the most satisfactory and least contentious way of giving aid to countries which need it.

It is a matter for congratulation that in most of the international agencies we rank second among the various countries which contribute. At the same time I think that the hon. Gentleman would agree that in the immediate present we have a special responsibility to countries which were until recently under our rule and whose economic future we have to do everything in our power to help if that political independence which they have acquired is to become a real independence, economic as well as political.

I was interested in what the hon. Gentleman said about the need for tying aid, and his reference to the figure which has been quoted before in the House that the Americans tie 95 per cent. of their aid. I am always a little dubious of figures about the exact degree to which aid is tied, and there are ways and means of getting round even the very high degree of tying like the 95 per cent. to which he referred.

In a matter of this kind, we have to be careful not to seek to tie aid so rigorously and inflexibly that the Government or country which is receiving the aid finds it almost impossible to meet the local costs. I am very conscious of the importance of tying aid to British goods and services, and I know that my officials in the Ministry are equally conscious of it.

The hon. Member for Oswestry (Mr. Biffen) suggested that we were spending too much on aid. If we were to reduce the flow of aid we should almost certainly find that other countries took similar action, and the flow of aid to the developing countries, which is already slowing down, would dry up almost to the point of disappearance. If that happened, the effect on our own trade would be very significant. We cannot completely clear our minds of the possibility that if we, as a friendly country, do not give aid to the developing countries there are always other countries which are prepared to step in, whose motives may not always be the same as ours. The hon. Member for Oswestry suggested——

Mr. Biffen

The right hon. Gentleman would not in any sense seek to misrepresent my view of this. Would he accept that at no stage did I put forward the argument that the total capital outflow of this country should be less? My whole argument was primarily designed to suggest that the Government-to-Government share was far too great.

Mr. Greenwood

I hope that I did not give the impression that that was not what the hon. Gentleman said. That was not my intention, and I did grasp the full point which he made. Perhaps in view of the lateness of the hour I am indulging in a little shorthand which did not accurately represent what he said.

I am grateful to him for reminding me that in replying to the Amendment I did not answer his question about whether the new Aden and South Arabian proposals affect the £137 million. The truth is that they do affect that figure, but they do not affect the ceiling of £225 million. They were already contained within that ceiling.

The hon. Member for Antrim, North (Mr. Henry Clark) very properly again raised the question of the Ministry of Overseas Development issuing an annual report. That is a very important point, because it would help to do what the hon. Member for Torquay suggested; that is, to tell people what aid is—what it is about, what it is intended to achieve, and what it is achieving.

The public has a right to know what the Ministry is trying to do, how it is doing it, and what success it is achieving, or what errors of judgment it has been guilty of. I would hope that at regular intervals the Ministry will produce an annual report or White Paper.

The Ministry has been in existence only since October, 1964, and it is not very easy at this stage to say in what form our annual presentation of the facts should be made, whether it should be a White Paper or an annual report. But certainly it is my intention that some time in the autumn we shall be able to place before the House and the public a review of what we have been doing since the White Paper issued last August.

I hope that it will be possible to produce a White Paper or report at a time which is more convenient to the hon. Gentleman than the middle of August to which he referred, although there is always the possibility that this year we may be sitting in the middle of August if we are to work as hard as the hon. and learned Member for Buckinghamshire, South (Mr. Ronald Bell) wishes.

Mr. Onslow

I am grateful to the right hon. Gentleman for giving the House this assurance. Would he go still further, particularly in the presence of the Leader of the House, and express a wish that the House should be able to debate such a report?

Mr. Greenwood

I will certainly consider that. I have no doubt that my right hon. Friend the Leader of the House has heard the point which the hon. Gentleman has made.

I was on the point of referring finally to the comment on the hon. and learned Member for Buckinghamshire, South that the Bill had whistled through the House. I am not quite sure upon whom this is an animadversion, but I notice that the discussion in Committee took 1 hour and 27 minutes. There was an opportunity for sitting for the whole of the morning and on the following Thursday morning. We could have had resumed sittings of the Standing Committee after the Recess if hon. Members had been so anxious to give the Bill the thorough going over to which the hon. and learned Gentleman referred. In fact, from beginning to end, except for the Amendments tabled yesterday by the hon. Member for Antrim, North, no Amendments were tabled by hon. Members opposite. So no one should complain that the Bill has whistled through the House. Hon. Members opposite should congratulate themselves on the general support that the Bill has received from Members of the House, which has facilitated its progress to another place.

Question put and agreed to.

Bill accordingly read the Third time and passed.