HC Deb 21 December 1967 vol 756 cc1449-53
1. Mr. Marten

asked the Minister of Overseas Development what effect devaluation has had on aid projects.

3. Mr. Wingfield Digby

asked the Minister of Overseas Development what review he has undertaken of the cost of overseas aid since devaluation; what decision he has reached as to economics; and what action he is taking where the aided territory has not devalued its currency, following the devaluation of the £ sterling.

7. Mr. Wall

asked the Minister of Overseas Development if he will make a statement on the effect of devaluation on overseas aid programmes.

11. Mr. Judd

asked the Minister of Overseas Development what estimate he has made of the effect of devaluation on the Government's overseas aid and development programme; and if he will make a statement.

17. Mr. Bryant Godman Irvine

asked the Minister of Overseas Development what effect devaluation has had on the value of aid given to overseas countries; and whether he proposes to make up the shortfall.

19. Mr. Goodhart

asked the Minister of Overseas Development whether British contributions paid in sterling to United Nations aid and development projects will be increased to offset the effect of devaluation.

The Minister of Overseas Development (Mr. Reg Prentice)

The effects of devaluation on our overseas aid are complex and vary from one country to another. The matter is under close study but I am not yet able to make a statement.

Mr. Marten

But did not the right hon. Gentleman go to see the Prime Minister yesterday on this very subject? Therefore, can he not tell us in principle whether aid is an area which is sacrosanct or an area which is not sacrosanct?

Mr. Prentice

My right hon. Friend the Prime Minister made it clear to the House a few days ago that all aspects of public expenditure, at home and abroad, are under study.

Mr. Digby

Where countries have not followed through into devaluation, will there be no question of making up the amount?

Mr. Prentice

I said that the whole matter was under study and, of course, that aspect among others is being considered.

Mr. Wall

Surely the value of the aid will have to be increased or the programmes cut. Can the right hon. Gentleman tell us whether the purchasing power of Britons working in overseas territories under aid schemes will be cut?

Mr. Prentice

There is a Question on the Order Paper later on the latter point. On the broader question, there is clearly some reduction in the value of the aid in certain countries. It depends on whether the country devalues. It depends on the way in which the aid is given. There is an effect, but it is very difficult to measure. We are studying what the effect is and what policy decisions need to be made arising from it.

Mr. Judd

Can my right hon. Friend say what the effect will be on multilateral agencies to which we have obligations such as the I.D.A. and the specialised agencies of the United Nations?

Mr. Prentice

That is an important aspect. A lot of our obligations to multilateral agencies are expressed in dollars. They will require adjustment in the amount of sterling paid in order to maintain the dollar value of the contribution.

Mr. Godman Irvine

Can the right hon. Gentleman say whether the Government statement that there will be an increased amount of aid for the forthcoming year still stands?

Mr. Prentice

I do not think that I can answer that precisely because all expenditure is under review at present. I hope that I will carry the whole House with me in saying that a significant aid programme from this country and every other developed country to developing countries is an important and permanent part of our policy and something to which we would all pay particular attention.

Mr. Pavitt

Would my right hon. Friend bear in mind that, while we are making a close scrutiny of our economic affairs, large sections of humanity are living in much worse economic circumstances than we are? In spite of our present difficulties, we shall inevitably increase our trade with the developing countries as they advance in the decades ahead.

Mr. Prentice

I agree. I repeat that a substantial aid programme is an important and permanent part of our policy, both on humanitarian grounds and in our own long-term interests.

Mr. Dalyell

Is not this the moment to reconsider schemes for tying aid from under-utilised capacity in this country to developing countries? Have the pilot scheme of the right hon. Member for Barnet (Mr. Maudling) and plans thought about by this Government been reconsidered?

Mr. Prentice

A good deal of our aid is at present tied to goods and services in this country. Clearly, this is something which we should always keep under review. As I said earlier, the whole question of policy and the size of our programme is being studied, just as every other aspect of Government expenditure is being studied.

Mr. Henry Clark

Would the Minister assure the House that the overseas purchasing value of salaries paid to British officers serving under aid schemes abroad will not be reduced as a result of devaluation?

Mr. Prentice

There is a later Question on that subject.

Sir C. Mott-Radclyffe

If no decision has been made concerning cuts in the amount of aid received by overseas countries, would the right hon. Gentleman bear in mind that it is better to give aid to those countries which subsequently ex- press some gratitude for it and to eliminate aid to those countries which in certain respects merely hurl abuse at us?

Mr. Prentice

A number of considerations are taken into account when deciding the priorities for aid, but it would be wrong to become too obsessed with the consideration which the hon. Member mentioned. If a political figure or diplomat makes a silly remark, it is not a particularly good reason for cutting off aid to his country.

Mr. Tilney

Would the right hon. Gentleman bear in mind that British commodity markets and our invisible exports have suffered major losses amounting to millions of £s owing to non-devaluation in various aided countries in the Commonwealth?

Mr. Prentice

That may be true. The Questions were directed to the effect of devaluation on the aid programme. The effect of devaluation on the economies of developing countries or the effect of their decisions on ours is a rather wider matter.

4. Mr. Boyd-Carpenter

asked the Minister of Overseas Development what steps he is taking in his plans for future aid to restore the financial position of countries such as Malawi which had suffered a reduction of 14.3 per cent, in the value of their reserves by reason of the devaluation of the £ sterling.

Mr. Prentice

Although all the resources of recipient countries are considered when aid allocations are made, aid is not provided to increase reserves. Since Malawi has devalued to the same extent as the United Kingdom, the value of her sterling reserves has, in fact, remained constant in relation to her own currency as well as in terms of her sterling purchasing power.

Mr. Boyd-Carpenter

But the value of those reserves externally has been diminished by 14.3 per cent. In those circumstances, does not the Minister accept that those countries that have suffered that kind of loss simply because they trusted us and kept their reserves here are morally entitled to a redeployment of aid in their favour?

Mr. Prentice

The effect of devaluation on developing countries is very varied. In some aspects, their economies may suffer, whilst in others they may benefit from the effects of devaluation. It is very complex. Malawi is the fourth largest recipient of British aid in the world. About £40 million has gone to Malawi since its independence, so we cannot be accused of treating her ungenerously.

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