OVERSEAS AID

HC Deb 01 February 1967 vol 740 cc587-602

7.13 p.m.

Mr. Dennis Walters (Westbury)

I am pleased to have the opportunity to raise a number of subjects in connection with overseas aid. I only wish that the debate on overseas aid would range more widely than the rules of order permit, because it is a subject on which the Government are particularly vulnerable. There are aspects like the increase in fees payable by overseas students to which I should certainly like to refer, but I realise that that is not in order at this stage and that I must confine myself to the assistance given to countries listed in the Civil Estimates.

I refer first to India and aid to that country. The Civil Estimates for 1966–67, printed on 30th November, 1966, include the total of £25½ million shown as a loan to India. This includes £15 million which appeared in the previous Civil Estimates, printed in 1st July, 1966.

The House will be aware of India's current difficulties and the prospect of famine which, regrettably, has loomed so often over the subcontinent and is now present again. An announcement was made early last year of an interest-free loan to India of £7½ million to help India in her food crisis. Of this sum, £6 million was already pledged and, therefore, the additional money made available was only £1½ million. I would like to ask the Minister about the present situation in India and whether this sum, together with the generous aid provided by the Governments of Canada, the United States and Australia has met the immediate problem.

An announcement was also made in April of an additional £17 million, which, it was said, would be directed to India's pressing economic problems. Some £10 million of this £17 million was said to be in the form of general purpose aid to buy a wide range of goods from Britain. This appears in the July Civil Estimates. I should like to know the situation concerning this sum. Have the goods and services been ordered or provided?

That leaves £7 million of the £17 million which was offered and which does not appear, as far as I can seen, in either of the two Supplementary Estimates which are now before the House. Four million pounds of this was to be for a new Kipping loan to assist engineering industries in India to buy from Britain badly-needed spare parts and components and £3 million was for the purchase from Britain of spares and components for the Bhopal heavy electrical factory. Why does not this appear in the Estimates? If the spares and components are badly needed, surely something should have happened between April, 1966, and February, 1967.

In December, 1966, the Government announced that they had made a £13½ million loan in flexible, non-project form, as it was described in the official handout from the Minister of Overseas Development, in recognition of India's need for quickly dispersable aid arising from the import liberalisation measures, the current food shortages, and the substantial service payments due to Britain under previous loans.

That appears to be very generous at first sight but it would be interesting to know how much actually will be available to India, because a substantial proportion of this is to be paid back to Britain for service payments under previous loans.

As we know, recently the Government have announced a cut in the target for Lid in 1967–68. I realise, regretfully, that that is outside the scope of the present debate, but it is against the background of broken pledges—particularly the pledge to devote 1 per cent. or more of our gross national income to aid for the developing countries—that the House must consider the Supplementary Estimates for overseas aid.

Perhaps one might recall that that 1 per cent., as agreed to by this country when we accepted the U.N.C.T.A.D. recommendations, was described by members of the present Government when they were in opposition as grossly inadequate. The right hon. Lady who is now Minister of Transport but who was speaking for the then Opposition on the subject, clearly stated that this was a woefully small sum to aim at and that we should go for a target of 2 per cent.

At the present time, India is passing through an ordeal which it is almost impossible for anyone in this country to comprehend. The enormous problems which the Indian Government have to face will not be solved by criticism or by pious platitudes. The help which we give must be directed to the real needs of India on a scale which can make a solid contribution to the enormously difficult situation which she is facing.

I want to ask the Minister first about the current situation in India, and how far the £7½ million has contributed to an easing of the famine situation. Secondly, what has become of the £7 million pledged to India for the Kipping loan and the Bhopal heavy electrical factory? Lastly, will the recent cuts announced relating to bilateral aid affect our assistance to India?

Then, briefly, I want to turn to the South Arabian Federation. There is very necessary assistance and aid pledged in these Estimates to the South Arabian Federation. I hope that the figure mentioned does not cover the military assistance which will be required, and which I hope that the Government will increase, and give eventually through an defence agreement with the South Arabian Federation.

I want to be reassured by the Minister that, even assuming that the Government will persist with their proposed cuts for 1967–68, these cuts will in no way affect the aid allocated for the South Arabian Federation. That would be extremely serious. Moreover, bearing in mind that the figure in the Estimate refers to a target for a year ahead when, according to the Government, the economic situation will have improved, it is to be hoped that the cuts will not be necessary.

In conclusion, I should like to hear the Government's attitude to the general aid problem and, more specifically, how this will affect India and South Arabia.

7.24 p.m.

Mr. James Ramsden (Harrogate)

I intervene briefly to ask the Minister one or two questions about Kenya and the South Arabian Federation, both of which countries fall properly within the scope of these Supplementary Estimates. I apologise to the right hon. Gentleman for having given him notice comparatively late in the day. However, the issues with which I hope to deal are relatively simple, and I anticipate that he will have no difficulty in furnishing the information for which I intend to ask him.

Taking Kenya first, some of us were privileged to visit that country on the business of this House in July. I should like to say straight away that no visitor to Kenya can fail to be invigorated by the spirit of genuine co-operation between the races which animates every form of public activity being carried on in that country. It is really a heartwarming example of genuine multi-racial co-operation conducted exactly in the spirit which one would wish to see. I am sure that no one speaking in this House would wish to say a word which might prejudice the successful future of developments in that direction.

Kenya still has many problems, and, naturally in an agricultural country, the bulk of them concern the use, ownership and development of the land. No one is more aware of their significance than those who are active in the political life of Kenya.

As I understand the Estimate, the two sets of loans mentioned in it—the loan already begun for development projects and the interest-free loan of £18 million towards the cost of general development and land transfer—are to be applied in general to the development or reorganisation of land and agricultural projects in that Colony.

The first thing which I would ask the right hon. Gentleman is if he could discriminate broadly between the various projects involved and due to be financed by these two loans. Secondly, and with specific reference to the £18 million interest-free loan, am I right in assuming that the bulk of the money involved will go to the Kenya Government in order to enable them to possess themselves of land at present in the ownership and occupation of Europeans for the purpose of settling African farmers on that land?

If that is so—and I gather that it is, though I do not think that it has been mentioned in the House since a Written Answer some time last November—I wonder if the right hon. Gentleman could give us some details of the progress of working out the scheme for land purchase between Her Majesty's Government and the Kenya Government. Who will administer the scheme? I presume that it will be the Ministry of Agriculture in Kenya, or it may be some independent body working under its auspices. Who will carry out the valuations of the farms concerned? Will the valuations be done by the Ministry of Agriculture in Kenya or by some independent body? If it is to be the former, will there be any appeal to an independent body of some sort in the event of a failure between the private party concerned and the Ministry to agree about the price? I had hoped that the right hon. Gentleman would be able to assure us that some machinery for arbitration had been built into the scheme.

If the right hon. Gentleman is able to give us an account of any progress which may have been made towards the implementation of the scheme, I am sure that the House will be very glad to hear it. When this matter last came before the House, I think that the Minister's hon. Friend told us that the Kenya Government were on the point of sending out letters to those whom they hoped might be interested parties. It would be interesting to know what has been the response, what has happened, and, in particular, what has been the reaction from the European farming community to any steps which may have been taken.

I wonder whether the right hon. Gentleman could also tell us whether, in the course of settling the business of this loan, he received any assurances from the Kenya Government as to when, on the completion of a purchase, the money would be payable—I mean the sort of time scale which would be likely to prevail between the contract being reached and the purchase being completed. I ask that because one knows that when public money is involved, in this country as anywhere else, payment sometimes takes a little longer than in the case of a private transaction, and if it takes too long it is possible for an ordinary case to develop into a compassionate case, a hardship case. I do not know whether the Minister can give the House any information about that.

As this loan scheme is not by any means the first of such transactions to have been entered into by the Kenya Government, but will, I suppose, be the major one of its sort, can the right hon. Gentleman give us any idea of what will be the overall picture, by the time this loan has been used, of European farmers who do not wish to stay and farm in the country? I know that many are staying. Some of them have extended their interests and have shown their confidence in the future of European farming in Kenya by extending their purchases of land. Others, for one reason or another, have made different plans for their future, and if the right hon. Gentleman is able to give us a picture of how the European Community as a whole will end up in relation to those who may wish to go, it will be interesting to the House.

There is one problem of administration related to the question of aid to Kenya in general, about which I should like to ask the right hon. Gentleman. I have already said that it was most impressive to see how all races were working together in the Ministry of Agriculture and in its out-stations all over the country in the administration of the schemes, made possible by aid of this sort. Africans, Europeans and Asians are working side by side and doing a wholeheartedly good job. On the other hand, there is perfectly understandable and natural pressure for the gradual increase of Africanisation in administrative posts.

Mr. Deputy Speaker (Sir Eric Fletcher)

Order. In accordance with Mr. Speaker's Ruling, we cannot go into the whole question of administration in Kenya. All that we can deal with on the Supplementary Estimate is the reason for increasing the original Estimate.

Mr. Ramsden

I was only going to touch on it, with a view to asking the right hon. Gentleman whether he had any information about the rate at which this is going to proceed, and of the intention of the Kenya Government in this regard. The position that we found was very reasonable, and I see no reason to think that it has altered, or that the right hon. Gentleman will not be able to give a satisfactory answer.

The agricultural problems of Kenya are not by any means specifically European ones. Is it intended to devote any of this money to tidying up, so to speak, the land holdings in Kenya as between one African community and another? Is it intended to apply some of this money to buy out one tribe and thereby consolidate the land holdings of another? Is it intended to be applied under schemes for the consolidation and enlargement of African land holdings?

Mr. Deputy Speaker

Order. I am afraid that it will not be in order for the Minister to answer those questions, because to do so will traverse Mr. Speaker's Ruling.

Mr. Ramsden

With respect, Mr. Deputy Speaker, surely it is in order for hon. Members to discuss money which is provided under this subhead? Are not hon. Members entitled to know the purposes for which it will be applied before they vote one way or the other?

Mr. Deputy Speaker

Mr. Speaker has laid it down clearly that on these Supplementary Estimates debates must be limited to the reasons for the increases, and must not extend to questions of policy for which the original grant was sought.

Mr. Ramsden

With respect, Mr. Deputy Speaker, are not we here talking about a new loan, and the first element, which I understand to be £600,000, in a new loan? Is not the whole scope of that loan therefore within the ambit of the debate?

Mr. Deputy Speaker

I do not think that it is, because we are dealing with the revised provision, which has been increased from £4,825,000 to £7,075,000. It is true that there is a new sub-head, but that can be debated only to a very limited extent, and cannot include the whole question of Africanisation in Kenya.

Mr. Ramsden

I do not want to detain the House, and it is with confidence that I leave it to the ingenuity of the Minister to furnish me with a reply which I think he knows I hope to have.

I propose now to follow what was said by my hon. Friend the Member for Westbury (Mr. Walters) on the question of Southern Arabia. He asked the Minister whether what was involved here was military aid, and I understand that it is not. I think that I am correct in saying that. It was announced in the House, I think last June, that military aid of about £12 million was going to become available to the Southern Arabian Federation for the build-up of the Federal Army. I take it that this is not the responsibility of the right hon. Gentleman's Ministry, and that what we are concerned with here is economic and social aid. If I am right, I add my plea to that made by my hon. Friend that the right hon. Gentleman should give us some account of the various projects which will fall to be covered by this aid.

I think that the House is very concerned at the moment with the prospects, about which we all know, of our withdrawal from the Aden base, and the whole question of the future of Southern Arabia. I think it must have become plain to anyone who has visited that theatre, as I have, that one of the reasons for the unrest and disturbances with which we have had to try to cope in the military sense during the last two or three years has been the fact that the hinterland of the territory, the seat of these disturbances, is an extremely poor community. The country is difficult to administer because of the absence of road communications. Its people are difficult to keep happy, and are, therefore, an easy prey to subversion, because the economy on which they endeavour to support themselves is a bad subsistence economy.

I need not labour the point that conditions there obviously require a considerable effort, and that it will have to be a greater effort in the absence of the annual inflow from the base, in the form of cash arising from the British occupation. It requires an obvious effort in the direction of social and agricultural development, and I hope that the right hon. Gentleman can give us some account of his intentions in that regard.

I hope that the Minister will be able to answer the points that I have raised without getting out of order.

7.41 p.m.

Sir George Sinclair (Dorking)

I want to follow up the very searching questions which have been put by my hon. Friend the Member for Westbury (Mr. Walters) about India by referring to some of the Supplementary Estimates now sought for Pakistan. I commiserate with the Minister on inheriting a Department which, in spite of the great hopes expressed when it was inaugurated, has had its money for this year cut and has lost its place in the Cabinet. I regard this as a most backward re-assessment in respect of the Government's atttiude to the whole question of aid, and I greatly regret it.

I know that within the bounds which have been set the right hon. Gentleman will do his best to see that British money is expended to the best purposes of economic development in the countries to which it goes. He has got together a considerable team to help him see that aid is well spent. I notice that in respect of the first loan there is a revised provision for £1 million and in respect of the third loan a revised provision for £100,000. Both loans are for British goods and services.

I welcome this expenditure. It is overseas investment and not true aid, in any sense. It is all going to come back to Britain in the form of extra trade. I am sure that the funds loaned will be of great use and will lead to economic development in Pakistan.

I should like the Minister to tell the House how much of the money under those loan heads is going into true economic development. Is it going into infrastructure? Is it to be devoted to the basic requirement of developing territories—the speeding up of agricultural development? To what purpose is this additional money to be put? I should like specially to know whether any sums are going through the agency of the Pakistan Industrial Development Corporation, which has now been split into two, one for East Pakistan and the other for West Pakistan.

I am interested in this matter because this was a device which Pakistan pioneered in tackling economic development which the private sector was not ready to tackle. The State has gone in to stimulate agricultural development and, when it has succeeded in getting economic activities under way, has disinvested and handed over to the private sector, using the money so derived as a rolling credit to sponsor new industries. This is one of the successful and helpful economic activities in which Pakistan is probably a world pioneer. I should like to know how much of this additional money will find its way through the two agencies in East and West Pakistan.

In respect of the second loan, for development projects, totalling £3.617 million, we are asked to approve an additional £200,000. What sort of development projects will be made possible by way of this additional money? Can the Minister say whether the money is to go into industrial development, into infrastructure, or into agricultural development? He and his predecessor have laid increasing stress on the need to increase investment and efficiency in agriculture, in which 90 per cent. of the people of Pakistan and India are primarily engaged. This sector has been consistently lagging behind throughout the developing world. I want to know how far the Ministry has been able to reorientate its efforts in respect of the agricultural sector in these countries.

In spite of these extra provisions, I am sure that the Minister will realise how inadequate our aid offer now is. Taken in the context of a percentage of the gross national product of the developed countries, allocated in respect of aid and technical assistance to the developing countries, the percentage has fallen over the last two years right across the board. In official aid we are now allocating 6.7 per cent. of our gross national product, according to O.E.C.D. The first and third loans are largely for British goods and services and, as I have said, do not represent true aid; they are an investment. That is why I have put down a Parliamentary Question to ask the Ministry of Overseas Development to help work out an international definition of true aid. O.E.C.D. adopts one criterion, U.N.C.T.A.D. another and various other U.N. agencies adopt yet other criteria. Some services are counted as aid while others are disallowed as being true aid. If we are to have a true assessment—

Mr. Deputy Speaker

Order. The hon. Gentleman cannot go into these general questions on this Supplementary Estimate.

Sir G. Sinclair

I abide by your Ruling, Mr. Deputy Speaker, and conclude by again referring to Pakistan and hoping that the Minister will say how the additional sums will be spent and how they will be divided among infrastructure, industry and agriculture. We want to know whether some of these funds will be canalised through the two excellent agencies, the Pakistan Industrial and Development Corporations of East and West Pakistan.

7.51 p.m.

The Minister of Overseas Development (Mr. Arthur Bottomley)

The hon. Member for Westbury (Mr. Walters) is to be congratulated for initiating this debate on overseas aid and, like him, I regret that we are not able to range more widely over this subject. He will agree that both of us have a great task in convincing the British public of the wisdom of giving overseas aid, although it is not only morally right that we should give it but a matter of self-interest, too.

I would also have liked to have talked about school fees and to say how my Department is responsible for bringing 2,500 students here, the cost of which goes on my Vote, which means that the British taxpayer pays for this. I would also have liked to have said how the Government sponsors students from overseas countries and how they will also be covered in regard to these increased fees, at least in respect of the students at present here. However, I cannot go into these matters for the reason mentioned by the hon. Gentleman; and if I attempted to do so you would soon call me to order, Mr. Deputy Speaker.

The Supplementary Estimates are designed to meet the items which have been mentioned and others. Extra expenditure was foreseen at the beginning of the year, but we could not at that time say precisely how the money would be spent. We could not give a firm estimate and there must, therefore, be a Supplementary Estimate. Of the amount of £24 million £19.7 million is new money in that sense, but £4.4 million is a carry-over from the Colonial Office Vote and, in that sense, it does not represent anything other than a transfer.

The main new item is the provision of £10 million towards an interest-free loan of £13.5 million to India. There is also provision for new loans to Pakistan and Kenya. Both of these items have been mentioned in the debate, but there is also provision for further disbursements under the existing Aid Programme for Ceylon, Kenya and Iran.

It is right that India should have been specifically mentioned. We are all concerned for India in its present difficulties and I can only say that the Government are conscious of the need to give all possible assistance. If, for example, one considers the financial year 1966–67, one sees that the sum pledged was £32 million but that, in fact, £44.5 million was spent in the calendar year 1966. If one considers the amount of aid that is given through the consortium of the Western countries, one sees that the British contribution is 10 per cent. Indeed, about one-third of all our bilateral financial aid is given to India.

As the hon. Member for Westbury said, one thing that is paramount in our minds is the famine situation in India. The whole of the new aid committed this year, £32 million, has been made available in a flexible way, and the Indians appreciate this. This flexibility enables them to take account of their food situation and I assure the House that we have this situation very much in mind as well. It helps India because it gives that country foreign exchange which it can use for such things as shipping and buying food. We are not a food producing nation in this sense, so we cannot provide the food India requires. However, we are able to supply money in a flexible fashion, and this enables the Indians to make the best use of it to meet their present problems.

To answer the question about the amount of money given, the whole of the £10 million loan of April 1966 has already been spent and the goods have been delivered. Of the remaining £7 million, committed in April, most will be spent in 1967–68. Orders are being placed now and it is probable that the whole of the £13.5 million will be spent this year.

In respect of the aid we give to India, like the aid we give to other countries, our deliberations on this issue are a continuing process. We are always looking at the matter of need. As the hon. Member for Dorking (Sir G. Sinclair) said, funds are limited, so that whenever I have to consider this matter I must have regard to the fact that the aid must come within the existing aid programme. We have helped India industrially, which is the way in which we are best suited to help, and we are helping in the flexible way I mentioned, and the Indians appreciate help given in this way.

I would have liked to have referred in detail to Pakistan in answer to the questions asked by the hon. Member for Dorking. Pakistan is the other country in that great sub-continent, but I admit that I am at a disadvantage, for I did not come prepared to answer such questions. I confess that I was not aware that Pakistan would be raised in this way. However, I assure the hon. Gentleman that too, have considerable knowledge of that great country and that I do not have the least doubt that many of the projects which he has in mind for Pakistan will go through the machinery which he mentioned. It is not, however, the responsibility of Her Majesty's Government to say what is best suited for the development of a country. It is for the country itself to decide but if the hon. Gentleman will permit me, I will consult my officials and, to the extent that he wants detailed information, I will send it to him.

Sir G. Sinclair

I thank the right hon. Gentleman.

Mr. Bottomley

The hon. Member for Westbury and the right hon. Member for Harrogate (Mr. Ramsden) raised a number of points and asked several questions concerning Iran and Southern Arabia. The position regarding Iran, from the point of view of the 1966–67 Estimates, is that the loan was not committed for specific purposes and that, therefore, we had to make provision for a token loan of £10. About £4 million from the loan has now been committed. The best example I can give of developments is that of an electrification project. The disbursements have begun and contracts involving more than £2½ million worth of generators have been placed and fortunately Britain is easily able to provide this equipment.

There is also the question of technical assistance which, I think the hon. Member will agree, is a very valuable form of help to a developing country. In Iran there is a water master plan bureau and a hydraulics research station and we have sent out teams of experts to help with the planning of these two projects and to advise on the equipment they will need. We are right to give this aid to Iran because it is a developing country which is making rapid economic progress under a stable, forward-looking government.

In the summer of 1966 my Department took over responsibility in Southern Arabia. Earlier this area had been within the province of responsibility of the Colonial Office and we were responsible only for aid provided under the Colonial Development and Welfare Acts, so far as they applied to that country, and to technical assistance. When Ministerial responsibility was transferred from the Colonial Office to the Foreign Office, we took over responsibility for budgetary aid. In this connection we believe it right to give all the help we can, bearing in mind that there is a move towards independence in 1968. We shall help as much as possible. To give an illustration, the figure for civil aid in Southern Arabia for the current year is about £9 10s. per head and in 1965 it was about £8 8s. per head.

Mr. Ramsden

Military aid is not within the province of the right hon. Gentleman?

Mr. Bottomley

No, military aid is not my responsibility. The hon. Member wished to raise a question on that but it would be difficult for me to give an answer as even with ingenuity I could not find a way round it.

Mr. Walters

Before the right hon. Gentleman leaves the subject of Southern Arabia, can he assure us that there will be no cuts in the proposed civil aid set out in these Estimates?

Mr. Bottomley

We could give no assurances of that kind. We have to talk with the countries concerned. Generally after this discussion has taken place we present the matter to the House. We shall have to wait to see what the position is as a result of further discussions on projected aid and commitments for the future.

For Kenya, as the right hon. Member for Harrogate said, we provide an interest-free loan of £18 million. This is partly for land transfer which involves European mixed farms. It is at the rate of about 100,000 acres a year. The loan is partly for development projects during the period 1966–67. The land transfers programme is expected to cost about £6 million. This is subject to review and the estimated expenditure for this year is £600,000.

The hon. Member asked the basis on which a settlement with the farmers is made. It is made on the basis of current market values as assessed by the professional valuers of the Kenya Lands Department. The basis is that of a willing buyer and a willing seller. Generally the scheme has been well received. I think the right hon. Member would agree that it is best to give it an opportunity to establish itself and that we should avoid hasty criticism. By all means let us examine it as we go along, but it would be best to allow it to work out on this basis and see how it goes. Knowing the Minister of Agriculture in Kenya, as the right hon. Member must know him, knowing the Government there and the willingness of the Europeans there and their readiness to co-operate, in my judgment we shall ultimately have the best possible results.

Mr. Ramsden

I was not criticising it. I hope the right hon. Gentleman will not think that I was doing that. I was merely asking for the details because, as far as I know, the House has not been told anything about the details.

Mr. Bottomley

The details have been given to the House before, perhaps not specifically in the way I have given them, but this is not new information being conveyed at this time. This is an opportunity for the hon. Member to refresh his memory as I have been able to refresh mine.

The final point I am called upon to answer is the suggestion that as a country we are not meeting our obligations under decisions of the United Nations, particularly of the U.N.C.T.A.D. Conference at which it was said that we should provide 1 per cent. of our income to help developing countries. In the past we have met that commitment by providing 1.17 per cent. and last year I think it was 1.15 per cent., so it has been over 1 per cent. Remembering that we have to take into account the national income, export credits and private investment, which is the requirement of U.N.C.T.A.D., it is too early to estimate for the period following April, 1968, but, despite our reductions in official aid in the current year, I think I can tell the House reasonably confidently that we shall meet the requirement of 1 per cent.

On the aid programme generally we on this side of the House, recognising the economic difficulties confronting the country and that if we do not get that right first we shall not only fail to help ourselves but not be in a position to help others. I look forward confidently to a situation in which we shall have overcome the economic difficulties and in which this Government, which established the Ministry of Overseas Development to co-ordinate aid to overseas countries, will resume the rôle we have played through successive Governments in helping those less fortunate than ourselves.