HC Deb 20 March 1967 vol 743 cc1009-19

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Harper.]

12.30 p.m.

Sir Gerald Nabarro (Worcestershire, South)

On the Motion for the Adjournment of the House under Standing Order No. 1, I propose to raise the subject of aid to Zambia. This subject is, of course, inseparable from the policies of Her Majesty's Government in proceeding with sanctions against Rhodesia. I am wholly opposed to this policy.

The extent of the aid which today is being given by Britain to Zambia is consequential on the sanctions policy against Rhodesia. The country which has been hurt most by the policy of sanctions against Rhodesia is Zambia. Britain has been hurt next most. Rhodesia has been hurt least of all, and it seems to me notable, from the reports in the Financial Times this morning, that little difference has been made to the Rhodesian economy by the policy of sanctions, though we in Britain are being called upon, on an increasing scale, to give financial and other forms of aid to Zambia.

The purpose of this Adjournment debate is to try to elucidate and drag from the mouths of the Government a detailed statement of the forms of aid which we are giving Zambia. All the Parliamentary Questions on this topic have led to inconclusive replies, one Department shuffling off the answer against another Department, and it has been wholly impossible for my hon. Friends and myself to find out what is the aggregation of aid to Zambia proposed in this year.

First, I want to refer to the gravest consequence of the Prime Minister's adventure in the form of Rhodesian sanctions which is the alienation of opinion in Zambia against Britain. As a result of this there has been a very large loss of British trade in Central Africa. This was summarised in an article headed "Trade Blow to Britain" by Mr. Peter Younghusband in Lusaka, and printed in the Daily Mail on 9th January, 1967, when he said: Britain's dispute with Rhodesia is costing far more than Whitehall will admit. Zambia, disillusioned with Mr. Wilson's handling of the issue, is giving rich contracts to European and Japanese firms. Once they would have gone to Britain. All the efforts by my hon. Friends and myself, and, in particular, by my hon. Friend the Member for Haltemprice (Mr. Wall), to secure details of monetary and economic aid to Zambia have met with the reply from the hon. Gentleman's Ministry that this year's aid amounts to £13.85 million, and that it is all tied aid. The Answer given by the hon. Gentleman's Department to my hon. Friend the Member for St. Albans (Mr. Goodhew) last Thursday was: Under the agreement with the Zambian Government grants of up to £13.85 million will be made for the following purposes:

  1. (i) Development, including some tar surfacing, of the main road links between Zambia Tanzania and Malawi.
  2. (ii) Improvement of the capacity for Zambian cargo at Tanzanian ports.
  3. (iii) Provision of British heavy road vehicles and railway wagons.
  4. (iv) Development of Mtwara airfield for Zambian traffic.
  5. (v) Assistance with new coal mine and power projects in Zambia.
  6. (vi) A contribution, at the request of the Zambian Government, of £250,000 to an airlift of aviation turbine fuel into Zambia by Laker Airways, a British independent airline."—[OFFICIAL REPORT, 16th March, 1967; Vol. 743, c. 147.]
The total of that aid is said to be £13.85 million, but it appears to me that it represents only a relatively small part of the aid which is flowing from Britain to Zambia.

At various times during this Parliamentary Session Ministers have referred to "aid to Zambia", "assistance to Zambia", "grants to Zambia", and "loans to Zambia". My first purpose this morning is to find out what sums of money are being given or lent by Britain to Zambia, apart from the declaration of £13.85 million of direct aid which the right hon. Gentleman said last Thursday was tied aid, because I am pleading for a policy of entirely tied aid, call it if one will British-African Tied Aid, B.A.T.A. I am saying that all forms of aid, or assistance, or grants, or loans from Britain to Zambia should be tied. They should permit expenditure by Zambia only on British goods and services and should not be expended with our European industrial competitors, or others, such as the Japanese. The hon. Gentleman will, I think, forgive the suspicions which my hon. Friends and I have.

Under the heading "Switch," the Daily Mail of 9th January, 1967, also said: A £20-million contract to build the 1,100-mile pipeline from Zambia on the coast was taken from the British company Lonrho and given to the Italian group ENI. The switch occurred while Zambia's President Kaunda was in Rome homeward bound from Chile. He had pointedly avoided visiting London and spoke publicly of Mr. Wilson's 'deceitful and dishonest ways'. I hope that the hon. Gentleman will not rise and give us the academic answer that £13.85 million of aid from his Department is tied to British orders. This is not enough. Britain is giving generous financial aid to Zambia. Zambia does not reciprocate our generosity. Zambia displays the utmost animosity towards Britain and delights in the practice of kicking us in the wrong place. In return for our generous financial aid, Zambia deliberately discriminates economically against Britain. My information, from a most excellent source, is that our tenders for this long pipeline were lower than that of the Italians, that the delivery of the pipes would have been faster than by the Italians, and that the pipeline would have been operational under British contractors earlier than under the Italians, but the animus displayed by President Kaunda towards our Prime Minister was so great as to cause him to guide the Zambians in placing this important contract with our industrial competitors.

The Daily Mail, in the article to which I have referred, quoted an editorial in The Times of Zambia which said: We have seen Britain discredited as both a world power and the moral head of the Commonwealth during the past year of evasions on the Rhodesian issue. It has opened the eyes of Zambia and many other Commonwealth countries. The Daily Mail went on to say: To Britain's losses in Zambia must be added the losses in Rhodesia, admitted by the British Government to be £30 million in export trade as a direct result of sanctions. Indirectly the loss has been far more. In spite of international sanctions agreements foreign competitors are there too, grabbing the vacated British markets. All that underlines my statement that the generosity of Britain towards Zambia is repaid by a policy of discrimination against British goods which is wholly harmful to our trading interests. Last Thursday my hon. Friend the Member for Haltemprice and I raised the question of tied aid. My hon. Friend said: Can the hon. Gentleman explain why all the major Zambian Government contracts since last summer have been placed with Italian, French, American, Japanese and Yugoslav firms—the Yugoslav contract worth over £20 million, at a time when the British taxpayer was paying £15 million towards Zambia? Should we not have a quid pro quo? to which the Parliamentary Secretary replied in the most guarded terms—and this shows the disingenuous if not ambiguous character of the answer. The hon. Gentleman said: The question relates to the provision of British aid, and the contracts to which the hon. Member referred are not financed in that way."—[OFFICIAL REPORT, 16th March, 1967; Vol. 743, c. 689.] If they are not financed with British aid, "in that way", will the hon. Gentleman tell us how they are financed? Will he tell us this morning what is aid, what is assistance, what are loans, and what are grants? Will he tell us how much money, in all, the British taxpayer is furnishing for Zambian aid? Is this aid all tied?

Are not we entitled to say that not only the £13.85 million should be spent on British goods and services, but that in return for our generosity all contracts for economic and financial development in Zambia should be placed in Britain? I thoroughly resent African emergent States—highly nationalistic in character—demanding large sums of money from us, passing round an ever deeper begging bowl for our financial subventions, and then harming us financially by outpouring our reserves from the sterling area and placing contracts with Italians, Germans and the rest—countries which are supposed to be operating selective mandatory sanctions against Rhodesia, and often do not.

On behalf of British exporters everywhere, I thoroughly resent our gifts to Zambia being used for the purpose of subsidising our European industrial competitors, as well as the Americans and the Japanese, because of the specious assurances given by our Prime Minister to the Zambians at the last Commonwealth conference. The pipeline contract to which I have referred would have been invaluable to the British steel industry, which in its present debilitated condition due to the Government's financial, economic policies is working at only 70 per cent. of capacity. The pipeline contract has now been awarded to the Italians.

In my judgment, it is futile for the Prime Minister and other members of his Cabinet to exhort British manufacturers—in spite of their magnificent export achievements during the last few months—to make even greater export efforts while the Prime Minister and his colleagues deliberately undermine their markets abroad by political blundering and miscalculations of the kind manifest in their policies of non-tied aid to Zambia and other African countries.

12.45 p.m.

Mr. Patrick Wall (Haltemprice)

Neither my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) nor myself are in any way anti-Zambia, but we feel that British taxpayers have a right to know how their money is being spent. Since November, 1965, with the declaration of U.D.I., the British taxpayer has put a great deal of money into Zambia, first, by way of military aid for example in respect of Javelin squadrons. I should like to know how much that cost, and also from whom the Javelins were to protect Zambia. Is it suggested that they were to protect Zambia against Rhodesia? That would be nonsense.

Zambia regards this money not as aid but compensation for U.D.I., because they regard the Rhodesian situation as being the fault of the British Government. Therefore I repeat my hon. Friend's question: is this sum of nearly £14 million to be regarded as aid? Is it tied? Is any other aid going to Zambia, for instance, to help their students, or their budget? Zambia is one of the richest countries in Africa; what other normal aid is going to Zambia, and how is this aid tied?

My hon. Friend has referred to the way in which foreign firms seem to attract the major Zambian foreign contracts. He mentioned Italy. In that connection I refer to the Fiat Tanzam contract, worth £5 million; the contract for the Tanzania oil pipeline, worth £16 million—for both of which contracts British firms tendered—to the fact that Alitalia has been allowed to operate from Zambia, which she was not allowed to do before, and will probably operate Zambia Airways if and when the Central African Airways break up, also that Italian contractors are said to be favourites for the Kafue hydro-electric project, which is worth £25 million.

It is alleged that estimates from British firms are shown to foreign Governments by somebody in the Zambian Ministry so that we can be deliberately undercut. I do not know whether that is true, but that is the rumour going round Lusaka, and it could explain what has been happening. The Minister has a duty to the British taxpayers to explain how these large sums of money, which are going to one of the richest countries in Africa, are being spent, in what way this money is tied to British firms, and why the Zambian Government in return for this aid or compensation have placed all their major contracts with foreign firms. I have mentioned Italian firms, but the Japanese have a contract to supply 800 rail trucks and the Americans have a contract to supply 26 new diesel motor locomotives. Yugoslavia is consulted on most major building contracts, France is developing the coal mines in Zambia, and so on. Many countries are involved, but not one single major Zambian Government contract since the summer of last year has been awarded to a British firm. Why? Broadly speaking, our firms are competitive with foreign firms. It is an extraordinary situation.

I echo the wise words with which my hon. Friend began his speech. Sanctions, and the whole related policy adopted by Her Majesty's Government, are affecting, first, the economy of Zambia, secondly, the economy of this country, and lastly, the economy of Rhodesia. What they have done is to so unite the Rhodesian nation—both black and white—that it is now prepared to fight the majority of the world.

12.50 p.m.

The Parliamentary Secretary to the Ministry for Overseas Development (Mr. Albert E. Oram)

Both the hon. Member for Worcestershire, South (Sir G. Nabarro) and the hon. Member for Haltemprice (Mr. Wall) have pointed to the fact that this debate is inevitably linked with political and trading considerations. Therefore, we cannot avoid a somewhat confused approach to the question. The hon. Member for Worcestershire, South said that his main purpose was to obtain a statement from the Government about the aid being provided for Zambia in order to clear up a number of misconceptions which he claims to have arisen recently.

I agree that there have been some misconceptions—and they lingered in the hon. Gentleman's speech. For instance, he referred to the £13.85 million that is being provided by my Department this year. This is the complete reverse of the case. This sum is the contingency fund provided by the Commonwealth Secretary. I understood that the hon. Member was going to raise the question of development aid. He was courteous enough to write to my hon. Friend the Minister of State for Commonwealth Relations that he would talk about this, rather than contingency funds, which is why I am replying instead of my hon. Friend. I will proceed to do what I can, and I agree that it is desirable to have as clear a statement as possible of the aid provided.

There are, broadly, three categories of aid. There is development aid, under my Ministry, defence aid and this large sum of contingency assistance. Development aid consists of a loan of £3 million to meet the cost of compensation for expatriate officers, that is to say, it is related to personnel. We also provide assistance tawards the cost of expatriate staff still serving in Zambia under the Overseas Service Aid Scheme which we sponsor, amounting to about £3 million a year. All this is clearly spent on the provision of British services. It is provided only to British personnel and there is no doubt about its being tied.

Then there is the sum for technical assistance, which is not a great amount, about £¼ million, which is used for the provision of British experts and consultants and some equipment. This also is fully tied to British goods and services. As I pointed out in an Answer last Thursday, we have made a grant of £1 million for the building of the second phase of the University College.

About 40 per cent. of this is tied to British goods and services, and in case the hon. Gentleman wonders about the other 60 per cent., it is almost entirely used for local costs. It is a feature of our aid operations that we tie as far as possible either to contracts placed in Britain or for the payment of local Zambian costs. I am sure that he will recognise that there are local costs which have to be met in this way.

My Ministry has provided also for a £10 million loan over the next two or three years, which is expected to be disbursed in 1969–70 and 1970–71. Of this, £2 million is for defence aid, which is also entirely tied to British equipment. The details of how the other £8 million will be disbursed remain to be negotiated, but our usual stipulations about the tying of aid to British goods and services will apply in our negotiations.

Now we come to the sum of money particularly referred to by the two hon. Gentlemen. What I have dealt with so far is that which comes under my Ministry, but the £13.85 million is that which has arisen out of the special circumstances following U.D.I. This was to help Zambia with the immediate difficulties created by that situation. I am not going into the rights and wrongs, on which we have differing views, but this is what we mean by the contingency fund assistance. My hon. Friend the other Minister of State for Commonwealth Relations made clear the distinction that this was not development aid but assistance for short-term purposes like the air-lift and the provision of such things as British locomotives, rolling stock, heavy lorries, petrol tankers and airport equipment needed to deal with the immediate situation.

This, too—as to the vast bulk, as the Prime Minister and other Ministers have made clear—is also tied to British aid. Then we come to the contracts, which are a different issue—

Mr. Wall

Would the hon. Gentleman agree that the total aggregate this year is about £14,500,000 in his Department, plus the £13.85 million?

Mr. Oram

No, that from my Department is about £3 million in regard to compensation to personnel and a continuing £3 million per year for O.S.A.S. One is compensation and one for continuing services, plus the technical assistance of £¼ million—

Mr. Wall

And defence?

Mr. Oram

Defence aid is part of the £10 million. Perhaps I did not make my self clear—

Mr. Wall

Is that £8 million from this fund or from the other one?

Mr. Oram

It comes from our funds, but that is not being disbursed and does not relate to this year. It is a loan which we have promised. The details have not been worked out, but it will be disbursed in succeeding years.

The hon. Gentleman will probably recognise that trade is not my field, although it is clearly related. Whatever may have happened in what he referred to as Central Africa, United Kingdom exports as a whole to Zambia do not appear to have suffered. As the President of the Board of Trade pointed out recently, United Kingdom exports in 1965 were £15.1 million and in 1966 had gone up to £26.3 million. So we were benefiting in that sense from our relationships with Zambia, and there is an upstepping of £10 million in our exports—

Sir G. Nabarro

But did Zambia pay for them; was it long-term credits or was it unrequited exports against grants in aid for the future? This is what we are trying to get at.

Mr. Oram

I have explained what funds go from this country to Zambia and they clearly have not covered the commercial aspects of the exports—

Sir G. Nabarro

Are they paid for?

Mr. Oram

In some cases they include the equipment, which is covered by aid, and in other cases not. We recognise that we have an obligation—

Sir G. Nabarro

I am sorry to cut down on the time for the hon. Gentleman's reply, but he has again used the word "aid". What is this aid in the context of these exports? Are our exports unrequited? Are they being paid for in Zambian currency or set off against some hypothetical reduction at some indeterminate future date?

Mr. Oram

I am sorry if I used the word "aid". My hon. Friend suggested that we should try to keep a distinction between development aid, which is the long-term provision of loans, and the immediate assistance of the current period. I have no doubt that if these exports were analysed they would be of three kinds—some paid for out of funds provided by our Ministry, some out of funds provided under the Commonwealth Office—

It being One o'clock, Mr. DEPUTY SPEAKER suspended the sitting till half-past Two o'clock, pursuant to Order.

Sitting resumed at 2.30