HC Deb 05 July 1968 vol 767 cc1917-54


1.20 p.m.

The Minister of Overseas Development (Mr. Reg Prentice)

I beg to move Amendment No. 1, in page 2, line 36, after 'order' insert ' made by statutory instrument'.

The Chairman

I think that it would be convenient to discuss at the same time Amendments No. 2 and No. 4.

Mr. Prentice

I am obliged, Sir Eric.

These are purely drafting Amendments. Originally, the wording was that the Minister may, with the approval of the Treasury by order provide for the payment out of moneys provided by Parliament … The usual form of words is to add after "by order" the words "made by statutory instrument", which the Amendment proposes.

Amendment agreed to.

Question proposed, That the Clause, as amended, stand part of the Bill.

Mr. Cranley Onslow (Woking)

I realise that the House is once again faced with a grossly overloaded Order Paper and that there is much business ahead of us. I will comment no further on that, except to say that we have, unfortunately, come to regard this state of affairs as typical. Nor will I comment on the fact of the characteristically discourteus way in which the proceedings on the Bill have been handled by those responsible for Government business, but the Committee will remember that we were promised more time for the debate on Second Reading and that this was allocated, at very short notice, late at night. I expected that it might be and have only myself to blame for not being here at that time, but I thought that there were some limits to the liberties which the Government would take with our right to discuss this important matter.

Clause I makes provision for the payments over three years of £64.8 million sterling, or 155½ million dollars, whichever is the greater. Therefore, apparently, if there is a devaluation before this full sterling payment has been made, we shall be committed to a larger sum than at present appears in the Bill. If this is not so, I should be grateful to be told that I am wrong.

The argument behind the Clause turns upon the somewhat new point in the jargon of international aid, the slogan that, for every £ we spend, we get 30s. back. As a statistic, I find that as unconvincing as the statistic published the other day in that otherwise sensible newspaper, the Daily Mail, that a third of all members of Parliament wear corsets. I am in no position to adduce evidence on the second statistic, but I can assure the House that the first one, that, for every £ we lay out under the moneys funded for the I.D.O. we get 30s. back, is fundamentally misleading.

The truth is that we are selling 30s. worth of goods for 10s. and that is how the situation should be described. We lay out £1, we get £1 back and we get 10s. from the pool which some other mug has put in, and which he does not get back, but we are not 30s. better off at the end of the day. We are providing goods and services to that value and we sell 30s. worth of goods for 10s. I wish that the Minister, when he supports actions of this kind, would use figures which correspond more closely to the facts.

To put it another way, we derive as much advantage from this state of affairs as would be gained by a shopkeeper whose till had been robbed if the thief returned to his store the next day and spent in his shop the money which he had stolen, plus 10s. which he had "nicked" from the shop next door. That is the mathematical way in which the facts should be presented, and I can see in that no justification for the action which we are now being asked to take, to commit £64.8 million worth of the British taxpayer's money.

If we consider the outflow in relation to our international commitments, we will get back only £324 million. This is pretty poor value for money. I do not believe—I have said this before, and no doubt will have to repeat it—that the argument that we derive positive benefit can be sustained, although it is remarkable how often it is used.

Nor do I believe—here, perhaps, I touch on a point on which I threatened to cross swords with my hon. Friend the Member for Essex, South-East (Mr. Braine) on Second Reading—that the question of whether the International Development Association itself is a wonderful organisation has anything to do with the merits of the case. This is another of those pieces of international jargon on aid. This is the "fine body of men" argument, which has about as much relevance to the facts as the argument that, because prison warders are a fine body of men, prisons are desirable. The two are not related. The fact that international civil servants can be splendid men or can include splendid men has nothing to do with the merits of the case.

Mr. Hooley

Would not the hon. Member concede that, although prisons are not desirable, they may be essential?

Mr. Onslow

If the hon. Gentleman is saying that prisons are essential and that therefore we are always to have a state of society in which they exist, we could have an interesting debate and still disagree at the end, because I would far rather that prisons were abolished, just as I would prefer aid to be abolished.

There is a great deal of evidence to show that much of the effort of the I.D.A. has, in the past, been wrongly orientated. It has been as guilty as most other people in the aid field of putting a wholly distorting and undue emphasis on industrial development at the expense of agricultural. The price which has been paid for that in terms of peasant suffering —let us talk about this for a change, rather than aid on a Governmental basis —is a very heavy one. Too often in argumentation about aid we confuse the Government and the country receiving aid, and we believe that because we have aided a Government, we have necessarily aided the people who make up the nation which is governed. It is not necessarily the same thing.

1.30 p.m.

Another argument which the Minister is fond of using, tied to the £1 and 30s. argument, is,"What would happen to our own economy if this aid were not granted?" It is the argument, with which the Minister is familiar, "Heaven help the people of Teesside." We may suppose that the people of Teesside will benefit directly from the expenditure of £64.8 million because, if the Minister is right in his mathematics, orders to the value of £97 million may be expected to come back to this country and to benefit areas in which, for one reason or another, there are particular problems.

But in that argument the Government never examine what else could be done with that money, supposing that it had to be raised in taxation at all. No one ever goes back to square one and asks,"What would happen if we did not provide this aid?" I ask the Minister, "If a large proportion of the sums of this kind were spent on improving communications with Teesside, would that not be very much more to the benefit of the people of Teesside?" Would they not be more benefited if they were put in the position in which they were no longer forced to rely for their employment on industry which, by definition— because it has to be subsidised—is non-competitive?

Would it not be for the benefit of the people of Teesside if their unemployment no longer had to be exported but genuine efforts were made to produce in Teesside conditions in which they could stand on their own feet, instead of having to be subsidised through the medium of Bills such as this, which are intended, one supposes, primarily to be of assistance to people living outside these shores but which have often been supported in argument as being of great benefit to the people of this country?

The latter I do not believe to be the case, because we are living in a climate of economic restrictions, and yet we are giving away 30s. for 10s. The people of this country are being forced to contain their economic activities, many of them to the extent of being put out of work. If public expenditure were to be curtailed, this is the point at which a cut should be considered. It gives me no comfort at all to see the increase which the Clause represents in the total commitment of the country to public expenditure.

The timing of the Bill and the timing of the commitment seem to me extremely undesirable. It could hardly be worse. May I refer to an exchange which took place—although with an interval of time between—involving my hon. Friend the Member for Shipley (Mr. Hirst), if I may so call him, and the Parliamentary Secretary, an exchange of analogies which is summarised in c. 1260 of the Report of the debate of Monday. The hon. Member for Shipley had been so bold as to criticise the business ethics or behaviour implicit in this commitment of a substantial sum of money at this point in time. The Parliamentary Secretary replied with a homely but I believe misleading analogy of his own. He put us in the position of a man buying his house on mortgage and having difficulty in repaying the building society, suggesting that that did not preclude him from lending a few pounds to his neighbour if his neighbour were out of work and his neighbours children were sick and hungry.

That is a very misleading analogy and I put what I believe to be a more correct analogy to the Parliamentary Secretary: when a man is deep in debt, as this nation is; when he is living above his means, as this nation still is; is it right that he should refuse to curtail any of his own unnecessary or frivolous expenditure? Much expenditure of that kind is being funded by the Government at the taxpayer's expense. Yet the argument is that, after that refusal, he says that he can improve his own long-term economic prospects by taking on part-time work at one-third of the standard rate. That is the analogy, and that is why I oppose the Clause.

Mr. Hooley

I agree with only one point made by the hon. Member for Woking (Mr. Onslow)—and that is that it is a pity that the Bill has been debated in rather a spasmodic and fragmentary fashion. But I entirely acquit the Minister of any responsibility for that, and I certainly do not agree with the churlish and ill-mannered assertions made by the hon. Member for Woking about where the fault for it lies. In the Parliamentary Session drawing to a close, we have succeeded in carrying through a vast amount of enormously valuable legislation—[HON. MEMBERS: "NO."]— and I regard this Bill as a very important although a minor item in that programme. I dissent entirely from the narrow, petty, parochial, shopkeeper mentality displayed by the hon. Member for Woking, with his fine calculation of pennies and shillings—

Mr. Onslow

It was millions of £s.

Mr. Hooley

The hon. Member was talking about £1 and 30s.

Mr. Onslow

The Minister said that.

Mr. Hooley

The hon. Member was talking about whether this individual or that individual, this country or that country, on balance, as far as can be calculated, will be 10s. better off or 10s. worse off. That is the kind of approach which is disastrous for any statesmanship in international dealings and, in particular, in international trade, commerce and monetary affairs. It is the kind of approach which was disastrous in the 1930's when the Conservative Party had charge of our affairs.

The value of the I.D.A. is that it recognises that the problem of world poverty is global and must be tackled, to some extent at any rate, by combined and carefully calculated international effort. The immense importance of the I.D.A. is that it provides funds—I am sorry to say on a rather limited basis—which are not tied directly to the commercial or political policies of an international government. For that reason, I very much welcome the fact that the British Government are participating vigorously and fully in the replenishment of the funds of this institution. It gives me particular pleasure that on one day in our business we are dealing with two institutions of the United Nations—the International Monetary Fund and the International Development Association—which are extremely impor- tant for promoting the well-being of the world at large.

I congratulate the Minister on persuading the Chancellor of the Exchequer that it is in the direct interest of this country—I repeat, in the direct interest of this country—that we should participate in the replenishment of I.D.A. funds. I have noted with concern that in recent months we appear to have adopted political criteria for the granting of aid to particular countries. I refer to the South Arabian Federation and to Tanzania. I hope that the contribution of this Bill will be regarded as a counterbalancing act, as moving more in the direction of international co-operation and away from narrow short-sighted political considerations in the giving of aid.

I welcome the Bill on the ground that it strengthens international co-operation and that it is a further token of the Labour Government's determination to take part fully in dealing with the problem of world poverty.

Mr. Philip Goodhart (Beckenham)

I agreed with only one remark made by the hon. Member for Sheffield, Heeley (Mr. Hooley), and that was in regretting that the Bill had been discussed in such an intermittent fashion.

I fully apreciate the Minister's anxiety to get the Bill through as quickly as possible. There is talk of further Government cuts, amounting to at least £15 million, and I understand that he would like to get the Bill safely on the Statute Book and so shield this contribution from any possible cuts.

We cannot dismiss the fact that this debate is taking place as we are tottering on the edge of yet another financial crisis. Anybody—particularly anybody looking at the matter from outside—loking at the way in which we conduct our affairs must think it odd that we should be busy trying to borrow money on the international monetary exchanges so that we can then contribute money to an international organisation that will lend it to other countries. I admit that, at this time of pending financial crisis, we are contributing to this Fund much more than other countries which are far more favourably placed than ourselves.

Some think that the size of the German monetary reserves is a major source of imbalance in world markets today. Nevertheless, the Germans are contributing a mere 117 million dollars while we are contributing 155 million dollars. France, which had enormous reserves before its recent troubles struck—and which certainly had enormous reserves when this bargain was struck—is to contribute only 97 million dollars, little more than half our contribution. Japan, our major industrial competitor, is due to contribute 66 million dollars. Thus, Germany and Japan, our major and highly successful competitors, with—and this particularly applies to Germany— large reserves, are together contributing only slightly more to the Fund than we are.

1.45 p.m.

Although I agreed with the financial analysis of my hon. Friend the Member for Woking (Mr. Onslow), who referred to our receiving 30s. back for every £1 we put in, the Minister conceded on Second Reading that this balance would move sharply against us in the next period covered by the Bill. I hope that the Minister will expand on those remarks.

One reason why the terms of trade concerning this aid will move against us is the new position in this matter of the United States. Another reason is the fact that in the past a great proportion of the funds that I.D.A. paid out went to India and Pakistan, which, because of their long association with us, placed a higher proportion of those sums than would normally have been the case in orders with this country. That situation may change and perhaps in future not so much of the Fund's resources will be devoted to assisting India and Pakistan.

It is difficult to ascertain what I.D.A. proposes to do with the new replenishment. It is noticeable that on Second Reading the Minister did not refer to the uses to which this money will be put. Are we likely to continue to see the major flow of money from I.D.A. going to India and Pakistan, or can we expect that in the years ahead there will be a change of emphasis, with more money going to Africa?

Looking through the Press cuttings file in the Library on I.D.A., the only reference I can find to future proposals for I.D.A. is the suggestion that a large loan will be made to Egypt. At a time when we are tottering on the edge of another financial crisis, it seems strange that we should be borrowing money to make a soft loan to Egypt. I can think of better ways of using our resources.

One of the disadvantages of contributing our aid funds to a multilateral organisation is that one loses control of them. When we distribute aid directly it is possible for hon. Members to discover how it is spent; and I acknowledge the co-operation which the Minister and civil servants extend to hon. Members who are interested in this subject. It is possible to see them, to discover how our aid is distributed and to make suggestions about how it might be better channelled. But one of the disadadvantages of channelling one's aid into a multilateral organisation such as the I.D.A. is that if one does not have this liaison one cannot have control over the funds. It will, therefore, be exceedingly difficult—it is difficult now, but it will be just as difficult in future—for hon. Members to find out how the funds we contribute are spent. Quite frankly, at a time when we have to look with increased care at the funds which we are spending on international aid, it seems to me that we should be ever more anxious to keep control of those funds in our own hands.

Mr. Arthur Blenkinsop (South Shields)

I would not have intervened at all in this debate but for the rather depressing speech of the hon. Member for Woking (Mr. Onslow), and I very much hope that the hon. Member for Essex, South-East (Mr. Braine) will, in due course, be able to put in better balance the attitude of his party. I have rarely heard a speech that was more obscurantist in its terms, which contained analogies that were no analogies and which clearly would, if the hon. Member were to succeed, lead the country into attitudes which would be condemned throughout the world and gravely endanger our position.

I note also that, although the hon. Member referred to the sums being made available for industrial development as compared with agricultural development —a matter of deep concern and of con- siderable importance—he made no attempt to suggest that the international funds to which we are contributing are making provision that is in any way unbalanced—

Mr. Onslow

I hope that the hon. Gentleman will take it that my anxiety not to develop to the full all the points I might have opened up was simply to enable the House to make some progress. I can assure the hon. Gentleman that I could speak for three hours on the subject if he were to provoke me.

Mr. Blenkinsop

The one welcome feature of the hon. Gentleman's remarks was that they did not detain the House very long. I hope that his future contributions will be as brief, if they need to be made at all.

The kind of comment that everyone will resent was the hon. Gentleman's reference to money being stolen out of the till. That kind of remark is obviously made to catch a great deal of Press publicity when it has no reality attached to it. Seeking a great deal of personal publicity with a catch phrase like this, which we know is quite meaningless, creates ill-will and ill-feeling in the country, and I believe that it is reprehensible for an hon. Member to make such statements.

I have more sympathy with what was said by the hon. Member for Beckenham (Mr. Goodhart) about control and information of the work being done by the international bodies to which we contribute. This is a fair point, and an important point. I have always argued in favour of multilateral aid as against bilateral aid, but I admit quite frankly that it is always a problem to ensure that there is adequate and effective control over the use of funds in multilateral schemes. There are very great political and other advantages in increasing the proportion of multilateral aid. It is clearly of immense importance to avoid individual countries feeling themselves completely tied to a certain country, which may even be regarded as an old colonial country linked with attitudes of Empire, and so on. As against that, we have not fully and satisfactorily worked out means of proper and adequate control.

The argument on the balance between agricultural and industrial provisions in many territories has gone on for a long time, and it is a matter to which the international bodies themselves have given a great deal of attention. It cannot be dismissed lightly. I know from the contacts I have had with many of these bodies that it is not true that they simply accept propositions that countries put forward, as though we were making funds available through these organisations to Governments without any kind of prior examination of the way in which the proposals link up with others, and so on.

That is far from the truth. Negotiations and discussions with Government and expert advisers go on, and in many people's view go on far too long, in order to try to make sure that projects being supported by international funds are viable, that the aid is not available only for one year but for long enough to ensure that a certain project can stand up until it can be completely taken over by the aided country, and that in all cases the country being aided is itself making the biggest contribution to the project. These are all matters of great concern.

Speaking for myself and, I am sure, for most of my hon. and right hon. Friends, I very much welcome the extra provisions that are being made. We regret that, inevitably, because of financial circumstances, those provisions are not as great as many of us would have wished. I share the anxieties of my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) about the way in which, increasingly, political issues may be creeping into our decisions. We are anxious that they should go no further.

Mr. Bernard Braine (Essex, South-East)

I agree with my hon. Friend the Member for Working (Mr. Onslow) about the way in which those responsible for arranging Government business have handled this Bill. This Measure is of immense importance, not merely to ourselves but to the other member Governments of the International Development Association and to a large number of developing countries which have been looking to that Association for assistance but have been left in some degree of uncertainty in recent months. This has been unfair to the House, and to the Minister himself. I hope that the lesson has been learned, and that this will not happen again.

My hon. Friend made a forthright attack on the principle of aid. He is right in saying that aid involves some transfer of resources—a giving of resources—to another country. He is right, too, to argue—and I think that we would all agree with him—that it would be a very good thing if the world's economic affairs were ordered so sensibly that aid was unnecessary. If, for example, developing countries could get reasonably stable prices for their primary produce so that they had a fair certainty of what they would receive over a number of years, if they could get selective preferences for some of their manufactures in the markets of the developed world, the movement from dependence on foreign aid towards self-dependence would be more rapid.

Unfortunately, we do not live in a perfect world but in a very divided world —divided less, perhaps, by ideology than by the fact that two-thirds of the human race live in relative poverty, and in which, whatever efforts they may make, with or without our assistance, the gap between their standard of living and ours will inevitably widen.

2.0 p.m.

Perhaps it would be right to say at this stage, because this is the crucial Clause of this Bill, that aid programmes have had much more success in the last decade than they had been given credit for generally, especially the aid programmes of the I.D.A. itself whose funds we are seeking to replenish. Some countries have moved out of the aid field altogether as a result of the effort which has been made—Taiwan, South Korea, Mexico, Brazil are examples—others like Kenya are moving out of the aid field too, reaching the point where they can dispense with foreign aid. In these cases the aid programme is achieving precisely the end which my hon. Friend rightly thinks desirable.

According to the World Bank, the gross national product of the developing countries as a whole has doubled over the last 15 years and their per capita income has risen by 40 per cent. That is a massive achievement by any standard of measurement. But what matters to the people of a developing country is not the overall picture of growth, but their own performance. Unhappily, the stark fact which this House must recognise is that for the majority of developing countries the performance has been disappointing. It seems unlikely now that the minimum 5 per cent. growth target set for those countries at the beginning of the United Nations Development Decade will be reached by many of them.

Yet that target of 5 per cent. growth was modest enough. It simply meant that, in about 70 years from now, the developing countries would reach the same average income per capita as the developed countries of Western Europe were enjoying in 1960. By all past standards, that would be a massive achievement, because it would mean that the developing countries would compress into a little less than a century the evolutionary processes which have taken advanced industrial countries like ours three or four times as long to accomplish.

But, of course, the developed world would not be standing still in that period. Indeed the mind boggles at the enormous strides it is likely to take in the next 10 years let alone the next 70. Whatever progress is made by the developing countries in that period the gap between them and us will not be narrowed unless some quite exceptional effort is made such as is envisaged by I.D.A. and other aid programmes to which all the richer countries are morally pledged. Nor can we reasonably expect—this is a harsh political fact which we have to face as realists—that the leaders in the poorer countries will be content to wait so long to secure what by contrast seem pitifully small returns. As the President of the World Bank once said: Humanity really can do better than this. We are dealing here with the most important Clause in the Bill, empowering us to make a substantial contribution to the funds of I.D.A. In the view of my hon. Friends and myself it is both significant and right that we are making that contribution at a time when our own economic situation is far from satisfactory. It is significant because it is a recognition that in the long run our own prosperity is bound up with that of the rest of the world.

I am sorry that my hon. Friend the Member for Woking has left the Chamber because these remarks are directed as much to him as to anyone else. We have a deep and abiding interest in helping to quicken the tempo of world economic activity. It is right to make this contribution, because of all the ways of helping the poorer countries to speed their economic development the I.D.A. method is one which ensures effective use of resources and can show considerable benefit not only for the recipients but for our own economy.

The reason I am sorry that my hon. Friend left the Chamber is that I do not agree with the arithemetical calculation he was making. It is a fact that our contributions to I.D.A. of about £60 million have produced £90 million worth of export orders. It is true that if one is measuring the benefits to the United Kingdom economy one must make allowance for the import content of the goods exported. One must also make allowance for the fact that if the goods were not exported under an aid procurement programme they might have been exported in the normal way to other markets. But this is very difficult to quantify. While there is an element of trulh in what my hon. Friend said, namely, that the benefit is not absolutely 30s. for every £ invested in I.D.A. funds, the benefit is considerably greater than he sought to show.

The provision we are making here, however, is but one contribution to an imaginative partnership of 18 relatively wealthy countries. The agreement does not become effective unless at least 12 of the partners whose contributions total not less 950 million American dollars ratify their agreement to contribute. On Second Reading the Under-Secretary told us that so far eight countries have ratified their agreement and two more were soon to do so. Their contributions, if one excluded our own, came to only 240 million American dollars. Thus even with our contribution this means that at this moment the venture is short of the qualifying minimum.

There is no point in glossing over the fact that unless the United States Congress ratifies the agreement on the replenishment of I.D.A.'s funds, the organisation as we know it will collapse. All of us in this House recognise the great difficulties which face the United States at the present time. It is no part of our function to advise, or even to comment, on the parliamentary proceedings of other countries, least of all of the United States to whose unparalleled generosity in times of difficulty we owe so much.

No European should ever forget the generous and timely help given under the Marshall Plan, which gave our war stricken continent a new lease of life. No Briton should ever forget Lend-Lease, which Sir Winston Churchill was once moved to describe as the most unsordid act in human history; but the United States Congress is now in effect answering at the door of history to an urgent call for help. It is answering, not only for itself, but for all the richer nations of the world. This is an awesome responsibility. All of us must fervently pray that wisdom will guide the actions of those in the United States on whose decision in this matter so much depends.

There is one point about the American contribution to which reference was made on Second Reading and which we on this side hope that the right hon. Gentleman will make clear. In normal circumstances the aid provided by I.D.A. is untied. We understand—the Minister went to great pains to explain this to us—tlhat certain arrangements have been made to help the United States overcome its current balance of payments difficulties. We make no complaint about that, but I am not sure that the way that the matter was explained to the House is very clear.

The Parliamentary Secretary said this: … the whole of the United States' contribution will be available in a free form within the period of three years."—[OFFICIAL REPORT, 1st July, 1968; Vol. 767. c. 1264.] Surely that is not correct. Page 14, paragraph II(d), of the Report of the I.D.A. Executive directors—Cmnd. 3599 —shows that the United States' contributions not used for procurement in that country cannot be drawn before 1st July, 1971. Therefore, the money will not be available within the period of three years". I thought that the right hon. Gentleman himself got it wrong. If I have it wrong and he can put me right, he will be doing a great service. However, I think that he got it wrong when he said this: The United States' share will need to be made available at the end of the three-year period, and once the money is in the organisation, it leads to untied orders."—[OFFICIAL RKPORT, 28th June. 1968; Vol. 767, c. 1032.] This surely implies that the whole of the United States' contribution would be made avaliable immediately during the three-year period. This cannot be the case. Paragraph II(e) on page 14 of Cmnd. 3599 makes it quite clear that the deferred contributions only become available three years after they become deferred. Since the contributions, like those of other members, including ourselves, are made in three equal instalments in 1968, 1969 and 1970, the United States' contributions for each of these years will not be available until 1971, 1972 and 1973 respectively. It is no part of my business to criticise this arrangement; it was entered into freely, but it is imperative that the Committee should be clear about what the arrangement is before we approve this legislation. I therefore invite the right hon. Gentleman to clarify the matter.

Finally, I hope that the right hon. Gentleman will reply to the point raised by my hon. Friend the Member for Beckenham (Mr. Goodhart) and say something about how the I.D.A. proposes to use the fresh funds it will obtain the years ahead. We do not ask this question in any critical spirit, because anybody who wishes to do so can study the detailed record of I.D.A. achievements over the past few years. After all, the key to the future lies in past performance. The benefits that have flowed from the use of I.D.A. credits can be measured in many Commonwealth countries. I have no doubt myself that the money will be utilised satisfactorily.

I think I am right in saying that the President of the World Bank estimated that developing countries could quite successfully and economically utilise between 50 per cent. and 60 per cent. more resources in their development than they are at present doing. This is spread over developing countries as a whole and must not be taken to be a figure for any particular country. I have little doubt, therefore, that the I.D.A. will be able to utilise its funds in a useful and economic fashion. Nevertheless, as my hon. Friend said, we are making available money for aid at a time of economic stringency and I think that Parliament and the nation are entitled to have as much information as to how that money will be used.

2.15 p.m.

Mr. Evan Luard (Oxford)

I am in very much the same position as my hon. Friend the Member for South Shields (Mr. Blenkinsop). It had not been my intention to speak, certainly not at this stage of the debate. However, I was so disturbed and distressed by some of the comments made by the hon. Member for Beckenham (Mr. Goodhart) that I am minded to intervene. I did not hear the speech of the hon. Member for Woking (Mr. Onslow), but I do not altogether regret that, because I am sure that the hon. Gentleman would have raised my blood pressure even more than the hon. Member for Beckenham did.

I am moved to seek to rebut as firmly as I can some of the points which the hon. Gentleman made, because it would be wrong if it were to go out from the House of Commons that the attitude of the House to the question of aid is similar to that which was expressed by the hon. Gentleman. His first point was that it was disturbing or wrong that we should be voting money for this purpose at a time when our own economic situation was so bad.

I cannot reply more effectively to this point than did the hon. Member for Essex, South-East (Mr. Braine). It is precisely because we are in a somewhat difficult economic position that it is all the more admirable that the Government have decided to go ahead with a comparatively generous contribution towards the I.D.A. replenishment. This will be accepted by anybody who believes in the whole principle of aid, certainly by any Socialist who believes in the redistribution of funds from wealthier sections of the population to another section. Most people—many Conservatives, too; many right thinking people in all parties nowadays— are convinced of the enormous and inestimable value of aid, not only to the recipients of aid.

One of the most essential points which must be stressed over and over again is that aid is valuable, not only to the recipients, but to many of the donor countries as well, for reasons which have been made plain during the debate. It serves to keep the flow of international trade moving and to bring back funds, even to the countries which make the aid available. The figure of 30s. return for every £1 which we have given is very important as regards our contribution to I.D.A. Although this may not be maintained in quite the same proportion in future, we shall continue to reap a considerable and important benefit from our contribution.

Mr. Goodhart

I would not want the hon. Gentleman to distort anything that I said as he seeks to reply to some remarks that I made. I did not argue that we should cancel our aid programme. Nor did I argue that we should even at this moment slash it. I argued that we should retain control ourselves over aid and that it was odd to borrow money internationally and to give to an international organisation. I did not argue that we should not be performing this function.

Mr. Luard

The point that at a time when we are borrowing it is strange that we should be giving applies just as much to bilateral aid as much as it does to multilateral aid. I agree with the hon. Member for Essex, South-East that it is admirable that we should be doing this even though we are in some economic difficulty.

The hon. Gentleman's second point was that it is surprising that we are giving more generously than some of our competitors which are in a similar stage of economic development. This is totally irrelevant. The fact that certain countries are not very generous in giving aid is no reason why we should not be as generous as we can be. I do not deny that one or two of the countries the hon. Gentleman mentioned have not been conspicuously generous. But there are several others—France is the most notable example—which have been much more generous than we have in aid generally, although they are not so outstanding in multilateral aid.

The hon. Gentleman's third point was that the form in which this contribution is to be made does not give us so much control over the way in which the aid is used. True, it is difficult for us in advance, at the time when we are voting this replenishment, to know to which countries the funds will be given, but it is not true that we have no idea of the kind of control exerted over funds which are used for replenishment. The control exerted by the I.D.A. is extremely strict, and it is generally on a multilateral basis in which we ourselves have representation since we have representatives on the Board of the I.D.A.

Furthermore—this is, perhaps, the crucial point—it is a form of control which is much more acceptable to the developing countries than any kind of control undertaken by an aid-giving country giving aid bilaterally. I do not deny the necessity of some kind of control over the way in which the aid is used, but it is essential to recognise that the control which a multilateral agency can exercise is not only more acceptable but, because it is more acceptable, is usually more effective than control which an individual aid-giving country can itself exercise.

Mr. Goodhart

I accept entirely that there is a British voice in the control over these funds, but what exercises me is that, at a time when Parliament is asked to make available 155 million dollars, we do not know how the money is to be spent. We cannot know precisely how the I.D.A. proposes to spend it, but, before Parliament passes the Bill, we ought to know broadly whether it intends to follow the same pattern as in the past. I am sure that the hon. Gentleman himself would like to know how the money will be spent.

Mr. Luard

It depends what one means by "how it is to be spent". If, as I suspect, the hon. Gentleman is asking to which countries the money will be lent, I should regard that as an unreasonable request to make in advance.

Mr. Onslow


Mr. Luard

This is a fund which is available to all developing countries. A decision has to be made on an annual basis as to how the fund for any year or period will be allocated, and it would be impossible if one were to decide in advance exactly how the whole fund was to be distributed. What one can expect to know—and what one can know already —is roughly on what principles the fund operates. We know roughly the kind of projects for which it makes loans. Moreover, it is an essential feature that we know on what terms the loans are made. One of the inestimable advantages of aid in this form is that it is given on particularly generous terms.

Nearly all developing countries now, and some in particular, are reaching a stage when the repayments of aid given to them in the past are becoming a severe burden on their balance of payments. It is fairly generally recognised now that, for this reason, an increasing proportion of aid, if not all of it, must be given in a generous form, in the form of soft loans which do not represent such a heavy burden on the balance of payments as the full market terms of interest would represent. This is one of the main advantages of loans through the I.D.A.

For that reason, I congratulate the Government on their present move. I regard it as a welcome step forward. Aid in this form is given in one of the best ways possible. In particular, I contrast it with some of the bilateral aid arrangements and some of the conditions attached thereto. For example, our recent aid to Tanzania led to an extremely unfortunate situation. We all welcome the resumption of diplomatic relations with Tanzania, but the cutting off of aid to Tanzania because that Government would not meet one particular requirement was an extremely unfortunate example of what can happen in bilateral aid. In the present case, however, I congratulate the Government on making considerable funds available in a multilateral fashion.

Mr. Henry Clark (Antrim, North)

I apologise to the Committee for not being present when the proceedings began. It has been difficult enough for a Member interested in the Bill to discover when it would be debated. To announce, at the very earliest, at mid-morning on Monday, when most of us had made our arrangements for the Monday, that the Second Reading would come on on the Monday night was not treating the House with the respect it deserves or, for that matter, treating the Bill with the respect it deserves. I must register a protest about it. Having made other arrangements, I arrived early on the Tuesday morning only to discover that the Second Reading debate was almost over. One almost suspects that the Minister hoped that he would get it through rather more quickly by taking it last Monday night than he would otherwise have done.

The Bill, and Clause 1 in particular, commits this country, in the middle of a balance of payments problem, to heavy overseas payments. This has been said before, but it ought to be said again. I welcome the speech of the hon. Member for Oxford (Mr. Luard), and I agree with much of what he said, because it should be made clear to the country, and to the other countries of the world, that there are two sides to the question of aid. A discussion of this kind is admirable.

It is, perhaps, wrong to discuss in detail on Clause 1 the merits and morals of aid as a whole, but we must look at the effects of a very large payment from this country on both this country and the recipient countries. We have been told about the 30s. worth of British exports resulting from every £1 of aid given through a multilateral organisation. That is a useful figure, but not much more. It has been argued that the 30s. worth of British exports mean, in fact, £1 worth of British exports for which we are not paid and only 10s. worth for which we are paid.

One can ask whether the figure of 30s. worth of British exports for every £1 of multilateral aid which we give is marginally correct. If we give an additional £1, do we achieve an additional 30s. worth of British exports? Of course not. If we give an additional £10 million, do we achieve an additional £15 million of British exports? Of course not. If we gave no aid at all through multilateral agencies, I should be prepared to agree that we might well achieve a considerable level of British exports for every dollar of aid given to multilateral organisations by the United States. The figure has some validity, but not complete validity, and the Minister would be unwise to hammer it too much.

Whatever be said we are giving away about £40 million over four years. We have considerable balance of payments difficulties. America has succeeded in negotiating a special deal to help its balance of payments problems. Could we have done something on those lines? One wonders. Only last night, one hon. Member remarked in rather cynical terms that aid giving was a good idea when one was in balance of payments deficit because one was always giving away borrowed money. There is a certain cynical logic underlying that comment.

This country might, perhaps, be compared with a Victorian gentleman in difficult circumstances. He maintains his West End tailor, his subscription to his club and his subscriptions to charity, largely to keep up appearances. There is something to be said for keeping up appearances. But every Victorian novel —and they nearly all seemed to deal with gentlemen in straightened circumstances—always viewed the chap who kept up his West End tailor as a silly ass.

We have every reason to look rather critically at Britain's aid giving. We have played a leading part. I am not one to think that many methods could not be used to stimulate development in underdeveloped countries, but I look also at the effect of aid on the recipient countries. One can almost invariably regard with satisfaction individual projects and the results of individual projects—I had something to do with one or two of which I am rather proud—but, now that aid has grown to considerable proportions, although it is still only a minor factor in the development of developing countries, we must look at the totality.

It is probably wrong to generalise about them, because they vary so much, but the nearest comparison one can take in looking at underdeveloped countries as a whole is that an underdeveloped country is rather like a developed country in a state of absolute slump in which almost all commercial activity has come to an end.

2.30 p.m.

It is noticeable in most underdeveloped countries that the public sector is the largest employer in the country, and in most underdeveloped or developing countries that I know the public sector, if it is not the largest employer, is considerably larger in proportion than the public sector in a developed country. The public sector does not add a great deal to productivity. It is the development of the private sector which adds wealth to a developing country. Countries which receive aid in large quantities almost invariably pay out the aid received through the Government, and thereby automatically increase the power of the public sector and increase the number of public servants.

Anyone who has recently, rather than 10 years ago, visited a developing country will notice that Parkinson's Law has had the most dire and terrible effects. In many cases, for quite simple operations, the number of civil servants necessary to administer a particular area has doubled or trebled. The power given by aid to the public sector is one reason behind this, since Governments do not take on too many civil servants unless they have the money to do so. The continuous building-up of the public sector is, I believe, thoroughly dangerous in totality, although I am not prepared to argue against the admirable effects of some minor projects.

There is another factor which must be looked at very closely when we are considering giving large quantities of aid to developing countries. When a new teacher training college, a new road or an institution is built in a developing country, because the money has come in aid and it is in an overseas currency, the tendency is to build it to a higher standard than is customary in that country. Only last year I visited a thoroughly admirable nurses' training school. It was built to a standard that had never before been seen in the area. It was to a considerable extent built of imported materials; corrugated iron sheets, concrete, steel window frames, expanded steel and glass. The previous nurses' training college in that part of the world was an excellent one which was built almost entirely of indigenous materials such as burnt brick, bricks, thatch, and locally-grown timber for the doors and window frames, and shutters rather than glass. This might be too low a level, but the money spent on the earlier nursing training college all went to people in the area, the people who cut the timber, the people who made the bricks and did the thatching, and the money was, therefore, kept circulating in the country. However, now that there is a training college of a higher standard, will any nurse put up with a training college of a lesser standard, and will that country have to depend in future upon imported corrugated iron, imported concrete, imported expanded metal and imported door latches? It is a thoroughly doubtful proposition.

I believe that we need to have a long look at the totality of aid. I hope that the Minister will say that he gives the fullest possible support to the notion of the President of the World Bank for an international audit of aid, an audit that could be a Radcliffe Report, setting down guidelines and showing the dangers which exist of over-high standards and overemphasis on the public sector. If, in our difficult circumstances, we are to give such a hugh sum, some conditions must be laid down, just as the United States of America has laid down conditions. Although I have made these qualifications, I think that I.D.A. is probably one of the best institutions for administering the aid and probably the best of the multinational ones. I do not grudge this section of aid, but every time we discuss international aid we must qualify our recommendation.

If I may be critical of my hon. Friend the Member for South-East Essex (Mr. Braine), he tends to get carried away. He is a bit starry-eyed on occasions. One must be down-to-earth. I am not at all sure that, if we had an additional £200 million of British commercial investment in developing countries, thereby strengthening the private sector, we would not be doing a great deal more good.

Mr. Braine

I was talking on Clause 1 "stand part", as we all are, and relating my remarks solely to aid. I have always held the view that aid is only one part, perhaps not even the most important part, of the job of helping underdeveloped nations. Trade is vastly more important, but it is difficult to argue this with one-crop country in great economic difficulties and needing help for the early stages of development, in order to enable private investment to take full advantage of the opportunities. This is the problem.

Mr. Clark

I am glad to hear my hon. Friend say that. I go further and say that aid can never be much more than a catalyst, and the main effort must come from the chaps themselves. The arguments of infrastructure are frequently carried too far. One sees the laying-down of a tarmac road from Nairobi to Mombasa directly parallel to the railway track, while a very important road in Tanzania remains one of the nastiest and dirtiest roads I have ever seen, and one wonders whether infrastructure arguments operated. One sees the encouragement of universal education, with the result that the infrastructure takes all the educated men. This country became industrially rich before it even had universal primary education, or even 80 per cent. primary education. The underdeveloped countries must realise that some things are luxuries which they cannot afford in the earliest stage of development.

Mr. Hooley

Is the hon. Gentleman seriously wishing upon underdeveloped countries the atrocities that happened in this country in the nineteenth century?

Mr. Clark

No one is suggesting atrocities, but I suggest that a 50 per cent. or 60 per cent. rate of primary education would allow almost every child who wants to go to school, or whose parents want him to go to school, to do so, and is something which could be afforded. I am suggesting that compulsory 100 per cent. education is not something a country needs. The number of educated men who are involved in teacher training colleges and as teachers is one thing which is holding up the development of developing countries.

I wish to speak for a moment more exclusively on Clause 1 than I have done so far. In both Clause 1(5) and Clause 2(1) are to be seen the phrases to which we have become so accustomed in all overseas aid Bills: … may with the approval of the Treasury … During the passage of the last major Bill on this subject, hon. Members on this side of the House spoke at considerable length on the candle-end controls imposed on aid by the Treasury. I am not certain that Treasury control is valuable in the day-to-day operation of aid. Will the Minister make a statement on this?

What is in my mind as probably the most sinister part of Treasury intervention in aid is the aid to Tanzania and the souring of relations between this country and Tanzania in the last two years. The Minister is well aware that a number of hon. Members for a long time have thought that it was entirely wrong that developing ex-colonial countries should be burdened with a huge pension bill. I am sure the Minister agrees that they should not. There may be a legal equity about it, but, believing as he does in the nationalist philosophy, no African politician will see his country burdened by £1 million of £1½ million a year for the payment of pensions to the nation's ex-colonial overlords. This, I believe, has been materially responsible for souring the relations between this country and Tanzania, which is a friendly and progressive country. I know that the initial reason for breaking off diplomatic relations was tied up with the O.A.U. decision on Rhodesia, but when I saw President Nyerere last summer the only reason why diplomatic relations had not been renewed was that negotiations were being carried out over these pensions.

Can the Minister give a clear statement about the resumption of diplomatic relations now that Tanzania is not paying these pensions? Has he at last broken the grasp of the Treasury, which stuck to its guns? Can we see a change in policy over a much wider area and not just over Tanzania? If so, I congratulate the Minister. I wonder whether in any future overseas aid Bills Treasury control needs to be so closely written in.

We were all delighted to read the official news in the newspapers this morning, but the House requires a clear statement about the negotiations with Tanzania and the renewal of diplomatic relations and what agreement has been reached about the payment of pensioners.

I do not expect an immediate answer to this, but I would remind the Minister that a number of pensioners are not living in this country. A particularly large number of pensioners of Tanzania come from Malawi, India and Pakistan. Have we done anything to guarantee that persons from Malawi, India and Pakistan, who served not only as clerks but in senior posts, are receiving pensions from the Government of Tanzania? I hope that we are not leaving them to the tender mercies of their own Governments, because they are too few in number to justify high level negotiations.

This matter needs the fullest examination by the House. The country has increasing doubts about the benefit of aid. A debate like this can do something to get sane thinking throughout the country on the subject, particularly on the Tan-zanian aspect. I trust that we may have a clear statement about this.

Mr. John Tilney (Liverpool, Wavertree)

Like my hon. Friend the Member for Antrim, North (Mr. Henry Clark), I apologise for not having heard what my hon. Friends the Members for Woking (Mr. Onslow) and Beckenham (Mr. Goodhart) said, but I was tied up with matters concerning the grave problems of Nigeria and could not attend the Committee from the start of the debate.

I welcome what my hon. Friend the Member for Antrim, North has said about private enterprise and pensions. I have heard many people in Merseyside argue against giving aid. I am in favour of it, and particularly in favour of multilateral aid, but I can understand their argument when aid is wasted. I remember seeing a nurses' home which had been built at Sokoto. It was utterly unused because the Northern Nigerian leaders would not accept Ibo nurses and no others were available. That was many years ago. I have also seen immense sums of money—£8 million, I think— wasted in Ghana—not that we gave Ghana very much aid; this was Ghana's own money—on Job 600, a vast palace of many storeys, completely useless to man, built by Nkrumah.

Nigeria has had, I think, more aid per head than any other country in the world. It is now engaged on a ghastly civil war, with atrocities far worse than anything from the Victorian Age that an hon. Member opposite referred to. One has to convince one's electorate that it is better to build, say, a dam in Asia than reclaim the Dee estuary and make it a place, like the Plover Cove in Hong Kong, for the benefit of the people of Merseyside.

It is arguable that if we reduce our aid over the next five years or so we may have much more to give in five or six years' time. It is a balance of decision. It is not all black and white and easy for everyone to say that £200 million or thereabouts is the right sum of money to give in aid. For the time being it may be that very much less is right, and in a few years' time it might be very much more. It is by no means an easy decision.

2.45 p.m.

I agree with hon. Members who have said that one wants, if one can, to prime the pump whenever it is possible to do this, but I am afraid that occasionally the pump is allowed to get a little rusty or badly maintained, and if one does not produce enough money the pump may never be primed. I have seen a wonderful example of proper priming—not by this country but by America—in Taiwan. There the sum of £500 million was spent, and the country through it reached the take off stage.

That is a wonderful example of the success of aid. But if one dribbles out the aid, as we have done over the years —both Governments have done so—we may get a Durgapur steel works set up —not all that successful—in India when possibly we ought to have spent the money on helping the agricultural revolution rather than the industrial one. Occasionally, the wrong decisions are made.

I, as a believer in private enterprise, wonder whether some help could not be given to insure investment overseas. Because of what is happening in many countries in Asia and Africa, private capital is very loath to enter some of those territories. I should like to see a stock exchange in almost every capital. I believe that the capitalist system works. But we shall not get the investors of the world putting money into those unstable countries which threaten to sequestrate or nationalise their properties or else say that they cannot, because of balance of payments reasons, remit profits.

I hope that in the coming year the Minister will give further thought to whether a certain amount of aid should not be given, preferably with other countries, for the purpose of establishing an investment guarantee fund or some form of insurance against exproporiation.

I turn to what my hon. Friend said about pensions. I believe that we have a moral duty to look after those who have served the Crown well in the past. Alone of all ex-imperial Powers, we insist on putting the burden of pensions on the newly-independent countries. France has not done so, Holland has not done so, Belgium has not done so, but we have done it. I am not sure that it has been a wise thing to do. The problem has been stated in much better words than I can use by Mr. A. H. Jamal, the Minister of Finance of Tanzania, in a speech on 18th June: Hon Members will recall that during my Budget speech last year I referred to the continuing burden on the Tanzanian taxpayer which resulted from pensions commutation and compensation payments to former expatriate pensioners. He went on: In the case of expatriates an entirely different situation exists, and the Government is not prepared to continue with the arrangements which we were obliged to accept at the time of our independence in 1961. I am sure that this is the opinion of many Ministers of comparatively recent independent territories of the Commonwealth. The trouble is that the problem comes up every year in the Budget that is debated in their assemblies, and we get no thanks and many brickbats.

I am suggesting—and the Minister has known my views for a long time—that from the totality of aid—£200 million or whatever it is—we should take away the pension obligations of about £15 million, leaving a lower totality. If we did that, pensioners themselves would feel secure. They would not be frightened of things going wrong. I hope, too, that their widows would feel much more secure than do the widows of those who served in the Ceylon Administration and who are paid in depreciated rupees. Whatever the Government do, nothing seems to come out of Ceylon.

I propose to quote one further short passage from the statement to which I referred earlier: These arrangements are clearly unsatisfactory and unfair. The public officers' agreement refers to a particular category of officers, those who were employed on overseas leave terms, and who were selected for appointment by, or at the instance of, the Government of the United Kingdom. By insisting on the execution of the public officers' agreement as an integral part of the arrangement for granting independence the Government of the United Kingdom formally acknowledged that the officers in this particular category were in a special sense their responsibility. I agree with that, and I hope that careful thought will be given to this problem by Her Majesty's Government.

I accept that there are certain territories such as Hong Kong, Bermuda and the Bahamas, which are rich enough to look after their pensioners, but all these public officers' agreements are bilateral, and there is no reason why, with a bit of trouble, one should not renegotiate them and take the price of these pensions off the totality of British aid.

Finally, I suggest that we have a moral duty to the people who have served this country of ours so well, and who were engaged, not by the Government of Tanzania, or Zambia, or Malawi, which did not exist at the time, but by either the Governor or the Secretary of State for the Colonies as he then was, and I very much hope that the Minister will look into this matter over the next few months.

2.52 p.m.

Mr. Prentice

We have had a long and wide-ranging debate on Clause 1, which I welcome. I share the views of those who have said that these matters have not been sufficiently debated in the House in recent years or, indeed, for several years. When I was on that side of the House, and there was a Conservative Government, I used to complain about the lack of opportunity to debate these matters, and I therefore welcome the chance presented to us this afternoon to debate Clause 1 in this way.

While I was listening to the hon. Members for Woking (Mr. Onslow), and Beckenham (Mr. Goodhart), I wondered when either of them would express any word of concern about the human problems of poverty in the developing world. What I found most depressing about their speeches was that there was no hint that these tremendous human problems should be of any concern to them, or to this House, or to the Government of this country, or to other relatively affluent countries.

Mr. Onslow rose—

Mr. Prentice

I rather think not, and I shall tell the hon. Gentleman why.

Mr. Onslow

I should like to correct what the Mnister said.

Mr. Prentice

Very well, I shall give way just this once.

Mr. Onslow

If the Minister reads HANSARD he will find that I referred specifically to the problem of peasant poverty. I hope to have an opportunity, when we come to Clause 2, to answer the Minister's challenge. There is an answer to it, and I shall give it to the Minister.

Mr. Prentice

I am glad that the hon. Member made some brief reference to it, but the greater part of his remarks seemed to ignore the moral aspects of the problem.

I think that I should tell the Committee that I do not propose to give way again. I have a number of points to refer to, and I should like to deal with them as well as I can but without taking up too much time, because, for reasons which I hope are shared by everyone, I trust that we shall complete the remaining stages of the Bill this afternoon.

When the hon. Member for Beckenham interrupted my hon. Friend the Member for Oxford (Mr. Luard) he said that he was arguing for a cut in the aid programme. I do not think that that was clear to me from his earlier speech, but, having said that, I should draw attention to the distinction. The speech of the hon. Member for Woking sounded like a slightly more sophisticated version of the kind of speech one would expect on these matters from Alf Garnett.

The aid programme has developed in this country under both Governments, and with the support of all parties and informed public opinion. It has done so for three basic reasons which many of us have stated before, and which I need not state now at any length.

First, there is clearly a moral obligation upon the people who are fortunate enough to live in those countries of the world which have had an industrial revolution, and which enjoy a standard of living based on that, to do something about their fellow human beings in poorer parts of the world. We should not pull the blanket over our heads and ignore the problem of world poverty.

Secondly, every trading nation, and Britain above all, has a vested interest in the growth of the world's economy. The economic growth of developing countries produces benefits for us and for other trading nations which, in the long run, are very considerable indeed.

I agree that we cannot measure the issue precisely in such terms as 30s. worth of orders for every £1 put into a particular fund. These figures have always been qualified both ways, but the longer-term benefits which cannot be qualified are greater than figures of that kind suggest.

The third basic reason for supporting a development aid programme is that this must surely be seen in our time and in the generation ahead as one of the factors most likely to lead to world peace. If the standards of life remain so different between the Northern and the Southern Hemispheres, or if the gap continues to grow, and we allow it to grow so that there is an indifference to the standard of life in the poorer countries, this will build up in the world tensions which, sooner or later, are bound to react on ourselves, on our children, or on our grandchildren, in a most disastrous way.

I insist that there is nothing anomalous about the situation of Britain, with her own economic problems, and owing money to those who have loaned it to us, taking part in the problems of world development. Whatever our economic problems, we have a national income of about £600 per annum per head, and we are talking about countries where the national income per head may be £50 per annum, £30 per annum, or even less. It would be a great tragedy and mistake if, in our time, the wealthier countries became so obsessed with the debts that they owe each other that they were to turn their backs on the rest of mankind.

I turn to some of the specific points which have been raised. I should like to deal particularly with those concerning the provisions for I.D.A. The hon. Member for Woking asked whether the commitment under the I.D.A. agreement was in terms of dollars. That is so, under Article 4 of the I.D.A. agreement. This led us, following devaluation of the £ last year, to make up the value of our earlier contribution. This is a continuing commitment to every country concerned.

3.0 p.m.

The hon. Gentleman spoke about the emphasis which I.D.A. had placed on industrial rather than agricultural development. Clearly, developing countries need both, and the right ratio between industrial and agricultural development must vary with each country. But, as a generalisation, I would agree that until the last few years it was true that in many developing countries there was rather too much emphasis on the creation of new industries and too little emphasis on rural development, and that this was an error made by developing countries, also by donors of aid, whether on a bilateral or a multilateral basis.

However, there has been a shift in recent years, including a shift in the I.D.A. programme. About 300 million dollars have been invested by I.D.A. in the last three or four years in agricultural development. This was not so at the beginning of I.D.A.'s activities, but it has become a much larger part of their operations in recent years.

The hon. Member for Beckenham asked about the proportion of I.D.A. funds going to India and Pakistan and whether this would continue. I cannot say at this stage what proportion will go to India and Pakistan in future or to any other country. In reply to the wider question, executive directors are carrying out a very active review of I.D.A. activities, bearing in mind the decisions about investment in the period ahead. They will continue to give help to countries which, in the main, have a per capita income of about £100 a year or less, which need capital development and which have shown that they can use it efficiently, but which should not be expected to take on the burdens of conventional loans.

I feel confident that India and Pakistan will be major recipients of I.D.A. money —whether it will be in precisely the same proportion remains to be seen; that has not been decided—some critics of the I.D.A. programme have suggested that India and Pakistan have received too much of the I.D.A. money. But if one works out the amount per head of population one realises that they have received about the same as many recipient countries in Africa, Latin America and elsewhere. Because of the enormous size of their populations, the amounts necessarily form a very large part of the whole.

The hon. Gentleman asked about the percentage of contributions from Britain as against other countries. The percentage we are paying this time is the same as that worked out originally. It could have been argued that we should be paying a rather smaller proportion and that certain other countries should be paying a rather larger proportion. The negotiations leading up to the I.D.A. replenishment were so complex in the matter of the amount and the terms of the replenishment—and we regarded it as a matter of such urgency that we should get agreement—that we decided not to press that point. We are reinforced in that by the fact that the I.D.A. operations are beneficial to the British balance of payments. Therefore, we did no wish to argue about one or two per cent. as against somebody else's contribution.

There is no proposal before I.D.A. for a loan to Egypt. That is not among the proposals being considered by the directors.

The hon. Member for Antrim, North (Mr. Henry Clark) raised a number of practical points about the administration of aid generally. In view of the time, I merely say that I found them most interesting. Although I would not agree with everything that he said, I agree that all aid donors must constantly keep under review the effectiveness of their programme and the need to get value for money in terms of development in the country concerned.

This is the constant effort of my Department. I believe that it is done more effectively in this country because the Ministry of Overseas Development has been formed. The concentration in one Department of all the relevant experience and expertise means that we are able to learn lessons from experience and are able to become more effective in the administration of the money.

In this connection, I beg the hon. Member for Liverpool, Wavertree (Mr. Tilney) not to generalise too much from one or two selected bad examples. Over the years there have been mistakes in development, as in any other field of private and public activity, and I sometimes worry about the fact that those who are hostile to development aid—I am not including the hon. Member in this—seize upon any bad example and magnify its importance while ignoring all the success stories which can be told.

I cannot go into detail on the question of pensions. I make two points only. First, I see no reason to change the view which I expressed to the hon. Member for Wavertree at about 3 o'clock in the morning, some time last January, when we debated these matters. The major argument against the proposal that we should take over the burden of pensions and deduct the cost from the aid total is that this would lead to our doing more for some of the countries who are better off and, therefore, doing less for many of the poorer countries that we were helping. It would mean a net cut in development aid to some of the poorer countries, and I could not contemplate that, in view of the tightness of the aid programme generally.

Mr. Tilney

I could not have expressed myself clearly. I was not suggesting that the payment of the pensions of those employed by the Hong Kong, Bahama and Bermuda Governments should be taken over by Her Majesty's Government.

Mr. Prentice

We should have to consider whether it was practicable to make a partial change affecting some countries and not others.

The second point is that, given the present situation and the fact that when a country repudiates a pension liability, as Tanzania has done, the British Government must assume that responsibility, and that the cost of assuming it must come from within the aid programme. Those who criticise our recent decision about Tanzania should ask themselves, "Who else should be expected to find the £1 million a year that is involved?" Surely it should come from Tanzania, who made the decision, and surely we should not cut off aid to some other country, which did not.

I could deal with this point in detail and if hon. Members can find some method of arranging a debate on it between now and the Recess I shall be happy to do so. It is a little remote from the precise terms of the Clause.

I must deal with two other points raised by the hon. Member for Essex, South-East (Mr. Braine). He asked for a more precise definition of the arrangements being made to deal with the problem of the United States balance of payments, and the concessions made to the United States point of view in arranging the new replenishment. I agree that the explanations both of my- self and my hon. Friend in the Second Reading debate were perhaps oversimplified for the sake of brevity. If I am to give the more detailed information which the Committee deserves I must sacrifice brevity for a few moments, to explain precisely what is involved.

Hitherto, the arrangement for spending the donors' contributions to I.D.A. has been that when I.D.A. came to draw upon these contributions to provide the cash to enable the recipient countries to pay for their projects it was drawn down from I.D.A. funds proportionately to the size of the donors' contributions to those funds. This is what is meant by saying that the drawings were pro rata. Thus, if the United States provided 40 per cent. of I.D.A.'s funds, 40 per cent. of every disbursement would be made by drawing upon the United States contribution.

Under the scheme in the second replenishment this kind of arrangement will not apply until the United States waives the special safeguards provided to it to protect it against adverse balance of payments effects of I.D.A. for as long as the United States is in balance of payments difficulties. Instead, when I.D.A. comes to make a drawing against donors' contributions, they will first make an estimate of how much of that drawing has to be spent in the United States and will draw only that amount. The difference between that amount and what would have been the pro rata drawing against the United States will then become the deferred amount. Accelerated drawings against the contributions of certain other donors, including the United Kingdom, which have agreed to this arrangement, will then be made in order to make good the shortfall.

Thereafter, the deferred amount of the United States contribution is subject to two conditions. First, it cannot be touched at all until after 30th June, 1971, and, second, each sum which is deferred cannot be drawn until three years after the date of deferrment which of course, now means some date after 1971 and will probably mean that some of these amounts cannot be touched until 1974 or 1975. When the money becomes available, however, it becomes fully and freely available to I.D.A., to spend where it will, in any donor country, regardless of the United States balance of payments position.

The balance of the United States contribution, other than the deferred amounts, however, can be drawn fully and freely at any time after 1st July, 1971, regardless of the state of the United States balance of payments, and can be spent fully and freely in any donor country.

As I have said on a previous occasion, the Government take the view that this is an unfortunate departure from previous practice, but it is one which we felt that we ought to agree to, since the United States is the largest donor and has these balance of payments difficulties and as the operations of I.D.A. have meant a net balance of payments cost to the United States. We thought that this was a price worth paying for a substantial replenishment of I.D.A.

It will certainly reduce temporarily the balance of payments advantage to this country in the earlier stages of the period head, tut that will be only a temporary difficulty and even during that temporary period I would not expect the balance of payments advantage to disappear altogether, and it will be made up when the full amounts become available and can be freely spent.

Finally, I welcome the hon. Member's reference to the decision which needs to be made in the United States Congress. He said that it was difficult for hon. Members to lecture American Congressmen on the decision which they must make and I may say that it is even more difficult for a member of the Government to do this. At the same time, I think it fair to add that the replenishment has been agreed between Governments after long and difficult negotiations, and we are all now entitled to hope that it will be ratified by the legislative assemblies concerned.

Specifically, I hope that it will be ratified by the United States Congress, without too much further delay I hope that the Members of Congress, like the Members of this House and all the other assemblies concerned, will see the replenishment of I.D.A. as being in their own countries' long-term interests, as well as something which wealthier countries should do for the sake of people in much poorer lands.

Question put and agreed to.

Clause, as amended, ordered to stand part of the Bill.

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