§ Order for Second Reading read.
§ 2.51 p.m.
§ The Minister of Overseas Development (Mr. Reg Prentice)
I beg to move, That the Bill be now read a Second time.
As we have reached this stage of our proceedings rather late in the day, I hope that I may be excused for making a speech more brief than I would normally expect to make in moving the Second Reading of a Bill of this importance. Perhaps I might add the hope that any example I set in this respect may be followed by other hon. Members.
Before describing the Clauses, I should like to make two general points. The first is that the replenishment of the funds of the International Development Association, which is the largest matter dealt with in the Bill, and the proposal to find money for the British share of that replenishment, underline the decision of the Government earlier this year not to cut our aid programme, despite our economic difficulties.
The House will recall that the Government's decision was to maintain the basic aid programme at the existing level of £205 million; that the programme should absorb rising costs, including extra costs due to devaluation, but that there would be added to it three extra items, one of which was the extra money needed to pay the British share of the higher replenishment of the I.D.A.
I know that I carry most hon. Members with me in saying that we were right not to cut our aid programme. It would have been wrong in principle, and wrong in terms of our own long-term self-interest, had we done so.
§ Mr. Prentice
The other general point is that the Bill is concerned mainly with multilateral aid and, as I explained to the House on 7th May, it is my view that we should move by stages towards a greater flow of aid through multilateral bodies, whether global or regional in scope. I told the House then that I expected that the proportion of British aid funds going through multilateral bodies would increase from about 11 per cent. last year to about 15 per cent. this year. The largest factor in that 1030 increase is a higher replenishment of I.D.A., which is the subject of Clause 1.
I should like now to move quickly to giving a description of each Clause, and I shall spend more time on Clause 1 than on other Clauses as it is the most important Clause. Clause 1 gives power to the Government to make payments to the I.D.A. in respect of the second replenishment of its funds which have been agreed between the World Bank and the Governments concerned. I shall not take up time in seeking to satisfy the insatiable curiosity of hon. Members about the details of the agreement. Instead, I refer them to Cmnd. 3599 which sets out a report, dated 8th March, 1968, of the executive directors of the Bank on that agreement.
The International Development Association was established in 1960 to meet a very important need in terms of world development—the need of a number of developing countries which desperately needed capital, which had reached the stage of their development where they could use capital efficiently, and benefit from it, but which were not able to undertake the debt burden of conventional loans. Indeed, it was true by then that a number of developing countries had already had to assume too great a debt burden which in itself was an obstacle to their further development.
During the period since then the funds committed to the I.D.A. have amounted to just over 1,800 million dollars and nearly all those funds have now been allocated, so that the replenishment we are now considering is a matter of urgency. The funds have been committed in long-term interest-free loans to developing countries with a per capita income of less than 250 dollars per year. In the earlier years of the period since 1960 most of this loan money went to Asia and Latin America, but more recently a proportion has been going to Africa.
These years have been a success story because the type of aid provided by the I.D.A. has been geared so exactly to the needs of the developing world. It has also been a success story because of the efficient management and wise choices made in the direction of this programme. But it has also been a success story for Britain, because of the 1031 export orders which have been derived from the activities of the I.D.A. we have obtained a substantial share. Since these operations began we have provided 12.8 per cent. of the funds of the I.D.A. and have obtained 20.6 per cent. of the orders resulting from the operations. That represents over 30s. worth of orders for every £ which Britain has contributed to the organisation.
This is due partly to the fact that a lot of this aid has gone to Commonwealth countries where we have had traditional relationships, partly to the type of projects that have been financed, which have been the kind of business that British industry is well able to do, and partly, of course, to the efficiency and enterprise of British exporters, who have used the opportunities presented to them.
The new replenishment of the I.D.A. funds is to be at a higher level than previously. The funds have hitherto been based on the original subscription and a replenishment which was made in the last three years. Replenishments for the last three years have a global total of 250 million dollars per annum. The new replenishment will be at the rate of 400 million dollars per annum. This is an increase of 60 per cent—an increase which I, and, I am sure, most hon. Members will welcome, both because this is aid in the most sensible form and also because of the relative advantages we might expect to gain for British industry through an expansion of the activities of the I.D.A. Indeed, I should have preferred a higher replenishment still. Of this sum, our share will be 12.96 per cent., as before, payable in three annual instalments of £21.6 million as provided for in the Bill.
There is one special aspect of the agreement to which I ought to draw attention. The funds of the I.D.A. have always been untied, and this has meant that some countries have gained a net advantage to their balance of payments, as we have, from the operations, and some have had a net disadvantage. In the United States there has been a disadvantage. The United States provides 40 per cent. of the funds of I.D.A., but gets a much smaller proportion of the orders. It is fair to say that none of us should regard the balance of 1032 advantage and disadvantage purely in terms of the short-term effects. The development which results from assistance of this kind leads to increases in the volume of world trade which can have long-term benefits for all trading nations, which includes Britain.
This means that the long-term benefit to Britain is greater than is suggested by the figures I have given, and that there should be a long-term benefit for other countries which do not get such a large share of the immediate orders. The other donors recognise the problem of the United States and have been prepared to go some way to meet it. It was right for us to do that, to get an arrangement which would help the United States to join in this higher replenishment, but which has some safeguards for its balance of payments problems.
The agreement preserves competitive bidding. The funds of I.D.A., once they are drawn down, will be available in such a way that developing countries can choose where to place their orders. It provides that the United States can defer part of the drawing-down of its contribution. It can defer the difference between its share of the contributions and the value of procurement in the United States. This means that it can defer this part of its funds for three years.
The consequence of this is that other donors, including ourselves, will need to put in a larger share, in the earlier stages, than we would otherwise have to do. 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. This is likely to mean that the balance of payments advantage for Britain will be reduced to some extent in the earlier part of the three-year period, but not wiped out altogether. Taking the period as a whole, there is no reason why it should be affected by this arrangement.
I understand from the World Bank that it confidently expects that these 10 countries will have ratified this agreement by the end of July. If the United Kingdom, and one or two other major donors can ratify this, as I hope, the replenishments will become effective as soon as the United States Congress ratifies the agreement. When it does so is a matter for it, but I express the sincere hope that its ratification will not be long delayed 1033 The latter part of Clause 1, subsections (5), (6) and (7) provide enabling powers for the Government to meet future replenishments of I.D.A. without the need for further legislation. Future replenishment could be made by Order, but parliamentary control would be retained in the sense that the affirmative procedure would be required for such Orders. In other words, the House can debate, and if it thinks fit, reject any Orders of this kind. I hope that the House will agree that that preserves essential parliamentary control, but provides a less cumbersome procedure than at present.
Clause 2 relates to regional development banks and provides an enabling power for the Government to make subscriptions or other contributions to these banks by an Order which would require an affirmative Resolution. There are general reasons for bringing this before the House and one specific reason. In general, in the last decade, we have seen the emergency of a number of regional development banks, making a growing contribution towards development problems. This is worth while. Such banks can mobilise local resources, promote regional co-operation and in particular provide an acceptable channel for a donor country in a particular region, in a way which will be favourable to its operations in that region. For example, there was the aid given by Japan and Australia through the medium of the Asian Development Bank. There are other examples. In general, it is right that the Government should have the power to make a contribution, subject to the approval of the House in the way which I have described.
The specific reason for wanting the Clause is that we hope that before long there will be a successful conclusion to negotiations for the establishment of a regional development bank for Commonwealth countries in the Caribbean. This has been discussed for some time. There have been certain setbacks to the negotiations, but we are now in possession of up-to-date proposals which resulted from a meeting of countries in the region in Trinidad on 12th May. We are considering these proposals and plan to discuss them next week with representatives of the Uni:ed States and Canada who are 1034 considering being associated with such development along with ourselves. I hope that before long we shall see a successful launching of the Caribbean Development Bank and we shall be able to make early use of the powers of the Clause.
Clause 3 relates to a problem arising in connection with the Asian Development Bank, of which Britain is a member. Hong Kong wishes to become a member of this bank. We are responsible for the external relations of Hong Kong and therefore, under the rules of the bank, we are required to give a guarantee of the Hong Kong subscription and we would need to give backing to any application for a loan which Hong Kong might make to the bank.
Therefore, if Hong Kong is to succeed in becoming a member, the passage of this provision is a legal necessity, although in every other sense it is a formality, for there is no likelihood of a default, or any likelihood that payments from the British Exchequer will be needed for this reason. Incidentally, the Clause would cover any future application which might be made by Fiji or Brunei if they should decide to apply for membership of the Asian Development Bank.
Clause 4 provides for some minor amendments to the Overseas Service Pension Scheme. This is the scheme established under the Overseas Aid Act, 1966, and is an optional scheme for people serving overseas who were in temporary or non-pensionable employment. Our experience has shown that one or two minor amendments to the rules of the scheme are desirable, for instance, to cover persons from the Channel Isles and the Isle of Man and also to count certain periods of service in this country for certain categories of people. This series of minor amendments should lead to the more successful operation of the scheme.
§ Mr. William Molloy (Ealing, North)
Will these amendments apply to people who have served overseas and then returned to this country for a period, possibly to take up other forms of employment? My right hon. Friend referred to a category of persons; I want to know whether it is a category of persons, or a category of other jobs.
§ Mr. Prentice
We are concerned with those who have served in a technical assistance or advisory capacity overseas and who should be able to take advantage of this scheme. Some of them will be covered by the Clause when they have returned to this country for certain periods of employment which will be able to count for pension purposes.
This is a small Bill, but it makes an important contribution to our aid in relation to the replenishment of I.D.A. and a number of other useful proposals to make our work overseas more effective. The House should see it as a further step in the development of our overseas aid policies which have grown in recent years under both Governments and with the support of all parties and which should continue to grow in future as a permanent and essential part of the relationship between this and less developed countries in other parts of the world.
§ Several Hon. Members rose—
§ Mr. Speaker
Order. I do not know whether the House wants to get the Bill today. If it does, I remind the House that there are 50 minutes left and many wish to speak. Mr. Braine.
§ Mr. Cranley Onslow (Woking)
On a point of order. Can you tell us, Mr. Speaker, whether, if we fail to get the Bill today, other time will be made available on another day?
§ 3.10 p.m.
§ Mr. Bernard Braine (Essex, South-East)
The House will be grateful to the Minister for his usual clear and courteous exposition of the Bill, but I know that he will understand when I protest at the shortness of time which has been allowed by the Government for this important Measure, upon which it is manifest that a large number of hon. Members, on both sides, wish to speak. This simply will not do. I hope that the right hon. Gentleman will convey these views to those who arrange the business of the House.
I say that with all the greater feeling because I wish, on behalf of my right hon. and hon. Friends, to welcome the Bill, which authorises the second British 1036 replenishment of I.D.A. funds. I do so remembering that the initial decision that our country should subscribe to the funds of the Association was taken by a Conservative Government in 1960 and that the first replenishment was authorised while that Government were still in office.
I do so also because we on this side are as sensitive as anyone to the dangers which are likely to arise in a world where relatively speaking the rich nations grow steadily richer and the poor grow steadily poorer. It is utterly unrealistic to believe that we and our children will be able to live our comparatively affluent lives in peace and security as long as the gap between the two worlds, the rich and the poor, grows wider. It is against that sombre background that we should consider the International Development Association, the replenishment of its funds and the British contribution which will be authorised by the Bill.
As the Minister has made plain, there has already been a massive programme of development projects financed by I.D.A. credits. These include the bringing under cultivation or the improvement of millions of acres of land in Africa, Asia and Latin America, the construction or improvement of thousands of miles of road, the expansion of railway and port facilities, the installation of electrical generating capacity, the improvement of water supplies, and the construction and equipment of schools.
At a time when, very properly, aid is being subjected to a critical eye all over the world, it is encouraging to note that every application for I.D.A. finance has to satisfy the strictest criteria. The Association will not assist countries which default on their external debts or which expropriate foreign-owned property without fair compensation. That is good to know. It does not provide finance if alternative sources are available on reasonable terms. That is sensible. It will not finance projects which fail the test of economic viability. Such projects can be left to governments. It insists on the borrowing country putting up an equal amount in local currency. This idea of joint venture and partnership is to be commended. Concerned as it is to stimulate the economy of the borrowing country, it is not inhibited—and this gladdens. 1037 our hearts on this side of the House— about financing the expansion of private enterprise.
Therefore, whatever view might be taken about aid generally, I do not think that anyone, in this House or outside, can seriously criticise the achievements of I.D.A. and the strict control that it exercises over the use of its funds.
§ Mr. Braine
I am not talking about aid generally, but the aid provided by I.D.A. [Interruption.] I am saying that in the case of I.D.A.—
§ Mr. Braine
Frankly I do not believe that anybody can criticise the kind of help that I.D.A. is giving.
§ Mr. Onslow
I hesitate to anticipate the excellent speech which I hope to be able to deliver to the House if I am fortunate enough to catch your eye, Mr. Speaker, but my hon. Friend should not be too categoric on this point.
§ Mr. Braine
We shall all look forward with intense interest to the speech which, I know, my hon. Friend will try to make —today or, possibly, next week.
Moreover, the critics of aid in this country should note that this particular method of channelling finance and expertise to developing countries is one which peculiarly benefits Britain. The right hon. Gentleman gave us some interesting figures. By the end of last year, as I understand it, I.D.A. had drawn upon £60 million of Britain's contributions but in the same period payments for goods and services supplied by this country amounted to just over £90 million. If my arithmetic serves me aright, that means for that 15 per cent. of total contributions we have been getting 25 per cent. of total exports. That is good business by any standards. Thus we enjoy, as the right hon. Gentleman said, a balance of payments advantage which, I believe, is shared by only three other members of the Association, Japan, Italy and West Germany. It follows, therefore, that other members of the Association, notably the United States, have so far received orders under I.D.A. credits less than the value 1038 of the amounts drawn by the Association from their contributions.
We are now being asked under the Bill to authorise a second replenishment to the tune of £64.8 million in three equal instalments payable over the next three years. Admirable as the record of the I.D.A. has been, substantial as this contribution we are being asked to make is, we should, I suggest, keep the matter in perspective. The I.D.A. is an instrument of multilateral aid. Our contribution to its funds is only about 10 per cent. of our total aid effort, the other 90 per cent. consisting of grants, loans and technical assistance on a bilateral basis.
It has been fashionable for some time now to argue that multilateral aid is preferable to bilateral aid and that the emphasis should be shifted more towards the former.
Senator Fulbright has put the argument for internationalisation of foreign aid most forcefully. He says:The problem of bilateralism is psychological and political rather than managerial. It is a problem of pride, self-respect and independency, which have everything to do with a country's will and capacity to foster its own development. There is an inescapable element of charity and paternalism in bilateral aid.I think that is putting it rather too strongly. We must be very careful to keep our feet on the ground. Where multilateral aid is concerned, it is necessary to get agreement among many donors as opposed to only one. If, in fact, the United States Congress fails to authorise an American contribution to I.D.A., the whole scheme will fall to the ground. The I.D.A. method is excellent, but, in my view, it would be a mistake if this or any multilateral agency ever got into a monopoly position. The receiving countries would then suffer from the consequential loss of flexibility.
In any event—and this is the point I want to make most strongly—the argument over multilateral versus bilateral aid is vastly less important than the question how to make the aid given more effective. That is the key to the whole matter.
§ Mr. James Johnson (Kingston upon Hull, West)
Would the hon. Gentleman care to cite Tanzania and ourselves as an example of this bilateral difficulty? Could he suggest how Tanzania would fit into 1039 I.D.A. if one of the I.D.A. members, that is, ourselves, failed Tanzania?
§ Mr. Braine
I do not wish to be distracted from my main argument, or to get on to particular cases. The hon. Gentleman will, no doubt, have an opportunity to expand that point later on.
Of course, if all aid were to be on a multilateral basis and if it were untied to purchases from any particular country, as is the case with I.D.A. credits, then, subject to the modifications which the right hon. Gentleman announced to the House with regard to the American contribution in the future, Britain would benefit more than most. The reason for this is perhaps not fully realised in the country, although it may be realised in the House. We conduct a larger proportion of our trade with developing countries, many of which are in the Commonwealth, than any of our major competitors. It follows that countries which are used to British goods and whose technicians and teachers have been trained on British equipment, will have a natural taste for what we produce. That is an attractive thought, and it is right to consider our own economic interests in these matters, especially when every other country is doing the same; but it is wrong, in approaching a matter of such grave import for the poorer part of the world, to put this in the forefront of the argument. It is wrong because it clouds the issue. It diverts attention from the main objective, which is surely to bring about a great upsurge in world economic activity. It may even conspire against the achievement of that objective, since, if the developing countries are to be at the mercy of the political whims and the national interests of others, then they can plan neither boldly nor hopefully for the future.
Nor should we fool ourselves into believing that aid alone, or even as a principal means, can bridge the gap between the advanced industrial nations and the poorer nations. If our objective is a steady, sustained effort to expand world economic activity, as it must be, then aid, both multilateral and bilateral, is only one of the instruments with which we must be concerned. I agree with what my hon. Friend the Member for Wan-stead and Woodford (Mr. Patrick Jenkin) 1040 said on this subject during an earlier debate. There are other instruments we must employ. International agreements for primary products would do an enormous amount to stabilise the earnings of developing countries, to promote their growth in an orderly fashion and so to reduce their need for aid. Selective preferences, enabling them to find easier access for their manufactures in the markets of the developed countries, would help them to earn more of the foreign currency which they so desperately need. These are matters which we could usefully discuss on another occasion.
The point I am making now is that the greatest enemy to sustained economic growth is uncertainty, and it is singularly unfortunate that there is so much uncertainty about the I.D.A. replenishment which must be decided before the Autumn. Is it not a fact that so far, only Denmark has passed the necessary legislation? I understand that the Bill authorising the American contribution is making little progress in Congress. Only last week The Times reported gloomily from Washington that the United States foreign aid programme is likely to be drastically cut. Would the Minister confirm that under the rules of I.D.A. there must be at least 12 out of the 18 donor countries ready to put up a minimum of 950 million dollars? Is it not a fact that if the American contribution is not forthcoming, the whole scheme collapses? If that happens—and one must not anticipate this —there will be a catastrophe for the poorer nations at a time when their plight has become all the greater because of the collective failure of the developed world to fulfil the high promises made at the outset of the United Nations development decade.
That is why I think it right for us to set an example to other donor states who are members of the I.D.A. by passing the Bill as quickly as possible, and with as much unanimity as we can muster. This reinforces the protest I made at the beginning of my speech about the shortness of time for our discussion. Every point of view on the Bill must be expressed. There are critics of aid, and there are others who wish to express their support, and 1041 there is not enough time for this to be done properly.
I now turn briefly to the provisions of the Bill. We agree with the provision in Clause 1 that in future it will not be necessary to introduce fresh legislation to replenish the I.D.A. It will be necessary only to produce an Order in Council which will be subject to the affirmative procedure which will ensure effective Parliamentary control. Incidentally, I think there is a misprint in line 9 on page 1. Surely the date of the Articles of Agreement of the I.D.A. was not 29th but 26th January, 1960? It is a small point, but we might as well be accurate while we are about it.
I note the provision in Clause 2 that the Minister may make a contribution to a regional development bank described in subsection (2) as:an international financial institution having as one of its objects the promotion of the economic development of any region of the world.That seems to be very wide. It could apply to development in North America or Australasia, where no doubt from the British point of view, investment would be very valuable, but it hardly seems in line with what we understand the Bill is about, namely overseas aid to the poorer countries. In order to qualify for financial aid, surely economic development must be the main object of a regional bank and not just one of its objects. Why is there this curiously loose wording? It seems that the Clause needs redrafting, and certainly we shall call for an explanation when we come to the Committee Stage.
On the other hand, the main purpose of the Asian Development Bank, which is specifically referred to in Clause 3, is to stimulate investment of public and private capital in a region where economic need is manifestly great and the capacity to employ capital is growing rapidly. It is, I suggest, significant and encouraging that 60 per cent. of the bank's capital is provided by 19 member countries in the region itself.
I see that Clause 3 gives the Minister power to make payments not exceeding £5 million in fulfilment of an undertaking given under Article 3(3) of the Asian De- 1042 velopment Bank Agreement that we would be responsible for the obligations of members which are British dependencies. I have studied the Agreement, and I see no reference to specific dependencies. Which are they? Do they include Hong Kong? Surely Hong Kong can be the only one in the region. What obligations have these territories assumed? Perhaps we may have an answer when the Parliamentary Secretary comes to wind up, whether it is today or at some other time.
Then there is provision in Clause 4 for an extension in the Overseas Service Pensions Scheme. The Explanatory Memorandum says that no additional sums will be required as a result of this provision, but that I find difficult to understand. I am sure that there is an explanation, but how this adjustment can take place without some additional money being found by the Treasury defeats me. Perhaps we may have an explanation.
This may not be the occasion on which to raise the question of responsibility for underwriting the pensions of former Colonial servants, payment of which has just been repudiated by Tanzania. I think that this is one of the points exercising the mind of the hon. Member for Kinston upon, Hull, West (Mr. James Johnson). However, all of us who take a close interest in Commonwealth and aid matters know that the point is frequently made that where a Colonial territory is receiving British bilateral aid and is having difficulty in meeting its obligations to its pensioners, responsibility for their pensions should be assumed by the British Government and taken into account in deciding the amount of aid to be given. There is something to be said for doing this in cases where countries are receiving aid. On the other hand, I can see the counterargument. Many Commonwealth countries not receiving aid continue to honour their obligations to their former servants, and it would not be helpful to take a step which would weaken their resolution. I make no further comment except to ask the Government whether, in view of the unhappy experience with Tanzania, they are taking steps to review the whole matter of pensions in relation to aid. On that, too, I think that we are entitled to an answer before the end of the debate.
1043 The fact that we give our support to the Bill and wish it a speedy passage must not be taken as unqualified endorsement of the Government's general approach to aid, though I must congratulate the right hon. Gentleman in managing to maintain his aid programme substantially at a time when cuts have had to be suffered by other spending Ministries. He has had a great success there, and I have no doubt that it is due to his own forceful advocacy as well as to the strength of the case that he has put up.
Finally, before sitting down, I wish to make two observations. First, bearing in mind the size of the current aid programme, which is now running at well over £200 million a year, and the high objectives that it seeks to attain, it is astonishing that this House is given so few opportunities to discuss the problems of development assistance. I know that I carry the right hon. Gentleman with me when I say that. Once again I make the plea for more time to be devoted to a subject of immense importance to this country and to the world at large.
§ Mr. Onslow
Will my hon. Friend also recognise that some of the procedures envisaged in the Bill are likely to be a curtailment of debate in future, because we shall be subject to the limitation of the affirmative procedure. This means that we are likely to get less chance of debate rather than more.
§ Mr. Braine
I note what my hon. Friend says, but he is on a bad point. The affirmative procedure permits us to discuss the limited question of further replenishment of I.D.A. funds. This will not occur anyway for a number of years.
I am, however, making a plea for more discussion on aid generally, which covers a very wide area—the kind of aid we should give, how much aid, and what should be the relationship between aid and private investment. These are matters upon which many hon. Members have strong views and informed minds. That is why I am asking for more time.
Secondly, it is also astonishing to me that, after 20 years of argument, endeavour and achievement in the sphere of development, during which the richer nations have formally accepted responsibility for helping the poorer nations, no 1044 expert body or suitably qualified international organisation has looked objectively at the lessons to be learned from that experience, assessed the results achieved, examined the techniques employed, and pointed to the way we should go in the future.
The United Nations Trade and Development Conference in 1964 was the first real confrontation between the rich and poor nations. That conference pointed in a general way to what might be done. Unhappily, since then the impetus has been lost. Even the Kennedy Round of tariff reductions benefited the richer nations far more than it did the poorer ones.
U.N.C.T.A.D. 2, held earlier this year, was a grave disappointment. But we should not be surprised. Conferences of this kind are not the best method of securing dispassionate analysis, they are not the best way of propounding precise remedies. They tend to be congresses of competing interests and forums of dispute.
What happened to the timely and sensible suggestion made by Mr. George Woods, the President of the World Bank, in Sweden last October? He said:I would like to suggest that the Governments of the developed countries—on whose support and resources any more ambitious strategy for the 1970s will depend—decide to get away from rumour and innuendo and half facts and half truths and put themselves in the position to learn the real facts. I suggest that they invite the dozen or more leading world experts in the field of development to meet together, study the consequences of 20 years of development assistance, assess the results, clarify the errors and propose the policies which will work better in the future. … We are ready at the World Bank, together with interested governments, to help to select and finance such a group of experts. I am ready to put at their disposal all the information and statistical material the Bank has accumulated and, if requested, to second staff to their service. Such a 'grand assize'— judging the world's record and prospects of growth—should in any case precede any attempt to round off our faltering 'Decade of Development' with a genuine reformulation of policy.Every time I ask this question the right hon. Gentleman gives me a sympathetic response, namely, that the Government support Mr. Wood's proposal. I know where the right hon. Gentleman's heart lies; I know which side he is on in this matter. However, for the developing nations it is not words that matter, but deeds, especially at a time 1045 when the aid performance of the richer countries is palpably lagging and when the elected representatives of the richest nation on earth are jibbing at foreign aid. Such a "grand assize" as Mr. Woods has suggested would do more than anything else to demonstrate that the richer nations really care about the growing gap between rich and poor. Why then does the Minister not take the initiative? Here surely is the chance for Britain, no longer in the front rank of military powers but still respected in the developing world as a moral force, still the leader, the heart and the hub of the Commonwealth, to take a lead. Let us, therefore, not only pass the Bill, but resolve to explore other ways of helping to resolve what is, after all, the greatest challenge facing mankind.
§ Several hon. Members rose—
§ Mr. Frank Judd (Portsmouth, West)
On a point of order. There is on the Order Paper from this side a Motion referring to the scandalously short time allowed for this debate. Would it be in order to read that Motion?
§ Mr. Deputy Speaker (Sir Eric Fletcher)
This debate is also in order and it will not necessarily be concluded today.
§ Mr. John Rankin (Glasgow, Govan)
Further to that point of order. Is it not obvious that we are having far too short a period in which to discuss this very important Bill, in view of the fact that the financial effects, in two cases, cannot at the moment be estimated? Does it not seem that you, Mr. Deputy Speaker, as the defender of the rights of hon. Members on both sides, should support the attitude taken by many of us?
§ Mr. Deputy Speaker
The hon. Member is under some misapprehension. So far as I know, there is no time limitation for this debate. This is the second in the order of today's proceedings. The House may have taken rather longer than was expected on a previous Bill, but it is a mistake to assume that the House is under any limitation of time on Second Reading of this Bill.
§ Mr. Braine
Further to that important point of order, which reflects the feeling 1046 of the House. Would it be in order to ask the Leader of the House to come down and give us the assurance that the fullest possible time will be given to further discussion on this subject? The mere fact that the debate may finish does not necessarily mean that we will get a proper time next week. Would it therefore be in order for us to ask that the right hon. Gentleman should come and listen to these views?
§ Mr. Prentice
I will certainly call my right hon. Friend's attention to the views expressed. Part of the reason for the shortness of this debate was the excessive long windedness of certain hon. Members on the earlier Measure. We could have divided the day sensibly between the two and had an adequate debate on each. The Leader of the House announced yesterday that provision has already been made for the further stages next week and many of the points which hon. Members have in mind can be discussed in Committee and on Report. 1 would appeal to the House most sincerely, for the reasons given by the hon. Member for Essex, South-East (Mr. Braine) and the effect on opinion overseas, and other things, to have the Second Reading by four o'clock today.
§ Mr. Braine
I reject the right hon. Gentleman's suggestion that the reason why we have too short a time for this debate was the long-windedness, to use his term, of those who spoke in the previous debate, which was also on a subject of enormous importance. The essential point is that if one looks at the order of business, one will see that, after this Bill, the Government were expecting to get the Second Reading of the Swaziland Independence Bill. It would have been my purpose, had he reached that Measure, to protest that an independence Statute, a measure of the highest importance to a Commonwealth country, should be dealt with in such a perfunctory fashion. I repeat, we feel so strongly about this that we should like to ask for the Leader of the House to come down and give us the assurance which we seek.
§ Several hon. Members rose—
§ Mr. Deputy Speaker
Order. Let me deal with the points which have so far been raised. I am sure that hon. Members realise that it often happens that the 1047 business put down for debate on a Friday for any other day takes longer than was contemplated. The debate on the International Monetary Fund Bill happened to take longer than expected, but it would be wrong to assume that there is any time limit for this debate. It is entirely a matter for the House to decide whether it wishes to conclude the second Reading today or, if sufficient hon. Members wish to speak, presumably further time will be found for the Second Reading on a further occasion. This is entirely a matter for the House.
§ Mr. James Johnson
Further to that point of order. Without commenting on the long-windedness of both the speakers from the Opposition Front Bench today, may I ask whether there is any precedent for a Second Reading debate which begins at an hour which leaves only 20 minutes for back benchers to take part in it to be continued on another day? Has that ever been done in the history of the House? If it has, we are pleading that it should be done again.
§ Mr. Deputy Speaker
That is not a point of order. My experience is that there are plenty of precedents for a Second Reading debate being carried over from one day to another, but this is really a matter for the Leader of the House.
§ Mr. Onslow
On a point of order. I think that the House would benefit from having the advice of the Leader of the House, if he can be found. It is not encouraging to those who wish to take part in the debate to hear the Minister's attitude which appears to be that the time available was adequate, and that it was in order for him to make a speech lasting 20 minutes and allow only five minutes apiece to back benchers. This is a gross insult to the subject of the Bill as well as to the House.
§ Mr. Molloy
Further to that point of order. Many hon. Members have been placed in a difficult and embarrassing situation because of the shortness of time for the debate. As has been said, we dearly want the Bill to be given a Second Reading today, but we should have preferred a full day in which to debate this important Measure. We are in a quandary. It is right that we should protest at the way in which we have been treated, 1048 but we know that if we carry on with our protest we shall in the eyes of the developing countries, be doing great damage by not allowing the Bill to receive its Second Reading today. It is extremely unfair that the Government, the Leader of the House, and other Ministers involved have placed us in such a ridiculous, absurd, and embarrassing situation.
§ Mr. Deputy Speaker
Hon. Members on both sides of the House have made their protests. They have said that there is inadequate time between now and four o'clock for hon. Members who wish to do so to take part in the debate. This is not a matter within the control of the Chair. Hon. Members must resolve the dilemma for themselves and decide whether they want the Bill to be given a Second Reading today or to continue the debate on another occasion. The Deputy Leader of the House is present. The Leader of the House will read the protests made by hon. Members. There is nothing further that the Chair can do.
§ Mr. Braine
Further to that point of order. Mr. Deputy Speaker, we appreciate your position. I accept everything that you have said, but since this discussion started the Patronage Secretary has come into the Chamber. I feel sure that he will be able to say that the fullest possible time will be allocated next week to debate this subject so as to meet the desire of hon. Members on both sides of the House to contribute to the discussion.
§ Mr. Prentice
Further to that point of order. My earlier appeal to the House to give the Bill a Second Reading today was motivated by the fact that this operation depends on international agreement, and ratification by one country can be an example to others. Nevertheless, as it is the feeling of the House that we have not had sufficient time for debate, and having consulted my right hon. Friend the Patronage Secretary, I can tell the House that further time will be found next week for the Second Reading debate to be continued.
§ Mr. Onslow
May we be told how much time will be provided? If time is to be found late at night, and we are under pressure to curtail the discussion, that will not be very much consolation.
§ Mr. Deputy Speaker
That is not a point of order. I do not think that we can usefully pursue this point of order, in view of the undertaking given by the Minister a few moments ago.
§ 3.44 p.m.
§ Mr. Robert Maclennan (Caithness and Sutherland)
The House has expressed in forceful terms its appreciation of the importance of this Measure. It would have been improper to have curtailed the debate, and I am sure that hon. Members welcomed the Minister's statement offering to provide more time for it.
It is appropriate to mention that the debate earlier today was not wholly unrelated to the subject matter of this Bill. I therefore do not associate myself entirely with all the Minister's strictures about the length of time taken on the earlier Bill. The relationship was noted only briefly in passing by the hon. and learned Member for Buckinghamshire, South (Mr. Ronald Bell), who made some disparaging remarks about the possibility of extending the special drawing rights to developing countries.
The relationship between the two Measures is clear. I would remind the House of the Prime Minister's speech on 15th May, 1963, on the reform of the world monetary system, in which he outlined three principal objectives, one of which was to make it possible for productive investment in fully industrialised countries to be used to increase aid to underdeveloped areas. To this end, to help developing countries, he proposed that the International Monetary Fund might be empowered to assign credit certificates, possibly £200 million to £300 million, to an international investment fund.
My right hon. Friend suggested that the certificates should be allocated for spending in fully-developed debtor countries with unemployed resources, such as Britain and the United States. The result of that scheme would be to increase international liquidity, to combat unemployment, to reinforce the gold reserves of countries under pressure and to carry through urgently needed jobs of world development.
It is a matter of considerable regret that the development of the less-developed countries has not been so assisted, presumably because it was not possible to 1050 reach a lowest common denominator of agreement. It is recognised that any increase in world liquidity will inevitably increase world trade, with consequent benefits to the less developed countries, but one might have hoped for rather more direct help in this field.
This Bill is of great importance because, as my right hon. Friend said, the record of the I.D.A. is a success story. The fact that the funds of the International Development Association have almost reached exhaustion is causing great concern throughout the developing world because the schemes of the I.D.A. have been universally successful. That is because of the careful supervision of the schemes by the World Bank and the commitment of the countries themselves, on a proportional basis, of capital for the development schemes. In its relatively short existence, the I.D.A. has shown a proper commitment to developing the infrastructure of the less-developed world.
I understand that of the outstanding 1.7 billion dollars of credit, one-third has been spent on transportation projects. About 29 per cent. has been spent on industry, 17 per cent. on agriculture and irrigation, 66 per cent. on education and 6.3 per cent. on electric power projects. All of these are vital to the development of the economies of the less-developed countries, but the momentum which has been growing is threatened by the exhaustion of these funds.
This has paralleled the slackening international effort in aid by the greater developed nations. Although between 1961 and 1966 the G.N.P. of the developed countries increased by 300 billion dollars, their official aid increased in the same five years by only 6 billion dollars. In other words, as a share of the national income, it fell to six-tenths of 1 per cent. Although increased aid targets have been agreed at New Delhi they have yet to be translated into action and, as the hon. Member for Essex, South-East (Mr. Braine) pointed out, that is what the developing world is seeking.
There must be concern in the House over the situation which has developed across the Atlantic. While my right hon. Friend referred to this in restrained terms, my hon. Friends will not feel so constrained as he, a Minister, must feel, in commenting on the development of the debate on the replenishment of 1051 the funds of I.D.A. in Congress where, apparently, stalemate has been reached in Committee. This is surprising in view of the special arrangements which have been made to ensure that the replenishment of the funds by the United States will not place an immediate burden on its balance of payments. As has been pointed out, we stand to benefit by making these contributions, while the United States does not. However, this should not inhibit us from strenuously urging our friends in the United States to be aware of the vital need to pass this legislation as soon as possible.
I congratulate the Government in taking such an important step in this field. Although the replenishment of the funds of I.D.A. constitutes a notable achievement on the part of my right hon. Friend—I say that because it has been notable, although our contribution to I.D.A. is directly beneficial to our balance of payments—this Measure is an important continuation of our aid programme and it fulfils the Government's commitment not to reduce our aid programme in the light of the economic difficulties facing this country.
§ 3.54 p.m.
§ Mr. Geoffrey Hirst (Shipley)
I am sure that the hon. Member for Caithness and Sutherland (Mr. Maclennan) will forgive me if I do not follow him, partly in view of the time and partly because my views are totally different from his. I agree with a great deal of what was said by my hon. Friend the Member for Essex, South-East (Mr. Braine), but I know that he realises that he does not speak for me in his approval of the Bill. Nor do I approve of the Government's overseas aid policy.
I cannot help observing that the amount involved before taking into consideration the upping to the I.D.A. is more than three times as much as it was 10 years ago. Even allowing for the change in money values it is substantially up when our own financial position is grievously down. I take a very serious view of that fact.
I cannot help but notice that today 56 per cent. of the aid is in the form of grants, about 25 per cent. is in the form of interest-free loans, and the balance of about 20 per cent. is in the form of loans 1052 at a commercial rate of interest, although we are having to borrow immense sums at undisclosed but, I am sure, fairly high rates of interest. That is not the right sort of approach, so I do not run with the Government at all in their deciding, first, that they would not cut overseas aid and then in not containing within that aid the upping of 60 per cent. to the funds of the I.D.A. That seems to me to be fundamentally wrong on all scores.
What we should be doing far more is encouraging the private sector of the economy to assist in this matter. I am rather shocked to discover that there are not the same facilities for the insurance of exports, for instance, to some developed countries as there are to countries which, for the sake of respectability, I shall not mention by name although my personal experience of the export trade has taught me are very devious in their ways. Far more of the assistance required should take the form of encouraging British exports, not by spending the taxpayers' money and getting some of it back.
The Minister very helpfully wrote to me on the subject and said that today about 60 per cent. of the aid was coming back in capital and interest, but I do not see that that will be the projection for the future. The rules were substantially changed in 1965, and in overseas aid far more emphasis is put on grants and all sorts and kinds of interest-free loans, with the result that there will not proportionately be the same return as there has been in the past. That in itself will add ultimately to the strain the taxpayer has to pay. I am not so stupid as to think that we can dismiss the whole argument by saying that charity starts at home. That is a little old fashioned, but there is a great deal in it when the economy is in its present state. This is not the time to add even marginally to overseas aid financed by the taxpayer.
§ Mr. Molloy
Will the hon. Gentleman explain how he sells something to someone who is poverty-stricken on his premise of getting an immediate profit?
§ Mr. Hirst
That intervention draws attention to what is on the tape today. As I understand, we are providing a considerable sum of money to India to enable her to pay back her debts to us. If, 1053 when I was in business, a customer owed me, say, £1,000 and my firm had then given him a cheque in order to allow him to pay his debt, I should not have had a very prosperous concern. That sort of thing does not the least good.
This is an illustration of nonsensical finance, especially when it is from a country in our position, paying the enormous sums which we owe. We cannot be Lady Bountiful to the whole world in this respect—
§ It being Four o'clock, the debate stood adjourned.
§ Debate to be resumed upon Monday next.