§ 11.6 a.m.
§ Mr. David Crouch (Canterbury)
I beg to move,That this House welcomes the report of the Pearson Commission and supports the full participation of the British Government and British private investment in international development effort, but regrets the continued fall in the proportion of gross national product voted to overseas aid.Two years ago the then President of the World Bank, Mr. George Woods, proposed what he called "a grand assize" to studythe consequences of 20 years of development assistance, assess the results, clarify the errors and propose the policies which will work better in the future.In August, 1968, Mr. Lestor Pearson, the former Prime Minister of Canada, accepted the invitation from Mr. Woods' successor as President of the World Bank—Mr. Robert McNamara—and formed a Commission, and they started work at once. They published their report a year 774 later, on 15th September of this year, barely 10 weeks ago. Today we are to debate that report—the first debate, as I believe, to be held in any of the Parliaments of the donor countries. It says something for our system of parliamentary democracy that it allows a back bencher to initiate such a debate and that the Government have to reply to it.
Today, we have an opportunity to speak on one of the greatest problems which mankind is facing. As Mr. Pearson says in the first line of the report:The widening gap between the developed and the developing countries has become a central issue of our time.When the idea of this study was first put forward by Mr. Woods, The Times, in its issue of 30th October, 1967, said:Unless something is done urgently to shock the donor countries out of their growing cynicism and prevarication, the 'have-nots' must inevitably lose patience and attempt to take the law into their own hands. A world so divided not only economically, but also politically by a bottomless gulf of suspicion, incomprehension and bitterness, would be a world doomed to self-destruction.The Times went on:If only people believed that aid worked, then the financial problems of the donors would yield the political will to succeed … But, given the right men, the Woods initiative could prove a historic turning point, the moment when at last the scales fell from the eyes of the donors and they began to realise that it was more realistic, as well as more blessed, to give than to withhold.I believe that the Pearson Commission's report will prove to be that turning point. It is an historic document. It is a warning, but it is something more. It is an argument for aid and an analysis of the difficulties—and it is also a programme for the next 30 years. I submit that we dare not dismiss it, file it, or forget it, because it concerns the future of the world—its economic pattern and its social and political shape. It will affect us just as it will affect the smallest country in Asia, South America or Africa. This country is involved with 15 other rich countries which are referred to as donor nations. Together, we have the power to prevent a catastrophe in the other half of the world which could engulf us.
I owe the House some explanation, perhaps, of my interest in the subject of overseas aid. I first saw India during the last war and I was horrified then at the poverty I found. But somehow it 775 was possible to turn one's back on it. We were fighting a war, we were much younger then and India seemed a long way away. It is no longer far away. It is on our doorstep. I returned there a few years ago and saw again the misery surrounding Bombay and New Delhi, just a few hours' flight from the comforting suburban lights of Heathrow Airport and the House of Commons.
Last year, I was in South America and again I saw the grim sight of human beings living like outcasts in holes in the hills around Lima, the capital of Peru. I have also been among the sampan cities and encampments of Hong Kong and seen whole communities living there in poverty and squalor.
But everywhere I have been I have admired the courage and spirit of people to go on living, to struggle, to maintain the fabric of their society and to keep their standards, but we cannot ignore the message which these scenes have for us. That message is that we must take action to help them before it is too late. Here, I must declare that I have a special interest. I am a director of a company which works closely in public relations with the organisation Christian Aid. But I did not approach the problem of overseas aid as a "do-gooder", if that phrase has a bad connotation for hon. Members. I do not think that it has, but doubt is sometimes cast on the wisdom of men who might be classed as do-gooders. But I believe that it is morally wrong to allow such poverty to exist in our world society.
Many hon. Members may have been approached by their churches in their constituencies to "sign-in" a document and a declaration against world poverty. I know that many hon. Members have felt concerned at the phrasing of that document and have wondered about the wisdom of signing it. I should like, therefore, to quote from a letter from the Archbishop of Canterbury, printed in the Canterbury Diocesan Notes in December, I have the Archbishop's permission to quote this. I believe that his letter and his advice on this subject is helpful and constructive, since there is a phrase in that document which could be misunderstood. He says:The 'Sign-In' declares that mass hunger, disease and illiteracy are intolerable anywhere 776 in the world, and that the skills and resources to change these unjust conditions now exist. It goes on to make a statement which has been criticised for failing to be specific: 'the international financial and trading system can and must be changed', for it is easy to say that without saying how it must be changed. I agree with the criticism. But I would not let this deter me from signing, because the things asked for in the next paragraph are quite specific—on the contribution of the United Kingdom to overseas aid and on the negotiation by our government of trade agreements favourable to the poorer countries.The purpose of aid is not charity, but the promotion of growth. Aid is for development and is designed to bring the developing nations into partnership with the industrially developed countries.
The record of the last 20 years of aid and the development which has followed has been encouraging and the achievements have been substantial. The less developed countries have moved forward, their growth average has been about 4.8 per cent. a year. The Pearson report has stated that, if sufficient help is given now and in the next 30 years, it should be possible for these developing countries to achieve a growth rate of as much as 6 per cent. per year, and that, if that were done and no time were lost, those countries could continue such progress without further aid at the end of those 30 years.
We are now in mid-stream in the task of aiding these countries in development. It would be a tragedy if we were to relax our efforts just when the other shore was in sight. The vital requirement is still to initiate and sustain rapid economic growth and development. At the first meeting of U.N.C.T.A.D. in 1964, the recommendation was made that the developed countries, the rich countries like ourselves, should transfer 1 per cent. of their gross national income to the less developed countries. We were achieving this until 1967, when the figure fell from that 1 per cent. to 0.94 per cent.
I should explain for the benefit of all hon. Members that the 1 per cent. referred to embraces both Government official aid and private investment aid. From 1966 to 1968, official gross aid has remained at very much the same figure of £210 million a year. But it has fallen from £214 million in 1966 to £208 million in 1967 and £210 million in 1968. Neither do these figures take into account price rises which reduce the real value of sterling to the receiving countries by 777 about 2 per cent. per year—and the effect of devaluation has also been forgotten.
Last year, at the second U.N.C.T.A.D., the new target was set for the donor countries to raise their over-all aid to 1 per cent. of gross national product. This, in effect, means an increase for Britain of about 25 per cent. on the original U.N.C.T.A.D. figure. Measured against this yardstick, Britain's performance is not only short of the target, but shows a steady decline since 1965. In 1965, the total figure of private and Government aid was over 1 per cent.—1.03 per cent. As the Minister told us yesterday, the figure for last year, on the same calculation, is now down to 0.75 per cent. Our total aid is split roughly fifty-fifty between official and private investment at the moment.
But I do not wish to make a great play with figures and statistics. There are other hon. Members more closely aware of the detailed breakdown and complicated adjustments which can be made to make these figures look different. I hope that we will not have a great argument about them, because my only purpose in referring to them was to show where we stand in relation to U.N.C.T.A.D. II, the second target, and the Pearson proposals, which—this is what we are really debating—are that we should reach that U.N.C.T.A.D. target by 1975 or 1980 at the very latest.
Put quite simply, if we had to write a report on Britain's achievement in overseas aid it would be that, having made a promising start, we have proved somewhat of a disappointment in recent years. In 1964, we contributed 8.3 per cent. of all official aid from the donor countries of the world, but last year our contribution had fallen to 6.2 per cent. and today we stand seventh in the lead of those 16 nations with Germany, France, the Netherlands, Belgium Portugal and Australia ahead of us.
The question I ask is: where do we go from here? The Pearson report is intended as something more than a critical analysis. It must be a basis for action, and time is not on our side. We, together with the other donor nations, must halt this decline in aid and move towards the Pearson target if we are to maintain the momentum of the economic development which we have helped to create.
§ Mr. Cranley Onslow (Woking)
I know that my hon. Friend does not want to bombard the House with statistics, but would he agree that the Pearson target of a gross flow required to produce a net amount representing 0.7 per cent. of gross national product in 1975 involves a sum of about £500 million?
§ Mr. Crouch
It does involve a large sum approaching the figure of £500 million, but, of course, the gross national product is increasing considerably, by up to 3½ per cent. a year. That contribution of official aid, measured against the gross national product, is, in my opinion, not a sacrifice which is impossible for us to bear.
The Minister came to the House yesterday—we were grateful to her—and made a statement about revised figures of Government contribution but I fear that the figures given by the right hon. Lady yesterday will not do enough to prevent this decline in aid overall. I believe sincerely that we have failed to set an example and that our apparent disregard of the Pearson target may well be the excuse which other donor nations, notably the United States Congress, are looking for to do little or nothing more.
The estimates which the right hon. Lady gave us yesterday for gross official aid in 1973–74 were £300 million. In my calculation, that represents 0.47 per cent. of the estimated gross national product in that period. If we are to achieve the Pearson target for that period, that percentage would have to be at least 0.58 per cent., and certainly not less than 0.51 per cent., to achieve the target by the end of 1980.
We cannot be satisfied with this, although we should be grateful that the Government have made a move towards the target and the Minister referred yesterday to her ultimate goal, aiming towards the last year of the second Development Decade to achieve it. That, however, is not the Pearson target, but at least we are grateful that the Minister has recognised the importance of the problem. I feel that we as a nation are failing in our opportunity to show that we recognise the magnitude and the urgency of the task. We must do better.
I want to turn away from statistics and consider another question that is often asked: whether Britain can afford to give money when we are in debt ourselves, 779 burdened with heavy taxation and living under the long shadow of a balance of payments problem. My answer is that it is not easy for us to give aid, and it is another burden, but it is something which we have to do. We dare not stand aside.
Our own problems are enormous, but we will still solve them. We are a nation rich in capacity, modern skills and new ideas. We are industrially powerful still. We are growing richer, not poorer. I will not digress now to criticise the Government for the fact that we are not growing richer quickly enough. I believe that Britain cannot afford not to give aid to the developing countries. We are a world trading nation and we cannot afford not to help the new nations, with whom we want to trade, to establish themselves economically. The object of our aid is to develop those countries to trade with us and with each other.
We have a good record of foreign private investment. Some people believe that this should be the main flow of our aid. Private investment in plants in the developing countries, however, can succeed only as far as the basic condition of those countries allows. For example, it is no good a chemical company building a fertiliser plant in a developing country if there is a lack of water on the farms. Fertilisers need water. It may also be necessary to provide a programme of education of the farmers in how to use fertilisers.
Private investment must go hand in hand with Government official aid investment and both must go hand in hand with the Government of the local country on the spot. I mention this because it is no good producing something which a developing country's Government thinks it should have but which a market study would reveal it should not have.
I have been making inquiries about the problem of private investment and I should explain to the House that the company to which I have talked is I.C.I. I have no connection with I.C.I. although once, as I think the House knows, I used to work for that organisation. It is a great exporting company and a great investing company abroad, and I wanted to talk to the company about the problem of private foreign investment and how it views it.
780 One of the directors, who knows the Latin American market very well, told me how incredibly difficult it was to get the Latin American countries to work together and co-operate to produce the sort of economic co-operation which we are beginning to see in other nation groups in the world. He said that it was frustrating, disheartening and very difficult. I then said to him, "What do you think would be the result if we did not give official aid to the developing countries in Latin America?" He said that, in his opinion, the dangers of withholding aid were enormous.
I talked to I.C.I. about its general attitude to foreign investment and I was told that in I.C.I.'s opinion, official aid was essential to provide the education in new agricultural techniques about seeding programmes, the use of herbicides, and so on. Although I.C.I. has its own large force of scientists around the world, they cannot meet the whole demand for developing the infrastructure that must go behind commercial development.
I.C.I. told me some interesting facts—for example, that certain things which are labour-saving are of little interest to some countries in South America. Farmers are not interested in intensive farming systems and the use of fertiliser for grazing land, because they have so much land.
The real criteria, however, which a large private enterprise concern has to work to is that its foreign private investment must be based on market opportunity, a market for the product produced at competitive prices. As the aim of aid is to improve trade, the products of the investment must be readily saleable and profitable. The aim of aid is short-term help towards ultimate economic viability.
Next week, on 6th December, I.C.I. is opening its new fertiliser plant at Kanpur, Northern India. It is the largest such plant in India and one of the biggest in the world. It is a full-scale economic plant which has cost £34 million. It will be run by Indians and, I.C.I. tells me, as efficiently as any of its plants in the United Kingdom. I was told that this had come about as the result of good training of Indian personnel in management, and I.C.I. maintains that this is one of the vital contributions to aid for developing nations.
I.C.I.'s total investment in India and Pakistan is about £50 million. Over the 781 last 10 years the company has shown an overall return on this investment of not less than in the United Kingdom; and this foreign investment has contributed dividends to Britain as well as contributing to the financing of I.C.I.'s expansion in those countries.
This is just one illustration of the importance of private investment. It can be heartbreaking, as I have shown, and many companies will have experienced a lack of will on the part of some countries to develop and trade together in larger nation groups.
Then there is the question of the safety of investment and the problem of high inflation in many overseas countries. Great strain can be put on maintaining the economic viability of plant and the re-equipment of such plant. The Minister may comment on this question of assisting the private investor over some of these hurdles and difficulties. We should recognise the great contribution that these companies are making to the developing world as well as to Britain as a trading nation.
The private investor can be relied on to see that his investment is secure and that it produces a good return, but what about official aid? We are often asked how we can be sure that it is not wasted. I suppose that the answer is by better co-operation. That is certainly the message of Pearson. But one factor is insufficiently realised and that is that official aid enables the receiving country to pay for British exports.
Of the figure which I gave earlier—£210 million gross of official aid in 1968 given from this country—about two-thirds of it, £140 million, returns in payment for goods and services. There is a further contribution back to this country in terms of the repayment of capital and interest. The amount of money winch flows over the foreign exchanges is very much less than the hundreds of millions of pounds that we talked about and I mention these figures because many people, in business and in the community at large, hold the view that it is wrong for us to think in terms of hundreds of millions of pounds for aid. They become sincerely concerned when Parliament talks in such terms.
I believe that it would be foolish if there was not a trade element involved; and trade is a two-way movement. It can 782 enable a new nation to grow and help us to enlarge our position as one of the central trading countries of the world.
Aid from donor countries is not only investment, grants, loans and technical assistance. It is also the removal of some of the barriers to the development of the poorer nations. As their economy and production expands, they will want access to the markets of the world to sell their primary products and manufactured goods. This will raise difficult and delicate questions for the richer nations which may prove even more difficult to accept than the provision of money aid. It is better that we should face up to the full consequences of this now rather than try to forget it.
The Pearson report calls on the donor nations to raise their targets and achieve them by 1975. We should accept that call. We have so often proclaimed that we are a world Power and that our voice should be heard in the councils of nations that here is our chance to lead the other donor nations, and this is a matter which calls for leadership.
If we can show that we accept the responsibilities and burdens that go with greatness, we could inspire the other rich nations to follow suit. We would show the developing nations that we understood their aspirations and were prepared to join them as partners in development.
We are entering one of the most remarkable periods in the history of mankind. We are on the threshold of space and man has walked upon the moon. It is right that he should do so, but we must also learn to walk upon the earth among our fellow men in dignity and honour. We live under the terrible threat that we have the power to destroy ourselves in a matter of days. We must prove that we can live in peace and not resort to war; that we can live in peace and prosper together.
In 30 years from now the population of the world will have doubled. In the developed countries it will have increased by 200 million while in the underdeveloped countries it will have increased by over 2,000 million. We must understand now what this can mean. The answer could be chaos, catastrophe and the greatest tragedy of suffering man has ever known. It could be the end of freedom.
783 We have our chance to prevent that disaster. Here is perhaps a turning point in history, a time when man recognised that he had the power to fight poverty. Here is our opportunity to gain a victory for mankind in peace and co-operation, not in war and domination.
I believe that we can win this battle. It is, perhaps, the greatest challenge we have ever faced. I do not think that we will fail. However, we will need courage and conviction. Our policy must be clear, like that spoken 22 years ago at Harvard University by George Marshall, when Europe lay in ruins and its future was in doubt. He said:Our policy is directed not against any country or doctrine but against hunger, poverty, desperation and chaos. Its purpose should be the revival of a working economy in the world so as to permit the emergence of political and social conditions in which free institutions can exist.That policy saved Europe. The challenge to us now is to help to save the world.
§ Mr. Speaker
Before I call the next speaker, I wish to observe that many hon. Members desire to take part in the debate. Last Friday I appealed, with success, for hon. Members to be reasonably brief. I was, as a result, able to call 21 hon. Members. I hope that speeches will be reasonably brief today.
§ 11.38 a.m.
§ The Parliamentary Secretary to the Ministry of Overseas Development (Mr. Ben Whitaker)
My right hon. Friend has asked me to tell you, Mr. Speaker, and the House, how much she regrets her inability to be here for the start of the debate. She has been attending a very important high-level Development Assistance Committee meeting in Paris this morning, but will be flying back so that she can take part at the end of the debate. She made a statement to the House yesterday to help hon. Members in this debate and she will be glad, when she speaks later, to reply to any points that are made.
Both my right hon. Friend and I very much welcome the debate, the fact that the hon. Member for Canterbury (Mr. Crouch) has chosen this subject and the sincerity of his excellent speech. It has rightly been said that he who can make two ears of corn grow where one grew 784 before has contributed more good to the world than all the politicians. We are debating a subject of such importance that it transcends party politics.
We have recently been admiring the courage and achievement of the first two expeditions to the moon. I believe that the task of peaceful development and cooperation on earth—of helping the poorer countries to reach their economic takeoff—presents an even harder and more important challenge for the human race. We cannot allow our children or future historians to say that we failed. The peace of the world will never be secure nor we on earth have a right to call ourselves civilised unless we are equal to this challenge.
The details of our task have now been focussed with great clarity by the Pearson report. Here, I would add a personal tribute to the work in the Pearson Commission of the right hon. Gentleman the Member for Birmingham, Handsworth (Sir E. Boyle), whom we are glad to see here today. It is a matter or great regret to me and to many other people of all political views that such an able and humane man should now have decided to leave the political arena for academic life.
The Pearson report analyses our shortcomings and problems and proposes solutions. It is now up to all nations to provide the will to act on the lessons of the report, and equally so of the United Nations Conference on Trade and Development. We must respond to them, not just with expressions of warm thanks and pious concern, but with deeds. The research begun by the Commission must be continued. We must ensure that its report does not become a 90-day wonder, but is followed up by action until its aims are achieved.
The first lesson of the report which I believe needs to be emphatically learnt is that aid is succeeding, albeit at too slow a rate. It has succeeded in helping those who are helping themselves. Pearson tells us that the developing countries' average increase in G.N.P. in the 'sixties has attained 5 per cent., although half the per capita benefit has been reduced by the welcome fall in their death rates. Eighty-five per cent. of capital investment is raised in the developing countries themselves, but the 15 per cent. being added by development programmes is 785 vital pump priming; it is crucial to the chances of success of a developing country to reach take-off point. Let us never forget that the poorer countries are making great efforts themselves. They want to be independent of aid as soon as possible and attain their own economic viability. The Pearson report holds out hope that the task of aid could be completed by the end of the century.
The most recent example of progress has been the so-called "green revolution"—the new high-yielding strains of wheat, rice and maize developed partly as a result of research by the Ford and Rockefeller Foundations. This has resulted where conditions are favourable, in a doubling or even trebling of foods which are vital for the most crowded one-third of the world. We need, of course, continuing research into the effects of the green revolution and, in particular, into its social consequences, because already in some areas it has brought the problem that the rich farmers who can afford the irrigation improvements become richer, whereas the poorer peasants have suffered as a result of the sudden expansion of crops.
This is one of the illustrations of the fact that real progress in development cannot be separated from social reforms, population planning or trade policies. It would be ironic if it were not tragic that at a time when, during the first Development Decade the terms of trade have worsened against the poorer countries, and when primary commodity prices are falling partly due to the development of the synthetics, the developing countries' proportion of world trade has fallen from one-third to one-fifth in the present decade.
This is one answer to those who argue "Trade, not aid" instead of both trade and aid. We must insist on efforts to improve international systems both of liquidity and trade. There is no point in giving trade with one hand and shutting out poorer countries' exports on the other.
It is right to point out that the developing countries need markets, not charities. The present world trading situation cannot be a complete substitute for development assistance: the former seeks areas of profit which are not always the same as the places of greatest need. Aid is, therefore, necessary par- 786 ticularly to build up an infrastructure in transport, power and education which a developing country must have as a basis for economic advance. As a recent leading article in the New Christian pointed out, there is nothing magical about a figure of 1 per cent. What is required is a comprehensive approach in which aid and other factors are included.
Someone recently alleged that the trouble with world development at present is that the rich countries are getting richer and the poorer countries are getting family planning advice. This is a danger we should guard against. It is also true that man does not live on material values alone, but it is difficult to develop the spiritual side in conditions of starvation. We need both life and soul, but soul depends on having life. The aim of aid should be to provide other people with the opportunity of choice; not to dictate their politics or the size of their family, but to allow them to choose their economic system and way of life—
§ Sir Stephen McAdden (Southend, East)
On a point of order, Mr. Speaker. I am a patient and a kindly man, and never seek to raise irrelevant points of order, but surely it is grossly out of order for us to have to sit here and listen to a speech read, and read very nicely, but read, obviously, word for word.
§ Mr. Speaker
This is not a new point of order. The Chair discourages the reading of speeches, but has ruled from time to time that hon. Members may make use of copious notes.
§ Mr. Leslie Spriggs (St. Helens)
I think that all hon. Members will agree that my hon. Friend's speech is very important indeed, and that it is what he says that matters, whether he reads it or not.
§ Mr. Speaker
Order. With all the good will in the world, the hon. Gentleman cannot contradict the Ruling I have made.
§ Mr. Whitaker
I am grateful, none the less, to my hon. Friend the Member for St. Helens (Mr. Spriggs).
The harsh fact is that at present the poorer two-thirds of the world are the victims of a vicious circle, through no fault of their own. Hunger and malnutrition; illiteracy and lack of education; 787 which, in turn, result in no opportunity to save themselves from getting relatively poorer.
In tackling this problem we are facing a race against the population increase. As the hon. Member for Canterbury has said, for every three people alive today there will be seven in 30 years' time and 25 a century from now. Every time our pulse beats two children are born, yet meanwhile the nations of the world are spending more money on weapons which could increase famine and death than on reducing hunger. Money spent on population control is probably the most cost-effective emergency solution, even though there is the danger that it will be resented as a form of colonialist pressure by some developing countries.
Meanwhile, despite all the work being done to bring home the urgency of the situation to the people in the richer countries, there is hostility to internationalism among many people. "Charity begins at home", they sigh, as they switch off a colour television set which shows pictures of babies dying of hunger abroad. At a time when several million people are estimated to be starving, and 1,500 million—or half the world's population— do not get the right diet, the health of several millions of men and women today is undermined by their being overweight, often, because of eating and drinking too much.
As a nation, we spend about £40 million a year on slimming pills and foods, and we are spending over £1,500 million on alcohol. Many of us in Britain will, over the Christmas holidays, be eating more than some African families have to live on for the entire year.
In many respects I believe that this country has an extremely good record on aid matters, and one that we hear too little about. We have increased the amount of our aid through multilateral channels from 11 per cent. to 14 per cent. in the last year. Our contribution to U.N.I.C.E.F. next year will be up by 20 per cent. Mr. Paul Hoffman told me last month how much he welcomed Britain's increased help to U.N.D.P. which, together with the World Bank, is one of the very successful agencies of international co-operation which we support. In fact, 83 per cent. of the United Nations' budget is being 788 used on the constructive economic and social side of its work, which receives all too little publicity. The Government are looking forward to the publication next Monday of the important report by Sir Robert Jackson on how we can further increase the efficacy of the multilateral channels.
The Pearson report also praises the policy of interest-free loans which were begun by my right hon. Friend the present First Secretary and which we recently carried further. Of about £96 million in our loans committed in 1968, 66 per cent. were interest-free, compared with 57 per cent. in 1967, and 43 per cent. in the previous year, 1966. Of our new Government-to-Government loan commitments entered into last year, 90 per cent. were interest-free.
But the seriousness of the situation which this policy of ours is helping to tackle is shown by the fact that aid servicing and dividend payments are absorbing half of the gross capital the poorer nations are receiving. With loan repayments Mr. George Woods has estimated that the whole annual aid outflow will be entirely offset within the next 13 years.
But we are not complacent about our aid programme. Indeed, I hope that no hon. Member will be complacent or satisfied while one single human family remains needlessly hungry or uneducated so that its members are prevented, through no fault of their own, from obtaining their full human rights. We must continually be re-examining the direction and effectiveness of our aid policies. To help increase the flow of aid, we must remember that any misdirection or waste would give a hostage to the enemies of the concept of aid.
There are also increasing arguments why the developing world requires, not grandiose prestige projects, but intermediate and rural technology to help counter the drift of populations crowding into urban areas. Labour-saving capital intensive attempts at industrial development could in some cases do more harm than good for the peasants who comprise four-fifths of the population of the developing world. M. René Dumont and Dr. Schumacher urge that it might be better to change the emphasis to basic technology and village industries. These could provide maximum employment for 789 the local inhabitants—for at present we must remember that there are more tractors in England and Wales than there are in the whole of Africa—as well as helping to develop community projects and self help.
At the end of the day we should recognise that development and the will to achieve it must come from within, from the ordinary people in every country, and cannot be imposed from the top. Governments can and should give a lead, but just as development itself requires the involvement of the people themselves at every level so we in the richer countries have the task of educating our public opinion in the urgency of the problem.
My right hon. Friend and I warmly welcome the work that is being done in this field, particularly by young people and by the Churches, by several right hon. and hon. Members, by V.C.O.A.D., UNFED, the Haslemere Group, 3W1, the organisers of the "Sign-In", Action for World Development, and many other groups—what one may call the army of the cold church halls up and down the country.
A poll by the Sunday Times last year showed that overseas aid is the least popular item of all Government expenditure. I believe that this shows that there is all the more reason for we politicians to give a moral lead to the nation and to have the courage to awaken people to the trivialities of many of the economic preoccupations of the richer countries when compared with those of Asia, Africa and Latin America. The 1968 U.N.C.T.A.D. received less Press coverage in this country than the new "no feeding" rule imposed at London Zoo.
Why, then, should Britain give aid, especially at a time when we ourselves have borrowed abroad? First, because this is a moral issue—as President Kennedy said, "Because it is right". We are dealing with the most basic of all human rights—the right to exist. But we should be thankful that in this country we are not really being called upon to make a sacrifice. Fortunately for us, ideals and morality coincide with our own self-interest. Our prosperity as a trading nation depends on the growth of world commerce. The undeveloped purchasing power of two-thirds of the world represents potentially valuable markets. 790 We already know that 30s. worth of orders are placed in the United Kingdom for every £ we contribute to I.D.A.
To hold back on aid could jeopardise workers' jobs in Britain for the future. Trade follows aid. If we provide a factory or a harbour overseas, we get future orders for spares and replacements. If we bring students and trainees to Britain, they are likely to buy British when they become managers. We get export orders from the untied policies of other countries' aid. While at present we provide about 7 per cent. of the global flow of aid, we get back about 12 per cent., nearly twice as much, of the orders for goods imported by developing countries.
I therefore hope that the British Press, which is patriotically keen on our exports, will welcome yesterday's statement. Our present figure involves only one-third—some £70 million—in payments across the exchanges. We are receiving about £60 million back in loan and interest repayments. Allowing for good will and trading prospects and the orders placed in this country as a result of international programmes, it is probable that we will gain as regards the balance of payments from any increase in world aid.
Above all, we cannot afford not to give increased aid, because it is an investment in peace and stability. The total United Kingdom expenditure on aid for the whole period since the Second World War is approximately the same as the amount we spend every year on defence. Like it or not, we are all interdependent in this world. The situation we must face is that the 20 per cent. of the world's population who live round the North Atlantic are the fortunate inheritors of nearly 80 per cent. of the world's income, trade and investment, while the rest of mankind are steadily growing relatively poorer.
In 1962 to 1967 the average annual income per head of the richer countries rose by £25 to about £820, while those in the poorest nations increased by only £1 a head to about £55 per annum. With the help of aid the developing countries are starting to make progress, but it is a race against time, because the relative gap is still widening and the division is mainly drawn on lines of colour. Mr. McNamara has pointed out that the rich 791 countries have increased their annual income so far this decade by an amount which exceeds the total annual income of the much more numerous developing world. This situation is as potentially inflammatory as it is morally indefensible.
The development of Press and television now enables the poorer nations of the world vividly to make an immediate contrast between their situation and the conspicuous luxuries of the richer nations. An increased aid effort by the richer nations, one hopes both of the West and of the East, would be an insurance to prevent any next and final world war, which I believe is less likely to be an ideological one than a racial conflagration over the indefensible allocation of the world's resources.
§ Mr. Onslow
On a point of order. Mr. Speaker, may I through you, ask the Minister, now that he has reached his third peroration, if he would allow the rest of the House to take part in the debate?
§ Mr. Whitaker
I am on my final paragraph, Mr. Speaker.
Indeed, if there were retaliatory escalation by Russia, China and the West in aid programmes, instead of in armaments, that might well be all to the good. The answer to the critics of aid is that the peace of the world which our children will inherit is indivisible. We believe that peaceful co-operation provides the only hope for the future of the world in which we wish our children to live.
§ 11.58 p.m.
§ Sir John Vaughan-Morgan (Reigate)
I am sorry to begin on a slightly sour note, but I view with regret what is apparently a new precedent today. On a day devoted to Private Members Motions, we are, as I understand, to have two Government Front Bench speeches. This is extremely unfair to the House and to Government back benchers, from whose time those speeches must come.
Since I have been in the House it has always been the practice that, if a Minister could not attend—I entirely approve the reasons why the right hon. Lady 792 cannot be present today—the debate should be handled by a junior Minister who intervenes at a later stage in the debate when he has had a chance of hearing what hon. Members on both sides have said. I repeat that I am sorry to begin on this note, but it needs to be said.
I warmly congratulate my hon. Friend the Member for Canterbury (Mr. Crouch) on his admirable speech, which forestalled some of the facts, opinions and figures we have heard since. I can assure you, Mr. Speaker, that, although I am not standing for election to Parliament again and I always have the feeling that this may be my last speech, which gives me a marvellous chance to get everything off my chest, my speech will be very short. My notes are not copious and they are not even legible.
I have just come back from the Pacific, where I had a chance to see, not for the first time, the practical effects of British and international aid. Since I came back, on Monday last week, I have, unfortunately, been ill, so I appear to be the only hon. Member present who has not read and not been furnished with a copy of the Pearson Commission's report. I do not intend in any way to take part in the battle of statistics, but to make a few comments on the aims and objectives of aid which sometimes, I think, are a little ill-defined.
To state my own views very simply without the qualification which is normally necessary, I certainly think that, on balance, investment is more use than aid and that development is far better than welfare as a means for the richer countries to help the poorer countries. This has been confirmed by all my experience. Before I went away, like other hon. Members, I was bombarded by letters protesting at what appeared to be a reduction in aid and urging us as Members of Parliament to increase spending on this matter. These often came from reverend gentlemen. With the greatest respect to the cloth, I sometimes felt that they were trying to "pass the buck" to us without doing their duty, as opinion-formers, to explain the need for aid and the necessity for aid to their congregations or audiences.
I want to revert to my experience of my recent travels. I say, in parenthesis, that everywhere I found immense and, 793 I think, justified praise for the officials of the Ministry of Overseas Development. In a perhaps unfortunate phrase a Minister in one of the countries—it was well meant, although not happily phrased—said that he had never expected to find in Whitehall people who were both sympathetic and efficient. It was a very well meant and warm tribute.
I want to talk not so much about the quantity of aid as the quality of aid. I come back more and more convinced that the best aid we can give as a country and in the United Nations agency as a whole in general is the loan of advisers rather than actual capital grants and, in particular, to foster the green revolution—a rather good phrase—with the loan of agricultural advisers.
As an example of this, the only one in which I shall name the country, I saw in Fiji a most remarkable afforestation project which had started within the last few years covering 4,000 acres. There was the project of immense importance for a country where much of the land is not usable for ordinary agricultural purposes. It was run by one British, one Fijian and one Peace Corps volunteer, a most happy example of international aid, but what a tragedy it was to think that that project, which could mean a real change in an economy which is almost a mono-culture economy, is being frustrated by the almost inevitable problems of land tenure and difficulties of obtaining extra land in that part of the world.
I wish to give two other examples which have led me to question whether our aid is always as wisely thought out as it might be. I leave them anonymous, because I was a guest and I should not like in any way to sound critical of my charming, kind and generous hosts. In a certain country which I visited which has been receiving not inconsiderable aid from this country, one of the show places we saw was a gold mine employing 2,000 people. I was slightly aghast to find that that mine was kept going by a Government subsidy. As a general principle, I am against all subsidies for industry, but if we have to give subsidies to industry I cannot think of anything more ludicrous than subsidising a gold mine, when the price of gold is low, for the reason that it was not viable.
I was told that part of the subsidy was given so that the mining company could 794 prospect to see whether or not there was more ore body available which might extend the life of the mine. If I know anything of the hard-headed capitalists who run that company, I should say that if they thought there was any extra ore body they would have spent their money on finding it. I began to wonder whether we should lend that country a series of financial advisers as well as particularly hard-headed capitalist minded economists.
The other case was in another territory where we saw a marvellous project which is still on the drawing-board. It is for a new hospital supplied entirely with British aid to provide the much-needed 250 beds for a population of 80,000. No one could say that that is anything but a fairly modest provision. It is not extravagant, for it is to cost between £1,000 and £1,500 a bed, which is very different from standards in the West. The plans were excellent. They had been drawn up by a British adviser whom we were lending. It was excellent and much needed, but what guarantee have we that in another five or 10 years that territory can and will satisfy the necessary moneys for maintenance and keeping the hospital up to the standards with which it will start?
I mention this because on other occasions I have seen many hospitals where a little more spent on maintenance would have obviated the necessity for building a new hospital. I am a little fearful that sometimes we give these handsome grants without being quite certain what the future holds. For that reason I think that we ought to look sometimes a little more at the quality of aid as well as the quantity of aid we give. We ought to think not only in terms of amounts, or even boast about them, but in terms of the ultimate results we are trying to achieve in what, after all, is taxpayers' hard-earned money.
§ 12.8 p.m.
§ Mr. Reg Prentice (East Ham, North)
I begin by congratulating the hon. Member for Canterbury (Mr. Crouch) on choosing this subject and for the speech with which he introduced it. I think it ironic that a subject of this importance should usually be debated in this House in private Members' time. There have 795 been a number of occasions over the years in which hon. Members from both sides of the House have won a place in the Ballot and chosen this topic. I did so myself six or seven years ago, and there have been many examples since then, of which that used by my hon. Friend the Member for Norwich, North (Mr. Wallace) was the most recent.
Although it is welcome that we should have debates in private Members' time on this subject, it is a reflection on the Government and the official Opposition that neither Government time nor on Supply Days, as a general rule, have been devoted a debate to this subject. As a reflection of the growing interest of the public in this matter we should have more debates in Government and in Opposition time on it during the period ahead.
I wish to speak very briefly today, particularly as I had the opportunity to speak on this subject during the debate on the Address in reply to the Queen's Speech. I want to make some comments upon the statement made by the Minister yesterday. It seems to me that in drawing up the aid programme for the next few years the Cabinet had an opportunity to carry out an act of statesmanship, of imagination, of compassion, an act of policy that would have been greatly in the long-term interests of this country. It seems to me that they have thrown away this opportunity.
If I may interpolate here a personal note, I was deeply disappointed a few weeks ago when I was asked to leave the Ministry of Overseas Development, but I am bound to say that if I had stayed at the Ministry I would have resigned at this point because of the inadequate response of the Government to the challenge of the period through which we are passing.
We are holding this debate on the eve of the 1970s, which have been designated by the United Nations as a Second Development Decade. We are entering that decade in an atmosphere of growing doubt and scepticism throughout the world as to whether the richer countries really have meant what they have said in supporting the resolutions of the second U.N.C.T.A.D. and in making constant declarations about their intentions to do more in the fight against world poverty.
796 At this moment we have the benefit of the Pearson report. It is a clear report containing moderate proposals that would not involve any of us in the developed one-third of the world in any very great sacrifices. Speaking entirely personally, I think that it is in many senses too moderate a report. But, at any rate, it lays down civilised standards for the ways in which the richer countries should conduct their affairs with the poorer countries. Indeed, the standards it lays down are already being followed in many cases by some—the minority—of the richer countries and should be followed by the rest of us.
I should like to concentrate for a moment on the central problem of the volume of aid. May I say, in passing, that this is only part of the picture. We should talk about the quality of aid, private investment, trading relations and all the rest, but the quantity of aid is a central issue and it is the clearest indication of the sincerity of our intentions in this field. I see no reason at all why the Government could not have clearly accepted the Pearson recommendations on the quantity of aid.
There are two main recommendations. The first is that we should reach a performance of 1 per cent. of our gross national product by 1975 at the latest. Last year, at New Delhi, Britain and other developed countries voted in favour of the 1 per cent. target and promised to use their best endeavours to reach it. If the phrase "best endeavours" has any meaning at all, it certainly cannot mean anything less than that we should reach it by 1975—about seven years after the U.N.C.T.A.D. at New Delhi.
Secondly, the Pearson report says that within this total at least 0.7 of 1 per cent. should be Government aid. The report gives a number of reasons for that, and I want to underline one reason here. That is that if we are to be sure of carrying out a total flow of resources amounting to 1 per cent., we really should have to make plans in terms of our public expenditure to provide at least 0.7 of that in the form of Government aid.
Yesterday, I asked my right hon. Friend what was the latest estimate of our total flow of resources in 1968 and she said it was now 0.75 of 1 per cent.—lower than we had originally thought. 797 It is lower because private investment was less than we had originally thought. Private investment apparently amounted to only 0.32 of 1 per cent. This is merely an indication of the fact that private investment is variable and cannot be controlled exactly by Governments. I agree with those who say that the Government might take further steps to encourage private investment by developed countries, but those who advocate it agree that there is no way of making sure that investment would take place. Indeed, it would vary from year to year.
If we take the figure of 1 per cent. seriously and recognise that this is a floor and not a ceiling, I suggest that that involves having at least 0.7 of 1 per cent. in the form of official aid. Therefore, we should not rely on those words in the Pearson report which say that 0.7 should be reached at the latest by 1980. It should clearly be reached by 1975 by every developed country which is in a position to provide aid.
Looking at the figures announced yesterday, I believe that the aid that we would have to provide for would be as follows. I take these figures from an article by Mr. George Cunningham in The Guardian of 24th November, and I believe these figures to be accurate. In 1971–72, instead of the announced figure of £245 million, it should have been £266 million. In 1972–73, instead of £265 million, it should have been £301 million. In 1973–74, instead of £300 million, it should have been £338 million.
Here, may I make these points about the figures, which are not generally understood. These figures, when they are in public expenditure publications, are in cash terms and make no allowance for rising prices. In that sense they are different from the figures published by every other Government Department. This is not generally understood. Indeed, it is not always understood by Cabinet Ministers who make these decisions that when one looks at a row of figures, say, for education, health, transport and other Departments, they are in constant prices and that when certain costs go up—for example, teachers' salaries—the figures of the Department have to be adjusted.
In the case of aid figures, they are in cash terms and, therefore, there is a 798 built-in cut of perhaps £5 million or £6 million a year. If we look ahead four years to 1973–74 we can expect the real value to be £25 million less than the figures indicate. Secondly, these are gross figures. The repayment figures of old aid loans are going up and the actual burden on the taxpayer is less than would appear from looking quickly at the figures.
The Cabinet should have the vision and courage to inspect the Pearson figures. The first chapter in the Pearson report is entitled "A question of will". I can only say that I think the decision which the Cabinet have taken represents a failure of will. It represents a failure of imagination and of statesmanship. When I say that, I am not blaming my right hon. Friend the new Minister, or my hon. Friend the Parliamentary Secretary, who made an excellent speech this morning, although it was an excellent speech for responding to the Pearson recommendations and not falling short of them. This is no fault of my hon. Friend's.
So far as my right hon. Friend has not persuaded the Cabinet to give enough priority to this subject, this is a failure which I shared during my two years in the Department and which my three predecessors also shared. None of us has yet persuaded the Government to give enough priority to this subject. I think that the responsibility has to be seen as a Cabinet responsibility. I do not join publicly in condemning the Chancellor of the Exchequer or the Treasury. Sometimes, when I was in office as Minister, I gnashed my teeth over the Treasury. Sometimes I wished that there was in that Department a more sophisticated, more imaginative and better-informed approach, but the Treasury is perfectly entitled to say that the decisions are collective decisions of Ministers.
What worries me about the attitude of the Cabinet to this problem, and the attitude of Cabinets throughout the developed world—this includes the attitude of the Conservative Cabinet when that party was in office—is not so much that they are opposed to development aid, but that they are for it in a vague and woolly fashion without giving it the priority and the study that it needs. This is true of many people in Britain 799 today, people who have a vague good will towards the subject but are not prepared to do their detailed homework on it.
§ Mr. Bernard Braine (Essex, South-East)
I hope that the right hon. Gentleman, with whose remarks so far I am in entire agreement, will readily concede that the former Conservative Government were a pioneer in development assistance; they led the world, set an example, and reached 1 per cent. of gross national product.
§ Mr. Prentice
The response of the previous Conservative Government was too little and too late. I apply that description to their record, to the record of the present Government, and to the record of many, but not all, of the other Governments in the developed world today.
The plea I make is that the present and any future Cabinet should devote a great deal more attention and priority to this subject. Compared with the time which is given in the Cabinet and in Cabinet committees, in my own experience, to relatively minor decisions and the amount of paper which flows to and fro, the time given to this subject just does not measure up to its importance. That is one reason why it has never had the priority which it deserves.
The position is made worse, if I may say so, if my right hon. Friend the Prime Minister, and other Government spokesmen, make speeches in which they claim that we have really done very well. When my right hon. Friend the Prime Minister says, as he did in the House the other day, that we have nothing to be ashamed of here, he bases that, I think, on the fact that we are not at the bottom of the league table and that there are many other countries below us. If that is so, it means that those other countries have something to be ashamed of as well as Britain. It means that the total response of the developed world has been inadequate.
The kind of response indicated in the Pearson report would not have meant heavy sacrifices for the British people. We could still have gone ahead with colour television, with the Channel Tunnel, with Concorde and many other expensive items of private and public 800 consumption. I am not against those things, but there should have been a greater shift in the direction of some extra priority for overseas aid, and the failure to give it will have tragic consequences throughout the developing world.
My right hon. Friend's statement yesterday was made a few days before the launching of a petition in churches throughout this country. In many thousands of churches of all denominations, this coming Sunday, the congregations will be asked to sign a petition to Parliament calling for a greater national aid effort. This is one development among many which shows the increasing dedication to this subject of people throughout Britain who have a conscience and who are prepared to think deeply about the problems of our time.
The growing number of young people who march for Oxfam, the growing number of university students signing the forms put round by the organisation known as 3W1 by which they undertake to devote 1 per cent., 2 per cent., or even 3 per cent. of their university grants to an aid charity of their choice—these are merely other symptoms of the growing movement.
I hope that those who take part in that movement will not be too discouraged by yesterday's statement. They will be disappointed, and so they should be. They will protest, and so they should. Their protests will find an echo on both sides of this House. But they must recognise, and we must recognise, that this is a long-term campaign, and what was announced yesterday was not the end of the road.
Putting it at its very lowest, the Government have an annual exercise in planning expenditure for some years in advance, and there will be other occasions to return to it. I hope that we can persuade the Government to return to it more quickly than that and devote extra priority to the subject. Those in the country who believe that they should do so should redouble their efforts and demand clearly that the Government make a response which measures up to the needs of our time.
§ 12.24 p.m.
§ Mr. John Tilney (Liverpool, Wavertree)
I am delighted to follow the 801 right hon. Gentleman the Member for East Ham, North (Mr. Prentice), who is a much liked and admired Member of the House and has been much respected for his work in the Ministry which he has now left. Many of us respect him also for what he has said on the back bench and for leaving the Government Front Bench when he did.
We have been discussing the quantity of aid, and on that I have no quarrel with what the right hon. Gentleman said. He mentioned also the variability of private aid, pointing out how difficult it was to ensure that the 0.3 per cent. private aid was kept at that figure, and that it was considerably less this year. I hope to show later that, by a limited regulated insurance scheme, it is possible for the Government to encourage private aid when it should be encouraged and keep it at a much higher level than it has been in some past years. I happen to believe that private aid is much more efficient in the long term than public aid.
I add my congratulations to my hon. Friend the Member for Canterbury (Mr. Crouch) for choosing this subject and for the views which he expressed. About 100 years ago, Disraeli was talking about the two nations. Now, the world is talking about the two worlds. I only hope that, as we have in large measure solved the problem of the two nations in this country, the world, long before 100 years are up, will have solved the problem of the two worlds.
My hon. Friend referred to mass hunger, disease and illiteracy. It may well be that mass hunger, thanks to Mexican wheat, Philippine rice and other technical advances in agriculture, will fairly soon cease to be the great problem that it has been in the past. Already, India seems likely to be self-sufficient in foodstuffs. But one of the main problems will be unemployment and underemployment in so many territories in Asia and Africa. I shall never forget being told in Bathurst—I think it was—that eight people lived on the earnings of one. This often happens in many of the towns of Africa, and one of our objects must be to try to prevent the drift into the towns from the countryside.
On the question of statistics, I think that I am right in saying that the aid 802 which we give through the Commonwealth Sugar Agreement is not calculated as part of our aid scheme.
§ Mr. Tilney
It amounts to a substantial sum of money, and I consider—perhaps the Minister will comment on this when she replies—that at least part of it ought to be considered as in our aid scheme.
§ Mr. A. H. Macdonald (Chislehurst)
I entirely take the point about the Commonwealth Sugar Agreement, but there have been times when, if that principle were applied, it would have meant a deduction from rather than an addition to our aid, because the difference in price has sometimes been in our favour rather than against.
§ Mr. Tilney
Yes, that was so for some time in the 1940s and also for a brief period at the time of the Cuba crisis; but, by and large, it has amounted to nearly £40 million a year, although part of that aid has, admittedly, gone to the fully developed country of Australia. But it is of great importance to the Caribbean countries and to a number of others.
Too much stress can be put on Government aid. Although I accept the totality of what is wanted, I think that the entrepreneur may produce a better answer than the taxpayer. Even if interest is waived, Government aid requires a return after a few years. There are also frequently political complications. When a private enterprise invests in a country, it is only when profits are made that anything is remitted back, and I consider that to be an easier position for a developing country. Indeed, not all Government aid is successful.
Reference has been made to the need for roads. While I accept that need, I recall the great roads that were built in Dahomey, which remains one of the poorest former French territories. The French built superb, almost Roman-type, roads there, but they have not produced the trade that some people think should have resulted. The Seventh Report of the Estimates Committee pointed out:In the case of Durgapur"—803 about£68 million of the taxpayers' money was invested there—certainly there can be little doubt that the purposes for which the aid was given have not been fulfilled. Your Committee are bound to conclude that too much emphasis was placed on political considerations when aid to Durgapur was first considered …".That often happens with Government aid.
§ Sir Edward Boyle (Birmingham, Handsworth)
Has my hon. Friend taken account of what we said in Chapter 5 of the Pearson report on the question of private capital as an alternative to aid, in particular the point that private capital is just not available to finance many of the most urgently needed projects? We particularly referred to countries in Asia and Africa where large mineral resources do not exist. We tried to meet the point that my hon. Friend has been making.
§ Mr. Tilney
I have taken account of that, but frequently it is the political risk that is involved in, for example, Africa and Asia which deters private enterprise from going in. If it were possible to insure against political risk, much more capital would be available.
What are the objects for help? The first is agriculture, and my right hon. Friend the Member for Reigate (Sir J. Vaughan-Morgan) referred to land tenure. This was extremely bad in the days when we dominated many of the Colonies, but I am glad to say that in, for example, Nigeria the land tenure system has to some extent been improved so that the benefits of the plantation system may be enjoyed. I pay tribute to the work of the Commonwealth Development Corporation. It has frequently gone into partnership with local governments, local stockholders and others outside the countries, and this has in many instances resulted in the benefits of the plantation system being enjoyed.
The second object of help is industry, which I believe should be labour-intensive and import-saving. It is remarkable what has been achieved in the way of import-saving by private enterprise. A frequent difficulty is that many countries do not have the foreign exchange to remit profits or even to buy some of the raw materials for processing. Witness 804 the importance of "Kipping" aid in India.
In 1960 imports of textiles into Nigeria were running at nearly £11 million, but because private enterprise put new industries into that country, by 1967 imports of textiles had fallen to £2,600,000. More than £5 million went for cement in 1960, while in 1967 the figure was down to less than £1½ million. About £3,800,000 went in foreign exchange on beer in 1960, while in 1967 less than £300,000 was spent. These are astonishing figures of private enterprise development.
However, private enterprise is fearful of expropriation and the inability to remit profits. The actions of some developing countries have, as Pearson points out, militated against the wish of private enterprise to participate. Indeed, Pearson's first recommendation on the question of private investment says:Developing countries should take immediate steps, where consistent with legitimate national objectives, to identify and remove disincentives to domestic private investment.The United States, Japan, Germany and several other European countries have provided insurance schemes, always on a bilateral basis and linked to investment agreements, so that their native companies can invest home capital in developing lands. The same cannot be said of the United Kingdom.
Many people ask why we should risk United Kingdom capital, which can in any event earn at least 10 per cent. here at home, particularly when there is the likelihood of a not much greater return in developing countries. The political risks that are involved in overseas investment and the frequent inability to remit profits are also mentioned.
What are the basic requirements of economic development? First, there should be enough capital accumulated from savings after the maintenance of public and private sector investment. That is nearly always lacking in developing countries. Secondly, there must be technical skills which can use that capital well and which are more likely to be available in a private enterprise than in a Government-sponsored scheme. Thirdly, there is the power to take risks so that those technical skills 805 can be used, and provided from this country when they are not available in the developing countries. These risks are more likely to be taken by private enterprise than by the Government. Fourthly, natural resources are valueless until they are extracted and processed.
When successful, private enterprise generates new investment, teaches new skills, raises standards, provides taxes—corporation tax and income tax—assists in the provision of local services, and provides funds for social welfare.
For what does the entrepreneur look? First, he looks for a stable, forward-looking government which is supported by the majority of its people and which is friendly to participation from the outside. However, he does not want a government which is subservient to foreign capital, for we know what can happen and how in, for example, Cuba revolution can result.
If the developing country and the entrepreneur are wise, there will be some sort of partnership, preferably by the issue of shares on the local stock exchange. The Pearson report urges a positive incentive to all companies, foreign and domestic, to share ownership with the public by the sale of equity in suitable forms. So many people think of the stock exchanges in terms of New York or London but a much better example would be one of the provincial stock exchanges in this country.
§ Mr. Whitaker
Would not the hon. Gentleman agree with the point made by the right hon. Member for Birmingham, Handsworth (Sir E. Boyle), which the Pearson Commission endorsed unanimously—that, in many of the poorest areas most in need of aid, there is no profit incentive for private investment, particularly in the provision of infrastructure, which is not likely to be profitable?
§ Mr. Tilney
I know many countries in West Africa and there is considerable incentive there but, because of the inability in the past to remit profits from Ghana, for example, or because of the political difficulties in Nigeria, not sufficient money—indeed, perhaps none at all in some cases—is going into that part of the world. Only the existing profits are being ploughed back. Of 806 course, one or two countries will have to have Government aid. I am not against Government aid. I merely say that private enterprise aid should be stimulated, and it can only be stimulated if it gets a reasonably safe return on its money.
The entrepreneur will also look for security of land tenure and local services, a pool of trainable manpower, and freedom to import expertise. This is most important because many countries make it difficult for technical skills to be imported for any length of time from this country. He also seeks a supply of local and imported raw materials and, more important than anything else, freedom from ideological prejudice. The yardstick of this is the treatment of existing investment.
I know that we have a balance of payments problem—or had, until very recently—and therefore it is difficult to argue for a major increase in aid across the exchanges. But if the Government would only look at a bilateral insurance scheme for new investment there would be less for the taxpayer to find. It would help our industries to found subsidiaries or branches elsewhere. I hope that in particular, it would help consultancy services. One must not forget the tremendous importance of consultants to many of these Governments. It would mean that trade would last for a very long time because—and this is much more important than the Government-to-Government link—it would be a link between our own industry in this country and a subsidiary or branch in the other.
I welcome what the right hon. Lady said about co-operation with the West German Government when she replied to a Question from me yesterday. I see no reason why a bilateral insurance scheme with the Germans should not be thought out. I hope she will look at that.
I believe that many people would rather see the Government partially underwriting someone else's risk than be taxed to do it themselves.
§ 12.43 p.m.
§ Mr. George Darling (Sheffield, Hillsborough)
When the hon. Member for Liverpool, Wavertree (Mr. Tilney) was developing his ideas about having proper insurance for risk taking activities which would give assistance to under-developed 807 countries, I thought that he was going to make a good constructive speech, but when he went on to suggest that the way out of the difficulties of many countries is to have a sort of capitalist class growing up, with shareholdings in enterprises provided for them through local stock exchanges, I reflected that this is surely the easiest way to create revolutions in such countries, with a lot of under-employed poor people and a local capitalist class taking the place of those who have been exploiting them for so long.
§ Mr. Tilney
One only has to look at what has happened in Jamaica where, a long time ago, there were no factories at all. The unemployment in Kingston was very high. Now, the area is like the Great West Road.
§ Mr. Darling
I want to say something about Jamaica and use it to prove my point that what some of these countries are suffering from—I did not intend to express it in this way, but the hon. Gentleman has provoked me into it—is capitalist exploitation.
I congratulate the hon. Member for Canterbury (Mr. Crouch) on raising this matter, which is vitally important. I am in full support of the Motion. We can and should be far more generous in the aid we give to under-developed countries. But we are in danger of becoming a bunch of hypocrites if we merely mouth the platitudes, on which we all agree, that more aid should be given, and do not get down to practical problems of how to give aid where it is most needed and on the scale that it is needed. But before I explain my views, I want to say that I, too, take a dim view of the prospect of having two Ministerial speeches on a private Members' day.
If we are to do this job in a practical way, we have to find out what the underdeveloped countries want, what they are most in need of, both in short term projects urgently necessary and in the longer term. On the social side, most of these countries need more medical services of various kinds—hospitals, doctors, nurses, clinics, medical research to eliminate indigenous diseases, family planning clinics to deal with population problems. Family planning clinics are now being started up with the full approval of the Government in Jamaica, and, I hope, in 808 other countries as well. These countries also need help with education—more schools, colleges and training centres. They need more help in housing—how to build more quickly and cheaply the kind of housing that the local inhabitants want. All these projects can be identified and we should play our part in seeing that in these countries they go ahead unhampered by lack of appropriate finance.
I want to look particularly at what one may roughly call economic aid. I agree that a lot more aid would be forthcoming if private enterprise had its risks properly insured by the Government, and I agree on the need for proper provision here. But we tend to think that the way out of the difficulties in many of these countries is to provide for the development of secondary industries—manufacturing industries—and industrial estates such as that at Kingston, Jamaica, and training skilled managers and workers to take them over. All this is necessary, and I fully support it, but a lot more can be done also, in other ways, by the Western countries.
I want to question whether the promotion of these projects, be they social or economic, can be satisfactorily carried out by the Ministry of Overseas Development. I have taken the view for a long time that it would be better to stimulate our own Ministries concerned with projects in medicine, education, housing and economic aid in this country so that they could project to developing countries their own expertise, knowledge and staffs. This would be of immense benefit to the overseas countries. In other words, all our Government Departments should be thinking in terms not only of what they are doing here, but of what they can do overseas in a comprehensive development aid programme.
The places where aid is needed can be identified and the kind of help can be identified through United Nations agencies, and to some extent also through the Foreign and Commonwealth Office, for our representatives abroad ought to know, and in most cases do know, what is needed in the countries where they are located, and the representatives of those countries here and in the other Western capitals know what kind of aid is required and where it is required. The specific needs could easily be made known to the Ministries concerned.
809 It would be far better, for instance, for the Department of Education and Science to become intimately and directly concerned with the development of schools and colleges and universities in the countries where aid is needed, as part of its work. The same is true of the health and housing services. This, of course, is no reflection on my right hon. Friend the Member for East Ham, North (Mr. Prentice), who served the Department so well, or the present Minister of Overseas Development, or the Parliamentary Secretary. It is just that I think that we could do a better job if the Ministry of Overseas Development did not exist.
I come now to economic aid. Here I may have a little prejudice, because if my ideas have any merit it would be the Board of Trade which would look after economic aid overseas. I think that this would be a good development.
§ Dr. Hugh Gray (Yarmouth)
In view of what the Board of Trade has recently done to India by introducing the 15 per cent. tariff on its exports of textile to this country, does that Department seem to be the most suitable to deal with this subject?
§ Mr. Darling
Certainly, because aid to other countries and the sacrifices we make here to provide that aid create problems which have to be sorted out. Whether the Lancashire cotton operatives would agree with my hon. Friend's criticism of the Board of Trade is something that could be discussed by the Lancashire Members; it is a difficult problem.
The Board of Trade is far more capable of considering specific projects of economic aid, because that is what it does in this country. Many of its activities could be more or less taken over to the countries concerned. The industrial estate at Kingston is a copy of an industrial estate in this country, and very successful it is, too. The Board of Trade is also more capable of finding relatively easily, and sometimes fairly cheaply, ways of helping some of these countries.
For instance, one of the needs of the smaller islands in the Caribbean is to get jetties, so that deep-water ships can come in and so help their trade. I know, but I had better say that there may be, one big construction firm in this country 810 which has produced ideas for a very cheap form of jetty. It is really a floating jetty and can be added to so as to take ships up to any size, the length of the jetty depending on the depth of the sea bed.
This sort of thing should be made known and developments of this kind might take place in many Caribbean islands. I question whether the Ministry of Overseas Development has the faintest idea that this sort of commercial and industrial research is going on.
§ Mr. Prentice
There is a great deal of expertise in the Ministry of Overseas Deveolpment on matters of this kind. In the Caribbean it has a very successful development division which is based on Barbados, and which is certainly in touch which the kind of problem my right hon. Friend has mentioned; and there are many others of that kind.
§ Mr. Darling
It is precisely because I know about it and because this project has been turned down that I have raised the matter.
I take another example, which also comes from the Caribbean. Anyone who goes to a yard for breaking up ships in this country knows that a number of small vessels, coastal vessels, which do not now fit our sophisticated pattern of trade, are sent for breaking up even though they have some years of life in them. They should be given away to the countries which need them. Some Caribbean islands could usefully do a great deal with this kind of ship. I understand that the Ministry of Overseas Development has informed some of the Caribbean islands in the Commonwealth that these ships are not, and cannot be made, available. There are many other things, machinery, and so on, which are broken up here, but which could be made available very cheaply to many countries overseas.
I come to a more important matter. Leaving out the wealthy oil States and dealing only with the poorer countries, there are about 50 countries in the world which are almost entirely dependent on the sale of a few primary products for their economic existence. There are some international agreements designed, in part at any rate, to keep the prices of some primary products stable and to cut out speculation, which if they did not exist would probably bring some of these countries into absolute bankruptcy.
811 But there are only a few of these international agreements and the supplies and prices of most primary products are still subject to what are called free market conditions. If for some reason there is apparent over-production, a country like Ghana, with its cocoa crop, or Nigeria, with its palm oils, can find its economy go haywire if prices fall to catastrophic levels.
There should be international agreements to make sure that the primary producing countries are safeguarded in some way, that their prices are so fixed that they can fluctuate only within narrow margins, so that the countries do not suffer poverty from having the price structure upset in one year, return to stability for two or three years, and then go bankrupt again. That state of affairs could be ended by more and perhaps better international agreements.
But we are becoming slightly hypocritical if we say that we want to give aid to these countries by building hospitals, schools, factories, and so on, when we can help them more by making sure that they get proper prices for their products. I take an example from Jamaica, which I recently visited. Jamaican banana producers get between 1½d. and l¾d. per 1b. for their bananas which are sold in this country at 1s. 6d. This is what I call capitalist exploitation, because I am not convinced that the difference is accounted for entirely by a properly efficient organisation of marketing, transportation, ripening and distribution to the final customer.
Even if it is, and even if nobody is getting an undue profit, I am equally convinced that the people of this country would not mind paying 1s. 6½d. a lb. for bananas. But that ½d. difference to the producers in Jamaica would be the difference between poverty and prosperity.
§ Mr. Darling
It would be even better to give them a penny.
That is true of other commodities. Unless we face this problem—
§ Sir J. Vaughan-Morgan
Can the right hon. Gentleman tell us what progress has been made on commodity agreements 812 in the last five years? If I recall rightly, this was a prominent part of the Labour arty manifesto in the 1964 election.
§ Mr. Whitaker
On this matter the Government agree with my right hon. Friend the Member for Sheffield, Hillsborough (Mr. Darling). The right hon. Member opposite will recall that we are already members of five international commodity agreements on wheat, coffee, sugar, olive oil and tin. We are in the process of discussions on other commodities.
§ Mr. Darling
The Parliamentary Secretary has just said what I was about to say.
My point is that we should help these countries by making sure that there is price stability at higher prices than many of them now obtain. I think that we should all agree that some kind of international agreement is necessary. We cannot do this unilaterally. If there is no international agreement, there might be over-production of those commodities resulting from higher prices—which, in the end, will be of no benefit to the countries concerned.
The hon. Member for Wavertree talked about under-employment in underdeveloped countries and said that, somehow, we must help these countries not only, as I suggest to become more prosperous by ensuring that they get better prices and better marketing for their primary produce, but to go on with further industrial developments to take up the under-employment. I agree with the hon. Member, and I hope that he will agree with me that we must do more to persuade manufacturers of products—especially things like motor cars, which will obviously be sold on an increasing scale in the countries concerned—to allow them to be assembled abroad; in other words, to ship out these products completely knocked down so that they can be assembled in under-developed countries.
A lot more could be done in places like Singapore, for instance, if we sent out stuff in bulk to be broken down there and packaged and sold throughout that 813 part of South-East Asia. These are examples of the projects that we should be considering, and helping in every way. I do not want to talk in platitudes on this business; I want to have practical proposals properly examined so that we can help these countries to the maximum of our ability.
§ 1.4 p.m.
§ Dame Joan Vickers (Plymouth, Devonport)
I am glad to follow the right hon. Member for Sheffield, Hillsborough (Mr. Darling). I also hope to put forward some practical points. I have worked for six years in the Far East and Africa, in Commonwealth and non-Commonwealth countries, and I have some personal experience of the problem.
I congratulate my hon. Friend the Member for Canterbury (Mr. Crouch) on his excellent speech. I am sorry that my right hon. Friend the Member for Birmingham, Handsworth (Sir E. Boyle) is not here, but I congratulate him on the part he has played in connection with the Pearson report—one of the most concise and clear documents that we have received for a long time—and I wish him every success in his new career; I and many other hon. Members will miss him very much.
In agriculture the picture is beginning to get better. There is an intermediate technology development group which is doing excellent work. It has been able to develop "Tools for Progress" with the Overseas Liaison Unit of the National Institute of Agricultural Engineering. A windmill pump, which has no running expenses, can be constructed for £120. Botswana has introduced rainwater catchment tanks, and micro-irrigation has been made possible. It is interesting to discover that modern machines can quite easily be pulled by bullocks, which can do twice as much work in a short time. This means that people can be kept on the land and that we do not have too many examples of complicated machinery tending to put many people out of employment.
I want to concentrate particularly on co-operation. The primary object of aid policies should be the promotion of economic development, which requires a sustained co-operative relationship between the rich and the poor countries. If the developing countries give adequate attention to fostering and promoting ex- 814 ports they should before the end of the century be able to participate in the international economy as self-reliant partners and to finance the investments and imports that they need without foreign capital or concessional terms.
Development aid should be linked to the economic objectives and the development performance of the aid that is now received. To do this by the end of the century means that the developed nations must get together—especially the European nations—to co-ordinate their aid, as this would be of great benefit to the developing countries. But it must be done quickly. If it is not done by the end of the century it is estimated that the income per head in the United States will be 10,000 dollars per annum compared with 200 dollars in India. I am sure that we should not like to see that situation arise.
Alas, the U.N.C.T.A.D. meeting in New Delhi was, in my opinion, an absolute failure. Its major project was the use of 50 tons of paper. It was a failure because there was a lack of co-operation before the conference began. I tabled a motion at the Assembly of the Council of Europe which was signed by ten other members, and I want to quote it because in January the Second United Nations Development Decade will be the main theme at Strasbourg, and I shall hope to obtain considerable support. It falls in with the opinion of my hon. Friend the Member for Liverpool, Wavertree (Mr. Tilney) about the insurance of private investment.
It says:1. That consideration should be given by the Council of Europe to producing a joint programme of aid to developing countries".I put down that recommendation because I tried in previous debates before U.N.C.T.A.D. in New Delhi, to get support on this. There are ten European countries on the board of U.N.C.T.A.D. We had a debate but, regrettably, I failed, and, except for O.E.C.D. there has been little co-ordination amongst the countries of Europe.
The motion goes on:2. That interest-free loans should be made to countries whose economic circumstances justify this concession;3. That economic investment in regard to industrial concerns should not be undertaken without plans for the provision of amenities for the employees and their families.815 In some places where industry has been put in people have drifted from the countryside to the towns and are living in shanty towns. We should have learned from our experience of our own Industrial Revolution.
I hope that exporting industry will consider using more materials of the country concerned. It is possible, for example, to use wooden frames for windows and not to import steel ones. It is possible to use the local materials instead of cement; this would be of great benefit.
The fourth recommendation was:That further provision should be made for the technical and other training of persons in their own countries, and that their studies in Europe (if in receipt of government grants)"—we had to put that in, of course, because one cannot control people who want to send their children here privately as students—should be confined, as far as practical, to post-graduate work; special attention being given to the need for an increase"—and I am sure that hon. Members would have expected this from me—in the number of facilities for the training of women".—and better education is particularly important for women.
The reason why we put this in is that I found in Malaysia that one can send a student to this country who learns very well, but who is terribly frustrated when he returns home to apply what he has learned, because he does not know enough about his own country's customs. This is why I am at the moment on a committee trying to raise money to improve the facilities for the University of the West Indies. It is of paramount importance that we should have universities in the countries of origin.
The fifth recommendation was:That in order to encourage further private investment, there should be a European insurance scheme.The Germans already do this and they have signed this document. If Europe could as a unit do it, this would make an enormous difference.
The sixth recommendation was:That all countries should give encouragement to young people to volunteer for service in the developing countries, with the host country providing board and accommodation.816 These last two points tie up entirely with the Pearson report.
The seventh recommendation was:… action should be taken by member countries of the Council of Europe to provide better information"—I am very keen on this—concerning the developing countries and their needs by means of mass media and programmes of education.Far too few people really know much about the developing countries. The ex-colonial nations may teach something about them in history lessons in their schools, but the general ignorance is very sad. In one debate in the Council of Europe, except for the rapporteur, I was the only person to take part. I hope that this will not be repeated in January, when we have our next real meeting on this matter.
I favour a non-reciprocal scheme of preference for developing countries' exports of manufactured and semi-manufactured goods, and this follows what the right hon. Member for Hillsborough said. I also favour an increase of resources by the International Development Association for 1971–75, together. This important point and another that has not been mentioned yet deal with debt relief. Europe now has a real chance of taking a lead. As I said, there will be this discussion in January and the theme will be, in a two-day debate, "The rôle of Council of Europe Member States in the Second United Nations Development Decade". Invitations have gone out to members of Parliament in Japan, Canada, Australia and the United States. We shall also in future have further debates on the O.E.C.D. Report. There is at the moment a lack of inteerst in the organisation, but it plays an important part.
An excellent measure was taken by the noble Lord, Lord Listowel, who is also a delegate to the Council of Europe and who, in May 1969, suggested that the Committee on Economic Affairs should become the Economic Affairs and Development Committee. This has now been agreed.
I am putting particular emphasis on co-operation, because I have seen what it means to be at the receiving end of aid. There is a considerable amount of wastage by overlapping of aid, and until countries get together we shall not avoid 817 this. I saw one example when I was in the Far East, in Indonesia. The Japanese had destroyed many of the sugar factories, and one country had agreed to send out the machinery for a factory. It was not until it was being assembled that it was discovered that the machinery was for beet sugar. Although that area is full of cane sugar, there is not a single beet in the 3,000 islands. This kind of thing happens, as I know from practical experience.
Therefore, to do the work now, there are two major problems. There is the complex problem that every donor country has a different set of regulations, and we should try to obviate this. I hope that, for this reason, the D.A.C. will sponsor a meeting of the major aid donors and the recipients in 1970. It is important that both should take part, to iron out the major obstacles to effective aid implementation and to explore together why it is not possible to introduce greater uniformity in the different regulations of donors and improve the procedures in the receiving countries.
I will not go into the question of private investment, because my hon. Friend the Member for Wavertree has already done so, and as I have expressed my views about this in the motion.
One point which has not yet been touched on but which is mentioned in the Pearson report is voluntary aid. This plays a spendid part and more people would like to play a part in this, because, to date, the United Kingdom has I think the second most generous record of any country in voluntary aid, but even this could be better co-ordinated. There are many organisations collecting money, and there is not much consultation. There is some consultation between the bigger organisations, but there is very little about the actual projects which they would do.
I should like to see the formation of a trust of experts who would go further into co-ordinating the projects of the existing voluntary organisations, and also a scheme which would help willing donors; in other words, people who wish to give money but perhaps find it not very easy. Various organisations have been mentioned in the debate but I should like action taken for further co-operation.
818 If we had this trust, not a Government trust, I would suggest that the Minister might consider a scheme whereby people can buy a card representing £1 to £10 units; then, when a person has any money, they can go to the Post Office and put in an amount which they can spare, and this, when completed, could then be forwarded to the trust. I should have thought that this was a practical suggestion which could help people to give aid when they want to.
As has been mentioned by many hon. Members, the World Council of Churches is very anxious that aid should be increased, but I do not think it will be very easy to channel this, to make the most use of it, if it is all done in a separate compartment. That is why I should be grateful if some consideration could be given to the point I have raised.
This has been a worthwhile and useful debate, but I hope that it will not end as a debate. I hope that the Minister will see that action is taken over the Pearson report and the many recommendations which we have not had time to discuss today. We now have a final chance to get the co-operation which I particularly desire and to get something working which will mean that, in the not-too-distant future, we shall not be talking abut the development of the developing countries: we shall all be getting nearer to the same level and eventually sharing the same standards of life which we would hope to see in all the countries of the world.
§ 1.19 p.m.
§ Mr. Bert Oram (East Ham, South)
I am glad to follow the hon. Member for Plymouth, Devonport (Dame Joan Vickers), because I entirely share her views of the need for recipient countries to co-operate among themselves and about the need for increased co-operation between donor and recipient countries. I also share her enthusiasm for voluntary aid and the need for us constantly to be devising ways in which that aid can be encouraged.
I follow the hon. Lady in congratulating her hon. Friend the Member for Canterbury (Mr. Crouch) and certainly, as I am sure the whole House does, I endorse what the hon. Lady and others have said about the right hon. Member for Birmingham, Handsworth (Sir E. Boyle), who has played such a part in the 819 House and m the compiling of the Pearson report. I do not, however, propose to follow the hon. Lady in her theme of co-operation between countries. My remarks will be particularly directed to bilateral considerations.
I am glad that almost every speech in the debate so far has dealt with the quality and character of aid-giving and that there has been less emphasis than I had expected on the question of volume, which is so controversial today. I am glad about this because, although I share the anxiety of friends of aid about the amount of aid that this country is providing, I have in recent days had a feeling that by concentrating on the question of quantity or volume of aid, we might in our discussions about it neglect some equally vital questions about what the nature of aid should be and how we can improve performance as well as improve the quantity of aid.
I should like to illustrate that from the Pearson report. So much attention has been given to the new Pearson target of 0.7 of 1 per cent. in terms of official aid that too little attention has been given to the fact that in the section of the Pearson report entitled "Outline of Strategy" there is not merely one recommendation, but there are 10 recommendations, of which the question of volume and the new Pearson target form only one. The other nine recommendations have much more to do with the question of quality rather than quantity.
Yesterday, at Question Time, and to an extent again today, challenging and sometimes almost harsh things were said about the performance of the Ministry of Overseas Development in terms of volume of aid. I join in expressing disappointment about the figures that were announced yesterday. I understand, however, the reasons why those figures should not be higher. Moreover, I believe that the Ministry of Overseas Development may claim that in almost all the other Pearson criteria, the Ministry and the Government have a success story to tell.
If I may give examples from the nine points on quality listed by the Pearson report, that report calls for a clearer purpose and greater coherence. I suggest that the very setting up of the 820 Ministry of Overseas Development had that objective in view and that in its work over the last five years the Ministry has had that objective very successfully before it.
The Pearson report calls attention to the need to tackle the problem of mounting debt by under-developed countries. The historic policy decision to have interest-free loans, to which my hon. Friend the Parliamentary Secretary referred, is a success story in meeting another of the Pearson challenges. It calls for effective aid management, and a great deal has been done over the last five years in achieving this. The report calls for emphasis on the multilateral machinery of aid. Here, too, the attitude of the Government has been unequivocal throughout. The report calls for emphasis on education and agriculture. Here again, I have seen a considerable new emphasis on these activities during the last five years.
Therefore, while I hope that my right hon. Friend the Minister will take full note of the criticisms that are being offered on all sides about the volume of aid, and the figures that she was able to announce yesterday, at the same time I hope that she will vigorously pursue the policies to which I have called attention and which would enable her and her Ministry to claim that in other matters than volume they are living up very well indeed to the standards and hopes expressed in the Pearson report. I hope that all due credit will be claimed and will be given to the Ministry in these respects.
I wish to deal with the question of volume of aid in a very different way from the arguments and analyses which are so often put forward and which have been very much put forward in the current controversy about aid volume. I always listen with great respect and attention to my right hon. Friend the Member for East Ham, North (Mr. Prentice) and others when they stress, perfectly properly, that the aid programme has a comparatively small adverse affect on the balance of payments. However strong that case is, however, and I recognise it as being very strong, I think that they would all agree that as to about one-third of the aid programme there is an adverse effect on the balance of payments. In present terms, that means an adverse 821 effect on the balance of payments of about £70 million a year.
Then comes the argument, which again, I entirely accept—indeed, I have put it forward—that that £70 million is worth it, because, even from the viewpoint of the interest of this country, it is bread cast upon the waters. But I also understand the point of view, which is often summed up as being the Treasury view, that that £70 million is on the adverse side of the balance of payments, and that the Chancellor of the Exchequer has to take this very much into account; and it is a sizeable amount when he is struggling to put the balance of payments in order. Inevitably, the Chancellor of the Exchequer is concerned not with bread that is cast upon the waters, but with the short-term effect upon the immediate balance of payments situation.
In discussing these aid matters, we should maintain a fair balance in the argument. Therefore, I wish today to put forward a proposal which, I believe, could bridge the gap in the thinking between the advocates of reaching the Pearson target and those, like my right hon. Friend the Chancellor, who have strong reasons for not being able to go as fast as we would all wish towards that objective.
I believe that we should devise a new form of aid. We should maintain and, as far as the balance of payments will allow, expand the orthodox aid in the form that we know it at present. In addition, however, we should have a system to provide developing countries with a large flow of concessional export credits. I suggest the shorthand term "trade aid" as a new tranche of aid over and above that about which the debate has been concerned so far.
From the point of view of the donor country it would be public finance to help the exports of the donor country; to help it obtain exports that it would otherwise not get. From the point of view of the developing country it would help it to finance its imports; help it to buy the imports that it could not otherwise afford. That is why I use the term "trade aid." I have in mind that public funds should be blended with privately provided resources so that our exporters are able to offer longer-term credit at lower rates of interest to the developing countries.
822 I recognise that this would present a formidable problem of control, and I do not wish to shirk this issue. If we were to adopt my proposal we would have to ensure that these financial facilities were not enjoyed by the wrong kind of exporters exporting the wrong sort of exports to the wrong sort of countries for the wrong sort of reasons. There are serious dangers, but I do not think that the dangers of abuse need be insuperable.
§ Mr. Frank Judd (Portsmouth, West)
I always listen to my hon. Friend speaking about development with profound respect and interest. He has been arguing that a fair balance must be borne in mind between the needs of the balance of payments and the desire to give aid. Would he explain the difference between what he is now advocating and an expansion of the principle of tied aid? Would he agree that if we have development as our primary priority, his new proposal might contradict that principle? Would he further agree that we do well out of an increased international aid effort on an untied basis?
§ Mr. Oram
If my hon. Friend will be patient he will see that my subsequent remarks will, to a great extent, answer his questions. I am proposing an addition to the existing aid programme, an addition which I hope my hon. Friend will consider is along the lines which he and I are anxious to see developed.
As I was saying, the problem of control, though difficult, should not be insuperable. During my five years in office I acquired great respect for the ability of civil servants to codify criteria and practices to safeguard the expenditure of public money. I am sure that they could do so for the purpose I have in mind. Indeed, in the administration of the present aid programme problems of definition and control, of equal seriousness and complexity, are being overcome daily, and I do not see why that expertise could not be applied to the sort of scheme I am suggesting.
I will mention some of the general points that could be covered. We should not bolster up inefficient or extortionate exporters. My right hon. Friend the Member for Sheffield, Hillsborough (Mr. Darling) pointed out the need to ensure that the developing countries buy at fair 823 prices. We should ensure that the contracts which our exporters win by the use of the financial facilities I am suggesting are those that they would be unlikely to win without what I have called "trade aid". At the importing end, in the developing countries, we would need to ensure that the imports served a real development need which would not otherwise be easily satisfied.
As for the kind of development which I believe my trade aid proposal could facilitate, at present this country provides—apart from its multilateral contributions—two kinds of finance, on the bilateral side, for the development needs of the developing countries. They are broadly, official aid funds for infrastructure and private flows for the rest. But between the two we neglect the important intermediate sector. This is not part of the infrastructure and it is not the range of activity which is most easily dealt with by ordinary commercial processes; it is not that superstructure.
I have, therefore, coined the phrase "inter-structure" for the bit between. Infrastructure consists of roads, schools, irrigation schemes, health services and the like and it is mainly for these purposes that the official aid programme is used. What I mean by "inter-structure" is the layer above the infrastructure and concerns, for example, telecommunications along the road, fertilisers and pesticides for the crops on the irrigated fields, perhaps prefabricated parts of houses and public buildings and machinery of all kinds appropriate to the special needs of particularly the vast rural populations of the developing countries.
It is in this connection that I support the call of the hon. Member for Plymouth, Devonport (Dame Joan Vickers) for attention to be given to the work of the satellite institutes of the Ministry of Overseas Development like the Tropical Products Institute and the Overseas Liaison Unit of the Institute of Agricultural Engineering, both of which are doing an excellent job. The same can be said of the Intermediate Technology Development Group, which has produced an excellent publication entitled "Tools for Progress", which is a compendium of useful machinery ideally suited for what I have called the inter-structure of the developing countries.
824 I would like to see a system which enabled the manufacturers of these machines and equipment to sell their products in vastly increased quantities where they are really needed. These British manufacturers could be helped to do this, and the developing countries could be helped to buy the machines if my concept of trade aid were adopted.
So far from this kind of aid being a burden on the balance of payments, it would be entirely on the right side of the account. It would, I agree, be completely tied, but we need not apologise for that, for it is the most effective kind of increased aid which we, in our present circumstances, can afford. It would serve the real development needs of the under-developed countries, but it would also serve British interests, and it would be none the worse for that.
I do not know whether this sum of money which I hope will be forthcoming would count towards the fulfilment of the famous 1 per cent. U.N.C.T.A.D. target. I do not know whether it could legitimately count towards the 0.7 of 1 per cent. of official aid that Pearson recommends. I believe that it could and should count to our credit in these matters but, quite frankly, I do not care whether or not it does. I am not greatly enamoured of sophisticated arguments about targets and targetry. All I am concerned with is that we should do the utmost in the ways that this country most suitably can, to contribute towards the development of the resources of countries in such desperate need.
§ Mr. Braine
We are following the hon. Gentleman's suggestion with the greatest of interest, but what he is proposing would increase the volume of tied aid going from this country, and this would encourage other donors to follow suit. One of the main recommendations Pearson makes is that there are great advantages to the developing countries to get away from tied aid as far as possible and, on balance, there are tremendous advantages to our economy if the international aid were more untied.
§ Mr. Oram
Provided that the right goods get to the right places by this means, and even if our competitors or partners in this business followed suit, the ultimate result would be beneficial all round.
825 This proposal is perhaps new, and it is certainly controversial, but I sometimes feel that the debate on aid gets itself on to stereotyped lines and suffers as the result. I am, therefore, urging my right hon. Friend to consider seriously what I have been saying, and the proposal I have made. I hope that it will be examined with all care. I know that there are formidable arguments against what I am proposing—and the hon. Gentleman the Member for Essex, South-East (Mr. Braine) has immediately raised one of them—but I hope that those arguments will be seen as something that can be overcome rather than submitted to.
I believe that on the basis of my proposal my right hon. Friend could argue for an increased aid programme of this special kind over and above the figure for orthodox aid which she announced yesterday; and that in doing so—and I mention this as it may be her chief anxiety—I believe that she would not only find that the aid lobby would be pleased with the results but that the Treasury, the Board of Trade and those who are concerned particularly with British interests in these matters would also be pleased.
I believe that it would enable us to do a job in relation to public opinion. As far as public opinion in developing countries is concerned, I do not think we have anything to lose. Their Governments and people all to readily believe that Britain, and other donors, are only in the aid business as much for their own sake as for that of the recipients; and there is probably an element of truth in that belief. But I believe that at home the whole concept of aid could be made more acceptable if we included this element of what I have called "trade aid". It would not only ultimately be acceptable to the aid lobby, but would also be acceptable among that great mass of public opinion which, as has been said today, is either indifferent, ignorant, or hostile to the question of overseas aid.
I believe that those in those categories of opinion can be brought to see more clearly that with this kind of proposal, their own jobs here at home, their own prosperity and Britain's own interests are closely connected with the standard of life of the people of the developing countries and that the two sets of interests 826 are in harmony and not in conflict. Too many people believe that aid is against the interests of Britain even though they admit that it would be in the interests of the developing countries. Some such proposal as I have advocated would overcome that difficulty and that people would much more readily see that the two sets of interests are really one.
I therefore urge my right hon. Friend to engage in a campaign along lines I have advocated for an increased aid programme of the kind that I think is practical. If she does this she will get the backing of men and women of good will in these matters.
§ 1.46 p.m.
§ Mr. Cranley Onslow (Woking)
I know that the hon. Member for East Ham, South (Mr. Oram) will forgive me if I do not follow him, not only because I wish to be brief but also because it is not long since he and I had the opportunity to debate the issue of overseas aid at a meeting organised in my constituency by Oxfam. He will know already that much of what I say will not necessarily agree with his observations or, indeed, with what other hon. Members are likely to say today: and whilst I welcome this first opportunity the House has had to debate the Pearson Report, I must explain that I am standing where I am standing, which is the nearest approach to a cross-bench position that the House allows, so that I can disagree impartially with both sides of the Chamber.
Overseas aid is a subject of great importance, but there is more misconception and self-deception about it than there is about almost any other subject of current debate. I must take issue with the Motion which my hon. Friend the Member for Canterbury (Mr. Crouch) so eloquently moved, because I am disturbed to see the emphasis placed in the final line on… the proportion of gross national product voted to overseas aid.Had my hon. Friend been able to refer to the proportion devoted to promoting economic progress throughout the world my quarrel with his Motion would have been the less. It is the emphasis on official intervention that I find so uncongenial, because I am one of those who wishes passionately to see economic 827 progress throughout the world but believes, equally passionately that official aid and its growing institutionalisation act as a major barrier to that progress.
I am aware that there are major vested interests lined up against this view. Politicians, civil servants, academics and clergymen in this country and throughout the world have in their various ways, strong vested interest in seeing that the flow of official aid increases, and we should recognise that. This being so, we should also realise there are those amongst us who are trying to put about concepts in support of their own views which will not stand close critical examination. One example is the notion of self-sustaining growth. Anyone who believes that such a condition can exist will do well to ask himself how it is that Spain figures amongst the underdeveloped countries listed in the Pearson report.
A second and perhaps more current concept that I find misleading is that recently expressed by the Bishop of Exeter, who has said in his diocesan leaflet that… people in Britain should be taxed even more heavily and so should the people of other 'affluent' countries … Two-thirds of the human race are living at starvation level.I do not know what evidence Dr. Mortimer has to support that statement, and I do not know whether, when speaking of starvation, we mean the same thing. If he means that two-thirds of the human race are dying of hunger, that is a very serious statement, but We do not have much evidence for it: and if it were true, it would seem to warrant a more positive reaction than the simple conclusion that people here should be even more heavily taxed.
I cite that case because it represents a type of propaganda in favour of aid to which we shall be increasingly exposed, and we might do well to pause, and to reflect that in many cases where people are short of food it is by no means necessarily our fault.
I spent four years working in Burma, a country with a population of about 25 million: it is a remote country, but not small and insignificant. I think it a fair example to cite in the present context. The House might like to hear what has been said by one of the few 828 Western reporters recently allowed into Burma. Speaking of conditions in the capital city, Rangoon, he said:they stand in line at 'people's stores', ration cards in hand, waiting for a chance to buy rice, bread, soap or a bit of cloth to make a longyi, the Burmese sarong. But when the doors open, the shelves, as often as not, are bare.So severe are the shortages that a standard joke in Rangoon, which averages 100 inches of rain a year, is that if the Government decided to nationalise water there would be a drought. Rice exports continue to decline, dropping from 1,800,000 tons in 1962 to an expected 600,000 tons this year.The report goes on to say that Ne Win, the head of the Government, commenting on the situation, has simply said:I am not interested in any economic situation … which does not put the people's interest first. We must go the way of true socialism.We can find plenty of countries where the situation may not be quite so critical as it is in Burma and where progress towards true Socialism is not so well developed. It is easy if we look at Indonesia, for example, to see why that country is making more progress now than it was five or 10 years ago. It is easy to look at South Korea to see that real progress there dates from the introduction of an efficient tax collection system. It is especially interesting to look at what is happening in India, the country which has absorbed most overseas aid in the last 15 years, and to take the testimony of an Indian economist on it.
Hon. Members may have seen in the Daily Telegraph of 5th November a letter from Professor B. R. Shenoy, Director of the Economics Research Centre, New Delhi, in which he comes to this conclusion about the effect of aid in India:Aid has failed in both its major objectives: protection of democracy and relief of abject poverty. India is nearer Communism today than when aid began, and each year tens of thousands of families are being pushed towards or even below the bread-line as a result of perverse income shifts in the context of semi-stagnant production.Mr. Prentice and others should understand that the remedy does not lie in increasing aid but in basic policy changes within aid-receiving countries and in channelling the flow of savings to them via the capital markets of aid-giving countries. It is fundamentally important that aid is put to the comparatively most productive uses, not dissipated in Government-fancies projects. The market mechanism may achieve this vastly better than any civil service.
§ Mr. Lewis Carter-Jones (Eccles)
Does the hon. Member think that there are extravagant ventures in India which are wasting public money?
§ Mr. Onslow
The hon. Member should know that the example of Durgapur has already been quoted, and if he wants other examples, I can give them. We should not imagine that all farmers are dead stupid. People who tell us, as my hon. Friend the Member for Canterbury did, that there is an urgent need for education to instruct farmers in the use of fertilisers, would do well to reflect that a farmer is most likely to respond to new techniques when he has a market for the product. Without this, all too often, the farmer's reaction will be to reduce the area under cultivation and thus frustrate the efforts of those trying to help him. It is the existence of an outlet which provides the incentive and which makes him maximise his efforts. In Thailand and in Malaysia we can see many examples of this.
My final point is a general one which I want to express in four particular ways. In talking of this subject we must at all costs avoid pretence. There ought to be no humbug about this and no deception. If the eyes of people elsewhere are on us, let us at least tell them the truth. Let us be frank about the Government's record. I do not know why the Government will not take credit for having been sensible in one respect, cutting down expenditure on official aid. They might just as well say that this was a deliberate, conscious and sensible decision—far more sensible than the cut they imposed on private investment.
If we are in difficulty, if there is a need to protect our reserves—this is the Ministerial line—it does not require enormous thought to see that we protect them best not by giving money away, but by allowing it to be invested and thus to earn an increment as well as to retain the ownership. This will also do the under-developed countries most good by concentrating resources on investments which are most profit-oriented—and this, again, means private investments. If we look at the figures we see that in 1968 private investment overseas was back at the 1962 level. This, to me, is a far more serious and disturbing situation than the fact that official aid has been cut.
830 Whatever the right hon. Member for East Ham, North (Mr. Prentice) may say, private investment is susceptible to Government action, and we know it. It is no coincidence that money devoted to this has gone down. Three types of control have been imposed since 1965—and what, moreover, has made capital so expensive in this country? Are the Government disclaiming responsibility for interest rates? The reason for the emphasis on official aid is that this enables the Government to exercise greater control. That is the key to the matter, not that it promotes greater progress.
It is idle for us to pretend that we are doing all we can so long as we adopt protectionist policies. If we sell to people overseas expensive machinery to make products we then refuse to buy from them, what service have we done them? There is far more need for expenditure in this country on restructuring our own industries than Ministers of Overseas Development have been prepared to admit, or, I suspect, to argue with their Cabinet colleagues.
I think it idle for us to pretend that we can pledge ourselves to spend £535 million in 1975 in fulfilling the 0.7 per cent. Pearson target. I do not think that we should pretend that this will be within the capacity of any Government of either party. There are pressures upon us—teachers' pay, to take a typical example—which will pre-empt the resources of the taxpayer. There is a need to develop our own medical education in order to avoid sucking in doctors from the underdeveloped world. We should concentrate on matters like those.
If we let it be thought that, although we will not say so openly, we are really committed to the Pearson figure, the disappointment which we shall finally spread about the world will be enormous and we shall find, when the end comes, that our acts will be in no way to our credit and to our advantage. Let us be honest now. Let us be realistic. Let us not hold out such false hopes to the people who are poor throughout the world that when they come to taste them they find that they have nothing to eat but pious words.
§ 1.59 p.m.
§ Mr. Lewis Carter-Jones (Eccles)
Paragraph 102 of the Seventh Report from the 831 Estimates Committee, Session 1967–68— Overseas Aid—says:Your Committee are concerned that the value of the aid programme should be more widely appreciated.That is appropriate, in view of the remarks of the hon. Member for Woking (Mr. Onslow).The Ministry of Overseas Development share this view and have made considerable efforts to increase the publicity given to their work. Your Committee believe that more can and should be done. Parliament can give a lead by devoting more attention to this question. It should be possible to hold a regular debate at least once a year on overseas aid.For the second time when the subject of overseas aid has been discussed it has been left to a back bencher to initiate the debate. If hon. Gentlemen opposite have as much interest in this subject as they pretend, they should persuade the Opposition Front Bench to have a full-scale debate on it, in the same way as my right hon. Friend the Member for East Ham, North (Mr. Prentice) and myself would like our Front Bench to initiate a debate on the subject.
It is unfair to make an assertion against any country regarding one of its major projects, The hon. Member for Woking referred to Durgapur but did not go on to say that there had been an honest attempt to put the matter right. He did not bother to put the record straight and say that the Indian Government themselves had gone out of their way to rectify the matter, had established their own committee and adopted its recommendations for improvement and putting the matter right. The impression left by the hon. Gentleman was that nothing had been done, whereas in point of fact the problem was recognised and tackled.
§ Mr. Onslow
My criticisms of Durgapur goes much deeper than that. I regard it as having been misconceived from the very outset and to have been a misplaced attempt to achieve a notion of economic independence which was wholly opposed to India's interests.
§ Mr. Carter-Jones
That is contrary to the view held by a large number of people in Britain and in India. Durgapur will be a living tribute to the wisdom of the O.D.M. and the Indian Government.
832 It is difficult for a Welshman like myself, with a non-conformist background, to talk of overseas aid in economic terms. However, we must talk of it in economic terms to the rather reactionary elements who see no good in overseas aid. I declare myself as being in favour of overseas aid on moral grounds. When I have said that, because of the opposition which arises from time to time I must now argue that it is not a case of whether we can afford to give aid. The real question is whether we can afford not to give aid.
§ Mr. Carter-Jones
The hon. Member has a very good record on this and he can be proud of it. He should try to persuade a greater number in his party to take the same line.
That is why I pay tribute to the hon. Member for Canterbury (Mr. Crouch) for having the courage at this stage to initiate the debate. Although the hon. Member for Woking (Mr. Onslow) said that he would speak from near the exit, he knew very well that he was making a speech which would be popular in the country, because public opinion surveys list it low down on the priorities for Government expenditure. I am delighted that it is for once the young who are taking the initiative and telling Parliament that we should be doing more about tackling the problem of the underprivileged.
In 1966–67 an Estimates Sub-Committee, which was chaired by the hon. Member for Aldershot (Sir E. Errington) made this observation:Those responsible for the aid programme are aware of the needs of British industry, and they must continue to be so. Great opportunities are available to British exporters as the result of the aid programme, and it is up to all concerned to exploit these to the full.These are the findings of a respected Committee of the House which spent a considerable time investigating the problem. As far as I know, no member of the Committee had any vested interest in promoting overseas aid. Some may have been dubious about its qualities, but we found no real examples of waste. We found plenty of examples of nations being grateful for the help we had given.
833 I want to refer to one element of aid which greatly concerns me. If we cannot achieve the Pearson report target, perhaps we can achieve something near one of the recommendations which appears on page 97 of "Partners in Development", namely:3. Discussions should be expedited leading to a programme of supplementary finance to deal with problems caused by unexpected and sustained shortfalls in the export earnings of developing countries.To highlight the problem of some under-developed countries, I refer to the aid known as "Kipping aid", after Sir Norman Kipping. The idea which Sir Norman, sometime chairman of the C.B.I., came up with—it could be said that he had a vested interest—should command the respect and support of all right hon. and hon. Members. His idea was that some countries are so desperately short of hard currency that from time to time they are unable to exploit their resources to the maximum, and sometimes some of their equipment and plant must lie idle because they are unable to get replacements.
The Estimates Committee says in paragraph 24:'Kipping' aid … was originally suggested by Sir Norman Kipping following a visit to India. This takes the form of loans for the supply of spares and components for British-orientated industries, which were not being fully utilised because of the lack of these essential parts; it was felt that for a comparatively small expenditure there would be a vast increase in industrial production.These are the views of Sir Norman.
The O.D.M. took up the idea, with extremely favourable results. Mr. John Freeman, our then High Commissioner in India, in answering a question put by the Chairman of the Sub-Committee, said this:This has been an immensely useful form of aid for two quite separate reasons, one, to quote Sir Norman Kipping's original epigram about it, you could find and can still find so many points in the Indian economy where a lakh of expenditure"—that is, 100,000 rupees—will create a crore"—that is, 10 million rupees—of production.He is saying that in certain sections of the Indian economy, or in the economy of any under-developed country, if they are short of hard currency it is frequently 834 possible to provide a small amount of aid which will generate production 100-fold.
The hon. Member for Canterbury used two phrases with which I completely agree. He said, first, that we cannot afford not to give aid. Second, he laid great emphasis upon multilateral aid. This is an example of the world "have" nations co-operating—if one likes, in the investment sense—to help the less privileged people. Because of our past glories in the Commonwealth, or because of our past ability to trade with Commonwealth countries, out of multilateral aid for every pound we put into I.D.A. we get 30s. back.
Anyone who pretends that we can afford to stand aside from the problems of the under-developed countries is not living in a true world. A very large number of industries in this country would deeply resent and deplore a withdrawal of aid which put their past investments at risk. It is high time this point was clearly stated, because if we do not give aid to these people and find a means of stepping up aid to them, one may rest assured that there are other people, perhaps less kindly motivated, who are prepared to take our place.
We have not got a privileged position in the world in trade. Our competitors are waiting to steal our markets. I am sorry to have to mention markets and economics in a debate on moral attitudes, but to those who like to think that aid can generate trade I have conceded the point. I am arguing that one cannot do without it.
However, in the last resort, Pearson himself once said that mankind must learn to live or die together. It seems to me that if we do not recognise enlightened self-interest we ought, for the sake of generations to come, not to pile up too many debts of bad behaviour.
§ 2.11 p.m.
§ Mr. Bernard Braine (Essex, South-East)
I have been in some difficulty in deciding when I should intervene. The Parliamentary Secretary decided to speak at the outset of the debate in the belief that the Minister would be with us to reply to the speeches at the end of the debate. I understand, however, that the right hon. Lady has been unavoidably delayed and is unlikely to be here. I 835 feel, therefore, that it might be convenient to the House if a view were now expressed from the Opposition Front Bench.
Let me begin by saying how indebted the whole House is to my hon. Friend the Member for Canterbury (Mr. Crouch) for using his good fortune in the Ballot to raise the crucial subject of world poverty, and for doing so in a speech that was a model of clarity, good sense and, if I may say so, compassion. His reward has been a debate of quite exceptional quality, and it is not over yet.
Most thoughtful people in this country now realise that world poverty presents the greatest challenge of our time. My hon. Friend gave the reasons. The world population is now increasing at an unprecedented rate. Every year the increase is greater than that of the entire population of this country. Every month that passes, the population of one country alone, India, increases by one million. Within the next 30 years the world population will more than double. What is more, that increase will take place mostly in the poorer two-thirds of the world.
The problem, as several hon. Members have emphasised, is not merely one of feeding these ever-increasing millions. The "green revolution" is beginning to show that that may no longer be a problem. It is one of finding useful productive work for them, of distributing fairly what is produced, of raising living standards—in short, of giving real hope to the poor of the world that a mere existence can be turned into a life worth living.
I agree with the hon. Member for Eccles (Mr. Carter-Jones) that we cannot afford to be indifferent to the dangers of failure that this represents to all mankind, including ourselves. Common humanity combines with common sense and common self-interest to demand that the richer nations face the implications and act now. For that reason it was right that my hon. Friend should focus attention on the Pearson report. That document appeared at a time when the mood of optimism which was generated in the 1950s about the chances of overcoming the problem of world poverty had begun to degenerate in many quarters both at home and abroad into one 836 of pessimism and even of cynicism. But the message of Pearson is that there are no grounds for pessimism. Given the political will in developed countries like ours, the problem can be overcome in measurable time.
The report shows very clearly that the development story of the last two decades, while it is not one of unqualified success, nevertheless justifies the belief that the majority of the developing countries can achieve a self-sustaining growth by the end of the century. That means that some of them will reach that stage before then. Here for the first time we have an attempt to look at the problem of world development in the round, to see aid and trade in their proper relationship. Here the most serious problem facing our generation has been put firmly in perspective.
The report shows, for example, that while aid has played a very important role in the developing countries in the last two decades, it has contributed no more than 2 per cent. of their total incomes. When one considers that they have managed to meet 85 per cent. of their investment requirements out of their own domestic savings, one sees that this is a very creditable achievement indeed.
The report shows, too, that at least one-third of the developing countries have managed a rate of economic growth which was actually faster than that achieved by the older industrialised nations at a comparable period in their history. An average growth rate of nearly 5 per cent. has been achieved, although high population growth in many developing countries has cut down the per capita increase to somewhere between 2 per cent. and 2½ per cent. Admittedly these figures conceal very wide variations of performance ranging from the very good to virtual stagnation, but they also indicate that growth is possible and, given appropriate and timely aid, that it can be accelerated.
Of course, the report concedes that there is no close correlation between aid and economic growth. This is partly because in the earlier stages aid was not always used to the best economic advantage, and, more importantly, because when it has been used, as it should be, for infrastructure—for example, when it is used to provide roads, water and power supplies, schools, or to train teachers and 837 so forth—it makes its contribution to growth only indirectly and over a period of time. But what is absolutely clear, and here I do not think anybody in the House will disagree, is that aid has been marginally critical to economic development especially where it has been in the form of technical assistance.
It is not surprising that the fastest economic growth has been registered in those countries that have been able best to increase their exports. We on this side of the House have always contended that trade is vastly more important than aid, but the two should not be confused. Aid is a supplement. It is sometimes a catalyst in increasing a developing countries efforts to improve the range, quality and volume of its trade and its capacity to meet its own internal requirements and so raise the standards of living of its own people.
The Pearson report rightly reinforces the U.N.C.T.A.D. view that further progress will depend substantially on the willingness of the advanced industrial countries, including ourselves, to give easier access to their markets—or, to put it another way, just to allow them to share in the annual increase in consumption which takes place in the developed countries. A great deal more could also be done and must be done to encourage trade among the developing countries themselves.
The report concludes that if the average rate of growth of the developing countries can be raised to 6 per cent. in the decade upon which we are now entering, the majority of them can reach self-sustaining growth by the end of the century. That is the first real ray of hope that we can overcome world poverty within a reasonable period. It is the first indication that aid need not be and must not be an open-ended commitment, a sort of dole to the poor of the world. Properly managed and co-ordinated, aid is now seen to be the means of helping the poorer countries to help themselves.
The question which the House must ask itself is this: can there be a growth rate in the 1970s of 6 per cent. and can it be maintained up to the end of the century? The Pearson report says that it can be done, but in order to achieve that objective it will be necessary for 838 the developed countries to contribute at least 1 per cent. of their gross national product. There is no magic in that figure. United Nations studies have revealed that it is roughly what is required to reach the development objective. Moreover, since some donors are richer than others, I like the figure because using the yardstick of gross national product means that each country gives according to its capacity. Even so the House will bear in mind that last year the total Western aid effort reached only 0.77 per cent. of our combined G.N.P.; so we are still some way off the target.
Hon. Members know that the 1 per cent. target includes private investment and export credits as well as official aid. As the right hon. Member for East Ham, North (Mr. Prentice) reminded us, since the volume of private investment is not altogether predictable—there are good reasons for that in this country, and I shall have something to say about it in a moment—and since development, obviously, requires assurance of a steady flow of funds over a period of years, the report recommends a target within the target. It recommends that by 1975—and certainly by 1980 at the latest—the level of official flow should reach 0.7 per cent. of G.N.P.
When the Pearson report was published, the Prime Minister rushed into print with a statement that it was one of the most important documents of the 20th century. So it is. But let us see how the Prime Minister matches his actions to his words. In his speech at Polesden Lacey on 14th September he claimed that the aid programmehas not been cut even in the most difficult days".That statement simply does not correspond with the facts. Gross disbursements were less in both 1967 and 1968 than in 1966. If we are to relate our aid to that of other donors, the proportion of G.N.P. is the fairest yardstick which we can apply, or—perhaps better still—if we relate it to the needs of the developing countries, we should consider aid net of capital repayments. On both those counts, this country's aid contribution was lower in 1967 and 1968 than it was in 1966, and, in fact, we are currently well below the target of 1 per cent. of gross national product.
839 Out of 16 member nations of the Development Assistance Committee, we are now seventh in the level of G.N.P. performance. Both France and Germany are doing better; they have already reached the 1 per cent. target. The Minister's statement yesterday indicated that we are not likely to reach it until about 1980, and perhaps not even then, whereas France and Germany have already exceeded it, and, as I said in an intervention earlier this morning, we reached it before but, that was under the previous Government.
§ Mr. Whitaker
I am sure that the hon. Gentleman would not wish unwittingly to misrepresent what was said yesterday. I was not present, but I understand that my right hon. Friend specifically said that the 1 per cent. target would be reached by 1980, or, depending on favourable circumstances, earlier than that. I do not, therefore, think that the hon. Gentleman is quite accurate in what he now represents.
§ Mr. Braine
I understood the hon. Gentleman to say that he was not here yesterday. We are at some disadvantage this morning because the Minister herself is not here. If the hon. Gentleman turns to the OFFICIAL REPORT, he will see that the right hon. Lady's predecessor asked her to confirmthat the figures which she has announced are not consistent with reaching the 0.7 per cent. Pearson target by 1975 or, indeed, projected forward, consistent with reaching it by 1980.The right hon. Lady never really answered that question. We can reach the 1 per cent. only if on top of the 0.7 per cent. we can maintain the Level—
§ Mr. Whitaker rose—
§ Mr. Braine
There is a lot more to be said. If the hon. Gentleman was not here yesterday, perhaps he had better not intervene.
§ Mr. Whitaker
I am relying on the record in HANSARD, not on any other source, and I see that in the course of her statement my right hon. Friend said:In any case, the Government intend, unless our balance of payments position should preclude it, to reach the target of 1 per cent. total flow not a moment later than the end of the Second Development Decade".— 840 [OFFICIAL REPORT, 27th November, 1969; Vol. 792, c. 634–7.]
§ Mr. Braine
But that is based upon the assumption that the flows of private investment which make up the difference between the 0.7 per cent. and the 1 per cent. will remain at their present level. If the Parliamentary Secretary had done his homework, he would know that the levels of private investment are already falling, for the reasons which have been given by one of my hon. Friends. It would have been better, I think, if he had not made that intervention, for I shall now deal with the matter in some detail.
It may be to the Government's credit that in a time of undoubted economic difficulty they have maintained an aid programme. I am the first to pay tribute to the right hon. Member for East Ham, North for the fight which he put up throughout his time as Minister to maintain a creditable aid performance on the part of this country. But it is not to the credit of the Government to suggest, as the Prime Minister did, that somehow we have done rather better than we have in fact. I found it refreshing that the right hon. Member for East Ham, North resigned on this issue, though it was sad to read his confession in the New Statesman of 17th October that he considered that the performance of his party in office had not measured up to the promises made in 1964 and that it was drifting into the 1970s without any clear idea of how it would achieve the 1 per cent. target.
The right hon. Member frankly admitted:We are clearly not giving the lead which might be expected from a country with a Socialist Government".In view of what the Parliamentary Secretary has just said, perhaps I may be permitted to add that we are not giving the lead which was in fact given in the days of the last Conservative Government.
We now have the Government's response to what the Prime Minister called one of the most important documents of the 20th century. Yesterday's statement fell miserably short of what is required. Coming at the outset of the Second United Nations Development Decade, it represented—I am choosing my words carefully—an abdication of leadership. Instead of a clarion call we have a squeak. The message has gone out—it 841 came this morning from the Parliamentary Secretary, who had been able to listen to what hon. Members on both sides had to say—"We shall help, but we are so unsure of ourselves that we think that the French, the Germans, the Dutch and even the Portuguese can spare a greater proportion of their national wealth than we can."
The statement yesterday meant, first, that there can be no immediate improvement in the volume of our aid effort. I find that deplorable, coming as it does at the beginning of the second Development Decade.
Secondly, it meant that the Pearson recommendation of a 0.7 per cent. G.N.P. official aid is completely ignored. The Minister gave no answer to the question I asked about that yesterday. On any estimate, the Minister's figure of £300 million by 1973–74 will leave the British contribution at under 0.5 per cent.
Thirdly, I want to make the point, which the hon. Gentleman has really invited, that there is no certainty as to when the 1 per cent. target will be reached, but if it is to be reached the task is to be left to private enterprise. [An HON. MEMBER: "Incredible."] It is incredible, as my hon. Friend says.
What a timid, defeatist approach! It has been said repeatedly in speeches throughout the debate that we in this country provide about 7 or 8 per cent.— the figures fluctuate—of the total Western aid effort, and, in return, receive 11 per cent. of the orders originating from developing countries. Someone should tell the Government, if it is balance of payments considerations that worry them, that while much of our aid is a straight transfer of resources—and so it should be—a good deal of it represents a long-term investment for the future.
The oddest feature of all is that a Government who have deliberately discouraged private investment overseas since 1965, and are almost alone among the Governments of the great trading nations of the world in refusing to encourage its flow to developing countries by introducing insurance for non-commercial risk, are now depending on private capital to fill the gap. That will not happen under the present Government. It cannot; it is impossible to expect that under them there will be any increased flow of private capital overseas, and it is not difficult to understand why.
842 I recognise that one of the difficulties in a debate of this kind is that we are dealing with a large number of countries at very different levels of economic and social development, which possess widely differing resources and offer widely different opportunities. For some there is a continuing need for official aid. There was no need for my hon. Friend the Member for Wavertree to be twitted on this subject. He has travelled around the world a great deal and he understands that point as well as anybody. There will be a great need for official aid for a long time to come for some run down developing countries, but for others the pre-conditions for normal private investment have already been established, and opportunities exist for expansion of the private sector.
Therefore, the right way in which to look at private investment is not as a substitute for official aid but as complementary to it and likely to become increasingly the means of ensuring sound and balanced economic growth as the development process gets under way.
Already, 30 to 40 per cent. of the total financial flows reaching the developing countries is in the form of private investment. Such investment, particularly, if it is in the form of joint ventures or partnerships, which are the new model and are what the developing countries want, can make a unique contribution to their growth. It is accompanied by managerial and technical skills that they cannot acquire in any other way. It provides jobs and training opportunities that they desperately need. It uses its resources economically—it has to—and it shoulders its own losses. That is a difference, is it not? It makes no drain on the British taxpayer, but contributes to tax revenue in the developing countries. It leads in the long run, and perhaps sometimes in the very short run, to an increase in British exports.
Of course, there are difficulties in attracting such investment—the report frankly recognised this, notably the political risks in developing countries and high taxation in the developed countries. This begs the question that if the Government really want to see an increased flow of private capital to the developing countries, they should take steps to provide insurance against non-commercial risk.
843 The reason they do not, as we all know, is that it has been their deliberate policy to check overseas investment. Thus if they ever hope to reach the 1 per cent. G.N.P., if they are ever to honour the commitment they have made, they will have to change their policies, and change them quickly.
May I take the opportunity of saying something about the Commonwealth Development Corporation. Here we have what I think nearly everyone in the House would regard as the most successful single instrument for overseas development ever devised. It is superbly managed; it is quietly efficient; and it costs the British taxpayer nothing. On the contrary, it shows quite a useful return. Yet it has been responsible for a wide variety of highly successful development projects, especially in the key matters of agriculture and rural development, which have proved an inestimable boon to the developing countries.
True, the Corporation was recently given modest increases in its borrowing powers and an indication that it will receive £11 million a year for the next three years. But it does not know for sure what capital money it will have after March of next year. Yet it is expected to provide the Treasury with estimates of its activities for the next three or four years. No business could operate on that basis. Such uncertainty makes planning exceedingly difficult, since agricultural projects at any rate involve disbursements which spread over three or four or more years.
Uncertainty is even greater when we consider interest rates. True, there is a waiver arrangement, but the corporation, I understand, has no idea at present what it can expect in 1970–71, and that makes rational planning of new activities in that year almost impossible.
Nor can it borrow from abroad. I find it difficult to understand why the Government allow local authorities to borrow overseas, when they should be told to be very careful about their expenditure, while the C.D.C., a proven instrument of economic development, is not allowed to do so. Had the Minister been here, I should have insisted on an answer.
844 We also require to know what the Government's proposals are to work towards creating what Pearson callsa framework for free and equitable international trade.At the U.N.C.T.A.D. 1 in Geneva in 1964, my right hon. Friend the Member for Bexley (Mr. Heath) gave the world a real lead by urging preferential treatment for the manufactures of all developing countries on a non-reciprocal, non-discriminatory basis. Since then, alas, there has been very little progress. The Kennedy Round, which was aimed at encouraging a greater flow of world trade, benefited the richer rather than the poorer countries.
U.N.C.T.A.D. 2 last year was a bitter disappoinment, and the only contribution by the present Government has been the savage decision that there should be a 15 per cent. tariff on textile imports from developing countries inside the Commonwealth in 1972. Their contribution to making it easier for the developing countries to sell more freely in the markets of the world has been a decision to reverse the traditional policy of this country and impose a damaging tariff, and, what is worse, to do so without any consultation with the Commonwealth Governments concerned.
There is clearly something sadly lacking in the Government's whole approach to the task of overseas development. The gap between promise and performance is woefully wide. There seems to be no positive strategy, no dynamism. Development is by its nature long term; yet the Government seem unable to look beyond the length of their noses.
Aid policy is now being subjected to detailed examination by the Select Committee. Many things which I wanted to say had time permitted are perhaps more appropriate for the committee to look into. But I want to express from this Box the profound dissatisfaction of the Opposition about the unimaginative way that that policy is being conducted.
I do not mean to criticise personally the right hon. Lady, and I certainly do not criticise her predecessor. The latter showed by his resignation how dissatisfied he was and how disturbed about the future he is. Indeed, my hope is that today's debate will have strengthened her hand in the struggle with the 845 Government, who have failed to rise to the occasion.
At any rate, the House of Commons, like a growing number of thoughtful people, particularly younger people, considers that the growing gap between the richer and the poorer nations is dangerous, unhealthy and should be reduced. It is clear that Britain has a direct interest in the alleviation of world poverty, in the quickening of economic and social development, and in the inevitable increase of world trade which would follow from that.
Let the Pearson Commission have the last word. In a chapter appropriately headed, "A Question of Will", it says:We live at a time when the ability to transform the world is only limited by faint-ness of heart or narrowness of vision. We can now set ourselves goals that would have seemed chimerical a few decades ago, and, working together, we can reach them.That is a positive message, and I ask the Government to ponder on it, to think again and see whether they cannot do better.
§ Several Hon. Members rose—
§ Mr. Speaker
I remind the House that six hon. Members have sat all day hoping to get into the debate. Reasonably brief speeches will help.
§ 2.38 p.m.
§ Mr. Frank Hooley (Sheffield, Heeley)
The hon. Member for Essex, South-East (Mr. Braine) has introduced a party note into what has been a broadly non-partisan debate. While some of the points he made are fair—I would make them myself—the notion that there was a golden age under the Tory Government with a splendid and glorious record of aid is nonsense.
The Conservative Government's record of aid between 1960 and 1964 hiccoughed along in an uncertain manner. The official contribution went up in 1961, down in 1962 and 1963 and up again in the boom election year of 1964. The record of the private flow of capital, about which the Conservatives are now so anxious, is more astonishing. The private flow in percentage terms went down in 1961, 1962 and 1963 and only hiccoughed upwards again in 1964, that boom election year. If we take these two sets of figures together as a percentage of gross national product, we see that our con- 846 tribution went down in 1961, 1962 and 1963 and rose a little in 1964.
The idea that there was a glorious commitment by the Conservative Government to overseas aid is not borne out by the facts.
§ Mr. Braine
I am sure that the hon. Member would not wish to be unfair. The point I was making was that the contribution of national wealth, which is the true test, was consistently higher. That is the point which matters.
§ Mr. Hooley
These are the figures I am quoting—the percentage of gro[...] national product. The hon. Gentleman will find that what I have said is correct.
However, I am more concerned to talk about the Pearson report. The most important words are the title, "Partners in Development". We are not discussing something we are doing for the poorer countries; we are discussing our part in a co-operative enterprise—in which we are co-operating with other rich countries, joining together our expertise, knowledge, skills and wealth with the lesser skills and lesser knowledge but none the less genuine effort which the poorer countries are making for themselves.
By an odd telepathy, the hon. Member for Essex, South-East quoted the words of Pearson which I was hoping to open with. It is a telling and good quotation and we need to remember that what Pearson is saying is that it is only faintness of heart and narrowness of vision which need hold us back in this enterprise. As he also says, the important thing is that we are to work together in this matter.
One thing I like about the Pearson report is its robust, constructive and optimistic approach. I do not approve of the apocalyptic prophesies of the catastrophe which faces the world. Man has greater resources of skills and science than ever before and I am satisfied that these problems can be solved. The record which Pearson outlines is encouraging. It points out that growth has been good and that 70 of the poorer countries have achieved a growth rate of 5 per cent. in the first development decade and that 20 have achieved more than 6 per cent. These growth rates are higher than those of the European and other Western countries at a comparable period of their own economic development.
847 Several hon. Members have mentioned the breakthrough in agriculture, the so-called "green revolution". This is important and encouraging because only a short while ago there seemed a grim despair about food and agriculture. We now see that, by applying research techniques and science, and looking at the problems of seed strains, fertilisers and irrigation, one can get and has got a breakthrough.
Pearson also draws attention to the fact that, in just over a decade, Africa has trebled its production of coffee, which is a valuable cash crop, earning exchange. I have not travelled around the world as much as the hon. Member for Canterbury (Mr. Crouch), but I was in Tanzania a few weeks ago and was struck by the wide range of cash crops which can and are being developed, such as coffee, sisal, maize and wheat. The Tanzanians are also given technical assistance and outside capital for the production of cattle, sheep, and so forth. So many of these things just need the jolt of Western science and capital. The report says that the record of development is encouraging and that the achievements have been substantial and have shown that such development aspects can move forward. That is a positive answer to those who say that we are up against an impossible problem and that aid is a waste of time. Pearson says the opposite—that the problem can be solved with the will and the vision.
I do not want to bandy too many statistics around, but I do want to put on record just what the aid target means. This is not so much because hon. Members concerned about it do not know. On the contrary, I am convinced that there is far greater ignorance among Ministers about the aid target than among people who are seriously concerned. The 1 per cent. aid target means a gross Government contribution not including repayment on capital. This should be hammered into the Treasury, because it does not know it. I have had a letter from a senior Treasury Minister who gives the wrong figures because he does not know the definition. It is high time that the Cabinet informed itself of this point.
It is ridiculous to argue that, if I give a man £10, and he pays back £5, I have given him a contribution of £10. The 848 official U.N.C.T.A.D. calculation is that the total should be disbursement minus capital repayments. This should be understood that aid figures should be minus capital repayments.
The 0.7 figure is slightly more difficult to get the hang of. It represents a fraction over 1½d. in the £ in our national wealth. Britain is an important donor country. In 1968, we were one of the top five in our contributions and after the United States we are the biggest contributor to I.D.A. Nevertheless, our record over the past few years has been disappointing and the figures announced by my right hon. Friend yesterday were very disappointing.
In 1960, we were giving about £1¼d. in the £ of our national wealth in Government aid; today it is 1d. in the £, or 1/240th of our national income. It cannot be argued that this will face us with national disaster, or represent great oppressive burdens of taxation. I have made some clumsy amateurish calculations of the consequences of the figures announced yesterday. Assuming £30 million repayment in the next few years and assuming a growth rate of 3 per cent. instead of 3¼ per cent. I reckon that by 1973–74 this famous £300 million will mean that we have crawled back to about our 1¼d. In other words, we shall be back where we were in 1960 in proportionate terms. Candidly, I think that that is not a good enough forward projection and is nothing like the largeness of vision for which the Pearson report called.
The alibi, of course, is always the balance of payments, but it should now be known even to the Treasury that the proportion of our disbursement which falls on the balance of payments is about £70 million and I have even seen the figure put at as low as £42 million. Even taking the higher figure of £70 million, that is against a turnover of £7,000 million of imports and exports both visible and invisible. We are pledging about £70 million at the most and complaining that it is somehow a restriction of our aid effort, and that is patent nonsense.
The Pearson report distinguishes three groups of rich countries. The first includes Germany, Canada, Sweden, Norway, Denmark and the Netherlands, which have already pledged themselves 849 to go for the percentage target; the second includes Japan, Australia and Switzerland, who have got there, or are well on the way. The third group includes the United Kingdom, the United States, Italy and Belgium, whose record recently has been disappointing and whose effort must be improved considerably if they are to get anywhere near the target. It is sad that our own country is in that third group and yesterday's announcement is not likely to take us out of it.
I want to refer to trade not because I think that trade is a substitute for aid, but because I think that in future discusions of the whole problem of helping developing countries the subjects of trade and monetary arrangements will bulk rather larger than hitherto. Although trade arrangements will have to be combined with a substantially bigger volume of aid from the rich countries, they will be more and more important and the discussions about trade, and particularly about the monetary system, will become much more important in this context.
I was glad to hear my hon. Friend the Parliamentary Secretary point out that this country was already party to all the international commodity agreements and I am glad that he indicated that we were pressing on with the discussion of further agreements in other commodities which are of great importance to the poorer countries. This is fundamental to their trade. It is of the greatest importance to get stabilised prices and markets for these commodities and I welcome what he said about that.
But I wish that we were moving faster and I hope constructively in preferences. The proposition for a generalised non-reciprocal scheme of preferences was one of the concrete propositions which emerged from U.N.C.T.A.D. 2, and it is of enormous importance. I know that some proposals are currently being processed by O.E.C.D. and I hope that this will go ahead and that something useful and valuable will emerge and that we shall not have a lot of horse-trading coming down eventually to the lowest common denominator which can be agreed among the wealthy countries. A preference scheme is enormously important for the trade of developing countries and I hope 850 that we shall get some advance on that front.
I echo what has been said about the 15 per cent. textile tariff. Hon. Members have been absolutely right to criticise that. It is open to criticism from the point of view of the interests of our own country. It makes nonsense for this country to protect 19th century industries if they cannot make a living at a proper level of efficiency. The future of Lancashire lies not in textiles, but in aircraft, chemicals, engineering, and so on. To protect textiles against countries like India, in whose foreign trade they are a vital component, is both inimical to the aid programme as a whole and not in the interests of our people and our own textile workers.
On the subject of monetary arrangements, I draw attention to one paragraph in the Pearson report concerning the Special Drawing Rights arrangement which was agreed by the I.M.F. this year. I make no apology for quoting this paragraph in extenso, because this creation of a new form of international liquidity—it is the creation of a new form of international money in effect—is of enormous importance for the world monetary system and is of special importance in the context of overseas aid.
The paragraph is on page 225 of the report and it says:Another way of increasing the resources available to the Association"—that is the I.D.A.—might be for the governments of developed countries to make available to I.D.A. part of the Special Drawing Rights which they are allotted in the International Monetary Fund. The activation of the S.D.R. scheme is an important step in the evolution of the international monetary system. However, it amounts to creation of several billion dollars of additional purchasing power which, as the system evolves, cannot fail to raise the suggestion that a larger fraction of such purchasing power should be steered to developing countries. (Under present arrangements, developing countries would receive only about one-third of the S.D.Rs.)International monetary arrangements are a rather esoteric topic which it is difficult to argue and difficult to put across. But it is fair to remind the House that the theories of Keynes in the 1920s and 1930s were regarded as esoteric, but eventually provided the way for the rich countries of the world to get out of stagnation and unemployment.
851 The special drawing rights scheme may provide a part of the answer to the problem of the disparity between the rich world and the poor.
I welcome the fact that the Pearson report has drawn attention to the importance of manpower and technical assistance. Our country has a valuable record in this matter, but I welcome the proposition made by the report that an international corps of technical experts—a professional careers group—should be created, and that there is also a place for an international corps of volunteers.
The Pearson report is conceived in terms of the Western world and Western economies. We should not overlook the fact that Communist countries are playing an increasing rôle in providing aid. We may question their motives and techniques, but they are interested, and are coming in. I welcome their commitment. They may learn from this. We must take this factor into account. On page 10, the Pearson report says:People today are increasingly aware of a world, as well as a national, community. Young people, especially, seem to have a feeling of oneness in human development and to be alive to the increasingly international character of human events and associations … This concept of world community is itself a major reason for international co-operation for development. It is an assertion of faith in the future, as well as a conviction of the need to act now.That is a call to which this country and Government ought to respond.
§ 3.0 p.m.
§ Mr. Richard Hornby (Tonbridge)
I shall be as brief as possible and shall, therefore, concentrate on only a few points. First, in any discussion of aid we must face the critcisms that are made about it. I suggest that the main criticisms are: first, that we cannot afford it; secondly, that it produces wasteful results; thirdly, that it sometimes distorts the normal trade patterns and patterns of development of the receiving countries; fourthly, that it is doing things that private enterprise and private investment can do better; and, fifthly, that it is doing at public expense what is best left to private charity. I shall comment on each criticsm.
On the first criticism, that we cannot afford it, I would say that it is difficult to afford lots of things. The point is that 852 we cannot ignore the environment in which we live. Our environment stretches beyond the shores of this country and of the Continent of Europe; it comprehends every country with which we trade, and those countries which affect the countries with which we trade—in other words, the best part of the world. Security and the opportunity for economic growth are presumably the twin pillars of any country's foreign policy. Therefore, we should look at the economic factors in the developing country.
On the argument that it is wasteful, of course there have been wasteful aid schemes. There has been waste in internal government. Equally, there has been waste in private investment. It is no good pinning the label of waste solely on policies directed to overseas aid. Not to give aid is also wasteful. Unemployment is wasteful. Markets which are not developing in the way they should are wasteful. Let us not imagine that the argument on waste is a one-sided argument, applying only to policies for overseas aid.
The question of the cost in terms of the balance of payments has been dealt with by other speakers. I merely say that the cost across the balances of trade is far lower than the total figures add up to. Figures of between £50 million and £70 million have been quoted. Many members of the public imagine that £200 million is the cost on the balance of trade. Figures for the period 1964–1966 show that about 66 per cent. of our aid came back to this country.
Then there is the argument about leaving it to private enterprise and the need for trade patterns not to be disturbed by Government interference. Many people who have used that argument say that it would be much better if more attention could be given to gradual agricultural development, and how worrying it is if aid goes in and accelerates a drift to the towns. They cannot have it both ways. Most of the private money that is devoted to overseas aid is being used to accelerate urban development. It is sometimes necessary to put in a balancing factor, to get a balanced social development.
§ Mr. Hornby
This balancing factor is important.
853 What we need is a partnership between the bilateral and the multilateral—between Government and private industry.
I turn now to one or two key subjects which need priority in the total picture of aid. First is the over-riding importance of technical assistance. It is the development of local manpower, with skilled outside assistance, where necessary, which is critical. I emphasise particularly the importance of administrative training. Far too many schemes, once launched, break down, particularly where there is partnership between local Governments and other enterprises, through too little administrative skill.
Second is the importance of population planning. In many countries, the efforts for economic development are being neutralised by the rate of population growth. This is equally serious in this country. It is no good preaching the importance of population policies to the developing countries if we pay no attention to them in the Western world. This argument has an unsavoury appearance if presented in that way.
Third is the vital importance of access to markets and the need for the multilateral approach to lowering tariffs. Fourth is the importance of improvements in aid management. Where waste is seen to occur, it damages the promotion of the idea and also the public opinion which one can obtain for the support of aid policies.
In the context of the argument about what should be bilateral and what should be multilateral, although there are considerable advantages in multilateral approaches, particularly in the service and the accumulation of capital, I believe that there is less waste in technical assistance if that side of the programme is done bilaterally. In most cases, bilateral schemes for technical assistance are way ahead in efficiency of the United Nations agencies and others, although it will be interesting to see what Sir Robert Jackson's report says in this context.
We are concerned with the efficiency of the machinery of aid but we are also, to quote the heading of the first chapter of Pearson, concerned with the question of will. This is where the politicians must come in. It is not enough to con- 854 sider the Gallup Polls and see that this is unpopular. It is necessary to take a view if one believes that one's environment is being dangerously affected by the absence of positive and collective policies on this problem. There is a generation gap on this subject. The young are prepared to take notice and help. The churches are taking action: the Action for World Development is to be encouraged. But if we want to argue it through and get support, aid is not solely or mainly a matter of charity. It is an investment in stability, and there is too little stability around today for comfort.
§ 3.8 p.m.
§ Mr. Frank Judd (Portsmouth, West) rose—
§ Mr. Judd
It is a great privilege to follow the hon. Member for Tonbridge (Mr. Hornby), because his courage and political leadership on issues of this kind has been well established for a number of years. I would like also to add my deep appreciation to the hon. Member for Canterbury (Mr. Crouch) for having given us an opportunity to debate this matter. Just after the last election, one of my first public engagements was to appear with him on a television programme. I realised then that the Opposition had a strong Member in the hon. Member for Canterbury, and one of deep sincerity and integrity. The way in which he introduced this debate has made this plain to us all.
When the Pearson report was published, one of the most outstanding statements of welcome came from the Prime Minister. This has already been quoted. In his Press release he said:I am convinced that it will become one of the most important documents of the twentieth century.He went on:To strive succesfully towards the objectives the Commission indicates will be a test of mankind's sincerity of purpose for the future.Taking that point, we see that we have to examine the Government's intentions in the light of that sort of commitment.
There are four lessons to be learned from the Pearson report. The first is 855 that this problem is finite; it can be solved. It can largely be solved by the end of this century. If we accept that judgment, nothing is more wasteful of public resources than to do too little.
For the benefit of those who might be tempted to believe that to try to reach a level of 1 per cent. of the gross national product is asking too much of an economy such as ours, perhaps I may again remind the House of the thoughtful words of the Prime Minister in his important book on this subject, "The War on World Poverty", in 1953. Writing of the need for a World Development Authority, which he greatly favoured, my right hon. Friend said this:This would involve a contribution by the advanced countries of, on the average, about 3 per cent. of their national income, though, of course, on the principle of equal sacrifices, the richest nations could afford not merely a higher contribution, but a higher proportion of their national income.That lead given by the Prime Minister in 1953 helps us to see the more modest argument of Pearson concerning the gross national product in proper perspective.
The second lesson to be learned from the Pearson report is the essential interrelationship of governmental aid programmes and private investment. What we learn from the report is that if private capital is to be able to secure the return it expects, if it is to be introduced into developmental operations, it is necessary to have governmental programmes on the level of 0.7 per cent. of the gross national product. Reading the Pearson report, I think it is also correct to conclude that private investment alone will never generate a pace of development which will enable the economies of developing countries to reach self-sustaining growth, let alone achieve it by the end of the century.
Thirdly, the lesson to be learned from the Pearson report is that while the contribution by industrialised countries such as ours is critical—the hon. Member for Essex, South-East (Mr. Braine) made this point very plain—it is only marginal because more than 80 per cent. of the effort for development is coming from the people and the countries of the developing world themselves. This is something which we should all remember with due modesty when we talk about the contribution which we are making.
856 The fourth lesson to be learned from the Pearson report is that when we try to introduce cohesion and sound planning into development processes in the third world, a greater emphasis on multilateral and international co-operation is essential.
In the short time that is available, it would be wrong to bombard the House with statistics, and it might even be repetitive, but there are certain facts which must be emphasised by anyone speaking on this subject from this side of the House. When we look at our record, there are certain facts which have to be underlined. First, we must recognise that in 1964 we were giving .53 per cent. of our gross national product in net terms towards development. In 1965, the figure had gone down to .48 per cent. and in 1968 it had gone down to .42 per cent. That cannot be disputed. To put the matter in rather more graphic terms, in 1964, allowing for interest and capital repayments, we were giving £153 million towards development. In 1967, this had gone down to £151 million and in 1968 it had gone down to £150 million.
To put the matter in an even more grave context, we have to realise that during the past eight years this country's gross national product has gone up by 60 per cent., or nearly £15,000 million. We have, therefore, seen a decrease of the scale which I have indicated during the time when there has been an immense accumulation of wealth in our community as a whole.
In looking at this position, it is small wonder that the Pearson Commission singled out Britain, together with Belgium, Italy and the United States for special criticism. The report said:It is a matter of extreme urgency that they stem the decline in the proportion of their gross national product devoted to official aid.If we accept that challenge in the Pearson report and then examine the statement made by my right hon. Friend the Minister yesterday, we are not encouraged.
Taking any reasonable rate of economic growth in Britain as the basis for our calculation, it is clear that by 1973–74 we will not be reaching 0.5 per cent. of the G.N.P. in our official aid programme. This is clear from the figures 857 given by my right hon. Friend. According to her figures there will be a significant jump in the level of our contribution three years hence, between 1972–73 and 1973–74, but we have no evidence to be sure that we can achieve even the figures which my right hon. Friend gave.
We must, therefore, consider the commitment of the Government for next year. When we do that we see that we will barely have any increase—indeed, there may possibly be a further decline—when the sum is looked at as a proportion of the G.N.P. If this is so, I hope that my right hon. Friend appreciates why many hon. Members who follow this issue closely are profoundly disappointed; and this view is shared by many people outside.
While I am sure that this argument does not apply to my right hon. Friend, if there are those among her colleagues in the Cabinet who believe that the lobby outside is comprised of well-meaning, charitable old ladies who do not understand the argument, they are completely misunderstanding the situation. It is my experience that the growing pressure in this context outside comes from those who comprise one of the best-informed and most articulate lobbies that Parliament has ever seen.
For the Government to, on the one hand, welcome the Pearson Report and the Motion which we are discussing and, on the other, produce figures such as those produced yesterday will delude nobody. Indeed, it may even lead beyond disillusion to open opposition to the Government's position. This may certainly be the feeling of those who are earnestly lobbying outside for something concrete to be done.
I join with my right hon. Friend the Member for East Ham, North (Mr. Prentice) in urging us to say to our friends outside, "Do not be too disheartened. By your action you have almost certainly prevented an even worse set of figures from being produced. We must now build on what we have so far achieved, modest though it is, to prevent a worse set of figures from coming forward and to ensure that the Government are compelled in future to move steadily forward on the aid front."
On too many occasions we hear about the economic difficulties which confront 858 the Government in their endeavour to give priority to the aid programme. It is high time that that misleading conception was nailed once and for all. Taking capital and interest repayments together, and allowing for orders placed in this country by the developing nations, we are, out of the international aid and development programme, doing quite well.
This is happening partly because of the lead that we gave in the past; the international effort is enabling the developing countries to place orders in Britain, evidently because we are able to supply their needs on a competitive basis. It would be disastrous for us if, by our actions, there occurred a deflation in the international effort. Indeed, if we were to take such action we would be cutting off our nose to spite our face.
I have advanced an argument on aid which is not based on traditional, charitable concepts. Instead, it is based on a fundamental recognition and acceptance of the principle of interdependence. If there was ever a country which was utterly dependent on the world for its economic well-being, it is Britain. If we wish to ensure sound economic prosperity for our people, we must look to an expansion of world prosperity and this must, therefore, have a high priority in the Government's thinking.
I join with those who say that there is sometimes complacency, even arrogance, in our view of civilisation. We occasionally seem to believe that our civilisation will achieve what no other civilisation in the history of man has yet achieved, which is its own survival. If we want to overcome the dangers—and there are plenty of warning signs on the horizon—of our civilisation going the same way as others, we must look at our very real responsibilities as politicians.
I am convinced that Western democracy, with its emphasis on freedom and all that we take so much for granted in our own society, depends for its survival and success on a real interplay of courageous political leadership and articulate public opinion. If we become prisoners of what has been described as "micro-psephology"—going out every day to find out the existing state of public opinion and taking that as a limitation to our policy—the collapse of Western democracy will be inevitable.
859 If Western democracy, and with it our civilisation, is to survive, we must certainly take public opinion into account, but political leadership means going out and telling that public opinion, "This is what we believe to be essential, and this is why we believe that it should be done." If we have not so far succeeded in doing that, it is no good trying to sweep the issue under the carpet, trying to face both ways, trying to say, "We are doing very well, but we do not want to pay any more for it."
We must say to the British public that we have to give aid because it is right, and because sick people, hungry people, ill-housed people are under-privileged people whether they are living in Latin America, India, Africa, London, Portsmouth, or wherever it may be. We also have to say to them that because of the sort of nation we are it is a foolish absurdity to believe that we can look to our own self-interest as a community without looking at the interests of the international community of which we are a part.
§ 3.22 p.m.
§ Sir Edward Boyle (Birmingham, Handsworth)
I join with many hon. Members in congratulating my hon. Friend the Member for Canterbury (Mr. Crouch) on initiating this debate, and I thank the Parliamentary Secretary for his kind reference to me at the beginning of his speech. As a member of the Pearson Commission, I have, naturally, felt very encouraged by the mood of the House today.
I begin by repeating that the aim of the Pearson Commission's report is to promote self-sustaining growth. Its aim is to urge developed countries to make a strong effort limited in time in order to get the poorer countries by the end of the century into a condition which will enable them to achieve a 6 per cent. growth without further need for aid on concessional terms. The date may be over-ambitious, but I am sure that the strategy behind the report is right. Furthermore, the aim of the report is to make some contribution to the achievement of a world order in which all nations can live in peace and dignity.
I agree entirely with all that has been said today about common humanity and enlightened self-interest as motives in aid 860 policy. I add only one other point, which we mention specifically in page 10 of the report. We point out there that the poorer countries have made their choice for development, and to them it is part of their unfinished revolution. It is important to remember that point.
As a member of the Commission, I paid a visit, not my first, to India in April last. I can so well remember a conversation which one of the other commissioners—Dr. Saburo Okita, of Japan—and I had with the head of the Indian Economic Planning Commission, Mr. Pitambar Pant, at breakfast one morning. He described in a most impressive way how, during the war, when imprisoned as a Freedom Fighter for the Congress Party, the achievement of Indian independence and the future of Indian economic planning were to him all part of a single process. We should never forget that developing countries are determined, as part of their whole political process and their wider objective for society, to achieve a better life for themselves and for their children.
My second point is to urge that we should avoid the extremes either of pessimism or of undue optimism when dealing with this question. There is often too much pessimism today about what aid has achieved and about prospects for development. It is worth remembering that the average rate of growth for all developed countries between 1950 and 1968 has been 4.8 per cent. and 35 developing countries have managed a growth in income per head of 2 per cent. or more over a ten-year period. That may sound small, but, pursued over 100 years, it multiplies the standard of living by 7 per cent., which was roughly what was achieved by developed countries in Western Europe and North America between 1850 and 1950.
However, the picture is not at all rosy and we should remember the other side. Living conditions over enormous areas of the world still remain below the standard in Europe before the Industrial Revolution. In over half the developing world average incomes are below the average figure of 100 dollars per head. With the rapid rise in population, improvement in income per head has often been imperceptible. For Latin America as a whole it has been growing at less than 2 per cent., in East Asia about 2 per cent., in Africa only 1 per cent. and in 861 South Asia only about half of 1 per cent. The gap between the rich and the poor nations is still widening rapidly, but still worse—and something which we ought never to forget—is the absolute poverty of individuals in the poorest nations of the world today.
My third point concerns the volume of aid. As many hon. Members on both sides of the House have pointed out, domestic savings in the 1960s have financed 85 per cent. of the development of the less developed countries. Even so, the marginal contribution of aid to development is still highly important. I think I am right in saying that the total official development assistance last year was about 6.5 billion dollars. I apologise for quoting so many figures in dollars; that is because their source is the World Bank. This financed approximately on average 20 per cent. of imports from industrialised countries. That extra 20 per cent. can make all the difference between growth and stagnation.
I agree entirely with the right hon. Member for East Ham, North (Mr. Prentice) that it is no good just being for development assistance in a vague and woolly fashion. Our aim on the Pearson Commission was to set a target which called for a big effort, but not so big as to make it easy for the donors to feel justified in rejecting it. I think that most hon. Members on both sides of the House feel that we got the balance about right. I am pleased by the general reception that the Pearson targets have had. For the same reason I feel seriously disappointed, as many hon. Members must be, with yesterdays statement by the Minister. I should like to have heard the right hon. Lady say clearly that the Government regarded themselves as committed to the fulfilment of the U.N.C.T.A.D. 1 per cent. target not later than 1975. I believe that the Government should have committed themselves to that target by the Pearson date of 1975.
As to the 0.7 per cent. target of official development assistance, I do not go quite so far as the right hon. Member for East Ham, North. I would not have expected the Government to accept the commitment to fulfil that target by 1975. I do not mind admitting that I supported the let-out clause in the Pearson report in relation to 1980. I was instrumental in 862 seeing that there was a paragraph in the report which emphasised the difficulty for certain countries with severe balance of payments problems, but I think that the right hon. Lady should have taken advantage of this let-out clause to have said that it was the intention of the Government to fulfil this target not later than 1980.
What I found so disappointing about the right hon. Lady's statement yesterday was that the requirements of the current Public Expenditure Survey Committee Report so clearly took precedence over the Pearson recommendations. I think that the Government should have committed themselves, looking ahead, to the Pearson strategy and the Pearson target of 0.7 per cent by 1980. I believe that it is highly important for Britain to give a lead.
Since no one else has quoted it in this debate, I should like to quote from the first of the articles which Mr. Cunningham, a former principal in the Department, wrote in The Guardian this week:The success of Pearson will, of course, depend on whether the Americans decide to implement it. The United States gives more than half of Western aid but this represents no higher a percentage of national wealth than Britain's programme. If one of the principal donors like Britain comes out with a clear undertaking that it will implement Pearson provided the other main donors do so too, this could tip the balance and put the development effort on to a higher and more stable basis.Those words are justified, and that is why I still hope that yesterday's statement by the Minister will not be the Government's last word.
With great respect, I sympathise entirely with and find entirely credible the statement of the right hon. Member for East Ham, North that, if he had not already left the Government, he would be doing so now rather than underwriting the statement made yesterday afternoon.
My fourth point deals with other issues, besides full time aid, which are of course, important as well. I agree very much with the hon. Member for Sheffield, Heeley (Mr. Hooley) that the main criticism of the Pearson report, or its main limitation, is that it left out the Communist world so completely, although that world was, happily, just represented on our staff. But I share 863 the hon. Member's view that we cannot afford to ignore the Communist section of the world when considering these problems of aid. I agree with what hon. Members have said about the importance of trade. May I plead that, whatever position we tend as individual Members to take on the Common Market, we shall never forget the interests of developing countries and their export opportunities in Western Europe when we are engaged in Common Market negotiations—[HON. MEMBERS: "Hear hear."] I am glad to have such widespread agreement on that.
I agree with what hon. Members have said about the importance of private investment. I share the feeling of my hon. Friend the Member for Woking (Mr. Onslow) about some of the measures in the 1965 Finance Act. At the same time, I still believe that we were right in this part of the Pearson report, on page 122, to answer as we did, I think quite decisively, the view that private capital is simply an alternative to aid. I just do not believe that.
We should never forget the problems of the least developed countries. It is no simple answer to say that they should diversify. The problem of agricultural prices are very great and a number of least developed countries are suffering very severe problems just now. We should not forget countries like Mauritius, which now faces a real threat of falling living standards in the coming years.
Then there are questions of population, which we have not discussed much today, but on which we make a clear recommendation to the World Health Authority, and questions of education. And there will be a good deal of support in the House for what we say about the dangers of the brain drain from developing to developed countries.
I agree with those hon. Members who have stressed the importance of maintaining a proper balance between project and non-project aid, particularly the reference of my hon. Friend the Member for Liverpool, Wavertree (Mr. Tilney) to "Kipping aid" whose importance I know so well.
My last point was to take up the remarks of those who have emphasised that the Pearson report is intended as a spur to action, as a report designed to 864 start a revival of will. I should like to see this action and this revival of will taking four forms. First of all—this is very important—is the increased study of aid questions in academic institutions. I expect that a number of hon. Members have read the searching yet generous, though, as one would expect, decidedly critical article by Dr. Paul Streeton, in the current issue of New Society. It identifies a number of dilemmas in the aid field, although, like all the most able academic analyses, it is even stronger on diagnosis than on saying how all these dilemmas are to be resolved. We are shortly to have a conference at Columbia University, which I shall be attending myself next February, and there is the work of the Institute of Development Studies at Sussex University.
Secondly, after the academic study of aid programmes, I would mention the importance of the growing aid lobby in this country, the contribution made by the Churches and the enthusiasm of so many younger people today. I sense that there is growing impatience among the young about words like "empiricism" and "pragmatism". There is a strong belief that those of us in public life must adhere firmly to certain moral imperatives and certain commitments. World poverty, like world peace, justice and race relations, is one of those subjects which inspire younger people with very strong feelings indeed.
My hon. Friend the Member for Ton-bridge (Mr. Hornby) has rightly pointed out the need to have in our minds the arguments used by the critics and the answers that we should give to them. I agree particularly with my hon. Friend's phrase that we cannot ignore the environment within which we live. It seems to me that there is no substitute for a Government with which one locally feels identified, but equally I look at the world development effort as part of what must be a collective world effort to make greater sense of our material and moral environment.
Lastly, there is the importance of opinion in this House. Let us remember that those overseas really attach importance to what is said in the United Kingdom Parliament on subjects of this kind. They want to hear not only what is said by us as individuals and, indeed, what is said by the present occupants of the 865 Ministry; they also want to hear the commitments undertaken in this House by the Prime Minister and the Leader of the Opposition.
I repeat my congratulations to my hon. Friend the Member for Canterbury for having initiated this very valuable debate. But before this Parliament comes to an end I suggest that we ought to have at least one more debate in this House—a full-scale debate—on this subject. If the Government fail to provide facilities we should do so ourselves, on this side of the House, in Opposition time.
Most hon. and right hon. Members will have shortly to face the 18-year-olds in the electorate. I think that they will be able to do this much more confidently if the organised parties in this House—not only individual hon. Members who are enthusiasts for this subject and who are known to follow it—have to face the issues raised by the Pearson report, and do so with resolution and courage. I hope that we have not heard the last word from the Government on this subject, and I think that we should be determined as a House to see that the strongest possible pressure is put on both Front Benches to ensure that when the next election comes, the political leadership of this country, is committed to a position of which we can feel proud.
§ 3.38 p.m.
§ Mr. Philip Goodhart (Beckenham)
My right hon. Friend the Member for Birmingham, Handsworth (Sir E. Boyle) has made a notable contribution not only to the debate but to the wider issue of development aid as a whole through his contribution to the Pearson Commission's report.
However, I must say that I do not find, with the right hon. Member for East Ham, North (Mr. Prentice), a growing interest in this subject outside the House of Commons. Look at the Press reception to the Government's, alas rather inadequate statement yesterday afternoon. There was not a single leading article in The Times, the Daily Telegraph or The Guardian. The right hon. Gentleman had an article in the Daily Mirror this morning, but there was no news at all in the Daily Mirror of the Government's statement. The Guardian, which has played a notable part in pressing for more aid, did not bother to mention on its front page the Government's statement.
866 I find myself today, therefore, in the rather odd position of encouraging a Minister and a Ministry to look to their public relations and to try to improve their image with the public as a whole. I can understand the problems facing the Ministry. It cannot argue this matter on a numerical basis, because the figures show that over the past five years even the net cash contribution through official aid has fallen, the proportion of the gross national product devoted to overseas aid has fallen, and the proportion of Government spending devoted to overseas aid has fallen.
Therefore, if the Ministry starts a great public relations campaign saying that there should be more aid and more interest in aid, there will, naturally enough, be a comeback. People will say, "Why are you not doing more". I understand the inhibiting effect which that must have on the Ministry's public relations. Nevertheless, I urge the Ministry to launch a public relations campaign centred on the quality of aid. Having lost the battle over the quantity of aid in the next four or five years, one must now turn attention with redoubled effort to the whole question of the quality of our aid.
I have been impressed by the disparity in the quality of aid between one country and another. I take as an example of our aid programme is one country which I know something, Bolivia. Our aid to Bolivia has been small, but, because there have been two people in our mission there passionately interested in development aid, we have been able to make a major contribution. Although the cash value of the aid was small, we were able to get the proper experts out there who could make a major contribution.
On the other hand, I think of another country to which I have been in the last two years where our contribution in cash terms has been far bigger than in the case of Bolivia. We put up a cotton seed crushing plant there, but, alas, the factory did not really work, and the cotton seed was not there to be processed if it had workd. The members of the diplomatic staff there—certainly all whom I met—looked upon our aid programme in that part of the world, I regret to say, as something of a joke.
The quality of our aid programme depends to a considerable extent on the 867 quality of the people on the spot. I am alarmed, therefore, by the disproportionate balance between the Ministry's staff at home and its staff overseas. In 1968 there were 1,572 staff of the Ministry of Overseas Development serving at home and only 55 serving overseas. I regard that proportion as wholly wrong. If we are to have imaginative schemes, well administered, we must have more people with development expertise overseas rather than at home.
There is also the question of Treasury control. The Minister appears to have lost the battle with the Treasury over money. I hope that she will not lose the battle over control within her own Ministry. I have heard of some worrying incidents. To give an example, a subscription to a technical magazine for a professor in a foreign country was queried and stopped by the Treasury. I hope that the right hon. Lady, having lost a big battle over money, will now fight with redoubled vigour the battle to control her own Ministry's affairs.
We should have far more time in the House to debate the whole question. We owe our debate today to the good luck, humanity and good will of my hon. Friend the Member for Canterbury (Mr. Crouch). It is very odd that our debates on this important subject should arise by chance. We should have an important set-piece debate every year on overseas aid and the Government's aid strategy. The right hon. Lady would find that that would help her in her battles with the Treasury.
§ 3.45 p.m.
§ The Minister of Overseas Development (Mrs. Judith Hart)
I apologise for taking up another few minutes of the time of the House in another Front Bench speech. I know how the House has felt about this. Sometimes it has been said that politics is the art of the possible. But I have found in the past two or three days that politics has been the art of achieving the impossible in terms of timing and being in two places at once. There was a very high-level, once-a-year meeting of Ministers in Paris. I felt a tremendous conflict over where I should be, and tried to fit in both that meeting and the debate.
I turn straight away to the relationship between what I said yesterday and 868 the meeting in Paris this morning. I believe that the House has rather generally reacted over-suddenly to what I said yesterday and perhaps exaggerated its importance. The point was that next week we shall have the White Paper on public expenditure, which will include the totals settled for aid up to 1973–74. Unusually, they have been settled in a rather determined form, not in the normal form of other programmes.
It seemed to me important that I should be able to tell the Committee of Ministers in Paris where we stood on all this, and, therefore, it was necessary to tell the House yesterday what totals we had arrived at, and to try to give an indication of where this left us in relation to the various targets—the officially accepted target of U.N.C.T.A.D. of 1 per cent. total flow, and the not yet official, still to be discussed, Pearson target of the dates at which 1 per cent. should be reached and at which an element of official flow should be reached.
Therefore, what I tried to do yesterday was merely to indicate in advance the figures in the White Paper. I think that our House of Commons procedure lets us down at times, in that we can suffer misunderstandings because we cannot explain what we are doing. I emphasise that I was not giving a Government statement on the Pearson Report. What I was doing was to indicate, in advance of the figures, what we shall reach in public expenditure as far ahead as 1973–74, and I was trying to assist the House by indicating where that took us with regard to the Pearson target up to 1973–74.
Therefore, I hope that those who have made some of the rather exaggerated judgments I have heard since coming into the House from Paris this afternoon, which have been very fully reported to me by my hon. Friend the Parliamentary Secretary, will now reflect on what exactly the statement was supposed to be and what it was not. It was not a Government statement on Pearson but was merely a report of the facts in advance about the White Paper on public expenditure up to 1973–74. I would like the hon. Member for Beckenham (Mr. Goodhart) to accept that, in effect, I have lost no battles but I have won a considerable battle.
Again, there is a misconception. I think this arises particularly in relation 869 to what I have heard said both yesterday and today by my hon. Friend the Member for Portsmouth, West (Mr. Judd) and my right hon. Friend the Member for East Ham, North (Mr. Prentice), for whom I have the greatest respect.
My right hon. Friend said yesterday that projecting forward the figures I had announced would not allow us to reach a 0.7 per cent. official flow in terms of Pearson by 1980. But Pearson asks countries to reach 0.7 per cent. of official flow by 1975) at the earliest, or by 1980 at the latest, but recognises, as the hon. Gentleman the Member for Birmingham, Handsworth (Sir E. Boyle) has kindly pointed out, the particular difficulties of three or four countries which have been remaining static over the last few years because of their own difficulties.
I am sorry to say that there is here an incorrect calculation. We project forward in public expenditure terms only for a limited number of years ahead. As we were discussing in Paris today, this is one of the problems which the Pearson recommendations present to countries in terms of advance planning. We are here asked to make commitments stretching beyond the period to which the normal planning of economic matters relates.
One can take two views. Firstly, one can make an advance commitment without the precise planning to support it. Secondly—and this I believe to be the correct attitude—one can say that in our forward planning we must ensure that we are on course to reach the targets we believe to be important in order, as we move on in the years in our forward planning, to reach the point at which we are able to give a commitment in precise terms, in terms of an absolute commitment in forward planning of public expenditure.
One can take either of these views. I tend to believe that it is better not to make advance commitments until one is in a position in which one can guarantee that one will meet them. This has always been the traditional attitude which Britain has taken on commitments of this kind, We are in a difficult situation in which we are asked to make an advance commitment of 0.7 per cent. of official flow. But normally in our own terms of planning ahead up to 1973–74, even the last two years of that period remain resolved finally at a later date.
870 I have established in the White Paper the public expenditure figures taken to 1973–74. These are firm and they represent in the last year an increase of 13 per cent. in our programme of aid. This is where the calculation of my right hon. Friend was not correct, in that, if one projects forward the 1973–74 figures and the rate of increase that represents, one would in fact reach the 0.7 per cent. by the Pearson date of 1980. My right hon. Friend said we would not, but in fact we would. But, of course, I am not offering to the House at this stage any guarantee that we can do this, because I am not able to project our public expenditure programming beyond the date of 1973–74.
What I have been doing is to set us a course to reach the Pearson target, although not at the earliest date. I wish we could. As the developing countries themselves are the first to appreciate, we have been in acute economic difficulties with our balance of payments problems. We have had a static figure of aid. The main purpose of the Government has been to get us out of that static period and on to a rise. We have done this effectively, as I showed in yesterday's figures. In that rise, we would be on course to reach the Pearson target if the Government of the day—whether ours, as I believe it will be, or a Conservative Government—chose to meet the later conditions in order to reach the Pearson target.
§ Mr. Judd
My right hon. Friend has said several times that we are on course. Would she not agree that the figures which she gave yesterday mean that no increase is likely in the net percentage of G.N.P.? Would she not further agree that any Government statement on Pearson now will be bound by the statement she made yesterday?
§ Mrs. Hart
Whatever calculations have been made since my statement yesterday have clearly been wrong. We are considerably increasing the proportion of G.N.P. that we expect—given that we cannot estimate G.N.P. in any accurate terms—on our own projection by 1973–74 at a rate which would permit us if we stayed on that course—and I emphasise that it is if we do, because we cannot make commitments beyond 1973–74—to reach the Pearson target in terms of G.N.P.
The House will completely understand that I am deliberately not saying today 871 all the things which I should like to say about aid in general. I am not answering all the detailed points, because it seemed to me that the time of the House was more important than having a full reply on detailed points. However, there have been tremendously valuable and effective speeches, and a number of important matters have been raised. To the extent that the usual channels can co-operate in this, I very much hope that we may have an official debate on aid.
I think that the House will want to know what the reactions were in Paris at the high level D.A.C. meeting to the Government statement yesterday. These are not the official reactions, of course, but I had the opportunity to talk to a number of delegates. This may come as a surprise to the House, which, naturally enough, has been pitching this in a sense in slightly unrealistic terms, very understandably so, and in terms with which I totally sympathise, but all the delegates to whom I spoke said that they were not only satisfied with but admired what we had done, because we had made an early statement of intention not about Pearson but about the 1 per cent. U.N.C.T.A.D. target to which my statement was directed yesterday. This is another thing which the House has not comprehended; I was directing my statement yesterday to the 1 per cent. U.N.C.T.A.D. target and I was not making a statement about the Pearson report.
What the delegates clearly felt and expressed to me was that, in terms of Pearson, although the United States, ourselves, Italy and Belgium had allowed their official aid to decline as a proportion of g.n.p. in the 1960s, and were far removed from the target and would find considerable difficulty in meeting the flow target by 1975, it was a matter of extreme urgency that—
§ Mr. Crouch rose in his place and claimed to move, That the Question be now put.
§ Question, That the Question be now put, put and agreed to.
§ Question put accordingly and agreed to.872
That this House welcomes the report of the Pearson Commission and supports the full participation of the British Government and British private investment in international development effort, but regrets the continued fall in the proportion of gross national product voted to overseas aid.