MALTA (AID)

HC Deb 27 April 1970 vol 800 cc881-90

The Minister of Overseas Development (Mrs. Judith Hart)

I would like to make a statement about the present position concerning aid to Malta.

I will deal, first, with the substance of the offer we have now reaffirmed. Britain's capital aid to Malta is made available in accordance with the Agreeinent on Financial Assistance concluded between our two countries in 1964, in order to assist the development of the economy of Malta. Under that agreement, £51 m. was made available for the 10-year period beginning 1 April, 1964. For the first five years the agreement specified that 75 per cent. should be drawn in the form of grant and 25 per cent. by loans. As regards the second five years, the agreement did not provide for any fixed proportion between grants and loans, but required this division to be the subject of future discussion.

Discussions accordingly took place in Malta in December, 1968, against an economic background which was much more favourable than had seemed likely in 1964. Great strides had been made in the development of tourism and industry. Economic growth had been outstanding, and foreign exchange reserves per head were among the highest in the world. Unemployment had been much reduced.

Taking into account all the special circumstances, the British Government proposed that 25 per cent. of the balance of £23m. should be made available in grant form and 75 per cent. by loan. These terms were more favourable to Malta than those which we have applied to any other country in similar economic circumstances.

The Maltese were unable to accept this offer and after representations by Dr. Borg Olivier, in January, 1969, the British Government revised the offer to one of 50 per cent. loan and 50 per cent. grant. The Prime Minister of Malta still found the offer unacceptable, but the British Government did not feel that any more generous terms would be justified since the Malta economy was continuing to grow at an exceptional and very satisfactory rate—9 per cent.

Meanwhile, it was not possible for further aid to be made available to Malta under the agreement after March, 1969. The British Government accordingly proposed temporary arrangements within the limits of their offer to enable aid to flow until the dispute was settled. But this, also, was not accepted.

I come to our information about the continuation of talks. Our position was restated by our new High Commissioner in Valletta to the Prime Minister of Malta on 13th and 17th April. Dr. Borg Olivier said that it was impossible for him to accept our terms, but he did not then in any way suggest that the discussions were at an end. This was the position as I knew it when I gave my Answer in the House on 23rd April.

After I left the Chamber I learnt of a telephone message from the High Commissioner that the Malta Prime Minister was intending to say that the talks had been discontinued, and I heard on Friday afternoon that a statement had been issued in Malta on the Thursday evening to this effect.

Dr. Borg Olivier made a statement to his House of Representatives on Friday evening that, consequent on my reply, he regarded discussion at an end.

Her Majesty's Government very much regret that Dr. Borg Olivier has felt obliged to take this view. We regard our offer as fair and so far as we are concerned it still remains open; and if there were any new considerations we should be happy to take them into account. I hope that further discussions can take place, possibly on the basis of the £5.6 million available in grant form which is so far undrawn for the period 1969–71.

Sir Alec Douglas-Home

If I may deal with the last part of the right hon. Lady's statement first, it seems very extraordinary that she appears to be about the only person who did not know on Friday afternoon that the talks had been broken off.

Am I right in thinking that the money in dispute is 25 per cent. of £23 million and, therefore, £1 million each year for five years?

The right hon. Lady made no mention of defence, which is very extraordinary because she and the Government must know that the 1964 arrangement was a mutual one whereby aid was given to Malta and Malta gave defence services to the United Kingdom.

This being so, I must ask the right hon. Lady to confer with the Foreign Secretary and the Leader of the House, because I think that the Government ought to give time for a debate on this matter.

Mrs. Hart

The amount under discussion is £.6¾ million. This is not a small sum. What must be borne in mind are our general conditions on grant as against loan in developing countries, our general aid policy, and the facts I have given about the very happy growth of the Maltese economy.

On defence, there is no provision in either Agreement for any unilateral abrogation. Indeed, the defence arrangements are continuing, and we have had no official notification on this aspect over the last year.

The somewhat extraordinary feature about the timing is that it was after I had left the Chamber when, unfortunately, the hon. Member for Haltemprice (Mr. Wall) had not been in his place to ask his Question for Oral Answer—I suppose that it would have been reached at 2.40—that I had a fifth-hand telephone message.

I did not think it right to make any change in the Answer from the Oral Answer the hon. Gentleman would have received had he been in his place and the Answer that then went to him in written form; I did not think that that would be right in House of Commons terms. Nor would I in any case have thought it right to act in terms of what was a fifth-hand message.

Mr. Wall

On a point of order. Mr. Speaker. Concerning the point about the Written Answer, the Table Office will know that I was not able to be here that afternoon. I downgraded the Question to one for Written Answer before Question Time.

Mrs. Hart

With respect, inquiries were made at the Table Office and our understanding, which may be right or wrong, was that the Question was still to be answered orally.

Sir F. Bennett

It may or may not be right that the right hon. Lady did not learn until later Thursday afternoon that a statement had been issued that morning in Malta. Can she now explain why, when she came to the House on Friday morning, she was adopting the attitude that her Answer to my hon. Friend the Member for Haltemprice (Mr. Wall) had been right and that she even then did not know about it, although it is now admitted that the High Commissioner was informed on Thursday morning that the talks were at an end?

As the argument is not so much about amount, but whether it is a grant or loan over 25 years, what is the net difference over 25 years for which we are putting at peril our whole defence arrangements in the Mediterranean?

Mrs. Hart

I certainly would not accept for one moment that the Government of Malta would take the attitude that the N.A.T.O. defence arrangements in the Mediterranean were to be put at risk because of this disagreement. It is not just a question of the amount that is involved as between grant and loan. It is a matter of the relationship between giving grant in the particular circumstances of the country in relation to our general principles governing these matters.

The hon. Gentleman was a little ungenerous in what he said in the first part of his supplementary question. I do not know whether he was suggesting that I did know before I answered the Question in the House, If he is suggesting that, perhaps he would say so and then I could deal with it in the way it demands.

Sir F. Bennett

As I am asked to say something, I will do so. All I can say is that the right hon. Lady's High Commissioner in Malta did know on Thursday morning. If he did not telephone her, that is his fault, not mine.

Mrs. Hart

As all of us in the House recognise, the hon. Gentleman is extremely fortunate in his vary rapid communications with Malta. The message that our High Commissioner in Malta received was received by him after lunch as a private secretary message in Malta. By the time it reached me in the House of Commons I had already given my Oral Answer. Indeed, I remember speaking to the hon. Member for Essex, South-East (Mr. Braine). At that time, I had not received this fifth-hand telephone message.

Sir F. Bennett

What about Friday?

Mr. Moorman

To return to the main substance of the problem, does not my right hon. Friend, whilst recognising the changing economic circumstances in Malta, also recognise that, although tourism and trade have grown, they are still highly vulnerable and that, therefore-it would be very helpful, because this is a very distressing matter to have arisen, if she would in say what initiatives she proposes to take now to resolve this very difficult matter?

Mrs. Hart

What I very much hope will happen—this is why I very much regret what Dr. Borg Olivier said to his House of Representatives on Friday—is that there can be a continuation of discussions. So far as we are concerned, discussions can continue. Clearly, it is only on the basis of discussions that we can find a satisfactory solution.

If I may add to my reply to the hon. Member for Torquay (Sir F. Bennett), I had to wait for official information. I could not act on the basis of Press reports indicating what a Government spokesman had said. Our first information was Friday after 11 o'clock, when we heard of the official statement from Malta.

Mr. Wall

The Government have been arguing with the Maltese Government for the past year about whether 50 per cent. should be grant or loan. As the right hon. Lady has said, there has been no argument about the other 50 per cent. Therefore, why cannot the other 50 per cent. of grant be paid to Malta so that she can get on with her reconstruction programme? Does the right hon. Lady appreciate that this is becoming a matter of party politics in Malta, which is putting Britain in a very awkward situation?

Mrs. Hart

I appreciate that whenever an issue of this kind arises it is bound to be a matter of domestic discussion in the country concerned, but we do not believe that it would be right, in the circumstances which I have described of Malta having a 9 per cent. growth rate and some of the best foreign exchange reserves in the world, to make such a departure from what is our normal aid policy on development grants.

Mr. Cronin

Returning to the main substance of my right hon. Friend's statement, will she bear in mind that with the large increase in travel allowances it is unlikely that the Maltese economy will continue its 9 per cent. growth rate? Will she bear in mind, also, that Britain has quite strong moral obligations to Malta?

Mrs. Hart

Indeed. One of the features of the whole matter that is most regrettable is that the Government of Malta do not find it possible to draw on the £5.6 million grant that is now due to them from the period 1969–71, which, clearly, would be of great assistance to them.

Sir Alec Douglas-Home

Was not the whole point of the 1964 agreement to increase the rate of growth of the Maltese economy, and is not this a very satisfying thing? Ought it not to go on for at any rate some years longer? The right hon. Lady is very complacent when she says, in effect, that this is enough. Is it not true that not a single payment has been made to the Maltese Government for one year—in other words, from April, 1969?

Mrs. Hart

The last statement is true, but this is not our fault. This is because the Maltese Government have chosen not to draw down what is available to them.

It is a matter of immense satisfaction to all of us that the economy of Malta is now doing so well. We are not talking about the total amount available to Malta to increase its rate of growth and encourage its further development. We are talking about the difference between grant and loan. In our view, the offer we have made in terms of grant and loan is extremely reasonable.

Mr. Dickens

To return to economic reality, will my right hon. Friend remind the House that Malta receives from Britain about £20 per head per annum in economic aid against 1s. 7d. per head per annum in the case of India? Is it not about time that Her Majesty's Government insisted that the Maltese Government drew more heavily upon the financial resources of the Maltese rich and the wealthy British residents in Malta who are living in a tax-free paradise at the expense—in part at least—of our constituents?

Mrs. Hart

The latter part of my hon. Friend's supplementary question is entirely a matter for the Government of Malta.

In making his first point, he put his finger on our dilemma. Clearly, in terms of our very special relationship and friendship with Malta we need to extend as many concessions as possible; but when this comes so sharply into conflict with the developmental needs from our restricted aid budget we are bound to consider what is the right figure to arrive at. We have felt that this is the right figure.

Sir A. V. Harvey

Will the right hon. Lady remind her hon. Friend the Member for Lewisham, West (Mr. Dickens) that for three years the civilian population of Malta had one meal a day out of the soup kitchen?

Is the right hon. Lady aware that one of the reasons given a year ago for not increasing the grant was Britain's economic difficulties? As our economic conditions have now been improved, could that matter be looked at afresh?

Is the right hon. Lady also aware that I have asked her right hon. Friend the Prime Minister twice this year if he will pay a visit to Malta and discuss this matter as Prime Minister to Prime Minister, and that he said that he would give it his full consideration? Can anything be done on that matter?

Mrs. Hart

I cannot at this moment say what are the views of my right hon. Friend the Prime Minister on that proposition.

In answer to the first part of the question, it is because we recognise the tremendous contribution that Malta made during the war that we have wanted to give this special assistance, but one cannot go beyond a certain point in terms of the merits of development and in terms of the demands on Britain's money. After all, it is hon. Members opposite who always seek to cut public expenditure. They cannot have it both ways. We think that we have reached a fair settlement, taking into account the special contribution of Malta and its own resources.

Mr. David Steel

Could the right hon. Lady say whether at any time during the past year there has been any doubt in the minds of the Maltese as to our right to renegotiate the second half of this agreement? I assume that there never have been any such doubts.

Secondly, bearing in mind our total overseas aid commitments and the needs of other countries, is it not perhaps more relevant that in 1970 there are parts of the world where people get less than one meal per day from a soup kitchen?

Mrs. Hart

In reply to the first question, there has been no reason for such doubt. The Malta Government have been satisfied about this aspect of the matter; at least, I trust that they are satisfied—unless I find that this is suddenly denied.

On the second point, we had to take into account how far we should make the right kind of compromise between the needs of people in other parts of the world and our special loyalty to Malta.

Mr. Wallace

Is my right hon. Friend aware that there are many people in Malta who are not British residents and whose need for housing has been affected by the tourist boom? Is she further aware that the Government's actions, so widely applauded in this country, in cutting away travel and currency restrictions, will possibly affect the Maltese very seriously indeed?

Mrs. Hart

This could conceivably be so. All I can say is that any effect of the changes in our allowances for foreign travel will be taken into account developmentally.

Mr. Hastings

When the right hon. Lady says that she wishes discussions with the Malta Government to continue, is she implying that she is prepared to improve her offer? What other point could there be in continuing the discussions? Does the right hon. Lady accept that many of us on both sides of the House believe that her present attitude is both ungracious and short-sighted?

Mrs. Hart

No doubt, that is the hon. Gentleman's point of view. I do not know how widely it is shared. When I say that I hope that discussions can continue, may I remind the hon. Gentleman what I said in my statement, that if there are any new considerations we shall be happy to take them into account. In the meantime, £5.6 million remains undrawn in grant form which could readily he available to the Maltese Government if they chose to draw it.

Mr. Speaker

Sir Alec Douglas-Home

Sir Alec Douglas-Home rose—

Mr. Hugh Jenkins

On a point of order, Mr. Speaker. Is it not your custom to call Members from one side of the House and then from the other?

Mr. Speaker

It is normal for the Speaker to call from one side of the House and then the other, but one extends certain courtesies to certain right hon. Gentlemen. This is one of those occasions. Sir Alec Douglas-Home.

Sir Alec Douglas-Home

Would one of the assurances that the right hon. Lady felt it possible to give be that foreign policy and the defence aspect are not lost sight of by the Government in connection with the money which should go to Malta?

Mrs. Hart

I can give that complete assurance. It is our assumption that the degree of responsibility of Malta is such that this would not arise.

Mr. Hugh Jenkins

Is not the cause of this trouble almost solely the responsibility of the Malta Government? Is not this fact recognised inside Malta, particularly by the Malta Labour Party, and would it not be fruitful for that discussion to take place in Malta because the Malta Labour Party is likely to be the next Government of Malta and will reach an agreement on this subject without any difficulty?

Mrs. Hart

I am sure my hon. Friend will appreciate it when I say that the British Government are anxious and eager to continue discussions and to arrive at a satisfactory settlement with Malta. Therefore, it might be best if I did not give detailed comments on this matter.

Several Hon. Membersrose>—

Mr. Speaker

Order. I must protect the business of the House.