§ 12 midnight.
§ Mr. George Cunningham (Islington, South-West)I shall not keep the House long on the Supplementary Estimates and the excess Vote on overseas aid. The Estimates I want to talk about are those contained in the documents 232 and 292 and the excess Vote for 1969–70. We should take every opportunity that presents itself for discussing some of the aspects of the aid programme. We do not have many opportunities.
I begin by supporting the proposal in the Report of the Select Committee on Overseas Aid that we should have an annual debate on overseas aid, preferably on the basis of a comprehensive document so that we can talk about the wider issues, which I should certainly be out of order in raising tonight.
In these Supplementary Estimates the Government are asking for about £13 million net. Therefore, it is worth looking at some of the provisions and the form in which the proposals are put before the House. I hope that the Minister will forgive me if I dwell quite a lot on their form, because this weakens the capacity of Parliament to oversee the expenditure proposed by the Executive.
We are invited here, as in the main Estimates, to pass a number of Votes, all of them dealing with overseas aid, the Votes being the Foreign and Commonwealth Services Vote, the Overseas Aid (International) Vote and the Overseas Aid (General Services) Vote, and occasionally there is a bit in the Pensions Vote. The result is to make the aid picture as it is presented to Parliament so involved and incomprehensible as to discourage Parliament from taking the interest in overseas aid that it should 1041 take, and to make it practically impossible for any hon. Member to understand what he is doing when the provisions pass through the House.
There is also a disadvantage very much related to the Estimates. I am thinking particularly of the excess Vote for 1969–70. The principal reason for which it is required is an additional payment to India, a very sensible additional payment, undertaken towards the end of the year when it was known that expenditure on another Vote would fall short. The necessity for that kind of thing would be reduced if we did the sensible thing and passed one Vote on overseas aid, and did not spread it over a number of Votes. I urge a change in that aspect of our practice. The aid Votes have been cleaned up and tidied up a bit in the past few years. It is now, barely, possible to comprehend them. But they would be much more easily comprehensible if this additional change were made. I ask the Minister to consult his Treasury colleagues who are responsible for the form of the Estimates with a view to making this change.
The partner to that change is to take out of the Vote on aid all the items which do not count as aid. In the Estimates we are discussing there is one—it appears at page 45 in document 232—which contains some items which are counted as aid for public expenditure purposes and some items which are not. We are told the total value of the items which count as aid and the total value of the items which count as defence assistance, but we are not told which is which. This is impertinent. It is not the Minister who is impertinent because he is doing only what Ministers have been doing for donkey's years. This practice should be terminated. If this were a self-respecting Legislature, it would not be tolerated that public expenditure should be controlled on the basis of regarding some things as aid and the Government ask Parliament to vote money but do not tell us what falls into which category.
The Minister should support a change so that we have one vote on aid which deals only with aid and does not cover anything else, and then it would be a great deal easier for all involved, including the Minister, to understand how the Estimates fit in with the figures with which we are all much more familiar— 1042 the ceiling figures which get the publicity for the aid programme.
The other aspect of the presentation of the aid figures to the House with which I want to quarrel is the almost total absence of supporting material. I would not want us to go to the extreme to which the Americans go and present to the House massive documents which no one would read explaining every detail of what the Government think they are doing in certain countries. But we need to go some way from the opposite extreme where we are now. In document 232 there is a small provision in respect of aid to the Maldive Islands. The only explanation given of the purpose of the aid is that it is towards the rehabilitation of the economy of the islands. One might as well have nothing at all as have that. We want to know to what sector of the economy of the Maldives the money is being applied and the Government's objective within the Maldives We need some indication of what they think they are doing in the Maldives and how the aid they are providing is linked with some stated economic objective there.
I commend to the Minister the form in which the Americans deal with this matter. They state in respect of each recipient country a small number of sectors, perhaps in each country, on which they are concentrating. They might say, for example, that in country X they feel that the major impediment to growth is in technical education and therefore they propose to concentrate two-thirds of the aid on technical education. Usually there will not be just one sector identified as the obstacle to growth; there will be several. This process, although one could be very critical of it if it were taken to extremes, would be a wonderful encouragement to clarity of mind on the part of the executive.
Since muddled thinking and doing what was done last year is a temptation to which every aid programme in the world is subject, as well as many other aspects of policy, it is important that the initiators of the proposals should be forced to state somewhere what they think they are doing. It would be no fault of theirs if, after a year or two, it turned out that their actions did not achieve the objective. But that would be as good for them as it would be for Parliament itself to see how policy could 1043 be changed in future in order to achieve objectives.
Another feature of the Estimates—returning to the question of the combination of aid and non-aid items—is that even items which do come within the aid programme seem rather questionably so defined. A considerable part of the money in the Estimates is for what can broadly be defined as relief aid. Relief aid of about £100,000 is provided for Malaysian flood relief. There is emergency relief to East Pakistan and what is called "rehabilitation money" totalling £280,000 for Nigeria, presumably to build up physical resources after the civil war.
I would not contest that there is a vague line between what can properly be called and what should not be classified as aid. There will always be items somewhere in the grey border area. But one must resist the inevitable temptation to classify as aid any item of expenditure provided to other countries because that way lies the adulteration of the aid programme and its transformation into a ragbag into which the political side of the Foreign Office can push all sorts of little expenditures for which it cannot otherwise find the money.
In 1964, when the old Ministry of Overseas Development was established, it was specifically stated not to be responsible for relief aid. It may be a questionable doctrine that the political side of the Foreign Office should deal with relief assistance and that the development administration should not, but it is a useful one for establishing that there are some transfers of resources generally regarded as of help to other people which should not be classified as development assistance.
We should look carefully at the inclusion of these relief aid items within the aid programme. When people hear that the Government have decided to provide £1 million to help Pakistan cope with disaster, I do not think they imagine that the money is coming out of funds which were going to be spent anyway. They think that it is a gesture of generosity and that we are putting our hands into our pockets a £1 million deeper than we otherwise would have done.
If relief aid is taken out of the aid programme allocation in such cases, all we are saying is, "Out of the generosity 1044 of our hearts we are taking £1 million from India and giving it to you", because India would probably have been the recipient of a large part of the £1 million of aid which the British Government has thereby transferred. It is worth looking at the question of transferring relief aid administration in the Foreign Office.
I want to deal with several individual items. For example, there is provision for an increase of £18,000 for administration expenses for the British Indian Ocean Territory, on page 36 of document 232. It has always been my understanding that what mattered about the British Indian Ocean Territory was that it did not have a population. I thought that it was devised as bits of territory which did not have a population in order that there would not be a population which could cause trouble and take it away from us later, that it was to be a secure base where no political trouble could arise.
I was confirmed in that belief by the Commonwealth Year Book which says that it is a group of islands all owned by the Crown and with no permanent population on any of them. It says that the inhabitants are mainly labourers employed on contract by the lessees of the islands and that the transient population varies considerably, but is just over 1,000, with no permanent population.
If there is not a permanent population, to whom are we providing aid? This is money for the administration of the British Indian Ocean Territory and the only point of the B.I.O.T. is to provide a possibel defence or communications base for the British. The cost of running it has nothing to do with development assistance, and yet that money is classified as part of the aid programme.
Someone has put one over on the Minister and got that little bit of rag into the bag. It is a small item, but it has got through. The fact that we are providing money for the administrative expenses of assisting a potential British base does not mean that it is overseas aid which ought to be meted out. This is probably the best illustration of the dangers to which any aid programme is open. I am not asking the Minister to answer these points tonight, particularly as some have ocurred to me only lately tonight and I have not given him notice of them.
1045 Another example is the advances to Rhodesian officers, page 74 of the document. I should be surprised if those advances to these officers were sufficiently of developmental relevance to justify the money being taken out of the aid programme money.
There is another item which I should like to call the "Malta gin bill". This is the provision of compensation for loss of customs and excise revenue in Malta, and the figure is £400,000, grant, not loan. At least part and perhaps the whole of that is compensation to the Government of Malta for the nice but peculiar fact that British forces in Malta get duty-free drink. It may be very nice for the British forces stationed in Malta, and if the British Government care to provide that aid to British forces stationed abroad, that is up to them. But how it can be classified as aid to the people of Malta I do not know.
I should like the Minister to let me know some time how much of that £400,000 is for the purpose I have described and whether he is satisfied that it is proper to take that money out of the aid programme. I am raising this not as an individual point, although I should like to hear the answer at some time, but as an illustration of the kind of thing that can get into the aid programme, that may be slipped in without the Minister ever getting to know about it.
I should like finally to give what is more of a warning than anything else. There is a provision on page 55 to provide Malawi with assistance so that she may meet her share of the topping up of the Central African Pension Fund. There is a legal obligation to top up that fund on the Malawi and other Governments. Therefore, if we help them to fulfil what is their legal obligation I agree that it is aid to Malawi and should come out of the aid programme.
One of the other Governments who are obliged to top up this Fund are the British Government. I should like to be satisfied that the British contribution to the topping up is not being counted as aid. The legal obligation for the British contribution lies on Britain. That money may be going out to officers living in Central Africa or living in Eastbourne, but by no criterion could it be regarded 1046 as assistance to any other Government to do something or to provide facilities for their population.
The next aspect of the way in which we deal with the voting of aid which I want to take up is the annual accounting. I am glad that the Select Committee's Report makes the proposal that the Minister should be able to carry over to the next year funds approved in one year but not spent in that year. The present system causes a great deal of waste. It makes for a situation in which the Minister is forced towards the end of the year to try to find purposes on which to spend some of his money.
Everybody who noticed it would be very worried about the reply which the Minister gave to my right hon. Friend the former Minister for Overseas Development on 22nd March, as follows:
At the end of February approximately £150 million of the basic programme of £212 million…had been disbursed."—[OFFICIAL REPORT, 22nd March, 1971; Vol. 109, c. 2.]The Minister then gave an equivalent figure for the additional aid programme and indicated that there would be heavy expenditure in March. I do not think that anyone would believe that whatever the March expenditure is—I do not know of any reason why it should be unusually heavy—it would bring £150 million to within seeing distance of £212 million. If that gap exists, it is much wider than the gap which has normally existed in the past. In the previous year the then Minister for Overseas Development went out of her way to find sensible purposes on which to spend money so that she did not fall short of the sum which Parliament had decided to spend. This is one reason why we are approving this £7½ million extra tonight. Whether a shortfall of £62 million is normal, normally there is a shortfall.That happens partly because of our system of annual accounting. It results, as there is this spare capacity at the end of the year, in non-aid items such as I have mentioned getting shoved into the total and then the following year, the precedent having been set, the Minister is saddled with those non-aid items, has to carry them, and still ends up with a shortfall in the next year between the total of aid and non-aid items and the ceiling he is supposed to spend. That 1047 is one of the consequences of our proceeding on an annual accounting basis.
It also encourages bad projects being put forward. The one we are dealing with tonight is not a bad project. The provision of £71 million at the end of the financial year for this purpose is laudable. The assistance we provide to India is far too low compared with its population and influence and is, in comparison with the assistance we provide to countries like Gibraltar and Malta, judged per head of the recipient country's population, grotesque.
There is a temptation, if an attempt is being made to fill up the expenditure list at the end of the year, to go for bad projects. This will always be so if the Minister knows that come the end of the year, if he has not spent his allocation, it is not added to his allocation for the following year.
It is high time that we put this nonsense right. The Minister will be told that it would be totally contrary to British financial practice to do what I am suggesting. It would be nothing of the kind. Canada, which has basically the same parliamentary system as ours and the same practices of financial control, has got round this with great ease and sees no problem about it. I commend to the Minister the two systems employed by the Canadians on loans and grants respectively to get round this problem. This has also been drawn to attention by the Pearson Committee. Everyone agrees that to set a figure for a year, and if one does not spend it one cannot have that amount next year is a crazy way of doing things.
If the Minister cannot get round the imagined parliamentary difficulty as the Canadians have done it, I commend to him the fall-back provision by which, if he gets £5 million one year he gets £5 million added to his ceiling next year, with parliamentary approval for the addition. He may have difficulty in getting his colleagues to agree, but obviously it is common sense. Second choice though it may be, this would give practical effect to the kind of recommendation made in the Select Committee's Report.
In these documents we are, as usual, informed of the repayments of capital 1048 and interest flowing back to this country so that we may be aware of that in voting the outgoings. It is high time that we thought of voting the net figure. This problem will get bigger and bigger as this decade goes on. We are receiving back about £6 million a year in capital and interest and it will amount to about £100 million by the end of the decade, yet Parliament will kid itself that it is providing the gross figure while ignoring the flow-back to this country.
A particular point in the nonsense to which I draw attention is the provision for the Commonwealth Development Corporation. The way in which the Corporation is financed is very sensible and does not have any great disadvantages for the C.D.C., but in the expression of Britain's total aid expenditure and making that as realistic as possible it is absolutely crazy. As the Estimates point out, if the Government wish, the C.D.C. is entitled to borrow from the Government to repay money previously borrowed from the Government. If the Treasury rate drops by a point and the C.D.C. therefore wants to reduce the interest burden of the debt, it may be given permission to borrow £10 million from the Treasury at 8 per cent. to discharge existing obligations to the Treasury which are going at 9 per cent.
If it did that—this is the most extreme example of the lunacy of doing these things—the British aid programme would show a rise of £10 million because the additional borrowing would be counted as aid and that amount would not be netted off before counting. Yet the more the interest rate was reduced, the less normal aid would be left in the programme. This does not matter very much from the point of view of the C.D.C. and that is why, although the Select Committee recommended that consideration should be given to the problem, it did not express the recommendation very strongly. When examined on the subject, the C.D.C. said that it would like to see this done but did not think there was much hone of it and no one had put pressure behind it.
I hope that the Minister will take the point which I am making, which is related not to the Purposes of the C.D.C. at all but to the way of accounting for the programme as a whole, and will see 1049 whether something can be done to convert the financing of the C.D.C. into a revolving fund basis, or at least ensure that the repayments should be netted off before we vote the aid for the C.D.C. There is a case for doing that more on C.D.C. than there is for doing it on bilateral aid, sensible though it would be on bilateral aid, too.
My last point of substance is that there is evidence in these Estimates of the constant danger of aid programmes spreading the jam too thinly. There are some provisions for very tiny quantities of aid to the Malagasy Republic, Togo, Chad and such places. These do not necessarily contain the totality of all that we provide to these countries. Nevertheless, I argue that we are spreading the jam too thinly.
I know the temptations to which Ministers responsible for overseas aid are subject, under pressure from ambassadors, to give something to everybody, but those pressures have to be resisted if the aid programme is to be effective and if people are to see the results of the aid that is provided. One little bridge in Chad cannot be said to produce identifiable results. It is better to concentrate the aid so that one can hopefully see some results from what one is doing.
There is in these provisions additional money for the Overseas Development Administration itself. I cannot resist reminding the Minister that when the reconstruction of central Government machinery was brought before the House it was indicated that one of the results of what I regard as the mistake of terminating the Ministry of Overseas Development and putting its functions into the Foreign Office was to save money. That is not long ago, and there has not been much time in which to save money; and it would be disastrous to save money on this anyway. When one is spending £200 million it makes sense to spend 2 per cent. of it to make sure that one is spending that money in the proper way.
We are, in fact, being asked for more money for the Overseas Development Administration, and the prospects of a reduction in expenditure by reason of the abolition of the Ministry of Overseas Development does not appear at the moment to have been realised.
1050 I hope that on these points which I have mentioned we shall be able to improve the presentation of our aid figures to the House, not just because it is the duty of the executive to put things clearly and to explain the reasons why they are doing them but because the very rational presentation of them and the necessity to do so is likely to clarify the thoughts of those who are initiating the proposals and to improve the understanding of the aid programme on the part not only of Parliament but also of the public outside.
§ 12.33 a.m.
§ The Minister for Overseas Development (Mr. Richard Wood)The hon. Member for Islington, South-West (Mr. George Cunningham) began by drawing my attention to the presentation of the Estimates. I have considerable sympathy with him because I have always found considerable difficulty in understanding the presentation of any Estimates. However, I feel bound to say that I found these Estimates rather easier to understand than others that I have pored over in the past.
I think that the hon. Gentleman's desire for greater simplicity may possibly lead him into directions which he would not particularly welcome. The overseas aid Votes have been reduced, as he pointed out, to three in number, and certainly it would be possible to consider some further reduction.
The hon. Gentleman began his remarks by suggesting that there were too few opportunities in the House of Commons for us to discuss aid, and again I have a certain sympathy with that view. I should like to have more opportunities because it is a very important subject. The presentation of perhaps a single Vote would tend to reduce the opportunities and the amount of parliamentary control, because it would afford Parliament less opportunity to exercise its authority over both the direction and the use of the aid programme. Therefore, this called-for simplicity—with which I have sympathy—might lead the hon. Member in a direction that ostensibly, he would not welcome.
The hon. Member talked about the necessity for as much information as possible, and mentioned particularly the need for information about certain countries. Again, this is important. I should like 1051 to see that Parliament is provided with as much information as it would like and would need about certain countries and about all aspects of the aid programme. The Estimates are not necessarily the most informative documents issued on this subject, or any other. We issue a full statistical digest each year showing the allocation under every heading and to every country. That is probably more useful than the Estimates that we produce. As I said in answer to a Question by the hon. Member earlier this week, we also publish our Report of the Development Assistance Committee. That has been published as a White Paper for the last two years. We also publish White Papers of a broader kind from time to time, and I am contemplating the publication of one in the reasonably near future.
The hon. Member was kind enough to give me notice of several of the subjects that he raised tonight. He also raised a number of detailed points, which he was kind enough to say he would be grateful if I wrote to him about. I shall do so. I shall give him an explanation of all the detailed points that he raised in the earlier part of his remarks.
The hon. Member raised the general point of relief aid and the proprietary of including it in the aid programme. He admitted the difficulty of differentiating relief aid from rehabilitation and, in the case of Nigeria, aid for reconstruction. I saw this difficulty with my own eyes when I was in Pakistan at the end of last year, at the time of the floods. It is difficult to differentiate, and I accept that certain provisions should not rightly count in a programme concerned with development. I shall look into the detailed points that the hon. Member has raised and try to write to him about them.
He raised two main questions—first, the Commonwealth Development Corporation and, secondly, the spending of the allocation of aid during the financial year. At the moment I am discussing with the Corporation its capital allocation for the ensuing year. I hope that it will be possible to increase that allocation. But that is not the hon. Member's complaint. I know his complaint, because he has put it to me before, at Question Time. He expressed it again this evening. Broadly, he would like what he 1052 describes as a revolving fund. I have two thoughts to put to him on that.
First, when the C.D.C. was first thought of, Parliament initiated a system which it felt gave adequate scope to the C.D.C. and the proper financial control to Parliament. As I think I explained to the hon. Gentleman in answer to a Question some time ago, I should be perfectly willing to look at the advantages which he feels a change in the system would have. I suggested to him then, and do so again now, that Parliament over the years, and in the renewal of the Overseas Resources Development Act, has taken the view that the existing system probably achieves the twin objectives of adequate flexibility for the C.D.C. and adequate control for Parliament, and has not yet been impressed by the advantages he urges—
§ Mr. George CunninghamI know that the Minister must say that the system is one that was passed by Parliament and that we must therefore assume that Parliament knew what it was doing, but that is not the case. Parliament did not know what it was doing. It passed the provisions for the C.D.C. as it passes these Estimates—because the executive put them forward. Responsibility lies with the executive in practice, whatever may be the theoretical position, and one cannot say that it was Parliament which wanted to do this. This was a proposal put to Parliament, and this is what Parliament passed without much thought with less thought than was given by the Executive to the proposal in the first place.
Another point—and I apologise for intervening at such length—is that the situation has changed since the system was started. When we did not have an aid ceiling this question was of no importance. It has acquired the disadvantages to which I have referred only since we have had the aid ceiling. What Parliament at first did was very close to having a revolving fund which imposed a top limit on the amount of debt the C.D.C. could have outstanding at any one time. It is only since we have had the present system with its aid ceiling that we have had these disadvantages.
§ Mr. WoodI almost feel that I should apologise to the hon. Member for interrupting him. I do not deny that Parliament may not always have realised what 1053 it was doing—it has had certain lapses recently—but on this occasion it repeated an action which it had initiated after the war. But perhaps I can set the hon. Gentleman's fears at rest with the thought that not only his suggestions to me over the last month or so but also the suggestion of the Select Committee that this matter should be examined will certainly be acted upon. I hope before very long to be able to give a considered response to the Select Committee's Report. It is one of the matters which the Select Committee has asked me to look at, as has the hon. Gentleman.
A point of great substance in the hon. Gentleman's remarks was the likely out-turn of the aid programme this year. He quoted an answer I gave to the right hon. Lady the Member for Lanark (Mrs. Hart), my predecessor, last Monday, and the Press, I notice, has suggested that there was to be a massive shortfall because only a proportion of the aid allocated had been spent up to the end of February. I do not think that the hon. Gentleman, with his great knowledge of the subject, is likely to fall into similar error. He knows that disbursements in this field and in other fields of public expenditure are naturally always very heavy in March. I am ready to admit that there may be a shortfall, but I do not think that it will be very large, and it will certainly be nothing conceivably like the shortfall that exists now. I think the hon. Gentleman accepts that view.
Last year my predecessor was very successful. She managed to spend £204 million out of a £205 million basic programme. In the previous years there had been an average shortfall of about £5 million. The hon. Gentleman will recognise the difficulty of administering an aid programme in 80 countries. His final remarks tended to criticise the number of countries that we aid. There are a great variety of circumstances which may change rapidly and awkwardly towards the end of the financial year. It seems that there is an inbuilt likelihood of underspending. There is the estimating adjustment which, when I first came to it, sounded like raising the sights of a rifle to fire above the bull's eye and hit the bull—if lucky!
1054 There is the prospect, with Treasury agreement, that the estimating adjustment will be substantially increased next year. That is to the good. There will still be difficulties if circumstances change in the receiving countries late in the year as frequently happens. I shall always be concerned if O.D.A. does not spend all the money it is authorised to spend by Parliament. Frankly I am less concerned about the possibility of a shortfall this year than by the future capacity of my Department effectively to spend a much larger aid programme. This was in the hon. Gentleman's mind, I believe.
The programme will be a good deal larger next year and will be about 50 per cent. greater in cash terms in 1974–-75 than the present programme. I am conscious that over the next three or four years this problem will get increasingly more difficult. I can give the hon. Gentleman the assurance that I am urgently considering ways in which to make sure that the large sums authorised by Parliament and provided by the taxpayers will be spent in the next four years. I thank the hon. Gentleman and the Select Committee for making this point. It is one of the matters which I shall study carefully and include in the considered response I make to the Committee's report. I am grateful to the hon. Gentleman for drawing attention to it tonight.