TRADE AND DEVELOPMENT (UNITED NATIONS CONFERENCE)

HC Deb 27 April 1972 vol 835 cc1847-905

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Humphrey Atkins.]

7.15 p.m.

Mrs. Judith Hart (Lanark)

Tradition has it that the subject of aid is normally a friendly one. Our relationship with the third world is usually regarded by the House as being controversial to the least degree—in fact, entirely uncontroversial, completely gentle and soft. Party political battle is able to rage to the right and left, but on aid and development there is a bilateral agreement. We tend to agree with each other and to express our mutual concern about the third world.

But, although the good will continues, and will continue where it is merited—and from our side of the House we shall con- tinue to give praise where it is due; for example, on the question of Bangladesh and the help which the Government have given and which we have supported—in the debate today we cannot be either gentle or uncontroversial. Nor, I fear, can we even be particularly friendly, because we bitterly regret and condemn what we regard as the failure of the Government to respond to the challenge that is presented by the agenda of the third meeting of UNCTAD.

I suppose we ought to indicate why we regard the third meeting of UNCTAD as so important. The United Nations Conference on Trade and Development meets only every four years. It met for the first time in 1964, and at that time the developing countries, somewhat tentatively, were working towards a coherent, joint policy to protect their own interests. They met in Algiers, and the Charter of Algiers represented the point of view which they put at UNCTAD in 1964. But it was not highly organised. It was not a totally logical and thought-out position from the point of view of the developing countries, and we had to wait until 1968 for the UNCTAD meeting at New Delhi for a much more coherent and stronger case to be presented on their behalf.

We have had to wait until UNCTAD III, in Santiago in Chile, for a coherent and sharp presentation of the demands of the third world from the rich world, and it is the agenda, which is the result of what is, in effect, a real confrontation between the rich and the poor worlds, to which we are devoting our attention today.

We are debating this at a time when the plenary session is to all intents and purposes over, when the positions of Governments have been stated, and when the conference has gone into committee and is thrashing out some of the points that have emerged from the plenary discussions, so we are in a position to form our judgments. That is a little difficult because, although we received excellent Press reports from The Times, the Financial Times and The Guardian, we have to search for a number of original documents, read the speeches, and consider the precise proposals that have been made by a number of developed and developing countries. It is not easy to get adequate documentation to present in a debate of this kind. I hope I shall be able to find my way through the various bits of original sources that I have with me.

We hope, while regretting very much the inadequacy of the Government's attitude so far, that this debate, which is taking place in Opposition time because of the importance that we attach to the subject, may yet result in our affecting what the Government do in the remaining weeks of UNCTAD.

There is perhaps one month ahead. Part of it will be committee consideration and part, at the end, will be resumed plenary session at which Governments are asked to state their final positions on what has emerged from the committees. There is time to reconsider. There is time to make a constructive response.

Our concern and what I can only express as our anger is shared by many people in Britain who follow these matters. They are only a minority, but they are an important and substantial one. They are caring people, and those who follow these matters and devote themselves to the cause of the third world share our concern and anger at the total inadequacy of the Government's response to UNCTAD III. It is because of that that, for the first time in the history of aid and development debates in this House, we shall divide at the end of the evening.

It has been said by many people that UNCTAD this year can make or break relationships between the rich and the poor world. It is difficult to judge just how true this may be. I have a strong feeling that it could be true.

I was in Peru just before the Committee of 77 meeting at Lima, its pre-UNCTAD meeting, in the autumn of last year. I was in the Netherlands in January at a conference concerned with UNCTAD at which were present a number of key officials of UNCTAD and representatives of the developing countries.

It is clear that if there is indeed a make or break confrontation this time it is because the Committee of 77, representing the developing world, has presented well organised, entirely logical and well presented proposals and requests, and these constitute the agenda.

It could be that if real progress is not made in Santiago the third world will turn its back on any concept of partnership in development and will turn in on itself and seek its own answers independent of the rich world. I do not know whether that is what the Government want. It might be an easy answer. It would be easy for any rich country to say Let the third world solve its own problems. We shall have no more to do with it".

I do not really believe that this is what Her Majesty's Government are seeking. If I am right, they are making a grave mistake in their lack of response to the entirely constructive proposals that are being made in Santiago.

I deal with these proposals against the background that we must clearly have in mind. It is a background in which we know that during the 'sixties, the first Development Decade, the poverty gap widened. We must consider why, for unless we can discover the reasons we cannot establish the answers or be clear about the importance of the response to the proposals that the third world is making in Santiago.

Part of the background is aid and part is trade. Probably the most important aspect is trade. Between 1960 and 1969 exports from developing countries grew at the rate of 6.9 per cent. Exports from the rich countries grew at the rate of 9.5 per cent. If we look in the same period at the primary commodities on which many of the developing countries, and particularly the poorest, depend completely—if we exclude oil, which benefits only a tiny number of highly privileged countries—we find that the export of primary commodities grew at the rate of only 2.5 per cent.

That state of affairs might have been satisfactory if prices had compensated for the lack of growth in the export trade, but they did not. During the 'sixties—it is difficult to generalise; one really needs all the elaborate figures of a Financial Times index—if we take beef, cocoa, coffee, cotton, iron ore, rubber, tea and copper—these represent most of the main primary commodities of the developing world—we find that prices at the end of the 'sixties were lower than they had been in earlier years, either during the 'fifties or during the earlier part of the 'sixties.

For a concrete example, consider copper. It is only two or three years ago since the price of copper was 78c per lb. on the London Metal Exchange. This year it has averaged between 48c and 50c. This selective fact indicates the importance of the price of primary commodities to a developing country. In Chile, where UNCTAD is taking place, a difference of lc per lb. on copper on the London Metal Exchange means 15 million dollars a year to the foreign exchange of Chile. That is a measure of the importance of the price of primary commodities.

We have a picture in which the development of world trade and the movement of prices for 10 years and more has favoured the rich countries. This has happened partly because trade barriers have not been relaxed enough.

The Minister has expressed the view to the House that the generalised preference scheme which Britain has adopted is much more generous than the one we are about to adopt under the EEC. We have made a move, as have most of the developed countries, on generalised preferences, but we have not gone far enough. If the developed countries had gone further, the picture of a declining share of world trade by the third world would have been a picture of an increased share for them.

I was privileged to observe the right hon. Member for Devon, North (Mr. Thorpe) on television last night in a party political broadcast. He totally failed to comprehend the nature of the problem. It is not enough to say that the rich countries are doing something by way of generalised preferences to help the poor countries. It is certainly not enough to say that the European Community, to which he is so devoted, is doing good things to help the developing countries. The question is whether those good things are good enough; whether, in fact, the trade barriers which still persist should be broken down.

Then there is the persistence of the rich world in developing substitutes for primary commodities, be they synthetic rubber or synthetic textiles, all of which embody a great technological revolution in Europe and America and reduce the capacity of the third world to sell its natural products. This great problem is being discussed in Santiago. It is one of the background reasons for the decline in the share of trade that has gone to the third world.

Associated with that is the leap forward in self-sufficiency of the rich countries. Does it make sense for European countries to seek to increase their production of beet sugar? I leave aside all the complicated arguments concerning the Sugar Agreement and the producing countries. Does it make sense for the rich countries to make more of the commodities upon which the third world relies for its livelihood?

Mr. T. H. H. Skeet (Bedford)

I am following the theme that the right hon. Lady is advancing. Europe seeks to exploit as much oil as possible now, because the price which the Middle East and Libya are charging is regarded as exorbitant. Therefore, Europe must have an alternative source of supply in addition to the supplies available from reserves in the Middle East.

Mrs. Hart

As the hon. Gentleman will have heard, I specifically excluded oil from my consideration of primary commodities. Oil and oil exports benefit only a tiny number of developing countries. Unfortunately, they are those countries whose rulers seem to be less willing to share the benefits of oil exports among their peoples. I do not include oil in this consideration. I am talking about commodities like sugar beet.

These are some of the reasons why the trade gap has increased. The poverty gap is more than just the trade gap. We must take into the balance sheet the fact that during the 1960s—I make no pretence that the Labour Government had any tremendous record in this regard—aid from the rich world was no more than peanuts and it shows no sign of being other than peanuts during the 1970s.

Taking it as a whole, the United States contributes, or has contributed, almost half of the official development assistance flow from the rich world to the poor world. Recent developments in Congress and the recent attitude of the Nixon Government to aid mean that part of the aid programme from the rich world as a whole is likely to be greatly diminished. There is no sign that other countries are likely to make up the gap that is thus created.

Another factor in the balance sheet is that debt piled up in the third world, basically because the rich were looking after themselves.

It may well be that this UNCTAD is the last chance to take a new path. I therefore wish to consider what the Government's position seems to be at UNCTAD and what it has been stated to be. I consider first the actual representation at UNCTAD. It will be remembered that in 1964, on the occasion of the first meeting of UNCTAD, Britain was represented by the then President of the Board of Trade, the present Prime Minister. He spent a long time there. He claims to have continued his concern for the third world since then. In 1968 my right hon. Friend the then President of the Board of Trade was in New Delhi for, I think, the whole of the plenary session.

This year the right hon. Member for Argyll (Mr. Noble) departed for Chile, attended on the opening day and the day thereafter, then no doubt had a pleasant Saturday and Sunday in the countryside around Santiago, departed for home on Monday, and was back in a House of Commons Committee on Tuesday, a fact which was completely deplored by the Opposition members of the Committee that he attended.

The Minister for Trade (Mr. Michael Noble)

The right hon. Lady might have asked and not stated it; because then she would have found out the facts. I was there on Saturday morning, which was the total time available on Saturday. I had an hour off after lunch before catching my plane home.

Mrs. Hart

Splendid—two days and one hour! I apologise to the right hon. Gentleman.

Mr. Noble

Two and a half days.

Mrs. Hart

Now we really know. I am anxious to do absolute justice to the right hon. Gentleman and the Government. I apologise deeply if I have offended the right hon. Gentleman by suggesting that he attended UNCTAD for two days when in fact he attended for two and a half days.

We heard only during the course of the debate in another place a week yesterday that the noble Lady the Minister of State for Foreign and Commonwealth Affairs is to go to Santiago, I believe for a week. Precisely what is the noble Lady to do in Santiago? I have a tremendous respect for the Minister of State, whom I know well. We know that she will add a great deal of grace and charm to Santiago. However, UNCTAD will be in committee. Is she to attend and take part in committees? If so, which ones? Is she taking with her any fresh proposals other than the non-proposals that the right hon. Gentleman advanced during his two and a half days in Santiago?

The right hon. Gentleman must understand that the reaction is not just that of hon. Members on this side. I quote The Times of 17th April: The initiatives and activities of Germany and France have completely overshadowed the extremely cautious opening positions adopted by Britain and the United States …Britain got off to a poor start, giving the impression at this international forum that it does not have confidence enough to back any new initiatives; even that it fears any new ideas as disadvantageous if they emerged since the United Nations debates two years ago on the second development decade. After getting a reaction like that, it is no wonder that the right hon. Gentleman beat a retreat to the safe shores of Argyll.

What are the policies that we would have liked the right hon. Gentleman to have put forward? What are the policies that we regret that the Government have not put forward? Looking first at trade, the need is for progress to be made on commodity agreements. One of the outstanding matters is cocoa, about which I know the right hon. Gentleman has had something, but not enough, to say. There is a need for import price schemes, for consumer support for development, for research into new uses, and for new markets for raw materials.

I turn to what has been said in contrast to each other by two people at Santiago. The French representative, M. D'Estaing, talking about the international cocoa agreement, which is one of these commodity agreements which are crucial at the moment for all third world countries which are producers of cocoa, and on which progress is being very steady, said this: To the French Government, this agreement on cocoa has the value of a test. We must not leave this Conference without having committed ourselves to succeed. France confirms here her decision to participate in the free financing of the regulator stock, even if other consumer countries were to refuse to contribute to it. That is a very strong and constructive statement.

I turn now to what the right hon. Gentleman said: Experience has shown just how complex and varied commodity problems are—and how many other often very different interests have to be reconciled. If we are realists we cannot ignore these difficulties. Where individual products are concerned we believe cocoa is one area were action very evidently is required, and we have been doing what we can to find solutions to outstanding issues in the current negotiations. Has the right hon. Gentleman made any commitment? If not, does he intend to make the kind of commitment that the French have made about the international cocoa agreement? This is the kind of specific step that we seek from the right hon. Gentleman.

Then there is the question of buffer stocks on which the Group of 77—the developing countries—are calling for positive initiatives. We on this side believe that buffer stocks are one of the valuable contributions which can be made to safeguard the commodity position and the pricing position of commodities for developing countries. We believe that buffer stocks would be a legitimate matter for contributions from the aid budget, if need be, so that safeguards could be given. Has the right hon. Gentleman had anything to say about buffer stocks? I think not.

What we are considering in this debate is the difference between words, vague good intentions, and hard concrete action, hard concrete commitments on specific policies. UNCTAD in Santiago is seeking a commitment on policies, and all that the Government have done is to quote vague words of understanding.

On the question of manufactured goods I quote Dr. Mansholt speaking for the European Commission. He invited UNCTAD to make a clear call to the industrialised nations to open their markets to permit a 15 per cent. annual increase in the export of manufactured goods by the developing countries. Has the Minister for Trade said anything like that? Of course not. We recognise the problems here. We recognise that internal economic adjustments are needed and that these can only be made on the basis of full employment. The Government do not have a chance of meeting the needs of the third world because they start from the position of having over a million unemployed. But nothing constructive comes from the Government.

I turn to finance, which is just as important. Here there are two key requests coming from the third world. The first is that there should be a participation by the third world in international decision-making on monetary matters. To be fair to the Minister, he has had one or two things to say about this. He said that participation might be possible. But he has not supported any of the concrete proposals. He has not given any real response to the third world demand. In all the monetary difficulties of the world as a whole in the last year or two, the last people to be considered have been the developing countries. The Group of Ten has met and tried to work out solutions. It has to some extent found solutions for its own problems, but it has given scarcely any thought, and certainly taken no action to seek to protect the third world from the consequences of actions by countries in the rich world. All that the third world is asking is to be involved in some of these discussions, to take part and have a voice to protect its interests. On this the Government's response is totally inadequate.

The other aspect of the financial problems is the question of special drawing rights. This reflects the demand of the third world for special drawing rights to be made by them upon the IMF in a much greater proportion than they do at the moment. This is a reflection of their critical and acute foreign exchange difficulties. It does not affect them all. Ceylon, Chile and India are just three which have acute external influences on their growth because of their foreign exchange problems. We in this country should know how far a balance of payments problem can restrict growth. We should be the first to sympathise and want to take positive action, realising as we do the relationship between foreign exchange problems and the rate of growth. But we seem to be the last.

In The Times of 24th April this year there appeared the headline: Demand by poor nations opposed by Britain". The story said that Britain refused to support the scheme. It said: The proposal, known as the Link, would provide poor countries with more finance for their development by means of special drawing rights on the international Monetary Fund". In contrast we have Dr. Mansholt, again speaking for the European Commission. He has been quoted as saying: My Commission believes that at the next allocation of Drawing Rights a special allocation for developing countries could be envisaged to compensate the losses in the purchasing power of their reserves resulting from the last monetary crisis The French support it, and from Germany Dr. Schiller said he favoured a greater share for the third world but with a smaller proportion of special drawing rights for industrialised countries to compensate. This is obviously a very elabor- ate area for discussion, but what matters is that the British Government have given no indication that they are even prepared to take any initiatives at the IMF to have the matter fully discussed and to provide an approach which could offer something constructive for the developing world.

I turn finally to aid and to debt relief. I do not want to elaborate on aid because we have exchanged views on this on a number of occasions. The Government refuse to accept any target for official aid as we believe they should and as we did in May, 1970. The Government rely on private investment to meet the overall international 1 per cent. target. We believe that private investment is not aid. I was astonished to see that the Minister of State for Foreign Affairs in the House of Lords said a week ago that she agreed that private investment was not aid. I wonder whether she had consulted her right hon. Friends, because this is not what we have been hearing from the Government. They have been saying that it does not matter about industrial development assistance not reaching specific targets. They say that what matters is that total aid flows, including private investment, should reach 1 per cent.

We regret and condemn the Government's attitude. It is not difficult to understand. It flows from the Conservative manifesto of June, 1970, and from the dogma of the Conservative Party. We regret that out of that dogma has come a conviction on the part of the Government that private investment can make a contribution to the developing world and that official development assistance is less important. This is the implication of their refusal to accept an official development assistance target. They are now one of a very tiny minority of rich countries which fail to accept it.

The Government have agreed that emphasis should be given to the least-developed countries, the poorest. It is not surprising, because they are carrying out the decisions of the last Labour Government aid framework of 1970 which provided for a considerable proportionate increase in the aid to go to the poor Commonwealth countries, most of which are within the category of least developed nations.

There is a total failure on debt relief. By the end of 1969 80 developing countries had accumulated nearly $60 billion of external public debt. It grew at the rate of 14 per cent. between the mid-1950s and 1969, and so did debt service payments. It grew because the rates of interest charged on early development loans were far too high and it has caught them up. Ceylon, India, Ghana, Chile, Pakistan—there is a long list of countries which are in acute difficulties because what they are due to pay back to the rich countries in loans is as much as, and even more than, the amount they are receiving in aid.

What should be done? The proposals of the Committee of 77 at UNCTAD are that the criteria and procedures of rescheduling external debt should be reviewed. The response from the Minister was that none of us could fail to be conscious of the considerable and growing indebtedness of developing countries. He said that the British Government were prepared to join in seeking constructive solutions to these problems. But what are the Government prepared to do about waiving debt repayment and debt interest? The Spectator thinks that the Government should abandon all claim to debt repayment. It is interesting to see that on the question of aid and development there can be the bitter divisions between the Spectator and the Government that we have seen on a number of other issues.

I have spoken at length because no one from this Front Bench proposes to intervene again. To sum up, we believe that British representation at UNCTAD has been inadequate to the point of being offensively inadequate. There has been no satisfactory indication of a constructive British approach either on the major agenda items of aid targets, debt relief, the link with SDRs, the creation of buffer stocks, the need for real progress on commodity agreements or on the need for internal adjustments to help imports of manufacturers. On all of this nothing constructive has emerged from the British Government. There is no sense of concern such as has emerged from Germany, France, Sweden and many other countries. It will be no use the right hon. Gentleman telling us of the Government's concern and compassion for the third world. It will be no good his telling us of vague good intentions, because rich countries at the time of the Santiago meeting will be judged by what they do and by their total commitment. On that test I am sorry to say that the Government have completely failed, and it is for that reason that we shall later divide the House.

7.51 p.m.

The Minister for Trade (Mr. Michael Noble)

I am delighted that the House has an opportunity for a general debate on the Third United Nations Conference on Trade and Development. I am also glad, though I suspect that the right hon. Member for Lanark (Mrs. Hart) is not, that I am here and able to take part. The right hon. Lady would no doubt have wished me to spend the whole of the conference in Santiago, and it would have been very pleasant.

When the subject of the conference was raised on the Adjournment two weeks ago by the hon. Member for Portsmouth, West (Mr. Judd) I was already in Santiago for the opening of the conference. During that debate my hon. Friend the Under-Secretary of State outlined to the House the Government's attitude to a number of main issues which will be covered by the conference. I shall go into a few of these in a little more detail. Before coming into policies, however, I thought that the House might wish to hear something of the atmosphere of the conference itself. The right hon. Lady's picture of it is very far from the truth, as far as I could see it or as has been reported to us since.

Perhaps the most striking thing about Santiago is the sheer size and scope of the conference. With representatives of 141 countries taking part and the whole range of financial, trading and development problems of the developing world within its ambit, it is an enormous undertaking. It is greatly to the credit of the Chilean Government that they have constructed halls and offices which are fully in keeping with the scale of the conference. The conference secretariat, too, should be commended for the documentation and organisation with which the efforts of so many experts from Governments and from outside bodies have been harnessed to give the conference the best possible start for its work.

But in any meeting of this size with heads of State, Ministers, and other distinguished visitors from almost the entire world, the formal sessions of the conference are only a small part of the interchange of ideas, which takes place; other less formal contacts take place continuously.

My stay in Santiago had unfortunately to be limited. I agree with the right hon. Lady that if I could have stayed there several more days it would have been both useful and pleasant for me, but this could not happen on this occasion, and she knows why. But I was able to take the opportunity in the three days I was there of having many discussions both with a number of our Commonwealth partners and with our new EEC partners.

The right hon. Lady referred to some criticisms at home of the tone of my opening speech to the conference. I make no apologies for this. A large number of heads of delegations who spoke to me, and many of the experts from the United Nations and so on, said that my speech in their view was exceedingly well balanced, and there was no comment, and has been none since, amongst the delegations there that we in any way let Britain down in the eyes of the developing world. The right hon. Lady may hope that we have, but that is not borne out by what is happening day by day in Santiago.

I can see what the right hon. Lady is trying to achieve. She wants to have a confrontation in the wildest possible form between the developing and the developed countries. I do not think that is helpful. I have regarded the discussions in UNCTAD, at both the first and second meetings, and at this meeting, as being very much of a dialogue between the industrialised countries and those who are still at an early stage of development. But it is a good deal more than that. It is a dialogue between the wide and major aspirations of the developing countries and often the hard realities of world trade and monetary affairs. I do not think anybody need be surprised that in such a dialogue there is bound to be an element of disappointment.

Anyone who has any knowledge of conditions in the developing countries will not be surprised that they pitch their expectations so high. Under the inexorable pressure of rapidly growing populations against limited resources, they are bound to feel that the world reacts too slowly to their demands for a fairer share. But the hard lesson of the first two UNCTAD Conferences is that progress does not come from empty rhetoric. This has never been the British way. We have tried never to promise what we did not honestly believe we could perform.

The second lesson which has been learned in these conferences is that the only road to progress is by consensus. It is no use the developing countries forcing through ambitious resolutions if these do not command a sufficient body of support amongst the industrialised world. The first step in getting this kind of support is hard work within the group of developed countries, known as Group B, to establish the highest possible level of agreement on the proposals coming from the developing countries. We have in the past been able to take the lead in working for a consensus of this kind, without which no progress is possible, and our delegation will continue to do this at the present meeting.

A third point which I would like to make is that progress depends not only on a consensus of the kind I have just described but on hard detailed work often carried out in other international organisations to implement the ideas which have sprung from the UNCTAD. A good example of this is the generalised preference scheme in which the United Kingdom played a leading part in both the first two conferences.

Once the principle had been established, it became necessary to work out the essential elements of the scheme in detailed and often tediously slow discussions in the OECD. But the result of this is that there are now generalised preference schemes operating in most developed countries. Their introduction is, I believe, a major contribution towards giving help to the developed countries in one of its most useful forms. It is a move to enable the developing countries to earn more convertible currency to finance their schemes of development.

The importance of this move is shown by the fact that some three-quarters of all the foreign exchange earned by the developing countries comes from the sale of their exports. One of the catch phrases of the first UNCTAD was "trade not aid". The preference scheme was a great step in the liberalising of trade.

We shall in due course be moving towards the adoption in 1974 of the somewhat different scheme of generalised preferences adopted by the EEC, but the general purpose of the scheme will remain. The right hon. Lady said that it was much less generous. In certain respects perhaps our scheme is the better. We do not necessarily have to decide today that we adopt the EEC scheme. We hope that the EEC may move some way towards adopting part of ours. But here I should like to state again what my hon. Friend the Under-Secretary of State for Trade and Industry, the hon. Member for Harrow, Central (Mr. Anthony Grant), said in the debate on 13th April, that the EEC has already shown itself outward-looking and has the interests of the developing countries well in mind. The right hon. Lady may well disagree with that. On the other hand, she kept quoting the very much, as she said, more open statements made by France and Germany at the conference. If she believes that, I do not see why she is in any way worried that we are joining the EEC.

Mrs. Hart

Would the right hon. Gentleman be kind enough to quote himself upstairs in Committee about a year ago, when he said that there was no doubt that our scheme was much more liberal? Secondly, Dr. Mansholt was speaking for the European Commission and made it clear that there were considerable difficulties within the EEC. I certainly hope that Dr. Mansholt's view will prevail.

Mr. Noble

It would be unusual if anyone in this House believed that the countries in the EEC and the European Commission were always entirely in agreement. That is not a factor in the matter at all. Our scheme is on balance better and more liberal, and I hope that as the new scheme develops after we join the EEC, it will be an improved scheme as well. There is a lot of evidence that it may be so. If I am right, there is no reason to fear that enlargement of the EEC will adversely affect the trade of the developing countries.

It is natural—and a statement has been made already today and often in the last few weeks—that there should be hopes that UNCTAD III will be the occasion of a major breakthrough for the benefit of the developing countries. Whilst I agree that it is natural that they should want this to happen, it is to some extent unrealistic. I looked up the peroration of a speech on this subject. It said: UNCTAD will be judged not by the eloquence of our speeches not by our ingenuity in committee, but by whether, at the end of the conference, we have moved measurably nearer some at least of these practical goals. That speech was made by the right hon. Member for Grimsby (Mr. Crosland), having produced a list a little shorter than the one I have produced and certainly no more precise. But he realised, because he was responsible for doing the task which I have been doing at UNCTAD, that all that one can usefully do is to set out the directions one is aiming for and then work to see how far one can get towards it.

Mr. Alexander W. Lyon (York)

That statement by my right hon. Friend the Member for Grimsby (Mr. Crosland) was made in 1967, when the balance of payments was very much worse than it is now, and when we ourselves were a debtor to the International Monetary Fund—again a situation which has considerably changed today. We should expect a great deal more of any British Government attending UNCTAD III because we are in such a better position.

Mr. Noble

The Opposition must not try to have everything both ways. They cannot both say that we are better off because our balance of trade is much better which it is—and at the same time say that we are worse off on the ground that we have a large number of unemployed. They must make up their minds about which wicket they want to bat on. It is true that development is a continuous process and the steps which the developed countries take to assist it do not occur at four-yearly intervals to coincide with UNCTAD. Indeed, it would be wholly wrong for possible progress to be held back to fit the UNCTAD time table.

I do not think that in the strictly trade sector ire is realistic to expect from UNCTAD III development on a par with the establishment of the generalised preferences system. This does not mean, however, that there is no progress on trade arrangements. Last January, a major new initiative for the liberalisation of trade was launched by a declaration made initially by the EEC and the United States and since supported by all the major industrialised countries. The declaration itself emphasises the need to take account in the negotiations of the interests of developing countries.

I am aware that there has been a disposition in some quarters to criticise a new initiative for trade liberalisation launched by the developed countries in the same way as the recent currency settlement has been criticised as simply a cosy deal worked out by the industrialised countries in their own interests. There seemed to be at least some elements of this in the right hon. Lady's remarks. But it is inevitably true that negotiations of this kind, which depend on reciprocity for their success, must, to a large extent, be decisively carried out between the major trading nations. But this does not mean that the benefits accrue exclusively to them.

Where tariff barriers are reduced and trade is increased, this contributes to the greater prosperity of the world as a whole. In a recent report, the UNCTAD Secretariat recognised that the rapid growth in incomes in the industrialised countries in 1969–70 and the consequent increase in world trade had been a major factor in helping the developing countries to exceed the export growth targets they had set themselves.

It is worth pointing out that development targets are being met. The target fixed by the United Nations for the first development decade was achieved and all the indications are that the target set for the second development decade will be achieved also. A successful round of multilateral trade negotiations would, therefore, help to set world trade again on an expansion course and the developing countries are bound to gain from this. Their principal objective must be to secure a rapid increase in their export earnings, and a general expansion of world trade is a sure, perhaps the surest, way to bring this about. Moreover, protectionism flourishes when trade and national economies are depressed, and the best safeguard against the setting up of new barriers is a rapid expansion of trade.

One trade question on which I hope that the conference will give a useful lead is the stabilisation of trade in primary commodities on which, despite progress in industrialisation, many developing countries rely very heavily. This is an area where we can take some credit. We have taken a leading part in all the international discussions, as befits our position as one of the largest importers in the world, and we have given our full support to the five existing commodity agreements.

The right hon. Lady mentioned cocoa. I think that we can take credit for having established last month a measure of agreement in the negotiations for an agreement on cocoa. The right hon. Lady talked about commodity agreements as though we could unilaterally decide to make an international agreement. She really does not understand the problem. Four years ago, the right hon. Member for Grimsby, in his speech at UNCTAD II, regretted that an agreement on cocoa, which he and the Labour Government hoped would be concluded, had failed just a few weeks before then. That was four years ago and we still have not got it. To talk about international agreements as being at the disposal of Britain, France, or the EEC is grossly to mislead the House. We shall certainly continue, as we have done, to put every effort we can behind this and any other impetus which UNCTAD III is giving to the work on commodities, because we regard it as an exceedingly important matter.

I do not think that it would be right for me to take up too much of the debate. I know very well the deep concern of many hon. Members who have written to me about the conference and the strength of public feeling they express. It is right that they should have adequate time to express this concern publicly. I do not therefore propose to go into aid and monetary issues of the conference, as they will be fully covered by my right hon. Friend the Minister for Overseas Development when he replies.

I end by emphasising that to anyone who like myself has, in the course of his work, had to travel to most corners of the globe in the last two years, the problems of the third world are only too serious and only too real. We in this country have many reasons for pride. Our particular contribution to world development has been through the development of the Commonwealth and the way we have brought independence to so much of it.

We certainly cannot now relax and leave their Governments to cope unaided with all the problems of squalor, hunger and disease and a population explosion which vastly exacerbates already formidable dangers. Nor, in our special concern for the Commonwealth, can we neglect the rest of the developing world. If our main aim in the last troubled years has been to secure peace, if in our efforts to achieve this we have spent much time and effort on trying to win over the minds of people in the developing countries, we need not be ashamed of that, We have had much to contribute, not least our democratic system.

I can assure the House that this Government in no way less than the last faces up fully to the immediate and urgent task of trying with their old partners in the Commonwealth and with their new partners in the EEC steadily to increase the effective aid that must be found to improve the living conditions and standards of life, indeed the lives themselves, of many millions in the developing world. The fact that we approach this enormous task with honesty and realism, as did the last Government, is, I hope the House will agree, to our credit.

8.12 p.m.

Mr. Lewis Carter-Jones (Eccles)

I want to begin with UNCTAD I, when our representative was the present Prime Minister. He said in 1964: Together we face the intolerable problem of poverty in the world. We are determined to find ways to banish it. Since he uttered those words the gap between the rich and the poor countries has almost doubled and the share of world trade enjoyed by the poor countries has been held down.

I was on the Estimates Committee which looked at overseas aid just after UNCTAD II, as was the hon. and gallant Member for Winchester (Rear-Admiral Morgan-Giles). There was a Tory chairman. The House completely accepted our report. I find it intolerable that our representation at Santiago should be so abysmal when one of the conclusions we reached about aid was: It has also brought very considerable benefits to this country, both in the form of good will and in the form of increased trade. Purely on the grounds of enlightened self-interest, on the chance of mopping up some of our unemployment we should have a much stronger representation at Santiago.

Secondly, we said: Finally, by helping to bridge the gap, both economic and social, between the more and the less developed countries it has contributed to maintaining that stability which is in the interests of the whole world". If it is in the interests of the whole world that overseas aid should be given, the Government should be extremely well represented at this important conference. This is why we on this side feel very strongly.

Rear-Admiral Morgan-Giles (Winchester)

I remember being on that Estimates Committee with the hon. Gentleman. Would he not agree that with the problem we are debating it would be much more constructive to take a reasonable, bipartisan view rather than appear to claim a monopoloy of concern for the third world by attacking the representation of the Government at Santiago? I cannot see what the hon. Gentleman is driving at.

Mr. Carter-Jones

The hon. and gallant Gentleman has opened his guns too quickly. I am condemning not only the Government; I am condemning my own side because in this matter I do not think our efforts were good enough either. My right hon. Friend the Member for East Ham, North (Mr. Prentice) resigned from the Government on this issue, and I strongly supported him then. I am not trying to be partisan about this. "A plague on both your houses for the lack of aid we are giving." That is my feeling.

It is enlightened self-interest for all of us to give a lot more by way of aid to these countries in desperate need. It would help our own financial position, but, above all, it would help them to raise their standards. Clearly, since the Prime Minister spoke at UNCTAD I, the share of world trade held by the poorer nations has fallen while we, the wealthy nations, have gone ahead. All the developed countries are faced with the problem that giving overseas aid is not very popular. It is not likely to win us votes. Nevertheless, we ought to be leaders in this.

Recommendation No. 11 of the Committee was that: The Ministry of Overseas Development should increase the publicity given to the aid programme through such methods as the production of an annual Report, greater use of television and films and talks to schools and universities. What we were saying then was "You have to convince the people that aid is essential; you have to create public opinion." I regret that so far very little has been done by the Ministry to sell the concept of aid as a good thing in the moral as well as the economic sense.

I end with a quotation from the present Secretary-General of the United Nations when he talked in Santiago about the importance of aid. He said: It is now incumbent upon all present here to show concretely the political will to come to grips with these problems and arrive at truly meaningful agreements which might lead to concerted action of benefit to the entire international community and particularly to those countries and peoples with the greatest need. The right hon. Gentleman would have prevented a vote tonight had he been forthright and positive in saying that the aid we are giving is inadequate and that we believe in giving more. His voice should have been heard clearly advocating the value of British aid and that of other developed countries.

8.17 p.m.

Dame Joan Vickers (Plymouth, Devonport)

I am pleased to follow the hon. Member for Eccles (Mr. Carter-Jones) because he has great knowledge of this problem. I want to say how disappointed I am about some of the reactions to the Santiago UNCTAD. It has to be remembered that at the first conference our present Prime Minister gave what I thought was a splendid lead. I had hoped that these conferences would do something in the future years, but one of the difficulties is that there are 2,000 delegates representing 141 countries together with 600 officials. It seems very difficult to get down to anything concrete with that number of persons.

I am particularly disappointed that the Council of Europe countries did not get together as there are 10 member countries on the Policy Board. I put forward a resolution signed by 11 other countries, trying to get a policy to the Committee of Ministers which could be agreed. It has not yet happened, but I hope that such agreement will come about. It was regrettable to find France and Germany taking completely different attitudes on many questions. The Secretary-General of the United Nations in his opening address said: Material conditions necessary for the success of this Conference are plentiful…These problems are clear. The problems have been clear for some time, but the object of these conferences is to find solutions and we do not seem to be any nearer to doing this. I do not think that the problems are being tackled quickly enough.

As for British aid, we are 13th in the table of gross national product, so we are not being ungenerous in that we are now giving £225 million. I gather that this is to be raised to £345 million in the near future. There is still a clash between the rich nations and the poorer nations. Mr. Maxwell Stamp would be disappointed if he could see the result of the plans which he so hopefully made in 1961. There will be no solution to all the problems of the developing world unless we can make a real effort.

One difficulty is that the poorer nations have failed to band themselves together. By doing so they would be able to force their plans on the more developed countries. There are 77 poorer countries, 30 rich countries and nine Socialist countries in different blocs. If the poorer countries would only band together we should be able to help them more easily. Not only are they split geographically, but they have different ideals and aims. In addition, UNCTAD, regrettably, has no power to enforce decisions.

At least 16 of the poorer countries are African countries. If we could take a group such as the 16 African countries and concentrate on helping them, they would then be more able to help each other. Our efforts are much too diffuse, and should be concentrated more on getting just one part of the third world on its feet first.

An official of the OECD confessed: It would be unfair to accuse the rich countries of having chosen the least developed as a means of splitting the 77. They did not put up the proposal, but when someone else did they fell on it with glee. Mr. Robert McNamara, the President of the World Bank, said: The state of development in most of the developing world is unacceptable—and growing more so. He went on to give the reason, which is that development programmes have been largely directed at gross economic goals and have failed to ensure that all nations and all groups within the nations have shared equitably in the economic advance. For example, children under five account for only 20 per cent. of the population, whereas they account for 60 per cent. of the deaths. There are now 100 million more adult illiterates than there were 20 years ago.

The right hon. Member for Lanark (Mrs. Hart) mentioned commodities and the lack of success in reaching agreements. I agree with her that we should try to persuade Dupont, ICI and Nestles to stop inventing artificial cotton, synthetic cocoa and even man-made bananas. Surely, other materials could be invented which would be of equal benefit and would not take away the trade of countries, for example, in the Caribbean whose major products are sugar and bananas. Dr. Mansholt said: It is discouraging to see that at the same time as we send pictures of Adam and Eve to Jupiter we have been unable to avoid the monetary crisis which has shaken relations between all the trading countries in the world. I agree entirely with those sentiments.

Economic progress depends largely on human aptitudes and attitudes. When one thinks how Malaysia, with some help from us, and Japan and Israel, by their own efforts, pulled themselves up from the devastation of the last war one realises how much the attitudes and aptitudes of individual people count.

I should like to see aid concentrated more on helping countries to plan and on training and teaching, especially technical skills. These are the only ways in which to increase gross national products. We see developing countries with a per capita gross national product ex- ceeding 500 dollars with 9 per cent. of the world's population and a growth rate of 6.2 per cent. We see the poorest countries with a per capita gross national product of less than 200 dollars, a population of 67 per cent. and a growth rate of only 3.9 per cent. Only by planning and enabling the people to acquire skills can the growth rate be improved.

The question of a general preference scheme was put forward originally by the Prime Minister at the first UNCTAD. Australia has acquiesced to this scheme, and so have the EEC countries, and Japan and Norway, but there are still Austria, New Zealand, Canada and the United States to join. I am sorry that these richer countries have not yet joined in the scheme.

Will my right hon. Friend say why Britain has refused to support the Link proposals. I have been unable to discover the reason why it was decided that we should not even join in the discussions, particularly as some other European countries are in favour.

Will my right hon. Friend also deal with his proposals (IX) and (X) in regard to multilateral negotiations? My right hon. Friend said: The multilateral negotiations which, I hope, will start in the GATT in 1973 should offer the opportunity to make real progress to wads the liberalisation of world trade for the benefit of all. I do not like the phrase "I hope". I should like to think that these negotiations which have been put off for so long will take place.

Paragraph (X) states: We should, here and in the future, discuss the development of an effective world code for shipping conferences firmly based on experience of the code already being applied by many conferences and on a sound understanding of the problem". There is to be a conference based on the experience of the code which is already being applied, and I should like action to be taken.

I understand that there is to be a summit conference in the EEC in which the four prospective members—Britain, Ireland, Denmark and Norway—will join, on this whole subject in October. Dr. Mansholt has stated that the countries of the EEC will have to make up their minds about the relationship between EEC and the third world. I hope he is correct in his reference to: …the movement of young people who are less and less in agreement with the traditional way of gearing economic development to the accumulation of wealth for a few and of considering economic growth as the prime objective of national economic policy. These forces will certainly push our Governments into action to do more for the developing world and to do it more quickly. Having read the speeches of the Secretary-General of the United Nations, Mr. McNamara, Dr. Mansholt and my right hon. Friend, I hope that some of the ideas expressed in them will come to fruition. If this third UNCTAD fails it will be the last conference of its kind. We cannot afford to bring together all these people without achieving any result, and it would probably be better to have finished discussions at the United Nations.

8.28 p.m.

Mr. Edmund Dell (Birkenhead)

The hon. Lady the Member for Plymouth, Devonport (Dame Joan Vickers) has made a moving speech, full of understanding of this problem. I think her speech has helped to justify this debate and even the Division which we propose to have later this evening.

Some months ago I had the pleasure of supporting the right hon. Gentleman the Minister for Trade when he was introducing the generalised preference scheme, and supporting him against some of his own back benchers. I would like to explain tonight why I am disappointed by the Government's reaction to UNCTAD III.

The right hon. Gentleman in his speech seemed to imagine that what we were looking for on this side of the House was empty rhetoric. Nothing could be further from the truth. We want a realistic appreciation of the situation by the Government, and that includes a realistic appreciation of the requirements of the less-developed countries a present and, if I may take one example, of the way the needs of the under-developed countries have been made worse by something that was entirely outside their control—the currency realignment at the Smithsonian Institute. This is something to which I understand the right hon. Gentleman the Minister for Overseas Development will make reference, but I must say that the Minister for Trade's reference to this point was quite inadequate. My right hon. Friend the Member for Lanark (Mrs. Hart) quoted words of Dr. Mansholt, the President of the European Commission. I would like to quote them again because they make my point so well and I will contrast that with what the Government are saying. Dr. Mansholt said: At the next allocation of drawing rights, a special allocation for developing countries should be envisaged to compensate for the losses in the purchasing power of their reserves resulting from the recent monetary crisis. In other words he was saying that there had been a loss in purchasing power by the less-developed countries owing to the recent monetary crisis and it was necessary to compensate them for that loss.

What do the Government say? I cannot take what the Minister for Trade said this evening because he said nothing, so I have to take what the noble Lord, Lord Limerick, the new Under-Secretary of State in the Department of Trade and Industry, said in another place on 19th April: In this connection suggestions have been made that the realignment of parities has been at the expense of the developing countries. The fact is that no generalisations are possible. Different countries—both industrial and developing—were differently placed as regards the composition of the reserve holdings and the denomination of their debts, and made different decisions about their parities and the form of their links with the major trading currencies. The terms of trade will have been differently affected for different commodities and different countries."—[OFFICIAL REPORT, House of Lords, 19th April, 1972; Vol. 330, c. 87.] Consider that carefully balanced assessment of the position, showing that some have not done as badly as others, with the categorical statement of Dr. Mansholt, clear and correct, that the less-developed countries have suffered as a result of the agreement at the Smithsonian Institute last December.

I will illustrate the ways in which they have suffered, and it is simple enough to do so. First, let us take the terms of trade, to which the noble Lord referred. It is quite clear that as a result of the Smithsonian settlement the import costs of less-developed countries have risen in terms of dollars. On the other hand, their export earnings have of course suffered, for the simple reason that commodity prices, those which are on long-term contracts and are usually denominated in dollars, will have fallen relative to the currencies that were up-valued in the Smithsonian agreement. Equally, of course, there are considerable commodity markets in which the United States exercises price leadership. The United States is so often by far the main customer for them. There are so many examples that I need not go into them. Therefore it is clear that commodity prices may tend to be sticky in terms of dollars and the terms of trade will turn even further against the less-developed countries than they have over the last few years, and we know that trend.

The second point is the increase in indebtedness of the less-developed countries owing to the realignment of currencies. UNCTAD has made an estimate that the increase in indebtedness of less-developed countries following the realignment of currencies is at least 2.5 billion dollars, and that estimate does not include increases in the dollar value of debt denominated in multiple currencies. My right hon. Friend referred to their current indebtedness and I am pointing out that this major problem has been made worse by this settlement among the countries of the developed world.

Then we come to the effect of the realignment in producing a decline in the real purchasing power of the reserves of the less-developed countries. Again UNCTAD estimates that the decline in real purchasing power is around 600 million dollars, and that is after taking account of a rise of 460 million dollars in the value of their gold reserves. Because of the fact that there has been an increase in dollar terms in the value of the gold reserves, the less-developed countries' share of world reserves has declined. At the end of June, 1971, it was estimated that they held 20 per cent. of world reserves but they have only around 11 per cent. of the increase in reserves due to the revaluation of gold. Here again their share of world reserves has fallen, again directly as a consequence of this settlement at the Smithsonian Institute, which was convenient to the developed countries and in which the less-developed countries had no part.

I quote Signor Rinaldo Ossola, Chairman of Deputies of the Group of Ten, whose comments on this matter were, I should have thought, of considerable importance. He said in London recently that one of the arguments for making a regular allocation of special drawing rights in 1973 is …to compensate somewhat the less developed countries for the loss they might have suffered on their dollar holdings following the devaluation of the dollar both in terms of gold and other currencies. This is the same categorical statement which Dr. Mansholt has also made and which the Government refuse to make but instead put up the Under-Secretary in another place to give a carefully balanced review of gains and losses.

The answer—and I join the hon. Lady the Member for Plymouth, Devonport in her question why the Government's attitude towards the link is so negative—is a link between reserve creation and development aid. All sorts of arguments are produced against this proposal. One is that we should not imagine that by creating such a link we are in some mysterious way developing new resources in the world which will fall into the hands of the less-developed countries and that this will involve a transfer of real resources from the developed countries to the less developed countries. Of course it will. That is the object. But I would rather have that transfer of resources than the transfer of resources which follows when gold enters into reserves, because that involves a transfer of resources to South Africa and the Soviet Union. The former is a better transfer of resources. I do not find that a very good argument against the link.

It is claimed that it might be inflationary. I suppose that it could be. But the international community can control the creation of special drawing rights. Resources are under-utilised in many developed countries, including this country, and therefore I doubt whether this would, under proper control, have the inflationary results which are feared.

There is then the typical argument of the Government, "There is an idea but it needs further study". The noble Lord, Lord Limerick, said in the debate to which I have referred: Our delegation at Santiago will make it clear that the British Government support the idea that this question should be closely examined, the examination to take place within the context of international monetary reform". —[OFFICIAL REPORT, House of Lords, 19th April, 1972; c. 88.]

One must agree that study will be required of the mechanics of the idea; there are problems of allocation, and so on. But the principle has been studied again and again and has been found valid again and again by expert groups in UNCTAD, in the Brookings Institute, and by an expert group in the Organisation of American States among others. Examination of the idea as to the principle is not needed, although the mechanics of operating it may need examination. I understand that Signor Rinaldo Ossola, one of the great world authorities on this subject, agrees with the view that it is not the principle which needs study. If that is so, I cannot understand why the Government cannot say as much—that they accept the principle, although the mechanics must be studied.

The last point which is frequently made about the link is that it would undermine the acceptability of special drawing rights and therefore endanger this development in world monetary cooperation. The creation of special drawing rights has been a remarkable example of world monetary co-operation. It is very welcome in a highly competitive world in which there is great anxiety about a retreat to protectionism, and in which developed countries sometimes seem to use their trade policies as a means of waging aggressive war against other developed countries.

This is an example of co-operation rather than competition. If the cooperation could only be extended to help the less-developed as well as the developed countries—indeed, to help the less-developed countries proportionately more—this would be an even more remarkable effort of world co-operation and would be very desirable. It would be a first-class form of multilateral aid which would help the less-developed countries and also the international community.

If my hon. Friends and I are expressing disappointment tonight, it is not for lack of empty rhetoric from the Government—indeed, I thought there was a certain amount of rhetoric at the end of the speech of the Minister for Trade. This debate has arisen because the Government will not say clearly that these are the unquestioned facts which they accept and agree must be tackled by the international community.

8.40 p.m.

Mr. Hugh Fraser (Stafford and Stone)

I sure the whole House was enlightened by the interesting speech made by the right hon. Member for Birkenhead (Mr. Dell), but his attack on the Government on this issue is somewhat misplaced.

The two issues which he raised are way outside the issue of UNCTAD. One is the question of the 23 billion dollar debt, which is far outside the UNCTAD. The other question he raised was the more complicated question of the link and the savage treatment of under-development by the Smithsonian Institute. Both matters are outside what is going on at UNCTAD. They cannot be decided at the UNCTAD but can be decided in the IMF, in the Group of Ten or elsewhere.

The aid programme of the present Government—and this applies to my right hon. Friend's efforts over Bangladesh and elsewhere—is as good as the programme pursued by the Labour Government. I will not go into this matter at length, but it seems foolish to divide the House on an issue which should transcend all party interests.

It has been said that this matter should concern us now not as a matter of charity but as a matter of national interest, in the interests of our own people, our own manufacturers and our own trade. This is a much sounder attitude to adopt than the attitude that is far too often adopted in this House by do-gooding and bleeding hearts. We are all desperately involved in this matter.

I take a view which is more similar to the view of Mr. Bob McNamara than to the views of some of those who have spoken from the Government Front Bench. I regard this as a serious situation. It is no longer a question of the wringing of hands, but of the ringing of alarm bells and tocsins at what is going on in the developed as opposed to the under-developed world.

I am afraid that some of the points put forward by the right hon. Member for Birkenhead and much of the talk about further development will take years to work out. This is why we should look to something a great deal swifter in operation which will have a much faster impact than did the Bretton Woods Agreement. At the moment nothing is emerging as a possible solution to this problem.

I turn to some of the points made by the right hon. Lady the Member for Lanark (Mrs. Hart). She referred to the fall in commodity prices, which is having a bad effect not only on the developing world but on our trade with the developing world. As the right hon. Lady said, the price of many of the basic raw materials in the world is lower than it was in 1960, yet the price of the tractor which the man has to buy to deliver his raw materials has increased by three times. This is the problem which is being experienced by the manufacturing world and we must try to discover how to put it right. I have a long list of raw material prices with which I shall not bore the House, but I would point out that it includes the price of copper, zinc, cocoa, tin, lead and of other essential materials. My right hon. Friend has worked hard on the commodity agreements, but they have not been particularly successful.

We should look not at a new concept but at one which was adopted during the war. The concept is simply that the developed world should start raising buffer stocks to stablise raw material prices. It is not a new idea. A man named Clive St. Clare Grondona put it forward in 1939. It was used during the war by the American General Services Administration. It was used after the war to some extent in the bulk-purchase agreements proposed by right hon. and hon. Gentlemen opposite. In some way it is reflectedin commodity agreements such as the sugar agreement which has been so successful in the West Indies. We have one today which is not unsuccessful relating to tin and the tin buffer pool, and tin is the only material which has remained fairly constant in a world of decreasing real prices in the last 10 years.

The time has come to look at this again. I say that not just because it was referred to in the report of the Lester Pearson Committee which recommended it on page 86. It was recommended at UNCTAD in 1964. I think that there was a committee of the World Bank looking at the details of the possible support of world commondity prices by the creation of buffer stocks.

Now we have further people coming forward, and I have in mind especially a short paper written by Sir George Bolton, who is probably one of our most experienced and successful international bankers. He ran the Bank of London and South America. He was very much involved in running the Bank of England in earlier days. Today he is head of the Commonwealth Finance Development Corporation. He puts forward the simple idea that we in this country, preferably with the EEC or the United States, should start making long-term agreements for the purchase of raw materials such as copper, lead and zinc—those materials which can be stored—and holding them out of the general stream of commerce, thus providing a stable base for so much of this world trade.

What is more, the advantage of such schemes have been argued in the past. They need a great deal of careful preparation. But in the City of London we have some of the most skilled people in these activities. We have the best metal markets in the world. It is probable that we have the most skilled mining companies. Surely here is a matter which is worthy of consideration, if we are to get stability of production and price in some of the basic raw materials of the world.

Sir George Bolton has a far wider experience than many hon. Members and many people in the Treasury in dealing with these matters. In his short paper, which I am sure my right hon. Friend will have, he outlines his idea and points out that it can be done really at no cost, since it can be done simply by making use of those dollars which are now surplus and unconvertible in the Exchange Equalisation Fund and putting them to the purpose of buying raw materials.

After the grand ideas that we have heard from some hon. Members opposite, this may sound a very pedestrian conception. But if we can get stability now and a less slow increase in the price of some raw materials on which the backward world depends for its economy, it will be far better than putting aid into areas where often it is misused. It is better to create a stable and growing market so that these people may know that they can buy their tractors, and so on, at reasonably stable prices. This is a better scheme; it is more worthwhile and instant in its impact than anything we have heard suggested from the other side of the House.

I said that I would not speak for long. I believe that these simple concepts on how to stabilise the output and value of the exports of these countries will go a long way to help us with some of our industrial problems and also help them to narrow the gap which is so quickly being established between the richer and the poorer nations.

8.50 p.m.

Mr. James Johnson (Kingston upon Hull, West)

Like other hon. Members, I do not intend to make a long speech.

At the beginning of the debate it was said that this has been a non-controversial subject for manyyears—at least 20 years in my memory. But anyone who listened to the Minister for Trade less than an hour ago would think it should be a controversial subject. I do not blame my right hon. Friend the Member for Lanark (Mrs. Hart) for attacking the Minister. She had a sting like a hornet—I am not certain about the sex—and the right hon. Gentleman deserved all that he got.

There is a growing lack of confidence about UNCTAD. This is evident when one talks to politicians from the developing nations. It is the old tale that the wealthy do not give to the poor. The gap is widening the whole time. I meet a genuine concern, even indignation, not merely here with the idealists among our younger people, but overseas. People are shocked by the lack of faith shown by leaders of other countries.

Less than a fortnight ago I was talking to a certain Prime Minister—I wish to address myself now and later to the Minister for Overseas Development—about my own Government's policy at UNCTAD and the right hon. Gentleman's capacity. I have heard the right hon. Gentleman make a speech in which he disowned being the Minister of handouts. The Prime Minister to whom I spoke said "You send your embassies and ambassadors here and they furnish their missions, but what happens beyond that? I have been an ambassador in Paris and a representative at the United Nations and I have attended constant cocktail parties. But that is no good. We like ambassadors' smiles, but we want to know what help the wealthy nations are giving to the poorer nations which are in the queue."

That is the attitude which I find when I go overseas. This disbelief becomes cynicism and often hostility, and we sometimes move into a situation of armed hostility.

I have never believed that the conflict in the world today is between East and West or capitalism and Communism. I believe that it is between North and South. The wealthy nations in the Western hemisphere, by their selfishness, are stirring up conditions between other peoples—mainly coloured—who live in the low latitudes.

I do not intend to comment on speeches which have gone before. I will not make any academic comments about the Smithsonian Institute, cocoa marketing boards, tractors, and so on.

I wish only to make a special appeal to the Minister. Earlier I said that he was not, or he disowned himself as being, the Minister of hand-outs. I am sure that he does not give these, but I should like to refer to the aid given by Her Majesty's Government, to developing nations overseas. The right hon. Gentleman once said that he does not give to those who shout the loudest. I believe, like him, that we should carefully husband and use all the aid and help which we give to the best possible advantage, not to waste it. I understand that overseas aid amounts to about £285 million, of which about 75 per cent. goes to the Commonwealth.

I now wish to talk about a part of the world which I have been in during the last twelve months, and about three nations which have been partly in and out the old Imperial dominion; namely, the Sudan, Somalia and the Yemen. These areas need help urgently. These nations have votes; their representatives attend UNCTAD, and while they are there they, like many other nations, complain about the wealthy Westerners who do not help them.

What help do we provide? We set up embassies in these countries, we furnish them, but what do we do after that? All these areas lack water. They are areas in which we have to fight the ogres of malnutrition, ignorance and poverty. What do we give them? We provide half a dozen teachers, two or three veterinary and livestock officers, and one or two courses in the English language, the world's working language. Beyond that, we seem to do very little.

These are areas in which we should provide help, not merely because of the idealism of our young people, but because, in a geo-political sense, these are sensitive areas. We are talking about questions of self-interest beside the wider context, and these areas need stability. Many of them have moderate Governments. These are areas of shifting sands, and for the sake of everyone concerned we must give them more aid, to give stable conditions. Whatever arguments there are in Santiago, or in any other meeting place, it is imperative that the Government do much more than they are doing at the moment. Instead of making pedestrian speeches from the Dispatch Box and in Santiago, they should be actively helping these poor overseas countries.

I am using my time this evening to plead the case for one place, and one place only; Sudan. It is an area which has demonstrated an act of faith. After a civil war which has lasted for 18 years, and in which there was a considerable element of genocide—certainly here despite what has been said about other parts of Africa—the two sides have signed an agreement in Addis Ababa. This is a wonderful act of faith by the two sides.

We have certain obligations in this area, just as we had in Aden and other places, because of our past colonial commitments, activities and associations. It is imperative that the Minister should move quickly. He should move more than modestly, but he must move quickly. The Government moved quickly to help Bangladesh, and I applaud what they have done there, but I ask the Minister to pay special attention also to the South Sudan. If we do not, within the next month or two, convince the people in the bush that things have changed in Khartoum and Juba, and that there could be a new deal, we shall be back to the old dithering and dothering that we had before.

People in these developing States are suspicious of the motives and machinations of western Governments. This leads to cynicism and then to hostility. Whatever the Government do in places like Santiago, and however, much they talk about special drawing rights and marketing boards, I ask them to fulfil their duty to these developing nations which have been so near to us in the past and which need help so urgently in the future.

8.59 p.m.

Mr. Harold Soref (Ormskirk)

I am sure that the hon. Member for Kingston upon Hull, West (Mr. James Johnson) will forgive me if I do not follow what he said. I agree with his hon. Friend who said that whatever hon. Members may say about it, the provision of overseas aid is distinctly unpopular in the country. On this subject I hold a view which is different from that which has been expressed so far. I believe that there is a good deal of feeling in the country over the whole question of overseas aid.

I have noticed during the brief period I have been a Member of this House that whether we are discussing questions like arming the country or the monarchy, there are always strongly differing views on either side. However, I have been distinctly surprised to find a bi-partisan view on the subject under discussion. I was privileged to be present when this matter was last debated. On that occasion I was, frankly, alarmed at the unity which existed, at least in words, on both sides.

In my view Santiago, at which a lot of lip service is being paid to the third world, will prove a propaganda sounding-board from which the third world will obtain very little. Certain countries are using Santiago for their own purposes. For example, there is little doubt that China is far more interested in giving aid to Malta to embarrass us and the West and to get into the Mediterranean than in giving aid to the third world. For this reason I feel that nothing very practical will come out of this typically United Nations discussion.

Indeed, there will be increasing efforts to exploit the East against the West, for one cannot create a welfare state of the world or look at the matter in the sense of extracting funds from the so-called richer to the so-called poorer countries.

Nor is there the moral element to which many hon. Members have referred. When it is voluntary aid—whether through Oxfam or other media by which people give their money—it is charity and it is commendable. But when it is a matter of public money being taxed for this purpose, then high moral purpose is not involved because the Government of the day, whichever party is in power, decide to tax the public to divert the public's money for this purpose. Where there is no personal or conscious sacrifice, it is not charity. Nor is it high-minded.

I do not accept that there is anything sacrosanct about giving aid to overseas territories. If one reads the report of the proceedings at Santiago one finds, for example, that at the opening of the debate President Allende, who made a particullarly hostile and passionately Marxist analysis of the theme, referred to the "privileged nations". I do not accept that they are necessarily "privileged".

Those countries which hon. Members describe as "rich" were not always rich. They pulled themselves up often by their own boot strings. Many countries have become rich through their own efforts. Consider Israel, Hong Kong, Malaya, and Formosa. These nations were not always rich. They have achieved their position through hard work and expertise.

Mr. Eric S. Heffer (Liverpool, Walton)

Is the hon. Gentleman aware that the city which both of us to some extent represent was built up on the basis of the slave trade and the fact that raw materials were drawn from colonial countries—in other words, not necessarily by hard work but by sheer imperialism, both political and economic?

Mr. Soref

It was built to a large extent by the shipping industry. The City of Liverpool grew up also because of all sorts of factories and developments which were no reflection either on Liverpool or on those who lived there.

I believe that the money which goes in aid year by year, which equals the entire surtax collection at present and which also equals the amount spent on all British universities, is not necessarily popularly supported in the country and I do not believe that it is necessarily to the advantage of the receiving countries.

Debts have been mentioned. In Ghana Dr. Nkrumah was given a vast amount of money by Britain. It did not improve conditions in Ghana. That debt has been dishonoured. Many of the countries which receive aid practise the worst forms of racism and the most inhuman policies. In those countries massacres and expulsions of British subjects take place. Before funds are given to such countries there should be a degree of security for British citizens living and working there.

It is not necessarily a coincidence that those countries which are most avid at the begging bowl are the same countries that have expropriated British interests and expelled British citizens. British citizens have been expelled from Kenya, Zambia, Zanzibar, Tanzania and many other countries. A British citizen was expelled from Malta only this week. Action must be taken against those countries.

I do not see why the British taxpayer or the capitalist taxpayer anywhere should have to finance the "Chilean road to Socialism" of President Allende. If Chile and other such countries wish to involve themselves in Socialism or Communism, and if they believe that this economic theory works, they should not consider that they must depend on the capitalist countries to pay up. The system of the distribution of goods in Chile, which was largely a British system until the revolution, worked admirably.

Mr. Heffer

What revolution?

Mr. Soref

It was reported in The Guardian yesterday or the day before that the system of distribution of goods in Chile by such British firms as Balfour Williamson, which have now been nationalised, worked admirably until the nationalisation and expropriation. Until there are adequate safeguards and protection for British interests, we should not give more money from British taxpayers.

We should also consider that these so-called developing countries—that word is pure supposition—are less developed than others because of their high leisure preference, their lack of interest in material advances. [Laughter.] Hon. Members may not appreciate it. However, Professor Peter Bauer, of the London School of Economics, gave that as one of the prime reasons for the condition of the people in the under-developed countries. I repeat that he is a professor at the London School of Economics, specialising in the under-developed countries, to which these people at times appear to be attentive. In these countries local institutions, beliefs and customs are not always compatible with material advance. The prestige projects and the uneconomic airlines that many of these countries have are also factors that have made their economies uneconomic.

On the other hand, I believe that with stable conditions in these countries, if they put their own houses in order, plenty of private enterprise would flow into the countries and create opportunities for the people there. But that stability is too infrequent. Societies do not have an inalienable right to increase their gross national product at someone else's expense. The ultimate hypocrisy is that those who are in Santiago, those who are demanding that most money should go to the undeveloped countries, often for an unrecognisable purpose, are the very people who are engaged in attempting to destroy the supply routes to the Cahora Bassa project, a £150 million scheme by private enterprise in Mozambique which is doing exactly what they fail to do.

The policy of those who wish endless funds to be paid out is to risk impoverishing the West. It is significant that those countries that give the most are those the recipients favour least. The United States has given more than half of the total amount expended by the so-called rich countries to the so-called developing countries. Yet while in session at Santiago there were the most violent demonstrations against America and the American flag was burnt. That is an indication of their lack of appreciation.

Mr. George Cunningham (Islington, South-West)

America is a very rich country and the figure of their aid, expressed in dollar terms, is very large. As a percentage of gross natural product America's contribution is very low—about comparable with our own—compared with other donors, and within that figure a very large part consists of so-called "supporting assistance" in Indo-China, which is assistance for purely poli- tical purposes, and with which most people in the world disagree.

Mr. Soref

America has been extremely generous in the aid she has given from the Marshall Plan onwards. Whether the total figure as a GNP percentage is more or less than ours, I am not certain. It could be less, but America has shown unparalleled generosity. In America there is an increasing and widespread public demand to reduce the figure.

As long as the undeveloped countries have economies which are not viable, and lack stability, it is unfair to expect the capitalist countries to finance the Socialist and Communist countries which are doing their best to subvert the nations which are giving the aid. For these reasons I believe that it is reasonable, not least because of the strong feeling that exists in this country, that we should be circumspect in the aid we give these countries. There is decreasing evidence that they prosper because of it.

9.15 p.m.

Miss Joan Lestor (Eton and Slough)

I am almost speechless after listening to the contribution by the hon. Member for Ormskirk (Mr. Soref), and I am sure the House will forgive me if I do not take up the point he raised. [An HON. MEMBER.] "Who could?"] Indeed, who could? If the hon. Member believes, as he said, that the whole question of overseas aid is unpopular, then his speech will be one of the most unpopular speeches heard in the House for a very long time.

I do not share the view that people do not care about aid or the developing world. I believe there is a growing lobby in this country, particularly among the young people, who care passionately about what is happening in the developing world, who feel responsible and who feel that the concept of responsibility for their neighbour has widened in the present situation in the world, and, in particularly, in the third world. I do not want to dwell on that. Instead, I want to take up one point not dealt with in the debate, which I am very glad we have had.

We have been told that the Government have rejected the 0.7 per cent. of GNP target for Government aid and are proposing as an objective the increase of private investment. To make that proposal in a country like Chile, which was recently rocked by the exposure of how an American company had tried to prevent the elected president from becoming president, is rather ironic. We are to embark upon an alternative to the proposal that we on this side of the House support. We want much more than is proposed. We are to embark on private investment, and it has never been explained clearly to me how that benefits the developing world.

The following advertisement appeared in The Guardian on 19th April: People are earning HUGE PROFITS in Nigeria, where there is a huge domestic market of 55 million people. Abundant manpower is available at a rate as low as 7 U.S. cents per man-hour. Pioneer industry enjoys substantial amenities. It is possible to get your investment back in less than three years. People are earning huge profits in Nigeria. Why don't you? That is not my idea of aid, and I do not believe that it is something the Government can substitute for the various proposals at the conference described by my right hon. Friend the Member for Lanark (Mrs. Hart).

I am not necessarily saying that there is always something wrong with export credit or investment. What I am saying is that those who indulge in it do so not out of compassion or because they want to benefit the recipient countries but because it is profitable for them. It is very odd that the Government lump together overseas investment with aid in relation to the developing countries, but not in relation to other parts of the world. It was Robert Wood, the Director of Studies at the Overseas Development Institute, who pointed this out so well when he wrote: When British Petroleum invests in Alaska it never occurs to us to think of this as part of a British aid programme to the United States. When credits are made available to facilitate the export of capital goods to the Ruhr, no one thinks that this is aid to West Germany. If such credits carry low rates of interest, they do so to enable Britain to compete with other suppliers and not because we want to help the Germans. Yet … if we make export credits available to Mexico, there is a disposition in some quarters to say that this is aid. But what has changed? Is business with rich countries business and business with poor countries aid? Sir Paul Chambers, former distinguished Chairman of ICI, made the following apt comment: It is no part of the duty of any private enterprise company to use the funds of the stockholders to help the development of an undeveloped country in such a way that the profits accruing to the shareholders are less than if the funds were used in some other ways.' In other words, when someone is indulging in private investment and private business with the developing world, he is doing it in order that his profits shall be as great as, if not greater than, if they were invested in this country or any other part of the world. For a private capitalist, financial investment in the developing countries is aimed at making a profit, not at improving the standard of living of the people in those countries. I think, therefore, that when the Government try to substitute investment for aid they are doing a disservice to what is being discussed at the conference and are also in a sense being hypocritical because they are giving the impression that we are making a far greater contribution to the developing world than we are.

I give another example because it is time that we looked at the whole question of investment. We are told that the record of the EEC in both aid and investment to the developing world is much better than ours and will be even better if we join. It depends on where one looks and how one looks at it. The most flourishing economy in black Africa —perhaps the showpiece of French and EEC relations with the third world—is the Ivory Coast. Over half the commercial and industrial enterprise of the Ivory Coast is in French hands with no restrictions on the repatriation of funds to Paris. The number of French personnel has multiplied several times since independence, yet unemployment in the indigenous population has doubled and the vast majority of peasants have seen no improvements in their living standards.

One can go on giving other examples, not necessarily of all EEC countries but certainly of some, where investment overseas is included in or regarded as and held out to be aid to developing countries. But the people it is helping and assisting are those who need it least, the rich, the private shareholders and the companies which are doing this to improve their present position.

Presumably, the hon. Member for Ormskirk, who sits with a smirk on his face, wants to avoid developing countries turning Communist and wants to help capitalist countries retain capitalism, but I am not bothered very much about that in the context of this discussion. I am bothered about the widening gap between the rich and poor and the fact that we are indulging in hypocrisy if we kid ourselves and other people that this alternative suggestion is going to make an alternative contribution to the question of aid.

My right hon. Friend, who so ably opened the debate, said that UNCTAD was not simply about aid but also about fairer conditions of trade for the developing world. She said—and I agree—that this is probably more important than an aid programme. This is what we ought to be discussing tonight and in the future, deciding on some strategy whereby assured markets for the products which the developing countries can best produce are open to them, and we adjust our economy and the economies of the developed world so as not to compete with them in that respect.

The cost of manufactured goods which we export to the under-developed countries is increasing much more rapidly than the cost of raw materials which we import from the poorer nations. One example is Malaysia, which had to export more than twice as much rubber in 1970 than in 1960 to pay for the same amount of manufactured goods. We know that the share of the developing countries in world trade fell rapidly during the 1960s. We know that the amount having to be paid back on debt service charges is rapidly approaching the amount which these countries are receiving in aid. Coupled with this is the fact that the rich countries are increasingly trading among themselves to the exclusion of the developing countries, and this is one of the aspects concerning many of us about the whole question of the EEC.

Mr. Alexander W. Lyon (York)

European trade with developing countries is expanding faster than ours, just as the trade within the Six is expanding.

Mr. T. H. H. Skeet (Bedford) rose—

Miss Lestor

I am sorry, I have not finished. My hon. Friend does not usually sit down so quickly.

My hon. Friend and I disagree on this point about Europe, but I do not think we disagree about the urgency of the problem facing the developing world. He puts a little more of his hope in Europe; I do not. We have to see which way we are going in the management of world trade and determine whether we can stop producing certain goods, changing the whole emphasis of production, thereby leaving open for the developing world markets where their infant industries and technology can best be used. This is urgent for Britain and the industrialised countries in or out of Europe.

I am sorry that the Minister for Trade was proud of making a balanced speech. I would have preferred that he made a very unbalanced one. One of the things happening at this conference is the confrontation of two worlds. Europeans are calculating whether enlarging the EEC offers us and others a better television set or washing machine, a sauna bath and a higher standard of living in general. The third world citizens would like the chance to live to be half the age to which large numbers of people in this country live. They would like the chance to see fewer of their children die, often before they have had a chance really to live. They would like to see more than one doctor to 50,000 inhabitants. It is difficult for us in the developed world to understand the stark poverty and the misery that there is in these countries. No one should make a balanced speech in this situation.

I agree that we do not want people representing Britain to make promises they cannot fulfil or widen horizons simply to pay lip service to sentiment. It is important that we do not allow this Government to get away with hypocritical noises by saying that instead of sticking to the target which we set they will indulge in private investment, which is exploitation at its worst.

9.28 p.m.

Mr. T. H. H. Skeet (Bedford)

The hon. Member for Eton and Slough (Miss Lestor) is very cynical when she suggests that countries such as the United Kingdom are only concerned in making profits and not in raising the standard of living in these countries about which we are talking. I can cite the case of an American company which is not only concerned with oil but with developing water resources. There is a Dutch company concerned with the development of agriculture in Venezuela. In our enlightened age I only hope that Socialists will wake up to reality and appreciate that we are faced with a critical situation between the third world and the West. If in all their bouncing about with the old and decrepit ideas of 50 years ago they think they can provide a solution they are entirely wrong. If only the third world would recognise that its participation in the capital of the Western world would be one of the best ways in which to develop this would be a wise course to adopt.

The right hon. Member for Lanark (Mrs. Hart) said that she specifically left out the Middle East. She said that was an area where one commodity—oil—was dealt with. She completely forgot that in Africa—in Egypt, Libya, Algeria, Nigeria, Ghana and elsewhere—supplies of oil are being exported and those countries are able to cash in on the arrangements which have been negotiated by OPEC and which will extend throughout the world. The recent currency arrangement of an additional 8½ per cent. applicable to the Middle East will be extended elsewhere. There is therefore some light on the horizon for these countries.

We are confronted with a world problem, and I am concerned about how to put it right. I was interested in what the right hon. Member for Birkenhead (Mr. Dell) said about special drawing rights. I do not know whether he observed what Paul Schweitzer, the managing director of the IMF, said, as reported in today's Financial Times: We must seize this opportunity to build an enduring system, not least because of the benefits that the developing nations will derive from a smoothly functioning system. He went on to say: We should not be content with technical improvements … but should seriously reexamine the system as a whole. Finally, to show a completely open mind on the subject: an enlarged monetary role for special drawing rights or paper gold. I believe that we shall come round to increasing world liquidity by giving addi- tional allocations of special drawing rights to the developing countries. There is a danger that it may be inflationary. By increasing the price of gold from 35 to 38 dollars an ounce the Americans received a substantial upgrading of their reserves. The reserves of the United States and the industrial countries of the Western world went up by a total of 3.8 billion dollars, whereas the poorer developing countries with few reserves had an increase of under 500 million dollars.

We must recognise that the best way to bring about alterations in commodity arrangements is by commodity arrangements, if these can be negotiated. But if the countries are too diverse and cannot get together through an agreement, those arrangements will be out.

I do not believe that stock-piling will be satisfactory. The United States is stockpiling copper. There are three major world producers of copper—Chile, Zambia and the United States—but even if stock-piling goes on the price of copper does not necessarily rise. When the economic climatic conditions throughout the world are bright, trade increases and people will participate in the rising price. When the world is booming everybody is happy and the developing countries are doing remarkably well, but when the world is in a state of depression the developing countries, unfortunately, come off worst.

I will outline one or two reasons why I consider that the developing countries require support. Between 1961 and 1969 the foreign debts of 80 developing countries increased three-fold and reached a total of 59 billion dollars. This is a considerable sum of money. I know there are cases like Ghana where President Nkrumah built up his own debt system and left it as a legacy to those who followed him. In many parts of the world countries want technical aid, advice and association. Justas in the United Kingdom we write off the debts of nationalised industries, we shall have to work through the International Monetary Fund or another international world order for some change whereby these enormous burdens can be taken off the shoulders of these developing countries. This question will have to be examined extremely closely.

I am also worried about the terms of trade. I have dealt with that but should like to mention again that if market prices are lower than in the late 1940s and if for developing countries in 1966 the price index for exports was taken to be 100, it had risen in 1971 to 107.7. So far as the developed countries are concerned, their price index had risen from 100 to 114. Therefore, they are paying more for their tractors and many other things they require for the necessities of life, and when they try to pay they find that they have not enough money in the bank.

This is the situation in which we stand and Her Majesty's Government have one way out: we can tie our aid. We have been doing this, of course; I think my right hon. Friend indicated in the House the other day that most of our aid continues to be tied. In 1966, 57 per cent. of our aid was tied. It had declined in 1969 to 64 per cent. after having risen in the interval.

The complaint of the developing countries is that if they had the right to spend the money they receive in various parts of the world they might get a bit better value for money. I appreciate that, but we have to look after our own industries and our own employment situation in the United Kingdom. Therefore, I think it quite equitable to suggest that if we are providing the money there is no reason why a certain amount of governmental aid should not be tied.

Mr. Lewis Carter-Jones (Eccles)

There is an intriguing point about this. The hon. Gentleman is talking about tied aid. In all the estimates made by the Estimates Committee and others, multilateral aid gives us the greatest return, and that is not tied.

Mr. Skeet

I am not sure that I agree. There are other countries which have tied aid. All the aid given by the Export-Import Bank in the United States is tied and they find it extremely profitable. I have no doubt that the Government would work on the assumption that if other countries would untie their aid we would probably do the same, but we are a liberal-minded country and we believe that by trying to develop more trade throughout the world we can assist the developing countries most.

There was mention also tonight of what our total contribution is, and I very much regret to say that if one looks at the Government support for the developing countries, one sees that it is not too good. The United Nations has mentioned 1 per cent. of the GNP, of which the contribution from the governmental source is to be 0.7 per cent. In 1966 it was 0.67 per cent. In 1970 the decline, which continued through both Governments—therefore neither can get the credit for it—reached 0 .37 per cent. This is not because we have not tried but there have been certain difficulties in the way.

I move on to the Generalised System of Preferences—GSP. This was a concept of the Prime Minister back in 1964 at UNCTAD I, and I think that it was a very good idea to encourage countries to produce what they felt they could in manufactured or processed goods and to send them to the United Kingdom. But one or two anomalies have grown up and I would mention these.

Hong Kong is the source of an estimated 20 per cent. of all the industrial products exported by eligible States. We find that Hong Kong is doing remarkably well but it does not mean that the smaller countries in Africa are sharing in the general prosperity. Looking at one or two of the other countries which do well, we find that the lion's share is going to five countries in all, which are relatively advanced and have extensive industries. I refer to Brazil, Mexico, India, Singapore and North Korea. Although it is said of the 96 members of UNCTAD that they are struggling and trying to find a way ahead, we find this rather anomalous situation that Hong Kong participates quite disproportionately, as do also Brazil, Mexico, India, Singapore and North Korea.

If we look at the oil States in the Middle East and the Persian Gulf, we find that in Kuwait, for instance, the standard of living is very high because the oil revenue is huge.

I should also mention the question of the leather tanneries, which are manned by people in the age range of 40 to 55 years. Will people here be prepared to see their own workers unemployed while we lower the barriers to allow hides to come in from other parts of the world? We must be reasonable, but there are difficulties. Tanneries are normally located in places where there is no other source of employment.

International trade is better than aid. We should be very wise to adopt the German scheme. We should help what is known as the poorer core first. To give soft loans at under 1 per cent. interest, extended over 50 years, with 10 years' grace, is a reasonable suggestion. I accept the view of Pierre-Paul Schweitzer that to extend special drawing rights to the developing countries and to impose very strict control to ensure that the inflationary situation does not go beyond bounds is a reasonable way of increasing their liquidity, possibly at the expense of the industrial States. But unless something is done, I can envisage a very much worse situation developing.

I look forward with great enthusiasm to our joining the Common Market. We have had a Commonwealth in past years. We are not imperialists. We have done more for the Commonwealth than anybody else; we have an exceedingly good record in that respect. Let us not bow our heads in shame. If we join the Common Market we shall be able to show France and her other European partners that we intend to assist the nations overseas and the developing States. Perhaps while we are debating the Common agricultural policy we shall consider that a great contribution should be made for the benefit, say, of some of the African States. That would be an extremely good idea.

There has been unanimity in the House that this is a very serious problem, and we must do something decisive if we are to arrest the trend.

9.43 p.m.

Mr. Barry Jones (Flint, East)

I should like to pose a question which I am sure many of us on this side of the House would like to put: where are the members of the Liberal Party? Why are their benches empty during a debate as important as this? Recently, in the Common Market debate, they held the balance between those for and those against. Now, when we are debating an international situation and the balance between rich and poor nations, they are nowhere to be seen. The debate is the poorer for that, and it is deplorable that their representatives are not present to speak.

There have been references to Mr. Robert McNamara, who heads the IMF. He came to fame as the person who made cost-effective mass killing in Vietnam fashionable, but in Geneva he is supervising the most sophisticated dole ever. We should like to think that he will be successful in his efforts. If he can manage to atone for the Vietnam blitzkreig by bringing an end to the "We steal and they beg" syndrome which has been apparent in the history of the last 500 years—that is, the rich nations stealing from the underdeveloped nations when they had empires and were the colonial masters, while they, until very recently and indeed now, had to go to UNCTAD and organisations like the IMF and say, "We must beg you to help us out of the problems caused by your exploitation of us over the generations" —this is one of the good things which will come out of UNCTAD.

9.45 p.m.

The Minister for Overseas Development (Mr. Richard Wood)

I apologise to the hon. Member for Flint, East (Mr. Barry Jones) for cutting short his speech. My dilemma is that if I am to make a full reply to all the points raised I am liable to occupy too much of the time in this short debate. This is the third debate on this subject in the two Houses of Parliament in the last two weeks and I am the fifth Government speaker. I will keep my speech as short as possible, but I hope to reply to some of the aid points which have been raised.

It is important to keep a sense of perspective. The United Nations Conference on Trade and Development convenes for some reason every Leap Year, and I do not know whether there is any significance in that fact. It is an extremely important gathering because of its subject matter and its effect on the world scene, but, clearly, the needs and problems of developing countries are both urgent and continuing. Many of the developing countries are making massive and effective efforts to quicken their own development, helped by the interplay of trade and investment and by aid flows from the richer countries and from the various agencies.

The purpose of the UNCTAD discussions is to take regular stock of progress —or lack of progress—in world development which, in the nature of things, is continually changing and extremely complex, and is a proper object of cooperative endeavour. For this reason it is extremely difficult for any contemporary judgment to be made as to the success or failure of any particular UNCTAD.

It is evident that most of us recognise the vast problems which exist in the developing world. Over the years this country and other nations have made significant steps forward in the provision of aid for development. Unfortunately, we have also a certain amount of guilt in taking some significant backward steps. However, I am proud that Britain alone has provided nearly £3,000 million to expand the economic potential of the world and to help the advance to the broader objectives of fair and just societies which human nature has in common.

From time to time we and other Governments have taken significant steps forward, sometimes at UNCTAD, sometimes in other parts of the United Nations and sometimes outside. But it is a mistake to regard each international gathering as a forum in which developed nations vie with each other on the lines "Anything you can do I can do better" and where developing nations are tempted to substitute sterile confrontation for the more fruitful co-operation which we would like to see.

Much that might be done must depend on reciprocal agreement between donors and between donors and receiving countries. Therefore, conferences like UNCTAD can most usefully set the scene for subsequent general agreement on further useful advances in the field of development. One of its benefits which this debate has helped to serve is that it helps to bring these enormous problems more closely before the people of Britain and many other countries. The hon. Member for Eccles (Mr. Carter-Jones) was particularly concerned with this matter. There has been a wide coverage in the Press and on television of UNCTAD and development problems. Next week on BBC2 there will be a series of six programmes called "Rich Man, Poor Man", and it will be remembered that my Department last year co-operated with The Times and with Thames Television to try to focus attention on problems in the developing countries. All this is to the good.

The right hon. Lady the Member for Lanark (Mrs. Hart) mentioned various targets, as did many other hon. Members. The 1 per cent. target which has come in for most discussion was not devised by this Government. This Government did not devise the 1 per cent. target or the elements that comprise it. The 1 per cent. target was devised by UNCTAD I and, in a different sense, by UNCTAD II, and it was followed by perfectly proper pressure to accept the target and to name a date for that acceptance. Now that the target has been accepted and is being largely achieved, some of those who pressed for its adoption denigrate it as not being aid. No one has ever claimed that private flows which form a significant part of the 1 per cent. target are official aid. The target was, and is, a target for total financial flows, and this Government have always claimed that private flows, freely accepted by developing countries, have a value of their own. Certainly the Pearson Commission commended them, and before the last General Election the right hon. Lady's Government themselves seemed quite enthusiastic about them. Presumably for the same reasons UNCTAD included them within the 1 per cent. target, and we continue to expect that a good part of the 1 per cent. flow will come from these sources.

Both the right hon. Lady and the hon. Member for Eton and Slough (Miss Lestor) pressed for the 0.7 per cent. official target. They will agree, I am sure, that like their Government, the present Government are a long way away from the 0.7 per cent. target. I have always been anxious to avoid paying lip service to a 0.7 per cent. target unless I was convinced that the Government could achieve it. On present plans we are likely to be considerably below the target of 0.7 per cent. of the gross national product in official development assistance, even though last November's White Paper on public expenditure showed that the Government intended to increase aid programmes in constant price terms each year by a greater rate than almost all other programmes of Government expenditure.

Various problems which have been thrown up by UNCTAD III have been discussed. It is perfectly clear that as development goes forward new problems and new possibilities are bound continually to arise. One major problem to which attention has been drawn in the debate is the growing indebtedness of many nations. The right hon. Lady mentioned it. My right hon. Friend referred to it in his speech at Santiago.

It is a subject of increasing concern which has led to studies both by the World Bank and by DAC. The World Bank study shows that the growing indebtedness of many nations often provides reasonably welcome evidence of success in attracting capital resources for development. As long as borrowed money leads to successful development, the resources necessary to service the debt are likely to become available. Obviously there are many other cases in which the position is less satisfactory. While donor Governments and institutions can do a certain amount to regulate flows of concessional aid, it is very difficult for them without being unacceptably paternal, certainly unacceptably paternal as most of us would see it, either to regulate or seriously to influence the decisions of developing countries on the uptake of commercial credit.

We and other donor countries can make efforts to encourage restraint, but, despite those efforts, developing countries may, and do, reach the decision from time to time to ask for the renegotiation of their debts. These requests are bound to create very serious situations which affect the creditworthiness of the country concerned and also the general confidence on which the present international credit system rests.

Developed and developing countries for this reason have common interests in the best management of resources and the avoidance of debt crises. This was one of the important subjects raised by my right hon. Friend in Santiago. He has been criticised tonight and on other occasions for not proposing solutions. I believe that it would have been entirely wrong for him unilaterally to have done so. This is a problem for the satisfactory solution of which many Governments must join together and discuss in the weeks and months ahead.

One topic which has been raised by several hon. Members, especially the right hon. Member for Lanark and my hon. Friend the Member for Plymouth, Devon-port (Dame Joan Vickers), has been the possible link between aid and Special Drawing Rights. Our delegation in Santiago has tried to make perfectly clear first, the Government's expressed support for the bringing in of and the participating by the developing countries in discussions on monetary reform, for which the right hon. Lady was kind enough to give my right hon. Friend credit, and, secondly, pointed out that several variants of the link proposal had been suggested and that it would not be realistic for Governments to accept the principle of a link without a better and clearer idea of what was proposed.

I should like to make it perfectly clear that an examination by the IMF is now going on and that many Governments broadly concur in the view which her Majesty's Government have taken on this matter.

My hon. Friend the Member for Plymouth, Devonport and other hon. Members raised the question of the least-developed countries. I assure her that it UNCTAD recommends a special international effort to help them, we should certainly, particularly in view of our close contacts with so many of the least developed countries, want to join in working for such an agreement. I recently expressed to one of my hon. Friends the view, which I think is shared by most developing countries, that the greatest need at present is for technical assistance rather than for capital aid.

The hon. Member for Kingston upon Hull, West (Mr. James Johnson) raised the subject of Southern Sudan. I am as pleased as he is to hear of the agreement which has been reached on the Southern Sudan. The problem of returning refugees is already grave and likely to cause great problems in future. Already British agencies, including Oxfam, the Save the Children Fund, and so on, are discussing the situation. My right hon. Friend the Secretary of State recently discussed it with the Sudanese Foreign Minister; the United States Government have offered substantial help; and we and other Western Governments are considering what we ought to do. The hon. Gentleman may like to know that I hope soon to be able to give an encouraging reply to the Sudanese Government.

The right hon. Member for Lanark has told us that the Opposition intend to have a Division at the end of the debate. If they want a Division, so be it; it is for them to decide. But we all know—my right hon. Friend the Patronage Secretary knows only too well—that when the troops are brought to the battlefield it is difficult to avoid a battle. No doubt the Division is intended to show that the Opposition's intentions are more honourable, positive, and enlightened than those of the Government. However, I think that tomorrow those who study the debate are more likely to be impressed by the objectives which have

united us rather than by the comparatively few arguments that seriously divide us. They will observe that between 7.15 p.m. and one minute to 10 o'clock the House of Commons was seriously divided on no important point of principle. I hope that they will rightly pay more heed to the substance of agreement throughout the debate than to the empty shadow of the Division which apparently we are now to act through.

Question put, That this House do now adjourn:—

The House divided: Ayes 108, Noes 127.

Division No. 159.]	AYES	[10.0 p.m.
Allaun, Frank (Salford, E.)	Grant, John D. (Islington, E.)	Morgan, Elystan (Cardiganshire)
Archer, Peter (Rowley Regis)	Grimond, Rt. Hn. J.	Morris, Alfred (Wythenshawe)
Armstrong, Ernest	Hamling, William	Mulley, Rt. Hn. Frederick
Atkinson, Norman	Harrison, Walter (Wakefield)	Oswald, Thomas
Barnett, Guy (Greenwich)	Hart, Rt. Hn. Judith	Owen, Dr. David (Plymouth, Sutton)
Bennett, James (Glasgow, Brldgeton)	Hattersley, Roy	Pendry, Tom
Bishop, E, S.	Heffer, Eric S.	Pentland, Norman
Blenkinsop, Arthur	Houghton, Rt. Hn. Douglas	Perry, Ernest G.
Booth, Albert	Huckfleld, Leslie	Prentice, Rt. Hn. Reg.
Bottomley, Rt. Hn. Arthur	Hughes, Mark (Durham)	Reed, D. (Sedgefleld)
Bradley, Tom	Hughes, Robert (Aberdeen, N.)	Richard, Ivor
Broughton, Sir Alfred	Irvine,Rt.Hn.SlrArthurfEdge Hill)	Roberts, Albert (Normanton)
Brown, Ronald (Shoreditch & F'bury)	Janner, Greville	Roper, John
Buchan, Norman	Jay, Rt. Hn. Douglas	Ross, Rt. Hn. William (Kilmarnock)
Carmichael, Nell	Jenkins, Rt. Hn. Roy (Stechford)	Shore, Rt. Hn. Peter (Stepney)
Carter, Ray (Birmingh'm, Northfield)	Johnson, James (K'ston-on-Hull, W.)	Silkin, Rt. Hn. John (Deptford)
Carter-Jones, Lewis (Eccles)	Jones, Barry (Flint, E.)	Skinner, Dnnis
Cocks, Michael (Bristol, S.)	Judd, Frank	Spearing, Nigel
Cohen, Stanley	Kaufman, Gerald	Spriggs, Leslie
Concannon, J. D.	Latham, Arthur	Stewart, Rt. Hn. Michael (Fulham)
Cox, Thomas (Wandsworth, C.)	Lawson, George	Stonehouse, Rt. Hn. John
Crosland, Rt. Hn. Anthony	Leonard, Dick	Strang, Gavin
Davidson, Arthur	Lestor, Miss Joan	Summerskill, Hn. Dr. Shirley
Davis, Clinton (Hackney, C.)	Lever, Rt. Hn. Harold	Tinn, James
Davis, Terry (Bromsgrove)	Lyon, Alexander W. (York)	Walker, Harold (Doncaster)
Deakins, Eric	Mabon, Dr. J. Dickson	Weitzman, David
de Freitas, Rt. Hn. Sir Geoffrey	Maclennan, Robert	Wellbeloved, James
Delargy, H. J.	McMillan, Tom (Glasgow, C.)	Willey, Rt. Hn. Frederick
Dell, Rt. Hn. Edmund	McNamara, J. Kevin	Wililams, Mrs. Shirley (Hitchin)
Douglas-Mann, Bruce	Mallalieu, J. P. W. (Huddersfield, E.)	Williams, W. T. (Warrington)
Dunn, James A.	Marsden, F.	Wilson, Alexander (Hamilton)
Dunnett, Jack	Marshall, Dr. Edmund	Wilson, William (Coventry, S.)
Faulds, Andrew	Meacher, Michael
Foley, Maurice	Mellish, Rt. Hn. Robert	TELLERS FOR THE AYES:
Foot, Michael	Mendelson, John	Mr. Joseph Harper and
Garrett, W. E.	Mikardo, Ian	Mr. James Hamilton.
Golding, John	Millan, Bruce
Grant, George (Morpeth)	Miller, Dr. M. S.
NOES
Archer, Jeffrey (Louth)	Chapman, Sydney	Fldler, Michael
Atkins, Humphrey	Chichesler-Clark, R.	Fisher, Nigel (Surbiton)
Awdry, Daniel	Clarke, Kenneth (Rushcliffe)	Fletcher-Cooke, Charles
Bennett, Sir Frederic (Torquay)	Clegg, Walter	Foster, Sir John
Benyon, W.	Cooke, Robert	Fowler, Norman
Biggs-Davison, John	Coombs, Derek	Fox, Marcus
Boardman, Tom (Leicester, S.W.)	Crouch, David	Fraser,Rt.Hn.Hugh(St'fford & Stone)
Boscawen, Robert	Deedes, Rt. Hn. W. F.	Fry, Peter
Bowden, Andrew	Digby, Simon Wingfield	Goodhew, Victor
Brinton, Sir Tatton	Dodds-Parker, Douglas	Grant, Anthony (Harrow, C.)
Brocklebank-Fowler, Christopher	Drayson, G. B.	Gray, Hamish
Buck, Antony	Dykes, Hugh	Green, Alan
Bullus, Sir Eric	Emery, Peter	Griffiths, Eldon (Bury St. Edmunds)
Carlisle, Mark	Eyre, Reginald	Grylls, Michael
Channon, Paul	Fenner, Mrs. Peggy	Gummer, Selwyn
Hall, John (Wycombe)	Maxwell-Hyslop, R. J.	Spence, John
Harrison, Brian (Maldon)	Meyer, Sir Anthony	Sproat, lain
Haselhurst, Alan	Mills, Peter (Torrington)	Stanbrook, Ivor
Hastings, Stephen	Moate, Roger	Stewart-Smith, Geoffrey (Belper)
Hawkins, Paul	Money, Ernie	Stodart, Anthony (Edinburgh, W.)
Hayhoe, Barney	Monks, Mrs. Connie	Stoddart-Scott, Col. Sir M.
Holt, Miss Mary	Morrison, Charles	Stuttaford, Dr. Tom
Hornsby-Smith.Rt.Hn.Dame Patricia	Mudd, David	Sutcliffe, John
Howell, Ralph (Norfolk, N.)	Murton, Oscar	Taylor, Frank (Moss Side)
Iremonger, T. L.	Neave, Airey	Tebbit, Norman
Irvine, Bryant Godman (Rye)	Noble, Rt. Hn. Michael	Thompson, Sir Richard (Croydon, S.)
Jessel, Toby	Normanton. Tom	Trafford, Dr. Anthony
Jopling, Michael	Nott, John	Turton, Rt. Hn. Sir Robin
Kershaw, Anthony	Onslow, Cranley	Vickers, Dame Joan
Kilfedder, James	Orr, Capt. L. P. S.	Waddington, David
Kinsey, J. R.	Page, Graham (Crosby)	Walder, David (Clitheroe)
Knox, David	Peel, John	Wall, Patrick
Lane, David	Percival, Ian	Ward, Dame Irene
Langford-Holt, Sir John	Pym, Rt. Hn. Francis	Weatherill, Bernard
Legge-Bourke, Sir Harry	Ramsden, Rt. Hn. James	Wilkinson, John
Luce, R. N.	Redmond, Robert	Winterton, Nicholas
McAdden, Sir Stephen	Reed, Laurance (Bolton, E.)	Wood, Rt. Hn. Richard
MacArthur, Ian	Rossi, Hugh (Hornsey)	Woodhouse, Hn.Christopher
Maclean, Sir Fltzroy	Scott-Hopkins, James	Worsley, Marcus
McMasler, Stanley	Sharpies, Richard
McNair-Wilson, Michael	Shaw, Michael (Sc'b'gh & Whitby)	TELLERS FOR THE NOES:
Maddan, Martin	Shelton, William (Clapham)	Mr. Tim Fortescue and
Mather, Carol	Smith, Dudley (W'wick & L'mington)	Mr. John Stradling Thomas.
Mawby, Ray	Soref, Harold

Question accordingly negatived.