CROWN AGENTS (FINANCIAL ASSISTANCE)

HC Deb 20 December 1976 vol 923 cc115-58

7.26 p.m.

Mr. Nigel Spearing (Newham, South)

Under Class II, Vote 8, of the Consolidated Fund there is a fairly large section devoted to the Ministry of Overseas Development. I wish to raise tonight, for the first time, I believe, since 7th November last year, matters of administration of the overseas aid programme. Since that debate last year there has been a report by a Select Committee—House of Commons Paper No. 191 of Session 1975-76—devoted to the subject of the world food crisis and Third World development and the implications for United Kingdom policy. Also, there has been the Government reply, Cmnd. 6567. But, alas, last Wednesday we had the announcement of cuts by the Chancellor of the Exchequer in his December measures.

I believe that this is the first opportunity which any Department has had, or any Back Bencher has had, under a departmental heading to discuss those measures. I have no doubt that my hon. Friend the Parliamentary Secretary will confirm what I believe to be generally accepted, namely, that there has been a cut of about 10 per cent. in this programme, which means that the programme has declined from about 0.89 per cent. of our domestic budget to about 0.8 per cent. Perhaps he will be able to tell us whether the consequence for the administration of the programme means that there will be non-implementation of matters which are planned or whether it will mean not putting into effect projects or schemes which it was hoped to undertake but which are not at the planning stage at the moment.

At this time of the year, some people might say that the Chancellor has cut gold, frankincense and myrrh by 10 per cent. I am not sure that that is right, because our overseas programme—it is the administration priorities which I am raising now—is not a straightforward matter. Here again, perhaps my hon. Friend may be able to tell us the extent to which our aid programme is not entirely altruistic in the sense that, certainly in terms of programme aid, there is some return to this country in purchases of products, especially manufactured products, which is valuable for our employment.

I do not believe that anyone would deny that that is so or would suggest that it was wrong. Obviously, if one puts a Third World country in a completed circuit, as it were, developments are taking place in that country which otherwise might not be possible. But this consideration draws to our attention the difficulty of seeing the shape of the overseas aid programme. Of the large expenditures involved—not as large as some of us would like, but considerable in absolute terms—there must be substantial sums spent on administration, on the assessment of programmes, on the maintenance of specialists in post and so on.

There is a large sum—over £100 million—in the technical assistance programme. I believe that this is one of the ways—I am sure that the Minister will agree—in which this country can be most effective, through its technical aid programme, especially in parts of the world where British assistance has been traditional over many years.

On the more direct side, there is the project aid under which particular projects are given assistance, and this is one of the first matters I wish to raise on the Minister's reply to the Select Committee's recommendations. Its seventh recommendation, in paragraph 61, was: The Ministry of Overseas Development should show more willingness to meet requests for the payment of local and recurrent costs. The Minister's reply, in his paragraph 9, is a little vague on this, saying: We recognise that these problems may become more severe as we place more emphasis on poverty-focused projects. We shall need to look at these problems case by case. In other words, the Ministry is reserving its position on what is in certain countries a very controversial matter. In my experience, the proportion of project aid which can be spent on local costs is often a constraining factor. I hope that my hon. Friend will be more forthcoming tonight than he was in his reply to the Committee.

The programme aid side of the Ministry's work is at least to some extent controversial. The Government quite properly wish to go along with local development plans drawn up by the Governments concerned. One would have no quarrel with that, but we might quarrel with the objectives or the manner in which the local development plan is being put into effect. In the White Paper "More Help for the Poorest", my hon. Friend states specifically what the objectives of British aid are. I know that he does his best to ensure that our aid meets those objectives. But when I was a member of the Select Committee on Overseas Development we had some unnerving answers to our questions about programme aid for certain countries. It appeared that at least locally there were not very clear indications how it was spent. That raises the whole problem of how one goes about development in a so-called underdeveloped country. The dialogue now taking place between the North and the South, a continuation of the UNCTAD talks in which my hon. Friend played a significant rôle, is part of the attempt to solve that problem.

We can say to many of the less developed countries that if we are providing aid to help the poorest we need some earnest of intent that there will be no exploitation, which can become rampant. A great deal of party politics has the object of ensuring that there is no exploitation in the United Kingdom, or that it is minimal. How far can we tell sovereign States "We shall provide aid only so long as there is no exploitation in your country"? I shall not dwell on the matter. Everybody knows that it is a very important political question. My right hon. Friend the Member for Lanark (Mrs. Hart) included a chapter on it in her interesting book about aid matters. It is a dilemma that the Ministry and posts abroad must face, especially now that we have nailed our flag to the mast on the question of overseas aid policy. What do we do if in our view the local plan of a host Government does not give aid to those who need it most, and if it contains elements of exploitation, or the risk of exploitation, particularly of the rural poor, of which donors in this country and our Government would not approve?

How does the programme aid work? It is not something that we can cut off at once, because much of it involves spare parts and matters to which we are committed. In a sense the White Paper of 18 months ago deals with a quandary, but it is a welcome quandary, because if the policy did not exist we should not have the quandary.

The Select Committee welcomed the White Paper, which at least turned our eyes in the right direction. The Committee turned our bodies in the right direction, but I am not yet convinced that we are advancing in the right direction. In paragraph 56 of its report, the Select Committee said: Your Committee believe that unless some specific rules are prepared, then implementation of a poverty focussed approach to aid will proceed too slowly. Existing methods are not appropriate. They have an inertia of their own. They will not be changed by a statement of principle. Direct action is required. That was not one of the paragraphs on which there was a specific recommendation, so I am not asking my hon. Friend to say what he will do about it. I believe, however, that the spirit of that sentence will be echoed, certainly on the Labour Benches.

Another important paragraph was paragraph 20, where the Select Committee pointed out the need for greater emphasis on rural development. It warned that if one benefited farmers as a whole one was more likely to benefit large farmers who were doing all right and not help subsistence farmers who lacked the ability to absorb the aid. I find some of the thinking behind the Minister's reply a little unnerving. For example, he believes that 30 per cent. of project aid is going to help the rural poor. Paragraph 16 of the White Paper says: half our bilateral project aid (which is about 30 per cent. of our total aid programme) went on projects to help the rural poor. But the criteria are difficult to define. Simply providing employment in rural areas does not necessarily mean that the poor people's best interests are being served.

We can think of our own Industrial Revolution as an example. If coal mines were opened in the countryside, poor people might crowd in to work in those mines or in small workshops nearby, but the creation of paid employment per seis not necessarily the best thing that can happen to people who are outside a money economy.

I find the Select Committee's report, and particularly paragraphs 20 and 21, out of focus in this respect. In an area which has partly a money economy and partly a subsistence economy, creating more money wealth and bringing more people into the money economy probably pleases economists and makes the statistics look better, but it does not necessarily mean that people's security is improved, or that their real standard of living is any better, if the basic rural subsistence economy is undermined.

It has now been clearly recognised in aid circles that through forcing statistical development on a country, in terms of all the usual economists' indicators, one not only undermines the basic agricultural economy of an area, which may be a subsistence area, but may make people open to exploitation. That occurs particularly where there is mineral wealth, plantation agriculture or a new product. Paradoxically, some of the least wealthy countries, perhaps those with the least mineral or power resources, have turned to rural development in a more realistic way than those which have been apparently blessed with considerable mineral resources but where urbanisation acts as a magnet and it is difficult to get a meaningful rural development programme started.

I am glad that our Ministry has focused its attention on the least privileged in the least privileged countries, because I believe that rural development, undergirding the subsistence economy, is the best approach to overseas development and the best contribution that the United Kingdom can make. However, I have severe doubts about the speed and perhaps the efficacy of the strategy whereby this admirable programme can be achieved.

I know that since the Select Committee's report the ODM has introduced a Rural Development Division. The Commonwealth Secretariat has a rural development section following a most interesting conference that my right hon. Friend the Member for Lanark had in this country when she was Minister for Overseas Development. It was one of the good things that came out of the Rome Food Conference. There are unnerving rumours about the Rural Development Division not having the internal muscle or clout, or whatever political word one chooses to use, to fulfil the admirable aims contained in the White Paper.

Some time ago I was asking the Ministry about progress in appropriate technology—namely, technology that is not sophisticated but appropriate to rural people who do not have much access to machinery. I found the answers not very enlightening. I am reminded of the phrase that Guy Clutton-Brock, who is fortunately no longer in gaol in Southern Rhodesia, as it then was, used in his book about Nyasaland at the time of the troubles. He said: The problem is that Southern Rhodesia thinks it wants Cadillacs when all it needs is a fleet of Ford Model Ts. I am not so sure that many countries want Ford Model Ts. Even they may be technologically too advanced and inappropriate for many countries in the world.

About a year ago I visited Malawi, Where the Kisungu Cured Tobacco Scheme was taking place. They may well have had the equivalent of Model Ts to get the agricultural scheme off the ground, but once that had taken place they went back, quite properly, to ox carts. Oxen eat food off the farm and not oil, which has to be imported, but reproduce themselves and produce milk and meat. Further, they do not need to be steered as they go along. There are all sorts of advantage to be found in appropriate technology. I am not so sure whether the Development Department, in its sophisticated and almost Westernised guise, has quite the right touch. Some of its agencies have, but I am not convinced that it has the right touch. I am not so sure that it is geared to that type of attitude.

The Minister's reply, and what I might call accepted development law, are not in disagreement with much of the thinking on the Government Benches and, indeed, throughout the world. As I understand it, the problem goes something like this—there is a reasonable amount of money for rural development but it is difficult to identify a project: and even if it is identified, is it possible to get people to run it? The departmental reply in paragraphs 25 and 13 rightly emphasises the difficulty of finding the right sort of personnel.

A great deal of help can come from the Rural Development Division. Specialised help can be gained from marketing, grading and storage experts from the Tropical Products Institute and other specialist bodies around the world, but in the end it is the person who is literally on the ground who has to co-ordinate and who has to be on the scene for a certain period.

Very often such people can come from the countries where the project is taking place, but that is not always the position. The best type of development that I have seen in this respect comes from the Colonial Development Corporation. In almost a worldwide organisation it is possible to develop a career structure for people who will devote their lives to overseas projects. In the past it might have been possible to do that within the Commonwealth Civil Service, but that is no longer true. However, it might be done through some large organisation such as the CDC. I know that in the Select Committee's recommendations there is reference to consultants. I do not know whether the CDC comes under that category, but it probably does. I do not know whether it comes under the category of consultant criticism in the Public Accounts Committee's report to which I shall refer—I think perhaps not.

The CDC has an important part to play. I hope that my hon. Friend the Minister will be able to reassure the House that some career structure developments are taking place for those who are willing to provide a lifetime of service in other countries and to provide specialised skills. I hope that that form of career structure is on the move. It is clear that success in rural development depends on a person with a knack. Such a person may not be highly qualified in any one area, but it is necessary that he has a knack and has shown by his abilities in other roles that he can do this type of work. That is true abroad and it is probably true in this country.

That brings me to the courses available for Third World students in this country. Reference is made to this matter in paragraph 17 of the departmental reply. The Select Committee thought that many of the courses available in Britain were not especially suitable for people coming from Third World nations. It thought that there should be an extension of postgraduate research activities in Third World countries themselves. That was stated in paragraph 20. Paragraph 17 highlights the criticism—I must say that I have heard a criticism of this nature in Third World countries—that many of the courses in Britain are not suited to Third World conditions. This is a matter that we must consider carefully. Indeed, I am not so sure whether many of the courses in this country are entirely satisfactory for United Kingdom conditions.

Recently there has been some concern about the expansion of education in certain areas. I do not want to enter into that discussion now as it is not part of the debate, except to say that the late Richard Crossman, in my hearing at the time of the Robbins Report, said: "Robbins says that we are going to have more of what we have got, but is more of what we have got what we need?" My answer is "No" for the United Kingdom, and I suspect that that answer is even truer for the Third World countries.

As for rural development, I emphasise to my hon. Friend—I do not think he will need much persuading—that we need to ensure that the system of subsistence agriculture in many Third World countries is not destroyed by development proposals or techniques. There is a need for a balanced system, or a system of development surpluses that can be either broken or undergirded so that there is no breaking up of a society's rural system for statistical gains and developments.

We all know that in the end rural development depends upon proper surveys of soil and climate, potential crops and the potential for marketing, grading and storage. Those matters must be joint number one in the operations of the Ministry overseas.

I turn to a related topic that is one step away, as it were, from the PAC's comments on the funding of the Crown Agents. This is a topic that appeared in the PAC's Third Report 1975-76. On 25th October I asked my right hon. Friend the Minister for Overseas Development in an Oral Question if he would be quite sure that when the Fay Committee came to make its report it would thoroughly go into the question of the relationship between the Crown Agents and the Ministry. The Minister for Overseas Development made no mention of any expansion of the Crown Agents. I raised the matter again because my hon. Friend's reply on 25th October was not specific on that issue.

Since that time the PAC's report has been published. I refer to the Third Report, page xvii, where in paragraph 24 specific reference is made to a further extension of activities by the Crown Agents. It says: However, in April 1974 the Ministry became aware that without their prior approval the Crown Agents had provided £60 million in financial support operations for the United Kingdom domestic institutions. The Crown Agents told us that certain of the support operations had had the encouragement of the Bank of England". Clearly, some of the other support operations have not had that effect. The reference to the evidence on page 22 did not back up that first statement.

In April 1974 there was a Select Committee on Overseas Development which began investigations into the Crown Agents. Everybody thought at the time that the Select Committee would come up with some information on this aspect in its report. However, I ask my hon. Friend to ensure that this matter is covered in the Fay Report—not only as to the way in which the Crown Agents were or were not given permission to extend their activities on this topic but on other matters. Clearly, the further support operations described in the PAC document occurred at a time when questions were being asked by a Select Committee. I believe that the matter should be thoroughly investigated and reported upon. I should not like the Committee to be silent on that matter, because otherwise some of us will still require to know more. Therefore, it is right that I should give my hon. Friend notice that some of us will be questioning him on these matters.

Many hon. Members recognise the great efforts made by the Ministry in the North-South dialogue. We have tried to be constructive, but we should like to see greater speed in terms of what is being done. We appreciate that we must examine the subject in a world perspective as well to have regard to the interests of the United Kingdom—not only in terms of an increase in world trade but in terms of decreased exploitation in the world, from wherever it may come. We also wish to ensure that some countries which have not had the advantage that we have enjoyed will be developed in a way that is suitable for all their people and not just for some of them.

7.53 p.m.

Mr. Richard Luce (Shoreham)

I wash to apologise to the hon. Member for Newham, South (Mr. Spearing) for not being here during the first few minutes of his remarks. A little earlier this evening we were both taking part in the proceedings of a Select Committee, and I regret that I missed his earlier comments.

I congratulate the hon. Gentleman on raising the important subject of the growing importance of rural development in the developing countries. As members of the Select Committee on Overseas Development, we have concentrated on that issue. As we in this country become more and more bogged down in our internal problems, we tend to forget the incredible importance and interdependence of the Western world on the developing countries. The EEC, for example, depends on the Third World for 55 per cent. of all its raw materials. Trading prospects in the Western world in the long term depend on increasing trade with the Third World. In my view, there is no prospect of political stability in the world unless the West encourages increased trade and a higher standard of living in the developing countries.

The developing countries, on the other hand, depend increasingly on the Western world—in other words, the industrialised countries—for their export markets. Already the less developed countries export three-quarters of their materials and commodities to the industrial democracies. That demonstrates the importance of the Western world to those countries. Secondly, the developing countries depend on aid from the industrialised countries or the developed countries to help them to expand their exports and thereby to improve their standard of living.

There have been a number of serious developments in the Third World in the last few years. For example, there has been the impact of the increase in oil prices, and certainly the latest increase will not assist the developing countries. We know that in the last three years the developing countries have seen a dramatic deterioration in their current accounts and a tremendous increase in deficits, rising from a total of £9 billion in 1973 to £31 billion in 1976. We know from the statistics that 650,000 people in those countries have to live on incomes of less than £24 a year. We also know that there is gross under-employment in those areas. It is estimated that in those countries 250 million people may be under-employed. In those countries we have seen a growing switch from rural areas to the cities, with all the concomitant social problems that follow. For example, in 1960 there were 45 cities with a population of I million and more. It is estimated that by 1985 there could be 285 cities with populations of 1 million or more. The vast majority of them are likely to be in the Third World.

All these factors demonstrably affect the nature of the problem we face. This brings me to the point mentioned by the hon. Member for Newham, South—namely, the importance of rural development. It is important that we should switch our aid towards a greater emphasis not only on the poor countries but on rural areas in those countries. By helping country areas to develop their agriculture and other labour-intensive industries, we can encourage them towards a policy of import substitution, which would help their balance of payments. We must encourage those countries to export more, and we must encourage them to create more employment and higher cash incomes to help them to cope with some of their social problems. The Select Committee has endorsed that approach.

Our thinking in terms of overseas aid must be more in line with the direction I have attempted to outline. I urge the Government to recognise the fact that there is a need no longer to look at aid and trade as separate issues. The two are entirely interrelated and must be seen as such by the Government. What we need in Britain and in the Western world, particularly within the EEC, is a comprehensive approach towards greater rural development in the Third World. We must aim at a policy that encourages more agricultural production, increased productivity, better yields, improved marketing and an integrated approach embracing roads, water, credit facilities, marketing problems, education, health and many other important facilities.

In addition, there is the assistance we can give in enabling the Third World countries to buy better seeds and fertilisers, better irrigation equipment and agricultural machinery and in improving the agricultural extension services. Further, there is the help we can give in improving communications and the marketing and processing of agricultural goods for export. All this is greatly needed.

There is so much that Britain and the West can do in our mutual interests in the less developed countries by way of rural development. We have a great deal to offer. There are the training facilities that we can provide and the expertise in agriculture that we can offer. There is all the experience of the Commonwealth Development Corporation, which has an admirable record. There is a great deal of technical co-operation that we can offer. All this must be done in close co-operation with the approach of the EEC to this issue which, as I understand it, is to encourage self-generating projects in the rural areas of these countries.

I hope that the Minister will say something about the way in which we are working in harness with the Community on these matters. My view is that until we in the West can work effectively with the countries of the Third World, particularly the poorer ones, to encourage a greater degree of rural and agricultural development, there will be continued political instability in the Third World and the long-term prospects for more trade between it and the Western world will be hampered. I shall be interested to hear the Minister's views and of the Government's approach to rural development.

8.1 p.m.

Mr. Frank Hooley (Sheffield, Heeley)

My hon. Friend the Member for Newham, South (Mr. Spearing) referred to the North-South dialogue while the hon. Member for Shoreham (Mr. Luce) pointed out that questions of aid are inter-woven with questions of trade and the general relationship between the Third World and the West. With these points of view I entirely agree. It would be unreal for us to debate the British aid programme and our provision for that programme without taking into account the wider questions which arise in terms of relations between the Western World and the Third World.

I do not wish to go over the history of the current argument. I shall mention only that it came sharply into focus at the special General Assembly of the United Nations in April 1974 when there was a sharp confrontation between the developing world and the rich countries of the West. The argument went on into the General Assembly debates in September 1974 when there was produced a charter for the economic rights and duties of states, which tried to set out a new relationship between the poorer and richer countries. The argument continued at the Seventh Special Assembly of the United Nations in 1975, when there was some change of attitude on both sides.

On the one hand the developing countries made it clear that they wanted a new relationship and a better deal but seemed not quite so anxious for a sharp confrontation with the richer countries. On the other hand, the Western World saw the danger of a stark confrontation. It needed raw materials, many of which came from the developing countries. It also needed markets for its products.

Arising to some extent from the discussions that took place in the General Assembly just over 12 months ago, the scene was set for two major discussions on these problems of aid and development. The first such discussion was the UNCTAD IV conference in Nairobi which took place in May 1976, to which I shall return. The second major discussion was the conference for International and Economic Co-operation which was set up in Paris in December 1975 and which has been adjourned until next spring. This has been referred to as the North-South dialogue and it raises a great many questions in relation to the British aid programme and our contribution to aid and development.

The CIEC, as it has been called, or the North-South dialogue, had a tripartite constitution. There were the developed countries, the United States, Japan, Western Europe, Australia, Canada and one or two others. The second group, interesting enough, was made up of the OPEC countries which, although they are developing countries in the sense of needing technical and development aid over a wide area of economic and social development, are not poor. They include such countries as Saudia Arabia, Iran and Venezuela, which have enormous oil resources. Nevertheless, in some respects they need aid and technological advice such as we can give through our development programme.

The third element in the North-South dialogue was the developing countries in the more precise sense, countries like India, Jamaica, Zaire, Zambia, Egypt and a number of others. They are in need of aid and technological assistance but cannot call on the great resources enjoyed by the OPEC countries.

The interesting feature of the Paris conference was the alliance which developed between the OPEC countries and the other developing countries vis-à-vis the Western countries. The conference has operated in the form of four commissions which have tried to deal respectively with energy, raw materials, development problems and finance. The discussions have taken place within those four categories.

I do not wish to say much about the energy discussions since these are not a responsibility of my hon. Friend and in any case the British position on oil is changing in that we are moving from being a major consumer to a major producer. The energy discussion is important in the sense that it has shown, so far, a tendency for a common approach to be adopted by the rich oil-producing countries and some of the poorest countries. If this alliance continues, as it might, it will pose certain problems for the Western world. Within the context of the Paris discussions there seems to have been, in this area at any rate, a certain amount of meeting of minds.

The OPEC countries began to appreciate that the West has a genuine desire for security of the supply of oil and for the long-term development of the supply of oil. On the other hand, the Western countries have accepted that it is reasonable for the purchasing power of the oil countries to be maintained even though they are anxious that changes in price shall not occur in the violent and unpredictable manner which so upset the world economy in 1973.

There has not been the same degree of common ground on the second issue of raw materials. The principal interest of the developing countries has been to achieve reasonably stable and remunerative prices for basic commodities. They would like to see an integrated commodity programme backed by a common fund to help finance buffer stocks and similar techniques to iron out fluctuations in prices and supplies. A major demand of the developing countries has been for the indexation of the prices of their products so that, as inflation drives up the cost of the machinery and other technological material which the West can supply, they do not fall behind because of a decline in the prices of basic commodities.

Another major interest of the developing countries has been in the effective establishment of an international fund for agricultural development, something which clearly is of immense importance to them. The agenda in the third commission, on development, generally related to the question of access to the markets of the Western world for the industrial products of developing countries, the transfer of technology from the West to the Third World, and increased financial assistance to the poorest countries which depend directly on the size and scope of our own aid programme.

The fourth commission was concerned with finance, but specifically with matters such as export earning stabilisation schemes, the financing of investment programmes, and the re-scheduling of debt, which has become a major problem for some of the poorest countries.

Within these four areas we must consider whether the North-South dialogue has been a dialogue of the deaf or whether there has been a genuine meeting of minds at the Paris Conference. I have suggested that on the question of oil there appears to have been a degree of rapprochement between the two sides—representing, possibly the genuine power structure of the oil producers, on the one side, and, on the other side, the formidable financial and industrial power of the Western world.

On the question of debt and the problem this creates for developing countries there appears to have been rather less agreement on what could and should be done. The developing countries are anxious that there should be a general conference on debt problems and, perhaps, a multilateral agency to deal with the debt difficulties faced by the countries represented at the Paris Conference. In a recent speech Mr. McNamara, the President of the World Bank, pointed out that the medium- and long-term debt of the countries represented at the Paris Conference had risen from $18 billion in 1973 to $23 billion in 1975 and was likely to rise to $41 billion in 1980. The response of the Western world to the debt problems of those countries has been to suggest that they can be dealt with only on a case for case basis, that only by looking separately at countries such as India, Brazil, Tanzania, Bangladesh and Mexico could any sensible conclusion be reached to the different problems.

The Western world has also been rather anxious that any unilateral report on debts should not upset the commercial banking system in the Western world. I understand that commercial bank credits to developing countries have risen from $2 billion in 1970 to about $10 billion in 1976. Therefore, clearly the Western world would not want action to be taken which would cause serious instability in the banking system.

Nevertheless, the problem of debt is serious. The servicing of the capital borrowings by the countries represented at the Paris Conference is still a formidable problem for them which we shall have to help to resolve. I should like my hon. Friend the Parliamentary Secretary to tell the House whether the United Kingdom is interested in the creation or a new agency or in the use of an agency such as the International Monetary Fund to try to manage the debt problems of some of the countries represented at the Paris Conference; or are committed to the general Western stance that these must be dealt with case by case—Tanzania separately from India, India separately from Mexico, and so forth?

I have always thought that there was a case for trying to get a multilateral agreement with the countries most affected so that they would pay only a certain percentage of their export earnings in any year in capital and interest payments. Obviously, the figure would have to be agreed with the country concerned. If such an agreement could be made for four or five years, at least the Governments of the countries concerned would know that they had a fixed commitment related to their total earnings of foreign currency. This would help them to plan their economies over that period without either needing or wishing to repudiate any debt item.

This is a serious problem for some countries and I should like to know what the Government's view is about this in relation to our total aid effort. It affects our aid effort in international terms, because to meet the United Nations requirement a certain amount is deducted from our gross contribution representing what is repaid to this country in capital repayments.

The next major issue dealt with at the Paris Conference was that of commodities and the problem of the common fund. This will become a matter of discussion next year under the auspices of UNCTAD, but the OPEC countries have, for the moment, held their hand and restrained their demands on the price of oil. It appears that there are now differences of opinion between two groups within OPEC. It is a matter of speculation whether this betokens a break-up of the cartel. I doubt it. OPEC, having shown a degree of restraint, will expect that when the North-South dialogue resumes in the spring something will be forthcoming from the Western world on commodities. I do not believe that we have seen a break between the OPEC countries and the rest of the Third World over what they must appreciate is their common interest to establish reasonable and fair prices for basic commodities.

It is in our interests to try to evolve a system which will to an extent stabilise the prices of raw materials. Britain is dependent on overseas sources for almost every important industrial raw material, apart from oil and coal. Anything that can be done to iron out fluctuations of the type that we saw from 1972 to 1974 will be in our interests.

Another argument that has been advanced by the developing countries has been that there should be a reasonable relationship between the export prices of raw materials and the import prices to them of machinery and goods from the Western world. So far, the United Kingdom has resisted this concept, as have most of the rich countries. If they continue to resist it, they will once again face serious fluctuaions in raw material prices, and perhaps even the creation of new cartels to maintain the price of certain materials, where this is possible.

There does not appear to have been a great movement about the actual volume of aid, following the North-South dialogue. The President of the Royal Bank, in a very forthright speech at Manila in October, stated categorically that the Western world was not producing the volume of aid that was reasonable and was not coming anywhere near the agreed United Nations target of 0.7 per cent. Unfortunately, Britain cannot count herself among the leaders in this respect. It is true that our aid record as a percentage of the gross national product is not so wretched as that of the United States and Japan, but it is nowhere near as good as that of Norway, Sweden, the Netherlands, France and our Commonwealth partners, Canada and New Zealand.

The announcement by the Chancellor of the Exchequer last week of our intention to cut the aid programme by £100 million was staggering and incomprehensible. I can think of few expenditures more directly to the advantage of this country than expenditure on overseas aid, which promotes development and increase in real wealth overseas, and thus creates markets for this country, which depends more than any other on the expansion and development of international trade.

In terms of the aid programme, I ask my hon. Friend the Minister how these cuts will affect aid to the poorest countries, how they will affect our aid in terms of rural development, and whether these cuts will affect our contribution to international agencies such as the International Development Association, the World Bank, the United Nations Development Programme, and so on. Goverrunent persistence in a policy of this kind could have a disastrous build-up effect in relation to other aid donors. Other donors in the Development Assistance Committee of the OECD may feel that if the United Kingdom is to reduce its aid effort it weakens the case they can make to their own electorates for doing as much as they are doing now or for doing more. I am seriously worried about the repercussions of this announcement in circles outside the United Kingdom. It is a bad example, and bad examples are sometimes a lot more infectious than good examples.

What has been called the transfer of technology, a very complicated problem, is linked with private investment in overseas countries and with the best way of transferring the technologies to which we are accustomed in the Western world to countries of a very different social and economic development. My hon. Friend the Member for Newham, South pointed out very clearly the snags which can be encountered merely by crudely transferring one type of technology to a situation which is totally different.

There are two points on which I should like to hear some comment from the Minister concerning our current policies on the training of overseas students in this country. The Government appear to be pursuing some rather strange policies in this connection. There is the fantastic increase in fees and the differential fee system, which I find entirely repugnant There is the idea that there is something improper or wrong in colleges, universities and polytechnics which have vacant places giving them to overseas students. I find this attitude puzzling, unconstructive and unnecessary.

No sensible person is suggesting that a local British student should be kept out in order that an overseas student may be taken in. I have never heard that suggested anywhere. But when there are places vacant in polytechnics, universities or other colleges, I find it hard to under- stand why there should be deliberate dis- couragement of overseas students taking those places. I should like some information from my hon. Friend the Minister on his Department's attitude on this issue.

With regard to the transfer of technology, I wonder whether we are making sufficient use of the enormous range of engineering and scientific expertise that we have in our public corporations. The Coal Board, the Gas Council, the Electricity Council, the railways and so on all have an enormous volume of knowledge and ability in matters which are fundamental to development. With all respect to my hon. Friend the Member for Newham, South, in some way or other the developing countries will have to get away from oxcarts. They may need a railway here and there, and they will eventually need electricity generation.

Mrs. Judith Hart (Lanark)

My hon. Friend will, I am sure, acknowledge that electricity generation is part of rural development.

Mr. Hooley

I am sure it is. That is why I am anxious that the knowledge and expertise of the CEGB in generation and in distribution should be brought to bear, if this can be arranged, through the Ministry of Overseas Development or through some other means for the benefit of countries in Africa and Asia.

The North-South dialogue at the Paris Conference adjourned this month without very much accomplished after 12 months of on and off discussion. It has postponed its consideration of development and aid matters until the spring next year. In the meantime the OPEC countries —which have allied themselves with the developing world, since they have many common problems with it —have made a decision about the price of oil which can hardly be regarded as wildly unreasonable in relation to world inflation. But I am sure they have not said their last word on this and that, having, as it were, dealt with their card for the moment, they will be waiting for some cards to be played by the Western world when the North-South dialogue resumes next spring. I should like to know, in terms of our own United Kingdom aid programme and our United Kingdom aid policies, what we intend to offer them in regard to debt problems, commodities, trade, and the transfer of technology.

We are no longer a great front-rank industrial Power. We have been overtaken by Japan, the United States, Germany, France and other countries. But we are influential, we have a rôle to play, we should be putting forward ideas, and the House is entitled to know what those ideas are.

8.27 p.m.

Mr. Dennis Skinner (Bolsover)

I do not want to speak about the issue just raised by my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley). I want to refer to some of the comments made by my hon. Friend the Member for Newham, South (Mr. Spearing), who initiated the debate. He referred to the role of the Crown Agents. The Crown Agents became involved in property matters several years ago. This became apparent some two or three years ago at the time when the property market fell through the floor.

Arising out of the serious problems facing the Crown Agents at that time, which were then revealed, the Fay Committee was set up in order to look into what was, without any doubt at all, a scandal. The Crown Agents had changed themselves from a servicing agency to a body involved in property speculation. They saw at that time that millions of pounds were being made—I am talking of the boom which lasted from 1970 until 1973—out of investing in property. The people responsible for administering the Crown Agents decided to put their money in as well.

Although the Crown Agents were acting illegally those activities have been shrouded in a great deal of mystery. People in the Establishment generally, both in this Government and in the previous one, have gone to great lengths to make it abundantly clear to the speeding motorist that he is committing a serious offence. The same attitude applies to the poor old mother who, in buying a few things for Christmas in the shops, quite inadvertently picks up something and is sent to prison for three months, just because she is trying to look after the kids. Persons convicted in that way must feel that it is a funny old law that allows the Crown Agents, involved in property speculation, to get away with it in the way they did, seemingly getting the backing of two successive Govern- ments for their actions. I just want to put that on the record, and I want to go a stage further with the more recent developments.

The Crown Agents, when they got involved in property speculation decided to use a sum of money, which was not their money, in what was known as the Stern Group, which was run, by and large, by William Stern, one of the architects of the Tories' ill-fated Housing Finance Act—or so he proudly claimed on BBC television. He was involved in making remarkable sums of money in property speculation, and this involved the Crown Agents, who decided to invest some of their money —although it was not their money really —in the Stern Group. William Stern was involved in shifting money around from one property to another. He had a pyramid-type business. The Stern Group invested large sums of money —money which did not belong to it —in William Stern's business, although it was apparent to some hon. Members at the time that he was on the verge of financial collapse.

Then a strange thing happened. On to the scene came Kenneth Cork, of Cork W. H. Gully and Co., one of the top accountants in the country. He was put in charge of the receivership of the Stern Group. His job—so most of us thought—was to ensure that William Stern became bankrupt, but he got a bright idea and put a proposition before the 32 creditors, who included the Crown Agents. He told the creditors that there was no need to make William Stern bankrupt after his company collapsed with debts of about £110 million. He suggested that William Stern should be allowed to buy and sell a few properties —to get them cheap and sell them dear, and thus make a few extra bob. The creditors would then get a little of their money back.

I want my hon. Friend the Minister to tell me when he replies why the Stern Group went to the 30-odd creditors at the meeting in July 1975 with a deed of arrangement put by Kenneth Cork to avoid bankruptcy. I want to know why the Crown Agents acted in accordance with that proposition. Why did they and the Government go along with the scandalous idea that this man, whose company had collapsed with debts of £110 million, should be allowed to get away with it? Why should there be a proposition which allowed him to earn £20,000 a year before he passed anything on to his creditors? That was the proposition which Kenneth Cork put to the Stern Group creditors, of whom the Crown Agents were one.

The Estate Times, which some of us read, published a list which made it abundantly clear that the Crown Agents were on the list of creditors under the name of Four Millbank Nominees Ltd., which is the company acting for the Crown Agents. Has the Minister kept in close contact with the Crown Agents in view of their abysmal record of breaking the law? As the British taxpayer has to bail out this company, it is the Government's duty to let us know what the Crown Agents were doing at that meeting and why they apparently agreed with the proposition put by Kenneth Cork.

Some prominent newspapers have been taking up the story month after month. Did the Government go along with this proposition? If they did, was it because they feared that the bankruptcy of William Stern would reveal a lot of important names?

Mr. Tony Durant (Reading, North)

On a point of order, Mr. Deputy Speaker. Could you clarify whether this is a debate on rural aid or on the Crown Agents generally?

Mr. Deputy Speaker (Sir Myer Galpern)

In the papers which were issued to hon. Members, the title of the debate is "Financial assistance to the Crown Agents", so there is no difficulty.

Mr. Skinner

As I made the point in the beginning, my hon. Friend the Member for Newham, South was wise and shrewd enough to put down this subject on a very broad basis of rural development and the Crown Agents.

I have it firmly in my mind that had bankruptcy proceedings taken place one thing is certain: a lot of names would have been revealed. There were more than 30 creditors, and some of them were very important. Some were shady property companies, and all the dirty washing would have been hanging out to dry. Perhaps Kenneth Cork was asked to find a suitable deed of arrangement dating back to the early part of this cen- tury, in order to get William Stern off the hook so that the names would not be revealed. It was reasoned that the property business would pick up again and some of the losses could be recouped. This has been suggested in the Daily Telegraph columns this morning. It says that it is conceivable that some of the creditors—not the Crown Agents—might get a few bob back.

This is a very sinister scenario. The Minister should tell us why the Department for which he is responsible had not been informed, and why the Crown Agents took the position they did at the meeting in July last year. Why did the Crown Agents, as a Government body, allow Kenneth Cork to put this proposition in order to get William Stern off the hook? Why was he not made bankrupt? A lot of people—hundreds, I believe—in this country are made bankrupt every year. Some of the people in the Clay Cross affair were made bankrupt because they fought, not for themselves and not to line their own pockets, but for a principle.

Mr. Durant rose—

Mr. Deputy Speaker

Order. I anticipate the hon. Member's point of order. I was going to draw the attention of the hon. Member for Bolsover (Mr. Skinner) to the fact that he cannot go on to discuss Clay Cross.

Mr. Skinner

There are some people who get very tetchy whenever I mention that. I am talking about the Crown Agents rôle in this very shabby affair. Why were the Crown Agents one of the principal creditors at that meeting in July 1975, and why have the Government allowed this matter to escape them when there are lots of people in the Press and outside who are keeping a very close watch on these proceedings and returning to them on many occasions?

It is even more sinister that when I raised this matter in the House a couple of months ago it was reported in one of the newspapers and the BBC invited me to make some comments about it on the "World at One" programme. Mr. Kenneth Cork was supposed to come along as well and explain his side of the affair. However, he threatened to issue a writ, and he asked people to write to the newspapers contradicting everything that I have said. But I am prepared to say everything that I have said today outside this place. It is strange that Kenneth Cork should threaten the BBC in this matter. The BBC told me that it could not have me on the programme because Kenneth Cork had threatened to take action. The BBC said that the Daily Telegraph and/or the Sunday Telegraph had published apologies when they had done nothing of the sort about the question of Kenneth Cork and the proposition that he made to Stern in the Sunday Telegraph published in September 1975. It is a shady business.

The Fay Committee must do a thorough job. It must take up the question of the way in which the Crown Agents acted when they tried to make money illegally out of property and nearly got away with it.

The Fay Committee should know how many properties Stern has been buying and selling in the last few months since the liquidator refused to make the company bankrupt. The Minister should tell the Crown Agents that, having been bailed out to the tune of £100 million by the British taxpayer as a result of their acting illegally a few years ago when they entered the property market, they have a duty to tell him what is going on now in view of the subsequent proceedings involving William Stern and the failure of Kenneth Cork to make him bankrupt as most people would be in that position.

After all this time, it is ironic that the one creditor, according to the Sunday Telegraph of 19th December, which is threatening to force the property tycoon into bankruptcy is none other than Kayser Ullman. That company has a record. It was the company that helped to bail out the Leader of the Liberal Party, his company, London and County Securities Ltd., and the chairman of the 1922 Committee. It is the company which, according to the Sunday Telegraph, has threatened to force William Stern, the property tycoon, into bankruptcy. Yet we know that the Crown Agents, which have sat idly by refusing to do anything about the situation, are accepting proposals which have been made in the past 15 months.

Some difficult and provocative questions have to be answered. If my hon. Friend the Minister cannot answer them now the Fay Committee must, because there are a few hon. Members and some people outside who will continue to press the issue until the truth emerges. It does not matter to me how big the names are. I know that there are a few big names, and my hon. Friend knows the many interests that the Crown Agents have in various companies. I intervene to help make the truth available.

8.44 p.m.

Mrs. Judith Hart (Lanark)

I wish that at the time I set up the Fay Committee I had appointed my hon. Friend the Member for Bolsover (Mr. Skinner), because he would have been a first-rate member of that committee. I do not know the truth or the merit of my hon. Friend's argument, but I think that it would be wise to take account of the reconstitution of the Crown Agents and of the fact that the situation is entirely different from that which existed in the early days and which led to the problems there.

I am sure that my hon. Friend the Minister who is to reply to the debate will not be able to say much about these things because they are in the hands of the Fay Committee, but I say to my hon. Friend the Member for Bolsover that it would not be a bad idea if he got in touch directly with the committee. The committee is responsible to hear anything that anyone wants to say to it, and I am sure that my hon. Friend could make a contribution. I emphasis to my hon. Friend that, whatever happened about this matter in July 1975, he should get in contact with the committee. Kenneth Cork's name is not familiar to me. It reminds me of Pamela Hansford Johnson's novel about Cork Street. I do not know about these things. in all seriousness, if there is something that the committee needs to know about, my hon. Friend should get in contact with it.

We are debating aid administration, which covers the Crown Agents. I should like to touch on one or two aspects of aid administration. I know of the valiant efforts that my hon. Friend the Parliamentary Secretary has made in the last few weeks on this matter —at least, I think that I know of the valiant efforts he has made. I want first to ask him, particularly as aid administration concerns rural development, which is our main subject matter tonight, what he supposes will be the effect on aid administration of the 10 per cent. cut in the aid programme this year and next year.

My hon. Friend will correct me if I am wrong, but my understanding is that a 10 per cent. cut in any public expenditure programme of any Government Department is a good deal higher than any other percentage cut suffered by any Government Department in the last three or four public expenditure exercises. My understanding —again, my hon. Friend will correct me if I am wrong —is that the maximum expenditure cut in all Departments except perhaps defence has been about 6 per cent.

A 10 per cent. cut over the next two years can to a certain degree be accommodated by the allowance that is made in any departmental public expenditure programme for carrying over from one year to the next, for the possibility of overspending or underspending —but not 10 per cent. in two years running. Therefore, it must mean that an element of the aid programme will have to be sacrificed next year and the year after.

Since the emphasis of the aid programme —as my hon. Friend appreciates, it has been my emphasis as much as that of his right hon. Friend since I left the Ministry—is on a poverty-oriented programme and rural development, one must then ask where programmes which had been planned will now not occur. I am not necessarily speaking of those agreed with other developing countries, and not necessarily of the point at which we have to abandon programmes agreed with them. However, how far shall we have to abandon programmes that within the Department have been settled?

Looking at this matter, I see one problem in the allocation of the aid programme that is much more serious in terms of a cut than would have been the case even three or four years ago. It appears to me that a far higher proportion of the aid programme is committed to multilateral programmes well in advance and automatically. For example —I make no complaint about this, and neither would any of my hon. Friends—we have a commitment to the IDA in the World Bank. One is glad about that. One would not want to cut it for an instant. It is one of the best elements of our multilateral programme. Equally, we have com- mitments taken on in advance to the United National Development Programme, and we have the new commitment, about which we can have no debate or argument, to the European Development Fund.

There is now a higher proportion of the aid programme which is automatically committed, with a little less latitude than in previous years for the disposition of our own aid. Even when there is a 10 per cent. cut, it seems—perhaps there is more complexity to it than I apppreciate—that it must fall on about 75 to 80 per cent. of the programme which is capable of being committed bilaterally. If that is the case, we are getting to the heart of the argument of programmes to the poorest countries and to rural development in the poorest countries—because we all agree that if we are talking about the poorest countries we are talking about rural development, with all the aspects of it which have been mentioned on both sides of the House tonight, and someone will come out very much worse at the end of this exercise as the result of a 10 per cent. cut in each of two consecutive years.

In the case of other departmental programmes such as education and housing, sooner or later, in one way or another, the House is given fairly precise information about where the cuts will have their effect. Even if the Government do not tell us, the local authorities tell us that they have a certain reduction in their school building, housing or roads programme. It has not been the practice for the Government to tell us where aid cuts fall, but perhaps that is because we have not had cuts in the aid programme for many a long year.

We have not had the increases that we might have wished, but we have not had the cuts. In 1969–70 we did not have cuts. We had a marginal reduction in the planned programme under the Conservative Government of 1970–74. We did not have cuts in 1974–75 or 1975–76. We only have them now. Perhaps it is a new experience and new questions should be put to the Government. I would not expect my hon. Friend to be able to give me an answer tonight, but I would expect him to take note of the fact that a 10 per cent. cut in the aid programme must be accounted for to this House.

We have a right to know where those cuts will fall and how far they will affect, for example, our commitment to the European Development Fund. In parenthesis, I must say that I should greatly welcome such a cut. I know that my right hon. Friend and my hon. Friend have fought hard and without success on the matter of the European Development Fund and the whole aid programme of the EEC, but that has resulted in an absurdly nominal recognition of the need to provide European aid to countries which are not associated with the EEC.

The end of the long struggle of two, three or four years to try to get a decent aid programme from the EEC to India, Bangladesh, Pakistan and other non-associated countries has ended with a dismal pebble in the pool. My lion. Friend knows that as well as I do. I would welcome it if the 10 per cent. cut came on the EDF programme, because it has little to do with the priorities of the British aid programme as we have expressed them in the House. Given the scale of the cuts, we have a right to know where they will fall in terms of the programmes envisaged or semi-committed within the Department.

In terms of many of the aspects raised by my hon. Friends, in terms of the role of UNCTAD, the North-South dialogue and what is happening in the relationships between the rich world and the poor world, the Government and the Department are, if I may be subjective, taking an extremely good and positive approach. I should like, however, on the debt problem—and I think that it was this to which my hon. Friend was referring—to see some kind of compromise whereby we recognise that while a case-by-case approach is right because of the immense variations in the debt problems of the developing countries, nevertheless, we as a nation would be right to make a generalised commitment to understanding the debt problems of the Third World. So far we have not quite done that.

We have said rather rigidly "We take a case-by-case approach". We have not been ready to say that it is within the framework of a general agreement that the debt problems of the Third World must be understood that we should wish to take a case-by-case approach. The difference is between the narrow, rather sterile—I am using rather rude words but am doing so deliberately— and arid approach of the economists who advise the Government on these matters from various Departments, and the political understanding that only Ministers can bring to these problems. I wish my hon. Friend well in his efforts to advance political understanding instead of the rather narrow analysis of many of the advisers in Whitehall on this subject, as on other subjects, in relation to UNCTAD and the Common Fund.

There is something very wrong, and we have commented on this in this House time and again, when, in a debate on this whole matter of relationships between ourselves and the Third World, there is such a poor attendance in the Chamber. I know that we are debating this issue on the Consolidated Fund Bill, but this is the first opportunity we have had for about 18 months for a real discussion of these matters. Until this country wakes up, until the Government wake un and until the Opposition Front Bench wake up. nothing very much will be done. Not one Opposition Front Bench speaker has been present throughout the debate. Indeed, there has been only one contribution to the debate from the Opposition benches. The Liberals are not here. SNP Members are not here. Plaid Cymru Members are not here. Let us take careful note of that when our colleagues and our comrades responsible in this country with activities concerned with the Third World next ask us to initiate matters in this House.

It is time that these matters were regarded as being at the centre of our economic thinking, because until they are we shall never solve our nation's problems. We shall solve our problems only in the context of some kind of answer to the problems of the Third World.

As my hon. Friend realises, I could speak for another half hour on this sub-jest, but I shall not do so. I know how hard my hon. Friend is working on these matters. I know that he will not be able to give complete answers tonight, but I hope that sooner or later the Government will take note of the desperation that is now entering into this dialogue.

9.0 p.m.

The Parliamentary Secretary to the Ministry of Overseas Development (Mr. Frank Judd)

I join my right hon. Friend the Member for Lanark (Mrs. Hart) in lamenting the poor attendance for what has been a thought-provoking debate. I am sorry that there will not be time, if we are to do justice to the other debates tonight, to do justice to all the points which have bene raised, because they have been profound and deserve detailed commentary.

It is clear that we are greatly indebted to our hon. Friend the Member for Newham, South (Mr. Spearing), and, to some extent, to my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley), for having balloted for this subject. My hon. Friend the Member for Newham. South has a long-standing and unrivalled commitment to overseas aid. I have seen it at first hand both in this country and abroad. But his commitment is not surprising when one considers the witness of his political life and also his active life—though he does not brag about it—in the United Reformed Church. What is clearly stamped on him is Chapter 4, verses 2 to 5, of the Second Book of Timothy, and the more hon. Members take that text seriously on an issue of such profound importance as this the better.

Mr. Hooley

What is the text?

Mr. Judd

My hon. Friend will find it instructive to go to the Library after this debate and read the whole of the Second Book of Timothy.

The aid programme for 1977–78 is being cut by £50 million in current prices to £494 million as against the £516 million that we are spending in this financial year. It amounts to a cut of some 10 per cent. This cut in the real value of next year's programme will reduce substantially our ability to respond effectively to the needs of developing countries.

It means that in real terms we shall do less than we are doing at present. Et means that we shall be able to achieve correspondingly less next year in our fight to help the poorer countries in overcoming hunger, malnutrition, disease and premature death, that more people will go hungry and will die, that more children will suffer, that less will be done to lessen malnutrition, infant mortality and diseases, that we shall have to refuse many requests for help with projects aimed at improving the lot of those living in the rural areas, and that the resources available to the multilateral agencies will be less than would have been the case otherwise.

The multilateral agencies are indeed in the forefront of the fight against rural poverty no less than the bilateral programme. The consequences of the cuts in the aid programme are therefore without doubt greater misery, greater suffering, more widespread disease, and more deaths in the developing world. About that there should be no illusion.

Naturally, it is my fervent hope and the no less fervent hope of my right hon. Friend—I have his authority to say so—that, as soon as circumstances permit, we should restore and more than restore the aid programme to the level at which we should all like to see it operating. Let us consider the challenge as spelt out not only in the context so eloquently expressed in the debate but in the international context.

We at present devote 0.37 per cent. of our gross national product to aid, whereas Sweden and the Netherlands have already passed the 0.7 per cent. target. Since 1961, the proportion of total Government expenditure on aid has fallen from 2 per cent. to 0.89 per cent. When we look at our record compared with other countries within the OECD, we find, by my reckoning, that only two of them are providing less per head of population for aid than we are. Surely we all agree that just when we have looked to others to come to our assistance with a significant loan from the IMF, it behoves us to look with an increasingly acute eye at our own responsibilities to those Governments who are struggling with problems against which our own begin to fade into insignificance.

This debate has been largely about rural development—though I shall come to other subjects later. It is now just over a year since we published the White Paper, for which we owe a great debt of gratitude to my right hon. Friend the Member for Lanark setting out our new aid policy on rural development. That policy expressed our commitment increasingly to concentrate our aid on the poorest countries in the world, defined as those with aper capitaincome of less than $200 a year, which is not much more than 6 per cent., or one-twentieth of the per capita income in the United Kingdom.

We have also said that we intend to concentrate in that strategy on the poorest groups within the poorest countries. Since the vast majority of the world's poorest people live in the rural areas, that inevitably means concentrating on rural development. Many of those whom we are trying to help live on the very margins of existence. In fact, to say that they "live" in any meaningful sense is probably an exaggeration.

They produce barely enough food to survive on. They have little or no access to the basic facilities of shelter, health care, or education. They are at the mercy of the elements and can face starvation or death if the rains fail and there is drought, or if the rains are too great and there is flooding.

In case anyone thinks that this is a partisan rendering by a Minister with special responsibility in this sphere, I shall refer to a speech made by Robert McNamara to the World Bank not long ago. He expressed the challenge far more clearly than has been done for a long time and spoke with all his distinguished record at the Pentagon: Malnutrition saps their energies, stunts their production and shortens their lives. Illiteracy darkens their minds and forecloses their futures. Simple preventable diseases maim and kill their children. Squalor and ugliness pollute and poison their surroundings. The miraculous gift of life itself and all its intrinsic potential, so promising and rewarding for us, is eroded and reduced for them to a desperate effort to survive. The self-perpetuating plight of the absolute poor simply cuts them off from whatever economic progress there may be in their own societies. They remain largely outside the entire development effort, neither able to contribute much to it nor able to benefit fairly from it. Unless, he said, specific efforts are made to bring them into the development process, no feasible degree of traditional welfare or simple redistribution of already inadequate national income can fundamentally alter the circumstances that impoverish them. That is a challenge that no reasonable hon. Member can ignore.

The rural development projects that we finance normally have at their core an increase in agricultural production, to provide both food for the farmers themselves and an income to help develop the social and other services if the community is to succeed in raising its standard of living. But increasing agricultural production itself requires the provision of basic economic and social services. These may include agricultural extension, rural roads, water supply, credit and marketing systems and basic education and health systems—in other words, integrated rural development.

The contribution of inputs needed will vary from region to region, but we are prepared to finance projects involving either inputs into one or two sectors, or into a number of different sectors in order to promote the balanced development of a particular region. In particular, we need to take account of the impact which inputs into one sector can have on others. For example, we need to take great care when financing irrigation projects that steps are taken to prevent the spread of water-borne diseases such as bilharzia.

In the last year or so, we have become involved in a number of rural development projects which fit in with our strategy. These include projects in the Upper Region of Ghana and in Gambia, in both of which we are providing, along with other donors, inputs such as fertilisers, veterinary services and marketing facilities. In the Upper Region of Ghana, 125,000 farmers are benefiting from schemes in which we and the World Bank are involved. I was fortunate to be able to visit the Gambia recently and to travel through the area of the project there. I was impressed by the professionalism and dedication of British experts there and by the potential for using British aid in support of an imaginative Government programme to help the rural poor. Other projects in which we are involved include the setting up of three demonstration farms in the South Darfur province of Sudan as the first stage of a project in which Arab development funds are also involved, designed to halt the present decline in incomes of poor farmers, and involvement with the World Bank in a major irrigation and rural development scheme in Sri Lanka.

These examples show that we are making progress with our aid policy. More generally, the proportion of our bilateral project aid allocated to projects designed wholly to benefit the rural poor was greater in 1975 than in 1974. This trend is encouraging, but we still have a long way to go. Furthermore, it would be wrong for me to give the impression that implementing our policy will be easy or quick. It will not.

Rural development projects involve difficult technical problems in ensuring that inputs such as fertilisers and seeds are properly adapted to the areas where they are needed, difficult institutional problems in ensuring that channels exist for funds and equipment to reach those in the often remote areas who really need them, and complex social problems involving the changing of deeply entrenched social attitudes.

Furthermore, the development of the rural areas often presents difficult political problems for the developing country Governments themselves, and can involve us in delicate negotiations in pursuit of our policy. It will take time and experience to learn how best to overcome these various problems. As a result we shall need to continue to finance sound development projects in other sectors.

We are also having to adapt our own aid machinery in order to cope with the very special problems created by rural development projects. Measures we are taking include making more use of interdisciplinary missions to visit countries and discuss with Governments the scope for our involvement in rural development projects, the introduction or expansion of schemes designed to train British experts in the various aspects of rural development, and the appointment to the Ministry's development divisions overseas of social development advisers to take account of the social problems involved in projects.

We have in the Ministry and in our development divisions overseas professional advisers with a wide knowledge and experience of the various aspects of rural development, including agriculture, fisheries, education, social development and engineering. In addition, the scientific units of the Ministry, in particular the Land Resources Division, the Tropical Products Institute and the Centre for Overseas Pest Research, carry out research and provide technical advice which is respected throughout the developing world and in industrialised countries too. We have also set up a Rural Development Department within our Ministry to focus on the problems associated with our new policy. I can assure my hon. Friends that we do use CDC and are prepared to use public corporations to help us with consultancy where appropriate.

However, we are aware that the new policy is likely to put a strain on our available manpower. We shall therefore be making more use of other sources of expertise, including consultants, experts from British universities and technical co-operation experts in between overseas assignments to help us identify and prepare projects. We are also strengthening our links with other donors, for example, the FAO and the World Bank, in order to share our expertise with them and to benefit from theirs.

My conclusion on this score, therefore is that in the first year of our new aid strategy—I hope that my right hon. Friend the Member for Lanark will be pleased with this news—we have made good progress in overcoming the difficulties which we face and in finding and beginning to implement projects which we believe stand a good chance of making a small but important impact on the alleviation of some of the appalling poverty which exists in the world today. In saying that, however, I take up one point made by my hon. Friend the Member for Newham, South. I freely recognise—I say this from my own experience both before and since coming to the Ministry and from my experience on field visits—that we cannot overestimate the importance of field liaison in the effective implementation of the rural development-oriented programme.

My hon. Friend asked also about local costs. Most of our bilateral aid is tied to the procurement of British goods and services, but rural development projects often involve a high proportion of local costs. In exceptional circumstances we are prepared to provide aid to cover these costs in certain cases where we consider that the need requires it—for example, on projects in very poor countries which the Government themselves cannot mobilise enough local resources to finance. We have to keep local cost aid within reasonable bounds, of course, but this has not, in my experience so far, been a hindrance to our ability to assist poverty focused projects in most countries, although there are some significant exceptions.

Mr. Spearing

On the question of local costs, would not my hon. Friend agree that some of the most effective schemes in rural development are schemes allowing people to develop their own resources on their own, and that these most useful schemes probably require a higher proportion of local costs? Would he not agree that, although there is a dilemma here, that is probably one of the best ways forward?

Mr. Judd

I acknowledge the force of what my hon. Friend says. I put it again to him that where there are exceptional circumstances we are prepared to look at them. We have not always been able to overcome the difliculties, and to suggest otherwise would be to mislead the House, but we accept that the point which my hon. Friend makes is profoundly relevant to the whole effective operation of rural development work.

My hon. Friend referred also to exploitation. Again, I think that most of us in the House would agree that, if we are genuine about the concept of partnership in development, the most important factor in any development situation—nothing can compensate for its absence—is the style, the commitment and the priorities of the Government on the spot. I am convinced, therefore, that in the context of our new programme we would naturally emphasise the relationship where this was clearly established as something in harmony with everything we were trying to achieve.

I have noted what my hon. Friends have said about students, and I acknowledge the force of their feeling on this issue. As they will appreciate, this is mainly a matter for my right hon. Friend the Secretary of State for Education and Science, and I shall see that their observations are conveyed to her. I assure my hon. Friends, however, that in our Department we well understand the important contribution which the education of overseas students in this country can make to the whole development process, so long as we take steps to ensure that the sort of people we are financing and the sort of courses on which we are financing them are relevant to the priorities which we have established as of overriding importance in our programme.

My hon. Friend the Member for Newham, South referred to a lot of matters—he always does, and rightly so—and I take next his reference to appropriate technology. We are conscious of the need to ensure the appropriateness of the tech- nology that we sponsor in our projects. We try to ensure that the machinery we provide under aid does not displace labour and can be easily operated by local people. Much of the initiative for the development of appropriate technology must come from the developing countries themselves, since they will be better aware than we are of the special needs of different regions and sectors. But we nevertheless play an important rôle in sponsoring the development of appropriate technology through our scientific units, particularly the Tropical Products Institute and the National Institute for Agricultural Engineering, and also through our support of the Intermediate Technology Development Group itself.

Now I come to the other important point, raised by my hon. Friend the Member for Bolsover (Mr. Skinner). It would have been impossible for me not to recognise since taking up my present office the great significance that my hon. Friend attaches to the issues he has raised. I also recognise his strength of feeling. I assure him without qualification that the terms of reference of the Fay Committee of Inquiry are wide and powerful. It has been given every encouragement to leave no stone unturned. Like my hon. Friend, I look forward keenly to the committee's findings.

I am sure that my hon. Friend understands that we must await publication of the committee's report, but I must say two things to him tonight. First, an attempt by the administrator to execute a deed of arrangement between Mr. Stern and his creditors failed. My hon. Friend may have been misinformed, because the Crown Agents voted against the scheme.

I am sure that my hon. Friend will endorse my other point, which is that in his anxiety about the past—and it is a sad and sorry story on which we are waiting for the Fay Committee to report—he will not wish to overlook the debt of gratitude owed to the present Crown Agents. I believe that it is partly due to their professionalism and commitment that so much has been revealed, because they have been determined to put the Crown Agents on an absolutely honourable and proper course. They are sparing no effort to do it. I should like to place on record my appreciation of that.

Mr. Skinner

If the Crown Agents representative at the meeting of creditors voted against the so-called scheme of arrangement, why have there been no proceedings in regard to the bankruptcy of Mr. William Stern subsequent to that meeting? Mr. Stern has gone on involving himself in buying and selling various properties. As my hon. Friend probably knows from various letters sent to the Department of Trade and my right hon. and learned Friend the Attorney-General, I have received countless letters from people with investments in some of the concerns with which Mr. William Stern was involved. They have written about the money which they invested and have wondered whether they will receive anything at all.

I also receive letters from the Department of Trade, usually from the Under-Secretary, my hon. Friend the Member for Hackney, Central (Mr. Davis), who makes it plain that at this stage no money is coming back. Notwithstanding the long period—15 months—if there was no deed of arrangement, as reported in the Sunday Telegraph of 19th September 1975, why is Mr. Stern carrying on in the way that he is?

Mr. Judd

I am sure that my hon. Friend will agree that at this stage, when we are awaiting the Fay Committee's report, it would not be helpful to be drawn too deeply into an exchange on this matter. I can assure my hon. Friend that the Crown Agents are well aware of the significance of the issue. The way in which they voted demonstrates that.

No hon. Member should be in any doubt that the Crown Agents have been instructed to cease their property speculations and to withdraw, as rapidly as is conducive with proper dignity and proper care of public money, from the secondary banking activities in which they have been involved. That is a course upon which they have set out with deep commitment.

Mrs. Hart

My hon. Friend will confirm that that instruction was given a year and a half or two and a half years ago.

Mr. Judd

My right hon. Friend rightly reminds the House that the instruction was given some time ago. She will be glad to know that it has been faithfully executed.

My hon. Friend the Member for Heeley, with his unrivalled—

Mr. Skinner

Is my hon. Friend leaving the Crown Agents?

Mr. Judd

I think that we shall leave them at this juncture.

Mr. Skinner

I assumed that my hon. Friend was going to answer my other question. Will he now instruct the Crown Agents to take the appropriate measures to ensure that William Stern is made bankrupt in accordance with the law of the land as, indeed, some creditors are suggesting they might do?

Mr. Judd

That is not necessary on the part of the Crown Agents. That action has already been taken and the Crown Agents' position, as I am sure will be recognised, has been established in the way I have communicated to the House.

I return to the interesting speech of my hon. Friend the Member for Heeley. My hon. Friend has a long-standing commitment to international affairs and international development no less than other aspects of international politics. I shall say a word about the Conference on International Economic Co-operation in Paris. I remind the House that at that conference the EEC Community participates as an entity with the presidency and the Commission as its spokesman. As a consequence, whatever the practice of individual member States may be in aid-giving, any statement made on the Community's behalf and any decisions eventually adopted by the CIEC must also be acceptable to all member States. Decisions must also be acceptable to the other seven Western countries participating.

In some matters related to aid we can go further to meet the developing countries than some of our partners, although in others our present economic position does not make that possible. We shall be holding the presidency of the Community for the first six months of next year. I assure my hon. Friends that we shall do our best to give a constructive lead in the dialogue, subject to our own national constraint and the limits to what can be done by our partners.

My hon. Friend the Member for Heeley asked about the UNCTAD programme as it had been mentioned in the UNCTAD resolution. As we stated and voted at UNCTAD—I was there to cast one vote and I know what I am about to say from my own experience—we are committed to serious study of that programme. We are already participating in international talks about specific commodities listed in the programme. I shall always take every opportunity of telling the pessimists about the outcome of UNCTAD that it was exciting, because for the first time the international community produced a specific list of 18 commodities. We are considering that list seriously.

My hon. Friend also referred to the Common Fund. That is a matter for my right hon. Friend the Secretary of State, but I can say that we shall take part in the exploratory talks in good faith. We have deep reservations about the fund's effectiveness as a mechanism for supporting any international commodity programme. We have repeatedly expressed that view. I believe my hon. Friend will accept that it is because of the seriousness with which we treat the international community that we believe that it would be wrong to pretend that we do not have profound reservations when we have them, but it is a measure of our seriousness that we are determined to put our reservations before the international community, probing them in depth. We shall ascertain whether our reservations can be met and how far we can commit ourselves.

My hon. Friend also mentioned debt, as did my right hon. Friend the Member for Lanark. The indebtedness of the developing countries was the second main subject at the UNCTAD Conference and continues to figure prominently in the CIEC. The proposals of the developing countries' Manila Declaration took the form of inviting creditor countries to agree to across-the-board measures of relief from debt service obligations for whole groups of developing countries. Britain and most other industrialised countries regard these proposals as misconceived for three main reasons.

First, they believe that debt service problems represent only one element, albeit in some cases a major element, in- balance of payments problems and need to be considered in that wider context. Secondly, they believe that the incidence and magnitude of such balance of payments problems vary widely and that where they exist they may be in varying degrees temporary or more deep-seated, and accordingly need different responses. Thirdly, they believe that there can be few developing countries that will not need to continue to borrow in future in order to sustain the development process.

But willingness by potential creditors to continue to lend must depend on confidence that debt obligations will be honoured. But confidence is a volatile commodity, and measures which involved generalised failure to meet debt service obligations, whether on ODA or commercial debt, would seriously risk undermining the confidence on which international credit—and, indeed, the whole system of international trade and payments—rests.

This is by no means saying that Britain, or other industrialised countries, are in any way unsympathetic to the difficulties of those developing countries which face serious balance of payments deficits and heavy debt service payments. Substantial measures have been agreed during the past year, in the IMF, to make finance more readily available to meet short and medium-term balance of payments difficulties. For those countries with a longterm structural problem, help in the shape of ODA on appropriately soft terms is particularly important. Our recent decision to provide bilateral aid to the poorest developing countries in the form of grants is part of our response, and we hope that other donor countries will progressively adopt similar policies. Nevertheless, we recognise that individual cases have arisen and will arise involving acute or structural balance of payments difficulties which will call for exceptional remedial measures. Well-tried arrangements exist for considering these cases in the shape of aid consortia, special aid groups and ad hoc meetings of debtors and creditors.

Against this background, creditor countries expressed their willingness at Nairobi at UNCTAD to give quick and constructive consideration to individual requests, with a view to taking prompt action to relieve developing countries suffering from debt service difficulties, in particular the least developed countries and the most seriously affected. The UNCTAD IV resolution also called for an examination of the features which might usefully be discerned from past operations and from the present situation, to provide guidance in future operations as a basis for dealing flexibly with individual cases. The British delegation worked hard throughout the Nairobi conference to achieve a marrying of the case-by-case approach with some general consideration of debt problems. It recognised the point made by my right hon. Friend the Member for Lanark. The consensus which was ultimately reached at the conference was based on a proposal which we ourselves had put forward.

We have continued to take the lead in the CIEC in identifying features of debt situations in accordance with the Nairobi resolution. We believe that this work should go a long way towards meeting the concerns of the developing countries for speedy and sympathetic consideration of their problems, while preserving the case-by-case approach. The developing countries have expressed appreciation of our evident good will and have come a little way to meet us. But they still persist so far in arguing that in addition to this work, there is a need for an immediate once-for-all generalised debt relief operation.

This has been a thought-provoking and powerful debate. Hon. Members have expressed their concern at what has happened to the aid programme. In our work there are three points of which we are constantly convinced. The first is that an aid programme by Britain is right. One can qualify that statement by all kinds of rationale and different arguments, but the basic principle, as I am sure every hon. Member will agree, is that an aid programme is the right course. However we approach the technical problems, the principles at the basis of social justice and social morality are indivisible.

How often we hear the phrase "Charity begins at home", but the truth is that if we contract out cynically from our international responsibilities, we shall soon be contracting out of our responsibilities nearer home. The rot then cannot be stopped in either direction. The programme is right, and that is why these things matter.

It is obviously in our long-term interests as a trading nation to improve the trading abilities of the world community. I always remember Paul Hoffman, the distinguished American who headed the United Nations Development Programme, almost exploding with anger in a New York hospital bed once when I was talking to him and saying that aid was not charity. He said "When I was in the automobile industry I always said that it made nonsense to set aside less than 3 per cent. of your budget for market development. I am not asking for as much as that." One of the problems of Britain is that there are people around who do not have the vision to see that, just because of the difficulties now confronting us, the purchasing power of the developing world becomes more important than ever.

The third reason for continuing this programme is that of international stability. Those of us who have families must recognise that in today's world, where one quarter of the population monopolises access to three-quarters of the world's wealth, where there has been a revolution in communications so that the deprived three-quarters are well aware of the disadvantaged state in which they live, there is no prospect of future stability if the problems of social justice are not tackled in a way which affords them the highest priority. For everyone who cares about future world stability this is an investment in the future, because in tackling at the root the problems that cause instability and conflict we shall be making a profound contribution to the stability of future generations.

Above all, we have to remember that, while we have deep and acute economic problems, as a nation our problems are not exclusively economic. They are also psychological. They are problems of will and determination. One of the ways in which we shall find our self-confidence as a nation and in doing so begin to win the confidence of the world community is by facing up to our international responsibilities and answering them fully as we should. Nowhere is this more obvious than in the sphere of aid and development. On that score I again express my appreciation to my hon. Friend the Member for Newham, South for having given us the opportunity tonight to remind ourselves of what we should be doing.