HC Deb 29 November 1976 vol 921 cc469-72
33. Mr. Hooley

asked the Minister for Overseas Development to what extent the value of the United Kingdom overseas aid programme has been reduced: (a) in percentage terms and (b) in cash value, by the decline in the exchange rate of the £ sterling since January 1976.

The Minister for Overseas Development (Mr. Reg Prentice)

The greater part of the overseas aid programme is disbursed in payment for British goods and services which are not affected directly by fluctuations in exchange rates. About 24 per cent. of our total aid is disbursed through multilateral agencies, and it is estimated that about £90 million of this would be subject to maintenance of value payments in 1976–77, but it is not possible to deduce from this that the value of the aid programme is reduced, because our system has a built-in adjustment for price changes year by year.

Mr. Hooley

Is my right hon. Friend aware that that information will be very welcome but that in its latest annual report the IMF has put on record the enormous importance of continuing the massive flow of aid from the rich to the poor countries? Will the Government bear that in mind during the current negotiations?

Mr. Prentice

Yes, Sir. I think that the Government gave evidence of the priority which they attach to the aid programme in July when, although cuts in public expenditure totalling £1 billion were made, we did not cut the overseas aid programme. These points are therefore very much in the Government's mind.

Mr. Forman

Does not the Minister's original reply underline the importance of multilateral aid, whereby British effort can be combined with aid from countries with stronger currencies? Would he confirm that the present balance between bilateral and multilateral aid of our own effort is still unsatisfactory at 2 to 1 in favour of bilateral aid?

Mr. Prentice

The proportion of our programme going through multilateral channels has been steadily increasing over recent years. The Government's view is that it should continue to increase, but this must obviously depend on the ability of the multilateral agencies to handle the extra funds. It would be wrong to make too quick a transfer if it were at the cost of effective use of the aid funds.

35. Mr. Hannam

asked the Minister for Overseas Development what estimate he has made of the effect on the need for aid in those countries assisted by Her Majesty's Government's aid programme of the proposed increase in world oil prices.

Mr. Judd

This is of course at this stage a hypothetical question, but any increase would undoubtedly have a grave effect on the balance of payments and development prospects of oil-importing developing countries.

Mr. Hannam

Will the hon. Gentleman make the strongest representations to the Governments of OPEC that any sharp increase in oil prices will hit the poorer countries the hardest, both by increasing their energy costs and, of course, by deepening the world recession? Will he point out to OPEC leaders that they have suffered only a 2.7 per cent. increase in the cost of manufactured imports and that, therefore, a larger increase in oil prices would not be justified?

Mr. Judd

Bearing in mind how very badly some of the poorest developing countries were hit on the last occasion, we shall certainly make that point at every possible opportunity—looking at it also, of course, in the context of the adverse effect on the world economy as a whole.

Sir Bernard Braine

Is it not a fact that the quadrupling of oil prices after the Yom Kippur war not only hurt the developing countries, particularly the poorest, much more than the advanced industrial countries, but actually widened the gap between the developing countries and the advanced industrial countries? Is that not in conflict with the Government's own aid strategy, which is designed to help the poorest of the developing countries? If that be the case, are there not any specific initiatives that the Government are prepared to take in order to advance the ideas behind the Question of my hon. Friend the Member for Exeter (Mr. Hannam)?

Mr. Judd

The hon. Gentleman will know that we are deeply concerned about the impact of increases in the prices of basic commodities generally on developing countries, particularly the poorest developing countries. Our strategy on every international occasion—including, for example, UNCTAD earlier this year —is to bring home the reality of this situation and to seek an appropriate international response which will take into account the needs of the poorest.

36. Mr. Spearing

asked the Minister for Overseas Development if he will make a statement concerning EEC aid to former Commonwealth countries not eligible for associate status.

Mr. Prentice

I am glad to say that since my reply to my hon. Friend on 16th November agreement has been reached upon a resolution on the harmonisation and co-ordination of member States' development co-operation policies. The 20 million units of account entered in the 1976 budget will therefore now be committed to development projects in several non-associated countries, including some Commonwealth countries and Pakistan, which is a former Commonwealth country. Countries not eligible for associate status have also benefited widely from Community food aid, and I expect that this will continue.

Mr. Spearing

I thank my right hon. Friend for that expansion of the Written Answer that he gave on 16th November. However, does he not think that 20 million units of account out of the original 100 million units of account per year and the total of 730 million allocated is very small and a price to pay for the harmonisation of our own development aid policy? Has the agreement on harmonisation meant any change in the Government's policy or in that of the Commonwealth Development Corporation?

Mr. Prentice

The answer to the second part of that question is "No, Sir". There is to be a study of harmonisation, and I have constantly made it clear that in no way would Her Majesty's Government accept an idea of harmonisation which meant scaling down the standards or quality of our programme.

As to the smallness of the 20 million units of account, I agree completely. It is a useful beginning, but it is nothing like the full programme of aid to non-associated countries which Britain has demanded for some years now and which was agreed in principle by the Council of Ministers in July 1974.