OVERSEAS AID (Hansard, 20 March 1978)

HC Deb 20 March 1978 vol 946 cc1174-86 1174

§ 1.10 a.m.

§ Mr. Malcolm Rifkind (Edinburgh, Pentlands)
This debate has come on a little earlier than expected and the Minister who is to reply is not yet in the Chamber.
Priorities in overseas aid are obviously an important topic and overseas aid plays a prominent part in the Supplementary Estimates before us. The Government's policy towards priorities in overseas aid can be found in the important 1975 White Paper, which covered the whole sphere of overseas aid, and the criteria in the White Paper found wide support on both sides of the House whenever overseas aid was debated.
The White Paper pointed out clearly that the main priority for the Government and the Ministry of Overseas Development was that aid should be concentrated on the poorest in the world and that this should be the main criterion before the ODM when considering expenditure on 1175 aid-related matters. Since the publication of the White Paper, it has been clear that a substantial proportion of the aid provided to many countries throughout the world has been given on the basis of the White Paper criteria. In that time the provision of aid under the overseas development programme has expanded at a substantial rate.
I am pleased that the Minister has arrived. He does not need to worry too much about what I have said so far. I shall be concentrating on the fact that the main priority for the Government is to be found in the White Paper "More Help for the Poorest". I have said that a large proportion of overseas aid in the last three years has been provided on the basis of the White Paper criteria.
I have raised this subject because there is a likelihood that these criteria have been departed from in recent weeks and will be departed from in coming weeks. The Minister will recall that the 1975 White Paper indicated the view of the Government and of many others concerned with overseas development that it was important for the future that aid should be directed not simply to Governments or States, but to the poorest sections of the community in those countries.
Announcements made in recent weeks, particularly about aid for the purchase of ships by some developing countries, have created enormous problems. For example, we had an announcement on Saturday that our Government were to make provision of £52.8 million out of the budget allocated for aid to India in order to purchase six cargo ships required by the Indian Shipbuilding Corporation. Whatever may be the desirability of providing cargo ships for India, I believe that a powerful case can be made that this particular provision in no way comes under the criteria in the White Paper relating to help for the poorest. In no way can it be argued that the provision of cargo ships will, for example, help the vast majority of rural poor on the Indian sub-continent. No jobs or food will be provided and no homes will be available to them simply because six cargo ships will be available to the Indian merchant marine. Nor will the urban poor of India benefit.
1176 Although it can be suggested that some minor employment will be provided on the ships concerned, no one can suggest that that justifies the expenditure of £52 million. Nor can any of the other normal criteria laid down in the Government's White Paper be met by the provision of aid from the aid budget for the construction of cargo ships. The health of the population, population control and urban development will in no way be promoted by this form of misuse—as I would describe it—of the aid budget.
I know that it has been pointed out by Ministry that the provision of aid from the ODM for the purchase of ships for India has occurred before. No doubt the Minister will point out that there is a precedent for this having taken place. But I would point out that the only precedent which does exist was contained in certain provisions during the early 1970s before the publication of the Government's own White Paper.
The publication of the Government's White Paper "More Help for the Poorest" clearly changed the criteria which the Government would apply. Since the publication of that White Paper, no misuse of aid funds had been put forward for this sort of purpose. Therefore, it must also be pointed out that, while no one would expect the Government to apply rigid criteria in determining the availability of funds for development purposes and while one might forgive the ODM for allowing a small part of the aid budget to be used for forms of development that do not meet the Government's own criteria, when one considers the Indian proposals one can see that, rather than a marginal departure from the normal rules that apply, there has been a very substantial departure. A sum of £52.8 million has to be compared with the total aid allocation to India of £136 million for the current year —in other words, almost half the total aid that is to be provided to India will take the form of a type of aid which does not come under the Government's own criteria for development purposes.
Of course, as the Minister has pointed out on several occasions, I am aware that the sums for this particular development are to be divided between two consecutive years. A sum of £26 million is to be provided out of this year's budget and £26 million out of the following year's 1177 allocation. But even on that basis we are talking in terms of 20 per cent of the aid budget to Britain's largest receptive country being allocated for development purposes contrary to the criteria laid down in the Government's own White Paper.
Therefore, with regard to the sums of money that are being made available, I would argue that there is clearly an abuse of the guidelines laid down in the White Paper, of the guidelines that have been pursued by the Government and, indeed, the guidelines that have been accepted by both sides of the House and by all those who are concerned and interested in development policy.
We must therefore ask ourselves what are the reasons put forward by the Government in support of this major departure from their own aid policy. Why have they decided, in a radical and dramatic way, to depart from their own guidelines and their own policy? One of the latest arguments that has been used on several occasions is that the aid allocated to India in the current year has been grossly underspent, that not only this year but last year the Government and the ODM were simply unable to spend all the money available.
That may be true and it may be very regrettable that that is the case. I suggest that that is no argument for directing the funds available to a purpose for which they were not intended. If it is proving difficult to spend the sum allocated, that suggests that to much money has been allocated to Indian development, or that the criteria in the White Paper might need to be revised. But in the absence of these two factors the Government's action is clearly indefensible.
The real reason, which has been admitted by the Minister herself on various occasions, is that the provision of ships for India, while it might make little contribution to solving the severe problems of poverty in India, will make a significant contribution to solving the problems of employment in Sunderland and other shipbuilding areas in this country.
There is no doubt that the main thrust behind the allocation of these large sums of money for the purchase of ships that even the Indians are not all that keen on having was the need to promote and improve employment prospects in British shipyards. That may be a worthy cause, 1178 but it is a gross and indefensible abuse of the aid voted by this House for development purposes overseas. The promotion of employment prospects in British shipyards is the responsibility of the Department of Industry or of those others concerned with regional and other forms of industrial development, and to use overseas aid funds to boost the Government's industrial stock in certain parts of the country is totally indefensible.
The problem would be severe enough if it applied only to India. It could be argued that it was an exception to the rule and that the Government were not departing from the criteria laid down. But a series of Questions from my hon. Friend the Member for Surrey, North-West (Mr. Grylls) has assiduously discovered that the problem is not restricted to aid for India. The Government have admitted that they are prepared to make a contribution out of the overseas aid budget to promote the purchase of ships built in Britain for use in Vietnam. The Government, we are told, are also undertaking negotiations with the Government of Pakistan for a similar purpose.
We find, therefore, that overseas aid for three countries suffering from severe poverty—in the case of India a very large proportion of the total aid being made available—will be used not to deal with that poverty but to boost the merchant marine fleets of these States. That is an abuse of the overseas aid budget. It is not only an indefensible policy, but it endangers the whole bipartisan approach to overseas development.
I hope that the Minister will not only explain the Government's thinking but will give clear assurance that in pursuing their policies his Ministry will use as the sole criteria those laid down in their own White Paper in 1975. I hope that he will give an assurance that, whatever interests other Departments might have in meeting the needs of the British shipbuilding yards, that is not the responsibility of the Ministry or of his right hon. Friend, and that it would be improper if sums voted by Parliament for overseas aid on the basis of the White Paper—that they should be concentrated on the poorest people in the poorest countries—were used for contrary purposes, irrespective of the views of Parliament or the needs of the people concerned.
1179 This is a serious matter. I hope that the Minister will not respond in a superficial manner but will give an assurance that this departure from the Government's own criteria will not be pursued in the foreseeable future.

§ Mr. Michael Latham (Melton)
On a point of order, Mr Deputy Speaker. I think that this matter comes within your province. There have been failures of the annunciator in recent debates, in that names of hon. Members speaking, particularly of Ministers replying, have not appeared. That causes grave inconvenience to hon. Members. I hope that this will be considered as a matter of priority.
May I have your assurance, Mr. Deputy Speaker, that if an hon. Member rises later in the debate, after the other debates have finished, it will be possible for you to call him, on the Question of Second Reading?

Mr. Deputy Speaker
We had the debate which was third in the Ballot and which was initiated by the right hon. Member for Crosby (Mr. Page), to which the Minister concerned replied in a few words. I know from experience that the annunciator probably takes a minute or two to switch over. I presume that hon. Members have been watching the annunciator, but unfortunately the governing factor is not the annunciator but presence in the Chamber. Therefore, whether the annunciator fails is not the concern of the Chair. We can see whether we can speed up the switchover, but it takes a little time.
The order of debate will be as follows. We are now on debate No. 9. Then we have No. 11, No. 12 and No. 15, on increased provision for the National Health Service. When we have disposed of that debate it will be in order for hon. Members to raise matters that they wish to raise, as this is Second Reading of the Consolidated Fund Bill.

§ Mr. Latham
I am much obliged, Mr. Deputy Speaker.

§ Lord James Douglas-Hamilton (Edinburgh, West)
On a point of order, Mr. Deputy Speaker. I was in the same position as my hon. Friend the Member for Melton (Mr. Latham). That was the reason for our absence from the Cham- 1180 ber. I am most grateful for your guidance that we can fallow on at the end.

Mr. Deputy Speaker
One little difficulty is that the Ministers concerned went home when they found that the hon. Members were not present. But we shall do our best to get them back again.

§ 1.33 a.m.

§ The Parliamentary Secretary to the Ministry of Overseas Development (Mr. John Tomlinson)
I apologise for being a couple of minutes late arriving in the Chamber because of the unusual speed with which we went from item No. 3 to this debate. I understand that just before I entered the Chamber the hon. Member for Edinburgh, Pentlands (Mr. Rifkind) was talking about his broad support for the prorities of overseas aid expressed in the White Paper. I welcome that.
It is clear that the developing countries, particularly the poorest among them, cannot themselves provide the resources needed to overcome their dire economic and social problems. Many people in Britain, as in other Western countries, feel a moral obligation to help, and successive Governments have by their decisions in establishing the maintaining the aid programme reflected this worthy desire.
In 1977 the Government, with Governments of other industrial countries, committed themselves to increase aid flows. Overseas aid is now one of the fastest growing public expenditure items in our programme, which is positive evidence of the priority the Government attach to it.
We must also recognise that it is in our own long-term interest that the present developing countries should have increased trading capacity and that an aid programme commensurate with our economic strength is an important element in ensuring that British interests are given proper weight in the various international forums. The composition of our aid programme depends on many factors including what the developing countries themselves want and what other donors are doing, as well as our own interests.
It was with these considerations in mind that the Government gave a new direction to our aid strategy as set out in the 1975 White Paper "More Help for the 1181 Poorest". Since then there have been minor changes of emphasis, but the basic principles which determine our policy are those laid down in the White Paper. They are, first, that we should give increasing emphasis in our bilateral aid to the poorest countries—not an exclusive priority, not an exclusive interest, but an increasing emphasis. The second principle is that within that we should emphasise aid for the poorest people, both in those poorest countries and in aiding other countries which do not necessarily qualify as the poorest countries, but the poorest people in countries which by other definitions might not be amongst the poorest. The third principle is that we should promote situations in which British aid can stimulate matching contributions of concessional funds from other Governments. Within this policy we pay due regard to comercial benefits and to political implications for the United Kingdom.
I do not want to labour the details of our present aid policy and the amount of our aid, because hon. Members, particularly those who are members of the Select Commitee, will appreciate that, although the primary purpose of the aid programme is developmental, the Ministry of Overseas Development works closely with other Departments to maximise the benefits accruing to the United Kingdom as a result of aid in so far as it is consistent with the aid strategy.
Our bilateral financial aid is, therefore, generally tied to the procurement of goods and services of United Kingdom origin. Although exceptions can be made, notably for local procurement hi some recipient countries and for local costs of aid projects, about two-thirds of this type of aid was effectively tied in 1976.
Furthermore, as I am sure the hon. Gentleman will be aware, a small proportion of the bilateral aid programme—about 5 per cent.—is now available to give higher priority to the commercial importance of a limited number of developmentally sound projects hi developing countries for which there is no aid allocation or where the allocation is already fully committed.
I turn to the question of shipping, to which the hon. Gentleman primarily directed his remarks. I hope that on reflection, particularly when he hears what I have to say and judges it against the background of the criteria which I have 1182 explained and which are slightly different from the way he emphasised the matter, he will perhaps, on more sober reflection, decide not to challenge or threaten the bipartisan approach that there is in the House for our aid programme. To say that the decisions that have been taken in relation to shipping were—to quote the hon. Gentleman's words—either contrary to the developmental criteria set out in the White Paper or an abuse of the guidelines, or to say that they in no way help to solve the problems of poverty, probably over-stated the case, as I hope he will agree on reflection.
Contracts have now been signed by the Shipping Corporation of India and Sunderland Shipbuilders, which is part of British Shipbuilders, for the supply of six 16,000-ton ships to India. The ships will be delivered in 1979 and 1980 at a price of £8.5 million each and the price will be covered by aid grants from within our existing programme to India. The Shipbuilding Intervention Fund will be making a payment to Sunderland Shipbuilders the amount of which still has to be negotiated.
The present situation is that India is expanding her merchant fleet and, whether or not we help her to do so with aid funds, her merchant fleet will be expanding. But aid means that some of the shipping orders will come to Britain, and I do not believe that that is either an unworthy objective or one that conflicts with the development criteria I have already explained. Without aid, there is no doubt but that we could have got none of the orders. The benefit of those orders to this country is clear. The six ships will provide work for 1,500 men for two years. The ships are needed in India and would have been purchased in any case.
The Shipping Corporation of India does not benefit financially from the fact that the ships are a gift under aid to the Government of India. The Shipping Corporation has to pay the full price of £8.5 million to Sunderland. In effect, the corporation buys the £8.5 million of sterling from the Government of India by producing rupees to that amount. This means that the corporation is not given any unfair advantage because of Her Majesty's Government's aid involvement in competing with British shipping lines.
1183 The Government of India may make a subsidy available to the Shipping Corporation of India if at the end of the day, as a result of being obliged to operate higher priced United Kingdom ships, the Shipping Corporation of India's financial return on overall assets is unduly affected. I believe that this is a sensible arrangement which is of benefit to India, and that to say that there is no benefit for people in India is to ignore the fact that the creation of a stable asset which is wealth-creating inside India will give the Indian Government the self-capacity and the additional resources themselves to assist the poorer people within their own country. I am surprised that an Opposition from which we frequently hear about the virtues of wealth creation cannot see the merit of this inside India to give the Shipping Corporation of India and the Indian Government the opportunity of a viable wealth-creation opportunity.

§ Mr. Rifkind
The Minister had better re-read his own White Paper, where the Government made clear that aid development which was simply used to help build up the economy of the recipient State was not sufficient. It had to meet the criterion of making a direct contribution to dealing with the problems of poverty in the recipient country if it was to meet the guidelines of the Government's own White Paper.

§ Mr. Tomlinson
The hon. Gentleman is trying to read into the Government's White Paper—

§ Mr. Rifkind
I did not write it.

§ Mr. Tomlinson
—a precision that was not written into it. My interpretation of it, having read it several times, is that it emphasises a change of direction. It does not produce an absolute objective and say that all aid will be in this form. It produces a change of emphasis and of direction and a new area of concentration and new objectives that we should be looking at. I believe that we are well within the criteria laid down in the White Paper in the course that we are pursuing.
The hon. Gentleman also mentioned ships to Pakistan. The position is that at the moment we do not have any commitment to supply ships to Pakistan under aid. Official talks about the whole aid programme to Pakistan in future years 1184 did refer to ships. These talks were exploratory and were without commitment on either side in regard to ships. But it is clear that the Government of Pakistan are considering whether they wish to propose using some of the available aid funds for ships. For my part, if they made such a request I should want to consider with my colleagues how we would respond, taking all British interests into account.
We would respond, as we always do in aid matters, to a request from the Government of the potential recipient. There is no question of our initiating discussions. It is the Government of Pakistan who will consider their need and make a request, and, together with my colleagues, I shall decide how we should respond, taking into account the fullest range of British interests.
The same applies to ships to Vietnam. Obviously, no one on the Government side makes any apology. We are clearly concerned to help employment in British shipbuilding and to assist British exports. The initiative in this case concerning ships for Vietnam was taken by the Department of Industry and the Department of Trade and not by the Ministry of Overseas Development. In this case the aid will be quite small—about 20 per cent, of the total cost—and would come from the aid/trade contingency provision which I mentioned earlier.

§ Mr. Rifkind
Will the Minister indicate why the Ministry of Overseas Development is meeting the full £52 million cost of the ships deal with India, whereas in the case of Vietnam, as he has pointed out, this has been the initiative of the Department of Industry, with the Ministry of Overseas Development—quite correctly, in my view—meeting only a very small proportion of the total cost?

§ Mr. Tomlinson
In the case of ships to India we were in a situation where, as the hon. Gentleman himself mentioned, from our existing aid allocation to India there were substantial resources still available for a variety of other reasons which we could go into, but I do not think that this is the most appropriate occasion on which to do so. It was appropriate, in all the circumstances, that we should fund the full cost of ships to India. In this circumstance, which is rare, it is being financed separately from the 1185 aid/trade contingency fund, and the amount of the aid contribution would be relatively small. In the case of ships to India there was no doubt that it was the Ministry of Overseas Development which was the main Department involved. We were not a Department responding to a Department of Industry or a Department of Trade initiative.
On the question of ships for Vietnam, there can be no doubt that the proposals are fully developmentally justifiable. Vietnam is clearly a poor country with great developmental needs, and it is those needs which a programme such as ours exists to meet. This is a fact recognised not only by the Government but by other Western countries. In making our decisions we shall take into account all the usual range of factors, including any factors relating to human rights, as we do in all the other circumstances in which we are involved with aid.
The hon. Member suggested that perhaps the fact that we were involved in these shipping deals with developing countries might be a reflection—I am sure that he said it knowing that the answer was in the negative—that our aid programme was operating on too generous a level and that the reason why we had perhaps underspent some specific aid programmes was a reflection that we had too high a proportion of our aid allocated to a particular country. I do not believe that, and it is not the Government's view that our aid levels are too high. The Government recognise that aid will be one of the fastest growing areas of public spending. That is a decision which has been warmly welcomed in all parts of the House. Details of the future levels of overseas aid are shown in the Government's expenditure plans which were debated in the House fairly recently.
The Government rightly expect continued progress towards the United Nations aid target of 0.7 per cent, of our gross national product. That is a target that we have accepted in principle, but without commitment about the date when it should be reached. But I am sure that it is the wish of most hon. Members that we should accept that target as one in respect of which we have to have a clear policy towards attainment.
The allocation of that aid programme is reviewed annually and, on present plans, we expect the percentage of our 1186 bilateral aid programme going to the poorest countries to increase from about 60 per cent., which it is at present, to more than 70 per cent, by 1981–82. That is a reflection of the impact of the principles laid down in the White Paper "More Help for the Poorest" coming into effect.
In 1978–79 it is planned that nearly half the overseas aid allocation will go to bilateral capital aid, nearly one-third to the multilateral institutions, and rather less than one-fifth in technical co-operation. That is a true reflection of the impact of the principles of the White Paper, principles which are warmly welcomed in all parts of the House. I look forward to that trend continuing. But, meantime, I do not think we should use the words in "More Help for the Poorest" as though they were some kind of absolute criterion and assume from that that we shall not look any further than rural development schemes or schemes in the poorest areas of the poorest countries as being the only ones which are aid worthy.
That is obviously the increasing focal point of our aid, but, within the principles laid down in the White Paper, there will be substantial other areas where our assistance is needed and asked for by developing countries and where the Government will be ready and willing to respond.