International Development (Brandt Report)

HC Deb 12 December 1980 vol 995 cc1253-317 9.35 am

Mr. Bruce Douglas-Mann (Mitcham and Morden)

I beg to move, That this House regrets that tier Majesty's Government has not responded more positively to the Report of the Brandt Commission 'North-South: A Programme for Survival.' I apologise for addressing the House while suffering from laryngitis, but most hon. Members who were present for the proceedings last night and early this morning have even greater problems. I make no apology, however, for bringing before the House for the third time in nine months the issue of the Brandt report. There can be no issue more important. The fact that I and the hon. Member for Newbury (Mr. McNair-Wilson)—we came respectively first and second in the ballot for Private Members' motions—have independently chosen this subject for debate indicates the importance that is attached to it. We have sought to raise the matter, even though the hon. Member for Cambridge (Mr. Rhodes James) introduced a debate on the subject earlier this year and the Government did so on 16 June.

Neither the problems nor the more obvious steps towards a solution indicated by the report are new. Certainly for the past decade anyone with an ear for the warning voices on the problems of world population, food production or resources has had no excuse for complacency. In 1972 the then Conservative Government received the report "Sinews for Survival", which had been prepared for the Stockholm environment conference on the instructions of the then Secretary of State for the Environment, the right hon. Member for Worcester (Mr. Walker). It warned in the first paragraph that the rate at which the world's resources are being consumed is gaining such momentum that mankind's very existence as we know it will within the foreseeable future be at risk. After reviewing all the threats to our environment and our resources, of which we have all become so much more aware in recent years, it concluded: We are by no means complacent about the management of natural resources in Britain or in the world … Above all, we doubt whether our many misgivings can be overcome unless our human population is stabilised. There is not much time to spare. That was eight years ago, and not a great deal has been done about the report.

In 1976 the Labour Government received a report from the Cabinet Office called "Future World Trends". That paper, in its way a vital forerunner of the Brandt report, has never been debated in the House, and I suspect that it has never been debated by the Cabinet for which it was prepared. It warned that the population of the world was rising very rapidly, particularly in the developing world. The body that prepared the paper had the gravest doubts about sustaining an adequte increase in food production to meet that expanding population. It went on to say that, although it was theoretically possible to meet the food needs of the estimated population of the would for the next 30 to 40 years", this was unlikely to be achieved because the money and the resources were more likely to be consumed in the rich world than in the poor.

From that report and from source after source since then, particularly the World Bank, we have had the warning, backed by overwhelming historical experience and the vast weight of expert opinion, that voluntary limitation of population growth occurs only where living standards are rising, where infant mortality is falling and where support from one's childen is not the only hope for one's old age.

In a world where resources are finite, however much more oil or minerals may be discovered, unlimited population expansion is clearly impossible. We may be able to manage the increase from over 4,000 million now to over 6,000 million in 20 years' time, but what about the following 20 years, and the 20 years after that? Certainly 40 or 60 years is not a long time for those who have children.

Of course, a limit to the expansion of the world population will occur. It can come in one of four ways: famine, disease, war or rising prosperity in the developing world. It is the Brandt report that has shown us the way to avoid the first three disasters and to achieve that limitation on population by the only method that can be tolerated by anyone looking towards the future.

We should not imagine that famine disease or war will spare us in the developed world, ourselves in this Chamber or certainly our children. Rising prosperity, on the other hand, as we have seen in Europe in the past 35 years, can banish both famine and disease. Similarly, with prosperity more fairly shared, the likelihood of war rapidly diminishes. As it diminishes, the thousands of millions of pounds and the mountains of scarce resources which the world spends on arms can be diverted to yet further improvements in living conditions and yet further encouragement to limit population growth.

I believe that there is still time to save the world from disaster, but this requires a massive transfer of resources in the form of increased aid and assistance to developing countries, a greater willingness to buy their goods and improvements in the world's finance and credit system to enable the poorer countries at the very least to buy the boot-straps by which to pull themselves up.

Many of us, of course, have been saying this for many years. We have presented it as a moral issue, as, of course, it is. But it is a moral issue on a scale so horrific that few of us can bear to contemplate it for long. We have also presented it as a threat to the future for ourselves and our children. But most of us are inclined to discount the future so heavily that immediately pressing problems and immediate demands take up our attention and our resources.

Now, however, we have Brandt. Now, we have an analysis of the world's economic problems which very pursuasively argues that a major transfer of resources from the rich world to the poor is needed, not only for all the reasons that I have outlined but to regenerate the ailing economies of the developed world. On page 273, the Brandt report estimates that the achievement of the goals it has set would require more than a doubling of the current $20 billion of annual official development assistance, together with substantial additional lending on market terms. In terms of aid, the Brandt target is modest—that the rich countries should advance immediately towards the existng aid target of 0.7 per cent. of GNP, and commit ourselves to increase that to 1 per cent. of GNP by the year 2000. What a trifling price to pay to avoid disaster! The Brandt commission contends that the consequence of implementing its proposals would also serve to maintain and promote world trade on which the welfare of all countries depends. The economies of the North need to regain economic vitality but their intimate dependence on world markets makes it impossible for them to do this by trying to put their own house in order while forgetting about the rest of the world. I fear that that is precisely what the British Government are seeking to do.

The Brandt report draws an analogy with the nineteenth century, or, indeed, the early part of this century, when a long and assiduous learning process was required before it was generally accepted that higher wages for workers increased purchasing power sufficiently to move the economy as a whole". I draw another analogy, with Marshall Aid after the Second World War, when aid and credit from the United States enabled the shattered economies of Europe and Japan to recover and, in turn, to sustain a steady growth in the economy of the United States—a growth that has only recently been running out of steam.

Unfortunately, and as I fear one would have expected, the response of the present Government has been precisely what the Brandt report warned against: trying to put their own house in order while forgetting about the rest of the world—and trying with remarkable ineffectiveness. They are cutting public services in order to reduce expenditure in an attempt to reduce their borrowing requirements. In practice, they are having to borrow more and more, because cutting public services cuts demand and increases unemployment. Unemployed people do not produce goods, do not pay taxes and are dependent upon public expenditure to survive.

The neo-Keynesian analysis upon which the Government have so disastrously turned their back, and the validity of which they are proving by their own economic failure, applies with equal if not greater force on an international as on a national scale. As The Times put it on 13 February this year, in an editorial welcoming the Brandt report: if the world is seen as a single nation it makes sense to raise the living standards of the poor to stimulate trade and economic growth. It also makes sense to meet grievances before they provoke war". Let us look at what has been done since the Brandt report was published in Feburary. Its major recommendations, on page 276, were for an emergency programme for the period 1980 to 1985, of which only four years now remain. Those recommendations were: 1 A large-scale transfer of resources to developing countries. 2 An international energy strategy. 3 A global food programme. 4 A start on some major reforms in the international economic system. And it called, on page 281, for a summit of world leaders, which could provide a new focus, and a new concentration on current world problems and their possible solutions". The report concludes with these words: Whatever their differences and however profound, there is a mutuality of interest between North and South. The fate of both is intimately connected. The search for solutions is not an act of benevolence but a condition of mutual survival. We believe it is dramatically urgent today to start taking concrete steps, without which the world situation can only deteriorate still further, even leading to conflict and catastrophe. It is in a spirit of concern, but also of hope that we have formulated the proposals contained in this Report. How have the Government responded to that appeal? Their first response came within a week of the publication of the report. It was an announcement in the House on 20 February by the Minister for Overseas Development that the Government believed that it is right at the present time to give greater weight in the allocation of our aid to political, industrial and commercial considerations alongside our basic developmental objectives."—[Official Report, 20 February 1980; Vol. 979, c. 464.] It is only fair to point out that that announcement had been prepared before the Brandt report was published. Nevertheless, it was made by the Government a week after Brandt and was not withdrawn, which I feel confident the Government should have done.

The next stage of the answer came in March, with the public expenditure White Paper. Table 1.6 of the White Paper showed a planned progressive reduction in overseas aid, measured at constant prices, from £794 million in 1979–80 to £680 million for the two years starting in 1982—a cut of nearly 14½ per cent., at a time when Brandt had shown how vitally an increase was needed. The Government will no doubt claim that all public expenditure was being cut—with a few exceptions, such as armaments. But the total cut in all public expenditure to 1982 is just over 4½ per cent. Overseas aid is cut by 14½ per cent.—more than three times as savage a cut as the average.

We then had some of the details of the Government's commitment to international action, on 2 May 1980, as reported in column 690 of Hansard, when, in a written answer to my right hon. Friend the Member for Lanark (Dame Judith Hart), the Minister for Overseas Development disclosed that our contribution to the United Nations aid agencies was being cut from £72.5 million in 1978–79 to £45.5 million it 1980–81—a cut, at constant prices, of over 37 per cent. The United Nations development programme, along with the world food programme, took some of the largest of these cuts.

We then came to the response—the publication by the Government of their White Paper in reply to Brandt, which was presented to the Overseas Development Sub-Committee of the Foreign Affairs Committee. I have already remarked on the Government's response to the Brandt commission's appeal for an increase in the transfer of resources and the world food programme.

It is fair to say that the Government have to some extent responded to the call for an international energy strategy. They are trying very hard to achieve some agreement with the other oil exporting countries, but it is naive of them to suppose that other oil exporting nations will agree to deal with one issue only out of the whole package that Brandt presented.

The Government's principal response to Brandt came only in July, in the memorandum to the Foreign Affairs Sub-Committee to which I have referred. One has to read the whole of the memorandum to appreciate its full, nasty flavour. However, I shall limit myself to quoting only one or two reviews. I shall take first the editorial in The Observer, which states: The Government seems hell bent on sabotaging the last, fragile chance of an accord between rich and poor nations on the new deal needed to revive the world economy. As 'The Observer' revealed last week, it was Mrs. Thatcher who stopped the Venice summit indicating to the Third World that it was ready for serious negotiations. Britain was also largely responsible for the collapse of the United Nations committee preparing the next round of North-South bargaining. Now the Foreign Office has published is detailed memorandum on the Brandt report. It is a miserable document: mean, callous, short-sighted, pompous, mealy-mouthed and altogether lacking in imagination. The Observer may be considered too unfriendly to the Government, so let me conclude by quoting from The Sunday Times of the same date. It states: Britain has voted for poverty, inflation and unemployment. That is the effect of the Foreign Office White Paper last week on the Brandt Commission. It is one of the shoddiest documents ever produced by a British Government, meeting the Brandt call for bold initiatives to avert a world slump with fatuous bromides about keeping faith in 'the merits of the present world economic system.' The article continues: It is unrealistic to approach the 63 billion dollar deficits of the developing world in 1980 by exhorting OPEC to pick up the tab, as Lord Carrington has done, without offering OPEC any incentives to do so.… Some urgently needed reforms would cost Britain nothing. An extra 80 billion dollars of development funds could be released to Third World borrowers simply by changing the World Bank's rules to permit it to borrow twice the value of its capital world markets. International Monetary Fund gold could be used to subsidise the cost of borrowing for poor countries while guaranteeing OPEC depositors a real economic rate of return. Britain says it can do little alone. But it is doing a lot—it is sabotaging all progress towards a sensible deal. The editorial also comments: 'its negative response to Brandt is a failure of intelligence, not of charity, I spoke earlier of four possible limitations to the explosion of world population—war, famine, disease and Brandt. Those members of the Government who are failing to respond to Brandt are not only creating unemployment: they are unwitting allies of famine, disease and war.

9.54 am

Mr. Geoffrey Rippon (Hexham)

I warmly welcome the initiative that the hon. Member for Mitcham and Morden (Mr. Douglas-Mann) has taken in bringing this vital issue before the House in the way that he has done. We are also grateful to my hon. Friend the Member for Newbury (Mr. McNair-Wilson)—I am sure he will be intervening in the debate—who has similarly, from the Government Benches, indicated the concern that many of us feel about the matter.

Whatever view may by taken of the recommendations of the report of the Brandt commission, it has served a great and historic purpose. It has focused attention on the fact that one-fifth of the world's population is suffering from acute poverty and malnutrition. Together with the hon. Member for Mitcham and Morden, I believe that that is in many ways the most urgent moral and practical issue facing the richer nations today. It is not that we are too poor to deal with the problem, but that we are really now almost too rich, too selfish and too complacent about what is happening in the world today. To secure a peaceful future for mankind, we have to offer millions of starving people a better choice than bread or freedom if we do not want the disaster and disorder that will otherwise occur on a massive scale.

The hon. Gentleman referred to the World Bank study that was published in August 1979, which gave the clearest possible picture of what is happening—for example, the way in which the cities and towns of the less developed countries will have to cope, as it suggests, with one billion more people in the year 2000 than they had in 1975. On that basis, it is calculated that, even if industrialised and developing countries can resume the growth rates of the 1960s, 600 million people will still live in what it described as absolute poverty by the end of the century. Even if it is considered that those population projections are too pessimistic—and, as the Government will know, I am certainly not one who has much confidence in forecasting the future—there is no doubt about the extent of the problem that we face immediately today without having to wait another 20 years to see what happens.

Over the past 15 years, the increase in the numbers of people in the developing world has been equal to the existing numbers in all the old industrialised countries. Of course, in many places standards of health, hygiene, sanitation and nutrition, although they have improved, remain basically pitifully low, but the improvements that have taken place have resulted in reduced death rates, although the birth rate has not fallen; it has remained as high as before, resulting in a population growth rate of over two per cent. a year.

Faced with the realities of the global situation today, the arguments that I have seen in quite reputable journals that the Brandt commission's remedies are too Keynesian for the monetarists to accept are both sterile and ill conceived. If the Brandt commission's remedies are dismissed, others must be found. If we do not want to fan the flames of revolutionary movements of every kind, we must be prepared to give financial and development assistance on a much more substantial scale than ever before, bearing in mind, of course, that the developing countries have suffered far more from the rise in oil prices than the rest of us.

We must also be prepared to transfer technology and to do it in such a way as to confer real benefit on the recipients. I do not think that any useful political purpose is served by providing developing countries with assistance in order to build up their economies and then denying them access to markets for their products.

Above all, I have always believed that the primary producers must be provided with what we used to call bankable assurances that the food that they grow and need to export can be given reasonable access at remunerative prices to the necessary markets. That should be a priority for foreign policy. It is really an aspect of defence policy, in so far as defence policy is, or ought to be, only the handmaiden of foreign policy.

Such a policy involves far more than just allocating some arbitrary percentage of gross national product to so-called aid, however defined, of the sort that smacks too much of charity. Of course, in present circumstances emergency relief has its place, but that merely scratches the surface of the problem. What is required—and this was implicit in what the hon. Member for Mitcham and Morden said—is a massive demonstration of vision and generosity, bearing in mind that all the evidence of history shows that by helping others we help ourselves, first, by creating new international stability, and, secondly, by opening up new opportunities for trade and employment. That, as the hon. Member said, was the significance of the Marshall plan. It has been said that the disparity in economic prosperity of, say, California and Alabama, or New York and Tennessee, was much greater than the disparities that exist in the Western world today.

Mr. Clinton Davis (Hackney, Central)

I agree with much of what the right hon. and learned Gentleman is saying, but does he agree that perhaps the word "generosity" was ill advised? Is it not really a question of mutual self-interest rather than generosity?

Mr. Rippon

I would agree with that. I am thinking in terms of generosity of spirit. I have specifically said that I do not believe in generosity in the sense of charity, bearing in mind that there is in all this what I would call a fair balance of mutual advantage. We shall find that by helping others, the developing countries, we open up for ourselves new markets and new opportunities and create for ourselves new trade. Of course, that is what the United States found. It found that, although there were some in the beginning who thought that Marshall aid would increase the difficulties in the United States it did a great deal to prevent a recession in the United States, because it opened up new European markets.

When I was the Member of Parliament for Norwich, South, I used to ask my constituents "What interest have we who make shoes in Norwich in people around the world going about with bare feet?" So there is an aspect of this which is very much self-interest. I agree with the hon. Gentleman. Perhaps I would concentrate on the necessity for having some vision about what we seek to do. It is undoubtedly true that if we stand idly by, we shall find to our own cost that pockets of prosperity cannot survive in a starving world.

We ought to try to give much more effective aid. There has been a tendency to give aid of a sort that suits us rather than the beneficiary, aid of a capital-intensive labour-displacing variety, which, by stimulating the wrong kind of growth, may increase rather than reduce poverty.

Dame Judith Hart (Lanark)

What the right hon. and learned Gentleman says on that point would have been very correct a few years ago. However, if he looks at the detail of the aid programme over the last few years, he will find that it has changed somewhat.

Mr. Rippon

I am not dwelling wholly, in this matter, on what we in this country do. We cannot solve this problem entirely on our own. It requires a greater international effort, both in the European Community and in the wider context of international agreement. I certainly took very much to heart what our Overseas Development Sub-Committee had to say.

If the right hon. Lady, who knows a great deal about these matters, says that we in this country are avoiding the sort of mistakes that were made in the past, for that I am glad. But the sort of aid that I had in mind was aid of the kind which was set up in the pattern of our aid to India. Punjabi large-scale farmers may want combine harvesters. Commercial interests of the West may want to supply them. The banks are anxious to finance them. But the effect of that sort of aid is to increase the unemployment.

Another example that was given was one under a technical service agreement for an automatic bagging plant being provided at a fertiliser factory, which did no good at all to the recipients. I felt the force of this many years ago when President Nyerere went to China to inspect some factories. Everyone said "Oh, he is a Communist." But he said "I did not go there because I am a Communist. I went there because China was building the sort of labour-intensive factories that I want and not labour-saving factories, which I do not want."

I do not like the word "aid" as much as the concept of development. We must get across that what we are doing is something which, being for the benefit of mankind as a whole, will also benefit us. We must get away from the idea that what we are giving is charity. It is terribly important that we do not simply say, perhaps as I did mistakenly, "We must be generous", other than in the sense of generous in spirit.

The Conservative Party has made its position clear. Before the general election we declared that we would seek, first, to help people rather than institutions and Governments; secondly, to concentrate aid on alleviating acute poverty; and, thirdly, to support labour-intensive and rural projects which, while helping people to produce their own food, can become export earning.

To achieve those objectives, we have put forward proposals, inter alia, to recognise that trade can be an even more important vehicle for development than aid. We have put forward proposals to review country by country the debts of the Third world on the basis of a nation's ability to repay, and to take steps to encourage investment in the Third world. I am sure that the. Government spokesman will confirm today that those remain the objectives of the Conservative Party. They are all very conveniently set out in a public document, published by Conservative Central Office in February-March 1979.

As we have indicated, this is not just a matter for our own national action. We have no need, I think, to be ashamed of our contribtion as compared with those of many other nations. It is true that all the old industrialised countries, and, I think, many of the newer ones now, such as South Korea or Taiwan, together with the oil-producing nations, must play a constructive part. What we know is that today the surplus countries remain unwilling to deploy their surpluses as part of the process of removing the chronic imbalances of deficit countries. They still remain unwilling to respond adequately to the need of the poorer countries, so as to secure their development and their political stability and, in so doing, to secure new markets and new employment.

There is still no sign from the international bankers and others of any new monetary or economic security comparable with that enjoyed after the Second World War under the Bretton Woods agreement. All right; that is cut of date. But we must recognise that it was miles in advance of the near anarchy that marks the system now prevailing. It is imperative that we in the United Kingdom should take a leading part in breaking the present deadlock in the North-South dialogue. I am confident, and I hope that this will be confirmed, that the Government will attach the highest priority to the summit conference which it is proposed should take place in Mexico next April. I hope that the Government will give that the priority that is demanded by the situation. I hope that we shall have an assurance today that the Government will be represented at an appropriately high level in order to mark the British determination to play a constructive role in solving this great human problem.

10.8 am

Dame Judith Hart (Lanark)

First, I extend my very best wishes to my hon. Friend the Member for Glasgow, Queen's Park (Mr. McElhone) in his position on the Opposition Front Bench.

Secondly, I take up immediately the latter part of the very distinguished contribution of the right hon. and learned Member for Hexham (Mr. Rippon). I do not want to talk about aid today, except to say that I share the views which will no doubt be expressed throughout this debate, and which are certainly being expressed outside the House, concerning the great sadness that there is that our aid programme is being cut so much more severely than any other public expenditure programme. It is being cut by 14 per cent. whereas, on average, other public expenditure programmes have suffered a lower percentage of cuts.

The Minister of State, Foreign and Commonwealth Office (Mr. Douglas Hurd)

The right hon. Lady's second sentence is right. However, when she said that the programme had been cut more than any other programme, she was incorrect.

Dame Judith Hart

Pro rata it has. I do not wish to go into detail. Under the Labour Government, the aid programme would have increased steadily by 6 per cent. a year. Instead, it has been cut by 14 per cent. a year. That switch from an increase to a decrease represents a more savage cut than can he found in any other programme. The 6 per cent. increase that took place under the Labour Government compared with in average of 2 per cent. for other public expenditure programmes. Therefore, I was not wrong.

Aid represents only one dimension. I have just returned from Vienna, where I spoke with Chancellor Kreisky. I am sincere when I say that the Government are stuck on the horns of a tricky dilemma. They have jostled for a place at the next summit meeting, having been the most hardline Government at the Venice summit. At the same time, they are defensive about the cuts in the aid programme. They find it necessary to justify those cuts by reference to their general strategy on public expenditure and monetarism. From their point of view, that is understandable.

There is a minor point that I find a little galling. My successor at the Overseas Development Administration, the Foreign Secretary and high commissioners from other countries sometimes say that the aid programme is very good. They quote the 1979 figures, which were the figures of the Labour Government. They say that Britain reached 30.52 per cent. in 1979 and that 70 per cent. of our bilateral aid went to the poorest countries. When they say that, they are referring to the very programme that Conservative Members criticised deeply. As my hon. Friends will appreciate, that is a shade galling.

The Government are not in a good position as regards increased contributions towards development. I hope that that will not deter them from making constructive contributions in areas in which they need have no such inhibitions. The right hon. and learned Member concluded his speech by referring to the subject of the international monetary system and the collapse of Bretton Woods. That is one of the key areas to be resolved. I refer to the need to recycle surpluses.

There is no philosophical or political reason why the Government should not think it a good idea to take a clear look at the way in which the international monetary system has degenerated into chaos. That is true despite the fact that the Government's economic policies are becoming more controversial every day. They should consider what needs to be clone. Many propositions have been put forward, such as interest subsidisation and changes in the methods of the IMF. Even a Conservative Government need have no inhibitions about saying that they will participate positively and that they will make an effort to restore order in the international monetary chaos.

Mr. Raymond Whitney (Wycombe)

Given all the right hon. Lady's experience, will she explain which method of changing the international financing system she favours?

Dame Judith Hart

I shall not go into detail on that point. I refer the hon. Gentleman to the papers that are being produced in the context of the United Nations Industrial Development Organisation. My views are geared closely to the ideas that are coming out of UNIDO. If the hon. Gentleman is interested, I shall give him the references later.

Let us consider the present lack of system and the recycling of surpluses. Government spokesmen have said that priority should be given to achieving a method of recycling oil supluses. We all agree about that. However, one point has not been taken fully into account. Indeed, it has not been adequately considered by the Brandt report. The most informed estimates indicate that about $900 billion is deposited outside the United States of America, mainly on the Euro currency markets. The estimates for the element of OPEC surpluses vary between $90 billion and $140 billion. That means that a higher proportion of Euro currency surpluses is moving around as hot money. Indeed, the recent high rate of sterling has meant that a good deal of that money has moved in and out of Britain. That money does not consist of OPEC surpluses.

The origin of the non-OPEC dollar investments in the Euro currency market can be traced, in part, to the period when the United States of America had a very large balance of payments deficit. Many of those dollars are still around. In part, they can be traced to the fact that a number of American commercial and private banks have greatly expanded their activities outside the United States of America during the past eight or nine years. As a result, considerable amounts of money have been deposited on Euro currency markets. It is legitimate and understandable that pre-tax profits should be deposited on the Euro currency markets. American multinational corporations have a year or 18 months before they need pay their taxes. They place their money on the money markets in order to make a bit more.

There may be other elements involved. In addition to United States dollars, other currencies are floating around on the Euro currency market. There is $900 billion on the Euro currency market, one part consisting of OPEC surpluses and the major part consisting of non-OPEC money. It is nonsense if none of that money is being used for investment in the industrialised or in the developing world during the deepest depression that we have known for 50 years.

Why does this area demand priority? I have always been in favour of trying to chalk up minor successes. Many of the Brandt proposals are very good, but one recognises that there will be inhibitions and problems in some quarters. In the North-South dialogue, it may take some time before a framework for international negotiation can be worked out. Indeed, the special session of the United Nations, which was held in New York in August, was stuck on that point. There will be problems.

Let us consider the international monetary system and the need for a new Bretton Woods-type conference to try to get some rationality into the matter. What objections would there be? The Government need not object. It would be in their interests. The developing countries would not object. It would be in their interests. The United States, with its experience over the last few years, would not object because it would be in its interests.

Would the private banking sector which deals with all these surpluses object? The private banking sector has been in the forefront in expressing its concern about the increasing deficits and problems of debt servicing by the developing countries. The private banking sector's interests lie in the development of world trade moving out of recession.

I cannot easily define any quarter from which there would be deep objection to regarding this as a priority area for negotiation. How it is done will be important. The Minister knows that the moment one begins to get into discussions on procedure, especially within the United Nations system, one is in trouble. I would hope that the mini-summit meetings could devise a way for ideas to be exchanged. The hon. Member for Wycombe (Mr. Whitney) asked me what my idea was. I told him that it was nearest to the UNIDO proposals. I should like to see some kind of consensus of approach formed and then to go on to the procedure. I suggest that we should not get stuck on the procedure first.

We could continue by talking of the need to restore the British reputation. In the debate on the Queen's Speech, the Prime Minister said: Nations overseas are applauding our new strength and resolve."—[Official Report, 20 November 1980; Vol. 994, c. 41.] This is a matter not only of the different approaches by both sides of the House but of concern and pride in the British reputation, which has been very high in these matters in the past eight or nine years. It is a matter of deep concern to me, as I am sure it is to hon. Members on both sides of the House, that Britain, far from being applauded for its resolve not only by Third world countries but by other industrialised countries, is being laughed out of court.

Mr. Nigel Spearing (Newham, South)

That is right.

Dame Judith Hart

We are told that we are the most hard line country and that, had it not been for us, even the Americans at Venice might have taken a different line. Germany, which is supposed to be the third hard line country, proposes to increase its aid by 8 per cent. a year—double the rate of increase for its other public expenditure programmes. Where does that leave us? I shall not be content, and this country should not be content, if Britain, with its Commonwealth background, its involvement in internationalism and its great achievements in the past on the world scene, is to be laughed out of court as the most hard line, the least understanding and the least prepared country to co-operate in initiatives which are in its own interests and in the interests of the world.

I hope that the Minister of State will see that there are ways in which he can move which need not contradict his belief and need not stand in the way of restoring the British reputation in these matters.

10.25 am

Mr. Cyril D. Townsend (Bexleyheath)

The right hon. Member for Lanark (Dame Judith Hart) made a highly partisan speech. Perhaps she would have been more honest if she had admitted that both the Government and the Opposition enter the debate with an albatross around their necks. We on the Government side have cut back our aid programme in a most devastating manner. The Opposition must agree that the Labour Party is now moving very far and fast towards protectionism. Protectionism has a fatal attraction to politicians because it combines short-term gain with long-term disaster. I look forward the right hon. Lady warning all sections of the Labour Party what protectionism actually means to the poorest countries on this planet.

The right hon. Lady made a second mistake, because the Government have clearly been changing their attitude in recent months. My right hon. Friend the Lord Privy Seal made a speech in his dry, laconic style, during which he was in danger of deep-freezing the Brandt report.

In a speech on Wednesday 8 October to the Tory reform group in Brighton, my hon. Friend the Minister of State gave that enlightened body a different account of the Government's proposals and attitude towards the Brandt report. The House should notice that there has been a considerable change in attitude. I suspect that the views of Foreign Office Ministers have been gaining ascendancy over the views of Treasury Ministers.

The key quotation of the Brandt report is: The issue today is not only, or even mainly, one of aid; rather of basic changes in the world economy to help developing countries pay their own way. Those words might have been written to encourage the British Government to take an enlightened attitude towards the Brandt report. The report is clearly a landmark that we ignore at our peril. It is an attempt to break out of the international confusion which has bedevilled the subject for far too long.

The weaknesses of Western industrial economies do not need enlarging upon. If no action is taken on the report, that weakness will spread and there will be 18 million unemployed in the rich West and there will be fewer rich European islands in the sea of world poverty.

I hope that we shall highlight the attitude of the Soviet Union and Eastern European States to this subject. They are also under great economic strain. Their record has been disastrous over the past few years. They do not recognise aid. They see it as a responsibility of the old colonial Powers. They do not make it easy for developing countries to penetrate their markets.

The main question is how we can persuade Eastern Europe as well as Western Europe to take part in this venture. If we fail in that fundamental task, we shall not get very far.

The Brandt report has charted the way forward. It is right to call for a summit meeting of regional leaders and the transfer of investments to the South. It is right to emphasise the need to increase food production and for greater participation by the developing world in the world development that affects the lives of people in those countries. It is remarkable that they have not been allowed to play a greater part in recent years. Some 60 per cent. of the world's exports of major agricultural and mineral commodities, other than oil, originate in developing countries. For that reason, one must be suspicious of those who are backing protectionism.

On examination, the basic problem that we face today is not a technical, legal or even economic one; it is a political problem. It is a problem for Members of this House and, indeed, for Parliaments everywhere. It is a matter of marshalling the political will to carry out the programme that has been put before us. Politicians must realise that producers and users of commodities need a guarantee of supply, some parity between the cost of raw materials, the technology of industrial nations and, above all, price stability.

I was fortunate enough to visit Zambia in 1976. There is an interesting reference to Zambia in the report. It states: There was a boom in copper prices from 1972 with the price peaking in April 1974 at $3,034 per ton; then it suddenly fell to $1,290 before the end of that year. But the prices of imports continued to rise so that the volume of imports Zambia could buy fell by 45 per cent. between 1974 and 1975 and the GDP fell by 15 per cent. The gravity of this situation for Zambia is put in perspective when it is contrasted with the 'oil shock' of 1974. This resulted in an increased oil bill for the industrialised countries equivalent to about 2.5 per cent. of their GNP. I believe that the advanced nations must use their technology to benefit the world as a whole. In that context, one can mention the concept of having two engines in a car, one that is electrical and one that runs on oil, chicken manure or whatever. One can visualise controlling tidal power and wave power, and again the technology of the West will be required to lead the way. We must also mention the peaceful use of nuclear power. I believe that there has been much scurrilous scaremongering on that subject. There is a need for a world conservation strategy. According to an advertisement in our newspapers, At current rates an area twice the size of Canada would become desert or semi desert by the end of the century, arid, barren and incapable of sustaining any but the most basic forms of life.… and hostile to men. The United Nations has a primary role to play, as does the Commonwealth, which represents both North and South. Perhaps it could be used to prime a bigger pump. This report is an obvious item for the next Commonwealth Prime Ministers' conference.

In general, the Government's attitude is still too passive and, at the same time, paradoxical. Rightly, we are proud of our increased international importance, particularly on East-West issues. Of course, we are well aware of the success of my noble Friend the Foreign Secretary in settling the Rhodesia issue, which had been a sore for so long. Recent policy statements on overseas aid, external broadcasting, overseas students and the British Council seem to undermine so much of the effective international work that is being carried out by our Ministers today. I hope that my hon. Friend the Minister will comment on that in his reply.

It is all too obvious that those in favour of the Brandt report are camped all around me, and those who are against it or are apathetic towards it are still to be found in the Treasury citadel. I hope that they will at least notice the number of campers on these Benches. I hope that they will also notice a new feeling in this country—particularly among young people—about the report. The number of copies that have been sold highlight that point.

Some years ago the developing world, led by President Boumedienne of Algeria, presented in bellicose terms its demands for a new international order. Today the situation is different. It has moderated many of its demands, and it should be easier for us to respond. Britain is given credit for her decolonisation since the last war. Well over 600 million people of all races and creeds have gained their participation in freedom, at a time when the Soviet Union has been expanding its empire. On the whole, we are trusted in a large part of the globe.

In my political lifetime, retrenchment has been the order of the day. The time has come for a more active and forward approach. Let us stop permanently looking at our economic problems, which in many ways have been self-inflicted by the British people. Let us look out at the world around us, the world on which we depend for our trade. How can we solve our internal economic problems if we ignore what is happening outside?

Let us take the lead in implementing this historic report. The world is faced with rising unemployment, poverty and even violence. Anthony Eden was once asked how he carried out negotiations when he was seeking peaceful settlements. He said that the answer lay in preparation, conference and agreement, and starting from the small issues and working to the great. That must be the way forward on the Brandt report.

10.37 am

Mr. Richard Wainwright (Colne Valley)

I am grateful to the hon. Member for Mitcham and Morden (Mr. Douglas-Mann) for bringing the House back to the Brandt report, and I hope that we shall return to it again and again, certainly up to the Mexico conference and beyond. While I wholeheartedly believe that specialist debates of this sort are of immense value, I hope also that our general debates on economic and foreign affairs and so on will be more fully informed in this dimension. It is a common criticism of people outside the House that the House of Commons has become desperately parochial and is continually looking at the country's navel instead of having a broader view that is appropriate to a country that is so dependent on the rest of the world.

In launching this debate—I hope there will be others—we are responding to a mood in the country. The sales of the Brandt report are remarkable and represent a great achievement. I am told that the current figure is about 68,000 copies. [HON. MEMBERS:"More".] I am glad to hear that it is more, but 68,000 is an impressive figure, Further, I detect—it is a hunch that I have, and I wonder whether other hon. Members share it—that many people, especially younger people, instinctively feel that their only hope of worthwhile long-term employment and the use of their education and talents lies in meeting some of the massive unexpressed demands of the South or the non-oil producing countries. I believe that that instinct is right.

The only hope of getting this country back to anything like full employment must surely lie in meeting the enormous needs of the other half—or more than half—of our fellow citizens of the world. I do not think that people will tolerate the excuse that to try to set that in motion might risk inflation and all sorts of other troubles. The troubles that we have at present are bad enough, and people will insist on something being done. I hope that the House and the Government will show leadership, so that instead of cranky or extreme attempts to solve the problem, some of which we saw before the last war, we shall have an ordered and skilful approach to this enormous and urgent problem.

In the meantime, there are still in some parts of the House the unjustified and old-fashioned idea that one should look at Britain's aid contribution in a static dimension—that this country has a fixed pool of wealth which some people, for reasons that always escape me, believe is small, as though we were a poor country, and that out of that fixed pool we must be careful how much we give away.

I am sure that every hon. Member who attends this debate will know that that is a parody of the true position. What is needed and is practicable, and what the Brandt report is so eloquent about, is having a dynamic effect and implementing proposals that will vastly increase the world's store of wealth and, in the process, increase our own people's store of wealth.

The case has been put well by a leading statesman from West Germany, which has also had a reputation as a hardline country. I have a report of a recent speech by Hans-Dietrich Genscher, the Minister for Foreign Affairs of the Federal Republic, which states: no one should indulge in the illusion that the industrial countries—whether in the West or in the East—and the oil-producing countries could evade the consequences if the efforts of the oil-importing developing countries proved abortive. Conscious of this, his Government had revised its basic development concept in the light of the recommendations of the Brandt report". I am not an expert in these matters, and I shall be grateful if the Minister will tell us whether he believes that that is a fair assessment of the current West German position. If it is, it behoves our Government to take notice of the movement on the West German front.

There are some who are impatient of calls for Britain to take a lead. At the risk of being boring, I wish to put on record the strong view of the Liberal Party that we not only have a duty to take a lead but are in a unique position from which to do so. The elements are well known to the House and I shall not dwell on them, but our unique colonial tradition, long Commonwealth experience, good and bad, the fact that we are unique among developed countries in having a huge store of indigenous oil, our enormous dependence on world trade, as evidenced by the supremacy of the City of London in many areas, and our constant need to find new markets all put us in a unique position as regards responsibility for leadership.

What worries me about the official British attitude is the constantly expressed fear that if the IMF is restructured—not, of course, put under the control of the United Nations on an inappropriate one-country one-vote basis—to reflect the changing balance of wealth in the world and if the World Bank is enabled to take a more relaxed view of its responsibilities, it would all be wildly inflationary.

I was impressed that just before his unfortunate death the late Lord Armstrong, chairman of the Midland Bank, strongly denied that and said that there was no reason why a skilfully managed substantial increase in special drawing rights or the allocation of SDRs specifically for development purposes should be inflationary. My limited investigations show that we are the only major Power taking the negative line that the whole problem has to be approached with plodding caution at a hopelessly slow pace because of the fears of inflation.

If that view is still the position of the Government, I hope that the Minister will explain the reasoning behind it. Do the Government feel, for example, that in the relatively underdeveloped world in the South there is a risk of immensely powerful trade unions claiming a monopoly position and taking advantage of new wealth to extract unjustified wage rises? That would be an extraordinary picture of labour in the developing world, but those who take the inflationary view so seriously must account for what I believe is a largely unjustified fear.

I am sure that many of our fellow citizens accept that we should be among the last countries to be cutting aid, taking a parochial view, pleading poverty and adopting a static approach. After all, we owe an enormous amount to the expansionary initiative of Marshall Aid. We go to extravagant trouble with our Common Market partners to protect our producers of raw materials, yet, having shored up our own agricultural interests with all sorts of special protection and arrangements, we still insist that most commodities from the developing world must be exposed to all the buffeting of unruly free market forces.

That is an unjustified position and I hope that the Government will put their house in order, so that we may cut a more respectable figure in the world and before long assume a position of leadership in world development.

10.47 am

Sir Bernard Braine (Essex, South-East)

One passage in the Government's written comments on the Brandt report raises serious doubts in my mind about their whole approach to the question of restoring growth to the world economy. The report rightly stresses the importance of resuming growth and suggests ways in which that might be achieved. We may disagree about some of the report's recommendations, but I do not think that any hon. Member can fault the analysis.

The Government's comment was: The Western industrialised countries, including the United Kingdom, must be the main motors of this growth. That is an unwarranted assumption. It would have been nearer the mark if that passage had read "The Western industrialised countries, including the United Kingdom, should be the main motors of this growth, but they have failed in this respect."

The truth is that the keys to world recovery are no longer held exclusively by the Western industrialised nations. Most of them, including ourselves, have been in a parlous state ever since the petroleum crisis at the end of 1973 and there are few signs, as yet, that any of them are pulling out of the recession. Indeed, the thinking of all Western Governments on this score is hopelessly out of date.

At the time of the Pearson commission report in 1969—the first comprehensive plan for stimulating economic growth across the world through international co-operation—it was the Western industrialised nations that held most of the keys. The emphasis then was on aid; that was the instrument which was to do the trick, and it was the Western nations alone which would be able to provide it.

That did not matter too much at the time, partly because the developing countries were only just emerging from colonialism and dependence upon metropolitan Powers and partly because the world economy was expanding anyway. One can always sound a note of confidence about the future when the evidence of expansion is all around.

As the World Bank report for 1980 reminds us, the gross national product of the industrialised countries grew at an average rate in the 1960s of 5 per cent. a year. Had they then responded in full to the Pearson commission's recommendations for sustained aid of 1 per cent. of gross national product, the subsequent story might have been different. But they did not do so, and an opportunity was largely thrown away.

By the time the Brandt commission reported, a decade later, we were all in a totally different situation. Growth in all the industrialised countries had slowed down. The difficulties of the developing countries had grown, too, although strangely enough, if we exclude the oil-producing countries, the performance of the oil-importing developing countries—and here I quote the World Bank: was still impressive in the face of the many difficulties encountered". Indeed, if we exclude the countries of Southern Europe, we find that the performance of the oil-importing developing countries in the 1970s actually surpassed that of the 1960s. That is an important aspect of the matter in view of the argument that I want to advance.

Of course, that performance was patchy. Many poor countries found themselves in great difficulties particularly in meeting their energy needs and making debt repayment. But the fact remains that, if we are to talk about motors of growth and development, it has been the countries of South-East Asia, Mexico and Brazil that have maintained the growth they achieved in the 1960s and have moved faster in terms of increases per capita and improved living standards than the European nations succeeded in doing in the nineteenth century.

In some cases, the achievement has been breathtaking. The whole world is not in acute depression. Some countries have managed to achieve substantial advance at a time when we here are obsessed with our own failure. A few countries have developed such a dynamism that they are able to compete effectively in the most sophisticated markets and, as a consequence, have doubled their share of world trade in manufactures over the past 10 years. Such an achievement should be a matter for rejoicing,because those countries have helped to keep the world economy moving.

Mr. Alan Clark (Plymouth, Sutton)

Like South Africa.

Sir Bernard Braine

The point is that over the past five years, the developing countries have played a major stabilising role in the world economy and have accounted for a rising proportion of the total exports of manufactures from Western Europe, North America and Japan.

Mr. Spearing

Does the hon. Gentleman agree that that is true of some countries, those that have something to develop? We are quite wrong in using the words "developing countries" to describe either the former or the present Third world. That is an important distinction.

Sir Bernard Braine

The hon. Gentleman is absolutely right. I was coming to that, but what I want to establish at this stage of my argument is that the energetic poor in some countries have constantly been helping to save the floundering rich. That leads to an important conclusion. Of course, the hon. Gentleman is right, and we should be careful not to get matters out of perspective.

The success of some developing countries in the 1970s underlines the fact that about one-fifth of the world's population is still living in conditions of such abysmal poverty that the operation of market forces has little or no meaning. The stark and awful truth is that, after three decades of international aid programmes, global summit meetings and solemn declarations of intent from the leaders of all parties in the House, there are now more poor people in the world than ever before. Two years ago, the World Bank said that about 800 million human beings were living in absolute poverty, a condition so characterised by malnutrition, illiteracy, disease, squalid surroundings, high infant mortality and low life expectancy as to be beneath any reasonable definition of human decency". At the same time, the World Bank came to the chilling conclusion that if we continued to go on as we had done until then—we await with bated breath to hear what we are to be told later in the debate about possible changes in emphasis—there was no hope whatsoever of eliminating absolute poverty in the foreseeable future. Poverty will remain—and I use the words of the World Bank: a problem of enormous dimensions at the end of the century".

Mr. Christopher Brocklebank-Fowler (Norfolk, North-West)

My hon. Friend mentioned the indifference of the poor to market forces. Is it not true, however, that their poverty is a direct result of market forces, and particularly the market forces resulting from the world escalation of oil prices? Is it not the responsibility of the rich countries to help protect them from those market forces?

Sir Bernard Braine

I should like to be on guard against making generalitsations. There is some truth in what my hon. Friend says. It is an inescapable fact that some countries have no resources—countries whose people are nomadic and which, as the result of the failure of a single harvest, can face starvation. That is a fact of life on our planet, which any country that calls itself civilised should try to do something about.

Even so, it is astonishing that, as the Pearson report pointed out in the beginning, most developing countries have managed to finance their capital requirements substantially, up to 80 per cent., out of their own resources. In reality, if only an infinitesimal amount of our wealth were transferred to these countries, that would achieve substantial results. Unhappily, the World Bank comment is the measure of the failure of Western nations collectively to take the Pearson report seriously.

I must make it clear, however, that the World Bank was not saying that there was no hope of overcoming the problem; it was saying simply that there was no hope of doing so by using present methods. That is the lesson we should learn not only from the World Bank but also from the Brandt report.

We must somehow break through the barriers of current thinking and practice. It is no longer any good arguing, as the Government do in their comments on the Brandt report, that the world recession makes it difficult for industrialised countries to find the resources on a sufficient scale to speed development. Of course it makes it difficult, but that does not remove the necessity. Instead, we must start to recognise that Western industrialised countries need world development if they are to get back to their previous high levels of employment and business activity. It is our preoccupation with largely self-induced internal problems—and the general lack of leadership in the Western world—that has made the task so difficult. Let us frankly admit it. If all donor Governments express the same view—namely, that aid will have to be reduced until their own economies are restored to health—we shall wait in vain for growth to be resumed.

We should not fall into the trap of thinking that aid is an indispensable element in the development process, except for the poorest countries. It can help, but the main instrument of development is, and always has been, trade. It is no accident that the developing countries that have experienced the fastest rate of growth in the past 30 years are those that have been best able to increase their exports. That trade is mutually advantageous is something that almost everyone understands. The man in the street understands it. I have no difficulty in explaining these matters to my constituents. They understand this very well. It does not take much imagination to see that a situation in which industrialised countries have unused capacity and an increasing army of unemployed workers—someone argued that the unemployed in the Western world now total about 18 million; I think that the figure is much higher than that, as my hon. Friend the Member for Cambridge (Mr. Rhodes James) no doubt will testify—while developing countries are crying out for all sorts of goods and services is wrong and wasteful and that all Governments should combine to do something about it.

In short, the problem is too great—here I come down on the side of the Government—and too complex for any one country to solve on its own. What has been disappointing is the failure of the Government to say so and to take a lead in calling for a new and broadly based Bretton Woods. For that is what is needed.

The situation has changed since the Pearson report in another way, and Brandt took full cognisance of it. The developing countries are no longer prepared, however much they may have moderated their language on the subject and are learning the art of statemanship and persuasion, to accept that the international institutions which flowed from Bretton Woods, including the World Bank, the IMF and the GATT, which govern and regulate finance, investment and trade and aid, should be under the virtual control of the developed countries.

That charge may not be altogether fair. The creation of the IDA, for example, in 1960 provided loans on easier terms. That was a gesture in the direction of the poorer countries. The IMF was broadened somewhat and the GATT has been modified. But it is not what the facts are that matters; it is what people believe the facts to be. Increasingly, developing countries have been clamouring for a reform of these institutions to suit their needs. Increasingly, they have shown their distrust of them.

In any event, both sides—the industrialised countries of the North and the oil-importing developing countries of the South—can complain about the failure so far to devise an effective way of recycling the OPEC surpluses in a way which helps rather than hinders world economic recovery.

I recall what my right hon. Friend the Member for Sidcup (Mr. Heath) said on the subject in an earlier debate. It does not lie in our mouths to criticise the OPEC producers. They are selling non-renewable resources which one day will dry up. They may not be using their earnings to the best advantage of all concerned, but, to be fair, they are devoting a higher proportion of their GNP to development than are their critics in the industrialised countries.

I do not believe that any new institutions are needed. But there is little hope of forward movement unless we are prepared to adapt existing institutions to accommodate the OPEC countries and at the same time to help developing nations, possibly by agreeing easier access to our markets for their industrial goods.

We are clearly in a new situation, as the Brandt report recognised, where the aim must be, if we are to have any chance of success, to reform the existing international institutions which so far have been manifestly unable to get world recovery going and to do so in a way which ensures a more effective approach to the related problems of trade, investment and debt management.

I should like to see Her Majesty's Government urging that the World Bank, the IDA and the OPEC fund be brought into closer relationship while the IMF and the GATT are encouraged to seek a wider membership. The object would be to stimulate trade in all directions, to invest in new energy exploration and development and, above all, to increase food production.

The present management of OPEC surpluses plainly is inflationary. The commercial banking system cannot go on handling them much longer. These funds need to be diverted into institutions whence it then can be made available for financing genuine development. This in itself might well have a stabilising effect on oil prices, which would be helpful to rich and poor nations alike, and it would also be in line with what I believe to be the desire of the OPEC countries themselves to help their poorer brethren in the Third world.

The man in the street may have some difficulty in understanding what aid is all about. He probably understands even less about high finance. But he has no difficulty in understanding the importance of trade. If there is a demand for the goods tat he is producing, he has a job. If that demand disappears, he is out of work. It is in the developing countries, therefore, that the demand should be stimulated by agreed international action. It is astonishing how well trade with these countries has stood up in recent years. The EEC and the United States are sending more than one-third of their exports and Japan is sending more than half of its exports to the markets of those countries. If, in addition, with the co-operation of OPEC, means could be devised of reducing the impact of oil price rises on developing countries, I suggest that our exports would rise dramatically.

That is why, in my judgment, the Governments of the industrialised nations have to be made to understand that the poor of the world, far from constituting an insuperable problem, offer a way out of our difficulties. That was the message delivered in the very eloquent speech by my right hon. and learned Friend the Member for Hexham (Mr. Rippon). We need one another as we have never needed one another before. What we lack so far is the political will to devise the machinery to get things moving in the right direction.

That has been the message in every speech that I have heard so far in this debate I hope that it is the message which the House delivers to the Government. Then, perhaps, as they approach the summit next year, they will stiffen the sinews, summon up the blood and show once again the imagination and the resourcefulness which in times of crisis in the past our leaders have always displayed. It is high time that they did so.

11.7 am

Mr. James Johnson (Kingston upon Hull, West)

To me and to all Commonwealth men—which we all are in this Chamber—this is in some ways a sad debate. It is not a post mortem, but I have listened to two former distinguished Ministers, my right hon. Friend the Member for Lanark (Dame Judith Hart) and the right hon. and learned Member for Hexham (Mr. Rippon), and this debate is at least a judgment upon the Government. I can go no further than that at the moment, but I may go further before I conclude my speech.

Last Tuesday, the Minister for Overseas Development gave a talk to the Royal Commonwealth Society, and many of us listened to him. I have a report of his speech, and I want to quote a passage from it on which to hang my comments. By no means did the hon. Gentleman make a bad speech; it was a most able speech. However, he was defending a bad case, and I told him so at the time. He said: I have been invited to discuss the Government's overseas aid policy, a subject, to judge from recent press comment, about which there is much misunderstanding and ill-informed criticism. I wonder whether there is. I do not think that the public are ill informed.

I have just heard the hon. Member for Essex, South-East (Sir B. Braine) talking about the man in the street. I shall refer to the well-considered and well-informed opinion of Methodists in Hull, who are men on the pavemerits and who go about the town. Does the Minister believe, for example, that the leaders of our Churches, with their offshoots overseas—including the Archbishop of Canterbury and the Methodists—are ill informed about this matter? They are well informed.

On behalf of Her Majesty's Government, the Minister added one or two other comments, in the course of which he attempted to cover himself. He quoted what was said by his right hon. Friend the Prime Minister at the Lord Mayor's banquet on 10 November: Contrary to what has been suggested, the Government is fully alive to the importance of this country's relations with the developing world. We are well aware of the human, economic and strategic reasons for helping the poor nations. And we are acting on these reasons—acting more effectively than many others. I wonder whether that is so.

Like other hon. Members, I receive a good many letters, and I am able to confirm what was said earlier by the hon. Member for Colne Valley (Mr. Wainwright) on behalf of the Liberal Party. There is, indeed, an enormous interest in this matter in schools, churches, and elsewhere. The old idea of the Daily Express that there are no votes in overseas aid is not true, as the following quotation will show: The members of the Hull Methodist Circuit Men's Fellowship wish to express their disgust at the proposed cut by the Government of £230 million from the level of aid planned to help developing nations … This huge reduction in aid is equal to seven times what the voluntary agencies, such as Oxfam and Christian Aid, put together … Britain's meagre response to the Brandt report to the United Nations exposed us as the only Western nation planning to reduce aid to poorer countries during the next five years. For this, we are despised by other nations and now stand out as the Scrooge of the world. That is what many ordinary people think about the behaviour of the Government.

Mr. Clinton Davis

Is my hon. Friend aware that many of us, including myself, representing a very deprived inner city area in London, have received more representations on this issue front all sorts of organisations, including those to which he has referred, than on any other over the last 10 years since I have been a Member?

Mr. Johnson

This is the common experience of Members. There is no doubt whatever that there is an enormous upwelling not only of good will but of emotional feeling in people's hearts towards the people overseas and a desire to help them.

I am chairman of the Anglo-Somali council. Not many months ago we held a film show in Westminster Hall, at which Jon Snow showed an ITN film. Afterwards, all the agencies present that were involved in the Horn of Africa and East Africa set up a committee. Since last September—the fund is now closed—we have raised £5¼ million for those people overseas. So do not let us in any way underestimate the feeling of the man on the pavement. I wholly disagree with the comment trade earlier from the Conservative Benches that the ordinary people do not know much about these matters.

The Government are immensely unpopular, not only because of unemployment at home but because of their behaviour in the matter of the Brandt report and overseas aid. They should not overlook the fact that there is deep concern. There can be no doubt that the Government have been unco-operative over the Brandt report. The Government claim that they have been co-operative, but that is riot the view taken in the New Commonwealth countries. I was in Lusaka, at the CPA conference where the Minister was leading the United Kingdom delegation. He and I recall that he got some stick in those debates, not least from a gentleman called Tom Smith, who represents the Government party in Sierra Leone. There is immense concern about the posture and the attitude of the British Government in this matter.

The Brandt commission looks upon the issue of the rich North and the poor South as being the greatest challenge to mankind, not only at the present time but also for the foreseeable future—I would say until the end of the century. This shopkeeper Government, with their obsession with making penny-pinching economies, see nothing amiss with a system which has led to deadlock in the North-South dialogue. They continually refer to "market forces"—that mystical and magical term. They also, in the most cavalier terms, talk about the poor nations needing to manage their own affairs better. That does not come too well from the mouth of the Government. Their sermonising is no good at all.

There is no future in attempting to tell countries such as Zambia and Tanzania how to manage their own affairs. There is no future in telling them that they are not doing as well as they should. All this is far too depressing and fatalistic, not only to me and my constituents but to tens of millions of people overseas.

There are those who like to tell the Arab States that they should spend their oil money in a better way. There are those who like to tell Saudi Arabia that it should give more to Somalia or to Sudan, as the case may be. But that is not my business and it should not be the Government's business. Our job is to do what we can in terms of our own economy here in the United Kingdom.

On 20 July 1980 The Sunday Times, in referring to the British Government, spoke of the Governments who had voted for poverty, inflation and unemployment. If unemployment is of no use to people in Hull or in Yorkshire, it is of much less use to the people of the Third world, where the impact of unemployment is far harder than it is here in our Welfare State, where we have facilities for shoring up our people.

Why cannot the tenant of No. 10 speak a little more like the tenant of the White House in 1962, a gentleman called Kennedy? I should like to refer to a succinct and pungent quotation from him, because I wish that the Government would adopt the views that he held then and which, unfortunately, he was later unable to implement. He said: To those people in the huts and villages of half of the globe, struggling to break the bonds of mass misery, we pledge our best efforts to help them help themselves for whatever period is required—not because the Communists may be doing it, not because we seek their votes but because it is right. If a free society cannot help the many who are poor, it cannot save the few who are rich. The constant theme this morning is that we must cooperate and link together for our mutual advantage.

Today in this Chamber—and, indeed, in our society in the United Kingdom—our eyes and ears are upon Poland. Detente between East and West is important, but the common enemy of men and the common enemy of ourselves—never mind the Third world—is poverty and disease. It must be fought on a global scale. This is where the North and South must unite together.

What are we to see in the 1980s? Is it to be confrontation or collaboration? The Western Powers, including ourselves, are deeply concerned—in my view, too deeply concerned—with our own economies. The Third world is divided and desperate at this moment. I have been to Zambia recently, as has the Minister. I have just been to Sierra Leone with my own lord mayor, town clerk and others on a civic visit, because Hull is the only city in Western Europe which is twinned with any black African city—Freetown. I would commend the work done at local government level, allied to the contribution by the Government through their Exchequer, to help people in the bush.

These things are being done and those concerned think that they are important, as Hull university lines up with Fourah Bay university in the same way as the docks board on the Humber can help the docks in Freetown.

Therefore, I commend this process. Without being too casual, I would also point out that the Hull City football team could soon play a Sierra Leone side in a magnificent new stadium, built by the Chinese, which can hold 70,000 people.

Mr. Alan Clark

Who pays the air fare? They would rather have a load of penicillin.

Mr. Johnson

If we do not do many of these things, nationally or locally, others will step in, whether China, the Soviet Union or Eastern Europe.

We all know that the poorest people in the world face hunger and misery and that the poor are the vast majority—about 800 million of them. There are three courses open to us. First, we could continue the existing posture, based on a false and shallow consensus. The Third world continually demands aid and OECD countries make half-promises. If these promises are not fulfilled, the political gap widens. Many Commonwealth States are looking cannily to Westminster and Whitehall. I am happy to say that that does not apply to Nigeria.

The second possibility is confrontation. I do not think that that is happening, in the light of events in Zimbabwe. I give the Government a small bouquet for solving there one of the stickiest problems that I have ever seen in the Commonwealth or throughout Africa.

The Government constantly say that only healthy economies can help the weak and the poor. The Minister and his colleagues say that we must build up our own economy and fight inflation, getting ourselves healthy, virile and fit. Then we shall be better able to help poorer countries. All Conservative Members make the same parrot cry—we must get inflation down. Must the toiling masses of the Third world wait until we get our house in order? [HON. MEMBERS: "Yes."] Many people do not think that they will wait.

The only way forward is the third option—collaboration. We must link together, North and South. Economic development in the South cannot wait for the North to get itself into the healthy state so often called for by the Government. The development or self-development of the Third world is an essential part of our recovery in the West.

The key decision for us is how high a priority we give to helping the Third world. I know what the answer is from my constituents in West Hull, in our schools and churches, but do the Government know? I hope that they are listening, because if they do not listen they will founder. On their reaction depends how the world divides or unites in the next two decades.

The year 2000 is not so far away, and in that year there will be four times as many people in the developing world as in the industrial world. They cannot continue in their present poverty and want.

11.25 am

Mr. William Shelton (Streatham)

Everyone who has spoken so far, and, I am sure, every hon. Member in the House, accepts that the disparity in wealth in the world is a cause not only of great suffering but of tension. It is in terms of humanity and self-interest that one should consider any and every means to reduce that disparity by making those who are poorer better off and able to live in more adequate surroundings.

Under Governments of both parties—the right hon. Member for Lanark (Dame Judith Hart) deserves some credit for the fact—the British record in aid has been by no means negligible. We have contributed the fifth largest amount of any country, exceeded only by the United States, France, West Germany and Japan, all of whose economies are stronger than ours.

In 1979, we allocated just over 0.5 per cent. of our gross national product to aid, while the Western democracies as a whole contributed only 0.35 per cent. I look forward to hearing from my hon. Friend the Minister what will happen next year or the year after.

My next point will probably introduce a more discordant note than we have heard so far. I accept the Brandt report's analysis, but not necessarily its remedies. It talks about the massive transfer of resources from richer to poorer countries. If that means from Government to Government—the report talks about it being done through Government agencies and discussions—I am more cynical than most other speakers today.

Is it realistic or helpful to transfer vast resources from Government to Government? I refer here to a leader in The Daily Telegraph about a week ago, headed "Brandt in practice". I would not necessarily go along with every word of the article, because it is written with some spleen, but it quotes Professor Bauer, who has been quoted so often that these words of his will one day enter the dictionaries of quotations: transfers of wealth broadly go from poor people in rich countries to rich people in poor countries. The article gives the instance of Italy. I am sure that hon. Members are aware of the tremendous experiment—more, the practice—of the Italian Government in pouring money from the North to the South, and how ineffective that transfer of resources has been, leading to migration from the South to the North, as soon as anyone gets any money, and a massive rip-off by people who are known as the "new Mafia" in the South of Italy. The Daily Telegraph leader says that if that can happen in one country with a common language, what will happen when Sweden gives aid to Zaire?

Although I have not had the advantage of administering aid, for nine or 10 years I lived and worked in underdeveloped countries. One was an oil country and, therefore, not typical, but the other was not. I shared in the life, ideals and ambitions of the community. To some extent I knew what was going on, because I have an inquiring nature. That is why I am cynical of the prospect of transferring money from Government to Government and have some sympathy with the outrageous remarks in The Daily Telegraph leader.

I saw with my own eyes aid money going to prestige projects. I saw great motorways being built and then stopped because the money ran out. Jet aircraft for the Heads of Government were bought with aid money. I saw the private wealth, the Swiss bank accounts and the corruption. Hon. Members who have lived or travelled in such countries know that that is true. How important it is is another matter. In some places it is of minor importance. In others it is of major importance.

The countries in which I lived received massive aid from the United States. However, the United States received no thanks and no return. The countries received no aid from Russia. Yet Russia was regarded highly by the Governments of those countries. I have no explanation for that. It seems extraordinarily unjust, but it is true.

If it is not a matter of a vast transfer of wealth through top level discussions in the United Nations, how can underdeveloped countries be helped? My mind is clear about that. There is a Chinese saying that if one meets a starving man one should give him not a fish but a fishing rod. Such countries can be helped by liberalising trade and encouraging investments. There is no doubt about that. Governments should remove the blocks in the way of trade and investment. I congratulate the Government on their decision in 1979 to relax exchange control. That has led to an outflow of investment to developing countries.

The ASEAN communities are in the Third world. Their growth rate in the last four or five years has been between 12 per cent. and 20 per cent. because private investment, not Government aid, is being well managed by the recipient countries. Malaysia is an example. Britain is the world's second largest investor, and that is something of which to be proud.

Multinational companies are regarded pejoratively by the Opposition. I have lived in countries in the developing world, and there is no question but that the reason why they have aspirin, medicaments, drugs and transport is that the multinationals are active there. They have done more to develop the poor and wretched Third world countries than any single outside Government. They will continue to do that provided that they are not hindered. There is an enormous amount of bank funding. Extraordinary advertisements show how 50 banks have joined together to raise $200 million for Malaysia or elsewhere. That is of tremendous importance.

Direct involvement is also of great importance, but it has little scope. Twinning is also important. I was impressed by the American Peace Corps. A good American friend of mine was an administrator of the Peace Corps. He fell to his death from the top floor of an apartment block. Rumour had it that he was despatched by Communist agents because of the help that he was giving to the country. He certainly did not commit suicide and it is unlikely that it was an accident.

I should also like to praise Voluntary Service Overseas, which is run by an ex-colleague in the House, Mr. Frank Judd. VSO's budget from the ODA is just under £2 million. That is a good way for Governments to help. The money goes not to the Government another country but to an organisation which sends people to work in the field. The budget is supplemented by another £1 million from overseas Governments. That is excellent, because when an overseas Government put in money they co-operate. Another £250,000 comes from airlines and others.

VSO will send nearly 400 volunteers this year on two-year courses. If the organisation had more money, it could double what it does. It might be appropriate to use some funds from the youth opportunities programme to help this excellent organisation.

Mr. Robert Rhodes James (Cambridge)

I am a member of the executive of Voluntary Service Overseas. My hon. Friend might not be aware that the Government, in spite of strictures from the Opposition, have increased their contribution to VSO.

Mr. Shelton

I did not know that. I am delighted. Perhaps money from the youth opportunities programme could increase the contribution further. In terms of the budget available, we are not talking about great sums.

I agree with the analysis of Brandt. I am sceptical about the prospect of vast transfers of money from Government to Government. These countries need help desperately. It is to our advantage, apart from humanitarian reasons, that they should have help. The way to help is through trade and investment. Trade and investment have helped them in the last 20 or 30 years more than than any Government have done or ever will.

11.38 am

Mr. Guy Barnett (Greenwich)

Some years ago I was on the staff of Voluntary Service Overseas. I have a great respect for that organisation. However, I doubt whether the hon. Member for Streatham (Mr. Shelton) fully appreciates that such an organisation can be extremely effective in making it possible for relatively young and inexperienced people to make a contribution in developing countries but that they cannot in any sense be a substitute for the professional advice, assistance and leadership which are required. I hope that the Government will not fall into the trap of believing that an easy way to cut the level of Government aid is to contribute more to the voluntary organisations. That does not mean that I deny the value of organisations such as Oxfam and VSO which work in the field.

My experience in VSO shows me that there is a complementary relationship between the experienced professional or expert and the volunteer who goes to a country for a couple of years at the beginning of his working life possessing valuable skills or qualifications. I think that our technical aid programme has been effective because of the close co-operation that often exists between the professional and the young but inexperienced contributor.

One of the interesting developments in VSO is the greater emphasis on the need for professional or technical qualifications. I therefore doubt whether the terms of the youth opportunities programme are exactly relevant to the objectives suggested by the hon. Member for Streatham, for it is the people with technical or professional qualifications that the developing countries require, not someone who in this country cannot obtain a job and is therefore more likely not to possess the experience, qualifications or technical training that would be required.

The debate has demonstrated a very wide measure of agreement, and that is a reflection of the factor referred to by my hon. Friend the Member for Kingston upon Hull, West (Mr. Johnson)—the great firment of interest in the subject that one encounters in one's constituency. He has met it in his, and I have certainly met it in mine. Perhaps an interesting example of that is that some months ago the Greenwich deanery synod held a full conference for an evening, inviting my hon. Friend the Member for Woolwich, East (Mr. Cartwright), myself and the hon. Member for Woolwich, West (Mr. Bottomley), who unfortunately could not attend, to discuss the Brandt report. That conference reflected the many welcome initiatives that have been taking place in my area and all over the country.

In view of the measure of the public interest that is currently being taken in the Brandt report and the degree of public interest that it has aroused, perhaps the sad fact is that throughout most of the debate the Press Gallery has been almost empty. That is an appalling reflection on the British press. While there is tremendous interest at the grass roots in our constituencies, while there is considerable interest and unity within the House, the communicators, those who should be conveying ideas to and fro, are just not here. I enter something of a protest that the British press is so obviously disinterested in a subject of such vital importance to us all.

Mr. Alan Clark

Why is the press not here? Because it would be bored blue, that is why.

Mr. Barnett

The hon Gentleman must answer that question for himself.

I congratulate my hon. Friend the Member for Mitcham and Morden (Mr. Douglas-Mann) on introducing this important subject and enabling us to debate it again. I hope that one of the consequences of the debate and of the unity that has been expressed in the House will be to push the Government one stage further towards the kind of recognition of the Brandt report that they should have given at the outset. I recognise—the hon. Member for Bexleyheath (Mr. Townsend) pointed this out—that the Government have moved a bit since their original lukewarm response. That is in no small part because there has been public and parliamentary pressure. I hope that the debate will continue that process, because it is vital that the Government should be giving a lead in this subject, and it is certainly not too late for them to do that.

The memorandum that the Government produced in response to the Brandt report has already been referred to. One of the most astonishing remarks in it was: The Government believe strongly in the merits of the present world economic system. I know that the Government do not deny the seriousness of the position that is described by Brandt. The speech by the Minister for Overseas Development at the Royal Commonwealth Society this week contained these words: We fully accept that the outlook of the developing countries and particularly the poorest is very serious. The Government are therefore in no doubt that the position is serious, and they have admitted it on many occasions. The hon. Gentleman continued: Where we differ from Brandt is not in our analysis of what is wrong but of what is needed to make things right. I cannot understand how anyone who has made a close study of the Brandt report and agrees with the analysis that pervades it—as the hon. Gentleman clearly does—can then maintain that he believes strongly in the merits of the world economic system.

The world's monetary and economic relations are in a state of disorder, with serious consequences for the economic management that all Governments are having to apply. We have economic problems, including rising levels of unemployment. When the Opposition criticise the Government for that and for our economic performance, the Government frequently give the excuse that there is a world slump. They are apt to blame world economic conditions rather than the policies that they are pursuing for the position in which we find ourselves.

Mr. Nicholas Baker (Dorset, North)

Does the hon. Gentleman agree that one way in which the Third world countries want to be helped is to be allowed and encouraged to manufacture the goods that we are manufacturing now? Does he accept that that would present us with a problem, given our high rate of unemployment?

Mr. Barnett

It would take a long time to answer the hon. Gentleman's point in detail, but in general I agree that the developing countries should be able to diversify their economies. I do not accept, however, that that would necessarily increase unemployment in the developed world. The brief answer to the hon. Gentleman's question is that we shall not achieve the position that he so obviously wants without a radical change in the world economic system.

Our problems are surely as of nothing compared with the problems faced by the developing world. The fact that it is suffering far worse than we are is a reflection of the world economic system, in which there is an unequal power relationship between the developed and the developing world, between North and South. It is a relationship in which the Third world is largely a passive recipient of what the advanced countries decide to give. We and the other OECD countries bear that measure of responsibility here. We are living in a state of near economic colonialism, born of the fact that large sections of the developing world were once ruled by the West.

It is evidenced in the pattern of trading relationships that exists between the rich and the poor. The Third world trades overwhelmingly with the advanced countries—75 per cent of its trade is with OECD countries. For the advanced countries, however, trade with the Third world accounts for only a minor part of their total. Add to that the way in which the terms of trade have affected many raw materials and the producers of those raw materials, the volatility of the price of raw materials—copper has been referred to in the debate—the heavy unemployment that pervades the developed world and the effect that has on markets for the developing world, and bear in mind as well the oil crisis, and one begins to realise the appalling position of the developing countries and the failure of the world economic system to cope with the problem.

Mr. Hurd

I have been following the hon. Gentleman's remarks carefully. He is painting a portrait, as many others do, of a world economic situation that is inadequate and static. However, does he not accept that the institutions that he is mainly referring to—the IMF and the World Bank—are changing very fast and have changed a great deal, even since the memorandum that we tabled in July 1980? The pace of change within those institutions is in the direction that I imagine that the hon. Gentleman and the authors of the Brandt report would favour and is a phenomenon that deserves much more notice than it has received.

Mr. Barnett

I do not deny that there have been changes in the management of the international institutions. However, I wish to draw specifically to the attention of the House the fact that it is the power relationship between the developed and the developing world with which we should concern ourselves. The decisions made are the decisions made by the Americans, by us, by the EEC and by OECD countries as a whole rather than in collobaration or co-operation with the full representation of the developing world.

It may be a matter for definition. If one talks about a need radically to alter the world economic system, perhaps it can be done by a gradual revolution. I hope that the hon. Gentleman is right. However it is done, there needs to be a radical change in the economic power relationship between the developed and the developing world.

The hon. Member for Streatham referred to the record of British aid. The British aid programme has been cut, but I am a bit puzzled by some of the figures that have been used in Government pronouncements. The Government persistently use the figure of £960 million gross to substantiate the claim, which the hon. Gentleman repeated, that Britain in our current aid record is about sixth in order of the developed countries. I cannot understand that. Could the Minister enlighten me? I hope that he will accept my sincere apologies if I am not able to listen to the whole of his speech. I have an engagement later today which I cannot avoid and which may prevent me from being present for the whole of the debate.

I am very puzzled by the figures that are used. I understand that the 1980 aid figure is to be £779 million. The hon. Member for Streatham wanted to know what the figures are likely to be as the years go by. The estimates are there. I gather that by 1982 the figure will be £677 million, which will be £113 million less than in 1979. Given the fact that in one set of Government figures the aid figure is £779 million, I admit to being puzzled by the fact that the Minister for Overseas Development the other day used the figure of £900 million as the amount of British aid, the figure that justifies the suggestion that 0.52 per cent. of our GNP is going in aid.

The suggestion has been made that the difference in the way in which the aid figures are accounted for may be the reason for the disparity. It has been suggested that the difference in the way in which multilateral aid is counted in this year may be responsible for the fact that within the current year there is money that has been given and money that is being promised being counted in the same year. Will the Government explain the position as clearly as they can? It puzzles a great many people. We need to be absolutely clear about what we are saying to the special session of the United Nations, because our reputation will hang upon the responsibility and accuracy of the statements that we make about our aid.

I wish that our moral standing as a country was higher in that regard. I had a great deal of sympathy with my right hon. Friend the Member for Lanark (Dame Judith Hart) when she suggested that our aid programme was a laughing stock in the world. However, I like to give credit when credit is due, and I warmly welcome the announcement made by the Minister for Overseas Development this week about the promised increase for the Commonwealth fund for technical co-operation. When we last debated the Brandt report, I spoke on that issue and suggested that it could well be a very good model. The Commonwealth fund for technical co-operation is an organisation in which there is universal membership, and in which decision-making is more evenly shared between lenders and borrowers". Those last words are a direct quotation from page 255 of the Brandt report. It is that kind of relationship that I want to see.

The right hon. and learned Member for Hexham (Mr. Rippon) emphasised the fact that he did not like the use of the word "aid". I agree with him very strongly. Other spokesmen have said that the Brandt report must be considered in the context of world development. If we think in that context, we are likely to redesign our institutions along lines that are relevant to the political and economic situation in which we find ourselves-a relationship of partnership rather than one of givers and receivers or lenders and borrowers. That is, after all, the relationship that the Commonwealth, after many years, has managed to establish. The relationship of the Empire was that of masters and servants. It is now a relationship of equal partners, regardless of economic, political or military strength. Everyone is an equal.

It is no accident—I may have said this in the House before—that we reached a satisfactory solution to the Rhodesia-Zimbabwe problem because of the massive assistance that we received from political leaders from all over the Commonwealth in making sure that that agreement became a reality.

In conclusion, I ask the Government to do two things. First, I hope that the initiative that they have taken with regard to the Commonwealth fund for technical cooperation will be continued and that they will continue to see the Commonwealth as one of the agencies most relevant to the sorts of relationship that we should be establishing with the developing world. I hope that that initiative will be followed by others that the Government will take at the Heads of Government meeting next year. I hope that they will encourage other Commonwealth Governments in the most positive way to increase their contributions to that fund so that it is able to make a more realistic contribution within the Commonwealth.

Secondly, I hope that the Government will seriously consider, in the light of the pressure that is coming from this House and the country at large, restoring the cuts. They have a responsibility in that direction. Whatever the figures concerning aid may be, one of the reasons why we in this country have a special responsibility is that we are a former imperial Power. I do not blame us for that. In some respects one feels proud of the imperial history of this country—and I speak as a member of the Labour Party. But there are other sides of our imperial history of which I feel deeply ashamed. In the light of that, we have a very real responsibility which we must fulfil.

Therefore, to compare our record with that of Germany, Japan or any other country does not seem to be relevant to the measure of responsibility that we have towards the Commonwealth at large. Apart from the measure of responsibility that we have, we also have everything to gain from the closest and most positive technical cooperation with those countries of the Commonwealth. Some of the poorest countries of the world are Commonwealth countries. Their poverty is in part due to economic policies that we have pursued in the past. For that reason, we have a special responsibility to give a lead among the countries of the developed world.

12 noon

Mr. Christopher Brocklebank-Fowler (Norfolk, North-West)

That the Brandt report is a vital document is not in doubt. In this country the interest in it is a measure of the importance of the issues it discusses. I join with others in congratulating the hon. Member for Mitcham and Morden (Mr. Douglas-Mann) on causing Parliament to debate it for the fourth time in six months. In doing that, I express the hope that we shall have a further debate on this subject before the June summit and that we shall return again to this issue after that summit to assess what progress has been made.

We in the Overseas Development Sub-Committee of the Select Committee on Foreign Affairs have every intention of watching the Government's performance in our continuing studies. If they accept the definition of the problems—and they do—but oppose certain of the proposals—which they also do—they are bound to put forward their own proposals to deal with the problems. This they have not so far done. Indeed, it is difficult to discern what the Government as a whole think. I am hoping very much that later this afternoon my hon. Friend the Minister will lift the scales from our eyes in that and other regards.

In attempting to discern what the Government's policy is, I have been looking at a number of speeches that different members of the Goverment have been making in recent weeks and months. I remind the House of the very fine speech that my right hon. Friend the Prime Minister made at the Lord Mayor's banquet on 10 November 1980, when she referred to the importance of this country's relations with the developing world. She went on to refer to the total flow of finance from public and private funds, making the point very fairly—this is something that we should not forget—that the total flow of funds from this country is second only to the flow from the United States of America. That is a considerable achievement. Whilst I have reservations about aspects of the Government's response to Brandt, it would be lunacy for the House not to recognise that Britain is the second largest transferor of resources to the developing world. And so we should be. I make no bones about that.

Secondly, my right hon. Friend made the point that the flow of these resources from this country has grown more rapidly over the last 10 years than the flow from any other country. That is partly due to the present Government and the relaxation of exchange controls and the very rapid growth in private investment, and—I say this in all fairness—to the right hon. Member for Lanark (Dame Judith Hart), who played a significant part in the former Government in accelerating the rate of increase in official development assistance. These are two components which have made up a pretty good record so far.

The Prime Minister then went on to refer to the need for the Government to make some reduction in plans for future spending on official aid. She said: We believe that unless we restore a healthy national economy we shall be in no position to give aid to anyone. On the face of it, that is a proposition with which I think all of us could agree. But what I think some of us are concerned about is that that is an assertion based on the assumption that Britain is not only an island geographically but is an island economically. That is the fundamental weakness in the Government's policy. In that same speech, the Prime Minister said: Our policy towards the developing world is founded on reality. I take issue with my right hon. Friend on that assertion. As many hon. Members have said, more than almost any other country, this country is interdependent with its partners in overseas trade We are bound to fail if we attempt to regulate our economy without regard—indeed, with a total disregard—to what is happening in the wider world.

During the debate on the Queen's Speech, my right hon. and learned Friend the Chancellor of the Exchequer referred to the public sector borrowing requirement. He said: Over half the increase is attributable to the recession being deeper than expected. Not for the first time, and I fear not for the last time, the Treasury has miscalculated. That phenomenon has been endured by successive Governments of all parties throughout Parliament's history. But the Treasury may be more out of touch with what is likely to happen in the world economy than at any time since I came into politics. My right hon. and learned Friend continued: The effect of the recession on trading conditions is similarly reflected on the external financing limits for the nationalised industries". The extent of the recession was not predicted. My right hon. and learned Friend's words show that it is affecting important parts of our industry.

My right hon. and learned Friend then referred to a CBI report. He said: the CBI report today makes a number of things clear—that the fall in output that has been taking place is slowing down, and as the forecast makes clear, is lively to be bottoming out shortly". I should like to know a little more about the phrase "bottoming out". In recent weeks it has been frequently used. I am never sure whether it is British industry's capacity to lose more jobs that is bottoming out or whether it is its capacity to go out of business. Perhaps it means that the world slump will bottom out. I am not sure what is supposed to be bottoming out. I hope that my hon. Friend the Minister will explain. Perhaps he will consult his colleagues on the Treasury Bench about whether the world economy will bottom out.

The appointments by the next President of the United States of America to his Cabinet and the recent actions of the Federal Reserve Bank have not led me to suppose that the United States of America will play a major part in the next few months in dragging the world out of the recession.

In reply to a question raised by the hon. Member for Dunfermline (Mr. Douglas), my right hon. and learned Friend the Chancellor of the Exchequer said: I have the gravest uncertainties about the pattern of forecasting".—[Official Report, 24 November 1980; Vol. 994, c. 313–30.] I agree with him. Indeed, I am sure that the House will also agree with him. My right hon. and learned Friend then referred to the Industry Act forecast, which suggested that the total output of the economy was likely to have just about "bottomed out". From my right hon. and learned Friend's remarks, I deduced that the Treasury, if not the rest of the Government, was considering Britain's economic problems on the assumption that the world economy would miraculously come out of the slump. The Government have not explained why they think that. Murmurs may be heard about restocking cycles and so on, but if the money to buy the stock is locked up in real estate or Arab banks, how is all this to be financed?

The real crisis is one of financial liquidity and getting the resources that are available in the world recycled into productive capacity in developing countries where needs can be translated into demand, which in turn can provide markets for us and jobs for our people.

It is worth remembering that there are about 1,000 million people in the developed countries who are sustained in their employment and standards of living by the earnings of 3,000 million people in the developing countries. That point has been made time and again throughout the debate. The stark figure to bear in mind is that there are three customers for each job that we want in this country.

My right hon. Friend the Secretary of State for Trade is well aware of the importance of trade. In his contribution to the Queen's Speech debate on 26 November 1980, he referred to the difficulties of looking beyond the recession to see how the cycle of economic decline can be broken. Indeed, he then referred to a previous remark by my hon. Friend the Member for Carshalton (Mr. Forman), who said that we must look beyond the present recession to see how we can arrest the cycle of economic decline from which our country has suffered for many years. That was an encouraging sign that the Secretary of State for Trade had taken on board the size of the problem facing not only our economy but other Western economies.

On the same occasion, the Secretary of State said: With 30 per cent. of our gross national product earned abroad, our domestic living standards are crucially dependent on our capacity to hold, and ultimately to increase, our 9 per cent. share of world trade."—[Official Report 26 November 1980; Vol. 994, c. 788–93.] That poses a nice point. Do we wish to increase our share of declining markets, or do we want to hold our share of an expanding market? It is my commercial experience that to hold on to a limited percentage of a declining market is a way to lose money in the long run but that to maintain one's share of an expanding market almost inevitably leads to profits. The same is true on the world economic scale.

Later in his speech, my right hon. Friend referred to the need to trade with less developed countries. He pointed out that we needed to be reminded that last year we had a surplus of £2.1 billion on our trade in manufactures with those countries. There can be no doubt that much of Britain's wealth and employment depends crucially on the capacity of countries in the developing world to purchase our goods and services. In 1979, we had a £2.1 billion crude surplus on trade in manufactures with the low wage developing countries, whose imports into the United Kingdom are regarded as a threat. Those countries account for only 8½ per cent. of our imports of manufactures. The balance between the United Kingdom and the developing world in terms of the flow of cash, of exports and of the generation of jobs is in our favour The whole of our national interest is to be served by an increase in the volume of our trade with the developing world.

As part of my search to find the Government's posture in their response to the Brandt report, I referred to the memorandum which they prepared for the Select Committee. This was the first disappointment for me. On page 5, paragraph 9, they stress the importance for the future of developing countries, of restoring growth to the world economy. The Western industrial countries, including the United Kingdom, must be the main motors of this growth. Having reached that judgment, it was profoundly depressing that the Vienna summit on 23 June then said that the first priority was the adjustment to the prices of oil. [Interruption.] I am glad to note that for once my hon. Friend the Member for Plymouth, Sutton (Mr. Clark) agrees with me on that point.

Mr. Alan Clark

I was simply correcting my hon. Friend; I was not indicating agreement. If anything, I was indicating dissent, but only on a trivial point. The summit was held at Venice, not Vienna.

Mr. Brocklebank-Fowler

I apologise. I am not wearing my spectacles today, so I am not doing very well with my quotations.

It confirmed that the first priority, which is obviously right, is that our country must adjust to the higher cost of oil and bring inflation under control. We could agree with that if it was understood that it is impossible to bring inflation under control without reference to our performance in international markets, the balance of trade and various other international factors that are beyond our control.

I am glad that my hon. Friend the Minister for Overseas Development is present. Some hon. Members had high hopes that Britain's contribution to the United Nations special session in August this year would be constructive, for the reasons that I have given. If one disagrees with the proposals, one should put forward counter-proposals for the solution of the problems defined by Brandt.

In his speech on 28 August, the Minister said that the Government were in favour of encouraging investment, technology, training, management and expertise. He said: It is for developing countries to create or maintain conditions to attract private external capital. We cannot disagree with that. He then said: The free market lies at the basis of our economic beliefs. It is the foundation of our economic beliefs, domestic and foreign. I take issue with the Government here. It is perfectly right for us to carry out an exercise in sensible domestic bookkeeping and to reintroduce a greater degree of market force into our domestic economy, but for us to expect the whole world to follow our example is unrealistic in the extreme. We have to accept that the world contains countries that do not share this interest in the market economy. There are planned economies and poor country economies where there is not sufficient cash to finance anything and where management is poor.

I hope that we can begin to understand that the domestic bookkeeping exercise that we are carrying out at present, in a period of rapid adjustment to changing world conditions, is painful but perhaps can be accepted. But the possibility that the rest of the world can only resolve its major problems in the same way is not acceptable. If there is an argument for monetarist policies at home, there is probably a bigger argument than ever before in the last 30 years for Keynesian policies abroad. My right hon. and learned Friend the Member for Hexham (Mr. Rippon) and other hon. Members referred to that in their speeches.

On 11 November, my hon. Friend the Minister for Overseas Development received a delegation from the various aid agencies in this country. In their memorandum they said—and this is the central point that I am trying to get across: As agencies we do not agree with the whole of the Brandt Report and we believe important points have been omitted from it, or underestimated in it—not least that real aid to people in need is not to be equated with the Governments of those people. Nonetheless, Britain, with its colonial past and its utter dependence upon trading, ought to be taking the lead presented by Brandt, making the issues of the Third World central to Government strategy. The realisation that those issues are not central to the Goverment's present strategy causes me great concern.

It is incumbent on the Government to respond more positively to the Brandt report and to understand that domestic and overseas policies interact and that Britain has a major role to play in the evolution of an expanding world economy. The Government must ensure that the issues are properly debated in the Cabinet, so that Treasury Ministers can be educated to the simple fact that their capacity to run the domestic economy requires a deeper appreciation of the fact that those in the developing world must have money if they are to be customers for the United Kingdom. If my hon. Friend the Member for Mid-Oxon (Mr. Hurd), the Minister of State, Foreign and Commonwealth Office, understands the issues, perhaps he will organise two seminars—one for Treasury Ministers and the other for Treasury officials.

I should like the Government to be represented at the summit at the highest level. I hope that we shall be told that if we are invited the Prime Minister will lead our delegation, and I hope that she will be accompanied by representatives of the Department of Trade, the Overseas Development Administration and the Treasury. It is important that there is much greater interdepartmental thinking on these subjects at the highest level.

I should like to know that the Government will play a leading part in constructive discussions to find practical solutions to the problems that are so well defined by the Brandt report. I urge the Government to reconsider their significant cutting of the aid programme. Many hon. Members have pointed out that two-thirds of our aid programme comes back to this country in the form of purchases of goods and services. On this year's figure of about £900 million aid, the net cost to us is only £300 million, which is a small price to pay for the undoubted good will that results to other British industries from our relations with the countries of the developing world.

Mr. Douglas-Mann

Does the hon. Gentleman agree that it could be much more than two-thirds, because that proportion does not take account of expenditure by recipients of aid in other countries, which generates the trade and economic activity of those countries and multiplies it, perhaps many times, to our substantial benefit?

Mr. Brocklebank-Fowler

The hon. Gentleman is correct. I was referring merely to the return that is visible and calculable. The other £300 million creates such good will and has such a knock-on effect that I am sure that it is more than self-liquidating in the long run.

The Government should also consider ways of improving the effectiveness of the aid programme. I am sorry that my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), the Minister of State, Foreign and Commonwealth Office, has just left the Chamber, because I wished to tell him that I have considerable reservations about the wisdom of spending £3½ million on the Turks and Caicos Islands, which will not achieve the objective of turning that tiny territory into a self-sufficient economic entity. The risk of destroying the social environment there may also prove to be a burden on future British aid budgets. That project should have been looked at with much greater care than appears at first sight to be the case.

Let me give another example of how I think the Government could give more help to developing countries. The Commonwealth Development Corporation is one of the major engines of transferring capital and management expertise into developing countries. It has a superb record in that respect. In my view, the Government should look again at the way in which the corporation is financed. It is surely not sensible that the CDC, which raises offshore funds in foreign countries, and relends or reinterests those funds in other countries, should have both figures accounted for in the PSBR The Foreign Office should consult the Treasury to find a way of spinning off the CDC so that its freedom to operate in the effective way that it does can be substantially increased.

Mr. Bowen Wells (Hertford and Stevenage)

Will my hon. Friend confirm that the net contribution of the CDC to the Treasury funds over the past three years has been in excess of £28 million? Is it not a classic example of overseas aid which benefits other countries and in turn comes back to this country, thus benefiting our industry and our Treasury?

Mr. Brocklebank-Fowler

I agree. My hon. Friend, who is a former distinguished servant of the CDC, knows the facts better than I do.

I should like the Government to look at ways of increasing our trade with, the developing world. I congratulate the Government on having relaxed exchange controls— clearly that was an important first step in building up trade and investment—but I hope that they will look specifically at the possibility of increasing the number of bilateral agreements concerning conditions for private investment. This country has agreements with probably 20 developing countries—a sort of code of conduct relating to private investment in those countries. The Government should be more active in seeking to secure formal agreement with other countries to make sure that private investors can invest with confidence in a wider range of developing countries than at present.

Next, the Government should consider giving technical assistance to less developed countries to help them identify opportunities for private investment in their national plans. One of the great problems of developing countries is that they are so short of people with commercial expertise that they are unable to see which parts of their national plans are most appropriate for private investment. The ODA could provide a valuable service to overseas Governments if it had a unit that could look at recipient Governments' national plans and help the Governments to identify Projects suitable for private investment.

I hope that I have made some constructive suggestions. It has been said many times that Britain has lost an empire and not found a role. I have no doubt that if the Government recognise that our history, the Commonwealth and our dependence on free trade require that they play a leading role in finding a solution to these major international economic problems, they will not only have the full backing of our people but will have found a role for this country that we can fulfil with pride.

Several Hon. Members rose—

Mr. Deputy Speaker (Mr. Richard Crawshaw)

Before I call the next hon. Member to speak, may I tell the House that six hon. Members who have been here since the beginning of the debate still seek to catch my eye. Any speech of more than 12 minutes will deprive one or more of them of the opportunity to speak.

12.30 pm

Mr. Eric Deakins (Waltham Forest)

I agree so much with a great deal of what the hon. Member for Norfolk, North-West (Mr. Brocklebank-Fowler) said that I do not need to dwell on the points that he made.

I join in the congratulations to my hon. Friend the Member for Mitcham and Mordon (Mr. Douglas-Mann) on choosing this subject for debate once more. It is clear that the Government miscalculated the public response to the Brandt report. That response has been overwhelming. All praise and credit are due to the right hoe. Member for Sidcup (Mr. Heath), not merely for hi:; part in the report but for the campaign that he has mounted throughout the country. All praise and credit are also due to my right hon. Friend the Member for Lanark (Dame Judith Hart) for travelling up and down the country, speaking at village halls all over the place on the subject. My right hon. Friend and the right hon. Gentleman have stimulated and catered for an enormous upswelling of informed public opinion, which the Government did not expect. I think that the Government hoped that the report would go away.

The Government response to the report is pathetic and disappointing. It is more or less in line with their general attitude to the aid programme—cutting it and giving it a low priority in the overall pattern of public expenditure. The Sunday Times said that they were voting for poverty and The Guardian said that they were myopic, blind and past caring. Those comments and other press comment indicate the opinion of non-party-political people across the spectrum on this major issue.

Even the Minister of State, the hon Member for Mid-Oxon (Mr. Hurd), said when giving evidence to our Overseas Development Sub-Committee of the Foreign Affairs Committee on 5 August, referring to the Government's reply, "the tone is bleak".

I wish to make three minor criticisms of the Government's response, which is the narrower theme of the motion. The first is of their insistence that we must resolve our own economic problems before we can do much more to help the developing countries. We unquestionably have serious economic problems, including that of inflation. I accept the Government's point on that, but it is an insult to people in poor countries and their Governments to claim that there is any equation between the economic problems in rich countries and those in poor countries. The problems of hunger, disease, poverty, ignorance and so on do not exist in rich countries. We have a different set of problems; we do not have the basic problems that face much of the world's population.

My second criticism is of the Government's implication that somehow the world's economic problems began only with the oil price rises in 1974–75. Certainly, our economic problems began to become noticeable and to come to public attention then. But the problems in the developing countries existed all the time. It is simply that they were not being noticed in rich countries. Now, fortunately, they are.

My third minor criticism is of the Government's general approach in their response, typified by the Minister's statement in evidence to the Sub-Committee on 5 August that the Government's approach was evolutionary rather than revolutionary. That sounds all right, except that I am reminded of the marvellous first two lines of that great Andrew Marvell poem to his coy mistess: Had we but world enough, and time, This coyness, lady, were no crime. It is a case not of coyness but of slowness. The Brandt report makes clear that there are certain urgent problems which will not go away and which it is in our mutual interest to resolve. The report suggested a short-term emergency programme.

There was a meeting in Vienna recently of a number of developing and rich countries, a meeting at which we were not represented. I am sure that that is not because we turned down an invitation but because we were not invited, I suspect because the world's attitude to us as a result of the Government's response is one of condemnation. If we are lucky enough to be invited to the Mexico summit which is to be the follow-up to that Vienna meeting, I hope, and I am sure that the House hopes, that we do not talk of our own economic plight in the sort of terms that we have in the past. If we are invited, we shall be there on sufferance. I hope that there will be no more speeches putting our own economic problems first and those of the rest of the world nowhere.

The major theme in the Brandt report is that of mutual interest, and there are various aspects that I wish to stress. There is the theme that development promotes stability in the countries of the developing world. This Government are giving a much higher priority to defence expenditure and demoting the aid part of the total public expenditure budget. That defence expenditure is needed because the world is a very unstable place, not merely as between East and West in Europe but in many other parts of the world where instability can allow other countries to come in and interfere. That means that we have to think about possible international reactions which affect our own posture in Europe. Therefore, it is in our own interests to promote stability in the world, and, by and large, development promotes stability.

It is also in our own interests as far as possible to stop the growth of the world's population in the next century. We cannot do it in this century because the people of childbearing age are already there, mainly in the developing countries. A major theme of the Brandt report and of World Bank reports is that development reduces fertility. That is a fact with enormous implications. The rich countries need to devote far more of their aid resources to the problems of aiding a decline in fertility in developing countries.

This Government, as part of the overall cuts in the aid budget, have cut back on aid for population control in developing countries. The annual grant to the United Nations fund for population activities, which was £3 million in 1977 and £3.75 million in 1978, was cut back to £2 million last year and is £2 million this year. Goodness knows what it will be next year.

That is a step in the wrong direction. It is in our mutual interests to do something aout world population growth as well as population growth in our own country. More people lead to greater pressure on the world's natural resources. That is self-evident. That must be mean rising real costs of energy and raw materials beyond what would otherwise be the case.

Unfortunately, there is little recognition in the Brandt report, and there is no recognition by Her Majesty's Government, of the effects of population growth on our own consumption patterns and those in rich countries generally. There is bipartisan support in this country for more and more economic growth. I am one of the few people who feel very strongly that further economic growth in rich countries, even at our present relatively low rates of growth, will widen the gap between the world's rich and poor.

Looking at the World Bank projections, even on the basis that there will be relative stability at this low level of world economic activity, we see that over the next 10 to 15 years they still show growth in rich countries being higher than growth in most of the world's poor countries except the newly industrialised countries and the OPEC countries. That means that the gap will widen.

Brandt also makes a point about arms control and disarmament. However, I pick up one theme which is ignored in the Government's memorandum to the Overseas Development Sub-Committee. Chapter 7 of the Brandt report makes it clear that there needs to be a cutback in arms sales, especially sales from developed to developing countries. In the section of the annex dealing with chapter 7 of the Brandt report, the Government's memorandum says that they regret that the report did not analyse … the fact that the military expenditure of the developing countries has been growing faster than any others. But it can only grow if rich countries are willing to sell them arms. If we stopped selling them arms or reduced the volume of our arms sales, they would be forced to spend less on arms because they would be unable to obtain them. To anticipate the objection which may well be raised by Ministers, let me quote from chapter 7 of the Brandt report: The traditional justification of arms selling—'if we don't sell them, someone else will'—cannot be accepted. Nor do I think that it is a moral argument. It is one that the House should reject, and we should be doing very much more in this direction.

My concluding remarks are concerned with development education. The Government made a grave mistake, as soon as they came to power, in cutting out altogether the development education programme, particularly in our schools. Indeed, the Government, in a sense, cut off their nose to spite their face—or rather, to be fairer, the overseas development part of the Foreign and Commonwealth Office—for, if there is a much better informed and educated public opinion in this country on aid and development matters, it is bound to help that Department in its battles with the Treasury over the volume and the amount of public expenditure on aid.

I am a member of the Council for World Development Education. It is a very small body but one of the few bodies left—the hon. Member for Norfolk, North-West is a member of it—in the field of aid and development education. It has a small grant from the ODA. That grant is not under threat now, but its future looks rather bleak from the end of next year. If the Minister cannot restore the whole of the development education programme, I hope that he will not shut out the few valuable bits which remain.

12.41 pm

Mr. Michael McNair-Wilson (Newbury)

I have the second motion on the Order Paper, and in my motion I pledge the support of the House, for the measures currently being taken by Her Majesty's Government in conjunction with other Western nations to assist developing countries. I chose those words because, having read the Brandt report—perhaps one should call it "North-South", for that is its title—I found myself wondering whether we were not in danger of being engulfed in a flood of idealism when what is needed is hard reality and practical solutions. Of course, I pay my obeisance to those who were members of the commission which has produced that report, and I remind the House that it is almost exactly a year ago today that it first saw the light of day.

The report sets four targets for the world: the transfer of at least $4 billion per annum over and above current aid, with a 0.7 per cent. aid target to be reached in 1985; a global food programme; an international energy strategy; and a start on major reforms of the economic system. These global concepts are much more likely to earn words than actions, for what is needed—it was said by the right hon. Member for Lanark (Dame Judith Hart)—is the institutions to make some of Brandt become a reality. Let us not persuade ourselves that Brandt is telling us anything very new. The United Nations Association made clear that that is not so. Indeed, in its little document called "Speakers' Notes on the Brandt Report", it says: Does it say anything new to those, like so many in the UNA, who have concerned themselves with the issues of world poverty, world development and overseas aid for so many years? There is little new in the proposals. So let us not imagine that we have been presented with some shining new blueprint which sets forth all the problems that none of us has been thinking about for the last decade. Rather, we have a report which now bears the signatures of people whose names are household words. To that extent, the addition of their names has made us conscious of those problems in a way that we were not conscious before.

We have been told that 68,000 copies of the Brandt report have been sold in this country. I understand that about a tenth of that number have been sold in America and that throughout the world the take-up of the report has been disappointing. That fact also deserves some consideration.

Whereas we in this country harp on the concept of the Government doing this, that and something else, other parts of the world may take a more practical approach. They may realise that, if we were to place the whole emphasis on what Governments do, very little can be done, since Governments have finite means to meet a multiplicity of needs, nationally as well as internationally. Some constituents will ask me why old-age pensioners should not get all they want when we are giving aid to other countries.

Mr. Douglas-Mann

Does not the hon. Gentleman accept that what is new about Brandt is that it presents, in a way in which it has never been so effectively presented before, the link between expenditure on aid by the rich countries and the renaissance of the declining economies of the developed countries as a consequence of that expenditure? Does he not accept also that probably one of the reasons for the larger Sales of the report in this country and the relatively smaller sales in others is that since May 1979, we have departed from the Keynesian economics on which Brandt is based and that the consequences have made the people of this country much more aware that Keynesian economics are more relevant, both nationally and internationally, than ever before?

Mr. McNair-Wilson

That could be one reading of why there have been more sales in this country, but one could also argue that our people are more idealistic than those in other countries. I do not want to pursue that point, except to say that we seem to be more interested in the Brandt report than are other countries which might have taken an interest in it.

Institutions are one of the keys. We all know that there is to be a summit next year in Mexico City. We can think back over the past decades to all the other summits, which have produced excellent communiqués about what has to be done but from which, in real terms, remarkably little has emerged. I question whether, even if there is a summit meeting of 25 leaders, as suggested in Brandt, or of any number we shall ultimately see the institutions which should be created if Brandt as a blueprint is to become a reality.

I have that doubt because I might ask why it is thought that we will use new institutions when we have the United Nations and its agencies, of which we do not make as much use as we should. Why should we think that a summit will make suggestions which can be turned into practical organisations in the twinkling of an eye to help the Third world? Why should we believe that when to date it has not happened?

Some hon. Members have likened Brandt to Marshall aid and the Marshall plan. That is the falsest analogy that anyone can draw. Marshall aid was a national programme of assistance by one country, the United States, to Western Europe. The concept of Brandt is world aid, from the North to the South.

Marshall aid was signally successful because the programme was in the hands of one nation and could thus be managed, monitored and controlled by that nation. Any concept of world aid seems to me to involve the problem of institutions which, I would argue, do not yet exist in the terms in which Brandt suggests they should.

Sir Bernard Braine

Surely my hon. Friend will recall that the essence of Marshall aid was that the United States generously gave it, but on condition that the countries that received it were prepared to co-operate with one another to promote the general economic well-being of the whole. The Organisation for Economic Co-operation and Development stems from that time. All that we have been suggesting in this debate is that that philosophy and outlook should be projected on a world scale. There is an analogy. My hon. Friend is wrong to suggest that Brandt is pie in the sky and a pure appeal to idealism. Brandt is putting in a concrete form what the hard-headed president of the World Bank has been saying in his annual reports for the last decade. I wonder whether my hon. Friend has read them.

Mr. McNair-Wilson

My hon. Friend has made one speech. He will forgive me if I do not comment on his remarks. I stand by the view that Marshall aid was a national programme. I shall leave it at that.

I turn to the question of how the needs of the Third World can best be met by the so-called developed world. I am in total agreement with the remarks of my right hon. Friend the Foreign Secretary when he said earlier this month at a conference in London: The idea of a sharp parity between North and South is too simple. The problems of a country like Brazil will be quite different from those of the African poverty belt. In that statement my right hon. Friend embodied a simple but important truth—namely, that the problems of the world may have a superficial similarity but that they are, on close inspection, very different. In other words, aid and assistance must be tailored to national and regional need. When we talk about the problems of North and South and what should be given to the Southern Hemisphere in terms of aid, let us not imagine that there is an area of the world called the Southern Hemisphere where all the problems are the same. Let us not imagine that if one could only find the single channel to that great hemisphere the problems would be cleared up. The Third world, the underdeveloped parts of the world and the Southern Hemisphere contain a mass of independent nations, all with national ambitions, newly acquired independence and different needs. In order to meet these independent needs most successfully, one needs a narrower approach than that suggested by the Brandt commission.

We are members of the European Economic Community. Since we want that institution to become more meaningful in terms of its place in the world, it is the most likely means by which this country can play the type of role suggested by Brandt.

I appreciate the criticisms of what the Government are doing. There are plenty of people to tell us that we should be doing more. However, one hears that call in relation not only to overseas aid but to anything else in our country. We must recognise that this nation has finite resources. Those who manage the affairs of this nation must use those resources in the most effective way. Therefore, I found no difficulty in supporting my right hon. Friend the Prime Minister when she said: We have had to make some reduction in plans for future spending on official aid. This is not because we underestimate its importance. It is because we believe that unless we restore a healthy national economy we shall be in no position to give aid to anyone. That statement sums up the situation.

With those words ringing in our ears, we should take more pride in knowing that what we give as a nation is larger as a proportion of our gross national product than that which is given by the United States, Germany or Japan. That is a considerable achievement for a rather smaller country.

I recognise the emphasis that Brandt places on the energy crisis facing the world. I recognise that he wants an international approach to this great problem and that he believes that energy costs have had a disproportionate effect on the Third world. He argues for price stability and reasonable assurances about levels of production and supply. Every nation in the world will say "Amen" to that. He is right to point out the inequity between energy uses in the Northern Hemisphere and in the Third world. Somewhere in the report is the comment that all the fuel used annually by the Third world is only slightly more than the amount of petrol used by the Northern Hemisphere in its cars. That is appalling.

Energy has become a precious resource, and, until plentiful supplies of alternative fuels become available, those possessing oil reserves will play a dominant role in the world's future. We are right to ask them to consider how they intend to recycle the vast sums that have come their way. My right hon. Friend the Member for Sidcup (Mr. Heath) so often reminds the House of the problem and is right to do just that.

It would be wrong to assume that some of those funds are not already being recycled to the Third world. I have recently been in touch with an organisation called the Bank of Credit and Commerce International, which has its offices in Leadenhall Street. That bank has recently sponsored a study group into how the world's financial institutions can help in financing the Third world. It supports the Third World Foundation and generally has shown itself to be as aware of the problems of OPEC surpluses as anyone in this House.

Like Brandt, that bank questions whether the existing commercial institutions have a large enough capital base to undertake the necessary finance and all the machinery for monitoring large-scale aid programmes. Like Brandt, it argues for a new financial institution which he calls the world development fund.

There is, therefore, a commonality between the commercial institutions and Brandt's global approach. But it would be a mistake for all of us to assume that the existing institutions are not already doing a remarkable job. Although we may well believe that greater resources should be made available to the World Bank and the IMF, I remind the House that the institutions of the City of London have played are are playing a massive role. Therefore, when we continually demand that the Government should be doing more, perhaps we should remind ourselves that those institutions can play an ever larger and more important part in this task.

To sum up, Brandt is, in effect, telling us that we live in one world and that to keep all the wealth in one part of the world will not increase world prosperity or the world market. If recession and unemployment in the North are to be banished, the world market must be expanded. In effect, therefore, the world economy needs stability, a stability that will enable developing countries to improve their economies.

One of my hon. Friends suggested that if the industrial strength of the developing countries was built up, competition for our industries would be built up as well. That is a most important factor. Although we are discussing how the Third world is to develop, how all those independent nations are to build up their economies, perhaps we should put in one extra thought. If they are to develop simply as nations competing with nations, I suspect that many of them will not have a large enough home economy upon which any real stability can be provided in the long term.

We joined the EEC because, to some extent, we recognised the weakness of our position in our post-Imperial days. We are creating an economic community with, if it works as we hope it will, a harmony of policies that will allow us to use our resources in a way that is not competitively self-defeating. If Brandt is to be effective and we are to create those world institutions from which aid is to flow, rather than that it should flow to individual countries, perhaps those emerging nations should be embracing to themselves the concept of economic communities throughout the world.

I believe that many of those nations would find that their neighbours and they together could plan their economies more effectively in harmony than individually. If they can create what effectively will be the home market concept of the European Economic Community, it seems to me that they themselves will be creating an economic strength which will allow them to trade with each other and build up their strength and from their communities to trade with the other communities of the world in such a way that we shall be swapping our surpluses rather than fighting each other in world markets to a point where some, at least, will be the losers and their people will continue to live in the kind of poverty and deprivation to which the Brandt report draws our attention.

In conclusion, therefore, if it is to be trade and aid rather than just trade that we are now talking about in commercial terms, perhaps it is not nation States but economic communities that point the way towards a more united world, and, as the Brandt report points out, it is interdependence rather than independence that should become our watchword.

Several hon. Members rose—

Mr. Deputy Speaker (Mr. Bernard Weatherill)

Order. It has been intimated to me that the winding-up speeches will begin at a quarter to two. There are six hon. Members who have been waiting to catch the eye of the Chair for most of the day, and I should like to be in a position to call all of them.

1.2 pm

Mr. Nigel Spearing (Newham, South)

The hon. Member for Newbury (Mr. McNair-Wilson) turns our attention to the surpluses of oil and also to his view that the institutions of the world are not doing too badly in that respect. I put it to him that oil surpluses also accrue, or are supposed to accrue, from the United Kingdom. Does he believe that even our own institutions can deal adequately with investing the surpluses that are supposed to arise from our own oil? I rather doubt it.

I therefore dissent from his view, which clearly favours his own motion and not that of my hon. Friend the Member for Mitcham and Morden (Mr. Douglas-Mann), which expresses disappointment with the Government's response to the Brandt proposals. I ask the Minister to tell us when lie replies whether the response in the memorandum prepared by the Foreign and Commonwealth Office for the Overseas Development Sub-Committee of the Foreign Affairs Committee, of which I have the honour to be a member, was indeed the response of Her Majesty's Ministers or, as the title says, a response from the Foreign and Commonwealth Office. There is no introductory letter, no signature and no authorisation of any sort in what is rather a bleak document.

I think that one of the reasons why the informed public have seized upon the Brandt commission report is not only because, as the hon. Member for Newbury said, it has some distinguished signatories but because it illustrates a wider vision than politicians are commonly supposed to have. I do not believe that that is a correct notion, because many debates which are held in this House illustrate a wider vision but are not reported in the press.

Nevertheless, I believe that it is a relief for many people to seize upon a political document which shows vision, compassion and the kind of leadership on a world and national level that many people wish to see and which they do not often hear about. It appeals to our moral feelings. Anything that has to do with turning swords into ploughshares, making deserts bloom as the rose or providing a moral equivalent to war is bound to appeal to public opinion. Indeed, at Christmas time this theme would no doubt appeal to all religions. Certainly, it is not incompatible with the thunderings of Isaiah thousands of years ago.

However, I feel that the Brandt survey, good though it is, does not go far enough in a full analysis of the real problems confronting us. They are about the production and distribution of wealth. In the end, all wealth comes out of the ground or the sea. Coupled with discovered techniques, those resources provide wealth. Some of them are renewable; others, like North Sea oil, are not. The media of exchange—money, capital and, dare I say it, commerce and banking—by virtue of their quantitative nature cannot take account of that qualitative fact.

In the eyes of money there is no difference between renewable and non-renewable resources. The difference between a just return in the medieval concept and exploitation is not taken into account. Almost by definition, certainly if it is based on an untrammelled laissez-faire concept, money cannot take account of qualitative factors. Indeed classical economists never claimed that it could.

The second point that I am not sure whether the Brandt report takes sufficient account of is the fundamental importance of agriculture—and subsistence agriculture at that. A large proportion of the world's population lives on subsistence agriculture. Savings and surpluses come from additional cash crops. Some Third world countries have managed to get their economies going by using the surpluses and savings and attracting outside capital to a point of economic take-off. However, all too often those profits or that surplus are siphoned off by exploitation at an early stage, and those who produce the wealth are never able to enjoy the fruits of the capital investment. It is perhaps the greatest problem—admittedly a political problem—that the Brandt commission did not approach. The control and use of the capital savings that arise out of the ground are a hot political topic throughout the world.

The untrammelled use of the market, which has been the subject of debate and difference among Conservative Members this morning, means that the gaps will inevitably widen. If market forces are used and more resources are available to X than to Y, the disparities in wealth will widen. Some Conservative Members suggest that we must provide pump priming to the Third world so that our industries may keep abreast of the times and unemployment can be reduced. That is the greatest breach of the policies to which they have given political and economic allegiance. The biggest difference within the Conservative Party today is between those who believe that the economic forces of the market should be given a free rein, without intervention, and those who say that it is not possible and that there has to be intervention at some stage. The arguments within the Conservative Party about our domestic economy also apply in the larger context of the world economy.

Over a hundred years ago, people argued for a more equitable distribution of the resources of this land. We should follow the example of those enlightened people who tried to reform our country. This country and the Western world stand in relation to the remainder of the world as those people stood at that time.

We are concerned not only with the failure of institutions. The problem goes far beyond what the hon. Member for Newbury said. It concerns the basic philosophy of ownership and use of capital. Capital and markets moving entirely at their own volition will always exploit. There is no qualitative judgment by the market. Intervention is therefore necessary. Although we are talking mainly about North-South, the big difference between East and West is the manner of that intervention. The Communist and Marxist philosophy advocates intervention in a way which is unacceptable to people in the United Kingdom, including hon. Members.

I shall close on the note struck so often by hon. Members in this debate. That is, that the position of Great Britain as a Commonwealth nation, an ex-colonial Power, in the North-South dialogue and its position in the East-West dialogue, on which the peace of the world also depends, are absolutely crucial. These are the sort of dimensions into which, perhaps, alas, the Brandt commission could not venture, which are absent in the report but of which account must be taken by this country, this House and any British Government. There is no indication whatsoever that the present Government understand these things. The next Government, any United Kingdom Government, must do so.

1.11 pm

Mr. Raymond Whitney (Wycombe)

At this stage of the debate I shall try to keep my remarks as brief as possible.

I join the general rejoicing that the reaction of the people of this country to the Brandt report has been so positive. We all agree on the significance of the report. I regret, however, that the level of the debate over the past 12 months has not intensified and has not been as rigorous and as well informed as it should be. Many of us who take a keen interest in these affairs in the House of Commons must bear a responsibility for that. Therefore, when I look at Brandt critically, that does not mean that I minimise in any way the great need to solve the problems which it sets out to solve or that I undervalue in any way the tremendously warm reaction from the British public.

What Archbishop Runcie described as flaws in the report are very much more than that. I give an example. The OPEC surpluses are touched on. In the 300 pages of the report, virtually every issue is touched on. But what does not emerge are the following figures. Every time a barrel of oil increases in price by $1, the oil bill for developing countries rises by $2. In 1978 the oil bill for the developing countries was $29 billion; in 1980 it has doubled to $58 billion.

We are talking of an OPEC surplus of perhaps $120 billion and of aid from Western countries of $20 billion. Even if we doubled our aid, which in present circumstances is politically and economically inconceivable, we should take it to $40 billion. But the deficit of the non-oil developing countries this year will be $70 billion and next year the deficit will be $80 billion. That is the broad outline of the problem. We talk vaguely about recycling. We need some concrete suggestions and results. That is the measure of the problem.

Another enormous gap is the reference to the Soviet Union and its lack of contribution. There is a three-line reference to the failure of the Soviet Union to participate in the debate. It will, of course, refuse to go to Mexico. Western countries, including EEC countries, are criticised, but their average contribution in development aid is .04 per cent. of their gross national product. The contribution of the Soviet Union and its allies is .04 per cent. It totals about $3.3 billion net, and 90 per cent. of that goes to Cuba and Vietnam.

The Soviet Union says "This is not our problem. This is a colonial problem. You, the West, are responsible for the poverty in the world." I totally reject that. Where the West has been, of course we have taken goods; but so, too, have we set up the ventures. We took the rubber to Malaysia and the tea to India. Therefore, we must not have a guilt complex. We must recognise the reality, our limitations, our responsibilities and the benefits that we get.

The same facts apply to what are now called the transnational corporations. Good things are said about them in Brandt, but the basic import of the words of Brandt is "Keep away from those nasty transnational corporations." But those of us in the developed world have tried very hard indeed to bring the transnational corporations to our countries—and to our constituencies. If anyone doubts that, he should ask the former Prime Minister, the right hon. Member for Cardiff, South-East (Mr. Callaghan), who tried so hard to invest in South Wales. One understands that. Brandt makes a dangerous shift of emphasis which is to the drawback of the developing world. In addition, it kindles the attack on the IMF and the World Bank. However, those institutions have already been defended.

The terms of reference of the IMF are to generate and liberalise world trade. It has done that well. In the 1960s, the less developed countries' average annual growth rate was 5.6 per cent. compared with 5 per cent. for the industrialised countries. During the difficult period of the 1970s, which included the oil shock and the mid-decade recession, the non-oil developing countries had an annual growth rate of 5.3 per cent., whereas the West had an average growth rate of 3.1 per cent. That is not a bad record.

Many things must be done. Great flexibility has been shown. Those who follow the workings of the IMF know about the facilities that it has made available to cope with the problems of international financing which have occurred since 1973 and the sudden rise in oil prices. For example, the rights of quotas, which used to be 300 per cent. and are now 600 per cent., can be held over three years. The standby credit, which used to be available for one year, is now available for three years. Two-fifths of a country's quota is available with virtually no conditions.

President Nyerere has made a hash of his country's economy, but that does not prevent him from interfering in the politics and economies of his neighbours and of other African countries. That does not stop him saying that these are terrible conditions. The IMF expects that. It has done a good job. At present, the IMF is actively engaged in looking for a new way. The Government must consider how we can continue to provide finance and how we can get OPEC to participate in the IMF. They must also consider whether the commercial and financial world can help.

Criticism of the World Bank is far too facile. During the last decade, loans from the World Bank have quadrupled to $7.6 billion. At the next International Development Association replenishment, $12 billion will lie involved. The West will contribute almost the whole; mount. The United States of America will contribute $3.2 billion and the United Kingdom will contribute $1.2 billion. Contributions from the OPEC countries are very small—for example, $390 million from Saudi Arabia.

The World Bank has changed its programmes since the vast infrastructures went wrong. It is ready to double its capital. I have referred to some of the poor analyses in the Brandt report. It also offers highly questionable solutions. For example, it is suggested that there should be a tax on world trade. Nearly everyone agrees that most of the solutions to the world economy will be found in the form of trade. How can anyone suggest that the introduction of an international VAT will promote economic recovery? That is scarcely conceivable.

The proposals on international commodity agreements may be highly desirable, but they are also very difficult. Experience shows that they can turn into international common agricultural policies. We all know how much some Labour Members like the CAP. Let us take the example of cocoa. Great efforts are being made to reach tin agreement. The Ivory Coast produces 22 per cent. and will not agree about the price. Mr. Gough Whitlam was a Brandt-inclined Prime Minister of Australia. Australia joined Jamaica to form the International Bauxite Association. As a result, the aluminium companies pulled out of Jamaica and settled in Australia, and Jamaica's bauxite industry was destroyed.

We must look closely and rigorously at these difficult areas. Those good men in our constituencies whose hearts are deeply troubled deserve from us the kind of analysis that illustrates these problems.

I am delighted that the Brandt report says that the primary responsibility for developing countries must be to solve their own problems. Indeed it must. We must look hard at the soil that creates economic growth and the soil that does not.

It is a sad reflection that four economies are challenging the West: Hong Kong, Taiwan, Singapore and South Korea. Some 60 per cent. of manufactures going into the developing countries come from those four countries. Not one of the 25 eminent persons interviewed by the 18 wise men on the panel came from those countries.

I was delighted that at the recent special session of the United Nations the EEC put forward important proposals on energy, on how to handle external balances and on food, and the United States called for a world trade pledge. These are the areas where, together with the gradual evolution of the financial institutions, progress is to be made. It is slow progress, but it has been continuing and we must not devalue it.

We must press the Government to make more progress. The direction is right. To quote a recent editorial in The Guardian, "Utopianism will lead us astray."

1.22 pm

Mr. Clinton Davis (Hackney, Central)

The hon. Member for Wycombe (Mr. Whitney) said that Ms constituents, among others, were entitled to a more profound analysis. I think that he should read his speech to see whether he has performed that service today.

Mr. Whitney

Ho, ho, ho.

Mr. Davis

The hon. Gentleman did a gross disservice to the whole purpose of the Brandt report. He was not simply picking up a few criticisms—we can all do that—but seeking to undermine the whole message of the Brandt report.

Mr. Whitney

Yes.

Mr. Davis

The hon. Gentleman says "Yes". I wish that he had said that more openly in his speech.

Mr. Whitney

Some of the messages.

Mr. Davis

Now we know where the hon. Gentleman stands.

Mr. Whitney

Will the hon. Gentleman give way?

Mr. Davis

No.

Mr. Whitney rose—

Mr. Davis

I shall give way later. I should like to complete a sentence, even if the hon. Gentleman does not like it.

The hon. Member for Wycombe has chosen to be an apologist for what is a pathetic response by the Government to the message that Brandt has sought to get across to the world. I believe that the Government, instead of adopting this surly, unconstructive and unco-operative response, should have taken the lead and said "We welcome what is said in the report. We want to evangelise for the purposes proclaimed by Brandt." I now give way to the hon. Gentleman.

Mr. Whitney

Does the hon. Gentleman believe that there is only one message in the Brandt report? If so, he misreads it. I take issue with some of the messages in the Brandt report.

Mr. Davis

The hon. Gentleman conceded that he did not like the Brandt report. Therefore, I shall not waste any more time on that point.

The Government's response to the Brandt report reminded me of an aspersion that was cast by the Court of Appeal on the summing-up of a recorder in the not-too-distant past. The court said "We can agree with only one thing that the learned recorder said in his direction to the jury. That was 'Members of the jury, you may not follow what I am trying to say.'"

I sensed that was the kind of response that we were getting from the Government and the hon. Member for Wycombe. Their motives are mixed. Their reaction is not only mixed but very surly. We cannot afford to adopt the complacent line that has hitherto been adopted in the Government's response to the Select Committee and in some of the speeches from their apologists today.

How can we lose sight of the appalling poverty that is afflicting the world, the futile and escalating arms race, the explosive population growth, the critical shortage of energy and, above all, the grotesque and growing inequality between North and South?

Those matters will not wait until we resolve our economic problems, and our economic problems pale into insignificance when we compare them with the problems of the Third world countries. The hon. Member for Hertford and Stevenage (Mr. Wells) and I visited Guyana recently, as members of a Commonwealth Parliamentary Association team. That is not one of the worst afflicted countries, but it is having to spend an enormous amount of its gross national product simply in supporting its oil bill. That is true of many other countries. Therefore, they cannot wait.

I should have thought that the Minister of State, Foreign and Commonwealth Office, who once had a reputation as a "wet"—I am not sure where he stands now—would have been urging his colleagues to try to convene an international conference and to take a lead because of our position of responsibility as a Commonwealth Power. The Government have decided not to do that.

The point has been made time and time again in this debate that if they criticise the proposals in the Brandt report the Government are duty bound to postulate the position as to where they stand. It is no use their being negative, as they have been. That is the message that has come over. The Prime Minister said that overseas nations are "applauding our resolve". She must be living in a world of self-delusion, because, clearly, that is not the message that is coming over. The difference in thinking that has been displayed by the right hon. Member for Bexley (Mr. Heath), who has approached the whole matter with vision—I applaud him for what he has done—and that of the Government, who have approached it with tunnel vision, is remarkable.

Against the weight of all the evidence and all experience, the Government continue to express the view that the huge international indebtedness from which the Third world is suffering can somehow or other be financed by the private banking sector. Of course it has a role, but to place almost exclusive hope in that being the way to resolve these fearful problems is adding insult to the injury that the Government have imposed by the massive reduction in their own aid programme.

My hon. Friend the Member for Mitcham and Morden (Mr. Douglas-Mann)—I congratulate him on introducing this topic today—drew attention to the tremendous growth of the world population and to all the hazards and perils to which that will lead. Coupled with the surplus of the OPEC countries, which is now running at $130 billion a year, the sort of problems to which I alluded in relation to Guyana are being reflected in more wealthy Third world countries, such as Brazil and the Philippines, which cannot obtain private finance in this financial year. That is a terrifying reflection on the present position.

We in the West are going through a difficult period, and I leave aside the present self-inflicted wounds that have been imposed on us by the Government's policies. At present, there is a huge waste of our human resources. About 18 million people in the OECD countries are out of work, and in the South the consequences are more terrifying. Some 800 million people are destitute, hungry and racked with disease. It is a tragedy that the Government seem to be incapable of seeing and understanding the magnitude of the problem. There is a desperate need for the transfer of resources to the Third world. If the Government do not agree with Brandt, let them spell out ways in which the problems can be resolved.

One of the most important tasks for the Government is to consider how we can control and reduce East-West arms sales and resurrect the SALT II discussions. A Conservative Member referred earlier to protectionism. I do not like protectionism, but there is a problem in that respect. The trade unions of the free world have a good record in terms of the liberalisation of trade and development—and tribute to that effect is paid in the Brandt report—but they are genuinely concerned when they witness substantial losses of markets and employment in their own countries, while working conditions and wages in the many countries of the developing world are being held down by the exploitation of unorganised and weak labour forces, particularly when those abuses are practised by the same trade unionists' employers in the Western world.

There is a particularly bad example of that in international shipping. The growth of flags of convenience is a supreme example of unfair labour standards being practised. There is a permissive attitude towards international standards of safety, a degradation, in too many cases, of proper working conditions and a denial of the right to belong to a trade union and to organise collectively.

Those are matters to which the Government should turn their attention, because we are a major shipping nation. Instead, the Government deny that we have any desire to stop the growth of flags of convenience or are indifferent to that threat. The fact is that this represents a major threat to us as well as to standards in the developing world.

It is not only trade unions that are concerned about unfair health and safety standards affecting those working in the developing world. The companies that play by the rules and seek to establish and encourage social progress are also being treated unfairly because of the bad practices, since they have to face unfair competition. The complacency of the Government in such matters is mind-boggling.

The voice of the hungry world is an angry voice. Though their economic situation is depressed, the people of the hungry world are becoming strong in a way that they have never known before. As nations, many of them are young and to them the rest of the world is quite new. But if we do not listen to them and hear them well, we face all the perils of ignorance and, with that, the perils of disastrous mistakes. Let us realise that, even if we do not listen, other powerful nations are listening and hearing well the voices of the hungry world—and they are acting. If we fail to listen to the cry expressed in the Brandt report, we shall be doing a singular disservice not only to the Third world but to our future prosperity.

Several Hon. Members rose—

Mr. Deputy Speaker

Order. The Front Bench speakers have kindly said that they will curtail their replies in order to enable me to call two more hon. Members to speak for five minutes each.

1.34 pm

Mr. Alastair Goodlad (Northwich)

Those of us who have participated in previous debates on the Brandt report will welcome the confluence, if not unanimity, of view expressed today. Even my hon. Friend the Member for Wycombe (Mr. Whitney), whose views we listen to with respect, even when they are not animated by his customary wisdom, seems to have mellowed.

I join in the congratulations to the hon. Member for Mitcham and Morden (Mr. Douglas-Mann) and my hon. Friend the Member for Newbury (Mr. McNair-Wilson) on their choice of subject for their motions. However, I think that the hon. Gentleman has slightly misunderstood the Government's position. We have heard extracts from the speech of my right hon. Friend the Prime Minister at the Mansion House and from the speech of my hon. Friend the Minister for Overseas Development to the Board of Social Responsibility of the General Synod of the Church of England.

I mean no disrespect to Jesuits when I say that I do not think that a Jesuitical scrutiny of what the Government have said over the months is particularly profitable. The matters that we are discussing cannot be discussed unilaterally. The positions of other countries are all-important. The Government would probably rest their case on the dictum of the late Sir Winston Churchill, who said that his views were a harmonious process related to the progress of events.

Hopes now centre on a summit meeting. What matters is results, not the good intentions expressed today. Everyone is nervous about tie potential failure of summit conferences. Some topics are much more suitable for summiteering than others. The priorities that the Brandt import lays before us—finance, energy, recycling of the OPEC surpluses and arriving at a less disruptive energy pricing regime—are not only suited to world summits but depend for their solution on summits.

We should not underestimate the difficulties facing us in the next few months. A successful outcome of the discussions next year on our external economic environment, on which our economic progess depends, presupposes progress in North-North as opposed to North-South problems before we get anywhere. Here our membership of the European Community is crucial.

Particularly important will be the energy pricing policy under the new American Administration and the behaviour of Japan in international trade. Success will also depend on an understanding within OPEC and between OPEC and OECD countries, as well as a long-term view by OECD on North-South issues.

We should be gravely mistaken if we underestimated the difficulties. Energy has not been on the North-South agenda very much so far. At UNCTAD last year, OPEC members refused to allow the word "energy" even to be mentioned in a Southern resolution on the world economy—and that in a year when the world price of oil rose from $13 to $25 a barrel, completely destroying any lope of respectable economic growth.

The problems are great. We should be satisfied that we are ready to translate into results the good intentions that the House has expressed and that the Government entertain. The first report from the Select Committee on Overseas Development in 1977–78 said: Your Committee have been quite unable to establish any capacity or administrative arrangements for long-term strategic inter-departmental liaison on foreign economic policy: much less have they been able to establish the means by which British foreign economic policy is co-ordinated with British domestic economic policy. It is to be hoped that under our Administration matters have improved since then, but there is nothing in this country that adequately performs the role of the French Commissariat du Plan or even the German Ministry of Economics.

There has been no political support in recent years for an independent Ministry pulling together policy strands, political considerations, trade policy, energy and finance. Needless to say, that stems from our deep-rooted and well-based scepticism about national plans and our antipathy to new bureaucracies.

The Foreign and Commonwealth Office exercises a coordinating role in North-South terms, but it lacks departmental economic competence as opposed to competent economists, which, of course, fit has.

The responsibility for economic policy, both internally and externally, rests with the Treasury, whose recognised competence and authority is in short-term economic management—some people might say that it is very short-term—or with those Departments concerned with the day-to-day management of commercial policy such as the Department of Trade and the Department of Industry. The Foreign and Commonwealth Office co-ordinates and articulates, but many other Ministries are involved, including the Departments of Industry, Trade, Agriculture, Energy, Education and Science and Defence and the regional Departments of Scotland, Wales and Northern Ireland when protection, trade and so on are involved.

The view of the Select Committee was that the structure of decision-making on North-South issues prevented rather than promoted an adequate appreciation of Britain's long-term interests.

The Brandt report has been described as a watershed in politics. I hope that it is being matched by an appropriate development in our machinery of government. Summits can succeed only with very careful preparation and detailed follow-up. I share the hope that my right hon. Friend the Prime Minister will go to Mexico next year, but I also hope that my right hon. Friend the Minister of State will reassure the House that the strands of policy are being drawn together and that our strategy is being animated at a level commensurate with the gravity of the subject.

1.42 pm

Mr. Ioan Evans (Aberdare)

I share with the hon. Member for Northwich (Mr. Goodlad) the hope that the Prime Minister will attend the meeting in Mexico. However. I recall the editorial in The Observer which ended by saying: The Government's obscurantism is isolating it from its partners in the rich world and squandering the good will it gained in the Third world through the Zimbabwe settlement. In the end its attitude to the summit may be relevant, for there is a chance that the summit will go ahead and that Mrs. Thatcher, humiliatingly, will not be invited. I hope that there will be an indication. I hope that the right hon. Lady goes and that she takes the Foreign Secretary with her to do the talking, because he has a greater understanding of the issue than the Prime Minister.

We have heard reference to the memorandum issued by the overseas aid agencies, including Oxfam, Christian Aid' and the Catholic Fund for Overseas Development. It is disturbing to read in it: Never before in our judgment has Britain's name and standing been so low in the opinion of so many people in so many parts of the world. People whose judgment we respect are puzzled, saddened and angered by the image we are projecting of ourselves. It is significant that the motions selected by the first two hon. Members to be successful in the ballot both relate to the Brandt report. I give warning to the Government that there are others of us who will be putting our names into the ballot and that the Brandt report will come back again and again to the House in an attempt to get a more positive response from the Government.

I attended a weekend conference of a group of parliamentarians from different parts of the world who formed an organisation known as Parliamentarians for World Order. They came from Kenya, Zambia, India, Canada and Europe. The one thing uniting them was support for the implementation of the Brandt report. It has had a major impact on world opinion. Expectations have been raised, and Parliament must seek to meet the aspirations contained in this historic document.

The Brandt report has directed increasing attention to the need to search for mechanisms designed to narrow the gap between developed and developing countries—the so-called North-South dialogue. Inevitably, this process eventually will require the diversion of a significant proportion of the world's resources to the nations most in need of economic development.

Today, it is generally recognised that this task is of paramount importance. Efforts to achieve a just economic order must consist of a number of initiatives. These have been most aptly and comprehensively considered in the Brandt report. The hon. Member for Essex, South-East (Sir B. Braine) spoke of the need to recycle the OPEC countries' revenues. However, I want especially to deal with one of the initiatives brought out in the Brandt report, and that is the relationship between development and disarmament.

Development and disarmament have been linked, especially by the developing nations, for obvious reasons. The Brandt report elaborated these reasons at some length: The armaments of the super powers and their alliances represent a precarious kind of balance which, given present political conditions, contribute to preserving world peace. At the same time, they represent a continuing threat of nuclear annihilation and a huge waste of resources which should be deployed for peaceful development. The build-up of arms in large parts of the Third world itself causes growing instability and undermines development… A new understanding of defence and security policies is indispensable. Public opinion must be better informed of the burden and waste of the arms race, of the damage it does to our economies, and of the greater importance of other measures which it deprives of resources. More arms do not make mankind safer, only poorer. The annual military bill is now over £200 billion, while official development aid accounts for only 5 per cent. of that amount. The present arms race carries with it the risk of mutual annihilation. Real security will be achieved only when there is disarmament which has international agreement and is verifiable.

When we consider the cost involved in dealing with the problem of world poverty, it is important to focus attention on the volume of the world's resources which are devoted to military purposes at the present time. The annual global military expenditure is estimated to be £200 billion, or about $500 billion. That is over $1 billion a day. In other words, about $1 million a minute is being spent on arms. Six countries—the United States of America, the Soviet Union, China, the United Kingdom, the Federal Republic of Germany and France—account for 72 per cent. of world military expenditure, about 96 percent, of all research and development for military purposes, 90 per cent. of all military exports and 95 per cent. of the exports of major weapons to developing countries.

The developing countries account for 50 per cent. of the world's population. They account for 14 per cent. of the world's military expenditure. While 14 per cent. is small in global terms, it is a terrible burden when we recognise their limited resources and tremendous economic needs. We should keep in mind that 80 per cent. of all military spending is on conventional arms. Although we should seek to prevent the danger of nuclear annihilation which is facing mankind, with the perpetual increase, in both East and West, in building up those weapons, we must also reduce expenditure on conventional weapons.

I know that the Government are bogged down in their monetarism and that we are having cuts in public expenditure in every area and in every Government Department, but even though they hold those theories they can surely help to work out a policy with the other nations of the world that will enable us to get away from this mad arms race, with the tremendous waste that is involved, and divert that arms expenditure to dealing with the real problems that are facing the people in the developing world.

Although we have debated the Brandt report today, I am sure that the House will return to the question again and again until we have a Government who will respond to the Brandt proposals. If the present Government do not respond to those proposals, I am sure that we shall have another Government who will.

1.49 pm

Mr. Frank McElhone (Glasgow, Queen's Park)

I begin—as have so many other hon. Members today—by offering congratulations to my hon. Friend the Member for Mitcham and Morden (Mr. Douglas-Mann) on his initiative in getting the debate today.

The Brandt report deals with the most fundamental problem facing the world. After three debates on the report, we are still waiting for a positive answer from the Government as to their attitude to a realistic aid programme. With no disrespect to my hon. Friend the Member for Mitcham and Morden, I hope that the Minister will take from the debate today a request from the Opposition to the Government that we are still expecting a very full and frank debate on the Government's aid programme over the next three years. Only a full-scale debate will elicit the information that many of us are looking for and perhaps clarify the ambiguous statement in the Queen's Speech: My Government recognise the serious economic problems that affect both developed and developing countries and will continue to work with other countries and international organisations in seeking to alleviate them. We should like that clarified, even if the Minister cannot do it today.

As we near the end of 1980, and as is customary, perhaps we might look back at this Government's record in overseas development. The past eleven and a half months have seen a catalogue of shame and despair in their aid programme. What is significant is not just the savage cuts over the past 18 months, not just the cut of £50 million, not just a 14 per cent. cut in real terms. In my opinion, it is the appalling double standards that have been constantly expressed—not just by Ministers present today but by the Foreign Secretary, by the Leader of the House each Thursday, when we press him for a debate on Brandt or the Third world programme, and by the Prime Minister herself.

The Prime Minister, when Leader of the Opposition, was very fond of giving lectures on double standards. I am sorry that she is not present today, but I would tell her that she is qualifying as the queen of double standards when she makes speeches such as the one she made at the Guildhall while constantly cutting the aid programme.

But truth will out. Unfortunately for the Government, the pretence of supporting Brandt has been torn to shreds, and not only by Opposition Members. We have heard quotations from editorials in The Observer and The Sunday Times, and on 11 February, commenting on a speech by a Foreign Office Minister to a United Nations conference in Delhi, The Times said: Britain was particularly uninterested. It sent a junior minister from the Foreign Office who read the initial country-by-country s speech and left. Reporters were told not to ask him any questions on the conference, because it was 'not one of his subjects'. That does not help the Government's image.

The Minister' for Overseas Development (Mr. Neil Marten)

It was not us.

Mr. McElhone

The Minister says that it was not either of the Ministers who are present. Perhaps he will tell us which Minister made that speech. We should be interested to know.

Britain also suffered acute embarrassment at the United Nations special session in August. I have a high personal regard for the Minister for Overseas Development, but it was with sadness and embarrassment that we read that his speech to the special session was greeted by friend and foe alike with "bewildered scorn". That is another damaging indictment of the British Government's standing.

Mr. Neil Marten

The report on that speech was written by a reporter who was not in the United Nations, who was not in New York, who was not in America—and she got it absolutely wrong.

Mr. McElhone rose—

Dame Judith Hart

However, I think that the full text of the Minister's speech was issued to all the press, so the reporter knew exactly what he had said.

Mr. Peter Bottomley (Woolwich, West)

The Minister was talking about the reaction. Withdraw.

Mr. McElhone

My right hon. Friend the Member for Lanark (Dame Judith Hart) was in New York during that special session, and I am prepared to bank on her judgment. If the quotation in The Times is wrong, I am surprised that the Minister himself did not repudiate it. Let us not waste time. The Minister already has suffered abuse t me and time again from many bodies about the Government's attitude to the aid programme. Three distinguished bodies, Oxfam, Christian Aid and the Catholic Fund for Overseas Development, expressed their total dismay to the Minister and the Foreign Secretary at tie Government's attitude to the aid programme. Because of the standards adopted by the Government they believe that never before have Britain's name and standing been so low in the opinion of many people.

The most subtle piece of honesty came from the hon. Member for Cambridge (Mr. Rhodes James), who said of tie Brandt report: If it errs on the side of pessimism, it must be bluntly admitted Mat there is a lot to be pessimistic about."—[Official Report, 28 March 1980; Vol. 981, c. 1802.] From someone who is in within the fortress, who sees tie papers and has a good relationship with the Minister, that is an honest comment. I am sorry that the hon. Member for Cambridge, who was here this morning, did not have the opportunity to speak.

Pessimism will not feed hungry children. I join in the criticism of the Government by hon. Members and many people outside the House who continually harass them to provide a realistic aid programme. However, it falls to the Opposition to offer constructive suggestions which can be tackled in a realistic and practical way.

I hope that the Minister will give careful consideration to the initiatives which I shall suggest. My first suggestion involves the European Development Fund. From 1975 to 1980, the EDF had a fund of £1,500 million. I am told by good sources that only £318 million of that has been allocated. The largest slice went to three former French colonies, Niger, Senegal and Mauritania. The Minister with responsibilities for the EEC should pursue a vigorous policy. He should say to Commissioner Cheysson, the European Development Commissioner, that he does not represent only France but has a duty to the Community at large. The Minister should make a strong attack on that set-up. The money is lying unused. The mean and vindictive way that Zimbabwe was treated by the EEC, especially by France, was disgraceful.

I shall run through the initiatives rapidly because of the time. Great play was made by the Prime Minister of our substantial refund from the EEC. I hope that the Prime Minister will promise when she goes to Mexico that a substantial part of that refund will go towards a realistic aid programme. That would not affect the Government's public expenditure plans, because the money has already been allocated. There is no point in expecting OPEC countries to keep bailing out countries such as ours, because they already contribute a substantial part of their GNP.

I understand that not all the refund will be in cash. We should tell the EEC that we plan to give the money for aid. Countries such as Germany, the largest net contributor, would not object. Implementation of such an initiative would go a long way to help the Third world with its energy bill and debt problems. As I understand it, 60 per cent. of the exports of Tanzania and the Sudan go to pay the oil bills. That would be another practical initiative that would cost the Government nothing because it is already accounted for in the contribution to the Community. It would win Britain a lot of credit if that matter were raised by Government representatives in Mexico.

For the third initiative, I ask the Government seriously to consider giving substantial technical and financial aid to the Southern African co-ordination conference, nine African countries that have tried to rescue themselves from economic domination by South Africa. With Namibia, which is still waiting to be freed, they want to stand on their own feet. That is a policy that should appeal to a Conservative Government. However, those countries need help. They were rebuffed to a large extent by the EEC. They advanced 94 reasonable projects and secured approval for 14. Yet the money available under Lomè I is still unused. That is a reasonable and practical initiative that would not involve the Government in any substantial expenditure.

The last initiative for which I have time is one that is dear to my heart. I have mentioned it repeatedly at this Box. It is the restoration of a programme of development education. My right hon. Friend the Member for Lanark started the programme, and although it was financially small it was realistic. It won a lot of credit for Britain. If we are to support Brandt's idea of marshalling public opinion behind the aid programme, a development education programme in Britain is one way to do so.

It was scandalous that the programme was abolished, not reduced, by the Government. Only by a development education programme will people understand Brandt and begin to understand the economic nonsense of 7 million unemployed in the EEC, $130 billion to $150 billion of OPEC surpluses lying unused in banks, and millions of people dying in the Third world for the want of water, food and shelter. Only by such a programme will people understand the need to look to the welfare of those 800 million people as an insurance for our future.

If we are to retain the social umbrella of rent rebates, student grants, mobility allowance and an attendance allowance—services that we in this country have quite rightly come to expect—we have to bear certain facts in mind. We are left with only two and a half decades of North Sea oil revenues. Our manufacturing base—the source of our wealth—is shrinking every year. We must accept that it is to those 800 million that we must look. When Brandt talks of a programme for survival, I hope that the people of this country will accept that a programme for survival is just as important to us as it is to the Third world.

We on the Labour Benches, with the right hon. Member for Sidcup (Mr. Heath) and many Conservative Back Benchers, have been trying to say for months that we do not expect the Government to commit themselves to 100 per cent. implementation of Brandt. We expect to give a lead, however. Britain has enormous skill and experience, especially in diplomacy. Whatever our economic difficulties, as democratically elected parliamentarians we must accept that our first and over-riding moral obligation must be to feed the hungry. Therefore, for us to fail—even worse, if we run away from the problem, however massive and difficult—would seriously threaten the future not only of this country but of the world as we know it today.

2.4 pm

The Minister of State, Foreign and Commonwealth Office (Mr. Douglas Hurd)

It is good news that the hon. Member for Mitcham and Morden (Mr. Douglas-Mann) chose the Brandt report as his subject and introduced it in such a thoughtful and interesting way. His speech bore favourable comparison at least to the early part of the speech of the hon. Member for Glasgow, Queen's Park (Mr. McElhone).

If I may get, as it were, the controversial bit over first, I would say that both hon. Gentlemen fell into the trap of quoting some rather flip comments from the Sunday newspapers, which, as has been effectively shown just now, do not bear a great deal of examination. We should have preferred their own analysis of, for example, the Foreign Office document that we submitted to the Select Committee. There has been a certain amount of flip comment, and I am sorry that the memorandum submitted by Oxfam and Christian Aid also relied to a certain extent on press comment. The memorandum is not really a peice of pamphleteering worthy of the good work that the organisations do and for which they are enthusiastically supported by so many. The debate has been useful in that we have got beyond that stage of rather shallow comment and have had a deeper debate, which has thrown a lot of light on the issues involved.

The right hon. Member for Lanark (Dame Judith Hart), as usual, spoke in a way that the House listened to with great care. However, I do not agree with her choice of phrase about the Government's standing overseas. A good deal of criticism has been directed at us from within the country from sources that I have mentioned. It is the give and take of life, and one cannot object. However, it is not my experience that the same kind of criticism is anything like as copious from our friends overseas. My hon. Friend the Minister for Overseas Development particularly and myself to a certain extent see a good many Ministers, journalists and others from developing countries and overwhelmingly and in particular from Commonwealth countries. The feelings and emotions that the right hon. Lady reported are not those that we characteristically find.

We find in our conversations with Ministers from developing countries, many of them well known to the right hon. Lady, that they are overwhelmingly interested in specific commodities and aid projects rather than in the talk of a new international economic order. That point is often lost sight of. It is an experience that we have all had and are bound to take note of in considering these matters.

We greatly welcome the debate that has taken place several times in the House and almost continuously in the country on the issues raised in the Brandt report. The hon. Member for Aberdare (Mr. Evans) does not worry us by his threat of more debates: the more the better. These are complicated matters, on which the Government wish to expound their views. We shall be delighted if the hon. Member comes top next time and chooses the same subject again. I am sure that he will speak with great eloquence.

No one with perception can doubt the genuine interest, going beyond the interested groups and organisations, that the issues are arousing in the country. It is a good thing. We should all welcome it, and the House should reflect that interest, as it is doing today.

I agree with two points that have run through the debate. The point is made in the Brandt report about the mutuality of interest, although it is not a very elegant phrase. My hon. Friend the Member for Essex, South-East (Sir B. Braine) emphasised the fact that there is no possibility of solving our problems in this country without regard to what is happening in the remainder of the world, particularly the developing world. Those things go together. Just as we rightly say in our memorandum that Britain alone cannot solve the problems raised by the Brandt report, so it is true that Britain alone cannot solve the problems of Britain without taking into account the issues raised by the Brandt report.

There is a great deal of activity on this front. This will be the theme of what I have to say. There is far more activity than is generally recognised. Some of it was taking place long before the Brandt report, and some of it has been stimulated and will continue to be stimulated by the report.

Her Majesty's Government are taking, and intend to continue to take, a lively and helpful interest in this work. I shall be specific about some of it, but I was asked for that general assurance by my right hon. and learned Friend the Member for Hexham (Mr. Rippon) and I give it. There is no question of our standing idly by while these matters are discussed.

I understand why many hon. Members have had to leave before the end of the debate for constituency engagements. My hon. Friend the Member for Northwich (Mr. Goodlad) raised the question of machinery in Whitehall. I read with interest the letter in The Times on this subject from Chatham House. Obviously, we are not complacent that we have the machinery exactly right. It is important that our approach to these matters should be co-ordinated between many Departments, which my hon. Friend listed, and that the important decisions should be taken at a high level. Those two things are now happening.

There is a danger in the general debate in the country in that it becomes hooked on matters of procedure. I should like to deal with procedures first. There is no particular magic in meetings or in machinery. There are already plenty of meetings. There is already plenty of machinery. The problem is not so much whether to create new machinery, because that is always a relatively easy thing to do. The problem is how one uses to good effect the machinery, meetings and opportunities which exist.

We have the prospect of a global round under the auspices of the United Nations. At the special session in the summer, we had difficulty in reaching agreement on the procedures for the global round. This is important, because it would surely be a mistake to launch on a global round on a basis which ensured, as it were, that it foundered or failed to make progress. It is worth taking trouble over the procedures.

Three countries of substance in this argument, the United States, Germany and Britain, were not happy with the text which emerged from the special session because we thought that the procedures proposed for the global round would or might undermine the autonomy and thus the effectiveness of the international financial institutions. We did not think that it was sensible, from anyone's point of view, that the institutions—the IMF, the World Bank and so on—should be put in a position in which they were subordinated to the General Assembly and virtually given instructions by it.

The discussion is still proceeding. Since the special session ended, there has been progress in the current session of the General Assembly and, although agreement is not complete, we hope that it will be possible to reach agreement on procedures and then on a practical, sensible agenda which will enable the global round to get under way next year as planned.

Another procedural idea much commented on in the debate is that of a summit, as proposed by Brandt. We see the attractions of such a summit. Obviously, much preparation has already gone into it, closely identified with the Chancellor of Austria and the President of Mexico. Arrangements are not complete. Decisions have not been taken. Invitations have not been issued. As we understand it, however, the plan is that there should be a summit in Mexico in June next year of between 20 and 25 participants. We expect to be one of them. If that is so, my right hon. Friend the Prime Minister will accept the invitation and will go to the summit with her customary zest and vigour.

The memorandum was criticised by the hon. Member for Newham, South (Mr. Spearing). Of course, the memorandum was approved by Ministers and submitted to the Select Committee in the usual way. We were cautious about a summit meeting, just as my hon. Friend the Member for Northwich was cautious about a summit. One should be cautious about summits, because they raise expectations. One must be clear about why one is going to a summit meeting and what the result is likely to be. We said that such preparation was sensible, and it is now in hand. A summit meeting must be handled with caution and must be given careful preparation.

I turn to the three matters of substance, namely, official aid, private investment flows and trade. There is a tendency to concentrate solely on official aid in some discussions. We do not underestimate the importance of that and mentioned it in the memorandum to the Select Committee. It is one of the three possible solutions to the problems posed by the Brandt report.

My hon. Friend the Minister for Overseas Development has published the aid figures. We are sad that there are reductions. We hope that those reductions will be made good when the economy has been revitalised. My noble Friend the Foreign Secretary has said that, and it is on record as a Government statement of intent.

The hon. Member for Greenwich (Mr. Barnett) raised a specific point about the figures. He was puzzled by a discrepancy in the figures published in the March White Paper and the figure used in subsequent speeches for spending in the current year. We enter the realm of funny money. The March White Paper published figures for five years on 1979 survey prices. On that basis, the figure for the current year, 1980–81, for the aid programme was £779 million.

Time has moved on. Money is worth less. The figure available to the ODA this year is £961 million, which takes into account the movement in prices between 1979 and 1980 and which also takes into account certain repayments of principal on past ODA loans which will accrue this year. The greater figure of £961 million, which is the amount available for this year's aid programme, is a gross figure. The figures in the White Paper were net figures based on 1979 survey prices. The subject is clear to me and I hope that it is clear to the House.

Mr. Douglas-Mann

I cannot pretend that I followed everything that the hon. Gentleman said about funny money. The hon. Gentleman criticised me for quoting from editorials in Sunday newspapers. Perhaps he will accept the comments of the World Bank report on development. In August 1980 the World Bank commented that of all the industrialised countries, the only ones that were not increasing aid as a proportion of their gross national product were Britain and Canada. Perhaps as a result of the general election Canada is now increasing the amount of aid that it gives as a proportion of its gross national product. The only funny money question as regards the report of the World Bank is whether our gross national product will fall sufficiently as a result of Government action to enable our aid to increase as a proportion. This country is one of the few to have its own oil resources and a rising balance of payments surplus. Why cannot we increase our aid contribution as a proportion of gross national product?

Mr. Hurd

I can explain that only by giving a lecture on our general economic situation, which the House would find tedious, showing why we find ourselves in a dire position compared with most of the countries to which the hon. Gentleman referred. I should then have to explain the measures that we are taking to put that right, but that is for another debate. The decision on aid was taken not because we dislike aid but because of the general constraints on public spending which in turn are part of our economic policy. There is no mystery about that.

I agree with the points made by my hon. Friend the Member for Streatham (Mr. Shelton) about the quality of aid. I think that the right hon. Member for Lanark would agree that the quality of British aid is high. One can quarrel about the Turks and Caicos project. On the whole, I think that it would be agreed that, whatever may have happened from time to time in the past, the quality of our aid, the fact that it goes where it is needed—two-thirds of it goes to the poorest countries—and the fact that it is concentrated on the Commonwealth is accepted. One has to watch it, but it is satisfactory that the quality of our aid is high.

Mr. Spearing

The Select Committee report on British aid to India concentrated on this matter and made recommendations, many of which the Government have not accepted. We believe that that would have added to the quality of the aid to which the Minister referred.

Mr. Hurd

My hon. Friend the Minister for Overseas Development, who has prime responsibility, will have noted the hon. Gentleman's remarks.

I turn to the second main element—private finance—which is higher in quantity than official aid. It falls into two main parts. In 1978, the last year for which figures are available, the total private finance flow was £4.3 billion, of which about £1 billion was direct investment from this country into the developing world and £3 billion was foreign currency lending cycled through London. That, with the official aid programme, makes a total flow from this country to the developing world of £5.3 billion. As has been pointed out, that is second only to the United States. Taking official and private flows together, our effort is put in a different context from that in which it is generally regarded.

The third element is trade. Obviously, there are pressures towards protectionism, but my right hon. Friends the Prime Minister and the Secretary of State for Trade are doing their best, through trading policies, to maintain a reasonably open market in this country. It is arguable whether that is the greatest single contribution that we can make.

I return to the issue regarding international institutions. This is where the debate in the country to some extent goes astray. We have a portrait of an international economic order that is stagnant, static and unresponsive and should be swept away if we are to make real progress. That is not what the Brandt report says, but it is a conclusion that is drawn by people who are eager for quick, complete and dramatic solutions. That is a mistaken conclusion. We believe that the institutions formed for the governance of the world economic order have, on the whole, done well and proved themselves and should be retained and encouraged to change rapidly to meet the needs identified in the Brandt report.

That is happening. The International Monetary Fund, as has been pointed out, has substantially relaxed its rules of conditionality. It has substantially increased the proportion of quotas—now up to 600 per cent.—which can be drawn in certain circumstances. But how many people in taking part of the debate and how many people in the Churches and charities know that?

Dame Judith Hart

The Minister talks about certain advances that have been made by the IMF since the joint meeting in September. Will he take into account the fact that we do not yet have a link between the developing countries and special drawing rights? Moreover, in the last 10-year period more SDRs have been used by the United States than by all the Third world countries put together.

Mr. Hurd

I am not saying that the changes will satisfy the right hon. Lady or that we shall ever dissuade her from pressing for further change. However, there is and has been substantial change, which is now helping countries in difficulty in the developing world. The World Bank has doubled its capital. We are now dealing with the sixth replenishment of the IDA. The British share of that sixth replenishment is £555 million. It has been considered by the House, and it is Government policy. In the United States it has not been considered by Congress, and we have had to take helpful measures to secure a bridging operation. That change is happening with our support and our participation.

The Lomé agreement was mentioned. It is important that the Commonwealth countries should have a fair share of what will be a very large sum. The second Lomé treaty provides for £3 billion in aid over five years, of which the United Kingdom's share is £450 million—another very large sum being contributed by this country. We are in close touch with Commonwealth Ministers and with the Commission, and we understand and accept the point about the Commonwealth getting its fair share.

Mr. Peter Bottomley

I should like to draw the attention of my hon. Friend to a comment in the Brandt report concerning the need for broad political participation in developing countries. Would it be possible for the Foreign Office to try to organise the United Nations, the Commonwealth and the OAU in order to ensure that the broad participation in Uganda during the last two days is allowed to determine its government, because political stability is also important in development?

Mr. Hurd

Of course it is, but my hon. Friend knows that once we start laying down political or human rights conditions we get into a new entanglement. There are considerations and factors to be taken into account, and Uganda has been one, but we must not complicate matters unnecessarily.

I am trying to list what is happening under the existing system and the existing institutions with our support. As my hon. Friend the Member for Wycombe (Mr. Whitney) said, the Ivory Coast has not yet joined the cocoa agreement. The European Commiunity has joined it and has been one of the main negotiators. It is an important commodity agreement, which we have joined and which we hope will succeed. We were under considerable pressure at one time with regard to the common fund. Negotiations have now been successfully completed, and we intend to sign the common fund agreement next week.

Our contribution to the second account of the fund will be financed by voluntary contributions, and it will be used to support longer-term commodity development measures. We are making a voluntary contribution of £4.27 million, which is the equivalent of $10 million at the agreed rate of exchange. That is in addition to our assessed contribution to the capital of the fund under the first account—another example of progress made by agreement under the existing institutions, and progress to which the Government are committing the support and resources of this country. There is not time to deal with energy, which perhaps requires a separate debate.

We have had a useful and encouraging debate. When talking about what is happening, we are describing not a fen of stagnant waters but a river that is rolling forward, albeit mote slowly than some hon. Members would wish. The problem facing the Government is how to direct all the activity towards intelligent change.

I give the House a final assurance that as regards both the interests of this country and the wider concern that our people feel, we shall be active and energetic in that direction.

It being half past Two o'clock, the debate stood adjourned.