INTERNATIONAL DEVELOPMENT (BRANDT REPORT)

HC Deb 16 June 1980 vol 986 cc1156-302

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

4.40 pm

The Lord Privy Seal (Sir Ian Gilmonr)

The report of the independent commission chaired by Herr Brandt has made a most valuable contribution to public debate in a crucial field. The interest generated both in the United Kingdom and abroad is evidence of this. Indeed, this was acknowledged most recently by the European Council this weekend after its meeting in Venice.

We have now completed our study of the report and I am in a position to give the House some account of our conclusions.

I should first like to give credit to the authors of the report, particularly to my right hon. Friend the Member for Sidcup (Mr. Heath), who played a leading role in the commission's work; to Herr Brandt, who played a vital role as chairman; and to Sir Shridath Ramphal, whose unique experience in that most successful North-South forum, the Commonwealth, was so valuable to his fellow members. I would also like to pay tribute to Mr. Robert McNamara, soon to retire as president of the World Bank, for his work over the years, and not least for his initiative in commissioning the Brandt report.

The analysis of the Brandt report is founded on the view that the world economy is in a state of crisis and, in particular, that the prospects for many developing countries are deeply disturbing. It foresees continued poverty in many countries of the South and persistent low growth in the economies in the North. It argues that these factors will lead to mounting debt burdens, the growth of protectionism and major tensions between countries as they compete for energy, food and raw materials. Overshadowing all this is the arms race.

The Government fully accept that there are very serious difficulties ahead. Indeed, since the report was written, further oil price increases have made many of the commission's forecasts look optimistic. For example, the size of the current account deficit of non-oil developing countries is likely to reach $55 billion in 1980. In addition, the developed economies face a balance of payments deficit of some $100 billion. The oil exporting countries, on the other hand, will have a current account surplus of over $130 billion in 1980. These estimates were made before the decisions taken by OPEC last week to raise further the price of oil. These imbalances are likely to show little change in the next few years. The strains facing the economic and financial system will thus be very great; and the human suffering which will lie behind these enormous figures can all too easily be imagined.

We fully recognise the enormous difficulties facing the Third world. But it is not true that the problems lie entirely in the South and that it is merely for the North to respond generously to them. The recent oil price increases, for example, will inevitably affect the capacity of the North for aid and trade. It has been calculated that by 1981 the real income loss to OECD countries will be between $300 billion and $400 billion. If the world economy is to recover from this shock, the economies of the developed countries of the North—the motor of world prosperity—must adjust to the new circumstances. Only then can growth be resumed. In the long run, this is also in the interests of the less developed countries which depend on us for markets, manufactured goods, finance and aid.

We therefore welcome the stress laid in the report on the need for measures of mutual interest. Of course, we recognise the importance of the Third world in the international economy, and we fully accept that its economic health is vitally important not only in itself but for our own well-being. But we believe that it should be recognised that the problems to be solved by measures of mutual interest are themselves mutual.

In approaching these complex problems, I should like first to mention a general problem to which the recommendations of the Brandt report make relatively little reference—inflation. Developments since the report was written have made it clear that this is a central problem for us all. A new round of inflation has been triggered off by a massive and continuing transfer of income to the oil producers. I need not dwell on the evils of inflation. The com- muniqué of the OECD ministerial meeting on 3–4 June clearly indicated the wide measure of agreement on the need for tough measures against inflation.

I should like now to turn to three major issues before us—energy, recycling and development. The first of these major problems is to try to ensure that the oil shocks which damaged the economic performance and prospects of developed and developing countries alike in 1974 and again in 1980 do not happen again. Here we are in agreement with much of what the Brandt report proposes. In particular, we welcome its recognition that the problem is one which requires action by all members of the international community : by producers as well as consumers, and in the South as well as in the North. It is vital that all countries, developed and developing, free-market or Socialist, adjust to the new reality of higher oil prices. For developing countries it may mean a reduction in non-oil imports and, therefore, of growth over the relatively long time that adjustment will take. For oil exporters it must mean accepting greater responsibility for the direct recycling of their surplus funds while increasing their non-oil trade with the less developed countries and the North.

The report also suggests an accommodation between oil consumers and producers with the aim of more secure supplies, more rigorous conservation, more predictable changes in oil prices and more positive measures to develop alternative supplies. The Government recognise the urgency and magnitude of the problems facing both developed and developing consumers. For our part, we are pursuing many of the proposals which concern consuming countries in the Community and at the International Energy Agency in Paris. We are taking measures both direct and via the price mechanism to encourage conservation now and in the future. We shall also continue to stimulate the search for new resources—both conventional and those involving new technology.

We recognise that future energy prices depend not only on market forces but on the policies of the oil-producing countries. It is particularly important to avoid disruption in supply. It is also important to avoid sudden leaps in prices of the sort which occurred last year. Plainly, therefore, the Brandt Commission's proposal that an accommodation should be reached with the oil producers deserves careful study. We do not pretend that such an accommodation would be easy to reach. But, despite the differing and important interests of the various parties, we hope that common ground will be found. Each country must play its part in ensuring that energy does not continue to be a major constraint on the growth of the world economy.

Mr. Dennis Skinner (Bolsover)

Perhaps we can get away from the generalised waffle that took place at the summit and get down to the specifics. Will the Minister explain why this Government, who support the free market and say that they are against the idea of price rigging, cartels, and so on, and are concerned about the price of oil, especially to domestic consumers in this country, when OPEC decides to put up the price of oil, allows ours to go up at the same time without any complaint at all?

Sir I. Gilmour

I think that the hon. Gentleman knows the answer to that. That is due to arrangements which were entered into under successive Governments, particularly the previous Labour Government. BNOC has let out its oilfields and under its contracts with other oil companies it is bound to allow oil to be sold at the market price. It would lay itself open to legal action if it did not do that. That has not in any way altered under this Government.

A further important aspect of the Brandt report in this area is the need to find new supplies of energy in the LDCs. Many LDCs depend to an even larger extent than developed countries on imported oil. A major effort to increase their level of self-sufficiency is a vital aspect of their adjustment. But we recognise that they will need help in doing that. The World Bank is already heavily involved in helping energy development, and it will shortly be reviewing what has been done and what might be achieved in the future. We look to it to examine all the possibilities freshly and vigorously. We also look to increased activity by the private sector, and we hope that the developing countries will take more account of the beneficial effects of private investment in this area.

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

A few moments ago my right hon. Friend told the House of the urgent need to find common ground between the OPEC suppliers and Western consumers of oil. Will he tell the House what the Government have in mind by way of new initiatives to bring about a new agreement?

Sir I. Gilmour

I cannot tell my hon. Friend that. The matter will need careful study. We welcome the idea, but so far we have not worked out an initiative, and we have not yet decided whether to make one.

The second area that I should like to consider is the need to recycle funds from surplus holders to those in deficit, both for balance of payments reasons and for development reasons. As I mentioned earlier, over $130 billion will need to be recycled this year, with the prospect of similar amounts in the next few years. In order to achieve that, a major role will be played by the private banking sector. Doubts have been expressed as to whether the banks will be able to cope. Complacency would be foolish, but I believe that the House will agree that the private banking system has shown itself remarkably adaptable and flexible in meeting this challenge. We believe that it can continue to do so in the future. The market will bear the brunt of the burden.

Of course, the market cannot do everything. The role of the international financial institutions will also be crucial. It will be especially important for those countries which have already borrowed extensively, and for those which simply do not have the resources to attract commercial lending. An enhanced role for the International Monetary Fund and World Bank Group is, therefore, important in itself. But it is also crucial because of their influence on flows of commercial lending. In response to increasing needs, the IMF has recently taken important steps to enlarge its available resources and to lengthen the repayment periods for medium-term adjustment.

The World Bank Group is increasing its resources, and it has just introduced an important new policy for lending for structural adjustment programmes. The international financial institutions are thus meeting the challenge over lending for balance of payments financing, structural adjustment, and development. Those institutions are, of course, constantly evolving, and I understand that the interesting ideas in the Brandt report relating to their work are already being taken into account in their discussions.

Mr. Tim Renton (Mid-Sussex)

In its annual report that was published 10 days ago, the Bank of International Settlements shows that it is moving away from the recommendations made by the Brandt Commission with regard to the IMF substitution account. Should not that be taken into account? Already the recommendations made by the Brandt Commission in this respect appear to be out of date, because the OPEC surplus countries do not wish to exchange their surplus dollars for SDRs.

Sir I. Gilmour

That should be taken into account, but it will not always necessarily be true in the future. No doubt my hon. Friend will be able to give his views on that when he catches your eye, Mr. Speaker.

I turn now to the third problem area, namely economic development. For many countries, in both the North and the South, economic development is a question of improving living standards. For some, however, it is simply a matter of survival. We therefore welcome the work in the Brandt report on the plight of the poorest, and on the need for a general attack on the problems of food and agricultural development in the LDCs.

Dame Judith Hart (Lanark)

Will the right hon. Gentleman give way?

Sir I. Gilmour

No, I shall carry on for a moment, and I shall give way to the right hon. Lady shortly.

My hon. Friend the Minister for Overseas Development will deal with those question I have just outlined in more detail when he winds up the debate. Our aid programme is substantial, even in the present circumstances. Our aid performance compares favourably with other donors. Our official development aid was 0.52 per cent. of our GNP in 1979. We remain committed to the United Nations target of 0.7 per cent. But because of our present economic circumstances, we cannot give a firm date by which that will be achieved. I can assure this House that an important guideline of our aid policy will continue to be that it should be directed at those most in need. In particular, much of our aid, both bilateral and multilateral, is targeted towards meeting the urgent need for increased food and agricultural production in the development countries.

We also have some sympathy with the Brandt proposals for reduced tariff barriers for the agricultural products of the South. The contribution in this field of the results of the Tokyo round of GATT negotiations should certainly not be under-estimated. Nor should we fail to give due credit to the special arrange-gements under the Lome convention, particularly for sugar and beef. There may also be possibilities further to improve the generalised scheme of preferences.

Trade, not only in agriculture, but more generally, is of vital importance to the developing country economies. As my hon. Friend the Minister for Trade, pointed out on 28 March, two-way trade between the OECD and the South was 35 times more significant than official development aid. The Government therefore share the view of the Brandt Commission in laying great stress on the importance of international trade in the development process. We believe, however, that the report considerably undervalues the efforts of the industrialised countries, especially in the context of the MTNs and GATT. The Community has also been active in this area, for example, under the Lome convention and the Stabex arrangements. The recently-agreed progressive liberalisation of Community trade in jute goods will be of particular benefit to developing Commonwealth countries such as India and Bangladesh. The House will also have noted the recent successful conclusion of a food aid convention as part of the progress towards an international grains agreement.

We believe that the achievements of the developed countries, particularly in difficult economic circumstances, should be given due credit.

Dame Judith Hart

Will the right hon. Gentleman say when he will be prepared to give way on the point that I wished to raise earlier?

Sir I. Gilmour

I give way.

Dame Judith Hart

I wish to take the right hon. Gentleman up on his remarks about international institutions. He said that he believes that the international financial intitutions are meeting the challenge and discussing the Brandt Commission proposals. We really need the Government's view on the Brandt proposals for a new financial institution. I do not think that the right hon. Gentleman has given that view so far.

Sir I. Gilmour

The right hon. Lady is correct.

The industrialised countries recently made absolutely clear their continued support for the open trading system in their declaration at the OECD ministerial meetings on 3 and 4 June. There are sometimes very difficult decisions to be made in this area. No country's record is entirely without blemish, but, given the difficulties, we have not done badly.

A further important factor affecting development is private investment flows. The economic success of countries such as Singapore and South Korea demonstrates what can be done if favourable conditions are encouraged.—[Interruption.] I think that the right hon. Lady will get a little more satisfaction later—a little more satisfaction.

We therefore agree with the Brandt report where it calls for an end to the mutual suspicion and tension between multinational corporations and host countries. We recognise the value of non-mandatory codes of conduct, such as the OECD's guidelines and the code now being discussed at the United Nations. The House will have noted the recent success in UNCTAD in reaching agreement on a restrictive business practices code. The Government are also actively pursuing bilateral investment, promotion, and protection agreements, as well as double taxation agreements. We believe that such agreements help to build confidence among potential investors. As the House will know, we have also completely suspended our exchange controls, thus freeing the flow of private development funds.

A brief reading of the summary of recommendations in the report will show that many are in the process of being implemented and many are under active discussion in world organisations. It will also be clear to the House from my description of the Government's own analysis that many of our conclusions are similar to those of the Brandt report. We therefore share much common ground, but there are many proposals with which many countries, both developed and developing, would have difficulty. There are also some areas where we believe the report does not go far enough. The report could, for example, have taken more account of the Soviet bloc's dismal record on aid and development. Soviet aid to non-client States was a mere 0.02 per cent. of GNP in 1978. Indeed, its recent contribution to development of other countries has a flavour that is more military than economic.

We would place much greater stress on the ability of the private sector to respond to the challenge of development. The chapter on the role of the South usefully touches on steps which LDCs could take by themselves. In my view, there is considerable scope in many developing countries. Measures could be taken, for example, to increase private flows, to influence population growth and to increase trade with other developing countries.

There is also an underlying difference of approach to the question of reforms. This is where I come, obliquely, to the right hon. Member for Lanark (Dame Judith Hart). The report calls for changes to be brought about mainly through the action of Governments. This somewhat exaggerates the capacity of Governments to control the world economy, so much of which is in private hands. The contribution of British investment to the industrial development of developing countries is seldom fully appreciated. In 1978, for example, the net flow of combined official and private resources to the developing world channelled through the United Kingdom amounted to £5.25 billion or 3.27 per cent. of GNP. Moreover, we believe that, at a time of serious economic difficulty, it would be preferable to continue the evolution of the present system in response to the challenges facing us rather than to make wholesale changes to the rules governing development and trade. The same applies to institutions. Such action would seriously undermine confidence and would harm rather than help the economies of many developing countries. By changing gradually to meet needs, existing structures and institutions can be used to the best advantage and to mutual benefit.

On the question of follow-up, the report itself suggests a summit of world leaders to launch the emergency programme. We agree that a summit might be useful, but it would need a good deal of preparation and would have to be carefully timed. There are a number of important discussions ahead of us. The international development strategy is to be agreed at the forthcoming special session of the United Nations in August. This will provide a valuable framework for the coming decade.

The same special session is expected to launch a round of global negotiations. These negotiations will cover almost the whole range of problems addressed by the Brandt Commission, including that of energy, which has been rather neglected recendy in such international discussions. The British Government will be looking to these negotiations to provide a real debate about concrete issues, not another round of rhetoric. The Brandt report is an especially valuable contribution to these negotiations because it focuses attention on major issues and on practical approaches to these problems. The House will have noted the conclusions of the European Council, which referred to the particularly interesting contribution which the Brandt report could make to the successful outcome of these negotiations.

It will be clear to the House from what I have said this afternoon that Her Majesty's Government are fully seized of the seriousness of the problems facing both the developing and developed world. I know that many hon. Members are deeply concerned about the prospects. They are right to be concerned. Major efforts will have to be made to tackle these problems by developing countries in the first instance, as they themselves would wish; by the adaptation of markets in response to economic forces; and, in those fields where they can be effective, by Governments.

There is much in the Brandt report on which we and others can build in seeking solutions. This is a matter not of benevolence, but of survival; the outstanding achievement of the Brandt report is to demonstrate conclusively that the interests of all countries of the world, developed or developing, North or South, are mutual; and that all countries have a great deal to do in tackling the world's problems. I assure the House that we are ready to play our full part.

5.4 pm

Mr. Peter Shore (Stepney and Poplar)

We have before us today a remarkable report, of outstanding importance. I can agree with one thing at least that the Lord Privy Seal said, in an astonishingly lacklustre speech—that those who helped draft this report deserve the thanks of us all.

Published only 12 weeks ago, first debated in the House on 28 March, the report is already firmly on the agenda of this nation and will or should be one of the principal topics at the forthcoming summit in Venice on 23 June. I have no doubt that we shall have many more discussions on the vast range of questions dealt with by this report—rightly so, because in essence it is about how mankind can have a better future, or even a future at all.

I should like to outline what I see as the great merits of the report. First, it brings together all the main problems which beset mankind—the abject poverty of 800 million people, the deadly and escalating arms race, the explosive population growth, the critical energy shortage, the threat in large areas of irreversible environmental damage, the unacceptable inequality of circumstance between North and South. The report insists that these things are not separate but interrelated aspects of the human condition and that we need a fresh global strategy if these great problems are to be surmounted.

Secondly, the report convincingly demonstrates that existing policies, both economic and political, are leading mankind into a cul-de-sac. Thirdly, it calls for a new exercise of political will and imagination, which will be essential if we are to escape our present dilemmas.

I could not find a great deal of evidence of political will or imagination in the speech of the Lord Privy Seal. The right hon. Gentleman has convinced me that he has read the report but not that he has absorbed or understood its real message. I shall come to that a little later, but I should like first to pick up one or two of his points.

The right hon. Gentleman identified energy as one of the great problems and talked of how we must avoid an "oil shock" of the kind that we had in 1974 and to some extent again only this year. But if we simply say that the best way of dealing with this problem is to build up alternative energy supplies and so on, we are talking about a programme which, even if it started now, would leave us all totally vulnerable for the whole decade ahead. Something much more urgent, serious and immediate is needed than that kind of solution.

On the crucial question of recycling, the right hon. Gentleman said that he thought the private banking sector would be able to continue to finance the colossal scale of indebtedness. That is totally untrue. It just is not credible. I do not know what discussions he has had that have led him to such a cosy conclusion.

The right hon. Gentleman said that our own aid performance compared reasonably well with others. Of course I accept that, but that is not the point. The point of the whole report is the need for a substantial increase in effort to meet phenomenally difficult new problems. We cannot escape the whole argument by congratulating ourselves on a relatively good performance in the past.

Many of the problems described by the Brandt Commission have been with us since the war, yet, with all the shortcomings of economic, trade and aid policies and with all the excessive advantages that have accrued to the industrial nations of the North, there was evidence of progress—painfully slow in many areas, but neverthless clear—until as recently as the end of 1973. For the 25 years that preceded that date saw not only an unprecedented expansion of the world's economy, a doubling and trebling of living standards in the industrialised North, almost uninterrupted full employment, and the end of poverty as the majority experience there, but in the South, too, a substantial growth of trade and development. In spite of a world population explosion, from 2,400 million people in 1950 to an almost unbelievable 4,000 million in 1975, food production kept pace with population growth. Per capita income in nearly all countries rose, although the levels remained pitifully low in many countries. Political independence became during those years virtually the universal experience.

Certainly further and bold initiatives were necessary. But looking back, we see that it is surely clear that this first hopeful post-war period ended abruptly in late 1973, when the OPEC countries, at a single meeting, quadrupled the price of oil and thus faced the world community with a major new challenge, and a challenge that it has failed so far to meet. It is my belief—I repeat it—that it is the cartelisation of oil production and oil prices that presents the single most important road-block to economic progress.

I say that for these reasons. First, in spite of the massive increase in expenditure and imports, including arms imports, the oil-producing countries, particularly those in the thinly-inhabited desert countries of the Middle East, are unable to turn their vastly increased revenues into effective demand for goods and services. Secondly, given the dependence of the North on imported oil, the North as a whole faced, and continues to face, a major balance of payments deficit—a situation that the North proceeded to "rectify" by deflating internal demand. Thirdly, and still more seriously, oil price increases faced the great mass of Third world countries with a still more desperate situation. They have to pay for essential oil imports out of other revenues which do not grow at a corresponding pace.

The amounts involved by the increase in oil prices have been enormous. In a single year, 1974, the surplus of the OPEC countries leapt from, I believe, $7 billion to $60 billion. At the same time, the current balance of the OECD countries changed from a surplus of $10 billion to a deficit of $27 billion, while the non-oil developing countries plunged from a deficit of $6 billion, to a deficit of $24 billion. Over the five years 1974–78, even though the OPEC countries increased their imports, the OPEC surplus totalled close on $200 billion. That is part of the size of the problem of recycling and the private backing of lending.

Oil prices have not, of course, remained static. Year by year they have increased. In the past year alone, they have again doubled. I am told that in 1980 oil prices will be about 15 times greater than they were in 1973. The surplus of the OPEC countries is now estimated, as the Lord Privy Seal has confirmed, to be running at some $130 billion a year.

This year the threat to the world economy is even more grave than it has been in the past four or five years. The borrowing limits—I hope that that the Lord Privy Seal will take this in—of many Third world countries have already been surpassed. Recycling, mainly through private Western banks, is beginning to dry up. Brazil and the Philippines are just two countries, by no means the least prosperous in the developing world, that have been unable to obtain private finance during this year.

The IMF, as recent bitter disputes with Tanzania, Turkey and Jamaica have made plain, is not geared, in spite of certain additional facilities, to lending policies that will cope with a long-term situation of balance of payment deficit. Indeed, there are today many countries whose total export earnings are being absorbed by essential minimum oil imports plus the servicing of accumulated debt. It is small wonder, then, that the Bank of International Settlements in its annual report this month—to which hon. Members have referred, although my reference is to a different part of it—speaks of the industrial world facing a long period of "painfully slow growth".

It is my view that the world is moving from recession to slump. That is the urgency of this debate and the urgency of the response that we and others must make. If I am right, the political consequences cannot be calculated, but they will certainly be serious. Mounting unemployment in the countries of the North, the plain evidence of the capacity to produce wealth but the inability to organise effective demand for the goods produced, will not in our generation and time be accepted with resignation or stoicism. There will be demands, ever more clamant, for action, and if democratic Governments cannot or will not act there will be a loss of confidence in democratic institutions themselves. At the same time, protectionism and economic nationalism will be powerfully reinforced, with all the damaging consequences that that will entail for international relations.

Outside the still basically affluent North, the economic consequences and resulting political destabilisation will be far more serious. I spoke earlier of the immense population growth of the 25 years from 1950 to 1975. It is virtually certain that the 4,000 million people of 1975 will reach 6,000 million in the year 2000—just 20 years on. But, unlike the period 1950 to 1975, when income per head in most areas outstripped population growth, on present trends per capita income will not only fail to grow but will decline. What kind of conflicts and stress will arise it is not difficult to imagine.

In our last debate on international affairs, on East-West relations, I warned that in the world-wide competition for political allegiance and advantage in the Third world peace and democracy were far more at risk through economic failure, political despotism and racial tension than they were through direct Soviet military challenge, although that must not be ignored and discounted, and adventures of the kind that we have witnessed in Afghanistan. I restate that view now.

At this point I can do no better than to quote from the Brandt Commission report itself. It sums it up as well as I think it can : Looking first at the North, we see advanced industrial countries in the midst of their worst recession since the end of the Second World War. Six per cent. of the labour force in the OECD countries—about 18 million people—are now unemployed…Productive capacity is under-used to the extent of at least $200 billion, in terms of the annual potential output. What a waste!

Turning to the South, the report states : the current account deficit of developing countries, which amounted to $21 billion in 1977 … reached $50 billion in 1979 and is expected to rise to perhaps $60 billion in 1980. The coexistence of the great needs in the South and the under-used capacity in the North suggest the scope for large-scale transfer of resources based on mutality of interests. It is against this background—moral, economic, political and strategic—that one must ask how it is that in the past five years the West has failed to see that North-South interests are indeed mutual; has again and again failed to respond to sensible initiatives such as the establishment of a common fund to give greater stability to raw material producers; to be more bold with the creation of new facilities in the IMF and the World Bank; and above all, has failed to stimulate its own economies and to transfer resources on a progressive scale to the non-oil countries of the Third world. Indeed, the failure is all the more remarkable because in 1974—as I well recall, being then the Secretary of State for Trade—when the OECD collectively discussed the new situation that was affecting the world economy, it was absolutely clear to all that the deflation of demand in the North was the wrong strategy for the North to pursue.

There is, unhappily, an explanation of this failure to act or to react that brings us face to face with the major division in political philosophy, not only in our own country but throughout most of the northern countries. It is the current obsession with inflation, and an appalling intellectual recidivism into the totally discredited economic doctrines of the 1930s. At the heart of the now dominant monetarist school of economic theory is the belief that Governments have no part to play in demand creation and that, on the contrary, any efforts that they make simply exacerbate the situation that those efforts are designed to remedy. Approximately 35 years ago, in the famous White Paper of the wartime coalition Government—whose author was generally reputed to be John Maynard Keynes—the following statement was made : It was at one time believed that every trade depression would automatically bring its own corrective, since prices and wages would fall. The falling prices would bring about an increase in demand and employment would thus be restored. Experience has shown, however, that under modem conditions this process of self-regulation, if effective at all, is likely to be extremely prolonged and to be accompanied with widespread distress, particularly in a complex industrial society like our own. That is as true today as it was then.

Three years ago the present Secretary of State for Industry spoke for the newly dominant faction in the Conservative Party. In flat contradiction, he said : Post-war conventional wisdom held that by raising demand the Government could generate growth. But we have ruefully come to recognise that Governments cannot generate growth. Though Governments cannot generate growth, what they can do is obstruct spontaneous growth. That is an abdication of responsibility and a rejection of the great post-war commitment. As the While Paper of 1944 states : Government accepts as one of their primary aims and responsibilities the maintenance of the high and stable level of employment. Monetarists cannot, therefore, accept the basic message of the Brandt Commission, namely, the basic mutuality of interest that arises from an abundance of surplus capacity in the North and desperate and unmet human needs in the South.

Together with deflation, there is serious cost-push inflation in the Western world. In Britain, the Government have done much of the pushing. At the same time, there is a clear lack of effective demand and, as a consequence, rapidly rising unemployment. Indeed, the Government appear to be so blind to those realities that they are deliberately planning a fall in output, not just this year, but, discounting North Sea oil, for four years ahead.

The effects will be felt not only in Britain, but in the world outside. Far from increasing the transfer of resources to the South, the fall in demand in this country will inevitably reduce still further the opportunities of Third world countries to sell to us. At the same time, our direct aid programme will be not increased, but cut by about 14 per cent. by 1983–84.

Mr. Renton

I have listened to a great deal of the right hon. Gentleman's speech with interest and a measure of agreement. It is a great pity that he is now linking his speech with an attack on monetarism. Is it not true that one reason why the OPEC countries that are in surplus will not invest those funds in long-term assets—in OECD countries or those of the Third world—is that they are frightened of the effect of inflation on repayment values? Those OPEC countries have as much interest as we do in ensuring that inflation is brought under control quickly. That is the only way in which we can persuade them to make long-term investment.

Mr. Shore

That is a fair point. I accept that a major factor is that OPEC countries want guarantees against rising prices if they are to invest their surpluses in an orderly way. One could make a number of suggestions as to how that might be achieved. However, if we argue that we cannot deal with that problem until world inflation has been reduced, we shall be plunged so deeply into depression and slump that the effects not only in the North, but in the rest of the world will be too damaging to contemplate.

Last weekend, there was some discussion at Venice. I shall quote from The Sunday Times, which stated : 'The message for the Third World was openly despairing. Its problems in the face of ever rising oil prices,' said the communique, ' were truly insoluble.' British sources put it even more bluntly—' They've got their problems—we've got ours.' The article referred to the presidential communique. This afternoon, the Prime Minister has given us little ground for belief that any serious progress was made in discussion of those issues at that first Venice conference. Having listened to the Prime Minister and to the Lord Privy Seal, I have little hope that the British Government will make any great thrust at the summit that will take place in about a weeks time.

I turn now to the other great question posed by the Brandt Commission, namely, the vast expenditure on arms. Over £200,000 million is now spent annually on arms. I wish to make two points. First, there is an enormous disparity between the arms expenditure of the North—I include the Soviet Union, as Brandt does in his classification of the North—and northern aid expenditure. Relatively small shifts from one to the other would make a great impact on the transfer of resources to the South. The Government should look again at the balance between their defence programme and their programmes for overseas aid.

Secondly, arms expenditure is increasing throughout the Third world, including those countries in which basic human needs are largely unmet. Far too much is being spent by regimes that are internally oppressive or potentially aggressive. Several measures are called for. First, there should be an agreed control and reduction of East-West arms sales. That effort has virtually been abandoned during the past two years. The lending countries of the North should more actively urge Third world countries to reduce the levels of their arms expenditure. The NATO countries should undertake a renewed drive towards arms limitation in relation to the Soviet Union. We should seek not just equality of arms between East and West, but equality at a lower level of balance than has so far been envisaged. We therefore need the ratification of SALT II. We must urgently press forward with a SALT III, and with the stalled negotiations in Vienna for mutual and balanced force reductions and a comprehensive test ban treaty.

The theme of my remarks will be familiar to those who have read the motion on the Order Paper in the names of my right hon. Friends and myself. We welcome the report of the Brandt Commission. We endorse its central theme of mutuality of interest between North and South. We believe that the arms race should be halted and that there should be a progressive transfer of resources from developed to developing countries. The target of 0.7 per cent of national income would—if achieved—virtually double the present volume of aid, and transfer an additional $30 billion a year to the Third world.

Finally, I shall touch on the last part of our motion : our request that the Government should announce their detailed response to the numerous recommendations in the report of the Brandt Commission. I have a feeling that the Lord Privy Seal feels that he has done that. I am glad that he is shaking his head. For a moment, I was worried that he might have convinced himself that he had made a serious response to the Brandt Commission's proposals. I believe, and I hope that he does too, that a great deal of further discussion is necessary. These are not easy matters.

I itemise the major proposals for the reform of international financial institutions and the creation of new ones. Apart from aid targets, there are new, complex and even exciting proposals for increasing the transfer of resources through proposed new taxes on trade and arms sales. There are varying calls for extra efforts to make progress with the common fund, with the transfer of technology, for agreeing an international code for the regulation of the multinational corporations, the extension of the generalised preference scheme, and some attack on that monstrous regime of agricultural protection and the subsidised export of food which we call the CAP.

Finally, there is that very important question about which the Lord Privy Seal sounded rather dubious, when I would have preferred him to be enthusiastic—the proposal for a world conference at the highest level between representatives of the OECD, OPEC, the Group of 77 and the Eastern bloc. That is important if we are to get the necessary impetus and thrust into a response to the Brandt report.

I invite the Lord Privy Seal to consider whether, in view of the importance of these issues, it would not be sensible at an appropriate stage to issue a Green Paper to engender discussions in this House and in the country at large before coming out with a firm and considered Government response to the mass of proposals in the concluding part of the Brandt Commission report.

The Brandt Commission itself has a priority programme for 1980–85, a programme for immediate action for increasing the transfer of resources to developing countries, particularly the poorest among them. That programme envisages immediate action to begin to tackle some of the problems arising out of the shortage and insecurity of energy supply; immediate action to increase food supplies and aid for those who need it; and an immediate early programme for extending the facilities of the monetary institutions of the world. Those proposals should not be held back for laborious or long discussions. They should be the subjects of urgent action and agreement at the earliest possible moment with our major partners in the North.

Materially and morally the arguments support the whole thrust of the Brandt Commission report. These matters should be lead items at the economic summit in Venice, and those who attend it should have firmly in their minds that this report is about matters of the utmost consequence for us all. It is truly about a "programme for survival".

5.34 pm

Mr. Edward Heath (Sidcup)

I am grateful to the Leader of the House for arranging for this day to be set aside by the Government for a debate on the Brandt report. I am also grateful to my right hon. Friend, the Lord Privy Seal and to the Shadow Foreign Secretary for the kind things that they have said about the nature of the report and those who contributed to it.

The Lord Privy Seal has given the Government's reactions to many of the proposals. Generally, not only in this country but in Europe and North America, as well as in the developing countries, there is broad agreement on the analysis in the report and broad support for the proposals that have been put forward. The one question that is posed to me on every occasion, whether by Heads of Government or by those who are attending meetings, is "How are these proposals to be implemented?" I want to hear—I hope that my right hon. Friend will agree with me—not the fact that the British Government stand ready to play their part in whatever may or may not be done but that the British Government will give a lead to Europe and to the North as a whole in implementing the proposals of the report That is what is now required, and it needs the political will and public support if it is to be carried through. It is to those two things that the Government should address their activities from now on.

I disagree with my right hon. Friend about some of the individual matters on which he touched. He said that he was looking forward to the special assembly of the United Nations in August and the global negotiations beginning in 1981. I do not have great expectations of those two meetings. We have had conferences of this kind for the past 15 years, ever since the first UNCTAD conference in Geneva in 1964, to which I led the British delegation. These conferences have achieved practically nothing. The reason is quite clear. When a world conference tries to take every item on the agenda right across the board it is impossible to reach agreement, particularly at the level at which it is handled—that of official representatives or junior Ministers. For the most part, junior Ministers are in attendance for a minority of the time. Alternatively, we must consider the possibility of a conference on individual items, as we have just seen take place in Delhi on industrial matters, but on individual matters the North can sometimes see advantage when the South does not, and the South can see advantage when the North does not. As a result, no agreement is reached.

This must be the lesson for us in trying to move forward in the future. This is why the Commission put forward the initial proposal of a small group of Heads of Government representative of the North, OPEC countries and the non-oil developing countries, in order to thrash out solutions between them, which could then be recommended to the much wider gathering of all nations. Of course, the whole thing could be done under a United Nations umbrella, with the blessing of the Secretary-General. This would require the imprint of the Heads of Government and the instruction to reach agreement on the principles that they lay down. That must happen if we are to make any progress. All my experience in international negotiations and in government convinces me of this absolutely.

I said that we would require the support of public opinion. How can this be gained? It can be done by showing quite clearly the problems of the next two decades, up to the year 2000. Those problems are not realised. There will be an increase in population of 2,000 million—that is, 2 billion—by the year 2000. At present there are 4.3 billion people in the world. By the year 2000 there will be at least 6.3 billion, and more likely 6.5 billion. That means that there will be an increase of 50 per cent. in 20 years. To put it into context, at the beginning of this century there were not 2,000 million people in the world.

What will be the consequences of this? There will be an enormous demand for food, raw materials for factories, and energy. Neither the North nor the South can escape the consequences of this during the next 20 years. Nothing can prevent the population increase, because between 50 per cent. and 60 per cent. of the population of the developing world is 18 years of age or under. It does not matter what population policies we follow, we cannot prevent that generation from having their families. That is particularly so in Latin America, where population policies are not adopted, and cannot be, for religious reasons. By the end of the century we shall find that Latin America will have probably the largest area of population in the world, apart from China and India.

This is the magnitude of the problem—food, raw materials and energy. We may say that the European Community, with wise policies, can be self-supporting in food. That is doubtful. Even if it could be, it could not escape the inflation- ary effect of grave food shortages throughout the rest of the world.

In the past year we have seen grain prices increase by 25 per cent. because of food shortages throughout the rest of the world. Apart from coal and North Sea oil, we depend on the rest of the world for our raw materials. We cannot escape the consequences of the shortages of raw materials for our industry. The investment in minerals over the past decade has become a trickle, and is now almost nothing. The reasons are the lack of confidence of the multinationals in the countries in which they want to invest, or conflict in developing countries with the multinationals when they are prepared to invest.

We already know the difficulties that arise over energy. The average per capita world consumption is 2 kilowatts, varying between 0.2 kilowatts in developing countries and 6 kilowatts in this country. By the year 2000 the average per capita consumption will be 6 kilowatts, which is triple the present consumption, and that is in the face of the shortages confronting us. Those are the problems that we have to bring home to our people. After a meeting in Glasgow on Tuesday night a man said to me "I now realise that I have to get something done about this or my children will have a very bleak time."

My right hon. Friend appeared to indicate that the Government could not be expected to deal with these matters, but the key factors can be dealt with only by Governments. No one suggests that Governments should take over the world economy, but they have control of the international institutions. It is there that action is required.

The financial surpluses of the OPEC countries are controlled by Governments, who are prepared to speak only Government to Government or Government to international institution. Governments have a part to play here which no one else can play. Private enterprise man as I am, I believe that it is quite inadequate to say that private enterprise must get on with it. There is a part for private enterprise, particularly the multinationals, which have the money and the expertise, but Governments have to deal with the associated problems.

The Brandt Commission has shown that all these factors are intertwined, and we have a mutual interest in finding solutions to the problems. The interest may not be the same in every sphere, but broadly speaking it is there. There is also an intimate relationship between North-South and East-West, which has been thrown vividly into the spotlight by the invasion of Afghanistan.

Afghanistan is one of the poorest developing countries. What did we do to convince the Afghans that we were on their side and wanted them to have a higher standard of living? We gave them the princely sum of £1 million. Their neighbours, Turkey and Pakistan, have been cut off from all aid and assistance for the past five years, because of Turkey's attitude to Cyprus and Pakistan's nuclear stance. We now turn about and embrace those countries. We say that they are our friends, and we want to help them, because the Russians have gone into Afghanistan. That attitude merely encourages belief in the West's insincerity, and makes other countries doubt our future policies. As we have seen in Pakistan, it also leads to rejection of help from the West. Those countries are not prepared to be accused of being our lackeys.

The lesson is that we cannot wait for crises in developing countries. We must think ahead, and win these countries to our side, although we should not attempt to change their position of non-alignment. We should not ignore them until there is a crisis.

No area deserves more serious consideration than the Caribbean, which is on the doorstep of the United States, on which rests the security of the Western world. There is Cuba; we know the grievous position of Jamaica; we have seen what has happened in Grenada; and we know what is happening in St. Lucia. The Caribbean is a clear example of the inter-reaction between East-West and North-South.

Mr. Cranley Onslow (Woking)

I understood my right hon. Friend to say that he was convinced that there was a recognition of mutuality of interest among every-suppose that he includes the Soviet one who mattered in the world, and I Union. He went on to tell us about the lesson of Afghanistan. Does he accept that there is another lesson to be learned—that the Soviet Union does not recognise its interest as being mutual with ours? That is one of the most important lessons to be drawn from Afghanistan.

Mr. Heath

I did not suggest that everyone recognises mutual interests. If that were so I should not be worried. I said that on the Brandt Commission we recognised that mutual interest. My right hon. Friend the Lord Privy Seal also raised the point, so I shall deal with it now.

When the commission was formed, neither the Soviet Union nor China wished to be represented. In our report we were careful to leave the door open on every proposal for the Soviet Union and China. Herr Brandt visited Mr. Brezhnev and discussed the matter. Mr. Brezhnev said that he was glad to hear that the countries of the North were proposing to make some amends for the grievous century and a half of colonial repression. However, as the Soviet Union had played no part in that, they had no part to play in the Brandt Commission. The Soviet position is clear.

I discussed these questions in Pekin.

Chairman Hua and Vice-Chairman Tery Hsiao-P'ing were extremely interested in the work of the commission and particularly in international institutions. As is known, China has now joined the IMF and the World Bank. From the point of view of development, although not geographically, China is a country of the South, and its requirements are enormous.

The North has five problems—high inflation, high unemployment, high interest rates, low growth and a constant increase in the price of the basic raw material on which our entire industrial life depends—oil. We have never before had to face the difficulties caused by those five factors at the same time. It is to that that economists and Governments should be addressing themselves. We have had booms with rising prices, high production, low unemployment and rising interest rates. We have had slumps with high unemployment, low production, low prices and low interest rates. We have never had high inflation, high unemployment, high interest rates, low growth and a constant increase in the real price of the basic raw materials on which we depend.

This is not a temporary phenomenon. The attitude appears to be that if the world is driven into a sufficiently deep depression the price of oil will fall. That is a fallacy from beginning to end. Commodities are produced by people who want to sell them. If they do not sell them, they drop the price in order to get rid of them. Oil is produced by people who do not want to sell it. For the most part they want to keep it under the ground for generations yet unborn. They have all the money that they require. They are looking for excuses to cut back production and often they do not even need excuses. On 1 April Kuwait cut production by 25 per cent. and will cut it further. The Saudis are under tremendous pressure to cut production. Mecca was a lesson to the rulers of Saudi Arabia on public opinion and what it is doing with its oil. Iran is producing 2 million barrels a day instead of 6½ million. It will not increase production. If anything, production will drop further. Even in this country people ask why we do not keep our oil under the North Sea for as long as possible. It is argued that we should preserve our precious resources.

With such attitudes, the price of oil will continue to rise for the rest of the century. That is an economic fact of life with which we have to live. It must govern the Government's policies, otherwise they will be unsoundly based. The reason for the continuing rise is that in new pits it takes 10 years before there is any quantity of coal at the top. It takes between 12 and 15 years to build nuclear power stations, and there is a limit on the number that can be built at any one time. We have been working on fast-breeder reactors for 20 years, as have the French, and we still have nothing. We shall probably not have a large output from fast-breeders before the year 2000.

The problems of the South are of a different nature. The South wants commodity agreements for stability. There is mutual interest between North and South here. However, the South wants not only stable prices but higher prices—something that is not in our mutual interest, because it increases inflation. Therefore, we have to put the emphasis on better processing and marketing to help developing countries.

On processing, oil is again a clear example. Saudi Arabia wants petrochemical plants. The Saudis say that it does not make world economic sense to transport masses of oil in super-tankers half way round the world, with all the consequent risks of collision and spillage. The world economic sense is to have petrochemical plants in Saudi Arabia and to ship only the products.

The Firth of Clyde, Rotterdam and other places will not like it, but it is going to happen, and therefore we had better take advantage of it and supply the petrochemical plants before the Japanese, the Americans or the Germans do so. That is where our industrial effort ought to be made. Similarly, we should help developing countries with marketing.

To the extent that commodity prices fall, that will help the North with its inflation problem, but it will greatly increase the problem of the indebtedness of the developing world, and, in many ways that may be worse.

My right hon. Friend the Lord Privy Seal rightly mentioned the Tokyo agreement on industrial access. If anyone is to believe in the agreement, Governments must show that they will stand up to internal protectionist pressures. That is required from the British Government, otherwise no one will believe that we are genuine when we say that having supplied them with equipment, we shall take some of their products. We ought to take more of their products, but we all know the problem of persuading someone in Lancashire that he is losing his job because developing countries are supplying us with goods that are cheaper and thereby helping the consumer.

The only answer is to make sure that we always remain at least one step ahead in new technology and thus are able to provide alternative jobs. That will not be easy. Again, it is difficult to persuade a chap in Lancashire, who loses his job in a textile mill, that it is all right because a number of people in Birmingham, Manchester or Sidcup are making microchips or the plant that goes with them. We have to go for a programme not only of new technology but of training on a massive scale to enable people to adjust, and of housing to give them the mobility that they need. That is something that Governments have to deal with. No one else can. It comes under Government planning, training and the resources that they make available for it.

Mr. Raymond Whitney (Wycombe)

Does my right hon. Friend agree that in view of the statements of some Labour Members, it was encouraging to hear the right hon. Member for Stepney and Poplar (Mr. Shore) refer to the dangers of protectionism?

Mr. Heath

I agree. I have now reached the stage when I welcome support from wherever it comes.

I turn to the question of transnational companies, which is more difficult in politics than in operations on the ground. I am convinced that it is possible to have a code that the transnationals will accept in their relations with Governments and that Governments will accept in respect of the investment in transnationals. It is working well in Malaysia, for example, in our Commonwealth. It needs general overall agreement, which must be organised by Governments or by an international institution. After all, the transnationals are in the North, not in the South. It could be organised, and it would give confidence to both sides. It is an urgent requirement.

I also have sympathy with the small countries which ask how they can negotiate with giant companies such as Shell, ITT or BP. Those countries do not have the trained people or the negotiating skills. There should therefore be a group which we in the North could form, to ensure that contracts are fair. That would be in our interests. If a contract were later found to be exploitive it would be repudiated, and the transnational company would be in difficulty. As the company would be from the North, we should be in difficulty. That is another, smaller example of mutual interest.

I come to the question of the international institutions, particularly the IMF and the World Bank. The South believes that those institutions were created in the image of the Americans and ourselves because we won the war. Despite the changes that have been made, they do not accept that those institutions represent the present spread of power in the world. That is particularly true of OPEC.

Changes are required, and they need the agreement of the Governments of the North to be brought about. Unless the North takes the initiative in doing what is required, nothing will happen. I know that Mr. McNamara and the IMF are examining the matter, but changes are required. I do not want to see a new world institution—far from it—but I want to see the existing institutions ready and adaptable. The crux of the matter is that unless we get institutions in which OPEC has confidence it will not put its surpluses into them.

The next question concerning the South is its indebtedness. It is no use saying that the countries of the South should never have got into debt. Look at the size of our national debt from our national investment. Every country has a similar problem. The countries of the South could not foresee, any more than we could, the constant increase in oil prices or the enormous height of interest rates today. There is no point in apportioning the blame. The problem must be dealt with. The question is, how to do it.

The North can help the least developed countries, through Governments again, at comparatively little cost—probably £4 billion for them all. The previous Labour Government helped 19 countries and the Swedes have assisted 29 countries. Few other nations have done anything. We ought to say to those nations "We have done our part. You do yours, and live up to what is required of the North."

The big problem is the rest of the South, mostly medium-developed countries, some of which are big in area, population and output. For example, Brazil has a total indebtedness of more than 50 billion American dollars. Last year, the cost of its oil, because of increased prices, and the cost of servicing its debt, because of increased interest rates, were more than the value of the whole of its exports put together. What could Brazil do, except incur further indebtedness, which it did?

This year, if Brazil is to meet the further increase in the price of oil and the high interest rates it will have to increase its exports from 14 billion dollars last year to 20 billion dollars this year. How is that country to increase its exports by 50 per cent. in one year? We know the problem of trying to increase our exports by 5 per cent. or 6 per cent. in a year. If Brazil has falling commodity prices for coffee and cocoa, the problem is made that much more difficult. The proportion of Brazil's indebtedness is 2:1 to Governments and international institutions on the one hand and commercial banking on the other. Again, Governments have a part to play, but I am concerned at this point with commercial banking.

I disagree with my right hon. Friend the Lord Privy Seal about recycling. The commercial banks, certainly Wall Street and the major banks in the City, have concluded that they cannot go further with recycling. The proportion of recycling in the developing world is as much as the banks can carry. That produces the problem of recycling the growing surpluses of OPEC.

The even greater problem is that if developing countries are forced to default the Western banking system will be in danger. That is another direct connection between North and South. We cannot say of the developing countries "Leave them to themselves, it does not matter what happens", because the banking system is integral to the survival of the Western world.

A few of us can still remember what happened following the collapse of the Credit Anstadt, at the beginning of the 1930s, and its impact on the rest of the banking system. It was followed by the Wall Street collapse, the years of unemployment, the rise of Hitler and the Second World War. If those countries are allowed to default, the Western banking system and Western society will suffer.

It is not a question of taking action over the next 10 or 20 years. We are talking about 1980 and the first three months of 1981. Action is required urgently. The banks realise that. Of course, they will not discuss it. The chairmen of banks in Wall Street or in the City do not discuss such matters publicly. They go on saying that it will be handled all right. If they do otherwise, they will increase the difficulties. However, we ought to know what the problems are, and so ought Governments. Action must be taken within a year, up to Easter 1981.

That is the last of the major problems, but it is our problem as well as that of others. When I read the comment that "They have their problems and we have ours" which appeared in The Sunday Times, I considered that nothing could be more devastating than for a British official to make such a remark, if he made it.

Mr. Tristan Garel-Jones (Watford)

Is my right hon. Friend aware that in September 1979 the total exposure in the Third world from the City of London alone was $50 billion?

Mr. Heath

Yes. These are enormous sums. The sum from Wall Street is infinitely greater than that from the City, quite apart from the other European banks. That demonstrates the size of the problem and the dangers that will arise unless effective action is taken to deal with it.

What proposals can one make to deal with the problem? I wish to be concrete about it, without going over all the Brandt Commission proposals. The first problem lies with the OPEC surpluses. They may have been considerably underestimated for the coming year. They will continue to increase year after year and they will continue to increase inflation year after year. The Lord Privy Seal said that that factor emphasised the importance of dealing with inflation. In fact, the OPEC surpluses are causing inflation. The only logical way of dealing with that inflation, ceteris paribus, is to have an increase in productivity that will cope with it.

How is that increased productivity to be achieved? It will not be achieved by a deflationary policy. All that that will do is to reduce productivity. That is because overheads have to be spread over a smaller output. That is basic to industrial life.

We have the problem of getting the OPEC surpluses recycled. The commercial banks have reached their limit. We may say "Give the commercial banks guarantees". Some of them might accept that everything that they have done so far is their responsibility and that anything in future will be guaranteed. I do not favour that course. I believe that it would undermine general banking principles and that it would be unwise.

We must persuade the OPEC countries to recycle through institutions, and we must make those institutions acceptable to them. We both want two things; we want guarantees of oil production to the end of the century and we want predictions of oil prices to the end of the century to enable us to know with what we have to cope. The OPEC countries want a means of finding investment now that they cannot recycle through commercial banks, and they want a means of getting reasonable guarantees of that investment when it is made. They have lost 25 per cent., in dollars, in five years and they do not want to go through that experience again.

I do not know what evidence there is that the OPEC countries would not welcome a substitution account as a way of getting rid of some of the dollars. My evidence is that they would welcome such a course. It would be possible to arrange for them to have a packet of currencies that would spread the risk.

Another proposal is for the OPEC countries to invest in bonds that could be used by the international organisations for investment. They could be indexed bonds, which would give the OPEC countries the security that they want. There would be an outcry from everybody else in the world, who would say "Why should they have the privilege of indexed bonds while we do not?" These are problems that have to be faced if we want to influence OPEC policy. If we do not, let us stand aside, and let the depression come and the collapse that will follow it. If we are to deal with OPEC we must be prepared to use imagination and to meet its needs to a large extent.

We both need two things, and that is where the dialogue should start. I hoped that the dialogue would start with the meeting of the Nine in Venice, but it did not. I hope now that it will start with the meeting of the Seven in Venice. I hope that this time the British Government will be prepared to give a lead, or at least to support those who are giving a lead to starting the dialogue with OPEC.

With great respect, it is not enough to say that the European Community stands ready to carry on a dialogue. That is a negative approach. We need the Seven to indicate that in specific ways they are prepared to talk to OPEC and to overcome the enormous scepticism and cynicism in the rest of the South about the North, and to show them that the North is prepared to do business. If the Seven indicate that willingness, they may get a response from OPEC. We can make it easier for them to meet their problems.

We must recognise that OPEC will require action that will have an effect on the non-oil developing world. This is where we come to the other part of the package. It is similar to the transnational arrangement. There will have to be some help with commodities and some extra access for industrial goods. OPEC needs the political support of the rest of the developing world. It requires the votes of those countries in the United Nations, especially on the Arab-Israeli dispute. Unless it can maintain that position it will not do a deal with us. If we are to be realistic, we must accept those elements.

As for the other aspects of food and energy, a great deal can be done at comparatively little expense. Indeed, if we can overcome the reluctance of OPEC to negotiate with us, I believe that it will share with us in the expense of dealing with food and energy. That will help both North and South to find alternative resources for both and to develop food production. Both courses of action are urgently necessary.

The first package must be to deal with the OPEC surpluses jointly and to show the OPEC countries that we shall make institutional changes. We could even set up a fresh part of the International Monetary Fund on which we could have the same sort of representation as we have on the International Fund for Agricultural Development, which is one-third North, one-third OPEC and one-third non-oil developing countries. That they regard as a proper balance of power. Let us develop that in whatever way we want for expenditure on new energy exploration and on new food production. We shall then be able to make a start on dealing with the problems.

I know that there is cynicism about dealing with the problems in this way. They are global problems, and they can be dealt with only by producing global solutions. No country can deal with the problems on its own. No country is able to deal with the recession on its own. Europe cannot deal with it on its own, and neither can the United States. That is the hard fact of life. Therefore, there must be agreement and action. The quicker we get that, the sooner we shall be able to deal with the problem.

Sir Ronald Bell (Beaconsfield)

I am listening to my right hon. Friend with interest. Will he explain how he would apply what he has been saying to the problem, for example, of Brazil, which he gave as an illustration, where there is a large uncovered debt? If the OPEC surpluses were applied to that problem, would it not increase the debt of Brazil and increase the interest charge? How does my right hon. Friend propose that that problem should be solved?

Mr. Heath

That is a perfectly fair question. It must be combined with the topic to which I was about to turn. It is a matter of investment in the developing world, and enabling it to get the fruits of the products of its investment. That is the only way in which, ultimately, we shall be able to overcome the problem. That leads me to the point that I was about to make about those who are cynical towards an overall approach of this sort.

We British should be the first to understand such an approach. We should understand it better than anybody else. It was the way in which we built up our industrial strength. In the nineteenth century we had all the production. The rest of the world—whether it was Brazil, Argentina, the Imperial Russian Empire, Canada, Australia or New Zealand—wanted the things that we could produce. They had the demand, but it was not an effective demand.

What did we say to those countries? We said" You have not got the money, but the City of London will produce the money. You will never see the money, because you will spend it here in Britain on the railways, water supplies and electricity supplies that you want." That is how British industry prospered. When we made a profit we did not say "We shall sit on it as a little surplus." We said "This is another way in which you can invest still more. We shall have still more jobs and employment." We were successful until the Germans and the Americans leapt ahead of us in technology. In the 1960s the Japanese leapt ahead of us all. That illustrates again the importance of staying ahead in developing technology.

That is a process that we should understand. The Brandt Commission set out to try to break the deadlock on, for example, commodity agreements. There were bitter arguments. That is to be expected of a commission of 18 representatives from five continents of every political and economic viewpoint. We ended up with total unanimity because we had come to the conclusion that we needed recommendations to recreate the world economy and not just to deal with individual items that affected individual developing countries.

That is what is required today. It has been done once before. It was done with the Marshall plan, with America and Europe. It may be said that it is more difficult because there are more European countries and 105 developing countries. It is more difficult, but that is an institutional, organisational problem. However, if it is not solved we shall continue the slide into the economic abyss, and neither North nor South will escape.

The two decades ahead for the coming generations will be bleak, but if leadership is prepared to take a grip on this and to ensure that instructions are given for the programme to be worked out, implemented and carried out in time, the comment that there is no hope for the developing world and no hope for us will be completely fallacious. Then we shall surmount our troubles. We shall overcome them. Once again, we shall be able to embark on a prosperous path and an expanding economy, and there will be hope for both North and South.

6.11 pm

Mr. J. Enoch Powell (Down, South)

This is a difficult debate for those hon. Members to take part in who find that they are unable to share or even in a degree to understand the vocabulary and the assumptions with which the subject of aid, development and the under-developed countries is discussed and with which the Brandt report is concerned. It is made a more difficult task by the breath-taking comprehensiveness and competence of the speech to which the House has just been listening. It is clear that those hon. Members whom I have described are relatively few in number because of the ready acceptance, the excitement and the interest stimulated by the document under discussion, which exemplifies all those charac- teristics and assumptions which we find most difficult.

Nevertheless, the attempt to open up the difficulties is worth making. I agree with the right hon. Member for Sidcup (Mr. Heath) that none of these matters could be dealt with without public opinion. Opinion has to be formed. It can be formed and tested only by debate and the comparison of points of view, of definition and of redefinition.

I begin by asking a fundamental question. There is no doubt that the contrast is patent between what we call, with too gross a classification, the developed and the undeveloped countries. Whether the definition is much helped by the use of points of the compass—East and West, or North and South—I beg leave to doubt. But the vast human contrasts in the scene are unmistakable. We characterise them by the contrast between the developed West or North and the undeveloped South or whatever we choose to call it.

How did this come about? How came there to be these masses of population differing so staggeringly on the economic criteria which we apply and in the terms with which we endeavour to describe them? After all, if we went back not millennia but only a few centuries and compared this country with the India over which the Great Mogul ruled, we would find that the technical competence and organisation of Mogul India was perhaps superior to ours—it was greatly admired by the Tudor and Elizabethan travellers—and we would find that by our measurements, imperfect as they are, the standard of living in Akbar's India was fully comparable with the standard of living in the England of Elizabeth I.

What has happened? Why is there this difference, this divergence, this bifurcation? Why are there these masses of people in so contrasted circumstances? I doubt whether the answer to that question is a very simple one. Indeed, I doubt whether a full and satisfactory answer to that question can ever be offered. But I will make a negative assertion : it is not due to any difference in intellectual capacity, human ability or insight. It is an absurd notion that the European is intellectually superior to vast millions of the human race in Asia and elsewhere.

The subtlety, the insight, the power of reflection and of argument to be found in India and elsewhere are equal to anything which is within our conception or grasp. As for character and human ability, it would be ludicrous, and a confession of total and boorish ignorance, to say that it is difference in those respects which accounts for these differences of experience.

In case I be misunderstood, may I say at once that I do not believe that the IQ method of analysing the human race produces useful results for this purpose. I doubt whether many of the characteristics which we regard as typically and transcendentally European are purely intellectual. I think they have in them very much of the moral and very much of the social.

The answer must be that those comparable characteristics are differently directed, for whatever reasons, and that the scale of values, the motivation and the whole conception of the world which those populations entertain is different from that within which the material development we are so proud of has taken place in Europe or in the West.

Yet as we contemplate the picture of countries in the depths of poverty, whose poverty reacts and interacts with our own economic objects and ambitions, we are told that what we should do is to elaborate a system for transferring resources from the developed to the undeveloped.

The right hon. Member for Sidcup held the attention of the House not least because of the grand scale on which he developed his organisational structure. But when we turn from the proposals of the right hon. Gentleman to the reality, we find a ludicrous contrast between the ambition to close the gap and to generalise our standards as a universal achievement and the scale of what is envisaged or can be envisaged in practice.

An hour or two ago, the two Front Benches were arguing about the difference between 0.5, 0.2 and 0.7 per cent. of the gross national product. If that were multiplied by 10, would it not be a fantastic proposition to imagine that any organisation to redistribute and re-apply resources of that scale, produced and compulsorily collected in the countries of the North or the West, and governmentally organised, would alter the phenomenon which we contemplate? It seems a crass illustration of the essential materialism of our civilisation that we could conceive such a method for closing the gulf between the civilisation and peoples of Europe and the cultures and peoples of the rest of the world.

Mr. Alexander W. Lyon (York)

rose—

Mr. Powell

I wonder whether I might develop my thoughts further before giving way happily to the hon. Member for York (Mr. Lyon).

I must not be supposed to be saying that there is no such thing as cross-fertilisation among the branches of the human race. Of course, there is. We have been talking a great deal this afternoon about trade, genuine trade—exchange, that is, between those who think that they gain equally from it. Trade on the grand scale disseminates abilities, possibilities, capabilities, inventions, technologies that could not be evolved in any single centre of culture or civilisation.

Even more important, I believe, is the intellectual and even the moral intercourse between the different branches of the human race. I speculated a little time ago on what might have been the reasons for—I shall use a vulgarism—the "takeoff" of Europe after the Renaissance. I suspect that one of the elements, one of the creative forces then at work, was intellectual aid and intellectual insemination, but not from anywhere else in the then world. Probably the biggest single force behind the Renaissance, perhaps the biggest single force behind the achievements of Europe in the last three or four centuries, was what had been thought, done and said in Greece in the fifth century BC, the knowledge of which, improbably surviving over a thousand years, lit the match of that prairie fire of which we are still seeing the consequences in the technology of the late twentieth century.

Mr. Onslow

I suggest to the right hon. Gentleman that there is a need to qualify what he says. While he spoke in the vulgarism of "take-off", he will, surely, recognise that Greece and Spain two Powers that, in those terms, certainly took off in past centuries, have been low, in recent years, in the scale of economic achievement. There is some moral to be drawn from that.

Mr. Powell

The strange thing is that the consequences of the thoughts of Plato and Aristotle, after being transmuted and transmitted over so long a space of time, would have been astonishing to the authors themselves, more astonishing than they are, in retrospect, to us. Those who plant the seed have no means of controlling or knowing what the fruit will be. "The wind bloweth whithersoever it listeth".

This is my natural point of transition to the other chord which I touched in attempting to describe the mutual assistance of the different branches of the human race. That is the moral impact. It is possible for there to be a moral effect, a moral stamp, placed creatively and revolutionarily, by those of one cultural sphere, upon those of another.

In Victor Hugo's "Les Miserables" the bishop, by his gift of the two candlesticks, affects a total transformation in Jean Valjean the ex-convict. It is the effect upon one human being of the renunciation, the insight and the generosity of another human being.

Those people, in the debate upon aid, are not mistaken who believe that there is a moral as well as an intellectual and technical influence; but it must and can come only through the individual. If the French Government had made provision under suitable legislation—or, perhaps, by decree of Louis Quatorze—for two silver candlesticks to be distributed to each ex-convict who left the galleys, I am prepared to assert that not a single human being's life would have been transformed. I am prepared to assert that it would not have been recognised as a transmuting act of generosity. It would have earned curses rather than gratitude.

The mistake we make is to believe that compulsion can do the work of freedom and that the engine of compulsion, the State, can perform what can only be performed by human beings acting, whether in the sphere of commerce, intellect or any other, upon one another. By our narrow concept, our mechanical concept, our materialistic concept of development and of the world, we are giving a stone where what we mean to give is bread.

Mr. Alexander W. Lyon

Will the right hon. Gentleman, in the context of what he says, say what he thinks about the American Marshall Plan at the end of the war that seemed to most people to recycle a lot of resources from America to Europe by Government action, with immense benefits?

Mr. Powell

The hon. Gentleman enables me to make an important distinction. The re-investment of capital in a Europe that was, in the sense in which we are using the term, a fully developed region of the world is totally different from the proposition that one can transform the under-developed countries by a governmentally directed injection of ideas or capital. I should like to take the occasion—it will cost the House only another 30 seconds—to make another distinction. It is between Government aid, properly so called, and that international comity between nations that leads one nation to assist another when overtaken by unforeseeable and exceptional disaster. There is nothing in common between that or the matter to which the hon. Member for York referred and, on the other hand, the propositions, the assumptions and the vocabulary that we use when we discuss national and international Government aid from the developed to the under-developed countries.

My use of the proverbial expression "a stone instead of bread" brings me to the most difficult part of what I wish to say—so difficult that it was with considerable hesitation that I decided to say it. It comes from the saying If a man's son ask for bread, he will give him a stone? If he ask for fish, will he give him a serpent? That would perhaps, nowadays, be translated"a viper". On that bread, there is impressed a personality. It is the same which is symbolised by the fish. There was a time, not long ago, almost within living memory, when the people of Europe and the people of this country were convinced that they had good news to give to the rest of the world. They were certain of it, and there was good conscience and conviction in what they were doing. It was the good news that God had become man, been sacrificed and arisen, and was available to all mankind.

I do not, for the purpose of my argument, seek the assent or dissent of any hon. Member to that proposition. My point is that a century and less ago we were acting upon the rest of the world in the strength of a conviction. Whatever else was associated with it, we acted in that strength. We do so now no longer. I think our danger may be that we are endeavouring to escape from the conse- quences of a lack of faith, of faith in ourselves and of confidence in ourselves, by a resort to an arid, statistical materialism, which in turn can be used as the screen for the ever-present desire to impose one's standards upon others, to exalt one's achievements over those of others, and to find a reason for exercising power over one's fellow men.

6.31 pm

Mr. Cranky Onslow (Woking)

That was a remarkable speech, and it would be very difficult for me to follow it, even if I wanted to do so. I hope, therefore that the right hon. Member for Down, South (Mr. Powell) will forgive me if, in what I want to say, I merely allude from time to time to one or two of the points on which I am most clearly and evidently in agreement with him.

My right hon. Friend the Member for Sidcup (Mr. Heath)—who, unfortunately is not with us now—must acquit me of cynicism if I disagree with him, because it is the right of each of us in this House to express his view and the right of no one to brand us as cynics because we do not agree. I wish to disagree with much of what he said and with much of what is in the report.

In one thing I agree with my right hon. Friend the Member for Sidcup, and also with the right hon. Member for Stepney and Poplar (Mr. Shore), namely, that we cannot afford to ignore the problems of the world and that the oil crisis is a key to many of them. It would have been well if more attention had been paid by both right hon. Members to the realities rather than the generalities of the situation, and if the Brandt report had focused on the intractable situation that we know to exist. It would have been better if, for instance, my right hon. Friend had suggested to us how it is that he sees OPEC as a homogeneous organisation that one man can represent; how Colonel Gaddafi, the Ayatollah Khomeini, the President of Mexico, and the ruler ad interim of any other oil-producing State, can be persuaded to agree in advance on the price that they will make the West pay for allowing itself to be blackmailed. It would have been better if my right hon. Friend had said how well he thinks it would go down in the United States if he went there and said that we must behave in such a way as to obtain the support of OPEC, because at the United Nations the Americans need our votes and the votes of the underdeveloped countries on the Arab-Israeli issue.

I mention those examples only to show that there are areas that, had my right hon. Friend come slighdy closer to them, he might have illustrated as being more difficult than he left us as supposing them to be.

I might as well begin by saying that I disagree first with the cover on the report, and with the map on it. A line is drawn between what we are led to believe are North and South. It is thick, black, arbitrary and misleading. There is no good reason, except an arbitrary judgment, why any one country should appear on either side of that line. If the line represents an economic concept, why is South Africa on the south of it? I hold no brief for the Afrikaaners, but I dare say that if anyone wishing to protest against the Russian equivalent of the Soweto riots took his chance in Red Square in Moscow he would suffer a good deal more severely than if he did it in Johannesburg. So why is South Africa on the south of the line and the Soviet Union on the north of it? A political, not an economic, criterion must have led to that decision.

Mr. Eric Deakins (Waltham Forest)

rose—

Mr. Onslow

No, I shall not give way, because I shall no doubt provoke a great many people, and the only way to be fair is to give way to none of them.

Why are Venezuela, Mexico and the Gulf oil States on the south of the line? Why are South Korea, Hong Kong, Singapore and Malaysia there? What puts them all in the South, if there is any such place—which there is not?

The only fair picture that could have been drawn on the cover of the report would be one that colour-coded each country according to its economic performance over, say, the last 10 years, and awarded whatever colour one might care to choose to those that had done best and black to those that had done worst. The result would have been pretty pointillistic but also very much more revealing and much more honest than the picture that is presented to us here, because the pattern of international development has been random and unpredictable, and it continues to be. There is no way in which we can predict it precisely.

There is no way in which we can justify the idea of a North-South confrontation. It is a figment of the Western liberal imagination, exploited to our own detriment. We ought to recognise it as such.—[Interruption.] If any of my hon. Friends are offended by what I have just called them, I apologise, but I said that I would provoke them.

Let it be clear, then, that there are no economic criteria, no allowances made for accidents of climate, of geology, of religious upbringing, or of all the determinants that are as important to economic progress in any one country as the political system—and, goodness knows, that is important enough. Let us say, then, that we have a misleading cover, a misleading map, and that much of the text inside is misleading.

There is no outright avowal—although the Opposition Front Bench spokesmen seemed to see it—that one of the planks upon which the so-called programme rests is a system of redistributive taxation on an international scale. I do not think that the word "tax" is mentioned anywhere in the document, although the implications are fiscal and punitive. There may be advocates of redistributive taxation on a domestic scale on the Government Benches. I hope that there are not, but, if any there be, I hope that they will think twice before identifying themselves with the objectives of the report. They will find themselves—if they have not read this far—on page 291, where there are two specific recommendations that might as well go on record. The report states that The flow of official development finance should be enlarged by : 1 An international system of universal revenue mobilisation, —there is a phrase from which even our own dear Chancellor of the Exchequer would probably back away— based on a sliding scale related to national income". A little lower down we have : 3 Introduction of automatic revenue transfers through international levies on some of the following : international trade, arms production or exports; international travel —and so on.

These are tax measures. The report does not say so. It does not touch upon the questions of international representation. It merely leaves them lying there. We should turn away from them, because they really are objectionable. It is no credit—[Interruption.] No, I shall not make an exception for my hon. Friend the Member for Norfolk, North-West (Mr. Brocklebank-Fowler). I am sure that he will be making an equally brilliant speech shortly. I shall not let him intervene, any more than anyone else.

I am sure that it would have been much more honest if the commitment to taxation had been clearly and unmistakably spelt out and if the question of representation had been tackled as well, which it is not on any page of the report. My hon. Friend can read the report again and he will not find anything in it about representation.

The second point that is misleading and objectionable is the inference that the substantial increase in the transfer of resources to the developing countries—to which the report dedicates itself—must axiomatically result in the resources so transferred being better used. There is no reason why that should be so. There is absolutely every reason to suppose that that is not so, because the resources are much more likely to be used well by those who have generated them than by those into whose lap they fall in the manner of a pools win.

There is a fundamental economic misconception there, and coupled with it the fundamental misconception about the Marshall plan, with which the right hon. Member for Down, South has just dealt with in a thoroughly masterly fashion. I am delighted that he has done so because it will mean that at last The Times will no longer be able to suppress the argument on the subject.

I wrote a letter in answer to Lady Jackson—or some other member of the "Aid Mafia"—who had used the Marshall plan analogy, pointing out that it was rubbish. I did not use the word "rubbish", because I did not think that The Times would print it, but I thought that at least The Times would respect the argument. I am sorry to say that The Times does not like that side of the argument, so the letter was not printed.

There is an argument that there is a fundamental difference between making funds available for the reconstruction of an economy or a society that lacks only liquidity and lobbing them out into parts of the world where skills are lacking and where infrastructure does not exist. The Marshall plan lasted for only four years. If anyone who thinks that there is a comparison to be made is prepared to say how long a term the latter-day equivalent or Brandt plan would have to continue to transfer resources, perhaps we shall hear from him during the debate.

The prosperity of the world depends on the prosperity of the industrialised part of the world, and that is overwhelmingly the West. We should observe that. Resources that can be released should be used where they can do most good, and that is in the West. My right hon. Friend the Member for Sidcup said that we must recognise that it is not easy to persuade an unemployed textile worker that the fact that he is out of work is all right because a number of people in Birmingham and elsewhere are making microchips. Of course that is not easy. It is not an answer to tell him that we must spend a lot of money in massive retraining, massive restructuring and massive relocation of housing. "Massive" is a lovely word, but what does it mean?

Where do the priorities lie? What are the choices? Who comes first—the unemployed textile worker or someone 5,000 miles away? The overwhelming economic argument is that if we could redeploy and re-use the skills in our midst—skills that lack only the funds, we should be doing a better service to the whole world. We should generate resources, open up trade, restructure our economy, lessen the need for protectionist measures and generally move forward, instead of taxing ourselves to a standstill—which is, I am sorry to say, the report's recommendation.

Another passage of the report, dealing with defence spending, is fundamentally misleading. On page 117, it states that The world's military spending dwarfs any spending on development. Total military expenditures are approaching $450 billion a year, of which over half is spent by the Soviet Union and the United States, while annual spending on official development aid is only $20 billion. If only a fraction of the money, manpower and research presently devoted to military uses were diverted to development, the future prospects of the Third World would look entirely different. That might be so if the diagnosis were correct, but it is a faulty diagnosis, for three reasons. First, it ignores the fact, which we all know, that internal and external security are essential to economic progress. Even the comic opera in the New Hebrides teaches us something about that point. If we consider past events in the Lebanon, Vietnam, Cambodia, Malaysia, Angola, Uganda, Ethiopia or even Zimbabwe, it is possible to detect a connection between money spent on promoting internal and external security and the conditions in which economic progress can occur. There is not the difference that is suggested in that section of the report.

I do not believe that it is true to suggest, as does the report, that there is little or no domestic expenditure to promote development in all the countries with which it is concerned, or that there is little or no private overseas investment. That is not true, because the figures do not compare like with like. The most serious flaw is the assumption that the best alternative use of funds released from the defence budget would be in the form of overseas aid. I reject that. I believe that many hon. Members and most outside the House also reject it.

I turn to the last part of my criticism, which I have tried to keep brief. In some ways it is the most important part. The authors of the report seem to have supposed that they were operating in some sort of international vacuum. They seem to have kidded themselves into believing that the world is a Utopian society, where we have only to propound a theory to make it possible to put it into practice. They deluded themselves into that extraordinary frame of mind. I know that that happens when great men study the problems of development.

The Pearson report, which hon. Members will remember, succeeded in not mentioning China in all its many pages. To most intents, the Brandt report follows suit. My right hon. Friend the Member for Sidcup told us a little about the reason for that. But a country that is capable of producing an inter-continental ballistic missile, and which has within its boundaries one-quarter of the world's population, probably has some bearing on the world's future. I do not think that we can produce a programme for world survival that takes no account of the prospects of China and its people over the next two decades.

If that is a criticism of substance, I now turn to one that is even more so. Those who have the report in their hands will find on pages 45 and 46 a reference to the Soviet bloc that states : The Secreariat had a dialogue with Soviet experts of the Institute for World Economy in Moscow, who assured them that they were observing the problems of the Third World closely. They pointed out that they had undertaken great efforts for the development of the people within their own boundaries, and also in a number of developing countries. They stressed the quality of Soviet aid and argued that necessary military expenditures limit their capacity to provide greater foreign assistance. They emphasised the need for improvement in East-West relations and progress towards disarmament. The Soviet experts were fully aware of the great needs of developing countries. They strongly favoured changes in the international economic and financial system and institutions. If they praise the quality of Soviet aid, they can scarcely praise the quantity, which it is agreed is rather less than 0.04 per cent. of Russia's gross domestic product per annum.

How could my right hon. Friend the Member for Sidcup and his colleagues put their names to a report that left that mealey-mouthed apologia for Soviet imperialism without a single comment upon it? What sort of world do they think they live in? Do they really believe that it is enough? The only answer that I can find is on page 10 of Hen-Brandt's introduction, which advocates the greater involvement of the Soviet Union and its allies.

We know that the real obstacle to world progress is the fundamental conflict perpetuated by a Communist creed. If that creed were to change, if its political influence were to disappear, it would be the largest single contribution to a more peaceful and prosperous society in any part of the world that anyone could possibly conceive. I do not think that that will happen. I know that the Communists are dedicated to ensuring that it does not happen. The concept of a constant extension of Communist domination is the only moral authority to which the men in the Kremlin can lay claim within their own domains. They have no other justification for being there, on the basis on which they are there. That will not change overnight. We are in a situation in which we cannot ignore the fact that the Communists are out to frustrate the objectives that the report seeks to advance, yet the report says nothing about them. I find it incredible that my hon. Friend should have been content to say—and it was news to me—that Herr Brandt visited Mr. Brezhnev, who gave him a brush-off answer.

The Russians are not simply interested spectators, watching the world get into a mess; they are right there in the middle of it, and they are trying to make the most of the mess for their own purposes. The report says nothing of that. That is an absolutely fatal flaw in its whole drive and tenor. Its recommendations may or may not have to stand the test of time, but it is not written against the background of the world as we know it. That is a tragic missed opportunity.

I have spoken to many of the report's supporters, and they say "It is a bit of a curate's egg. There is some nonsense in it, but basically it is pretty good stuff, and we should go along with it." They are entitled to that view. I hope that some of them will admit it today. To my mind, the report is not a programme for survival. I hope and pray that it will not prove to be a recipe for disaster. However, I am quite sure of one thing—it is a self-inflicted wound in our attempts to create a better place for every human being who lives in this world and who wants to do better in it.

6.50 pm

Mr. Alexander W. Lyon (York)

We listened earlier to a magnificently statesmanlike speech from the right hon. Member for Sidcup (Mr. Heath), which was in marked contrast to the speech from the Government Front Bench. It was copied, though not by the same kind of stature, by the speech of my right hon. Friend the Member for Stepney and Poplar (Mr. Shore). However, the speeches of both right hon. Members were also in marked contrast to the things that they said, and the attitudes that they exhibited, when they were in government.

This report is a magnificent document. It is a searing analysis of the world as it is, and, contrary to what was said by the hon. Member for Woking (Mr. Onslow), I believe it to be the world as it is. It is also a leal challenge to the stature of politicians throughout the world to face up to those problems. That is true of the document, which has been written by people who on the whole have left active politics and have passed the moment when they were involved in decision making.

If, at the time of the IMF loan crisis in 1976, my right hon. Friend the Member for Stepney and Poplar had said what he has said now, we would not have adopted the policies for deflation which were adopted then as a result of Cabinet decisions. The turning point came not in Whitehall but rather when my right hon. Friend the Leader of the Opposition and my right hon. Friend the Member for Leeds, East (Mr. Healey) came back from the conference of world leaders in Puerto Rico determined to start on the monetarist policies that we are now following even more intensively under the present Government.

That is a commentary upon what is wrong with the report and what we might expect to be wrong in the response which is made to it. It is a commentary to which the House should address itself today. No one can exceed the right hon. Member for Sidcup in stating the propositions contained in the report. All of us have read it, and I do not want to labour the point again. However, we must ask what we intend to do about it.

When I came into the House 14 years ago, along with Frank Judd, who was then a Member of the House, and my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley), we formed a group to push overseas aid in the House. It was a small group and it seemed a small thing to do. We did not expect any great success. It was not due to our efforts—I have no doubt about that—but the whole thing took off. It may not have taken off in relation to economic development in the developing world, but the remainder did so because within a few years there was a massive lobby throughout the country in support of overseas aid. It made Governments think. If there were changes in Government policy, a great deal was due to the pressure which came from ordinary people, particularly in the Churches, over overseas aid.

What characterised our attempts in those days, as well as the attempt of the overseas aid lobby, was something which I am afraid the right hon. Member for Down, South (Mr. Powell) overlooked in his quotation from the Bible. We were concerned with what Jesus was saying when he asked "Do you really believe that the parent who is asked for bread would give a stone, and would your heavenly Father give less?". That is what animated us. We were animated by the politics of compassion and the thing to which the right hon. Gentleman turned—the creed by which our civilisation has come into being, by which we have stamped this century.

But that is not enough. Compassion is not what this is about. It is not that we must now depend on persuading our people to be charitable towards the Third world. We must say, as the right hon. Member for Sidcup said so well, that this is in our own interests, and that it is the only way in which we shall overcome the problems which face us. Of course, that will not have the assent of the right hon. Member for Down, South, still less that of the Treasury Bench.

What was wrong with the Government's response today was that it came from the Deputy Foreign Secretary. Had the Government been serious about this matter, their response would have come from the Chancellor of the Exchequer. It could not come from the Chancellor of the Exchequer, who has adopted a monetarist creed, because the whole thesis of the report is that monetarism is not an answer to the kind of problems which it analyses.

The thesis is that we must adopt a system which is basically Keynes writ large. In fact, if Keynes had been listened to at Bretton Woods, instead of being out-manouevred by American delegates, we might have had a system which would not have collapsed in the early 1970s, which would have done something to build up the Third world. We are not talking about compassion or charity. This is the only way in which the world will revive its trading position, and encourage growth throughout the world which will help us encourage growth here at home. Of course, we are in relative decline compared with our major manufacturing countries. But that is a small part of our problem. It is a problem which could be overcome if world trade was increasing at the kind of rates at which it increased in the 1950s and 1960s. We must stimulate world trade.

The most important part of this report is the question of what we do with the surpluses. It is significant that both Front Bench speakers talked about the OPEC surpluses. However, it is only recently that the West and Japan have run out of surpluses. Indeed, at the time of the Puerto Rican conference it was Germany and Japan who were acquiring the surpluses and causing the run-down in world trade. The question is what is to be done in a world in which some countries acquire resources at enormous rates, and hold them to themselves, if at the same time other parts of the world want resources only to stimulate their economy.

Here I take exception to the suggestion made by the right hon. Member for Down, South and the hon. Member for Woking about the Marshall plan. Of course, I accept that the Marshall plan was directed towards a basic infrastructure which needed reviving. But when I listened to the right hon. Member for Down, South expatiating upon the renaissance heritage which has been handed down to us, I thought of the time when I was in Uganda, before Amin, and talked to a farmer who had increased his crops by about four-fold. He did so because he received training from someone from the West, who taught him how to use his resources and helped him to buy the grain and the primitive equipment which brought about that change. There was not a lot in it. What he got from the West was microscopic compared with the overall need of the world. But he improved the quality of his crops immensely.

I do not go along with the current fashion which says that over the first 10 or 15 years we got overseas aid all wrong by putting it into industry rather than into agriculture. After all, India today, largely as a result of overseas aid, is the tenth largest industrial nation in the world. That was done with help from the West.

However, if we are to make an impact upon the problems posed by the right hon. Member for Sidcup, I accept that we ought to build on what the South has, which is its capacity to develop its agriculture. We must channel the resources in order that the South can develop its agriculture, and to some extent its other basic raw materials. As a result, we would be able to make a startling change in the capacity of the South to help the North—and therefore, the North to help the South—in a limited period or time, with probably a limited shift of resources.

We are challenged to make a redistribution of resources. It will come about anyway. In my infancy, in the overseas aid lobby, I preached the politics of compassion and said that we should give because it was right to give. Of course, we did not give on the scale that was required. But OPEC took it and developed its own marketing procedure and structure in world trade to divert resources to itself. It did that by a conscious decision. For so long as the world needs oil there will be an irreversible shift of power and resources to OPEC from the West. That will also be true of the rest of the South in so far as we need the kind of materials that it can produce. If it is food—in 20 years when we have to feed 6,000 million people, food might be the most expensive part of the life that we shall live, and we shall probably need it from the South—that resource will be diverted. If it is raw materials, other than energy, that resource, too, will be diverted.

I represent a constituency which has within it a third of the confectionery industry of this country and that industry is dependent to a great extent on cocoa. I know what was done in West Africa. An East German was brought in to organise the marketing of cocoa. The result was an increase in the price of cocoa beans and, therefore, of Rowntree's chocolates. That was a diversion of resources from my constituency to the West African infrastructure. That also is an inevitable part of this process.

Therefore, we must recognise not that we need compassion or charity, but that we shall have to face an increasing diversion of resources from the North to the South in any case. However, it will be unplanned, uncharted, and will lead to the kind of conflict and difficulties which ultimately will make the whole system break down.

We need to get back to a system such as Bretton Woods posed for us. We need some kind of international forum in which the channelling of resources can take place on a planned basis so that it helps the whole world, not just parts of the world. The best way is to develop the IMF and the World Bank and to use the SDR as a reserve currency. I take the view of the right hon. Member for Sidcup that we do not need any more world institutions. But what Jamaica and Tanzania have shown us in recent years and what we have learnt from the experience of 1976 is that the IMF cannot produce the imagination that is required to deal with the problems of the developing world. It has disgracefully abandoned Tanzania and Jamaica, and to some extent Turkey, to the prospect of a change of regimes which will be markedly anti-Western—much more so than the existing regimes—in countries which have done an enormous amount to build up their own resources.

When I was in Tanzania 18 months ago President Nyerere told me that his country had increased its production of maize to the point where it could supply the whole of the maize that Zambia wanted for the following year out of the crop that it had garnered. Yet we slapped him in the face by failing to give him the resources of the IMF and the help that he needed in the aftermath of the invasion of Tanzania by Uganda and the military riposte that he had to mount.

If we are to match the challenge of this report, we need to change our political outlook and to recognise that the measures that we are now taking to deal with our industrial decline are not right either for us or for the world. We need a new international economic policy which will be shared not only by the West but particularly by OPEC and the developing nations.

7.5 pm

Mr. Julian Amery (Brighton, Pavilion)

The speeches that we have heard show that the House as a whole is conscious that we are facing not just an economic problem but a political and even a moral problem. My right hon. Friend the Member for Sidcup (Mr. Heath) underlined that point strongly.

I would not necessarily say that the North-South problem is more important than the East-West problem, but it is clear to all who have thought about it that the determination of the East-West problem will be greatly influenced by the way in which we tackle the North-South problem.

My right hon. Friend the Member for Sidcup gave us an idea of the enormous scale of the problem facing us. The scale is colossal, but the problem is not new. When the great depression hit us in 1930, with nearly 3 million unemployed, and with the collapse of production at home and of raw material prices abroad, we tackled the problem within the framework of that part of the world for which we were responsible. Between 1932 and 1960 the British Commonwealth saw an extraordinary revival of the prosperity not only of this country but of the countries that one might say belonged to the South.

It may be instructive to look back and see how it was done, because there may be some lessons to be drawn from it. The revival, which took off dramatically before the Second World War began, was based on the creation of a trade and payments area. The trading side was based essentially on the principle of Imperial preference, but it was seconded by commodity agreements—particularly for sugar, but there were others as well—and by fairly careful administrative planning.

After the Second World War the idea of aid, which had scarcely been accepted before the war, came on to the map, and there was a good deal of judiciously channelled aid. The home Government—I had something to do with this in later years—were able not only to determine the aid programmes but to see that they were properly carried out.

Perhaps more important than the tariff and quota and commodity agreements side was that there was a single currency—sterling. That had the great advantage that, as all the central banks of the territories, whether independent, such as Australia, or dependent, such as the African territories, banked their reserves with the Bank of England, any fluctuations in the terms of trade did not have to be settled overnight with balances built up in favour of the raw material producers when raw material prices were high and run down when the terms of trade went the other way. The result was a spectacular improvement in the conditions both of this country and of the countries with which we were politically associated.

I have to add that other factors were conducive to this success—and it was a great success. One was that after the Second World War there was a boom as the world began to recover and raw materials came to be in great demand. Stability was assured by the Common- weath system, as it was in those days. There was no threat to the external security of the countries concerned, because Britain was capable of ensuring their defence. Much the same can be said of most of the countries of the French Union.

We are now in a different position. There is not a single currency between groups of nations; there is an anarchy of currencies. There is widespread political instability internally, and there are also external threats, as can be seen in Angola, Ethiopia and many other countries. Wars, civil wars, and misgovern-ment have destroyed the stability that existed previously. There is also the current recession, underlined by the enormous increase in oil prices.

There is no question of going back, but can we learn any lessons from the past? We cannot recreate the British Commonwealth as it used to be, or the French Union; that is all over. But are there any lessons to be learnt? I should like to ask a few questions. My right hon. Friend the Member for Sidcup and the hon. Member for York (Mr. Lyon) sought to achieve global solutions to the problem. The world has shrunk a great deal, and yet I wonder whether we should be thinking in terms of regional solutions. If we try to achieve a global solution—which would be best—by trying to revive or recreate Bretton Woods, would we succeed, or would we simply waste years arguing about the detail?

Certain groups of countries are, by geography, economic interest or historical association, more closely linked to each other than others. Although this country has had many interests in Canada and South America, the American interest predominates in South and Central America and Canada, and it seems likely that the influence of Japan will dominate in South-East Asia, and perhaps in China and even Australasia.

Looking back over the history of Europe, we see that our links have always been closest with Africa and the Middle East. Should we be thinking in terms of trying to recreate—obviously not on an imperial or neo-colonial basis, but on a voluntary basis—the sort of relationship between the European Community and Africa, and possibly the Middle East, that used to exist between Britain and the southern countries of the old Commonwealth? I am suggesting that this should be not an exclusive relationship that would keep out the Americans or the Japanese but one that would give preference to the European market, which is a bigger market for the Third world countries than the American market. It would give preferential terms to Africa and the Middle East, and it would perhaps move towards the building up of a European monetary system that would provide Third world countries with an alternative reserve currency to the dollar.

Mr. Donald Anderson (Swansea, East)

The weakness of the hon. Gentleman's proposition is that it assumes a willingness on the part of the receiving countries to enter into such a relationship with a developed country. The South American countries may not be willing to have a semi-exclusive relationship with the United States, and the South-East Asian countries may not be willing to have such a relationship with Japan.

Mr. Amery

The hon. Gentleman is right. There are many difficulties, and therefore I stress that I am not suggesting an exclusive relationship. But the balance of mutual advantage may incline the countries concerned to make flexible arrangements with the particular industrial centre to which their goods most naturally go. Certainly, in respect of Africa and to a considerable extent the Middle East, Europe is that market. We see already their difficulties in relying so heavily on the dollar. If we could develop a European monetary system it might go some way towards meeting their anxieties. That concept is not new. It is accepted in the Lome convention and it is accepted by the associated States to the European Community.

I am not going to try to answer the question, but I wonder whether we should consider going beyond the generalised system to specific and mutual preferences between, say, Africa and the Middle East and possibly other countries and the European Community, as existed in the Commonwealth in the old days. The greatest step might be to make the European monetary system—we would have to belong to it if this were to happen—a reserve currency to which associated countries to the European Community might wish to link themselves to some extent.

Inevitably, there are political overtones to what I am saying. No economic policies, no provision of aid or investment, and no agreements on tariffs or on monetary arrangements will work unless they are secure in political and defence terms. People will not invest their money unless there is a prospect of internal stability and of security against external aggression. Perhaps that is where Europe comes in. We cannot guarantee internal stability, but where we have great interests we can make greater provision—I tried to make this point during the debate on the Defence Estimates—for developing and building up the sort of rapid deployment forces that the French used with great effect in the Shaba crisis in Zaire, and more recently in Tunis. We cannot dictate policies to independent countries, but we can indicate how we can best protect their interests and ours and how we can work out with them mutually advantageous solutions consistent with their dignity as independent countries.

7.18 pm

Mr. Guy Barnett (Greenwich)

I am glad that the right hon. Member for Brighton, Pavilion (Mr. Amery) has introduced the Commonwealth into this debate. It struck me as slightly odd that the Brandt report hardly makes mention of the Commonwealth, even though the Commonwealth Secretary-General, Sir Shridath Ramphal, was a member of the commission, and the Commonwealth Secretariat made a considerable contribution to the report. Although the right hon. Gentleman and I disagree to some extent about the approach to the Commonwealth, I am glad that he has introduced the subject. I shall refer to it later in my speech.

We all feel at a disadvantage compared with the right hon. Member for Sid-cup (Mr. Heath), who, in a considerable speech, gave the House a full canvas of the appalling problems facing the world at large. He gave a grim warning of what would happen if the world—and particularly Britain—goes on as previously. He described a worsening situation. He, and the report, pointed to growing shortages of food and energy. The most frightening prospect that came across in his speech, and also in the speech of my right hon. Friend the Member for Stepney and Poplar (Mr. Shore), was the prospect of a world economic collapse and the consequent civil disorder and military conflict that would arise from that. Every hon. Member who has spoken, at least from this side—if I may exclude the right hon. Member for Down, South (Mr. Powell)—has recognised the importance of the Brandt report in these respects.

I go along a long way with my hon. Friend the Member for York (Mr. Lyon). Although the report is a considerable document, many of its prescriptions and analyses of the problems are not new. We have been aware of them for a long time. My hon. Friend asked the fair question : why did the right hon. Member for Sidcup, when he was Prime Minister, or when he was a significant Cabinet Minister in the 1959–64 Government, not pursue the policies that he now regards as important?

I do not mean any criticism of the right hon. Gentleman personally. My hon. Friend the Member for York made similar criticisms of Labour Governments. What has characterised the members of the commission is that they have held significant positions in government yet have not carried out the policies that they are now, properly, advocating.

Sir Bernard Braine (Essex, South-East)

I am sure that the hon. Gentleman does not wish to be unfair to my right hon. Friend the Member for Sidcup (Mr. Heath). It is in the recollection of those who were in the House at the time that he took a major lead in trying to move the world towards a greater liberalisation of world trade when he was President of the Board of Trade. Therefore, it is not true to say, or to imply in the context of this debate, that he has discovered virtue only recently. He has been a consistent champion of a global approach to these problems.

Mr. Barnett

I am grateful to the hon. Member. He may not have recalled it, but I was in the House at that time and was well aware of the lead that his right hon. Friend took in the UNCTAD negotiations, which is presumably what he has in mind. I was about to refer to that very matter. I hope, therefore, that no one will accuse me of injustice or unfairness. Nevertheless, neither the hon. Member nor anyone else can argue that any Government over the last couple of decades have taken seriously the prescriptions of the Brandt report.

The question that I am asking is one to which we must address ourselves : why, if the compassion that we may have, and even our own interests, are well served by adopting some of the report's recommendations, have we not done so? I remember the right hon. Member for Daventry (Mr. Prentice), when Minister for Overseas Development in a Labour Government, saying that we must give aid to developing countries because it was in our own interests. That is what a member of a Government said a dozen years ago, yet the aid given by Governments, in my view and that of many other hon. Members, is nothing like commensurate with the need.

As I said, I do not want to engage in recriminations about the past, but it is fair to ask whether the Brandt report will gather dust as the Pearson report did. Will it be taken seriously? We can hope that it will be taken more seriously than other analyses of the problem and suggested solutions to it, since we have now reached a crisis in world affairs because of the actions of the OPEC countries.

I agree that we can expect developing countries to take a leaf out of OPEC's book, when they have the opportunity and if the North fails to respond to the proper demands that are made. It is no surprise to me that members of the Group of 77 are beginning to realise that they have no prospects of solving their own problems without far more effective participation in the solutions and when they are only on the receiving end of decisions by the North about trading, investment, financial relations and the rest. Unless they participate in the decisions, they will be bound to take whatever steps the situation demands. Part of the answer must be that they should play a much more active part in decisions taken largely on their behalf.

The right hon. Member for Sidcup properly introduced a note of urgency into the debate. It was not enough for the Lord Privy Seal to say that the Government broadly accepted the report's conclusions and that they might be argued for in international councils. He said that Britain could give a lead.

That brings me to the speech of the right hon. Member for Brighton, Pavilion. Britain is exceptional because, among the countries of the so-called North, we are a member of a non-aligned group. With Canada, Australia and New Zealand, we are a member of an association of great importance in terms of these problems. That group, the Commonwealth, has grown up, to the point at which it can play a much more effective part in world affairs. The proof is in the effectiveness of the Lusaka conference last year and the massive contribution that the Commonwealth made to the Zimbabwe settlement.

The Commonwealth has now proved that it can tackle certain political problems. I profoundly regret that, even though such a contribution has been made, one hears stories about deteriorating relationships between the Foreign and Commonwealth Office and the Commonwealth Secretariat. I have no doubt that the Secretary-General of the Commonwealth made a considerable contribution to the Lusaka conference and to the negotiations which resulted in the Zimbabwe settlement.

The odd thing about our remarkable position is that it sometimes seems, from the way in which Governments and individuals speak, as if we did not want the association of the Commonwealth. One discovers that the French are envious of the relationship that we enjoy—a relationship of equality with the other countries, which exemplifies its relevance to these problems and shows that some of the things that the right hon. Member for Brighton, Pavilion was saying may not be relevant in the 1980s.

Certain aspects of the Commonwealth contribution are peculiarly important today. An essential element in development is education. Ever since the late 1950s the Commonwealth has made a significant contribution here. We have already debated the Government's attitude to overseas student fees. That was part of the important contribution that we could make to Commonwealth education, which I believe to be vital for development.

As someone who many years ago made a small contribution as a teacher in a Commonwealth country, I recognise the vital importance of education. It needs to be underlined, because some people have said, in effect, "Education has not solved the problem, so we can afford to neglect it". Education itself and, indeed, development itself have very few prospects without proper attention to the issue of health. I notice from recent reports, for instance, that the mosquito is beginning to gain a hold in many African countries. The debilitating effect that it can have on students at school, farmers or individuals at work can be devastating in relation to a developing country.

I talk about the Commonwealth in a specific context, because the context in which I see it is that it can act as an example of what can be done. I think that one of the useful contrasts that can be drawn between the Commonwealth and the United Nations agencies is that the Commonwealth invariably does things on the cheap—largely because it does not have very much money. But an organisation such as the Commonwealth fund for technical co-operation does an immense amount of valuable work with very few funds indeed.

As I have done before, I commend to the Government the importance of that body. Even though its funds are minute, that is something to which, through the Commonwealth itself, the Government could recommend increased contributions by this country and other Commonwealth countries. It has a twin benefit—first, that it does effective work, and, second, that the fund is administered by the Commonwealth as a whole and, therefore, responds to the demand that is coming from the developing countries and the world at large to be able to play their part in making decisions where the decisions need to be made.

Let us be in no doubt as to the consequences of failure in respect of some of the report's recommendations. I spent two and a half years of my life in Kenya towards the end of the colonial period there. We were very fearful then of the political instability that would arise in that country if economic disaster were to befall it. We had good reason to believe that, because only a year before independence the country was stricken by a very serious famine.

There are problems arising in that country now as a result of very different circumstances. In spite of our fears, the fact is that the Kenya economy has made very remarkable strides. Recently, in spite of the peak year of 1977, the fact is that the 1978 statistics revealed Kenya's difficulties. Last year the gross farm income fell by nearly 22 per cent. This was due mainly to a fall in world coffee and tea prices. This can only have a devastating effect on an economy that is so dependent upon the success of its agriculture. It can mean rural poverty. It can mean rural unemployment, and a drift of people to Nairobi and other towns.

1 speak of Kenya because I happen to know it, but it is a situation that can be repeated over and again throughout the African continent. Some of us have spoken about the dangers of political instability that can result from economic collapse. The signs of it are already beginning to appear in certain developing countries as a consequence of such circumstances. Therefore, I believe that there is a vital situation to be dealt with.

I want to make one or two brief suggestions as to contributions that can be made. The right hon. Member for Sidcup said that we ought to be making an immediate contribution; we ought to be looking at our industry to see the degree to which it might be relevant. I make one suggestion. I do not claim to be an expert in the field of energy, but I should like to suggest solar energy. What contribution is British research now making to a form of alternative energy that is directly relevant to the situation in the developing world? It seems to me to be something on which we could be concentrating, because, although solar energy may not have much of a future in the United Kingdom, it could provide a solution to many problems in developing countries. It could provide a very useful contribution to employment in Britain if we were to get into that field.

Dame Judith Hart

My hon. Friend probably knows that about two years ago the then Ministry of Overseas Development set up an advisory committee on alternative sources of energy appropriate to the Third world, including solar energy. What I do not know is whether it is continuing.

Mr. Bamett

I am grateful for that information. I have to plead ignorance. I am delighted to hear what my right hon. Friend has told the House. I should be very interested to hear this evening how that experiment has gone on.

But there are other issues. Surely this country must be one of the experts in offshore oil exploration and exploitation. Have we a contribution to make in that direction? I do not know. I know that there is talk of the possibility of exploration and exploitation off the coast of Bangladesh, for instance. That is one example, and there may be others where that could be relevant.

Those are only suggestions as to the kind of contributions that we could be making. It seems to me that Britain can make two immediate contributions. The first is through the Commonwealth and by a more active pursuit of our membership of the Commonwealth, because there is a lot more sympathy and readiness to cooperate with us than many in this country believe. The second contribution to be made is by looking at specific contributions, by anticipating demand rather than waiting for it and then missing it. So many times in the past we have complained about the failure of the British car industry to provide any vehicle other than the Land-Rover—and then not enough of them—to meet the needs of tropical countries.

We must not fall down this time. We in this country are in the unique position to give something of a lead. We have a unique relationship with the Commonwealth which will enable us to do so, and a lot of our tradition and history makes us peculiarly relevant to the solution of many of the problems with which the Brandt Commission is concerned.

7.36 pm

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

Some of us have waited for four months for this debate. We have waited with a sense of anticipation, because when the report was published in April we were promised by the Government that they would consider its contents carefully and that they would report to the House in due course their consideration of the report. Some of us, in all parts of the House, are a little disappointed today, because, despite those promises, it seems clear that over the months little consideration has been given to major areas of the report.

Although I normally look forward to, and remember with pleasure, the speeches of my right hon. Friend the Lord Privy Seal, I confess that today's offering was one of the worst and the least meaty that I have ever had the misfortune to hear from him. It was a speech that repeated what has been said in answer to questions over the previous months—that this was all a serious matter and that we should go on considering it.

I beg my right hon. Friend to take note that many on the Conservative Benches believe that the issues in the report are not concerned only with the giving away of money to profligate people in countries for which we have no great affection—far from it. The whole purpose of what the report has set out to do is to draw our attention very forcibly, as my right hon. Friend the Member for Sidcup (Mr. Heath) has done this afternoon, to the fact that the issues are central to the whole future of the British economy for the next decade and to the end of the century at least. To treat it as a trivial document which can be glanced at en passant and then forgotten is not to do justice to the work, skill and ability of the considerable number of people who have played so great a part over several years in bringing about its publication.

I regret that my right hon. Friend the Lord Privy Seal gave only an assurance that the Government accepted that there were problems ahead. Apparently, he accepts that measures are needed in order to cope with our mutual interests. He regrets that much of the inflation from which Britain and Europe suffer results from oil prices. We know all that. We have known that for more than a year.

We had hoped that the Government would reveal how they would cope with those problems and what their policies would be for the next five years. Not only is our own narrow interest at stake, but—more importantly—we could make a leading contribution to the solution of the major problems that affect Britain and a large part of the world. My right hon. Friend referred briefy to energy and the need to recycle petrodollars. He spoke of the need to search for common ground but said that we were not ready to begin that, even if we decided that it would be a good thing. He demolished the very position that he had just spelt out.

My right hon. Friend then referred to the role of banks and the private sector. Rather glibly, he said that they were meeting the challenge. It is absolutely clear that they are not meeting that challenge. As my right hon. Friend the Member for Sidcup said, they are incapable of meeting it. As they are incapable of recycling petrodollars into the world economy, that economy continues to diminish. Britain's share of that economy will lessen and unemployment will continue to rise, because of our poor competitive position.

My right hon. Friend then referred to the importance of aid. I thought that his remarks were inappropriate, because they came from a Government that had just cut aid by 6.1 per cent., 6.8 per cent. and 14.1 per cent. over three years. That cut takes no account of the adverse effect of devaluation during those three years.

My right hon. Friend said that there was a role for the private sector. Of course there is. Indeed, Conservative Members are particularly aware of that. We know that multinational companies are important. They establish plantations, recover mineral resources and encourage investment overseas. They provide education for the work forces, a discipline of employment, and bring people into the cash economy. However, private investment alone has no hope of coping with the problems that the developing countries face. As the Brandt report points out, there must be a massive transfer of resources. Both aid and investment are needed. However, the scale is larger than private industry can organise.

I recognise the part that a free foreign exchange will play in facilitating overseas investment by private companies. I hope that they will find stability in the countries that need investment. I also hope that companies will reach agreements with the Governments of those countries in which they wish to invest to ensure that that investment is made on an equitable and secure basis.

Once again, I must criticise my right hon. Friend. I apologise for being so critical. He did not refer to the need for an emergency programme. The Brandt report spells out that although some major problems can be dealt with at relative leisure—within a period of 10 years —others cannot be left for five years. I was appalled that the Government made no response to those specific points, particularly the need for a global food programme. We all know that the world population is likely to increase by 50 per cent. during the next 20 years. In other words, before the year 2000 the world population of 1910 will be added to our present population.

Agricultural production is failing in many of the developing countries. The price of food in the world will rise rapidly unless something is done to reverse that trend. We still import nearly 50 per cent. of our food requirements. It is clear that it is in our interest to do all that we can to avoid shortage.

The second point in the emergency programme is the need for an international energy strategy. We should remember that energy in the developing world means not only nuclear energy or oil, but solar energy and wood.

Dame Judith Hart

Biomass.

Mr. Brocklebank-Fowler

I am grateful to the right hon. Lady for that little gem. I think that I know what she means, and I am sure that the House understands. All those types of energy are crucial. The developed world has a great part to play in enabling the developing world to produce alternative sources of energy so that their need for the oil that we require for our heavy industry is not so considerable.

The third point in the emergency programme refers to the need for major reforms in the international economic system. It is clear that if money is taken out of the world economy and invested un-productively by the OPEC countries that money is not being recycled for the possible purchase of manufactured goods from the developed world. We must recognise that need exists in the developing world. It is the job of the international monetary system to translate that need into demand, so that the demand can provide the employment that we in Western Europe seek.

Fourthly, the emergency programme involves the large-scale transfer of resources to the developing countries. The record of the United Kingdom may be comparable with those of the other Western Powers as regards aid. That is not the point. We do not give as much as is necessary if we are to ensure that the poor countries get off the ground and absorb our exports. We are heading for a deeper recession than ever before. OPEC moneys are being withdrawn from circulation.

I remind the House of a report by the former Select Committee on Overseas Development in about 1975, a Committee chaired by my hon. Friend the Member for Essex, South-East (Sir B. Braine). The report referred to India. According to the report, the whole of India's export earnings surplus and the whole of its moneys available for the purchase of manufactured goods were absorbed in one go by the first 1973–74 increase in OPEC oil prices. That process has continued. Indeed, there is another one in the pipeline. Every major price increase withdraws the purchasing power of a developing country, on which jobs in Britain depend.

How do the sceptics suppose we shall avoid such a slump and recession, with the unemployment, civil unrest and violence that can accompany such periods? The right hon. Member for Down, South (Mr. Powell) referred to the impression of the Western personality on developing countries. He regretted it. I think that he wished that we were able to withdraw it. However, it is too late to repeal the effect of Western civilisation on the developing world.

Many developing countries have been drawn into the international economic system. Many of them have rising expectations and want to be in the cash economy. They want improved standards of living, education and health. It is too late to say that they should go back to being the primitive tribal societies that they were before their earliest contacts with Western civilisation. That is too ingenuous an argument for us to take seriously in this day and age.

The truth is that this country needs an appropriate strategy covering all the great Departments of State. The significant thing about the Brandt Commission report is that it affects not only the Foreign and Commonwealth Office but the Department of Trade, the Department of Industry, the Department of Employment, the Department of Energy, the Ministry of Agriculture, Fisheries and Food, the Ministry of Defence and the Treasury itself. What we expect today and want in the future is a coherent response, drawing together all the threats of interdepartmental interest in Whitehall and presenting the nation with a blueprint for the next stage in our national development

Britain, more than any other country in the world, is dependent on world trade. We export 32 per cent. of our gross national product, and 29 per cent. of our exports go to the developing world. These amount to sales in excess of £12 billion. We make a £2.1 billion profit in our trade in manufactures with the developing world. Therefore, we need all our Departments to examine together, in a major Cabinet sub-committee, the ways of co-ordinating the various Government Department's policies in order to ensure that Britain makes the best of its policies at a time when decisions will be particularly hard to take. I should be very interested to know what computer studies have been made on the Treasury computer of models which set out the various alternative courses of action open to us.

This country has emerged from its period of post-colonial power. We have lost our confidence and have become inward-looking. Those of us who supported Britain's accession to the EEC hoped that in that Community we should find another kind of security and another forum within which to develop our self-confidence and to express ourselves. I believe that the basis is there and that if we can persuade our partners in Europe, with us, to take this report seriously, we can in the process rediscover our own importance as a major trading nation. That will be done only if the Government show the nation leadership. My right hon. Friend the Member for Sidcup today showed the nation leadership in considerable measure. I hope that we can look forward, by means of a Green Paper or a White Paper in the future, to the Government's providing leadership for the House.

7.54 pm

Mr. Russell Johnston (Inverness)

It is a pleasure to speak after the hon. Member for Norfolk, North-West (Mr. Brocklebank-Fowler), who has such a distinguished, consistent and brave record on matters concerned with the problems of disadvantaged countries. I am one of those who believe in the televising of proceedings in the House of Commons, and I feel that it would have been of great benefit to the public to watch the right hon. Member for Sidcup (Mr. Heath) deliver his long and masterly address this afternoon without glancing once at a piece of paper. It would have done a great deal to restore public confidence in the capacity of politicians.

This is an enormous subject, covering questions of nationality, economic disparity, morality, merit and opportunity, some, if not all, of which—and even the most idealistic of us realise this—will take a long time to solve.

The right hon. Member for Stepney and Poplar (Mr. Shore), in opening for the Opposition, said that the report was about how mankind could achieve a better future. One could hardly ask a wider question.

I thought that it was symbolic that this debate was preceded by two statements. The first concerned the European Community. Certainly, the right hon. Member for Sidcup would agree that the chances of the broad lines of the Brandt report being implemented will suffer a severe setback if the Community fails to agree within itself.

If the nations of Northern affluence demonstrate an inability to solve their problems of relative affluence; if the general public, despite dramatic and even ghoulish media treatment of the terrible events in Uganda and elsewhere, still have little genuine understanding of the awfulness of life in the developing world; and if we cannot make the European Community work, I cannot see any prospect of effectively bridging the formidable heights and gulfs of opportunity throughout the world. If the developed countries are unable to set aside their nationalism, there is little chance of influencing the underdeveloped countries to develop an international approach.

The second statement was on the New Hebrides—a small patch on the map. It is a symptom of our continuing Western incompetence that we are spending considerable sums of money flying marines in VC-10s to a remote island that is regarded as a paradise on earth. The argument there is about that island's independence. If that happens in that idyllic setting, it is hardly surprising that much worse happens in less congenial spots in Africa, Asia and South America.

It is difficult to criticise the Brandt report, because it is full of statements of what is good, what is right and what should be done. The real question is whether the report will have any practical effect whatever. I agree entirely with the strictures on the Government by the hon. Member for Norfolk, North-West. I did not get the impression from the Lord Privy Seal that Government policy in the United Kingdom would be changed in any way as a result of the study of the Brandt report. In fact, there was not much evidence of any study at all. Nor for that matter was there any indication that EEC policy would be notably changed. It has already been mentioned that our overseas aid has been cut by about 14 per cent. across the board over the next four years.

I shall turn now to the things that Brandt did not face up to. The disturbing thing about the Government's approach was that they did not even criticise the report. They did not say that it was a good thing and that they would act on it. They did not say that it was bad. Indeed, they did not say anything at all. The approach was entirely anodyne.

There were three factors that Brandt did not face—religion, nationalism and climate. The right hon. Member for Down, South (Mr. Powell) made some surprising remarks about the last with which I did not agree. We cannot define why people do something or what they will do only in economic terms. To attempt to do so avoids fundamental considerations.

For example, although as a Liberal I was critical of the totalitarianism of the Shah, I acknowledge that he was endeavouring to inject technological advances into Iran's economy. It is no comfort to see his regime replaced by a theocratically dominated regime that rejects the concepts of pluralism and tolerance, which I believe lie at the heart of civilisation. Even worse, that Administration and their ideas have widespread democratic support, with an upsurge from the heart of the people. That was difficult to predict. The Brandt report tends to assume that human behaviour is predictable, although there are a large number of variables, of which religion is a notable one. Religious leaders in other faiths also display little interest in technological advance, which they often see competing with their concepts of the eternal verities.

It has been stressed that the Brandt Commission, comprising 11 members from the South and nine from the North, was unanimous. I do not believe that these religious leaders would care about that. The right hon. Member for Sidcup said in passing that it was as difficult to control population growth in South America because of the built-in religious factor. However, we should at least consider the problem and engage in public debate about it

We should also consider the push of nationalism. Crossing the Channel, especially by sea, one sees the rabies notices, the French word for which is "rage". I feel that that is a good word for nationalism, an attitude that we and the French share in good measure.

The report strongly attacks protectionism and arms dealing. There is an early-day motion in the name of the Leader of the Opposition and several of his right hon. and hon. Friends extolling the report. That fits clumsily with the Opposition's regular calls for import controls. At root, like their view of the European Community, such attitudes stem from nationalism. Nationalism is the divider.

I accept the attack on arms dealing. However, as a cynical friend said the other day, "Give an underdeveloped country money and it will buy not bread but Mercedes or machine guns". I do not take a high-and-mighty attitude about this, but I do not know the answer. We have been through similar stages of development and may not have entirely emerged from them. In the end, the Brandt report said nothing new about arms proliferation not dealt with by East-West negotiations about arms reduction. It is wrong to suggest that arms dealing can be considered other than in East-West terms.

We should then consider climate. The Brandt Commission never addressed itself to why various parts of the world are at different stages of development. The cradle of civilisation was not in the dark satanic mills of northern England or the shipyards of central Scotland. It was the warm, wet banks of the Euphrates and the Nile. Why did the centre of civilisation not remain there? I agree with the right hon. Member for Down, South that there are no differences in innate capacity or intelligence quotients, but different climates give rise to different attitudes. For example, for many years Liberia was extolled as the one country in Africa that was independent. Although people travelled to and from the United States, there was no imperial rule. Why did Liberia not become like Denmark or Norway? At the end of the day there was a blood bath, and Liberia was taken over by a master sergeant.

Mr. James Johnson (Kingston upon Hull, West)

Perhaps the missing factor is the Nonconformist conscience of the United Kingdom in the nineteenth century.

Mr. Johnston

That may be. However, we should recognise that what we as Northern Europeans see as progress is not necessarily recognised as such by others, who do not always see our society as progressive. In Iran the bulk of the people did not wish for the sort of society that the Shah was seeking to impose. I do not understand it, but it is so. Countries will develop at different rates, because their mores are different. The report would have been different had it faced that fact.

I shall confine myself to three further points, even though we are going on till midnight, as many hon. Members wish to speak. The report lays stress on mutual interest. That interest has been defined in terms of the North wishing to hang on to what it has, but realising that that depends on raw materials from elsewhere and on peace, and of the South wanting to emerge from poverty and achieve some of the expectations that are taken for granted in the North.

We should quantify that mutual interest. The hon. Member for Norfolk, North-West referred to the Treasury computer, which sent shivers of horror down the spine of the hon. Member for Aberdeen, North (Mr. Hughes). However, it is a fair point. Herr Brandt confessed that, as Chancellor, he did not pay much attention to these matters, because he was preoccupied with domestic affairs. There is no point in talking in generalities. That mutual interest needs to be demonstrated and quantified. It needs price tags. Otherwise, it will remain only a general statement.

There is then financial stabilisation. Despite what the hon. Member for Woking (Mr. Onslow) said, the report mentions a tax on trade, travel, the sea bed and arms. As regards the sea bed, it is not long since we agreed to what amounted to maritime nationalism by extending our boundaries to 200 miles. Many people said "Hurrah, what a good idea", but I did not think that it was a good idea to lessen the opportunity for international control over a significant part of the globe where considerable resources lay. It is difficult to step back from such a position. It is easy to talk about it, but difficult to do something about it.

I conclude on the size and nature of the contribution made by the North to changing the situation. I am not sure that I go along with the hon. Member for York (Mr. Lyon), who said that compassion and charity are not enough. I am not even sure that they are the same thing. They do not mean the same to me. I think that compassion is better than charity, but that may be a linguistic difference between us.

However, I know for certain that if we are talking about 0.7 per cent. of GNP by 1985 and 1 per cent. by the end of the century we are not talking about much. As the right hon. Member for Down, South said, we are talking about giving stones to people who ask us for bread. That is an accurate description of our response to the problem.

The report has shortcomings, and it is a compromise, but it is a compromise of hope. If we do not follow it, we shall slide into the abyss that the right hon. Member for Sidcup referred to. The Government believe in asserting themselves. They say so day in and day out. Let them assert themselves positively on the report. It is a gigantic task, beset with difficulties, but we must try. We are not trying now.

8.12 p.m.

Sir Bernard Braine (Essex, South-East)

The hon. Member for Inverness (Mr. Johnston) asked a question but did not provide the answer. He asked why ancient civilisations had disappeared. Surely the answer lies in Toynbee's theory of history—the theory of challenge and response. If a civilisation does not respond to challenge; if, with the barbarian at the gate, it does not defend itself; if it does not deal with threats from within, and if it does not adapt and change, it will assuredly be destroyed. That is what has happened throughout history.

That surely is what the Brandt report is trying to tell us. That is precisely why my right hon. Friend the Member for Sidcup (Mr. Heath) told us. The world is in crisis and the world economy is in a mess. There are certain actions that we can take that may lead us out of our difficulties and provide a ray of hope. If we do nothing, we shall continue to drift, with the inevitable consequence that our civilisation will give way to stronger forces.

Like other hon. Members, I have long been interested in the theme of world development. I have explored it from different angles and have visited many developing countries, from the Caribbean to China and from Africa south of the Sahara to the villages of India. I have been the chairman of two Select Committees on overseas aid and development.

It is easy to describe the appalling deprivation that one has seen and to parade the statistics of starving children, malnutrition, illiteracy and diseases, but it is infinitely more difficult to see how we can eliminate the worst features of world poverty. It is also more difficult than it was in the early 1960s, when developed countries such as Britain jointly accepted the challenge and provided resources for aid.

My right hon. Friend the Member for Sidcup, and the right hon. Member for Down, South (Mr. Powell) served in Governments that accepted the challenge and sought to make a contribution towards alleviating world poverty. It was not all waste, or throwing away scarce resources on people who did not understand how to use them. There were notable successes. There was an inching forward, and improvements in the standard of living of many developing countries.

We agreed then to devote at least 1 per cent. of our GNP to overseas development, of which at first 0.5 per cent. and later 0.7 per cent. was to be in the form of official aid. Alas, with few honourable exceptions, those internationally agreed targets have never been realised and in the past three years there has been no increase, in real terms, in investment of either public money or private resources in poorer countries. Indeed, the richer countries have shamefully dragged their feet in the search for a fairer international trading system.

Aid has always been only part of the answer. It hardly makes sense to give aid to a developing country and then to deny access to our markets for its products, or not to ensure a fair return on what it produces. It is not aid but trade that constitutes the main engine of development. The Brandt report makes that point clearly when it says : 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. The irony of the situation is that many of the earlier assumptions about the efficacy of aid have proved false. With the raising of oil prices by the OPEC countries and the onset of world recession, the keys to recovery are no longer held exclusively by the richer nations. It sometimes sickens me to hear Western leaders pontificating about recovery when they are not in control of the situation.

Some developing countries have moved fast since the early 1960s—much faster, in terms of increases in per capita income and improved living standards, than European nations did during their own industrialisation in the nineteenth century. In some cases, the achievements of developing countries have been breathtaking. Hong Kong, Singapore, South Korea, Taiwan, Brazil, Mexico and others have developed such dynamism that they are now able to compete in the most sophisticated world markets and have seen their share of world trade in manufactures double in the past decade.

Mr. Dealkins

Is that so surprising? In the nineteenth century there were few industrialised nations. To industrialise was a new and bitter experience. There were no precedents, and no one from whom a country could learn. There was nowhere from which to import technology. Surely developing countries today, particularly the newly-industrialised countries, have all those advantages and more.

Sir B. Braine

The hon. Gentleman is right. Nothing that he says conflicts with what I am saying; on the contrary, it illustrates the wrong-headedness of the argument of the right hon. Member for Down, South. Money has no colour, scientific and industrial techniques have no nationality, and it is just as possible for a Punjabi peasant to discover how to make two blades of grass grow where one grew before as it is for a prairie farmer.

If we genuinely want to deal with the problem of world poverty we must accept that it can be done only by an exchange of proven techniques. It has nothing to do with race or anything of that sort. I concede to the right hon. Member for Down, South that one of the most formidable barriers to development lies in the attitudes of primitive peoples. Admittedly, there is a tremendous contradiction in India. At one end of the scale are some of the world's best scientists, and entrepreneurs who can teach Western business men a few tricks about the techniques of capitalism. At the other end of the scale there are about half a million villages in the dry areas where the constant pressure of population has created a problem of abysmal poverty. We have a tremendous contradiction within one society. That is no argument against extending to India or to any other developing country the techniques that we have perfected in the West.

A recent GATT report made plain that over the previous five years developing countries have played a major stabilising role in the world economy and have accounted for a rising proportion of total exports from Western Europe, North America and Japan. It has not been a case of the developing world waiting cap in hand for the advanced countries to give them a little aid. If it had not been for some of the developing countries, world trade would have been even more sluggish in the past few years than it has been. If we are to understand what confronts us, it is essential that we grasp that simple fact.

The significance of the Brandt report is that for the first time it brings us up sharply against the realities of the world in which we live. Running through it is a single, powerful theme, namely, that we should no longer think in terms of aid to developing countries but in terms of mutual benefit and mutual survival. That is why it is such an important document, and perhaps why this is turning out to be such an interesting and valuable debate.

There can be no doubt about the idiocy of the present world order, in which 15 million people were unemployed in the industrialised countries in 1975. I have checked the latest figures and I find that the unemployed in the industrialised countries now number about 19 million. In 1975 there were about 300 million unemployed or underemployed in the developing countries. Goodness knows what the figure is today. Around the world there are hundreds of millions unemployed and production facilities under-utilised. Against that background can we wonder why we are in a world slump?

Who is likely to be hurt most by the continuing drift in the world's economy? The wretched poor will undoubtedly remain wretchedly poor and the starving will continue to starve. I wonder how many hon. Members have seen the report in today's edition of The Daily Telegraph, which tells us that millions of people in 17 African countries are now facing starvation. Hundreds are dying daily. I have heard no reference at Question Time to that appalling situation. It reminds me of what was happening in Cambodia only last year and the year before, and what was happening 10 years before in Bangladesh. It is a condition that is to be found in some parts of the world every few years, while the rest of us do little about it.

Even so, in relative terms it will be the richer countries—I am not talking about the starving, because they will starve anyway—that will have the most to lose if the world economy continues to drift. They will face increasing economic difficulties, which will lead inexorably to political and social tensions that their peoples will find unacceptable. They will do so for two main reasons.

First, unless there is a substantial increase in world demand, the advanced countries will face increasing difficulty in competing effectively in third markets, either with each other or with newly industrialised countries, in consumer and even capital goods.

Secondly, the world population is now 4.4 billion. It will reach 6 billion by the end of the century, with certainty. Most of that increase will take place in the poorer countries. Inevitably, that means that within the next two decades the entire world—not merely regions in Africa and Asia—will face serious food shortage that cannot be remedied merely by increasing production in Europe and North America.

It is no use railing against population increase in the poorer countries. One might just as well rail against storm or tempest. Family limitation will come in developing countries only with rising living standards, as it did in Europe, North America and Japan and is now taking place in China. It is no use the right hon. Member for Down, South shaking his head. Family limitation will not precede rising living standards; it will follow. That has been the pattern in the world until now.

Mr. J. Enoch Powell

In Britain the increase in family sizes took place in the previous century. Family sizes were small and stable until the nineteenth century. It was in the nineteenth century that the change took place.

Sir B. Braine

I doubt that very much. In the eighteenth century family sizes were considerable.

Mr. Powell

No.

Sir B. Braine

We shall differ about that. One of the first results of movement of population into urban industrial areas in Britain was a large increase in population. My contention is that only with a rise in living standards did the size of the family fall. It has continued to fall. That has been the pattern in every other industrial country. In the meantime, while we are waiting for that to happen, the ever-growing army of the poor and hungry will threaten world stability. It was 18 months ago that in New Delhi the Secretary-General of the Commonwealth Secretariat said : An unequal world which ordains that many must go hungry is an unsafe world. Islands of affluence within seas of want are more than an affront to morality or a challenge to piety. They are a provocation to anger and to conflict. That has always been so, but it has never been more so than today.

The Brandt report focuses our attention on ways of avoiding what seems to be an inevitable march to catastrophe. First, there will be a need to restructure international relations to demonstrate that we in the relatively rich countries understand the problem and wish to find solutions that are practical and fair. The Brandt report states repeatedly that the developing countries must themselves be associated with such solutions.

It is an unfortunate state of affairs that the OPEC countries are not linking their surpluses automatically with the World Bank system. I do not believe in the proliferation of institutions. We do not need more institutions. However, it is a fact that the OPEC surpluses are being invested in an odd and patchy way. We could face the future with a little more confidence if we had one world institution dealing with a problem as effectively as the World Bank has dealt with its own sphere of responsibility. But that is not the reality.

Secondly, we in this country have to set our faces against protectionism in any form. We should not forget the lessons of our own experience. The great postwar expansion of trade took place as tariff barriers were reduced. Lower-cost imports might well mean the loss of some jobs, but there would be the compensation of a check on inflation and an increase in the purchasing power of developing countries. One of the factors of this world recession has been the continuing maintenance of trade between ourselves and developing countries. The cost of adjustment within our own economy would be small compared with the cost of switching from old and dying industries to new technology-based industries, anyway.

Why should we be frightened of change? In the United States, between 55 and 60 per cent. of jobs are lost every 10 years, and they are replaced by better jobs. One of the reasons why we in this country have fallen so far behind our industrial competitors in recent years is that we have chosen to keep dying industries going.

I am convinced that the single most valuable step that we can take is to promote agricultural revolution in at least some of the poorer countries. I do not believe that a massive transfer of resources is needed to achieve substantial results. The Brandt report says that agriculture provides 44 per cent. of the poorest countries' GDP and 83 per cent. of their employment. In other words, the way to change the picture lies in the improvement of agriculture in these countries.

In the last 20 years the developing countries have grown dangerously dependent on the West for their foodstuffs. Last year, they imported 45 million tons of grain. Brandt says that they are not growing enough to feed their people, and projections indicate that they will encounter a food gap of at least 20 million tonnes by 1990, which amounts to about one-third of their consumption. That is a dire prospect.

I am not making light of the formidable obstacles in the way of further agricultural development in the developing countries themselves—the need for land reform, making better use of water resources, providing better credit facilities, and, above all, changing the emphasis in favour of small farmers, small rural industries, and so on, which is a political decision difficult to take in many instances. The experts have been looking at this for a considerable time and in some areas have achieved remarkable results with relatively small inputs. There is no doubt that given the right inputs of finance and technical expertise, food production, especially in South Asia, could be doubled or even trebled quite quickly. What is more, it could be linked with the production of fuel crops.

The hon. Member for Greenwich (Mr. Barnett) asked what this country was doing to encourage the development of solar power and other alternative sources of energy. The developing countries are being crippled by their oil bills. Brazil is a particularly bad case of a country crippled by a huge bill for oil imports. Already she is producing 14 per cent. of her motor spirit from plants. That is sensible development. There is no reason why the developing countries should not be encouraged to do this alongside other agricultural improvements.

What is needed above all is a new creative initiative that not only Governments but ordinary people can understand. Over the years, I have agreed with the right hon. Member for Down. South about a good many matters. However. I disagreed profoundly with his speech today. I have argued elsewhere for a new Marshall plan to meet the problems that we are discussing. In 1947, in an act of unprecedented generosity and political wisdom—it was not just materialism—the United State gave away 2.5 per cent. of her gross national product over a period of five years to put a war-weary and physically shattered Europe back on its feet, and was rewarded in due course not only by the recovery of Europe and tremendous expansion in its productive capacity but in terms of her own economy as well.

The right hon. Member for Down, South argued that the Americans were simply helping people who had possessed an infrastructure and who knew how to run Western business and operate Western industries but had gone through a period of misfortune and collapse. True, but I still argue that there are some developing countries where, if resources were made available, results could be achieved in a relatively short time. There are not many examples, but they exist. Taiwan is an example of a country that, following a massive injection of American aid, was ultimately able to cope on its own and is now one of the great trading countries of the world. There are other examples.

Brandt suggests a new approach to financing development. The Government should give serious consideration to the ideas advanced, about which my right hon. Friend the Member for Sidcup spoke eloquently and authoritatively. It is not that OPEC surpluses have not been recycled; they have been. But the system of using commercial banks has not been operated in a way conducive to balanced economic development.

Some means has to be found of marrying the expertise of the IMF and the World Bank and these massive oil money surpluses. I am not sure whether any new institution, such as the world development fund suggested in the Brandt report, is necessary, but there is surely a new role for the International Monetary Fund—to become the international banker—a bankers' bank—to keep a regulatory watch over commercial bank lending and to help developing countries with severe payment difficulties. Oil surpluses, as long as they last, should be used to encourage food production and alternative sources of energy if the world economy is to move forward with any confidence.

The Brandt report performs a most useful service in focusing attention on these matters, all the more so since it shows that the poor of the world, far from constituting an insuperable problem, offer the industrialised countries a way out of their own difficulties. We plainly need one another. The world has grown too small for the rich to ignore the poor any longer. We have everything to gain by recognising this mutuality of interest and building on it. The reverse is also true. If we do not co-operate and grow together, we shall perish together.

8.37 pm

Mr. James Johnson (Kingston upon Hull, West)

I am sorry that the Lord Privy Seal has left the Chamber. Being a kindly man, I would prefer to attack him to his face rather than behind his back. I am enjoying the debate immensely. Of the four speeches at the start of the debate, three were spanking contributions. We are in debt to those hon. Members. I wonder, however, what to say about the Lord Privy Seal's speech. Abysmal? Pusillanimous? There was no content in it.

There is, however, one gleam of hope. When challenged by my right hon. Friend the Member for Lanark (Dame Judith Hart), the Lord Privy Seal turned and whispered to his hon. Friend the Minister for Overseas Development saying, perhaps, "You will attend to this". I have the impression that we shall get answers to our questions when the Minister replies.

Mr. Robert Hughes (Aberdeen, North)

My hon. Friend is an optimist.

Mr. Johnson

We shall see. The hon. Member for Essex, South-East (Sir B. Braine) talked about his adventures in Africa. Like the hon. Gentleman, I have been lucky enough to be a member of delegations and have paid other visits to countries in Africa. Like him, I have been lucky enough to help independence movements in Africa. When he and I and those like us travel to the Third world we meet all sorts of types. We can meet politicians; we can meet lawyers; we can meet wealthy business men. But this is a very tiny minority of their people, the vast majority of whom are tied to the land. They work from dawn till dusk—particularly the women. They are, dependent upon constant physical hard labour to eke out a livelihood, and they live in extreme poverty and destitution. This is the so-called Third world. These are the people that we are talking about. This is what the Brandt Commission calls the South.

To escape this poverty and monotony, what do they do? Many of them leave the land and make for the towns. These footloose families get themselves into the most indescribable slums in Lagos, Nairobi, and so on, and they are worse off than when they began in these euphemistically termed shanty towns. They lack the disciplines of their village, however poor was their environment. Even more important, they are then moving more into the position of the white man and becoming more individualistic. They are losing the benefits of the extended family system.

This is a terrible plight that we have imposed upon them by taking to them the so-called torch of civilisation. Therefore, we have debt to pay. There is a moral side to it all. It is not just a matter of putting £5 million into building a big dam in Upper Volta or elsewhere to give them cheap power. It is much more than that.

It would be foolish of me to make a long speech when so many of my colleagues are waiting. It would take a good while to tackle even a few of the many issues raised in the Brandt report. But all my experiences overseas, and all the lessons they have taught me, confirm everything that is set out in the commission's findings. I believe that the report is an encyclopaedic analysis of our global malaise. It would appear from the debate that many people are not accepting all that they find in its pages, but I cannot imagine anyone on either side of the Chamber who has been overseas—and particularly in the Third world—who would not accept the findings.

A sombre outlook faces us, and mutual help is essential. The people on each side of the line will have to get together and collaborate, otherwise there will be no end to poverty and destitution. Without collaboration we can only ameliorate the conditions; we cannot eliminate them.

I should like to quote half a dozen lines from the report which summarise my attitude and are in agreement with what I have found. They appear on page 46 of the report, where we read the following : A painful look for the poorer countries with no end to poverty and hunger, continuing world stagnation combined with inflation;…increasing threats to the environment and the international commons through deforestation and desertification, overfishing and overgrazing, the pollution of aid and water. And overshadowing everything the menacing arms race … A number of poor countries are threatened with the irreversible destruction of their ecological systems; many more face growing food deficits and possibly mass starvation. That is the outlook for those poor people in the so-called Third world.

We have to pick up the tabs. The Northern nations, both capitalist and socialist—I lump them together here and am talking not only of Canadians but also of East Germans—must, in their own self-interest, join in this mutual task to ensure survival. I welcome the emphasis on survival. Along with that, the globe must be made more peaceful and less uncertain.

I listened to the speech made by the hon. Member for Woking (Mr. Onslow), in which he said "But you cannot do that because there is a nasty, big, bad ogre called the Soviet Union." We accept that the Soviet Union exports more Migs and tanks than it builds power dams and highways. It is keener on instigating uncertain conditions in Africa than on building fish farms and the like. There is some substance in the hon. Gentleman's remarks.

I wish to keep to the theme of world peace. We must ensure that those in the Third world are able to get more food, and able to lift their standard of living. That task is superhuman because men and women af good will are fighting the political shellbacks and ideologues of Washington, and Moscow and the bureaucrats of London and Brussels. I was appalled to find that, last September in Mogadishu, orders for food went by telex to the EEC. The EEC discussed the matter and confirmed the order. But even now certain stocks of food, which have been paid for, have still not arrived in the camps on the Ogaden and Eritrean borders. I shall amplify those remarks later. To cap that, the ILO and the World Bank estimate that 800 million in the Third world are destitute. That means that they are merely surviving.

By chance, I picked up today's newspaper and saw that yesterday at the United Nations Dr. Raphael Salas, the executive director of the United Nations Fund for population activities, said that 2 billion people would be added to the global population in the 1980s and 1990s. By the end of this century, 80 per cent. of mankind will live in the Third world. Given those facts, there is not the slightest cause for any complacency. Unless urgent measures are taken to alter the living conditions in the Third world, deprivation and poverty will worsen.

Those conditions are a powder keg for social instability, leading to political instability, and so to intervention by other powers. About two years ago in Khartoum at the OAU, Mr. Sekou Toure from Konakry, who had not attended for five years, told his colleagues that Africans like themselves were too fond of indulging in border disputes following the departure of the white man. He said that they did not so much fight each other as invite outsiders to come and settle the squabble. That is a terrifying situation.

I want to continue on this theme, because these people cannot get off the bottom unless they get aid and are allowed to live in peace. The two most important words in the report are "peace" and "aid". Hence, I wish to comment on the position in the Horn of Africa, and to use it as an illustration of intervention and instability. The consequences are appalling. In my opinion, the Horn of Africa is the most unstable and dangerous spot on the globe. I know that we talk about those who arc in refugee camps in Cambodia, Kampuchea and elsewhere and about people in boats off Hong Kong. But I believe that the situation in the Horn of Africa is the worst in the world.

I shall shortly give some figures, but I should now like to quote from a letter in The Observer, signed by Sir Leslie Kirkley, who is the chairman of many good causes, not least the Disasters Emergency Committee. He is also connected with Oxfam. The letter states : The effects of war and drought in East Africa have created one of the worst disasters in modern times. Some 8 million lives are at risk". The letter goes on to quote other places, and adds : One and a half million refugees from the Ogaden need immediate help in Somalia. Millions of others, who have fled their homes because of war or who have been made weak through lack of food caused by drought urgently need help". That applies to Ethiopia, Eritrea, Djibouti, Sudan, Northern Kenya and the Karamoja belt in Uganda. Up to 8 million people are in possible danger, and about half that number are in destitution in camps.

The Disasters Emergency Committee consists of CAFOD, Christian Aid, Ox-fam, the Save the Children Fund, and others. Anyone who cares to watch BBC television will be able to see an excellent documentary on Wednesday next at 9.25 on this disaster zone in the Horn of Africa. I hope that it will make an impact on those who watch it.

The suffering is partly due to the elements and to climatic change. But in my view it is basically due to the machinations of Powers in the North, and has been since the end of the last century. We have devastated these parts. The Italians and ourselves have played a part, as have the French. However, now the villains of the piece are, obviously, the Soviet Union and Cuba.

I believe, as we all do, that all empires are equally evil and obnoxious, be they black or white. Indeed, even allowing for apartheid, I have come to the conclusion that black Imperalism can be even worse than white. The white imperalists have left the Horn in the militarist occupational sense. But we have new imperalists there. I should like to know what the Soviets and the Cubans are doing in the Horn. They are there with their gunships, blasting away up to 6,000 feet against the Eritreans. They have also occupied the Ogaden, which is ethnic Somalia, and they are there as judges, policemen and the like. We have this unholy combination of war as opposed to peace and devastation and destitution caused by climatic change. For so long as we have unsettled social conditions due to warlike activities, there will be no hope of economic development or of lifting up the living standards of the people in the area.

Millions of people have had to flee their homes because of the fighting. They need help urgently. They are not a burden, but an obligation to those in the well-stocked North. We can go out from this Chamber and have a meal anywhere. I understand that water has not been delivered to the poor devils in the camps in the Ogaden and elsewhere because of shortage of cash to pay for it.

I add my heartfelt plea to the pleas of Sir Leslie Kirkley and others for help for these poor people. These are the casualties of the Third world. These people need help. It is no use talking about power schemes, fuel energy, investments and banks in New York. These people need help now. I hope that the Minister will do his utmost to help in this matter.

8.57 pm

Mr. Tim Renton (Mid-Sussex)

I listened with interest and sympathy to the hon. Member for Kingston upon Hull, West (Mr. Johnson). I hope that he will forgive me if I do not follow his theme as there are other points that I should like to make about the Brandt report. Many other hon. Members also wish to speak and I do not wish to detain the House for too long.

Anyone taking part in this debate on the Brandt report must feel a strong sense of depression. In the six years since I became a Member of Parliament there have been many international initiatives about help from tthe North to the South, to use an easy catch phrase, which have not led to anything. There was the Jamaica conference, which was to lead to commodity support funds and a great extension of commodity stabilisation schemes, UNCTAD IV and UNCTAD V, meetings of the Group of 77 which turned into meetings of the Group of 120-plus. I know that the right hon. Member for Lanark (Dame Judith Hart) was present at many of those meetings, yet I think that she would agree that overall the amount achieved over the past 10 years—the first development decade—has been pitifully small. One wonders whether this report, written and signed by so many eminent persons, will go the same way as so many other reports written and signed by so many other eminent people in the past.

It would be easy to dismiss this report, as my hon. Friend the Member for Woking (Mr. Onslow) started to do—unfortunately, he is not in his place—as institutionalised neo-Keynesianism on an international scale—a scale that we have not seen before. But despite some of its faults, we must take the report seriously. It points us to the problem—potentially the tragedy—that is larger than any other in the world today. It also shows that the solution to that tragedy is, by and large, in our hands. We can solve the problem if we are intelligent and flexible enough to do so. By that, I mean that the Brandt report emphasises the mutuality of interest that exists. It is very much in the interests of the OECD countries to help the poorer developing countries to purchase more of our equipment and to develop a little faster than they would otherwise have done, in order to start to solve the problem of starvation that is on the doorstep of hundreds of millions of people. I quote from one paragraph in the Brandt report on that subject : If the developing countries outside OPEC had cut their imports of manufactured goods to meet the increased oil prices of 1973–4, there would have been three million more unemployed in the OECD countries. In fact, by maintaining their trade in manufactured goods with the newly industrializing countries alone the industrialised countries (according to OECD estimates) have gained on average 900,000 jobs in each of the years 1973–7. This indicates how critically the North has come to depend on the South for its markets. That is a clear expression of mutuality of interest. It is also worth reminding Labour Members of that paragraph, because it lies ill for those who call constantly for increased protectionism to support the recommendations of the Brandt Commission without thinking through how much employment is still being created in this country, and countries such as ours, by our continuing volume of exports to the less developed countries. If we become protectionist, barriers will be put up against our exports to those countries.

One of the strangest things that future historians will note about this century will be that demand for our products existed in the developing countries, that there was a slump in our own country because of the lack of demand for goods that we manufactured and that we failed to marry up the two. When they consider the sophistication in trade today—telexes, the World Bank, the IMF, conferences, the Brandt report and good will—next century's historians will be amazed that we did not marry up the two positions.

There is an obvious bridge between the two, and the Brandt report is at its weakest when discussing that bridge. Here, I refer to the money that is needed to finance the cost of growth and the increase in demand of the LDCs for manufactured goods that will be supplied in the years ahead by the OECD countries. In the short term there is only one place from which that money can come—the surpluses of the oil-producing countries. Brandt makes a great mistake in dealing with the subject of recycling surpluses when he stresses the use of SDRs, the substitution account and developing the substitution account. Those are not the sort of assets in which the OPEC countries wish to invest at the moment.

For one thing, who would invest in something called a "substitution account" ? It does not sound safe, does it, from the word "go" ? When inflation is running at 20 per cent, in the Western world, the OPEC countries want solid assets which they can be more or less certain will have retained their value when they cash in their investments in five or 10 years.

They are not content with SDRs and substitution accounts. My right hon. Friend the Member for Sidcup (Mr. Heath), in his moving speech, said that he knew of no evidence for that. I would submit to him—I am sorry that he is no longer here—that the evidence lies firmly in the annual report of the Bank of International Settlements, which has just been published. It shows that last year, when the total new investments by the oil-exporting countries rose to $53 billion from S13 billion a year before, they invested 75 per cent. of that surplus in short-term money market assets, denominated either in the United States or in the United Kingdom or in deposits in foreign currency markets.

Therefore, the OPEC countries were investing almost totally in Treasury bills or something comparable, because they could not be confident of the value of anything else that they were offered. Those investments by themselves produce a disproportionately and dangerously distorting effect in foreign currency markets, because if the bills are only 90 days long and at the end of the day the OPEC countries have less confidence in the United States dollar, they simply cash in; that produces a run on the dollar, so they are already distorting our existing financial mechanisms.

Above all, by investing in this manner—never before have they invested as much as 75 per cent. in short-term money market assets : the previous highest figure was 55 per cent. in 1974, when they started having major surpluses—they show how little confidence they have now in long-term assets.

By investing in this way, OPEC countries are not being encouraged to put their money where in simple terms we can see that it is needed—that is, through an international institution into long-term investments in the developing world. It is easy to analyse the problem——

Mr. Alastair Goodlad (Northwich)

Will my hon. Friend give way?

Mr. Renton

If my hon. Friend will forgive me, I do not want to take too long. I know that he is an expert on this subject, and I hope that he will be able to make his own speech.

It is therefore clear to me that the IMF or the World Bank—I hesitate to judge which of those institutions is right for this purpose—must be encouraged to create an asset which is much more attractive for the OPEC countries to invest in. I believe that that asset should be a weighted basket of currencies, and that it would have to be at a floating interest rate, tied to an RPI or some other index of inflation. Only in that way will the OPEC countries make more of their money available to an international institution, for the money in turn to be led on.

I was glad that my right hon. Friend the Member for Sidcup did not press the suggestion of a new institution. That would be a mistake. We have made such mistakes in this country before : whenever we saw a problem we created a new quango to deal with it. We see a problem now in recycling these funds. Let us use the existing institutions and make what is to be offered—first to the lender, the OPEC countries, and then to the borrower in the third world—as simple as possible. That also gets to the heart of it.

People do not understand SDRs or the substitution account and, therefore, they run away from them. But to offer to borrow in francs or marks, or even sterling, at a floating rate of interest, and then equally to lend on, with some adjustment for the interest, however that may be decided, again in the basket of currencies, is an explicable and demonstrable form of banking in which the IMF or the World Bank must indulge more if they are to use the OPEC surpluses. The magnitude of the problem demands an enormous but a simple solution—not a complicated solution.

I end with a rather cynical judgment and comment. On this issue the parties across the Chamber are by and large united, with the exception, perhaps, of the right hon. Member for Down, South (Mr. Powell) and my hon. Friend the Member for Woking. They are united in that all Back Benchers agree that something should be done, and all Front Benchers agree when in power that, passionate speeches apart, nothing will be done. I very much hope that the next few years will show that that cynicism is not justified. I hope that in winding up the debate, my hon. Friend the Minister for Overseas Development will give us a positive lead as to the steps that the present Conservative Government will take to start to bridge the terrible gap demonstrated by the Brandt report.

9.11 pm

Mr. Eric Deakins (Waltham Forest)

The hon. Member for Mid-Sussex (Mr. Renton) made an interesting speech. I hope that the Treasury, in particular, will have listened with care to his constructive suggestions for dealing with the problem of the OPEC surpluses and their recycling. The hon. Member's speech, like most of those in the debate so far, was impassioned and closely argued. The only speech that we have heard this evening which has not fallen into that description was, unfortunately, that of the Minister. I shall not say anything more about that. It has been criticised already by a number of right hon. and hon. Members on both sides of the House.

There have been two major themes in the debate. Some hon. Members have taken the line that we should be talking about the wide issues, almost the philosophical issues. Here the speech of the right hon. Member for Down, South (Mr. Powell) was a case in point. But the hon. Member for Woking (Mr. Onslow) attacked root and branch many of the assumptions and aims of the Brandt report. Although in a minority, those speeches expressed powerfully a point of view that is widely held outside the House. Most of the other speeches, including that of the hon. Member for Mid-Sussex, were practical in the sense that they were trying to see their way through to possible solutions to the problems posed in the report.

I wish basically to be as constructive as possible. But before specifying five problems and suggesting possible solutions—problems, incidentally, which will probably be of even more interest to Opposition Members than to the House generally—I shall take issue with one or two matters in the report itself. I do not wish to go into any details on them, since I had the advantage of taking part in the very good debate held in Private Members' time on a motion moved by the hon. Member for Cambridge (Mr. Rhodes James). The right hon. Member for Sidcup (Mr. Heath) was good enough to sit through the whole of that debate without taking part, which was greatly appreciated by everyone present. Now that we have heard the right hon. Member today, we appreciate what we missed then. His was a marvellous speech, and we are all grateful to him for it.

Where I take issue with the Brandt report is, first, on the moral dimension of the problem, which I think the report very much underplays. I shall return to that matter in my concluding remarks.

Secondly, I take issue with the report on its addiction—I can put it no higher—to policies of faster economic growth. Perhaps the right hon. Member for Down, South would refer to them as policies of greater and greater materialism in the Western world in order to help the poor countries. It is immoral to go for policies of faster growth. However, I shall not develop that theme, as I did so in the debate of a few weeks ago.

In the speeches of most hon. Members and in the Brandt report there is an underlying assumption that the gap between rich and poor will eventually be closed. However, even if faster growth in the West occurred, that argument would be fallacious. For example, there are about 630 million people in India, and 1,000 million people in China. If those countries had the same standard of living as Britain, which is in the middle income bracket of the rich countries, there would be about 100 million motor cars in India, and perhaps 200 million in China. That might be marvellous for workers in the newly industrialised countries and for those in our beleaguered car industry, who might be able to produce those cars, but what about the consumption of energy? What about the consumption of raw material in the construction of such cars? There are not enough natural resources in the world to give all the people on this planet the standard of living that we enjoy.

The Brandt report is good, because it concentrates on the need to get rid of absolute poverty. With the right policies, we can look forward to achieving that. However, we shall then be faced, as we discovered during the eighteenth and nineteenth centuries, by a bigger problem—that of relative poverty. The solution of that problem will require a global redistribution of resources. With the best will in the world, that cannot be effected by rich countries, or by their citizens. Eventually, we shall need some form of international government.

I turn to five specific problems of concern to my party and me. I hope that this list will not be considered exhaustive. First, there is the problem of public opinion in the rich countries, including Britain. Secondly, we must consider the practicability of growth, as distinct from its desirability. Thirdly, we must face the problem that our industries are declining in the face of competition, particularly from the developing countries. Fourthly, one must mention the problem of multinational companies. I understand that they are now called transnational companies, but that means the same thing. Last, but by no means least, we should all be concerned about the measures that poor countries must take.

It is disastrous that the Government have ended our small development education programme. The right hon. Member for Sidcup said that we needed the support of public opinion. If we are to get that support, public opinion must be informed and educated, Perhaps only a few tens of thousands of people will be so informed, but that number will increase. People will then be prepared to support policies that may involve sacrifices in their standards of living.

The Brandt report is clear on that point. On page 259 it states : The Commission considers it essential that the educational aspects of improved North-South relations be given much more attention in the future. It is imperative that ordinary citizens understand the implications for themselves of global interdependence and identify with international organisations that are meant to manage it. With the exception of the Government, most hon. Members would agree with that sentiment. The Government have only given a lead in the wrong direction.

In addition to suggesting the restoration of a type of development education programme, one could make another positive suggestion. During the Second World War, towns and villages were linked with Her Majesty's fighting ships and so on. The local people were linked with one section of the fighting forces. They did a great amount of work to raise money, to knit comforts and so on. Is it beyond the bounds of possibility for the Government or some organisation to start a scheme whereby towns and villages in this country are linked with towns and villages in parts of India. There could then be, in the towns and villages in this country, exhibitions and other demonstrations of the standard of living and way of life of the people in the linked village in India. That would encourage British people to be aware of the problems of developing countries. Air fares being what they are, we can never hope that people will be able to travel all over this planet merely to see what living conditions are like in other areas. Therefore, I offer that suggestion, which would cost no money. All that it would require is a lead from someone in authority.

The scond problem is that of economic growth and its practicability. We know that we must pay higher prices for energy and raw materials in this country. We must accustom our people to the prospect of almost nil growth. Even if people consider faster growth desirable, it is likely to become impracticable. My right hon. Friend the Member for Stepney and Poplar (Mr. Shore) made the point today that we were moving not just into a recession, but possibly into a slump.

If we are to shape our economic policies in this country in order to face the realities of the next 20 years, we must think in terms of a continuation of some of the factors that the right hon. Member for Sidcup mentioned. We cannot eradicate all the difficulties in the next 20 years. It does not lie within our power as an individual nation to eradicate them. We must learn to live with these problems. It is better to try to learn to live with them than to resent them and constantly try to move our society in a completely different direction economically. That would prove impossible.

Thirdly, we need not import protection for our declining industries, as the Labour Party wants, but adjustment assistance so that new industries can be set up in areas of declining industry. It has been known for the last 10 or 20 years that our textile and footwear industries have been declining, and in more recent years the electronics industry has been declining. We know that they are bound to continue to decline no matter what any Government do, because overseas countries can produce the goods more cheaply and effectively than we can—and good luck to them. Therefore, we must learn gradually to phase out those industries.

We must not make people redundant and throw them on the scrap heap. Many of them have marvellous skills, and they represent a great investment in national resources. That investment should not be wasted. Given retraining facilities, which, sadly, have been cut by this Government, it should be possible, with good will and resources, to provide alternative employment. I do not expect to carry Conservatives with me on this point, but if private enterprise is reluctant, unwilling or unable to provide this new investment in new industries in areas where people live, the State or some national organisation may have to step in and do so instead.

We in the Labour Party must decide what we want to do when we talk about controlling the multinational companies and their activities. If it were not for the multinationals there would have been far less improvement in living standards in the poorer countries. That does not mean that we could not have seen faster growth, but the multinationals have played their part.

We must decide for what purpose we think multinationals should be controlled. There is a suspicion that we want to control their investment, which is merely another means of saying that we want them to invest in jobs for British workers, but not to invest in jobs for Malaysian, Hong Kong or other workers in countries whose standards of living are about one-twentieth or one-thirtieth of those that we enjoy in this country. Morally or practically we cannot argue that investment by multinationals should be controlled for that reason. If we did, workers in other countries would have something to say.

There are also suggestions that we should control the way in which multinationals operate overseas in order to improve the pay and conditions of those working in their factories in poor countries. That is a laudable ambition. However, it appears to be a cloak for saying that, if the pay and conditions of those workers cannot be raised to an acceptable level, we shall not accept the goods produced in those factories. It is another excuse for import controls. The moral reason is overlaid by protectionist feelings that have crept in over the past couple of years on both sides of the House. That is not a reason to control multinationals. If workers overseas wish to control their pay and conditions, they can develop trade unionism, as we did, on a collective basis to improve conditions.

Last but not least, multinationals could be controlled in poor and developing countries with regard to contracts for mineral extraction and use of resources. However, that should be for international and not national action. The report deals with the matter at page 191. The solution there is probably the right one. There should be standard contract terms and conditions laid down, with an international appeal body. That would help multinationals, poor countries and rich countries to work together.

I come finally to the most sensitive and delicate area in this long catalogue of problems and possible solution. It is understandable that the report was somewhat mealy-mouthed in dealing with it. What measures should be taken by the poorer States to improve living conditions for the bulk of their people? On page 42 the report states : Only they can ensure that the fruits of development are fairly distributed inside their countries, and that greater justice and equity in the world are matched by appropriate reforms at home. On page 139 it states : In countries where essential reforms have not yet taken place"— and that excludes very few poor countries— redistribution of productive resources and incomes is necessary. That is quite a Socialist concept, and I was not surprised that the commission put it forward. However, it is only half a solution.

More serious aspects of the problem need to be considered. I should like to quote possibly the greatest development economist of all, Gunnar Myrdal. In his book "Asian Drama", which was boiled down to a Pelican publication, "The Challenge of World Poverty", some years ago, he said this of the reforms needed in poor countries : These centre on breaking up inegalitarian and rigid economic and social stratifications. In agriculture, land reform stands out as the crucial issue. Birth control must be spread among the masses of people. A fundamental redirection of education and a vigorous adult education campaign are needed"— and here we come to the crunch— Corruption must be stamped out and stricter social discipline enforced. There is a great deal to be done by the poor countries themselves. The problem that will increasingly face the rich countries is how far we dare go in pointing out the deficiencies and taking steps to remedy them without being accused of gross interference in their internal affairs.

The moral dimension did not figure largely in the report, and, apart from the speech of the right hon. Member for Down, South, it has not figured much in the debate. I agree with the Brandt report that helping the poor countries is in our interests, but, even if it were not, it is a moral imperative for many of us.

This is the most important debate since the six-day debate in October 1971 on our entry to the Common Market. I should like to quote from that great capitalist and convert to concern for developing countries, Robert McNamara, the president of the World Bank. In his annual report for 1973 he said : Should we not make the moral precept our guide to action? The extremes of privilege and deprivation are simply no longer acceptable. It is development's task to deal with them. You and I—and all of us in the international community—share that responsibility.

9.30 pm

Mr. Iain Mills (Meriden)

The hon. Member for Waltham Forest (Mr. Deakins) made an interesting speech and I shall touch on one aspect of it later. The situation that we are discussing has all the potential for a future massive disaster. Growth of population is here. The seeds of growth and the generation of young people could combine to lead the world to do one of those strange things, such as the race of the lemmings and the creatures that dash into the sea—that nature does every so often.

It seems to me, though this is speculative, that some form of action is not only desirable but essential to prevent, not merely a possible economic disaster, but a disaster with far-reaching consequences beyond the economy. It would be a tragedy if all the intellects that have been applied to the problem, not only in our debate, but in the production of the Brandt report could not achieve some form of solution, however inadequate.

In the developed countries we have businesses that desperately need markets for their goods. In the less developed countries we have markets that are desperate for those goods. Finding a solution by matching those two circumstances may not be easy, but it must be a priority.

I shall not comment on the global issues, as so many other hon. Members have done so ably. I shall refer more to practical, detailed matters. As always in our great debates, analysis is far easier than solution. The solution of massive redistribution of wealth through aid and help from developed countries is not a viable long-term solution. Surely the long-term solution must be for the developing countries to develop self-sustaining wealth centres through manufacturing industry and better agriculture.

If they cannot do that, we shall reach the crisis in the cycle that always develops at a later stage. Part of our effort should be directed not merely to redistribution, but to providing the right climate of encouragement for those countries, with the aid of Governments and private enterprise, to develop their own means of sustaining their future necessities. They will need the help of Governments on a grand scale, but will they not also need the existing skills and abilities of transnational and multinational companies?

I declare an interest as one who was employed for decades by multinational companies and who spent part of that time in developing countries in the Africas. I like to think that there are parts of the globe where multinational companies have played a highly beneficial role.

Given the possibility of prices increasing steadily and inevitably, even if OPEC countries achieve a magical, unified oil price structure so that we know what increases will take place each quarter, the scale of the increases will ensure that the problems of industrialised countries and particularly of less industrialised countries will continue for several decades.

That is a further argument for the self-sustaining, decade-long type of solution which can be provided only by manufacturing industry, service industries and better agricultural methods in the developing countries. Should we not apply all our effort and valuable resources to develop that instead of thinking merely of aid and redistribution?

If developing countries are to achieve the objective of self-sustaining wealth creation, they need the ability to add value to their indigenous raw materials. To do that I suggest that encouragement is essential through Government aid and through creating the right climate for multinational, transnational and small companies.

I offer a few examples of GDP per capita in dollars in 1977. The Ivory Coast had a GDP of $1,251, Zambia $455, Singapore $2,780, Malaysia $1,005, Sri Lanka $231 and Burma $120. Those are poor examples and it is easy to pick holes in them, but they provide a general guide. Those are countries that have taken a practical and realistic grasp of the opportunities offered by private enterprise through multinational or transnational companies. They have managed to drag themselves up by their boot straps with a little help from their friends.

The hon. Member for Waltham Forest commented on transnational companies. I held a meeting last week at which I asked some representatives of leading multinationals to justify their operations. I shall pass on some of the discussions that we developed at that meeting. As an ex-employee of a multinational company, I believe it to be a valid argument that the operation of business world-wide works on the checks and balance of profit and is subject to business disciplines. The management system is set not only the objective of achieving growth, better market share and better profit but of avoiding waste. Managements are totally accountable within their organisations.

The work of many multinational and transnational companies abroad is done by people of the country. Gone is the day when the bright young man or woman from Britain with the right training could expect a sinecure, a chauffeur-driven car with an indigenous person at the wheel and a swimming pool. Those features may still exist in some remote corner of the world, but the large multinational companies now reserve those privileges for very few, if any. The use of expatriates has declined very much because of the good moral intentions of many companies as well as pressure from local governments.

On the whole, market forces will ensure that the processes and the products that are introduced to countries overseas are appropriate to those countries. I suggest that the introduction of those elements is much more use to the residents of the country concerned that some of the grandiose projects than can arise from Government aid.

1 do not underestimate the role of the multinationals in the long term. They are there to stay. They do not go to other countries to exploit and to lift off their investment after a few years. There are thousands of such companies that are reliably, morally and well managed that are looking for a long stay. If they are in business for the long term and not for a fast buck, good behaviour and good corporate citizenship are much in their interests if they are to develop a successful role in the local community.

That factor emerges in a spin-off and a multiplier. Their benefit lies not only in the wealth that they create, which I suggest is often worth 10 times, 20 times or 30 times the profits that they may take out. If equity is locally held, there is a multiplier effect for the shareholders. The wages and salaries that are paid are self-sustaining. They are not taken out of a grant that finishes at the end of the year. They are redeveloping themselves because of the business process. Services are bought locally, materials are bought locally and taxes are often heavy abroad.

Any good multinational company will provide training and benefits to its employees and its customers. I accept that that can be classed as a form of colonialism. However, the sportsground and the company housing estate with better hygiene facilities than the Government provide are, in my experience, well known in parts of Africa. If we wish to see an engine of dynamism in developing countries, we should look not merely for the redistribution of nationally bought resources but for less elective processes and more initiative and more incentive for private enterprise to play a greater role in the development.

My right hon. Friend the Member for Sidcup (Mr. Heath) referred to the need for a code of practice. I wholeheartedly agree with that proposition. For every bad company there may be 1,000 good companies, but we must have a code of practice. That would allow the country, its representatives, the employees and the partners in the cycle of operation of a multinational to understand fully what they should expect. I cannot think of any responsible multinational company which would restrict its operations other than to go along with that code of practice.

In addition to the comments that I have made already, partly based on my own experience and partly based on watching with admiration the success of the Prime Minister of the new Zimbabwe, which is a shining example to many other countries so far—and which I hope continues to be—I suggest that a realistic attitude towards the role of private investment, towards the role of agriculture not in national hands and towards the role of investment abroad from sources other than Government ones is a most practical engine of wealth creation and of growth.

We have debated to a small extent moral, and to a large extent practical, solutions. However, many of the difficulties of the developing countries are of their own making. It would be less than honest not to say that I feel deep suspicion on occasions of regimes which allow their citizens no real rights, which are restrictive and whose political dogma seems to be more important than their practical realism. If the leader of a regime wishes to follow extremist policies, whether they be of the Left or of the Right, in the end, because of his keenness to achieve his political system, he will in some way make his country less able to grow crops, sustain manufacturing industry and build up its economy.

But we should not just sit here blinded to the needs of developing countries. Aid should be judged and given first on the basis of need. I remind the House of the Vietnamese boat people. We can all think of many other cases of extreme nationalism and political attitudes which have created a need for aid, taking it away from the real basic job of helping the less developed countries to develop.

Although I am the last person to suggest that we relate aid totally to politics—because that will make some starving children even more hungry—there seems to be a need somehow to do it. Perhaps I have not read the relevant chapter in the Brandt report as fully as I should have, but I searched and found little reassurance that in some way the pressures on extreme political regimes to moderate their policies in exchange for help was a moral necessity from our point of view.

If we are to be successful in the end in creating a new machine and a new engine of growth, we must recognise that the reconstruction of industry in the developed countries while the developing countries take an increased share of those traditionally home-produced goods is vital. A dynamism in our own industrial reconstruction, in our export growth and in the shape of the materials and products we produce is therefore essential. I agree that some sort of assistance for readjustment is vital. France has already pioneered this, and Holland has already started to follow her example. If we are to see old industries die and the products originally made by them go to developing countries to become, in the end, to our benefit, there is a role for the Government to play in this which must not be forgotten. The role that Governments, managements, trade unionists and employees alike must recognise in this readjustment is that innovation will be the very starter motor and the petrol on which that engine runs.

I have spent the last five years of my life trying to manage innovation, and I know what a difficult job it is. I suggest that in Britain managements, trade unions and Governments have not realised and accepted the necessity for innovation and for each to shape in its own way and in its own role in manufacturing industry how to encourage innovation.

It is vital that we do something. If we do something, our achievements will only be as good as the resources provided and the mechanism we provide to make those achievements. The provision of Government aid on a large scale alone cannot ever be successful in the long term. The encouragement of the machine of private enterprise is vital.

If we can create this development in countries overseas, I plead that we give some sort of first status to our Commonwealth friends. In our relationship with the Commonwealth we have something for which every Marketeer would give his right hand. It is a relationship which is not valued in sheer cash terms. It is defined in terms that are difficult to put into words. We should ensure, whatever initiatives are taken, that we do not forget them and that we try to use them as the core for a new, more vital and dynamic relationship, with the developing world.

Mr. Speaker

Order. In view of the tone and significance of the debate I have deliberately not asked for short speeches. I merely inform the House now that at least another 10 hon. Members would like to contribute. As the winding-up speeches are likely to begin at about 11 pm, I would ask hon. Members to bear that factor in mind.

9.46 pm

Mr. Donald Anderson (Swansea, East)

It is of value to stress the contribution that the private sector can make to development in terms of innovation and dynamism, but it is insufficient. Just as it is insufficient in the declining industrial sector of our internal economy, so it is in the world economy. The hon. Member for Meriden (Mr. Mills) spoke about the validity of the code of conduct. The hon. Gentleman has only to turn to the example of South Africa to see the inadequacy of the code of conduct in respect of transnational.

The Brandt Commission officially exists no longer. The ideas that it expresses are clearly not new, but the urgency and realism of its analysis are unique. The message has been passed to the world community. We now ask ourselves what should be our response as a democratically elected member of part of that community. Some newspaper responses have stated that the North-South conflict could be the cause of a third world war. It was described by my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) as the great issue of mankind. Yet, sadly, one has to say that the Government's response has been lacklustre and disappointing, adding little to the response to the debate of 28 March. The response amounted to finding the least that one could get away with, while showing a degree to good will to the points raised in the report.

The commission stresses that the measures it recommends are a package. It draws from that package a medium-and longer-term programme. The North and the South should decide themselves which features are the most urgent and those that are physically and politically capable of being implemented. For the North, there is the unpopularity of foreign aid and the drive for protectionism, particularly in sectors of my own party and the fear of LDC imports. The task of the Government is to educate our electorate about the mutuality, stressed by many hon. Members, and, also, the moral case for aid. That moral case is felt among many of our young people and in many Church groups.

Equally, as many hon. Members have stressed, there is a burden on the developing countries themselves in terms of population policy and in terms of the elites there to go beyond their narrow class and national interests. In terms of a Government educating people about the overriding importance of this subject, one is not encouraged, in this country, by the Government's expenditure plans 1979–80 to 1983–84, which envisage a cumulative reduction of £307 million in the aid budget and an increase in defence expenditure, over the same period of £2,278 million.

There is need for an early initiative—the first of many—and a recognition that the proposals constitute the only set of proposals with any chance of acceptance in the 1980s whatever hesitation may be felt about the details of that programme. The alternative is the road to greater protectionism and a greater confrontation between the countries of the North and the countries of the South. If we accept the validity of the analysis in the report we must surely accept the validity of the warning that the search for solutions is the condition for our mutual survival.

To what extent, then, is it fair to say that the analysis is cogent but that the conclusions are perhaps less than realistic? Certainly it is not surprising that such a diverse panel should agree these recommendations. With respect to the right hon. Member for Sidcup (Mr. Heath), all its members were international citizens. All occupy the centre ground of world politics and assume a basically unchanged world, with unchanged world economic and political structures. A sceptic might ask "Why is it that people assume a greater enthusiasm for the subject when they are not in a position to have control over the policies that their own Governments pursue?"

Why is the crisis not now recognised? Why is it likely that the report will have the same fate as the Pearson report, gathering dust on Government shelves? Is it conceivable that the impact of the energy crisis will galvanise Governments now into attaching an importance to this report that was certainly not attached to the Pearson report, in spite of the sentiments of good will that followed it about 10 years ago?

It is agreed that the solutions posed are not new ones. Indeed, they resemble the UNCTAD call for a new internal economic order—the transfer of financial resources, commodity agreements, and the opening of Northern markets. Yet perhaps the complexity of the aid policy has been understressed. It depends on the uniqueness of each governmental situation in individual countries. Since there is more poverty than aid money, it is perhaps inevitable that donors, being selective, find aid policy as just another tool of their individual foreign policy.

Free trade, equally, is not a panacea, because Northern economies may be severely damaged before there is a sufficient mobilisation of purchasing power from the developing world.

Again, the commodity agreements are cumbersome to manage and subject to great violation. I am sceptical about the proposed trade tax, because a tax, by its very nature, discourages a given economic activity when part of the measures by which the LDCs can be assisted is by a development of world trade.

I am glad that the right hon. Member for Sidcup modified the recommendations of the commission in not calling for the creation of new bodies—the international trade organisation, on page 185, and the world development fund, on page 252. Perhaps I can express some sympathy with the sentiments of Lord Carrington, in his speech to the United Nations last September, when he said : We must all guard against the creation of new bodies whose primary function is the exchange of rhetoric. The creation of new bodies would, indeed, take time, and there is an overriding urgency in the recommendations of the report, so perhaps we are better advised to adapt the existing bodies.

I agree, too, that the commission is realistic in encouraging the North to help the South to learn to help itself, by means of the untying of aid and of internal policies that encourage investment. To this extent I accept the partial thesis of the hon. Member for Meriden. The major constraints on the implementation—economic, social and political—hardly need stressing, but if obstacles could not be overcome it would not be worth setting out on the road, and a very depressing future would face all mankind.

In his contribution the right hon. Member for Down, South (Mr. Powell) appeared to say that the role of development aid was not that of Governments but of individuals—moral man in the immoral society. Whatever may be the economic attractions of that thesis, it has no relevance to a world that is in desperate need of assistance and that is facing a looming economic crisis.

There is a growing recession in the North, with a rise in the number of Governments who are temperamentally sceptical about the value of foreign aid. In the South, there is a growing nationalism and an attachment to sovereignty. The policies in the South often determine the pace of their internal development. The relative success of Kenya, as opposed to the relative failure of Uganda, is derived from the internal policies of that country, whatever may have been the role of external agencies.

The implementation of the report requires the co-operation of many States that see their interests as contrary to Brandt's proposals. In that context we think of the more militant members of OPEC. To show how deep is the international context in which the recommendations have been formulated, we think of the move to greater defence expenditure following the Soviet invasion of Afghanistan.

There is an unfriendly climate for the realisation of the five-year emergency programme. In that unfriendly—nay, hostile—climate, what do we expect from the Government? Do they accept the analysis, and do they accept the urgency of that analysis? We should support the current initiative from Austria and Mexico for a summit. What are the existing alliances both within the Community and within the Commonwealth? Because of our established connections with the Commonwealth we should seek means to regulate multinational corporations by encouraging or requiring them to become agents of economic development—training, fair employment practices, technology transfers, the inclusion of standard contract terms, and so on. The Government should use all diplomatic means to influence a climate in favour of Brandt. We know that our major partners, such as the Germans and the French, are embroiled in their internal election campaigns. We have no such constraints. We could mount an initiative. That, sadly, does not appear to be likely from the Government's response thus far, even though we know that if the OPEC surpluses are not recycled it will push the world further down the recessionary spiral.

Brandt has finished his work. The report says to the world community "Over to you". Our work as citizens—and, one hopes, as a British Government—should now begin. We need to educate. We need a vision. We need action in support of these vital recommendations. We hope that the ultimate response of the Government will be more forthcoming.

It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Ordered, That, at this day's sitting, the Motion in the name of the Prime Minister for the Adjournment of the House may be proceeded with, though opposed, until Twelve o'clock.—[Mr. Waddington.]

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

10 pm

Sir Ronald Bell (Beaconsfield)

I found myself in unexpected agreement with a good deal of what was said by the hon. Member for Waltham Forest (Mr. Dea-kins). I hope that he will not be embarrassed by that. I did so particularly as to the practicality of some of the comments that have been made, especially as to the possibility of attaining equivalence of living standards throughout the world. However, on that point, I thought that the hon. Gentleman was a little pessimistic, because one day the ingenuity of the human race in finding substitute materials will be so great that I am sure that what he at present sees as a physical barrier to that kind of progress will be removed. Nevertheless, I am sure that in the short or medium term his comment was absolutely right.

It is, therefore, with all the more regret that I could not agree with the hon. Gentleman about the importance of the moral factor. That is where the Brandt Commission made its basic mistake, because, in spite of the hon. Gentleman's criticism that it did not put sufficient emphasis on the moral factor, I thought that it put a great deal too much emphasis on it. In fact, it is set out as the keynote on page 7 that the report should contribute to the development of worldwide moral values"— whatever that may mean. It is described as : the great social challenge of our time and its purpose is to shape the world's future in peace and welfare in solidarity and dignity. There is much more to the same effect in the same kind of words.

I think that it was the late George Saintsbury, that remarkable literary critic, who said that he could judge a book when he had read the first page. One could apply that sentiment to the whole of the report by basing oneself on the first page of Willy Brandt's introduction. It is obviously well meant, but it is really phrasemongering in excelsis. I hope that it will not embarrass him, but I very much preferred the speech of my right hon. Friend the Member for Sidcup (Mr. Heath), because there at least I could detect a theme. I could not agree with all of it, as he will probably realise, but it was cogent, powerful and consistent throughout.

Sir Bernard Braine

And convincing.

Sir R. Bell

That is what I am coming to. I want to examine the underlying basis of all this. Ultimately, the report is based on the moral argument. My first comment is that it is rather a facile moral argument, because it is based throughout on the assumption that more equal is more just. I know that a good deal of post-war politics—perhaps even prewar politics—is based on the belief that the doctrine of more equal being more just is an axiom and is something about which one does not have to argue. Certainly, there is not one sentence of argument in the Brandt report to justify the underlying assumption that more equal is more just.

In place of argument we get apocalypse—that is to say, we are told that, in effect, it must be so, because if we do not level out the world is running forward to red ruin, war, collapse and disaster.

You have asked for short speeches, Mr. Speaker, and, therefore, I shall not go into questions of war, collapse and disaster. I would just say that having made that analysis more or less explicitly, the Brandt report goes on to propose its basic remedy, which is a massive transfer of resources from the temperate zone to what is called "the South". If there is one word that occurs more than any other in the report it is the word "massive". If we ask ourselves what is meant by "massive", we are given a certain numerical value. It is about £30,000 million a year. Someone asked for how long. That is in the report, too, at page 251. Twenty years, anyway. The suggestion is that it should build up year by year over the next 20 years to the end of the century, presumably becoming greater each year.

When we think of it, the business of pumping resources into backward countries has already gone on for 30 years—and probably a good deal longer. I suppose that it is a good deal longer, but I start with the big attempts at groundnuts, sunflower seeds, the Colonial Development Corporation—the programmes that were launched after 1945. Since then, with no real respite by Britain and other countries, the process has gone on in a truly massive way.

The result has been described by many hon. Members. My right hon. Friend the Member for Sidcup described very well the present nature of the problem. If it is done by way of grant, financially, that is easy; we pay the money over and it has gone. If it is done by way of loan, which is mainly how it has been done, the problem builds up cumulatively. With respect to those who talk about the price of oil, it is not true that the impending insolvency of borrower countries was not perceived by anyone who cared to look at the problem before the increase in the oil price. It was obvious that they were accumulating an ever-higher burden of debt and an ever-higher liability for interest payments, and that their increase in production never looked like financing it, except for a few exceptional countries to which I shall refer later. Basically, this is a policy which, as a priming of the pump, has so far failed.

The argument in the report is that we should therefore double, redouble and re-redouble the process. It is going back to the old groundnuts argument—that each year will be better despite the loss in the previous year. The idea is that if we swamp them with money and, as the report states, give them the security of knowing each year, for 20 years, what is coming to them, in some way the pump will be primed.

I suppose that there are a few places and occasions where and on which we succeed in that process, but not many. I believe that we have done great harm to many of these countries by that process. The report, after all, is the beatification of the begging bowl. We are pauperising some of these countries—bringing them to mendicancy. I do not suggest that my hon. Friend the Member for Meriden (Mr. Mills) would go so far as to agree with me that the real service that we can render to these countries is to get them to understand that in the end it all depends on them.

Mr. Russell Kerr (Feltham and Heston)

Treat them mean.

Sir R. Bell

It is nothing to do with treating them mean; it is teaching them the lesson that we learnt—the lesson that the hon. Member for Feltham and Heston (Mr. Kerr) can find in Samuel Smiles and many other excellent writers. A very good form of overseas aid would be to send them a whole lot of copies of Samuel Smiles' admirable book.

If we analyse that into economic mechanics, in almost all cases the answer for those countries is to start small in agriculture, commerce and industry, and to build up. That has happened in Taiwan, Korea and certain other countries. Agriculturally, it is happening in Malawi. I do not suggest that Taiwan and Korea have received no foreign aid. They have received some aid, but it has played no significant part in their meteoric rise. Starting small and building up self-generated prosperity has been the secret of their advance. If we merely pour in financial aid, we get unbalanced, artificial and non-viable development, as we have seen in many cases.

Sir Bernard Braine

What cases?

Sir R. Bell

I could give my hon. Friend specific examples from other countries, but I should be preventing other hon. Members from speaking if I did so. I shall be happy to give him examples after the debate, if he so wishes.

Sir B. Braine

My hon. and learned Friend is making a general case against aid. He says that it has failed, but he declines to give the House examples. The House is entitled to know what he has in mind.

Sir R. Bell

I was trying to save time, but in order to pacify my hon. Friend I shall give two examples. One example is that of a magnificent hospital in Maracaibo. It was one of the finest hospitals in the world, but it had no patients because it had no nurses and no doctors. In those circumstances it was a little silly to build it. Another example is that of a marvellous hydro-electric and steel-making complex on the River Orinoco, which was electrocuting the fish because there was no coke with which to make the iron, and therefore the steelworks did not work, and the river ran pointlessly. Those are two examples, and there could be others. My point is that far too much money is spent on prestige projects. My hon. Friend the Member for Meriden said that multinational companies must be modified, because if a multinational company moved out of an area there might be a collapse, because there was no substratum—

Sir B. Braine

rose—

Sir R. Bell

I am sorry, I cannot give way. My hon. Friend spoke for 25 minutes earlier, and that was an adequate contribution.

My final point is the most difficult of all to make. We were told—I accept it—that in the next 20 years the population of the world will rise from about 4,000 million people at present to about 6,500 million people. It was suggested in the report that the top prority should be a crash programme of food aid in order to abolish starvation and poverty in the world, but is it a moral obligation on the people of the temperate zone to provide subsistence for an unlimited increase of people in the tropical regions of the world? I know that that question shocks people, but it must be asked. Why should the most advanced peoples in the world—who are probably slightly declining in number—who, because they are advanced, have restricted their families, have the moral duty of supporting an increase of 2,000 million in the equatorial and tropical regions of the world where family limitation does not exist?

If people are prepared severely to depress the standards of living in the temperate zone, as one would have to do to achieve that end, and to see themselves, in the final mix of world population, massively outnumbered—[Hon. Members : "Ah."] yes, and we know that population pressures find expression in migration pressures. If we are prepared to do that, that point should be put clearly and squarely to the people of this country and of the other countries of the temperate zone, so that they know what they are being asked to do.

If the people choose to accept the consequences of that gamble, that is their decision, but what is not excusable is not to mention that point at all, but just to slide over it on the easy assumption that when one raises living standards, birth rates come down. They do in some parts of the world, eventually. There is not the slightest evidence that they ever have done so among the Asiatic or South American people.

Sir B. Braine

What about Japan? My hon. Friend is talking absolute nonsense.

Sir R. Bell

My hon. Friend really must content himself with the 25 minutes for which he spoke earlier.

Sir B. Braine

But this is rubbish.

Sir R. Bell

Japan's was an extraordinarily organised operation in abortion—a massive and remarkable operation, which certainly will not be rivalled in India, Pakistan or South America. Let us be realistic about that : everybody knows that that is true. It cannot be done at all in the next 20 years. One day, perhaps it will, but meanwhile the suggestion is that the people of the temperate zone have a moral responsibility to feed and to keep alive an increase of 2,500 million in the next 20 years in the tropical and equatorial regions.

These are the considerations that underlie the Brandt report. My complaint about it is not its lack of good intentions but that it has not faced the implications of what it proposes, but has taken refuge behind fashionable phrases that are all too glibly exchanged among pseudo-liberals in all parts of politics and in all parts of the Western world.

10.17 pm

Miss Joan Lestor (Eton and Slough)

At the beginning of this debate I thought that one of the telling texts from Tawney that would apply to some of the things that I wanted to say was that, whatever the differences are of colour, capacity and abilities among human beings, however important on their own plane, they are as nothing compared with the common humanity that unites them all. On the high plan on which I wanted to enter this debate, I tried to apply that philosophy to the hon. and learned Member for Beoconsfield (Sir R. Bell) but I failed.

It was difficult to succeed in the face of the propositions advanced by the hon. and learned Member, which amounted in the end to the claim that if people cannot or do not control their populations, we in the rich West should do nothing and should allow them to starve. That is an extraordinary concept when we are debating a report that does not emphasise aid or mere handouts, or even make it the main part of its text. The right hon. Member for Sidcup (Mr. Heath) made that absolutely clear. The whole thrust of the argument of the Brant report is that we should look further than simply aid or short-term solutions.

This debate, for me and I think for many other hon. Members, has an air of unreality. Hardly was the ink dry on the Brandt report than the Government announced a cut of 14 per cent. in overseas aid over the next four years. That must have dashed the hopes of those who put their signatures to the Brandt report, and those of us who thought that, perhaps, because of the implications of Brandt for the developed as well as the developing world, something would come from it.

The problem has been well put, as one would expect, by my hon. Friend the Member for Waltham Forest (Mr. Deakins). When the House last debated this matter on a Friday in March, there was wide agreement on the propositions in the Brandt report.

There are, surely, two aspects of this problem—how one bridges the gap between the rich and the poor, in the present long-term shortage of resources, which will never extend to the developing countries, and how one avoids the suffering and the problems that we have faced as an industrialised nation. There is a long-term and a short-term proposition. I think that it is these to which the report was addressing itself.

Whatever are the deficiencies in the report—and some of us have put the emphasis in various places—it has brought us to face the challenge of the question whether we take refuge in burying the report because of Britain's short-term interests—or the belief about what are its short-term interests—or whether we say that here we have an opportunity, faced with the appalling problems in our own country and the West, to take on a new challenge and to bring about mutual solutions to the benefit of both sides of the great North-South divide. It is therefore a question not of benevolence but of mutual survival.

The situation in Britain has already been described. More and more people are rapidly becoming unemployed because we cannot find markets for the goods with which we previously dominated the world and which previously people demanded. We have to match with that situation the question how one abolishes hunger, disease, malnutrition, and so on in the poorest countries.

The report says that countries that have not reached 0.7 per cent. in aid must do so by 1985 in order to contribute to the developing world, and that the annual target of 1 per cent. must be reached by the end of the century—in 20 years' time. Presumably, most of us in the House will still be alive at the end of the century. It is a very short period, in which we are faced with the stark reality of making this contribution and this switch in our philosophy and our economic policies if many people in the rest of the world are to survive.

Unlike my hon. Friend the Member for Waltham Forest, I believe that the Brandt Commission attempted the moral argument in respect of this matter. Had the moral argument been put many years ago it might have been easier to persuade people in the West that that argument, plus economic necessity, would persuade Government's to have the courage to make the necessary change.

The argument about military expenditure, which has not been stressed much this evening, appals me, as I think it appals many of us. I believe that the report says that 0.5 per cent. of one year's military expenditure would pay for all the farm equipment needed to increase food production in the developing world and would allow countries suffering from food deficiency to approach self-sufficiency within 10 years. That is a staggering concept. In a sense, it is simple as that. Yet we are bent on a path that is going rapidly in the opposite direction.

If that is the choice in the present situation, clearly the choice must be made. When people talk about defence cuts and when the Brandt Commission talks about cuts in military expenditure, the point must be made—it is very rarely made in our defence debates—that the developed nations of the West, modern nations, now have overkill in terms of weapons of not 100 times but 300 times. The tragedy that flows from this is that the more the developing world sees the developed world amassing weapons and preparing for war, the greater their insecurity becomes. The greater their insecurity becomes, the more they are pushed along the same road, because the values and fears visited upon us are in turn visited upon them.

Therefore, one of the most important facts brought out in the report was the stark contrast between the developed nations and what they and many others are now spending on arms, and how a small amount of that, a tiny reversal, could contribute to ensuring that at least some of the 12 million children who are destined to die before the age of 2 will have a chance to live.

I do not find it amusing that the hon. and learned Member for Beaconsfield shrugs his shoulders at such a situation. He implied that if people would not accept birth control or learn to limit their families, the rich nations of the world should do nothing. He hinted that we should allow children to die. That is appalling. Whether or not the Government are prepared to do anything about the Brandt Commission's report, the stark facts of poverty and the stark reality of the misery that faces many people lie before us.

One other aspect of the Brandt report is of interest. That aspect is characteristic of some of the arguments that were made even before the report was published. It characterises many of the debates that we held on aid, trade, exports and imports. In 1979, 22 per cent. of our exports went to the developing countries, another 40 per cent. went to OPEC countries and 60 per cent. to non-OPEC developed countries. In contrast, only 18 per cent. of our imports came from Third world countries. We had a trade surplus with the Third world of £600 million, in contrast with a trade deficit of £3,100 million with the EEC countries. Those figures tell me a great deal. I was aware of such figures before we went into the Common Market, but since joining the Community we have become caught in our own trap.

Unemployed steel workers and closures in the steel industry can be linked direct with the Third world. Because of our lack of interest and development, the Third world is too poor to buy the steel that it needs to develop its economies, and partially to alleviate the poverty and misery that exists. The report makes a fundamental connection between events here and what is happening in many other parts of the world. The bridge must be crossed if Britain and similar countries are to survive.

Third world countries have provided, and could provide, major growth markets for British manufactured exports. One must bear in mind the employment opportunities that that could involve. The Government announuced that they would cut back overseas aid at about the same time as the report was produced. They dealt a severe blow to many who had hoped that the Government would grasp the nettle. They had thought that the Government would take up the challenge in the Brandt report and admit that the country was facing enormous economic difficulties.

We have lost markets. Many of our manufacturing industries have been taken over and surpassed by other nations. If we face that problem, in conjunction with the demands and needs of the developing world, and in conjunction with the trade that those countries need in terms of the manufactured goods and infant technologies that we can provide, mutual benefit and responsibility will bind us together.

I said that the debate had an air of unreality. The Government will admit that the report is excellent and they will outline many of the problems that we have yet to face. However, they will not be prepared to do anything about it. They will say that they have set themselves a certain economic policy from which they cannot depart. The tragedy is that if we do not recognise the implications of the Brandt report, Third world countries and the industrialised countries of the West will suffer.

10.30 pm

Mr. Charles Morrison (Devizes)

I agreed very much with the hon. Member for Eton and Slough (Miss Lestor) when she related the Brandt report to the position in this country. I do not think that it can be stated often enough that the Brandt report is at least as much about the future of the domestic economy as it is about the development of the Third world. Therefore, although it is a pleasure to see two Foreign Office Ministers on the Front Bench, the Government would have demonstrated a greater understanding of what the report was about if, instead, there had been at least one Minister from the Treasury or the Department of Trade on the Front Bench.

The Times leading article immediately following the publication of the Brandt report commented : As a description of the problems that face us, and a warning of what could happen if we fail to respond, the report can hardly be faulted. It ought to become one of the basic documents of the decade. It is not uninteresting that the Vote Office has already handed out more than 450 copies of the report, and I assume that every Minister has a copy of it in his Red Box as he goes home each night. In addition, when Herr Brandt himself had a meeting in Oxford it was attended by more people than had attended any meeting in Oxford since 1938. Also, newspaper comments abound, and there has been a stream of seminars to consider the report.

That is all very encouraging, because it shows that there is an awareness of the world scene that is not always credited. It also shows that there is real concern about the future, which is not entirely surprising. After all, the world is a pretty bleak-looking place when one considers the recession, poverty, hunger, unemployment and the arms threat, let alone the constant threats from Soviet imperialism. None of those factors is likely to increase hope or happiness about the future. Therefore, a report that has been described as a devastating indictment of human folly but which, more importantly provides guidelines and signposts for the, future is timely. Not long ago a report with the sub-title "A Programme for Survival" would have been thought portentous and presumptuous, but not now. There is now a growing realisation not just that we still have major economic problems but that the world is in a mess and that new initiatives are needed.

At I listened this afternoon to my right hon. Friend the Member for Sidcup (Mr. Heath) I was reminded of earlier warnings issued in the House in the 1930s to which few at the time paid attention but for which, later, everyone paid a price. The Brandt report provides the idea for new initiatives. No one at this early stage can say that all its proposals are correct in every respect, but the broad thrust of the recommendations must be right, and the Governments of this and other countries that are genuinely interested in solutions to the world's problems would be totally misguided to ignore them.

Again I refer to The Times leading article, which summed up the Brandt approach in this way : 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. Those comments provide a pretty apt answer to the remarks made by my hon. and learned Friend the Member for Beaconsfield (Sir R. Bell).

Few in this House will doubt that the richer countries of the world have some sort of moral obligation to assist the poorer countries to develop. However, we have now reached the stage at which moral duty in that context has become increasingly synonymous with self-interest. To put it another way, the argument that from time to time many of us have had in our constituencies, defending the concept of aid, is largely outdated. The development of Third world countries is now at least as much in our interests as theirs. It probably always has been, but until now the argument has been much more difficult.

Even so, aid will not be acceptable for long and there will be no further investment and transfer of resources if, in developing countries there is not political stability and effective administration to make good use of aid and encourage investment. Whatever the consequences for the countries of the North, if there is to be a transfer of resources there must be political stability. Without that, that transfer will not occur.

Too often in the past aid has been wasted, misguided and misused, for good reasons and bad. One has only to look at the economic chaos in some African countries to be reminded of that. I therefore believe that the North has a major duty and a vested interest to do what it can to assist political development in the poorer countries. As the emergency programme for 1980 to 1985 in the report points out, the scope of what is required in our mutual interest, even in the very short term, is mind-boggling.

I wish to refer briefly to population. My right hon. Friend the Member for Sidcup reminded us of some of the more hair-raising population statistics. In them and in their implications, more than anywhere else, lie the seeds of the destruction of mankind. We can have transfers of resources well in excess of expectation, a perfect energy strategy and global food programmes, and we can reform the international economic system to perfection, but all will come to nought if we cannot control population growth. On page 116 the report states : We also believe that development policies should include national population programmes aiming at satisfactory balance between population and resources and making family planning freely available. International assistance and support of population programmes must be increased to meet the unmet needs for such aid. I put that recommendation, above all others, top of the programme of priorities, top of the tasks for the 1980s and 1990s, and top of the emergency programme.

Man claims to be a wiser animal than others. If that is not demonstrated by his ability to control the size of the human population, the human race will meet the same destructive fate as other excess animal or bird populations in the wild.

Most people take a passing interest in the world about them but few bother very much with its less pleasant realities. Brandt forces us to face them and proposes solutions for the survival of civilisation. Only at our peril do we ignore those problems and solutions.

10.39 pm

Mr. Tom McNally (Stockport, South)

Like my hon. Friend the Member for Waltham Forest (Mr. Deakins), I was in the House for the debate on the Private Member's motion of the hon. Member for Cambridge (Mr. Rhodes James). The most notable aspect of that debate was not the silence of the right hon. Member for Sidcup (Mr. Heath) but the fact that it was an unreal debate, because we missed the voices of the right hon. Member for Down, South (Mr. Powell), the hon. and learned Member for Beacons-field (Sir R. Bell) and the hon. Member for Woking (Mr. Onslow). This debate has been more real, because we have heard some of the prejudices that the Brandt report, Government and Opposition will have to overcome if we are to make a reality of the report's aspirations.

The speeches made by Conservative Members on the motion of the hon. Member for Cambridge made it appear that the Brandt Commission was pushing at an open door. However, the report calls for a concentration on aid to the poorest, and the Government have abandoned that concept. The report calls for greater access to technology and training, but the Government, by their increase in the fees for overseas students, have barred many developing countries from such access. The report calls for greater access to markets, but even in my own party there is a growing demand for protectionism. Not only are we not going as far as the report wants; in many respects the Government's policy is going in the opposite direction.

I do not say that in order to pour cold water on the debate. It has all the importance that many hon. Members attached to it, but it is also important to realise that those of us who support the report are calling for a reversal of Government policies and of their concept of the aid and development programme.

We are arguing that the Government have got it wrong. The Prime Minister has got it wrong when she argues that, much as she supports the idea of a development programme, it will have to wait for recovery. As the Brandt report emphasises time and again, the recovery of the West and the development of the Third world are not separate processes. They have to go together. They are part of the same global development.

The right hon. Member for Down, South would pour scorn on such an argument. He says that it is a matter for the drive of personal choice. I believe that the level of aid, which has struck at the same level under successive Governments, owes more to the cowardice of politicians and the fear of the occasional slap on the wrist in the John Junor column than it does to the feeling of the British people.

When tragedies occur, such as those in Kampuchea or Uganda, the British people respond instinctively and generously. I sometimes feel that we might even challenge the Treasury to put on the tax forms each year a box saying "I will pay an aid levy" and challenge the Churches and development organisations in February and March to launch a programme saying "Fill in the box. Pay the aid levy". Let us test the individual and individual choice. The media could show the reality of what is happening in Kampuchea or Uganda.

Mr. J. Enoch Powell

Have a flag day.

Mr. McNally

Indeed, but such a flag day paid for by the Inland Revenue might be more effective.

Mr. Powell

No, voluntary.

Mr. McNally

Yes, voluntary, through the tax form. It seems that the right hon. Member for Down, South and I will be pressing the Treasury to put such a box on the next tax form.

I am not an expert on international finance, but when I read the Brandt report and other specialist documents I get a gut feeling that one of the dangers that we shall face in the 1980s relates to the management of international finance. On reading the Brandt report's references to the IMF and other accounts of its activities, I wonder whether the IMF carries out what Herr Brandt describes as its responsibility to cure maladjustments in economies without resorting to measures destructive of national or international prosperity. I wonder whether the IMF is not too rigid, especially in its dealings with developing countries, so that its very cure is destructive of national prosperity.

A number of hon. Members referred to the examples of Jamaica and Tanzania. It is almost unbelievable for the IMF to ask Michael Manley to increase unemployment by at least 11,000 at a time when unemployment in Jamaica is 40 per cent., or to ask the President of Tanzania to increase prices by 25 per cent. to 40 per cent. while managing a real cut in wages. If we want countries, democracies and societies to survive, we must not allow the international monetary system to take the attitude of the bloodletter and to leave the patient weaker at the end of the treatment than he was at the beginning.

Third world debts have risen from $74 billion to $300 billion in the past 10 years. Some observers are predicting that it will reach $800 billion by 1985. In these circumstances I worry that so much emphasis has been put on the private market and private banking in servicing those debts. I am not an expert in these matters, but in my mind there is an uneasy echo of an earlier age when private banking extended too far into vulnerable economies. I am mindful of the possible repercussions for our own economic system if the structure were to collapse.

I turn to a problem that the Labour movement will have to face and to which my hon. Friend the Member for Waltham Forest referred. The Brandt report rightly states that restructuring is a continuous process in efficient economies through which more productive activities replace less productive ones—as in leather goods, shoes, textiles and ships. In one sentence Brandt dismisses about 1 million British jobs. We must face the problem of how to satisfy our debt to the Third world in terms of its desire to enter our markets and yet explain to workers in the industries that I have mentioned how we shall replace their jobs.

I believe that the often discredited multi-fibre arrangement might show a way ahead—namely, a more finely tuned agreement that lets in goods from the poorer developing countries while recognising that multinational companies within developing countries, which can plant in them highly sophisticated and highly competitive industries, may not have the same access.

Brandt is a trifle naive when he talks about the rights of trade unions in some of the poorer countries. The sad truth is that they do not have the same rights and have not developed in the same way as have the British trade unions. It is too much to ask that British workers should allow multinationals to transfer their industries to countries where jobs, safety, pay rates and trade union rights are not protected to the same extent and then call for access in the name of free trade.

That is something that my party has to face. We must come to terms with our desire to help the developing countries with the need to accept that there is nothing especially honourable in saying "My principles are so high that I shall sacrifice your job." We must have a much more considerate attitude to those in industries that are threatened by the developing countries. The logic of the argument of some Conservative Members does not stand up to examination. We must have far more intervention. I hope that the right hon. Member for Sidcup will not be embarrassed if I say that the Brandt report is a very social democratic and interventionist document, with which we have to come to terms in respect of domestic policy.

I was fascinated, listening to the right hon. Member for Down, South and hon. Members who have criticised Brandt. It is easy to find criticism. When, however, I read how smallpox has been eradicated by Western technology and when, as I have seen on a number of visits to Asia and Africa, two blades of grass are growing where one grew previously, I cannot accept the right hon. Gentleman's example of the Christian ethic. If we are to capture, or recapture, the moral certainty that he once saw in the Christian ethic, it is not only in words but in deeds that we have to live up to that ethic. I believe that Brandt offers that opportunity.

It is necessary for us to resuscitate our own Western economy in order to bring about a vibrant economy in the developing world. A moral imperative is also involved. Perhaps, as T. S. Eliot said in another circumstance, it is a happy coalition of intelligent self-interest. The arguments of those who have spoken in favour of Brandt and a concerned Western world involvement in the Third world have hung together with greater logic than anything heard from the detractors.

The hon. and learned Member for Bea-consfield is living in a false world if he believes that he and those who think like him can remain in prosperity while leaving the rest of the world to starve. They will not let us. That is a lesson that we should learn.

10.52 pm

Mr. Alastair Goodlad (Northwich)

I begin by springing to the defence of my right hon. Friend the Lord Privy Seal, lonely though I feel, against the ungenerous attack made on him by the right hon. Member for Stepney and Poplar (Mr. Shore) and others. We should not allow the customary sobriety of my right hon. Friend's delivery to belie the underlying conviction with which he supports the measures to which he referred. My right hon. Friend regards the distinguishing mark of Toryism as the recognition of the overriding importance of circumstance. His speech was evidence of the Government's recognition of the ominous circumstances that we face and the urgency with which the Government view their responsibilities. We are only at the beginning of the task. There is a long way to go.

My right hon. Friend pointed out that trade is 35 times more important than official aid to the less developed countries. I should like to follow the excellent remarks of my hon. Friend the Member for Meriden (Mr. Mills) about multinationals. As the Brandt report points out, the multinationals control between one-third and one-quarter of all world production. The total sales of their foreign affiliates in 1976 were over $800 million, approximately the same as the then GNP of all the non-OPEC LDCs put together.

The report emphasises the mutual benefits of the multinationals' involvement in LDCs but criticises what it describes as the excessive power of multinationals in international trade and the use of artificial transfer prices and unethical commercial and political activities. Chapter 12 of the report contains wide-ranging proposals for the regulation of international companies and a proposed regime for international investment. Not all these proposals will gladden the hearts of company boards, already pressed by multitudes of problems, but none can deny their vital importance. The sections on contract, the transfer of technology and patents, particularly deserve the closest attention by Governments and companies. If we succeed in reaching agreement in those areas the prospects for prosperity in both the North and the South could be substantially enhanced.

Investment has not been evenly spread in the Third world, other than purely financial investment in tax havens such as the Bahamas and the Cayman Islands. Seventy per cent. of the investment in the Third world has been in only 15 countries, over 20 per cent. has been in Brazil and Mexico, and over 25 per cent. in the OPEC countries.

Many developing countries believe that foreign capital, technology, management and marketing skills carry with them disadvantages that outweigh their potential benefits. If we succeed in removing the grounds for such beliefs we shall have made a very worthwhile contribution both in the North and the South.

Of course, private capital is no substitute for aid. It has ignored some countries and selectors most needing aid. Rut part of the purpose of the report is to rectify that situation, and what we in the House and the country must agree on is that private capital has been a tremendous engine for prosperity where it has flourished, and has an important future role to play. Its benefits must be more widely spread and its blemishes eradicated.

Commentators and political historians all have their favourite watersheds—the Anglo-Irish treaty of 1921, the fall of Singapore, Indian independence, Suez, the resignation of the Treasury Ministers in 1959, the use of the oil weapon in 1973, and so on. It is a characteristic of watersheds that we cannot always recognise them when we are crossing them, but we are crossing one now.

Future generations will judge us on whether we take the easy path of sacrificing the future—or the possibility of the future—to the national preoccupations of the moment; or, on the other hand—as I believe can be and will be the case—taking a very hard-headed look at long-term necessities and charting a course accordingly.

My right hon. Friend the Lord Privy Seal quoted in his book "Inside Right" the remark made by Dr. Johnson about George Lyttelton : Politics did not so much engage him as withhold his thoughts from things of more importance. That is not a temptation to which we are likely to succumb. The Government's authority, both nationally and internationally, has never been higher. With elections imminent in the United States, in Germany, in France and in Japan, the responsibility for maintaining the momentum that the Brandt report has started is heavier than ever. Make no mistake, there is a momentum, particularly among the younger people in Western Europe.

The forthcoming special session of the United Nations will be very difficult, not least because of the rifts within the group of 77 and the lack of unity within OPEC. Having devised and agreed on a practical strategy, we as a country are suited by our history and our Commonwealth connection to press that strategy hard by traditional diplomatic methods and to act as a catalyst in the establishment of good will and understanding.

That irritating phrase of Dean Acheson's about losing an empire and not finding a role can now happily be laid to rest. The fulfilment of national roles need not necessarily be sinister or ridiculous. The present generation, I am sure, perceives our country's role as forwarding the purposes outlined in the report. I have every confidence that we shall do so.

10.58 pm

Mr. Ioan Evans (Aberdare)

The hon. Member for Northwich (Mr. Goodlad) has, rather late in the debate, defended the Lord Privy Seal. The Lord Privy Seal seemed to come under attack from every quarter. It was not a personal attack on him. I realise his difficulties, with the Foreign Secretary in the other place and a Prime Minister who wishes increasingly to take part in foreign affairs.

Having had a debate on this subject on 28 March—when the report of the Brandt Commission had already been available for a good while—we know that the Government were not then ready to say what their reactions were to be. But now, three months later, in a debate of this kind, I think that the House was expecting that the Government would tell us which of the commission's recommendations they accep'ted and which they did not accept.

Questions remain in the debate that one would have thought the Government would answer right at the beginning. My right hon. Friend the Member for Stepney and Poplar (Mr. Shore) asked whether the Government would publish a Green Paper on their position on the Brandt report, so that the nation would know their response. Will that question be answered tonight? I would go further than my right hon. Friend, because I think that we need a White Paper. The Brandt report is a form of Green Paper. We now need an indication of the Govment's response. Will they support a top-level political summit, as proposed in the report? The Lord Privy Seal touched on that matter but did not give a definite answer. I put that question to the Prime Minister today. It appears that foreign policy on the Middle East is being decided in a gondola in Venice. The EEC Ministers are determining their common policy to put to the economic summit in Vienna, yet when I asked the Prime Minister about their response to the Brandt report she said that the matter had not been discussed. She said that they touched on certain matters in the Brandt report—but the report touches so many things. It appears that the EEC Ministers do not intend to deal with the report at that important summit on economic affairs. The Government have not played their part.

Will the Government review their position on the level of official development assistance in the light of the report's recommendations? The Government's policy on overseas aid was announced after the report was published. They should have had the decency not to cut back on overseas expenditure until they had given some thought to the matter. In their mad policy to cut expenditure they have cut overseas aid, and that at a time when the report calls for a massive increase.

We have seen the report of the EEC discussion in Venice over the weekend. The preparations among the EEC countries to concentrate on food, energy and finance at the special session of the United Nations General Assembly—to which the Prime Minister referred—are thought by the developing countries to be too restrictive. In the light of the Brandt report, are the Government giving sufficient emphasis to trade, commodities and Third world industrialisation? Those are the matters that we should be discussing. The feeling of the House is that we should give more aid.

There have been exceptions to that view. I would like to hear the interpretation of the hon. and learned Member for Beaconsfield (Sir R. Bell) of the Good Samaritan. We have heard the Prime Minister's interpretation. Apparently, not only should we simply pass by and do nothing; we should clobber them. That is the philosophy of the hon. and learned Member for Beaconsfield. I think that the House has completely rejected that view.

The public expenditure estimate submitted by the Government shows that aid is to fall from £790 million last year to £779 million this year, and to £680 mil- lion in the new financial year. The Brandt report talks about the need for the rich countries to divert more aid to the underdeveloped countries, yet this Government are going in the other direction.

We have discussed petrocurrencies and the multinationals. We must decide what we shall do as a Government and as a people—not what others will do, or even what the Third world will do to help itself. Of course it must help itself, but it cannot do so unless it is given some assistance to put it on the way. We know that the Government have monetarist policies and that they are swinging the axe on public expenditure. The answer must be to examine the policy of the Western world on arms expenditure.

I am glad that the hon. and learned Member for Beaconsfield has returned to the Chamber. He thought that he had won the argument by saying that it would cost £30,000 million to help two-thirds of humanity, and that we could not tolerate it. In fact, world military expenditure is over £200,000 million annually.

The moral question is : are we to help the cause of peace by aiding two-thirds of humanity living in starvation conditions, or are we to continue this mad arms race in which we are involved? Every two minutes £1 million is spent by the world on arms. How many millions of pounds have been spent since we began debating this issue at 4.40 this afternoon? It goes on day by day.

The Government are increasing their arms expenditure from £7,720 million to £8,740 million by 1984. They need to do not a U-turn but an about-turn. They are going in the opposite direction from that recommended in the Brandt report.

Sir Ronald Bell

A U-turn is an about-turn.

Mr. Evans

The Government need to go in reverse, not just round corners.

I should like to refer to the four examples in the Brandt report. I hope that Conservative Members will listen, because these will be telling arguments in defence debates. Willy Brandt, in his introduction, states :

1. " 1. The military expenditure of only half a day would suffice to finance the whole malaria eradication programme of the World Health Organisation, and less would be needed 1285 to conquer river blindness, which is still the scourge of millions.
2. 2. A modern tank costs about one million dollars; that amount could improve storage facilities for 100,000 tons of rice and thus save 4,000 tons or more annually : one person can live on just over a pound of rice a day. The same sum of money could provide 1,000 classrooms for 30,000 children.
3. 3. For the price of one jet fighter (20 million dollars) one could set up about 40,000 village pharmacies."

The fourth example is the telling one in terms of arms expenditure : One-half of 1 per cent. of one year's world military expenditure would pay for all the farm equipment needed to increase food production and approach self-sufficiency in food-deficit low-income countries by 1990. That is the question to which we have to address ourselves.

We want the Government to produce a White Paper in response to this issue because, as the Brandt report states, this is a time of real crisis.

One Conservative Member did not want to talk about the dangers facing us now. I should like to come to one of them. The Brandt report's recommendation for "An Emergency Programme : 1980–85" gives the four principal elements, all of which should be dealt with equally :

1. " 1. A large-scale transfer of resources to developing countries.
2. 2. An international energy strategy.
3. 3. A global food programme.
4. 4. A start on some major reforms in the international economic system."

I conclude with a quotation from Earl Mountbatten of Burma. In a document issued by the World Disarmament Campaign, he said : As a military man who has given half a century of active service, I say in all sincerity that the nuclear arms race has no military purpose. Wars cannot be fought with nuclear weapons. Their existence only adds to our perils because of the illusions which they have generated. I do not want to read the whole text, but, referring to the Middle East initiative, Earl Mountbatten said : Is it possible that this initiative will lead to the start of yet another even more vital miracle and someone somewhere will take that first step along the long, stony road which will lead us to an effective form of nuclear arms limitation, including the banning of tactical nuclear weapons? After all, it is true that science offers us almost unlimited opportunities but it is up to us, the people, to make the moral and philosophical choices, and since this threat to humanity is the work of human beings, it is up to man to save himself from himself. The world now stands on the brink of the final abyss. Let us all resolve to take all practical steps to ensure that we do not, through our own folly, go over the edge. Those were the words of Lord Mountbatten of Burma a year ago, before his sad death. I believe that that is a message to the people about the nuclear threat. The Government will be committing a criminal folly if they spend £4 billion or £5 billion to add to the nuclear threat that faces humanity. They can better spend that money by giving it—as recommended in the Brandt report—to help the starving millions of people in the world to live a better life and to enable us to live it with them.

11.11pm

Dame Judith Hart (Lanark)

I am glad to follow the remarks of my hon. Friend the Member for Aberdare (Mr. Evans). I emphasise that the speech of Lord Mountbatten that he quoted was a speech that our press chose not to quote. It was not quoted anywhere in the popular media, although it was a valuable contribution.

I wish to quote one of my favourite passages from the Brandt report, which is also one of the only light-hearted phrases in it. It says : It is not enough, as one of our commissioners put it, to sit around tables talking like characters in Chekov plays about insoluble problems. I hope to discover from the right hon. Member for Sidcup (Mr. Heath) which commissioner said that.

This has been a remarkable debate. It has been one of the most significant debates in the House for a long time. We should not measure its significance by the attendance at the end of the day, because we are not voting on this matter tonight, but the content of the debate has been significant. I am certain that the Lord Privy Seal and the Minister of State will have taken full note of the fact that, with one or two idiosyncratic aberrations, there has been a total unanimity of view on the Brandt report's general concentration on the world crisis, its identification of mutuality of interest, and its identification of human solidarity and a commitment to social justice. I hope that the Lord Privy Seal will take note of that because, in contrast, his speech failed to reflect the degree of concern that the House has expressed.

I may be wrong—and the Lord Privy Seal will no doubt correct me if he thinks that it is proper to do so, or, if he regards it as a matter that falls under the Official Secrets Act, he will not allow himself to do so—but I suspect that the Brandt report has been the subject of discussion by an interdepartmental official committee. I doubt whether it has been the subject of Cabinet discussion. That is to be deduced from the fact that—unusually for him—the Lord Privy Seal did not seem to be totally familiar with the issues that he outlined to the House at the beginning of the debate. I am not unduly suspicious, but I think that that is what has happened.

I believe that both the right hon. Gentleman and the Minister of State have been supplied with official briefs that do not reflect a real involvement by Ministers in the issues presented by Brandt. Yet the Prime Minister will have to have reactions to take with her to the second Venice summit. Are those reactions to be only those that we have heard from the Front Bench tonight? I hope not. I hope that the Prime Minister will allow herself to be influenced by the views of the House of Commons. Others will be. Herr Schmidt will be identified with the Brandt issues. We know that the Netherlands, Italy, Denmark and, indeed, France are likely to wish to consider them seriously. Japan is taking them very seriously.

Unexpectedly, perhaps, to Conservative Members, I will not make a speech about aid tonight. I rest upon what my hon. Friends have said—that, faced with this challenge of Brandt, it is sad and disastrous that we have chosen this moment to cut our aid programme. Foreign aid is one aspect of the direct transfer of resources to the Third world, but it has been cut by 14 per cent., as opposed to 6 per cent. increase committed for the next four years when the Labour Government were in power.

But aid is only one aspect. I think that the Lord Privy Seal will agree that this is not essentially—it cannot be—a party issue. One of his hon. Friends compared the problems identified by Brandt to the issues presented to the House in the 1930s, in terms of gravity and of the mistakes made by many people then. That is a valid point. Were I to deliver a Socia- list critique of the Brandt report, I would say that it does not go far enough in some respects, but its content can command the support of us all.

My fear is that the Government have got themselves into a position of psychological defensiveness because of their public expenditure cuts, owing to their belief that Friedmanite monetarism must, across the board, challenge any kind of international Keynesianism as a philosophical dogma. Because of their cuts in aid, they feel that they must ask for defensive briefs whenever they discuss the Brandt report.

The aid cuts are deplorable. The Government could take a very different approach, even within the context of the predominant attitude of the Cabinet towards economic problems and their solution. Brandt stresses mutuality of interest—a concept that has been around for a long time. We used to call it "interdependence". I wrote an article for The Times in 1976 when that phrase was current.

The Government cannot fail to agree that there is a deep mutuality of interest in resolving the problems that will face us as a result of the increase in population. To what has been said on that subject I will add only that, whatever is done by effective family planning programmes, which of course are needed, the females already born will be bearing children between now and 2023.

The problems presented by population growth and the demands upon food resources, energy resources and mineral resources are matters on which everyone must agree that there is a mutuality of interest, because those problems can be resolved only—be it, one way or another, by public or private development—by developing the untapped resources of food, energy and minerals in the Third world and by inducing the process of development, thereby bringing about the conditions that create population decline and smaller family size.

We are bound to agree on that. There can be no failure on the part of the Government to recognise the realities of the crisis. It is a crisis that cannot and and will not go away.

Looking at it in terms of our sharper, narrower British self-interest as against the global concerns, I do not know how often it is realised that the aid programme, quite apart from the development in the broader sense, maintains, every year, 415,000 jobs in this country. When we have unemployment at 1½ million, and when it is scheduled to climb to over 2 million, 415,000 jobs is a lot of jobs. They come directly from the aid programme.

If one manages to get the thrust net only in aid but in trade and all the other respects which Brandt discusses—the thrust that will achieve the self-generated economic growth, which is the objective of all of us for the developing world—415,000 jobs will be as nothing.

The very famous page 238 of the Brandt report includes the statement that the industrialised countries…have gained on average 900,000 jobs in each of the years 1973–77. I give another figure. It is not from Brandt. It is a figure from the United States Bureau of Intelligence and Research, which did a piece of work on the effect of the transfer of $20 billion a year to non-OPEC developing regions. In year 1 the bureau estimated that the effect of that would be as follows : the volume of world exports would increase by 3 per cent.; the volume of OECD exports would increase by 3.1 per cent.; the volume of developing country imports would increase by 8.4 per cent. That gives an indication of the mutuality of interest, of interdependence, of the value to us and to OECD countries of achieving some of the objectives set out in the Brandt report.

I want to mention two particular matters in the brief time available to me. I should have liked to say a lot about import controls and to agree with those of my hon. Friends who have pointed to this as a matter that must concern Labour Members in getting our policies right in terms of protecting both our infant industries and our threatened industries, and at the same time protecting those developing countries that we wish to protect. My view is that we can do it if we have a system of selective quotas, because—[Interruption.] It is my view and I do not want to be drawn on it, because I have other matters to go into.

I agreed with the right hon. Member for Sidcup when, during his splended con- tribution, he emphasised the methodology of international conferences. He is right. I am not certain which type of summit is best but I agree that conferences that last for a month and that are attended by junior officials with prepared briefs—into which a junior Minister may fly to make a speech in the plenary session and rush off again—are no way to solve the outstanding North-South issues.

I wish to turn to an immediate issue that was raised by the right hon. Member for Sidcup. No Friedmanite inhibitions can impede that issue. There is an immediate need to recycle surpluses into programme lending. The Brandt report correctly points out that the transfer of resources to provide capital for long-term development is essential. However, low-income countries, middle-income countries and the global economy as a whole need an injection of money if the developing countries are to order goods from the developed world. Such an injection would help to provide the necessary stimulus to get us all out of the depression. That is the only step that will take us out of the longest and deepest depression that we have known for 30 years.

It would appear that the depression is taking us into a new dimension in world terms. What are we to do? It is true that as a result of OPEC petrodollars a great deal of money is sitting in the banks of the European and advanced countries. Because of the depression, that money is not being lent for investment in the developing countries. I disagreed to some extent with the right hon. Member for Sidcup when he implied that private banks had no contribution to make. That is not true. Some private banks have money that they could lend. It has been said that security is needed for such lending. The recycling of money that is sitting in private banks, earning high profits but doing nothing, could be underwritten by international institutions. Whatever the mechanism—special drawing rights, and so on—we must find an international and institutional method of underwriting such loans.

Do we need a new institution? The right hon. Member for Sidcup thought not. He would prefer to rely on the existing institutions of the World Bank and the IMF. I have always opposed new institutions. There are plenty of international institutions. However, this is not a job for the World Bank. According to its articles, it cannot undertake such work. That leaves the IMF. The right hon. Gentleman seemed to argue that we should reform the IMF so that it could take on this new job. I do not think that the IMF is capable at this moment of that degree of radical reform.

I say nothing now that I have not told directors of the IMF. A number of the developing countries—not only Tanzania and Jamaica but Turkey, Portugal, Peru and Ghana—have run into deep crisis because of shortage of foreign exchange caused because they had to face increased oil prices. They were oil-dependent countries that had to buy oil; they had nothing else. They had to face the consequences of our inflation, because they were also dependent on importing our manufactured goods and had to face a period of a general decline in the prices of the basic commodities on which they relied for their foreign exchange earnings. So they were in trouble.

The IMF formula is universally applied both to developed and developing countries. It was applied to us. But there is an important difference. A Minister of one developing country described the IMF formula as a fourwheeled chariot. It is "Devalue, deal with your money supply, cut wages and cut public expenditure." When the IMF told Britain "Cut public expenditure", whatever the agonies we went through, it was saying "Cut the rate of growth of your public expenditure." But when one tells a developing country "Cut public expenditure", one is giving it a prescription for nil or negative growth, because only public expenditure can finance the infrastructure needed for economic development.

There is no profit in building schools and educating children; no profit in hospitals and health services, in the basic infrastructure that is necessary for development. The IMF has consistently failed or refused—I am not sure which—to understand this.

I do not think that, with the best will in the world, the IMF will be capable of enough reform in its attitudes to be able to do the new job that needs to be done. Therefore, my predilection is to say, despite my dislike of new institutions, that the IMF cannot do this job, that somebody must, and that therefore we may need a new sort of bridging institution—not one with a massive bureaucracy and the rest, but a new technique that can enable the job to be done.

Mr. Brocklebank-Fowler

Is not the only way to get the private surpluses into investment in the developing world to ensure that the security of that investment and the rate of return are competitive in the money market? What does the right hon. Lady suggest is the answer to that problem, which is apart from any major institutional change that may or may not be necessary in the World Bank?

Dame Judith Hart

We may need an international underwriting.

Mr. Brocklebank-Fowler

Of investment?

Dame Judith Hart

That is right.

Whatever the inhibitions of the Lord Privy Seal and the Minister about Keynesianism in the world as a whole, and their inhibitions related to their belief in Friedmanism, of which I know the right hon. Gentleman is not a wholehearted supporter, we have here a definition of problems that everyone can agree upon. We also have an immediate problem for the solution of which the Government can agree that whole hearted support is demanded at the forthcoming summit in Venice. I hope that the Prime Minister will there say "There are some problems for us within our context. We do not happen to think that aid is a good thing, and we have cut our aid programme, but we agree that there is a mutuality of interest and a deep need in particular to find a solution to the short-term critical need for the recycling of surpluses and for allowing the Third world to play its part in resolving the problems of the North."

I end with two quotations. One is a quotation that I have on a very attractive poster in my room at the House. It is produced by the students aid lobby organisation, Third World First, and comes from King Lear : So distribution should undo excess and each man hath enough.' The other quotation is something that the President of Sri Lanka said last August at a meeting of the Society for International Development and which I think sums up everything that the Brand report is telling us. He said : The interdependence of our economies is such that if we falter, we will not be able to buy the goods you produce. Our poverty, which in many cases we have learnt to live with, will inevitably pull you down as well.

11.36 pm

The Minister for Overseas Development (Mr. Neil Marten)

My hon. Friend the Member for Mid-Sussex (Mr. Renton) and the hon. Member for Kingston-upon-Hull, West (Mr. Johnson) said that they hoped that I would answer all the points raised in this debate and give a lead. I am afraid that I must disappoint them. First, there is not enough time and, secondly, I do not think that I could possibly do so.

I am always aware, as I am sure everyone else is, of my own deficiencies. Today I was even more acutely aware of them, after hearing the powerful speech of my right hon. Friend the Member for Sidcup (Mr. Heath) and the references by the right hon. Member for Down, South (Mr. Powell) to Plato, Aristotle and Victor Hugo. It is not my scene. Within limitations, I shall do the best I can to answer this debate.

Following up the remarks of the right hon. Member for Lanark (Dame Judith Hart), the points raised in the debate will be considered by the Prime Minister before she goes to Venice. That is what parliamentary debates are for. I agree with the right hon. Lady that this issue is not a party matter in the true sense of the word. It is more of a personal issue, concerning people's views on the Brandt report and aid generally.

The right hon. Member for Lanark also talked about aid keeping so many jobs going, and gave some figures. I have to correct the record. I am not picking her up, but she had the figures wrong. I believe that she said that 415,000 jobs were kept going by aid. For Britain alone, the calculations made a year or so ago showed that there were only about 40,000 jobs. That is not a negligible difference.

Dame Judith Hart

I apologise. The figures were given by the Minister's Department.

Mr. Marten

I do not know when. The latest figures that we have is for the last year. The right hon. Lady also mentioned the question of population, which was touched on by my hon. Friend the Member for Devizes (Mr. Morrison) and my hon. and learned Friend the Member for Beaconsfield (Sir R. Bell). The commission tells us that although the rise in population growth rates may be slowing there could still be 2 billion more people in the world by the year 2000, and 90 per cent of that increase will be in the developing world. This accords with United Nations projections. We recognise that already in many developing countries economic progress has been eroded by high rates of population increase and that many such countries are looking for assistance to tackle this problem.

In 1979 the United Kingdom provided early £9.2 million in population aid and we shall continue to support population programmes as fully as the many claims on our resources permit. In particular, we have maintained our support for the United Nations Fund for Population Activities and the International Planned Parenthood Federation—both of which will receive £2 million this financial year—and the World Health Organisation's research programme in human reproduction.

This has been a remarkable and wide-ranging debate. There have been very different and sometimes strong reactions from right hon. and hon. Members to the issues raised in the commission's report. The key concept underlying the report is that of the North-South co-operation and the common pursuit of shared objectives on the basis of enlightened self-interest. Questions have been raised about the extent of that self-interest and, again, views expressed during the debate have been varied.

I agree with the right hon. Member for Stepney and Poplar (Mr. Shore) and my right hon. Friend the Member for Sidcup about the fundamental importance of oil prices and supplies in the world economy. They are indeed at the centre of the problems of world inflation, recession and development. We accept that the trend, in real terms, will be upwards, and that we must all adjust to the consequences. There is no way that we can do this without pain. The question is how to achieve it with the least disruption, and how to induce more stable prospects for the future. My right hon. Friend was quite right to put his finger on this point but, as others, such as my hon. Friend the Member for Woking (Mr. Onslow), pointed out, other realities must be taken into account.

These realities limit very much the scope for a purely British initiative of the kind that my hon. Friend the Member for Norfolk, North-West (Mr. Brocklebank-Fowler) and others suggested. It is because the problems are global and are linked, and because they need the co-operation of all the actors on the stage, that the solutions are difficult, hard to seek, and not quick to find. Let me give a simple example. An agreement to stabilise the market for any raw material—oil or otherwise—simply will not work if it does not have the backing of the majority of the producers and consumers. My hon. Friend the Member for Woking was right to underline vigorously this point about the Russians.

In our view the main questions pinpointed in the Brandt report are issues for an emergency programme, or for more urgent attention. My hon. Friend the Member for Norfolk, North-West saw these problems as requiring action over the next five years. My right hon. Friend the Member for Sidcup was concerned about the next few months. We believe that we must concentrate on these few main issues—energy, food and recycling—in the global negotiations. My right hon. Friend was despondent about that process, but we believe that it can be turned into a real examination of what is needed, with plain talking and a relatively narrow agenda leading to practical results. If it seems that a limited high-level political gathering might help that process forward, we shall be ready to consider it. As my right hon. Friend the Lord Privy Seal said, this would need careful preparation and timing.

Meanwhile, there are some immediate problems, not least of finance, and the adequacy of the banking system, to which several hon. Members have given much attention. I am glad that my right hon. Friend thought that the right way forward was to adapt the present institutions rather than create new ones.

Mr. Brocklebank-Fowler

Will my hon. Friend tell the House whether we can look forward to receiving a detailed analysis of the policies put forward in the Brandt Commision's report and, if so, what form that will take? Do the Government expect to publish a Green Paper or a more serious response that the one we had to the debate this evening?

Mr. Marten

I shall come to that point later.

I was just pointing out that it was right to use the present institutions, rather than create new ones. Certainly, it would be a much faster process. The International Monetary Fund stands at the centre of the monetary system. It is already girding itself to help take much more of the strains than in the past. Only recently Turkey, which was mentioned by several hon. Members, agreed with the fund on drawings going far beyond its quota. The normal limit has previously been 300 per cent. of its quota. That was not enough in Turkey's case. The managing director is already acting to mobilise extra funds if required and is exploring new possibilities with the surplus countries and others, as the IMF interim committee decided at the end of April.

The IMF managing director himself stressed the fund's new approach as lately as 3 June. The hon. Member for Stockport, South (Mr. McNally) may care to note this after his most agreeable speech. The managing director said : The Fund must be prepared, when necessary to lend in larger amounts than in the past. Also, the structural problem faced by many countries may require that adjustment take place over a longer period than has been typical in the framework of Fund programmes in the past. Further, lending by the Fund must reflect in practice the sort of flexibility, with an awareness of the circumstances of members, that is called for in the Fund's current guidelines for conditionality. As to the policy approach to be followed by the Fund, this must endeavour to create conditions conducive to improvement in the supply of resources and broadening of the productive base. Such developments will require, of course, supportive measures on the demand site … It is only through the pursuit of such a comprehensive macro-economic approach…that domestic saving can be promoted in the context of a sensible plan of investment. The adjustment programmes we support would thus be an integral part of a longer term strategy for fostering investment and economic growth.

Dame Judith Hart

Surely the Government does not regard it as part of their duty to defend hook, line and sinker the IMF.

Mr. Marten

I do not believe that anyone was suggesting that.

That shows that the criticisms of the right hon. Member for Stepney and Poplar and the hon. Member for York (Mr. Lyon) are out of date, if they were ever valid at all. They both mentioned, as examples of the inflexibility of the Fund, the difficulties experienced by Tanzania and Jamaica. The hon. Member for York spoke of the IMF having "disgracefully abandoned" these countries. He talked about the IMF giving Tanzania a slap in the face, but although negotiations between Tanzania and IMF officials did, at an earlier stage, reach an impasse, they have now been resumed, and are currently under way again. There is a real hope of reaching agreement on a standby programme. The Government hope that these negotiations will be successful, but that is a matter for the two parties concerned, and it is not for me to prejudge the outcome.

As to Jamaica, the IMF has provided considerable assistance in the past, as has the United Kingdom. It is true that the Jamaican Government have broken off discussions with the fund on a new programme. We hope that these negotiations will get back on the road, but I believe that it would not assist the resumption of negotiations for me to offer further comment at this stage.

There has been a good deal of interest in ideas but forward for some kind of scheme, like the post-war Marshall Plan. We have heard both the similarities and the differences between now and then argued tonight. It is against that background that the Brandt Commission recommends early attainment of the 0.7 per cent. aid target.

The huge scope of the financing needs of the non-oil developing countries is not in contention. What is not agreed is whether the bulk of these transfers can continue to take place through the commercial banks. My right hon. Friend the Member for Sidcup feared that they could not. Others have also pointed to signs that some individual countries may be unable to borrow on the scale that they need.

In fact about 80 per cent. of all debt is owed by about six or seven fairly advanced developing countries. Some of these, such as Mexico, will clearly face no problems. Other borrowers, such as Peru, have already taken steps success- fully to adjust. Others again may find that it would be wise to seek early fund help to enable them to redirect their investment plans and resume growth on a rather different path. The World Bank has launched a new scheme for longer-term programme loans to support structural adjustment. These can be combined with medium-term help from the fund, repayable over 10 years. They can also be combined with commercial bank lending through co-financing. In the shorter term, many countries will be able to draw on relatively high reserves.

We do not, therefore, believe that a crisis is upon us in the next few months, or that the changes now being made will be inadequate to prevent a breakdown of the whole banking system. As my right hon. Friend the Member for Sidcup said, we have a major interest in that matter, and we agree with him that we must look to the international institutions for any further necessary adaptation. We shall indeed lend our weight to the work that they are carrying out, particularly on the report's recommendations.

The right hon. Member for Stepney and Poplar and my hon. Friend the Member for Norfolk, North-West asked the Government to consider publishing a Green Paper setting out our detailed views on the report. We have already promised to provide such a detailed paper as soon as possible, I hope by the end of the month—to the sub-Committee on overseas development of the Select Committee on foreign and Commonwealth affairs, of which my hon. Friend is a distinguished member. It will be for the sub-Committee to publish the paper if it wishes. We shall be happy if it decides to do that.

Dame Judith Hart

This is a crucial point for the House. A paper to the overseas development Sub-Committee of the foreign affairs Select Committee is unlikely to reach the Floor of the House for a long time, and then only at the discretion of the Select Committee. We need a statement of Government intent for discussion as soon as the Government have reached a view. Can the Minister give us such a commitment? I am sure that I speak for both sides when I say that that is what the Houses wants.

Mr. Marten

I cannot give the right hon. Lady a commitment here and now but I shall certainly look into that point to see what can be done.

Mr. Brocklebank-Fowler

The Select Committee has made clear that if such a document were made available it would enable the Government to publish the document straight away for the information of the House.

Mr. Marten

That would be a sensible solution to the problem.

Mr. Nigel Spearing (Newham, South)

I declare an interest as a member of the select Committee and its Sub-Committee. Does the Minister agree that it would be an advantage to the House and everybody else if the Select Committee could question the Government on the memorandum and that that should be done before the Summer Recess? Will the hon. Gentleman bear that in mind, and can he give any indication of the timing of the memorandum?

Mr. Marten

I have just said that we hope to produce the memorandum for the Select Committee shortly. As to questioning people, it is up to the Sub-Committee to summon those whom it wishes to question.

The hon. Member for Greenwich (Mr. Barnett) asked what contributions Britain was making to developing the alternative energy sources of developing countries. We are pursuing an initiative launched by the previous Government, financing a programme of research and development into new and renewable sources of energy for less developed countries. The programme is concentrated mainly on small-scale, low cost sources of energy, adapted to the needs of village communities. As time is pressing, I shall write to the hon. Member about the programme in Bangladesh, to which he referred.

The hon. Member for York rightly said that we should build on what the South already has. He mentioned agriculture in that connection. I agree with him. Here, there are also signs of hope for the poorer countries. Paradoxically, it is the better off, more industrially advanced developing countries that will suffer most from the energy price changes. Like us, they are locked into a pattern of development that depends upon the consumption of hydrocarbons, and they cannot change that pattern without a considerable shift in resources.

Countries further back on the road have, to some extent, a greater opportunity to choose. That is where emphasis on labour-intensive development, using appropriate technologies, can yield important returns. In no sector is that more vital than in agriculture and the production of food.

Progress was disappointing during the 1970s, especially because of slow agricultural growth in the poorest countries. The 4 per cent. annual growth target that we should all like to see met is still far from achievement. Of course, the darker world prospects also have implications for agriculture, not least on the price of fertilisers and the necessary pest controls. There is a great deal that developing countries can do to achieve faster growth, and I am glad that that has received such attention both in the Brandt report and from special international bodies such as the FAO, the World Food Council and the recent World Conference on Agrarian Reform and Rural Development.

The FAO has underlined the two major policy areas where action is specially needed. The first is the low share of public investment going to the rural and agricultural section, which even in India, with its advanced industries, holds 80 per cent. of the population. The FAO would like to see that share raised to an average of 17 per cent. of public investment in the developing countries.

The second major step would be to improve the terms of trade between the countryside and its farmers and peasants and the urban consumer and the industrial sector. Too often the terms are distorted by subsidies to consumers and industrial investors and by artificially low prices to farmers. When I am travelling in the developing countries and talking about these issues, including the price of food, I always cite the example of the Common Market and its policy of high prices producing a surplus of food. If only the developing countries would latch on and study that, no doubt they would achieve a surplus of food in no time.

Alongside these major policy shifts there is the creation of a proper infrastructure to support agriculture with extension services linked to national and international research work, food storage and pest control, and an efficient system for delivering advice and inputs for the small farmer at the right time. I very much welcome what the Brandt report says on all these matters in chapter 8. In our own programme we continue to give great emphasis to agriculture and rural developments. This is not at odds with the Government's decision to give commercial and industrial factors greater weight alongside developmental ones. British business in 1979 captured well over 10 per cent. of all World Bank contracts going to foreign firms for agriculture projects. This is both good business and good development.

The Brandt report quotes several estimates of the external resources that are needed to set up both agriculture and other developments in the countries in the poverty belt of Africa and South Asia. The commission recommends a special action programme of at least $4 billion dollars a year for 20 years in soft aid for these countries. It especially endorses the inclusion of large regional projects on water and soil management and disease eradication, to be supervised by new regional machinery and backed by greater technical assistance. We shall continue to do what we can for these countries, which already occupy a large place in our own aid programme, not least because so many of them are our Commonwealth friends.

We have some doubts about the sweep of the Brandt recommendation for an action plan. The FAO has clearly advised that the best way to faster agricultural growth is not by new jumbo projects, which make heavy demands on scarce money and staff, but by small-scale schemes to make more intensive use of presently cultivated land. We cannot overestimate the importance of speeding up agricultural growth. Without greater food production an increasing number of human tragedies will rise to meet us through famine, natural catastrophe and civil war.

The real value of aid is its effect on long-term development. This is what eventually enables the recipients to stand on their own feet and even to help rescue others. Development takes time and it cannot be switched on and off. We want more flexibility in our programme. We do not want to impair the progress of long-standing and valuable investment projects.

The hon. Member for Kingston-upon-Hull, West (Mr. Johnson) asked what we intended to do for the victims of war and famine in the Horn of Africa. I am going to Khartoum later this week to attend a conference organised by the Sudan Government on refugee resettlement problems. I have decided to allot 5,000 tons of grain from small reserves for emergencies in 1980 to help feed refugees in Somalia. I gladly take this opportunity to announce that decision. We have also committed £850,000 to the appeal of the United Nations High Commission for Refugees. We have committed over £110,000 to help United Nations agencies and British charities to get food and medical services to northern Uganda, and we are considering urgently what further bilateral help might be possible.

We are finding our share of the cost of the Community's programme for these countries. That includes nearly half a million pounds for emergency aid in Uganda and 10,000 tons of cereals and 600 tons of butter oil for refugees in Somalia.

The unique value of the Brandt report is the clear way in which it paints a picture of the interlocking problems that face the world. We do not believe that the commission has found all the answers to the problems; nor do all the answers interlock. However, it is far better to have a wide range of ideas and suggestions to explore than a dearth of them, and I am grateful for all the views that have been expressed in the House, which the Government will consider——

It being Twelve o'clock, the motion for the Adjournment of the House lapsed, without Question put.