INTERNATIONAL DEVELOPMENT ASSOCIATION

HC Deb 17 June 1980 vol 986 cc1485-504 10.21 pm

The Minister for Overseas Development (Mr. Neil Marten)

I beg to move, That the draft International Development Association (Sixth Replenishment) Order 1980, which was laid before this House on 13 May, be approved. As hon. Members probably know, the International Development Association is the affiliate of the International Bank for Reconstruction and Development, which gives loans for development projects on highly concessional terms to the poorest of the developing countries—those that would have great difficulty in servicing a large external debt on conventional or near conventional terms. That means that the IDA's resources must themselves be provided on a concessional basis whereas those of the IBRD are obtained mainly through borrowings on the money markets.

Since the IDA began operations in 1960, most of its funds have come from periodic replenishments of its resources by the industralised countries, known as the part I member countries, although others, including oil-exporting developing countries, also contribute. These replenishments of the IDA's resources are now carried out at three-year intervals on a regular and planned basis.

The resources provided by the fifth replenishment are expected to be fully committed at the end of this month. Discussions on the sixth replenishment, to provide the IDA with resources from mid-1980 until mid-1983, began towards the end of 1978, and agreement on proposals for the amount of the replenishment and the shares of individual donors was finalised by executive directors in January of this year. It is their report which has been reproduced as Cmnd. 7900.

The board of governors adopted the resolution approving the replenishment on 26 March, the United Kingdom governor having voted in favour, and the agreement is now, where necessary, being put for the approval of legislatures.

We have great respect for the administrative efficiency of the IDA, which is well established as an aid agency, and consider that it is sensitive to our views. About 90 per cent. of all IDA resources are channelled to the world's 40 or so poorest countries and IDA credits normally finance the foreign exchange costs of development projects proposed by the borrowing country with the IDA's assistance. The main sectors concerned are agriculture, rural development, transportation and power.

The IDA is also a useful source of procurement for British firms. In the 12 months to 30 June 1979, $66.2 million was earned by United Kingdom business, which was 10.2 per cent. of total foreign procurement by the IDA in part I countries. It is important to bear that in mind as we discuss the amounts that we are proposing to contribute to the new replenishment.

The total replenishment of $12 billion is expected to provide an increase over the last replenishment in real terms as well as in cash. It was reached after taking into account both the needs of the poorest developing countries and the donor countries' ability to pay.

The United Kingdom's proportionate share of the total contributions to the IDA is decreasing as the IDA has found new contributors and as some traditional donor countries have been able to increase their contributions as their economies have strengthened. Our share in IDA 6 as compared with IDA 5 has reduced slightly, from 10.6 per cent. to 10.1 per cent. Nevertheless, a contribution on that scale is much higher than would be justified by our present economic strength relative to other part I members—the traditional donor countries. We have therefore agreed with the IDA management, with the understanding of the other donor countries, a special arrangement whereby the drawings against our contribution will be lower than they would otherwise have been for the first six years.

That formula will enable us to reduce substantially the cost to public funds over the next few years of contributing to the replenishment. Had we insisted on a reduction in our overall share, the negotiations, which were at an advanced stage by the time we took office and reviewed the financial position, would have been likely to collapse.

Hon. Members will note that the amounts are expressed in sterling, and not in United States dollars or their equiva- lent. As with the two previous replenishments, the amount of our contribution is fixed in sterling and there is no obligation on us to maintain the value of our contribution in terms of any other currency.

If the House approves the draft order, we shall be able to inform the IDA that we are prepared to make our contribution and subscription under the terms of the resolution establishing the replenishment.

Thereafter, once the replenishment has become effective, we shall deliver three promissory notes, each representing one-third of our contribution—the first in November this year, the second next year, and the final one in 1982. The IDA will then draw against the notes to meet its disbursements. As shown in the table in paragraph 16 of the Command Paper, drawings of all donors are expected to continue for 10 years, reaching their peak in the fourth and fifth years. In the case of the United Kingdom, the phasing of drawings will be subject to the special arrangement that I referred to earlier.

I turn to a point of particular importance. For the replenishment to become effective, it is necessary for the United States to authorise its full contribution and subscription, and appropriate some part of it. The budget for the United States fiscal year 1981 is currently under consideration in Congress. The draft order that we are considering presupposes that the replenishment will become effective. Unless and until that happens, the order cannot be given effect.

I feel sure that hon. Members will wish to ensure continuity over the next three years in the lending programmes of the IDA, with its continuing emphasis on the poorest countries and on those sectors which will bring particular benefit to the neediest people in those countries. I ask the House to approve the order.

10.29 pm

Dame Judith Hart (Lanark)

In the light of the Minister's remarks, it is a good thing that we brought this matter to the Floor of the House. The hon. Gentleman raised points that some hon. Members may wish to explore. The IDA, as the soft loan end of the World Bank, benefiting poor countries and their infrastructure, with its concentration on agriculture and rural development, is supported by the Opposition. We also support the order. There are, however, questions that I should like to put to the Minister.

As the hon. Gentleman has said, our contribution—our major multilateral commitment—represents a reduction in percentage terms. In the fourth replenishment, we stood roughly equal with Japan and Germany. In the fifth replenishment, the same was broadly true. In this instance, we have fallen considerably back to third place with a contribution of £226.5 million compared with £251 million in the fifth replenishment at constant prices, taking 1973, the time of the fourth replenishment—according to an answer by the Minister—as the base.

We have noted from remarks by the Minister and others that the Government are intent upon seeking a further reduction in the seventh replenishment for which negotiations will begin in 1982. We should like to know more of what the Minister has in mind. It is the nature of the way in which we organise our affairs in the House that we cannot vote tonight on increasing the financial commitment to IDA as the Opposition, I believe, would have wished.

The issue must be seen in the multilateral element of the whole aid programme. The public expenditure White Paper, announcing the cuts in the overseas aid programme, indicated an absolute reduction of 1.3 per cent. this year and 6.7 per cent. next year and the year following. In his statement on the Government review of aid policy, the Minister said that the Government would be looking critically at expenditure on multilateral aid programmes.

The multilateral aid programme, within which the IDA replenishment is set and must be seen in context, includes our contributions to a number of United Nations programmes. I note from information supplied in answer to questions in the House that during this financial year the provision in the Estimates indicates a cut in a number of the programmes. We have cut our contribution to the United Nations development programme. We have cut our contribution to the general programme of the United Nations High Commissioner for Refugees. We have cut our budget core contribution to UNICEF, the United Nations children's fund. We have cut our contribution to the world food programme. We have cut our contribution to the United Nations University. We have cut our contribution to the FAO fertiliser programme and to the international fertiliser supply scheme.

I regard these cuts as mean and nasty. I do not envy the Minister his duty in trying to explain them when he attends United Nations bodies and visits other countries. I believe that this is the first time that any Government have reduced their core budget contribution to UNICEF. Our second major multilateral commitment is to the European development fund. I understand—the Minister will correct me if I am wrong—that there are no choices. We are committed to an increasing proportion of the EDF budget over a period of years. It would be interesting to hear from the Minister—this is one of the few occasions on which we can draw him out on the matter—the pattern of the increase in our compulsory contributions from a declining aid programme. I have given his office notice of these detailed questions, but I recognise that he may be unable to give detailed answers tonight. We should like to hear the decrease in the proportion of the multilateral aid programme that this represents for this year and next year. What proportion of the total aid programme during the two years—this year and next year—does it represent?

I seek not to depart from the replenishment order but to elicit information which will enable us to make judgments on each amount within the framework of the multilateral element of our aid programme, a high proportion of which is constituted from the European development fund.

Am I right in calculating that this year 17 per cent., and next year 19 per cent., of the total British aid programme will go towards fulfilling our commitments to the European Community? That was sad enough when we had an increasing aid programme, but it is doubly sad when we have a reducing aid programme. In terms of the Community commitment, we have no check on spending or underspending ; we have no control over allocation ; we have no power to ensure that a higher proportion of money goes to the non-associated countries of the Commonwealth which tend to be the largest and the poorest.

Two weeks ago the Minister of State announced that net Briitsh aid to the developing countries in 1979 amounted to £974 million—equivalent to 0.52 per cent. of GNP. In a press release he said : These figures … have been compiled according to the Development Assistance Committee's new basis of assessment which requires the inclusion of promissory notes deposited in respect of certain multilateral agencies instead of the cash drawn down by those agencies. I assume that the replenishments to IDA are much related to the inclusion of promissory notes and what is drawn down from them.

We should welcome a more substantial explanation of the Minister's remarks about the degree to which drawing down is related to commitment. How is that likely to be reflected in calculating the aid disbursements for the year? Have we made a commitment on which money is likely to be spent only if the United States Congress agrees to the American contribution? Are we making a commitment which will not be fulfilled unless that condition is met? Are we making a commitment which could be reflected in a serious underspending of the already much reduced aid programme for this year if the money is not drawn down?

Will the Minister explain more fully the change in the new basis for assessment by the Development Assistance Committee? His written reply was interesting but did not explain. May we have the comparative figures for the ratio of official development assistance to GNP by other OECD members for 1978 and 1979? That is an important change in the way in which the aid programme is assessed in official terms.

The memorandum of the Select Committee explains that the agreement on the sixth replenishment contains safeguards against the possibility of serious delay or default in the payment of contributions. I suppose—the Minister will tell me if I am mistaken—that that reflects the concern felt during the past two or three years about the problems faced by the Government of the United States. They have given commitments to the IDA, but they were unable to fulfil them because of difficulties in obtaining Congressional approval.

I know how much of a problem that has been and we fully appreciate that there are important differences of procedure in terms of approvals, authorisations and so on between one country and another. In a sense, I think that we are remarkably fortunate in our procedures at Westminster. However, it would be helpful to have further details about the safeguards which have been agreed which I think relate to the point about drawing down and the point about whether our commitment means anything in view of the fact that the United States is not able to obtain authorisation for its contribution.

In other words, are we debating something which is real or something which is conditional upon two or three factors beyond our control? If the latter, what will be the effect on our aid programme? We approve the order, but we would be grateful for an explanation of these points.

10.41 pm

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

My hon. Friend the Minister will know that I try to be helpful to the Government on as many occasions as I am able and this evening is no exception to that rule.

Some of us have been familiar for some time with the IDA replenishments, and orders of this kind provide us with regular opportunities to consider in some depth certain aspects of the Government's aid programme. I welcome the Government's commitment to continue to give substantial support to the IDA, but there are, nevertheless, a number of questions I ask my hon. Friend to answer more fully than he sometimes feels able to answer at Question Time or in other broad-ranging debates.

First, I note the reduction in our share of the IDA contribution from 10.6 per cent. to 10.1 per cent. I hope that I recall correctly that in the fifth replenishment we made a contribution of about 11 per cent. and that that had reduced very substantially over the years during which we have contributed to the IDA from an initial contribution of about 22 per cent. I ask my hon. Friend to take time to put this latest reduction in the context of what I think I am right in saying is a series of reductions over a number of years.

Secondly, may I ask my hon. Friend to say something about the possible com- mercial effects of these reductions, bearing in mind the quite proper attention of the Government to the political and commercial advantages which are some of the criteria by which we should judge the quality of our aid programme? Is my hon. Friend able to forecast the effect that that may have on the possibility of the United Kingdom benefiting from orders which arise on the IDA disbursements to the poorest countries?

Thirdly, I wonder whether my hon. Friend would say something about administrative costs. Many of us who are concerned not only with our own aid programme but with international multilateral aid programmes have been concerned in recent years about the rate at which administrative costs have risen. That was the subject of debate when we examined the fifth replenishment. I should be grateful if my hon. Friend could tell us something about whether the administrative costs are increasing and, if so, to what extent.

Fourthly, it is undeniable that, at a time when the Government have decided, for reasons which they have fully explained and which are understood by the House, to make substantial cuts in the aid programme, any increase in the multilateral part of the aid programme can only be at a cost to the bilateral aid programme. As my hon. Friend will no doubt agree, the bilateral part of the aid programme comes closest to fulfilling the revised aims of our programme—namely, to provide a greater degree of political influence and a larger source of orders for British industry. To what extent will this new replenishment diminish our disbursements of bilateral aid over the next year and the year after that? What assessment has he made of the likely effect of that on British industry and on our exports to countries which benefit from this programme?

Fifthly, will my hon. Friend tell us about the maintenance of value payments and whether on this occasion we are to be subject, yet again, to maintenance of value payments during the sixth replenishment? If so, what further diminution is that likely to have on our bilateral aid programme?

Sixthly, will my hon. Friend tell us about the shares of disbursements and explain the percentage that he expects to go to India and Africa, which in previous years have been the largest recipients of disbursements from IDA, and how that proportion is likely to be varied in future?

Finally, I should like to make a point on voting rights. I think that I am right in saying that on the fifth replenishment, by some Machiavellian and perhaps historic arrangements, the United Kingdom contrived to be the third largest contributor but the second largest voter. I note from the order that a major part of the increased contribution is to carry voting rights and that a much smaller part is not to carry voting rights. Will my hon. Friend explain whether that diminishes our power in respect of voting rights in IDA?

If my hon. Friend can genuinely take some time to answer these pertinent questions, I think that he will feel pleased to know that I at least will be very happy to hear at length what he has to say.

10.47 pm

Mr. Kevin McNamara (Kingston upon Hull, Central)

I am sure that the Minister will be happy to have that tremendous vote of confidence from his hon. Friend the Member for Norfolk, Northwest (Mr. Brocklebank-Fowler), who has put a number of pertinent questions to which the House as a whole would like replies.

We must be immediately concerned about the 0.5 per cent. reduction in our contribution to the IDA and to have an explanation for it. Is it because we have decided to make a cut or that there are other countries which we would all be happy to see making contributions to meet that reduction?

Equally, we are concerned about the 0.5 per cent. reduction against the background given by my right hon. Friend the Member for Lanark (Dame Judith Hart) of reductions in other spheres : UNIDA, UNHCR, UNICEF, the world food programme and so on. These must be matters of concern, because we are making reductions in these programmes at a time when recession is setting in and this country is in a difficult position. But our difficulties are as nothing compared with the countries which in the past have been recipients of our development aid and resources, whether of a multilateral or bilateral nature.

Therefore, I turn to the next matter about which we are concerned. I grant that we shall make this replenishment, but what does it, and other multilateral replenishments to various organisations, mean in terms of the amount of money that we shall give in bilateral aid? What share will bilateral aid have in the diminshing budget of the Government when compared with past aid? What does it mean in real terms to the individual countries that had reason to expect a more generous approach to their immediate problems from the Government than they may have expected from multinational organisations?

We have tremendous responsibilities, some unwanted, which are part of our unwanted inheritance of empire, influence and trade. In that position we are responsible, both in terms of Commonwealth countries and countries outside the Commonwealth, for formulating a more generous bilateral policy than seems to be the present aim of the Government.

If we consider the multilateral aid that we are bound to give by treaty, together with future commitments, and then consider the probable contribution to the contingency fund, we find that there will have to be considerable reductions in our bilateral aid. If the Government are to maintain those reductions, how do we compare that with the points put before the Foreign Affairs Select Committee by the Foreign Secretary of trying to maintain our economic, strategic and political interests? Where will the money come from if we are to maintain the multilateral aims and obligations into which we have entered and at the same time maintain the fund for contingencies?

We should maintain the IDA. We should have a full explanation of why our contribution has diminished. If the input of other countries into that fund and their ability to maintain themselves have increased, that is splendid. But what has happened to the 0.5 per cent? Is it intended that it should be written off, or will it be used for other purposes? We know, because of what the Government have published in their White Paper, that any gains that we may make on one swing we shall lose on the roundabout of cuts in public expenditure. The Government must come clean on the matter. If we are to maintain our contribution to the multilateral agencies, as committed by treaty, and if we are to increase our sums for contingency, for strategic and for political reasons, our bilateral policies must suffer drastically. The Government must make the position plain, not only in global terms but to the countries involved.

10.54 pm

Mr. Frank Hooley (Sheffield, Heeley)

I suppose that it is in some way suitable that we should be debating the order hard on the heels of the debate on the Brandt report. Unfortunately, owing to parliamentary commitments elsewhere, I was not able to be in the Chamber yesterday to listen or contribute to the debate. I read one or two brief press comments, which seemed to indicate that the Government were extremely unforthcoming about Brandt—which I regard as both tragic and shortsighted.

However, we are now discussing an instrument which could have been used by the Government and, indeed, by the Western world as the beginning, or a token, of a move towards recognising the plea inherent in Brandt for a great increase in the shift of resources from the Western world to the Third world and, in particular, to the poorest parts of the world.

If I understand the Minister correctly, what we have done under this replenishment is to make a commitment, which I think he said was slightly more than the previous commitment under the previous replenishment, in actual cash, though there seem to be some curious conditions attached to the drawing of the money, which I did not wholly understand from what he said. He dressed it up in some phrase—I am paraphrasing, and if I have it wrong I apologise—to the effect that the drawings would relate to the economic circumstances in which this country finds itself.

Mr. McNamara

I think that we understood that any of these drawings were subject to what was decided in the United States Congress.

Mr. Hooley

With respect, that was not quite the point I was making. I want to come to the question of the United States contribution shortly.

I understood the Minister to say that, even assuming that the Congress votes the necessary money—which we all hope it will; it would be catastrophic if it did not do so—the IDA's ability to draw down the actual contribution made by the United Kingdom would be limited by an informal agreement that drawings would not be made beyond a particular figure.

I should like the Minister to spell that out a bit, because, as my right hon. Friend the Member for Lanark (Dame Judith Hart) said, this would have implications for the disbursement of our aid programme overall. Clearly, if for some reason the drawing by the IDA were limited by some informal understanding, which is not on the record and which is not even explained to this House, we might find that instead of our aid programme including, say, £50 million to the IDA in a particular year, the effect was about £25 million. Then we would come to the end of the financial year and, lo and behold, to our surprise, the aid programme would have again been underspent by £20 million or so, instead of its reduced aggregate being spent right up to whatever the new figures is.

We need some clear explanation of these limitations on drawings, what the practical effect will be and, in short and simple terms, what is likely to be our expenditure against the aid programme on the IDA—I emphasise "expenditure", not "commitment"—during the current financial year and the following financial year.

I would not make quite such a point of the reduction from 10.6 per cent. to 10.1 per cent., because clearly this ratio is determined not so much by what we contribute, although that has an effect, as by the range of contributions of other countries. If the 0.5 per cent. adjustment means that countries such as Japan and West Germany, and possibly some of the oil States, are now contributing up to the amount that they should be contributing, our fallen percentage is an adjustment that one does not need to take too seriously. It would be interesting to know whether West Germany and Japan, particularly, which do not have a brilliant record against the United Nations 0.7 per cent, target over the past few years, and are countries which are undoubtedly powerful and wealthy—more so than we are at present—are now making a better contribution through the IDA than they have done in the past.

It would also be interesting to know whether we have managed to draw in some of the oil-rich countries which do not have enormous populations. Obviously, one would not expect it from Nigeria or Mexico, or countries with very large populations and considerable problems, but some countries could make a larger contribution to the IDA.

If the change in percentage from 10.6 to 10.1 means that other countries are now contributing more generously, that is a matter for satisfaction rather than regret. I hope that the Minister can give some figures so that we can gauge the true position. The figure about which I am particularly concerned is the cash contribution through the IDA set against our aid programme in the current financial year, next year, and, if possible, the following year.

At the summit in Venice there was some vague reference to the Brandt report, but the Prime Minister did not refer to Brandt in the context of Venice in her report to the House yesterday. As we know, there will be another summit in Venice, which will be more important in the sense that the President of the United States will be present, and no doubt a representative from Japan. Can the Minister say whether the British Prime Minister will go to the second summit with a view to impressing on world leaders the enormous importance of the North-South dialogue, the immense significance of the Brandt report and the relations between the West and the Third world if the West seeks to cut back on its obligations in respect of pay?

This is not a light-hearted matter. We know that present relations between the West and the oil-producing world—the Arab world, Venezuela and other countries—are not happy. But those countries identify themselves with the Third world. If they feel that at the summit and elsewhere the West is taking the problems of the Third world seriously, and is prepared at least to move in spirit and intent towards some of the ideas put forward in the Brandt report, some of the tensions that exist between the oil-producing countries and the Western world may be slightly eased. But if the second Venice summit pays as cursory and as little attention to the North-South problems as the previous summit, it will not help world relations, and it will not help Western Europe and the United States in their dealings with Third world countries.

In the context of the IDA replenishment and this debate, I hope that the Minister will represent to his right hon. Friend the Prime Minister that the North-South dialogue, the Brandt report, the replenishment of the IDA and our contributions to the various United Nations agencies constitute an important element in our relations with two-thirds of the nations of the world. We can neglect them ; we can deride the importance of aid provision; we can plead perpetually that we are poor, when in fact we are one of the richest countries in the world. If we do so, it will be no use complaining bitterly that our standing, prestige and rating in countries in certain parts of Africa, Asia and other parts of the world have declined, and that other people do not like us or understand us. If we show no understanding of their problems, it is unlikely that they will show understanding of ours.

11.5 pm

Mr. Neil Marten

The sum referred to in the order is £550 million or more. Surely any developing country must realise the concern that we show for it and other such countries when it considers that figure. If the hon. Member for Sheffield, Heeley (Mr. Hooley) is able to obtain a copy of tomorrow's Hansard, he will find the answers to his questions about the Prime Minister going to the second Venice summit. Yesterday's debate on the Brandt report—I must not stray on to that because I know that it would be out of order to do so—was magnificent. There were many good speeches. I gave an assurance at the end of the debate that the contents of the debate would be brought to the attention of my right hon. Friend before she went to Venice No. 2. That answers the thrust of the hon. Gentleman's remarks on the Brandt report debate.

The hon. Gentleman asked whether other countries are stumping up because our contribution is decreasing slightly. I gave the answer to that question in my opening speech. I said : The United Kingdom's proportionate share of the total contributions to the IDA is decreasing as the IDA has found new contributors and as some traditional donor countries have been able to increase their contributions as their economies have strengthened. The hon. Gentleman spoke of drawing down our commitment. The commitment is not altered, but when IDA is requiring funds it will not necessarily take up the whole of our commitment for years one, two or three. Over the 10 years it will try, due to our economic situation, to use less of our commitment in the early years and to make up for that in later years.

Mr. Hooley

I fully understand that the commitment is not altered. However, if the IDA does not draw down the commitment in, for example, the current financial year to the extent that it might have done but for the understanding, it could mean that the aid budget would be under spent. Is not that correct?

Mr. Marten

I doubt that very much. I cannot see that the aid budget will be underspent as I consider the present position.

Dame Judith Hart

It is the figure that is in the aid framework that matters, namely, the figure for IDA spending in this financial year. To the extent that there is a figure in the aid framework, it cannot be allocated elsewhere, and not until January-February is it possible to discover that the figure allocated to the IDA is unlikely to be fully spent by the end of March. It is then too late to allocate it to other further spending. It is the figure in the aid framework that matters, the figure that has been allocated to the IDA spending for this year.

Mr. Marten

That comes back to the depositing of the promissory notes for the years one, two and three. It is a technical point——

Dame Judith Hart

No.

Mr. Marten

It is a technical point on which I do not claim to be expert after one year——

Mr. McNamara rose——

Mr. Marten

I had better get on be cause the debate last only until——

Mr. McNamara

My intervention is on the aid framework.

Mr. Deputy Speaker (Mr. Richard Crawshaw)

Order. The hon. Member for Kingston upon Hull, Central (Mr. McNamara) must not rise and start speaking unless the Minister gives way.

Mr. McNamara

With great respect, Mr. Deputy Speaker, if the Minister knew the issue that I wished to raise, he might be willing to give way. It relates to the aid framework——

Mr. Deputy Speaker

Order. The hon. Gentleman cannot explain his intervention before the Minister has given way, and he obviously has not given way.

Mr. Marten

I have not given way, Mr. Deputy Speaker.

Mr. McNamara

May I ask the hon. Gentleman——

Mr. Deputy Speaker

The hon. Gentleman should ask the Minister, not me.

Mr. McNamara

Will the hon. Gentleman give way on the aid programme?

Mr. Marten

No.

Mrs. Gwyneth Dunwoody (Crewe)

Why not?

Mr. Marten

Time is running on. This is a limited debate.

Mr. McNamara

There are 40 minutes left.

Mr. Marten

I was asked a number of questions. I must explain to the House that I am not an instant mathematician with expertise on the percentages by which budgets fall, or other percentages. I shall write to hon. Members on the points they have raised when I am able to get out my calculator and work out the figures accurately. I am very bad at the instant calculation of percentages.

The right hon. Member for Lanark (Dame Judith Hart) asked about EDF expenditure as a percentage of multilateral and total ODA expenditure. I regret that I am unable to give figures for 1980–81 and 1981–82. It is not the practice, as she knows, to announce forward planning figures. These are based on—and I think that I use her own words to a Select Committee—intentions and assumptions which may not be realised. She will understand, for example, that the date of entry into force of the second Lomé convention could have a substantial effect on the size of our contribution to the EDF 5 in the current financial year. Before she intervenes, may I remind her that the next debate is on the European development fund. My hon. Friend the Minister of State, who is here, heard what she said. Perhaps she will stay and put her points to him.

Dame Judith Hart

I do not want to press the Minister unfairly on this. My understanding has been that we have a commitment to the European Community for a certain contribution each year and that this has been an increasing contribution over the years. Therefore, unlike other aid framework figures, it is not quite so mutable.

Mr. Marten

The commitment to the Lomé convention was made as a global sum about this time last year.

Dame Judith Hart

This is our commitment to the EDF?

Mr. Marten

Yes. This is our commitment to the EDF. The figure is 18.7 per cent.

The right hon. Lady asked about aid performance as a percentage of the GNP. The net official development assistance in 1979 amounted to £974 million, equivalent to 0.52 per cent. of the GNP, which compares with £759 million in 1978, equal to 0.47 per cent. of the GNP. These figures are compiled according to the OECD development assistance committee's revised basis of a settlement, which requires the inclusion of promissory notes deposited in respect of certain multilateral agencies instead of cash drawn down by those agencies. That comes back to the answer which I, perhaps rather ineffectively, gave earlier.

The change was introduced to ensure proper international comparability of aid performance figures. A detailed explanation of the change is contained in the 1979 development co-operation review by the chairman of the OECD development assistance committee.

I have here a table which I confess I cannot read as I do not have my spectacles with me. It is very small print. It gives the 1978 ODA performance figures for DAC member countries on the revised basis of reporting. The average for DAC donors as a whole was 0.35 per cent. of GNP. The United Kingdom's performance compared well with this figure and was significantly greater than those of certain of our other major industrial partners : West Germany, for example, 0.38 per cent., the United States, 0.27 per cent., and Japan, 0.23 per cent. We need not be ashamed of our performance. The 1979 data for all OECD countries will not be published until the end of June.

The right hon. Lady and others raised the question of the United States legislative position. Authorisation by the United States Congress is necessary for IDA 6 to become effective and for the United Kingdom to become legally bound to make its contributions, as effectiveness requires a commitment of about 80 per cent. of total contributions. The proposed United States share is 27 per cent.

As the right hon. Lady will remember, there has been difficulty in obtaining timely congressional approval for the United States contribution to previous replenishments. A bridging arrangement was agreed for the IDA fifth replenishment in 1977 which enabled IDA to continue to commit funds to projects, pending United States legislative authority for its contribution.

As regards the IDA sixth replenishment, there is no certainty that Congress will eventually authorise and appropriate its full contribution, and we and other donors are therefore reluctant to consider a bridging arrangement. Congress is due to debate the relevant Bill on or about 18 or 19 June. If no authority or appropriation has been secured by 30 June, representatives of all donor countries will be convened by IDA to discuss how to proceed.

My hon. Friend the Member for Norfolk, North-West (Mr. Brocklebank-Fowler) asked about the administrative costs of the IDA operation. He gave notice of that question because he raised the same question in Committee three years ago. Having read the report of that debate, I was forewarned. For the five years ending June 1981, actual or estimated administrative costs vary from 5.4 per cent. to 6.2 per cent. of gross disbursements for IDA and the International Bank for Reconstruction and Development combined. The two institutions have the same staff. Next year's figure is budgeted to be 5.6 per cent. For IDA alone the figures range from 5.6 per cent. to 10.2 per cent. Next year's figures are budgeted at 8.9 per cent.

The wider variation in the annual figures for IDA reflect lower than budgeted disbursement figures in recent years due to problems encountered in the implementation of projects. The fact that administrative costs measured against gross disbursements tend to be higher for IDA than for IBRD reflects the greater difficulty in administering aid to the poorer countries that form IDA's clientele.

At the start of each year, the World Bank produces a detailed, analytical statement of its administrative costs and other budgetary projections for approval by the executive board. The bank is highly cost-conscious, and year-on-year statistics indicate that its administrative efficiency is of a high order. A valid comparison of the administrative costs of the World Bank with those of other agencies cannot readily be made, because the World Bank carries out a range of tasks, such as research and advisory work, that cannot be paralleled in other lending institutions.

My hon. Friend also asked about voting rights. The voting rights on IDA are dependent on our contributions throughout the period since IDA's establishment. Our present contribution, which is very much in line with our share in previous replenishments, will not have any substantial effect on our voting rights. My hon. Friend also asked about the percentage of business that we got out of it. I mentioned that point in my opening remarks, but perhaps my hon Friend was not then in the Chamber. I said that the IDA was also a useful source of procurement for British firms. In the 12 months to 30 June 1979 $66.2 million was earned by United Kingdom businesses. That was 10.2 per cent. of the total foreign procurement by the IDA in part I countries. It is important to bear that in mind when discussing the amounts that we propose to contribute in the new replenishment.

Many other points have been raised which I either cannot answer or remember. I shall go through the report of the debate carefully and will write to hon. Members on any points that I may have missed. I hope that the House will approve the order.

Question put and agreed to.

Resolved, That the draft International Development Association (Sixth Replenishment) Order 1980, which was laid before this House on 13 May, be approved.