HC Deb 24 July 1981 vol 9 cc727-92

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

9.40 am
The Lord Privy Seal (Sir Ian Gilmour)

The recent European Council and the Ottawa economic summit earlier this week began a period of intense international activity at the highest level concerning the developing countries and their place in the world economy. This subject will also be prominent at the Commonwealth Heads of Government meeting in Melbourne in September-October; and, of course, at the special summit of 22 countries at Cancun in Mexico later in October.

In the intervening months, the United Nation's conference on new and renewable sources of energy in August, and the conference on least developed countries in September will also be devoted to aspects of the same theme. In all these meetings, Britain will be participating actively both on our own account and, on occasion, in our current capacity as President of the European Community.

I therefore welcome greatly this opportunity to debate the vital issues which will be discussed over the coming months, and explain the Government's approach.

The Cancun summit, which we fully support, is directly inspired by the Brandt commission report. Over the last 18 months, the report—in which my right hon. Friend, the Member for Sidcup (Mr. Heath) played such a leading part—has stimulated a lively interest and concern throughout the country. It has aroused a powerful surge of activity from the churches and all other organisations concerned with development. In May, we witnessed a mass lobby of several thousand people.

The House of Commons Select Committee on Foreign Affairs and its Overseas Development Sub-Committee have thoroughly examined the Brandt report and the issues it raises. Since the Committee's report was published only yesterday morning. I hope that the House and the Committee will understand if I can give only a preliminary reaction today; but, in general I welcome the report and confirm the Government's intention to respond by means of a Command Paper shortly. There is considerable common ground between the Committee and the Government, as I shall elaborate later. Most of the Committee's recommendations find an echo in the Government's own approach.

The Brandt report sets out vividly the momentous problems facing the developing countries in terms which confront Governments, of both rich and poor countries, with the responsibilities which they must face if the world is to be an acceptable place for 6 billion inhabitants in the year 2000. The problems are daunting and for many developing countries the outlook is grim. Strenuous action is needed on many fronts. We for our part—both the Government and the people of Britain—recognise our responsibilities in and to the international community.

Most people in Britain, I am sure, see this as a moral challenge. They believe that the relatively rich countries should be helping their poorer neighbours.

The Government share this view. It is utterly wrong that hundreds of millions of people should live out their lives in poverty, hunger and disease. If only for reasons of humanity and justice, we must take part in the fight against poverty and assist those in the Third world to achieve a better life. This is reflected in the laudable efforts of the British voluntary agencies in their relief work and their small scale development projects, and we have maintained in real terms our help for them through the joint funding scheme.

But, as Brandt says, this is not only a moral imperative; it is also a matter of mutual economic interest. This, too, is a view which we share. We should all benefit if we could work out better international economic arrangements from and remove obstacles to development. Growth within the Third world and growth in trade between developed and developing countries are also in our interest. We all live in what used to be called "one world"—I think that the phrase was coined by Mr. Wendell Willkie a long time ago; he wrote a book on the subject, which I read, although I do not remember much about it—where increased prosperity is ultimately to the benefit of all.

But interdependence obliges every Government to follow responsible policies which help and do not hinder their neighbours. We in Britain cannot make the contribution we should like to world growth, to expanding markets, to aid for those in need without a strong economic base. That is why we must achieve an efficient economy here in Britain. Protection is not a responsible alternative. It would be cruel folly, damaging to our own economic efficiency and damaging to the prospects of many developing countries.

Interdependence is not simply an economic matter. The Brandt report emphasises the close link between economic advance and political stability. When countries of the Third world are frustrated in their efforts to develop, Governments come under threat and instability increases. That situation benefits only the Russians—and perhaps explains why they do so little generally to help the Third world, giving aid worth a mere 0.1 per cent. of their gross national product in 1979.

Political instability, on the other hand, strikes hardest at the poor and unprotected who become refugees and victims of famine, as millions are in Africa today. We have therefore the strongest political as well as humanitarian motives for helping those countries that seek to help themselves and to preserve democratic government and open societies.

Naturally, the Government do not agree with everything in the Brandt report. I will note only three points of difference. First, the outlook is not bleak for all developing countries. Many have made great progress over the last two decades and continue to prosper in difficult circumstances.

Secondly, we do not think it would help to overturn the present world economic system, with its attachment to open markets and free movements of capital. Instead, we want to improve it so as to give developing countries a better chance.

Finally, while agreeing that Governments have an important role, we think that there is also a vital contribution which is already being made and could be increased by the private sector—by farmers, manufacturers, traders, bankers and investors.

Therefore, we differ, on occasion, from the Brandt report on methods, but not on goals. We would rather strengthen and adapt existing institutions than create new ones. We prefer to reduce obstacles to private activity than to introduce new governmental regulations. But we accept the moral, economic and political challenge which the Brandt report puts before us.

I should like to tell the House something of how preparations are being made for the important summit at Cancun and how it will fit in with other international discussions concerned with developing countries.

The Mexican Government will be the hosts for the summit, to be held on 22 and 23 October. Heads of Government of 22 countries will attend. There will be a good regional balance of economic summit nations, OPEC and non-oil developing countries. Seven Commonwealth countries will take part, including Britain.

My right hon. and noble Friend will attend a preparatory meeting of Foreign Ministers in Cancun at the end of next week. That will set the scene but will not prejudge what the summit itself will do. The primary aim is to agree procedures for the summit that will provide maximum opportunity for Heads of Government to tackle the problems that concern them most in an open, informal and spontaneous discussion.

Four themes have already been chosen for the summit—trade, food, energy and finance. Three of those match elements in the emergency programme of the Brandt report and the fourth, trade, is no less important. I shall take them in turn. International trade remains a major engine for growth and development. The volume of trade in both directions involving the Third world is 25 times that of official aid flows. A progressive expansion of trade is in the interests of all countries and is vital to the economies of the developing countries. We must, therefore, continue to help the developing countries expand by maintaining access to our markets for their products.

As members of the European Community, we offer trading preferences to the 61 ACP countries that cover all their industrial exports and some 90 per cent. of their agricultural exports. The Community's generalised scheme of preferences was renewed in January this year and offers greater benefits to the poorer countries.

Increased trade, of course, implies changes in the industrial structure which bring problems, especially in times of slow growth. Special arrangements may be necessary in a few especially sensitive sectors, such as textiles, to ensure that the pace of change is socially tolerable. But, as a major trading nation, we recognise the need to maintain the open trading system. Protectionism as a general principle—which many Opposition Members opposite would advocate—would not be in the interest of the United Kingdom or the Third world.

It is heartening that the developed countries have resisted any widespread recourse to protectionism, and that was reaffirmed at Ottawa earlier this week. They continue to provide markets for 70 per cent. of developing countries' exports by value. Britain takes 20 per cent. of its total imports from the developing world, and the proportion of manufactures that we import from the developing countries is the highest in the European Community after Germany.

Meanwhile, we look to the more successful exporters among the developing countries, which are taking a growing share of the world market, to remove their own trade barriers as their economies strengthen and to take a fuller part in the international trading system. We hope to keep up the momentum in trade matters and to give our full backing to the proposal for a GATT ministerial meeting next year.

The problem of food production rightly arouses strong feelings. Famine and malnutrition are the most acute problems faced by developing countries, and obviously the ones that most affect the conscience of the world. There has been encouraging progress, notably in India and Zimbabwe, but in other countries, especially elsewhere in Africa, the position is becoming worse. My right hon. Friend the Member for Sidcup recently noted that per capita food production had dropped in more than 60 countries during the past decade. There is only one durable solution and that is to improve food production in the developing countries themselves.

The primary responsibility must lie with them to choose wise policies and to maintain them over a long period and this they increasingly accept. The policies should apply not only to food production itself, but to the whole rural sector, including land tenure, investment, storage and rational pricing policies that do not penalise farmers in favour of those in the towns. Population policies are also important.

We are ready to help in three main ways, which correspond quite well, I believe, to the recommendations of the Foreign Affairs Committee. First, we shall support the growing weight of investment by international lending agencies, such as the World Bank, in food and agricultural production, and by our own technical and financial assistance. That is an area where relatively modest sums skilfully applied can do as much as large projects.

Secondly, we must improve the trading environment and promote greater food security. Recent changes in IMF facilities, which can now compensate countries facing a sudden increase in cereal import costs, will help in that direction. The prospects for a new international wheat trade convention are less certain, but we continue to support it.

Thirdly, there is food aid. We have supported the new food aid convention and will contribute this year more than £50 million directly and through the Community, though Britain is a net food importer. But food aid must be temporary only and must be given in ways that clearly promote, and do not discourage, local food production.

The energy shortage and the massive oil price increases of 1979 and 1980 have produced a bitter economic setback for most developing countries. The extra they must pay for their oil imports far exceeds the total official aid they receive. Here, our first responsibility must be to conserve energy resources, so as to take the strain off the oil markets. The achievements of OECD countries have been encouraging.

It is also important to encourage energy production in the developing countries themselves. We have some large bilateral aid projects devoted to that, for example, in Sudan and Sri Lanka. We also support efforts to enlarge multilateral funds for energy investment, for example, from the World Bank. One objective here is to generate additional private investment.

Mr. Denis Healey (Leeds, East)

Do the Government now support the energy affiliative of the World Bank?

Sir Ian Gilmour

The right hon. Gentleman will be aware that the Ottawa summit, earlier this week, stated the readiness of the Government to explore with OPEC any possible financial mechanisms that would take account of its financial contribution. We would have to see exactly how an energy affiliative would be set up. We are not opposed to it, but we do not think that it is necessarily the best way of doing it. We shall look carefully at the recommendations of the Foreign Affairs Committee in that area.

The United Nations Conference on new and renewable sources of energy in August will pursue ways of making all countries, and especially developing countries, less dependent on dwindling resources of fossil fuels. Meanwhile, we look for every opportunity to develop a dialogue with the oil-producing countries for a better understanding on matters of demand, supply and price of oil. Energy is identified as an especially important element of the proposed global negotiations. Finance is needed by all developing countries to supplement their own efforts to build up their investment, to sustain growth, and to adjust to present economic conditions.

Aid is one essential element. Even with the cuts, the British aid programme is the fifth largest in OECD and will exceed £1,000 million gross in 1981–82, 8 per cent. above last year. We must ensure that that aid is well used and goes to those who need it most. That means focussing on the poorest countries, which find it hard to increase their export earnings and cannot get finance from other external sources. In 1980, 62 per cent. of our bilateral aid went to the poorest countries, and in the last financial year about two-thirds, the highest proportion of the five major Western donors.

Mr. Clinton Davis (Hackney, Central)

Words of good will are one thing, and cuts are another. Does not the Minister recognise that a cut of more than 15 per cent. during two years is hardly a real symbol of the Government's good faith? Does not he think it right that to exemplify the position for other nations he might restore some of the funds that have been cut?

Sir Ian Gilmour

The hon. Gentleman knows the answer to that question. It was given as recently as yesterday by my right hon. Friend the Prime Minister. We cannot be shielded from cuts that are being made right across the board in Government expenditure. We regret the necessity, but it was due to the economy that we inherited.

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


Sir Ian Gilmour

I have dealt with this problem.

Mr. Brocklebank-Fowler

The right hon. Gentleman has dealt with only part of it.

Sir Ian Gilmour

Within the existing aid programme, we are developing new activities in areas where we believe our aid can do most good. We intend to launch a new programme for drinking water and sanitation and the fight against water-borne diseases as part of the United Nations decade. We shall do more to promote better use of energy in developing countries. We shall expand our activities in agricultural research. We shall contribute more to international population programmes. These four areas deserve special attention. Much can be achieved by relatively small amounts of public money and they will especially help the poorer countries.

Many countries benefit from private financial flows, which now provide nearly two-thirds of the total funds reaching developing countries. Here, our performance is particularly strong. In 1979 we fulfilled, nearly three times over, the 1 per cent. target for public and private flows together.

Private direct investment in developing countries is a vital source of capital, technology and managerial skills for developing countries. Britain invests more overseas in relation to GNP than our major European partners.

Bank lending helps to recycle funds which may originate with OPEC countries, but the risk is carried by banks in the City of London. A year ago, some thought that the banking system was on the point of collapse. However, this view under-rated the skill of the banks and the determination of borrowing countries to remain creditworthy.

Though some countries still remain vulnerable, others have adjusted successfully and are now on the road to recovery. The Financial Times of 20 July, referring to a World Bank report due for publication in August, gave the bank's view that there would not be a general debt problem in the Third world.

Mr. John Townend (Bridlington)

Will my right hon. Friend tell the House to what extent the lifting of exchange controls has helped private investment in the Third world?

Sir Ian Gilmour

It has helped it considerably. It has been of enormous benefit to the Third world. I am grateful to my hon. Friend for bringing that issue to the attention of the House.

Mr. Edward Heath (Sidcup)

Our aid contribution is often quoted as 2.33 per cent. However, that includes funds which have come from outside and which have merely passed through the City of London. It is completely bogus to claim these funds as a contribution from the United Kingdom. They have come from OPEC and elsewhere. They pass through the City and go on for investment. No other country includes that sort of transfer operation as a percentage of its GDP. My right hon. Friend should stick to the basic acknowledged figures and quote the genuine proportion of GDP that we contribute.

Sir Ian Gilmour

Perhaps my right hon. Friend did not hear what I said. I accepted that much originated from the OPEC countries. I made that clear, but I said that it was the banks in the United Kingdom which carried the risk. I was not claiming that all the funds come from the United Kingdom although a good many of them do so.

Indispensable support is provided by the international financial institutions—the IMF and the World Bank. That emerges clearly from the recent report from the Foreign Affairs Committee and from the memorandum of my right hon. Friend the Member for Sidcup. Over the past year, the IMF has greatly increased the amounts that it can lend. Pakistan, for example, has arranged to borrow $2 billion. It is gathering the resources to sustain these larger commitments. Saudi Arabia has concluded a very large loan agreement with the fund. We have ourselves contributed to a loan arrangement with a group of central banks.

The fund is tailoring its conditions to the situation of each borrowing country in a humane and sensible way. It is also beginning to look at the next review of quotas, which are linked to voting strength.

Meanwhile, greater resources are being mobilised for the World Bank. We have supported the doubling of the capital of the World Bank itself and the sixth replenishment of the IDA, to which Britain contributes 10 per cent. The IDA replenishment now depends on the approval of the United States Congress for the American contribution. The Senate has approved it and we now await the House of Representatives. Together with our Community colleagues we have encouraged the United States Government in their request for this approval.

We are also considering favourably ideas such as that proposed in the Brandt report for enlarging the gearing ratio of the World Bank, and look forward to hearing the views of the bank's new president on these matters. We are taking part in various negotiations to replenish the regional development banks and funds, and hope before long to join the African Development Bank.

I have explained our approach to the Cancun summit and the themes which will dominate both the summit and other international meetings this autumn. Many of them may also be picked up in the proposed global negotiations. We and our Community partners agreed at the European Council that a positive impetus to preparations for global negotiations should be given at the Ottawa and the Cancun summits. A definite step forward was made at Ottawa this week.

Our approach in all these matters accords well with that of our other Western partners and we are in close consultation with them. The participants at Ottawa this week stressed their support for the stability, growth, independence and genuine non-alignment of developing countries and reaffirmed their commitment to co-operate with them. They called upon the Soviet Union and its allies to do the same. They undertook to maintain substantial aid policies, and give their backing for the international financial institutions. They stressed the importance of access to their markets and of accelerated food production in developing countries.

We are also in close touch in these matters with our fellow members of the Commonwealth, the Secretary-General of which is also a Brandt commissioner. There is a Commonwealth Heads of Government meeting in Melbourne in October. That is bound to devote much of its attention to issues affecting the developing world. We hope that the open and informal atmosphere that prevails at Commonwealth meetings will provide something of a pattern for the Cancun summit meeting, which will follow only two weeks later.

The Cancun summit ought to bring all these international efforts into focus. That is why the Brandt commission suggested such a summit. We shall he developing the British position in the light of the Foreign Ministers preparatory meeting and the Select Committee report.

It would be wrong to raise expectations too high. A summit meeting of two days' duration cannot cover everything. It cannot negotiate arrangements which would bind those who are not present. However, we would like to see the summit lead to a meeting of minds at the highest level, which could influence the whole range of activities elsewhere. We would like it to promote a better understanding of the problems and a greater urgency and common purpose in tackling them.

If the countries of the world can co-operate effectively in the spirit of the Brandt report, the massive problems of which the report has done so much to make us aware may become less daunting. Morality and our interests are involved. By taking the right action together we may yet counter despair with hope, parochialism with global vision and apathy with a new sense of purpose.

10.9 am

Mr. Denis Healey (Leeds, East)

The House will welcome the debate, but I hope that at some stage the Government will find a day other than Friday to discuss what is perhaps the most important single problem facing the modern world. However, the debate is uniquely well timed, because it follows immediately after the Ottawa summit and comes before the Commonwealth summit in Melbourne and the North-South meeting in Cancun. We have the advantage of an excellent and comprehensive report from the House of Commons Select Committee on Foreign Affairs, and no doubt that will figure widely in our debate. We have a powerful memorandum from the right hon. Member for Sidcup (Mr. Heath), which was circulated to the Governments attending the Ottawa summit.

In addition, we have reports from the International Bank, the IMF and the OECD, the three major economic institutions in the world. That emphasises and re-emphasises the urgency of the problem that we are discussing. Those reports expose the fatuous complacency of the Government's official response to the Brandt report last year, when they said: The Government believes strongly in the merits of the present world economic system. They said that it was regularly adapted to changing conditions.

The Lord Privy Seal's opening remarks gave one some hope of a more positive approach, but I regret that as he got down to practice, and as the flaccid platitudes drivelled out, it became obvious that there has been no fundamental change in the Government's approach to these problems and, above all, no sense of the urgency required. When I listened to the right hon. Gentleman, I could not help remembering the story about the Highlander who was asked what the word in the Highlands was for "mañana". He said " I do not think we have any word in our part of Scotland which quite conveys that sense of urgency". We could say that about the right hon. Gentleman's speech.

Let us look for a moment at the merits of the present world economic system as described in the reports produced by the leading economic and financial bodies set up by the international community. The OECD has just forecast for the industrial world over the next 18 months a far worse situation in nearly all areas than six months ago. It sees unemployment rising to 26 million in the second half of 1982 in the industrial world, and one out of every five young people on the dole in Britain, France and Italy.

The IMF, which covers the whole of the non-Communist world, is equally gloomy, and especially gloomy about the non-oil developing countries, whose fate is the main concern of the Brandt report. It says that their populations will grow by about 2.5 per cent. a year, so that their living standards are bound to fall unless their economies and output can grow at least as fast. However, the chance of their growing fast enough to maintain their present appalling living standards is small because the terms of trade that they face deteriorated enormously, by 16 per cent., between 1973 and 1980. The cost of debt service has almost doubled. I shall return to that problem in a moment.

Mr. Larosiére, speaking a couple of months ago in San Francisco, said that even if the industrial Governments manage to get growth up and inflation down, even if oil does not rise in price in real terms and even if the non-oil developing countries are successful in improving their balance of payments performance, for the 38 poorest countries in the world and the 50 middle income countries there will be major increases in their debt and they risk being unable to finance their deficits at all.

That is the problem faced in the Southern part of the world, with which we are concerned today. The consequences are spelt out in horrific terms in the alarming World Bank report, which is due out in 10 days' time but which was comprehensively leaked in the Financial Times last week. I gather that that leak is endorsed in its accuracy by the right hon. Gentleman, because he referred to that report and quoted it in his remarks. The World Bank report states that there are 750 million people in absolute poverty today. I remind the House that the definition of absolute poverty as given by Mr. McNamara when he was head of the World Bank is a condition of life so limited by illiteracy, malnutrition, disease, high infant mortality and low life expectancy as to deny its victims the potential of the genes with which they are born.

The House and the country must reflect on that. There are 750 million people living in absolute poverty now in the developing world. On the best assumptions that the bank can envisage, that could be cut to 630 million by the end of this century—that is, by 2000 AD. In order to achieve that modest but welcome fall in absolute poverty, the industrial countries would have to grow faster in the 1980s than in the 1970s. There is no sign of that now. Free trade would have to be maintained and extended—it is under severe threat in spite of the Ottawa summit. The real cost of oil would have to rise by no more than 3 per cent. a year. Official aid would have to increase by 50 per cent. as a percentage of the gross national product of the countries giving aid.

Even on that extremely rosy assumption, the outlook for many of the developing countries would remain appalling, because the bulk of the aid from the richer part of the world goes to a handful of developing countries. Most of the American aid goes to Israel and Egypt. OPEC aid goes to Syria and Jordan, to a large degree. French aid is largely concentrated on France's ex-colonies. Therefore, the poorest countries in the world, other than those that I have mentioned, even on the rosy assumptions about the way in which the world economy is likely to develop, would face a fall in their incomes of 1 per cent. a year, and the middle income countries dependent on exporting raw materials for their prosperity would get no growth whatever.

That is the outlook as described in one of the more conservative reports which the international bankers have published in recent years. That outlook is based on assumptions that are far more optimistic than it is reasonable to expect will be fulfilled. If those assumptions are not met, the World Bank sees absolute poverty increasing by 100 million by the end of the century.

The consequences of that would be unimaginable human suffering and mass starvation in many parts of the world. As the right hon. Gentleman rightly said, this is not a human and moral problem but a problem that deeply and directly engages the interests of the richer countries, such as ours. It would present an immense threat to the economies of the industrial world. As the fifth report of the Select Committee on Foreign Affairs says, in 1980 Britain had a surplus of £6¼ billion in its manufacturing trade with the Third world. That would be bound to shrink savagely and there would be a risk of a chain of defaults on private bank lending throughout the world, which could bring down the whole private international banking system in a crash similar to that of 1929.

The political instability which the right hon. Gentleman rightly said would follow would threaten the industrial world's sources of vital raw materials and could involve Russia and the West in direct conflict. The House must debate the questions raised by the Brandt report against some of the political realities of the developing world. The developing world has already lost 20 million people killed in 130 wars since 1945. Its arms expenditure as a percentage of the world's arms expenditure has almost doubled in the last decade and currently represents 5.9 per cent. of the GNP of the developing countries, a higher percentage by far than arms expenditure in NATO countries.

If instability develops on the scale implied by the predictions of the World Bank, there will be a temptation for some of the developing countries to grab by force of arms. I see in today's newspaper a prediction that Pakistan may have its own nuclear weapons within 12 months. The risk that they would try to grab by force that which they cannot get because of the functioning of the world economic system, to which the right hon. Gentleman and his Government pay such glowing tribute, would be real. There is little prospect, with the present policies being followed in the industrial world, that the rosy assumptions on which these catastrophes can be avoided will be met.

The seven leading industrial countries which met in Ottawa last week failed to come to grips with their own problems or with the problems of the developing world. That threatens a far worse outcome than that foreseen by the World Bank. M. Mitterrand, Chancellor Schmidt, Senor Spadolini and Mr. Trudeau directed attention at Ottawa, according to newspapers, to the fact that the current policies being followed by the industrial world of reducing unemployment and low growth were wholly disproportionate to the meagre gains on the inflation front. President Reagan denied that. He thought that overriding priority should be given to inflation alone and not to unemployment.

The level of American interest rates was described by Chancellor Schmidt as the highest since the birth of Christ. I suspect that that is true, because in the United States they are 10 per cent. higher than the rate of inflation. Present interest rates are crippling and unheard of in real terms.

M. Mitterrand said that the interest rates were inflicting great damage not only on the United States, but on Europe and the world, but President Reagan again denied that that was so.

The main role of the British Prime Minister, according to the Financial Times, was to chip in now and then and say "I agree with President Reagan". It is no wonder that the other delegations, according to the Financial Times, found that the right hon. Lady had lost some credibility and that less attention was paid to her remarks than in the past. What a role for a British Prime Minister—to be a parrot on the shoulder of Long John Silver! Or is it a budgerigar?

Mr. Raymond Whitney (Wycombe)

I appreciate the opportunity of intervening at this amusing point. Is it not true that the Socialist Mitterrand, Senor Spadolin, and Herr Schmidt put their names to a document which said that controlling inflation was the key factor and that sustained growth could be achieved only if inflation was conquered? They also put their names to a document which said that the world economy must basically depend on the development of the free market economy and that protectionism was the danger.

Mr. Healey

I agree that protectionism is one of the many dangers threatening the whole world, and the developing world in particular, but the hon. Gentleman is wrong on his first point. They said at the Ottawa summit that unemployment and inflation were equally important. That position was not accepted by the Prime Minister, reporting from Ottawa yesterday. She is clinging to the idea that conquering inflation is the overriding priority and that we must be prepared to continue sacrificing output and employment in that cause. I understand from today's newspapers that she ladled out the same pat to the 1922 Committee last night.

Mr. Whitney

I accept that The Times gets these things right. According to The Times, the communiqué said: We must continue to reduce inflation if we are to secure the higher investment and sustainable growth on which the durable recovery of employment depends.

Mr. Healey

I have attended summit conferences and I know that communiqués are prepared several months in advance by the sherpas to conceal disagreement. The other part of the communiqué makes it clear that unemployment is equally important and should be an objective that is equally important and should be an objective that is given equal status with inflation. The hon. Gentleman will not deny that. The communiqué is a tissue of contradictions or, to quote the The Times, "a mountain of fudge".

Mr. Brocklebank-Fowler

The House might like to know that the quote for which the right hon. Gentleman was searching in the interests of accuracy is on page 2, paragraph 4: The fight to bring down inflation and reduce unemployment must be our highest priority.

Mr. Healey

I am grateful for that information. It confirms what I have said. It is also clear that the Prime Minister, although she subscribed to the document, does not accept that view. She made that clear yesterday in the Chamber and, I gather, upstairs. She believes that the continuation of her policies to conquer inflation must be given absolute and overriding priority, whatever the cost in lost output, lost welfare, damage to the rest of the world and damage to the youth of Britain.

American interest rates will remain high. Whatever Mr. Regan, the Secretary of the Treasury in the United States, might say, the chairman of the Federal Bank made it clear a few days ago that that is the case. Interest rates in the United States will remain exceptionally high. That will inflict appalling damage on us all, but particularly on the developing countries.

The Bank of International Settlements recently endorsed a calculation by the Morgan Guaranty Bank of New York that e very increase in interest rates of 1 per cent. costs the developing world the equivalent of an increase in the cost of oil of $3½ a barrel. That is the direct effect of the increase in the cost of servicing their debt.

On top of that there is the effect of the high interest rates on the exchange value of the dollar. Because oil is priced and paid for in dollars, the increase in the value of the dollar due to these high interest rates since the turn of the year has imposed a burden and increased the real cost of oil to those who buy it by the equivalent of $2 a barrel. There is the equivalent of a $5½ a barrel increase in the cost of oil, which has not only obliterated the effect of the modest fall in the oil price, but has increased the oil price in real terms from what it was at the end of the year by about 3½ per cent.

The high interest rates are exporting both inflation and unemployment to the rest of the world. At present, far too many Governments believe that the only answer to interest rates is to raise their own interest rates, deflate their own economies, reduce their own deficits and add further to the deflation.

I predict that when the IMF and the OECD present their next forecast towards the end of the year, just as the current forecast is far worse than the one made six months ago, it will be far worse than those that I have cited. That is why I regard the Government's remark, endorsed by the Lord Privy Seal this morning, that the Government believe in the merits of the present world economic system and its capacity regularly to adapt to changing conditions as a sick joke.

Nobody who pays the slightest attention to the predictions of the world's economic authorities can regard the present world economic system as having merit Nobody can believe, against the background of the way in which it has failed to adapt in the last few years to the second increase in oil prices, that it is capable, as at present run, of adapting to changing conditions.

What is to be done? Oddly enough, there is almost unanimous agreement among all who have studied the problem—the international economic organisations, such as the OECD, the World Bank, the IMF, and in the fifth report of the Foreign Affairs Committee published yesterday, and also an interesting report recently published by the Group of 30 under the last managing director of the IMF, Dr. Witteveen—that there must be an increase In aid, particularly through large replenishments of international development aid.

Secondly, there is a need for massive investment in energy in the Third world over the next five years. Dr. Witteveen suggests $25 billion. Thirdly, we need to relax the limits on the growth of international bank lending—that is World Bank lending, through the IBRD. Fourthly, we need a doubling of the gearing ratio of the World Bank from 1:1 to 2:1.

I want to concentrate for a moment on the problem of world aid, because it has become clear in the last year that the poorest countries, which are likely to be the worst affected by the outlook that I have described, are unlikely to be able to borrow the money that they need. The private banks are over-lent and over-exposed and they are very nervous about lending to the poorest countries. Many of the poorer countries find it impossible to meet the conditions laid down by the IMF, even though they have rightly been relaxed, and I hope, from what the right hon. Gentleman said, that they will be further relaxed in the coming months.

What is needed is an increase of 50 per cent. in official aid as a percentage of GNP, from 0.33 to 0.5 per cent., of the OECD countries. Some countries in Europe are making increases of that nature and on that scale, particularly the Netherlands, although the United States is threatening to cut its foreign aid. Even in 1980, last year, the United States spent more on potted plants and flowers than on aid. Its total aid to the outside world was only 0.27 per cent. of GNP, and it is by far the richest country in the world. The whole concept of foreign aid—indeed, the concept of international co-operation to deal with these problems through the World Bank—is being challenged by the idealogues in the United States Treasury and Congress.

The British record is even worse. Let us look at the facts. Last year Britain was the only major developing country running a surplus on its current account, yet we were cutting aid savagely. The March White Paper on public expenditure shows that the Government plan to cut foreign aid by 15.3 per cent. over a two-year period, which is nearly 10 times the average cut in public expenditure—1.7 per cent.—planned in the White Paper. It will not do for the Lord Privy Seal to tell the House that we are in a difficult position and that everyone has to suffer. The Government are cutting foreign aid by 10 times as much as they are cutting anything else, at a time when they are increasing defence expenditure in real terms by 3 per cent. a year.

We know that the Prime Minister's attitude to foreign aid is scandalous. She has described it as a handout. The views that I express about the disgusting nature of the Government's performance are shared by almost all our friends abroad. The Commonwealth Secretary-General described it as appalling parsimony at the last Commonwealth conference in Bermuda. Mr. McNamara, who was then still the managing director of the World Bank, singled Britain out for criticism last year. The development assistance group of OECD, which met recently in Paris, attacked not only the cuts, but the Government's decision not to concentrate on countries in need but to give priority to political, military and commercial considerations.

Sir Ian Gilmour

That is untrue. I explained to the House earlier that we give a higher percentage of our aid to the poorest countries than is given by any other country.

Mr. Healey

The right hon. Gentleman is a member of a Government who have undertaken publicly to the House to give political, military and commercial considerations priority. That means that he does not give priority to the needs of the poorest countries. He cannot have it both ways. He knows perfectly well that it takes time to change the pattern of aid, and the pattern of aid was decided by the Labour Government in 1978 and 1979. However, this Government plan to cut aid and to change their direction.

The best proof of the disgust felt by our friends in the world is that when the Chancellor of the Exchequer turned up the other day in Lomé expecting to be elected to my old job as chairman of the interim committee he was blackballed in Libreville. [Interruption.] The right hon. Gentleman is obviously extremely sensitive about this, because he remembers it so well. The plain fact is that the Chancellor trotted off and got the Americans lined up, in the belief that he would be elected, but the developing countries and some of the others would not touch him with a barge pole, so he came home with his tail between his legs.

Of course, the Government tried to fiddle the figures by changing the method of calculation, using a different financial year from the international institutions, changing the inflator and counting in, as the right hon. Gentleman did a moment ago, money which is not provided by Britain but which is simply put into British banks by OPEC countries and then on-lent, with their agreement, to countries in the developing world. There was no sign whatever this morning that the Government are to change their decision to cut foreign aid. On the contrary, the right hon. Gentleman simply stuck to what the Prime Minister told us yesterday and said that there was no chance whatever of their doing that.

My party is committed to achieving a target of 0.7 per cent. of GNP by the end of the first Parliament. A condemned woman does not hurry to the scaffold, so perhaps the Parliament will start in 1984, or perhaps we can get her out a little earlier. However, that is the commitment which we shall make and which we shall keep. The House knows that in our last public expenditure White Paper before the election we committed ourselves to increase foreign aid in percentage terms three times as rapidly as we increased the rest of public expenditure.

Mr. John Townend

The right hon. Gentleman criticises the amount of aid that the Government give. Instead of speaking in percentage terms of what a future Labour Government would like to do, can he tell the House how much more cash aid he would like to see in the next three years over and above the Government's present proposals and how he would finance it? Would it be from increased taxation, and, if so, which taxes would he increase, or would it be from reductions in expenditure on, say, defence or help to the unemployed?

Mr. Healey

I should like to answer the question in detail, but I shall answer it in broad terms. First, I should like to see the Government sticking to the 6 per cent. a year increase in foreign aid, to which we pledged ourselves before the election. Secondly, one of the many ways of financing that would be a reduction in defence expenditure, to which we are also pledged. However, another way to finance it would be by an increase in borrowing from the savings in Britain, which are running at a higher rate than in almost any other industrial country. I remind the House that the Government themselves admit that the bulk of foreign aid comes back to this country in the purchase of goods and services from Britain.

I have dealt with one or two of what I regard as the most urgent aspects of the Brandt report. I know that my hon. Friend the Member for Glasgow, Queen's Park (Mr. McElhone) will deal with other questions, particularly food and energy. I wish to conclude with a more general remark. I believe that the House must face this, as public opinion and Governments in many other industrial countries are beginning to face it. It is now crystal clear that the existing world economic system is not working satisfactorily and is not adjusting satisfactorily to changes in its environment. It is also crystal clear that the mix of policies adopted by many industrial countries is not producing the results. "Stagflation" is still the ruling experience of the industrial world. The time has come for a radical shift in policy in the industrial world which will give output and employment at least equal priority with the conquest of inflation.

In the sentence that was quoted a moment ago from the communiqué, that was the conclusion reached at the Ottawa summit. Apart from the ambiguous and equivocal communiqué, the Ottawa summit fudged and bungled its responsibilities. There will be another chance at the Melbourne Commonwealth summit just before Cancun. Unless the Government shift the position that the right hon. Gentleman described, I see no possibility that the British Government will rise to the level of events. I warn the House that if there is a failure to make progress at the Melbourne summit, the chance of real progress at Cancun will be zero. The Cancun meeting could be a disaster for relations between the industrial and the developing world—between North and South.

I hope that what the right hon. Gentleman hears during the rest of the debate will cause him to think again and to use his influence with the Chancellor of the Exchequer and the Prime Minister to try to achieve the shift that everyone knows is needed if the fine words that he used earlier are to have the slightest reflection in Government policy.

10.41 am
Mr. Charles Irving (Cheltenham)

I join the right hon. Member for Leeds, East (Mr. Healey) for a moment in his gentle complaint about the timing of the debate. After the mass lobby that attended Parliament and the representations that were made by millions of people, a debate of this importance deserved to be selected midweek when more hon. Members could be present to contribute and share in the anxieties of those of us who are present today. Many of us have had to cancel long-standing constituency engagements to be present.

The immensity, complexity and urgency of the interlocking issues involved in world development and world peace were brought home especially pungently by the Brandt report. We owe a considerable debt of gratitude to my right hon. Friend the Member for Sidcup (Mr. Heath) for the nationwide interest that he has stimulated in one of the most worthwhile reports that we have ever had the opportunity of considering.

I cannot believe that any person who cares with a conscience or a heart does not bear in mind the outrageous and nauseating conditions in the Third world where, as the right hon. Member for Leeds, East said, according to World Bank statistics 750 million to 800 million people live in the most unbelievable and chronic poverty that can possibly be described. In addition—it is worth mentioning the figures—15 million children under five years of age die from malnutrition every year. I am sure that few are not moved by those figures.

Some of us who have had the privilege of visiting Third world countries and seeing at first hand the poverty, misery, repression and deprivation of the people must inevitably come to the conclusion—I say this with the greatest respect to the Lord Privy Seal, who I know is a caring person and realises all the difficulties—that more urgency should have been injected into the Minister's speech today.

I am glad that most people in public life and a growing number of the electorate accept the need for international action to assist the developing countries to end their growing poverty, even though there is often perplexity about the cost, especially at a time of world economic recession. It was thought that, as economic conditions improved in the developing countries, the resulting demand for goods and services would go a long way towards alleviating the current economic recession. Most of us were of the opinion that when those and other aspects were publicised and faced, there would be the political will to act. I hope that urgency and political will will be given the highest priority in Government thinking.

We have learnt that the main need is for orderly, major changes in the world economic and financial structure, costing Governments very little. I am glad that the Government welcome the report as a spur to discussion and action.

I hope that we shall play a more vigorous part in the North-South summit. We look to the Government to give a lead in resolving the difficulties and in positive forward moves. We are privileged to live in a developed, rich country and should pledge ourselves to work for world development—materially, socially, culturally and spiritually in every possible way. Many in the community already give about 1 per cent. of their after-tax incomes, sometimes through the church or other voluntary sources, for that purpose. Let us appeal to those in public life to realise how much is hoped for from them and by how many and to seize, nay seek, opportunites for bold but well-considered action.

"Charity begins at home" or "Can we afford it?" has become the ritual moan of critics and cynics about the economic co-operation that we already provide from the developed to the developing countries. How fallacious is the policy to which that premise has led them. Perhaps the development of the Third world is a key to the problems of unemployment and low growth in our society.

Over 35 per cent. of the United States and European community exports and over 45 per cent. of Japanese exports go to developing countries. Can we in the industrialised countries afford to disregard the deepening indebtedness into which many developing countries are sinking at this time? A default, even by a relatively minor borrower, could fatally weaken the Western banking system and bring chaos to the world's monetary affairs.

For Governments to recognise a limit to the public purse is no justification for blindness to their own national interests in the development of the Third world, nor is it remotely credible as an alibi for neglecting the economic problems of the non-aligned developing countries after the West's positive stampede to rescue the Polish economy. In a flash, and with public money at the ready, Governments were able to stave off a looming default by Poland in its debt to Western banks. Yet the circumstances—the still more precarius position of many of the developed countries whose ratio of debt to earnings is much higher than Poland's—commands little more than a murmur of concern in the West.

Perhaps the North could guarantee the value of any large additional funds which OPEC is prepared to place in the international lending institutions. How much less expensive this would be for the West than to provide from its own purse all the requirements of the Third world for loan capital which the commercial banks are unwilling to meet.

When will Governments finally realise that inexpensive ways exist for channelling large sums of money to developing countries? Let them, for example, give the OPEC countries a more equitable share in the running of the World Bank and other leading institutions. Perhaps then countries such as Saudi Arabia and the Sudan might increase their contributions. Economic assistance can not only be an engine of prosperity and employment in the West; it is also an investment in the friendship and stability of vital developing countries.

For many Third world leaders, the reliability and generosity of Western economic assistance is both a test of our commitment to them and a major determinant of their good will towards us; and for Marxist countries, such as Angola and Mozambique, it can provide an escape from the pervasive Soviet influence to which they have long been subjected.

We would do well to recognise that instability in vital developing countries, which is rooted in poverty, hunger, lack of jobs and disappointed economic expectations, can in the long run be countered only by sustained and adequate economic assistance to help remove the causes of turmoil. The history of Africa is littered with coups precipitated by food shortages and crop failures which the West did little or nothing to remedy, even on an emergency basis.

To threats such as these, Western military power is no credible counter. Strategically placed countries such as Somalia and the Sudan are testimony to the growing importance of sustained and equitable economic progress in strengthening the resilience of the Third world against Soviet encroachment.

It is, therefore, vital for the sake of all, for the West urgently to deepen its economic partnership with the developing nations of the world. Many millions of people in this country—despite the cynics—would give this a high priority in their thoughts.

10.53 am
Mr. Eric Deakins (Waltham Forest)

There is not a single sentence in the speech of the hon. Member for Cheltenham (Mr. Irving) with which I would disagree. He made the case very well, and painted with a broad brush. I hope that the House will forgive me if I go into a little more detail on one or two subjects. It is essential, if we are to give guidance to the Government in their approach to both Mexico summits, for some of us to go into a little more detail.

I start by referring to paragraph 14 of the Ottawa summit communiqué, which has not so far been referred to, where the leaders of the world's economy, the leaders of the rich countries, say: We are committed to maintaining substantial and, in many cases, growing levels of official development assistance".

Britain, as we have heard, is one of the exceptions to that growth in official development assistance, and I draw the attention of the House to recommendation No. 73 of the Select Committee on Foreign Affairs, which says: Your Committee recommend that in order to have a positive psychological impact the Government devote at least the same proportion of total public expenditure to overseas aid that it achieved in 1980–81".

That with respect, is not asking for the moon. It is not asking the Government to go back to the growth pattern of the previous Labour Government. It is not even asking the Government to go back to the aid level in the first year of their office. But it is asking them at least to maintain in real terms the growth pattern that was established in the second year of their office. I hope that the least that the Government will do in the run-up to Mexico will be to accept that Select Committee recommendation.

In paragraph 11 of the summit communiqué there is a welcome reference to the Mexico summits. The leaders say: We look forward to constructive and substantive discussions with them"— that is, the leaders of the developing countries who will be present.

I draw the attention of the Minister of State to the importance of adequate preparation for the major Mexico summit. The Select Committee, in paragraph 75 of its recommendations, has suggested that at least half a day should be given to each of the four topics which everyone agrees are, so to speak, on the agenda—if there is to be an agenda—for that summit.

But in addition I strongly urge the Minister—as I have been urging his colleague, the Minister for Overseas Development, in questions recently—to have consultations with the other Commonwealth countries which are going to Mexico, at the Commonwealth Prime Ministers' conference and perhaps at official level apart from that, because these Commonwealth countries are the only group of countries which are linked and perhaps can arrive at some concensus before the summit meeting. It is no use agreeing with the other rich countries on the approach, because that will mean that there will be two major divisions of opinion at the Mexico summit. One way of bridging that potential gap in advance is to have widespread consultations with the other Commonwealth countries which will be represented at the meeting.

I draw the Minister's attention also to the great importance of considering at the 1 and 2 August meeting in Mexico of Foreign Secretaries, the follow-up to the major Mexico meeting. There is no reference to this in the Ottawa summit communiqué, and I hope that the Minister will be able to tell us something of the Government's thinking on this. We did not directly allude to it in the Select Committee recommendations. We were concentrating solely on the summit. But what is to be the follow-up?

For example, does the Minister think that the summit might consider setting up a secretariat to service future summit meetings of that kind? How is that summit meeting and its progress to be linked with the global negotiations in the United Nations? Are the Government envisaging that this will be a once-for-all summit, and that thereafter the problem will be handed over to the United Nations? I do not think that would be a good thing, because there is a strong case from time to time for smaller numbers of countries from North and South, meeting together, to discuss these problems in ways that cannot be done when 130, 140 or 150 nations are taking part.

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

Does the hon. Gentleman accept the difficulty that this group is, as it were, self-selected and does not represent the whole?

Mr. Deakins

I fully agree with the sensitivity of the problem and I do not know the answer. All I am suggesting is that it might be discussed with the developing country members of the Commonwealth which would be present, just to sound them out, because they have their contracts with the Group of 77 in a way that we do not. We must not regard the Mexico summit as necessarily a one-off meeting. Whether it is a success or a failure remains to be seen. We have to be thinking about what follows from it, or the world will be left in some disorder.

I now turn to the major part of what I want to say, relating to the Select Committee's recommendations on food policy. With that I couple the sensitive issue, for many countries, of population policy.

In paragraph 26 of the Select Committee's report—I speak as a member of that Committee—we say: Your Committee believe that the issue of food supplies for the world's growing population should no longer be considered separately from that of population policy throughout the world. I think that population policy will become increasingly important, and I do not think it will be possible for the leaders at the Mexico summit to consider food policy without reference to population policy.

I appreciate the sensitivity of that issue, as do the Government. I was heartened to see a brief reference to the subject in paragraph 20 of the Ottawa communiqué in which the leaders said: We are deeply concerned about the implications of world population growth … we recognise the importance of these issues and will place greater emphasis on international efforts in these areas. If that means anything, it must mean that the matter will figure indirectly in the discussions at both Mexico summits. I hope that the Minister of State will be able to give us an assurance on that aspect.

World food supplies are likely to be outstripped in the next two or three decades by world population growth, which is in the pipeline and cannot be stopped. As my right hon. Friend the Member for Leeds, East (Mr. Healey) said, that will lead to greater problems in the developing world, not merely for the developing world, but for us.

It will not be a case of looking at starving children in Ethiopia or anywhere else and putting our hands in our pockets. There will be political, social and economic instability which will rebound on us. Even if there is not that instability, which I believe to be inevitable, there will be greater pressure on world resources, which will affect our economic performance.

I was privileged recently to be sent to Nairobi as the United Kingdom's IPU observer at a conference of African parliamentarians on population policy—the first such conference ever held in Africa. Africa is a vast continent, with a sparse population for the land area. However, the current population of 470 million will reach 850 million by the year 2,000, 1 billion by 2,010 and, unless strict measures of population control are taken, 2.2 billion by about the end of the twenty-first century. That is unsustainable by any conceivable growth in resources.

The crude birth rate in Africa is 46 per 1,000. In the world as a whole it is 28 per 1,000 and in Europe the rate is 14 per 1,000. I hope that hon. Members will forgive me for quoting a few figures, but they show the measure of the problem.

The crude rate of natural increase in population in Africa is 2.9 per cent., compared with 1.7 per cent. in the world generally. The fertility rate in Africa is 6.5 children per woman. In some places, including Kenya, it is over eight children per woman. Those are appallingly high figures.

Food demand in Africa has been growing at the rate of 2.6 per cent. a year, but the production of food has been growing at a rate of 2 per cent. a year. There is an increasing gap.

Estimates for the next 20 years show that the production of food is likely to increase by 2.8 per cent. a year. That is a considerable increase, but the demand for food will rise by 3.7 per cent. a year. The result will be that the trade deficit for cereals for the whole of Africa, which was only 2.9 million tonnes imported in 1963 and 7.3 million tonnes, importation in 1975, will rise to 16 million tonnes in 1990 and 30 million tonnes in 2,000.

Food production can be increased by more, but that will necessitate big increases in agricultural inputs, irrigation and the area of arable land. All those problems require greater resources.

The importance of population policy for development is accepted by every hon. Member. Excessive population growth produces, particularly in developing countries, high dependency ratios. That means that the countries concerned have fewer savings for investment in production and productive capacity. They also have to spend much more on education, health and welfare services for an increasing number of mothers and children.

For example, Kenya, which has the world's highest population growth rate, at 3.9 per cent. a year, spends 35 per cent. of its budget on education, and that percentage will rise because one-quarter of the population is under the age of 5 and not yet at school.

Excessive growth leads to increased demand not merely for food, but for water and arable land. All that will create tremendous development problems in Africa and other parts of the world.

There is a further concern that should appeal to us all. There is an implication in population growth for individual human development and it is not a pleasant implication. Women are the depressed class throughout the developing world. They do the childbearing and much of the labour and they live lives which are, in the words of Hobbes, poor, nasty, brutish, and short. Usually, their lives are very short.

Those women could play a major part in the economic and social development of their countries if they were relieved of much of the burden of childbearing between the ages of 15 and 44. The rich countries could do much more in that area and the Select Committee's recommendations for Mexico would help to that end.

However, in the last resort the developing countries must help themselves by making the best use of their own individual human resources. I believe that the use of human resources is a sine qua non for development in any developing country, no matter how much aid we put in or how much we change the world economy to help them. That must mean a proper population policy throughout the developing world. More than any other factor, that will allow individual human development and allow people to get away from absolute poverty and towards leading the lives of proper human beings.

I conclude by stressing the importance of development education in the rich countries. Political initiatives to help poor countries must be based on popular understanding in the rich countries and, if possible, popular support. Paragraph 14 of the Ottawa communiqué makes a brief reference to that: We … will seek to increase public understanding of its importance. That is a reference to the importance of increasing official aid.

It is tragic that our Government have virtually cut out development education, for the sake of saving a few million pounds. I hope that they will change their mind and I suggest to the Minister of State that this is a subject, if not a major subject, which should be alluded to at Mexico and, I would hope, mentioned in the final communiqué.

It is essential to have proper development education in rich countries to promote the concept of one world. Unless we promote that concept we shall not get support from our people, and politicians will not be giving the lead in rich countries that they should be giving. One hopes that that lead will come out at the Mexico summit.

11.8 am.

Mr. Bowen Wells (Hertford and Stevenage)

I wish, not to criticise the Government, but to encourage and help them, and I hope that they found the Select Committee encouraging and helpful.

There is much for this country and the Government to learn about the interdependence of Britain and the world, particularly the developing world. Reference has been made to how we, alone among developed countries, run a surplus on current account with the developing world. Britain is also way ahead of any other nation in its dependence on world trade. The value of our exports hovers around 30 per cent. of our gross domestic product. Our nearest rival is Japan, at roughly 12 per cent., with the United States much lower. This means that we are uniquely dependent upon trade. We are uniquely dependent, therefore, upon the financial position of the trading nations of the world.

I want the Government to go to Mexico in a positive mood to find a solution to the problems outlined in the debate. I want them to realise that the only way out of our domestic problems is through an international effort connected with trade and the development of countries that can buy from us. If they cannot buy the exports, we cannot export. We cannot therefore work our way out of the serious problem of unemployment. I believe that the Government are beginning to understand the situation. I welcome the speech of my right hon. Friend the Lord Privy Seal. Despite the criticisms of the right hon. Member for Leeds, East (Mr. Healey), my right hon. Friend has shown a positive attitude, certainly much more positive than the Government have adopted in the past.

I wish to concentrate, as the Select Committee report does, on practical means for making the Mexico summit a success without spending vast sums of money which we do not have. There is no doubt that the financial situation of the world is in a mess. It is impossible for our business people to plan when both exchange and interest rates vary to a tremendous extent. They vary because there is no agreement in the international financial world on how to smooth out the problems of financial flows.

I hope that the Mexico summit will address itself to setting up a seminar, an annual conference or a meeting, at whatever time is necessary, to study how to regularise the financial difficulties that now exist. Since the collapse of the Bretton Woods agreement in the early 1970s, this problem has not been tackled. The only answer that I have received from the Treasury is that the problem is so large that the Government cannot even think about it. It is, however, necessary to think about it. We must think about it and try to plan a way out of it. I hope that such a recommendation will emerge from Mexico. It will not cost any money.

The Government have to seize the initiative in Mexico. Britain will be the only developed country at Mexico that is oil-sufficient. We can therefore talk to the OPEC countries and other oil rich countries in a manner that provides a bridge. The Prime Minister is in a unique position to grab the opportunity that I have outlined. The initiative must be grasped. We must make use of this unique position to try to find a way to recirculate to the developing world the profits and the surpluses made by the OPEC countries, so that trade can expand. That money needs to go into profitable investment in those countries. It needs, if possible to go through the private institutions.

I accept the criticism of my right hon. Friend the Member for Sidcup (Mr. Heath), that a large part of the money that we recirculate through our private institutions does not originate from this country. None the less, the banks play a major and important role in getting that money into profitable investment in Third world countries. Paragraph 55 of the Select Committee report spells out the extent to which the private sector is lending. It is four times greater than our own official public flows. It should, however, be pointed out that £700 million was private direct investment and export credits were worth £500 million and that £3 billion was in the form of portfolio lending, much of it on lending of OPEC surpluses.

Mr. Nigel Spearing (Newham, South)

That was the evidence that the Government gave. It no doubt incorporated the point made by the right hon. Member for Sidcup (Mr. Heath). If, however, capital is going for the highest return possible, is there not sometimes a conflict when the highest return may not be in the developmental interest of the country where the money is invested? Indeed, it could be detrimental to that interest. A great deal of the money may go to areas that are not receiving the sort of developmental capital that even the hon. Gentleman would wish to see.

Mr. Wells

There is a great deal in what the hon. Gentleman says. This is why we have to combine the private flows through the banks and look at the rate of return that will be of most benefit to the country in which it is invested. The problem arises, as I think the hon. Gentleman will agree, when investments are made in the poorest countries, which will probably not show the highest rate of return. This means that the private flows do not go to the poorest countries. The need for public sector flows therefore arises. I should like to see a re-jigging of our whole aid thrust to make public flows and private flows work together in the poorest countries. That combination would, I believe, produce a dynamism of development in the poorest countries, resulting in maximum benefit.

Mr. Brocklebank-Fowler

If that is the hon. Gentleman's view, why, in the determination of the Select Committee report, did he find it necessary to vote against the expression of opinion by the remaining members of the Committee that they were concerned about the recent trend in official development assistance?

Mr. Wells

The reason for my vote on that occasion is that I do not believe that development can best be accomplished simply by increasing the amount of public flows, particularly when this country finds itself in great financial difficulties. I shall come to the amount of money that is involved in the Government's cuts. I believe that, as a gesture and as a token of our good intent at the Mexico summit, we should restore the £62 million to which the hon. Member for Waltham Forest (Mr. Deakins) referred. That is the difference between £803 million and £741 million. I reckon the drop in aid, if my arithmetic is right, to be about £60 million. I should like to see that amount restored. The reason for my vote in the Select Committee is that I do not believe that at a time of great financial difficulty we can increase our overseas investment from the public sector. I want to see private sector expansion.

Mr. John Townend

The right hon. Member for Leeds, East (Mr. Healey) indicated that he would pay for increased Government aid from public sector borrowing—that is, borrowing to give away. How would my hon. Friend pay for the extra £62 million? Would he choose increased borrowing? Would he choose taxation; and, if so, which type of taxation would he select? Would he prefer to see reductions in expenditure in other areas? Will he specify what he has in mind?

Mr. Wells

I shall not duck the question. It should, if necessary, be done through increased borrowing and, if necessary, by increased taxation. However, the thrust of my speech is that I do not think that either is necessary if an expansion in world trade can be achieved, because with an expansion of world trade the whole economy would expand.

I regard the overseas aid budget as an investment. It should be an investment. Sometimes it is not, and we can criticise it where that is so. It should be an investment that creates wealth. If we create wealth, the problems of raising taxation and borrowing will not arise. But if in the initial phase we need to do that, the extent to which we would have to raise taxation would not be great. We are talking about £63 million. We would not have to raise taxes or increase the borrowing requirement by very much. After all, the Government increased the PSBR by default, it seems, by over £5 billion, and interest rates and inflation are coming down. So I do not think that we are talking of these problems in practical terms when we talk about trying to increase our aid budget by a modest amount of £63 million.

Due to interventions, and so on, I think that I am taking up too much of the time of the House. However, I want to emphasise the need for the Government to seek every means by which they can expand trade and private investment overseas. The Government must take credit for their great and bold initiative in abolishing exchange control and assisting the outward flow of capital from Britain. That is part of the reason why the exchange rate has gone down. It will result in profitable projects overseas, in greater trade for Britain, and in the export of management expertise, which the Third world badly lacks.

That is one of the reasons why we need to increase our overseas investment—to increase management, technical and administrative assistance. Without those human resources attached to the money flows, we cannot create development in the Third world. That is why the private sector is so important. That is why we should tailor our public overseas aid effort towards, and in conjunction with, private flows.

I believe that the Prime Minister has a tremendous opportunity at Mexico to grasp the initiative, on the part of Britain and for the world. I ask her to do so in the name of Britain, but also in the name of the party of which I am proud to be a member.

I think that there are three psychological things that my right hon. Friend the Prime Minister could do to help. It would help Britain as well, because all these things help Britain. It is not just the overseas development. This is an interdependent philosophy. We are dependent upon our trading partners and others in the world. I think that we should restore some of the cuts that we have made in respect of overseas students. We could do that through the aid programme. It is a modest amount; it would not cost very much. I give credit to the Minister for Overseas Development for the increase that he has given—an increase of £6 million for grants to overseas students from the poorest countries. However, we should increase that still further.

If that were done there would be incalculable benefits for our relationships with the world at large and particularly with the Commonwealth. It would assist that necessary ingredient of all development—young people and others being educated in British ways, so that when they return to their countries and think of any projects, they come to Britain to make their purchases, thereby increasing our exports. As I have said, we should restore the cuts that we are planning for 1980–81 and 1981–82. That would cost us £63 million.

Those psychological gestures, plus the conference to which I have referred on the revision and remodelling of our international financial institutions, plus an effort to expand trade in every possible way, with great determination and enthusiasm, and continuing efforts to increase world trade and thereby the prosperity of Britain and of other countries, are what we need. I beg the Government to think on those lines.

11.24 am.

Mr. Kevin McNamara (Kingston upon Hull, Central)

I thought that it might be for the benefit of the House if I were to try to outline the way in which the Select Committee arrived at its conclusions and the reasons for them. Therefore, apart from a few comments at the end of my speech, I do not think that I shall say anything very polemical. I shall try to explain the way that we set about our task in the Select Committee, because it is important.

It is important for a number of reasons, not the least of which is how it was that my hon. Friends and I could come out with such a mild report—as it might be regarded by some of out friends in the development world and by some of our colleagues in our party.

The first thing of which we, as a Committee, were conscious was the great wave of enthusiasm which had come from the British population for many of the ideas contained in the Brandt report. That was remarkable in the experience of all of us.

Some of us have, in the past, been engaged in many hectic election campaigns, and occasionally we have had at least half a dozen people at a political meeting. I cannot recall any occasion when so many Members of this House, in village halls and town halls of great cities, have seen so many members of the population so enthusiastic, keen and desperate to take on board the philosophy contained in Brandt. That was a remarkable achievement. It shows the great concern that exists within the population of Britain, in just general humanitarian terms, to seek to implement the ideas of Brandt and to show their concern for the concept of one world.

The second matter which considerably amazed us all was the number of copies of the Brandt report that had been sold in Britain—126,500 at the latest count. That is a phenomenal number. It may not be of Harold Robbins proportions, but I can think of no Government publication, of the present Government or any previous Government, which is likely to have sold so many copies in such a brief period.

Great interest in this subject has been shown in Parliament, too. We have had three days of debate in this House—some of it in Government time and some in Private Members' time—and one debate in the House of Lords. We had a fantastic lobby in May, with estimates ranging from 4,000 or 5,000 to 10,000 people coming to the House to show their concern about the problems of the Third world.

It was against that background that the Select Committee worked.

It is also interesting to note, in many ways for the first time, the way that public opinion on this matter has changed Government attitudes completely. I do not believe that any Government would specifically announce that, as a result of all this, they would immediately change their plan. However, when one looks at the rather cold, hard, original reactions of the Government to the ideas contained in Brandt and compares those reactions with the almost positive espousal of the report by the Lord Privy Seal this morning—as though, if he had not written it, his right hon. Friend the Prime Minister might have done so—one can see the change that has taken place in Government attitudes. That is to be welcomed not only for the issue but also for the degree to which it shows the Government responding to popular opinion in Britain. Therefore, I do not criticise the Government for altering their position; I welcome what they have done.

I also welcome the attitude that the Lord Privy Seal took to the Select Committee's report. Obviously, we all appreciate that he cannot give an immediate and considered reply. Nevertheless, as a Committee, we felt that the House should have an opportunity of at least reading our conclusions before the debate took place.

The spirit of the Select Committee was to respond to what we believed was public opinion and to welcome the change in the Government attitude, but also to realise the limitations that are placed upon the Government and to realise the self-imposed limitations that they have placed upon their own development policies. We therefore sought to find ways whereby we felt that Britain could perhaps make a unique and helpful contribution to the discussions that are likely to take place, bearing in mind the Government's own inhibitions about these matters.

We felt that we had to look at the matters that were of most practical and immediate significance, and that we would eschew any temptation to talk in terms of new institutions and grandiose organisations. We did not believe that they would be particularly helpful in view of the enormous difficulties that face the developing world. We felt that to create a new international bureaucracy would perhaps take a decade, and in that decade, on some of the figures that were originally supplied to us, 150 million children under the age of 5 might have died.

In all our attitudes we took the existing situation and asked "How best can what we now have be used, expanded and developed?" That was the practical attitude that we as a Committee took. Looking at the international institutions—whether it was the IMF or the United Nations—we believed that we could work to develop and expand. Thus, we believed that many of the ideas—the energy affiliative, the role of the OPEC countries, the degree of participation of the developing countries in deciding policies—necessarily creating fresh, new, expensive and, almost by definition, dilatory institutions.

The second matter that we considered was the degree to which we felt that there was an expertise within the United Kingdom which could be used for these purposes, within the framework of the four main issues which the Minister of State enumerated to the Sub-Committee when he gave evidence on the four main issues of food, energy, trade and financial flows and institutions. We had to decide how best our country's financial expertise could be used in these matters.

We felt that many of those did not require great sums of money—perhaps a transfer of resources, a change of emphasis, a transfer of personnel, and a use of existing expertise and knowledge. For example, the great importance of food in many ways is not the actual production of food, but its storage, transport and the marketing. In such matters we have an expertise and technology which can be transferred, and will not cost much money.

Equally, we felt that there was not necessarily a lack of knowledge in relation to energy, but perhaps a lack of purpose and will in seeking to discover in the non-oil producing developing countries possible alternative sources of energy. We felt that there was not a lack of expertise in finding a particular financial arrangement which could cushion the poorer developing countries without their own natural energy against sudden fluctuations in energy prices. We felt that it was all there. We have it, but we need to be able to use and develop it.

We also felt, however—here I take up the point made by the hon. Member for Hertford and Stevenage (Mr. Wells)—that there had been a loss of prestige and influence by the United Kingdom Government as a result of some of the cuts which took place in the high and early days of this Government's pursuit of their monetarist policies. There is the matter of aid to overseas students, and in particular to those who were outside the official aid programme—the great number of private students who benefited from our low fee structure. The cuts in aid that have taken place have also damaged our prestige, and are far and above the cuts that have taken place in any other form of public expenditure—15 per cent. over a period against 1.7 per cent. on the gross figure of public expenditure.

We therefore felt that a psychological boost was needed, which we believed would come if the Government accepted the recommendations of the Select Committee in going back, not to the 1979–80 figures, but merely to the 1980–81 figures. As the hon. Member for Hertford and Stevenage said, £63 million could have a psychological effect in helping to restore our prestige and in showing our concern and determination to deal with these matters over and above the sum of money involved.

Let me give an example. When Lord Soames went from this country to the Zimcord conference in Zimbabwe and announced increases in British assistance—not a momentous sum, but significant and in areas of delicacy and importance in the Zimbabwe economy—that gesture did more than anything else for our prestige in that country and to help Her Majesty's Government regain respectability.

We said that there were three main arguments why it was important. In paragraph 8 we said that we accepted that there is a fundamental moral case, based upon human dignity, for taking action to end absolute poverty in the world". The other is Mr. McNamara's definition of world poverty, which my right hon. Friend read out from the Dispatch Box today, and which merits continuous repetition. It is a condition of life so limited by illiteracy, malnutrition, disease, high infant mortality and low life expectancy as to deny its victims the very potential of the genes with which they are born and men also and women made in the image and likeness of God condemned to a living hell".

The second reason, although it was the third in the arguments that we put forward in Committee, was given in paragraph 14: Economic development that enables people to move out of desperate hunger, poverty and misery could provide a chance of greater stability in countries of the Third World". That, we believe, is of fundamental importance. Certainly, in terms of world peace, I personally believe that the problems of peace in the world and the danger of war will not necessarily come from an eyeball-to-eyeball confrontation between Russia and the United States over East Berlin, West Berlin or Poland. It is more likely that we shall be dragged into some sort of conflict by a surrogate of either party dragging the super-powers into a war. Anything that we can do to create stability in the Third world is in our own basic and selfish interests and those of our children.

The third is, again, a selfish argument and one which is of enormous importance—the actual trade and jobs involved in this country in Third world development. With the Third word, both oil-producing and non-oil-producing countries, we have a surplus on bal ante of payments. We can only maintain that trade if those countries can purchase the goods and services that we want to sell to them. That can only be done by stimulating their economies. So the jobs, livelihoods and opportunities of my constituents and the constituents of all hon. Members depend upon the trade and development that take place in the Third and developing worlds. That was one of the three main arguments put forward by the Select Committee—one being human dignity, one being world peace, and the other being self-interest. We believe that Brandt and the question of mutuality of interest has to be followed through.

It had been my intention to be a little polemical about what the Prime Minister said to me yesterday, but I content myself with making one observation. I find it a little hard that the right hon. Lady should sign an Ottawa communique which says: We are committed to maintaining substantial and, in many cases, growing levels of official development assistance and will seek to increase public understanding of its importance. Bearing in mind the fact that we have ended development education and, more particularly, that our development aid at present is on a sliding scale and moving downwards, I do not know how the right hon. Lady came to sign that document.

When I put the matter to the right hon. Lady yesterday, she said: I cannot promise increased Government aid this year. I did not ask for that. I merely wanted it maintained. The right hon. Lady went on: I hope that our excellent flows of private aid will continue and that they will increase from other countries, but that will happen only if the developing countries adopt a code of practice to safeguard those investments."—[Official Report, 23 July 1981; Vol. 9, c. 501.]

The Select Committee makes just that recommendation. It says that there should be codes for protection. Whether it be public or private flows going to developing countries, people obviously wish to feel that they can get a fair return on their investment and that it will be properly safeguarded against sudden and violent changes, in economic and domestic policy.

We talk about "agreed" codes because, equally, the developing country has a right not to expect to he ripped off. It has the right to expect that its natural minerals, for example, shall not be seized and exploited by the developed and industrialised world without the country getting any sort of protection and inward investment of other sorts building up its own infrastructure and investment potential. It has to be a two-way switch. It is not only a matter of protecting money. It is protecting the future of those countries as well. That is a very important matter which right hon. and hon. Members who speak about protection must recognise. It is not just our money over there which has to be protected. The future and well-being of the developing country has to be protected as well.

11.43 am
Mr. Raymond Whitney (Wycombe)

I welcome the remarks of the hon. Member for Kingston upon Hull, Central (Mr. McNamara) about the importance of trade with the rest of the world for all our constituents, and I shall return to that topic at the end of what I hope will be a very brief intervention.

As one who has spent most of his life working in or with overseas countries, I welcome the sense of interdependence—of one world—that has emerged constantly as the main theme of our debates on the Brandt report over the past year or so. That in itself is a great achievement of the publication of the Brandt report, and the hon. Member for Kingston upon Hull, Central drew attention to the incredible interest that it has generated in Britain. That is to be welcomed. It demonstrates a readiness to look outwards and to manifest our humanity and our sense of linkage with the rest of the world.

I am conscious that I am about to break the happy unanimity that has generally prevailed in these debates, and it is a pattern that tends to be repeated. However, it needs to be said that we have also managed to create a climate in which, to point out some of the fallacies of Brandt seems to suggest a degree of insensitivity to the poverty and suffering of the rest of the world.

That very manifestation is itself damaging. It has created some element of unreality about our treatment of these problems, as Britain or as the Western nations, and our approach to them. The Brandt phenomenon, for good or ill—and mostly for good—is a British phenomenon. We have heard of the 126,000 sales of the report in Britain. That figure has in no way been matched in any other developed or developing country. That is to our credit, but it is a very British manifestation. It is a manifestation of the continuing compassion that we in Britain feel and of which we should rightly be proud.

The Churches have played a prominent part in it, and, as a Christian, I welcome that. But, however compassionate we are, and however Christian we are, we have to understand that we are dealing with economic, social and political facts and that we cannot therefore escape the history and reality of economic and social problems and of political relationships.

Therefore, I offer a few other statistics. I do so with some regret, because none of us likes to absorb statistics. I offer them recognising that they too, may be fallible and questionable. I say "too" because the statistics with which we are generally provided about the enormous problems of feeding the world, of population and the rest of it are themselves challengeable.

Up to a point, we must not talk ourselves into total depression. We must not forget, for example, that over the 20 years up to what we now describe as "the oil shock" the developing countries generally were increasing their growth by about 6 per cent. a year. That is a factor that will make a significant difference to the projections that the right hon. Member for Leeds, East (Mr. Healey) offered.

Much the same is true of the projections in "World Economic Outlook", which may or may not be falsified. Its forecast for the next five years is that the economies of the developing world will grow by about 5.8 per cent. over that five-year period.

Mr. Deakins

I am sure that the hon. Gentleman appreciates the distinction between overall growth rates in GDP and growth rates per capita, which are what matter when it comes to raising the living standards of people in developing countries.

Mr. Whitney

I appreciate that, and I shall return to the population statistics in a moment, if the hon. Gentleman will allow me to continue.

Reverting to the Brandt report, the change from 6 per cent. to the lower rate of growth that we have had in all countries, including the developing countries, was in large measure caused by the oil shock. One of the lacunae in the Brandt report is that it deals very sketchily with the impact of the oil changes.

I take up the point about population just made by the hon. Member for Waltham Forest (Mr. Deakins). He and the right hon. Member for Leeds, East quoted some projections of figures. I offer some others which may enable us to provide a slightly more optimistic note about the population problem.

I do not deny that there is a problem and that it is increasing, but I might point out that figures produced last year by the United Nations fund for population activities suggested that there was a decline in world population growth, and that the world fertility survey suggested that, because the birth rates in Third world countries and developing nations diminished significantly during the 1970s, one set of estimates suggested that the peak rate of 2.1 per cent. in the mid-1960s was now down to 1.6 per cent. or 1.7 per cent. and that in the big countries of the world—China and India—it was down much more sharply.

Chinese demographic statistics are notoriously difficult, but one estimate is that they are heading towards about 1.4 per cent. If the Chinese and Indians, given the massive proportion that they represent of the underdeveloped population of the world, can achieve rates of that sort, I suggest, without being complacent, that we must not be alarmist about the significance of the population figures, and therefore the implications for the feeding problem.

The American study last year, Global 2000, was in no way optimistic. It was couched in the standard pessimistic approach which, sadly, has become all too common in the fraternity that usually specialises in that area. It forecast that by the end of the century there would be a population increase of 42 per cent., which is frightening enough. It also forecast an increase in food production of 69 per cent. I hope that that prognostication is correct, and therefore that the other gloomy prognostications will be falsified.

Mr. Heath

I do not think that my hon. Friend's remarks in any way deny the Brandt report's basic statement that the world population will rise from 4.3 billion to 6.3 billion or 6.5 billion by the year 2000.

Mr. Whitney

They do deny that statement. The prognostications on those figures come to less than 6 billion—namely, 5.75 billion. A quarter of a billion people significantly change the problem with which we are dealing.

Many references have been made to the Ottawa summit. The right hon. Member for Leeds, East—perhaps for want of his own inspiration—used the reference in The Times leader to "a fudged summit". He attacked the whole content of that statement. That was an extraordinary thing to do, because it was signed by such leading Socialists as President Mitterrand and Herr Schmidt. The suggestion that it was put together by a few clerks a few weeks before the summit, and that the Heads of Government simply put their initials to it, is a serious calling into question of the sense of responsibility of all the world's leaders, not least the Socialist leaders. The difference is that those Socialist leaders accept the force of reality and common sense.

The world as a whole, and especially the developing countries, should welcome the statement in the Ottawa summit communiqué. It was accepted that global negotiations should continue on a basis of mutual interest. I hope that we can adopt that piece of jargon—global negotiations—rather than the North-South dialogue, which is itself misleading and has so many curious and strange connotations. The communiqué recognised the gruelling poverty in parts of the world and the need to aid the poorest. I see nothing to complain of in that. We must insist, as I am sure the seven leaders do, that practical steps are taken in the light of their assertions. They called upon the OPEC countries for help.

They were right to point out—I am sure that none would disagree—the appalling record of the Soviet Union and its allies towards the developing world. That point cannot be stressed too often, not only in the democratic world, but in Third world countries.

The most important point of all is the emphasis in the communiqué on the need to resist the protectionist pressures that are growing in the world. As my right hon. Friend the Lord Privy Seal said, it is all too easy to slip into the aid discussion. Speaking as someone who has spent 10 years working in developing countries, I assure the House that trade is far more important. The figure quoted by my right hon. Friend was 25 times more important. That is the key to the thought that I wish to leave with the House.

I hope that the Opposition accept and understand that in living in one world we have a duty to understand that the wealth of that world was created by free market forces and that the real growth in world economy came from the operation of the market. One of the major weaknesses of the Brandt report is that it concentrates, as is the Socialist wont, on redistributing what exists. We must create more and more wealth. That is the key to the solution of the great problems. However, they are not quite as great or quite as daunting as has been suggested. They can be cured if we have a sensible approach to free and open trade policies.

I hope that the Opposition and the trade unions in Britain, and the Governments and workers of all countries, understand that that is where salvation lies for us all.

11.55 am
Mr. David Ennals (Norwich North)

The hon. Member for Wycombe (Mr. Whitney) would not expect me to agree with his concluding remark. However I must agree strongly with his condemnation of the Soviet Union, whose record on development aid is modest compared not only with that of the Western industrialised countries but with what the Soviet Union can afford to provide.

I wish to pay a personal and warm tribute to the right hon. Member for Sidcup (Mr. Heath). During his period as a member of the Brandt Commission, and also during the long months that have passed since then he has rendered both this country and the world a great service. He has given not only of his time but of his effort and influence to ensure that the message that is written in Brandt has been conveyed to the people, especially the British. I welcome the fact that he was concerned that the message should also be conveyed to the leaders in Ottawa. I congratulate him on the memorandum that was circulated. I hope that he will speak in the debate.

I wish to congratulate the Select Committee on not only the timing but the contents of its report, and also my hon. Friend the Member for Kingston upon Hull, Central (Mr. McNamara) for his excellent exposition of it. I do not need to delve into the details of the world position. They were presented in stark form by my right hon. Friend the Member for Leeds, East (Mr. Healey). I wish to add only one point, which is that spending on official development aid is running at less than one-twentieth of the world's military spending. That is getting matters wholly out of proportion. The Government are making a modest contribution to that imbalence between what is spent on development and what is spent on aid. Many of the developing countries are spending far more than they can afford, and far more than they should, on arms. That was pointed out in the Brandt report.

I wish to make three points. I agree with the Lord Privy Seal. I welcome his approach and his mood, which was sharply different from the first reaction of the Government to the report. He said today that it is a moral problem. We have a moral imperative to do everything in our power to assist—even at a time when Britain, in many ways due to the Government's actions, is impoverished. However, compared with the starving nations, we are rich indeed. The challenge upon us to share some of our riches, both to the advantage of the developing countries and of Britain, is very great.

I agree with the Archbishop of Canterbury, Dr. Runcie. He is President of the British Council of Churches. He supports the Brandt repotr and the May lobby, in the hope that they will increase public awareness of the terrible evils of world poverty. He said: I would urge the Government to make every effort to give a strong moral lead in combating such an evil. The impressive lobby that we met on 5 May was a magnificent example of the way in which the message of the Brandt report has got through to people throughout Britain. I do not remember a more impressive and better organised lobby. Hardly ever do we see the House lobbied by those who want something for others rather than simply something for themselves. Great credit should go to the World Development Movement, which co-ordinated the lobby. I am glad to say that it has opened a branch in Norwich this very week.

Among the 9,000 or 10,000 who were present were many young people. I believe that three issues inspire our young people, especially if their view of life has not been jaundiced by the horrors of unemployment. First, they hold positive views about the importance of the fight against poverty. Secondly, they wish to see an end to the fearful growth of weapons of mass destruction. Thirdly, they recognise that there is an urgent need to protect our environment from the ravages of so-called modern urban development.

The recommendations of the Brandt report are not about handouts to the poor nations, if we are to quote the Prime Minister. There is a healthy recognition of mutual self-interest. None of us is looking for confrontation between North and South. We wish a soundly based cooperation that makes markets available for exports for poor countries as well as making markets available, as a result of the growing wealth of the poorest countries, for the exports of the industrialised nations.

We need major reforms in the international monetary system. We need much more progress in debt relief, which imposes such a heavy burden upon developing countries. We need, as my hon. Friend the Member for Waltham Forest (Mr. Deakins) has said so clearly, a major emphasis to be placed on food production and distribution as well as population policies.

In April 1974, I had the honour to lead the United Kingdom delegation to the United Nations special session on economic development. The session took place in New York. At the time, I held the position that is now held by the Minister of State, Foreign and Commonwealth Office. I said in New York: when we get down to the detailed discussion of individual issues it may perhaps be misleading to speak in the shorthand terms of rights and duties … Are we not more honest with ourselves if we talk in terms of what we need or want and of what we can offer or contribute in fair exchange? I believe that this realistic approach will lead to the evolution of an economic relationship which transcends our divergent interests and results in growing, and more evenly spread prosperity for all nations not, in disorder and this dislocation. I think that I did rather better in 1962 when I wrote the following: No country will consciously act against its national interests. The task of the United Nations is to harmonise these national interests, to prove that, on balance, national interests are best served by co-operation, and to facilitate such co-operation. By some of its present policies, Britain is acting against its national interest. The world is a market for our manufactured goods, for our technology and for our experience. That is to our advantage and to the advantage of others. We are throwing away our opportunities. I was glad that the hon. Member for Hertford and Stevenage (Mr. Wells) referred to overseas students. We place obstacles in the way of students from overseas who come to study here. This will have immense long-term consequences. I know that that will be so. I reached that view both as Secretary of State for Social Services and as a Minister in the Foreign Office. It was also my view when I was working in overseas development years ago.

It is recognised that, by coming to Britain and gaining skills and experience, and becoming familiar with our equipment, students are better able to promote our interests when they return to their countries. More and more students are going to France, Germany and the United States. Some are going to the Soviet Union. They are turning to countries other than Britain. It will be a good thing if some gesture is made on that score before we go to the Mexico summit.

We cut our voice in the world by miserly cuts in the external services of the BBC, an issue that was debated last night. We have reduced our planned aid programme by about £125 million. The majority of the cuts will have an effect on our bilateral aid, as the Minister for Overseas Development will recognise. About three-quarters of that aid is tied to the purchase of British goods and services. That means more employment in Britain or, if the aid is cut, less employment and less British trade overseas.

The Government's attitude, and especially the attitude of the Prime Minister, damages our long-term commercial interests and lessens our leadership in the world. I do not know how the right hon. Lady was able to sign the Ottawa agreement, which commits Britain to enlarging official aid. Apart from the new Government of the United States, whose policies are presently negative—I hope that that will be a temporary phase—the British Government represented the only country to be moving downwards and away from the 0.7 per cent. gross national product target for official aid. This is happening after several years of gradual improvement and movement towards that target. I am glad that my right hon. Friend the Member for Leeds, East confirmed from the Opposition Front Bench that that target will be achieved during the lifetime of the Parliament that stretches before the next Labour Government.

My third and last point is, in a sense, quite different. It was taken up by the hon. Member for Wycombe, who said that he did not like to hear the term "North-South". Apparently he prefers the term "global negotiations". I recognise that there is some confusion about North-South. In the Grand Committee Room during the Brandt lobby, the Minister of State referred to the massive increase in refugees. There are about 8 million refugees in Asia, Africa and Latin America, and even in Europe. There is an increasing flow from Eastern Europe. Some of the refugees in Africa and Asia are in desperate need, as I have seen for myself during recent journeys overseas.

The Minister of State said that these people are refugees not because of economic factors but because of political oppression. I have a close interest in refugees. It has been one of my interests for many years. I do not agree with the hon. Gentleman's conclusions. Many of today's refugees, especially those from Vietnam and other parts of South-East Asia—certainly those in the Horn of Africa and even those from Poland—are as much economic refugees as political refugees.

There is a link between our East-West discussions and our North-South dialogue. What we are doing in trying to promote greater dialogue and co-operation between North and South can have beneficial effects upon relations between East and West. I should like to see the Government to contribute a programme of assistance, or consider such a programme, to Vietnam, from which there is a new flow of refugees who are nearly all economic refugees. I should like to see a new programme for Poland. Discussions should be taking place now to ascertain how we can help the newly emerging and freer Poland of today.

I hope that the Minister will deal with those two points when he replies, as well as spelling out in some more detail—I recognise that this will be difficult, with the discussions which will take place with the Foreign Ministers in a couple of days' time—a little of the constructive approach which the Government will take at the Mexico conference. The lobbies and interests in the matter have perhaps moved the Government. The right hon. Gentleman has moved the Government away from what had seemed to be a cold, negative attitude at least to the right mood. We now need, either before the Mexico conference or in Mexico, positive proof in terms of funds which at present are being cut back and also in terms of other ideas which can regenerate the leadership role which Britain used to play in this area and which today it seems to be slipping away from.

12.11 pm
Mr. Edward Heath (Sidcup)

I thank the right hon. Member for Norwich, North (Mr. Ennals) for the generous tribute that he paid to the Brandt Commission, to any part that I was able to take in it and to anything that I have been able to do since. I have had many opportunities to express my views. They are largely embodied in the commission's report. Today I should particularly like to concentrate on the future, which will include the conference of Foreign Ministers beginning on 2 August, the Commonwealth conference in Melbourne in September and the meeting of Heads of Government in Cancun in Mexico towards the end of October.

There can be many criticisms of the Brandt Commission report. I do not accept some of the arguments put forward by my hon. Friend the Member for Wycombe (Mr. Whitney). Whatever the criticisms, and whatever the assessment of the recommendations, one thing is remarkable. As far as I can recall, it is the first report of any kind that has brought about a meeting of the Heads of Government of 23 countries. Although from time to time there may be disappointment, and sometimes disillusionment, among members of the commission, we must never forget that we have brought about the forthcoming summit and that it is a ray of hope in what is at the moment a dark world.

I wish to say a further word about the speech of my right hon. Friend the Lord Privy Seal. I do not particularly want to argue about statistics. I find that international opinion of Governments and organisations accepts the basic statistics on which we work. The report to which my hon. Friend referred which concerned the year 2000, is purely an American internal working group report and has not carried the same weight as that of the Brandt Commission. Nevertheless, my hon. Friend is entitled to quote his figures. However, whatever difference there may be does not diminish. The immense crisis that will face the world from the point of view of the problems that we set forth in the Brandt Commission report are also set out in the report that my hon. Friend mentioned.

Mr. Whitney

Does my right hon. Friend accept that I was quoting three sets of figures—not only Global 2000 but the World Fertility Survey and the United Nations study on populations last year in June?

Mr. Heath

That does not alter my basic thesis about the facts in Brandt, which have not been challenged and which are now accepted as general recommendations for the future. Of course the position in India and China is important. Especially those of us who have been to China and have discussed the matter with those at the top know that it is difficult to obtain figures for what is happening to population growth in China. The Chinese are still working on a high population growth. In India there was a period when the rate declined, but it has now steadied out again. In Latin America, because of religious history and background, one finds that the population is increasing fast. That will weigh largely in the balance of world population.

What impresses me is my hon. Friend's final conclusion. He said that, if we leave everything to the market, everything will be solved. That was the underlying theme and philosophy of his speech, and it is also that of his writings and general outlook. It is a philosophy that many of us feel bound to challenge.

My hon. Friend referred to developing countries that have done well, but one only has to look at the reason why they have done well. Let us take Brazil as an example, which has had one of the highest growth rates of the developing world. Two-thirds of its investment comes from governmental or international sources and only one-third from private enterprise.

One should consider the amount of Government investment in the much-quoted examples of Singapore and Hong Kong. That has come largely from the British Government. We have built up Singapore and Hong Kong and we should be proud of that. At the same time, those countries have had an immense amount of international help, as Lee Kwan Yew will be the first to admit. He has been skilful in securing that help.

In Taiwan and South Korea there have also been considerable amounts of investment from international sources. Therefore, it is an over-simplification to say that some developing countries have done well, that that has been done through the market, and that, if we leave the rest to the market, that will produce the answer. That is the greatest fallacy of all.

My hon. Friend can criticise Brandt for not putting emphasis on the private sector, which I do not accept. We in no way underestimated the importance of the contribution of the private sector. There was a chapter in the report that dealt with transnational companies. From the point of view of development, it is the transnational companies that get the job done, because they have the money and the expertise. If my hon. Friend now nods his head, he cannot criticise Brandt for the chapter on transnational companies and the code that was referred to just now. Yesterday, my right hon. Friend the Prime Minister rightly emphasised that that was of great importance. Therefore, in no way can he say that we overlooked the contribution of the private sector.

Mr. Whitney

I am very grateful to my right hon. Friend for giving way again. This seems to be developing into a dialogue between us. Does he accept that in my remarks I made no suggestion that there was an attack by Brandt on transnational companies? Nor did I suggest that individual countries were right or wrong to use their own methods for their own economy. I agree with that. I did not mention the newly industrialised countries or Brazil. Each community must find its own way. Chapter 3 of Brandt is absolutely right when it says that the majority of the impetus for growth must come from those countries, whichever way they choose.

Mr. Heath

This is a debate in which I am winning round my hon. Friend. That is encouraging. By the time that we get to Cancun, he may totally support me.

I welcome what my right hon. Friend the Lord Privy Seal said and the tone in which he said it, which is in keeping with his views and his hopes for the future. It is true that there has been a development of Government attitudes over the past 18 months. The country will welcome what my right hon. Friend said, in exactly the same way as it welcomes much of what is in the communiqué from the Ottawa conference.

However, this country and the world will be asking to what extent the Ottawa communiqué is cosmetic and a change in tone and approach, and to what extent it represents reality. One of my doubts arises from the fact that there has been a complete lack of interest in the Treasury and by all Treasury Ministers in any debate in the House on the Brandt report. The Chancellor of the Exchequer has never appeared. He has shown no interest. No Treasury Minister is here today. No trade or industry Minister is here. The matter has been left entirely in the hands of the Foreign Office. I have always admired the Foreign Office, having been Lord Privy Seal myself, and I recognise the extent of its power and influence, but it does not dominate the Treasury.

We have suffered a great deal in the last 18 months from the Treasury's attitude, which finally led to the blackballing of a British Chancellor of the Exchequer as the chairman of the Committee of 22. I cannot recall that happening before in my political experience. It is a lesson that the Government should learn.

I welcome what the Lord Privy Seal announced about the specific areas in which the Government are to take additional action. We shall have to concentrate on specific points. The Government are to support the activities for clean water, and so on. At the same time, the London School of Tropical Hygiene and Medicine, which is probably the finest in the world, is being driven to desperation by having its resorces cut off by the Government. It is suffering because of the reduction in students. Its income has fallen by 20 per cent. It fears that next year it will lose still more, that it will have to reduce staff and that it will just not be the school of which we have been so proud.

The Lord Privy Seal and his colleagues must be consistent. They should look at the matter. They might say that it is not the Foreign Office but the Department of Education and Science that is involved. However, this is a specific case. The Government will be judged on whether their action to help with clean water throughout the world is to be consolidated by the work done by the London School of Tropical Hygiene and Medicine, which no other school in the world can equal. That is the British contribution.

There are other examples, but I do not wish to be too controversial. There is the question of producing technicians for the developing world. The three principal new institutions for producing technicians in Britain—and Aston is one—are suffering heavily. They have to cut down on what they can produce. That again represents a lack of consistency in the two spheres. I hope that the Foreign Office will look into that.

I turn to the question of the conferences. It is clear that the situation in the developing world is, in every respect, worse than when we produced the Brandt report 18 months ago. From the point of view of its terms of trade, of interest charged on its debts, of its oil prices and of the growth of protectionism, it is worse. Above all, from the point of view of its total deficit year by year, it is worse. I do not want to quote many statistics, but I shall illustrate what I mean.

When we wrote the report, it was thought that in 1980 the deficit would be $72 billion for the non-oil producing developing countries. The deficit turned out to be $80 billion. In 1981 it was estimated that the deficit would be $80 billion. It is now expected to be $100 billion because of the worsening tendencies that I have described. In that respect the indebtedness is piling up and the general situation has become worse. The need to take action is greater.

Let us examine the results of the Ottawa conference. There are matters in the communiqué about which we can be pleased. One might concentrate on four matters. First, there is the willingness to co-operate with OPEC to increase energy production in the Third world. That is relevant to Cancun. Secondly, there is the desire to make increased resources available for food security and the food programme. That is also welcome. Thirdly, there is the approval of a GATT ministerial meeting to deal with the trade problems. Finally, there is the positive statement on aid.

When one examines each of those, one sees the inner contradictions of the Seven in the agreement and in the practice that they are pursuing. One of the first tasks must be to try to bring consistency between what they have agreed and what they set out in the communiqué

I turn to the programme for the Heads of Government meeting. On procedure, objectives and agenda there are two schools of thought. The first is that this should be a non-structured meeting in which people have a general discussion. The second is that if 23 world leaders get together they should agree on certain basic principles which they will implement. I say without hesitation that I belong to the second school. I believe that unless there is specific agreement on certain things—albeit a limited number—there will be grave disappointment and disillusion.

I understand the fears of those who want a non-structure meeting. They are afraid that it will lead to a confrontation of the kind that we have had in previous global negotiations. That is why, for two practical reasons, I have no sympathy with the views of my hon. Friend the Member for Wycombe that we should talk all the time of global negotiations. As far as we are concerned, for the past 15 years they have to all intents and purposes failed. Secondly, from the South's point of view, they regard it as an alibi for the North doing nothing.

That is the position that we are in. That is why Brandt suggested not another global meeting but a meeting of a limited number of Heads of Government who could, in fact, reach agreement not to start from heavily prepared positions, as the North and the South do, or the Group of 77 does in the global negotiations, but genuinely, by preparation beforehand, to see where they could compromise and reach agreement.

I assure my hon. Friend the Minister of State that if 23 Heads of Government agree on measures for the benefit of the North and the South, I do not believe that the rest of the world will complain; one says to them "If you want to come into this arrangement do so, you are welcome, and, if you do not, you stay out, and that is your affair." If 23 Heads of Government can agree on specific action in four different fields, everyone will heave a sigh of relief. It will be the first time that we shall have seen it. So those are unnecessary worries, but they are seen by the South as being just a cover-up and a reason for not reaching agreement when one talks about global negotiations and says that we must be so careful about what the rest of the world thinks.

Mr. Hurd

The hon. Member for Waltham Forest (Mr. Deakins) asked whether the Cancun summit would be the first of several, and it was in that context that I said that there was a difficulty-the Cancun membership was, as it were, self—appointed and that created a problem. My right hon. Friend takes me up on that and says that everyone would be delighted if the meeting reached agreement. I simply say that the worries about the fact that the Cancun membership is self-selected come to us not from ourselves or our partners in the North, but from certain developing countries in the South.

Mr. Heath

I believe that I have been in touch with probably the greater number of those countries, and the worries, to my knowledge, come from two. They come from Australia in the North. Mr. Fraser is very strongly behind the Brandt report and will back it at the Commonwealth conference, and I believe that that fact is now becoming well known. He would like to be at Cancun, and some of us would like him to be there. The other worry comes from the South from President Castro. he is at the moment chairman of the 95 non-aligned countries, and in many ways he has a claim to say "I should be represented there or they should be represented there through the President of Cuba". There is a strong argument for saying that, which I discussed with him. I personally wish that he was to be there, because I believe that the opportunity for the American President and the President of Cuba to meet informally is one that should not be missed. However, in this I may hold unusual views, because I want to bring about a settlement in the Caribbean.

If we now come to the items that deal with the summit, which the Lord Privy Seal mentioned. I do not know whether he mentioned them in the order of discussion or importance, but I should like to say a word first about his first item, which is trade. This is, in fact, the most difficult item with which to deal. Of that there can be no possible doubt. Looking at it from the point of view of the organisation of a conference, what one wants to do is to start with the things on which one can most easily reach agreement and then move, step by step, to the most difficult.

I should not challenge the four, but when it comes to trade, how much can we hope to achieve in those circumstances? I have suggested that the countries should agree on a standstill on protection. Is that feasible? The Ottawa communiqué says that trade is all important. At the same time, the world hears that the European Community has announced that the multi-fibre arrangement will be more restricted next time than it was last time. How do we reconcile those things? If one had a genuine agreement in the North and a standstill on protectionism, one would gain a great deal.

We should consider the American position. President Reagan has been very strong about maintaining free trade, but with the dollar where it is, and with the slump announced yesterday in New York and Washington as now being firm, the opportunities for Japan to compete in the United States will become greater. We saw that when the pound went up to $2.35. With the dollar going up, the United States will have to withstand more and more competition industrially. We know what happens in the United States in those circumstances. We have seen it under previous Presidents.

One must recognise that trade is the most difficult of all the subjects on which to reach agreement. On food, we can be practical at comparatively limited cost, and we can support the institutions. However, we have technical knowledge and expertise to contribute.

On energy, we have the problem of the energy affiliate which the World Bank wants to create but which has so far been barred. There is a misunderstanding here as well. The energy affiliate is justified from a number of points of view. We want exploration to be carried out in the poorer developing countries. It is not true to say "Leave it to the market" and the great companies will do it. There is nothing to stop their doing it now, if they wish, but they are not. They are not doing so because of the political risk involved in exploration and development. They know that if, as individual companies, they are backed by the World Bank, or by an affiliate of the World Bank, the political risk is enormously reduced, because no developing country will interfere with a project in which the World Bank has an interest.

That is why we encourage individual enterprise to play its part in development. No one is suggesting that the energy affiliate should carry out the exploration and exploitation, but it gives a cover for that political risk that the companies want. From that point of view it is justified.

What about our point of view? The impact of marginal increases and decreases in oil supplies is enormous. During the Iran-Iraq war oil supplies have decreased by 4 per cent. and the price has increased by 130 per cent. That is the marginality of that commodity. A comparatively little production from a developing country can influence world oil supplies considerably. Even though production is limited, it can have a large impact on the total economy of a small, developing country. It is therefore of great importance to them.

For all those reasons, one should support an energy affiliate, which would concentrate on those aspects with the oil companies of the world.

Finally, there is the question of the institutions and monetary arrangements. It would not cost us or the Americans anything to change the institutional structure to give a larger say to the people who are prepared to put money into it. Fundamentally, that means the OPEC surpluses. So far, that has not been possible.

I know that the so-called bureaucracy of the IMF and the World Bank is prepared to accept that. It has been prepared for some time to do so. Brandt did not want to have an additional institution of this sort. We suggested it because we thought that it was a suitable tactical manoeuvre to bring the World Bank and the IMF together to see whether they would be prepared to adjust. They have shown that they are prepared to adjust. It is now up to the Governments of the North, not the South, who will have to agree to that. When the South says that it wants a genuine demonstration of the will of the North, we can do that. It will not cost us a penny or a cent., and therefore I urge the Foreign Secretary, when he goes to the conference on 2 August, to be prepared to make those changes in the institutions.

The view has grown in the United States—although it is probably now beginning to decline and will decline further—that these things are much better handled bilaterally. Of course there is a place for bilateral action, but there are certain areas in which results cannot be achieved purely by bilateral Government action or by bilateral private action—first, because of the nature of the task and, secondly, because of the scale of the task.

There are, for example, the major dam projects. Very few Governments in the world are undertaking such projects. We are doing one in Sri Lanka. I imagine that the Treasury wishes that we were not doing it, but we are. I do not believe that some of the larger projects—particularly the one in West Africa—can be undertaken by one country. The reafforestation of the Himalayan slopes is another example. There are also the problems of Brazil. They cannot be managed by one Government. They can be done only by an institution that is efficient and has multilateral resources.

A second view is that it can all be done by Governments on a regional basis. The United States has recently done a great deal to help the Caribbean. The question has been asked: why do not other Governments take other sections of the world and act similarly? To a certain extent we do it with the Commonwealth, but that does not deal with the problem of a large number of the least developed countries. Here one might ask who is to take over Africa? Who is to provide for the development of so much of Black Africa? Who is to deal with a large part of Asia—particularly Bangladesh, and the forthcoming needs of India? I do not believe that it is possible to divide the world into regions in that way and say that the United States will be responsible for one region, the EEC for another, and Japan for another. What is there left after that? The problems cannot be dealt with in that way.

That is why it is necessary to have international institutions, with resources, which can see that the areas most in need are dealt with—areas which are the least attractive either from the point of view of bilateral Government action or of private enterprise.

In that respect, I hope that Cancun will succeed in bringing the North round to the view that this is a false trail. Countries can look after areas with which they are particularly concerned or with which they have long connections, as America and Canada have with the Caribbean, and so on. But we have to continue with the process of developing international institutions which can cope efficiently with the problems of the least developed countries.

I hope that the Foreign Ministers will now prepare the conference with a view to finding how much ground there is upon which they can agree. The Heads of Government in Cancun will then obviously have to discuss matters further. They will be able to reach agreement on specific issues, such as the four that have been mentioned. Trade ought to come at the end of discussios, and it will be much more limited than many people want. There will be great difficulties of implementation for countries such as the United States and ourselves, and other European countries. There will be great political difficulties, but it is essential to overcome them if world trade is to be increased.

It should never be forgotten that one of the basic objectives—if not the basic objective—of the whole of the exercise is to recreate world economic activity. Whatever economic doctrines people may have, there is no sign at the moment that anyone has any other way of recreating it. It was said yesterday in the United States that a depression has now started and will be continued. I cannot see that the present policies of the American Administration will recreate American activity, and if American activity is not recreated, the world can no longer look to the United States as its dynamo, as we did at one time.

When we get to the end—if there is an end—of a long period of unemployment and acute monetary stringency, what will enable the economy to recover? That is something that can be discussed in more detail in the debate on Monday. The real, outstanding purpose of the recommendations of the Brandt Commission was to deal not only with the problems of poverty, hunger, disease, mortality, justice and fairness in the world, but to recreate world prosperity so that we should all be able to gain, and so that the differences between us would be decreased and the North would be able to help the South as well as helping itself.

I ask the House not to overlook the fact that the whole purpose is to recreate world economic activity on a stable basis. That is what the world expects from us.

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

It is extremely difficult to follow a speech of the calibre which has rightly engaged the attention of the House for the past 20 minutes. The right hon. Member for Sidcup (Mr. Heath) has played a leading part in educating the House and the British public in the range and scale of the problems facing the international economy. He deserves the thanks of us all for his important work.

I wish to extend the apologies of the hon. Member for Inverness (Mr. Johnston) who is not able to be here, because he has to be in his constituency.

I am disappointed that after four debates time has still not yet been found to consider this important subject on a day other than Friday and when the House is full and we could expect the attention of senior Ministers from other major Departments as well as the Foreign Office. Having attended the debates regularly, I get the impression that Foreign Office Ministers are put up to play the straight bat with the sort of egregious and circumlocutory charm of some of the leading figures on the Government Benches which fudges the real issues. I would welcome the participation of Ministers from other Departments, if only to ensure that at least some of them read the Brandt commission report and began to get to grips with some of the problems it describes.

The Brandt report is a challenge to all of us. It is a challenge to Governments all over the world to look at our contemporary world problems with an imagination which has been lacking in the past. This has led, as the late Dame Barbara Ward pointed out recently, to the stark choice that lies before us. It is either in the direction of the Brandt report—towards peace and co-operation—or the way that the world went so disastrously in the 1930s—towards war, death, destruction and unemployment.

Although there are increasing signs that Ministers in the Foreign Office perceive some of those great issues, I regret that there are few signs that the rest of the Government do. I was encouraged to see last week that in the United States of America, despite the more overt remarks of the Administration, at least the Under-Secretary of State for Economic Affairs recognised in evidence to the joint economic committee of Congress the crucial linkage between foreign economic policy and both foreign policy objectives and domestic economic policy.

Our Government have failed to make that link and to understand the interaction between what they are trying to do domestically and what is possible in the contemporary world economic situation. That leads to the sort of despair that some of us have felt in recent months at the successively weak responses from the Government to all the pressures from the public who want them to play a leading part in the world negotiations to solve these problems.

As many hon. Members have testified, the Brandt report has excited enormous interest in Britain. This has occurred not only on moral but also on economic grounds. The Churches, large numbers of groups and individual members of the public have been excited by the problems of the world and wish to see the Government play a constructive part in solving them. Can we really hope now that the Prime Minister will approach the Mexico summit rather less like a virgin facing a fate worse than death upon her marriage and rather more like the enlightened bride who knows that her future will depend on understanding and partnership?

That is what we look to the Prime Minister for. We wish to see not fear for the future and a certain looking to the past but hope for the future and a clear idea that our destiny depends on our forging strong economic partnerships not only with the developed countries and the OPEC countries but also with the developing countries.

No country has more to gain from the expansion of the world economy than Britain. Few have more to contribute in leading the search for solutions to the problems of food, energy, international trade and the financial flows of institutions that are to be the main items on the agenda in Mexico. I shall deal with the food problem first.

I should like to remind the House that the Brandt Commission report says: There must be an end to mass hunger and malnutrition. I am sure that all hon. Members will say "Aye" to that. The fact is that 50,000 a day die of starvation. Thirty-five individuals a minute throughout the world are dying of starvation. This is clearly unacceptable in a world that wishes to call itself civilised. No less than one-quarter of the world's population is hungry. Against that background, we have to remember that before the Second World War every major region of the world, with the exception of Western Europe, was a net exporter of grain, the basic measure of food sufficiency. Now the position has changed, so that Africa, Asia, the USSR and Latin America are all net importers of food grain. That is a major turnround, partly a reflection of growing population but also a reflection of slackening in the growth of agricultural development in many of the developing countries.

Another factor to be borne in mind is that, in this year of 1981, no less than 30 per cent. of world food stocks are lost each year through infestation by pests or consumption by rodents. One-third of the world's food is lost in this way. These are clearly major problems that have to be tackled in a major fashion. Food production in many developing countries is not keeping pace with the growth of population. Half of Africa's population—225 million people out of a total of 450 million or slightly more—do not have enough to eat. Twenty-six out of 43 countries in Africa are net importers of food. What is to be done?

First, as Brandt said, the South itself has an important role to play. The less developed countries themselves must plan for food self-sufficiency. Without that basic planning in the developing countries, the efforts of the rest of the world to help them will be slighter than we would wish. I am careful to say food production and not agricultural production. One of the great difficulties beginning to emerge in developing countries is that far too much of the available agricultural land is going to plantation crops that can generate foreign exchange earnings from exports while at the same time the capacity of the country concerned to support its own population from agricultural production offsets that by causing the country to be a net importer of food and thus spend a high proportion of the foreign earnings that it gets from plantation crops.

Many of the developing countries must look at the whole question of food crop pricing, because unless price levels are right in these domestic economies there is serious danger that people will go for cash crops and ignore the more important food crops which are necessary for the health of the population concerned.

I agree very much with the right hon. Member for Sidcup that we in Britain have a major part to play in enabling management and technology to be available in this great drive for agricultural self-sufficiency. I should like to see more British men and women making their careers in the developing world and working on food production projects, which I think are infinitely preferable to food aid. Of course food aid is necessary to cope with disasters and with short-term shortages, but there is a serious danger that if the European Community expands its food aid programme too substantially, we shall get the recipient populations too used to alien products which can then subvert their interest in growing their traditional food grains.

I say that, unlike the Minister for Overseas Development and the hon. Member for Newham, South (Mr. Spearing), as a supporter of the Community. We must watch the food aid programme with great care.

We should certainly be working towards improved food security and a world food reserve. We should increase our aid for food production in the poorest countries. One of the most cost-effective ways of doing this—I am not now arguing for an increase in aid, although I believe that an increase is necessary—is making far more aid funds available for feasibility studies. One of the biggest hang-ups in trying to get medium-sized and smaller agricultural schemes going in the developing world is the shortage of money up front to fund feasibility studies, which can then be picked up by the private sector in order that potentially profitable schemes can be brought into operation more quickly.

I urge the Minister to look at the aid programme to see whether there is not a case for making more funds available for surveys of the kind I have mentioned.

Certainly, Britain should be playing a leading part in food production. Before the Foreign Secretary goes to Mexico, I hope that we shall have—perhaps in The Command Paper—a much more positive statement of what the Government propose for Mexico, as opposed to them simply saying, "We are broadly in agreement with that," which is suggested by someone else, or, "We are a little sensitive about that," or "We have reservations about that." What I think the country is looking to the Government for now is a positive, constructive and imaginative statement, not only on the question of food but in other spheres, to ensure that we play a leading part in the forthcoming negotiations.

Many other speakers are hoping to catch your eye, Mr. Deputy Speaker, so I shall not go into the questions of energy and trade as I should have liked to do had there, been more time for the debate. However, I cannot let the. Government's remarks on aid, in the Lord Privy Seal's opening statement, pass without comment.

The Government have acknowleded the importance of aid, but the Lord Privy Seal refused to explain why, at a time of domestic economic difficulty, which we all know exists, the aid programme should be cut by 15.3 per cent.

over two years and the rest of Government expenditure should be cut by only 1.7 per cent. Those are the figures in the Select Committee's report. If the Minister disagrees with them, I hope that he will reply to that matter. If they are correct, it shows that the Government have cut the aid programme nine times as much, exactly, as the general cut in the level of public expenditure. That, quite apart from anything else, is a very poor earnest of our real interest in solving some of the problems posed by the Brandt report.

There is no doubt that, however important trade is, and it is important, some countries can make no progress whatever without a substantial amount of aid going into their economies each year. It is a matter of great regret to me that the party to which I used to be proud to belong, during its two years in power has reduced the percentage of GNP that is available for official development assistance to the lowest level since official development assistance has been given by any British Government.

We in the SDP are committed to the earliest possible attainment of the 7 per cent. target. When we come to Government, as I have no doubt we shall, I hope that we shall be able to restore the rapid increases in aid expenditure which happened before this Government came to power.

Finally, I want to say a word about financial flows, which were touched on by the right hon. Member for Sidcup, and also the question of debts, because they are key factors in the forthcoming discussions in Mexico. Means have to be found to ensure that OPEC surpluses are put into sound investments in developed and developing countries to enable them to buy sufficient oil and to permit developing countries to run import surpluses with developed countries.

In other words, we want a basic triangle of mutual interest between the OECD, the OPEC countries and the less developed countries. The OECD has surplus capacity and is seeking markets for the products that our unemployed people would like to make. The OPEC has money which is seeking inflation-proof investments, and the LDCs have the most appalling poverty which, if only it could be financed and turned into demand, could provide substantial markets for the Western countries' surplus capacity.

It is to that central problem that the Government must address their attention. The principal ingredients of that are to try to agree a system of tricycling—if I may put it that way: getting the funds round the triangle—and providing debt guarantees. These matters can only be negotiated between the parties concerned. It would be a major start if, as the right hon. Gentleman said, the 22 round the table in Mexico could begin to make bilateral progress between themselves on these key issues so that the rest of the world could later begin to be associated with them.

I believe that Mexico gives the Western world a real opportunity to make progress on solving these macro-economic issues. I hope and pray that the Government, after reflection on the Select Committee report and the tone of this debate, will go into those negotiations, not simply seeking to do no worse than any other European country or the USA but having made up their minds that they will take the lead and encourage other countries to help solve these important and contemporary problems in an imaginative way.

Several Hon. Members


Mr. Deputy Speaker (Mr. Bernard Weatherill)

Order. The hon. Member for Norfolk, North-West (Mr. Brocklebank-Fowler) said that a number of other hon. Members wished to take part in the debate. In fact, there are five, and it has been intimated to me that the winding-up speeches will begin at about 1.45 pm. If hon. Members could limit their speeches to about 10 minutes, we shall be able to get everyone in.

12.59 pm
Mr. David Crouch (Canterbury)

Mr. Deputy Speaker, I shall certainly take your injunction to heart.

It has been quite a Friday. It was said at the beginning of the debate—I think by the right hon. Member for Leeds, East (Mr. Healey)—that it was a pity that this debate on such an important subject should be taken on a Friday. I do not really object to that, because the debate has been enlivened by speeches of quality and great consideration, not least the distinguished and outstanding speech of my right hon. Friend the Member for Sidcup (Mr. Heath), who treated us to the opportunity of learning from his enormous experience, study and understanding of the problems which the world faces today as a result of world poverty.

No one does more than my right hon. Friend to remind world leaders, politicians and others in influential positions that action must be taken to deal with this crisis, because the world will be in peril if we do not. Therefore, I am particularly glad that I stayed today to speak in this debate, because it enabled me to hear my right hon. Friend make his major contribution to it.

My right hon. Friend spoke not only as an international statesman but as a great Tory, especially when he reminded my hon. Friend the Member for Wycombe (Mr. Whitney) that the problems would be solved by national Governments and international intervention and could not and must not be left by us to market forces alone to produce the solution. By speaking thus, my right hon. Friend spoke as a man made in the great Tory mould of concern for all people and not as one who preferred allowing market forces alone to ensure that all the people were served.

The House has also been fortunate in having a good attendance by those responsible for aid. I exclude Treasury Ministers. However, my right hon. Friends the Lord Privy Seal and the Minister for Overseas Development and my hon. Friend the Minister of State, Foreign and Commonwealth Office have all attended the debate, and, of course, we have also had present the Shadow spokesman for foreign affairs, the right hon. Member for Leeds, East. I am sorry that the right hon. Gentleman could not stay for the whole of the debate. It may be that he had another engagement.

We are also indebted to the work of the Select Committee on Foreign Affairs and to all those members of the Committee who have remained behind today to contribute. They have spoken with detailed knowledge of the problem and, as was illustrated by the speech of the Chairman of the Overseas Development Sub-Committee, the hon. Member for Kingston upon Hull, Central (Mr. McNamara), they have shown that the work of a Select Committee is to study a subject in detail and to give the House the benefit of its investigations on behalf of the House during many hours of work. We are grateful to them. They have added greatly to the debate.

The Mexico summit has been referred to by a number of hon. Members. I happen to be attending a summit of parliamentarians in Havana in September—the Inter-Parliamentary Union. I shall be speaking on energy matters as they affect the world, bearing in mind the Brandt overtones.

That inter-parliamentary conference is being given 10 days. No one can say that a meeting of parliamentarians from some 90 nations is worth 10 days if a summit of 23 world leaders to consider the Brandt commission problems is given only two. It is extraordinary to expect our leaders to be able to consider four major elements of the Brandt report in a mere two days.

Today I adopt a broad brush approach. I shall not deal with any of these matters in detail. I have been rather put on the spot about Brandt by my constituents. They came to the House in a mass lobby, and they are coming back to me again in my constituency demanding that I attend a public meeting. It must be said that they do not have to demand, because I go willingly. I welcome it.

Above all, I am glad and proud that my constituents recognise the importance of Brandt sufficiently to convene a public meeting before the Mexico summit with a view to producing a message for me to send to my right hon. Friend the Prime Minister telling her what at least a few people in the country feel should be achieved in this vital area.

As my constituents' Member of Parliament, I have to take some action. I accept that. There is a moral challenge in Brandt, and a political one as well. I know that elections will not be won by offering more overseas trade.

Politicians must give the lead. We have a duty to educate, to explain more and to make people look outwards and not inwards. I have no doubt about my political response. There has never been any doubt about it. Twelve years ago I introduced a Friday debate on the Pearson commission report. I advocated that official Government aid should be at the Pearson recommendation of 0.7 per cent. I still advocate and fight for that. I will make sacrifices in any other area to achieve that.

As the Select Committee report properly and severally said, to increase aid now would have great psychological effect around the world. The greatness of this nation in understanding its place in the whole community of nations—among rich and poor—is to set an example and to help.

I agree with Brandt, who, on page 282 of his report, referred to the search for solutions being difficult. He said that that was not an act of benevolence but a condition of mutual survival. That is the sort of educational message that I am trying to convey to my constituents. We have a duty to explain the implications—to use Brandt again—of global interdependence. Above all, there is a need today for an outward-looking education. The youth of the nation must be taught to look outwards. We must begin to think—again, in the words of Brandt—of investing in a healthier world economy, so properly referred to by my right hon. Friend.

We cannot ignore the poverty that exists in the world, but we do that all the time, from our cosy armchairs, when sitting inside our new imported cars as we commute to and from our jobs, as we sit in front of our new colour televisions, adapted with video, as we listen to our latest hi-fi and as we fill the planes and the ferries for our summer holidays to the Continent, the United States, Miami and the West Indies. [Interruption.] I am talking of all the people. We are ignoring the problems from our comfortable positions. Many of our business men, lunching in their walnut-panelled dining rooms, are ignoring the challenge that faces them as they drive home comfortably in their Rolls-Royces and Daimlers. Looking around Britain today one would not think that it was a poor, penniless and poverty-stricken nation. It does not give that impression.

Many others are ignoring the problem. They do not wish to see outside our country. They refuse to acknowledge that we have a duty not only to help the poor, but to help mankind survive.

Mr. Stanley Newens (Harlow)

I am following the hon. Gentleman's remarks with great interest. I hope that he will stress the point that Brandt's recommendations are not only in the interests of the developing countries but will help to provide the additional markets and goods that we desperately need in Britain. It is not simply a question of charity.

Mr. Crouch

I agree with the hon. Gentleman. That point has been made by many hon. Members, and I accept it absolutely. He has taken the words out of my next note. I am told that charity begins at home. I am told also that Britain cannot afford charity at present because it has enough troubles of its own. I do not accept that. I am looking outwards, and must continue to do so. There are even echoes today of the philosophy of "I'm all right, Jack". I accept none of that. We must not turn our backs on the problems of the poverty of the world.

Brandt described what poverty means. We use the word rather lightly and loosely. Brandt said that the nature of poverty means hundreds of millions in starvation and despair. Can we turn our backs on that? Of course we cannot. We dare not turn our backs on the possibility of war or of an attack upon us. We cannot ignore the possibility of an attack on the West. We must spend thousands of millions of pounds to guard against that eventuality. We are investing overseas as well as at home in the cause of defence. We are investing in bases, airfields, ships, troops and in support of our allies. If we did not do so, we might well be overrun and overthrown.

We cannot turn our backs on the problems of poverty and social injustice in Britain. We have been warned in Liverpool, Brixton, Manchester and elsewhere. The Brandt report is another warning of an even greater crisis. It speaks of immense risks threatening mankind. In his introduction to the report Willy Brandt describes the problem as too important to be left to Governments alone.

I conclude with the following words from Willy Brandt: Our appeal goes to youth, to women's and labour movements, to political, intellectual and religious leaders, to scientists and educators, to technicians and managers andto members of the rural and business communities. I agree that we must take up the challenge. This debate at least affords us that opportunity.

1.12 pm
Mr. Frank Hooley (Sheffield, Heeley)

In his fascinating speech, the right hon. Member for Sidcup (Mr. Heath) omitted to say that there is the element of a power struggle between the Third world and the economic domination of the rich industrial North. We would be unwise to overlook that element within what is going on and what will take place at the Mexico summit. We hope that that will be transmuted into co-operation and common agreement. The challenge at Mexico will be partly whether we can successfully use and re-form the highly sophisticated machinery of international co-operation that has been built up over the past 35 years—for example, the United Nations, GATT, the IMF, the World Bank and UNCTAD—to achieve a new international order.

We must remember that there is a political and economic struggle in which some quite rich countries in the Third world have identified themselves as on the side of the Third world and against the industrial North. Unless we can resolve this conflict by coming to some of the excellent conclusions and policy that the right hon. Gentleman outlined in his speech, the power struggle will become more serious and more grim.

I shall direct my remarks to financial institutions and to energy. In some ways the IMF encapsulates the entire debate between North and South. It focuses the argument on power and the flow of resources.

At present the IMF is predominantly a Western institution. The United States, the United Kingdom and France possess 32.1 per cent. of the voting power. The 109 countries within Africa, Asia and Latin America possess 30.1 per cent. There are 20 industrial countries which between them possess nearly two-thirds of the voting power—59 per cent. The 121 other countries, including all the great oil producers in OPEC possess only 41 per cent. Even more startling is the fact that the United Kingdom alone has a 6.9 per cent. of the voting powers within the IMF. That is more than the right extended to the whole of Africa excluding the oil-producing countries.

The IMF has come to represent to me a symbol of orthodox finance, monetary policy, cuts in public expenditure and indifference to unemployment. There is no worthwhile reason why that should be so. The IMF's objective is to facilitate the expansion and balanced growth of international trade, and to contribute thereby to the promotion and maintenance of high levels of employment and real income and to the development of the productive resources of all members as primary objectives to economic policy. That is enshrined in the charter of the IMF. It has been overlooked to a considerable degree in the policies of the IMF hitherto.

Of course, all in the IMF is not negative. There has been the creation of the special drawing rights which, as Brandt himself said, represents a clear first step towards a stable permanent international currency. There has also been the creation of the compensatory financing facility, the buffer stock facility and, recently, special arrangements for food within the fund. Therefore, the IMF, whatever its past defects and faults, as an institution and as a structure contains within it possibilities for a genuine move forward in the building up of a new international order.

There should be four objectives of policy at Mexico by the British Government and the other Western Governments. First, there should be a genuine move towards sharing power with Third world countries within the voting structure. That is recommended in the Foreign Affairs Select Committee report. Secondly, the IMF must become one of the main mechanisms for the recycling of oil surpluses. It will not do to rely on the private banking system to deal with that problem.

Thirdly, the compensatory financing facility resources should be trebled to at least $12 billion, as is recommended in Brandt. Fourthly, there must be a serious move and serious negotiations towards making special drawing rights a principal reserve asset in the world and linking the allocation of special drawing rights with the developing needs of the Third world countries. Related to that are the more complex, highly technical problems of getting off the ground the idea of a substitution account which would take the strain off the dollar as an international currency.

I shall now say one or two words about energy. The Third world countries have two urgent problems. The first is the cost of oil imports, which has been referred to several times. The second is the fact that its urgent and immediate energy requirements are leading to the massive destruction of the forests and also the widespread use for domestic energy purposes of animal dung, which should be used as fertiliser on their farms. Those two factors are causing immediate and disastrous effects in many Third world countries.

The objectives of policy which should be pursued at the Mexico summit are, first, that in the North we have a massive responsibility to use our energy resources efficiently. We must bear in mind that the use of energy per head in the rich industrial world is currently 40 times as great as its use per head in the poor world. It is important that we should not only use sensibly the hydrocarbons which we have, but we should develop more rapidly and vigorously the newer resources such as solar, wind, hydro and other possibilities, which are infinitely renewable. Thus, we should not be gobbling up our finite hydrocarbons.

The Third world must have financial help to cope with oil debts. What is more important and more urgent is investment in technology to explore and exploit those countries' hydrocarbons. The World Bank has said that probably 58 Third world countries have some oil resources. Given the technical help and financial assistance, they could exploit those resources.

We know that those countries also have gas and that some of the greatest hydro-electric possibilities on the greatest rivers in the world exist in Third world countries. Investment there could provide an infinite and renewable source of electricity for many of those countries, which would make them less dependent on oil and hydrocarbons generally. Investment in renewable energy resources is just as important in Africa, Asia and Latin America as it is in the North.

The United Kingdom has a special opportunity to contribute on energy. We possess great public corporations such as the National Coal Board, the Electricity Generating Board, the British National Oil Corporation and British Gas. They have immense technological skill and experience in the exploitation of hydrocarbon resources. It could be made available at great cost to Third world countries. I understand that the NCB is already assisting in India and might be involved in other countries. There is no reason why our great public corporations should not make their skill and knowledge available to other countries that have natural resources to exploit.

In addition, we are rapidly developing considerable knowledge and skill in wave and wind power and in solar technology. That could be passed on at no enormous cost to countries with the natural possibility of exploiting the resources. The Commonwealth Development Corporation has immense experience in dealing with utilities such as electricity, and could provide the managerial experience.

There is a great opportunity at Mexico to give hope to the poor people of the world and to use the international machinery that already exists. If the chance is missed, what could be a constructive dialogue will develop into a acrimonious wrangle and will help nobody in the world.

1.22 pm
Mr. Hugh Dykes (Harrow, East)

The hon. Member for Sheffield, Heeley (Mr. Hooley) knows a great deal about the subject. He supplied the House with some interesting ideas in the closing part of the debate. It has been a good and constructive debate, as other right hon. and hon. Members said.

Recently, I received a letter from a constituent who complained about the noise, shouting and fighting in the House of Commons as he heard it on the radio. He asked why the House of Commons could not behave more like their Lordships in their quiet and more thoughtful debates. As a footnote he said that, however, he had attended the House of Commons once on a Friday, and it was more like the House of Lords then. This debate has been an example of that. If we accept that constructive advice, we have to aspire to the difficult concept of duller politics, which might be difficult for some to accept.

There has been a substantial meeting of minds on some of the priorities in the Brandt report. Unfortunately, I missed the opening stages of the debate and the first part of the speech of my right hon. Friend the Lord Privy Seal. It would not be right to rehearse and repeat some of the ideas that have already been expressed. The urgency of the whole concept of the need for a Brandt solution to the world's development problems in underdeveloped countries has come through clearly from both sides.

That was not fully endorsed in one or two comments. I recall the comment of my hon. Friend the Member for Wycombe (Mr. Whitney), who is no longer in the Chamber. He said that the matter was important but that we should not become too pessimistic. That comment might have some validity if it means that we should not get so depressed that we do not move to take constructive international action. However, if it means that there is not much of a problem, so what we are worried about, that is unacceptable.

I do not suggest that my hon. Friend's remarks were in any way akin to the remarks of my hon. and learned Friend the Member for Beaconsfield (Sir R. Bell) in the previous debate on the Brandt report on 16 June 1980, when he said: The report, after all, is the beatification of the begging bowl. We are pauperising some of these countries—bringing them to mendicancy … 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 … it is teaching them the lesson that we learnt—the lesson … 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."— [Official Report, 16 June 1980; Vol. 986, c. 1265–6.] I do not know whether many hon. Members, irrespective of party, would accept that not very modern proposal.

The tenor of the debate has been right, in that it has again and again emphasised the partnership between private efforts and public and international efforts, but surely it is not a matter of ideology or political obsession in a narrow sense to say that the lead has to come from international agencies and from Governments working together.

That is why these forthcoming international conferences are so important. The two basic crises in the world—the crisis of the underdeveloped countries and the crisis of the advanced world—fit together. We may call the advanced world the Western world, but of course it includes Japan. The whole of the advanced world is capable of producing goods and services that can be consumed and used by the aggregate demand of the world, but there is not sufficient demand in these countries themselves, and there certainly is not in the underveloped world—excluding the oil-producing countries if then-demand is developed by their resources in the future.

None of those countries at present has that total real demand to meet the potential output of the Western world, not only the output that we have now because of the depression in the Western world, but the output that we could have if we returned to the concept—which may to an extent strike some people as old-fashioned but which I think is very modern—of the need for renewed growth throughout the world and for advanced countries to get their internal growth going again through concerted and direct action and partnership between public and private effort. My right hon. Friend the Member for Sidcup (Mr. Heath) also referred to those important imperatives, and we pay tribute to him for the work that he has done in this area.

One point that has not yet been made may reduce the amount of agreement that has so far been manifested in the debate. I think of the relative lack of enthusiasm of Opposition Members for the European Community and its institutions. It is important for the European Community, as a single entity and not just as a collection of members, to be a wholehearted and enthusiastic supporter of the entire Brandt exercise. There should be some sort of Community identity imposed, at least at the margin, on these forthcoming international conferences.

I think that I am right in saying that the planned disbursements from the European development fund for the next five years to 1985 are about £2.8 billion, and we will be making a good contribution to those figures. However, that is a tiny amount—about 1½ per cent. of the current size of our economy. Over the five years, the percentage figure is even more minuscule. It would help if the European development fund could be built up. If the member States had the will and the determination to build up the budget and provide more resources for overseas aid, we could have a much larger European development fund in the future.

That is the plea that I make specifically to my hon. Friend the Minister of State. I hope that he will encourage the concept of a larger EDF, coupled with the obvious requirement that the EDF's control procedures in the underdeveloped countries need to be improved. It is not a contradiction to say that many officials in the European Community are very worried about the way in which money that is distributed from the European development fund and related funds can be misused at the margin by wicked officials in some underdeveloped countries. We all have our favourite stories, and they cannot necessarily be related in this debate, but that would be the Community's contribution, although it needs an effort of will by all the individual member States.

My right hon. Friend the Member for Sidcup referred to the fact that the countries from the South—he used the word colloquially, because he said it included Australia—may have been worried that 23 leaders were gathering to the exclusion of other countries and feared that agreements might be made in the names of countries that were not present. I noticed that my hon. Friend the Minister of State disagreed when my right hon. Friend cited the two specific examples of Australia and Cuba. I should, therefore, be grateful if my hon. Friend would say which countries from the South have expressed misgivings. It would help the House to have those.

There is not time to go into more detail, but I wholeheartedly agree with what has been said in the debate about the imperatives and priorities of Brandt. However, I end with a plea to my right hon. Friend. Although in recent months there has been an improvement in the mood and attitude in each country and in the response in official circles to all that Brandt stands for, as a result of various pressures, I am not sure that they go far enough.

Even in the journal about the whole excercise—"IDS Sussex"—when in April Frances Stewart considered the Brandt report and summed up its impact, one can see the danger of what always follows even a striking international excercise such as Brandt, which is unique in world history. The article concludes: Detailed examination of almost all the areas covered by the Commission suggests that the obstacles to change—conflicts of interest, opposition of powerful groups and so on—are more powerful and effective than the mutual interests, which is not surprising given the manifold failures to negotiate change. Therefore, even if we have the conferences this year, and even if this Parliament and others express the essential will to take Brandt further forward, unless individual Governments operate with ruthless determination to get co-operation growing in the world—I include the British Government, above all, with our legacy, history and experience—we and the starving millions will face a very grim future, indeed.

1.31 pm
Mr. Clinton Davis (Hackney, Central)

We were privileged to hear the right hon. Member for Sidcup (Mr. Heath). Those of us who have read the Brandt report unanimously join in the tribute to him for his dedication, together with that of his colleagues on the report, in making a unique and remarkable contribution to international thinking. It is an inspiring example. I suppose that the central theme of the report is the interdependence of the North, and the South.

The views that the right hon. Gentleman and the report express contrast vividly at least with the Government's initial hostile reaction and in particular the reaction of the Prime Minister. Some time ago I attended a meeting at which there was a large number of the militant faction, and I found a remarkable coincidence of view between them and the Prime Minister on the Brandt report. They, of course, felt that it was a capitalist conspiracy, because the right hon. Member for Sidcup was on it, and they rejected its whole thesis. They believe that we have to wait for the whole system to change before we can bring aid to the depressed people of the world. In a sense, that reflects the Prime Minister's view. She believes that we must first get our economy right, as she would put it, before we can embark on a massive programme of aid. However, there just is not time for that. Time is not on our side. Above all, I do not believe that the Government have the will to see the transformation of events in the world that is so vital if we are to secure the objectives set out in Brandt.

We cannot ignore the backcloth that has been repeatedly referred to in the debate, which is that one-fifth of the world's population suffer from the most acute poverty and malnutrition and have apallingly low health, hygiene, sanitation and nutritional standards, and that things are getting worse with an increase of 2 per cent. a year in the world population. That represents a deadly threat to each one of us and to our children, because it is peace that it is in issue. Eventually, the hungry have no hope. They have nothing to gain from seeking cooperation with an unco-operative and unfriendly world, and when they continue to be denied anything remotely resembling a square deal, what will they do? I believe that the prospects of disaster should be clearly before those who attend the Mexico summit.

Unfortunately, the most significant country in the Western world has taken a hard line view about that. On 12 March it was announced that President Reagan had decided to shrink the American Peace Corps, reduce the scale of direct American food aid and curb American bilateral development assistance. The Asian Development Bank faces grim prospects. The United States had promised to provide, under President Carter, $3,240 million to the International Development Association over three years and proposed three instalments of $1,800 million, but President Reagan has called in his new budget for the current year for IDA funding to be cut to $540 million and for next year's funding to be cut to $850 million. That is the example set by the leading Western nation, and it is an example for which the Prime Minister, apparently, has so much admiration.

Whatever view the Government may adopt about that, there is tremendous mutuality of interest between the North and the South, but the burden lies on the industrialised nations to lead the way. They should show good will to engender the confidence that is in such short supply.

I do not intend to speak about energy supplies. I had intended to, but the subject was covered by my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley).

I should like to speak briefly about the financial and other institutions. If the developing world is shut out of decision making, we shall never engender the confidence that is so essential. That has been the case hitherto. I hope that the Minister will say whether he proposes to change the composition of the financial institutions to ensure that the developing world has a greater say than in the past.

When I was in Government my responsibility was for shipping. In that area the Government could have shown that they have good will towards the developing world, but they have not done so. I mention two examples. Decisions have been taken by the Government which I believe are wholly inimical to the purposes of Brandt in developing trade and ensuring that there is a better and fairer deal for the developing world.

We had a report, which was unanimously accepted by the industry, about phasing out differentials in pay between seafarers registered in Britain and Asian seafarers. It would have been carried out over five years. It was a direct and immediate way of ending a disgraceful exploitation of workers from the developing world. It would have given them improved status and dignity and the opportunity to improve their standards of seamanship, because the two things go hand in hand. To their shame, the Government have failed to implement that report.

The second problem is that the Government have aligned themselves against the developing world and the recent UNCTAD conference on shipping by sustaining an abuse, which itself sustains the exploitation of seafarers from the Third world.

That sort of attitude will injure our interests over a period of time to an extent that the Government appear not to contemplate. We should recognise the demand for a fairer share of trade in shipping. We need to pass on the considerable expertise that we have accumulated over the years as a traditional maritime country. We could do that in a number of other directions, too. However, we should endeavour to strengthen the role of our international trade unions, because there is so much exploitation of workers the world over. The trade unions are weak at present and they need to be nourished. The one essential role that they can fulfil is that of getting better conditions for workers, better wages and a more equitable deal generally.

1.4 pm

Mr. Austin Mitchell (Grimsby)

It has been an interesting exercise over the last few months to watch the evolution of the Government's attitude towards the Brandt report. The first phase was clearly just a blank negative, with the Prime Minister criticising aid as handouts, and others attacking aid as being wasted—the traditional kind of attack by truism to dispute the case. It was as if at that stage they wanted to pretend that the Brand report did not exist, like the right hon. Member for Sidcup (Mr. Heath).

We then passed into the "praising with faint damns" phase. Today we seem to have moved into a new, more reverential phase, with the Lord Privy Seal's speech about the Brandt report. I welcome the evolution, because U-turns are a great spectator sport. I hope that it will lead to changes in policy, because we are suffering still from the serious and harmful effects of what has been done, and those effects will be with us for a long time unless the policies on aid and development are reversed.

The Sub-Committee's report shows that the overseas aid figures for 1982–83, as compared with 1980–81, will be down by 15.3 per cent.—that is compared with a cut in public spending generally of 1.7 per cent.—because this brave, courageous Government go for an area which is apparently defenceless and make their biggest cuts there. That shows a state of mind which is totally hostile to the purposes and intentions of the Brandt report.

We have had the treatment of overseas students, the abolition of help to development education and studies, and also the depression and deflation in our domestic economy—our "Made in Britain" depression—which, as well as being a blow at the weaker regions of this country, is a blow at the Third world.

It is hypocrisy to condemn protectionism, as the Lord Privy Seal did, and then to use unemployment as an import control, which is essentially what the Government are doing. The realities of the Government's policies are harmful to world development and to the developing world generally. They are throwing away what should be a major advantage—the contacts, the relationships, and our ability to contribute to development, which come from a long and close association with the developing world. They are being cut back and pared down just at the moment when they could and should be most useful.

It is hardly surprising that the Prime Minister, alter staying to hear of the threat from sex shops to the morals of passing bicyclists, did not stay to hear the speech of the Lord Privy Seal, because that speech was at variance not only with her own past words but with her hard, uncharitable attitudes and the narrow piggy-bank economics that she preaches. It is still the Prime Minister's attitudes that are conditioning our international stance when she finds herself, as she did last week, as "Little Miss Echo" to the economic follies that the Reagan Administration are proposing to pursue in the United States, and when other nations want to condemn the increase in American interest rates, which is itself a direct tax on the developing world in an extremely tough financial situation.

In my view, the train theory of economic development still works, and it is up to the industrialised countries, by expanding and growing and by inflating their economies once again, to pull the rest of the world out of the depression.

I have one or two reservations about the Brandt report from an avowedly protectionist point of view which I will mention briefly, because there will be no future for this country unless we take steps to rebuild our basic industries and rebuild our industrial base. That envisages some measure of import management, but that is import management directed against the advanced industrial countries, not against the developing world. It is interesting to see from the Sub-Committee's report that both the TUC and the CBI emphasise that the threat to our industries comes from the advanced industrial economies and not from the developing world.

I was particularly interested in the rather jolly contribution from Professor Jolly about the beneficial impact of trade with the developing world on the economy. The report quotes a surplus in trade in manufactures with the developing world of £6 billion, in contrast to a deficit of £2.8 billion in trade in manufactures with the EEC in 1980. That is the economic problem which we have to tackle by protectionist measures. Trade with the developing world is not the problem. That must be built up, because our destinies are interlinked.

I shall not detain the House by quoting figures about the relative position of the Third world, because the statistics have been well rehearsed in our debate, which has been of a high standard and has included a particularly moving and effective contribution by the right hon. Member for Sidcup, for which we are all grateful. The statistics of poverty and the tragedy of the developing world are so appalling that they numb in the delivery.

We must emphasise the essential burden of the Brandt report—our moral responsibility to help and our commitment as one of the stronger and better-off countries, despite the Government's efforts—to help those who are far less well off. We have to help, because we are one world and we go forward together or not at all, and we must help because it is in our interests to build up trade and contacts, particularly our long-standing contacts on the Third world.

The Brandt report is important because it sets out a considered, effective and powerful programme of action for both the long term and the short term. It proposes an avenue on the international scene down which the world should move. The report is also a powerful document because it acts as a rallying point for informed opinion, which is building up steadily in this country.

As politicians, we are accustomed to hearing people ask why we should give aid to others when we have no money for ourselves to build new schools and so on. The Brandt report provides a rallying point for people to come together as a pressure group for aid and development. It gives point and focus to concerns about the Third world. We had a mass lobby of the House and many hon. Members have been lobbied in their constituencies, particularly by church groups, but also by groups that are forming round the report and are anxious to push its proposals and to persuade the Government of the need to accept them and to push them on the international stage.

My speech springs directly from such representations in Grimsby. This building pressure is an important demonstration that the Brandt report will be a major issue in British politics, as well as on the international stage, in the 1980s. Parliamentarians and Governments who ignore it do so at their peril.

The change in the climate of opinion which is developing rapidly, thanks in large part to the proposals of the Brandt report, means that the Government should take the lead and use our traditions, accumulated expertise and close relationship with the developing world. They should go to Mexico, not to listen, but to lead and to advance the workable, practical and important proposals of the Brandt report. I am particularly attached to the financial proposals, the need to sustain countries through balance of payments deficits arising from expansion and the need to sustain the transfer of the surpluses of oil countries for development.

This is an area in which we have a good record, close contacts and experience and in which public opinion is becoming increasingly involved and concerned. We have a responsibility to take a lead and to make a moral contribution instead of preaching the Gradgrind, piggy-bank economics of the Prime Minister or sitting on the international stage like Micawbers saying that something will turn up internationally, as we say that something will turn up nationally.

It is our responsibility to put forward positive proposals in Mexico and to seize the opportunity that we have been spurning for too long. It is important that the summit at Mexico should lead not to the usual mass of verbiage and platitudes but to positive proposals to help the developing world. The consequences of not doing so are disastrous, both internally and externally.

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

I should be failing in my duty if I did not begin by paying my tribute to the excellent work of the Overseas Development Sub-Committee of the Select Committee on Foreign Affairs. Its efforts on this and several other reports being published this week and later have been a trememdous help to Opposition Members. I hope that the Government will pay serious attention to its recommendations, expecially as they refer to the Mexico summit.

I hope that the Government will also accept that the Opposition kept pushing for a major debate on the Brandt report week after week to present the Government with an opportunity to explain to the House the specific proposals that they intend to make at the summit meeting in Mexico. I listened attentively to the speech of the Lord Privy Seal the right hon. Gentleman will not be surprised if I express almost total disappointment at the Government's lack of specific pledges and proposals for the summit. The very fact that a Friday was allocated for the debate smacks of a fair lack of commitment. The hon. Member for Canterbury (Mr. Crouch) said that he thought that holding the debate on a Friday was a good idea. He also talked about the need to educate people. The difficulty about Friday is that many hon. Members have constituency commitments. It is apparent that the Press Gallery also has many other commitments.

Our experience of previous debates on Brandt on a Friday has shown that they receive practically no coverage from the media. If we are to educate people, as the hon. Member for Canterbury and I wish, I believe that the media—especially in the absence of an education programme—has some responsibility to promote the issue.

I should like to add my personal tribute to the right hon. Member for Sidcup (Mr. Heath) not only for his outstanding speeches in the House. From my experience on the campaign trail, with meetings at universities, churches and local bodies, I often find that the right hon. Gentleman is in advance of me, that this process can mean long waits on railway stations, long journeys by car and, in the right hon. Gentleman's case, long journeys by air to get across the message of Brandt. His meetings, of course, are excellent. No praise is too high for the tremendous efforts of the right hon. Gentleman over the last 18 months.

I come to my first question to Ministers. If there are to be no specific proposals today, will the Government give a promise that by September at least they may have some clear intentions which will enable those who take an interest in this matter to respond and give support? If the suggestion of the hon. Member for Hertford and Stevenage (Mr. Wells) about restoring the £63 million cuts in the aid programme was to form part of the proposals for Mexico, I would give loud and public support to the Prime Minister. If the Prime Minister presents clear and rational proposals, she will have the support not only of the House but the country. This is essential if Britain is to make an impact at the summit in Mexico.

I have mentioned that the speech of the Lord Privy Seal was somewhat negative and empty of specific proposals. This is in sharp contrast to earlier promises by Ministers. As an example, I refer to a speech by the Minister of State—the hon. Member for Mid-Oxon (Mr. Hurd)—at Watford on 13 March. Talking about the Mexico summit, the hon. Gentleman said: The Prime Minister will certainly go with a clear analysis and good ideas.

I hope that the Minister is right. There has been a marked absence of clear analysis and good ideas from the Government today. We look to them for that, because they are "our Government" when British Ministers go abroad. We wish them well.

However, the response so far, in practical terms, has been extremely disappointing. After all, as was mentioned yesterday by my right hon. Friend the Leader of the Opposition and this morning by my right hon. Friend the Member for Leeds, East (Mr. Healey), all that we have had so far from the Prime Minister, at Ottawa and in this House, is platitudes. How can she justify saying that she supports the Community, which gives added support for aid and development policies for the Third world, and, at the same time, in an interview in Ottawa, say "I have not changed any of my policies"? There is no way in which one can justify such double standards. Therefore, we are looking to the Prime Minister to attend the summit with a very positive attitude to the discussions.

I am the first to admit that the Prime Minister's task will not be easy—that I grant the Government—for she goes to that conference as a Prime Minister whose credibility on the Third world is seriously flawed. It was her public indiscretion at the Dispatch Box when she declared that aid was only a handout. It is public knowledge now that it was her hectoring of the leaders at the summit in Venice that persuaded them not to include anything specific about the Brandt report in the communiqué.

Therefore, if anyone thinks that my judgment is harsh or unjust, he will have to show me, the House and the country how the Government can justify attending a conference and pledging the good will of Britain to the Third world, when we and the Government know that over the next two years there will be a 15.3 per cent. cut in the official aid programme.

I hope that the Minister will not repeat what he and other Ministers have said so often—that in money terms we are spending far more than the Labour Government spent. In the Prime Minister's days in Opposition, she always informed and lectured Labour Members that we were talking about Government finance and that we always had to talk about it in real terms. The right hon. Lady is hoist on her own petard in that matter by indicating that we shall be spending over £1,000 million in the aid programme. We must talk in real terms. I hope that that is the way in which she will talk at Mexico, for to do other at that very distinguished foreign gathering would make the British Government a laughing stock.

The truth—I do not think that any Opposition Members dispute this—is that the Government are somewhat unwilling and reluctant partners at Mexico. Indeed, it is the Prime Minister's appalling record over the last 18 months that has ensured that we are not even invited to be a co-sponsor of the conference. That is a terrible insult to a country with our standing and reputation in the world. It was very questionable at one time whether we would even be invited to attend the conference.

But, however unwilling and however reluctant from a moral and philosophical point of view, the Government have no excuse from an economic point of view. With our almost total dependence on trading with the rest of the world, we should be grasping the opportunity to provide leadership at that conference. In the next few months, we should be saying that we shall make aid and trade a central part of the Government's economic strategy.

No one expects the present Government, especially as they are so uncaring and so insensitive to the Third world, to say that they will implement Brandt 100 per cent. However, at the many public meetings to which I have referred, one thing has come through very sadly. The caring British public have been gravely embarrassed by the fact that when this woman Prime Minister of ours returned from a visit to the Middle East and India, having witnessed the crushing poverty and misery in those areas, with all the maternal warmth of an ancient dinosaur, all that she could boast about was the selling of arms and equipment of destruction. I hope that no Conservative Member would seek to justify that statement by the Prime Minister.

Nevertheless, if the Government are bereft of ideas or practical suggestions let me, in a few short minutes, try to present what I hope the Foreign Secretary and the Prime Minister will get across at that conference table. As has been said so often today, food is probably the highest priority of the four that have been mentioned. A strong crash programme is needed to stimulate food production in the poorest countries. I hope that that programme will seek to develop farming systems that are appropriate to the local needs of each country. An essential part of that programme—and this is perhaps one of the weakest parts of Brandt—would be the strongest possible pressure for land reform. Land reform was one of the weakest aspects of the Brandt report. All too often, as the Minister for Overseas Development will accept, giving aid to Governments is no guarantee that the aid will reach the poorest parts of their countries.

I hope that we shall make greater use of the expertise and skills of the Commonwealth Development Corporation. The right hon. Gentleman commented on the absence of Treasury Ministers. Yesterday I had a fruitful discussion with the Commonwealth Development Corporation. Its finances are in a critical position. I lay no blame at the door of the Minister for Overseas Development, but the corporation has some scathing things to say about the Treasury. This important body, like the London School of Hygiene and Tropical Medicine, is at risk. I hope, therefore, that the Minister will be able to tell me, if not today then in the near future, about the finances of the Commonwealth Development Corporation.

I take this opportunity to press, as I hope the Minister will press, for the setting up of a new and effective international grains agreement that will guarantee a real degree of price stability. Provision of water is one area in which we have great expertise. Britain has an outstanding lead in this respect. One only has to talk to Sir Robert Marshall, the chairman of the National Water Council or Mr. Devenay the director of my Strathclyde region, to discover not only their expertise but their wish to be involved. What is needed is not a large number of darns as those in Sri Lanka. I have great doubts about that project, welcome as it is to the people of Sri Lanka. Nor do we want sophisticated water systems that too often break down or remain unrepaired. What is needed is more low-cost equipment that can be manufactured in the developing countries. That would cost little in financial terms, and would do much for health as well as water and food provision in those countries.

The second area of policy, and perhaps the most important, apart from food, demands that an attempt should be made to fill the empty chair at the summit in Mexico. That empty chair is the chair of OPEC. Of course, members of OPEC will be at the conference, but it is essential that at future summit meetings the organisation that has a greater influence than any other—it is the most powerful economic weapon in the world—is there in an official capacity. The fate of many of the poorest undeveloped countries rests with that organisation.

Tanzania, for example, pays almost 70 per cent. of its export receipts to cover oil bills. That is frightening. Unless an agreement can be reached with OPEC on the future levels of oil prices, several of the poorest countries will be in danger of defaulting on their commercial debts. That should be a serious warning to us, particularly as we are an influential banking country, because that debt burden is reaching a critical stage.

I hope that the Minister will have examined Lord Lever's articles in The Times last week. My right hon. and noble Friend is a man of outstanding ability in finance matters. I shall give one brief example. Last year, interest payments on external debts accounted for 16 per cent. of export earnings of 12 largest borrowers in the non-oil producing Third world countries. This year, the figure could reach 20 per cent.

Therefore, I warn the Government that if this debt burden continues, it is possible that one major bank could be seriously at risk, which in turn would precipitate a crisis in the international monetary system almost of the proportions of the Wall Street crash. It should also be borne in mind—I believe that it is accepted by everyone—that the future of our exports to the Third world would be affected, because almost a quarter of the total would be seriously at risk, with our economy ending in disaster if that occurred.

It is crucially important in this week of the thirty-seventh anniversary of Bretton Woods that the Government should take the lead in calling for fundamental changes in the present structure of our international monetary system. It is in a mess, and there have to be changes which create a more democratic effort to get management and control representing Third world interests.

I and others before me have said in these debates that there must be a constant endeavour by us all to correct the economics of madness in which 800 million people are living in absolute poverty, there is more that $100 billion in OPEC surpluses, not including the billions which are floating round the Euro-doallar market, and there are almost 9 million people unemployed in the European Community.

The Prime Minister's main and continuing response is "Leave it to market forces." We have had no better response than that which we heard from the right hon. Member for Sidcup.

We are told that the Prime Minister's intentions in this matter are sincere and honourable. However, the Bible tells us that the road to hell, too, is paved with good intentions. It also tells us that the greatest joy in the Church is when a convert is received. I hope that this message will get through to the right hon. Lady. If she proved to be a convert even to the last objective that I outlined, there would be no greater joy in my heart, in the country and in the Third world.


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

I shall try in the time available to deal with most of the principal matters raised in what has been a very far-reaching debate.

I pick up immediately a point made by my hon. Friend the Member for Cheltenham (Mr. Irving) and others about the timing of the debate. I, too, would have welcomed a mid-week debate if between them the Opposition and the Government could have contrived it, but for a slightly different reason. It would have enabled more right hon. and hon. Members to attend and a greater variety of opinions to be expressed.

Those of us who are here should not delude ourselves. At the beginning of the debate, there were about 50 right hon. and hon. Members present. There are now rather fewer. There has not been a Liberal in the Chamber all day. But that is not my point. My point is that most of the speeches by right hon. and hon. Members on both sides of the House have adopted roughly the same theme. With the exception of the hon. Member for Grimsby (Mr. Mitchell), most right hon. and hon. Members spoke against protectionism. But if we are honest, we all know that, if today's debate had been about the textile industry, there would have been a quite different 50 or more right hon. and hon. Members, all, regardless of party, speaking in favour of protectionism and for protection against the developing as well as the developed countries.

The same is true of public spending. In any given debate, the subject is treated by most right hon. and hon. Members who take part as the highest priority—a phrase which I have heard several times today. The trouble is that we have so many highest priorities—housing, social services or, as today, foreign aid. The Government have to sort out and accept the fact of life that, at the end of the day, there can be only one highest priority, and the rest have to be grouped.

Although this has been a very interesting debate, I believe that it would have been better if right hon. and hon. Members on both sides of the House with a slightly wider range of opinions had taken part.

Mr. Hooley

On the question of priority, the Minister is misrepresenting the tenor of the debate. The point is that overseas aid has been given a far higher and grossly disproportionate cut than the general level of cuts being applied by the Government.

Mr. Hurd

I accept that. If the debate had been on a different subject, the same argument would have been applied. Other programmes have been cut more heavily than aid. I rest upon that point.

The right hon. Member for Leeds, East (Mr. Healey) courteously told me that he had to attend his reselection conference this afternoon. No doubt that will be another stimulating occasion. He made a number of points to which I shall not reply in detail as he is no longer here. He criticised a number of countries for the spread of their bilateral aid programmes. He give interesting facts. He did not attempt to include the Government in that stricture, and we are well placed on that point.

It is perfectly legitimate to criticise the reductions in the Government aid programme, but its spread and quality cannot seriously be criticised. It is spread over 100 countries. Sixty-two per cent. of the money in 1980 went to the poorest countries. Although the figures are not yet finalised for 1980–81, the signs are that the proportion going to the poorest countries rose to 69 per cent. That is a high figure indeed.

The right hon. Gentleman and some of his colleagues strongly criticised the United States' attitude. It is true that the new Administration took office with some of its supporters looking at the whole North-South problem with an approach so sceptical that it makes us appear to be radical enthusiasts. It is part of our responsibility, and that of our European allies, to express our views to the new Administration about the importance of this range of subjects. But it should not be done by the sort of denunciation to which the right hon. Gentleman occasionally turns his mind.

United States policy is still evolving. It still has some way to go before we can be clear how it views the different negotiations. There has been some devolution, certainly on the question of global negotiation and on the important question of the sixth replenishement of the IDA, which is being supported by the Administration and is currently before Congress. We hope that it will go through. It would be wrong to be over-pessimistic. It is wrong to suppose that the attitudes on the other side of the Atlantic will change or evolve in the right direction if we continue to bang against them in the way that the right hon. Gentleman did.

The hon. Member for Waltham Forest (Mr. Deakins) made an extremely interesting speech. One phrase that he used set me back on my heels. He said that it was essential that the Cancun summit should be adequately prepared. I remember that it was the use of exactly that phrase, in the Foreign Office first memorandum on the Brandt report, which brought down upon our heads the fire and brimstone of the Sunday newspapers. They said that we had rejected Brandt and shown ourselves to be hostile. Yet we had simply said that the summit should be adequately prepared.

Six months later, the hon. Gentleman has made exactly the same point. He is right, and we were right. Of course the summit should be adequately prepared. When I comment on the speech of my right hon. Friend the Member for Sidcup (Mr. Heath) I shall say more about that. The hon. Gentleman was also right to stress the value of advance Commonwealth consultation—and not only at Melbourne, although that will be important. We are trying to do that. I had an interesting conversation with Mr. Jha, the Indian member of the Brandt commission. He is close to the Indian Government's thinking on the matter. That sort of consultation over the months is important. It is a virtue and value of the Commonwealth that such conversations come about easily, and are valuable when they occur.

I welcome the stress that the hon. Gentleman placed upon population policies. My right hon. Friend said in his opening speech that within our existing programme more resources would be available for international population programmes.

My hon. Friend the Member for Hertford and Stevenage (Mr. Wells) made a thoughtful and interesting speech. I think that he achieved the right combination, which in my view escaped some later contributors to the debate. It is too simple to talk about this subject as if it were some primeval contest between private flows and official aid programmes. I know of one or two Conservative Members and one or two journalists who speak of matters entirely in terms of market forces. I know of one or two Labour Members who think entirely in terms of official flows and Government programmes. Anyone who has studied these issues in any depth will accept that a combination is required. There is plenty of room for argument about how one achieves the right combination. It is absurd to present the debate as a Tweedledum and Tweedledee argument.

My hon. Friend and the right hon. Member for Norwich, North (Mr. Ennals) spoke of students and training. From the British national point of view that is a valuable form of spending. I think that every Foreign Office Minister must agree with that principle. In our daily work we see examples of the benefits which it brings. It is an area in which we would all like to spend more.

However, everyone knows that the principle of Government policy has been changed. We have moved away from a subsidy that goes to everybody and towards selective awards. We would dearly like more funds to be available but we must fit ourselves to our resources.

However, we have been able to restore the number of new awards by means of the 1981–82 aid programme under the Government-to-Government programme to about the levels of 1978–79. We have taken a similar step in respect of the Commonwealth scholarship and fellowship plan, bearing in mind what was said at the Commonwealth education ministers conference at Colombo. Within straitened resources we have tried to make up, to some extent, for the effect of the change in general policy.

The hon. Member for Kingston upon Hull, Central (Mr. McNamara) kindly told me that he has been reselected today, too. It seems to be a critical day in the operation. I am grateful to him for the way in which he spoke. I do not accept every part of his account of what has happened in the past but he was reasonably gracious about the present. He explained the philosophy underlying what strikes us as a most useful report by the Select Committee. As my right hon. Friend said, we shall be sending the Committee what I hope it will regard as a constructive reply as soon as we can.

My right hon. Friend the Member for Sidcup made a speech to which everyone listened with great attention. It came on top of a campaign of great energy and dedication over recent times. I speak from personal experience when I say that there is no doubt that it has had a substantial impact on the thinking of many individuals.

My right hon. Friend's remarks included a reference to the London School of Tropical Hygiene and Medicine. We understand the importance of the problem and the future of the school. Its problems and those of other postgraduate medical schools are being considered carefully. Money has been made available. The Government made available £5 million in 1980–81 to safeguard postgraduate work of especial importance following the withdrawal of the general subsidy from overseas students. Of the £5 million, there was an allocation of £3.75 million to London university, of which the school is a part. A further £3 million is being made available this year to safeguard important postgraduate work.

I understood that the main thrust of the advice which my right hon. Friend wanted to give to the House about the Cancun summit concerned his emphasis that, whatever else happened, specific agreements should come out of it. He accepted that those agreements might have to be limited in scope, but emphasised that they should be specific. That was an important point coming after a powerful analysis. I shall make sure that my right hon. and noble Friend the Foreign Secretary studies what my right hon. Friend has said before he goes to the preparatory meeting in Cancun at the end of next week.

It is not the present intention of the two original sponsors—Mexico and Austria, which have taken the lead in organising the summit—that there should be such a specific agreement at the end. The general approach seems to be rather that the summit is subject to what is worked out at the preparatory meeting in Cancun and then at the summit. Cancun should provide a focus for discussion, to draw out the threads and to draw the different strands together, and an impetus for later action.

Mr. Ennals

By whom?

Mr. Hurd

The question "By whom?" links with the problem of the global negotiations. We are committed in principle to the global negotiations and have been for some time. Last year there was a difficulty about the exact terms of reference, which has not yet been entirely resolved. The Ottawa summit has enabled a slight move forward to take place. We expect that in one way or another the global negotiations will take place. Much political effort has been invested in them by the Group of 77. They will not be lightly relinquished. This is a personal thought and has not yet been achieved. Those negotiations could provide a context for the discussions of energy which are desperately important, which the Brandt Commission underlined as necessary, but which no one has yet found a way to bring about.

My right hon. Friend took slightly out of context a cautionary word which I interjected into the speech of the hon. Member for Waltham Forest about future summits of the Cancun sort, which the hon. Member suggested might happen. We do not exclude that as a possibility, although personally I have a strong feeling that we are in danger of creating too many summits. If one adds them together, the utility of each new one is less than that of the last one. I believe that we are reaching the limit of the law in those matters.

We do not exclude the idea of future summits, but there is more unease in the Group of 77 about the membership of the forthcoming Cancun summit than my right hon. Friend suggested. I do not want to give details of private conversations, but it is not self-evident to the Group of 77 that this is a formula which should be repeated indefinitely, particularly if it is regarded as cutting across negotiations in which they all have a part. That is not in any way a smokescreen, but a real problem in deciding the answer to the question of how one carries on and how the impetus which, we hope, will be created at Cancun will be translated into activity afterwards.

Mr. Ennals

If there is no decision about follow-up afterwards, what is the case for having a conference which takes no decisions on the spot?

Mr. Hurd

I hope that decisions will be made about the follow-up and that there will be an impetus to future work. That might turn out to be the heart of the matter.

Mr. Dykes

If it was not Australia or Cuba which was worried, which countries did express anxiety?

Mr. Hurd

I do not wish to give details of confidential conversations which I and others have had with other members of the Group of 77.

My right hon. Friend the Member for Sidcup knows the facts about the voting structure in international financial institutions but other hon. Members might not be familiar with it. The voting strength of countries in the IMF and the World Bank are based on their quotas, in the case of the fund, and their shareholding, in the case of the bank. These are adjusted regularly in the light of the changing economic conditions of member States.

A review of the quotas in the fund has just begun. It will reflect changes since they were last adjusted in 1976. Quotas and votes of developing countries in the fund, including OPEC countries, have risen to 41 per cent. In the bank they are 35 per cent. In the regional banks, their share is higher. It would be possible to break the link between quotas and voting. We do not support that because we believe that the votes in the two bodies should reflect the contribution to the capital or quota. That is one reason why the bodies continue to command the general confidence of the major subscribers—including, for example, Saudi Arabia and other markets.

I am sorry that I missed the speech by the hon. Member for Norfolk, North-West (Mr. Brocklebank-Fowler). I am told that he raised a number of interesting points about food storage, self-sufficiency in food and the need for further action. The Minister has taken careful note of what he said.

I agree with my hon. Friend the Member for Canterbury (Mr. Crouch) about that terrible phrase "charity begins at home". Whenever I hear it I know that I am in for an argument. We should try to banish it from civilised discussion in the House.

My hon. Friend the Member for Harrow, East (Mr. Dykes) rightly stressed the European Community dimension. He urged a further increase in the European Development Fund. As he knows, we have moved from EDF 4 to EDF 5, which involves an increase. That is under a treaty with a five-year span. Obviously, before too long we shall have to look at the size of the next EDF. I note what he said about that.

The hon. Member for Hackney, Central (Mr. Davis) raised two shipping points which I listened to carefully. I shall examine what he said with greater care, in concert with my colleagues in the Department of Trade, and write to him.

It is one thing to talk about the awful grind of poverty and the intolerable way in which that degree of poverty denies the individual the chance of developing himself. We are all conscious of that. I do not believe that it is right to go on from that and state, as the two Opposition Front Bench spokesmen did, that the world economic system is on the edge of collapse. I do not believe that. The evidence is beginning to appear that it has coped rather better in the last year than was sometimes predicted. Certainly, the IMF believes that most developing countries with access to financial markets—I agree that that is an important qualification—will be able to raise sufficient loans. Many of the poorest countries cannot benefit from that. Neither the World Bank nor the OECD foresees a generalised and cumulative debt problem. The summit at Cancun will not start a new and revolutionary economic order. It should provide a focus on essential problems and give an impetus to the accelerated change that is clearly needed within existing institutions.

We accept the case for that change. We accept that it is the will of our electors that we in Britain should use part of our skills and resources to push that change forward in all the various fields covered by that debate. Despite what has been said about my right hon. Friend the Prime Minister, in her absence, if she believed purely in market forces she would not preside over a Government who are spending over £1 billion in foreign aid this year and who belong to a number of financial institutions, nor would she be going to the Cancun summit. She will be going in the spirit of the speeches made at this Dispatch Box and in the spirit of what was said at Ottawa, and will certainly play a constructive part.

It being half-past Two o'clock, the motion for the adjournment lapsed, without Question put.