HC Deb 15 June 1981 vol 6 cc815-34
Mr. Deputy Speaker (Mr. Bernard Weatherill)

Mr. Speaker has selected the amendment on the Order Paper.

10 pm

The Minister for Overseas Development (Mr. Neil Marten)

I beg to move, That this House takes note of European Community Documents Nos. 4318/79 (amended Commission proposal for a Regulation on Food Aid Management) and 9175/80 (draft Resolution on the use of Community food aid and draft Regulation layind down general rules for the supply of products other than cereals, skimmed milk powder or butteroil to certain developing countries and specialised bodies) and of the updated explanatory memoranda of 5th June; and endorses the Government's intention to work for the early adoption of a Regulation on Food Aid Management, on the lines set out in the explanatory memoranda, and urgently to encourage greater reinforcement by the Community's Food Aid programmes of efforts by developing country recipients to improve their own food and agriculture production. I welcome the Select Committee's recommendation that because of their legal and political importance these documents should be further considered by the House. Food aid is one of the main instruments of the Community's development policy. Unlike the European development fund, it is provided to developing countries all over the world. It will cost the Community development budget about £200 million this year. About one-fifth of this will fall on the British aid programme.

Mr. Tony Marlow (Northampton, North)

My right hon. Friend is talking money. I should be very grateful if he would tell he House exactly what, in European prices terms, will be the value of the food that will be distributed in food aid, so that there is no misunderstanding.

Mr. Marten

I shall come to that shortly. I said that it will cost the Community development budget about £200 million this year. About one-fifth of this will fall on the British aid programme. This is apart from the related production and storage costs, which form part of the ordinary cost of the common agricultural policy. So we are not talking about small sums.

This short debate is also timely for another reason. A few days ago there was a debate in another place as a result of a wide ranging report by the relevant Sub-Committee upon the different aspects of the Community's aid policies. Food aid was scrutinised as part of that review, and there was a remarkable unanimity of comment upon it. The Government's own views were given in that debate and closely coincided with what was said by others. We shall be publishing a detailed response to the recommendations made by that Sub-Committee as soon as we can.

These two documents for debate tonight propose, first, a new policy and management framework for food aid and, secondly, arrangements under which it would be possible to supply products other than cereals and dairy products as such aid. They were originally put forward by the Commission about two years ago, but little progress was made, because of conflicting reservations from other member States We are bringing them before the House for examination now because it looks, at last, as though there is a good chance of getting the Council of Ministers to agree in the next few days on compromise arrangements based on modifications to them. I shall explain these in a moment, but it may be helpful to the House if I first outline briefly the past history of this question.

When the Community's food aid programme started in 1963, first with cereals and later with dairy products, its chief aim plainly was to dispose of agricultural surpluses. Taking cereals, the Community then became a party in 1967 to the international grains agreement, whose two wings were the wheat trade convention and the food aid convention. So the legal basis on which food has been given as aid has been article 43 of the Treaty, which relates to the common agricultural policy, and article 113, which deals with the common commercial policy.

When we and others joined the Community we too became bound by the food aid convention, and the Community's pledged annual contributions of cereals were increased accordingly. In 1980 a new food aid convention was negotiated. This provides a guaranteed total of cereals aid pledges of 7.6 million tonnes every year until mid-1983 from donor members. The Community's share of this is 1.65 million tonnes, and of this over half—927,663 tonnes—is paid for from the Community's budget and administered by the Commission. The rest is split up between the member States and handled bilaterally. Our own share of this is about 117,000 tonnes.

Dairy products aid began in 1973, and consists of dried skimmed milk and butteroil. Unlike cereals, it is administered and paid for wholly by the Community. It reached its present level of 150,000 tonnes milk powder and 45,000 tonnes butteroil in 1976, when increases were made that, among other things, allowed large amounts to be pledged to India, over several years, to support "Operation Flood"—a scheme that many hon. Members may have seen, which is designed to boost India's dairy industries and to bring important benefits to rural producers. I mention this because so far it is the only example of a forward food aid commitment by the Community over several years ahead.

Very small quantities of sugar have been given as aid through the United Nations Relief and Works Agency to the Palestinian refugees and rapeseed oil is going to China. Very exceptionally some other products have been bought on local markets to meet emergencies—red beans were so provided last year to Nicaragua in the wake of the civil war.

Ever since Britain joined the Community we have striven, with some other member States, to shift the basis and administration of food aid from surplus disposal to development. There was a breakthrough in 1977—I pay tribute to the right hon. Member for Lanark (Dame Judith Hart) on this—when we succeeded in getting the Council of Development Ministers to adopt revised criteria for allotting such aid and a whole range of other policy decisions that improved its effectiveness.

But food aid is really still only a kind of balance of payments aid to the poorer importing countries. At the end of last year, things were carried an important stage further when the Development Council agreed to multi-year forward commitments. These will be made when, amongst other things, food aid is to be used more directly together with European development fund or non-associates' aid to put specific development projects into effect. The Council also agreed to provide a proportion of food aid to build up stocks, case by case, when a developing country is setting up a well-defined, socially useful and economically sound food security programme.

So far, so good. But there is still much more to be done to see that food aid that is given for development has a really positive effect upon the prospects of the recipients. Those who have looked closely at this question are convinced that in some cases—it may only be a few, but certainly some—the availability of food aid allows difficult decisions to be postponed on necessary changes in internal policy, which would make a big difference to domestic food and agricultural production. And the use of food aid directly for development projects—to pay workers on seasonal construction, or to feed schoolchildren—does not always help these major internal issues to be tackled.

We shall carry forward work in the Community on how to improve things further during our Presidency. The problems that remain will not all be solved simply by the Council adopting a proper management regulation, but when it is agreed the regulation will be a major step forward. First, it will incorporate in Community law the policy improvements already made since 1977, and will found this partly upon article 235—the basis of common development actions—and not article 113, which deals with the common commercial policy. Secondly, it will provide a system for settling food aid issues that is much simpler than the present arrangements, under which, in principle, everything has to be agreed ad hoc by the Council. So it should cut down bureaucratic delays and increase efficiency.

At the same time, the compromise proposals that we are now considering will continue to reserve to the Council decisions on several policy issues regarded as major by various member States. These include the total volume of aid of each product; the share of cereals aid due from individual member States, as against the Community; the list of eligible recipients; the basic and derived products to be supplied; and the general criteria for transport of food aid beyond the FOB stage.

For its part, the Commission will be completely responsible for day-to-day work under the programme. It will also chair a Committee of member States' representatives, which will decide by qualified majority on allocations to individual countries and organisations, on the size of the reserve, and on the amounts of cereals to provide for emergencies and for international reserves.

I should underline that in the case of emergencies, as opposed to food aid for development, the Commission will also be able to decide on individual actions and to provide up to three months' supply of the food deficits needed by those affected. Swift action of this kind is obviously desirable, provided member States are told at once and are given the right to quick consultation as necessary. Last year about 20 per cent. of the cereals programme and 10 per cent. of the dairy products were directly used for emergency relief in this way.

The powers reserved to the Council are the chief difference between the new compromise and the Commission's original proposal, though it also mops up the arrangements for diversifying products and contributing to food security that are proposed in Document 9175/80, on which the Council has already taken the decisions that I have mentioned.

I understand that if the Council accepts the Presidency's proposal the Commission may still dissent, and the matter would then have to go to the European Assembly for conciliation. But we place great importance on the early adoption of a sound and continuing new legal basis for food aid.

Mr. Marlow

My right hon. Friend has just said that if there is a disagreement between the Council and the Commission that has to go to the Assembly for conciliation. What powers does the Assembly have? How does it effect that conciliation? I think that it is a very important matter for this House.

Mr. Marten

As I understand it, a conciliation committee has to try to arrive at an acceptable solution. I do not think that the Assembly has any powers in this respect.

We recognise that, like ourselves, other member States have issues of major importance to them on which they want to safeguard their interests. We congratulate the Dutch Presidency on the very considerable efforts and skill that it has deployed in making these compromise proposals, and for our part we want to see them adopted as soon as possible.

I undertake that if the Commission brings forward proposals for additional products to be given as aid we shall ensure that the Select Committee will be given time to comment upon them before the Council adopts them.

Finally, I shall sum up our views on the balance of the Community's food and effort. The volume of food aid is quite large enough. We should not want it increased, and we should indeed prefer to see dairy products aid, which is usually of less value, reduced somewhat.

The distribution of food aid is now broadly satisfactory as between poorer and wealthier countries. Last year 90 per cent. of cereals and 85 per cent. of dairy products went to poorer countries. The Commonwealth received 29 per cent. and 30 per cent. respectively. Because of the special problems in Africa, the share of non-associated countries fell to 34 per cent. and 32 per cent. respectively, but more needs to be done to concentrate the programme if we can, including bigger Community allocations to the main international agencies.

The use of food aid could be further improved, especially by seeing that it reinforces sensible policies for agricultural and food production across the board, rather than sometimes tending to undermine them. Direct help for poor and vulnerable groups, and in emergencies, also means continuing to channel aid through voluntary and international agencies.

The staffing of the Commission's food aid side should, we think, be strengthened by transferring people from less urgent work to somewhere else in the Commission. That is, of course, a matter for the Commission. The way is now open for forward commitments. We should like to see more food aid bought from developing countries, such as Zimbabwe, and more in the form of local products suitable to the people's diet. Article 3(2) of the original Commission proposal has been retained and refined. It mentions specifically the possibility of buying in other developing countries, if possible in the same geographical region, if there is an emergency or if the products needed are not available in the Community market.

While I naturally have sympathy with the general feeling behind the amendment, I regret that the Government cannot accept it. Whether food given to relieve hunger and promote development is in surplus or not, it still has value for the recipients. It is therefore rightly classed as "aid", in just the same way as goods and machinery produced by the industries of the originating country. To prevent donors abusing this arrangement by describing as "aid" money that is really spent to support their own farmers, food aid may be valued only at world market prices. So if the total Community cost comes to, say, £500 million, but the world market price for the same products is only half that, £250 million will be shown in chapter 9 of the Community's budget, which deals with development aid, and the rest in chapter 6, which deals with agriculture.

If the Government and the Community accepted the amendment, the consequence would be the transfer of all expenditure from chapter 9, dealing with aid, to chapter 6, dealing with the CAP, with a resulting fall in the Community's aid performance. We could not agree to such a fall on chapter 9 being made up by other Community aid expenditure, since that would push up the overall cost of the Community budget, which we are trying to restrain. Equally, we could not make up the difference ourselves by other forms of non-Community aid, since that would increase public expenditure overall.

Finally, to transfer these costs to chapter 6 would mean giving up all the ground that has been won by this Government and their predecessors in getting food aid more firmly established on a developmental basis. Its disposal would be entirely a matter of agricultural surplus management. The whole basis of the regulations that we are now discussing would collapse. The result might be that much more subsidised food was given away—but without any of the safeguards for which we have worked so hard—or that all food aid grants were stopped and the products were sold instead—probably to wealthier countries.

Mr. Nigel Spearing (Newham, South)

I am grateful to the right hon. Gentleman for allowing me to intervene, as my question may save time later. In his explanation of the Government's attitude to the amendment the right hon. Gentleman implied that its acceptance would increase the size of the budget, yet it appears that it is a matter of transfer from one chapter to another. Is he telling the House that the cost of cereal and dairy food aids do not at present come out of the agricultural budget?

Mr. Marten

I said earlier, when I quoted a notional figure of £500 million, that the world price comes under the development budget and the difference between the world price and the export price is on the CAP.

Accordingly, I commend the documents to the House, and the Government's position on them.

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

The debate brings into question once again not only the food aid management policy, but the aid and development policies of the Community. Although the Government's motion is more than the usual anodyne motion tabled on such occasions, nevertheless, consistent with his former track record on the Common Market, the Minister will no doubt privately agree, and possibly some day publicly tell us, that the motion is far from radical in its meaning.

I congratulate the Minister on his appointment to the Privy Council. Our difficulty is that, however much we disagree with him, we all like him personally. The right hon. Gentleman and the people of this country know that the Government and the Prime Minister are unwilling, if not unable, to achieve the necessary fundamental reforms of the structure of the EEC to do something, as I have urged time and again, about the rampant self-interest of the French.

My right hon. and hon. Friends and I welcome the great election victories of President Mitterrand and the French Socialist Party, but our Prime Minister and Government should have been trying to change the portfolio of the Commissioner for Development. I see the Minister nodding. The French have held that portfolio almost since the Treaty of Rome was signed. No one doubted the efficiency and ability of Claude Cheysson, but he is now the French Minister for External Affairs and we have in his place a former French Minister of Agriculture. The Opposition and some Conservative Members who have expressed concern about the rampant self-interest of the French must have cause for further concern.

If we are to have a realistic food aid programme, we must also have an efficient European development fund, and the Community aid programmes must be just and fair. Former French colonies seem to get an advantage over many British interests, despite the objections of our Government.

Those in the aid world have expressed continuing concern in many meetings with us. We all believe that too often the food aid programmes are merely a ploy for the dumping of CAP surpluses. I have no doubt that that is the main reason why my colleagues tabled their amendment. They are afraid that the abuse will be perpetrated further unless there is some guarantee about money. I am not sure whether the Minister's explanation will satisfy them.

Mr. David Myles (Banff)

I am trying to understand how the hon. Gentleman can suggest that we give food aid when we do not have the wherewithal—surpluses—to give it.

Mr. McElhone

The Minister said that he hopes that much food aid will come from other developing countries.

There are grave doubts about the honesty of some of our European partners, and it is believed that support for food aid programmes is a ploy to get rid of the surpluses of the CAP. That is the view that I have arrived at after talking to many people who are much more knowledgeable than I about the Community.

The two main elements of the Community's food aid programme are a regular food aid programme and an ad hoc programme for disaster relief. I accept the second element. No one could object to food aid devoted to disaster relief, but I have grave doubts and reservations about the first element. I have made the point about surpluses. For any country that needs food aid on a regular basis, the priorities must be a programme of agricultural production, a programme of rural development, a programme of technical training and urgent programmes of water and irrigation schemes. It would not have been out of order, perhaps, for the Minister to have alluded to some of those matters.

Mrs. Peggy Fenner (Rochester and Chatham)

I find the hon. Gentleman's condemnation of the French leaders of the aid programme rather astonishing. He congratulated Mitterrand, whose special friend, Claude Cheysson, was the Commissioner in charge of overseas aid in the European Community for some years. I am sorry that the hon. Gentleman holds such a low opinion of Claude Cheysson. Mitterrand does not. He has appointed him Foreign Minister.

Mr. McElhone

The hon. Lady has missed the point. I talked about rampant French self-interest. I make no apology for having made that point several times in the House. Anyone who has studied the course of the European development fund will see that from 1975 to 1980 the largest part of the funds went to former French colonies. From memory I can name Niger, Mauretania and Senegal as having received the largest slices of European aid.

We are supposed to be equal partners. I believe that British African interests have suffered badly compared with French interests. It is for the Government and the Ministers who represent us in Europe to back our interests. I recognise that it is not in order to quote the text of debates in the other place, but anyone who reads the debate of 3 June will realise that the noble Lords, including the Chairman of the Select Committee, indicated how the issue of food aid had been badly mishandled. They also made a number of other criticisms, to which I hope I shall be able to allude.

Another major reason for using the priorities that I have outlined is that 70 to 80 per cent. of the population in underdeveloped countries live on the land. It is in these areas that the main development policies are needed, yet anyone who studies the operation of the European development fund will see that a relatively small proportion of its budget goes towards rural development. Members of the Select Committee in the other place complained that Ministers are far from assertive enough in the Councils of the Community when discussing aid policy. The House does not have to take my word for that. The criticisms are well documented and made by those who are supporters of the Government.

The efficiency of EEC aid is also a cause for concern. Six months before the end of the Lomé fund, only 64 per cent. of the total had been committed to projects, and only 27 per cent. had been spent. That was a poor performance compared with any other international aid programme. It is a matter that should be mentioned continually in this type of debate. The second Lomé fund started on 1 January of this year.

On a per capita basis, there will be a reduction of 21 per cent. in the European development fund allocations to under-developed countries. That is very worrying, and hon. Members on both sides of the House should shout about it continually, so that when the Prime Minister and the Foreign Secretary meet other Heads of European Governments they will keep getting across the hunger experienced by so many people because of the lack of an effective European development programme.

Advice has been given by me and others on the Labour Benches with considerable experience of the workings of the European Community. I would go so far as to say that we have on the Labour Benches considerable experts in these matters. The Government lack assertiveness and do not complain to the Community about the treatment of non-associated countries, such as India and Bangladesh. What reason can the Government give for aid going where it does under the fund, while very poor countries such as India and Bangladesh are almost left out of the programmes?

This is a short debate, and I do not wish to trespass on the time of other hon. Members who are here to make their contributions. The Opposition are far from happy with the conduct of the food aid programme in the past and have no confidence in future programmes. The conduct of the European development fund is a source of deep concern.

How can the Government be taken seriously when they have announced cut after cut in our own aid programme? Over the next two years we are to make a cut of almost 15 per cent. in real terms. That does not give us much strength of argument, because we are the only Western European nation, I understand, to cut aid in this way. Therefore, we do not have much standing when we make points on issues as important as this.

That is why not only the majority of the British people but the vast majority of the people of the Third world hope and pray that we shall have a Labour Government at the earliest opportunity.

10.32 pm
Mr. Teddy Taylor (Southend, East)

I should like to ask my right hon. Friend the Minister three questions arising out of his important speech on this minor motion.

First, will he comment on the point so ably made by the hon. Member for Glasgow, Queen's Park (Mr. McElhone)? Why has food aid so far been limited to certain categories, and what is the reason for the extension? If food aid is designed to help people in under-developed countries, it seems strange that the whole emphasis has been on cereals, dry skimmed milk and butteroil, where there have been the biggest and most uncontrollable surpluses. On what criteria will a decision be made to extend the products covered under the new proposal?

Secondly, will my hon. Friend say something about the percentage of aid that is provided at a price and the percentage that is provided free? There is widespread concern about the devastating effect on the poorest countries of the EEC's irresponsible action in dumping certain products on the world market at knock-down prices. For example, some of the West Indiam countries and Mauritius, with about the lowest per capita income in the world, depend largely on sugar. Some of them have had their economies and their people's living standards devastated by EEC dumping.

My hon. Friend will have noted what has happened to the price of sugar and the damage that that is doing. Can he give us an assurance that none of the activities under this food aid programme will have the same results as those of the EEC in dumping food, as has happened with butter and sugar, at knock-down prices, which are devastating the real economies and the real production of some of the poorest countries in the world?

Mr. Marlow

My hon. Friend answered the question that my hon. Friend the Member for Banff (Mr. Myles) asked by saying that one must have surpluses, or else one cannot produce food aid. It is the surpluses that are depressing the developing countries, and thus depressing their food production. Therefore, the amount of aid that is required is greater than it otherwise would be. The point made by my hon. Friend the Member for Banff was the wrong way round.

Mr. Taylor

My hon. Friend has put the matter very clearly. Although food aid appears to the recipients to be real help to real people with real need, the actual use of the surpluses does more damage to those countries than if there were no aid programme.

I am glad to know that some of the funds that are to be retained by the recipient countries under these proposals will be retained for building up food production in their own countries. That is good, but I fear that the disposition of surpluses, because of EEC policies, is destroying the ability of those countries to build up their own industries and, in particular, their food production. There is no better example than the appalling story of sugar, and, to a lesser degree, what has happened to the wealthier countries, such as Australia and New Zealand, as a result of the dumping of butter at subsidised prices.

The problems of food aid were spotlighted in the report of the House of Lords Select Committee, which contained some devastating conclusions. Does the Minister, in whose judgment on these matters we have every confidence, believe that the problems of food aid are being tackled properly in these new proposals? If so, can we expect that they will take up the slack that is being used to provide the appalling and shameful export of subsidised food to the Soviet Union, which is being used to build, prop up and finance its war machine?

I received the information the other day in a written reply that since the invasion of Afghanistan we have exported no less than 149 million litres of wine to Russia, at an average price of 30p per bottle, which is then sold at about four times the cost. That, of course, will help to finance the Russian war machine. The Minister will have seen the figures of food exports to the Soviet Union, published on 8 December. They show that we broke the record on exports to the Soviet Union in every commodity, except butter, where we exported only 80,000 tonnes.

Can we hope that these proposals will lead to an end to the shameful traffic whereby we provide the Soviet Union with vast quantities of food at knock-down prices, which is then sold at very high prices, thus providing the Soviet Union with vast profits and helping to finance the invasion of Afghanistan? The Minister will know that, far from decreasing, these exports are increasing substantially. For example, in 1980—since the invasion of Afghanistan—we have exported 576,000 tonnes of wheat, 217,000 tonnes of barley, and 342,000 of flour. Vast amounts of food are going to prop up a regime that is causing immense problems for the under-developed countries and obliging them to spend far too much money on weaponry and defence.

We should welcome this proposal if, by sorting out the problems arising from food aid, we could reduce—if not put an end to—the sale of surplus food to the Soviet Union at one-third of the price that pensioners in Britain have to pay for it.

10.39 pm
Mr. Nigel Spearing (Newham, South)

I beg to move, at the end of the Question, to add but considers that aid expenditure on all items of food which are in surplus with in the European Economic Community should be a charge on the costs of the Common Agricultural Policy and not charged against aid funds". Everybody in the House, whatever his view about the EEC and the way which its deals with its surpluses, is agreed that the food aid programmes to deal with emergencies are good and proper programmes. The only question is whether we supply foods other than those in surplus. The Minister mentioned certain food aids. I hope that when emergencies occur it is the policy of the EEC—I know that it is the policy of the British Government—to supply emergency food aid that is best suited to the nature of the population and the disaster that has taken place. The figures and details that we have seen to date make me doubt whether, in emergencies significant quantities of food are supplied other than those in surplus.

There is a question about longer-term matters. We are right to divide the problems into the calculation of cost, the organisation of distribution, the efficiency with which that is carried out and, possibly, the political implications of the supply of the programmes. I want to deal with the question of cost. It is not simply how much is carried by the CAP—the Minister said that that is the cost of export restitution—but the cost that must be carried by what is notionally the aid budget. The Minister said that the cost in terms of the equivalent world price is charged to the aid budget. It has been made clear in various reports, including that of the House of Lords Select Committee, that, while food aid purchased in the EEC at world prices might be a reasonable calculation, there is some doubt whether the food could be sold at that price. In other words, is not that an overpricing to the aid budget?

The EEC audit board, in its most recent report in the official journal, C342 of 31 December 1980, obligingly set out a table showing the relative expenditure. The expenditure for 1979 is summarised at 351 million EUAs for appropriations for export refunds and 287 million EUAs for appropriations for food aid, giving a total of 638 million EUAs. There is not much difference between the amount charged to aid and that charged to the CAP. The Minister said that where food is in surplus only the export restitutions are charged to the CAP, but the table shows little expenditure on food aid that is not in surplus. Other products shown under the heading "token entry, miscellaneous" total 0.59 million EUAs, against a total expenditure of 287 million EUAs for the items in surplus. Unless the Minister claims to the contrary, it appears that there is virtually no food aid other than foods conveniently in surplus.

The motion has some merit. My hon. Friend the Member for Glasgow, Queen's Park (Mr. McElhone) referred to the passage encourage greater reinforcement by the Community's Food Aid programmes of efforts by developing country recipients to improve their own food and agriculture production. That has been a well-worn theme in many places. I wonder whether the Government motion is worded correctly, because it refers to greater reinforcement by the Community's Food Aid programmes". Perhaps the Minister can tell us where in the food aid programme there is any capital allocation for rural development to enable the countries concerned to increase their own food and agricultural production. I doubt whether there is. I believe that the Minister will say that such programmes come either under the Lomé convention in specific aids or in the European development fund, which is another fund not under food aid, administered in a separate way.

I draw the attention of the House to the fact that the criterion for investment in the European development fund is not by any means the food needs of the countries concerned. We have been told in various ways that the criterion of investment in the European development fund is largely a matter of advice from the European Investment Bank. The criterion of that bank is to provide the highest capital return in the country concerned on a completely commercial basis.

If that is so—I do not believe that the Minister can deny it—I suggest to him that the food production with which we are concerned will not necessarily give the highest rate of return in those developing countries. It may give some rate of return, or a good rate return, but I understand that the EIB wants more than that. It wants the maximum rate of commercial return available. If that is so, it appears that there is no means whereby the objectives of the Government's motion can be achieved, because the money cannot come out of the food aid programme, as the money is not for that purpose. That is not always possible under the EDF. It might be in certain circumstances, but perhaps it is not encouraged as much as it might be.

An important report was made by another place on the development aid policy of the EEC. That is the twenty-first report of this Session, House of Lords 146. Three of four pages are devoted to food aid, all of which become worse and worse as one goes on. I shall quote a paragraph, which succinctly says: The evidence suggested that for many countries the administration of EEC food aid, whether for development or for emergency relief, is erratic and haphazard, and that there is inadequate evaluation of the effects of the programme. The Committee heard an example of emergency skimmed milk powder, requested to mitigate the effects of a cyclone, which arrived one and a half years after the emergency. Such occurrences can be attributed to some of the major shortcomings of the food aid administration, which may be summarised as: a very small albeit enterprising staff (only nineteen in Directorate-General VIII); almost no overseas Delegations outside the ACP countries to supervise its implementation; insufficient collaboration with the overseas posts of the Member States or with other multilateral agencies; laborious tendering and procurement procedures (see Annex V); an underlying policy objective of responding to requests from as large a number of countries as possible; and the constraints of annual budgeting.

Mr. Keith Best (Anglesey)

For the sake of completeness, will the hon. Gentleman also look at page 45 of the report, in paragraph 9, under the heading "Food aid"? It says: The Community's food aid programme suffers from inefficiencies in planning, administration and delivery. The suitability for developing countries of some of the programmes (notable dairy foods) is questionable. A management regulation is necessary to encourage multi-annual planning and less haphazard execution and delivery. The United Kingdom Government should press the Council of Ministers to adopt the Commissions' draft management regulation. Does the hon. Member subscribe to that?

Mr. Spearing

I confess that I have not looked at the paragraph, but it sounds constructive, and an improvement. I do not suggest that the regulation is not an advance, but there is still a long way to go. There is a great deal lacking in the provision of food aid beyond those items in surplus. The Minister has yet to respond to the question.

I referred to the Court of Auditors' report. It, too, contains severe criticisms of what has been happening. Paragraph 9.4 states: As a result of criticism of the food aid operations in the past few years, the European Parliament on 18 April 1979 invited the Court of Auditors to prepare a special report on the subject. This report, which has now been submitted to the European Parliament, gives a critical account of Community food aid from its inception until 1979, through the various stages of implementation. The present annual report will therefore concentrate upon the utilization of appropriations in 1979 and the findings made, on the basis of records and on-the-spot visits, in respect of the implementation of the 1979 food aid programme. In general, the management of food aid showed no notable improvement, not the least because the draft regulation to modify the policy and management of this aid, submitted by the Commission in January 1979, is still before the Council. The regulation is an improvement, and we welcome such improvements, but I hope that the Minister and the Council will consider the other shortcomings mentioned by the Court of Auditors. On page 146 the report states: a large part of Community aid is still shipped on vessels which are not registered either in a Member State of the Community or in the State receiving the aid. Nor is the condition of the vessels used subject to any check; a part of the food aid intended for free distribution had to be sold by a recipient country which was unable to marshal the resources needed for free distribution. The Minister suggests that the amendment would reduce the amount of food aid available, as it would alter the chapter headings. It may reduce the amount notionally credited to aid, but the figures that I quoted earlier should not be credited to aid. If the food was not distributed in aid, it would, in any case, come under export restitution. From what we gather, virtually all the food aid given is in surplus commodities, so it should properly be charged to the CAP. I do not, therefore, believe that my hon. Friends should withdraw the amendment, although I see why, practically, the Government resist it. I believe that we shall have to resolve the matter by having inserted an "Amendment negatived" in the Official Report, as my hon. Friends wish to register their profound concern over moneys ostensibly for one purpose being used for another.

10.59 pm
Mr. Stephen Dorrell (Loughborough)

There seems to be a remarkable degree of unanimity in the House tonight that the food aid programme as developed by the European Community over the past 20 years has been wholly unsatisfactory from the point of view of the developing countries and of anyone interested in aid and development. I suspect that that is common ground among the hon. Member for Newham, South (Mr. Spearing), my hon. Friend the Member for Southend, East (Mr. Taylor) and myself.

I wonder, however, whether many of those who have spoken so far have read in detail what the Commission proposes to do to change the basis on which food aid has been given. I welcome very much what I concede at the outset is a small but important step down the long road towards improvement in the quality of the food aid given by the European Community. I think that the hon. Member for Glasgow, Queen's Park (Mr. McElhone) perhaps underestimated the importance of the right hon. Member for Lanark (Dame Judith Hart), as a Minister, seeking to push the Community down that road and recognising that food aid is a matter not of disposing of agricultural surpluses, but of undertaking something that is relevant in the context of the developing world.

Mr. McElhone

Just for the record, I have more than once paid tribute to my right hon. Friend the Member for Lanark (Dame Judith Hart) for her sterling work, particularly in the Community, and I had hoped that that would be understood by the hon. Gentleman.

Mr. Dorrell

My point was that the right hon. Lady had a perceptible impact in persuading the European Community of the error of its ways. The reports before us tonight are evidence that the Community is beginning to respond to the pressure that British Governments of both parties have been keen to exert upon it.

The Commission's report makes two important points. First, it states that any assistance in the form of food aid must be relevant to the conditions of the recipient in the developing world. Secondly, it uses the dreadful word "multiannual" which I have never seen other than in a European Community document. I assume that that relates to long-term planning, which the Commission has recently been allowed to adopt by the Council of Ministers, and which I very much welcome.

I welcome also the fact that the Commission is now seeking powers to build up stocks of food aid as a kind of buffer against the unforeseen. It is worth reminding those who have stressed the importance of building up stocks to deal with emergency short-term food deficits of the fact that in a country such as Bangladesh such deficits appear almost annually and are not in any real sense emergencies, but are part of regular contingency planning which regularly comes into use.

Mr. Best

Does my hon. Friend agree that the multiannual aspect of this is a welcome but belated acknowledgement of the statement on page 102 of the Brandt report that Continuity of food aid, as with any other type of aid, is critical and that that is exactly what we should seek to achieve?

Mr. Dorrell

Certainly it is a response to what the Brandt report asked for, and also something that British Governments of both parties have pressed for over a long period. I therefore cannot understand why Labour Members do not welcome that development as wholly positive.

Certain points should also be drawn from later parts of the document. I welcome the Commission's statement that food aid should not be given except in the context of what it calls a "national food strategy". It is recognised on both sides that an emergency response to a food surplus in Europe is not a sufficient basis for giving food aid. It must be part of a national food strategy.

To take up another point made by the hon. Member for Queen's Park, the Community has been giving food aid in the context of a national food strategy to the Indians under the flood scheme and has also indicated a willingness to do so to the Bangladeshis. Bangladesh is mentioned in a footnote as being one of the countries that have adopted a national food strategy. That is one of the safeguards included in the document as a criterion to judge whether a particular food aid project should be recognised by the European Community.

The Commission also says that the Community is keen that food aid should be given by it as part of an integrated development programme at the European end, so that not only must there be a national food programme in the developing country, but there must be an integrated development programme as part of the guidelines for the giving of food aid from the donor country end. Those are precisely the kinds of safeguards that we should look for in the giving of food aid.

I should like briefly to mention some of my concerns about food aid as a way of assisting developing countries, because I share the unease that has been expressed on each side of the House about the consequences of dumping food at concessionary prices and undermining the profitability of agriculture within the developing world. That seems to me to be doing a great disservice to the developing countries, and perhaps salving our consciences at their expense.

There are three methods that are highlighted within the document as being the main methods of giving food aid. The first two methods are counterpart funds, that is to say, giving aid to a developing country's Government which they then sell on to their own country, or, alternatively, paying for work or people hired within the developing country in terms fo the food that they eat. Both methods are dangerous, not only because of the impact they have on agriculture within that developing country, but because of the impact on agriculture within the other supplying developing countries. We have to look not only at the local agriculture, but at the whole supplier-customer relationship within the developing world.

There is a third method which, superficially, might seem to be more attractive. The hon. Member for Waltham Forest (Mr. Deakins) and I recently visited a project in India. It was made clear to us that it was an unattractive way of giving aid. It is what the Commission calls direct action—seeking to take out a section of the community and saying that those people would specially benefit from extra nutrition. Perhaps there can be no better class of persons that might be held to benefit in that way than the mother and the new-born child.

It was as members of the population group that the hon. Member and I went to a project in India where food aid had been given to mothers and new-born children to try to improve the nutritional standard of the new family. It was established that it did not work, for the apparently very simple reason the the mother took the food aid to the market and sold it. It was the most inefficient possible way of giving aid to the people who in the end really needed it. Large sums of money were spent. Someone was paid to monitor the results, and they were shown to be unsuccessful. I hope that the Commission will take note of that kind of experience in assessing future food aid programmes.

All this is simply an illustration of what must now be a very well-worn truth—that the best way of improving someone's standard of living is to give him cash and not to seek to pay him in kind. Whether the recipient is a developing country or an individual, it leaves the opportunity to the recipient to buy the things felt to be of most value.

Mr. Myles

rose—

Mr. Dorrell

I hope that my hon. Friend will forgive me if I do not give way. I have already given way twice, and I know that other hon. Members wish to speak.

If cash is what is important, surely the best kind of food aid is what the Commission calls the triangular deal—a system by which the Commission buys food from a developing country on behalf of other developing countries that need it. That is the kind of assistance that gives real help to people in real need and boosts the development potential of the countries that we are seeking to boost.

Mr. Deputy Speaker (Mr. Ernest Armstrong)

There are 26 minutes left for debate, so I hope that those hon. Members who are called will be particularly brief.

11.5 pm

Mr. Eric Deakins (Waltham Forest)

I endorse the argument of my hon. Friend the Member for Newham, South (Mr. Spearing) on the Community's financing of food aid. I shall address myself to the narrow budgetary context of food aid in the Community scheme of finance.

There was a proposal in 1978 and 1979, when the regulations were in gestation, that food aid should be treated more properly as the receptacle for the money that was spent to help developing countries by the disposal of surpluses in the EEC. It seems that that proposal has survived, because the Minister said that as long as we remain a member of the EEC we should switch the emphasis from the disposal of surpluses as part of the CAP to food aid as part of the development budget. In one sense no one could quarrel with that view of how the Community should develop.

Although steps were being taken in 1978 and 1979 to change the budgetary arrangements, according to the Minister's updated explanatory memorandum of 5 June, which is No. 4313–79, the earlier proposals for changing budgetary presentation on food aid have been dropped. It is not clear why they have been dropped, but on the whole I welcome the fact that it has happened. Had the original proposals gone forward there would have been a transfer from the CAP title of the budget to the food aid title. As my hon. Friend the Member for Newham, South said, that would have presented a distorted view to the rest of the world, including the citizens of the EEC, of the actual costs of financing food aid. It would also have taken moneys away from the cost of the CAP and credited them to food aid. That would have meant that the aid and development budget of the Community would have been that much larger and the CAP would have been that much smaller. From a public relations point of view the Community would have killed two birds with one stone. It would have reduced the ostensible cost of the CAP and increased the development budget, which no one in his right mind would want to oppose. What a wonderful example of sleight of hand that would have been. I am glad that it is not taking place. To prevent that happening was one of the purposes of the addendum that was tabled by my right hon. and hon. Friends and myself.

It is clear that 99.9 per cent. of the Community's food aid consists of surplus products and that there would be a cost even if it did not leave the EEC as food aid. I shall not comment on the suitability of the products as food aid. Cereals are obviously very good. Butter is less good, but butteroil and perhaps butterfat can be of assistance from time to time in emergencies. However, if we ever get the CAP in order—I doubt whether that is possible, but that is the aim of Government policy as long as we remain in the Community—we shall have a policy that means that few surpluses are produced. On that basis the Community's food aid programme will decline substantially. That may be said to be a hypothetical issue, but it is the objective of Government policy to get the CAP in order.

If the Government succeed in that objective of reforming the CAP and preventing any further surpluses arising, it will have an impact on the Community's food aid. The Community will have to dig into its budgetary pocket under the development aid heading and start buying food on the world markets at cheaper prices to finance its development budget. That may be no bad thing, but it will increase the net cost to the Community quite substantially.

Although the Minister and the explanatory memorandum have set some of our minds at rest, there are some warnings to be heeded for the future. In spite of the rigmarole that we have heard about the Community moving in a new direction, it still regards food aid as the disposal of surplus products. If those products disappear, which I very much doubt, the food aid will disappear.

11.10 pm
Mr. David Myles (Banff)

I shall try to be brief, but the House should congratulate my right hon. Friend on becoming a Privy Councillor. Perhaps that will make him more assertive, as the hon. Member for Glasgow, Queen's Park (Mr. McElhone) suggested.

The greatest advocate that the world's hungry have ever had lived near to my home, in the shape of Lord Boyd Orr of Brechin Mearns. Lord Boyd On said that the hungry are crying out for bread and we give them pamphlets. I hope that we are not giving them documents. Lord Boyd Orr also protested that he had no difficulty in persuading farmers of the virtues of nutrition, because they could prove with their stocks that it paid dividends, but he could not convince anyone that the same was true of children. He could have added that when animals are suffering from malnutrition they cease to conceive. Unfortunately, the same is not true of humans.

Lord Boyd Orr was a critic of the marketing boards, as they were organising shortages—a criticism that may be levelled at the Potato Marketing Board but could not be levelled at the Milk Marketing Board, or at the CAP. He saw the danger to that organisation of the shortages that seem to be such a popular concept in the debate.

It is to the great credit of the National Farmers Union that it has never advocated scarcity, although there is no doubt that if those surpluses in Western Europe had never been produced the farming industry would have been much better off.

I welcome the Community documents as being sensible in pointing the way to coping with two Community problems. First, they demonstrate the value of the CAP, lest we should throw the baby out with the bath water before we have conceived a better alternative. Secondly, they suggest ways of partially implementating the recommendations in the Brandt report.

Mr. Marlow

Will my hon. Friend give way?

Mr. Myles

No. My hon. Friend has been bobbing up and down like a jack-in-the-box all night.

Having regard to the Treaty establishing the European Economic Community, articles 43, 209 and 235 thereof and the opinion of the Court of Auditors, it is right that we should recognise that food aid should be made a real instrument of the Community's policy of co-operation with developing countries. Food aid appropriations should be presented in the budget consistent with the nature of the operation's finance and should meet the need for greater budgetary transparency and better management of that aid. It should be recognised especially by those who continually complain about the cost of the CAP, that about 36 per cent. of export restitutions on food products goes to Third world countries, and amounts to almost 50 per cent. of the CAP budget.

The intervention stores are valuable to cope with the necessity underlined in the documents for a ready supply of food to meet sudden emergencies. The main items needed are those in surplus—that is, cereals, dried skimmed milk powder and butteroil. To those I add sugar. Surely there is nothing immoral in keeping a reserve of that high-calorie product when it can help the sugar cane producing countries and our sugar beet producers, and calorie deficiency is the greatest immediate problem.

As has been said already, we must be careful that we do not inhibit the incentive to produce food in recipient countries. It cannot be morally justifiable for us or the Community to use that as an instrument to make those countries more dependent on us and, therefore, beholden to our political point of view, but we should recognise that that could be a valuable spin-off.

11.15 pm
Mr. Frank Hooley (Sheffield, Heeley)

In discussing food aid it is appropriate to consider the world food situation. Last year wheat stocks fell for the second consecutive year, and global reserves of wheat are half what they were two years ago. The consequence will be a rise in prices on world markets, which will be serious for Third world countries, which buy 50 per cent. of the 90 million tonnes of wheat traded in world markets. African countries alone spend £2 billion a year on wheat and import 13 million tonnes a year.

The World Bank has predicted that the Third world deficit may be 77 million tonnes by 1985, and the International Food Policy Research Institute has put the deficit at 100 million tonnes or higher. It has been calculated that the number of undernourished people in the world could double to 1,000 million within the next decade.

I welcome the fact that the Minister has said that the objective of the food aid management scheme is to move away from the disposal of surpluses to development policies for food. He said that it is designed to help developing countries with balance of payments problems and to see that they build up sensible stocks for food security programmes. Those are admirable aims, but there are other means of achieving them that are far better in terms of expenditure of money and effort than the Community's scheme, which is basically a means of disposing of 3urplus production.

My hon. Friend the Member for Glasgow, Queen's Park (Mr. McElhone) was right when he said that if the surplus declined because of the reform of the CAP, which does not look likely, the food aid would disappear. We are talking about making the food surpluses look respectable by giving them a purpose that can be passed off to the world as respectable.

A more sensible and constructive policy was outlined by the Minister in a speech to the World Food Council last month. He said: In these last days, the Interim Committee of the IMF has agreed important new changes to its Compensatory Financing Facility. These will provide much-needed help to those countries whose own harvests fail unexpectedly, or who find that world prices have suddenly risen, putting normal imports beyond their grasp…this help will involve only light conditionality. That is a far more constructive line of policy, which I hope that the EEC will support, than simply dumping food surpluses.

The right hon. Gentleman went on to say that we want to see food aid used much more effectively. Apart from relief and emergency assistance, food aid is still searching for a specially effective role in development. The documents seem to suggest that it has already found such a role.

The Minister added: Many in Britain—including Parliamentary Committees—are questioning the usefulness of providing such help, either as short-term payments support, or in traditional project form. Such aid must more directly reinforce the whole agricultural and food production policies of its recipients. I see no evidence in the documents that the EEC policy of food aid will achieve that.

I refer next to the sixth point made by the Minister in that speech. The right hon. Gentleman, talking about the International Fund for Agricultural Development, said: We also hope all countries will now confirm the pledges they have already made towards the equitable replenishment of the International Fund for Agricultural Development, so that it continues its lending. A compensatory financing fund from the IMF, an examination of whether food aid is relevant to development at all, and the strengthening and enhancing of the resources of the IFAD amount to a coherent and constructive policy. I am glad that the Minister has put forward such a sensible policy and has supported it at the World Food Council. However, these regulations on food aid management are, at bottom, another way of covering up the appalling deficiencies of the common agricultural policy, and I believe that the amendment in the name of my hon. Friend the Member for Newham, South (Mr. Spearing) is justified.

11.21 pm
Mr. Keith Best (Anglesey)

I must be brief, as my right hon. Friend wishes to have five minutes in which to reply to the debate. In the time available one cannot articulate all the matters raised in the documents. Like most hon. Members who have spoken, I welcome what I believe to be a fundamental reappraisal of the EEC's food aid policy. It is a reappraisal that moves in the right direction. Even those of us labelled Euro-fanatics by hon. Members—including some of my hon. Friends who do not necessarily believe the arguments that we put—would not pretend that what we are discussing is the right answer. It is not. It is, however, a move in the right direction.

My hon. Friend the Member for Loughborough (Mr. Dorrell) referred to the multiannual aspect. That is what Brandt was arguing. It is what we should be seeking in developing continuity of aid. One of the most damaging aspects of aid in the past has been its ad hoc nature. Developing countries have not been able to rely on the degree of continuity that is necessary. I wish to restrict my remarks to considering whether the concept of aid is better achieved through the agency of the EEC or through bilateral agreements. At present, 72 per cent. of this nation's aid is handled through bilateral agreements, while only 12 per cent.—equivalent to £107 million—goes towards EEC side.

Much can be argued in favour of directing aid through the EEC. Two aspects were raised in the debate in the other place on 3 June. There is less of a colonial aspect to aid if it is developed on a Community basis rather than on a national basis. There is also more chance of a degree of continuity if aid is directed through the EEC, with all nations agreeing, rather than if it is provided by national Governments on an ad hoc basis, under which the emphasis on food aid can change from year to year, depending upon the vagaries of a nation's own economic situation.

I congratulate my right hon. Friend on his elevation. I hope that he will endeavour to persuade the Government to direct more of the food aid programme through the EEC rather than to purchase bilateral agreements. Such agreements can be extremely dangerous, for the reasons that I have mentioned. If we can achieve a degree of consensus throughout the EEC for providing a continuity of aid to developing countries it will assist the countries concerned. They will know that it is the European Community that is assisting them, rather than nation States for their own private ends.

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

First, I add the congratulations of the Social Democrats to those that have been offered to the Minister. I am sorry that his elevation has coincided with the spending of the lowest proportion of the GNP on development assistance for 10 years. I congratulate him warmly, nevertheless.

I share the widespread concern and reserve about the usefulness of food aid to development. I do not want to rehearse the arguments too widely: I simply agree with the major points made by the hon. Member for Loughborough (Mr. Dorrell)—[Interruption] The hon. Member for Plymouth, Sutton (Mr. Clark) does not need food aid. He has been out of the Chamber for an hour and 18 minutes. He could do the House the courtesy of being quiet when he returns.

I agree with the hon. Member for Loughborough. The Government's proposal, set out in the explanatory memorandum, does not convince me at all. Much of the food that goes to developing countries undermines their efforts to become self-sufficient in food production.

I am particularly sceptical of the proposal that the ranges of Community food aid products should be extended as proposed. I am nervous about the suggestion that sugar and oil should be added to the list of food aid commodities, because they will be derived from surpluses in Europe. Although I welcome the Minister's assurance that funds should be made available to buy those products from Third world sources, he must carefully watch the French efforts to increase their sugar acreage and dispose of their surpluses in food aid, while making no contributiion to the development of agriculture or the improvement of the standard of living in many of the poorest developing countries.

11.27 pm
Mr. Neil Marten

I take the last point of the hon. Member for Norfolk, North-West (Mr. Brocklebank-Fowler), but, as time is very short, I will not follow him further.

This has been, as the usual saying goes, a wide-ranging debate—rather too wide, in fact, in that many of the points raised, interesting though they are, are not relevant to these documents.

For me it is a nostalgic occasion to be in the "hot seat" and not on the Back Benches in a debate on Community documents, but I shall obviously have to reply to many of the points in due course.

One general point that has been raised is that emphasis on agricultural development is one of the main objectives of our aid programme, so that the developing countries can feed themselves as soon as possible. Also, much depends on the developing country itself—for example, in fixing a "right price" for the farmers.

As I have said before in the House, if one's price is sufficiently high, farmers—given the sun of Africa, and so on, and provided there is water—will produce. The high prices in the Common Market, after all, have produced the great surpluses of which many hon. Members have spoken. I have often said to the leaders of the developing countries that if they raised their farm prices they would get much more food production and could then help themselves much more than they do.

Mr. Marlow

rose—

Mr. Marten

In an intervention, my hon. Friend the Member for Northampton, North (Mr. Marlow) asked about conciliation. I gave him an answer that was partly correct but not completely so. The form is this: if the Assembly and the Council cannot agree within a period of conciliation—usually three months—the regulation will take direct effect as originally adopted. However, the aim of conciliation is precisely to see whether differing views can be met.

The hon. Member for Glasgow, Queen's Park (Mr. McElhone) complained that the EDF gives too much to ex-French colonies. The division of the EDF by the Commission was not due to some French plot. To allay disquiet among the 19 Yaoundé associates, including Mauritius, about the position of their special relationship—

It being half-past Eleven o'clock, MR. DEPUTY SPEAKER put the Questions necessary for the disposal of the proceedings, pursuant to Standing Order No. 3 (Exempted Business).

Question, That the amendment be made, put accordingly and negatived.

Main Question put and agreed to.

Resolved, That this House takes note of European Community Documents Nos. 4318/79 (amended Commission proposal for a Regulation on Food Aid Management) and 9175/80 (draft Resolution on the use of Community food aid and draft Regulation laying down general rules for the supply of products other than cereals, skimmed milk powder or butteroil to certain developing countries and specialised bodies) and of the updated explanatory memoranda of 5 June; and endorses the Government's intention to work for the early adoption of a Regulation on Food Aid Management, on the lines set out in the explanatory memoranda, and urgently to encourage greater reinforcement by the Community's Food Aid programmes of efforts by developing country recipients to improve their own food and agriculture production.

Mr. Deputy Speaker

I am grateful for the self-restraint shown by so many right hon. and hon. Members in a short debate.