Overseas Development and Co-operation

HC Deb 20 December 1982 vol 34 cc747-74 9.13 pm

The Minister for Overseas Development (Mr. Neil Marten)

I beg to move, That the draft Asian Development Bank (Third Replenishment of the Asian Development Fund) Order 1983, which was laid before this House on 6th December, be approved.

Mr. Deputy Speaker (Mr. Ernest Armstrong)

With this we shall consider the draft African Development Bank (Subscription to Capital Stock) Order 1983 and the draft International Bank for Reconstruction and Development (1979 General Capital Increase) Order 1983.

Mr. Marten

The purpose of the orders, which were laid before the House on 6 December, is to authorise subscription payments to the International Bank for Reconstruction and Development and the African development bank, in the latter case as part of the procedures to enable us to join that bank, and a further contribution to resources of the concessional Asian development fund.

At the start of the debate on the Commonwealth Development Corporation Bill, about a week ago, I warned the House that, because of its technical nature, portions of the ensuing speech might well be tedious. I regret that I must repeat the same warning tonight. Behind the haze of technical jargon and statistics, however, it is worth bearing in mind that these institutions all have a direct impact on the developmental prospects for the poorest countries and the poorest groups within those countries. However, I must put certain facts and figures on the record, and I am afraid that my speech will be slightly tedious.

Before describing each one in detail, I shall make some general comments about the institutions, their place in the developmental scene and our attitude to them. The World Bank—IBRD—was established in 1945, and the two regional development banks in the 1960s. They are an integral part of the international economic system, and of course the World Bank has a pre-eminent world-wide role in development. All three institutions stimulate cooperation between developed and developing countries. The United Kingdom was a founder member of the World Bank and of the Asian development bank and intends to join the African development bank now that its membership has been opened to non-regional States. All three have broadly the same developmental objectives as our aid programme—to help the poorest countries. Our role in these institutions and, in the African case, in the concessional African development fund, reflects our historical and current political and commercial interests in the countries covered by their activities.

These institutions have played, and are playing, a continuing role in the provision of development assistance to developing countries, including the Commonwealth. We have strongly supported them in the past and will continue to do so, within the limits of our financial constraints. One advantage of such institutions is that they are generally regarded as politically neutral. They can therefore exert an influence on development policies in their member countries.

The purpose of the International Bank for Reconstruction and Development (1979 General Capital Increase) Order 1983 is to authorise an increase in our subscription to the capital stock of the World Bank. The United Kingdom has voted in favour of an increase in the bank's capital, subject to the approval of Parliament for our own increased subscription.

I should say something about the World Bank and our attitude towards it. No one can doubt that it has become the premier international institution for Third world development. It now has a membership of more than 140 countries, and has accumulated unrivalled technical resources. Furthermore, it possesses knowledge, gained first-hand, of the whole range of developing countries' problems and an operating experience that is second to none.

In the year ending June 1982, the bank lent $10,330 million. We welcome the bank's emphasis on the key and central aim of alleviation of poverty and its concentration of resources in key sectors, such as agriculture, rural development and energy. We also note with satisfaction the importance that the bank attaches to maintaining its extremely high rating in the world capital markets and the strict observance of its role in supporting only developmentally sound projects.

I turn in more detail to the draft order. The bank finances its lending operations primarily from its own borrowings in the international capital markets. A substantial contribution to the bank's resources also comes from its retained earnings and flows of repayments on its loans. The 1979 general capital increase, when fully subscribed, will enable the bank to expand its capital base to about $80 billion. Only 7½ per cent. of the nominal capital value of shares is required to be paid in. Of this,¾ per cent. is to be paid in current United States dollars and the remaining 6¾ per cent. in £ sterling. Contributing members may subscribe from time to time before 1 July 1986.

The United Kingdom's allocation of shares was 24,336. However, extra stock was needed to accommodate claims for shares from several other countries, and we agreed, in the circumstances, to relinquish one half of our allocated shares. That was reported to the House by my hon. Friend the Minister of State, Foreign and Commonwealth Office on 7 May. This step was generally welcomed. It also reduced our financial obligations from about £140 million to about £70 million for the paid-in element. We are therefore now seeking parliamentary authority for payments not exceeding the sterling equivalent of $1,467,886,680 in current United States dollars. Of that, $11,009,150—¾per cent.—and the sterling equivalent of $99,082,351–6¾ per cent.—will be paid in. The hon. Member for Norfolk, North-West (Mr. BrocklebankFowler) is looking a little puzzled. The balance will be callable.

Most major donor countries, including the United States, have now taken the necessary steps to accept their additional share allocations. The United Kingdom intends to continue to play its full part in support of the World Bank's programme of assistance to the lower-income developing countries. I therefore commend this draft order to the House in the knowledge that the United Kingdom's financial support is necessary and will be well applied.

I should like now to deal with the African development bank order. The purpose of the order is to authorise our subscription to 7,525 shares in the African development bank's capital stock, thereby allowing us to join the bank. I told the House on 13 May 1981 that, subject to Parliament's approval, the Government had decided to seek Britain's entry to the bank when the existing regional members had finally ratified changes admitting non-regional States. That moment has now come.

The bank was set up in 1963. Membership of the bank was originally restricted to African States, but since 1973 the United Kingdom, along with other donor countries, has been a member of the associated African development fund, which provides finance on very soft terms to regional members of the bank. Our membership of the bank and the fund reflects our long-standing interest in Africa, especially independent Commonwealth countries.

So far the bank's operations have been on a relatively small scale. Last year it lent about $323 million. Its growth has inevitably been held back by difficulty in tapping finance on the capital markets, which it can then on-lend for long-term development. Broadening its financial base is the major reason why regional member States decided to open up the bank to non-regional States.

The bank's board of governors passed resolutions in May 1979 to amend its articles of agreement to allow non-regional countries to become members, and to increase the capital stock of the bank to the equivalent of about $6,110 million to allow for the admission of non-regional countries.

The resolution amending the articles of agreement was finally ratified by regional members on 7 May 1982. The text of the amended articles of agreement was laid before the House in July 1981 as Cmnd. 8284. The United Kingdom and other non-regional countries have since been asked to accede to the bank in the hope that the "new" bank would come into operation on 1 January 1983.

Negotiations for the entry of 21 non-regional States—all members of the African development fund—took place in 1978 and 1979. Those negotiations provided for one-third of the bank's increased capital stock to be allocated to non-regional States. Under that allocation the United Kingdom was invited to take up 10,832 shares to a total value of £63,451,367, of which 25 per cent. was to be paid in over five years and the rest was to be callable.

These are the figures given in paragraph 5 of Cmnd. 8284. I hope that the hon. Member for Norfolk, North-West is happy with those figures. It seems that he has taken a note of them.

During the delay in ratification of the amended articles of agreement, however, several other countries, which now contribute to the African development fund but which were not party to the earlier negotiations, expressed a desire to join the bank at about the same time as the other non-regional countries. These included India, Portugal, Saudi Arabia and the United Arab Emirates.

As there were no shares left unallocated in the non-regionals' one-third of the proposed increased capital stock, we were informally approached by Portugal, one of the would-be new founder members, to see whether we might be prepared to relinquish some of our allotted shares in their favour. We decided to help all the new donors in the fund to join the bank from the outset with at least a small shareholding.

The Government have therefore decided, subject to Parliament's approval, to take up 7,525 shares, instead of 10,832, at a total value of £44,079,721, of which £11,019,930, or 25 per cent., is to be paid in. The rest will be callable capital. Our new allocation will give us about 4.3 per cent. of the non-regional shareholding, in line with our share of the African development fund.

We understand from the African development bank that the shares we relinquish will probably be offered to India, Portugal and Saudi Arabia, which have expressed their satisfaction with our decision. Our subscription must be paid in five annual instalments. We expect to deposit the first promissory note for about £2.2 million, for immediate encashment, in this financial year. This cannot be done till our membership becomes effective. We expect to complete the necessary ratification procedures early in the new year, and an Order in Council will be laid before the House separately to meet privilege and immunity obligations which we will accept on joining the bank.

I am sure that hon. Members will understand that, as we are not yet a member of the bank, we have had no influence on the bank's existing policies. I personally hope that the bank, as other such institutions do, will over time give greater emphasis to agriculture and the production of food, to energy requirements and to social infrastructure—and here I shall not forget the interest of certain hon. Members, which I share, in population control. We welcome the opportunity to become a member of the African development bank.

The purpose of the Asian development fund order is to authorise an increase in our payments to the soft lending arm of the Asian development bank. Once again, I shall first briefly describe the work of the fund itself and then give essential details about the order.

The Asian development fund was established in 1973. Some 90 per cent. of its resources have gone to the bank's poorest member countries since 1976. Our support for the fund again reflects our long-standing ties in Asia, not least the Commonwealth countries.

I now turn to the details of the draft order. The initial funding and the first two replenishments of the fund have provided a total of nearly $3,500 million for commitment between 1973 and 1982. Of that, the United Kingdom's commitments total £89.6 million, of which nearly £21 million has so far been disbursed.

Negotiations for the third replenishment of the fund's resources, to cover the commitment period 1983 to 1986, started in July 1981 and were successfully concluded in April 1982. The contributing countries have agreed to provide a total of $3,214 million. That is nearly 50 per cent. more than the size of the last replenishment. Subject to parliamentary approval, our own share will be £71,943,310. That is 4.14 per cent. of the total replenishment agreed between the developed member countries. This share is more closely related to our relative voting power in the bank than was our share in the last replenishment.

The proposed replenishment and its terms and conditions were approved by the board of governors of the Asian development bank on 30 July 1982. In accordance with the agreed governors' resolution, our subscription must be paid in four annual instalments.

The bank hopes that contributing countries' parliamentary procedures will be completed in time for the replenishment to become effective by 31 May 1983. Our payments will be in the form of the deposit of non-interest bearing notes encashable on demand. We expect them to be encashed over several years. It is only at that encashment stage that there will be a call for funds from the aid Vote.

I commend these three orders to the House.

9.31 pm

Mr. Guy Barnett (Greenwich)

The three orders give the House an opportunity to discuss the conduct of the three banks concerned, the policies that they are pursuing, the relevance of those policies to the current world financial and economic crisis—especially as it affects developing countries—and the needs of the developing countries themselves. The debate is also an opportunity to suggest reforms or changes that hon. Members may wish to put forward.

I thank the Minister for his explanation and I, for one, will study his remarks with care. By his own admission, he made a rather tedious speech about the orders and the need for them. It hardly reflected the tone of the speech made by his right hon. Friend the Foreign Secretary to the Royal Commonwealth Society a week or two ago. The Foreign Secretary excitedly told his audience Our foremost aim must be to encourage faster economic growth in the poorest countries of the World. The moral and humanitarian case for concentrating our efforts in those countries is overwhelming. The exhilaration that we all felt when we heard those words was not aroused by the speech of the Minister for Overseas Development today, nor can it be justified by what is happening. As the Minister knows, in the current financial year, net Government spending on aid amounted to only £950 million, which is 1 per cent. of total Government spending. The drop in aid from the previous year was 11 per cent., which is the largest ever drop in Britain's aid programme. Per head of the population, we spent 35p a week on aid compared with £4.85 on defence. The House should reflect on those figures.

The principal victim of the cuts is, or is likely to be, bilateral aid, which is the easiest to cut. From time to time, the Minister expresses a preference for bilateral rather than multilateral aid. As he admitted at Question Time last February, he cannot escape from multilateral commitments made earlier. I got the impression from his speech that that was his difficulty. The Government are fulfilling commitments, but do not sound over-enthusiastic about doing so. As a result, his bilateral programme is projected to take a steadily reducing share of a reduced aid programme. Will the Minister tell me whether I am right?

Of course, it is not the Minister's fault. It is a result of the cuts imposed upon him by the Chancellor of the Exchequer, who was accurately described as Mr. Micawber in reverse. He is waiting for something to turn down. To turn down an increase in the overseas aid budget is an act of folly and of blindness. It is an act of folly because the international financial position as it affects the Third world and us is much too serious for such a step. I warn the Government that the Labour Party will strongly oppose any further attempt to reduce our contributions to international bodies such as the United Nations development programme. Such cuts cause untold damage and should be restored. However, perhaps the Minister and I can agree that the European development fund is a disgrace to the name of development. That is the only programme that appears to be the recipient of a greatly increased contribution from the United Kingdom.

There can be no doubt about the crucial role of the World Bank. It is important to see its role in terms of the economic problems that the world faces. It is no exaggeration to say that the world economy faces catastrophe and that we have very little time to put matters right. Karl Otto Poehl, head of the West German Central Bank, said recently that the entire international and social system now faces its worst threat since the Second World War. The president of the World Bank, Mr. Clausen, has said that the whole fabric of international co-operation may not be able to survive prolonged economic stagnation.

Forty countries are now in arrears with their debt repayments to the tune of $5.5 billion. They include many of the world's poorest countries. The economies of Brazil and Mexico are on the brink of collapse and the Government must now face the dilemma, tinged with a certain irony, of whether to come to Argentina's rescue. For the Government, the truth of the Brandt dictum that we are all interdependent is being amply, almost cruelly, vindicated.

Perhaps the world economic crisis will not come to a head in the sudden collapse of a major debtor nation. Signs are that Governments and central banks find the prospects of such a collapse so frightening that they are reacting speedily, as they did in the case of Mexico, to avert collapse.

Last Wednesday Mr. Peter Rodgers wrote in The Guardian: The real danger is rather that there will be a chronic series of international debt problems over several years, cumulatively causing a depression which would make the 1930s look rosy. Most commentators seem to agree about the reasons for the crisis that we are facing. First, the Western banks lent onwards the huge oil surpluses to finance the deficits of oil-importing countries. Third world countries preferred to borrow from them rather than from the IMF because they could do so without accepting strict conditions. That was one reason why, in the 1970s, the economies of the Third world grew faster than those of the developed world.

The second reason is that the monetarist policies pursued by most Western Governments produced a recession of a depth and a duration that the private banks failed to foresee. The result has all the appearances of a major banking catastrophe. Most countries, especially African countries, have no hope of earning enough to pay high interest rates on their loans, still less to service the new loans that they need to keep their economies going and to provide for their increased populations.

According to Mr. Rodgers, Morgan Guaranty, the New York bank, said that new lending to Third world countries outside OPEC in 1981 rose 20 per cent. over 1980. If this year it does not rise at all, those countries' output will be cut by 3 per cent., because their capital inflow would be $50 billion less. Growth in the industrialised countries will be 1 per cent. lower than otherwise as a direct result of the slump in the Third world. Some economists say the reduction could be twice as great.

Later in the article Mr. Rodgers says: These cuts may not sound large, but they are. The effect of similar falls in growth in the UK economy in recent years has been to produce a deep recession. In the Third world, the social pressures of contracting economies could lead to bloodshed and revolution. And for everyone, including Mrs. Thatcher, hopes of an economic recovery in 1983 could vanish. The problem is grave and urgent. The World Bank and the IMF have a central part to play. One answer in this deteriorating circumstance—it could be a good deal worse than most people yet realise—is an immediate increase in the resources available to the World Bank. That is, of course, well beyond the relatively small capital increase that we are debating today. Such an increase would enable the bank to finance continued growth in the Third world. It would also reduce the strain on the private banks, which are increasingly reluctant to lend to developing countries.

Most Opposition Members have had severe doubts about the new president of the bank—Mr. Clausen—following the presidency of Mr. Robert McNamara who made a tremendous contribution to the Third world. It is an interesting reflection that the man whom President Reagan chose to follow Mr. McNamara—Mr. Clausen—is a conservative Californian banker who has obviously been strongly influenced by his experience of the bank's work. He recently uttered the following words: We urgently need a disciplined expansion of the world economy, to reduce the suffering of unemployment and aggravated poverty. In an article by Dr. Magnifico, the economic adviser to the Bank of Italy, which appeared in the Financial Times last week, it is suggested that the World Bank should issue special bonds, using the money to grant funding loans to the less developed countries.

The World Bank has a vital role to play in the coming year. The Opposition support the order and hope that the Government, with other Western Governments, will seriously consider proposals further to increase funds to the bank next year.

I shall now deal with the African development bank. I strongly echo the words of the Minister for Overseas Development about the number of African countries that are members of the Commonwealth and with whom we enjoy close relationships and ties. I welcome the Government's decision to become one of the new non-regional members of that bank. But the problems of Africa, the world's poorest region, demand concerted action from both developed and developing countries. Nevertheless, exactly what aid policies are needed for Africa are a matter of controversy.

This is an appropriate time to say a little about the type of policies that the Opposition would like to be pursued. In 1980, the Heads of State of the Organisation of African Unity agreed upon their Lagos plan of action, which was designed to give Africa self-sufficiency and economic integration by the year 2000. Last year, the World Bank issued a report entitled "Accelerated Development in Sub-Saharan Africa: an agenda for action". It was the so-called Berg report.

The Minister will no doubt have read that report. I hope that he agrees that it is seriously deficient and does not carry on the tradition of enlightened analysis which was a feature of the McNamara years at the World Bank. I am not saying that there is not much that is good in the report, but in its recommendations for change, it is weakened by all-too-familiar dogma.

The report rightly says that skilled manpower is Africa's "scarcest economic resource", yet it warns against excessive Government expenditure in basic services such as education. That is an extraordinary statement. Surely future development in Africa will be impossible without increased expenditure on education. Indeed, it contrasts oddly with the view expressed in the world development report of the bank this year. It said: By broadening domestic, technical and managerial skills, changing the attitudes of farmers and workers, and, it is hoped, lowering the birth rate, human development offers the prospect that per capita living standards can be improved faster in the 1980s. That passage must imply the need for a sustained and high level of educational expenditure in that continent.

The Berg report criticised the growth of the public sector in the 20 years since independence yet it ignored the fact that much of that Government enterprise has come about because there was no one else to do it.

A Government cannot sell State enterprises to private capital when there is no private capital to buy them. It is no good lecturing poor nations about the virtues of the market economy when they do not have a market economy.

The report also omits any mention of the past behaviour of private capital in Africa. Examples of excess profits, exploitation of labour, transfer pricing and, in the case of Rhodesia, sanctions busting do not encourage Governments in Africa to trust in private capital.

The report attacks cumbersome African bureaucracies, over-valued currencies and policies that do not encourage export growth, but it shows little understanding of how politically explosive such issues are. I give just one example. Recently, the IMF insisted on the price of sugar in Sudan being increased by 60 per cent. It might have been right from an agricultural or a macroeconomic point of view, but the result in Khartoum was rioting in the streets.

Tanzania faces an extremely serious and precarious foreign exchange and production crisis. In September, Professor Birmingham, the chairman of the British-Tanzania Society, wrote to the Minister asking him to use his influence with the World Bank and the IMF to ensure a favourable outcome to negotiations with Tanzania, which have so far proved abortive.

The Minister was not nearly as forthcoming as he might have been, either in support of Tanzania's case or in giving assurances of additional programme aid to supplement help that would come following an agreement with the World Bank and the IMF. I do not expect the Minister to comment tonight, but I ask him to look at the matter again.

The Berg report is little help to Tanzania. Many commentators have put the position simply: the report is prejudiced against centrally planned economies. Malawi is praised for sustained growth in its agriculture, but there are the usual predictions of disaster for the economy of Tanzania.

The fact that by almost any objective standard—whether GNP per head, adult literacy, health care, infant mortality or life expectancy—Tanzania has performed better than Malawi is ignored. There is a grave danger that such biased assessment will lead to biased policies and that Reagonomics and monetarist dogma will be applied in circumstances where the consequences can only be disastrous.

We have close Commonwealth friends in Asia and our continued membership of the Asian development bank is important. The Reagan Administration's attitude towards overseas aid is perhaps shown most clearly in their refusal to increase their contribution to the ADB. That has forced the bank to cut its soft loan target by nearly $1 billion—£538 million.

A headline in The Observer earlier this year, said Asia takes fright at Reaganomics". The ADB argued that it needed a minimum of $4.1 billion over the next four years to help the poorest Asian countries over the effects of the world recession, high oil prices and the high cost of commercial borrowing. The Americans were not interested. The Observer on 25 October last year quoted an Asian money manager as saying: The sprinters of Asia, countries like Korea and Taiwanin are already practising Reagan's philosophy. But what about the laggards? What good is the Reagan recipe if you can't control population growth, if your resources are scant, your infrastructure primitive and your Government unstable, if you are too poor to have an entrepreneurial private sector, if you are heavily dependent upon imported energy, if your agriculture regularly falls victim of drought and flood and if you can't get your manufactures past the tariff barriers of the rich? The debate could have been fairly perfunctory, but current events justify the use of the occasion to draw attention to the troubled economic and financial problems that all of us face. There are opportunities for the Government to act positively and constructively during the coming round of international meetings.

The GATT meeting in Geneva gave little comfort to Third world countries. Next year there will be meetings of the IMF and UNCTAD as well as the World Bank. In addition, as the Minister will know, the pre-negotiations for the conference on the new economic order have got bogged down. I ask the Government to play a positive and constructive role at those meetings. The Brandt commissioners have just met and will report early next year. For three years the Government have failed dismally to rise to the challenge of the Brandt report. There is still time—but not much—for the Government to start to talk and act constructively. It is vital that they should do so.

9.51 pm

Mr. Bowen Wells (Hertford and Stevenage)

The hon. Member for Greenwich (Mr. Barnett) has provoked me in a way which I did not expect from him. His speech was inconsistent with his claim that the Government have continually worked against and sought to reduce aid to and investment in the developing world by Britain.

The orders demonstrate the Government's sincerity in trying to assist the developing world. The hon. Gentleman has totally ignored the good things in the Government's record. He has not examined carefully the World Bank's report on sub-Saharan Africa, which has been universally welcomed. It is regarded as a realistic report, worthy of consideration by all the countries in sub-Saharan Africa, showing a path by which they could find their way out of the terrible conditions in which they find themselves.

The hon. Gentleman's remarks on Tanzania demonstrate the difficulties in which African countries find themselves because of reliance on centrally planned economies.

Mr. Frank Hooley (Sheffield, Heeley)

Is it not odd that the World Bank report, which suggests a market economy in agriculture for African countries, overlooks the fact that no rich country in the world has a market economy in agriculture? In both Western Europe and North America, agriculture is tightly controlled and massively subsidised and directed by the State. A free market system would not work for agriculture.

Mr. Wells

The hon. Member for Sheffield, Heeley (Mr. Hooley) is right. No successful agricultural economic framework has been developed without considerable Government intervention or some other way of ensuring that the price paid to the farmer is consistent with the production of food in excess of that farmer's local needs.

The report does not state in a dogmatic fashion that the establishment of a market economy in agriculture is essential. It states that a price has to be paid to the farmer to encourage him to produce efficiently, and usually to produce a surplus for the starving people in the towns. There is nothing inconsistent with that in terms of African economies.

The hon. Member for Greenwich failed to point out some of the remarkable achievements of my right hon. Friend in his difficult role as Minister for Overseas Development. I refer to the remarkable de-linking of the International Development Association contributions to the International Bank for Reconstruction and Development—a subsidiary of the World Bank. The British Government led the world into making contributions to the IDA when the United States Government were holding back. It was only because of my right hon. Friend's efforts that the IDA was replenished in the way it was, and he deserves enormous credit for it. That is inconsistent with the picture that the Opposition continually try to paint of the Government not wishing or wanting to see overseas development take place, and trying to limit the reductions in aid in order to make the British economy more prosperous and to make its markets available to Third world countries, so that they can expand their own production and sell goods to Britain. That should be the principal objective of any country.

The retention of the open-door trading policy, in spite of the difficulties that confront us as a result of recession, is paramount if we are to try to help Third world countries, and if we are to help private investment in the Third world from Britain and elsewhere.

With regard to the World Bank, may I ask my right hon. Friend precisely when it is expected that we shall have to pay the large sum of money that he mentioned? Out of which budget can we expect it to be paid? Must we expect our multilateral contribution, as put forward in the ODA budget, to increase to accommodate it? If it is not to increase, what reductions does he propose to make in that budget?

The policies of the IBRD—the World Bank, as it is commonly known—and its structural adjustment loans are a new feature of World Bank lending which take into account the most difficult situation that the bank has had to encounter when making its project loans to various countries throughout the world. Often it has found that the host countries' economic policies have worked against the possibility of bringing about proper development. By that I mean development designed to expand those countries' economies. When they have got into extreme difficulty, the bank has tried to take some action to restructure the option that the host Governments have adopted. The hank has offered valuable financial and managerial advice to the countries concerned in making certain that the options adopted as economic objectives in those countries were such as to be consistent with the project loans being given and with the loans given by private developers and by multilateral developers.

Two contrasting countries in Africa are the Ivory Coast and Tanzania. The Ivory Coast has accepted a structural adjustment loan from the World Bank and has begun to achieve on time the objectives that were commonly agreed between the Government of that country and the bank. Jamaica has done the same. The result has been the disciplining of the economy that—as the right hon. Member for Greenwich rightly claimed in support of his arguments—Mr. Clausen wished to see adopted throughout the world. It is only through these structural readjustment loans that the World Bank has begun to get a grip on the economies of those countries. That has not been so in the case of Tanzania.

The Tanzanian Government are having to import food because the centrally planned economy has been inefficiently administered. It has been bolstered by aid funds given indiscriminately to the Government. The result is that, although Tanzania is capable of producing its own food requirements, it is unable to distribute the hybrid seed to the place where it is needed to grow the crops because the roads are not in good enough condition, and because the lorries designed to carry the seed are not being maintained, and spare parts are scarce because there is no foreign exchange with which to buy them. That is one scene that can be depicted clearly. It was seen by the Overseas Development Sub-Committee on our visit. That is the factual position in Tanzania. At the same time, the Tanzanian Government are adopting grandiose plans to expand a brand new capital at Dordoma. A second airport is being built at Dar-es-Salaam with French Government assistance. It is an example of French Government bilateral assistance inhibiting the aims of development of the World Bank and other better disciplined aid programmes to that country.

The financial, managerial and administrative structures that the World Bank offers through structural adjustment loans are with the agreement of the host country. This is not being dictatorial, neo-colonial, monetarist or Reaganite. They are simple common-sense policies to produce development. Is that wrong? The World Bank has a vital function to play. It is fulfilling that function while also developing and changing.

A feature of the order is that Britain is taking a smaller share ownership in the World Bank. It is enabling other countries to enter into a share ownership in the World Bank. The hon. Member for Greenwich did not mention that. It is a development that is much welcomed by the Third World. It will produce, I hope, some greater shareholding by the oil rich countries which will expand the total capacity of the World Bank to give greater assistance and will develop the Third world more quickly.

I regret very much that the energy affiliate of the World Bank has not taken off. Its establishment is necessary to devote resources to alternative energy sources in the Third world, although I welcome the pragmatic manner in which the World Bank has adopted some of those aims through its programmes within the central budget and the IDA budget. That is to be encouraged. I hope that my right hon. Friend will try to press forward with the formation of the energy affiliate or the diversion of a greater percentage of resources of the World Bank to that objective.

The shareholding of the African Development Bank is a major advance. We should be flattered to have been asked to become a shareholder in the bank. We can offer enormous assistance to the bank in creating real development—not least in housing, through Shelter Afrique, one of the major programmes of the African development bank, promoted by my friends in the Commonwealth Development Corporation. As in the case of the IDA, we are making a contribution to the Asian development fund even though our American colleagues are not doing so. This shows the determination of the Government to help wherever possible.

The hon. Member for Greenwich is right in saying that this country, together with the world economy, will not find a way out of the present difficulties unless we adopt a policy designed to expand world trade, to make the monetary base expand and to produce financial stability in our trading relations. We must avoid a yo-yoing of interest rates and exchange rates. There is need to provide a currency in which trade can expand free of the horror of the spectre of bank collapses and the possible recurrence of the depression of the 1930s.

It is only through an expansion in world trade and better financial control over the world's monetary system that we can begin to look towards a fuller employment programme and the Third world can begin to expand again, as it vitally needs to do. We may be in need, but the Third world about which we are talking and which the Government are being generous to and trying to assist is starving. I thank my right hon. Friend for tabling these orders.

10.5 pm

Mr. Frank Hooley (Sheffield, Heeley)

The hon. Member for Hertford and Stevenage (Mr. Wells) made a gallant attempt to exculpate his Government in their overseas aid policies. He seemed to overlook one or two points, so I shall remind him about them.

First, there are the severe cuts in aid to which my hon. Friend the Member for Greenwich (Mr. Barnett) referred. There is the weird saga of overseas students fees, which has attracted condemnation not only from both sides of the House but from practically all parts of the world. There is the rather petty-minded imposition of health charges on overseas students. There has been the attack on world famous institutions in this country that are concerned with tropical medicine and veterinary services. Only this week in the New Scientist there was a leading article on the plight of the London School of Hygiene and Tropical Medicine because its cash is being cut by the University Grants Committee in 1982–83 and it is in severe financial difficulties.

There has been an attack on the scientific units of the ODA itself in terms of manpower and finances, the Tropical Products Institute and the Centre of Overseas Pest Research, all in the name of the Reaganomics. Finally, there was the infamous reply to the Brandt report in which the Government said that aid to the poorest may be all very well, but their dominant concern was with the political and commercial advantages to this country in terms of the aid programme.

Latterly there seems to have been some recognition by the Government that perhaps this collection of policies was politically and electorally not as wise as they thought, so perhaps the Brandt lobby had some impact. Recently it has been suggested that there will be a modest real increase in the aid budget next year. It is not very much, £85 million or £95 million, but it is slightly in excess of the rate of inflation.

On 7 December the Secretary of State for Foreign and Commonwealth Affairs made a fascinating speech devoted entirely to overseas aid. He made one or two interesting points, one of which was quoted by my hon. Friend the Member for Greenwich. There is the delightful sentence: Aid is not always appreciated as it should be. Perhaps the right hon. Gentleman should have sent that message along to No. 10 to stop the Prime Minister from drivelling on about handouts and taking the cynical attitude to aid that she took not so long ago.

Perhaps more important, in that speech the Foreign Secretary said that at the moment 40 per cent. of British aid is multilateral. He referred specifically to some of the most important multilateral agencies, and one that falls within our debate tonight. He said: The best are very good and have our full support. The International Development Association … is an example. The IDA is an associate body of the World Bank, the contribution to which we are discussing, and part of the finances of the IDA in the past 20 years has come from World Bank funds proper. According to the review of the IDA, a fascinating document which was recently published, the World Bank has transferred $1.6 billion over the past few years from its own immediate resources to the IDA.

The IDA is directly concerned with the poorest countries, and over the past two decades of its existence it has committed $26 billion to no fewer than 78 countries for a wide variety of projects. Of that money, $6 billion has been allocated to India.

In 1980, the IDA claims to have met 60 per cent. of the deficits of the low-income countries and 16 per cent. of all the official aid that went to those countries. Eighty per cent. of its contributions have gone to countries where the per capita income of the population is less than $410 a year—less than £250. Its contribution has been very much to the poorest of the poor.

The association is now taking a growing interest in the problems of the smaller countries. Notwithstanding that over the past two decades the largest single recipient has been India, it is beginning to shift its interest and resources more into agriculture and is not exactly turning away from but giving less high priority to very large irrigation projects and turning more to the smaller projects such as the provision of wells and pumps for small farmers.

The IDA is also taking an interest in new priorities. I quote a passage that appears on page xv of the report: Experience has shown that raising the productivity of the poor means more than providing them with productive assets. It also means increasing their skills and strength through education, health programs and other services. IDA's education lending, for example, has given increased emphasis to primary schooling, as well as vocational and technical training. However, the report acknowledges that the IDA has had a greater impact and more success in Asia, especially in South Asia, than it has in African countries. We have already heard in this debate of the problems of the sub-Saharan countries. The IDA recognises that, notwithstanding its contribution to many countries in Africa, it has not had the same impact there as it had in Asia. It attributes this to certain institutional problems in African countries and also to the shortage of trained manpower there and has virtually undertaken in the report to concentrate more attention in the future on the problems of the poorest countries in Africa.

When the hon. Member for Hertford and Stevenage (Mr. Wells) was talking about Tanzania, he omitted to mention the massive deterioration in the terms of trade and the fact that some of the basic commodities produced by Tanzania now have a purchasing power on world markets of about one-tenth of what they had a few years ago.

The other interesting feature of the IDA has been its capacity to grow and develop, to shift its resources away from some of the countries that it helped originally towards those which now are in the greatest difficulty. It has had considerable success in mobilising international finance, but the most grim and important message of the report is that the need for concessional development assistance remains as great as ever in the poorest countries.

The resources of the IDA are part of the totality of the World Bank's responsibilities and efforts. Over the two decades of the association's existence, 30 per cent. of its resources have come from the United States of America. Japan has been the second largest provider, providing 11 per cent. or $2.7 billion, and the United Kingdom has come close behind Japan in third place. For those who may have misgivings about British multilateral aid, it is as well to point out that, for every £11 that the United Kingdom has given to the IDA, we have had £14 worth of procurement orders for goods and services.

The IDA's review of its activities points out that each replenishment of IDA resources has been more difficult than the previous one, and this has resulted directly not, as was said earlier, from the behaviour of the American Government but from the behaviour of Congress, which has refused to appropriate sums required for the replenishment of the various IDA fund-raising efforts. It is probably no bad thing that the role of the United States, proportionately not absolutely, should have declined within the IDA.

I am not convinced that it is healthy for an international body of that kind to be dominated by the contributions of one country even though that country is the richest in the world. I deplore the meanness of the American Congress in refusing to pay up for the replenishment of the IDA. I believe that in the future there should be a greater percentage of contributions by those countries which are now playing a greater role in the world economy such as Japan, West Germany and others. Some of the OPEC countries are already making a generous contribution.

I have already mentioned the evolution of the IDA, with its new emphasis on agriculture and rural and urban development and the importance it places on human resources—education and health—to which the quotation I read earlier refers. IDA resources in those areas have increased from 32 per cent. to 53 per cent. of its effort and are still growing. There is still the problem of the poorest countries. I quote again from the report: If anything, their needs have grown and their burdens are greater. They still have to break out from the cycle of extreme poverty. We must remember that the poorest countries are the least credit-worthy and least able to obtain credit and loans from the private banking sector. They cannot attract private capital and their needs must therefore be met by organisations such as the World Bank and its affiliate, the IDA, and bodies such as the African and Asian development banks.

I am aware that the voting power and control of the World Bank, the IDA and the IMF is a highly controversial subject. There are disagreements among some of the Third world countries and some of the richer countries. Originally the United States of America had 27.6 per cent. of the voting rights in the IDA. I assume that it was broadly the same for the World Bank. The United Kingdom had 11.4 per cent. It meant that two countries only controlled 40 per cent. of the voting power in those institutions.

The richer industrial countries, referred to in the jargon as part 1 countries, originally controlled 68.8 per cent. Of the voting power within those bodies while the rest of the world had to be content with just over 30 per cent. The position has shifted to some extent. The United Kingdom and the United States of America had two-fifths of the control previously. That has been reduced to a quarter. The United Kingdom has about 7 per cent. of the voting power and the United States of America has 18 per cent. Japan and Germany have increased their percentage of the voting power because of their increased contributions. However, the part 1 countries—roughly the OECD countries—still have more than 58 per cent. of the votes while the rest of the world has only 41 per cent.

The pressure for a revision of that balance of power and voting within the IMF, the World Bank and the IDA will increase and the Western world would be well advised, whatever its notional or legal rights, to come to some accommodation with that pressure, otherwise those extremely valuable and important institutions may be discredited.

On the other side, there is a fear that if the voting power shifted too much in favour of the recipients rather than the donors of the fund there might be a lack of power on the part of the World Bank to borrow—for example, in world markets. All kinds of fears have been expressed about the IMF. I am satisfied that, unless some accommodation is reached between the rich and poor countries, the relationships within these enormously important institutions, of which I am a wholehearted supporter, will be damaged.

I welcome the orders in so far as they strengthen the work of the World Bank. That is all to the good. I also believe that the regional banks have a valuable role to play. The Government should bend their mind to the question of control and voting rights. Has any progress been made on the energy affiliate of the World Bank, because that is an important development? I am quite sure that the orders will enjoy the approval of both sides of the House.

10.21 pm

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

The SDP welcomes these orders as a sign of the Government's residual commitment to the developing world. The figures we are discussing are substantial but do not in themselves contribute greatly to the solution of the massive problems of international debt and liquidity that face the developing world and which affect our prospects of developing our own economy.

From the figures quoted by the Minister, I could not help but noticing that we appear to have reduced the amounts that we are spending. I believe that the amount to be allocated to the African development bank has been reduced from £63 million to £44 million; that the figure for the IBRD has been reduced from £140 million to £70 million; and that the Asian development bank will continue to receive £72 million, as previously estimated.

In putting forward the orders tonight, the Minister, as he confessed to me in a letter in July last year, has contrived to reduce the annual outflow from the aid budget for these laudable purposes. That achievement does not measure up particularly well to the assertions of the hon. Member for Hertford and Stevenage (Mr. Wells) that the Government were playing a major part in solving the problems of the international community at a particularly difficult time.

When we last debated the African development bank on 7 July, I suggested that this is a particularly inappropriate way of debating a sum of £186 million. I suggested then, and I repeat it now, that orders of this kind would be considered better by the Standing Committee on Statutory Instruments &c. or the Overseas Development Sub-Committee of the Foreign Affairs Committee so that we could look at the detail of the orders and the way in which these organisations spend the money that we donate to them on behalf of the taxpayer.

In these debates, and tonight is no exception, we have a broad exchange on the principles of aid, the principles of the World Bank, our generosity or lack of it. We never get down to the technical details of the orders. The last time we debated this matter on 7 July, the right hon. Gentleman was kind enough to say in his winding-up speech that he thought that the suggestions were worthy of greater consideration. He said that he would refer the matter to his right hon. Friend the Leader of the House so that on future occasions expenditure of this nature would get better scrutiny than it receives on an occasion such as today when, of necessity, time is short, and when, further, this is not the appropriate forum in which to get down to detail.

However, I should like to mention one element of detail on this occasion. It concerns the African Development Bank Order 1983. When we had the last debate, I had an exchange of correspondence with the right hon. Gentleman. He asserted that when Her Majesty's Government joined the bank he expected to be much more closely involved in the organisation of the institution that manages the fund, and he hoped that that would be beneficial. He said that in the context of the accusation that the disbursement of moneys from the fund had, since its inception in 1974, been particularly slow. I press him again tonight to tell the House that his more active involvement as a director of a fund—or, in his absence, that of the permanent secretary or whoever is the alternative member—will be directed towards speeding up the disbursement of moneys from the African development fund into the agricultural and rural projects. that are its main aim.

At that time, the right hon. Gentleman referred kindly to the attitude of the president of the bank. I was particularly interested to see in South magazine in July of this year the assertion of Mr. Mung 'omba that some of the projects that the bank has financed are undoubtedly "well intented", but that some of them tend to be larger than the countries themselves can sustain. I hope that the Minister, in winding up will assure me that the pressure of Her Majesty's Government as directors of the fund will be directed towards bringing forward smaller projects which can be brought to fruition much more quickly in an effort to speed up the rate of disbursement once the House has approved the level of financial support tonight.

I welcome these orders, but I repeat that this is a difficult forum in which to get down to the details of the orders. I hope that the right hon. Gentleman will make renewed representations to the Leader of the House to ensure that they are considered in a more appropriate forum in future.

10.27 pm

Mr. Eric Deakins (Waltham Forest)

I do not agree with the suggestion by the hon. Member for Norfolk, North-West (Mr. Brocklebank-Fowler) that we should in future consider these orders upstairs, because, being orders, they are not amendable, and because we have always taken orders, including more detailed orders relating to other Department's work, on the Floor of the House.

My main objection to considering the orders upstairs is that they relate to an important topic, and, even though they can lead to what the Minister described as a tedious opening speech, I did not find it so. If one is interested in the subject, one knows some of the background and appreciates what the Minister is saying. In my opinion, the Floor of the House is the appropriate place to consider any matters affecting the relationship between rich and poor countries. That is the most important topic that we can discuss in this House.

Mr. Brocklebank-Fowler

Did the hon. Gentleman also hear me say that I thought these orders would be the subject of more careful scrutiny in the Foreign Affairs Select Committee and that they would be debated in the House of Commons in the light of the more detailed report that that Committee could make to the House? Instead of trying to comprehend the kind of speech that the Minister made this evening, we could have had something in writing to help us to consider the orders.

Mr. Deakins

As a great fan of the Select Committee system and having spent three and a half happy years with my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) and the hon. Member for Norfolk, North-West on the Overseas Development Sub-Committee, I am delighted with any proposal to give Select Committees more power. I suspect that the proposal that the hon. Member for Norfolk, North-West has put forward would require a change in our Standing Orders which would not necessarily be easily given, knowing the powers that be in this place, but I would not object to the hon. Gentleman's proposal.

Wider issues are raised by the orders which we are debating tonight, particularly the IBRD order for an additional subscription—a vast sum of money—to the World Bank. We must place that in the context of the gloomy and pessimistic prospects for the developing countries as set out in the 1982 annual report of the World Bank. The report, on page 19, says: in 1981 … the overall economic performance of the developing countries was poor. Then on page 20 it says: The impact of the recession on their"— the developing countries— export earnings, as well as the effect of high interest rates on their debit burden and hence on their capacity to borrow further, undermined their ability to sustain earlier levels of production". Unfortunately, there are many more parts of the report in that gloomy vein.

The report of the World Bank, unlike the Minister, who appreciates the need to cope with population pressures in the developing countries, not so much plays down such considerations as misses them out altogether. There is hardly a mention in this year's annual report of those population pressures. Yet, strangely enough, because the World Bank is run by some very intelligent people, it is accepted that population pressures are causing problems because, in the section on the poor countries on pages 20 and 21, it says: The weakening of the economies in Latin America and the Caribbean, as well as in North Africa and the Middle East, was so extensive that per capita incomes in both regions declined." The reason why per capita incomes declined, particularly in Africa south of the Sahara where they have been declining every year since 1977, is the growing pressure of population in those countries. We have had several debates in the House on these matters, and it is worth emphasising once more that, although there has been some growth in developing countries partly as a result of the money which the House votes from the British taxpayer to the IBRD and the other development banks, that money is increasingly going merely to maintain growing populations at a very low average standard of living. In fact, the World Bank in its report says that growth in per capita GNP for all developing countries was a mere 0.2 per cent. That is after taking account of population growth. Those figures speak more loudly than any speeches in the House.

When the Minister replies, I ask him to say whether, as a result of the orders for an additional subscription to the IBRD, the Government can persuade the World Bank to do what the Overseas Development Administration has done in Britain, which is to introduce a population component into its major aid projects in various parts of the world.

I am not at all certain whether the World Bank does that. If not, the Government, having put their house in order, should suggest to the World Bank that it copy our extremely good example.

Another feature of the World Bank report affects the economic context in which we are debating these orders. It comments on what is happening in rich countries, such as Britain, which makes it clear that the report is written by an international banker—Mr. Tom Clausen.

Page 19 states: The industrial countries"— that is us— realise that they must control inflation if they are to return to a stronger path of growth". That sentence could have been uttered in any statement by the Chancellor of the Exchequer, the Prime Minister or any other Minister.

It is interesting to note that the World Bank has now caught the monetarist bug. It does not seem to appreciate that by backing that solution in rich countries, it is undermining the very solutions that it proposes for poor countries. There are two examples of that, again from the World Bank's annual report. The World Bank admits: The effects of the resulting fall in demand"— the effects of the measures taken in rich countries to control inflation— have been felt in the economies of the developing countries. The report goes on to talk about the effect on commodity prices. I found the figures devastating. The report states: international commodity prices (excluding petroleum) declined by 14–5 per cent. in 1981 compared with 1980 levels and slipped an additional 8 per cent. in the first six months of 1982. The price fall was common to all three major groups of commodities: foods, agricultural nonfood products, and metals and minerals. The World Bank has not got its act right yet. I hope that a future British Government will tell the House, when renewing the orders, that they are convincing the World Bank that the solutions that it is advocating in rich countries—the type that this Government are putting forward—are undermining our additional subscriptions to the IBRD. Those additional subscriptions are merely staving off an impending disaster that has been created, at least in part, by the economic policies developed by the rich countries during the past four or five years.

In both rich and poor countries, monetarist remedies are quack remedies for a wrongly diagnosed disease. We shall never get anywhere, unless the president of the World Bank does what Mr. Robert McNamara did when he went to the World Bank in 1972 and 1973 and unless he takes a fresh look at the facts and stops accepting the preconceptions that are all too obvious in certain sections of the World Bank report.

The additional subscription to the World Bank—to the IBRD will need replenishment from time to time. However, we wish to ensure that the money will be spent correctly. I have already mentioned staving off impending disaster and helping to maintain living standards when populations are rising. Neither of them is the right objective if the taxpayer wishes to contribute to raising living standards per head in the developing world. There is less and less prospect of that happening, even with the extra money that will result from the order.

The recession's impact on the operations of the World Bank is becoming noticeable. I promise hon. Members that this will be my last quotation from the annual report of the World Bank. It comes from the section on eastern Africa. It states: The current economic situation is a matter of concern not only because of hardships it causes among the population, but also because the long-term process of capital accumulation and acquisition of skills has suffered a setback. These difficulties have been reflected in the Bank's activities in member countries, as many projects have faced delays in implementation as a result, for instance, of budgetary constraints. Against that background, we have a right to ask the Minister to use his best influence, as one of the major shareholders in the World Bank—particularly with the additional subscription—to convince its directors and the officials that the world needs to take a new economic path if the money that we are providing is not merely to stave off impending disaster. We should like more money to be provided, but that is another matter.

I remind the Minister that, although Mr. Robert McNamara, when he went to the World Bank in the early 1970s, was a practical man of affairs, a true conservative, a man who had been the president of the world's largest private enterprise company—General Motors—a man who had been an efficient and effective Secretary of State for Defence under a Republican President, when faced with the facts of world poverty and deprivation and destitution in the developing countries he made a profound statement which will live as long as any statement made by a politician. In that statement in the foreword to the World Bank annual report of 1973 he showed himself to be astonished at the depths of poverty in the world, at the fact that many hundreds of millions of people were condemned at birth to an early death. That famous statement is beautifully written and is surprising coming from a man with such a practical background.

We must all hope tonight that Mr. Tom Clausen will be influenced similarly and will come to the same conclusion. Then, when next we are debating orders such as these, we shall have better quotations from the World Bank annual report and perhaps even a slightly less tedious speech from the Minister in which he can let his hair down slightly and tell us a little more about the progress being made in improving living standards per head in all the poor countries of the world.

10.41 pm

Mr. Tom Clarke (Coatbridge and Airdrie)

I rise to make some brief and general observations about a debate of great importance, particularly at this time of the year and especially when one considers the interest of the young people of Britain in Third world matters—an interest that I regret to say does not seem to be reflected in the attendance at our debate but which I hope will be borne in mind as we discuss these matters in future.

The Minister, in a most modest way, almost apologised for the speech he made to the House. I did not have the privilege of being present last week during the debate on the Commonwealth development fund, but I did read the Minister's remarks in which he made a similar apology. I hope that he will not regard it as a personal remark when I say that in terms of our contribution as a nation as reflected in the orders and indeed in our interest in these matters, I believe, if I may paraphrase a remark made at a nearlier time, that we have much to be modest about.

The hon. Member for Hertford and Stevenage (Mr. Wells) might, when he reflects on his speech, regret his comment that we are this evening making a remarkable contribution to the problems of the areas under discussion.

I have found nothing remarkable in what has been proposed. It is a minor extension of capital in a part of the world which demands a far greater investment of both public and private capital. That has not been reflected in any of our discussions or in the Minister's proposals. I am sure that the Minister, in his own modest way, would not wish to claim for one moment, as was claimed by the hon. Member for Hertford and Stevenage, that this represents a remarkable achievement by the Government.

Those of us who had the privilege a few weeks ago of listening to the Archbishop of Canterbury on these matters were greatly impressed by the urgency that he attached, and the urgency attached by the Churches in Britain, to the great challenge of poverty in the Third world. All of us from time to time claim achievements for our domestic economic policies when the truth of the matter is that for example, we are, as a nation, entitled only to claim credit for reducing inflation, largely because of the remarkable reduction in world commodity prices to which several hon. Members have referred.

I ask the Minister specifically whether any part of the allocation that we shall be making this evening will apply to the Philippines. If it does, we should bear in mind the growing concern about the denial of human rights in that part of the world and the feeling that the British House of Commons, on behalf of the British people, should be asserting itself and showing that it believes that the sort of things that are going on are an affront to human decency.

We should expect the President of the United States to be as brave as the former President Carter. Instead, we have seen almost an endorsement of the policies that are being pursued in the Philippines, which are repugnant to us all. However, they appear to be condoned by President Reagan. He appears to bear in mind the defence interests which he assumes that his country has.

Our discussions on the Third world can appeal to the imagination of the British people. Even if that imagination did not exist, my hon. Friend the Member for Greenwich (Mr. Barnett) was right when he talked about the absence of debate and discussion on the Brandt report. That report was a remarkable document. I am not suggesting that everything it recommended was right. We face industrial and economic problems, but in many parts of the world there is poverty. We ignore the basic theme of the Brandt report and we do a great disservice to those who produced an excellent report.

Some of my hon. Friends had the privilege of attending a meeting at Blackpool which had originally been organised by the late Frank McElhone. Unfortunately he did not live long enough to attend it. It was addressed by Dr. Ben Bella from Algeria, who said something quite profound and worthy of repetition. As he addressed the British people through that meeting he said "Your unemployed are our dead". That is true and that is the challenge. It is a signal that we can recover from our present economic slump and depression and in so doing make a contribution to the Third world.

The problem of poverty in the Third world represents a greater threat to peace than any other consideration, including nuclear weapons. For that reason I am delighted that we have had this debate. I am delighted also to have had the opportunity to participate in it. I hope that we can have other debates before very long on these subjects.

10.49 pm

Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)

I shall not detain the House any longer than have other hon. Members.

I agree that debates such as this are tremendously important. We face many problems in the Western world, such as unemployment, but happily, in the Western world and certainly in Britain, if people are unemployed they face problems but no one starves and no one must suffer the agonies of spirit and family that occur in the so-called underdeveloped parts of the world, for which we are all responsible. To say that we are not our brother's keeper shows that we do not understand that what we call hardship those in the undeveloped world call riches. Our lower commodity prices and the lessening effects of inflation upon us mean starvation to the undeveloped world. If we face problems, they face disaster.

At least twice a year, it is almost cathartic for this House to think about not just our temporary problems but the genuine disasters that face much of the underdeveloped world. We cannot evade that fact in the end. Their population growth, the inflation that always grows apace and the demands of the so-called civilised world upon our riches are so intense that the more we look upon our norm that people shall always be comfortable, the more the possibility grows that millions of people in underdeveloped countries will starve to death.

We compound the problems, because in good times we lend the underdeveloped world short-term money for long-term problems. The debt of those countries has grown by about 24 times since 1950. They cannot repay it now and they will never repay it, because they cannot even afford the interest that must be charged in a modern world.

Britain is doing as much as and more than other countries. However, we cannot go home for Christmas and believe that the problem can be shelved. It is very much like storm clouds that gather on a summer day. They will grow and the position will become worse. Britain has 3 million unemployed. America, West Germany and France have the highest unemployment in their history. However, those problems are nothing compared with the problems faced by other far-off countries. Unless we can get a positive response from nations on that basis, this generation or the next must deal with misery on black death proportions. Whenever I travel in Africa or South America, I always think that even the poorest in the developed world are wealthy. Unless we preach a better gospel, we shall have the greatest paradox of all—among riches, more will starve and more will die.

Getting that message over points more to the problem than to the answer. I hear people say that they are without this or that, that they are unhappy, that they have not had a foreign holiday this year or that they have not changed their car for 10 years, yet there are many people who have never had a square meal in their lives.

What we do in the House is little. Britain does as much to help as most countries, but it is still pitifully little. When we talk of rescheduling this or rescheduling that, the vast billions in debts now gather, whether it be in Mexico or Brazil, and the time will come when much more has to be done—it may have to be through the IMF or through the World Bank.

We must always remember that our sorrow is other people's disaster. Unless we do more and can persuade the Western world to do more, those people must help themselves. The greatest paradox of all is that the more we reach for the stars, the more we can do great things with electronics and computers, the more our dreams of yesterday become the luxuries of today, the more people will starve and die.

I support my right hon. Friend the Minister. There is much more to do. We must do much more to convince our constituents, otherwise the problem will get worse. The problems cannot be alleviated unless we are more positive about those who are a long way away. We wish the problems to stay there but they will not.

10.56 pm

Mr. John Sever (Birmingham, Ladywood)

The Minister is fortunate today in that his fan club seems to have turned up. Nobody has spoken against the orders. Nobody has spoken against the spirit in which we consider these matters and the way in which the House tries to make sense of the policy towards the Third world and developing countries that the Minister advances on behalf of the Government.

Several points have been made. I am sure that the Minister will have taken note of them and that they will enable him to reflect—I am sure that he has done so in the past—on the genuine heart-felt feelings of many hon. Members who, as the hon. Member for Coatbridge and Airdrie (Mr. Clarke) said, speak for many people outside, especially the younger generation.

We are sometimes at risk in this hallowed place of disregarding what might be the aims, desires and aspirations of younger people who are not normally the most vocal group or those who fill our mail sacks full with letters every day. Nor are they necessarily the most literate section of society. Nevertheless, many young people genuinely want this and any succeeding Government to do rather more in aid of those with the greatest problems in the world. As the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) said, the tragedy that we think besets us in the United Kingdom is in no way comparable with the tragedies that face the Third world.

I am sure that the orders will command the support of the House. The Minister must reflect on the fact that many of us feel some disquiet. We believe that whatever efforts the Government are making, they are not sufficient to honour the commitment that the Government should have to those in greatest need.

The hon. Member for Hertford and Stevenage (Mr. Wells) compared countries in Africa, their levels of poverty and the ways in which they try to combat them. We do ourselves a disservice if we easily compare one country with another and say that our policy is good, bad or indifferent because it compares favourably with other countries. The problems and difficulties facing African countries are not the same. The geographical considerations in the Ivory Coast bear little resemblance to those in Tanzania. Comparisons do not help much; all those countries need support from those that are richer and able to help overcome problems that seem insoluble to African nations.

Mr. Bowen Wells

When making comparisons, I was pointing out that the World Bank had given a structural adjustment loan to the Ivory Coast, which was gradually getting out of its economic difficulties, whereas that discipline was not accepted by Tanzania, which is not getting out of its economic difficulties.

Mr. Sever

I concede that if the hon. Gentleman wishes to see the argument in that way he has a valid point. Of course, what was presented to those countries may not have been received with the same fervour in both. Perhaps the proposed plan was not the best for both countries. We could debate that all night.

I am sure that we agree that if the countries for which we share a common concern receive the aid and support that we are capable of giving, the situation in all those countries is likely to improve. I am also sure that the hon. Member for Hertford and Stevenage will be pleased to hear that I agree with him about the lack of drive in the development of an adequate energy affiliate of the World Bank. The hon. Gentleman nods; I have won a friend. One of the greatest problems facing the Third world is that of energy supply. Much information is available on what various countries require, and developed countries have a commitment to provide aid—technical advice and assistance and invaluable expertise.

My hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) referred to the way in which money is made available by the World Bank and other institutions. It is necessary to look at the way in which loans are geared. I do not say that we should depart from good husbandry, but there may be opportunities for our representatives on those worthy institutions to argue for a little more flair and imagination in the development of programmes and perhaps we could examine the way in which loans are made, without worryng too much about the gearing ratios.

Hon. Members have mentioned the voting strengths on various bodies. If we forgo some power through a reduction of our voting strength that will lead to a wider dissemination of power in the making of disbursements, and I hope that the Minister will look at that.

The hon. Member for Norfolk, North-West (Mr. Brocklebank-Fowler) mentioned that we had debated disbursements previously. I hope that the Minister will act on the anxiety about the way in which money is disbursed and the speed with which programmes are agreed and money gets to its destination. I hope that he will try to ensure a quicker disbursement of the meagre funds that are available.

My hon. Friend the Member for Waltham Forest (Mr. Deakins) has often advised the House of the extreme difficulties that are faced in the developing world on a range of subjects, and his cautionary remarks this evening concerning population growth and control will have been noted. It is an area that seems not to have received the attention of the bodies that we are talking about this evening. But when global plans of this kind are being made and when propositions are being put forward, reference must be made to, and cognisance taken of, all the various aspects that go to make up the problems that we face in overseas development. Population control is certainly one of the fundamental problems. In certain areas, as the Minister will probably tell us later, we have been somewhat successful in promoting compaigns, but in far too many regions we have not met with much success, and there needs to be a great deal of extra work done in that regard.

My hon. Friend the Member for Coatbridge and Airdrie referred briefly to the Brandt report. In what I think was generally accepted by the House as a splendid contribution to our debate, he reminded the House that recently the Archbishop of Canterbury addressed a gathering in London at which my hon. Friend and I were present. The Archbishop was very critical—I am sure that the Minister will have had it reported to him—of the Government's policy. Without putting too fine a point on it, his argument was that we were not doing enough. I think that it is generally accepted in the House by the Minister's fan club that we are not doing enough, and that we should be driving forward a policy that will aid the Third world in a far more meaningful fashion than has hitherto been the case. It will not be difficult to do, because the Minister has available to him an endless amount of research and information which explains clearly and succinctly what needs to be done.

All we need is for the Minister of State to be able to convince the Chancellor of the Exchequer, and one or two other assorted personalities in the Cabinet, to give him more money. That does not seem to me to be too difficult a task for a Minister of such status, and I am hopeful that he will cajole, threaten or bully his colleagues into giving him some money.

I do not think that there is any area of public activity that is likely to receive greater or more growing attention than that of overseas development and the advance of the interests of the Third world. As was said earlier, that problem probably poses a greater threat to the stability of the Third world than most other things that we can think of. I cannot think of anything more devastating to anyone than the prospect of not having a square meal tomorrow and not living through the day.

Mr. Keith Best (Anglesey)

Will the hon. Gentleman accept that what a individual country can do—although obviously one wants to see more resources devoted to the Third world, for the reasons that have been articulated tonight—is nevertheless very small in global terms? The hon. Gentleman has referred on more than one occasion to the fact that we are dealing with global problems. Will he agree that it is incumbent on all of us—and particularly the Government—to try to encourage the maximum contribution from all countries throughout the world so that we can find global answers to such global problems? That is the only way in which they will be dealt with realistically.

Mr. Sever

Yes, I would certainly concede that point. It is right that we should recognise our own difficulties in our own domestic economy and programme our future policies in accordance with them, but it is fair to say that several other countries, such as Holland, do far more for development in the Third world than the United Kingdom does. It may well be argued that our economy is weak and that perhaps we cannot afford the money, but I refer the hon. Gentleman to the contribution made a few minutes ago by the hon. Member for Selly Oak. Some choice phrases were used, such as that the Third world is suffering misery of Black Death proportions. Indeed, it is.

If we are to recognise our own difficulties and put our economy in order—we are told by the Government that that will happen, although some of us are wondering when—part of that improvement must be for the Third world, and will have to go to those in greatest need. If we can promote the economy so that we have a greater impetus, and a bigger gross national product, some of that money must find its way into the stomachs of the starving children about whom we talk.

I am bothered by the thought that even if our economy does not improve substantially, there is a groundswell of public opinion that demands that we do something further, in addition to what we are already doing. That is a tricky problem that we all have to face. We all have to tell our constituents that we are sorry, and know how badly off they are and how they are suffering from economic depression, but somebody somewhere is far worse off, and we want to make a commitment to people such as that.

We can tell that story. The Minister tells it. I know that in his speeches he makes sure that the nation is aware of those demands. To that extent, my colleagues are more than happy to support him. It is not necessary to wait for that burst through in the economy.

To emphasise the commitment of the Labour Party, I point out that we believe that 1 per cent. of the gross national product should be devoted to overseas development and aid programmes. If we were to achieve that, there would be an avalanche of improvements in the schemes and programmes around the world. If we were now contributing 1 per cent., many of the people to whom the hon. Member for Selly Oak referred to as being in dire need would not be in such great difficulties. I offer qualified support to the proposals—qualified only in the sense that they may be not enough. I support the Minister's measures.

I understand that the commissioners are to bring forward an up-dated report on the Brandt report early in the new year. I believe that it will show that under none of its subject headings has there been any improvement since 1978. If that is true, it is a dreadful condemnation, not only of us, but of the developed world. If, after all the debating, and all the public expressions of approval and sympathy for the report, we now find ourselves three years on in a worse position than was first reported, we shall have to look somewhere for improvement. The job of bringing about an improvement falls to the Minister, and I hope that he wil be able to explain to us how best we might be able to tackle these problems for the future.

11.13 pm

Mr. Neil Marten

I am grateful to the hon. Member for Birmingham, Ladywood (Mr. Sever) for a reasonable and reasoned reply. I liked the way that he said that it was so easy to persuade the Chancellor to give money. I hope that the time will never come when the hon. Member has to do that, but, if it should, I think he will find it rather different from the way that he looks at it at the moment As the hon. Gentleman knows, our aid has been increased next year, although not by an enormous amount. We are on the right type of route, and in the year after, if the hon. Gentleman looks at the White Paper, he will see that there will be an increase again.

We give 68 per cent. of our bilateral aid to the poorest countries, as the hon. Gentleman mentioned. Much of the multilateral aid goes to the poorest, and we are fulfilling that role. I do not know whether the hon. Gentleman was speaking for his party when he talked about giving 1 per cent. of gross national product on the official aid programme. If he was, I do not know what his target was for the mixture of private and public flows, for which at the moment there is a United Nations target of 1 per cent. and we give 2 per cent., so we are well ahead.

The point of substance raised by the hon. Member for Ladywood concerned the gearing ratio at the World Bank. This was one of the recommendations of the Brandt report. It is laid down in the bank's articles that its total lending must not exceed its total capital and reserves. Any change from this one-to-one ratio requires amendment of the articles. This would need very careful handling if it were not to imperil the bank's triple-A rating in the financial markets, drive up the cost of its borrowing and perhaps reduce its access to funds.

Mr. Sever

I accept readily that it is a very tricky area and one which has to be looked at carefully. However, in my view we have to look at it, and I was trying to get from the Minister the assurance that he would look at that aspect of the World Bank's arrangements to see whether there was room for movement there for us.

Mr. Marten

This suggestion, if not as a result of the hon. Gentleman's intervention, as a result of the Brandt recommendation, will be looked at. I can give the hon. Gentleman that indication—I cannot describe it as a positive assurance. We could act on the lines that he suggests.

The hon. Member for Greenwich (Mr. Barnett) disappointed me. He kept on referring to cuttings from newspapers which I do not normally read. I got a bit lost. I had never before heard of the authors of those press reports, so I cannot judge their veracity. But I shall get my press department to turn them up, and I shall discover who the authors of those important statements are when I get back to the ODA.

The hon. Member rather dismissed the World Bank's finances as being far too small. The capital base of the World Bank is $80 billion. I do not know what the hon. Gentleman thinks it should be. He dismissed it as being rather trifling. I do not agree with him.

My hon. Friend the Member for Hertford and Stevenage (Mr. Wells) dealt with the speech of he hon.

Member for Greenwich, and I shall not repeat my hon. Friend's condemnation of it, because time is running short. But the debate went on to that theme about a centrally planned economy, such as that in Tanzania, as against the IMF's sensible and commonsense approach to the Ivory Coast. I come down firmly on the side of the IMF approach, bringing its wisdom and commonsense view to developing countries. It has produced a great deal of good when it has been done tactfully and helpfully.

My hon. Friend also mentioned the energy affiliate, as did the hon. Member for Sheffield, Heeley (Mr. Hooley), and asked what we were doing to help the World Bank set up this energy affiliate. We have supported the creation of this affiliate as long as it will attract additional finance for energy development, especially from the members of OPEC. At present, the prospects for attracting additional funds from capital surplus developing countries are not great. The bank itself plans to allocate 22 per cent. of its resources for energy projects, and this may rise to 25 per cent., although it will go no higher than that level because of the competing claims of other sectors.

I note the views that the hon. Member for Heeley expressed on the control of voting rights. Perhaps I may be allowed to write to him on the subject. He welcomed the orders, and I was grateful for that.

The hon. Member for Norfolk, North-West (Mr. Brocklebank-Fowler) suggested that the Overseas Development Sub-Committee should study proposals of this kind before they are put before the House. I hope that the Chairman of the Committee has taken note of that. We had no request of that sort, but the hon. Member for Heeley is present, and he doubtless will have noted what the hon. Gentleman said.

The subject of the African development bank speeding up its rate of disbursement was mentioned. By the end of 1981 the bank had disbursed some $656 million out of about $1,649 million of committed loans—a disbursement to commitment ratio of nearly 40 per cent. That compares favourably with the African development fund in which the ratio is about 24 per cent. It is criticised by hon. Members and myself during the debate on the fund replenishment orders in July. We hope that the bank will maintain and improve its record, if possible.

I am grateful and most encouraged by the fact that the hon. Member for Waltham Forest (Mr. Deakins) did not find my speech tedious. It might be tedious to the House, but the subject fascinates me. I note what he said about population control. As he saw in the report, the bank has been doing something about it, but not enough I am afraid. I hope that Mr. Clausen will read the hon. Member's speech. They have a habit of reading our speeches on the other side of the Atlantic. The hon. Gentleman should not be misled by contrasts in style and rhetoric between Mr. McNamara and Mr. Clausen. I believe that Mr. Clausen and his staff are pursuing the same goals as his distinguished predecessor. The proof will be seen in the annual reports of what the bank does.

The hon. Member for Coatbridge and Airdrie (Mr. Clarke) described a minor extension of capital by the World Bank. Our contribution is the sterling equivalent of $1,467,886,680, which I do not call a minor extension. He went on to refer to human rights in the Philippines. He may have been here during the debate on the Commonwealth Development Corporation last week when he would have heard that matter fully discussed. The poverty of the people in the Philippines has to be balanced against the security position. At the end of the day a judgment must be formed on that balance. That task falls to me and I shall carry it out. His speech was sincere and the sort of speech that his predecessor in the House might well have made.

My hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) raised one of the technical problems involved in any development programme. He referred to educating people in this country about the subject, and I believe that that should be done more and more by the schools. There is no reason why people should not become interested in it while they are young. There are plenty of school teachers to do it and there is nothing to stop them from going ahead and getting the information from the development headquarters in London.

My hon. Friend the Member for Selly Oak showed the real feeling for the humanitarian arguments for aid which reflect the wide beliefs held by many ordinary people in Great Britain. I was grateful both to him and the hon. Member for Coatbridge and Airdrie for underlining that so powerfully at Christmas.

Some hon. Members have strayed further than the World Bank and the Asian and African development banks. If I have not answered their points now, I shall write to them, mainly about the ones that are in order.

Question put and agreed to.

Resolved, That the draft Asian Development Bank (Third Replenishment of the Asian Development Fund) Order 1983, which was laid before this House on 6th December, be approved.

Resolved, That the draft African Development Bank (Subscription to Capital Stock) Order 1983, which was laid before this House on 6th December, be approved. That the draft International Bank for Reconstruction and Development (1979 General Capital Increase) Order 1983, which was laid before this House on 6th December, be approved.—[Mr. Neil Marten.]