Overseas Development

HC Deb 11 February 1982 vol 17 cc1128-203 4.15 pm

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

I beg to move, That this House, recalling the Prime Minister's commitment to the Third World at last year's Conferences in Ottawa, Melbourne and Cancun, is appalled and dismayed at the Government's intention to cut the aid programme for the year 1982–83 by at least 11 per cent. in real terms; deplores the Government's policy of moving away from funding projects that help the poorest groups in the Third World; considers that these actions only serve to confirm the callous indifference of Her Majesty's Government towards the 800 million people who are Living in absolute poverty; and calls upon Her Majesty's Government to increase and not reduce the United Kingdom's aid programme so that they move towards, and not away from, their stated commitment to reach 0.7 per cent. of gross national product for official development assistance.

Mr. Speaker

I have selected the amendment in the name of the Prime Minister.

Mr. McElhone

The Minister will know that in India on 24 February Mrs. Gandhi will open a conference of 34 countries to try to pick up the debris of the Cancun summit conference. It will be a serious attempt to restore the belief that the poor of the Third world will not be forgotten and that the basic principles outlined in the Brandt report will somehow be implemented in the foreseeable future.

The truth is that, for all the pious statements of President Reagan and the Prime Minister, the Mexico summit was a dismal and abject failure. Added to that depressing picture is the fact that the Heads of State meetings in Ottawa and Melbourne resulted in not one extra pound or dollar being offered by President Reagan or the Prime Minister. Therefore, is it any wonder that the Government have no credibility left with anyone in the aid and development world?

Nevertheless, some of the supreme optimists in the aid world believe that the cost of staging the Cancun summit was worth while, if only to give President Reagan his first lesson in development education, so that he is now aware that there are 800 million people living and dying in absolute poverty. Experience so far seems to show him to be a somewhat reluctant and unpromising convert, for his advice in Cancun to those starving millions was, crudely, to get on their wagon and look for salvation. What California in land resource terms one might find in Tanzania or Bangladesh, I do not know.

The only tangible offer of help that the President seemed to give to that conference was a promise of some flying farmers. I understand that people associated with air traffic control and Jodrell Bank have been looking for those strange angels of American mercy, but so far they have not appeared on the horizon.

The Minister will no doubt say that I have been grossly unfair to him and the Government, but he must answer for the Prime Minister, who is not here. The right hon. Lady sent a note saying that she had to be in some other part of the country. The hon. Gentleman must tell the House why, at Cancun, the summit where so much was expected, Brandt's emergency programme and the programme put forward by Kreisky of Austria for a Marshall aid-type plan costing $100 billion was not even seriously discussed.

The Prime Minister, if she were present, would no doubt intervene to refer me to the promises outlined in the communiqués. Communiqués are always full of promises, especially as they are written before a conference starts. The fact that statements are often hypocritical is best outlined by pointing out that a few days after Cancun President Reagan attempted to block the World Bank loan to India. What a glaring indictment of his commitment!

The Prime Minister at least achieved the dubious distinction of being consistent in her hypocritical approach, from the first hour in Downing Street when she read the epistle of St. Francis—her first action when she went through the door of No. 10 was to cut £50 million off the aid budget—through to her infamous description of aid as only a handout. When she returned from Mexico she immediately took £26 million off the aid budget and described aid as a handout. I understand that that brought a panic reaction from the "dries" on the Government Benches. It showed the indifference of the Prime Minister. I am not exaggerating when I say that that was bloodsucking the poor. It is not possible to convey all the sadness and bitterness in the Third world because of the cuts in the aid programme.

Mr. K. Harvey Proctor (Basildon)

The hon. Gentleman has been critical of my right hon. Friend the Prime Minister and the President of the United States. Is he aware of the view of Professor Peter Bauer, that overseas aid is detrimental to both donor and recipient countries?

Mr. McElhone

That comment is not worthy of an answer. One has only to speak to people who are starving or to those who represent them to know what a callous question that is.

Mr. Cranley Onslow (Woking)

Will the hon. Gentleman define absolute poverty? How does he calculate the figure of those suffering from that condition to be 800 million?

Mr. McElhone

If the hon. Gentleman had taken an interest in the debates or in the reports of the Brandt commission, which comprised many experts on aid and development, he would know that the judgment is 800 million. I believe that each year 5 million people die because of poverty and about ¼ million children go blind because of the absence of fresh vegetables. The hon. Gentleman should listen to the right hon. Member for Sidcup (Mr. Heath), who has tremendous experience of this issue because of his long service with the Brandt Commission. He should listen to voluntary agencies and to other people who work in the field.

It is scandalous that in the financial year starting on 1 April there will be an 11 per cent. cut in real terms, compared with a projected overall budget target implying a 0.5 per cent. increase. That is political larceny on a grand scale. Is it not tragic that against a background of continuing cruel and callous treatment of the Third world, on the Front Bench not even a ministerial mouse squeaks? Those hon. Members who uttered a word went to the Back Benches. This is the first full-day debate in the lifetime of this Government on the Department's policy. We had a half day in Opposition Supply time. I challenge the Minister to describe the policies that he is trying to operate within his Department.

The catalogue of misery does not end there. Last month the United States Administration cut their contribution to IDA—the part of the World Bank that gives low interest loans to poor nations. The United States President has decided on a massive 25 per cent. cut, and Britain has gladly and gleefully followed suit. What makes the cut more offensive is that the United States Administration are substantially increasing their spending on weapons of destruction, especially in chemical warfare.

On 28 January the Prime Minister misled my hon. Friend the Member for Battersea, South (Mr. Dubs) on the IDA, when she stated that only a proportion of our sixth IDA contribution could be used during this period. If the right hon. Lady studies that answer again she will realise that to the credit of Norway, Sweden and Denmark, and to the eternal shame of Britain, those countries rejected the United States position and continue to make a full contribution to the IDA.

The action by the United States Government means that India and some of the poorest African countries will suffer adversely and will be forced to try to borrow on the open market, not only to service their growing and standing debts, but in many cases just to survive at the barest level of existence.

That is a policy that the Government and the United States Administration want the poorest countries to follow—"Get out into the market for any money that you require". The nonsense of it is that those countries, which are in the greatest need of assistance, are not sufficiently creditworthy to borrow anywhere except from the World Bank. It is a mockery to suggest to countries with such low incomes that they should obtain money from the Eurodollar market, when one knows that such an attempt would be rejected out of hand.

Those countries have to fall back on the iniquitous IMF, which, under pressure from the West, especially the United States, imposes rigorous conditions. It insists on extremely tough new targets for public spending cuts before agreeing to loans. It is a painful experience, as some of us know from earlier years. Those harsh conditions not only add to the crushing poverty in those countries, but they are leading to destabilisation and the creation of political unrest in countries from Costa Rica to the Sudan.

Apart from the many millions of pounds lost in British orders because of the cutback in IDA funds, the real concern is the threat to some of our international banks because of the serious difficulties that Third world countries have in trying to service—never mind cut back—their outstanding debts. Some of those banks have suffered adversely from loans to Poland and Turkey.

There is a real possibility that one bank could be in trouble if one or more Third world countries were to renege on their debts. In the present climate, the knock-on effect on the British economy would be too serious to contemplate. I have always believed that the collapse of the Creditanstalt Bank in Austria in May 1931 did more to encourage the excesses of Adolf Hitler than the Reichstag fire, because of the mass unemployment that it created.

The message to the Government is stark and clear. Aid is not a charity or a handout. It is, by the necessity for interdependence, essential to the economic survival of the world.

Another area of development policy in which the Government are extremely vulnerable is aid to the poorest. The Government and the Prime Minister consistently tell us that their priority is to provide aid to the poorest. If that is the case. why did the Government at the Paris conference in September resist until the very last minute the proposal to accept the target of 0.15 per cent. of GNP to assist the least developed countries? In a totally discreditable way, because of much pressure, no doubt, from the Treasury, they agreed, provided that no date was set for Britain to reach the target.

The previous Government reached 0.14 per cent. of GNP in 1979. I have five questions for the Minister, which he should be able to answer when he winds up the debate. What is the latest figure, at the nearest available date, for bilateral aid to the least developed countries? Why has the figure for 1980 not yet been published? The Minister must have it in his brief, so perhaps he will tell us when he replies. When does he expect to reach the target figure of 0.15 per cent. of GNP to the least developed countries? What specially designed projects costing £2 million or more for the poorest groups has the Minister approved over the past 12 months? What was the total value of those projects in the past 12 months?

The giving by the Prime Minister of £30 million to Mexico, which is the fifth richest country in the world in oil and gas, to build a steel mill hardly smacks of aid to the poorest. I still wish to know more about the £150 million recently given to India for a steel mill. I am told that that aid did not go through the proper departmental procedures.

Mr. Archie Hamilton (Epsom and Ewell)

Under the hon. Gentleman's Government were we not still giving aid to Saudi Arabia?

Mr. McElhone

I fear for the Government if they have to depend on such support.

Dame Judith Hart (Lanark)

The answer to the hon. Gentleman's question is "No".

Mr. McElhone

I repeat that there is deep concern inside and outside the House about the £150 million aid to India to build a steel mill, which I understand has not been started. I am reliably informed that that vast sum, which is a substantial proportion of the aid budget, did not go through the proper departmental procedures—the project committee. Just to please the Prime Minister, will the Minister try to justify that aid during the debate?

I should fail in my duty if I did not mention the scandalous collusion between the Government and the United States Administration over Nicaragua. After 40 years of Samoza'a dictatorship, Nicaragua has emerged as a free country, but in the process it has become almost bankrupt. Because of United States pressure Britain is now the only EEC member that does not give Nicaragua assistance. I do not count the derisory £30,000 that we gave in 1981–82. We do not help Nicaragua, because President Reagan says so. My right hon. Friend the Member for Leeds, East (Mr. Healey), myself and others have made requests, but the Government will not even reopen the embassy in Managua.

The situation is critical. The United States Administration openly published the fact that they are running training camps in Florida and in certain South American States for Samoza's ex-national guards. The Foreign Secretary mentioned the situation in the House a few weeks ago. Are we to have another Bay of Pigs? The Government should convey to the United States how critical a position we shall be in if they take that critical and hasty step.

How much longer can we have a Prime Minister who endangers the country's standing and integrity by riding shotgun on the wagon of the dangerous old Californian in the White House? I have visited Nicaragua in the past 18 months. Anyone who talks to the Mexican and other Governments in the area knows that the United States is playing a dangerous game in. Nicaragua and El Salvador, and they seem to have the overt support of the British Government.

I make it crystal clear to the Prime Minister that on this issue, as on many others, such as nuclear weapons, chemical warfare and cuts in overseas aid, in supporting President Reagan she is not speaking for the Opposition. The world is too small for anything but peace and friendship. I hope that we shall have a change in philosophy. I hope that the next time the Prime Minister meets President Reagan she will show him a copy of the doctrine of General George C. Marshall, the architect of the Marshall plan, which states: Our policy is directed, not against any country, or doctrine, but against hunger, poverty, desperation, and chaos. That was the policy that saved Europe after the Second World War, for the Allies as well as the enemy. That type of policy, in complete contradiction of what is coming from the present incumbent of the White House, will save world peace today.

Mr. Raymond Whitney (Wycombe)

President Reagan and Mr. Haig have offered Poland massive help precisely on the lines of the Marshall plan, conditional only on the observance by the Polish regime of human rights agreements of the sort signed at Gdansk. Do the Opposition support and endorse that generous offer?

Mr. McElhone

I am dubious about supporting any offers made by the American President. I resent the double standards of the Reagan Administration. They are concerned about Turkey and Poland, but they give no aid to the starving people in Nicaragua, and they interfere in El Salvador's affairs. I respect the position of Solidarity. I have publicly spoken against the activities of General Jaruzelski and the Soviets, but we get fed up with hearing only of the desperate situation in Poland, when there are also problems in Chile, Nicaragua and El Salvador. We cannot have double standards.

With over 3 million unemployed, with the rapid pace of technology destroying thousands of jobs each year, with our manufacturing base shrinking each year and with the need to finance an ever-expanding social umbrella for the growing numbers of elderly, unemployed and others unable to work, time is not on our side. One hears of amazing technological progress in Japan, where &£9 million will buy a manufacturing unit to do the work of 500 men for 24 hours a day, with no quality control problems because of the absence of the human factor. That should make us think about the need to expand our manufacturing base. If the Government will not accept the moral argument for a realistic aid programme, or the philosophical argument, at least as a Government of so-called business entrepreneurs they should understand the economic case for helping the Third world, but they do not.

I give just two or three examples, because my hon. Friends will develop other arguments during the debate. Can the Minister tell me, in all logic, why we continue to charge full-cost fees to overseas students? The result is a drop of almost 40 per cent. in the numbers coming from Third world countries, especially from the poorest ones. The nonsense is that these students are being snapped up by France, Russia and other East European countries, which recognise what this Government are too blind to see, which is that when these youngsters are trained they will return to their own countries, probably to positions of importance in industry, commerce and Government. They will not buy British goods. They will buy the French and the Russian equipment in which they have been trained. We are losing the seed corn of the next generation of British export orders. If the Government ever doubt that view, they only have to speak to the Foreign Secretary and hear of the criticism that he is receiving from Malaysia and the danger to the valuable orders from that country.

Mr. Bowen Wells (Hertford and Stevenage)

We are debating the aid budget. It would be fair if the hon. Gentleman would make it clear that Her Majesty's Government have increased the amount of money available for students' grants, thus increasing the possibility of students with the least means coming to this country. The number of overseas students who will not be coming are, generally speaking, from the higher income brackets in their country.

Mr. McElhone

I have read the Government's figures—which is a hazardous exercise these days. I understand that they have cut back £100 million over three years. That might not fall within the confines of the budget of the Minister for Overseas Development because the Department of Education and Science has a say in this, but I do not see any change or any return to the logic of helping students from the poorest Third world countries. I hope that I am wrong. I await the figures from the Government or a statement from the Minister today.

Another economic failure of the Government is seen in their handling of the European development fund. We make an 18 per cent. contribution to it, but hardly ever achieve a 10 per cent. return in industrial orders. That is because the Government have neither the guts nor the guile to stand up to the French, who have unfairly held on to the development commissioner's portfolio for almost 20 years, which ensures that they do exceptionally well when it comes to orders from this fund. What are the Minister's views on the Court of Auditors' report, which expressed grave reservations on the conduct of that fund? That, together with the millions of pounds in lost orders because of our support for President Reagan's cuts to the International Development Association, serves further to condemn the Government's abysmal record in the economic management of the country.

When a political system generates such cynicism by its failure to respond to a moral cause, it is sowing the seeds of its own destruction. When the Prime Minister tells us that aid is a handout and that the poor must carry an equal burden when public expenditure is cut, she adds strength to those who argue that parliamentary democracy is an irrelevant sham and that the only way forward for the people of the South is violent, bloody revolution.

That in itself is bad enough. The failure of Cancun, with an open-ended and undefined commitment to global negotiations its only achievement, has had an even more damaging effect on political relationships between North and South. We might pay a price for our selfishness and greed, because, although they are used to being poor and to suffering and hunger, the poor countries sit on most of the precious minerals and commodities. The day that they organise together they can bring the industrial North almost to a halt very quickly. It may be that the programme for survival about which Brandt speaks is a programme of survival for this country as well.

The Government are cowardly and miserable. They are so afraid to justify their aid policy that they leave it to the Opposition to provide parliamentary time from the small number of days allocated to them. They are so afraid to try to justify their policy that they allow only 10 minutes per month for questions on this subject on the Floor of the House. They are so afraid to let the public know what they are doing about aid and development that they did not just cut the development education started by my right hon. Friend the Member for Lanark (Dame Judith Hart);, they abolished it.

By any standard of justice, fairness or compassion the Government stand condemned, for they have destroyed the good name of the British Government around the world. I conclude by challenging the Prime Minister to give the British electorate the soonest possible opportunity to make its judgment. It is my belief, and not just the belief of the 3 million unemployed in this country, that by their votes people will provide the unanswerable case for casting the debris of the Government into the political abyss so that a more caring, compassionate and understanding Labour Government will once again be restored to their rightful stewardship of this country.

4.47 pm

The Minister for Overseas Development (Mr. Neil Marten)

I beg to move, to leave out from "That" to the end of the Question, and to add instead thereof: this House, recalling the Prime Minister's commitment to the Third World at last year's conference in Ottawa, Melbourne and Cancun, and recognising the prime importance of trade and private capital flows to the progress of developing countries, welcomes the Government's decision to maintain an aid programme in excess of £1,000 million pounds, which provides a substantial and effective response to the real needs of the developing countries whilst helping to safeguard jobs in exporting industries in this country.. I am grateful to the hon. Member for Glasgow, Queen's Park (Mr. McElhone) for allowing me to reply to many of his points in my wind-up speech, for which I will seek the leave of the House to speak at the end of the debate. He accused the Prime Minister of having no credibility in the developing world. It is a pity that he does not go enough to the developing world to hear what is being said there. I go a great deal—I am off tomorrow. The Prime Minister has credibility in the developing world. It is nonsense to say that she does not.

Further, to say that the Prime Minister is destroying the good name of Britain in the developing world is rubbish, as the hon. Gentleman would know if he went there. Perhaps he cannot do so because of the cost, but he should take every opportunity to travel there to find the reaction of the developing world to the aid programme. The hon. Gentleman's speech was one of gloom and pessimism, and he seemed to drag up every little possible tin can that he could throw.

The hon. Gentleman moaned that only 10 minutes a month were allowed for questions to the Minister for Overseas Development. That is a matter for the usual channels to arrange, and if he likes to chance his arm by suggesting that Overseas Development questions should be put in with the Foreign and Commonwealth Office questions which have a much longer period I would be open to discussions.

Mr. McElhone

Will the Minister assure us that, when we approach the Leader of the House, he will support us in our request for additional time? In that way, those who table questions will have a better deal. For 1 February 17 questions were tabled, but only three were answered.

Mr. Marten

I cannot give the assurance for which the hon. Gentleman asks, simply because time for other matters would have to be cut if more time were allowed for Overseas Development. I would welcome discussions to decide when questions to my Department should be tabled—either on their own or mixed up with the Foreign and Commomwealth Office questions.

I welcome the opportunity that the debate provides of enabling the House to consider a subject of great interest to all hon. Members, but one that can too easily be lost from view in the welter of our domestic preoccupations in Britain. The Government are deeply concerned with the severe problems faced by many developing countries. Their struggle against poverty, hunger and disease has been made more difficult by the oil price rises and the world economic recession of recent years. We are committed to helping the developing countries overcome those problems, both on humanitarian grounds and to provide conditions in which political stability and freedom can thrive.

For the developing countries as a whole private flows are a much more significant source of capital for development than is official aid. The developing countries that have experienced the fastest economic growth are those that have provided conditions likely to attract private investment. Other countries would benefit from adopting similar policies. Britain has had a major role in providing and facilitating flows of private capital for development. Our abolition of exchange controls has made such flows easier, while the efficiency of our financial institutions is an essential factor.

Mr. Barry Sheerman (Huddersfield, East)

If we must look to private investment to solve some of the dreadful problems that we are discussing, should we not remember that the beneficiaries of most of that money will probably be those in the best position to help themselves? What will we do about those who will not receive that money?

Mr. Marten

That is precisely the point that I am making. Government aid is devoted, in large part, to the least developed countries that cannot obtain financial flows because of their credit worthiness.

Nevertheless, we recognise that private investment is likely to benefit mainly the better-off developing countries. As I told the House in my statement on aid policy two years ago, we therefore recognise that official aid continues to be an essential element in development especially for the poorest countries.

But for the developing world in general, it is generally recognised that aid is not the only, or even the most important, answer. The World Bank has stressed that the economic health of the developed countries is a vital condition for growth in the developing ones. The most useful contribution we can make is to restore stable growth to our economy and maintain an open trading system. That will enable us not only to give more aid but, more importantly, to provide a growing market for Third world exports. That can be achieved only through bringing inflation under control. It is, therefore, essential to I min public expenditure, and that, unfortunately, has required cuts in many areas, including the aid programme.

The aid programme will, therefore, fall in cash by some 2 per cent. between this financial year and the next. Clearly, the fall in real terms will be greater by an amount depending on the actual rate of inflation, which the Government are working to keep to a minimum. Nevertheless, the programme is substantial, and the gross aid programme for the current year exceeded £1 billion for the first time and will remain at more than £1 billion next year. Only four countries—the United States, France, West Germany and Japan—give more aid than Britain, and those all have stronger economies than ours. It is, however, simplistic to judge an aid programme just in terms of figures for particular years. It is more important to look at what it achieves. I believe that the British aid programme stands up well to any comparison on that basis.

The policy I outlined to the House two years ago had as its core a greater attention to political, industrial and commercial factors alongside the developmental ones which remain basic to it. I will say more in a moment about the ways in which we have altered the emphasis of the programme to reflect those other factors, but as there appear to be some misunderstandings about our commitment to ensuring that our aid programme contributes to real development I shall say a few words about that.

Britain gives a much higher proportion of its aid programme to the poorest countries than does any other major donor. During the last few years of the Labour Administration, the poorest countries received about 60 per cent. of our bilateral aid. We have maintained a similar proportion with India, Bangladesh, Kenya, Tanzania, Malawi and Pakistan among the major recipients. In both 1979 and 1980 the figure was more than 60 per cent. That makes rather curious the words of the Opposition motion considers that these actions only serve to confirm the callous indifference of Her Majesty's Government towards the 800 million people who are living in absolute poverty".

Dame Judith Hart

I am sure that the Minister is aware that, within the aid programme, project spending is calculated two or three years in advance. The figures that he has quoted today, which have been quoted internationally by his colleagues, relate to the Labour Government's programme. I know that he cannot give precise figures for forward commitments, but we want to know what the figures will be this year and next year when the Conservative rather than the Labour programme its represented.

Mr. Marten

When the right hon. Lady was in my job, about 60 per cent. of aid went to the poorest countries. In 1979–80 the figure was slightly more than 60 per cent. I do not yet have the figure for 1981.

I reaffirmed our policy of concentrating our bilateral aid on the poorest countries—where it is most needed—at the United Nations conference on the least developed countries in September.

During the past 12 months, I have approved several proposals which will be of benefit to the poor within developing countries. In India, for example, a rural health project, a low-cost housing project and two major fertiliser plants will help the poor. In Zimbabwe, there will be a land resettlement programme for the poor. There will be extensions to the sewerage project in Cairo, a rural water supply project in Swaziland, and veterinary and agricultural engineering projects in the Yemen Arab Republic. There is a long list of many more proposals.

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

What about the Turks and Caicos Islands?

Mr. Marten

I shall deal with that point when I reply. I shall enjoy doing so.

We are also substantial contributors to multilateral aid programmes that concentrate on the poorest countries—in particular through various programmes of the European Community, which accounted last year for well over 10 per cent. of our total aid, and the International Development Association. Hon. Members will be aware that the first and second instalments of the United States' contribution to the latest IDA replenishment have not been appropriated in full by Congress. We and other members agreed to pay our first instalments in full despite that. For the second instalment, in accordance with the terms of the IDA sixth agreement, we and most other member of IDA will limit our contributions to preserve the burden-sharing principle that is basic to the IDA. I agree that Norway and Sweden have not done so, but all other countries have. To offset that reduction, $800 million of additional lending on World Bank terms will be made available to IDA borrowers.

Mr. James Johnson (Kingston upon Hull, West)

We have listened for a long time to a long catalogue of local schemes in various parts of the Commonwealth and elsewhere. Can the Minister honestly say that, for example, for Africa, he is getting more money now out of his Cabinet colleagues, and that he is upping his job, so to speak? Is his Department doing more work for the millions of people in need?

Mr. Marten

I said in my opening statement that the aid is being cut by 2 per cent., from £1,037 million last year to £1,017 million this year. That is the measure of the cut in cash terms. As for value, we are probably getting better value as we improve our techniques in giving aid.

Mr. Brocklebank-Fowler

rose—

Mr. Marten

I must get on. A lot of hon. Members wish to speak, and it is already 5 o'clock.

Our aid is on generous terms. All official aid to the poorest countries is in grant form. We have also taken new steps to ensure that our aid is effective—a matter that I consider to be of the highest importance. Our assistance needs to form part of a coherent development strategy, which is determined by the developing country itself. It is up to the Governments of these countries to decide upon their own priorities, and we cannot force our views upon them. However, where the right conditions exist, well-planned aid that is well executed can have a significant impact. We have now developed a more rigorous approach to monitoring the implementation of projects and programmes to ensure that maximum value is obtained for our money, and I have greatly increased our resources for evaluation of completed projects, which is enabling us to learn from previous experience. I have found on my visits to the field that British aid has a good reputation for being practical and relatively free from lengthy procedures.

One of the most valuable aspects of British aid is the comparatively large amount of technical co-operation that we provide. Over one-third of our bilateral aid takes this form. The transfer of expertise through provision of British experts and consultancies—training both in Britain and overseas for key people from developing countries—can be very cost-effective, particularly when directed towards developing and sustaining the institutions and structures that will enable the developing countries to use effectively the investment resources available to them.

One problem in a number of developing countries is the lack of management and marketing training. We should encourage those countries to seek such training in this country, as we have considerable expertise in that connection. Britain, with its long history of links with the Third world, has a great deal of experience to offer. At the end of 1980, there were some 7,000 experts, supported by the British Government, under bilateral technical cooperation arrangements, and we took special steps last year to try to maintain the numbers of aid-financed students and trainees here in Britain.

Despite the pressures on aid programme resources, we propose to increase aid advances to the Commonwealth Development Corporation from £30 million in 1981–82 to £34 million in 1982–83, and we have given it a planning figure of £37 million for 1983–84. In addition, the corporation will be allowed to borrow in foreign currency on approved terms with a Government guarantee up to £15 million a year in each of the next three financial years. This demonstrates in real terms the importance that the Government attach to the valuable role that CDC has played in overseas development through investment in projects that will help to increase the wealth and employment of the countries concerned and, at the same time, yield a reasonable return on the money invested—a role that I know from personal experience is equally welcomed by the countries in which it operates.

Mr. Nigel Spearing (Newham, South)

I thank the Minister for giving way. The facts about the CDC that I think he has just announced for the first time—perhaps he will confirm that—may be of great significance. Will he say whether the policy of the CDC to assist people most in need, particularly smallholders in subsistence agriculture, is still maintained under the new arrangements? Or does he think that the CDC should pay greater attention to the announcement two years ago to which he referred, which was a departure from the principles laid down in the Labour Government's White Paper, published by my right hon. Friend the Member for Lanark (Dame Judith Hart)?

Mr. Marten

The CDC still operates in the same way, trying to help the poorest nations. May I correct the hon. Gentleman and say that I made the announcement about a fortnight ago, but it was in a written answer.

I should like to pay a particular tribute to the outstanding contributions made by British voluntary agencies. In recognition of this, the Government provide funds through their joint funding scheme to help these agencies extend their developmental work among the poorest groups in developing countries. I have seen to it that the provision for joint funding has continued to rise.

I am also impressed by the excellent contribution by the volunteer sending societies, particularly in the poorest countries. At the end of last year, there were almost 900 British volunteers. We have maintained the value of our financial support to the British volunteer programme.

The Overseas Development Administration meets 90 per cent. of the agreed budget costs of the sending societies in the form of a grant and, following consultations with them, I propose, subject to parliamentary approval, to increase our support by 22 per cent. in cash terms to over &£4 million in 1982–83. That will allow the number of new volunteers to be sent into the field this year to be increased to about 600, compared with about 520 last year, and a strengthening of the administrative support available in the United Kingdom and overseas.

Another area where I have decided that we should do more is in relation to population activities. This matter was raised at Cancun. As announced in the House earlier this week, I intend to increase our contributions to multilateral agencies in this field to £6 million in the next financial year. We also hope to spend more on population in our bilateral programmes.

I have described some of the ways in which we have sought to ensure that our aid is effective in developmental terms. Now let me say something about the new emphasis on responsiveness to political, industrial and commercial considerations.

We have maintained a high concentration of aid on the Commonwealth, reflecting our close political links and the great needs of many Commonwealth countries. The successful establishment of a programme in Zimbabwe has been an excellent example of how aid can both contribute to a political settlement and be spent in ways which really benefit the country concerned.

We have also increased the provision that we make for funds to be deployed at short notice in response to urgent needs that often have political implications. We have thus been able, for example, to make a significant contribution to ameliorating the plight of the refugees from Afghanistan. That is a way in which we have devoted more to the political aspect of our aid.

At the same time we have worked to improve the industrial and commercial benefits of our aid programme to Britain. We have done so, not by sacrificing the principle that all aid spending must contribute to the development of the recipient country, but by seeking actively ways of promoting such development at the same time as encouraging orders for Britain.

As a very significant example, I refer to the major steel plant in India, for which a British firm recently received a letter of intent. I recognise that the initial steps to earmark British aid for this project were taken by the previous Administration. I have had no hesitation in carrying through the offer of substantial aid support for this project, which we expect will be of major benefit both to Britain and to India.

Bilateral capital aid continues to be largely tied to British goods and services. Aid-financed consultancies can and do offer prospects of further business financed commercially or through international lending agencies.

Major projects such as the Victoria dam in Sri Lanka provide the firms involved with an opportunity 1.o demonstrate their expertise. The £50 million we have committed to renewing and expanding the sewerage system in Cairo, as well as providing clear benefits through improved health to the poorest people in that country, presents substantial opportunities for British contractors to enhance their technical reputation in new techiques for tunnel building and is associated with a further £100 million of export orders for Britain.

Hon. Members will know that the previous Administration established an aid trade provision for the support of particular contracts with British firms, and in particular to help them match subsidised credit terms offered by their competitors. It would not be in Britain's interest to stimulate an international credit race, since we could not win it. But since many of our competitors are actively supporting their firms through aid and through mixed credit, we must have a means of matching this competition, and we have, therefore, increased the size of this provision. I consider each case personally to ensure that it meets our developmental criteria as well as the industrial and commercial criteria for which my right hon. Friends are responsible. Since the beginning of 1978, when the right hon. Member for Lanark introduced the scheme, a commitment of £174 million from the aid programme has opened the way to contracts concluded or under negotiation worth £760 million. Therefore, I congratulate her and—

Dame Judith Hart

What percentage are they?

Mr. Marten

I do not have those figures with me

The Government have also taken steps to improve the flow of information to British firms about the important opportunities open to them as a result of our membership of international financial institutions and other multilateral agencies.

Mr. Brocklebank-Fowler

rose—

Mr. Marten

I shall finish my remarks.

Mr. Brocklebank-Fowler

rose—

Mr. Deputy Speaker (Mr. Bernard Weatherill)

Order.

Mr. Brocklebank-Fowler

The right hon. Gentleman should listen.

Mr. Marten

Perhaps the hon. Member will ask the right hon. Member for Lanark about the percentages.

The motion before the House refers to the succession of multilateral meetings which the Prime Minister attended last year, culminating in the Cancun summit.

These meetings provided an opportunity for constructive discussion among developed and developing countries at the highest level. The Cancun summit itself was designed not to take decisions, but to promote a new depth of mutal understanding between world leaders. That was an important aspect of it. We have tried to build on this in preparation for global negotiations in New York, where we have worked actively to promote a consensus for the launching of negotiations. Although full agreement has not yet been reached, useful progress has been made in these informal consultations.

Since I have been Minister for Overseas Development, I have visited a wide variety of developing countries and seen for myself the operation of British aid in the field. I have been struck particularly by the importance of recipient countries' own policies if they are to develop and if our aid is to be effective. I have also been impressed by the valuable contribution that often relatively small amounts of British aid have had in the right circumstances.

I see no contradiction between a concern for the needs of developing countries and due regard for Britain's interests through increasing the industrial and commercial benefits to Britain of the aid we provide. Trade and private flows will continue to play the main part in the process of development, and that is entirely right. We shall, nevertheless, maintain an aid programme that is substantial, effective and responsive to the real needs of the developing world, particularly the poorest.

Several Hon. Members

rose—

Mr. Deputy Seaker

Before I call the right hon. Member for Lanark (Dame Judith Hart), I would point out that 25 right hon. and hon. Members have indicated that they wish to speak and I appeal for short contributions.

5.13 pm

Dame Judith Hart (Lanark)

For perhaps the first time, I must apologise to the House, because I shall have to leave at about 7 o'clock and travel to Sheffield to chair a conference. I much regret this and apologise for the fact that I cannot, therefore, hear the Minister wind up.

It is nice in one way but extremely galling in another that the Minister's pride in aid programme achievements should be related almost entirely to programmes begun in the last Labour Government's time. It will be interesting to know what the Minister is proud of when we get a little further into his Government's time.

I address myself to the Prime Minister's amendment because it goes to the crux of the issue. I know that many of the Minister's hon. Friends believe that development is not necessarily about aid and aid programmes. Such programmes are an essential element in the whole complex matter of the interdependence between ourselves and countries in the South. However, they are not the only aspects and the amendment recognises the prime importance of trade and private capital flows.

I take the Minister up on his remarks. Both private and public trade and capital flows are of immense importance; let us consider the position, what is happening and what the Government are not doing. I much regret that no Treasury Minister is on the Front Bench because these issues stretch far beyond that now rather humble part of the Foreign and Commonwealth Office—which is represented by overseas aid—into the very heart of the Treasury in terms of the international monetary system, the IMF, IMF conditionality and so many of the deep factors presently affecting the Third world.

Perhaps the Minister will be kind enough to tell his Treasury colleagues that it would be a good thing if they had been here to listen to what has been said. In parenthesis, the proposal emerging from my party for the future is not only to re-create a separate ministry of overseas development, but that we create a ministry which has considerably stronger functions than in the past. We suggest that it should be a ministry which engages in most, if not all, of British relationships with the Third world. It would not only be responsible for the World Bank and the international development banks but also for IMF relationships with developing countries and for many trade relationships with them. It is as well that these facts are known and that that is likely to emerge from the agreement within my party.

Taking capital flows—

Mr. Bruce Douglas-Mann (Mitcham and Morden)

Can the right hon. Lady tell the House to what extent such a Ministry would also be concerned with the imposition of import controls if a Labour Government were in office and to what extent she believes that such controls might be of benefit to developing countries? What impact and controls would they have? Would she also tell the House, if a Labour Government took Britain out of Europe, whether that would have an impact on Britain's world food productive capacity and the subsequent effect it would have on world food prices?

Dame Judith Hart

The hon. Member for Mitcham and Morden (Mr. Douglas-Mann) is attempting to engage the rest of my speech. On his first point, under our proposition it is probable that the Ministry I suggest would engage in negotiations with Third world countries involving our policy on trade. If he has read the Labour Party documentation fully, he will know that we differentiate between the newly industrialised countries and the poorer countries. I am sure that he still has those documents on his bookshelves.

I could spend half an hour on his second point concerning the EEC. I was in Brussels about two weeks ago on that subject and I should be happy to talk to him about it in the corridor but I shall not allow myself to be interrupted. I have no doubt that entry to the EEC has diminished the British effort to help the poorer developing countries, and getting out of it will enable us to do better. [HON. MEMBERS: "Rubbish."] I would happily speak for half an hour on this subject. Any hon. Member who wishes to know more can write to me. I have all the facts and figures.

Mr. David Alton (Liverpool, Edge Hill)

It is two or three years since we debated this subject and I remember participating in that debate with the right hon. Lady. Although I agree with the argument to some extent, does she accept that if it means more reductions in aid in the future—there were reductions of £15 million in 1976 and in 1977—simply re-establishing a Ministry for Overseas Development will be of no benefit to ordinary people in Third world countries?

Dame Judith Hart

I cannot be held responsible for the one reduction, which was made when an hon. Gentleman opposite was in charge of the Ministry.

I turn to the debt problem, capital flows, and flows in general. My hon. Friend the Member for Glasgow, Queen's Park (Mr. McElhone) mentioned the debt problem in developing countries. We must be clear where we are on this matter. It was strongly emphasised in the Brandt report. It is estimated that the debt of the Third world will rise by 15 per cent. this year to $524 billion, or £250 billion. Interest charges are likely to rise by 22 per cent. to £55 billion this year. Moreover, private bank loans have risen to about half the total debt service burden of developing countries.

The interest charged on the debt of rather better-off developing countries—not necessarily middle income countries, but not the poorest—has almost doubled, from 7 per cent. to 13.3 per cent. My hon. Friend is quite right. It is well known that if one of the major developing countries with an enormous debt problem—probably one of the middle income countries, possibly a Latin American country—were to default, it could, theoretically, bring one of the world's major banks tumbling down. That will not happen because the banking sector will not let it happen. It is also unlikely that the banks would allow a situation to arise in which such a country had to default, but it is theoretically possible. That is the measure of the Third world's desperation in relation to debt problems.

How will Third world countries cope? Will they earn more from exports? I can only deal with the problem in shorthand. Since the oil price rise in 1973, many developing countries have inevitably been stricken by the following factors.

The first is the rise in oil prices. That was bad enough for us but many developing countries are completely or almost completely oil-dependent and the price rise hit them much harder. Secondly, inflation in the West meant that developing countries had to pay more for imported manufactured goods which are essential for development. Thirdly, the depression in Western industrialised countries meant that a number of their major basic products fetched a lower price on the world market. If the West is in depression, we pay less for rubber and copper and prices slump.

If they have to pay more for essential fuel and essential development imports and receive less for their exports, how do they cope? They have to borrow. This is where the question of capital flows, private or public, comes in.

Mr. Anthony Nelson (Chichester)

The right hon. Lady mentioned three possible ways in which developing countries could try to meet the far greater demands for hard currency to service cumulative debts in future years. A further important possibility was referred to by Mr. Clausen, president of the World Bank. Projections for the number of migrant workers over the next 10 years suggest that extra transfer payments of some £40 billion per annum could be earned. Is not that an important source of income with implications for the immigration policies of developed countries?

Dame Judith Hart

That is an interesting point, which we might consider for a moment, although frankly I do not think that it is worth considering for much longer than that. In a world depression, there is less demand for migrant workers. Moreover, I do not think that we shall resolve the global crisis by simply saying that people must move out of their own countries and live away from their families.

Mr. Eric Deakins (Waltham Forest)

"Get on your bike."

Dame Judith Hart

Yes, that is the philosophy, and it is no answer to the global crisis.

I shall give some figures that I researched for a lecture some months ago. I mentioned the Eurocurrency market in our last debate on this subject. Here we are talking about capital flows, particularly private capital flows—or rather the lack of them. It is estimated that the Eurocurrency market has now increased to more than $1,300 billion, and its net size after adjustment for inter-bank depositing has risen to some $650 billion. It is reckoned that the amount of what one can only call hot money, because this money is chasing around from deutschmark to yen to dollars, now in the Eurocurrency market exceeds all the currency reserves of all the countries by a factor of four.

Where are the capital flows? They could come from the enormous deposits in the Eurocurrency market, but they do not, because hot money likes to make a quick profit and these Eurocurrency dollar reserves cannot make such profits by investing in the type of infrastructure which for the developing countries is the only basis for development. There is no profit in building schools, hospitals or roads, so the capital does not flow. Conservative Members who seriously wish to consider private rather than public capital flows must recognise that only public money is likely to finance the non-profitable infrastructure which is the only basis for development.

What about the IMF, and the action that the Government should take in trying to make some progress in recycling the $1,300 billion? It should be remembered, moreover, that at any given moment some $3 trillion are engaged in the paper exchanges on futures and the commodities produced by the Third world. There, too, is a tremendous area of profit and money.

How does one deal with recycling? If the Minister for Overseas Development really believes, and the Prime Minister really believes, as I think she does, that private capital flows can solve every problem, why are they and the Chancellor of the Exchequer not considering initiatives that Britain could take to try to achieve some recycling of private capital which is there to be recycled?

That means dealing with the IMF. But the IMF will not respond to that kind of approach unless there is some tough argument from its members and major contributors who have some strength to their elbow. Germany might put the argument, or France, under President Mitterand. It is unlikely that President Reagan would do so. The United Kingdom could, and some of the other contributors would assist us.

It is a matter of increasing special drawing rights. SDR .s have always been seen as one of the mechanisms for transferring money to developing countries. It must be remembered, however, that until now 75 per cent. of the allocation of SDRs from the IMF has gone to developed countries, not to developing countries. Indeed, over the past few years, the United States has received almost as much SDR allotment as all the developing countries put together. This is a big area for challenge and reform. I am sorry that a Treasury Minister is not present. It is clear to the Opposition that a major thrust is needed towards reforming the IMF so that it serves world interests—not on a basis of narrowly defined classical economics, but with an understanding of the economic requirements of development in the Third world.

It is partly a matter of staffing, partly a matter of detail and partly a matter of defining critera much more carefully. The present criteria of the IMF conditionality are appalling when applied to a developing country. They are to cut wages, to devalue, to deal with the money supply, and to cut public expenditure. That combination is a recipe for far greater destabilisation than President Reagan appears to think the Cubans are wreaking in the Caribbean and Central America. That is a total recipe for destabilising democracy.

The Government have not the slightest understanding of what is required or what needs to be done. I urge that the Government begin to have that understanding and quickly to take some initiatives.

5.34 pm

Mr. Reg Prentice (Daventry)

I intend to abstain in the vote tonight because I believe that the aid programme has been disproportionately cut by the Government and that that trend should be reversed. I shall deal with one or two other points before I give my reasons for that belief.

I have no desire to attack my right hon. Friend the Member for Banbury (Mr. Marten) who is my constituency neighbour and the Minister responsible for the programme. He has a long record of dedication on this subject and brings to it a sincerity and commitment that we all admire.

If I needed a reason to change my mind about voting this evening I would have found it in the Opposition motion, which I consider to be objectionable. The Opposition's reference to the callous indifference … towards the 800 million people who are living in absolute poverty is a foolish and hysterical phrase, even by the current standards of the Labour Party. The disappointments that arise from British performance and the extent to which Britain has failed to measure up to the challenge of world poverty have applied under both Labour and Conservative Governments with only marginal differences between the two.

In mitigation of what I propose to go on to say, I accept totally the phrase in the Government amendment about the prime importance of trade and of private capital". The developing world needs more trade, more private capital and more official development assistance.

I have supported publicly over the last three years the need for cuts in public expenditure, perhaps more severe than those the Government have made. During the Budget debate last year, I gave examples of what I considered could have been larger cuts in public expenditure in the Department of Health and Social Security where I had served as a Minister. It is always difficult in that position to argue for a higher programme for a particular Department. Nevertheless, I do so. As the Government amendment says, the current outflow is about £1 billion a year at a time when total Government expenditure now exceeds £100 billion. In other words, we are talking about a little less than 1 per cent. of public expenditure. We are talking about a little less than 1p in every pound contributed by taxpayers to the Exchequer.

The Government, on coming to office, recognised some programmes as being special cases. They recognised that there had to be an improvement in the defence programme to the extent of 3 per cent. a year in real terms. That was right. Some of the reasons, although not all of them, for making a special case of the aid programme are similar to the reasons for expanding the defence programme. Neither this Government nor their predecessors have given to this Department the priority that is required. The Government recognise the need for an aid programme. They reject the view associated with Professor Bauer. They reject the view of the leader writers of The Daily Telegraph. They reject the view of many men and women of all political persuasions throughout the country who ask why money should be given to ungrateful foreigners. The Government accept, as did the previous Government, and as do virtually all Governments of the Western world, the need for an aid programme. The degree of priority given to it is insufficient.

One has to return to the classic arguments for an aid programme. Those arguments have to be repeated over and over again, and will no doubt still have to be repeated in 20 years' time. But they have gathered extra strength and momentum due to recent events. That is why the Brandt report made a bigger impact on world opinion than the Pearson report 10 years previously, although both were excellent in the context of their time.

There are three classic sets of argument. There is the moral argument. There is the argument in terms of the interdependence of our domestic economic problems and those of the developing world. There are the arguments that can be grouped under the headings of foreign policy or strategic considerations. I accept that some people support one set of arguments and not another.

The hon. Member for Glasgow, Queen's Park (Mr. McElhone) would probably be less enthusiastic than me about the strategic arguments, but enthusiastic for the first two arguments. In my view, all three arguments are valid. All three are gathering momentum. The moral arguments are self-evident. The most eloquent and compelling part of the inaugural speech of President Kennedy was his remark that developing countries should be helped to help themselves, not because the Communists were doing so or because we wanted their votes, but "because it is right". The words "because it is right" are all that need to be said. If the argument for aid and development assistance rested on those words, there would be no need for any further arguments.

Those moral arguments become more compelling year by year because the gap grows. Every decade of this century has seen an enormous increase in the gap in living standards and the gap in opportunities between those who live in the developed countries and those in most of the developing countries. Of course, some of the developing countries are making a breakthrough but, by and large, the gap is growing.

The gap grows in times of recession. At such times, the people of a country such as Britain might have to accept a diminution in their living standards averaging a few per cent., but the effect on a country such as India is far more devastating, and the gap becomes worse. Therefore, the moral case for aid and assistance becomes stronger.

Every year that passes shows new evidence of the economic interdependence of all countries of the world, particularly those that depend on trade to the extent that Britain does. That argument is set out particularly well in the Brandt report and has emerged in much of the argument since. We are not losing the £1 billion referred to in the Government amendment. That money is counterbalanced to some degree by the repayment of old aid loans. The repayments are still coming in and benefiting us across the exchanges. Much of that £1 billion is spent on orders for goods associated with development projects, and provides orders for British firms and jobs for British workers.

There is also the indirect effect by which, if a project has been financed in the past through a development programme, the demand for spare parts, replacements and so on can lead to further orders for our firms later on.

Another important point is the training element in our programme by which students come to Britain, and our experts go to the developing world. That leads to people in those countries becoming familiar with British goods and placing orders for them. Britain also receives orders from multilateral aid programmes—the United Nations agencies, the International Development Association and all the others. Britain receives orders that arise from other countries' aid as well as from our own aid. That has been a major factor.

While I was a Minister at the Foreign Office the first time round, there was an agreed paper between the economists of the Overseas Development Ministry and the economists of the Treasury. Some took a little persuading, but the agreed paper was published in a learned journal. The paper showed that the effect of the aid programme over the years had been beneficial to the British balance of payments. The aid programme represented an element of sacrifice to the taxpayer but, on balance, it had been of benefit to the balance of payments. As the world moves out of recession and if we wish to avoid or mitigate further recessions, it is vital that we think more constructively and more positively about the need for increasing living standards in the developing world so as to help with the expansion of the world economy.

I deliberately emphasise the arguments that I would describe as foreign policy or strategic arguments because some of my hon. Friends are keen on defence, but some may be sceptical about the need for the aid programme. I suggest to them that the two sets of arguments overlap.

It is probably still true today, as it was when I sat at the Cabinet table, that in public expenditure discussions the defence budget is discussed completely separately from the aid budget. I do not believe that they should be so discussed. In many ways they are related. They have the same purpose—to preserve peace. The needs for a strong defence posture and for a growing aid programme are relevant to the preservation of peace. I shall make three brief points on this matter.

First, there are a limited number of cases where we need to consider the economic strength of an ally. At the moment, we do that in the case of Turkey. Turkey has been a major recipient of British aid under Labour and Conservative Governments partly because it is a poorer country than we are, although not as poor as many of the other recipients of our aid programme, but mainly because the stability of Turkey in its exposed position on the Eastern flank of NATO is an essential element in the defence of Europe. It is for that good reason that Turkey should be aided. There may be other reasons for other countries, whether they are in NATO or not.

Secondly, there is a much larger range of situations in which the instability of a country crucially placed in one of the trouble areas of the world represents a threat to peace both for it and for us. Zimbabwe has been mentioned in the debate. When the House passed legislation for the independence of Zimbabwe, there was a demand from both sides of the House for a major effort in development aid. The Government made a major provision, taking into account the constraints to which they were subject. They made a diplomatic effort to persuade other aid donors to participate.

That was right. Whatever disappointments we may have about recent political developments in Zimbabwe, its stability is a vital element in the future of South Africa arid in the prospects of peace in that region. Our prospects for peace depend as much as anything else upon those parts of the world, where we could be dragged into a war by conflict between States with which we have friendly relations, for example, South Africa, the Middle East arid South-East Asia.

Therefore, when we are investing in terms of development aid in those regions or when we are cooperating with the countries of those regions in terms of their trading or private investment needs, we are investing in peace. It is essential that we should do so. That should be considered in the defence context. We should consider not the defence and aid programmes as programmes competing for public funds, but as two programmes, both of which can be conducive to the maintenance of world peace.

Thirdly, in the past decade we have seen a number of easy gains for Soviet imperialism in the Third world—in Vietnam, South Yemen, Ethiopia, Afghanistan and other places. Those gains were achieved sometimes by latching on to local independence movements or local revolutionary movements, infiltrating them and taking them over. The gains were achieved sometimes with the use of Cuban mercenaries. Afghanistan was gained by the direct intervention of Soviet forces. Those easy victories have been achieved by methods that the West will not and should not use. However, the West needs a strategy to answer those developments.

Such a strategy involves many questions outside the debate. Among other things there is the case for stronger aid programmes to our friends in the developing world. That was one of the classic arguments behind the growth of the American aid programme some years ago. A period of disillusion set in because some people in the United States had expected too much in terms of an immediate quantifiable return for the aid that they were giving. Nevertheless, basically it was right to think in terms of the co-operation of powerful Western nations with countries in the developing world, which would be helpful to those countries, without overt political strings attached, but so that goodwill would be created. We must think much more along those lines.

Mr. Douglas-Mann

Does the right hon. Gentleman agree that an additional point in his strategic argument, with which I agree, is that the rapid increase in the world population from about 4½ billion now to 6 billion or more by the turn of the century and continuing througout the next century is a major threat to world peace? Competition by the vastly increased population of the world for finite and slowly growing resources is another factor threatening world peace. Does the right hon. Gentleman accept the argument in chapter 6 of Brandt that the best means of achieving a limitation of the world population is to generate rising living standards in the poorer parts of the world?

Mr. Prentice

Generally, I accept that. The hon. Gentleman's last point is absolutely valid. The history of Britain and other countries tends to bear that out. Every problem that we have discussed in the debate will become much more severe with the rapid growth in world population.

It is tempting for people in Britain—given our serious economic problems—to become isolationist or self-pitying and to say that we have too many problems of our own to worry about the problems of those overseas. We have all heard that in our constituencies and elsewhere, from people of all political points of view.

Those arguments are not only wrong but self-defeating. The future of Britain, of the European Community, and of the Western world can be seen only in the context of the whole human family. It is impossible to conceive that Britain and its neighbours will prosper in the years ahead unless the world economy makes some progress. Within that progress, there is a continuing and growing need for Western nations to do more to help the developing nations to help themselves. There are overwhelming reasons of morality and self-interest for doing that. Neither this Government's record nor that of previous Governments measures up to that challenge.

5.51 pm

Mr. David Alton (Liverpool, Edge Hill)

I must touch on four issues this evening. First, however, I should say that I listened with interest to the right hon. Member for Daventry (Mr. Prentice) and the two previous speakers. The right hon. Gentleman has had the immense experience of service in the Ministry himself. We note that he will be abstaining. I hope that some of his hon. and right hon. Friends will do the same. I should welcome it more if they were to join members of the official and unofficial Opposition later this evening in the Lobby. There was little in his argument with which I could disagree, or that seemed in conflict with what the hon. Member for Glasgow, Queen's Park (Mr. McElhone) said.

The right hon. Member for Lanark (Dame Judith Hart) talked about re-creating a Ministry for overseas aid and development. One problem is that sometimes we raise symbols as though they in themselves were vital, instead of getting down to fundamental questions. We are rehearsing the arguments of two years ago. I could not help but think that the Chamber had probably experienced such debates back in the 1960s when the right hon. Member for Huyton (Sir. H. Wilson) established a separate overseas aid and development Ministry; in 1970, when the right hon. Member for Sidcup (Mr. Heath), decided to integrate it into the Foreign Office; in 1974 when that decision was reversed by the right hon. Member for Huyton; and in 1980 when the Government decided to turn the whole thing on its head once more.

It is more important that we should be discussing such things 'as the interdependence of our nation with other nations in the Northern and Southern hemispheres than concentrating on symbols and gestures—pure tokens which mean little to people who are suffering in the Third world.

The four areas on which I should like to touch—I am conscious that many other hon. and right hon. Members wish to contribute to the debate, so I shall try not to be too long—are the opportunity costs and spending priorities of this and other Governments; self-interest, the enlightened determination of our overseas aid spending; Britain's standing in the world; and the humanitarian reasons why it is important that our budget on overseas aid and development should be increased rather than reduced.

Since the publication of the Brandt report, the plight of developing countries has occupied many column inches, has been debated in national Assemblies and Parliaments and has brought together Heads of Government at Ottawa, Cancun and Melbourne. Fifty-four Nobel prize winners issued a manifesto urging that more aid should be provided. Marco Panella, a Member for the European Assembly, decided to go on a hunger strike to persuade other Parliaments to respond to the plight of the needy in the Third world. If anything, since the publication of the Brandt report in 1980, the gulf between North and South, the affluent and the deprived, the haves and the have nots seems to have become greater.

Twelve years ago, in October 1970, the United Nations passed resolution 2626 calling for 0.7 per cent. of our gross national product—the figure mentioned in the Opposition's motion—to be set aside in development aid. We in Britain live in one of the 12 richest countries, yet our total contribution is less than half of even that very modest target. The £972 million that Britain set aside for aid in 1981–82 represents only 0.34 per cent. of our gross national product.

It is sometimes helpful to translate such statistics into terms that are more understandable to the public. This year the United States of America will spend more on potted plants and flowers than on overseas aid and development. We in Britain will spend nearly 10 times more on our independent nuclear weapon, Trident, than on Third world aid.

Mr. Onslow

Will the hon. Gentleman repeat that extraordinary statement about this year's expenditure on Trident compared with overseas aid?

Mr. Alton

I did not say that that was being spent this year. Estimates for the Trident programme vary between £5 billion and £10 billion. That money will be spent over about 15 years. However, although that sum will be spent on the Trident missile system, only £972 million has been set aside this year for overseas aid and development.

Throughout the globe the arms race has achieved a momentum unparalleled in peace time. In 1981 military spending reached at least $550 billion, with the world spending 2,300 times more on military activities than on peacekeeping. Britain spends about 20 times more on military activities than on aid.

Those are some of our priorities and some of the opportunity costs that we are missing. In the introduction to his report Willy Brandt made the same point, but with different illustrations. He pointed out that only half a day's military expenditure would suffice to finance the World Health Organisation's whole malaria eradication programme. He also pointed out that a tank cost about $1 million. The same sum could provide 1,000 classrooms for 30,000 children. He mentioned that one jet fighter costs $20 million and that that could provide about 40,000 village pharmacies in the Third world.

In terms of everyday sanity, such spending priorities take a lot of rationalising and they are morally indefensible. I shall mention later some of the enlightened reasons for contributing to Third world countries. However, there are two other avenues to explore. Self-interest is not an attribute, for which I, as a Liberal, have any great fondness. However, it is a reality and intrinsic to the Brandt Commission's concept of mutuality of interest. Investment in overseas aid is investment in peace, in stability, in the supply of raw materials and, consequently, in investment in economic activity between them and us.

I make no apology for suggesting an essentially Keynesian solution in a decade of monetarism, but a transfer of resources from the North to the South would put money into the hands of the poor, who could then buy our goods. That, in turn, would create employment in the North and prosperity in the South. The concept of a Marshall aid programme appears slightly hackneyed these days, but, as the hon. Member for Queen's Park said, it transformed our Western economy after the Second World War and a similar stimulation could once again set the wheels of Western industry turning.

My next point is relevant to the Government's amendment. To rely totally on private capital flow and to see that as a universal remedy is not good enough. There must be some stringent code of conduct if we are to encourage private enterprise to do more in the Third world countries. I cite as an illustration the sale of Western artificial baby foods to Third world countries.

I went with a delegation to see the Minister about that and he was sympathetic and listened to our points. Nevertheless, a product such as artificial baby food, which requires clean water, good sanitation, adequate family income and literate parents who can follow printed instructions, cannot properly or safely be used in areas where water is contaminated, sewage runs in the streets, poverty is severe and illiteracy is high. If we are to encourage, as I hope we will, private enterprise in conjunction with the State to make a contribution to the Third world it is important that a properly established code of conduct should be introduced.

Trade with Third world countries is important to our self-interest. This poses a dilemma for the official Opposition, who will have to decide how far to go down the protectionist road. It is inconsistent to argue for increased trade with Third world countries while campaigning at home for the erection of protectionist barriers. All that that will do is create an island fortress and a siege economy.

Mr. Spearing

Would the hon. Gentleman not make a distinction between what are known as the LDCs, which often have not many manufactured goods to export and which are largely involved in foodstuffs and raw materials, and the newly industrialised nations, for instance, Korea and Hong Kong, which are not recipients of official aid?

Mr. Alton

The hon. Gentleman has made an interesting point. I was lucky enough to visit Hong Kong some months ago. I noticed that on its streets there were buses manufactured in this country by British Leyland. The new underground system was built by Metro Cammell, a British company. When I arrived home one of the first things that I saw was that the London Labour Party was complaining about London Transport buying model buses from Hong Kong. That is a good illustration of the kind of outlook that the Labour Party has today. It wants to erect barriers and build up a country that is no better than a banana republic that will float off into the Atlantic and probably sink.

Still on the question of self-interest, I want to deal with the issue of overseas students being required to pay full cost fees. A year and a half ago my right hon. Friend the leader of the Liberal Party and I, while on a visit to the Middle East, met business men in Jordan. One of the points that they made was that it had been damaging to British industry for us to turn away students from their country. They said that they could not meet the full cost fees that had been introduced.

As Professor Marris said recently in an article in The Times, graduates represent good value for money. 'We should be exploiting our expertise not only for ourselves at home but by way of aid to foreign students wishing to study here and by offering funding for our trained personnel to work overseas. That would make far more sense than leaving graduates on dole queues at a loss to the Exchequer of about £4,500 each a year. It would make more sense than closing courses and colleges, when Great Britain could become a centre for learning. What finer investment in future orders and contracts for British industry could there be than an increase in overseas students studying in the United Kingdom?

Then there is the greatest self-interest of all. The globe has all the appearance of a world making ready for sell-destruction. Apart from Soviet attempts at sell-aggrandisement, there are many Third world countries that are unstable and capable of maverick actions that could plunge us into a conflagration. These countries need support and help. It is dangerous to isolate those countries and even more dangerous to sell them arms. I hope that the Government will press the United Nations to set up a register for arms sales to developing countries. We should tie our levels of aid to countries which abide by that register and seem to be using their resources on sensible things rather than preparing for war.

Another important point is Britain's standing in the world. Our past connections with developing countries and our position as part of the world's largest trading block, the EEC, equip us uniquely to play a leading role in establishing a co-ordinated response to the needs of the Third world. That is a role for someone like the right hon. Member for Sidcup. He could play a leading part in co-ordinating Europe's effort in the Third world. We must avoid the nonsense of blundering in and dumping mountains of free food if it is going to bankrupt peasant farmers, or drilling more water holes in desert areas if it accelerates the encroachment of the desert as herdsmen increase the size of their herds beyond the capacity for grazing. National programmes should not be in competition. There is a crying need for someone to coordinate the efforts of the European nations.

No Briton can be proud to see our nation characterised as niggardly, selfish and losing its spirit of generosity of which we have been justifiably proud. I am sorry to say that Britain has been turning in on itself and away from the outside world in the past few years. It has been part of our overall loss of self-confidence to see foreigners as unfriendly, overseas competition as a threat and international obligations as infringing our sovereignty. We have tighter and tighter restrictions on immigration, rising support for import controls and the imposition of higher and higher fees on overseas students, and the Common Market is being made the scapegoat. These are all part of the same moves, the same welling up of nationalism and xenophobia.

I conclude by returning to the humanitarian reasons for increasing our contribution to developing nations, UNICEF estimates that in 1978 alone more than 12 million children under the age of five died of starvation. Many millions more died of disease, violence and neglect. The World Bank hazards the view that 800 million people are in an absolute state of starvation and despair or, in the words of the former president of the World Bank, Robert McNamara, below any rational definition of human decency. According to the United Nations, there are still 34 countries where over 80 per cent. of the population are illiterate. Such frightening figures almost pass beyond the limit of our comprehension. If we were to witness personally a fraction of the suffering and degradation that lie behind these statistics the horror of what is happening would strike deep into our souls. Television news reports allow us to become anaesthetised to pain, yet even the glimpses that we see in the comfort of our homes convey something of the immeasurable scale of the problem, inducing for some feelings of helplessness, anger and perhaps shame.

Behind the huge challenge of world poverty and global inequality looms the growing threat of nuclear conflict and a capacity for self-destruction of quite staggering proportions. The link between a hungry and divided world and peace and security should be obvious. Self-interest alone should drive the rich, industrialised nations of the North to realise that the cries of distress that they hear from hundreds of millions wracked by starvation and disease are a chilling warning of what might be the ultimate political explosion. Such retribution would be a bitter legacy for future generations. Instead of waiting for some mythical or illusory development, Parliament must give the force of law to the need to save the living. It is the powerful of the earth who must bear the greatest responsibility. If through inertia they do nothing, it is they who will be blamed.

6.8 pm

Sir Paul Bryan (Howden)

I should like to devote my few minutes to Government policy for overseas students. At first sight, this might seem to be the responsibility of the Department of Education and Science, but recent policies, in particular the raising of overseas students' fees, have received such a hostile reception abroad and so soured our relations with countries which have been our friends for years that it has become a proper concern of the Foreign Office.

The Foreign Secretary has just been to Malaysia. I shall be very surprised if, when he comes back, he does not report that the raising of students' fees has been one serious cause of the friction which has sadly replaced the traditional harmony of our relations with that country. The Lord Privy Seal has spent a few days in Hong Kong. I would guess that at least a dozen times during his stay the subject will have been raised with passion with him. He will have been left in no doubt of the feeling there. The Foreign Office will have had reports from all over the world on the same lines, also deploring our intention to charge overseas students for medical treatment.

On the face of it we might complain that this is all rather unjust. Overseas student enrolments in Great Britain rose from 34,000 in 1970 to 85,000 in 1978; even now they stand at about 70,000. Those figures surely show that we welcome foreign students. They represent overseas aid on a vast scale of probably £100 million or more. But it is because overseas students have felt welcome here and felt that we were their friends that it came as a great shock when, apparently without consultation, fees increased to such an extent that prospective students felt deeply offended. Many have now gone to Canada, Australia and America, where they seem more welcome. Colleges from those three countries have actually sent out recruiting teams to pick up the students who should have come to Britain.

The serious effect of the increase in fees on our relations abroad has been realised in the House and has been reflected by the fact that the Overseas Development Sub-Committee of the Select Committee on Foreign Affairs reported on the subject, as did the Select Committee on Education, Science and Arts. Outside the House, the Overseas Students Trust produced an outstanding study entitled "The Overseas Student Question". I understand that the Foreign Office is awaiting a further report from the Overseas Students Trust on the options open to the Government.

This is, therefore, an admirable moment to sound out my right hon. Friend to discover whether the Government's original reactions to the Select Committees' reports have been modified in the light of the bad effect that our policies on overseas students seem to have had on world opinion. I hope that the Government are in an open-minded mood.

One matter that stands out from all the reports and studies is the multi-dimensional nature of the overseas student problem. As Professor Peter Williams says in the Overseas Students Trust book: It is a broader question than the narrow issue of whether or not overseas students have been contributing to Britain the equivalent of the full cost of their education. Beyond the important financial aspects, there are considerations of trade, political and cultural influence, and assistance to overseas development". As a method of saving money, the swingeing increase in fees for foreign students has proved much too crude. It saved money but it did damage in many other respects, especially in international relations. Therefore, I am not merely asking for something to be done about overseas students' fees; I am asking what is being done or what is in mind about the development of a coherent policy on overseas students, for which both the Select Committees asked. The problem is long-term rather than short-term.

As a start, let us consider some of the things that are wrong with the system that has obtained during the past 10 years. Through no policy decision of the Government, the number of overseas students trebled at a heavy cost to the British taxpayer, without any apparent thought of true British interests. In a way, overseas aid was being given indiscriminately. Many of the subsidised courses taken had no obvious relevance to overseas development or to British trade. No great heed was taken of where the students came from. Did we really wish to have so many students from Iran? As we had no policy on the country composition of the overseas student body, we could hardly complain.

Professor Peter Williams says in the final chapter of his book: On the one hand there were sectors of British higher education where the admixture of overseas students was so diluted as to be unnoticeable. At the other extreme there were instances where the proportion was so high one could only conclude the publicly subsidised courses were being laid on exclusively for an overseas clientele and in furtherance of institutional expansionist policies". By now it is clear that a new and easily understood policy for overseas students is required. In framing such a policy some principles must be established, and established in relation to the experience of relevant countries. As an example, I wish to relate the principles to experience in Hong Kong, which is the territory that I know best.

The numbers applying in Hong Kong for visas to study here have fallen sharply. There was a drop of over 42 per cent. in 1980 as compared with 1979 and of about 20 per cent. in 1981 as compared with 1980.

I suggest that the first consideration to be taken into account is our obligation to individual countries because of our historic special links, because of the poverty of the countries in the Third world, or because, for one reason or another, the country has become dependent on Britain for part of its education.

The first and third of those considerations apply very much to Hong Kong, with which we could not have more special historical links. Although a fine education system is being built up there, including two excellent universities and a large polytechnic, the system has relied on about 5,000 of their students completing their education here. In many cases they take a year or two of secondary education in the United Kingdom in preparation for university courses.

To stem the tide of Hong Kong students flowing away from British education towards America or Canada, the Hong Kong Government have instituted interest-free loans. I should like to see a system introduced whereby Hong Kong students could revert to a home student basis of fees, in part payment for which the Hong Kong Government would pay a lump sum into our Treasury. That would be a happy solution for which Hong Kong would pay part of the cost. One reason why the Hong Kong Government are taking positive steps to continue the flow of students to Britain is the undoubted effect that it has on trade.

That brings me to the second consideration that we should bear in mind when framing our policies. In the Overseas Students Trust book a whole chapter is devoted to a study of the economic costs and benefits of overseas students by a Professor Blaug. Backed up by a mass of statistics, he suggests that the benefits are fairly hard to identify. But the very fact that the Overseas Students Trust is financed by a number of progressive companies, which are convinced of the benefits, makes the statistics highly suspect.

What is our experience? Hong Kong is our largest market in Asia. We export more to Hong Kong with its population of 5 million than we do to immensely rich Japan with a population of 100 million. Is that astonishing situation unrelated to the fact that a high proportion of decision-makers there were educated in Britain? I can only say that leaders of industry, commerce and banking, which is now so important in Hong Kong, have no doubts about it.

In framing policies, emphasis should be given to studies that link up with trade and investment overseas. That means concentration not just on science and technology, which prepare one for a career in manufacturing, but on subjects applicable to the financial and commercial sector, which has come to mean so much to our invisible exports.

The third principle to be considered is the effect of our policy on international relations. Hon. Members who have attended Commonwealth Parliamentary Association conferences or travelled in the Commonwealth will have met hundreds of political leaders whose respect and affection for Britain is rooted in the education that they received here. Consequently, in countries that have become partially dependent on education in Britain, any break in the system brings a hostile reaction out of all proportion to what one could reasonably expect.

The student fee grievance, coming on top of the British Nationality Bill, has undoubtedly added to the fears of many people in Hong Kong that Britain is trying to distance herself from the territory.

High standards of academic quality must clearly be another essential in our policy for overseas students. They should not merely feed on our education system but be a positive asset, bringing new breadth of knowledge and experience .to our schools and universities. Again, I am glad to say that from the results I have seen in Hong Kong their students can take on the world in academic quality.

I have raised a number of considerations that I think the Government should bear in mind in framing a coherent overseas student policy. The Select Committees has listed a good many more, and the Government have the difficult and complicated task of producing actions out of words. The Government already fund a number of schemes, such as the admirable student aid scheme for outstanding research students, and allocate funds to training programmes for students from developing countries.

Many industries and institutions provide instruction and training at various levels and in many subjects. A vast job of co-ordination is required, and the Government will frequently come up against a shortage of funds. In considering finance, the Government should note that other countries regard overseas students as a positive asset and are aggressively selling their educational institutions to those who had originally aspired to ours.

However generous this Government decide to be, we shall still in the end have a system in which the majority of our student body, even if better selected, will consist of students paying full fees. This is no disaster if we regard the reception of overseas students in Britain as an opportunity, an investment in Britain's future, rather than a tiresome and costly legacy from the past.

Britain's image abroad has already suffered rather from that attitude. We have one of the best further education systems, but we must still sell it and sell it more proudly than we have done in the past. If we do, I have not the slightest doubt that we shall get the quality of overseas students that we want, in the numbers that we believe to be right.

As I have said, in formulating a policy many Government Departments will be involved, as will other official bodies such as the British Council. At the end of the day, however, overseas student policy is predominantly an aspect of internationl relations, and the lead Department in the co-ordination of policy should be the Foreign and Commonwealth Office.

6.23 pm

Mr. James Johnson (Kingston upon Hull, West)

On 5 May 1981 this booklet was in the hands of, or on the desk of, each and every Member of the House of Commons. On that day there was, in my opinion, one of the largest mass lobbies that I have ever seen in this place. Those involved asked for Government action to fight world poverty. Let us not forget that 80 per cent. of the absolute poor—those in the States with less than $200 a head per annum—are in the Commonwealth, so we have a special obligation in this Chamber to do more than we are now doing to lift these people off the bottom.

Each year I talk to a Methodist men's association in Hull, and so I want to ask the sort of questions that those men ask about what is happening. When I ask the Minister individual questions, I am sure that he will know what I am saying. If we are stocktaking after 12 months and we ask the Minister whether he is satisfied with what has happened since that marvellous lobby day, can he tell us what has been done? Has he lobbied assiduously in the Cabinet? I think that he has, but his difficulty is that he has Cabinet colleagues who do not think as much as they should about the starving millions of Africa and Asia. Perhaps they are too busy. Certainly the Chancellor of the Exchequer—about whom I shall have a word to say in a moment—is very busy. Has there been any change of attitude at all amongst the Minister's colleagues in that Cabinet? Sadly I say that there has not.

Are we meekly following the line set by the White House in Washington and the World Bank? Unkind people talk about the present incumbent of the White House being a cowboy, and his actions give us no cause to think better of him. The World Bank has changed its vision since the days when Mr. McNamara was its No. 1. There is a director now called Clausen, and I do not think that he is even purblind. I understand they have cut the contribution to the International Development Association by 20 per cent. The Administration in the White House spends 40 per cent. of the total budget on arms. Obviously the more one spends on arms the less there is left for other things that I think are better.

What disturbs me is that we seem dutifully to follow our leader in Washington. Even our "Leaderene" here in No. 10 plays second fiddle for once. I do not think that we should meander along in the shadow of the Americans, because we are still the leader of the Commonwealth. I am not asking for a Marshall plan, but what the Minister and his Government might attempt is a joint operation to arrest the Sahara desert movement south into Senegal, Nigeria and the like. Again, I am speaking in an EEC context. We could do this with the French and others who have a number of former colonies there. Why do we not have joint schemes with other nations for the provision of pure water or for rural electrification in many parts of Africa, Asia and Latin America?.

What bothers me is that we are so closely hobbled to Washington. We are not sufficiently linked to the old Imperial powers, which have an obligation to their former colonies.

Again, it may be that we are merely following a domestic policy of cut and cut and cut again. Public aid is, sadly, falling. The Minister admitted an hour or two ago that in actual terms we shall see 11 per cent. less being spent in the coming year. That is what I understood him to say. I am shocked by that when I see smaller nations—the Netherlands, for example, and obviously Sweden and Denmark—who not only do more than that, but actually hit the United Nations aid target of 0.7 per cent. at which we set our sights many years ago in this place.

I found that difficult to square with what the Minister said at the EEC conference in Paris. I have The Times of 3 September beside me. The Minister of State was speaking for the Community, as I understand it. The report said: Mr. Marten added that the Community reaffirmed its commitment to a 'target of 0.7 per cent. of GNP for overall official development assistance. That is why I intervened in the Minister's speech. We receive plenty of commitments, but seem to have no timetables. I could listen to a catalogue of hundreds of schemes, and I might know some of them, in 15, 20, 25, 30 or 40 States. That is simple enough, but I should like to know how much money we shall give and not merely what we say in an international assembly that we shall give.

I shall sound like the Methodists in Hull and elsewhere when I say that I think the Government's attitude is that of the Anglican Church before the Hitler war, when the affluent in their oak pews thought of the destitute poor on Sunday mornings but did not think much of them, and forgot them completely on the other six days of the week. The overseas poor are in the same category. They are an even more distant issue to many people, particularly in the Cabinet.

The Minister has been to refugee camps in Africa, and I have been where he has been—to the Sudan, Somalia, the Ogaden and elsewhere. How many of his Cabinet colleagues have been to Africa? It would do them the world of good to go. The right hon. Gentleman might then obtain more money when he put forward his budget. The right hon. Gentleman's leader seemed to change after she went to Lusaka. She went with certain ideas in her head, but they were knocked out of it by black men who talked to her about the facts of life as they know them and live them.

I seriously suggest that the right hon. Gentleman should invite the Chancellor of the Exchequer to spend a sabbatical month in a camp somewhere west of the Ogaden. If the right hon. and learned Gentleman accepted that invitation he would be better equipped to look at the Minister's facts and figures and understand his arguments, and he might give him a little more latitude when money is doled out to Ministers in the Budget.

Some may argue that much of the problem is due to wars. I think of South-East Asia, where there are many conditions that we are debating. The world has 800 million people who are almost destitute. Wars do not help anyone anywhere, whether in Latin America or the Horn of Africa. It is said that aggression is egged on and abetted by the Soviet Union, whose development aid performance, to judge from what little I know about it, is abysmal, even compared with that of the United States, which could be better than it is. The figure for the Soviet Union is about $50 million compared with $5 billion from the West.

Mr. Deakins

The record of the Soviet Union and its allies in overseas aid is indeed abysmal. It bears no comparison with that for the United States, which is still, in spite of a cut in the aid budget which most of us on the Opposition Benches deplore, the largest aid donor in the world. Furthermore, much of the aid given by the Soviet Union and its allies is military assistance and is confined to very few countries, hardly any of which do not have Communist Governments.

Mr. Johnson

My hon. Friend has made a better speech than I am making, and I thank him.

Mr. Alton

Does the hon. Gentleman accept that the largest bloc to give aid to Third world countries is the EEC?

Mr. Johnson

Those of us who have spent some time on the matter and know something about it accept what the hon. Gentleman says.

There is talk about private investment and the gap being filled by industrial firms, instead of our using public money to build docks, harbours, the infrastructure and everything else that is needed to improve people's standard of living. The history of the past decade or so is not helpful. What disurbs me when I am told that firms should try to instil into the indigenous people some idea of a modern economy is that we at this end persist in condoning weak and falling commodity prices. We do not give the peoples at the other end a fair deal.

In about 1977 Julius Nyerere was talking to me in Dar-es-Salaam about sisal and Leyland tractors. He said that in 1965 he could pay for a Leyland tractor from the sale of about 17 tons of sisal. Within six or seven years he needed 42 tons. The position has steadily worsened, and now he would perhaps say that he needs more tons of sisal even to buy just a few parts. Commodity prices are settled by people at this end, and the Third world has no chance. We, the developed States, determine the prices.

In addition, when I talk to people outside the United Kingdom I learn that our banks are not helpful in giving terms. In fact, they are more helpful in giving money to Eastern Europe—not to Poland in particular, but to Bulgaria, Romania and other places.

I am driven to the conclusion that the United Kingdom's policy has suffered a complete turnabout in the past two years. Not merely is less aid being given, but our aid is no longer going to the poorest sections of the poorest countries. I have listened to a catalogue of certain schemes now being adopted, but I still hold to what I say.

I conclude with a quotation from a document produced by what I believe to be a reputable body, the World Development Movement. I find its statistics helpful, and they are confirmed by most people. It says: The Commonwealth Development Corporation, a statutory body, which has played a major role in attracting private investment to some of the poorest countries in the Third World was told last December that it can reduce its new commitments to the poorest countries from the current level of over 80 per cent. of its total new investment to nearer 50 per cent. Overall the proportion of British aid going to the poorest developing countries has declined from nearly 70 per cent. to just over 60 per cent. now and this proportion is likely to decline still further in future years. Basically, the people most affected by this subject are farmers. They live with their families in the bush in the hinterland. They are fleeing in their millions from the land, out of the bush, to dwell in hovels of the utmost squalor in shanty towns on the edge of big cities, such as Lagos, Salisbury and Rio de Janeiro. While that is happening we in this House are voting less and less money to give their families better housing, better farm machines, better animals and above all better supplies of clean water. Deforestation goes on apace. We are creating man-made deserts. Whom God wishes to destroy, he first makes mad. We must open our windows upon this globe about us. We are witnessing a nightmare.

6.40 pm

Mr. Cranley Onslow (Woking)

One problem about the subject of this debate is that the aid industry has developed a language of its own in which some words do not carry their normal meaning. The Opposition motion is a good example of that. The hon. Member for Glasgow, Queen's Park (Mr. McElhone) could not define "absolute poverty".

To listen to the hon. Member for Liverpool, Edge Hill (Mr. Alton), it would seem that the term includes illiteracy. The fact that a man has never needed a written language does not mean that he must starve. Many people in rural economies around the world are by no means living in absolute poverty even though they cannot read or write and have never had the need to. The patronising attitude that underlies the transference of Western intellectual values to overseas communities, whose whole ethos and way of life may be quite different from ours, is encapsulated in his comment on that point. The assertion that 800 million people live in absolute poverty—which is the core of the Opposition's motion—should concern us, but has it any validity?

There was a time when the poor were defined in the language of the aid industry by international income comparisons. It was quickly proved that if someone in Ethiopia had an annual income of less than $300 a year it did not mean that he was trying to live in the United States on less than $1 a day, which would be impossible. The comparison was quickly exposed as meaningless. We then moved to a slightly more subjective and vague formula, which is embodied on page 50 of the Brandt report and which is still open to analysis and destruction on similar grounds.

The probing minds of people who want aid to be an intellectually respectable exercise have driven the definition of absolute poverty into the vague, subjective and patronising Western terms that are embodied in Mr. McNamara's definition. The definition has become progressively more meaningless and the numbers progressively more suspect. Again, there is no mention in the definition of the number of people who live in absolute poverty because of causes that have nothing to do with illiteracy, starvation or disease. War was rightly mentioned by the hon. Member for Kingston upon Hull, West (Mr. Johnson). If the populations of Cambodia, Ethiopia, Chad or Afghanistan live in absolute poverty, whose fault is it? How will increased expenditure on overseas aid cure their problems? The fact is that the oft-quoted figure has relatively little meaning or relevance.

So much of the discussion on aid is conducted in similar terms that I must produce another example for the House. When the Brandt lobby came to the House, one of those who spoke was Professor Richard Jolly, the director of the Institute of Development Studies of the University of Sussex, and a member of the United Nations Committee for Development Planning. He said: One of the big lessons of development of the last 10 years is that peasants will respond if only they are given a fair deal. I do not know were Professor Jolly has been. I am bound to tell him that, had that fact not been self-evident since the beginning of civilisation, no society would ever have progressed beyond the level of subsistence agriculture.

Again, what patronising overtones there are in the statement that peasants will respond if only they are given a fair deal". The truth is so self-evident that I am astonished that a member of the United Nations development planning committee has only just learnt it in the light of the experience of the past 10 years.

I make those two points because I believe that it is time that we use more common sense and rely less on the so-called experts of the aid industry in our discussions. What we are really talking about—and where we disagree; there is no reason why we should not—is means and not ends.

We share the same objective. We want the world to be peaceful. My right hon. Friend the Member for Daventry (Mr. Prentice) understands that peace is an essential precondition of economic progress. Money spent on defence fosters and makes possible the use of money on other things. It makes economic development possible. To suggest, as the hon. Member for Edge Hill did in his intervention, that there is an inherent conflict between peacekeeping and economic progress distorts the argument beyond recognition.

Can we talk about the means of achieving the end that we all want, which is a peaceful and more prosperous world? When I was fortunate enough to discuss the Brandt report with the churches in my constituency, which I have done on four or five occasions in the past 12 months, we, ultimately focused on this as the real issue. In the process, we agreed that much of the Brandt report does not stand serious examination.

I do not believe that the Opposition motion stands serious examination either. The statistics with which it is coloured are suspect and the policy embodied in it is absurd. To listen to the hon. Member for Queen's Park, speaking for the official Opposition, one would suppose that the problem could be solved simply by throwing money at it.

I happen to agree with the hon. Gentleman that it is not a good idea—and was a mistake by the Government—to lend money under the aid budget to Mexico to build a steel mill there. I have always maintained during my interest in the subject, which goes back 20 years, that the Indian Government's development plan aimed at economic independence is largely responsible for their present predicament. India has an atomic energy programme, a space programme and massive steel mills. It has bought, through the West German aid programme, a complete television system. What good is colour television to the poor of Calcutta? Colour television is no doubt of enormous benefit to the German manufacturers, but what contribution does it make to ending the absolute poverty in Calcutta?

It is nonsense for us to take money from our taxpayers and virtually give ships to the Indians. The same applies to the Poles. It makes no sense for us to make subsidised loans to the Soviet Union. We are committed to a crazy policy. The Soviet Union can borrow more cheaply in this country than can underdeveloped countries. At the end of the day we are taking money from our taxpayers to underwrite policies which actually militate against development.

It can indeed be argued that this country and the United States, by their policies towards trade, on credit, on the sales of agricultural services and the provision of technology are subsidising and underwriting the Soviet subjugation of Eastern Europe.

I have no time for self-destructive and frustrating policies. When I first saw the Government amendment I thought that I should be pushed to vote for it. It was not until my right hon. Friend said some sensible things about the part that trade must play, the need to do away with protection and the need to open up markets in this country for the products of the underdeveloped countries that I began to think that I might end up in the Government Lobby tonight.

For all that, it is a pretty inadequate amendment. I do not accept that the exporting industries are the only ones that matter—that is not such a tangential point as one might think—any more than I accept the proposition that the current world recession is the prime reason for high unemployment in Britain. It stems from the resistance and opposition to necessary economic change led by the Socialist Party and, I am afraid, condoned by the Conservative Party since the war. The Socialist Party has been the prime mover and the prime agent in trying to put the clock back. Mr. Jack Jones and Mr. Hugh Scanlon bear a heavy responsibility for our present unemployment level. It is time that we recognised that a sensible restructuring of our economy to promote international trade, particularly in commodities, is as good as and may in some ways be more effective than overseas aid.

Let me illustrate what is going wrong. In Bridgend in South Wales a couple of years ago the Welsh Development Agency lent Gamilla Oil Mills £400,000 to start an edible oil processing plant. I declare an interest. I am a consultant for a company active in the area, although that is not a major part of its activities. I speak not on behalf of a particular company, but on behalf of the edible oil processing trade.

Gamilla went into liquidation last year, so that is presumably £400,000 down the drain. Recently Foods and Feeds Ltd. in the Clyde area was offered grants of £2.75 million to rebuild an old vegetable oil meal complex in Shieldhall in Glasgow, which had collapsed under its previous ownership because of its uneconomic location. At about the same time an efficient oil mill on the Thames, Erith Oil Works, announced that it was going out of business because of the unprofitability of processing soya in the United Kingdom. The loss of 75 jobs was caused by poor dock facilities, over-capacity and discrimination by Brazil in favour of its own crushers.

That is not the end of the matter. The Department of Industry and the Ministry of Agriculture, Fisheries and Food are in discussion about a grant from public funds to a Malaysian company that wishes to build an edible oil refining plant in Hull, which might create a few jobs in the short term. The examples that I give are scattered about the country—Bridgend, the Clyde, Hull and Erith. Different agencies are involved—the Department of Industry, MAFF, the WDA and the Scottish Economic Development Board—all, I imagine, acting independently of each other. We are spending taxpayers' money to create a few new jobs in one place, while robbing another area of work. Additionally, the industry already faces intense international competition. For instance, the Brazilians want to win more of the market by adding value and employing people in their country; the Malaysians are doing precisely the same.

We are frittering away scarce resources, perhaps not in enormous amounts but still in recognisable sums, and getting nowhere. I am sure that the same thing is happening elsewhere. We are wasting taxpayers' money which should be properly used, if it must be used through the agency of the State. It could be used to help employment, to train people in new skills for new jobs, and to promote new industry in areas where we do not face intense competition. We might then, for a change, be able to tell a country that we have enabled it to buy from us plant with which it can make a product which we shall be glad to buy back, instead of putting up barriers and going in for a policy of protection, which is so stultifying and self-defeating.

The Government should not regard overseas aid as a closed and private world, as the right hon. Member for Lanark (Dame Judith Hart) appears to do. Only if our policies on aid, on defence and on the restructuring of our economy are consistent with one another and only if the Treasury and all other Government agencies involved coherently pull together will we have a sensible development policy on an international scale. I hope that I have said all that in language that the House can understand.

6.55 pm

Mr. William Hamilton (Fife, Central)

I have heard the hon. Member for Woking (Mr. Onslow) on that line before. I do not propose to follow him, except to say that I profoundly disagree with the philosophy behind his argument, as do millions of people in Britain and throughout the world.

As the House will recall, we have recently been witnessing a massive campaign in the world for disarmament. Side by side with, and not unrelated to that, as has been said, we had the lobby a few months ago on the Brandt report, which was massive and impressive in quality, behaviour and the information that inspired it. The movements for disarmament and aid are closely related. The threat to world peace is as much related to world poverty as to nuclear armaments.

It is worth recalling that world expenditure on armaments is over $500 billion a year—about £300 billion. Our contribution is about £12 billion and increasing. The hon. Member for Woking did not mention the need to curb armaments expenditure. He is part of the pressure group that urges the Government to spend more on weapons of death. The United States and the Soviet Union are also hell-bent on pouring more and more resources down that futile drain.

The Government say that, whatever the economic exigencies, our defence expenditure must not be cut. Repeatedly top civil servants from the Ministry of Defence come to the Public Accounts Committee and say that there are good reasons for excluding defence from cash limit disciplines. There is enormous pressure on the Government to let defence expenditure rip. That is in sharp contrast to the Government's attitude to development aid.

It is difficult to define absolute poverty. We cannot say that exactly 800 million people are suffering gross deprivation and poverty. One has only to go to any State in Africa or India to know very well what it is when one sees it, although one may not be able to define it. No Government of a civilised nation can ignore that harsh reality, or, if they do, they do so at their peril.

The record of the United Kingdom in the last two years is shameful. Net public expenditure on aid in 1982–83 is to be £950 million. That is a cut in real terms of just over 11 per cent. over the previous year. It is a bigger cut than in any other field of public expenditure. That is the measure of the Government's priority to overseas aid.

What is more, the aid that the Government are giving is not being directed to the countries most in need. On the contrary, all the signs are that it is being directed to other, less desirable quarters for purely political and commercial reasons. In view of the time, I do not want to expand on that, as the situation was referred to by my hon. Friend the Member for Kingston upon Hull, West (Mr. Johnson), who went into some detail.

I want to mention one or two harsh facts, not because I have any solution to the problem, but to show the enormity of it. I quote from a UNICEF report published in 1979: 250,000 children are blinded every year 'for the lack of a daily handful of green vegetables'. About 40 million blind people live—or exist—in the developing world. The International Agency for the Prevention of Blindness was set up about six years ago. In partnership with the World Health Organisation, its aim is to mobilise international interest and resources for global action against preventable blindness—blindness that can be prevented by cheap, simple methods. The technology is available to control the four diseases that account for most of the preventable blindness in the Third world. Blinding malnutrition, which is how it is aptly described, blinds about a quarter of a million children each year, but could be controlled internationally, within 10 years, by determined action.

We must bear in mind those facts about preventable blindness and the £950 million aid programme of the United Kingdom. I have with me two documents. One is called "Defence in the 1980s", and the other is the annual report of the Royal Commonwealth Society for the Blind. It is worth quoting some facts and figures from the two documents, because all policies debated in the House are arguments about priority and how we should disperse the wealth produced by our workers.

On page 77 of "Defence in the 1980s" there are some figures. I know that hon. Members will remind me that the sums are spread over a number of years, but for illustrative purposes they are revealing. For example, the estimated cost of the Sting Ray lightweight torpedo is £920 million. We know that the cost has exceeded that estimate and will be more like £1,000 million. That one weapon system in our defence programme is costing us much more than a whole year's programme of aid, spread over the whole of the developing world.

Another item in the programme is the Sea Eagle air-to-surface anti-ship missile, which costs £350 million. That is about a third of the aid programme. The lesser items which are the small change of our defence programme cost less. For example, a 155mm illuminating ammunition shell for one of our big guns, an FH70 which is used to light up the sky, costs £450. The annual report of the Royal Commonwealth Society for the Blind tells us that £3 will pay for a sight restoring cataract operation in an Asian eye camp". So, if we said that we would not produce these shells for £450, for every one not produced we could cure the blindness of 150 children. It would be laughable if it were not obscene.

Another example is the 155mm smoke ammunition shell, for the same gun, which costs £340. £90 will enable you to adopt a blind child for three years", says the RCSB. If we dispense with four of these shells we could provide for four blind children to be adopted for four years. That would meet the costs of the clothing, special equipment, outings and fares home in the holidays. That is what the debate is about and what priorities are about—how we use resources. I get very angry, as I am sure many in the country do, when I see the gross waste and the money that literally goes up in smoke while millions of children and adults are suffering from diseases that would be cured if we had the will.

What the answer is, I do not know. However, the point has been made, and should be made by people who remain in the Labour Party, that trade production and import controls cannot be married with pretending that we can solve the problems of the Third world. The two things are contradictory. I hope that the Labour Party will take this seriously. We cannot say at one and the same time that we will restrict entry into the United Kingdom of the manufactured goods and raw materials of the Third world countries and that we shall lift these people out of their poverty. The two do not match up.

One of the big problems in the Third world is that of commodity prices, which need to be stabilised. The people there want increased trade, aid and technical development. About 750,000 of our workers are employed directly in the export trade to the developing world. That is a close interlink between what our workers are producing, and what the Third world needs.

It is no good tinkering with the administrative machinery or saying that another Minister or Department will be provided unless the will is there to change resources and to redirect them from the defence programme to the most important defence programme—the Third world development programme. That is the most important development programme. I hope that the House understands that there is a vast idealistic movement in Britain determined to ensure that there is a reallocation of our resources of wealth to that end.

7.10 pm

Mr. Anthony Nelson (Chichester)

The House always listens with interest to the hon. Member for Fife, Central (Mr. Hamilton). He is not afraid to speak out against his party or the Government of the day if he feels strongly about certain issues. I agree with the latter part of his speech about the need not to interfere with free trade, and that the interests of the developing countries would be served least by erecting protectionist barriers. There, however, my sympathy with him ends. I can in no way support the thrust of his argument that we should substantially enhance the development programme at the expense of the defence budget. It is true that we shall spend about 10 times as much on defence this year as on official overseas aid, but the question is not whether we would spend more on aid if we spent less on defence. If we had no defences, the question might be whether we could spend anything on overseas aid.

If we dismantled our defences and broke up the collective security system of Britain and Western Europe, we might be relegated to the suppressed satellite status of countries such as Poland. We must ask what contribution such countries can make to the needs of developing countries. I cannot accept that the hon. Gentleman is right in his judgment. I would not go as far as my right hon. Friend the Member for Daventry (Mr. Prentice) and suggest that the Secretary of State for Defence and the Minister for Overseas Development should sit down together and regard their budgets as one. I accept that there is a relationship between the two, but they are distinct matters. It is important, as a first priority of Government, to defend our people and maintain a growth in real defence expenditure.

The Government's record on overseas development is not without distinction. More than £1 billion will be spent on official aid this year and next year. That is considerable both in real and in relative terms. Only four OECD countries will spend more this year on overseas development than Britain. As my right hon. Friend the Minister said, it is the quality as well as the quantity of development assistance that is important. I gain confidence from the fact that about two-thirds of our bilateral aid goes to the poorest countries and that Britain is a signifacant contributor to forms of multilateral assistance for the least developed countries.

The International Development Association, which is attached to the World Bank, contributes considerable amounts to the poorest countries. Britain will be contributing more than 10 per cent of the funding of the sixth replenishment of the IDA. It is worth noting that that compares with 5 per cent. for France and 5.4 per cent. for the Gulf countries, which include Saudi Arabia, the United Arab Emirates and Kuwait. We should be proud of that fact because it is a real contribution to the developing world.

The Opposition motion is both cynical and inaccurate. It deplores cuts in the aid programme, yet conveniently forgets that the Labour Government made cuts in 1978 when forced to do so. We might be better able to assist the developing countries now if they had not indulged in a spending spree with taxpayers' money when they were in office. The figure of 11 per cent. referred to in the motion assumes a certain rate of inflation, but the actual reduction in money is about 2 per cent. I assume that the difference is accounted for by an assumption about the rate of inflation.

A significant factor about the development budget is that that money is largely converted into foreign currency and spent abroad. Therefore, movements in the exchange rate are as important a factor as the rate of inflation. If one argued that the rate of exchange of sterling were to rise by 11 per cent. during the next year, which is not impossible because fluctuations in currency have been at least as large in recent years, we would be spending more in real terms. The figures can be very misleading, and the House and the public should be aware of that.

The motion accuses the Government of "callous indifference" and a lesser commitment to the plight of 800 million people living in poverty. My hon. Friend the Member for Woking (Mr. Onslow) asked who they were. The World Bank has assumed the figure of $635 per capita as its definition of poverty, which produces a figure of 750 million people. Perhaps the Opposition have chosen to round up the figure by 50 million—but what is 50 million to them if they are trying to stir up trouble with the Government of the day? Most of our aid goes to the poorest people. My right hon. Friend the Minister gave details of specific help to sub-Saharan countries—agricultural schemes, population programmes, water supplies and energy resources.

The Government accept the principle of 0.7 per cent. of GNP being the target for overseas development aid. But they are wise enough to recognise that we have no prospect of meeting that if our economy is unsound and if no action is taken to curb the burden of public expenditure and the rate of inflation.

I find it deeply offensive that the Opposition assume a monopoly on moral conscience about overseas assistance. I feel as strongly as they that we have obligations to the developing world and that we must strive energetically to narrow the growing gap between the world's rich and poor. It would he imprudent as well as cruelly deceptive if we pretended that our aid programme bore no relation to our economic circumstances. Worse, it would make more probable an even larger cut in later years. The best means to ensure that we can make the contribution that humanity, national security and self-interest demand is by putting our house in order and increasing the national wealth at our disposal.

I congratulate the Foreign Affairs Select Committee on its work and contribution to the subject. I read the reports that it produced before the Cancun summit. It played a significant part in impressing on the Government the importance that many of us attach to following up the Brandt report and taking the conference seriously. Are we doing any more than paying lip service to Brandt's objectives and to the contents of the Cancun communiqué? I confess that the language of compromise and hesitancy surrounding many official statements in response to Brandt has not reassured me that Britain, as a developing country, has yet grasped the significance of the Brandt report conclusions or begun to tackle them in a practical way.

I wish to give one example of the garbled verbiage emanating from Cancun. The communiqué states: The Heads of State and Government confirmed the desirability of supporting at the United Nations, with a sense of urgency, a consensus to launch Global Negotiations on a basis to be mutually agreed and in circumstances offering the prospect of meaningful progress. If that sort of state emanates from a meeting of Heads of State—despite the comments about reaching an emotional understanding rather than formulate a practical programme—I must despair. Now is the time for action. That extract of the communiqué related only to a proposal for further talks rather than action. An action programme is needed to implement some of the proposals referred to by the Brandt commission and our Select Committee—for example, on food, trade, energy and finance.

I wish to comment on one of those broad areas, namely, the financial flows and institutions. The financial crisis facing most non-oil developing countries has worsened in recent years because of the 1979–80 oil price rises, the international recession and the level of interest rates. The three causes are related, but they have had a compound effect on countries without indigenous energy resources, whose principal exports are primary commodities, raw material and minerals, and which already have substantial debt charges on accumulated foreign borrowing. The result was that in 1981 the oil-importing developing countries incurred a balance of payments deficit of $97 billion. That enormous imbalance would have been impossible to sustain were it not for the petrocurrencies which were recycled through international banks, not least in Europe and this country, and multilateral institutions such as the IMF and the World Bank.

However, a significant factor in this recycling of finance from oil rich to non-oil poor is that much more of the finance flowing into developing countries is in the form of loans rather than investment. Eventually those countries must repay the former. On the latter they only have to generate a rate of return.

My fear is that we are building up a much bigger financial problem for those countries, and that many banks may encounter great difficulties in the future. I fear that a lot of the money simply will not be repaid. The fears expressed by the right hon. Member for Lanark (Dame Judith Hart) that a major bank might collapse as a result of the inability of a major country or authority to repay its loan may be realised if the borrowings of those countries compound in the way that is happening now. That is recognised by the World Bank and its IDA affiliates, but it is insufficiently recognised by Governments and the banking system elsewhere. The answer lies in promoting investment rather than lending to the developing countries, and in particular in encouraging the oil rich countries, individuals, and monetary authorities to place long-term investments—not loans—in projects which can make a return and generate hard currency income through exports. It also emphasises the need to back with official aid schemes that are likely to earn foreign currency for the countries in question. Our aid disbursements rightly emphasise agriculture and infrastructure schemes such as roads, electricity and water supply. However, we should not lose sight of the advantage of backing income-generating schemes in those countries. The less-developed countries will have to pay their way much more in the new world financial order, and we can best help them by backing ventures that will generate jobs and hard currency in the years ahead.

What else should we do? I want to mention three areas—interest rates, exchange rates and the financial institutions. In recent years high interest rates have placed an impossible burden on developing countries, which cannot escape the necessity of financing their trade with credit or their development plans with foreign loans. High interest rates internationally are a direct consequence of inflation, and without more co-ordination between the developed countries to produce a more stable and secure international financial framework we shall continue the spiral and self-defeating process of competing against one another for liquidity in the system and maintaining the exchange rate of currencies.

In my judgment, the answer is to pursue, as Her Majesty's Government are doing, economic policies designed to lower the domestic rate of inflation and to enable interest rates to fall by reducing the demands of the non-productive public sector of the economy on the nation's resources. However, it is not enough to- get on with that task at home and ignore what is happening abroad. Financial markets and national economies are more interdependent than ever before, and much can be done within Europe and between Western Governments to co-ordinate plans for economic recovery.

In the context of high interest rates, loans made by the International Development Association assume greater importance. I understand that the IDA can lend money for up to 50 years, interest-free, and with periods of up to 10 years' grace—the only financial commitment being a commitment fee of 0.75 per cent. a year. I fully support the large contribution that the Government make to the IDA, but I understand that the IDA can lend only to Governments. In view of what I said earlier about backing more income-producing schemes, should there not he more flexibility in the recipients of loan finance from the IDA?

In its proposals for reform of the world monetary system, the Brandt Commission laid great emphasis on the need for stable exchange rates. This is a matter of great importance for non-oil developing countries which have seen their financial obligations and their balance of payment deficits rise in large part because of movement in exchange rates.

Brandt discussed various ways in which exchange rates could be stabilised. For some time, my preference has been for action on a regional block basis to iron out sharp and damaging fluctuations to currencies. In our case, it means that we should become full members of the European monetary system. Failure to do so has acted as a detriment to trading within Europe and as an unstable influence on international currencies. In my view, it would be the first step to having a European currency and greater stability and order in the international financial system.

I welcome the fact that internationally we have greater use and acceptance of special drawing rights. That is a good sign of the extent to which there is a common and accepted settlement system which the International Bank for Settlements and Redevelopment is using to advantage. Experience of the EMS in recent years shows that we have little to fear, in practice or theory, in becoming full members. I hope this country will join the EMS, not only because I regard that as an essential political step in Europe, to demonstrate' our unity with it, but also because it will produce more stability and have a practical and beneficial impact on the developing countries.

Finally, I shall say a word about the institutions themselves. I pay tribute to the contribution of multilateral institutions such as the IMF and the World Bank. Last year, the World Bank lent over £12 billion on 250 projects in 50 countries. Many new multilateral and bilateral institutions have sprung up in recent years, especially in the Middle East. However, I question whether some institutions with grand names which imply development assistance are moving fast enough, giving money and employing the right criteria and expertise in development assistance abroad.

I think particularly of the Sudan, a country that was mentioned by the hon. Member for Kingston upon Hull, West (Mr. Johnson). That country is bigger than the whole of Western Europe. It is the biggest country in Africa. It has enormous untapped mineral and agricultural potential. Nevertheless, for a decade the rich Arab oil-producing countries have been promising substantial financial assistance to make it the garden of the Middle East, promising to pour money into stock and agricultural development. The money simply has not arrived. The Arab development fund for agriculture—I forget the exact name of the institution—promised to make available substantial sums for that development, but it has not arrived. There is absolute poverty in that country and throughout Africa, and resources in terms of food production which the world will not be able to do without during the next 20 years are going to waste. There is therefore an urgent need for some of these fine-sounding multilateral institutions that are set up by Arab countries to deliver the goods and demonstrate that the promises that they make to help countries are being translated into reality.

There is also an urgent need to rearrange the shareholdings of the IMF so that the quotas can be reviewed, and to increase the borrowing to capital ratio, as proposed by both the Brandt commission and the Select Committee. I hope that my hon. Friend will comment on that matter when he winds up.

Institutions must manage projects, as well as provide the finance for them, to ensure that there is less wastage, inefficiency and corruption, because those factors bring into disrepute the substantial efforts that we and other countries make toward development assistance.

I live uneasily with the reduction in funds that has been announced for development aid. However, because I believe that the paramount importance of redressing our economic problems is that it offers the hope that we shall be in a position to increase aid in real terms—and much more than otherwise would be the case—in future years, I am prepared to go along with the Government tonight. I assure my hon. Friend that I shall be in the vanguard of those who will press for a greater allocation to overseas development in future, but he can rest assured that he has my support for the proper priority of looking to our home front first—reducing the rate of inflation—while maintaining a substantial and a record absolute amount of money for these worthy recipients.

7.30 pm

Mr. Guy Barnett (Greenwich)

The hon. Member for Chichester (Mr. Nelson) made an interesting speech and at one point referred to the importance of the quality of the aid that we give. When debating this subject in March last year I paid tribute to the quality of British aid. I apologise to the Minister for missing a small part of his speech, but I had a brief appointment with one of his ministerial colleagues. I gather that he, too, referred to the quality of British aid.

It ought to be mentioned that there is one aspect of the total budget that the British taxpayer spends on aid that does not bear examination on quality. It is that part of the budget that is channelled through the European Economic Community. I shall devote my remarks to that aspect of our aid programme, because there is a good deal of evidence to support my view that the quality of aid given by the European development fund is considerably worse than that given by the bilateral or, as the hon. Member for Chichester said, the multilateral programmes.

The quality of aid ought to be examined, because it is an important element in the British programme of official development assistance, since we are currently contributing about 18.6 per cent. of the total EEC aid budget. In itself that figure may seem too high, and in view of the criticisms that I shall make of European assistance organised under the EDF I see the money spent directly on our bilateral programme.

I should be interested to know what efforts the Government have made to discover whether that percentage could be reduced, on the argument, of course, that it seems a particularly high percentage for a country with the income that Britain has. The Supply Estimates tell us that the aid amounts to about £106 million a year, and from experience I gather that there is a strong probability that there will need to be a Supplementary Estimate to cover the cost of our contribution to European aid.

I have been in contact with War on Want and it is concerned and disturbed, as I am, that this element in our assistance programme should be so wasteful and inefficiently administered, and that it often does not reach the poorest people for whom it is intended. Indeed, there are repeated suggestions that development assistance is getting into the wrong hands, and on occasions there have even been suspicions of fraud.

The Minister, of course, has no direct responsibility for the alleged deficiencies, but he does sit on the Overseas Development Council, representing the United Kingdom, and therefore he has a duty to ensure that British taxpayers' money is wisely and effectively disbursed and reaches those for whom it is intended. Any failure by the Government to maintain a watching brief on possible abuses is not only a serious dereliction of duty, but has the added result of bringing aid for development into disrepute among the general public in Britain and throughout the EEC. Of course, other EEC countries also contribute towards the programme through taxation.

I am sure that all hon. Members agree that frequently when addressing audiences about aid or development a question comes from the floor about whether the money gets to the people for whom it is intended. That question is sometimes difficult to answer, but it behoves all hon. Members concerned about aid to ensure that, so far as is humanely possible, the money goes to those who need it.

I shall refer briefly to trade, not least because it is referred to in the Government amendment and has properly been raised by other hon. Gentlemen.

The EEC figures for 1976 to 1978 show that six countries accounted for over 60 per cent. of Community imports from ACP countries, whereas 32 countries provided less than 1 per cent. of total ACP exports to the Community. Therefore, the Stabex theory, if I might describe it as such, of free access for ACP countries is in sharp contrast to the reality. Most of those countries are not able to take advantage of the concessions. Indeed, the EEC operates protective mechanisms, such as the common agricultural policy and others. The agreement grants relatively low priority to enable industrialised products to be imported into the Community. People keep telling us that the Labour Party will be protectionist. We ought to draw their attention to the fact that the EEC is already protectionist on industrialised products or any goods liable to compete with its own agricultural outputs.

The Government are right in their amendment to emphasise the importance of trade. Therefore, I hope that the Minister will be forthright in his criticisms. The Guyanese ambassador to the EEC, Mr. Insanally, has been forthright. Among other things, he said last October that since 1975 the proportion of ACP exports to the Community had increased from 6.7 per cent. to a paltry 7 per cent. He said that the overall pattern of trade had barely changed from that which prevailed before the convention first came into force. Indeed, the vast bulk of ACP exports—85 per cent.—to the EEC still consists of raw materials, including oil. It has been stated before that EEC policies have the effect of perpetuating the colonial relationship of supplying raw materials rather than diversifying into industrial production.

Much attention has been paid during the debate to the plight of some of the very poorest countries. I shall speak shortly about the plight of the so-called "non-associates". When Britain entered the EEC, the Government of the day were able to extract a promise—a joint declaration of intent—designed to ensure that Asian countries would be considered in the new Community trade and aid policies.

That promise has never been kept. I raised that matter strongly when I was a Member of the European Assembly in 1975. However, there is still no agreed management regulation on how to deal with the administration of funds to "non-associates". Until there is, there can be no significant increase in EEC aid flows to some of the poorest people in the world.

Being outside the Lomé agreement, of course, such countries have an added disadvantage on trade. The Stabex scheme was generally welcomed when it was first brought into effect. However, it is clear that things have gone seriously wrong. Theory and reality are wide apart. Between 1975 and 1979 over 60 per cent. of the scheme's benefits were shared among seven of the ACP countries. It is worth noting that the transfer to Senegal was only 17 per cent. of the total money available.

Mr. Richard Body (Holland with Boston)

I visited Senegal not long ago. Is the hon. Gentleman aware that much of the aid goes not to the Senegalese Government, but to companies that are owned and controlled by French concerns and freely remit profits back to Paris, with the result that much of the aid is really going to France rather than to Senegal?

Mr. Barnett

I had heard that, but did not intend to mention it as I have not the hon. Gentleman' s direct experience of the matter. I am grateful that he has drawn attention to it, as, having been to Senegal and studied the situation at first hand, he is better qualified than I am to do so.

I should also mention that, of the total money available under Stabex, 19 per cent. is spent on one crop—groundnuts—and falls in export income on this one product throughout the ACP countries accounted for that proportion of cash volume.

The scheme itself suffers from one serious defect. As I understand it, its whole purpose was to compensate producers of primary products for falls in the world prices, but there is no requirement that that should actually be done and there is no evidence that the benefits of Stabex reach the primary producers who should benefit. For all that I know, the Governments concerned may be using the money to purchase arms and military equipment, which the Government are so eager to pour into the Third world.

Last year the European Commission defended the operation of the scheme, saying that it had "not collapsed" but was "functioning correctly". The evidence that I have seen suggests that that is very far from the truth.

As the House knows, the European Communities Committee in another place last year produced a damning report on the EEC's aid programme. It quotes a European Commission paper written by Katerina Folke, which says that the food aid policy is dictated by agricultural interests rather than by any intention to promote development and that: It is an inefficient way of distributing European surplus production to the poor countries, associated with high costs, countless mishaps, delays, wrangling over responsibility and bureaucratic obstacles. One incident has been reported in which milk powder arrived 18 months after the cyclone whose effects it was intended to mitigate.

Last year I drew the Minister's attention at Question Time to the scandal of European food firms making large profits out of food aid. He replied that at that time he had made no representations to the European Commission. I wonder whether he has now done so.

An article by Mr. Leonard Doyle in Brussels on this subject states: Rotten food, unfit for human consumption, has been sent by European firms as food aid for the Third world, it was recently admitted in Brussels. While EEC officials have drawn up a blacklist of the companies thought to be involved, privately they admit that little can be done to prevent this scandal. Under current food aid procedures, quality control is often left to the good faith of the dispatcher or national food aid agencies, leaving plenty of room for profiteering and malpractice. Trading in human misery, several European firms have made fat profits at the expense of starving and destitute people in the Third world, and, of course, the European taxpayer. Food decay has occurred while consignments of rice, wheat, milk powder or butter are en route from Europe to Third world countries. However, in at least three recent cases, it has been established that food was unfit for human consumption before leaving European ports. Matters of that kind require the closest investigation. The Court of Auditors in its report last year referred to "exorbitant illicit profits".

The right hon. Gentleman will be aware of the damage that can be caused by the uncontrolled distribution of food aid on the successful development of indigenous agriculture. Many years ago I was personally involved in distributing food aid in a part of Africa. I know of the enormous danger of depressing the price of food and therefore making it uneconomic for indigenous farmers to produce.

The House of Lords Committee referred to the slowness of distributing aid by the EDF. I understand that by September 1979 almost four-fifths of the aid available to finance development projects remained to be spent, even though the Lomé convention had almost run its course. I emphasise that the British taxpayer contributes to that fund. If one compares our 18.5 per cent. contribution to the fund with the lack of return in terms of contracts for British firms, Britain has good reason to feel aggrieved. The Government amendment refers directly to that aspect of aid. If the Government are as good as their word, I expect strenuous efforts to be made to end the bureaucratic confusion which a British trader related to me only this week. He said that it denied British firms a fair opportunity to bid for work financed by EDF money.

Perhaps the most serious aspect is the financial control and policy auditing under the EDF programme. Admittedly, in 1977 the Directorate for Financial Control started field visits to EEC delegations in Lomé countries. About six visits were carried out between 1977 and 1978, but at that rate it would take about seven years to ensure that each local delegation received one financial control visit. I therefore assume that one-half of the local delegations have not yet been covered.

I understand that audits that have been carried out do not measure up to the standard which the House would properly expect of money spent directly by a Government Department such as the Overseas Development Administration. The fact that the staff are employed by the Association for European Co-operation means that they are not subject to the same rules as the staff of the European Commission and that there is genuine doubt about the authority of the audit's findings over the activities of AEC personnel. I cannot over-emphasise the damage that such laxity can do to the cause of overseas development expenditure, especially among those who support it most strongly.

War on Want has provided me with a dossier about a bank fraud allegedly perpetrated by an EEC delegate working in an ACP country who, I understand, still works for the Commission. The document suggests that the allegations are true and they are backed by documentary evidence. If I pass the dossier to the Minister, will he ensure that the matter is stringently investigated by the Commission? The sums involved may not be large, but if a few thousand pounds can be made by an individual where audit provisions are lax the same may be happening elsewhere.

The press has implied that the new Commissioner responsible for development, Mr. Pisani, is determined to make major changes in the Community's development policy. He was a member of the Brandt Commission, and with his background one can only welcome his appointment, especially as he is apparently seized of the need for closer supervision of how money is spent.

I have three questions which I hope the right hon. Gentleman will put to Mr. Pisani when he next meets him. First, what guarantee can he give that the funds transferred to ACP countries are used for development purposes? Secondly, can the Commission guarantee that funds generated from food aid that is sold are used again only for development purposes? Thirdly, can the Commission guarantee that there will in future be a comprehensive system of financial control and audit—ultimately by the Court of Auditors—of EDF funds disbursed from abroad?

I know that these criticisms of European development policy will receive a sympathetic response from the Minister. I am sure that he shares my concern that the money should be spent properly. If he takes an independent and objective view of the European Community, as I know he does, he will agree that these matters should be pursued. I hope that in his reply to the debate the Minister will give the House evidence that he is following up at least some of these issues.

7.50 pm

Sir Anthony Kershaw (Stroud)

Once again the House is indebted to the hon. Member for Greenwich (Mr. Barnett). He has drawn attention to what seems to be a veritable can of worms, which certainly needs to be investigated. I do not suppose that any of us can say how justified the hon. Gentleman is, but he spoke impressively and I hope that my right hon. Friend the Minister will pursue the matter with his customary vigour.

I shall not detain the House long because what I have to say has already been covered eloquently, persuasively and in a well-documented manner by my hon. Friend the Member for Howden (Sir P. Bryan).

The subject of overseas students has been debated several times in this House, and to the hard boys still in the Chamber the arguments are familiar. I have never accepted the Government's basic thinking or financial arguments for increasing fees. The basic error has been to hand the decisions to the Department of Education and Science while at the same time requiring it to make economies. The DES does not have a very elastic budget. What it spends depends largely on the number of students it has to take care of, and that is not within its control. Naturally, therefore, when the DES receives such orders it has to cast around for economies. It is nothing to the DES that the Foreign and Commonwealth Office is uneasy about its operations in that regard, or that the Treasury calculations on the cost of overseas students are wrong. I do not blame the DES, which has its own budget to make.

But better organisation would produce a result that is more in the long-term interest of this country than we have seen up to now.

I congratulate Her Majesty's Government in one respect. The ODA has managed to find the funds to hold the numbers of overseas students here under ODA auspices at about the previous figure. That has of course made a certain amount of nonsense of the proposed economies because ODA students are more expensive than students who pay for themselves. Nevertheless, that is a desirable result. It is desirable also because ODA-sponsored students tend to come from the poorer countries, whereas fee-paying students are either personally richer or come from richer countries. I regret nevertheless that those numbers will fall, too.

I realise that there is no point in just moaning and saying that everything is terrible, as I have done previously. Therefore, I have three proposals, none of which entails extra expenditure. In today's economic climate that would be foolish.

First, the policy should be laid down, not by the DES, but by the Government, taking into consideration the interests of the whole country. Above all, the Treasury should be made to admit that private expenditure of students living here can legitimately be brought into account. One of my hon. Friends said that the Foreign Office should be the lead Department. I do not quarrel with that. The Government must take responsibility and not leave it to the DES.

Secondly, the ODA should, within its own budget, divert funds to maintain the numbers of its overseas students. This is a valuable means—the reasons have already been eloquently stated—for giving this aid.

I wonder, finally, why the DES should fix the fees that overseas students pay. This could surely be done by the universities and the polytechnics. They know what they are selling and the legitimate price to charge for it. I should have thought that more accommodation could be provided if these centres of higher education were allowed to charge whatever they believed the market could bear. I have an idea that the amount would be much less in most cases than is now charged.

In principle, the Government must now formulate a policy. They must know why students are wanted here, the numbers that can be accepted, the countries from which they should come and the "follow-up" procedures to be adopted when they leave. That would make sense.

Several Hon. Members

rose—

Mr. Deputy Speaker (Mr. Ernest Armstrong)

Order. It may help the House if I say that 10 hon. Members are still trying to catch my eye with only 80 minutes remaining before Front Bench speakers wish to reply.

7.56 pm

Mr. Michael Welsh (Don Valley)

I was dragged, if that is an acceptable term, into overseas aid when serving His Majesty. I had the opportunity to see the conditions in which people lived. That was many moons ago. My interest was heightened when Nye Bevan asked for a contribution of 1 per cent., not 0.7 per cent., of the gross national product to be directed towards overseas aid. The only country that will reach the higher figure over the years ahead is Norway. It is therefore a pleasure for me to speak on this subject. I have pursued the honourable occupation of a miner. However, one sometimes has to lower one's standards, and I have ended up in the House of Commons. I accept that the fight for our people—because they are our people—in the Third world goes on.

This debate might never have taken place but for the savage cuts in overseas aid. The cuts must amount to about 11 per cent. in real terms. It has been stated that this debate is concerned with 800 million people. I do not know the exact number. We are, however, discussing millions of people who are our brothers and sisters—a fact that is sometimes forgotten. Their living standards are very low. While this debate has been in progress, many will have died of starvation. Many babies never reach one year of age due to lack of aid. It should be a matter of shame to the country and to the Government that aid to the world's poorest has been cut since this Administration came into office. The figures have been mentioned. Some are worth mentioning again.

The statement of the World Bank relating to the next five years shows the terrible embarrassment that the Government will face. There has been little reference by Ministers to that report showing how money will cease to flow from this country to the Third world. It is deplorable. From 1974 to 1979, aid increased by about 42.6 per cent., an annual average of about 7.4 per cent. According to the OECD review, between 1979 and 1980 United Kingdom aid fell by 26 per cent. In the Government's first year of office aid fell drastically. The planned decrease for 1981–82, contained in the Government's expenditure plans, is £63 million. I do not know whether that amount will be cut, but that is what the Government's expenditure plans for this year say. After allowing for inflation, the decrease will be 11 per cent.

The Minister says that because of the country's plight we must all make cuts in all programmes. However, it is strange that an 11 per cent. cut is being made in overseas aid when total public expenditure will increase by 0.5 per cent. Total public expenditure will increase and expenditure on overseas aid will be cut by a minimum of 11 per cent. Even the aid that is given to commercially orientated undertakings will be cut to some extent. That is at a time when the Third world is facing an unprecedented economic crisis as a result of the oil price rise of 1979–80 and the recession in the West. The poorest countries are the hardest hit. It is a coincidence that both Britain and the United States are carrying out a monetarist policy. That policy has made the crisis worse in the poor countries.

According to the World Bank World development report 1980 Britain will be the only donor country to reduce its aid in the next five years. The hon. Member for Chichester (Mr. Nelson) said that we should fight for more increases in aid as the country gets on its feet.

The World Bank report says that 0.52 per cent. of the GNP was given in aid for 1980, then for succeeding years the percentages are 0.48, 0.45, 0.42, 0.40 and then 0.38. We shall be the only country out of 17 that will reduce its aid. I am not sure whether that is correct. However, I can only think that some information must have been given to the World Bank for the report to state those facts. It is obvious that further cuts will be made affecting our poor brothers and sisters in the Third world.

Multilateral aid has also been hit, especially the International Development Association, which is the part of the World Bank that makes low-interest loans to poor countries. The United States has cut its contribution to IDA by 25 per cent. Britain has followed suit. We have said that we must cut our aid because the United States has done so. However, the Scandinavian countries are maintaining their contributions at the agreed level. Therefore, only the United States and ourselves are making cuts in that important aspect of aid. As a result, countries such as India must now go to the Euro-markets and the International Monetary Fund for funding.

The Government talk about private capital. It is difficult to get private capital in this country, never mind in the Third world. Private bank lending, which makes up the bulk of United Kingdom private capital flow, is highly concentrated, with over two-thirds of it going to just 12 countries. It does not benefit the poor countries. The Government accept that private money does not go to those countries.

Paragraph 2 of the Government's statement to the development assistance committee of the OECD in 1981 stated: The Government recognises that private direct investment and private financial flows benefit mainly the upper and middle income countries. We are asking for private capital. It is not going in the right direction—to the poor countries. Because of the failure of private capital markets and official aid to recycle OPEC surpluses to the poorer developing countries, those countries are forced to turn to the IMF. The result is that, under pressure from the West, especially the United States, the IMF has had to tighten up on its terms and conditions for loans. A wave of political and social instability has been the result in many poor countries.

The Minister says that he has explained any cuts that must be made to the countries of the Third world. He has visited those countries. He says that the Third world understands our position and that it is not shouting about it as much as the Opposition. That may be so, but it is strange.

One of the great issues is overseas students' fees. That is an important factor for our old Commonwealth countries. Being shortsighted about increasing overseas students' fees will have many bad results in the long-run for this country. I shall give one example.

Last year I was in Malaysia, just before the Commonwealth conference. I met the Malaysian deputy Prime Minister. He said that what our country gained in the short run by increasing overseas students' fees we would lose in the long run. I do not know whether he was right. However, I know that Malaysia is a fast growing country with large reserves of energy, which must be worked. The workers go down to the bowels of the earth for it. Not many British firms have won contracts in that country. Therefore, even if we have gained anything by increasing students' fees, it is estimated that £40 million from October last year has been lost to the business world because of those increases. I appreciate that the Minister is not involved directly. However, if any Department has to make such decisions, it is better if it consults the appropriate Minister as he will know more of the probable results of such decisions.

British business is now suffering. We have lost £40 million in contracts since October of last year. The Malaysians feel that Britain's decision to raise education fees for overseas students was directed primarily at them. The Daily Telegraph referred to that on Monday.

When we were in Malaysia before the Commonwealth conference we learnt that, because of the rise in students' fees, neither the Prime Minister nor the Deputy Prime Minister would attend the conference. I thought that that was bad. We asked them to change their minds, but they did not. Incidentally, 27 per cent. of overseas students come from Malaysia. I asked the deputy Prime Minister about Third world aid. I asked whether Malaysia would consider giving aid to the rest of the Third world, which is poor, as Malaysia is now quite rich and is doing well. He said that he saw no reason why Malaysia should not contribute to the poorer States of the Third world. I am not saying that he has done that, but he has given that assurance.

I have much to say, but time is limited and I shall make four main points. The International Confederation of Free Trade Unions said that poverty anywhere constituted a danger to prosperity everywhere. That is true. First, without affecting their policy on cuts and so on, the Government could abandon their commercial, political and industrial criteria for aid projects. It would cost them no more to do that. They could steer aid towards the poorer countries. Secondly the Government could maintain their existing commitment to the IDA, despite the American cutback. After all, the IDA exists to help the poor countries. Thirdly, the Government could accept the Third world case for a new issue of world reserve currency with special drawing rights. A sum of between $6 billion and $10 billion would not be inflationary in a world market of about $1,500 billion. Such steps would help the liquidity problems of developing countries, which have only two months' reserve of foreign currency with which to cover imports.

Fourthly, we could resist American pressure on the IMF to tighten up the conditions on which loans are given to the Third World. Those measures would not cost the Chancellor of the Exchequer a penny and would help. Such steps would show that Britain still cares for the poor of the world.

I hope that the Minister will consider those four points. It would be worth taking them up to see whether we can help the poor who are asking for help. After all, it is our duty to help.

8.12 pm

Mr. Keith Best (Anglesey)

As many hon. Members wish to speak, I shall make five brief points. I hope hon. Members will forgive me if they are delivered somewhat staccato so that I can cut my remarks to the minimum.

Like most hon. Members, I am disappointed that there has been a cut in the aid budget. However, I appreciate the reason for that, given our current economic position. Sometimes we are in danger of being too short-sighted. The aid that we give to overseas countries has ramifications that go far beyond our domestic economy and that stretch towards defence and other interests. Hon. Members should not fool themselves into thinking that aid is a dead issue for the general public. The public are immensely interested in global problems, and aid is an integral part of that. The debate will probably arouse great interest among the general public.

Let us remember that the Brandt report was, after all, a best seller. Copies of it can be found on the bookshelves of many of those whom one might not otherwise expect to be interested in such matters. Interest has been generated because the public understand the link between world hunger, expenditure on arms and the destabilising effect of the expanding gap between the rich and poor countries. There is also a link with defence. The aid that we give to developing countries is far less ephemeral than the military aid given by the Soviet Union. After all, military aid can change sides quickly, as the experiences of Somalia and Ethiopia show.

I now turn to the five points that I wish to make. First, there should be closer co-ordination of all aspects affecting overseas aid. I refer not only to the finance that is made available, but to the direct effect that aid has on our economy. Recently it was calculated that one fifth of the firms that gained aid orders employed fewer than 100 people. Almost half the British companies that won orders had fewer than 200 workers. Therefore, such orders directly benefit our smaller industries. Many hon. Members no doubt believe that our prospects of higher employment are probably based on the small firms rather than the large old manufacturing industries. Therefore, our interest in aid is both selfish and philanthropic.

My. hon. Friend the Member for Stroud (Sir A. Kershaw) who is the Chairman of the Select Committee on Foreign Affairs mentioned overseas students. We must never neglect them. If overseas students come to Britain and learn to use British equipment, they will want to buy British when they return to their countries. I fear that we have been very short-sighted about overseas students.

There are potentially two areas of considerable waste. I hope that my right hon. Friend the Minister will give them his close attention. I welcome the remarks made by my right hon. Friend the Prime Minister on 26 October 1981 about the Mexico summit meeting. In column 557 of Hansard, she said that aid should be concentrated on the developing countries so that they grow more food for their people and generate self-help.

There is a great need for education in some of the Third world countries if they are to use aid to the greatest effect. When I visited India I was told about an American agricultural team which had shown an Indian village how to generate twice as much rice by using a particular form of paddy and they thought that the village could sell the excess and buy luxury items. The following year the team discovered that, instead, the village had planted only half the amount of paddy and were cultivating the same amount of rice. The villagers were not interested in anything beyond that.

There can also be great waste when aid is given to Governments. I welcome the Prime Minister's commitment that aid should be given to people not institutions. When I visited Afghanistan—in case hon. Members leap up to intervene, I should add that I visited it before its unhappy occupation—I went to the north and found that many people were dying of malnutrition. Both the Soviet Union and the United States of America had poured in a massive amount of aid but it had got no further than Kabul, because it was sold by the Government to the highest bidder. It never reached those in greatest need.

We should concentrate aid on the poorest countries. That has been said many times, but the poorest countries are the potential breeding grounds for dissent and revolution, for the spread of Marxism and for military interventions by other nations. That is one reason among many why we should concentrate aid on those countries. In the end, who will make the global decisions about aid to the poor countries? Brandt, the Cancun conference and a host of other organisations have said that ultimately it all comes back to the United Nations.

I question whether the United Nations as constituted is a proper body to make those decisions. It is nothing more than a forum for Governments to articulate their own prejudices and end up without coming to conclusions. The only way the United Nations can be made a more proper body is to try to introduce into it a parliamentary element. Many in the House subscribe to the Parliamentarians for World Order, which believes that we must try to achieve that goal to enable the United Nations to reach proper answers to these grave problems. Those of us who believe that the ultimate answer is through a system of enforceable world law have to direct our attention very much to that end. We can have debate after debate on the amount of aid and on the countries to which it goes, but if ultimately we have not worked out institutions to ensure that it goes to those most in need we are debating in vain.

8.21 pm

Mr. Eric Deakins (Waltham Forest)

I agree with a number of points made by the hon. Member for Anglesey (Mr. Best), particularly his reference to the great public interest in this issue. We have not seen so much of that interest in recent months since the Cancun summit, which was a great disappointment to the many people round the world and in this country who take an interest in this subject. Nevertheless, it is there beneath the surface. If there had been more notice of this debate—in the nature of a Supply debate it is difficult to give more than a few days' notice—there would have been quite a large lobby and many people would have asked their Members of Parliament if they would attend.

I do not agree with the hon. Member's attitude to the Government's record on overseas aid. In his opening remarks the Minister was a little disingenuous, but perhaps all Ministers have to be from time to time when they do not have a good case. He gave the cash figures. Even on those figures there was a slight decrease, but in real terms it is rather more. Although £1 billion sounds a great deal in cash terms, it diminishes year by year.

The Minister said that the Prime Minister's credibility in this matter was extremely high in the world, but I must disagree. I have not travelled as much as the Minister, but I can think of countries where the Prime Minister's credibility is probably extremely high—Turkey, Chile, Argentina, Guatemala and perhaps even El Salvador. I am not sure that I should be proud to have Britain's name held high by the Governments of those countries. One needs to have regard to the moral attitude that one is adopting in the world as well as this realpolitik attitude.

In these debates and in our discussions we always tend to compartmentalise aid. Aid and development have implications for all our policies. I want to point out some of the links. Starting with our domestic policy, we all realise that trade and industry are dependent upon trade with poor countries. I do not want to labour that point, which has been made already by other hon. Members. I agree with my hon. Friend the Member for Fife, Central (Mr. Hamilton), who said that he would not support any policy by any party which had the effect of raising more obstacles to trade by Third world countries with this country or any other industrial country. We may have serious problems, but I do not agree with the Minister or with the attitude of the Government that our economic problems are in any way comparable with those of the poor countries.

I should like to take a rather unpopular line by saying that there are links between aid and development policies and economic policies. I am not thinking merely about whether we expand the economy. All parties—I stress "all" without exception—are dedicated to faster economic growth. Not merely is faster economic growth in a rich country immoral, although I shall not go into the point now because it would take too long to explain why, but it is going to become increasingly impracticable.

As the right hon. Member for Daventry (Mr. Prentice) said, faster economic growth in a rich country increases the gap between rich and poor countries, and there is no way in which the poor can catch up. Also, it ignores the fact that economic growth, fast or slow, in this country as in many other industrial countries is based on a disproportionate share and use of the world's natural resources. The United States, with 6 per cent. of the world's population, uses 30 per cent. of the world's natural resources each year and no doubt will continue to do so. That cannot be fair, even though the United States is a very powerful country.

There is also a great waste of resources in this country. I refer not merely to the fact that the Government are throwing away the valuable benefits of the natural resources of North Sea oil and gas on paying unemployment benefit and things like that, but to the fact that we live in a wasteful society in which there is still conspicuous consumption, in spite of the recession. It would horrify many in the Third world to see it, just as it would have horrified many of our rather frugal forebears in the nineteenth and earlier centuries.

If we are to help the poor, ultimately we have to readjust our economic expectations of what the Government and society can do for us. The years of continuous economic growth and rising living standards on average for the people of this country and other rich countries are gone for ever. We shall have to learn to live with low or nil growth and cope with the consequences. That will require policies of equality and redistribution.

In our education policy as well we ignore Third world developments at our peril. We have abandoned the programme of development education. A paltry few million pounds is spent on it compared with the amount for armaments and things like that. Even the £150,000 per year which the Minister kindly gives to the Centre for World Development Education, in which I plead an interest, because I am on the council, is under threat. Our efforts to raise money from our own resources are only getting off the ground slowly.

I do not think the Government are interested in development education; this is wrong and not in their interest. If the Government want popular support for aid and development in the Third world they must have informed public opinion. That means educating the children in school. The general attitude of turning our backs on the world's poor fosters attitudes of racism. That can be overcome not merely by development education in schools, but by multi-cultural education. Development education and multi-cultural education are two sides of the same coin and they will safeguard the future for any Government who wish to take aid and development seriously.

Mr. Brocklebank-Fowler

Does the hon. Gentleman agree that, just as it may seem sensible for assistance for overseas students to be paid for out of the aid budget in future, so it might be worth while for the Government to examine the practicability of funding the CWDE out of the education budget? It can be argued that that is more properly the responsibility of the Department of Education and Science. No doubt the hon. Gentleman will agree with me that that is a fundamental part of our domestic education.

Mr. Deakins

I hope the Minister will take the hon. Gentleman's point on board, although he cannot answer it tonight, because it represents a fundamental change.

The last link between our aid and domestic policies is population. We are very good at telling the rest of the world, rightly so in poor countries, that they must restrict the growth of their populations. In Britain we have no population policy at all. The Government's attitude is that the population can reach whatever level it wishes and the Government will try to cope with the consequences. That is wrong. One extra child born in the United Kingdom will, during its lifetime, consume between 20 and 30 times more of the world's natural resources, than a child in India, Bangladesh or Tanzania. Therefore, when we are trying to cut the populations of poorer countries, we should bear in mind that for every 20 or 30 that they cut we should reduce our population in proportion. It would be good to have a Government who took seriously for once the idea of an optimum population in Britain, which should be much less than the present 56 million.

There are also links between our aid and overseas policies. Many hon. Members have said that development and aid in the Third world help to promote stability if we put our full backing behind the appropriate country. We must widen our definition of human rights. The concept of human rights is one not only freedom of speech and freedom from arbitrary arrest and torture, but freedom from hunger. That is a more basic human right—because one cannot survive without the other—than freedom of speech. I hope that the Government and all who speak about human rights will bear in mind that there are more fundamental human rights than freedom of speech. One must have the freedom of life and the freedom to grow up without one's genes being incapacitated because one's mother did not have proper nutrition.

We must also be clear about the sort of aid policies that we should pursue as part of our foreign policy. Some countries have popular Governments. They may not always be democratic in the Western sense, but those who visit such countries know that, by and large, the people support the Government. Our priority, within the limits of our aid budget, should be to help those countries. The collapse of countries such as Tanzania, which has a popular Government, Costa Rica, which is one of the few democracies south of Mexico, and other such countries would be a blow to democracy and would open the way to the sort of Communist infiltration and subversion about which the United States of America always talks. We have the remedy to aid not only our friends but Governments and political systems in poor countries which will be poles of attraction for other countries that are seeking their development paths. We do not wish to have Cuba as the only pole of attraction, but Costa Rica, Nicaragua and other such countries.

There are difficulties when we apply the principle to Governments that are based on repression and social injustice. I do not know the answer, but I hope that the Government will accept that there is a problem about aid going to many of those repressive countries. We cannot be certain whether the aid will get to the ordinary people, let alone to the poorest people. How can we achieve social reform in those countries? I do not know, but it should be an objective of our foreign policy as well as our aid policy to take those points on board.

The last link between aid and overseas policy is defence. If there is instability in a country because of poverty, social injustice and oppression, it will lead, as in many countries today, to guerrilla activity and civil war. Such war will unquestionably, as in El Salvador, begin to draw in the great powers or their surrogates, either directly or indirectly. We must show that we are concerned about world peace. We can ensure stability by using aid and economic development.

We undermine peace in the policies that we adopt—I do not blame any particular Government, because it goes on under all Governments—for arms sales to Third world countries. I do not say that we should abandon those arms sales altogether, but with our partners in the EEC and America, and all the countries that sell arms, we should try to restrict those sales and not send them to repressive and socially unjust Governments. The arms trade wastes not only our resources but the resources of the poor countries that purchase them. It serves to increase tension in the world.

We must take disarmament negotiations much more seriously than any British Government have done in the past. The negotiators are buried in Geneva and Vienna and no one pays them the slightest attention. Many Question Times can go by without a question being asked about the negotiations. We neglect them, but we must take them seriously if we are to decrease the world's arms spending. We could do much more to help peace, stability, aid and development by trying to strengthen the United Nations peacekeeping role. It might become a substitute for poor countries spending so much money on arms to protect themselves against the ambitions of their neighbours.

Finally, the politicians and the people of Britain must widen their perceptions of what goes on in poor countries. We should regard them not merely as recipients of crumbs from the rich man's table, but as fellow human beings who have much more urgent and worrying problems than we have. During the next few years all our policies must acquire a Third world dimension so that we can consider genuinely the interests of people in poor countries as well as the interests of British people. We all have a mutual interest, as Brandt stressed, in the survival of the human race. If this debate contributes to that end, it will have served a very useful purpose indeed.

8.35 pm

Mr. Neil Thorne (Ilford, South)

I am very interested to hear this debate which has certainly been wide ranging. It was especially interesting to note that the Opposition Front Bench castigated us for this country's contributions and those of the United States, but said nothing about the contributions by Russia, China, or some of the oil-rich States which not so long ago were themselves recipients and could now well afford to play a major contributory part.

The Opposition claim all the credit for what the Government have done even though the record of not only this but of previous Conservative Governments has been markedly better than that of the Labour Party in office. Although the Labour Party has persistently demanded a target in aid of 0.7 per cent. of the gross national product, in 1964 it was 0.52 per cent., in 1978 it was only 0.46 per cent., and then in 1979 it was back again to 0.52 per cent. Moreover, in no intervening year did it reach a higher proportion, so, as usual, the Labour Party's words speak louder than their deeds.

Our performance in exceeding the other United Nations' target measure of 1 per cent., including private funds, is excellent. Why is that figure ignored by the Opposition? Is it because they cannot bring themselves to pay tribute to the private sector under any circumstances? Or is it that they only believe that the State counts? I deplore the recent reduction in the aid target, but l accept that it is difficult to expand anywhere in times of severe economic difficulty. The first responsibility of Government must be to put the country back on its feet.

It would be quite wrong to limit our consideration to cash aid, whether national or private, including loans. In my view, it is more important that we should pay particular attention to education and technology. Our education system is still the best value in the world, and I am not so pessimistic about the increase in overseas students' fees as some of my hon. Friends, especially my hon. Friends the Members for Stroud (Sir A. Kershaw) and Anglesey (Mr. Best). There are special facilities for subsidising those from Third world countries; while those who come privately or from industrial or oil-rich countries outside the EEC will pay their full share instead of relying on the British taxpayer to pick up the bill.

Technology is certainly an area of great opportunity. Recipient countries are able to benefit from the latest designs, and in return a future market is assured for our products in both initial supplies as well as spares and renewals. That is certainly the procedure that has been adopted by the French, and I think that we should take a leaf out of their book.

I am delighted to hear that the Commonwealth preference still applies to aid, and I understand that three-quarters, of the 70 per cent. of aid which is directly placed goes to Commonwealth countries. However, I should like to indulge in a special pleading. My right hon. Friend the Minister will not be surprised when I advance the cause of Nepal. We have had a special relationship with the Nepalese for a long time and they have supported. us through thick and thin, especially during two world wars. On my way to the House today I passed an Army 4-tonner full of Gurkha Nepalese on their way home from Buckingham Palace where they are at present performing their annual Sovereign's guard duty. Ever since our relationship began we have been a more prosperous nation than they, but the gap has widened considerably in recent years. I would hope that we could devote more of our efforts to helping them. They need more roads in a terrain that is such that they have to arrange their school year into two terms so as to give the children five days to get to school and five days to get back at the end of a term because very few motorable roads reach the villages. After they have left the roads it often takes several days to walk the rest of the distance.

The Nepalese also need better water supplies. It is not unusual for a housewife in Nepal to have to go 2,000 ft down to a spring every morning and climb up with water needed for the whole day. That is a considerable distance. There are many ways in which we can help. I hope that we shall examine the possibility of giving the Armed Services, particularly the Royal Engineers, an opportunity to gain experience by providing such aid. It would be very good experience and well worth while.

The Nepalese also need educational aid and help, including development guarantees, to develop the enormous potential of their tourist industry. British companies are both well respected and well received by the Nepalese, and I hope that they will be in the forefront in trying to carry out such developments. They will certainly need financial backing, which I hope the Government will provide.

I similarly ask my right hon. Friend to re-examine the pensions paid to Second World War service pensioners. An increase would be a direct and positive way to provide aid where it counts most—right into the villages. Incidentally, before Gurkha pensioners return to their villages they are taught medical skills, which are essential in communities perhaps two or three days away from the nearest qualified doctor. Often the best help available in emergencies can be provided by a pensioner medical orderly.

Those who retired after their service in the Second World War have been caught in what we in this country call a poverty trap, because of a tripartite agreement with India, which took over responsibility for some of the Nepalese units on receiving its own independence. We promised to march in step with India on the pay given to the Nepalese soldiers, which included pensions. Unfortunately, the value of some of the pensions is now so small that they are hardly worth collecting. I trust that my right hon. Friend will look again to see what can be done.

Many people decry our defence expenditure, but it is an aid to international stability. There is no doubt that if there were another world war the world's poor would be among the first to suffer. Therefore, it is ridiculous to suggest that we should lay down our defences to help the Third world. We would do much better to impress on the Iron Curtain countries their duty, too, and agree to a multilateral reduction of arms, and ensuring that the resultant savings are used in aid.

Several Hon Members

rose—

Mr. Deputy Speaker (Mr. Bryant Godman Irvine)

Five hon. Members wish to catch my eye. The Front Bench speeches will not start until 9.15 pm, but I am sure that brevity will be appreciated.

8.43 pm

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

Apart from aid, which is the subject of our debate, the key policy questions for both the United Kingdom and the developing world as a whole are questions about trade and investment, to which several hon. Members have referred. Therefore, those matters need to be integrated with policies on economic management as a whole. Development policy must be put in the context of the global economy, rather than treated, as it so often has been, as no more than a minor extension of aid policy.

For those reasons I deplore—notwithstanding my personal regard for the Minister for Overseas Development—the fact that when we debate these matters we do not attract to the debate more than 40 hon. Members from all parts of the House at the peak of discussion, and never attract Ministers from any of the key economic Departments or from the Foreign and Commonwealth Office itself. That is a shame, because we on the Opposition Benches take as a starting point the view that the recession in the United Kingdom economy cannot be reversed by domestic policies alone. Depending upon the precise mix of fiscal and monetary policy chosen to increase the level of domestic demand, any increase in the level of activity is likely to raise the demand for imports and switch resources from exports to domestic production.

We assume that a rise in the level of economic activity in the United Kingdom will be accompanied by deterioration in the balance of payments and, possibly, the elimination of the existing surplus. It is all the more important, therefore, that domestically induced expansion of the British economy, when it comes, is accompanied by global expansion. Only then is it likely that drastic adjustments in the exchange rate, and all that that implies for domestic inflation, can be avoided if external equilibrium is to be roughly maintained.

In this way we argue that there is a direct relationship between domestic economic policy concerned to raise the level of activity and reduce the level of unemployment, on the one hand, and, on the other, international economic policy designed to expand the global economy in loosely synchronised fashion.

Steps must be taken by the international community to increase the import capacity of developing countries. It has to be acknowledged that the proportion of British manufactured goods which go to the developing world is substantially less than that which goes to Europe and the United States.

However, we ought to bear in mind the fact that the balance of payments advantages of exports to the developing world is substantially in our favour. In 1980 it amounted approximately to the total balance of payments on current account. I argue that this constitutes an important reason for not ignoring the developing world in the process of re-establishing expansion in the global economy.

Although I do not endorse the concept of making the developing world the sole or principal growing point of the expansion of the international economy, I believe that the Brandt commission is right to argue that it would be morally right, as well as politically and economically sensible, to give the developing world an important part in the process of global expansion. The potential markets are large in absolute terms. They are often for goods that are relatively intensive in the use of labour though incorporating substantial human capital.

A proportion of manufactured imports is essential if developing country exports of raw materials are to be maintained and to grow. On those grounds I believe that a positive policy on the expansion of the import capacity of the developing countries is inalienable from policies designed to expand the British domestic economy.

I would number them as three. The first is trade liberalisation. I acknowledge immediately—the Minister will agree with me—that it is not possible for the United Kingdom as a member of the European Economic Community to liberalise unilaterally, even if it were politically or economically prudent. It is in British interests, as many more British manufacturers recognise, for Britain to use its influence to this end in a multilateral context.

The effects of trade liberalisation and the improved access of developing countries to richer world industrial markets would be to moderate inflation by reducing the cost of some goods which would be of benefit to the British consumer. It would create demand by enabling developing countries to earn hard currency, to which many contributors to the debate have referred. It would require Governments to consider more carefully support for and indeed partnership with British industry during the period of adjustment which might follow.

I am arguing for the possibility of developing countries being encouraged to increase their export earnings and at the same time for the British Government to have a greater partnership with British industry to enable it to improve its technology and move into more advanced fields and to sell the goods and services in the developing world.

A second major area is that of commodity price stabilisation, to which the hon. Member for Fife, Central (Mr. Hamilton) referred. It is important that we make progress to establish stability in world commodity prices so that developing countries can begin to show a real return to the producers of the products which they seek to export, who too often are subject to the risk of wildly fluctuating exchange rates.

The third important area to which many hon. Members have referred is investment. The Minister is wrong to suggest that private investment can replace aid as an important part of the restructuring process, particularly in the poorest countries. However, in threshold and less poor countries great encouragement should be given to the private flow. I urge the Government to give a high priority to increasing the number of investment protection agreements with the developing countries, perhaps in return for a bilateral code of practice to ensure that companies operate on terms fair to themselves, their shareholders and the countries in which they operate.

The final part of the mix of trade liberalisation, commodity stabilisation and investment is the aspect of aid which we are debating more specifically. Aid to the poorest countries offers the only possibility to many to establish an infrastructure and gradually to improve their people's lives from standards below those which we recognise as acceptable in the West.

We are seriously concerned about the fact that the Government have given trade and investment far too high a priority—although even in those areas they have not gone far enough—compared with aid. However much the Minister defends the Government, it remains a fact that they have savagely cut the aid programme in real terms—on some estimates by as much as 11 per cent. or 12 per cent. this year.

In his unusually unhelpful, defensive and self-congratulatory speech, the Minister showed no imagination, sense of urgency or commitment. He was defending a programme of substantially reduced aid. It is no good for the Government endlessly to mouth the magic figure of £1,000 million. It shows their failure to control inflation more than any success in persuading the Prune Minister to be generous to the poor.

Therefore we shall vote with the official Opposition. We have some regret. The motion is immoderately phrased, but the point is fair. We are determined to achieve at the earliest opportunity a transfer of official development resources of 0.7 per cent. of GNP.

8.53 pm

Mr. Bowen Wells (Hertford and Stevenage)

It is no surprise to the House to hear the hon. Member for Norfolk, North-West (Mr. Brocklebank-Fowler) speak so eloquently and passionately on a subject which he has espoused with great enthusiasm throughout his time in the House. The House respects his view.

It is dangerous for a Government to forget the idealism innate in the world and particularly in Britain. Most people in Britain will respond if one describes the way in which the people whom we are considering live. Mr. McNamara, the president of the World Bank, once described it as a condition of life so limited by illiteracy, malnutrition, disease, high infant mortality and low life expectancy as to deny the victims the potential of the genes with which they are born. The hon. Member for Waltham Forest (Mr. Deakins) also referred to that description, and it was mentioned in our previous debate in July. I make no apology for repeating it. The speech of the hon. Member for Waltham Forest was dignified by the great idealism that he always displays on these occasions.

It will come as no surprise to my right hon. Friend the Minister to learn that I, amongst others, am very disappointed that it has been found necessary to decrease the overseas, development budget for 1982–83 by £26 million from the previously planned figure. In the report of the Select Committee on Foreign Affairs on Brandt, and in my speech on 24 July, I called for a modest restitution of £63 million to the aid budget, which I wanted to see used for the Commonwealth Development Corporation. The Government, in their reply to the Select Committee report, said: The size of the United Kingdom's aid programme must depend in large part on the strength of the United Kingdom's economy. When the health of the economy improves the Government hope they will be able to do more. It is to that promise that many Members will wish to hold Government.

One of the things that drove me into politics in Britain, and a reason why I am not working overseas for a cause in which I passionately believe, as others do, is that I believe, with the Government, that the most important single thing that Britain can do for the developing world is to strengthen its own economy. To do so it is vital that we apply ourselves to the disciplines imposed by the private enterprise system and move away from the Socialist planned State, which impoverishes not only Britain but large parts of Eastern Europe, and, regrettably, large parts of the Third world. To become more prosperous Britain has first to make a political decision in favour of a capitalist system. From that decision Britain could expect to provide better for its people, but also for all those who trade or work with us and who are our fellow human beings.

How does a prosperous Britain help developing countries? It provides markets for their goods and investment in their countries, which brings jobs and taxable profits to those host Governments. From those taxes they can provide the welfare and infrastructure that are needed to build up the economies of their own countries. Britain can afford to train more people from the Third world in its universities and schools. It is this kind of self-help that the developing world is demanding.

In many ways it is insulting to continue to speak in terms of aid. The developing countries are not demanding, or expecting, to receive the crumbs from the rich man's table. They want the dignity of working for themselves and building up their own countries in their own way. It is a disservice to continue to use that term and I am glad that we use the better term "overseas development budget".

The Government are right to put the emphasis on getting the British economy right even if it means temporarily cutting the overseas budget. Britain's lack of prosperity has led to cuts in student grants and the imposition of import controls through the multi-fibre arrangement, often supported by Members of both sides of the House who have textile interests in their constituencies. That is understandable, but shortsighted.

When we debate the multi-fibre agreement, how often do we hear the voice of the many people who buy textiles? They are usually silent, so I was glad to hear many hon. Members make the point today about the necessity of the Third world to sell and the need for open trade practices. These are things which we can provide which do not cost us money but for which we must plan to make certain that our industries adjust.

I shall continue to argue that the way out of our current unemployment problems is to increase opportunities for trade and for both public and private loans to the developing world. These provide jobs for the Third world and the incomes to purchase more goods and services from Britain, thus creating more jobs in Britain's factories and commercial houses.

An example of that is our contribution to the United Nations development programme of $34.5 million. It has generated orders and jobs totalling $47 million, of which $16.2 million is spent on equipment, $12.8 million on consultancies and employment of consultants, and $18 million on students. That is how Britain benefits from what is described as the aid programme. More money is spent in Britain as a result of our contributions to international agencies, with the one exception of the European development fund, which was mentioned by the hon. Member for Greenwich (Mr. Barnett). With that exception, Britain benefits disproportionately from the world aid programme. That matter should constantly be driven home.

I must tell my right hon. Friends, therefore, that they have chosen the wrong target when they cut aid disproportionately. That cut has succeeded in souring our relations with Third world countries, as no doubt my right hon. and noble Friend the Foreign Secretary will have learnt at first hand last week in Kuala Lumpur. It will be interesting to see whether the charm of my hon. and learned Friend the Secretary of State for Trade can convince the Indonesians that, in spite of a stricter multifibre agreement, they should continue to buy British. They objected before, and we lost orders worth many times in job and cash what Indonesians textile exports would have cost Britain.

However, I accept the reality of the situation. I know that many of my friends overseas understand our predicament. How can I argue for increased cash for aid when my schools do not have enough textbooks and chalk, and when there are not enough nursery schools or welfare helpers? We are faced with a real dilemma. It is easy to cut the aid budget, because those who receive it do not vote in this country.

I cannot end without congratulating my right hon. Friend on the way in which he supported the Commonwealth Development Corporation in the settlement that he made, thus assuring its future. It is through that corporation that we create the most positive form of development, by investment and the creation of jobs and profitable enterprises in those countries. However, that cannot be achieved without the assistance of the grant money that we give in our aid programme. I give credit to my right hon. Friend, because the large majority of our aid budget is in that form. We should co-ordinate that grant sector with profitable investment, so that we create socially and politically profitable enterprises with British expertise. That is the way forward.

We need a Conservative aid programme, first, to provide trading opportunities, by reducing inflation and adopting policies to strengthen the home economy. Secondly, we must maintain as free and open a market as possible. Thirdly, we must encourage private investment overseas and public investment in infrastructure programmes related to the establishment of profitable enterprise. Fourthly, we must increase funds available to the CDC and develop it into a major arm of Government policy to assist private and public investment. Fifthly, we must reform the international monetary system, of which the right hon. Member for Lanark (Dame Judith Hart) spoke. Finally, we must continue support for multilateral agencies for development.

That is the path that we follow to grasp the idealism that exists in Britain. It is the way out of the recession and unemployment that exist in Britain. It is a way in which we can start to solve the world's problems of hunger and poverty. I believe that it is the path that Britain wishes to follow.

9.4 pm

Mr. John Sever (Birmingham, Ladywood)

The House will have been disappointed this afternoon by the Minister's statement. It was ponderous, unadventurous, and defensive. It was born, of course, out of a discredited policy and out of a discredited set of ideologies handed out to him doubtless by his right hon. Friend the Prime Minister. He appeared very uneasy when presenting that brief because the measures he presided over and the policy he has adopted lately have done little if anything to encourage hon. Members on both sides of the House. They wanted the Government to play their part—as was intimated by his right hon. Friend at international conferences—in defending the interests of the Third world, of the underprivileged and of those in developing countries.

A considerable economic crisis faces the Third world. Average incomes are very low. Average life expectancy is unacceptably low and below that of the developed and developing world. The Third world's disadvantages can be understood from considering a range of topics. The Minister seems to offer it little today. I thought that he would be in the forefront of doing all that the Government could for those in greatest need. The whole tenor of his contribution today was very disappointing.

The Government have taken a negative approach on tackling Third world problems, despite their assurances that everything would be done to try to improve the lot of those most disadvantaged and underprivileged in developing nations.

We heard ideas this afternoon, primarily from Government supporters, about private investment and enterprise which might assist in aiding the problem. However, I want to know where the evidence is for the argument that capitalism—in the Western sense—means that people are running round the Third world doing anything positive to bring about improvements. It is no good arguing that private investment will correct the matter or suffice because it clearly will not.

The aid and assistance that Governments of developed nations such as our own can give are far more valuable than some of the platitudes we have heard about the probable private investment that will flow from Eurodollars and the West in general.

The Minister of State should know about a miniconference—not a summit meeting or exciting discussion—that recently occurred in Birmingham, Ladywood. It was held in my friend's sitting room. He is an established community leader among the Ladywood Indian community. He, I and a few friends from India, Pakistan and some other South-East Asian territories simply argued—as was earlier suggested—that we should not be throwing money at the problem but recognising that Britain and many other countries are better placed than most to do something about the difficulties encountered by my friends in Ladywood and their relatives in the Third world.

We simply say that not enough has been done so far or promised this afternoon to bring about an improvement for the people in developing nations. At that meeting, we said that it would be a good idea for the Government to recognise, even at the lowest level, that there would be something in it for them and us if we invested development money in the Third world. As hon. Members said this afternoon, in speeches far more eloquent than mine, we shall sooner or later be able to expect a dividend. The growth of these nations' economies and the independence they will achieve from economic stability, infrastructure growth, education and the rest of our programmes will result in economic progression.

We must accept to some extent that our economy will not grow to the size many political leaders have promised over the years. However, economies in the Third world might and they would then be able to buy British-built motor cars and heavy engineering from the Black Country and the other industrial production centres of Britain. If we can encourage their growth and development they might manage to do that before we go bust. I should have thought that the Government would find some comfort in that lowest level of the argument for finding a few more pennies for the developing world.

I had prepared what might have been a reasonable speech, but I am aware of the stricture of the hour and I do not wish to delay the reply to the debate. I wish to put forward for the Government's consideration one or two measures which would not cost a great deal of money but which might improve the situation generally.

First, the Government should abandon their shortsighted opposition to attempts to stabilise earnings by arguing for discussion at UNCTAD of proposals to allow the Third world a larger share in the processing of raw materials. I should have thought that they could involve themselves in that at little, if any, cost and thus offer some substantial help.

Secondly, the Government could allow their IDA contribution this year, which I understand is already deposited, to be spent on countries such as India which have been forced by the shortage of funds at their disposal to go to the IMF and other international moneylenders for assistance.

Some of these measures, of which the Minister is well aware, are relatively easy to implement, will cost the Government virtually nothing and will bring about a ratio of improvement which far outweighs the effort involved. I hope that the Minister will give favourable consideration to them.

Private capital has been mentioned several times in the debate. In 1980, only 9 per cent. of private capital from. the United Kingdom to the developing nations was in direct investment. Sixty per cent. was in bank lending, and some two-thirds of the outstanding loans were to l2 countries only.

I asked the Minister in an intervention whether he agreed that private capital and investment went primarily to those countries that were developing best. I cannot put the argument any more simply. The countries that are not developing, that are having the hardest time and in which progress is being slowed down, are not getting the money that Conservative Members allege is readily forthcoming. I do not accept that it is forthcoming. I hope that the Minister will deal with that.

I am aware of the shortage of time, so I shall conclude as I began. What the Minister said this afternoon is not good enough. Our friends around the world who look to Britain for a lead to help those in greatest need will have been sadly disappointed.

9.13 pm

Mr. David Crouch (Canterbury)

rose—

Mr. Deputy Speaker

Order. I am not sure whether the hon. Member for Canterbury (Mr. Crouch) was in the House when I announced that the winding up speeches would start at 9.15 pm.

Mr. Crouch

I realise that that time has been agreed through the usual channels, Mr. Deputy Speaker. I shall make an abbreviated speech.

I have sat here for more than five hours today and I have attended just about every overseas development debate since 1966. I initiated the first debate on the Pearson Commission's recommendation of the 0.7 per cent. target, when we had a six-hour debate and carried the day. I still believe in that 0.7 per cent. target. I am glad that the Opposition accept that target in their amendment and that they recognise that the Government also believe in it.

All that the Opposition are saying in an over-stated and over-complaining motion is that we should hasten rather than slow down progress towards the 0.7 per cent. target. The Opposition may have over-stated their criticism, but the Government, by their response in the amendment, may have under-stated the seriousness of the position. If I did not support the Government tonight I might turn out to be assisting them. I am not against the Government's policy—I am just disappointed with it.

Hon. Members have said that there is great interest in the Brandt Commission report. During the Cancun conference my constituents wanted me to ring the Prime Minister, not in Downing Street, but in Cancun, and they offered to pay for the call. They thought that the matter was so serious that I should draw her attention to their feelings about it.

There were, of course, other views. One met the so-called "shop-keeper mentality" of so many people in this country, who wanted to know about neither aid nor Cancun. Many thinking people, represented by a great many thinking hon. Members here tonight, wanted to know about Cancun and wanted something done.

I am glad that the Government believe in aid, that they recognise the responsibility of the richer nations to help the poorer nations, and that they regard aid not as a charity, but as a vital economic social and moral duty.

A total of £1,000 million is no mean figure. The Government have said they would like to provide more, but they argue—this is what the Opposition complain about—that we must first correct our own economic troubles to enable us to contribute even more effectively to the development of the poorer nations. Many hon. Members have said that that is right, but I question that. We cannot use that simple solution on a complex and critical problem. Should we make ourselves richer first? Should we overcome our own problems before we help the Third world? Should the Third world wait? The needs of the Third world cannot wait. Time is not on our side. If aid from the industrial world is restrained and does not grow in this decade, the gap between the rich and the poor nations will grow.

That great man who has now retired, Mr. Robert McNamara, said in the World Development Fund report last June that the income gap between the richest and the poorest countries will continue to increase". That was his summation. Dare we let that happen? We should think of aid not solely in terms of what we can afford, but of what is essential. As the industrial world races ahead in this new age of science and technology, as we increase and develop our resources, so we are in danger of still further increasing the gap and leaving the poorer nations far behind—perhaps too far. We must pause and consider again the whole question of aid and whether we dare let our aid decline.

9.17 pm

Mr. Frank Hooley (Sheffield, Heeley)

Two great issues of foreign policy will dominate the last two decades of this century. The first is nuclear weapons and disarmament and the second relations between the richest and the poorest people in the world. The first concerns the survival of all of us. The second concerns the survival now for 800 million people who live literally on the edge of starvation, many of whom are dying from hunger at this moment.

The debate has thrown up a number of themes. My hon. Friend the Member for Glasgow, Queen's Park (Mr. McElhone) dealt fiercely and effectively with the subject of cuts, but it is interesting that hardly any hon. Member made any defence of the cuts in aid, amounting to 11 per cent., announced recently by the Minister. In fact, a former Minister of this Government, the right hon. Member for Daventry (Mr. Prentice), said that he would not be supporting the Government on this issue. The hon Members for Chichester (Mr. Nelson), Anglesey (Mr. Best), Ilford South (Mr. Thorne),Norfolk, North-West (Mr. Brocklebank-Fowler), Hertford and Stevenage (Mr. Wells), and all my hon. Friends have condemned the Government policy of cutting the aid budget.

The second theme is that of interdependence. The shadow of Brandt has been over the debate in that respect. Whether we are referring to trade, commerce, industry, defence, or even policies of high interest rates and deflation, the links with the developing world and the interests of the Third world recur over and over again, and these points have been made repeatedly by hon. Members on both sides of the House.

The next theme was the interlocking nature of the problem as between Government Departments within our own Administration and our own society. The hon. Member for Anglesey and my hon. Friend the Member for Waltham Forest (Mr. Deakins) spoke of the need for coordination in our relations with the Third world not only involving the Foreign Office but also the Departments of Trade and Industry to make sure that, at all points of Government, the policies that we follow towards Third world countries have some relevance and some sense in relation to our domestic policies. My right hon. Friend the Member for Lanark (Dame Judith Hart) and the hon. Member for Chichester made interesting speeches about the problems of debt and the flow of capital towards Third world countries. I shall come to some of these points later in my own speech.

The issue of trade has dominated the debate. The Minister himself laid great emphasis on the importance of trade. The hon. Member for Liverpool, Edge Hill (Mr. Alton) also referred to the matter, as did my hon. Friend the Member for Waltham Forest and the hon. Member for Norfolk, North-West. A false distinction is made in the arguments over protection and the liberalisation of trade. It is possible and feasible, in my opinion, to expand trade in a planned manner. In international affairs, the idea of planning and international agreement in trade matters rather than a totally free and uncontrolled flow is gaining ground. The prototype is the multi-fibre arrangement. I know that the arrangement is not beloved of Third world countries. I am also aware that enormous pressures are building up in Europe in relation to Japan, in Japan in relation to the United States, and in the Third world countries in relation to the great industrial markets.

The notion that liberalised free trade—whatever its economic attraction—will solve problems is politically not on. Those who talk in terms of liberalising trade and thereby solving the problems of the Third world are not talking political reality. While there is every reason for the expansion of trade, for the encouragement of trade and, indeed, for the encouragement of the manufactures of Third world countries to come into the great industrial markets of Europe, North America and Japan, this will not be done by a laissez-faire approach. There will have to be some planning, some control and some international agreement.

Another theme that has bulked large has been overseas students' fees. There have been two devastating critiques amounting to a damning of Government policy from the Conservative Benches. The hon. Member for Howden (Sir P. Bryan) and the hon. Member for Stroud (Sir A. Kershaw) to whom I apologise for leaving during his speech to have a sandwich—I am sorry that as a colleague of his on the Select Committee I did not hear his remarks—spoke eloquently and cogently of the crass stupidity of the Government's attitude in pushing up to ridiculous heights the fees for overseas students. Hon. Members on both sides of the House have set out the idiocy of this policy and the damage that it causes to our own interests, quite apart from its appalling effect on countries that for years have been friendly and well disposed towards us and which have been only too anxious to send their young men and women to our great educational institutions. Now we put obstacles in their way.

The question of commodities was raised by my hon. Friends the Members for Kingston upon Hull, West (Mr. Johnson) and for Birmingham, Ladywood (Mr. Sever) and by the hon. Member for Norfolk, North-West. This is an important issue to which I hope to have time to return.

The issue of arms and disarmament also bulked large. A penetrating and forceful speech was made by my hon. Friend the Member for Fife, Central (Mr. Hamilton) who pointed out the indecency of the fact that thousands, if not millions, of boys and girls in the Third world suffer from a curable blindness that a small amount of money could deal with. The amount is tiny and insignificant compared to the huge volume of pounds and dollars poured out in arms. My hon. Friend the Member for Fife, Central also referred to the obscenity of the arms trade, and to the fact that this country, among others, pours out weapons to Third world countries.

Two other more specialised matters were raised. My hon. Friend the Member for Greenwich (Mr. Barnett) made a cogent critique of the failings of the European development fund, and my hon. Friend the Member for Waltham Forest touched on the fundamental and important problem of population. What I found slightly odd was the lack of attention paid to energy problems, not the price of oil, but the technical problems that face the Third world countries in exploiting and developing their own energy resources. I do not want to be unfair to any hon. Member, but I made fairly extensive notes and I can recall hardly a single contribution on that important matter.

I wish to examine how we can mobilise and possibly reform the sophisticated machinery of international cooperation that has been built up over the past 35 years by the international community—for example, the World Bank, the International Development Association, the General Agreement on Tariffs and Trade, the United Nations Conference on Trade and Development, the United Nations Development Programme, the International Monetary Fund and others.

The World Bank has been described as the world's largest and most influential international development institution. That is one reason why, in the fifth report of the Select Committee on Foreign Affairs, we called for a substantial expansion of its role in the development effort. At this point, I take the opportunity to pay a compliment to my hon. Friend the Member for Kingston upon Hull, Central (Mr. McNamara) who chaired the Select Committee Sub-Committee on Overseas Development with considerable charm and skill. Although we shall miss him from that Committee, I congratulate him on his promotion to the Opposition Front Bench.

The undoubted prestige of the World Bank enables it not only to disburse its own funds of about $13 billion a year but to mobilise other donors and other funds, and there is no doubt about the desire of countries to borrow from it. I am glad to see that there is authorised a general capital increase from $37 billion to $75 billion. I should like an assurance from the Minister that the United Kingdom will play its part in making a pro rata increase in subscription.

The fifth report of the Select Committee referred to the importance of improving the borrowing-to-capital ratio of the World Bank—what is technically called "gearing". At the moment, that is an extraordinarily conservative ratio, by banking standards, of 1:1. We suggested that it should go up to 1.5:1, as suggested by Brandt, or preferably 2:1 as this would enormously increase the lending powers of the bank. Would the Government approve of a move in that direction?

Another important feature is for the Third world countries to play a much greater role in the management and running of the World Bank. Do the Government agree with that policy? It is extremely important because Third world countries are under-represented in the management, and their nationals are under-represented in the staff of the bank.

While I pay tribute to what the bank has achieved and can achieve, there are some worrying developments. The interest rate charged by the bank in June last year was 9.6 per cent. By December, it had increased to 11.5 per cent. I understand that it is now about 13 per cent., which is an appalling level of charge for the poorer countries which rely on its loans.

The bank recently produced a report called "Accelerated Development in Sub-Saharan Africa", a report requested by the African countries. It has attracted a great deal of public criticism because the tone seems to lay a good deal of stress on free market and free enterprise trends in the outlook of the bank and on the way the bank approaches some of the problems of the poorest African countries. The bank's analysis is complex and thorough, but the remedies it seems to be suggesting in the report are distressingly reminiscent of the sort of policies that have wrecked Britain's economy in the past three years, and of the type of idiocy that goes by the name of "Reaganomics". One can only suppose that such remedies would have even more disastrous results if they were applied to developing African countries. The report is also disturbing because one sentence refers to the African Governments and States: Without policy reform higher aid will be difficult to mobilise". That implies a threat. The bank is telling those countries that their economies should move in a certain direction. If they do not do so—to put it politely— higher aid will be difficult to mobilise". They will not get the money. I hope that it is not a threat. I hope that the bank will live up to the ideals of its most famous president, Mr. McNamara, as a much more liberalised institution to help the poorer countries.

Those who know more about such things than I are also disturbed by the apparent attitude of the new president, Mr. Clausen, in the economic policies which the recipients of the bank's money will be expected to follow. Hon. Members will no doubt tell me that what matters is not the bank but its alter ego, the International Development Association—the body responsible for giving soft loans to the poorest countries. In that respect, I shall quote from an important speech made by Mr. Clausen last September. He said: IDA is clearly a sound economic investment for the low-income countries. But it also is a sound economic investment for the nations contributing to IDA who will one day earn substantial returns on that investment through expanded trade. That economic fact of life had been demonstrated many times over in IDA's 20-year history". That is right, but unfortunately it seems to have fallen on deaf ears. Congress has cut its contribution to IDA by 25 per cent. by the simple expedient of extending the payment of money over four years instead of three. I am appalled that the United Kingdom should follow that bad example. There is some story that we have an alibi in that we promised to do what the United States of America does. That is silly—it is not a valid excuse. Sweden, Norway and Denmark have refused to follow that line and are not cutting back their contributions to the IDA. I tell the Minister and the Government most emphatically that it is extremely foolish for the United Kingdom to follow America's lead in this case. It will destroy orders and jobs in British industry and will penalise the poorest countries, which will be able to borrow far less.

Those developments within the World Bank and the IDA are highly dangerous and damaging. To some extent they arise from the stupidity of American policy. They are contrary to the Brandt analysis and to the spirit of Cancun. More seriously, if they are pursued to any lengths they will drive the Third world to create its own institutions, which may divide the international bodies that are now genuinely international in the sense of linking both the Third world and industrial countries.

If the World Bank and the IDA pursue a policy of high interest rates and a free enterprise economy and cut back on the soft funds available, the Third world may ask if that is right for them. Britain should not assume too lightheartedly that those countries have nowhere else to go. OPEC has vast funds at its disposal and its sympathies lie with the Third world. We should not discount the possibility that a division may grow up between those great institutions if the more illiberal policies take hold.

A similar problem arises with the IMF. A little while ago there seemed to be a tendency towards liberalising the IMF's conditionality and towards coming to terms with the Third world's genuine need for borrowing when in balance of payments difficulties. There is evidence of a reversal of that trend. America's bitter and unjustified oppostion to the great loan to India is in an example of that.

The rich countries of the world must make some move towards power sharing within the IMF. There must be a more generous allocation of the special drawing rights, an increase in the compensatory financing facility, and a restriction on the harsh conditionality terms that have been imposed hitherto. The West would be wise—in its own interests—to press on with creating a substitution account to take the strain off the dollar as an international currency. If we do not do that, "Reaganomics" will have an appalling backlash on Europe and on Britain's economy. I do not know whether Germany, the United Kingdom and the United States of America have any political will to develop such an account, but we shall regret it if we do not do so.

I shall touch quickly on the subject of energy, because I implicitly criticised my colleagues for not doing so. In many respects, energy is an integral part of the whole argument. The increased price of oil has created great difficulties for the poorest of the developing countries. We had hoped that, as a result of the meeting at Cancun, an energy affiliate of the World Bank would be created. I hope that that idea has not been lost and that the Government still support it.

Energy is an appropriate subject for debate in this House, because the United Kingdom is well placed to provide help for the Third world. Britain has great public corporations such as those for gas, coal, electricity and—if the Conservative Party does not destroy it—the British National Oil Corporation. They have enormous reservoirs of skill and technical knowledge, which could be made available to Third world countries to help them develop indigenous resources of gas, oil and coal. Thereby, we shall not only provide such countries with additional wealth, but will make an enormous contribution towards solving their balance of payments problems that press so heavily on them, because they have to import oil. In addition, Britain has a considerable technological expertise in solar, wind and wave power. Those sources will be of great importance in the twenty-first century, if not by the end of this century. Some Third world countries have great potential energy resources, but they need the capital and technical skill to develop them.

I do not have time to deal with the commodities market, but that is in an alarming state. The surge in the price of tin should warn Britain that we cannot write off lightly the potential of some Third world countries to manipulate the market in the minerals which are vital to our industries. The Government's approach to overseas students' fees—and the pettiness of charging for treatment under the NHS when they eventually get here—to the British Nationality Bill, to the cuts in the aid budget as well as their approach to many other aspects of aid is mean, petty, inadequate and dangerous.

We live in one world. We are interdependent. There is no way we can cut ourselves off or distance ourselves from the 2,000 million of our fellow human beings in Africa, Asia and Latin America. A Labour Government would increase aid and strengthen and reform international institutions. We would use the skill and technology of our public corporations and industry to help other countries. We would certainly abandon any pathetic belief that free market forces can solve these problems. We do not believe there is the remotest chance that such forces will bring the much-needed aid and succour to the people who live in destitution and face starvation.

9.41 pm

Mr. Neil Marten

With the leave of the House, I shall try to wind up the debate. May I first welcome the hon. Member for Sheffield, Heeley (Mr. Hooley) to the Opposition Front Bench, particularly at this time?

The hon. Gentleman said that no one defended the cuts. I was not sure that that was necessary. Surely everyone knows that the measures that the Government are taking are to promote the nation's economic recovery."—[Official Report, 15 December 1976; Vol. 922, c. 1525.] Those are the words that were used by the right hon. Member for Leeds, East (Mr. Healey) on 15 December 1976 when he announced his IMF package, when he cut aid by £50 million in the following year and £50 million in the year after that. Having just read that statement and the questions and answers that followed, I find it interesting that not one hon. Member from either side of the House raised the question of aid cuts. It is worth reminding the House that in spite of all the criticisms that we have heard today the Labour Party has done much worse than we have done. Of course, we all regret what has to be done.

The hon. Member for Heeley spoke about reforming world institutions. We are always interested in finding ways whereby organisations like the World Bank can provide larger amounts of money for developing countries without involving increased contributions from the donors. An increase in the gearing ratio would be one such method. An alternative would be an increase in the amount of callable capital. Our major preoccupation must be to get the general capital increase in place before considering further devices.

The hon. Gentleman referred to Mr. Clausen's speech in Tokyo recently. That speech is worth studying. He referred to the North-South expression which is used in the aid question. It polarises the issue—North and South. Mr. Clausen says that there are many more poles that should be in this. He wants to look at it in a multi-polar way—Europe, the new industrialised countries and various points. For anyone who is interested in the subject, his speech is worth studying.

The Cancun summit and energy were also mentioned by the hon. Gentleman. We are supporting the energy affiliate, provided that we can get OPEC funds attracted to it.

On Health Service charges, the hon. Gentleman said that we were being cruel to overseas students, but I have given an assurance to the House that when students come here on development courses paid for by the ODA we will cover their Health Service charges.

The hon. Member for Glasgow, Queen's Park (Mr. McElhone) asked why the Government had resisted the proposal at the Paris conference to give 0.15 per cent of the gross national product to the least developed countries. Admittedly we were the last to agree, but I was at the conference, and I can tell hon. Members that there was no great pressure. The Government were making quite sure in the negotiations that by agreeing to give 0.15 per cent. to the least developed countries we would not deprive countries such as India, Pakistan and Sri Lanka, which are not in that category, from receiving the aid due to them. That is a fair point.

The hon. Gentleman also mentioned bilateral aid. In 1980 that amounted to 0.06 per cent. of the gross national product, which was the same as in 1979. That made up 30 per cent. of the bilateral programme of aid to the least developed countries. The figures for 1981 are not yet available. The performance against the target of 0.15 per cent. of gross national product also includes multilateral aid. The donor country's performance against the 0.15 per cent. target for aid to the least developed countries includes, in addition to bilateral aid, figures for expenditure by multilateral institutions imputed to donors in proportion to their contributions to those agencies. The figures are calculated by the Organisation for Economic Co-operation and Development, and we have not yet received those for 1980.

The hon. Gentleman also mentioned the United Kingdom procurement from the European development fund and the Court of Auditors' report, which was dealt with fully by the hon. Member for Greenwich (Mr. Barnett) and in the splendid intervention by my hon. Friend the Member for Holland with Boston (Mr. Body). I agree with almost everything that was said. We are taking the matter seriously. I hope to discuss the matter with Mr. Pisani when we have a formal meeting of the Council of Ministers early in March.

The hon. Member for Queen's Park also mentioned Nicaragua, which he raised at Question Time a few days ago. I am pleased to tell him that we are giving aid to Nicaragua. Subject to parliamentary approval, we shall contribute £20,000 to the International Committee for the Red Cross appeal for its activities in Nicaragua. We have also agreed to provide two further Land Rover ambulances for use by the International Red Cross in Nicaragua in addition to the two provided in 1980.

Mr. Andrew Faulds (Warley, East)

Would not the greatest contribution that the Government could make to South America be to oppose the Reagan Administration's intentions and policies in that part of the world?

Mr. Marten

That is a complete non sequitur. We support many other countries in that part of the world, such as Belize in the Caribbean. I do not agree with the hon. Gentleman.

Mr. McElhone

We are grateful for any help that is given to Nicaragua, but that figure is derisory. It is much less than for any other European country. Will the Minister reconsider the figure before 'we become the laughing stock of the Community?

Mr. Marten

No, I shall not reconsider it. As I explained at Question Time, we have already given a considerable amount of humanitarian aid. This is merely a top-up at the request of the Red Cross.

The right hon. Member for Lanark (Dame Judith Hart), unfortunately, could not be here for the winding-up. I should like to correct one point that she made. The right hon. Lady said that under her tenure as Minister for Overseas Development no British aid had been given to Saudi Arabia. In fact, British aid to Saudi Arabia is recorded as £41,000 in 1976, £33,000 in 1977, £35,000 in 1978 and £7,000 in 1979. The Opposition, when they were in Government, gave aid to Saudi Arabia. That is the point that I wish to establish.

Mr. Faulds

rose—

Mr. Marten

No, I am sorry. I must get on.

The right hon. Member for Lanark also said, regrettably, that if the Labour Party ever came back into office—which is a very long-term prospect, purely hypothetical—it would separate the Overseas Development Administration from the Foreign Office where it is now. I can only say that that would be a great mistake, because it has merged extremely well. As somebody else said, there is a political input to all aid, and I think that the ODA should remain where it is and not be separated once again.

Mr. Faulds

rose—

Mr. Marten

No, I will not give way.

We also have two Cabinet Ministers from the Foreign Office, whereas when the ODA was separate there was no Minister in the Cabinet. Those two voices are worth a lot.

My right hon. Friend the Member for Daventry (Mr. Prentice) made a very interesting speech on defence, which I shall study with interest.

The hon. Member for Liverpool, Edge Hill (Mr. Alton) wishes to spend more an aid. I note that, but the hon. Member asked why aid had dropped from 0.5 per cent. to 0.34 per cent. I have said a number of times in the House that the reason for that is that contributions to ODA could not be deposited because the United States Congress was in the middle of an election, and it delayed the United States deposit. For that reason, that huge chunk of money was delayed. Also, drawings from India were very slow that year. Those are two reasons why in that year the contributions dropped to 0.34 per cent.

The hon. Member also referred to baby milk. This matter was raised last week at Question Time by the hon. Member for Greenwich. The hon. Member for Edge Hill said that we should have a properly established code of conduct. The World Health Organisation has established such a code of conduct, and it is the right organisation to go to the developing countries and implement the policy if they want help. I take his point. It is an important subject from a health point of view. Also, if one has clean water, that helps in many situations about which I know the hon. Member is concerned.

I take the hon. Gentleman's point about wishing my right hon. Friend the Member for Sidcup (Mr. Heath) to take over the EEC Commission. I will inform my right hon. Friend, who no doubt will speak to the hon. Gentleman about it.

Overseas students were referred to by my hon. Friends the Members for Howden (Sir P. Bryan), for Anglesey (Mr. Best) and for Stretford (Mr. Churchill) and by the hon. Members for Don Valley (Mr. Welsh) and for Heeley. The student problem is largely one for my right hon. Friend the Secretary of State for Education and Science, not for me, but I can say that the total number of students and trainees financed under the aid programme in 1980 was over 14,000. We expect the total for 1981 to be about the same. New awards in 1981 are likely to be about 4,600.

Therefore, the question needs to be examined in two parts—those who are the responsibility of my right hon. Friend the Secretary of State for Education and Science and those who come here on a Government-to-Government basis under the aid programme.

Mr. Phillip Whitehead (Derby, North)

roe,—

Mr. Marten

I shall not give way.

The hon. Member for Kingston upon Hull, West (Mr. Johnson) asked me to reveal what the feeling in the Cabinet was about the aid cuts. The Cabinet has a collective responsibility, and of course I cannot do anything of the sort.

The hon. Gentleman also asked whether we could do joint operations with other countries in the aid programme. In fact, we do that. The dam in Sri Lanka is a joint operation, involving Sweden, Germany, the World Bank and us.

With regard to the 0.7 per cent. of GNP going in aid, which the hon. Gentleman asked about, our commitment is exactly the same as that of the Labour Government. We agreed to it as a target, but progress must depend upon our own economic conditions. I hope that once we get the growth going in this country we can move nearer that target.

The hon. Gentleman also mentioned Soviet bloc aid, and he was backed up by the hon. Member for Waltham Forest (Mr. Deakins). The whole of the Soviet bloc aid is barely more than the total aid from the United Kingdom—a shattering figure—and that aid goes to those countries that are closely welded to the Soviet Union, such as Cuba, North Korea, Vietnam and Afghanistan. The House rightly focused on that point—the almost cruel approach of the Soviet bloc to the developing countries.

I was sorry to miss the speech of my hon. Friend the Member for Woking (Mr. Onslow), but I had to be out of the Chamber at the time. I shall read it with great interest. The same applies to the speech of the hon. Member for Fife, Central (Mr. Hamilton). I share the hon. Gentleman's concern about preventable blindness. Successive Governments have for many years contributed to the multilateral efforts under the auspicies of the World Health Organisation to combat river blindness in West Africa. In addition, we are helping a number of countries by providing ophthalmologists and equipment under our technical co-operation programme.

We are discussing with India its plans for a national programme for the prevention of blindness, which will be largely directed towards preventing blinding malnutrition. We await a formal request from the Indian Government.

We are sharing with the International Agency for the Prevention of Blindness the cost of a project to rehabilitate blind farmers in Ghana. We also provide budgetary support to the agency, and we are co-operating with the Royal Commonwealth Society for the Blind on a number of projects, including a school for training ophthalmic assistants to work in rural areas in Bangladesh. Therefore, I hope that the hon. Gentleman will accept that we are doing what we can.

I agree with the hon. Gentleman that we must not interfere with free trade. I had just come into the Chamber at the time, and I think that is what he said.

Mr. William Hamilton

Not quite, but near enough.

Mr. Marten

I hope that the hon. Gentleman will persuade his party colleagues to adopt that attitude. My hon. Friend the Member for Chichester (Mr. Nelson) made the same point.

I should like to deal with many other points, but time does not permit. I shall write to the hon. Gentlemen concerned.

I finish by thanking hon. Members in all parts of the House for their contributions. I ask them to support the Government's amendment.

Question put, That the original words stand part of the Question:—

The House divided: Ayes 65, Noes 117.

Division No. 66]	[10 pm
AYES
Alton, David	Evans, John (Newton)
Booth, Rt Hon Albert	Faulds, Andrew
Brocklebank-Fowler, C.	Foot, RtHon Michael
Brown, Ronald W. (H'ckn'y S)	Foulkes, George
Campbell-Savours, Dale	George, Bruce
Carter-Jones, Lewis	Grant, George (Morpeth)
Cocks, Rt Hon M. (B'stol S)	Grant, John (Islington C)
Cryer, Bob	Hamilton, W. W. (C'tral Fife)
Cunningham, G.(Islington S)	Hardy, Peter
Davis, Clinton (Hackney C)	Harrison, Rt Hon Walter
Davis, Terry (B'ham, Stechf'd)	Homewood, William
Deakins, Eric	Hooley, Frank
Dean, Joseph (Leeds West)	Howells, Geraint
Dewar, Donald	Hoyle, Douglas
Dormand, Jack	Janner, HonGreville
Douglas-Mann, Bruce	John, Brynmor
Dubs, Alfred	Johnson, James (Hull West)
Eadie, Alex	Jones, Rt Hon Alec (Rh'dda)
Evans, loan (Aberdare)	Kerr, Russell

Kilfedder, JamesA.	Sandelson, Neville
Lyons, Edward (Bradf'd W)	Sever, John
McCartney, Hugh	Skinner,Dennis
McElhone, Frank	Spearing, Nigel
McNamara, Kevin	Stoddart, David
Millan, Rt HonBruce	Welsh, Michael
Morton, George	Whitehead, Phillip
Owen, Rt Hon Dr David	Wigley, Dafydd
Palmer, Arthur	Williams, RtHon Mrs (Crosby)
Pavitt, Laurie	Wilson, Gordon (Dundee E)
Pitt, William Henry	Winnick, David
Powel1, Raymond (Ogmore)
Roper, John	Tellers for the Ayes:
Ross, Ernest (Dundee West)	Mr. Allen McKay and
Ross, Stephen (Isle of Wight)	Mr. Frank Haynes.
Rowlands, Ted
NOES
Alexander, Richard	Fletcher-Cooke, SirCharles
Alison, RtHon Michael	Forman, Nigel
Ancram, Michael	Garel-Jones, Tristan
Arnold, Tom	Glyn, Dr Alan
Aspinwall, Jack	Goodhew, SirVictor
Atkinson, David (B'm'th, E)	Goodlad, Alastair
Baker, Nicholas (N Dorset)	Greenway, Harry
Berry, HonAnthony	Griffiths, Peter Portsm'th N)
Biggs-Davison, SirJohn	Grist, Ian
Blackburn, John	Hawkins, Paul
Body, Richard	Hawksley, Warren
Boscawen, HonRobert	Heath, Rt Hon Edward
Bottomley, Peter (W'wich W)	Hunt, John (Ravensbourne)
Boyson, Dr Rhodes	Hurd, Hon Douglas
Braine, Sir Bernard	Jopling, RtHon Michael
Brinton, Tim	Kershaw, Sir Anthony
Brooke, Hon Peter	Lang, Ian
Brotherton, Michael	Lloyd, Peter (Fareham)
Brown, Micheal (Brigg & Sc'n)	Loveridge, John
Bruce-Gardyne, John	Lyell, Nicholas
Bryan, Sir Paul	Macfarlane, Neil
Buck, Antony	MacGregor, John
Budgen, Nick	Major, John
Cadbury, Jocelyn	Marlow, Antony
Carlisle, John (LutonWest,	Marten, Rt Hon Neil
Carlisle, Rt Hon M. (R'c'n)	Mates, Michael
Clark, Hon A. (Plym'th, S'n)	Mather, Carol
Clarke, Kenneth (Rushcliffe)	Maude, Rt Hon Sir Angus
Cranborne, Viscount	Mayhew, Patrick
Dorrell, Stephen	Mellor, David
Dover, Denshore	Mills lain (Meriden)
Dunn, Robert (Dartford,	Mills, Peter (WestDevon)
Faith, MrsSheila	Moate, Roger
Fenner, Mrs Peggy	Morgan, Geraint
Finsberg, Geoffrey	Morrison, HonC. (Devizes)

Mudd, David	Spicer, Jim (West Dorset)
Murphy, Christopher	Spicer, Michael (S Worcs)
Neale, Gerrard	Stainton, Keith
Nelson, Anthony	Stanbrook, Ivor
Neubert, Michael	Stevens,Martin
Newton, Tony	Stradling Thomas, J.
Normanton, Tom	Taylor, Teddy (S'end E)
Onslow, Cranley	Tebbit, Rt Hon Norman
Osborn, John	Thomas, Rt Hon Peter
Page, Richard (SW Herts)	Thompson, Donald
Pattie, Geoffrey	Thorne, Neil (Ilford South)
Percival, SirIan	Waddington, David
Pollock, Alexander	Wall, Sir Patrick
Proctor, K. Harvey	Waller, Gary
Rathbone, Tim	Warren, Kenneth
Renton, Tim	Watson, John
Rhodes James, Robert	Wells, Bowen
Ridley, HonNicholas	Wheeler, John
Rossi, Hugh	Wickenden, Keith
Sainsbury, HonTimothy	Wilkinson, John
St. John-Stevas, Rt Hon N.	Wolfson, Mark
Shaw, Giles (Pudsey)
Shaw, Michael (Scarborough)	Tellers for the Noes:
Sims, Roger	Mr. David Hunt and
Speed, Keith	Mr. Selwyn Gummer.
Speller,Tony

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 32 (Questions on amendments), and agreed to.

Mr. Deputy Speaker

forthwith declared the main Question, as amended, to be agreed to.

Resolved,

That this House, recalling the Prime Minister's commitment to the Third World at last year's conferences in Ottawa, Melbourne and Cancun, and recognising the prime importance of trade and private capital flows to the progress of developing countries, welcomes the Government's decision to maintain an aid programme in excess of £1,000 million pounds, which provides a substantial and effective response to the real needs of the developing countries whilst helping to safeguard jobs in exporting industries in this country.