Co-operation and Economic Development in the Commonwealth

HC Deb 21 November 1983 vol 49 cc79-124 7.27 pm

Mr. Stuart Holland (Vauxhall)

I beg to move, That this House condemns the failure of Her Majesty's Government to promote political co-operation and economic development in the Commonwealth, deplores its international policies which delay economic recovery in both the United Kingdom and other European and world economies, and calls on it to initiate a major project for international economic recovery which would benefit the United Kingdom, the countries of the Commonwealth and the world. The 1980s are supposed to be the development decade. In reality, they are already a decade of crisis and threaten economic catastrophe to developed and less developed countries alike. There are more than 500 million people in the less developed countries without a regular job or regular income, which means that in those countries there are as many unemployed as the developed countries have total inhabitants. Half of the world's population has only one tenth of the world's gross domestic product per head. Countries such as Tanzania, Bangladesh, India and Sri Lanka are among the least developed in the world in terms of gross domestic product per head.

The absolute poverty now affecting the south of the global economy is a condition of life of malnutrition, illiteracy and disease beneath any reasonable definition of human decency. This is the formal definition of absolute poverty given by the World Bank. It is a condition in which some 800 million people are currently living out their lives. According to UNICEF, some 40,000 children die each day because they cannot get enough food, safe water and medical care. In more than 30 countries throughout the world, including Commonwealth countries, the average life expectancy is under 50 years. Diseases such as measles and diarrhoea, so easy to treat in the north, have devastating effects in countries where the infrastructure of care is weak, and the cruellest attacks are reserved for the young. In many parts of the world, only a small percentage of the population has access to clean water. For hundreds of millions of people, the future holds nothing but misery and despair.

World Bank president Clausen has warned that the economic distress of the poorest nations is a time bomb ticking away. We delay defusing it at our peril. He was referring inter alia to the problem of Third world debt. That is a symptom rather than a cause of the underlying crisis in accumulation, income and trade in the global economy, but it has now assumed such gigantic proportions that it has become the primary short-term obstacle to global recovery.

For a decade after the first oil price increases, the level of activity in the world economy depended heavily on the ability of the international banking system to circulate funds from surplus to deficit countries. Essentially, the private banking system was performing a Keynesian function in recycling global demand from OPEC, through Europe and the United States, to Third world countries. During most of the 10 years from the first OPEC increases in September 1973, the private banking system was thus offsetting the monetarist policies pursued in varying degrees by leading Governments who thought that OPEC had thrown an oil slick on the global economic prospects, and instead of adjusting the steering or easing the pace, had slammed the brakes on the OECD economies.

By the end of last year, however, global debt lent by the private banks amounted to more than $1,000 billion, of which the less developed countries owed nearly one third. That is apart from official lending and short-term credits, which raised the less developed countries' total debt to nearly $500 billion. That is still an underestimate, however, as the Bank for International Settlements figures exclude loans from Arab banks, and the World Bank figures exclude most military credits, which bring the Third world debt to about $660 billion.

At the end of last year, a tremor shook the private banks when three major countries effectively defaulted on their debts—Mexico in August, Argentina in September and Brazil in December. What went wrong?

First, the global economic recovery expected by many Governments, including the British Government, did not take place. The global recession was shifting into slump due to the monetarist policies pursued in the developed countries of the North. Balance of payments problems caused key countries to cut back their development programmes. For instance, in 1981 Nigeria imported $700 million worth of goods, mainly manufactures. In 1982, that was cut back to less than $50 million. Other key OPEC countries, instead of being able to perform their initial recycling operations, left the league of big spenders. Iran did so due to the war with Iraq and the Ayatollah's regime. Argentina cut back on spending in an economic crisis aggravated by the Falklands war. Brazil was badly hit by the recession as some 60 per cent. of its exports and 70 per cent. of its manufactures went to developing countries most hit by the new phase of the economic crisis.

A second major factor, rather closer to the House, is the scale and variation of interest rates on private bank lending to Third world countries, including Commonwealth countries. The North has a key responsibility for this. High interest rates in Britain and the United States, both pursuing monetarist policies, affected the international banking system and LIBOR—the London inter-bank offer rate. The three-month Eurodollar rate was 5 per cent. at the end of 1976 and nearly 20 per cent. in March 1980. Average rates rose from less than 8 per cent. in 1976 to nearly 15 per cent. in 1981. Those are variations in the cost of borrowing which less developed and Commonwealth countries can scarcely absorb with ease.

Monetarist deflation of global demand and trade, associated with high interest rates in the North, have crippled the development prospects of many countries of the South. Morgan Guaranty recently estimated that the debt service ratio for Chile, Brazil and Mexico ranged from 115 per cent. to 130 per cent. and for Argentina it was 180 per cent. An economy such as Brazil's, which is crucial for the trade of the South and other Commonwealth countries and not just for Latin America, now needs more than its total export earnings to service its debt.

In the Commonwealth itself, Zambia owes $4 billion, India $20 billion and Nigeria $13 billion. In south-east Asia, Indonesia, the Philippines and South Korea—the so-called miracle economies of yesteryear—now owe $22 billion, $21 billion and $40 billion, respectively, in the international community.

It is not just a Latin American, Commonwealth or south-east Asian crisis. It is a crisis for the North, for the United States and for the European economies. In May this year, loans to Brazil, Mexico and Venezuela alone from half a dozen major banks in the United States, including City-corp, Bank of America and Chase Manhattan, amounted to between 140 per cent. and 180 per cent. of those banks' own equity capital. Lloyd's Bank is arguably at risk if Latin American countries default. It has been estimated that there is a one in 10 chance that the future of Lloyd's as an independent operation could be threatened. Not least by calling in loans, the private banks are worsening the debt syndrome by threatening further default. The Bank for International Settlements recently reported that with only a few exceptions the private banks are now draining resources out of the South rather than transferring them to it. It is hardly surprising that the new president of Argentina, Raul Alfonsin, has argued, "We will repay our debts if you buy our exports." Without a recovery in the North, without even the beginnings of the process of recovery in the North, without a recovery in a key global institution such as the Commonwealth, there is very little prospect of recovery for the South.

Mr. Stephen Dorrell (Loughborough)

Is the hon. Gentleman committing the Labour party to doing as President Alfonsin wishes and easing the access to Western countries, especially this country, for Argentine goods? Does that reflect the beginning of a shift by the Labour party away from the policy of import control that it supported at the time of the general election?

Mr. Holland

The hon. Gentleman should address his comments to the Prime Minister. It is clear why the Government have been so unwilling to exert economic pressure on Argentina, even during the Falklands crisis. If they had done so and Argentina had defaulted, British banking interests would have been threatened.

What are the alternatives? What alternative strategies are recommended by the Labour party and by members of the Commonwealth conference which begins in New Delhi today? Is there a global international alternative? Clearly, there are several. First, there are the recommendations of the Brandt "North-South" report and its successor, "Common Crisis". Another is the package of recommendations made by Commonwealth Finance Ministers at their annual meeting in Port of Spain, Trinidad, two months ago. We understand that those proposals are also on the table for the Commonwealth conference in New Delhi.

There are key recommendations shared by the Brandt report and the Commonwealth Finance Ministers' package. They include preparations for a new international financial conference to discuss reform, increased funds for the IMF and the World Bank, easier conditions attached to assistance by the IMF, some amalgamation of the functions of the IMF and the World Bank, and an increased voice for Third world countries in the running of international financial institutions. Britain, however, according to reports of reactions to the conference in Port of Spain, believes that present tight conditions governing IMF assistance should be maintained and argues that there is no realistic possibility of increasing the flow of aid to the underdeveloped world.

The Financial Times of 22 September reported: A sharp split emerged yesterday between Britain and most of the members of the Commonwealth after Mr. Nigel Lawson, the Chancellor, made it clear he could not accept most of the proposals for a new 'Bretton Woods' reform of the world's financial system. If the Government will not accept those proposals and the ones that are now being tabled at the Commonwealth conference, what will they accept? At Cancun the Government, who represent the senior member of the Commonwealth, showed no readiness to bring pressure to bear on the American Administration to realise the recommendations of the Brandt report. At the Williamsburg summit, they appeared to have turned down flatly President Mitterrand's call for a new Bretton Woods and a fundamental reform of the IMF. Why? Because essentially the Government do not believe that there is an alternative. At home they do not believe that there is an alternative, and abroad, therefore, they believe that there is no alternative for global development.

Even on their aid record, the Government's performance has been derisory. Not only have they cut aid as a percentage of gross domestic product, but at 0.44 per cent. we rank with the Japanese at 0.28 per cent. and with the United States at 0.2 per cent. as among the lowest aid contributors of any developed country towards global development. When Conservative Members criticise the performance of the French economy, they should remember that France gives 0.73 per cent. of GDP in aid. Scandinavian countries, such as Norway and Sweden, provide 0.8 per cent. of GDP or more.

The links between the alternatives for the South and the alternatives for the North have rightly been stressed by the authors of the Brandt report and its successor. It is time that that argument registered with the Government. In the North, against a post-war quarter century of full employment, there are now 15 million people unemployed and 35 million people are out of work in the OECD countries. Because the brakes were slammed on after the OPEC oil price increases, real incomes have fallen and total income and economic welfare are as much as one quarter lower than they would have been if expansion had been maintained in the North.

The unemployment figures are only the official ones. We all know that behind them are millions more people who do not register as unemployed because they are not entitled to benefit. Millions of people suffer from reduced income because there is now only one person in the family working full time. Others who have been made unemployed from Britain's industries have no foreseeable prospect of employment.

The Government argue that there is no alternative here, or presumably abroad, because we have to give priority to inflation. I shall be interested to hear the Minister's comments on the latter. In fact, there is no problem of hyper-inflation in western European economies. Most have rates of inflation of less than 10 per cent. As to the priority of reducing inflation, one might argue that, just as we should not congratulate a doctor on reducing a patient's temperature if the result was rigor mortis, so the Government should give priority to recovery rather than the reduction of inflation if they are to fulfil their responsibility to the British people and those who live in the Third world.

There is no risk of hyper-inflation in the world's leading economies. Gripped by monetarism, the Government appear to believe that if the world cuts its budget deficits it will, by some miracle of the invisible hand, recover tomorrow from today's crisis. They have no recovery programme and appear to be offering none in New Delhi.

The world is now gripped by militarism as well as monetarism. There is an arms race in the West, which even the CIA now recognises is unnecessary, based on allegedly false estimates of Warsaw pact and Soviet Union arms spending. The Commonwealth is calling for co-operation, development and disarmament.

It is interesting that tonight's reports show that Mahrajkrishna Rasgotra, speaking for India before the opening of the summit, chose to highlight an appeal to the Soviet Union and the United States to stop the nuclear arms race. The Commonwealth Secretary General, Shridath Ramphal, urged the 48 nations, which are now meeting in New Delhi, to plead for an end to obscene military spending. Meanwhile, what will the Government do about their contribution or their European contribution to any form of recovery programme? They fail to recognise that, if the North recovers and lends on a proper public long-term basis to the South, the North and the South will benefit. That public lending is increasingly necessary for precisely the reasons that I have stressed. Private banks can no longer continue the recycling operation. Indeed, they are now draining resources out of the South.

It has been estimated for OECD countries—Britain has a major responsibility here as the senior member of the Commonwealth—that if the OECD were to achieve the aid target of 0.7 per cent. of GDP and accepting that some OECD countries have already exceeded that target, the result would be the creation of nearly 2 million jobs in OECD countries. Moreover, if the target were achieved, the public budget balance would still be positive at 0.12 per cent. The balance of goods and services on trade would deteriorate by only 0.02 per cent. Recovery is mutual. That is the Brandt reports' message. Many Conservative Members are open to that point.

What about the recovery in Europe? Can anything be done? Are we to consider only the Commonwealth conference, or will the Government respond to other proposals for recovery which might be made at the Athens summit? What will the United States do in the world economy? Is there really a recovery there? What is the nature of the so-called pick-up in the United Kingdom economy?

Despite present evidence that the United States is recovering at a GDP rate of about 5 per cent. a year, the balance of payments deficit that is emerging is colossal. The OECD forecasts that the United States will have a deficit of $35 billion to $45 billion within six months.

At the beginning of his statement last week, the Chancellor stressed the importance of any recovery being made by Europe as well as the United States. That is important. If we are to avoid mass unemployment in western Europe as well as in the South, western European countries should be spending about $100 billion a year for 10 years to cope with the problem of unemployment. That might appear to be a large sum, but it is less than one tenth per year of the outstanding debts of North and South countries which cannot feasibly be repaid if there is not a recovery.

However, if there were a European recovery of that magnitude, it would add between 3 per cent. and 5 per cent. to the visible exports of the United States and the South because Europe is such a major trading partner. If that were to be fulfilled, despite the astronomic level of the debt crisis now facing North and South, we could, within five years—not 10 or 15 years—put the Third world debt crisis behind us. Will the Government welcome any such initiatives or will they continue their opposition to arguments for recovery?

The millions who watched television this week will have noted that the Queen was visibly moved by the poverty and deprivation of India and its children. I am sure that the House will approve and applaud her award of the Order of Merit to Mother Theresa.

What will the Prime Minister's message be to Mother Theresa? Will it be that the Indian poor are the undeserving poor; that they should take up their beds and walk—if they do so in Calcutta, they will give their places to others who have nowhere to lay their heads—and that there is no alternative for Britain, Europe, the OECD, the North and, therefore, the South?

What steps will the Government take to follow up the Cancun summit on the Brandt report and to answer President Mitterrand's call at the Williamsburg summit for reform of the IMF? What steps will they take to answer the same call from the Commonwealth Finance Ministers' meeting in Port of Spain? How will they prepare themselves for recovery arguments at the European summit which will shortly be held in Athens? Will they amortise the debt of the Third world countries for 20 to 25 years—for that is what they need and what is now demanded by many countries—to permit real development into the 21st century? What steps will they take to shift resources from the arms race into global development?

While I have been speaking, several hundred children have died in the Third world for want of food or inexpensive vaccines. At the same time, £25 million, which could have saved them, nourished their families and promoted employment for their parents, has been spent on the arms race. Those are the figures of the Rockefeller foundation. It is a mad, inhumane world in which militarism and monetarism exclude development and disarmament.

Were this House the Assembly of Chad, Mali, Upper Volta, Tanzania or Bangladesh, we might abandon hope for those we represent, or call on one of the super- powers to stave off famine for a few further moments. But this is not the least developed country in the world. It is one of the richest and still most influential on the globe. It is the only developed country with energy self-sufficiency, financial institutions second to none, any technology within our reach and partners so powerful that they control two thirds of the world's trade and account for most of the world's financial resources.

If the Government will not take a lead in New Delhi, they should admit that they are leading not a Commonwealth but common poverty, and that this will be a disaster decade rather than a development decade for the world's economy. I commend the motion to the House and call on Conservative Members as well as my hon. Friends who are concerned about North or South to support it in the Lobby.

7.52 pm

The Minister for Overseas Development (Mr. Timothy Raison)

The subject of the motion is: co-operation and economic development in the Commonwealth" The main focus of my remarks will be on the Commonwealth.

The hon. Member for Vauxhall (Mr. Holland), whom we welcome to the Opposition Front Bench, ranged widely. He referred to the Commonwealth from time to time, but it is not unfair to say that his speech covered the whole gamut of development. He gave us a rapid Cook's tour of what he thinks about it. There were moments when I felt that the hon. Gentleman got bored with the Opposition's somewhat complicated motion. Indeed, as I shall show, he appeared to forget altogether parts of what it says.

I welcome this opportunity as a curtain-raiser to the Commonwealth Heads of Government meeting in New Delhi. My right hon. Friends the Prime Minister and the Secretary of State for Foreign and Commonwealth Affairs are on their way to what I am sure will be a valuable conference. It is generally agreed on all sides that there is something special about these conferences. They are marked by relative informality and unity of language, they are founded on long friendships, and there is a predisposition to quiet exchange over confrontation.

There have been occasional dramas at conferences, but for the most part they provide a serious, co-operative look at the range of major problems facing a large part of the world.

The Secretary General of the Commonwealth Secretariat, to whom I pay tribute, had no doubt about its modern role when he said recently: It is no longer relevant to discuss whether the Commonwealth has a future. The urgent need is for a debate on where the Commonwealth can lead the rest of the world". Many people have said that the Commonwealth is perhaps the most sympathetic forum—or rather, meeting ground—among those available to rich and poor countries for examining the difficulties facing us all, but especially the developing countries. Therefore, it is right to have this debate on the eve of that conference.

The Labour party has come up with a rather rum motion as a basis for the debate, and I propose to take the various propositions one by one and to illustrate how they distort the real position.

First the Government are criticised for alleged failure … to promote political co-operation". That is a curious charge. We all know that the Commonwealth is a diverse association. It includes some of the largest and most populous countries and some of the smallest. Economically, Commonwealth members range from some of the most highly industrialised countries to some of the poorest and least well-endowed. Politically, the range is almost equally diverse.

This diversity is one of the Commonwealth's unique features and the source of its strength. It would be unrealistic to expect all its members to adopt a united approach on all issues. The Commonwealth operates by consensus, not by vote, and it can therefore act effectively only when all its members agree to act together. Therefore, it would not be sensible to expect unanimity on all issues.

But there have been positive, practical achievements in political co-operation, which we have fully backed. It will be remembered that the Commonwealth played an important part in the Rhodesia settlement. Special teams of Commonwealth observers monitored the elections in Zimbabwe and Uganda in 1980. In Uganda a Commonwealth military training team with representatives from seven Commonwealth countries is currently doing valuable work in training the Ugandan army.

In the Falklands, two thirds of the support that we received in combating the totally unacceptable resolution tabled by Argentina in New York earlier this month came from the Commonwealth and, of course, the Commonwealth gave us practical as well as moral support during the crisis.

At the last Commonwealth Heads of Government meeting in 1981, member states, in the words of the communiqué, were united in calling urgently for a political settlement in Afghanistan. Those are examples of the sort of practical political co-operation that the Commonwealth partnership can achieve and that are referred to in the motion. The United Kingdom Government have played no small part in promoting those.

Mr. Eric Deakins (Walthamstow)

Before leaving political co-operation between Commonwealth states, will the right hon. Gentleman say something about the possibility of political co-operation on Grenada—a Commonwealth country that is at present occupied by foreign troops? Will he comment on the suggestions that there should be a Commonwealth force?

Mr. Raison

We must think about that carefully. In helping Grenada to get back on its feet, it is likely that the Commonwealth will be able to play a valuable part. I certainly hope so, but we have now reached the stage at which we must think carefully about the real requirements and then proceed as quickly as possible with whatever programme seems to be appropriate.

We also give full backing to the Commonwealth Secretariat, not only financially but in every other way. We meet 30 per cent. of the cost of the Secretariat's programmes and as Marlborough House, which we provide free, is its headquarters, we are well placed to co-operate with it here in London.

The Labour party also seeks to attack our failure … to promote … economic development in the Commonwealth". The hon. Member for Vauxhall concentrated on the economic argument. He did not begin to make out his case. There are many ways in which we support such development in the Commonwealth, not least through the aid programme.

Our 1980 aid policy statement made it perfectly clear that the Commonwealth would have a special place in the allocation of our aid. In recent years, Commonwealth countries have received about three quarters of our direct bilateral aid, concentrated on the poorest countries of south Asia and sub-Saharan Africa.

The quality of our aid is also important. As the recession has taken its effect, we have paid particular attention to the need to provide aid in flexible forms and to act in concert with other donors wherever possible.

We fully recognise, for instance, the value of our training assistance and the provision of manpower aid. Most of this goes to the Commonwealth, where our common links mean that British consultants, experts and volunteers can be particularly effective. We have also responded to a series of requirements by Commonwealth countries and some other poor countries for aid, not just for new capital projects, but for maintenance and recurrent imports. Where possible we target such aid to specific sectors—for example the private sector in Jamaica; the agricultural and transport sectors in Kenya and specified public corporations in Bangladesh.

Mr. Stuart Holland

The Minister criticised me for giving a Cook's tour of the global crisis, but he is giving a Cook's tour of the ODA report. The Opposition are well aware of the spending programmes on aid. Is the Minister aware that the total United Kingdom aid programme is about, one-thousandth part of the debt crisis of Third world countries? What will the Minister and the Government do about that in New Delhi?

Mr. Raison

I shall deal with the debt question and the role of the IMF and other bodies in dealing with aid. I remind the hon. Gentleman that, according to the Order Paper, we are discussing co-operation and economic development in the Commonwealth. It seems hardly wrong that I should be discussing that subject.

Commonwealth countries also benefit from the substantial contributions we make to multilateral programmes. Many are members of the Lomé convention or recipients of non-associates aid and food aid through the European Community. The World Bank group, regional development banks and United Nations agencies and programmes are other sources of support. India, for example, is currently the largest beneficiary, not only of IDA credits but of European Community aid. It is very far from being the Francophone preserve that it is often thought to be.

We have also played a constructive part in developing the Commonwealth's own effective technical co-operation activities. The high standard of the work of the Commonwealth fund for technical co-operation, will be known to many hon. Members. It is interesting that many of the land's experts are recruited from developing countries within the Commonwealth. Over 90 per cent. of its training is undertaken in those countries. Our contribution in the current financial year, amounting to 30 per cent. of the total, is £5.7 million.

We also provide direct support through the Commonwealth scholarship and fellowship plan. In 1959 several Commonwealth governments agreed to provide in total about 1,000 scholarships and fellowships annually at the postgraduate level. With more than half the awards being made available by Britain in United Kingdom institutions the British Government are now providing almost £7 million a year in support of this scheme. We very much hope that other Commonwealth Governments will follow our lead and increase their contributions.

Our increased support for the scheme is part of the overall package of measures we announced in February on overseas students. This provides an additional £46 million over the next three years. It serves to replace a haphazard and indiscriminate subsidy with schemes that are more selective and better targeted.

I have spoken about aid, but of course flows of private capital are in aggregate much more substantial. The place of private direct investment is of particular interest at present. Many developing countries are realising the potential that this has from two points of view—the association of funds with management expertise and the advantage of a form of finance that requires repayment only when it has produced concrete results. By removing exchange controls and supporting investment protection schemes, we have done much to ease the flow of private capital to developing countries.

Mr. Stuart Holland

Surely the Minister is aware that 85 per cent. of multinational capital in the form of foreign and private investment goes to only 13 of the more—not least—developed countries. Can he give the figures on the least developed countries and United Kingdom investment in them?

Mr. Raison

I cannot, off the cuff. I will certainly let the hon. Gentleman have them in due course.

I now turn to the next element in the Opposition motion, which attacks our international economic policies. I make no bones about the fact that we prefer sound policies to the mirage of a headlong dash for growth. At home, that has meant, among other things, that there has been a paramount need to control public spending. The aid programme has not been exempt. Nevertheless, we are committed to maintaining a substantial aid programme. Contrary to recent speculation—fuelled by some of the development lobby—that we were about to cut the aid programme next year by £50 million, there will, in fact, be an increase.

The allocation next year will be £1,170 million gross, an increase of almost 5.5 per cent. in cash over the current 1983–84 allocation of £1,110 million. This year's allocation was in turn 8 per cent. higher in cash than that for last year. We shall continue to place special emphasis on the needs of the Commonwealth in allocating these resources.

Mr. Bowen Wells (Hertford and Stortford)

My right hon. Friend's figures do not correspond with mine. Is my right hon. Friend saying that there will be a 5 per cent. increase in the figures announced for 1982? Will there then be a further increase? If so, I wish to congratulate him now.

Mr. Raison

The 5.5 per cent. increase is a cash increase on the 1983–84 allocation of £1,110 million. I hope that makes the position clear to my hon. Friend. That is the outcome of last week's statement by my right hon. Friend the Chancellor of the Exchequer about public expenditure.

Over the past year we have heard many prophecies of doom about the effect the debt crises in many countries will have on the international financial system. Commonwealth countries are not among the debtors whose problems are largest, but I will take this opportunity to say that we believe that the case-by-case approach adopted to debt problems has served debtors, creditors and the system as a whole well. We do not think that it would be right to abandon this approach. Nor do we believe that Governments should adopt a wider role. The case-by-case approach has been typified by unprecedented co-operation between the creditors, both official and private. The IMF has been invaluable in co-ordinating the approach in many of the most severe cases.

The United Kingdom has played a positive role in resolving major issues before the IMF. In February, my right hon. and learned Friend, then Chancellor of the Exchequer, now the Foreign and Commonwealth Secretary, as chairman of the IMF interim committee, secured agreement to increase the fund's quotas by 47.5 per cent. to SDR90 billion. At the IMF-IBRD annual meetings in September our proposal on access to the fund's resources after the eighth general review of quotas was accepted by the interim committee. We have played a considerable part this year.

We very much welcome the success last week of the United States Administration's efforts to obtain the legislation authorising their quota increase and concurring in their participation in the general arrangement to borrow.

IMF lending to developing countries is at record levels. In the year to end September, all drawings on the fund were by developing countries.

Another important matter discussed at the annual IMF-IBRD meetings was, of course, the proposed seventh replenishment of the International Development Association, the soft loan arm of the World Bank. We very much hope that it will be possible to reach agreement on this by the end of this year so that the replenishment comes into effect no later than next July. Negotiations are still continuing on IDA 7. That is an important matter.

I wish to say a little more about Lomé. In doing so, I remind the House that if the Labour party had come to power at the June general election, I suppose that we would be on our way out of the convention. I wonder whether the Labour party believes that that would have helped the position of the developing countries.

Mr. Guy Barnett (Greenwich)

As the Minister has provoked Opposition Members, I must say that we would come out of the Lomé convention—because we would give more favourable treatment to countries of the Commonwealth than does Lomé.

Mr. Raison

No doubt the hon. Gentleman will seek to catch your eye, Mr. Deputy Speaker. Perhaps he will tell us the form that the more favourable treatment will take. We shall be interested to know, as I do not think it was spelt out in the Labour party's manifesto.

Mr. Bowen Wells

At what level does my right hon. Friend envisage the United Kingdom's contribution to the IDA seventh replenishment?

Mr. Raison

That depends on the negotiations now taking place. My hon. Friend is extremely well versed in this whole matter, but the level depends on what other parties to the negotiations have to offer. However, I hope that we shall be able to make progress before long.

The first Lomé convention came into being in 1975 to accommodate the aid and trade relations of the African, Caribbean and Pacific Commonwealth countries within the enlarged Community, including Britain. The second Lomé convention will expire in February 1985. It is worth remembering that the majority of the ACP countries are Commonwealth countries. Last month, I attended the formal opening of the negotiations for a successor convention. I believe that they will be very significant negotiations about an important aspect of the Community's relations with developing countries. It is notable that the representatives of the Commonwealth countries in the ACP play an exceptionally prominent part in such negotiations.

The aid aspects of the convention are financed from the European development fund. We attach considerable importance to ensuring that the EDF makes an effective contribution to development. We have a duty to ensure that the aid is well used, and that is why we strongly support the Commission's proposal for policy dialogues with the ACP to ensure that the aid makes the best contribution to local development policies. We particularly support the proposed emphasis on agriculture and food self-reliance by the ACP countries.

At least as important, if not perhaps more important than the aid relationship, is the trade relationship. In 1982 trade flows were £9 billion, as against £1.8 billion from all Community bilateral and multilateral aid. The Lomé convention makes particular provision for Commonwealth ACP beef, rum, bananas and sugar. Of course, the arrangements for sugar are of indefinite duration and are not up for renegotiation.

I believe that the Lomé trade regime is already generous, and some 98 per cent. of Community imports from the ACP are free from tariffs. Nevertheless, it is important to maximise ACP trading opportunities, and we shall look sympathetically at proposals for further liberalisation. Do hon. Members really believe that ACP countries would be better off if we withdrew from that relationship and were unable to speak for our Commonwealth friends?

The motion next calls for a "major project" for international recovery, which would benefit the United Kingdom, the countries of the Commonwealth and the world. Before the debate began I was intrigued to discover what that grandiose project was. We thought that the hon. Member for Vauxhall would magically pull something out of a hat at his first appearance at the Dispatch Box in a serious debate. We were all expecting a blinding flash of revelation, but the hon. Gentleman seemed to forget that part of the motion. We were never told what that major project was. I am completely mystified.

Mr. Stuart Holland

It is notable that every lime the right hon. Gentleman speaks, he is talking about quite derisory sums for the aid programme, and that he has failed to grasp the scale of recovery necessary if there is to be any development at all this decade. We referred to one specific project—"Towards a New Bretton Woods—Challenges to the World Financial and Trading System"—which was endorsed by the Finance Ministers of the Commonwealth two months ago in Trinidad, and which is on the table in New Delhi. Will the Government support that? If the Minister has not got a copy of the text from the Overseas Development Administration, we can obtain one for him from the Library. However, will the right hon. Gentleman support that project for recovery, which is essentially similar to Brandt?

Mr. Raison

It would have been much easier for all concerned if the hon. Gentleman had mentioned in the motion the exact volume to which he was referring. I have, of course, been studying that project.

I believe that the series of reports—as the hon. Gentleman knows, there are three—that have been produced during the past year by the Commonwealth Secretariat, contains a good deal that is worth thinking about carefully. The suggestion that the hon. Gentleman now apparently has in mind corresponds to the proposal in the report "Towards a New Bretton Woods" for an international monetary conference. I am not sure what such a conference could practically achieve. There are many detailed issues on which international financial institutions are already working, and they do not have too bad a record. An unsuccessful conference could do considerable damage to confidence as, indeed, could an unsuccessful round of United Nations global negotiations, even though we do not reject that idea in principle.

Thus, we have reservations about the proposal for an international monetary conference, but there is much else in the report "Towards a New Bretton Woods" with which we would agree. At the discussion of that report at the Commonwealth Finance Ministers' meeting in Trinidad, my right hon. and learned Friend the then Chancellor of the Exchequer proposed the formation of a Commonwealth group to work with the financial institutions to identify changes that would command general acceptance. That proposal may well be discussed further during the Commonwealth meeting in New Delhi.

As I have said, the Heads of Government will also have a chance to look at two other Commonwealth reports: one dealing with the threat of protectionism and the other with ways of improving the structure of the dialogue between rich and poor countries. We welcome both those reports. We are committed to maintaining an open trading system and remain firmly committed to the GATT. It is important that as many countries as possible should contribute to halting and reversing protectionism, as identified at the OECD meeting in May, and at Williamsburg.

The second report makes some excellent suggestions about practical ways of improving negotiating mechanisms in the North-South dialogue. Thus, while the hon. Member for Vauxhall obviously goes for the grandiose, the cause of development and of the Third world would be much better served by looking carefully at the solid and constructive proposals in the report, instead of giving us high-blown flannel.

The Government believe that the longer-term solution to the present difficulties of the developing countries lies in the resumption of sound, lasting growth among the industrialised countries. That will enable the developing contries to export more, increase their earnings, service their debts and invest in the future. The need to ensure that recovery endures and spreads to the developing countries was recognised by the Williamsburg summit partners and, more recently, in Trinidad.

The industrialised countries' commitments at the OECD meeting and the Williamsburg summit to halt and then reverse protectionism will in turn help to spread the benefits of recovery to other countries, by ensuring that as recovery proceeds they will be able to benefit from increasing demands in the developed countries. There are signs that recovery is firmly launched in north America and elsewhere. Output rose in all the major industrialised countries in the first half of 1983. Progress on both inflation and growth has been faster than expected earlier this year. In Europe, recovery should resume in 1984 after some faltering in the second half of this year. In the United Kingdom the Government continue to believe that the only prudent course at present is to pursue sound and balanced monetary and fiscal policies that will encourage that recovery.

The motion before us fails to recognise reality—the reality of the Commonwealth partnership; the reality of the Government's actions and policies to promote political and economic co-operation; and the reality that recovery, difficult though the recession has been, is beginning. Therefore, I call on the House to reject the motion.

8.17 pm

Mr. Guy Barnett (Greenwich)

I am delighted that this subject is being debated. My one regret is that the debate is taking place at the wrong time. My information is that the Prime Minister took off for Delhi at 2.30 pm today, and is presumably now winging her way across Saudi Arabia. Therefore, she has been unable to hear the speeches tonight. I think that perhaps she should have heard them before going to the Heads of Government meeting, which starts on Wednesday, though she is unlikely to take much notice of what we say tonight, even if she were willing to do so. It is vital that the Prime Minister should take the conference seriously. She should come out with a positive attitude and do something to correct the appalling impression that she made in Melbourne in 1981.

I am glad that the debate is about the Commonwealth and Britain's relationship with the other 47 members. Alas, such debates are rare. I do not believe that we have had a debate about the Commonwealth since Britain entered the Common Market. Any hon. Member who visits any Commonwealth country will soon realise the degree to which support for the Commonwealth exists. There is much more support for it abroad than there is here. I have just returned from a Commonwealth Parliamentary Association conference in Nairobi. I was reminded again and again of the enthusiasm for the Commonwealth which exists in other Commonwealth countries and I wish that it was reflected here to a greater extent.

There has, however, been a greater recognition of the role of the Commonwealth over the past four or five years, which has been reflected on both sides of the House. The Minister mentioned the Commonwealth's role in Zimbabwe. I can go back further than that, because I believe that the Rhodesian settlement and the independence of Zimbabwe were major achievements by the Commonwealth. We could not have done it by ourselves, and we did not do it by ourselves. The Commonwealth is entitled to most of the credit for settling a problem which was almost as serious as that which the French had to face in the late 1950s in Algeria, and the Commonwealth was probably more successful. A major part was played by the Presidents of the front-line states, by the Prime Minister of Australia, Malcolm Fraser, and by Michael Manley the former Prime Minister of Jamaica.

The Commonwealth, as I know from having seen it, has played, and is still playing, a major role in helping Uganda back to democratic government and the rule of law. That country's aspirations—as I know from contacts that I have had—are firmly democratic and Commonwealth-oriented.

There has already been some discussion between the Front Benches about the three reports that have been published by groups of experts. I wish to say a little about two of them, although all are of enormous value. The first is "North-South Dialogue; Making it Work". I believe that that was a valuable contribution to world negotiations. The document on protectionism, which was published last year, was of great value, and we can learn an enormous amount from the recent publication of the Helleiner committee.

I believe there is a danger that unless Delhi points the way forward the Commonwealth will begin to run out of steam. I noticed with interest that Mr. Derek Ingram said recently: The trouble with the Commonwealth today is not that it is in any way in danger as far as its survival is concerned (it is not), but that it is in danger of sending its members to sleep. The international position is alarming enough. The Commonwealth is uniquely qualified to play a significant role, but this week it begins a Heads of Government meeting in Delhi still needing to work out where it is going in the international order of things.

I wish to illustrate that in a number of ways. The first is Grenada, which promises to be a major issue at Delhi. I believe that part of the reason behind the crisis of the past month or two was a failure by the Commonwealth and the Government. What political objective did the Government believe they were serving when they cut our aid to Grenada by three quarters? Was it done because of political prejudice? I believe that the Government must bear a heavy responsibility for their cold-shoulder treatment of the Bishop Government. The reason must have been political, because, according to the World Bank, Grenada had an excellent developmental record.

The Commonwealth also has a responsibility for the crisis. About half the Commonwealth countries are small island states, some of them maintaining stability and integrity with difficulty. That fact was recognised at Chogm in 1981. It is ironic, is it not, to recall that at that conference Grenada and St. Lucia proposed the setting up of a Commonwealth Select Committee on small island states and other specially disadvantaged areas? That proposal was rejected. I wonder what the right hon. Lady's position was on that?

The Commonwealth is the only international organisation of any size with a strong bias in its membership towards small island states. I believe that that gives it a special responsibility in that area. It is no accident that Sir Shridath Ramphal was able to speak with authority on behalf of the Commonwealth during the Falklands crisis and say: In making a firm and unambiguous response to Argentine aggression, Britain is rendering a service to the international community as a whole. During the Grenada debate my right hon. Friend the Member for Leeds, East (Mr. Healey) claimed that grave damage was done to the unity of the Commonwealth by recent events in the east Caribbean. Patrick Keatley in The Guardian today predicts a split in the summit on that issue. I think that that division arises because of the Commonwealth's failure to act in time.

The other nettle that Delhi must grasp is the desperate plight of the poorest countries, of which the Commonwealth contains a high proportion. The three reports to which I referred earlier gave practical suggestions about the way forward and guidelines for the Commonwealth and other Governments to follow.

The Helleiner committee, echoing the words of "Common Crisis", called for the OECD countries to achieve 0.7 per cent. of GNP official aid in the 1980s. The Minister's response to that aim, which we heard this evening, is pathetic, complacent and even self-satisfied. We are told that we are doing all that we can until we have our house in order. The Government have used that excuse for five years and it is wearing a bit thin. Moreover, their performance is not, despite the Minister's fine words, getting any better. It is becoming worse. The Minister repeatedly uses cash figures, but it is clear from the public expenditure White Paper that in real terms our aid programme this year is £936 million at 1981–82 prices compared with £1,108 million in 1979—the Labour Government's last year. The Government have no record of which to be proud.

I can point to one example of gross dereliction of duty by the Government in relation to aid. One of the best multilateral programmes in existence is the UNDP. Its work is supported not just by words by the developing countries. They subscribe 60 per cent. of its budget. The Government slashed the contribution to UNDP by no less than 56 per cent. in real terms. The small increase offered by the Government at the pledging conference the other day, hardly makes up for so massive a cut. That fund is vital to the needs of the poorest countries. Many of them are Commonwealth countries. I believe that the Government have a duty to restore their contribution to the previous level.

There are two issues which relate directly to the role of the Commonwealth—technical co-operation and finance. I was glad to hear what the Minister said about the Commonwealth fund for technical co-operation. I know how highly it is respected by his Department. That fund has been operating for well over 10 years. It sprang from the concept of third party aid. It exists on a relatively small budget of only about £20 million a year. Technical aid for the poorest and most disadvantaged countries is certain to be a continuing need for many years to come.

Unfortunately, I do not believe that we in Britain will be able to continue to provide the bilateral technical assistance personnel of the quality that have been available in the past. The reason is that for about 20 years we have been able to employ ex-colonial specialists—ex-agriculture, forestry and livestock officers—whose training and experience on the ground cannot be matched today. They are now retiring in significant numbers and are not being replaced by people of similar training and experience.

Last week, on 17 November, a written answer showed that Government plans to reduce the Civil Service will mean a cut in ODA strength from 1,793.5 on the staff to 1,500 in 1988, a fall of 16 per cent. over four years. The first 12.5 per cent. of the fall comes in the first year. Meanwhile, I gather that the Home Office expects the number of its staff to rise from 35,755 to 41,132 over the same four-year period, an increase of 15 per cent. in its manpower. There will be 5,000 extra people. What is the logic behind that? When he is asked why there is a cut, the Chancellor of the Exchequer usually replies, "For more efficient use of manpower." This is happening at a time when the ODA is losing some of its most experienced and valuable staff. I hope that the Minister will answer my question, because I am concerned about the strength of the ODA, which will be affected by the staff cuts which appear to have been approved by the Cabinet.

For some time I have been critical of the administrative set up of the ODA in the field. I have high regard for the development divisions. They do a first-class job and at present are well staffed, although many of them cover much too wide an area. The ODA needs to administer its own programme overseas and not to be dependent on the diplomatic service to do that for it, although the diplomatic staff whom I have met, who have been charged with that responsibility, generally do a good job.

Our competence, which is lower than in the past, leads me to ask whether there is a widening role for the Commonwealth fund for technical co-operation. Is it not time that the Commonwealth began to think seriously about greatly increasing its budget? Serious thought should be given now to the possibility of setting up under the fund a Commonwealth development service. Such a service could recruit staff from all over the Commonwealth, including Britain. Many ex-volunteers from VSO, its Canadian equivalent, and others, would want to apply, and would come with two years' experience in the field.

India, Malaysia and other countries have a fund of experience that would be highly relevant to the needs of other tropical countries—experience gained from the green revolution, and knowledge about irrigation, pest control, forest management, co-operative development and appropriate technology. I emphasise that the purpose of the service would be to supply people to work on the ground and gain a knowledge of tropical conditions. However valuable visiting experts may be, they cannot compensate for the lack of experience on the ground that has been available in the past from people with years of experience in tropical countries.

A terrifying food crisis is developing in the African continent. What is called for is an imaginative and bold initiative of the sort that I have described, because there will be a continuing need in that continent for a high level of technical co-operation and assistance for many years to come.

I was fascinated by an idea put forward recently in an article by Guy Arnold. There is no time to refer to the recommendations of the Helleiner committee, but Mr. Arnold's suggestions could make a contribution. The article deals with the problem of indebtedness. He proposes a new Commonwealth initiative. I have no doubt that it will not be considered in Delhi this week, but I hope that it will be considered one day. His idea is a Commonwealth development bank. The bank would be funded by capital and interest repayments to Britain and other rich members of the Commonwealth instead of being fed back to the general funds of the donor countries. Debt repayment and forgiveness during 1981–82 amounted to no less than £68 million to Britain alone. I suggest that that money should go to the bank. It would mean that all our aid to Commonwealth countries would be in the shape of grants, and as a consequence the Commonwealth bank would have a regular income, which it could employ in the same way as the World Bank and the IDA do at present.

It is all very well to rail against Congress for its failure to ratify replenishment of the IDA, but the Commonwealth can, and should, give a practical example, through practical action, because of the urgency of the position facing the world. In "Common Crisis" there are references to the role of groups of like-minded countries and the possibility that they could help to break the logjam in global negotiations. The Commonwealth report "North-South Dialogue; Making it Work", is a valuable contribution to that end.

There are practical contributions which a group of nations such as the Commonwealth could make to help to heal more sick people, help more starving people and give hope to the poor who at present have little or no hope. The value of that contribution, although it may be relatively small in world terms, can go much wider. It can shake the Americans and the Russians out of their present complacency. It can demonstrate what can be done, and should be done, in the alarming position now facing the world.

8.36 pm

Mr. Mark Robinson (Newport, West)

I am pleased to have the opportunity to follow the hon. Member for Greenwich (Mr. Barnett) because he has done the House a service this evening by focusing attention on the Commonwealth and the forthcoming Commonwealh conference.

The motion before us is perhaps phrased in an unfortunate way. The House is being asked to judge the Commonwealth conference and Britain's role before that conference has taken place. Rather than shutting the stable door after the horse has bolted, we are being asked to shut the door before the horse has been put into the box.

Both the world economic position and Commonwealth co-operation are on the agenda for the meeting. To charge the Government, as the motion does, with failure to promote political co-operation and economic development in the Commonwealth is to say that Britain is not playing an effective part in the Commonwealth. That I believe to be profoundly untrue.

I shall not catalogue the contributions that the Commonwealth, with Britain as part of it, has made in recent years. That was ably expressed by the hon. Member for Greenwich. Indeed, if I did, I would have to declare my interest in the Commonwealth. Instead, I shall confine my remarks to two or three specific points about the Commonwealth heads of Government meeting which begins on Wednesday.

My first point relates to the Commonwealth study group report on the Bretton Woods system. The Opposition hinted this evening that that document is a blueprint for the world economy. It is not. Indeed, it is far from that. It is designed to be a contribution to the debate on international funding arrangements. It is an important debate because those arrangements were put into place in 1946—after the last war. The time has come to take a fresh look at them. That does not mean that we need do that along the lines recommended in the report. I was glad to hear my right hon. Friend the Minister tell the House that the Government are prepared to push positive proposals in New Dehli.

It is unrealistic to expect the Commonwealth, at the meeting in New Delhi, to produce solutions to world economic problems. It is not, as a forum, designed to do that, and it does not, as a forum, try to do that. One great value of the Commonwealth is the informality of its discussions and the opportunity provided at its meetings for an exchange of views and experience. There is also an input of views into wider international forums. Therein lies the real worth of the discussions that take place at Commonwealth meetings. I believe that we shall find exactly that kind of formula in the communiqué in 10 days time, together with several constructive suggestions about the way forward for the world economy.

My second point relates to technical co-operation in the Commonwealth. It has been said tonight that Britain contributes 30 per cent. to the Commonwealth Secretariat; but it also contributes 30 per cent. to the Commonwealth fund for technical co-operation. To expect the Government to contribute more than 30 per cent. in either case is not viable, realistic or sensible. I would argue not just that the Commonwealth fund for technical co-operation should continue to play a constructive role in economic development, but that its role could be expanded.

That is a matter not just for the British Government, but for all participating Commonwealth Governments. One value of that fund is that the contributors are not just the developed countries of the Commonwealth. Indeed, Nigeria is the fourth biggest contributor. Virtually every Commonwealth country contributes to the funds. It is a collective effort that is greatly valued in many countries throughout the Commonwealth. In that respect I was a little disappointed that the ODA report gave only a brief paragraph to the CFTC. As we are a major contributor to the fund, we might sometimes blow the trumpet for it a little more.

We should sometimes consider more closely our attitude to the Commonwealth and to co-operation within it. The time is coming when it would be legitimate to take a closer look at our role. Over the last 20 years, Britain's attitude to the Commonwealth has been, that in the modern Commonwealth, Britain should not necessarily be seen to lead from the front. If it does, those who may be the Commonwealth's detractors will argue that the Commonwealth is simply a new form of colonialism.

Now that so many countries—48, we hear, will be present in New Delhi—have acquired independence, it is time to take a fresh look. In recent years, Canada and Australia have used the Commonwealth as a forum for pushing new ideas, and so can we.

As a reasonably new Member, I am naive enough to believe that our proceedings will be communicated to New Delhi for anyone who is interested. I should therefore like to mention the topical subject of small states, which, in the modern world, are peculiarly vulnerable—not just, as my right hon. and learned Friend the Foreign Secretary was reported to have said, to hijacking in the same way as an aircraft, but to extreme economic buffeting which they find it extremely difficult to cope with.

I mean that in the sense not just of economic storms or downturns, but economic negotiation. Small islands must negotiate with big international neighbours and with multinational companies in the private sectors, and sometimes they are desperate for, and short of, advice. We must remember that a wrong economic decision in a small island economy may bring down the Government and even destroy its democratic system. It is a tribute to the modern Commonwealth that so many democracies have survived in small countries. Grenada is the exception rather than the rule.

Assistance is being given in many areas, including the training of civil servants and the provision of legal draftsmen, but more is required. That is where we can and should extend our focus. Discussions about that were in train at the previous Heads of Government meeting in Melbourne, and recent events have brought the point closer to home. Many of the small island economies are in the Pacific, which is often regarded as being in the sphere of influence more of Australia and New Zealand than of Britain, but I hope that, in assessing the contribution that I know the Government will make to the meeting in New Delhi, the problems of small islands will be taken into account.

The Heads of Government meeting in New Delhi, which will last for nearly 10 days—one of the longest Heads of Government meetings on the international agenda—will provide an opportunity for genuine dialogue and for countries of the North and of the South to meet informally without being hidebound by the necessity for formal votes, as happens in the United Nations or in other international bodies. In the quiet of those meetings, views can be aired in a way that is impossible in larger forums. The representatives of countries will have the opportunity to say things to each other that they could not otherwise say. In my experience of the Commonwealth at work, that has always been an advantage. Zimbabwe proves the case, but there have been many other such examples.

I hope that the House will reject the motion.

8.46 pm

Mr. David Alton (Liverpool, Mossley Hill)

I associate myself with the remarks of the hon. Member for Newport, West (Mr. Robinson) about the vulnerability of small island states and of the smaller Commonwealth states. The hon. Gentleman spoke with great knowledge about those matters, and he was right to say that the Commonwealth must pay great attention to those problems in the future. Twelve Commonwealth countries are small island states with populations of less than 200,000. Non-island states, such as Belize, are especially vulnerable because of the aggressiveness of some of their more belligerent neighbours. Post-Grenada, it may be worth while Commonwealth leaders considering setting up a rapid deployment Commonwealth force to avoid the problem of super-powers, or of Britain, acting unilaterally in times of tension.

The Minister talked about the value of the 1979 Commonwealth conference at Lusaka that led to the Rhodesian settlement. The first faltering steps towards an independent Zimbabwe were taken at that conference. Hon. Members paid tribute to that process, but two years previously another significant step was taken at the Commonwealth conference held here in London when the Gleneagles agreement was signed. That agreement demonstrated Britain's concern for the emerging black countries in Africa, and its abhorrence of apartheid. I wish that the Minister had also paid tribute to that conference.

Two years ago at the last Commonwealth conference the Melbourne declaration gave great fluency to the concern of many people in the North and South about the failure to implement the recommendations of the Brandt report. That point was discussed at some length by the hon. Member for Vauxhall (Mr. Holland). Liberals and Social Democrats associate themselves with his concern that insufficient will be done this week at the Commonwealth Heads of Government meeting in New Delhi to break the circle of poverty, referred to in the Melbourne declaration. All of us will have read with some anxiety the article in The Sunday Times yesterday which stated that the Prime Minister and the Foreign Secretary would be on their way to New Delhi with Their briefcases bulging with platitudes, but empty of proposals. It went on: The British think this is just as it should be. But it means that, on the crises confronting the Commonwealth—Grenada, Cyprus, world recession—Britain is unlikely to show leadership or imagination". The Sunday Times referred to the conference as being "a summit of platitudes". I hope that it will not be that. It is important that the issues before the Commonwealth conference should be debated in all seriousness and that Britain demonstrates the leadership that it has traditionally shown in the Commonwealth.

I come back to the 1981 declaration in Melbourne. There the British Government were a signatory to a declaration which asserted that the gross inequality of wealth and opportunity currently existing in the world, and the unbroken circle of poverty in which the lives of millions in developing countries are confined, are fundamental sources of tension and instability in the world; as a consequence, assert our unanimous conviction that there must be determined and dedicated action at national and international levels to reduce that inequality and to break the circle". There are three important reports before the Commonwealth Heads this week, and they could give this country the chance to demonstrate determined and dedicated action and to prove that we really want to break the circle. First, there is the report on protectionism. The Minister expressed a view that I share—as, I suspect, do my right hon. and hon. Friends in the Liberal and Social Democratic parties—about trade barriers. We do not believe that the erection of trade barriers will help the developing world. That is why we dissociate ourselves from Labour Members on that matter.

The hon. Member for Newport, West mentioned the second report that is being discussed in New Delhi this week about the need for a new international monetry conference and the need for a new Bretton Woods agreement. On 27 January of this year, the Secretary General asked: was it not inevitable that sooner or later—for a long time it seemed later—we would have to begin again the rigorous intellectual journey that led in 1944 to Bretton Woods and must lead us now to the threshold of a new era of international economic arrangements and relationships? He went on to say: Bretton Woods was about money and finance and about trade; it was esoteric and to many barely intelligible; but it was, in the end, about people. Indeed, to a greater degree than was attainable at Bretton Woods in the twilight world of those early post-war years, the world's trading and financial system of the 80s and beyond must be responsive to the needs of all the world's people". He was saying, just as the hon. Member for Newport, West said a few moments ago, that if one is really serious about the need to break down the protectionism that exists in the world today and that discriminates against so many of the developing countries, there needs to be a new imaginative across-the-board settlement, a new worldwide agreement. But one cannot have a stand against protectionism without the need for a new international monetary conference.

There will also be a third report discussed in New Delhi on the failure to implement Brandt. In failing to respond to the problems of the Third world, we make a mockery of the Melbourne declaration. In 1982, the real aid that we provided to the Third world was down by about 16 per cent. to £1,024 million. Although I welcome the announcements made tonight of a small increase in our aid, they should be seen in perspective. After all, Britain can find some £10,000 million for our independent nuclear deterrent, Trident, and £6,000 million for our continued presence in the Falklands through to the year 1988, but we can find only about one sixth of that for this year's aid programme to the Third world. I think it was Bacon who observed, about 400 years ago, that wealth is rather like manure—the more evenly it is spread the more effective it is.

That is why we must increase our aid programme. After all, about one in three of the 1,000 million people who live in the Commonwealth are malnourished. Development assistance for agriculture is totally inadequate—we are providing only about three fifths of the requirements. Millions of people are badly educated or illiterate.

Our response should be measured against the United Nations target that we have never attained, of 0.7 per cent. It should be measured against the 2,200 times more that we manage to find for military purposes each year than on peace-keeping. It should be measured against the 40,000 children who die every day. UNICEF say that progress towards preserving the lives of those children is now slowing down and that for many the quality of life is beginning to fall. It should be measured against the half day's military expenditure that would be enough to wipe out malaria from the world. It should be measured against the 800 million people whom Robert McNamara said were living in an absolute state of starvation, despair and destitution. It should be measured against the 12 million children under five who died of starvation in one year alone. Those chilling statistics are a small measure of the massive challenge facing the Heads of Government in New Delhi this week.

Perhaps nowhere has our insularity and selfishness been more apparent than in our treatment of overseas students, a form of aid which is mutually beneficial to the recipient and donor. In 1980 the introduction of full cost fees had the effect of driving away thousands of overseas students from this country. At Liverpool university alone of 7,000 students on the campus only 170 are this year from overseas.

That is an appalling state of affairs, but is it surprising? Consider medical fees. At a time when countries such as India desperately need doctors the cost of a five-year course at a university like Liverpool is £7,000 a year, a total cost of £35,000. That is a prohibitive figure for the average student from a Third world or underdeveloped country. About 45 per cent. of all overseas students in Britain are from the Commonwealth, but enrolments, according to Department of Education and Science figures published last June, are dramatically down. In 1977 there were 22,900 Commonwealth students in the United Kingdom. Today there are only 15,000.

Numbers of all overseas students are down, from 61,400 in 1981 to 55,000 this year. There has been a 32 per cent. cut in Commonwealth student numbers, yet what an investment those people are as ambassadors for this country's industry, commerce and trade. What great people they are in helping to build up our relations with the developing and Third world countries. Where will the 32 per cent. of students turned away go? Many of them will end up in eastern bloc countries, being educated in their universities and colleges. Is that an investment in peace for the future?

The Government went some way to meet these arguments earlier this year when they restored £46 million to the programme. That, over three years, will provide an additional 5,000 to 6,000 scholarships and awards, but only half will go to Commonwealth students and it will not be enough to bring us back to the 1977 position. It falls far short of the Overseas Students Trust recommendations. That is why the Government should pledge more money to aid student mobility and help set up a Commonwealth higher education programme along the lines of that approved in principle at Melbourne.

Mr. Guy Barnett

I am pleased that the hon. Gentleman is dealing with the vital subject of overseas students. Does he realise the grave damage that has been done to relations between this country and other Commonwealth countries as a result of Government policy? Apart from the valid points that he has made, devastating damage has been done to our relations with, for example, Malaysia.

Mr. Alton

Indeed, and the hon. Gentleman speaks with greater knowledge than I on that subject. I endorse what he says. From my experiences in Third world countries and in the middle east, having spoken to business men and academics there, it is clear that in terms of sheer self-interest the decision of the Government to introduce full cost fees makes no sense. On moral grounds and in terms of enlightenment it makes no sense either. I do not know how this country can call itself civilised having been party to such massive reductions in the past four years.

Apart from our response to those three important papers that are being discussed in New Delhi this week—on protectionism, on the practical steps to try to put flesh on the bones of Brandt and on the need for new monetary arrangements—there are other issues on which Liberals and Social Democrats feel that new Commonwealth initiatives are required. We have recently seen the election of Rauf Alfonsin as the new president of Argentina. He is a member of Liberal International and has had useful discussions on previous occasions with my right hon. Friend the Member for Tweeddale, Ettrick and Lauderdale, (Mr. Steel). Argentina's move towards democracy should be welcomed. In that context, I deeply regret that the Prime Minister, when in Washington recently, was reported in an Argentine newspaper called Clarin to have said: The democratisation of Argentina will not change the British position. That is an obstinate and stubborn position to take. What will change her position? We cannot continue with the lunacy of fortress Falklands, which will cost £6 billion between now and 1988, for the sake of 500,000 sheep and 1,800 people. There must be a political settlement or the lives of our service men which were given on the beaches of the Falkland Islands will have been worthless. That is why an obstinate policy now is no way to proceed.

I referred earlier to small island states but I should like also to refer to Hong Kong. If the talks with China fail, to avoid the mad scramble of political refugees that would inevitably follow, there must be Commonwealth arrangements to guarantee resettlement opportunities. That should be put on the agenda of the next Commonwealth conference. It is an important and urgent issue. We should particularly enter into bilateral discussions with Australia at the earliest opportunity to see in what way Australia could assist, through, for instance, changes in its immigration law.

Liberals would support the Shagari plan which will be discussed this week in New Delhi—a plan for Namibia which would lead to the replacement of Cuban troops in Angola with a mainly African peacekeeping force.

Instead of lone dissent, the United Kingdom should also support all the other Commonwealth states in their efforts to ratify the law of the sea convention this week.

Her Majesty's Government should press for greater Commonwealth commitment to minorities within member states. I raise a matter that was mentioned to me by my hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) about the oppression and continuing problems of the Tamil community in Sri Lanka. We hope that proper concern will be shown by the Government this week in bilateral discussions on this issue with the Sri Lankan Government.

We also believe that less emphasis should be placed on the role of the Commonwealth Development Corporation as a corporation tax generator and more emphasis placed on the merits of aid projects, regardless of profitability or consideration of political quotas.

Finally, in this wide range of serious issues to which we hope the Government will give some attention, we hope that the next Commonwealth conference will initiate a 10-year programme of environmental management in the Commonwealth countries. We commend to the House Richard Sandbrook's paper to the International Institute for Environment and Development on this subject.

Britain's heritage and its traditions are bound up in the Commonwealth. It is a unique organisation, a collection of heterogeneous states, membership of which enables us to reach out of Europe into the wider world. In 1971 at Singapore, the Heads of Government said: International co-operation is essential to remove the causes of war, promote tolerance, combat injustice and secure development among the peoples of the world. In 1983 the need for positive commitment from Her Majesty's Government to achieve those objectives has in no way been abated. Briefcases bulging with platitudes will not be enough to break the circle of poverty or to achieve the international co-operation to which Her Majesty's Government say they subscribe.

9.2 pm

Sir John Osborn (Sheffield, Hallam)

I welcome this debate about a challenge that has concerned me for years, and even decades. The hon. Member for Vauxhall (Mr. Holland) referred to what is wrong on the global scene. Perhaps the Commonwealth Prime Ministers' conference is a good time to consider these issues, but I very much hope that Opposition Members will make the success of that conference easier rather than more difficult.

The first part of the motion condemns the failure of Her Majesty's Government to promote political co-operation and economic development in the Commonwealth". The Government's record is good, and by implication the records of previous Governments have not been too bad either. Therefore, I fundamentally disagree with the motion.

The second part of the motion relates to international economic recovery which would benefit the United Kingdom, the countries of the Commonwealth and the world. That is a constructive trend that I shall try to develop.

Between 1975 and 1979 I was a member of the Development Committee of the European Parliament concerned with Lomé 2. Since 1980, I have been a member of the Economic Affairs and Development Committee of the Council of Europe. Therefore, I have met officials of the OECD and become aware of the Development Assistance Committee. I have met Bradford Morse and had meetings with the World Bank. What the hon. Member for Vauxhall and the hon. Member for Liverpool, Mossley Hill (Mr. Alton) have spoken about is of concern to all those institutions and their members who must provide the funds that they spend. This is a challenge that I should like to discuss, because from it follows on Brandt 1 and Brandt 2. My right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) must be commended for his part in this.

When the Council of Europe representatives went to New York, some 18 months ago, we met Bradford Morse, Mr. Clausen and other members of the World Bank. The discussions that took place then have convinced me of two hard facts that face western Governments. First, if Governments have limited funds, they want to channel them to countries that will not abuse them. The World Bank has Mexico, Brazil and, more recently, Argentina under the microscope. The hon. Member for Vauxhall spoke about a new Bretton Woods conference and mentioned other countries that are in debt.

I have been asking myself why this has happened. Is it that these and many other countries, whether they be members of the Commonwealth or of the club of 77, do not have the economic, managerial, technological and industrial disciplines to give the Governments of western powers—the developed world—and the OECD countries sufficient confidence to increase the burden on their taxpayers during a world recession? Will it be possible to make progress if these countries take steps, with the help of the developed world, to put their houses in order?

Secondly, I have been disturbed even further, on talking to representatives from clearing and merchant banks——

Mr. Stuart Bell (Middlesbrough)

rose——

Sir John Osborn

I hope that the hon. Gentleman will allow me to finish and then I shall give way—to member companies of the CBI, the International Chamber of Commerce, the ABCC and companies that have considerable experience in investment in the Commonwealth and colonies. They have said that the political colour of many of the Governments is such that capital, free enterprise and wealth-creating activity is distasteful and only too easily penalised.

Mr. Bell

The hon. Gentleman makes the point that this is somehow the fault of the economic management of those countries. Is he aware that the Commonwealth Secretary General, Mr. Shridath S. Ramphal, in a statement on 21 September 1983 on behalf of the Commonwealth, flatly contradicted that proposition?

Sir John Osborn

I have worked fairly closely with him in a number of areas. One must work out whether my approach, which comes from others, is realistic. Twenty years ago, I was a joint author of a Conservative publication, "Trade not Aid", when insurance against the political risks of investing abroad was all- important. Since that time, there has been much compulsory purchase—if not confiscation—of assets.

There have been notable exceptions to this lack of skill in economic management. In 1964, I was at an International Chamber of Commerce conference in Delhi at which I met many business men of the Third world. They worked well with engineers and their counterparts in the North and knew the disciplines that were necessary to make irrigation, mining, agricultural developments and industry work. However, over the years, too often those people have told me that these values have had to play second fiddle to political ideals—often the misplaced ideals of Socialism.

But for Socialism in Great Britain, when Harold Wilson came to office in 1966 for a second time and British Steel was nationalised, companies with which I was associated would have developed a project in India. The site for the factory was in West Bengal, but that area went Communist. Due to political factors in Britain and India, a good, wealth-creating Indian enterprise never went ahead. The people with whom I would have worked had expertise that I respected. The Tata organisation and the Birla family are well known in this sphere.

Another example is Lee Kuan Yew in Singapore. When I first visited that country, it was an old British colony. It is now a thriving industrial area where all these management techniques are known and understood.

I suspect that in too many newly independent Commonwealth and ex-colonial territories the role of free enterprise and wealth creation is insufficiently understood. The Socialism which, but for a change in 1979, would have brought Britain to its knees, still prevails in some of those territories. Who is to blame for that? It is this country and other European countries, the British Labour party and other Socialist parties. In the London school of economics and some of our universities and colleges politics, economics and philosophy courses and good management and the techniques that go with it have had to take second place to well-meaning but perhaps politically misplaced ideals.

Since I have been in the Council of Europe, Lomé 3 and the work of the Development and Assistance Committee of the OECD have been discussed. An Icelandic Socialist Member of Parliament, Olaf Grimsson, has produced two excellent reports on "Human needs and the Earth's resources". Not unconnected was the Third world energy conference in Nairobi which also had a Council of Europe input.

The main issue facing the Third world, and indeed the whole world, is food for a rapidly expanding population and resources of all kinds, mineral and non-mineral. The interdependence of the Third world and the developing world is all too easily forgotten, but this is a vital factor.

I congratulate my right hon. Friend the Minister for Overseas Development on the excellent publication, "British Overseas Aid 1982" and the information contained in it. Irrespective of the total of about £1 billion, expenditure on aid is only 0.37 per cent. of GNP compared with the DAC average of 0.38 per cent. Despite the recession and the failure of our basic industries under Socialist and Conservative Governments, the British aid programme has been good. One might compare it with the Soviet Union's programme—mainly arms, education in Moscow and perhaps, as the Inter-Parliamentary Union has put it, back-door colonialism.

What is important is value for money. The key to the future is not necessarily the level of public aid—0.7 per cent. is not a vital figure—but the overall momentum of private investment and aid. The critical need is to help the Third world to help itself. Modern financial and managerial disciplines of commerce and industry are essential ingredients. If our recognition of that interdependence brings employment, trade and exports for British industry—for me, that means Sheffield, as I hope to elaborate in a later debate tonight—that is to be welcomed.

The 23 countries of the Council of Europe are organising a conference entitled "North-South—Europe's Role" in Lisbon from 9 to 11 April. The World Council of Churches and the international aid lobby will be invited and welcome. Well-known names such as Willy Brandt, OECD Secretary General Emile van Lennep, Commonwealth Secretary General Sir Shridath Ramphal and Commissioner Pisani who is very much concerned with Lomé 3, will be attending the conference with Members of Parliament from 23 European countries and some other OECD countries.

I have been in touch with civil engineers, construction engineers, consulting engineers and some multinational companies to learn how they train management and bring Third world people on. I hope that we can take up the challenge of helping the Third world to help itself. It will provide the developed world with opportunities to buy what it wants from the Third world. That will make aid programmes much more palatable to the unemployed. I hope that my right hon. Friend will send representatives from his Department. I also hope that he will consult the Secretary of State for Trade and Industry.

Great Britain and the Commonwealth are an example that the rest of the world envies. But for shortage of time I could have spoken about the Commonwealth Development Corporation and given other illustrations of this. I cannot accept the motion. Nevertheless, there is work to be done and it should be started in Delhi. I hope that the wealth creators, such as the engineers, the technologists, the scientists and those who know what training and modern management are about, will be given a chance to take part in the task and to work with the diplomats and experts who normally have so much to say on the subject.

9.15 pm

Mr. Eric Deakins (Walthamstow)

The hon. Member for Sheffield, Hallam (Sir J. Osborn) had some fairly jaundiced views on Commonwealth development which were rather at odds with the tone of the Minister of State's speech. However, I suspect that the hon. Gentleman will strike a strong chord in the heart of the Minister who will wind up the debate. I look forward to hearing the different nuances between the Government's opening and winding-up speeches.

I take a more gloomy view of Commonwealth development than the Minister. He was not complacent. Indeed, he was a little more optimistic than circumstances warrant. My hon. Friend the Member for Vauxhall (Mr. Holland) mentioned the enormous debt problem, which is not confined to Commonwealth countries. He also mentioned the problem of high interest rates, which are likely to continue for a long time because world interest rates are decided by what happens in the United States. Whether we like it or not, the United States has a favourable surplus on capital account. It does not have a favourable surplus on the ordinary balance of trade, but it is increasingly obvious that what happens on capital account in the United States, or the inward flow of capital, decides the level of interest rates there, and they settle the level of interest rates around the world.

Poorer countries, especially Commonwealth ones, have problems with their balance of payments. They also have a problem of rising populations. We always seem to steer clear of that subject. I am not sure of the Commonwealth Secretariat's attitude to rising population. The hon. Member for Newport, West (Mr. Robinson), who spoke elegantly in his glowing panegyric of the Secretariat, did not mention it either. The House has many debates on development, but since I came here in 1970 I cannot recall a debate on the Commonwealth since we entered the Common Market on 1 January 1973. We had many debates that concerned the Commonwealth in 1972, when we were discussing whether to enter the Common Market, but since then interest has dwindled. The Government's attitude has been that we must resolve our own problems before we do too much to help the rest of the world or the Commonwealth.

The circumstances of the last year are such that we cannot continue like this. The North-South dialogue, in which the Commonwealth should play a major part, has failed on almost every occasion in the past three years. At each international meeting or conference, members of the Commonwealth have been divided on North-South lines. Seven Commonwealth countries were represented at Cancun. Before the then Foreign Secretary and the Prime Minister went there, some Opposition Members tried to organise a meeting of Commonwealth technocrats, perhaps through the Commonwealth Secretariat, who could have tried to co-ordinate the Commonwealth's view at that important conference. The whole idea failed, as did the Cancun summit.

We recently had a debate on the second Brandt report It has died a natural death and no one speaks about it any more. The United Nations global negotiations have completely run into the sand. No one asks questions about it anymore, because it has got so bogged down in New York.

The last GATT conference was almost a complete failure, in spite of the protestations about stopping further protectionism. One of the reasons was that, as a result of the attitude of Britain and other Common Market countries, no real progress was made on international agricultural trade. That gives the lie to what the Minister said about Lomé, because, although that is important, international agricultural trade is even more so to many Commonwealth countries. However, nothing was done about that in GATT.

There was the failure earlier this year of the UNCTAD conference in Belgrade. Above all—I regret this bitterly because my own party supported it as much as the Conservative party—we have had a much more restrictive multi-fibre arrangement this year than ever before. It has now become a system for regulating Third world textile exports to rich countries rather than a means of opening up the markets of rich countries to Third world textiles. The CAP is a further hindrance, but I shall not go into that.

Is there now a role for the Commonwealth in the North-South dialogue? Like many hon. Members, I believe that there is, but it simply cannot be one of producing rhetoric.

The hon. Member for Liverpool, Mossley Hill (Mr. Alton) quoted from the rhetoric of the Melbourne Heads of Government summit of about two years ago. That was a marvellous document, but it contained only words. If New Delhi reproduces the same rhetoric and nothing else, it will have been a failure for economic development.

I wish to make some positive suggestions for the future. It is no longer the British Commonwealth; it is the Commonwealth of nations. However, Britain still has a major role to play and the headquarters of the Commonwealth Secretariat are here. Why not try to arrange more frequent meetings of Commonwealth Ministers? For such Ministers to meet every couple of years is too infrequent, given the present state of the world economy and its financial markets.

EC Ministers meet regularly, probably once a month, if not more often, depending on the subject they cover. The Commonwealth cannot go to those lengths, but we should try to aim at meetings once or twice a year for Ministers with common interests. Through the Commonwealth Secretariat we should try to ensure that as far as possible the views of Commonwealth countries are co-ordinated in international forums, not merely in the United Nations but at economic summits and so on.

It should be remembered that at Western economic summits, of which Williamsburg was a prime example, no Third world or Commonwealth countries are represented other than Britain and Canada. In those circumstances, Britain and Canada have a moral duty and obligation to speak for the whole of the Commonwealth, not just for their own selfish interests, however important.

Mr. Mark Robinson

It is not just the western side of the equation within the Commonwealth that must be balanced. Everyone goes home to his respective grouping. The non-aligned grouping has a considerable influence, especially as it includes countries such as India. Therefore, it is not as simple as bringing Britain and Canada together.

Mr. Deakins

I was referring to Britain and Canada simply in relation to the economic summit of the seven major trading nations. I was not thinking of other international forums where, obviously, India and other countries have a vital role to play.

We should also try to draw up a proper agenda for meetings of Heads of Governments within the Commonwealth. I concede that these meetings are often informal and that much of the best discussion takes place at the margins—to use that terrible Common Market phrase—outside the conference sessions. Nevertheless, at each meeting the Commonwealth ought to discuss trade and aid within the Commonwealth and what is happening about it.

The Commonwealth should discuss also its attitude to the reform of international institutions. As the hon. Member for Mossley Hill said, the Commonwealth experts' report from Delhi should be germane to those discussions. We cannot proceed, as the Minister said, when dealing with the debt problem and the IMF, merely with a case by case approach, because that smacks of expediency in the increasingly tense financial problems of the world. We must have a strategy to deal with the debt problems faced by many Commonwealth countries. It would be helpful if this subject were discussed at the Commonwealth conference.

Mr. Alton

The hon. Gentleman is making an interesting contribution to the debate. Is it not a contribution that in Paris last week the British Government agreed with nine other high-powered European and north Atlantic countries to enter into discussions about the whole monetary system? Yet the Government at the New Delhi conference are turning down a similar request from our Commonwealth partners.

Mr. Deakins

Yes, I find that very strange. I think that that smacks of Britain still seeing itself as a rich country working with other rich countries to try to get the world economy woving in its own interests, without necessarily having regard to those of the poorer countries. The Government believe—I think that they are wrong—that if the economies of the rich countries are moving, the Third world countries, whatever their problems, will be dragged along in our wake. I do not believe that to be the case, even if it has been so during the past 30 years.

I wish briefly to refer to the International Development Association. I have recently attended a conference with American legislators of the British-American parliamentary group. The prognosis by the members of the House of Representatives who sit on many important international economic committees is that it is unlikely that the United States will agree to an IDA seventh replenishment, which would give the World Bank the $16 billion that it requires during the replenishment period.

It is unlikely that the United States will even agree to the sum which would give IDA $12 billion, which is the existing figure. The most that the American legislators are likely to allow the President to give—I am not sure about the Administration's attitude—is $0.75 billion annually, which would give the World Bank and IDA only $9 billion to spend, as opposed to the $12 billion and $16 billion for which they have asked. Compared with the progress made in recent years, that will be a great setback.

If the United States reduces its contribution to $0.75 billion, which is less than that under the previous replenishment, will Britain do likewise? I sincerely hope not. I am sure that the House would welcome some reassurance on that important matter. Although we could not pick up all the pieces which the Americans will let fall if they reduce their contribution, we should not reduce our contribution proportionately just because American public opinion and legislators are not terribly interested in the Third world.

Some hon. Members are worried about our remaining dependent territories—I leave aside the special problems of the Falklands, Gibraltar and Hong Kong—the Turks and Caicos Islands, the Virgin Islands and others. We spend very little on the economic development of those countries. We try to make them independent, but many are not economically viable. Will the Government consider inviting the rest of the Commonwealth to join Britain in establishing a programme of economic development for our remaining colonial dependencies, so that the Commonwealth as a whole helps to bring them up to an economic level at which they can achieve some economic viability and eventual independence?

At each successive Commonwealth Heads of Government conference we must raise problems of the constraints on economic development that arise because of unrestrained or hardly restrained population growth. That was mentioned at the Cancun conference. I believe that this subject is much less sensitive than before. The world's population is increasing, and many Commonwealth countries have rapidly increasing populations, which will probably double towards the end of this century. That is only another 17 years away. The economic problems which they face, and which we shall, quite rightly, be asked to help them bear, will be compounded and made worse by rising populations. I am worried about public opinion in this and other rich countries if the aid that we give merely goes to maintaining existing paltry standards of living, instead of making improvements.

Sir Peter Mills (Torridge and Devon, West)

The hon. Gentleman has put his finger on the problem and on the key to the future of much of the Commonwealth. How can we convince the people on the ground that this is not just another Western idea, but is for their benefit?

Mr. Deakins

The hon. Gentleman is perhaps being a little gloomy. In many Commonwealth and Third world countries Governments are taking population problems seriously. Although there are religious and cultural obstacles in many countries, the main problem is getting the facilities to the people. For example, in India, 700,000 villages need to receive contraceptive advice and supplies, and mother and child help facilities. That is a mammoth undertaking. With our help and that of other countries the Indian Government are doing their best despite the fact that the problem is immense.

Hon. Members have a duty to ask the Government to put the Commonwealth at the forefront of their concerns. Outside the United Nations and its associated bodies, it is the only institution in the world which unites rich and poor countries and which is multi-racial. With the imagination that has been mentioned, we could make a lot more use of it. Whether at New Delhi or subsequently, I hope that we shall all do our best to urge the Government of the day to make better use of that marvellous institution.

9.31 pm

Mr. Bowen Wells (Hertford and Stortford)

I congratulate the hon. Member for Walthamstow (Mr. Deakins) on a vigorous and constructive speech. Indeed, there have been many constructive speeches, and I particularly congratulate the hon. Member for Greenwich (Mr. Barnett) and my hon. Friend the Member for Newport, West (Mr. Robinson) in that regard. It is a compliment to the Commonwealth that this issue should be at the forefront of our minds and that we should suggest to my right hon. Friend the Minister that he should take a lead.

I congratulate the Minister, because he has obviously fought his corner well to be able to maintain and slightly increase the aid budget in the coming year. I also congratulate him on the ODA report, which is the first of its kind. It sets out well the Government's determination to maintain a real and substantial aid programme overseas, despite our own financial difficulties. However, my old friends in the Commonwealth Development Corporation are mentioned in the report as being able to borrow in the private sector. My right hon. Friend will know that for some unaccountable reason, the Government have prevented them from doing so, and have thus deprived the corporation of the ability to expand its portfolio in vital overseas projects, predominantly in the poorer countries and the small island economies.

The Heads of Government meeting in New Delhi is to discuss "Towards a New Bretton Woods". However, I have one concern about the whole issue of international monetary reform. After 1970, when we abandoned the fixed exchange rates which came out of the original Bretton Woods agreement, we entered a period of floating exchange rates. That was analogous to the time when the world began to abandon the gold standard in the 1920s and early 1930s. After that we also had a period of floating exchange rates. As a result, protection increased and employment expanded. Due to deprivation and the undermining of the currency in Germany, we gradually lurched into antagonism and then into war.

The issue of international monetary reform is central to our domestic economic expansion and to that of the whole world. However, it is vital to the developing countries of the Commonwealth. The issue must be taken up and thought through. The Government must set up, even within the Treasury, a small group to research and develop ideas, because the current circumstances in which world trade is contracting cannot be permitted to continue from any country's point of view—developed or underdeveloped. Bretton Woods is a vital component of the New Delhi conference.

The Opposition are being unfair to my right hon. Friends the Foreign Secretary and the Chancellor of the Exchequer on the IMF and the IDA. When he was Chancellor of the Exchequer, the Foreign Secretary undoubtedly led the replenishment of the quotas through his chairmanship of the interim committee. That is acknowledged throughout the world. It may not be enough, but it was a major contribution to the reform of the IMF and its resources.

Secondly, much to my astonishment, his successor as Chancellor of the Exchequer persuaded the American Administration that it was vital that they should back the IMF quota increase that was then going through Congress. I am relieved to find that, in the past week, Congress has, in spite of itself, passed that increase. The IDA replenishment issue was well set out by the hon. Member for Walthamstow. I understand that the problem in Washington is that the Administration are putting forward a $9 billion IDA and that Congress—I checked this 'with a leading Congressman in the House of Representatives—would be willing to go along with the $12 billion which is the current rate.

I do not accept my right hon. Friend's statement that he will not tell us what level he will support. He has an obligation, in his turn, to persuade our American allies that $12 billion is the minimum that should go to IDA. From IDA come those vital projects in the poorest countries which begin to generate wealth, employment and exports, which bring in vital foreign exchange and which begin therefore to prime the pump that launches them on their recovery. Without that many of the developing countries will not be able to begin to go forward through the recession. It is that vital.

I believe that Grenada is a shameful incident in Commonwealth history. We can put the blame on both sides of the House and on the United Nations for what happened. Eric Gairy was a tyrant, a tormenter of his people—the Mongoose gang terrorised the country. He took land away without compensation and gave it to his friends; he ran down the island's economy and reduced it from the most prosperous of the Windward and Leeward Islands to the lowest economic level of those islands. I have no time for Mr. Gairy. We wrongly agreed to his becoming Sir Eric Gairy. He contributed to the problems that we face in that small island.

Mr. Eric Gairy was offered independence by Lord Shepherd when he was a Minister in the Foreign Office under the Labour Government of Harold Wilson. I thought that the offer of independence to Mr. Gairy was despicable not just because the Minister knew his record, which I have just described, but because Mr. Gairy usurped and turned upside down the intentions of the West Indies Act 1967, which said that if Mr. Gairy wanted independence from Britain he would have to get a two thirds majority in the legislature, and put the matter to a referendum, in which 75 per cent. of the population would have to vote in favour. All of that would have to happen before Britain would entertain an application for independence. All of that was swept aside and Britain gave Grenada six months' notice that she would end the relationship, with no reference to the electorate in Grenada. That undermines the fundamental ideas of democracy that we hold so dear. We have gone on. We have done it to St. Lucia, Dominica, St. Vincent, St Kitts, Nevis and Antigua. What an example to set of the way in which to run and support a democracy.

The only time that I have marched on the streets of London was in the company of the New Jewel movement based in London, to protest against the independence of Grenada, offered by the Foreign Office Minister then in charge, Lord Balniel, a Conservative Member. That was disgraceful. The New Jewel movement consisted of several elements. It consisted of Marxists, Communists and also nationalists, of which I should say Maurice Bishop was one. However, it was ignored and decried. It was not even analysed and I do not believe that the Foreign Office got close enough to find out what was happening.

When Maurice Bishop went back to Grenada, the constitution was operated, however imperfectly. There was an election, but Eric Gairy got his Mongoose gang to terrorise the voters so that they did not go to the polls. However, Maurice Bishop managed to be be elected, and was leader of the opposition when he led the bloodless revolution. There is no doubt that his force was backed by Cuba. What did the United Nations, Britain and the eastern Caribbean states do? Nothing. They did not condemn the forced takeover of a legally elected and established Government in Grenada. We did nothing. Yet when Maurice Bishop was killed, the British Government said that they could not interfere with the sovereign state of Grenada, go to the rescue of all the democracy-loving people of that island and begin to restore to them the liberty that should never have been put at risk by what I regard as the irresponsible position that the British Government took in their relationship with that small, vulnerable island. It is not possible to give those people independence in the real meaning of the word.

Mr. Dennis Canavan (Falkirk, West)

The hon. Gentleman, like myself, was a member of the Select Committee that reported in the previous Session of Parliament and made specific recommendations on Grenada. One was that the Foreign and Commonwealth Office should improve the quality of its representation on Grenada so that we could get more accurate information about what was going on. Secondly, it recommended that the British Government should have consultations with the Government of Grenada with a view to the resumption of a bilateral aid programme. Is it not a tragedy that both those recommendations were ignored by the FCO? Something could have been done to avert the tragedy in Grenada.

Mr. Bowen Wells

I agree with the main thrust of the hon. Gentleman's intervention. We could have taken measures to become closer to the Government of Grenada, prevent the tradegy and promote the restoration of a democratic Government. I believe that Maurice Bishop understood that if he was to get tourists on to the island, he would have to become closer to Britain. A precondition was that he had to hold elections. That could have happened, but the situation became desperate and there was an explosion.

The hon. Gentleman is not correct. Our representation in Grenada was changed as a result of the Select Committee's recommendation. Mr. Kelly took over there and has been there since we visited the island. I imagine that his reports are more accurate than those of the representative whom we met, and who had not met a Minister in Grenada since he had arrived two years before. So we did not know what the devil was happening and we had nothing on which to base a policy of sound information. However, that is in the past now; let us look at what we must do in future.

Essentially, we must do two things. First, we must offer to provide a massive increase in economic aid to Grenada. I know that Ministers will throw up their hands in horror and say, "That is terrible, we do not have the money." Yet although I say massive, the amount of money involved is tiny because we have been gradually cutting down aid to Grenada. There must be a positive introduction of economic development, in conjunction with other members of the Commonwealth, especially the richer members, and with Caricom and the eastern Caribbean states. It is a matter of real urgency. I want the Government to demonstrate that they understand the urgency and need for such development.

Secondly, we should consider means by which we can guarantee the democracies, not only through their defence load, but by ensuring that democracy continues to grow in those islands. There should be a pact, backed by Britain, the Commonwealth and the United States, aimed at ensuring the orderly development of the political scene in those countries. I do not know quite how that will be done, but there must be concerted action within Caricom and the eastern Caribbean states—Jamaica, Barbados and Trinidad—to bring about stability in the political regimes of the islands.

The islands are tiny, and could easily be taken over. Hon. Members of this House, armed with guns, could take over St. Lucia tomorrow morning if they flew there in a 747. The islands are vulnerable not only to attack but to subversion and economic decay.

It is our responsibility as a member of the Commonwealth to organise a support system for the islands so that they can live in peace, look forward to economic development and be sure that they will not be ruled by tyrants, of whatever complexion. I am sure that that will be a major item for discussion in India. I hope that Britain will respond positively and creatively. If we do not there will be more Grenadas—at least five in the Caribbean and others throughout the world.

9.48 pm

Mr. Stuart Bell (Middlesbrough)

I enjoyed the speech of the hon. Member for Hertford ad Stortford (Mr. Wells). I hope that the points that he has so carefully and articulately made tonight will be on the agenda of the New Delhi meeting.

In the last few moments before the Front Bench spokesmen speak, I wish to comment on the part of the motion that calls for a major project for international economic recovery which would benefit the United Kingdom, the countries of the Commonwealth and the world". My remarks are against the background of the Commonwealth communiqué issued after the meeting of Commonwealth Finance Ministers in Trinidad and Tobago on 21 and 22 September. They were in no doubt about the state of the poorer countries of the Commonwealth. They referred to the developing countries where real per capita incomes have declined for three successive years. They referred to development efforts that have been disrupted and economic prospects that have remained especially grim. They showed that real interest rates have been persistently high, that exchange rates have been volatile, that the debt system has been precarious, and that there has been protectionism, virtual stagnation in the flow of development assistance and adverse terms of trading. Those are some factors that dominate the thinking of Third world countries as they go to New Delhi. It would be remarkable if those Commonwealth countries, especially the undeveloped nations without the succour of their own oil, were to turn their gaze to New Delhi and to reflect that the leaders of the Commonwealth were about to embark on a new financial and economic beginning.

When the Minister replies, I hope that he will say whether the Government are prepared at New Delhi to take an initiative to provide leadership and to agree that there should be a new Bretton Woods agreement.

The problems of those in the Third world who starve and are not comforted are related directly to the world's financial and economic policies. If the concept of Tina—the pin-up of the Conservative party—about which we have heard much during the past four years, has been disastrous for the 2 million newly unemployed since 1979, how much greater is the disaster when translated from the world scene to Commonwealth and Third world countries which have no oil and few natural resources of their own? It would be uplifting for those people if, out of New Delhi, there came the seeds of a new financial and economic order.

As my hon. Friend the Member for Vauxhall (Mr. Holland) said, the old world order that was created at Bretton Woods in 1944 is dead. Many contributions made tonight have confirmed that. We can talk about the lack of convertibility to gold in the 1920s and about the American decision on 15 August 1971 to move from the convertibility of the dollar to gold, but when John Maynard Keynes helped to set up the World Bank and the International Monetary Fund in 1944 he set up the bank as a fund and the fund as a bank. The Minister, in congratulatory tones, said that the United States Government have increased their contribution to the IMF, but the sum is modest and so insufficient that the group of 10 in Zurich is discussing a further £6,000 million standby credit for the IMF. The fund is no longer a fund and the bank is no longer a bank, and the Third world feels the strain and looks to New Delhi for solutions to the problems. I accept that those solutions cannot be brought about easily and that we cannot, simply by waving a magic wand, create a new order. However, we can give leadership and we can seek, in accordance with the recommendations of the Secretary General of the Commonwealth, to bring about that new order.

When Commonwealth Finance Ministers met at Port of Spain, in their report, "Towards a New Bretton Woods", they had specific objectives in mind: that there should be measures to support economic recovery, to provide sufficient liquidity from official and private sources to developing countries, to alleviate the plight of the poorer countries and to prepare for a discussion of international economic reform. Those proposals were made by the Commonwealth Finance Ministers.

When the Secretary-General reflected on the modest increase in the IMF quota of the United States Government, he pointed out that, even with that increase, the ratio of quotas to world imports would be lower than it was in the 1960s. The Secretary-General also said that a Commonwealth Secretariat analysis showed that between July 1982 and June 1983 three quarters of the total commitments of the IMF went to the five developing countries with the largest debts. Although he paid tribute to the United States for providing a new quota increase, he also said that it was a matter of hard reality that when the United States chose to increase its budget deficit and refrain from increasing taxes, each 1 per cent. increase in interest rates added £2,000 million to the debt burden of less developed countries. Those factors must be considered at the conference this week.

The poor Commonweath countries are directly affected by the collapse of the Bretton Woods system and by the deterioration of their oil trade balance, because their non-oil terms of trade have deteriorated and they must meet extra interest repayments to service their sovereign debts. The Minister failed to understand the consequences for the Commonwealth, as well as for Britain, if the flood of sovereign debts that is engulfing the world risks putting one debtor nation under, so that the problem of sovereign debt comes into direct collision with our democracies and those of the Commonwealth.

A new Bretton Woods agreement will eventually be the order of the day, not just because it will be on the agenda of the Heads of Government meeting, nor because the world is awash with sovereign debt—the position is rather like the sorcerer's apprentice, who does not know when to stop carrying water—but because, as debts pile up, Third world countries will be the losers.

I end with a quotation from Henry Thoreau, who in the last century said: There is no ill which may not be dissipated like the dark if you let in a stronger light upon it; but if the light you use is but a narrow and paltry taper most objects shall cast a shadow wider than themselves. At the New Delhi conference Third world countries and the Commonwealth will be looking for what, in the Methodist villages of old, were called men of vision. We do not mind if we also have women of vision at the conference, but we are afraid that the vision will be seriously diminished and that we shall have at New Delhi nothing short of the light of a paltry taper.

9.57 pm

Mr. George Robertson (Hamilton)

I congratulate my hon. Friend the Member for Middlesbrough (Mr. Bell) on bringing the House, after an informed and well-balanced debate, round to the critical matters that face the Commonwealth Heads of Government at their conference in New Delhi. The debate has been wide-ranging, as is to be expected with a matter so close to hon. Members' hearts, and in the few minutes allocated to me I shall try to reply on behalf of the Opposition. I hope that some of the more important questions that were asked by hon. Members this evening will elicit perceptive answers from the Minister when he replies.

The debate was rightly dominated by the economic and financial issues that will be discussed in New Delhi, but there are many other matters that could equally have taken up our time. The hon. Member for Hertford and Stortford (Mr. Wells) rightly commented on Grenada, which will inevitably be much discussed at the conference. Namibia is another country whose problems cause anxiety to many people not least to its long-suffering inhabitants. The initiative taken by President Shagari of Nigeria will be strongly commended to the representatives at the conference, and Britain, as a member of the contact group, should listen carefully to the message of a positive initiative which could perhaps break the deadlock in that area. The problems of Belize, Cyprus and Hong Kong could also have been legitimately discussed during such a wide-ranging debate, but no doubt we shall return to those matters in future debates.

The Commonwealth still provides a unique forum for the discussion of issues that go well beyond the immediate problems of Commonwealth countries themselves. As my hon. Friend the Member for Walthamstow (Mr. Deakins) said in an outstanding contribution, the Commonwealth brings together a blend, perhaps a unique blend, of countries, both rich and poor, of all races, types and sizes. All the other conferences that he outlined failed to take on board the massive problems that face the world, partly because they were made up either of all the rich countries, as at Williamsburg, or of all the poor countries, as at UNCTAD. They all failed to produce answers to the difficulties. Perhaps the unique organisation of the Commonwealth will bring together the north and south, and perhaps find a resolution to the dilemma that faces us today.

I listened with interest to the speech of the hon. Member for Newport, West (Mr. Robinson), because he has worked with the Commonwealth Secretariat. He told the House that the Commonwealth was not the forum to discuss these huge issues, nor should it try to do so. If that is not the forum at which to try to reach a resolution of these problems, what is the forum at which to do that? All the other forums have failed to come up with an answer. We lurch from crisis to crisis. If the Commonwealth conference, which is longer than any other which Heads of Government deem it important to attend, cannot produce an answer, one must despair of the world's capacity to solve the problem.

The crucial issue for the future of the world is whether we are capable of resolving the financial crises which constantly threaten to engulf us all. In a world which is dominated by issues of security and defence, where the enormous risks of nuclear weapons, piled one on top of the other, pose enormous problems and risks which should not be underestimated—not least the consequences for the finances of the world when so much of the resources are spent on armaments—we cannot underestimate the consequences for future generations if the world does not solve the economic crisis that confronts it today. President Reagan, who is often given to strong rhetoric in defence of one or another ideological point, said recently about the International Monetary Fund, which he defended in the United States Congress, that if the replenishment from the United States did not take place an economic nightmare might occur which could plague generations to come. President Reagan used that as an argument to persuade Congress to give resources to the IMF, and he succeeded in persuading it so to do. He did not underestimate the problem that confronts us all.

The challenge to our generation today is as significant as the challenge to the generation in 1944 that gave birth to the first Bretton Woods arrangement. The world was conscious at that time that a world war had destroyed not only world stability but a whole generation of people. I say, as one who was born two years after the first Bretton Woods conference, that unless our generation gets to grips with the problem, as that generation did, with vision and determination, future generations, as President Reagan said, will be plagued for years to come. That is why it is important for Commonwealth countries to take on board the radical recommendations that are contained in the document "Towards a new Bretton Woods".

I do not understand the Government's attitude to that document and their whole approach to a radical restructuring of world financial institutions. The report was commissioned by and was the idea of Prime Minister Muldoon of New Zealand. He is no great radical, and he is certainly no Socialist. The committee was set up under the chairmanship of Professor Helleiner of Canada, an eminent authority in this connection. The British representative was Sir Jeremy Marsh. Far from being one of the mad Marxists, whom the Government so fear, he is the chairman of Lloyds Bank and a man of eminent financial acumen.

The point must be emphasised that the report about which we are speaking—and the reform which we invoke in the project for which we are calling in the motion—was radical, emphatic, perceptive and unanimous. All the parties involved in that process came to the conclusion that something radical had to be done about the future of the world's financial institutions. They also agreed that that action had to be taken immediately and that, if that were not done, the consequences would be horrendous for the stability of the world's economies.

Therefore it pales into the ludicrous when the Chancellor of the Exchequer, who has been praised in various contexts—for example, for the pressure he put on the United States—dismisses the most radical proposals of the report as irrelevant. Without saying that specifically, without ever granting an interview and without informing the House of Commons, he feeds out the information that the Government have grave reservations about the majority of the important recommendations in it. If we looked for enlightenment in the Minister's opening remarks, we simply got his statement that the Government were not sure what a new Bretton Woods conference could produce, although it was not rejected in principle.

The Minister made that statement following his claim that he had read the report. However, the report was careful to say that a new Bretton Woods conference would not be the first stage in the process of re-ordering the world's economic institutions but would be the final stage. That would take place after a realisation of the need for new institutions and of the reality of what could be achieved.

I am therefore totally unsure now of the Government's position on the subject. One can only hope that the Prime Minister, who is winging her way to New Delhi, but who presumably will be without the advantage of the advice that we are offering tonight, will have a more perceptive awareness of what the report says.

Hon. Members have stressed the crucial issues facing the Commonwealth countries. We must remember that the majority of Commonwealth countries are among the less developed, as defined by the international institutions. Hence, the Commonwealth is predominantly a Third world institution, although it has that careful blend of rich and poor that gives it the great potential that we look to for a resolution of the world's problems.

In speaking of the need to replenish the IDA's finances and take account of the problems that are occurring in that context, hon. Members have failed to point out that 70 per cent. of IDA flows are to Commonwealth countries. Thus, we above all have a stake in making sure that the United States does not rat on its obligations to the IDA which, as an institution, is of the greatest importance.

Sonny Ramphal, the Secretary General of the Commonwealth, a man of great experience, has been prayed in aid so often in the debate that he has become almost a hero. Even the Minister paid careful tribute to him; and, as one of the great supporters of the Government during the Falklands conflict, well should Conservative Members recognise the role that he has to play as a most perceptive individual.

In what must be considered to have been an extremely significant speech to the Commonwealth Finance Ministers in Port of Spain—so significant that hon. Members have referred to it time and again in the debate—Sonny Ramphal said that any restriction on the finances of the IDA would be a particularly direct way of enlarging human suffering. Therefore, I hope that the Minister will tell us of the Government's regret about the way in which other countries, specifically the United States of America, are treating their obligations under the next replenishmemt of the IDA.

If the Government are truly proud of their role in the refunding of the International Monetary Fund—we have heard it so often and credit is due in terms of leading that refunding—and if they recognise the importance to the Commonwealth of the World Bank and of the IDA, let them take a similar stand, and let the Chancellor of the Exchequer squeeze the Americans again and tell them how important an American lead would be in refunding the IDA. If what my hon. Friend the Member for Walthamstow said is right, following his discussions in Bermuda, or the Bahamas, or some other less well developed country that he was visiting last week, and the United States of America is planning a cutback in its funding to the IDA, let us hope that the Government will make a stand. If they believe what they say, the time to give a lead is now.

Although the IMF has been saved at the last moment by public intervention in the United States market, its problems are not over. The fact that three quarters of the total American commitments to the IMF were to only five debtor countries means that the problems will be horrendous for the next year. Although we have escaped like the "Perils of Pauline" in the nick of time from this trap, the problem is still there.

The Commonwealth conference is an opportunity to see with some vision and determination the problems that confront our generation and will confront future generations unless we solve them. Sonny Ramphal said that a move towards a new Bretton Woods conference would be a process of working together without rhetoric or a spirit of confrontation, as fellow-citizens of one world and not as adversaries from separate worlds". That theme would go down well in New Delhi. It is an inspiration for which our generation is looking, and if we fail in developing that consensus, if we fail in grasping that opportunity, our recovery and the recovery of every other industrialised country in the world is in peril. The chance is there and we must hope that when she is in New Delhi the Prime Minister will grasp that opportunity.

10.13 pm

The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Ray Whitney)

The hon. Member for Hamilton (Mr. Robertson) spoke of the "Perils of Pauline" and in the last minute of his speech brought us back to the Opposition motion, which is the subject of the debate. It has been an interesting debate but for the most part has been a re-run of the Brandt debates that we have had so many times in the House. Perhaps we are none the worse for that, but it is odd that the Opposition should have chosen this form of motion. I will, with your permission, Mr. Speaker, return to that in a moment. In the short time that is available to me it is not possible to answer all the important points that have been made by hon. Members on both sides of the House.

The hon. Member for Greenwich (Mr. Barnett) made what appeared to be a worrying point about the reduction in ODA staff over the next four years from 1,793 to 1,500. I am delighted to be able to set his mind at rest, because that mostly reflects the transfer of the directorate of overseas surveys. In effect, only 50 staff will be lost over a four-year period. I hope that the hon. Gentleman will accept that, even within the bounds of the ODA, it must be possible to accomplish that without detriment to the management of our aid programme.

The hon. Member for Liverpool, Mossley Hill (Mr. Alton), in his wide-ranging contribution, attacked, for example, the efforts we are making in the Falkland Islands and yet called for aid and understanding of the rights of the Tamils in Sri Lanka, a call that we would support as we hope the Sri Lankan Government do——

Mr. Alton

rose——

Mr. Whitney

I cannot give way in the time that is available to me.

I also hope that the hon. Gentleman will recognise that the efforts being made in the Falkland Islands relate to the interests, the rights and the self-determination of the Falkland islanders. While we continue to face a Government that will not declare a cease-fire, we have no alternative to that policy.

My hon. Friend the Member for Hertford and Stortford (Mr. Wells), who always makes a powerful contribution to these debates, called for aid to Grenada. I hope that when the needs of Grenada are clear the Government will be ready to respond to whatever is required. My hon. Friend referred to the vulnerability of islands such as Grenada. He will recognise that my right hon. and learned Friend the Secretary of State has already recognised that problem, and I have no doubt that that will be the subject of discussions in New Delhi.

The hon. Member for Middlesbrough (Mr. Bell), in an interesting contribution, called for vision, as did the hon. Member for Hamilton. I agree that there should be vision. The Opposition do not have vision, but a capacity to be starry-eyed. In the motion the Opposition are looking for unanimity in the Commonwealth. The idea that the Commonwealth is an organisation where political co-operation can be brought to the point that has been suggested by the Opposition is, as the Opposition should understand, unrealistic. No party, including Labour, which has such difficulties in reaching consensus among its membership, should underestimate the possible differences between 48 independent sovereign countries when trying to reach a consensus. The Commonwealth offers a magnificent opportunity for international understanding. Anyone who has been connected with any sort of Commonwealth activity—my right hon. Friend the Minister of State made this point during his opening remarks—will understand that the Commnwealth is unique, and could not be invented. We should all be grateful for our membership in and our connection with it.

I have no doubt that the Commonwealth Heads of Government conference will not be a rehearsal of platitudes, as stated by the gentleman from The Sunday Times, who was quoted with such approbation by the hon. Member for Mossley Hill, but a meeting of like-minded people who have signed the Commonwealth declaration at Singapore, who adhere to the same principles and approach the problems of the world in a remarkably similar manner.

The utopian, unrealistic idealism of the Opposition on economic content is even more remarkable. We have had references many times to one of the three Commonwealth documents on protectionism. The Labour party's attitudes to protectionism tell a different story. I correct the hon. Member for Mossley Hill. He should not blame us for protectionism. He should have referred to the Labour party. "Labour's Programme 1982" states We will therefore set import penetration ceilings on an industry-by-industry basis across a broad range of sectors. It continued: The main principles are that the overall 'global limits' for imports of textiles should be maintained and extended to cover `outward processing' and to countries with which the EEC has preferential agreements.

Mr. Stuart Holland

Will the hon. Gentleman give way?

Mr. Whitney

No, I cannot give way. The hon. Gentleman had much longer than I have. Do Labour Members not understand the importance of trade to developing countries? How dare they talk about economic co-operation while they peddle views of that kind?

Mr. Holland

Will the hon. Gentleman give way?

Mr. Whitney

No. The Labour party also suggested in "New Hope for Britain"—we used to call it "No Hope for Britain"—the introduction of back-up import controls using tariff and quotas.

Mr. Holland

rose——

Mr. Whitney

The hon. Gentleman had 20 minutes.

More is threatened. The hon. Member for Vauxhall (Mr. Holland), writing on 23 September, talked about withdrawal from the EC. Yet the contribution of the EC to the opportunities for the Caribbean, the ACP countries and the Commonwealth countries is enormous. The Opposition should understand that.

Mr. Holland

rose——

Mr. Whitney

No, I will not give way. The Labour party cannot duck this issue. They cannot suggest economic co-operation while advocating import controls in one policy document after another.

Mr. Bell

Will the Minister give way?

Mr. Whitney

No, I will not give way. Nor can the hon. Member for Vauxhall talk about withdrawal from the EC when everyone knows——

Several Hon. Members

rose——

Mr. Speaker

Order. Not three at a time, please.

Mr. Bell

I am grateful to the Minister for giving way. I hope that I can help him. Will he use the remaining time to deal with today's debate and the Commonwealth conference?

Mr. Whitney

I shall be delighted to do so, but I am also keen to ensure that the issues so carefully ducked by the Labour party will be ducked no longer.

Mr. Holland

rose——

Mr. Whitney

This must be nailed. The Labour party cannot continue to preach economic co-operation in one breath and import controls in the next.

Mr. Holland

rose——

Mr. Whitney

The Opposition suggest that government policy will delay recovery. The policies for recovery are not the Labour party policies of creating ever more paper money and inflation but those agreed, for example, at Williamsburg and supported by many other Governments, including some Socialist Governments. Perhaps the hon. Member for Vauxhall would care to discuss that with his Socialist friends on the other side of the Channel. All the countries at Williamsburg and many earlier conferences recognised that we must focus on achieving and maintaining low inflation and reducing the present too-high interest rates.

We renew our commitment to reduce structural budget deficits, especially by limiting the growth of expenditure. That is the voice of sanity, realism and experience. The hon. Member for Vauxhall said a great deal about the Bretton Woods conference. The Opposition should know that it was inflationary domestic policies that precipitated the breakdown of the Bretton Woods system and not the other way round. Although the British Labour party is slow to learn, I am delighted that most other Socialist parties in the world are learning and understand that problem. When the Opposition talk about the problems of inflation, if they believe that the answer is to launch the world on another bout of printing money, like the Bourbons, they learn absolutely nothing.

Of course we understand the problems. That is why my right hon. and learned Friend made his proposals at the IMF and my right hon. Friend the Chancellor made his proposals in September. We understand that there is no cheap panacea and no magic formula or mirage as the Opposition motion suggests. There is a steady hard grind to economic reality. That is the work that the Government and other sensible Governments of the world are embarked upon. That is what will offer the market that the developing world wants.

Mr. George Robertson

Which market?

Mr. Whitney

The market of the European Community, out of which the hon. Gentleman wants to take us. It comprises 270 million people.

Mr. Holland

rose——

Mr. Whitney

The Opposition's proposition has been utterly exploded. It is based on shifting sands and I invite the Hose to reject the motion.

Question put:—

The House divided: Ayes 190, Noes 332.

Division No. 74]	[10.25 pm
AYES
Abse, Leo	Fisher, Mark
Adams, Allen (Paisley N)	Flannery, Martin
Alton, David	Foot, Rt Hon Michael
Anderson, Donald	Forrester, John
Archer, Rt Hon Peter	Foster, Derek
Ashley, Rt Hon Jack	Fraser, J. (Norwood)
Ashton, Joe	Freeson, Rt Hon Reginald
Atkinson, N. (Tottenham)	Freud, Clement
Bagier, Gordon A. T.	Garrett, W. E.
Banks, Tony (Newham NW)	Gilmour, Rt Hon Sir Ian
Barnett, Guy	Godman, Dr Norman
Barron, Kevin	Golding, John
Beckett, Mrs Margaret	Gould, Bryan
Beith, A. J.	Hamilton, James (M'well N)
Bell, Stuart	Hamilton, W. W. (Central Fife)
Bennett, A. (Dent'n & Red'sh)	Harman, Ms Harriet
Bermingham, Gerald	Harrison, Rt Hon Walter
Bidwell, Sydney	Hattersley, Rt Hon Roy
Blair, Anthony	Haynes, Frank
Boyes, Roland	Heffer, Eric S.
Brown, Gordon (D'f'mline E)	Hogg, N. (C'nauld & Kilsyth)
Brown, Hugh D. (Provan)	Holland, Stuart (Vauxhall)
Brown, N. (N'c'tle-u-Tyne E)	Home Robertson, John
Brown, R. (N'c'tle-u-Tyne N)	Howell, Rt Hon D. (S'heath)
Brown, Ron (E'burgh, Leith)	Howells, Geraint
Bruce, Malcolm	Hoyle, Douglas
Caborn, Richard	Hughes, Mark (Durham)
Callaghan, Rt Hon J.	Hughes, Robert (Aberdeen N)
Campbell, Ian	Hughes, Roy (Newport East)
Canavan, Dennis	Hughes, Sean (Knowsley S)
Carter-Jones, Lewis	Janner, Hon Greville
Cartwright, John	John, Brynmor
Clark, Dr David (S Shields)	Jones, Barry (Alyn & Deeside)
Clay, Robert	Kaufman, Rt Hon Gerald
Cocks, Rt Hon M. (Bristol S.)	Kennedy, Charles
Cohen, Harry	Kilroy-Silk, Robert
Coleman, Donald	Kinnock, Rt Hon Neil
Concannon, Rt Hon J. D.	Leadbitter, Ted
Cook, Frank (Stockton North)	Leighton, Ronald
Cook, Robin F. (Livingston)	Lewis, Ron (Carlisle)
Corbett, Robin	Lewis, Terence (Worsley)
Corbyn, Jeremy	Litherland, Robert
Craigen, J. M.	Lloyd, Tony (Stretford)
Crowther, Stan	Lofthouse, Geoffrey
Cunliffe, Lawrence	Loyden, Edward
Cunningham, Dr John	McCartney, Hugh
Davies, Ronald (Caerphilly)	McDonald, Dr Oonagh
Davis, Terry (B'ham, H'ge H'l)	McGuire, Michael
Deakins, Eric	McKay, Allen (Penistone)
Dixon, Donald	McKelvey, William
Dobson, Frank	Mackenzie, Rt Hon Gregor
Dormand, Jack	McTaggart, Robert
Douglas, Dick	Madden, Max
Dubs, Alfred	Marek, Dr John
Duffy, A. E. P.	Marshall, David (Shettleston)
Dunwoody, Hon Mrs G.	Martin, Michael
Eadie, Alex	Mason, Rt Hon Roy
Eastham, Ken	Maxton, John
Evans, Ioan (Cynon Valley)	Maynard, Miss Joan
Evans, John (St. Helens N)	Meacher, Michael
Ewing, Harry	Meadowcroft, Michael
Fatchett, Derek	Michie, William
Faulds, Andrew	Mikardo, Ian
Field, Frank (Birkenhead)	Millan, Rt Hon Bruce
Fields, T. (L'pool Broad Gn)	Miller, Dr M. S. (E Kilbride)

Morris, Rt Hon A. (W'shawe)	Short, Mrs R.(W'hampt'n NE)
Morris, Rt Hon J. (Aberavon)	Silkin, Rt Hon J.
Nellist, David	Skinner, Dennis
Oakes, Rt Hon Gordon	Smith, (Isl'ton S & F'bury)
O'Brien, William	Snape, Peter
O'Neill, Martin	Soley, Clive
Orme, Rt Hon Stanley	Spearing, Nigel
Park, George	Steel, Rt Hon David
Parry, Robert	Stott, Roger
Patchett, Terry	Strang, Gavin
Pendry, Tom	Straw, Jack
Pike, Peter	Thomas, Dafydd (Merioneth)
Powell, Raymond (Ogmore)	Thomas, Dr R. (Carmarthen)
Prescott, John	Thompson, J. (Wansbeck)
Randall, Stuart	Thorne, Stan (Preston)
Redmond, M.	Tinn, James
Rees, Rt Hon M. (Leeds S)	Torney, Tom
Richardson, Ms Jo	Varley, Rt Hon Eric G.
Roberts, Ernest (Hackney N)	Wardell, Gareth (Gower)
Robertson, George	Wareing, Robert
Robinson, G. (Coventry NW)	Weetch, Ken
Rogers, Allan	Welsh, Michael
Rooker, J. W.	White, James
Ross, Ernest (Dundee W)	Wigley, Dafydd
Ross, Stephen (Isle of Wight)	Williams, Rt Hon A.
Rowlands, Ted	Winnick, David
Ryman, John	Woodall, Alec
Sedgemore, Brian	Young, David (Bolton SE)
Sheerman, Barry
Sheldon, Rt Hon R.	Tellers for the Ayes:
Shore, Rt Hon Peter	Mr. Harry Cowans and Mr. Austin Mitchell.
Short, Ms Clare (Ladywood)
NOES
Aitken, Jonathan	Carlisle, John (N Luton)
Alexander, Richard	Carlisle, Kenneth (Lincoln)
Amery, Rt Hon Julian	Carttiss, Michael
Amess, David	Chalker, Mrs Lynda
Ancram, Michael	Channon, Rt Hon Paul
Arnold, Tom	Chapman, Sydney
Ashby, David	Chope, Christopher
Aspinwall, Jack	Clark, Dr Michael (Rochford)
Atkins, Rt Hon Sir H.	Clark, Sir W. (Croydon S)
Atkins, Robert (South Ribble)	Clarke Kenneth (Rushcliffe)
Atkinson, David (B'm'th E)	Clegg, Sir Walter
Baker, Kenneth (Mole Valley)	Cockeram, Eric
Baker, Nicholas (N Dorset)	Colvin, Michael
Baldry, Anthony	Conway, Derek
Banks, Robert (Harrogate)	Coombs, Simon
Batiste, Spencer	Cope, John
Beaumont-Dark, Anthony	Cormack, Patrick
Beggs, Roy	Couchman, James
Bendall, Vivian	Critchley, Julian
Benyon, William	Crouch, David
Berry, Sir Anthony	Currie, Mrs Edwina
Best, Keith	Dickens, Geoffrey
Bevan, David Gilroy	Dicks, T.
Biffen, Rt Hon John	Dorrell, Stephen
Blaker, Rt Hon Sir Peter	Douglas-Hamilton, Lord J.
Bonsor, Sir Nicholas	Dover, Denshore
Bottomley, Peter	du Cann, Rt Hon Edward
Bowden, A. (Brighton K'to'n)	Dunn, Robert
Bowden, Gerald (Dulwich)	Dykes, Hugh
Boyson, Dr Rhodes	Edwards, Rt Hon N. (P'broke)
Braine, Sir Bernard	Eggar, Tim
Brandon-Bravo, Martin	Emery, Sir Peter
Bright, Graham	Evennett, David
Brinton, Tim	Eyre, Reginald
Brittan, Rt Hon Leon	Fallon, Michael
Brooke, Hon Peter	Favell, Anthony
Brown, M. (Brigg & Cl'thpes)	Fenner, Mrs Peggy
Browne, John	Finsberg, Geoffrey
Bruinvels, Peter	Fletcher, Alexander
Bryan, Sir Paul	Forman, Nigel
Buchanan-Smith, Rt Hon A.	Forsythe, Clifford (S Antrim)
Budgen, Nick	Forth, Eric
Bulmer, Esmond	Fowler, Rt Hon Norman
Burt, Alistair	Fox, Marcus
Butcher, John	Franks, Cecil
Butterfill, John	Fraser, Rt Hon Sir Hugh

Fraser, Peter (Angus East)	Leigh, Edward (Gainsbor'gh)
Freeman, Roger	Lennox-Boyd, Hon Mark
Fry, Peter	Lester, Jim
Gale, Roger	Lewis, Sir Kenneth (Stamf'd)
Gardiner, George (Reigate)	Lightbown, David
Gardner, Sir Edward (Fylde)	Lilley, Peter
Garel-Jones, Tristan	Lloyd, Ian (Havant)
Glyn, Dr Alan	Lloyd, Peter, (Fareham)
Goodhart, Sir Philip	Lord, Michael
Goodlad, Alastair	Luce, Richard
Gorst, John	Lyell, Nicholas
Gow, Ian	McCrindle, Robert
Gower, Sir Raymond	McCurley, Mrs Anna
Grant, Sir Anthony	Macfarlane, Neil
Greenway, Harry	MacKay, Andrew (Berkshire)
Griffiths, Peter (Portsm'th N)	MacKay, John (Argyll & Bute)
Grist, Ian	Maclean, David John.
Ground, Patrick	Macmillan, Rt Hon M.
Grylls, Michael	McNair-Wilson, M. (N'bury)
Gummer, John Selwyn	McNair-Wilson, P. (New F'st)
Hamilton, Hon A. (Epsom)	Madel, David
Hamilton, Neil (Tatton)	Major, John
Hampson, Dr Keith	Malins, Humfrey
Hanley, Jeremy	Maples, John
Hannam, John	Marland, Paul
Hargreaves, Kenneth	Marlow, Antony
Harris, David	Marshall, Michael (Arundel)
Harvey, Robert	Maude, Francis
Haselhurst, Alan	Maxwell-Hyslop, Robin
Havers, Rt Hon Sir Michael	Mayhew, Sir Patrick
Hawkins, Sir Paul (SW N'folk)	Mellor, David
Hawksley, Warren	Merchant, Piers
Hayes, J.	Meyer, Sir Anthony
Hayhoe, Barney	Miller, Hal (B'grove)
Hayward, Robert	Mills, Iain (Meriden)
Heathcoat-Amory, David	Mills, Sir Peter (West Devon)
Heddle, John	Miscampbell, Norman
Henderson, Barry	Mitchell, David (NW Hants)
Hickmet, Richard	Moate, Roger
Hicks, Robert	Monro, Sir Hector
Higgins, Rt Hon Terence L.	Montgomery, Fergus
Hind, Kenneth	Moore, John
Hirst, Michael	Morris, M. (N'hampton, S)
Hogg, Hon Douglas (Gr'th'm)	Morrison, Hon C. (Devizes)
Holland, Sir Philip (Gedling)	Moynihan, Hon C.
Holt, Richard	Mudd, David
Hooson, Tom	Murphy, Christopher
Hordern, Peter	Neale, Gerrard
Howard, Michael	Needham, Richard
Howarth, Alan (Stratf'd-on-A)	Nelson, Anthony
Howarth, Gerald (Cannock)	Neubert, Michael
Howell, Rt Hon D. (G'ldford)	Newton, Tony
Howell, Ralph (N Norfolk)	Nicholls, Patrick
Hubbard-Miles, Peter	Norris, Steven
Hunt, David (Wirral)	Onslow, Cranley
Hunt, John (Ravensbourne)	Oppenheim, Philip
Hunter, Andrew	Oppenheim, Rt Hon Mrs S.
Hurd, Rt Hon Douglas	Osborn, Sir John
Irving, Charles	Ottaway, Richard
Jackson, Robert	Page, John (Harrow W)
Jenkin, Rt Hon Patrick	Page, Richard (Herts SW)
Jessel, Toby	Parris, Matthew
Johnson-Smith, Sir Geoffrey	Patten, John (Oxford)
Jones, Gwilym (Cardiff N)	Pattie, Geoffrey
Jones, Robert (W Herts)	Pawsey, James
Jopling, Rt Hon Michael	Peacock, Mrs Elizabeth
Joseph, Rt Hon Sir Keith	Percival, Rt Hon Sir Ian
Kershaw, Sir Anthony	Pink, R. Bonner
Key, Robert	Pollock, Alexander
King, Roger (B'ham N'field)	Porter, Barry
King, Rt Hon Tom	Powell, William (Corby)
Knight, Gregory (Derby N)	Powley, John
Knowles, Michael	Prentice, Rt Hon Reg
Knox, David	Price, Sir David
Lamont, Norman	Proctor, K. Harvey
Lang, Ian	Pym, Rt Hon Francis
Latham, Michael	Raffan, Keith
Lawler, Geoffrey	Raison, Rt Hon Timothy
Lawrence, Ivan	Rathbone, Tim
Lawson, Rt Hon Nigel	Rees, Rt Hon Peter (Dover)

Renton, Tim	Taylor, John (Solihull)
Ridley, Rt Hon Nicholas	Tebbit, Rt Hon Norman
Ridsdale, Sir Julian	Temple-Morris, Peter
Rifkind, Malcolm	Terlezki, Stefan
Rippon, Rt Hon Geoffrey	Thomas, Rt Hon Peter
Roberts, Wyn (Conwy)	Thompson, Donald (Calder V)
Robinson, Mark (N'port W)	Thompson, Patrick (N'ich N)
Roe, Mrs Marion	Thornton, Malcolm
Rossi, Sir Hugh	Thurnham, Peter
Rost, Peter	Townend, John (Bridlington)
Rowe, Andrew	Townsend, Cyril D. (B'heath)
Rumbold, Mrs Angela	Tracey, Richard
Ryder, Richard	Trippier, David
Sackville, Hon Thomas	Trotter, Neville
Sainsbury, Hon Timothy	Twinn, Dr Ian
St. John-Stevas, Rt Hon N.	Vaughan, Dr Gerard
Sayeed, Jonathan	Viggers, Peter
Shaw, Giles (Pudsey)	Waddington, David
Shaw, Sir Michael (Scarb')	Wakeham, Rt Hon John
Shelton, William (Streatham)	Walden, George
Shepherd, Colin (Hereford)	Walker, Rt Hon P. (W'cester)
Silvester, Fred	Wall, Sir Patrick
Sims, Roger	Waller, Gary
Skeet, T. H. H.	Walters, Dennis
Smith, Tim (Beaconsfield)	Wardle, C. (Bexhill)
Soames, Hon Nicholas	Warren, Kenneth
Speed, Keith	Watson, John
Speller, Tony	Watts, John
Spence, John	Wells, Bowen (Hertford)
Spencer, D.	Wells, John (Maidstone)
Spicer, Jim (W Dorset)	Whitfield, John
Squire, Robin	Whitney, Raymond
Stanbrook, Ivor	Wiggin, Jerry
Stern, Michael	Winterton, Mrs Ann
Stevens, Martin (Fulham)	Wood, Timothy
Stewart, Allan (Eastwood)	Woodcock, Michael
Stewart, Andrew (Sherwood)	Yeo, Tim
Stokes, John	Younger, Rt Hon George
Stradling Thomas, J.
Sumberg, David	Tellers for the Noes:
Tapsell, Peter	Mr. Carol Mather and Mr. Robert Boscawen
Taylor, Rt Hon John David

Question accordingly negatived.