International Debt (Hansard, 26 April 1990)

§ 4. Mr. Cryer
To ask the Chancellor of the Exchequer when he intends to respond to the Treasury and Civil Service Select Committee's report on international debt strategy.

§ The Financial Secretary to the Treasury (Mr. Peter Lilley)
My right hon. Friend will be responding shortly.

§ Mr. Cryer
Will the Minister respond to the Committee by doing something that the Treasury has so far failed to do, and assist Third world debt, which in the major indebted countries is running at over $500 billion, by revoking the £1.9 billion tax concessions, using taxpayers' money, given to British bankers to service debts? As the Minister knows, that money goes not to the starving poor of the Third world, but into the pockets of shareholders of the big banks. When will he end this scandal?

§ Mr. Lilley
The hon. Gentleman may have noted the changes made in the Budget, which increased the relative attraction for banks to return debt to the indebted countries. I am sure that he will welcome that. He is wrong to say that the Government have done nothing to help with the debt problem of underdeveloped countries. Far from it. My right hon. Friend the Member for Blaby (Mr. Lawson) launched the sub-Saharan debt initiative, we have forgiven £1 billion of debt to the 27 poorest countries and the abolition of exchange controls ensures that more direct investment goes from the United Kingdom to underdeveloped countries than from all the other EC countries put together.

§ Mr. Paice
In terms of international debt, is not it also important for Britain not to continue to incur debt itself? Is not the reduction of our debt, to the extent that we are paying £2.5 billion less in interest, an effective move?

§ Mr. Lilley
My hon. Friend is right. The Labour Government left us with vast overseas debts and were the first Government of any major country to have to call in the International Monetary Fund, which should be helping poor countries in need. We shall ensure that that will be the case.

§ Mr. Chris Smith
Would not it be sensible to use the tax system not only to encourage the banks to make provision in their own accounts against Third world debt but to forgive debts to Third world countries? Even after the Budget changes, does not the present system provide an easy ride for the commercial banks but offer no real help to the struggling peoples and economies of the Third world?

§ Mr. Lilley
The hon. Gentleman is wrong. As I pointed out, and he half-acknowledged, the Budget has increased the relative attractions for banks to give back debt to debtor countries. If he or the Opposition have proposals retrospectively to withdraw relief that banks have been expecting, as all other commercial entities do, I am sure that the House would be interested to hear them.

§ Mr. Oppenheim
Does it strike my hon. Friend as strange and even inconsistent that Labour Members spend so much time complaining about the burden of debt in the Third world, when in the next breath they encourage the Government and the EC to erect yet more trade barriers, such as the multi-fibre arrangement, against Third world products? Such barriers prevent Third world countries from improving their living standards by selling us the products that they can best make.

§ Mr. Lilley
My hon. Friend is right. The under-developed countries most need access to two things—the markets and the capital of the developed world. Socialist policies would deny them both.

§ Mr. Cryer
On a point of order, Mr. Speaker. In view of the pathetically inadequate response to my question, I beg to give notice that I shall seek to raise this matter on the Adjournment at the earliest opportunity.