British Economy (Hansard, 18 October 1993)

§ 39. Mr. Butler
To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the benefits to the British economy from the aid programme.

§ Mr. Lennox-Boyd
British companies benefit substan-tially from contracts financed through the aid programme and from spending by the multinational aid agencies.

§ Mr. Butler
I thank my right hon. Friend for that reply, although I had hoped for some figures; perhaps they will appear next time. Does he agree that the benefit is twofold: first, to small and medium-sized British firms; and, secondly, to the intended recipient as it takes control of 17 expenditure of the funds given by hard-pressed British taxpayers out of the hands of the corrupt regimes that often cause the problems that we are trying to deal with and leaves it more firmly in the hands of our Overseas Development Administration?

§ Mr. Lennox-Boyd
My hon. Friend is right. Small enterprises such as consultancies and other training providers benefit greatly from delivering services under the overseas aid programme.

§ Mr. Meacher
Since British aid is 84 per cent. tied aid —the highest in the European Community—and since the Overseas Development Administration states that every £1 of Britain's multilateral aid produces an extra £1.40 in British exports, are not the Government shooting themselves in the foot with their aid cuts? Will the Minister confirm that, as a result of the Government's two-year freeze in aid, by the year 1995 the aid budget will have fallen to its lowest recorded level of 0.26 per cent.of gross national product—precisely half the figure for 1979? Even if the Government do not care a hoot about aid cuts to the third world, does the Foreign Secretary care about kicking British exports in the teeth, which is what the Government will be doing by making additional cuts in aid in next month's Budget?

§ Mr. Lennox-Boyd
There were two factual inac-curacies in what the hon. Gentleman said. He described tied aid as 80 per cent., but it is not. He got his facts wrong —it is 70 per cent. He talked about aid cuts; there have not been aid cuts. The aid programme has risen by 10 per cent. in real terms in the past four years and this year increased in real terms by 1 per cent., so he was wrong again.

§ Sir David Steel
No one doubts that the aid programme benefits British industry in the way that the questions on the Order Paper suggest. However, is the Minister concerned that, while the commitment made in the Conservative election manifesto and by the Prime Minister in Rio last year was that we would move towards the United Nations target of the gross national product aid programme, we are moving away from that target even before the present round of spending cuts is completed?

§ Mr. Lennox-Boyd
As the right hon. Gentleman knows, we reaffirmed our commitment to meet the target as soon as possible at Rio de Janerio. We have a substantial aid programme which includes all sorts of aid amounting to more than £2 billion a year. That is a significant programme which is deeply respected throughout the world.