HC Deb 01 March 1994 vol 238 cc801-48
Madam Speaker

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

4.24 pm
Sir David Steel (Tweeddale, Ettrick and Lauderdale)

I beg to move, That this House notes with concern the high proportion of British aid that is tied to the purchase of British goods and services; notes the remarkable coincidence between defence-related contracts and the allocation of British aid; further notes that many of the companies who have benefited from such deals are major donors to the Conservative Party; believes that allegations relating to the Pergau Dam affair have seriously undermined the credibility of the British aid programme; condemns the past conduct of Her Majesty's Government in relation to this matter; and calls upon Her Majesty's Government to restore the public's confidence in British aid by setting a timetable for achieving the United Nations target of 0.7 per cent. GNP, reducing the proportion of tied aid and increasing the proportion which is spent on the basic human needs of the poorest people. In opening the debate, I intend to advance five propositions: first, that the Pergau dam project was a costly mistake to which the Government should never have committed taxpayers' money; secondly, that the only possible explanation for that error was the Government's eagerness to lubricate the trade channels with Malaysia and especially the arms trade; thirdly, that, as in the case with arms to Iraq, the Government proclaimed one policy to Parliament and the public, but, in reality, pursued another; fourthly, that there has been an unhealthy use of the overseas aid programme generally to assist arms sales around the world; and, fifthly, that there has been an equally unhealthy dominance in the receipt of the aid and trade provision by firms that are donors to the Conservative party. In conclusion, I shall propose changes in policy to ensure that those wholly unacceptable happenings do not recur.

I begin, therefore, with the decision to support the Pergau dam project. In 1987, which was a year before the Government got committed by the then Prime Minister to supporting that project, the World bank's power sector had advised against that hydro-electric project and suggested instead that Malaysia should concentrate on gas-fired electricity generation until the turn of the century. The Malaysian Government turned down a less expensive tender for such a power station, which, incidentally, British companies were well placed to supply and which would have been far less environmentally damaging.

That was before the then Defence Secretary's now notorious visit to Malaysia in March 1988, when he signed a protocol on arms sales in conjunction with a promise on aid, and before the equally notorious visit by the then Prime Minister. Having got hooked on the project, the Overseas Development Agency sent a team to Malaysia to assess the project. The Public Accounts Committee has described that as the shortest project appraisal ever to come before it. Nevertheless, the then Prime Minister offered the Malaysian Prime Minister support for the project, conditional on full economic appraisal.

A year later, in February 1990, the ODA concluded that the dam was a "very bad buy" and the Department for Trade and Industry proposed a review of the Malaysian power sector. Nevertheless, the Malaysian Government were determined to proceed and, in February 1991, the then Permanent Secretary to the ODA, Sir Tim Lankester, told Ministers that the proposal, which was not some flea-bite incidental project but the largest single funding ever to be made by our overseas aid programme, was unequivocally a bad one in economic terms and an abuse of the aid programme". Sir Tim told our Public Accounts Committee a few weeks ago that he therefore required ministerial orders to go ahead with the payments. Mr. Rais Yatin, who was Foreign Minister of Malaysia at the start of those discussions, has said that the deal was a "gross irregularity".

In its report last year, the National Audit Office drew attention to the history of errors in the project and concluded that the cost to the British taxpayer was £234 million, plus more than £50 million for funding soft loans.

Among the first duties of Parliament are the voting of moneys to Governments and the check on their use. We should be failing in our most fundamental duty if we did not censure the Government for their assent to that expenditure.

That brings me to the question, why? The answer is that, so keen were Ministers to re-establish trade with Malaysia that they set aside a series of normal procedures to enable them to do so. There was, first, the agreement made by George Younger, now Lord Younger of Prestwick, to link an arms sales package with the promise of aid. He says: a verbal understanding was given by somebody—to link the aid to the defence contract". The House is entitled to know who that somebody was.

Mr. Alex Carlile (Montgomery)

Does my right hon. Friend agree that the relationship between British and Malaysian Ministers became unacceptably cosy, and that there are grounds for investigating the basis on which public interest immunity certificates were signed by Ministers against the interests of Mr. Lorrain Osman, who was then in Pentonville prison in London, which, if they had not been signed, might have led to the disclosure of documents that would have enabled Mr. Osman to present his defence in a proper fashion?

Sir David Steel

I agree with my hon. and learned Friend that there is a case for looking into that connection. In preparing what is inevitably a wide-ranging speech, I decided not to go down that alley, but it is one well worth exploring and I hope that hon. Members will do so in the debate.

I have a copy of the subsequent memorandum of understanding that was signed by the two Prime Ministers after a meeting from which all officials were excluded. As it is classified as secret, I shall not read any of it to the House. Suffice it to say that it contains some unusual provisions, including the use of concessionary interest rates by private banks to be guaranteed by the Government, rather than the normal export credit guarantee arrangements, the establishment of permanent units in our Ministry of Defence and in Malaysia to oversee the contracts and the provision of military training, as well as a list of various arms suppliers.

Here I have to be blunt and say that, in the course of batting for Britain, which our former Prime Minister did extremely well, her close circle often seems to have been involved. In this case, Sir Tim Bell, well known as her public relations adviser, is also adviser to the Malaysian Prime Minister and to Tam Sri Armugam, who controls GEC Malaysia, and was heavily involved in some of the contracts under the deal.

Another person who helped broker parts of the deal is Mr. Steve Tipping, a business associate of Mr. Mark Thatcher and, indeed, best man at his wedding. Tim Bell told the The Sunday Times when asked to clarify Tipping's exact role: What he does for a living is introduce people to each other". That is lucky for him. It is clear that between them, George Younger, Margaret Thatcher and persons unknown made the deal, which also included an agreement to give Malaysian Airlines a landing slot at Heathrow airport, for which the Treasury had to fork out more than £2 million of public money as compensation to British Airways.

I now turn to the deception of Parliament. According to the Alan Clark school of thought, none of it, including possible payments to middle men or politicians into Swiss bank accounts, is at all untoward in the determined pursuit of British business interests. [Interruption.] Some Conservative Members say, "Hear, hear", but it is not the stated policy of Her Majesty's Government.

I do not want to get hung up on the argument about whether it was illegal, but it was certainly wholly against the ODA's declared policy objectives and the published guidelines of the aid and trade provision which specifically exclude as eligible "equipment for military purposes".

Mr. James Paice (Cambridgeshire, South-East)

Does the right hon. Gentleman accept that the principal responsibility of the British Government, of any persuasion, must be to look after British interests first? In that context, is it not quite clear, after the events of Thursday and Friday onwards Concerning the Malaysian trade embargo against Britain, that countless thousands of British jobs are at risk? Would not the right hon. Gentleman be doing Britain more good, and doing more for British jobs by calming the situation down rather than stoking the fire, which he is actively doing?

Sir David Steel

I will come on to my suggestions about the best way of pursuing British interests towards the end of my speech. But if the hon. Gentleman is suggesting that deception, backhanders or anything of that kind should be part of British policy, let us have that stated as British policy. What I am complaining about is that the policy pursued in this case was different from the public policy that was declared to us in Parliament. More than that, Ministers constantly denied any link between arms supplies and aid in several answers to parliamentary questions. I shall give two examples. In November 1989, the then Prime Minister told the House: Overseas aid is frequently used to finance civil engineering contracts … It is not used in connection with sales of military equipment."—[Official Report, 14 November 1989; Vol. 160, c. 121.] That was already untrue by the time she said it.

In December 1991, the Minister for Overseas Development, the then Mrs. Chalker, told the House: There is no question of linking aid and arms 'deals"'.—[Official Report, 20 December 1991; Vol. 201, c. 331.] But there was a question, and she had already been overruled in that instance.

The columns of Hansard are littered with such denials. As late as 26 January this year, when asked to confirm or deny the specific allegation that aid to Pergau was linked to arms sales, the Prime Minister wrote in a letter to me that the Memorandum of Understanding did not cover aid. I cannot accuse the Prime Minister of telling me a lie, because you, Mr. Deputy Speaker, would rule me out of order, and he is technically correct. It is not there. But he and other Ministers have been miserly with their veracity, right up to Sunday, when the Foreign Secretary, in a phrase that ranks alongside "economical with the truth", told us that the two had for a time become entangled.

One of my conclusions is that, as in the arms to Iraq fiasco, the Government have become not only sloppy in their use of power but cavalier in their treatment of the House, and have sought to mislead us by concealing the truth until finally found out.

Mr. David Harris (St. Ives)

The right hon. Gentleman will appreciate that some of us who are on the Select Committee on Foreign Affairs are in a difficult position. Indeed, I have just come from the Foreign Office, where I was looking through some of the papers. I ask him to accept that all these points will be looked into carefully by the Select Committee on Foreign Affairs. I think that he will perhaps want to reconsider some of the points that he makes when the whole story is known. I hope very much that that is so.

Sir David Steel

I can assure the hon. Gentleman that I have looked carefully at all the papers relating to this matter and am choosing my words extremely carefully. I believe that the House was misled in the parliamentary answers that were given, because it is undeniable that aid—

Mr. Harris

Has the right hon. Gentleman read it?

Sir David Steel

I have read the memorandum of understanding. Of course there is no reference to it, but if the hon. Gentleman had been following me closely, he would have heard that George Younger, as he then was, made it quite clear that a verbal commitment was given by somebody to promise the aid. I am asking the question that I hope the hon. Member will ask as a member of the Select Committee on Foreign Affairs: Who was that person? I invite him to ask that question.

My fourth proposition is that the Pergau dam affair illustrates something that has gone wrong with our aid and trade provision. There has been a growing correlation between increased aid programmes to other countries and arms sales contracts. Malaysia is not a poor country; its gross national product per capita is $2,500. The amount spent on the Pergau dam project alone, every single year from now through to 2000, exceeds what we gave last year to the whole of Somalia or Ethiopia, each of whose gross national product per head is only just over $100.

Mr. Bowen Wells (Hertford and Stortford)

Does not the right hon. Gentleman agree that the kind of aid that is given to Somalia will not be under the aid and trade provision and therefore cannot be truly classified in the same way as the aid given on the Pergau dam?

Sir David Steel

I accept that it comes out of a different part of the ODA, but the hon. Gentleman will agree that the total, both the trade and aid provision and the ordinary aid programme, amounts to our overseas aid budget. They are together. I shall talk in a moment about the inadequacy of the total packages. Obviously, money spent on one is not available for the other; that is the point that I am making.

Even further removed from poverty is Oman, with a gross national product per capita of over $6,000—higher than the figure in Portugal, a European Community aid-giving country. Its aid from Britain has doubled during the lifetime of the present Government, and it currently ranks third in the list of purchasers of arms from Britain. For 1994, defence spending is planned to occupy 30 per cent. of Oman's national budget. Thailand and Jordan are other better-off countries with increasing aid receipts and growing arms purchases from Britain.

Most offensive of all, however, are the sales and aid programmes for undesirable regimes. Let us take Ecuador, for example. In comparison with neighbouring Colombia and El Salvador—which share the same level of poverty —Ecuador receives growing British aid. It currently amounts to 0.33p per head, as against 0.07p and 0.04p in the other two countries. The difference is that Ecuadlor is the fifth largest purchaser of British arms. In 1991, the Ecuadorian human rights commission registered 23 cases of unlawful killing and 38 of torture.

Even more striking is the case of Indonesia, where our aid programme has quadrupled under the present Government. It has become the fourth largest purchaser of British armaments. Since 1975, when Indonesia invaded its neighbour East Timor, a third of the population—some 200,000 people—has been killed. In 1991, the army massacred 100 civilians at a funeral in the East Timor capital. The United Nations Commission on Human Rights has condemned Indonesia. Last year's Amnesty International report lists more than 180 prisoners of conscience, and states: Torture and ill treatment of political detainees, peaceful demonstrations and criminal suspects were common and resulted in some deaths. Government forces extrajudicially executed scores of alleged supporters of independence in Aceh and East Timor. Some countries, such as Belgium, have suspended their aid to Indonesia; others, such as the United States, have banned arms sales. Britain has increased both. I believe that most people in this country find that wholly unacceptable, and would prefer us not to sell arms to unsavoury regimes—and certainly not to lubricate those sales by using parts of our limited aid budget.

I agree with what Lady Chalker, the Minister for Overseas Development, said in a lecture a couple of years ago: excessive military expenditure can create political and military insecurity. It can also seriously damage development by pre-empting resources.

Mr. Ian Bruce (South Dorset)

I am trying to follow the right hon. Gentleman's argument about the public policy of a political party, and what a party says when it goes overseas. Will he confirm that his own party was quick to congratulate the new Liberal Canadian Government on their economic policies, when they had just announced the cancellation of a helicopter project which would have been very expensive for the Canadian taxpayer? The leader of the right hon. Gentleman's party, the right hon. Member for Yeovil (Mr. Ashdown), then told the local press that he had dispatched the right hon. Gentleman to ask the Canadian Government to reinstate the project.

Sir David Steel

With great respect, that has nothing to do with what I am talking about. I assure the hon. Gentleman, however, that I have indeed discussed the matter with Canadian Ministers. It is evident from the Canadian Liberal election programme, which is clearly set out, that it was designed to reduce the defence budget and increase the aid budget. I have been trying to argue that case here.

In a recent Foreign Office publication, the Government said that they attempted to promote good government through their aid programme. It seems highly selective. In the foreword, the Foreign Secretary writes: The more open a society is, the more transparent the decisions of government, the more difficult it is to hide corruption and the abuse of human rights. Those are fine words, but tell that to the Malaysians and the Indonesians!

My fifth observation relates to the connection between firms that benefit from the aid and trade provision, and donations to the Conservative party and its allied organisations. [Interruption.] The hon. Member for Chelmsford (Mr. Burns) should listen to what I am going to say before intervening.

The fact is that companies linked by such donations have been the main beneficiaries of the aid and trade provision—to the tune of 42 per cent.—since the Government came to power. They include Cementation International—owned by Trafalgar House—Balfour Beatty, GEC, AMEC International, Biwater and Davy; not to mention the walk-on part of our old friend the privatised British Airways.

I am not alleging that there is anything as corrupt as a direct link between those companies' donations to the party in government and their receipt of aid and trade provision from the Government: perish the thought. It is just that the two have, in a somewhat unseemly manner, "become entangled".

Mr. Simon Burns (Chelmsford)

May I return to the right hon. Gentleman's earlier point? He mentioned both GEC and Malaysia. No doubt he knows quite a bit about my constituency from his previous role as leader of the Liberal party; he will know that it contains four GEC companies, which employ people who have been hard hit by defence-related redundancies. Over the past week, those workers have become extremely nervous and concerned about the threat of trade with Malaysia, where they are involved in non-military contracts such as the airport project.

What would the right hon. Gentleman do if redundancies were announced in Chelmsford as a result of pathetic, naive debates of this kind? Will he consider reading an article in The Times by Peter Riddell, which puts the whole issue into perspective?

Sir David Steel

If any redundancies were declared in Chelmsford, I would say that the hon. Gentleman should look to his own Government, who got into this mess in the first place—unless he is seeking to defend the actions that I have described; I am not sure whether he is or not.

What are we going to do about all this? Let me take the last point first. Over the years, the House has on several occasions dodged the issue of the funding of political parties. I believe that such corporate donations should be outlawed. I am not in favour of state grants for political parties, but I believe that there is a case for examining a scheme whereby each individual citizen was allowed to donate a small fixed amount from his or her tax bill—say £50—to the party of his or her choice. That would provide an element of public subsidy for democracy, but according to the individual's choice—leaving space for the political parties to go out and get it.

That is my first proposal for a change in policy. My second is that we should legislate, as the United States Congress has done, against arms sales to regimes with appalling human rights records. I do not believe that the American action is foolproof, but at least it is a start in the right direction.

Thirdly, I am well aware of the argument—which appears to be supported by some Conservative Members —that, if we do not engage in arms trade sweeteners, payments to middle men or bribery, to put it crudely, others may nip in and secure the contracts. The Organisation for Economic Co-operation and Development is well aware of that, and has established a working party on illicit payments.

Mr. Burns

The right hon. Gentleman does not understand.

Sir David Steel

I am trying to tell the hon. Member for Chelmsford something. For more than two years, the working party has been battling against the indifference of the British and Japanese participants. I want an assurance from the Government that they will take the issue seriously, and help the OECD to reach an internationally accepted code of behaviour. In the meantime, we should look at the American legislation, which is punitive to the extent of imposing $2 million fines and five years in gaol for corrupt payments.

Mr. Tim Renton (Mid-Sussex)

I thank the right hon. Gentleman for giving way, but I think that he must agree that he is misinforming the House about that OECD examination. My understanding is that it is a proposition put forward by the United States, because of the stringency of its domestic law, but it is being discussed, debated and in some degree opposed, not only by Britain and by Japan, but by all our continental European neighbours, because they simply do not think that it is pertinent to their legislation. It is totally unfair, therefore, for the right hon. Gentleman, as it were, to put Britain alone in dock in that context.

Sir David Steel

I did not put Britain alone in the dock. I said simply that my information was that Britain and Japan had been dragging their feet in that working party, which has been going on, not for two months, but for two years. If the right hon. Member for Mid-Sussex (Mr. Renton) is suggesting that some of our European Community partners are also dragging their feet, I find that equally deplorable. I am saying that it is no good advancing the argument that if we do not behave badly someone elsewhere will, and therefore we might as well behave badly, which appears to be the case that Mr. Alan Clark and others have advanced.

We all know that our overseas aid budget, far from moving towards the UN target of 0.7 per cent. of gross national product, has been moving disgracefully away from it. Moreover, a large chunk has had to be devoted to eastern Europe and the former Soviet Union, leaving a smaller proportion of the diminished budget for the desperately poor in our world. It is time that the overall budget was progressively increased towards our UN commitment and that the share-out within it was reordered to help the poorer countries. Perhaps we could be given details of the rethinking that has already taken place in the Overseas Development Administration on that last point.

Finally, I believe, as did our Select Committee on Foreign Affairs, that the aid and trade provision should be removed from the ODA and transferred wholly to the Department of Trade and Industry. There is everything to be said, of course, for assisting our industries to obtain contracts—that is not at issue—but that is not one of the declared aims of the ODA and, in the light of this sad episode, it should become solely that of the DTI.

Mr. Graham Riddick (Colne Valley)


Sir David Steel

No; I am concluding now.

The British are generous people and the response to the overseas development charities by the public proves that to be so. They have been appalled that their tax revenues, instead of going to the poor and the hungry, have been so misused in that way. The Government stand condemned and the scandal must never be allowed to happen again.

4.51 pm
The Minister of State, Foreign and Commonwealth Office (Mr. Alastair Goodlad)

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: 'strongly supports the Government's substantial aid programme aimed at sustainable economic and social development, particularly in the poorest countries, which draws on the skills and excellence of British institutions, companies and nongovernmental organisations, and creates significant jobs and wealth in the United Kingdom.'. I wonder, having listened to the remarks of the right hon. Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel), whether we are debating the same aid programme. I welcome the opportunity to remind him of the basic purpose of our aid programme and of the realities of the world. I doubt whether the dedicated people working in the field to implement our aid programme in a number of countries will take much encouragement from having listened to the right hon. Gentleman. I quote from the Foreign Office's 1993 departmental report, "The purpose of our overseas aid for developing countries is to promote sustainable economic and social development and good government in order to reduce poverty, suffering and deprivation and to improve the quality of life for poor people. The best advertisement for increasing our aid programme is its effectiveness. Since 1987–88, we have increased the amount of aid that we give to developing countries by 10 per cent. in real terms. We have the sixth largest aid programme in the world. We remain committed to the 0.7 per cent. aid/gross national product target, but, like many other donors, we cannot set a timetable for reaching it. Levels of aid must take account of our economic circumstances. Those are realities which confront other donors. Some, such as Germany, have frozen their aid. Others—for example, Canada, Italy and Finland—have cut theirs. Our programme, meanwhile, continues to grow.

However, it is not just a question of how much money donors provide. The results of that aid are what count—how well the aid works. That is why the quality and effectiveness of aid are so important. We would not have provided more resources if we were not convinced that we would put them to good use in the interests of the recipient countries and of British taxpayers.

Mr. Tony Worthington (Clydebank and Milngavie)

What criticisms were expressed in what the Organisation for Economic Co-operation and Development said last week to the British Government about the quality of our aid?

Mr. Goodlad

I was coming to that. The development assistance committee of the OECD has just completed a review of the United Kingdom aid programme, while the hon. Gentleman was on his travels in Africa. It is still in business—unlike, I regret to say, the hon. Gentleman, who has been shamefully let down by his own Front Bench —a case of serious injustice.

Mr. Tom Clarke (Monklands, West)

When the Minister speaks about injustice to Front Benchers, does he agree that the biggest injustice this afternoon is that he should be put up to answer for the Government in this miserable situation?

Mr. Goodlad

On the contrary, I regard it as an honour and a privilege.

The development assistance committee of the OECD has just said: The United Kingdom has a highly concessional, well organised bilateral programme based on substantial national expertise and largely oriented towards the poorest developing countries. That conclusion from an internationally respected organisation hardly squares with the Opposition motion, but I am most grateful to the hon. Gentleman for drawing the House's attention to it.

Far from being a misuse of funds, the aid programme is effective because it is well targeted. It is well targeted in where we spend our aid—on the poorest countries, especially in Africa and Asia. Seven of the 10 biggest recipients of our bilateral aid in 1992–93 were poor countries in sub-Saharan Africa. The other three were populous and poor countries in Asia—India, Bangladesh and China. It is also well targeted on clearly defined objectives. They were set out clearly in the speech of my noble Friend the Minister for Overseas Development at Chatham House last year. The aim is long-term, sustainable development.

Mr. Ian Bruce

Does my hon. Friend agree that one of the things that seem to have annoyed the Malaysian Government is the fact that commentators in the House and outside seem to be saying that they should not play a part in deciding where aid should be spent and that they do not have the ability to know where that is best used? Is not that appalling? Should not the British Government always listen to the Government of the country involved about where they feel that aid is best applied?

Mr. Goodlad

I think that my hon. Friend makes a very important point. We in government always listen, but I am quite used to patronising, condescending and neo-colonialist attitudes from Opposition Members.

What are the areas on which we spend our aid programme? Let us move away from the hysteria and allegations of recent weeks and take a cool look at what we are trying to achieve. We support economic liberalisation. Sustainable development needs sound economic policies, which encourage investment, give incentives to producers and improve the efficiency of public services. We promote the productive capacity of developing countries, improving management skills, encouraging more effective public expenditure programmes. We promote good government to ensure sound development policies, to improve legitimacy and accountability, to extend popular participation in the development process and to promote respect for human rights and the rule of law.

We are increasingly focusing our programme on the direct reduction of poverty. We promote human development, including better education and health and access to family planning services. We help poorer countries to tackle environmental problems and we have a record second to none in providing speedy and effective humanitarian assistance to the all-too-many communities struck by natural or man-made calamities.

Mrs. Ann Clwyd (Cynon Valley)

Can the hon. Gentleman confirm that in 1991 the ODA published a series of reports which were independent evaluations into the use of the aid and trade provision? There were two sets of reports, carried out by academics. One set was for the ODA, and in that severe criticisms were made of ATP in relation to power projects in countries throughout the world. The criticisms of the use of the aid and trade provision were edited out of the set of documents that were published for public consumption, however. Will the right hon. Gentleman confirm that that was the case in 1991 and tell us what Overseas Development Administration practice is now?

Mr. Goodlad

I have not read the documents to which the hon. Lady referred, but we recommend constructive criticism from whichever quarter it comes, even from academics. An aid and trade provision review has just been conducted and a copy of it has been given to the Select Committee on Foreign Affairs.

Mr. Jim Lester (Broxtowe)

It may benefit hon. Members to demonstrate the difference between the bilateral aid programme, which my right hon. Friend is describing very well, and the aid and trade provision, which is 9 per cent. of the total bilateral aid budget. The latter is covered by different rules and is designed to assist British companies obtain contracts overseas. The two things are not the same. The criticism of ATP has been published and ATP has been reviewed, which has resulted in tremendous changes in the way in which it operates.

Mr. Goodlad

I am grateful to my hon. Friend and I shall talk about the aid and trade provision later.

Anyone can set out a list of objectives. The key is ensuring that funds are spent in pursuit of the objectives. Aid programmes do not stand still. They reflect a changing international agenda. They must respond first and foremost to the needs of recipient countries. The way we give aid —the form it takes, the channels that we use and the countries that receive it—is under continual review to ensure that it is closely geared to the needs of individual countries.

Mr. Riddick

Does my right hon. Friend agree that in addition to using overseas aid to help to alleviate poverty and encourage development, we should link it far more closely to trade, so that we enable British firms to benefit and create more employment in this country? The 9 per cent. figure is far too low and we should increase it significantly.

Mr. Goodlad

My hon. Friend is right. The aid and trade provision includes the objectives that he described, much as it sticks in the gullets of Opposition Members, especially Labour Members, who introduced the aid and trade provision, but do not like British businesses to be assisted.

Mr. Robert N. Wareing (Liverpool, West Derby)

The Government often proclaim the principle of promoting good government. Does not that principle also relate to the debate? In an answer to a written question on 10 June 1993, the Under-Secretary of State told me that the Government use their aid programme to improve the quality of government. He said that where standards were not met, for example, where human rights were persistently abused, the Government were prepared to withdraw or reduce their assistance. In view of events in East Timor, does not Indonesia come into that category?

Mr. Goodlad

As I have said, and as the hon. Gentleman has quoted, it is right that good government is included in the criteria that we take into account. I shall deal with East Timor later.

The ODA maintains rigorous economic, technical and environmental criteria to ensure the quality of the programmes and projects that we support with official funds. In particular, we have systems to determine accurately development needs, to design the aid to meet those needs in the most cost-effective ways, to develop ways to monitor performance and to feed the aid management lessons of each project into the design and management of future projects.

Our procedures for safeguarding proper use of aid funds are thorough. We and other donors require competitive tendering for procurement contracts. We continually monitor the implementation of our projects to guard against misuse of funds. We would have no hesitation in withdrawing support from a project where it was clear that aid funds were being improperly used.

We have heard a lot of misguided criticism about aid and trade provision. It is a long-standing part of the aid programme and was started in 1977 by a Labour Government. It enables us to promote development in sectors where British companies have a lot to offer. It is a successful scheme. Nearly £4 billion worth of British exports have been won through projects assisted by the aid and trade provision since the start of the scheme. That has involved more than 270 projects in 50 countries worldwide.

Let us not delude ourselves. Most aid donors have similar programmes. We estimate that all our major European partners have bigger and in some cases substantially bigger programmes than we do, as do the Japanese. Aid and trade provision was set up in response to moves by other countries to offer tied aid financing in markets in which we competed. Does anyone deny that our exporters should have a level playing field?

Rev. Martin Smyth (Belfast, South)

The Minister will recognise that I have been among those who have urged the Government to reach their agreed target of honour. While I recognise his arguments on the care with which we conduct our ODA policy, does he accept that we as a nation depend on our export business to raise money? Does he accept that because of the freedom of the press and its frailties, from which we often suffer, firms are being hit in regions of high unemployment, including Northern Ireland?

Mr. Goodlad

The hon. Gentleman has advanced an important argument.

Mr. Alan Williams (Swansea, West)

Does the right hon. Gentleman realise that he is in danger of slightly misstating the origins of ATP? During my time at the Department of Industry, I was in charge of the power plant industry. We faced competition from the Japanese, who were giving aid to obtain power station orders, so we agreed to introduce a system whereby aid was supplied for projects for which construction was due to take place. The aid was intended for a specific power station project and not for ancillary deals—that was never envisaged. Given that the strict intention was that aid should relate to the project in hand, how does the Minister explain support of £234 million of soft loans, plus £46 million of Export Credits Guarantee Department support, making a total of £280 million out of a £308 million British content? That amounted to 90 per cent. of the cost of the project to a country that can pay cash on the nail for £1 billion worth of arms.

Mr. Goodlad

I am glad that the right hon. Gentleman is loyal to the system that he helped to found. I shall come to the Pergau project later.

I should like to deal with the argument advanced by the right hon. Member for Tweeddale, Ettrick and Lauderdale about the group of companies that have benefited from aid and trade provision. I am sure that he will confirm that all companies providing goods and services out of the United Kingdom have been, and are, eligible to apply for ATP. Without including consortium partners and subcontractors, 141 companies have benefited from ATP-supported projects. Large overseas construction projects are very specialised and only a few UK companies have the expertise to act as the prime contractor. ATP is awarded to the recipient Government for a project and not to UK companies. The grant element of an accepted offer of ATP goes to the recipient Government. Of course, ATP support benefits many smaller sub-contractors and suppliers, whose customer is the prime contractor.

The suggestion by the right hon. Member for Tweeddale, Ettrick and Lauderdale that there might be some connection between companies that have worked on ATP-funded projects and contributions to the Conservative party is unfair in two respects. It is unfair to the ODA officials who vet those projects and who seek to make no connection between the Conservative party and ATP. It is also unrealistic and unfair to the Governments who receive ATP. Hon. Members would objectively have to agree that that is a classic case of the smear and innuendo that the Malaysians have found so offensive.

Mr. Julian Brazier (Canterbury)

For nine years, I worked for one of this country's largest investors in Malaysia and I believe that my right hon. Friend has shown commendable restraint in his remarks. The truth is that an absolutely nonsensical campaign, whipped up in the media by Opposition voices, has done incalculable damage to our trading relations with an important trading partner.

Mr. Goodlad

My hon. Friend speaks not only from knowledge but with ample justification from the heart.

Mr. Burns

Does my right hon. Friend see the irony in the fact that, when unemployment rises, the Opposition parties pontificate and mouth platitudes about how disgraceful it is, but, when the Government are working to help British companies to win exports and to safeguard and create jobs, the antics of those parties destroy exports and jobs? They then have the nerve to complain about the unemployment that results from their disgraceful behaviour.

Mr. Goodlad

My hon. Friend is absolutely right. The Opposition parties are quite unashamed of doing what he describes.

Mr. Harry Barnes (Derbyshire, North-East)

I have a particular constituency interest in the aid and trade provision and the benefit that has arisen from it. Biwaters operates from Clay Cross in my constituency and was involved in the contract to provide rural water supplies in Malaysia. A contract for the refurbishment of the water supply, worth £1.5 billion, was ready to be signed but has now been lost. It has been lost not because we have a free press, but because of the link between arms and aid. The Government began something that might have benefited trade, but their action has resulted in my constituents facing unemployment.

Mr. Goodlad

I am afraid that the hon. Gentleman is living in a complete fantasy world and is compounding the problems that he rightly highlights. The atmosphere of innuendo has contributed to the unfortunate unemployment in his constituency and I hope that his constituents will notice his involvement.

I said that I would reply to the right hon. Member for Tweeddale, Ettrick and Lauderdale about ATP for the Pergau project. My right hon. Friend the Foreign Secretary has already made it clear that, in deciding to proceed with the Pergau project, he took account of our wider interests in Malaysia and of the consequences for the United Kingdom in 1991 if we did not go ahead with it.

The Pergau project formed part of Malaysia's diversification strategy for a new, urgently needed electricity capacity. Since it began, Malaysia's demand has increased even more than forecast. The Malaysian Government had decided that the project should go ahead as it was economically and developmentally in the national interest. We ourselves have a diversified energy policy. If we had not carried through our commitment to the Pergau project, our credibility as a trading and investment partner would have been seriously damaged and would have withered a wide range of British prospects for the future. We should have paid the penalty for a breach of faith.

Mr. Keith Mans (Wyre)

Does my right hon. Friend agree with the comments of Sir Tim Lankester which were not widely reported in the press? In his evidence to the Select Committee, he said that the project was proceeding very well and that it was likely to be finished on time and under budget.

Mr. Goodlad

Yes, my hon. Friend is absolutely right and he is also correct to point out those facts.

Mr. Lester

The Pergau dam is also part of Malaysia's regional policy, something which the Labour party should understand. The project is deliberately in the north of the country, which is the least developed part, and the intention was to bring electricity to a part of the country which does not have the sophisticated power stations that exist in the south. The Labour party is a great supporter of regional policy and should understand that the Malaysians were well within their rights to make that decision.

Mr. Goodlad

My hon. Friend is knowledgeable about these matters and he is, of course, absolutely right.

The right hon. Member for Tweeddale, Ettrick and Lauderdale mentioned so-called links with defence sales and what, in his eyes, were the Government's attempts to conceal what has happened. I have been re-reading some parliamentary questions and found that in June 1989 the hon. Member for Eccles (Miss Lestor), who is in her place, asked my right hon. Friend the Minister for Industry about this matter. My right hon. Friend said: Following the expression of Malaysian interest in United Kingdom overseas aid in early exchanges, my right hon. Friend the Secretary of State for Defence made it clear to the Malaysian Finance Minister that it would not be acceptable to Her Majesty's Government to link aid with the defence sales package."—[Official Report, 13 June 1989; Vol. 154, c.397–98.] In 1989, therefore, the matter was in the public domain.

Furthermore, on 25 January, my right hon. Friend the Foreign Secretary of State gave a written reply to the right hon. Member for Copeland (Dr. Cunningham), who is not in his place. He said: During discussions in 1988 about the proposed memorandum of understanding on defence sales, the Malaysians had requested a reference to aid. A protocol was signed during a visit to Kuala Lumpur in March 1988 by the then Defence Secretary, my noble Friend, Lord Younger of Prestwick. This set out the Malaysian Government's intention to buy defence equipment from the United Kingdom, with the details to be elaborated in the later memorandum. The protocol included a reference to 'aid in support of non-military aspects under the programme'. After consultation with ministerial colleagues in London, the Secretary of State for Defence wrote to the Malaysian Minister of Finance in June 1988 to say that aid could not be linked to defence sales. As a result the issue was not taken up in the memorandum of understanding on defence procurement which the British and Malaysian Prime Ministers signed in September 1988, and which did not cover aid. Our aid programme is not linked to defence sales."—[Official Report, 25 January 1994; Vol. 236, c. 145–46.] The Pergau project was suggested after Lord Younger had made it clear that there could be no formal link between defence sales and development projects.

Let us examine the reality of the multi-faceted relationships that Governments enjoy with one another. It is ridiculous to suggest that a country that has a defence sales relationship with another should, because of that relationship, be ineligible for ATP. It is equally ridiculous to suggest that a company involved in an ATP relationship should, because of that relationship, be ineligible for defence sales involving British industries. Provided that the two do not depend on each other and that aid is not used —it is not—to finance defence sales, it seems that that is the way in which countries will inevitably proceed.

Sir David Steel

I do not disagree with that general proposition, but, in this particular case, the Minister is not seeking to deny what Lord Younger has said, which was that someone gave a verbal assurance that the two would be linked in the way that the right hon. Gentleman has just said should not happen. He subsequently corrected that in the letter that was read out.

Mr. Goodlad

I do not know when the verbal assurances were given—whether it was before the memorandum of understanding was signed—but I have no doubt that the Select Committee will investigate all these matters.

Mr. Alan Williams

Will the right hon. Gentleman give way on that point?

Mr. Goodlad

No, I must make progress.

We agree with the development assistance committee of OECD that aid quality should predominate in decisions to fund projects in which there is a large commercial interest. ATP does precisely that. Our procedures ensure that ATP is spent on projects in creditworthy developing countries where there will be development benefit and where British firms have proven experience to offer.

Let us put ATP into a proper perspective, as my hon. Friend the Member for Broxtowe (Mr. Lester) said. It accounts for less than 5 per cent. of the aid programme, which, in 1992–93, meant just over £90 million. In the same year, we spent £290 million on humanitarian assistance. Expenditure on the Pergau project is to take place over 14 years and the peak expenditure in any one year is £27 million—less than 1.3 per cent. of our current but expanding aid programme—so much for allegations that the project is taking over the programme.

Mrs. Jacqui Lait (Hastings and Rye)

Before my right hon. Friend moves on, will he comment on the long-term damage being done to our relations with Malaysia as it affects companies—one, for instance, in my constituency, where unemployment stands at more than 13 per cent.—that are engaged in trade related neither to ATP nor to arms sales, yet are in danger of losing product?

Mr. Goodlad

I have every sympathy with the people whom my hon. Friend is describing—and we know where the blame lies.

The allegation that aid to a whole range of countries is linked to arms sales, which has been made by the right hon. Member for Tweeddale, Ettrick and Lauderdale and by others who clearly should know better, is absolute nonsense. There is no link between the provision of aid and the supply of arms. Some of the countries mentioned by ill-informed critics receive such a modest amount of aid from the United Kingdom that the whole idea is ludicrous.

Our aid is provided according to well-established criteria. Eighty per cent. of our bilateral aid goes to poor countries, with special attention being paid to progress in economic reform and to good government. Of course, we also pay particular attention to historical ties, especially with Commonwealth countries.

The right hon. Member for Tweeddale, Ettrick and Lauderdale mentioned the selective and misleading World Development Movement analysis and I shall deal with four examples from that. First, Jordan is a lower-middle income country with which Britain has close ties. We have a modest technical assistance programme spent mainly in the education and water sectors. Aid figures in recent years have been amplified not by the provision of more aid but by debt relief and by the inclusion of relief provided to refugees during the Gulf war. I presume that the right hon. Gentleman would prefer us not to have provided that relief.

In Oman, we provide only a small programme of technical assistance—a mere £750,000 in 1992–93. Our funds are spent on developing the country's human resources, which had been lagging behind its economic progress, and those funds have been put to good use. We are accordingly able to plan an even lower level of aid in future. Any attempt to link those tiny sums to Oman's defence purchases is laughable.

Contrary to what the right hon. Gentleman said, apart from investment by the Commonwealth Development Corporation—which, as he may wish to know, the Government do not control country by country—our overall assistance to Thailand, including ATP, has declined from about £5 million in 1989–90 and 1990–91 to a little more than £2 million in 1992–93.

Indonesia is not a rich country. Its income per head is only about $650 a year. It is internationally acknowledged as having an outstanding record of sound economic management. According to the World bank, the numbers living in poverty have dropped from 70 million in 1970 to 27 million in 1990. But, of course, that is not a matter of any interest to Opposition Members.

Mr. D. N. Campbell-Savours (Workington)

Having said that we provide some form of aid to Indonesia, the Minister told us the income per head there. Will he tell us the comparable figure for Oman, to which he said that we also provide aid? What is the income per capita in Oman?

Mr. Goodlad

Without notice I cannot give the hon. Gentleman figures for per capita income. However, I can say that our aid to Oman amounts to a mere £750,000—a derisory amount. [Interruption.] Hon. Gentlemen are shouting that there should not be any aid. They obviously take no interest in the people of Oman, but others do.

As I said, the number of people living in poverty in Indonesia dropped from 70 million in 1970 to 27 million in 1990. That, of course, is not a development in which Opposition Members will take any pleasure, because they could not care less about the poor in Indonesia.

Our aid supports projects in sectors such as energy efficiency, communications, forest management, education and public administration. Total British aid last year was only 18p per head. By comparison, our aid to Mozambique was nearly £2 per head. Nor is there any truth in the allegations of links between our aid and the sale of Hawk or other defence equipment.

I said that I would mention East Timor. We take a number of important criteria, including human rights, into careful account when deciding aid allocations. We do not recognise Indonesian sovereignty over East Timor and the Indonesians are well aware of the importance that we attach to human rights both in Indonesia and in East Timor, because we take frequent opportunities to remind them of it. Our aim is to influence, rather than to isolate, the Indonesian Government and that is best done through dialogue. Suspending aid to Indonesia would not necessarily improve the human rights situation and could hurt those whom it is intended to help. However, I appreciate that the problems of those whom aid is intended to help are of no interest whatever to Opposition Members.

Ultimately, it is the policies of the countries concerned that will make the real difference. Let us applaud when poor countries become more prosperous through their own efforts, as many have done—or at least, let my hon. Friends applaud; I expect no applause from Opposition Members. Well-targeted and professionally managed aid has played a part in the success of such countries. But enterprise, entrepreneurship and sound policies play a greater part.

Aid will continue to be essential for the poorest countries, especially those unable to attract significant private resources. In delivering that aid, we shall continue to look for the best means available to achieve maximum impact.

We are now involving a larger number of British organisations, both public and private. The amount of official aid to be channelled through British nongovernmental organisations, for example, has increased fivefold over the past six years and my right hon. Friend the Minister has just announced a further increase.

Our aid programme and its objectives are under continual review and it is right that that should be so. Our aid should be scrutinised. We welcome that, because we believe that we do an excellent job. There is no danger whatever, either in developing countries or in British industry, of Opposition Members being seen to take any interest in the alleviation of poverty, or to be batting for Britain.

Mr. Roy Beggs (Antrim, East)

Will the Minister give way?

Mr. Goodlad

I hope that at the end of the debate Opposition Members, while they may be none the wiser—

Mr. Beggs

On a point of order, Mr. Deputy Speaker. Thank you for permitting me to intervene at this point—[HON. MEMBERS: "It is not an intervention."] I do not wish my party or myself to be included in the remarks that the Minister has made—

Mr. Deputy Speaker (Mr. Michael Morris)

Order. I greatly deplore that intervention; it was not a point of order. If the hon. Gentleman has a genuine point of order, will he put it now to the Chair? Am Ito take it that what he said was not a point of order but an interruption? That is greatly to be deplored.

Mr. Goodlad

Further to that point of order, Mr. Deputy Speaker. Of course, I except the hon. Member for Antrim, East (Mr. Beggs) and his party from what I was saying.

5.27 pm
Mr. Tom Clarke (Monklands, West)

I warmly congratulate the right hon. Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel), who opened the debate with an excellent, indeed an unanswerable, speech. The Minister who has been put up to reply is one of many Ministers who speak in the House on overseas aid. Another sign of how lightly the Government treat that crucial issue is the fact that, every day that aid is discussed, a different Minister appears. The Minister—

Mr. Goodlad


Mr. Clarke

I shall give way in a moment.

The Minister said that he was proud and privileged, yet he sounded lumbered and desperate, as well he should have done.

Mr. Goodlad

The reason why more than one Foreign Office Minister takes part in such debates is that we are all interested in the subject—unlike the Labour party, in which only one person, if that, seems to be interested in it.

Mr. Clarke

That must be an interest which has been hidden from the House hitherto—unless ATP stands not so much for aid and trade provision as for "assisting Tory paymasters". Many of us are beginning to see that that is what the debate is really about.

The right hon. Member for Tweeddale, Ettrick and Lauderdale has done the House a great service, because we discuss overseas aid and development all too seldom. It is staggering, but it is another sign of how the Government see such matters, that, although the debate is being opened by the Minister of State, Foreign and Commonwealth Office, it is apparently to be wound up by a Minister from the Department of Trade and Industry. We now see how vested interests have deep control of the Tory party and little to do with the needs of the third world and the poorest in this universe. [Interruption.]

When the howling mob opposite reflect on the real problems of this debate, they will conclude that we are right to concentrate on the issue of the Pergau dam, even though the Minister left it almost as an aside towards the end of his speech. We are right to do that, not because criticisms have come from Opposition Members—which were wholly justified—but because criticisms have come from almost every quarter where people have been invited to consider these matters.

The Public Accounts Committee, the National Audit Office—which is not an affiliate of the Labour party—and many others have been invited to consider these matters. I do not think that The Sunday Times comes into the category of people who support my view. When the Minister failed to deal with the interesting exchange of letters in The Sunday Times last week when he was dealing with arms, he missed a crucial point in this debate. I shall return to that matter later.

Mr. Keith Mans (Wyre)

The hon. Gentleman suggested that the Public Accounts Committee criticised the Government in this matter. Can he confirm that the Committee has published its report?

Mr. Clarke

As the House knows, the proceedings of the Public Accounts Committee were very public. The National Audit Office, to which I referred, has published a report. [Interruption.] If there is a little order in the House, I may have an opportunity to refer to that report later.

The Pergau dam project, which is one of the most shameful episodes among many in the history of this Government, represented not only one bad decision but three. It represented the link between aid and arms; it represented funding of a very bad project; and it represented a Government who, having decided to fund a bad project, then produced a system of financial control which cost the British taxpayer an extra £56 million, according to the National Audit Office.

Mr. Andrew Hargreaves (Birmingham, Hall Green)


Mr. Clarke

If hon. Members want to take up my limited time by intervening on jobs, I put it to them that £56 million would produce a great number of jobs in their constituencies, so they should support the view of the National Audit Office.

Mr. Hargreaves

The hon. Gentleman continues to refer to the Pergau dam project as a bad project. Nevertheless, can he state categorically whether he believes that it was the preferred site and the preferred project of the Malaysian Government?

Mr. Clarke

The Malaysian Government have a right to consider their priorities, as do British taxpayers and this House.

The Minister attempted to pretend that there was no link between the Government's obsession with Malaysia and blatant arms deals. I ask the House, as did the right hon. Member for Tweeddale, Ettrick and Lauderdale, to consider the evidence. I welcome the fact that the Select Committee on Foreign Affairs will be considering the evidence. I did not hear a similar welcome from the Minister.

We begin with the protocol of 23 March 1988, which is an extremely interesting document.

Mr. Goodlad


Mr. Clarke

The Minister should allow me to develop this point.

Mr. Goodlad

To reiterate what my right hon. Friend the Foreign Secretary said, we welcome the report of the Foreign Affairs Committee. We hope that it will clear away some of the sleaze and innuendo that has been propagated by Opposition Members.

Mr. Clarke

Having generously given way, I want hon. Members to know that I intend to continue my speech.

When the Minister, in one of his little asides, pretended that there was no link between aid and arms, that was blown apart by the letter dated 28 June 1988 from the then Secretary of State for Defence, Mr. George Younger, to the Malaysian Minister of Finance, which was mentioned in The Sunday Times. The letter clearly stated that the linking of aid to projects was governed by international rules which would preclude the sort of arrangement which the Malaysian Minister of Finance had seemed to envisage at their meeting in March 1988. Of course, the then Secretary of State for Defence was very much a part of that meeting. Any suggestion that he was not a party to the decisions and what was envisaged was totally removed on the same day in the letter from the British high commissioner to the Malaysian Minister of Finance dated 28 June 1988. In that letter, the British high commissioner said that the Government were willing to offer further support for contracts… up to a total of £200 million for development projects to be agreed mutually between the two Governments".

Mr. Llew Smith (Blaenau Gwent)

Last November, I asked the Secretary of State whether the decision to grant support for the Pergau project in Malaysia was linked to any bilateral trade agreement with Malaysia. The answer was no. When we consider the revelations of the past few days, does my hon. Friend think that I am too polite to accuse the Minister of being economical with the truth?

Mr. Clarke

My hon. Friend is absolutely right. When the Minister and his sycophants pretend that the Government have been open and honest, even the most preliminary examination of replies to written questions such as that given to my hon. Friend show that the Government seek to hide from the truth time and again.

In the exchange of letters on 28 June, especially the letter involving the high commissioner, there is a firm indication that the Government were using the very limited overseas aid budget for the purpose of trade in arms. Not only is that unacceptable to the House, and not only has such a policy never been adopted or endorsed by the British people—it has never been the British Government's objective.

If the Minister says that it was the Government's objective, I invite him to produce one document from the Overseas Development Administration which says so. I am happy to give way to the Minister if he can produce it. Clearly, he cannot.

We then examine the role of the Foreign Secretary in this shabby affair. A telephone call from Portugal on Friday showed that the Foreign Secretary said that the business of aid had become entangled with arms. The question that we must ask today is, when will it be disentangled? We heard about the mathematical formula. We are entitled to ask who was invited to give a view on the mathematical formula—the Foreign Office, Downing street, the Minister's civil servants or the then Secretary of State for Defence. Above all, in the light of this debate, we are entitled to ask whether this was a one off.

My hon. Friends are perfectly entitled to draw the attention of the House and the Minister to what is taking place in East Timor, and the Government's involvement with Indonesia. Time and again, as we saw in Iraq, the Government have been involved in shady arms deals, only to find that our troops have been on the receiving end.

Would it not be ironic if we found that Indonesia, Malaysia and Vietnam were in a dispute over the islands in the South China sea and a Foreign Office Minister then came to the House and apologised for our role in providing the arms for such a conflict? Worse still, would it not be ironic if that were associated with our limited overseas development budget? [Interruption.] When the Minister sought to justify the Government's shady deals—

The Minister for Trade (Mr. Richard Needham)


Mr. Stephen Day (Cheadle)


Mr. Clarke

I am happy to give way to the Minister or to the hon. Member for Cheadle (Mr. Day), who is trying to intervene from a sedentary position, if he will have the decency to put his point.

Mr. Day

My constituents who work in the defence industries would be interested to hear how many people the hon. Gentleman is prepared to see put out of work. He seems to have taken upon himself the high moral ground. Is he somehow saying that there is something morally wrong in working in the defence industries?

Mr. Clarke

No Opposition Member should take lectures about jobs from members of the party which is responsible for 2.8 million people on benefit, and a party which endorsed the view of a previous Chancellor of the Exchequer that unemployment was "a price worth paying". I do not remember the hon. Gentleman objecting at that time.

Several hon. Members


Mr. Clarke

I will give way later, but I am entitled to get on with my speech. It may be that Conservative Members agree with the Malaysian Prime Minister that we should not have a free press in this country, but we do have a Chamber where we are entitled to express our views. I shall endorse that privilege. I shall give way for the last time to the Minister.

Mr. Needham

I am most grateful to the hon. Gentleman for giving way, and I am grateful for the fact that this will be the last time he will do so, as we want to get on.

The hon. Gentleman commented about Vietnam, Malaysia and Indonesia perhaps having a fight over the Spratley Islands. What would happen if China were to get involved in that fight? Who then would provide the arms to let those countries legitimately defend their national interests? Would the hon. Gentleman deny them that?

Mr. Clarke

The House is entitled to know what would happen, and that is precisely the point that we are seeking to make.

Ministers have come to defend the indefensible, and they have told us that our case is merely political smearing. We are entitled to remind them that the dam was well and truly breached by a Lankester bomber of the old school. Some of us listened to the evidence to the Public Accounts Committee, and we heard Sir Timothy Lankester explain that the project was uneconomic. He was certainly in a strong position to do so, because he had forced them to produce the first ministerial direction since the Government came to power in 1979. He had forced the National Audit Office investigation, and he described what took place in Malaysia as an abuse of the aid programme.

The onus is on the Government. A senior and respected civil servant—so senior that he has now been put in charge of the whole Department for Education—has taken the view that it was an abuse of the aid programme. The Government ought to have put a stronger case than they have managed today. What Sir Timothy said was fair comment. After the appraisal in 1989, the price went walloping up, first by £81 million and then by another £20 million. It was indeed a bad buy.

We are told that the decision was taken against the advice of many people and organisations. Those included the World bank, which took the view that the project should be gas-powered and not hydro-electric. When the matter has been subjected to any reasonable examination, such as by the National Audit Office, it has been found faulty in the extreme.

In the light of all the evidence, Conservative Members are belatedly screaming about jobs. That is not a subject to which they have been hitherto terribly committed. If the Government had taken the right decision on Pergau, and had concluded on the evidence—as they were entitled to do —that it was not viable, the worst that could have happened was that we lost Malaysian contracts. Is that not what happened in any case? The loss of jobs is the responsibility of the Government, not of any Opposition Member.

What did the Government spend £230 million of taxpayers' money on? They did not give a damn for the starving poor: they gave a dam for their business friends. That is a reflection, not only on the way in which the Overseas Development Administration has been abused, but on the way in which our trade policies are conducted. It is a reflection on the Foreign Office that it was prepared to see such things taking place.

If there are difficulties between Malaysia and Britain, the responsibility lies as much with the Foreign Secretary, who overruled Sir Timothy Lankester, as it does with the Minister for Overseas Development, who apparently advised against the project but did not take action to follow through what appeared to be her convictions.

Mr. Wells

Will the hon. Gentleman give way?

Mr. Clarke

I will not give way, if the hon. Gentleman does not mind. I have been generous in giving way hitherto.

The mess that the Government have produced in respect to the Malaysian project has most unfortunately put a question mark over the whole concept of overseas aid. Would it not be so much better if we had a Government who were really concerned about the British taxpayers' money and about a strategy for aid and development? Would it not be better if we had found the opportunities that exist in Africa, Asia and central America, where there are examples of the most crass poverty?

Those opportunities call for a change in the way in which aid is administered—there should not be a reduction in overseas aid, and it should not be abused in the way it has been on the Pergau project. How much better would it be if the Government took the policy back and made it work for people who are genuinely in need? Would it not be better if the Government placed the administration of those crucial policies at the heart of government, with a proper recognition of the full departmental status which overseas development should have?

Would it not be better if the Government accepted their responsibilities for the poorest people in the poorest countries, and if the Government managed their spending policies with proper openness and accountability? Above all, should not the Government accept the need, not to downgrade, but to upgrade the ODA?

Is it not absurd that, on the few occasions on which we have these debates, the Minister is not here? Baroness Chalker interrupted her trips abroad for a brief stopover in Wallasey, where she was rejected at the ballot box. She now pops up again at the House of Lords Dispatch Box, and we are supposed to accept that that is democracy in action in modern Britain.

As we have seen throughout the debate, the Overseas Development Administration has been treated with contempt by the Government. If we are not careful, the ODA will receive the same fate as the Department of Energy, which is sadly no longer with us. Should there not be a Department to deal with the crucial issues of world poverty? That Department could have a real say in foreign policy, an influence in the Treasury and an influence in the crucial problems of debt and refugees. What we have seen today is totally unacceptable to the House and to the British people.

In contrast to that sorry mess, the Labour Government will re-establish the essential humanitarian core of our aid policy. We shall do so in a way that is consistent with our wider principles of openness, responsibility and accountability. We shall restore the good name of Britain's aid programme, and the moral authority which this country once enjoyed.

5.48 pm
Mr. Tim Renton (Mid-Sussex)

I found the speech of the hon. Member for Monklands, West (Mr. Clarke) utterly despicable. He made a personal attack on Lady Chalker, who has given years of her life to working for the Overseas Development Administration. He talked of shady deals, Tory paymasters and the Pergau dam. What on earth does the hon. Gentleman know about the ODA and its work?

I declare an interest, as an unpaid vice-chairman of the British Council, along with the hon. Member for Hamilton (Mr. Robertson). I am sorry that he is not sitting on the Opposition Front Bench today, because I think that he would have been as horrified as I was, and he would not have recognised the work of the ODA from what the hon. Member for Monklands, West has just said.

The hon. Member for Monklands, West recently lost his seat on the shadow Cabinet. I now see why, and I hope that he soon loses his responsibility for the ODA also.

Several hon. Members


Mr. Renton

I am not going to give way.

Mr. Tom Clarke

Will the hon. Gentleman give way?

Mr. Renton

I will give way to hon. Gentleman, as I have just named him, but not to anyone else.

Mr. Clarke

The right hon. Gentleman ought to calm down. There were times when he ought to have told us that he was a moderate Tory. Could he please rely on the facts? One of the facts that he might wish to consider is that I was not only re-elected to the shadow Cabinet, but I increased my vote and moved from 18th to 13th place.

Mr. Renton

I know that the hon. Member for Hamilton has taken the hon. Gentleman's position as shadow Secretary of State for Scotland. I assumed that the hon. Member for Monklands, West had lost his seat altogether. If I was wrong about that, I certainly apologise to him.

Let me remind the House of a little history. In 1987, as a Foreign Office Minister, I visited Malaysia. It was one of the last trips that I made as Minister of State, Foreign and Commonwealth Office. I stayed with the high commissioner, Sir David Gilimore, now the civil servant head of the Foreign Office. That visit came at the end of six years of patient hard work in rebuilding the relationship with Malaysia after it had been broken when the Conservative Government decided, for good economic reasons, that overseas students had to pay full university fees.

The high commission, the Ministers involved, and I too, played a part in the slow process of re-establishing a cordial relationship with Malaysia. The position is inevitably difficult with a country that was once a colony. Britain regarded Malaysia as a source of rubber or tin. As a country comes into full independence as a member of the Commonwealth, it can have a touchy relationship with what one might call its previous matriarch, expropriator or coloniser, depending on the view that one takes. Over the years, we have had exactly the same difficulties with India.

It is tragic for Malaysia, for Britain and for industry in Britain that the careful rebuilding work has been temporarily jeopardised by the publicity surrounding the Pergau dam and the arms deals. I stress the word "publicity". The Malaysian Government have time after time made it plain that their objection and the reason why they have returned to a "buy British last" policy is not the arms deals, if they existed, or the dam contract, but the media interest in Britain, which has, of course, been stoked up by Opposition Members.

I shall not rehearse the arguments. My right hon. Friend the Minister of State, Foreign and Commonwealth Office has rehearsed them well this afternoon, and he did so in the House last Friday. Although I was not in the House last Friday, I read the comments by the right hon. Member for Copeland (Dr. Cunningham). I thought that they were disgraceful, coming from someone who pretends to be a shadow Foreign Secretary. His comments were dishonourable and bad for the reputation of Britain.

Malaysia is undoubtedly the most successful market in south-east Asia at present. One fully understands why companies such as BICC, P and O, and Trafalgar House are anxious to build up their contacts there. I must say in response to some of the comments of the right hon. Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel) that if one wants to trade with an overseas country, one has to trade according to its manners and customs, not one's own. We may sell on the basis that British goods are best, but we cannot sell on the basis that the British way of doing business is best. In my judgment, it is arrogant to try to do so.

There are instances in which our way of business is not very good. For example, our major companies are often slow payers. The Government are slow payers. Local authorities are slow payers. That would not be acceptable in Germany. The Germans would find it unbelievable that major companies do not pay a 30-day invoice for 90 or 120 days.

Mr. Campbell-Savours

Will the right hon. Gentleman give way?

Mr. Renton

No. There is little time. I hope that the hon. Gentleman will have an opportunity to make his own remarks, if he catches your eye, Mr. Deputy Speaker.

Before I entered the House, I spent 20 years with an international commodities firm. We sold commodities around the world. If our chairman of the day did not like the way of doing business in one country—for example, because it was necessary to pay an excessive commission or agency fee to our agent to get the order and we had to look the other way and not inquire too much where it was going—we simply did not go into that country. But someone else got the business.

We did not try to change that country's ways, because we knew perfectly well that it would be a waste of time. We were a private company, and those were decisions that we could take, but in overseas trade one must do in Rome as Rome does. If people do not like it, they should not go to Rome.

Sir David Steel

Will the right hon. Gentleman give way?

Miss Joan Lestor (Eccles)

Will the right hon. Gentleman give way?

Mr. Renton

I give way to the right hon. Gentleman simply because I referred to him.

Sir David Steel

I should genuinely like to know where the right hon. Gentleman would draw the line between payments to agencies and backhanders in Swiss bank accounts, open bribery and so on.

Mr. Renton

The right hon. Gentleman cannot possibly expect me to pursue that line. I am not saying that I approve of such things, condone them or wish to make them legal. I am simply saying that, in the world as it is and has been for a long time, if people wish to sell overseas they will sell in the manner that is acceptable to that country. If they do not like it, they should not try to get into that overseas market, because they will simply waste their time.

Miss Joan Lestor

Will the right hon. Gentleman give way?

Mr. Renton

No, if the hon. Lady will forgive me. I will not give way. I hope that she will catch your eye later, Mr. Deputy Speaker.

I hope very much that relations will very quickly return to normal between the United Kingdom and Malaysia. Both countries have a real interest in that, because they have a lot to offer each other.

There are about 12,000 Malay students in Britain at present. After years of repairing bridges, we now have more Malay students in Britain than students from any other place except Hong Kong. It would be tragic for Malay students and for the United Kingdom if their education here were interrupted. When former students return to their country of origin, they usually—I stress the word "usually"—prove to be sympathetic, understanding, sometimes critical, but friends of Britain, to our political and commercial advantage.

I have already declared an interest as a vice-chairman of the British Council. The House should know that the British Council regards itself as a partner of the Overseas Development Administration. Not only does the ODA provide about a quarter of our grant in aid each year—some £32 million or £33 million—but the British Council acts as agent for the ODA on technical development contracts, to the extent in the last financial year of a declared figure of £127 million.

The ODA acts as our agent in all human development matters, such as small hospitals, development of small companies and education—the list is endless. If people want to learn more about it, I strongly recommend to them the last British Council report.

Over 30 years, the British Council has worked with the ODA. It has been a successful co-operation. Increasingly, thanks to Treasury rules, we secure the agency work through our success in the competitive bidding process. We reckon that we win the bids because we have the necessary project management skills and a great deal of local knowledge.

In order to maintain those skills, we should like to have much more ODA work, because we need a necessary basis of work from the ODA to be successful in bidding for project work that is funded by the multilateral agencies, such as the European Community and the World bank. Here I am certainly making a point on behalf of the British Council.

The British Council would like to see the approach to the work done with the money made available by the diplomatic wing of the ODA as a seamless robe in which diplomatic posts, bilateral overseas aid and British Council know-how funds all had common objectives and a common agenda. That objective would be improvement of the human condition of the recipient country but also, humanitarian aid apart—that is approximately 15 per cent. of the ODA budget—consideration of furthering British interests.

I have spoken about the growth of the multilateral agencies and of projects that could come to the British Council through the World bank or the European development fund. That is a point which the hon. Member for Tweeddale, Ettrick and Lauderdale ignored. Of the total money now available to the ODA, approximately half already goes to multilateral agencies over which the ODA effectively has little control.

If the figure is 50 per cent now, it is likely to rise to nearly 60 per cent. by 2000. Those are the contracts that the British Council wishes to win on the back of a regular, steady bank of experience as agent for the Overseas Development Administration. We must get closer to the European development fund—in order to ensure that many more of its funds are invested in education and training, which are particularly important for us and in health—and, more generally, to the Anglophone countries.

The right hon. Member for Tweeddale, Ettrick and Lauderdale gave the impression that he saw a slant in our bilateral aid towards countries to which we can make arms sales. To be fair, he should have looked at the programme of the European development fund. He would have seen that more than 50 per cent. of its fund goes to Francophone countries, which is a far higher percentage than can be justified on the grounds of their population or gross domestic product.

Some 28 per cent. of the European development fund is spent on exchange stabilisation. The major beneficiaries of exchange rate stabilisation were—surprise, surprise—Cote d'Ivoire, Cameroon, Senegal and Papua New Guinea. Cote d'Ivoire alone received more than twice the total African, Caribbean and Pacific expenditure for exchange stabilisation.

The House should look at that area—it is where the great growth of the future lies and where we must have more influence. It is where we in the British Council are interested in winning jobs to provide income and experience for British training and education. We must increasingly look to that area for our future work.

Mr. Riddick


Mr. Renton

I shall not give way, as I am about to conclude.

I was delighted to catch the eye of the previous occupant of the Chair, as today happens to be the 20th anniversary of the day that I was elected a Member of Parliament for Mid-Sussex. My majority then was 12,000, and it is now more than 20,000things seem to be going in the right direction.

Over those 20 years, I have learnt that politics is not a simple business. In the past 10 years, I have been at the Foreign Office, two of my daughters have been working for aid agencies that are partly financed by the ODA, and now I am at the British Council; and I have learnt that aid is not a simple, purist business.

To win overseas contracts, we have to fight with all the means and vigour in our power against industrial competitors from all over the world. I hope that we continue to do that for the benefit of the third world, the developing world, overseas countries and, certainly, the benefit of this country.

6.5 pm

Mr. Tony Worthington (Clydebank and Milngavie)

I congratulate the right hon. Member for Mid-Sussex (Mr. Renton) on his 20 years in the House. He used the term "majority"—he has not yet reached that. We hope that there will be an election that will prevent him from reaching his majority.

I think that, surprisingly, there is some general agreement on both sides of the House that we are in a mess over the issue of aid. There is fear at the effect on jobs of the problems in our current relationship with Malaysia. We are concerned at the way in which the aid for trade provision has been used. The use of that provision has been heavily criticised by the Overseas Development Administration, the senior civil servant within it and, we believe, the Minister within it. The National Audit Office has also criticised the abuse of the aid budget. The criticism has been internal—from within the ODA—and external and objective—from the National Audit Office.

The abuse of the aid for trade provision has consequences throughout the House and in my constituency. The fine firm of John Brown produces gas turbines. It has provided a bedrock of stability in Clydebank when all else has collapsed around it. It has competed all over the world in difficult markets. ft has competed in Malaysia, where it has won contracts for about £185 million worth of gas turbines without aid and trade provision and without subsidy. It now fears that it will be cut out of further markets to the value of £250 million due to the consequences of the use of the aid and trade provision.

The Government sponsored the Pergau dam project by Balfour Beatty-Cementation despite the fact that the National Audit Office report criticised it for being bad for Malaysia and the consumer, and for being expensive. The Government sponsored the project despite a World bank report that said that gas turbines should be used in Malaysia. By sponsoring that project, the Government have removed any chance of jobs for my constituents who work in the gas turbine industry.

Mr. Alan Duncan (Rutland and Melton)

Does the hon. Gentleman accept that the Malaysian Government have the right to decide their priorities and to decide which infrastructure project they want to support in their own country?

Mr. Worthington

Of course they do—but it is an easy decision to make when another Government approach the Malaysian Government saying that they will pay for the project. The Government told the Malaysian Government, "You have a free choice, but we will pay for this option." That is what happened with the Pergau dam.

We are faced with the problems of a Government who have never regarded their aid budget with the long-term aim of developing the poorest parts of the world—as my hon. Friend the Member for Monklands, West (Mr Clarke) said. That is the purpose for which an aid budget should primarily be used. The Government have always seen the aid budget first and foremost as an instrument of trade.

There is some legitimacy in that, but it means that the Government always put issues such as poverty reduction and human rights on the back burner if they get in the way of other issues, particularly the arms trade. We are faced with the hypocrisy of the Conservative Government who criticise developing countries for devoting too much of their budget to arms, but rush to sell arms to those countries. Britain preaches that the countries of the developing world should spend more of their budget on health and education but seeks at every opportunity to sell them arms.

In a parliamentary answer, the Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs said that we did not allow the export of arms and equipment that was likely to be used against the civilian population. We must have a much more serious answer from the Minister of State about what has been happening in East Timor. According to the figures given by the right hon. Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel), 200,000 of the 750,000 people of East Timor have died since the illegal occupation of that country by the Indonesians in 1975. How were they killed and what was the role of British arms in that? Even the Americans have cut aid to East Timor.

I was told in a parliamentary answer that the European Union does not regard Indonesia as somewhere that should be given significant amounts of aid. We have shovelled arms and aid towards Indonesia whereas, considered objectively, our aid budget to that country should be falling. I cannot remember whether it was the Minister himself who said that, according to Baroness Chalker, the numbers living in absolute poverty in Indonesia fell from 70 million to 27 million between 1970 and 1990. When there is rising poverty in the rest of the world, there is at least a case for priority to be given there.

The diversion of funds that links arms and aid is pretty massive. The £234 million for the Pergau dam is three times the aid for any other capital project. We are spending £234 million on Pergau. In 1991–92, we spent a total of £236 million, £2 million more, on all the 47 least developed countries in the world. That is the scale of the commitment to Pergau. The £56 million—the loose change of the Pergau deal—to find the least efficient way of paying for it, is twice what we have given to Somalia.

Let me give another example of the diversion of aid to countries that use arms, which increase their use of arms and which buy arms from us. In the Foreign Office's list of capital projects of over £20 million in value—there have been only 18 in total—four have gone to one country, Indonesia. By contrast, in the whole continent of Africa there is only one project of over £20 million, and that is in Egypt.

Last year, a huge amount of soft loan money went to Indonesia, so soft that nothing need be paid back for seven years. Last year, at very much the same time—I hope that the Minister will tell us the purpose of these visits—the Secretary of State for Foreign and Commonwealth Affairs and the Secretary of State for Defence went to Indonesia. We clinched a deal for £500 million worth of Hawk aircraft, and the amount of assistance to Indonesia in soft loans and other facilities went up rapidly as well. Were those negotiations on arms and aid linked or were they, to use the jargon of the day, in parallel? And what does that mean, in parallel? Or, again using the jargon of the day, was it just done on a "nod and a wink" basis?

Perhaps the Minister will give me another answer. Will he, either now or in a letter, comment on the press report that negotiations are going on for the release of Xanana Gusmao, the East Timor leader, who was imprisoned after an appalling trial? Are the British Government and their European partners negotiating his release to Guinea-Bissau—

Mr. Needham

Perhaps I can answer the hon. Gentleman's first question about Indonesia because that is an important part of my remit. The hon. Member knows that we decided to concentrate aid and trade provision on the poorest countries of the world, with incomes of less than $700 per head. That includes Indonesia, which is one of the poorest countries in the world. We are giving the people of Indonesia worthwhile infrastructure projects which will lead in time to increased trade. We have done exactly the same in China., but the hon. Member will use only those examples that suit his argument.

Mr. Worthington

When I looked at the list of very large projects, I wondered whether to draw attention to the fact that there were two projects of over £20 million for China and to ask where human rights came into them.

The Minister interrupted what I was saying. I wonder why he interrupted at that particular point. Is any negotiation going on at present between the British Government and their European partners for the release of the East Timor leader? Is his release to take place to Guinea-Bissau so that the European Union will moderate its criticism of Indonesia at this month's meeting of the United Nations Commission on Human Rights in Geneva and so that Britain and others can continue arms sales to Indonesia? We shall watch That with great interest. The Minister of State, Foreign and Commonwealth Office, the right hon. Member for Eddisbury (Mr. Goodlad) is present and could seek to deny that right now if he wished.

The pause is interesting. The Government seem to have commented already.

We must remember also the hidden victims of the Government's use, which I would call a corrupt use, of the aid budget—the Governments of the world who would otherwise benefit from that assistance and the countries that cannot benefit from aid and trade because they have no money with which to trade.

We must also ask whether this provision is really necessary. It is a complicated issue because hon. Members in all parts of the House realise that we need to stimulate British industry because of its run-down over recent years. The Government boast that British firms benefit enormously from the aid budget. They legitimately boast that, for every £1 of aid, British industry receives £1.40 worth of orders from overseas. The information that I recently received from the World bank was that, for every £1 that Britain puts into the World bank, British industry receives £1.85 worth of British contracts. That raises the issue of how the World bank conducts its business. If it is done on a perfectly fair basis, it seems that British firms benefit more from our putting money into the World bank than from our aid and trade provision.

The appalling thing is that Britain's aid budget is falling. The Minister, with his selective—

Mr. Jeremy Corbyn (Islington, North)

My hon. Friend is dealing with a very important subject when he mentions the World bank and its policies. Will he reflect on the lack of democracy in the make-up of the World Bank's board and its decision-making process and on the way in which it tranfers a large amount of wealth from the poorest countries to the richest?

Mr. Worthington

I am not in the least grateful for that point because it would lead me, in the concluding part of my speech, right up another avenue that I do not want to explore at present, because I want to concentrate on what I am saying now. But the openness and accountability of the World bank are legitimate concerns. Perhaps one of the reasons why we found out about the Pergau dam was that here we have instruments such as the National Audit Office and the Public Accounts Committee to find out these things. The problem with the World bank is that if similar events were occurring in its business we would have no mechanism with which to find out.

Our aid budget has fallen and is still falling. It has gone from 0.51 per cent. of gross national product in 1979 to a figure that we do not now know. We do not know it because the Government are fiddling the aid figures in the same way as they fiddled the unemployment figures. They have put the traditional overseas development budget in with central and eastern Europe, and they will not now tell us the figure for our aid budget.

The tragedy of the Pergau dam affair is that the relatively poor people of the world are being shrunk out of the aid budget by considerations other than their particular needs. The needs that have been met have been those of the Government to stimulate the arms trade, in the case of the Pergau dam. Who can now doubt that the reason why the Pergau dam went ahead was that, alongside it, in parallel and entangled with it, was the need to procure very large arms orders for this country?

That is that is wrong about this, and it is why I congratulate the Liberal Democrats on raising the issue in this debate.

6.18 pm
Mr. Den Dover (Chorley)

As a civil engineer, and one who was responsible for overseas work in Iran—the joint venture of Laing and Wimpey in 1975–77—and as unpaid parliamentary adviser to the Export Group for Construction Industries for the past 12 years, I express my interest, but I have no paid interest to declare. So here are my own thoughts and comments on tonight's debate, a debate which shows a lack of appreciation on the Opposition Benches of how business is done in overseas territories.

I am delighted that my right hon. Friend the Member for Mid-Sussex (Mr. Renton) pointed out the need to pay people in those territories for introducing work. Would any Opposition Member not pay an estate agent for finding somebody to buy his or her house? We have agreed reasonable operating fees in overseas markets and we need to grab the work, in fierce competition with our overseas competitors such as Germany, France and Holland.

It is alleged that the Malaysian Pergau dam project has received some grant. If it has not, there is no onus on Malaysia to repay that in terms of a defence contract. All that we have given are soft loans, which means a reduced interest rate on the repayments which the Malaysians must make for that project, as well as reduced export credit guarantee rates of cover. No money has been put into the project by the Government. We are simply giving reduced interest rates. Why is there, therefore, an onus on Malaysia to place defence contracts with British suppliers of armaments?

Mr. Mans

Does my hon. Friend agree that there is clear evidence that there was no linkage? The defence agreement reached with the Malaysian Government changed from an agreement to supply Tornados to an agreement to supply Hawk aircraft. If there had been a link, one would presume that it would have had a consequential effect on other projects such as the Pergau dam. There was no such effect, which is clear factual evidence that there is no such link.

Mr. Dover

I entirely agree that there was no such linkage.

I welcome the Foreign Affairs Select Committee investigating this matter in great detail. I shall listen carefully to what is said there and look carefully at the record of the discussion and investigations.

The Pergau project is exactly what the Malaysian Government wanted. That fact is extremely important. The Sunday Times said that the project is no good as it is producing electricity for only a few hours a day. However, the dam is to meet peak demands and it can cost an enormous amount to build enormous power stations or gas turbines to fill that peak demand of electricity. It is far better to go along with a project that the Malaysians wanted and were willing to pay for over a long period.

The media also tried to show that the 12 or 14 years project is a long period. But it is on programme; it is only a five-year programme; and it is working within budgets.

Another point of correction is that, as my right hon. Friend the Minister pointed out, the aid-trade provision is only 5 per cent. of the Government's total overall aid budget. I welcome the fact that, under the aid-trade provision, jobs and the provision of equipment from the United Kingdom flows out to those countries; they paid good hard currency for those exports, which results in jobs in the United Kingdom.

A lot of misrepresentation and misinformation about the project has been rife in the media. I am delighted to have this opportunity briefly to correct one or two points. We must press, in fierce competition, for such projects. We must do everything possible to get future Malaysian contracts back on the road, and I deplore the possibility of losing the international airport project because of stupid media hype, which has done the United Kingdom no good whatever.

6.23 pm
Mr. Derek Enright (Hemsworth)

Because of the comprehensive job that was done on the negative aspects of the motion by the right hon. Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel), I need not dwell long on them, save to make a few comments about the remarks by the right hon. Member for Mid-Sussex (Mr. Renton) and, more recently, by the hon. Member for Chorley (Mr. Dover).

I have considerable practical experience of firms trading overseas and of overseas aid, which is why I was surprised that the hon. Member for Mid-Sussex got wrong the way in which the European budget works. If we are to affect the European budget—it is important that we do—it is crucial that we understand the instruments properly before we start to criticise them.

On the question of currency, the Minister's speech on the Government's positive amendment to the motion was disappointing. He said what far-sighted chaps they were, looking forward to a fine future and concentrating on aid to the poorest, but not once did he mention sub-Saharan Africa or the Government's policies to be pursued there. Given that the Government amendment contains some important, positive aspects, that was the least that he could have done. It was a shame that his entire speech consisted of petty, party-political sniping when something important should have been discussed.

To take up the comment by my hon. Friend the Member for Islington, North (Mr. Corbyn), we might have heard something about the World bank, for example. We are experiencing real problems with the relationship between the World bank, the International Monetary Fund and a variety of UN institutions, which need to be more integrated in their approach; the Government should recognise that they are not operating in isolation. They should consider what policies their partners within the European Community and the United Nations are pursuing. As the hon. Member for Mid-Sussex mentioned the British Council, it might be worth looking at what the United Nations Educational, Scientific and Cultural Organisation is doing. I know from personal experience that it is doing some first-class work in basic linguistics, which would be assisted by co-operation with the British Council.

Given the Government's positive attitude, they might consider funding UNESCO again. It is important that they look at it afresh and see whether they can mingle with the British Council. We can be proud of what the British Council does and I pay testimony to the superb quality of its staff, but it is totally out-gunned by Germany and France, which put far more resources into such work and carry it out in many countries other than the ex-empire.

In Guinea-Bissau, for example, which my hon. Friend the Member for Clydebank and Milngavie (Mr. Worthington) mentioned, the British Council regularly refused to do anything except pay an occasional visit because it did not have the resources, whereas similar institutions in Germany, France and Portugal were doing a considerable job. The aid that the United Kingdom gave to Guinea-Bissau during the three years in which I was there consisted of a set of football shirts. Although they were welcomed by the football team that received them, they did little for development. Guinea-Bissau is one of the poorest countries in Africa, yet it was given no money whatever.

My next point impinges slightly on the Malaysian issue and concerns the coal operation business and the effective use of money, particularly that spent on energy. If money is to be spent on energy, be it on a dam or whatever, it should be spent effectively, economically and in a sustainable way. I understand that, technically, that is not necessarily the case with Malaysia as the money could have been spent more economically, although the contract would then not have gone to the company to which it went. It is certainly true elsewhere that, when electricity generators are given, which admittedly produces jobs in this country, the power station can use that electricity generator for its quarter lifetime but it is then incapable, because they go to the poorest countries, of paying for the spare parts and repairs required. One has only to go round Africa looking at machinery there to see that it is disused, and for one simple reason—there is not sufficient hard currency to buy the spare parts.

I return to the problem of the World bank, the IMF and the United Nations and to the point made by the right. hon. Member for Mid-Sussex about more money from the European development fund going to French countries than to others for the stabilisation of their currencies. That shows that the right hon. Gentleman does not understand that the French franc is used on the Côte d'Ivoire as a basis for the common currency, which is a semi-hard currency. If those who live out there cannot get a dollar or a pound they are very pleased to get francs CFA. The currency is backed by the French and provides a semi-hard native African currency with some purchasing power. The ability to continue to buy is crucial to some African countries. Not one of those problems was mentioned by the Minister.

At Question Time on Monday, I put some of the problems to the Minister. He had notice of my question, but ducked it completely. Currency in Africa is important for its survival and development and it is about time that a real effort was put into addressing the problem.

Turning from the World bank to financial development, the most successful lending projects in Africa, South America and, indeed, Indonesia, have come not from the World bank but from small credit lines. There are credit lines in Africa set up by African women and primed by European money, that have a rate of return which would be the envy of the greediest capitalist.

Those projects are doing something truly effective in agricultural production. They are renewing tools which do not necessarily come from Cheltenham or from the constituency of any other hon. Members who scream about the loss of jobs that will occur if we do not dump on other people unsustainable debts through selling them arms and other such large-scale projects. Those credit lines are producing the small developments which are crucial. That grass roots development should be sustained.

The hon. Gentleman talks about British people getting jobs directly because they make arms in Cheltenham. I invite the hon. Member for Cheltenham—

Mr. Burns


Mr. Enright

I apologise for lumbering the hon. Member for Chelmsford (Mr. Burns) with Cheltenham. Even representing Chelmsford, the hon. Gentleman should visit my constituency in Hemsworth. He can come to Featherstone, South Emsell and South Kirby and see the pits that have been destroyed directly by the Government. The pits did not depend upon foreign trade, but were closed directly as a result of his vote.

The hon. Gentleman stands up and says that we do not want to lose jobs, having said that losing jobs in Hemsworth represented the harsh light of real economic facts, whatever they are. I will not accept the crocodile tears of Conservative Members until they have stopped the direct loss of jobs as a result of the Government's actions. I am delighted to see at least one Conservative Member who abstained on the vote on the miners.

Mr. Burns

With regard to the crocodile tears, I will not take any sanctimonious lectures from the hon. Gentleman.

Mr. Enright

I know that many hon. Members wish to speak. I look forward to the speech by the hon. Member for Chelmsford and I hope that he will give way to me.

The right hon. Member for Mid-Sussex rightly said that bribery often occurs, but it is wrapped up. It is not called bribery; it is called commission. That indeed happens. I do not see why we should call foreigners people who take bribes when we call Mark Thatcher and his partner people who take commission for performing exactly the same job of selling arms abroad. That simply will not do.

I leave the Government with one thought, and the Minister for Trade has direct responsibility for this matter. The greatest thing that we can do for development in Mozambique, which was mentioned earlier, is to prevent the export of mines from Britain. Will the Minister ban the export of mines unilaterally?

6.36 pm
Mr. Andrew Hargreaves (Birmingham, Hall Green)

I am grateful for the opportunity to contribute to the debate, not least because I have worked with three different financial institutions that have had extensive dealings over the years with Malaysia.

During today's debate and others, hon. Members have mentioned the Pergau dam. I should like to reiterate one point that Labour Members underestimate. There is a staggering intellectual, patronising arrogance when British civil servants or hon. Members tell the Malaysians that they have accepted a dam in the wrong place. If it is Malaysian policy to have a regional spread of such projects and they want energy provided in a certain area for regional development, as well as for the purely and strictly economic benefits that such a project may bring to that area, they are within their rights in standing their ground and saying that they want the dam in that particular spot and prefer it to another type of project elsewhere.

When the British Government are criticised for having underwritten the financing of the dam, it is unjust to call it shabby or, as some Opposition Members have suggested, the corrupt use of the aid for trade provision.

"Aid for trade" should be exactly that. Some Conservative Members would disagree profoundly with Opposition Members about the whole nature of overseas aid. Some Conservative Members would say quite openly that they do not believe that our overseas aid should be distributed to foreign countries unless it goes either directly towards humanitarian aid in the poorest possible countries, or specifically where there is some benefit to British interests.

I support entirely the decision of my right hon. and hon. Friends who were originally involved in the project. In the case of Malaysia, they did exactly what they thought was in the British interests. In the harsh light of day, there may have been economic arguments against putting the dam in that particular place or against there being a hydro-electric project as against a gas-fired project. However, that was the Malaysian preference and it represented an effort to restore our diplomatic and trade links with that country; that was in the British interests.

Mr. Mans

Does my hon. Friend agree that what is so disturbing about the whole affair is that the article in The Sunday Times about alleged corruption in the Malaysian Government was published with a picture of the Pergau dam underneath it, despite the fact that the story was more than nine years old and in no way related to the Pergau dam? That is what the Malaysians were complaining about and why they took the action they did, which proves conclusively that their action had nothing to do with the project or the arms sales that took place at about the same time to Malaysia.

Mr. Hargreaves

I am grateful to hon. Friend, as I can now foreshorten my remarks. I was about to come specifically to that point. What aggrieves me and my hon. Friends is that the right hon. Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel) did not take that into consideration. In an uncharacteristic fashion, the right hon. Gentleman went down a route of what can only be described as rather shabby smearmongering.

Mr. Burns

But that is characteristic.

Mr. Hargreaves

No, I disagree. I believe that such smearmongering appears to have been promoted by one or two individuals here, perhaps with senior editors of certain Sunday or other newspapers, carrying out a distinct campaign or vendetta, particularly against the Prime Minister, but also against the Foreign Secretary.

It is sad when British interests and jobs—in companies such as by Biwater or PowerGen, which are in neighbouring constituencies to mine, and in which my constituents work—are put at risk by other people's political smearmongering and by the vendettas of one or two editors against Ministers or against the Prime Minister himself. That is extremely regrettable and I urge Opposition Members to refer their remarks strictly to the appropriateness of the dam and the Malaysians' choice of that project, rather than trying to obtain some cheap political capital out of smeafmongering.

6.40 pm
Sir Russell Johnston (Inverness, Nairn and Lochaber)

On the basis of the old military adage that attack is the best form of defence, I expected the Chief Secretary to the Treasury to wind up. He could then have said to us, "If you think that we are bad, look at all these other chaps; they are so much worse."—[HON. MEMBERS: "Foreigners."] Who can speak about foreigners with more knowledge and certainty than those with foreign blood in their veins?

In his opening speech, my right hon. Friend the former Liberal leader, set out our criticisms and specific recommendations. With respect to some of the reactions that we had from Conservative Members, he was restrained.

Mr. Burns


Sir Russell Johnston

I know that the hon. Member for Chelmsford (Mr. Burns) virtually frothed at the mouth at one stage.

Mr. Burns

It was sleazy, innuendo and rubbish.

Sir Russell Johnston

The hon. Gentleman obviously believes that shouting at people is good for his soul, but it does not advance rational argument. I am saying that my right hon. Friend advanced a rational argument which is also demonstrated in many other places. There is no doubt whatever that these are matters of public concern. They have attracted particular attention in a number of newspapers. The hon. Member for Birmingham, Hall Green (Mr. Hargreaves) indicated that if matters were raised in The Independent on Sunday, the Observer or The Sunday Times it is media hype. Other hon. Members said the same. That is quite a surprising view to take of newspapers that attempt—The Independent on Sunday and the Observer certainly do—to maintain intellectual standards of journalism.

Mr. Mans

Does the hon. Gentleman agree that the article that caused such offence to the Malaysian Government had nothing whatever to do with the Pergau dam, despite the fact that the newspaper published a picture of it below the article?

Sir Russell Johnston

I suppose it was triggered by it, but I am not arguing with the hon. Gentleman about that. As some quick-witted chap—quicker witted than I—said earlier, perhaps the Government should do something about Murdoch. That perhaps was quite a good point.

Mr. Corbyn

It was me.

Sir Russell Johnston

There is no doubt that the non-governmental organisations are deeply unhappy about certain developments in the British aid policy and programme. That also cannot be denied by Conservative Members. We can always argue about the size of the aid budget, but the House should not forget that the Conservative manifesto of the previous election contained a commitment to meet the United Nations target of 0.7 per cent. of gross national product, and that the Prime Minister renewed that commitment in the run-up to the Rio summit. That is on the record. Yet, under the Conservative Government, whatever words are written or spoken, the proportion of GNP has declined from 0.51 per cent. in 1979 to 0.31 per cent. in 1992 and is projected to fall to a record low of 0.26 per cent. next year. That is a very bad record.

The Minister of State, the right hon. Member for Eddisbury (Mr. Goodlad), chided my right hon. Friend. In my opinion, the Minister is usually amiable—sometimes a little deadpan, but certainly amiable. But on this occasion he said, rather uncharacteristically, that my right hon. Friend was unhelpful to those working in the field. I do not accept that at all. Indeed, both Ministers know that the opposite is true. The NGOs have been in touch with my right hon. Friend and me in advance of the debate, expressing views, many of which he articulated. There is no doubt that the leading NGOs in the aid field are concerned about not only aid quantity, but aid quality; whether it is rightly focused, as the Government continually claim; tied aid; and the role of the aid and trade provision and so on. Therefore, it is not at all fair for the Minister to attack my right hon. Friend on that basis.

The Minister also seemed rather reluctant to engage in a debate on that question. His speech was rather spattered with phrases such as "they could not care less about the poor in Indonesia." He was referring to the collectivity of Opposition Members. What he said was totally untrue. It was quite ridiculous to suggest such a thing. There is a legitimate cause for concern about the treatment of East Timor. He did not respond to that. He said: Our aim is to influence rather than to isolate Indonesia. What influence have the Government had in East Timor? It is not an easy issue. I am not trying to pretend that it is or that we have some great simplistic solution. One might say that cutting aid will hurt only the helpless, who are not responsible for these human rights infringements.

One could equally say that sanctions on Serbia are undoubtedly harming a great many totally innocent people who have nothing to do with the adverse side of Serbian policy. But knowing that should not lead us to ignore the problem or not to be willing where necessary to face up to those things. What concerns us is that the Government, so far as we can judge, and I agree that the evidence is circumstantial, are not wrestling with those admittedly difficult problems, but are allowing their judgment to be over-influenced—I put it no stronger than that—by the market for arms. That might be resented by Conservative Members—and is in some cases. That has been consistently denied—I recognise that—but it is widely believed, not for any sleaze reasons, among commentators and the NGOs.

On Malaysia, no one has explained what the Foreign Secretary meant when he talked about the aid and trade being "briefly entangled".

Thailand has benefited from a 624 per cent. increase in United Kingdom aid between 1980 and 1992–93. lit was also the fifth largest buyer of British arms; Indonesia was the fourth.

There is clearly a difference within the House, not always simply on the basis of the two sides on the issue, because it is difficult. It also relates to constituency problems. That is undoubtedly the case. But surely we should have some policy on aid, some view of what Government should do. For example, both Japan and the Netherlands have decided: to adopt an aid policy that consciously favours countries that renounce the arms trade. Many countries are not subject to any perceptible exterior threat.

Mr. Duncan

Does not the hon. Gentleman accept that most of our major competitors see their aid programmes as part of their foreign policy? Does he not accept that most companies should adapt their business practices to suit the markets in which they are working? Is Liberal Democrat policy now "When in Rome, be British"—or, to put it another way, "Always play the game, and always lose"?

Sir Russell Johnston

The short answer is no. I do not think that I need expand on Tat very much.

The Government have not been terribly persuasive today. Will the Minister please try to tell me what sort of guideline suspends aid in the case of Kenya—probably quite properly—but does not do so in the case of Indonesia? I simply do not follow the logic. Certainly, the Government themselves would always say that they have a logic, and have sustained it; but I do not see any consistency.

The right hon. Member for Mid-Sussex (Mr. Renton), a former Conservative Chief Whip, has graced the Chamber with his presence for 20 years. He said that we must adjust to ways of doing trade—as did the hon. Member for Rutland and Melton (Mr. Duncan)—and that we could not tell other people how to trade. There is a good deal of truth in that: I follow the argument. It is, of course, not always corrupt for some enabler to get a commission—but it can be corrupt.

It seemed to me, sadly,. that the ultimate logic of the right hon. Gentleman's argument was that any illusions about a good governance concept operating in aid policy should simply be dumped, because Governments would simply conform to local conditions. If local conditions mean a few pounds here and there—or whatever currency obtains; rupees, perhaps—that is the way life is.

As I have said, it is not easy. I am annoyed, however, when people say, "We have a good governance clause", and then do little about it. Conservative Members may say that Liberal Democrats, or even Labour Members, are being naive; I heard that word once or twice. But we must have some bloody ideals, must we not?

Hon. Members will be relieved—as will you, Mr. Deputy Speaker—to learn that I do not intend to go over the Pergau dam affair again; it has been dealt with at length by my right hon. Friend the Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel) and the hon. Members for Monklands, West (Mr Clarke) and for Clydebank and Milngavie (Mr. Worthington).

I want to make two more short observations before concluding on the controversial issue of political contributions from companies, which will allow certain hon. Members to froth at the mouth again. First, the Government continually claim that 80 per cent. of British aid goes to the poorest countries. I am afraid that that does not mean that it reaches the poorest people. An OECD report on international aid to basic education found that only three donors in the world spent more than 25 per cent. of their educational aid budgets on basic education and adult literacy—New Zealand, which spent 63 per cent.; Sweden, which spent 53 per cent.; and the United States, which spent 42 per cent. We spend 5 per cent., which is not enough.

Secondly, it is worth reminding the Government that the non-governmental organisations—virtually unanimously, as far as I know—are not in favour of tied aid, considering it in the main more expensive and less effective. They think that it tends to concentrate on large projects which may often be inappropriate. I shall not go over the appropriateness of the Pergau dam project again, but there are other examples in the world: large capital projects have been chosen, not primarily because of attitudes to aid but because the action was commercially driven by the donors, who wanted the work connected with the construction of a large project.

Let me say a little about the question of "sleaze". Conservative Members took great offence from the comments of The Independent on SundayClique makes millions from aid … Five companies led by Tory loyalists pick up half the cash.….System hurts countries most in need". The simple answer that the Minister would give is to say that those are the best companies anyway; that there are relatively few companies with the expertise, the knowledge and the track record to undertake such large capital projects abroad. Other Conservative Members will add that, if those companies give money to the Conservative party, that is only their common sense coming to the surface; they would do that naturally.

The Government, however, really must address the problem of patronage, and the link between action and "who you know and who you don't". It is true that most companies would rather give money to the Conservative party than to Labour or the Liberal Democrats; but it is also true that, as a consequence, they have a certain influence with the Government. That was, perhaps, more true for the Labour party in the old days, when it was certainly true that the trade unions—as the Labour party's paymasters—had a certain influence with that party.

Mr. Bernard Jenkin (Colchester, North)

What about the British School of Motoring?

Sir Russell Johnston

I am very pleased that the hon. Gentleman is happy with his humour. It is always a good thing to be happy with one's humour. Unfortunately, I did not hear what the hon. Gentleman said, but I ask him not to repeat it.

My right hon. Friend made the important point that it would be a good idea to review, or reform, the financing of political parties. That would be for the good of our democracy, and would avoid accusations which, in this case, do not add up to a great deal, but do not look at all good. I think that state financing of political parties lifts suspicion and makes everything clear and above board; that is the case in most of our colleague countries in the European Union.

The Government would be foolish to ignore the unhappiness and concern that exist widely among people who are knowledgeable about, interested in and concerned with overseas aid. I do not think that our record is as good as it should be, and to defend it blindly will get us nowhere.

6.57 pm
The Minister for Trade (Mr. Richard Needham)

The right hon. Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel) made five points, and I shall do the same. I shall talk about the aid and trade provision and arms, the Liberal party and the ATP, alleged company support for the Conservative Government to sweeten aid deals, the behaviour of some of the press recently—particularly as that issue deeply concerns the Malaysian Government—and the lessons to be learnt.

I shall concentrate on the ATP. As many of my hon. Friends have said, it amounts.to only 5 per cent. of our total aid budget, but it is a very important 5 per cent. Aid leads to trade, and trade leads to an increase in manufacturing exports. As Minister for Trade, I am responsible for trying to help British manufacturers to compete around the world.

My right hon. and hon. Friends will have noticed one aspect of the speeches of Opposition Members. Not one —apart from the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) mentioned what our competitors do. What happens to the French, the Germans, the Italians, the Japanese and the Americans is of no concern to them. Their aims were summarised in the clever, dissembling speech of the right hon. Member for Tweeddale, Ettrick and Lauderdale.

I go round the world with the right hon. Gentleman, and when he is cleverly dissembling on behalf of Britain I will be on his side all the way. I have to say, however, that I think that what he said tonight in terms of innuendo, assertion and suggestion was a disgrace. We are not, in the debate, taking part in some university debating society game about what happens with the major markets for our economic potential. As the hon. Members for Monklands, West (Mr. Clarke) and for Derbyshire, North-East (Mr. Barnes) said, we are speaking about thousands of jobs and billions of pounds' worth of business. The right hon. Gentleman lambasted the Malaysians and castigated the Indonesians. Other Opposition Members had a nice little go at Thailand. They are the major markets for British increased exports and trade for the future.

If we wish to get into those markets with our competitors, what do we have to do? We have to establish trust. We have to establish friendships. The hon. and learned Member for Montgomery (Mr. Carlile) spoke about a cosy friendship between British Ministers and Malaysian Ministers. I do not know what he meant by that. I spend most of my life trying to make cosy friendships with buyers overseas. That is what I thought my job was.

Mr. Beggs


Mr. Needham

I will give way in a minute.

One of the ways of doing that is to ensure that aid and trade provision is available to assist infrastructural development. That infrastructural development is so vital to those countries and so vital a base for our manufacturing industry to build on.

Mr. Beggs

Will the Minister confirm that we in Northern Ireland especially are very dependent on export orders, that those people responsible for careless talk can damage both trade and aid, and that this country would be done a great service by those people who have made unfounded allegations if they would withdraw them and apologise?

Mr. Needham

The hon. Gentleman and I spent many months trying to save GEC Larne because of the problems with Rihand II in India. No one has yet spoken about India or China, by the way. That factory was being taken over, as he knows, by F.G. Wilson, now the largest manufacturer of small generators in the world. Where will it be in the markets that it is trying to sell in, if we continue to suggest to the Governments, and to the people who are doing business, that somehow most of them, if not many of them, are involved in some sleazy, underhand dealing?

The right hon. Member for Tweeddale, Ettrick and Lauderdale asked, quite rightly, what the British Government's view is about underhand dealing. That is a perfectly fair question. We do not support underhand dealing. We do not support bribery. We are perfectly sure that the Organisation for Economic Co-operation and Development working party, which is working towards ways of getting rid of corrupt practices, should be supported, but there is no point in our singularly summing up with a solution that is neither workable nor realistic. That simply makes no sense.

What we have to do, as our first and foremost principle, is to ensure that the interests of our aid budget, and the trade that follows from that under the aid and trade provision umbrella, are properly protected in the interests of this country.

If we take the line of the right hon. Member for Tweeddale, Ettrick and Lauderdale, which is to say that there is a linkage between the ATP budget and the arms sales that we make in those countries, when will we make arms sales to those countries? Should we not give the Indians, the Indonesians, the Malaysians and the Thais the right to self-defence?

Is the argument of the right hon. Member for Tweeddale, Ettrick and Lauderdale that we supply arms or that we supply ATP? We cannot do both, because if we do both, the right hon. Gentleman and his right hon. and hon. Friends will link the two. What will be the effect then on the countries to which we are trying to sell? Will they again come to us and give us orders if they are going to be slated and slandered in the press of this country and on the Floor of the House of Commons? Of course they will not.

That brings me to the subject of the Liberal party and arms and ATP. There was an advertisement published this weekend in the national press which said, We are proud to work in Malaysia. One of the companies that was advertising was the Westland Group. What is the view of the right hon. Member for Tweeddale, Ettrick and Lauderdale and his right hon. Friend the leader of the Liberal party when it comes to selling helicopters to Malaysia? He is perfectly happy to sell helicopters to Canada. Gracious me, the right hon. Member for Yeovil (Mr. Ashdown) was shoved off to Canada to speak to his Liberal Democrat friends to save the Westland deal. Of course he did not do it. He did not save it. Then he denied it, but he did not do it. What is the view of the right hon. Member for Yeovil about the selling of helicopters to Malaysia? That is the question to which the people of Yeovil would like to know the answer.

I will tell the House why the people of Yeovil would like to know that. Members of the Liberal party are champions of the defence cause in the constituencies—champions of the defence cause in my constituency—but in Westminster they are champions of the World Development Movement. The Liberal party, as it always does, tries to do one thing in the constituencies and another thing in Parliament.

Let me just say to the right hon. Member for Tweeddale, Ettrick and Lauderdale that if, in a few months' time, some of the workers of Westland walk out of the gates on a Friday evening, not with their wage packets but with their P45s in their pockets, they will know where the blame lies.

Mr. Simon Hughes (Southwark and Bermondsey)

The Minister knows well the answer that my colleagues would give to that question, which is that it is perfectly proper to seek business overseas, including in defence-related industries, if one is clear about what one is doing, not underhand and not tying it to other secret deals.

The Minister has not answered the question that my right hon. Friend the Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel) asked, which is how this weekend the Foreign Secretary admitted that there had been an entanglement between, on the one hand, defence contracts and, on the other hand, aid, while for the past five years in this place and the other place, Ministers have said that there was no link at all. That is the question which he has not answered.

Mr. Needham

I do not think that the hon. Member for Southwark and Bermondsey (Mr. Hughes) was here for much of the debate when those issues were mentioned. I can say one thing to the hon. Gentleman: it is perfectly true to say that the Liberal party is never clear about anything.

The third point that I wanted to make, which leads on from the remarks that I have just made about the Liberal party, arms and ATP, relates to the issue that the hon. Member for Inverness, Nairn and Lochaber mentioned at the end of his comments, when he showed us that heading from The Independent on Sunday dated 13 February. The article is headed: Clique makes millions from aid. I should like to read it to the hon. Gentleman so that we cannot make any mistake about it: A handful of leading building and engineering companies with close links to the Government and the Conservative Party have been the main beneficiaries of Britain's industrial overseas aid programme, picking up nearly half of the £1.4 bn dispensed since 1978.… The companies with an inside track on aid are led by Balfour Beatty, the joint contractor on the Pergau dam project in Malaysia. Its parent company, BICC, has since 1980 given £90,000 to Arms for Industry, British United Industrialists and the Economic League—all right-wing groups closely allied to the Tory party. Over the same period, Balfour Beatty received 21 per cent—nearly £300m—of the Overseas Development Administration's Aid and Trade Provision. Well, £90,000 over 14 years to three small pressure groups? That works out at £2,000 per year in return for £300 million-worth of business. My goodness—that is value for money.

Perhaps the chairman of the Conservative party should go down to Transport house, speak to Bill Morris and tell him that if he were to cut the millions that he now gives to the Labour party and instead give £2,000 a year to the Fabian Society, the Institute for Public Policy Research and the Labour Co-ordinating Committee, he would lose no influence. He could give the money instead, as one hon. Member said, to John Monks to fund his new Trades Union Congress search for influence. What a ridiculous argument. What a ludicrous argument. The best thing that the hon. Member for Inverness, Nairn and Lochaber can do is to quote from The Independent on Sunday of two weeks ago about £90,000. What an insult to the Overseas Development Administration officials who are responsible for the way in which the budget is administered. The correspondent involved, Mr. Blackhurst, wisely went to Kuala Lumpur last week to see what effect his article was having. He filed a story this Sunday which stated: British companies in Malaysia will be starved of business and forced to close their operations down in the years ahead. Well done Mr. Blackhurst.

Mr. Tom Clarke

The Minister talked of the insult to ODA officials. Does not he recall that the principal accounting officer at the ODA, Sir Timothy Lankester, said that the proposal was not economically viable and was an abuse of overseas aid? Will he therefore explain how £56 million of British taxpayers' money can abused in that way? How can that be justified?

Mr. Needham

I shall come to that argument. The hon. Member has advanced that argument about five times and he repeated himself in his speech.

Mr. Blackhurst may have learnt his lesson, but the editor of The Sunday Times has not. On Sunday, as the editor sat on David Frost's sofa drinking his freshly squeezed orange juice, he said: I mean, just remember in the 1930s in this country, newspapers did not tell the truth about Nazi Germany because we were told not to upset nice Mr. Hitler". The one sure way to obtain an order is to compare your client with Adolf Hitler. The editor of The Sunday Times continued: So, I think we've just got to be careful on this and the fact is that in building this dam in Malaysia a quarter of a billion pounds worth of British taxpayers' money was used as a sweetener to then get the arms deal for 1.3 billion. The hon. Member for Monklands, West made an effort to make the best of a bad show and referred to a letter from Lord Younger in June 1988. That letter formed no part of the arrangements thereafter between the British Government and Malaysia. That is not the point, however. My right hon. Friend the Minister of State showed that only 1.2 per cent. of the aid budget will go on the Pergau dam in any single year.

The editor of The Sunday Times continued: Now, there is a legitimate matter of British taxpayers interest in this. Was this the proper use of money, especially when all the technical advice from our own officials said this dam was useless". Even the hon. Member for Monklands, West did not go so far as to say that the dam was useless. There is nothing more patronising or arrogant than for Opposition Members to suggest that the Malaysian Government and people are so foolish that they have no idea what they need and want. The hon. Gentleman said, "Ah, but we could have got a combined cycle gas-fired power station if we had not done this." But that is not the case, because, as my hon. Friends have said, the Malaysian Government would not have accepted such a power station. As one of my hon. Friends said, they would not have accepted it because they wanted to build the dam in a part of the country with little development, and because combined cycle gas-fired turbines would have involved more imports of goods and materials, whereas the building of a dam involves much more local labour and local content.

If we do not want the business, it is no good then saying, "If they had done what Sir Tim Lankester said, we could have determined that the Indonesians would give us what we want". As my right hon. Friend the Minister of State said, that is neo-colonialism of the worst sort.

The editor of The Sunday Times said not only that the dam was useless, but that it would produce electricity for only two hours a day. That would make it the biggest lavatory bowl in the world: it would flush for two hours and take 22 to fill up. That is a ludicrous comment on the workings of hydro-electricity. As my right hon. Friend the Minister said, the dam was designed for peak load at peak hours. The editor continued: it would actually increase the price of electricity to ordinary Malaysians". How could it do that when it was powered by water and the British Government were providing the aid for it? He went on to say: Why in our overseas defence … budget are we giving aid to Malaysia? I mean, the budget's meant to be for the poorest countries in the world. Malaysia's one of the booming tiger economies of the Pacific basin. The income per head in Malaysia in 1988 was $1,780 a year. That was well within any limit on aid to developing countries. It is one eighth of the income per head that this country enjoys. Are the hon. Member for Monklands, West and the editor of the The Sunday Times saying assistance to Malaysia was provided when it did not deserve aid? Every other country in the world was supporting Malaysia.

Sir David Steel

The Minister does not have much time, so if he wants to reply to the editor of The Sunday Times he should send him a letter and reply to the debate in the House.

Mr. Needham

My reading of the newspapers and the reports from Malaysia suggests that the comments and reports of the editor of The Sunday Times, backed up by the right hon. Gentleman and Opposition Members, have led to the break-off of relations with Malaysia, threatened our relations with Indonesia and Thailand and could put a vast number of jobs and industries in this country at long-term risk.

I had always accepted that we had to compete with the Germans, French, Italians and Japanese. I had not realised that we would at the same time have to deal with the distortions of some sections of the press, the hypocrisy of the Liberal party and the patronising neo-colonialism of the Labour party. The Conservative party is the only party in this country that represents the interests of our trade and industry and British jobs in British factories. I ask the House to reject the motion.

Mr. Simon Hughes

rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to.

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

The House divided: Ayes 159, Noes 305.

Division No. 149] [7.17 pm
Ainsworth, Robert (Cov'try NE) Harman, Ms Harriet
Allen, Graham Harvey, Nick
Alton, David Hattersley, Rt Hon Roy
Barnes, Harry Heppell, John
Barron, Kevin Hinchliffe, David
Battle, John Hoey, Kate
Bayley, Hugh Hogg, Norman (Cumbernauld)
Beith, Rt Hon A. J. Home Robertson, John
Betts, Clive Hood, Jimmy
Boyes, Roland Hoon, Geoffrey
Bradley, Keith Howarth, George (Knowsley N)
Brown, N. (N'c'tle upon Tyne E) Howells, Dr. Kim (Pontypridd)
Bruce, Malcolm (Gordon) Hoyle, Doug
Byers, Stephen Hughes, Kevin (Doncaster N)
Caborn, Richard Hutton, John
Callaghan, Jim Illsley, Eric
Campbell, Mrs Anne (C'bridge) Jackson, Helen (Shef'ld, H)
Campbell, Menzies (Fife NE) Jamieson, David
Campbell, Ronnie (Blyth V) Johnston, Sir Russell
Canavan, Dennis Jones, Ieuan Wyn (Ynys Môn)
Carlile, Alexander (Montgomry) Jones, Lynne (B'ham S O)
Chisholm, Malcolm Jones, Nigel (Cheltenham)
Clapham, Michael Keen, Alan
Clark, Dr David (South Shields) Kennedy, Charles (Ross, C&S)
Clarke, Eric (Midlothian) Kennedy, Jane (Lpool Brdgn)
Clarke, Tom (Monklands W) Kilfoyle, Peter
Coffey, Ann Lewis, Terry
Connarty, Michael Llwyd, Elfyn
Corbyn, Jeremy Loyden, Eddie
Corston, Ms Jean Lynne, Ms Liz
Cox, Tom McAllion, John
Cryer, Bob McAvoy, Thomas
Cummings, John McCartney, Ian
Cunliffe, Lawrence Macdonald, Calum
Cunningham, Jim (Covy SE) McFall, John
Dafis, Cynog McKelvey, William
Dalyell, Tam Mackinlay, Andrew
Darling, Alistair Maclennan, Robert
Davidson, Ian McMaster, Gordon
Davis, Terry (B'ham, H'dge H'l) Madden, Max
Dixon, Don Maddock, Mrs Diana
Dowd, Jim Mahon, Alice
Dunwoody, Mrs Gwyneth Marek, Dr John
Eagle, Ms Angela Marshall, Jim (Leicester, S)
Enright, Derek Martin, Michael J. (Springburn)
Etherington, Bill Martlew, Eric
Evans, John (St Helens N) Maxton, John
Ewing, Mrs Margaret Meacher, Michael
Fatchett, Derek Meale, Alan
Flynn, Paul Michael, Alun
Foster, Rt Hon Derek Michie, Bill (Sheffield Heeley)
Foster, Don (Bath) Michie, Mrs Ray (Argyll Bute)
Galloway, George Milburn, Alan
Gapes, Mike Miller, Andrew
Garrett, John Morris, Rt Hon A. (Wy'nshawe)
George, Bruce Morris, Estelle (B'ham Yardley)
Gerrard, Neil Mudie, George
Godman, Dr Norman A. O'Brien, Michael (N W'kshire)
Godsiff, Roger Pickthall, Colin
Golding, Mrs Llin Pike, Peter L.
Gordon, Mildred Pope, Greg
Graham, Thomas Powell, Ray (Ogmore)
Griffiths, Nigel (Edinburgh S) Prentice, Ms Bridget (Lew'm E)
Griffiths, Win (Bridgend) Primarolo, Dawn
Gunnell, John Redmond, Martin
Hall, Mike Robertson, George (Hamilton)
Hanson, David Rooker, Jeff
Hardy, Peter Ross, Ernie (Dundee W)
Short, Clare Wareing, Robert N
Simpson, Alan Welsh, Andrew
Skinner, Dennis Wicks, Malcolm
Smith, C. (Isl'ton S & F'sbury) Wigley, Dafydd
Snape, Peter Williams, Alan W (Carmarthen)
Soley, Clive Wilson, Brian
Spearing, Nigel Worthington, Tony
Steel, Rt Hon Sir David Wray, Jimmy
Steinberg, Gerry Wright, Dr Tony
Taylor, Mrs Ann (Dewsbury)
Taylor, Matthew (Truro) Tellers for the Ayes:
Turner, Dennis Mr. Andy Kirkwood and Mr. Simon Hughes.
Tyler, Paul
Wallace, James
Ainsworth, Peter (East Surrey) Day, Stephen
Aitken, Jonathan Deva, Nirj Joseph
Alexander, Richard Devlin, Tim
Alison, Rt Hon Michael (Selby) Dorrell, Stephen
Amess, David Douglas-Hamilton, Lord James
Ancram, Michael Dover, Den
Arnold, Jacques (Gravesham) Duncan, Alan
Ashby, David Duncan-Smith, Iain
Aspinwall, Jack Dunn, Bob
Atkins, Robert Durant, Sir Anthony
Atkinson, David (Bour'mouth E) Dykes, Hugh
Atkinson, Peter (Hexham) Eggar, Tim
Baker, Rt Hon K. (Mole Valley) Elletson, Harold
Baker, Nicholas (Dorset North) Emery, Rt Hon Sir Peter
Baldry, Tony Evans, David (Welwyn Hatfield)
Banks, Matthew (Southport) Evans, Jonathan (Brecon)
Bates, Michael Evans, Nigel (Ribble Valley)
Batiste, Spencer Evans, Roger (Monmouth)
Beggs, Roy Faber, David
Bellingham, Henry Fabricant, Michael
Bendall, Vivian Fairbairn, Sir Nicholas
Beresford, Sir Paul Fenner, Dame Peggy
Biffen, Rt Hon John Field, Barry (Isle of Wight)
Blackburn, Dr John G. Fishburn, Dudley
Bonsor, Sir Nicholas Forman, Nigel
Booth, Hartley Forsyth, Michael (Stirling)
Boswell, Tim Forth, Eric
Bottomley, Peter (Eltham) Fox, Dr Liam (Woodspring)
Bottomley, Rt Hon Virginia Fox, Sir Marcus (Shipley)
Bowden, Andrew Freeman, Rt Hon Roger
Bowis, John French, Douglas
Boyson, Rt Hon Sir Rhodes Gale, Roger
Brandreth, Gyles Gallie, Phil
Brazier, Julian Gardiner, Sir George
Bright, Graham Garnier, Edward
Brown, M. (Brigg & Cl'thorpes) Gill, Christopher
Browning, Mrs. Angela Gillan, Cheryl
Bruce, Ian (S Dorset) Goodlad, Rt Hon Alastair
Burns, Simon Goodson-Wickes, Dr Charles
Burt, Alistair Gorman, Mrs Teresa
Butler, Peter Gorst, John
Carlisle, John (Luton North) Grant, Sir A. (Cambs SW)
Carlisle, Kenneth (Lincoln) Greenway, Harry (Ealing N)
Carrington, Matthew Griffiths, Peter (Portsmouth, N)
Carttiss, Michael Grylls, Sir Michael
Cash, William Gummer, Rt Hon John Selwyn
Channon, Rt Hon Paul Hague, William
Clappison, James Hamilton, Rt Hon Sir Archie
Clark, Dr Michael (Rochford) Hamilton, Neil (Tatton)
Clarke, Rt Hon Kenneth (Ruclif) Hampson, Dr Keith
Clifton-Brown, Geoffrey Hanley, Jeremy
Coe, Sebastian Hannam, Sir John
Colvin, Michael Hargreaves, Andrew
Congdon, David Harris, David
Conway, Derek Haselhurst, Alan
Coombs, Anthony (Wyre For'st) Hawkins, Nick
Coombs, Simon (Swindon) Hawksley, Warren
Cope, Rt Hon Sir John Hayes, Jerry
Couchman, James Heald, Oliver
Cran, James Heath, Rt Hon Sir Edward
Currie, Mrs Edwina (S D'by'ire) Hendry, Charles
Curry, David (Skipton & Ripon) Heseltine, Rt Hon Michael
Davies, Quentin (Stamford) Hicks, Robert
Davis, David (Boothferry) Higgins, Rt Hon Sir Terence L.
Hill, James (Southampton Test) Onslow, Rt Hon Sir Cranley
Hogg, Rt Hon Douglas (G'tham) Oppenheim, Phillip
Horam, John Ottaway, Richard
Hordern, Rt Hon Sir Peter Page, Richard
Howard, Rt Hon Michael Paice, James
Howarth, Alan (Strat'rd-on-A) Patnick, Irvine
Howell, Rt Hon David (G'dford) Patten, Rt Hon John
Howell, Sir Ralph (N Norfolk) Pattie, Rt Hon Sir Geoffrey
Hughes Robert G. (Harrow W) Pawsey, James
Hunt, Rt Hon David (Wirral W) Peacock, Mrs Elizabeth
Hunt, Sir John (Ravensbourne) Pickles, Eric
Hunter, Andrew Porter, Barry (Wirral S)
Hurd, Rt Hon Douglas Porter, David (Waveney)
Jack, Michael Portillo, Rt Hon Michael
Jackson, Robert (Wantage) Powell, William (Corby)
Jenkin, Bernard Rathbone, Tim
Jessel, Toby Redwood, Rt Hon John
Johnson Smith, Sir Geoffrey Renton, Rt Hon Tim
Jones, Gwilym (Cardiff N) Richards, Rod
Jones, Robert B. (W Hertfdshr) Riddick, Graham
Jopling, Rt Hon Michael Rifkind, Rt Hon. Malcolm
Kellett-Bowman, Dame Elaine Robathan, Andrew
Key, Robert Roberts, Rt Hon Sir Wyn
Kilfedder, Sir James Robertson, Raymond (Ab'd'n S)
King, Rt Hon Tom Robinson, Mark (Somerton)
Kirkhope, Timothy Roe, Mrs Marion (Broxbourne)
Knapman, Roger Ross, William (E Londonderry)
Knight, Mrs Angela (Erewash) Rowe, Andrew (Mid Kent)
Knight, Greg (Derby N) Rumbold, Rt Hon Dame Angela
Knight, Dame Jill (Bir'm E'st'n) Ryder, Rt Hon Richard
Knox, Sir David Sackville, Tom
Kynoch, George (Kincardine) Scott, Rt Hon Nicholas
Lait, Mrs Jacqui Shaw, David (Dover)
Lamont, Rt Hon Norman Shaw, Sir Giles (Pudsey)
Lang, Rt Hon Ian Shephard, Rt Hon Gillian
Lawrence, Sir Ivan Shepherd, Colin (Hereford)
Legg, Barry Shersby, Michael
Lennox-Boyd, Mark Skeet, Sir Trevor
Lester, Jim (Broxtowe) Smith, Sir Dudley (Warwick)
Lidington, David Smyth, Rev Martin (Belfast S)
Lightbown, David Speed, Sir Keith
Lilley, Rt Hon Peter Spencer, Sir Derek
Lloyd, Rt Hon Peter (Fareham) Spicer, Sir James (W Dorset)
Lord, Michael Spicer, Michael (S Worcs)
Luff, Peter Spink, Dr Robert
Lyell, Rt Hon Sir Nicholas Spring, Richard
MacGregor, Rt Hon John Squire, Robin (Hornchurch)
MacKay, Andrew Stanley, Rt Hon Sir John
Maclean, David Steen, Anthony
McLoughlin, Patrick Stephen, Michael
McNair-Wilson, Sir Patrick Stern, Michael
Madel, Sir David Stewart, Allan
Maitland, Lady Olga Streeter, Gary
Malone, Gerald Sumberg, David
Mans, Keith Sweeney, Walter
Marland, Paul Sykes, John
Marlow, Tony Taylor, Ian (Esher)
Marshall, John (Hendon S) Taylor, John M. (Solihull)
Marshall, Sir Michael (Arundel) Taylor, Sir Teddy (Southend, E)
Martin, David (Portsmouth S) Temple-Morris, Peter
Mates, Michael Thomason, Roy
Mawhinney, Rt Hon Dr Brian Thompson, Sir Donald (C'er V)
Mayhew, Rt Hon Sir Patrick Thompson, Patrick (Norwich N)
Merchant, Piers Thornton, Sir Malcolm
Mills, Iain Thurnham, Peter
Mitchell, Andrew (Gedling) Townend, John (Bridlington)
Mitchell, Sir David (Hants NW) Townsend, Cyril D. (Bexl'yh'th)
Moate, Sir Roger Tracey, Richard
Molyneaux, Rt Hon James Tredinnick, David
Monro, Sir Hector Trend, Michael
Montgomery, Sir Fergus Trotter, Neville
Moss, Malcolm Twinn, Dr Ian
Needham, Richard Vaughan, Sir Gerard
Nelson, Anthony Viggers, Peter
Neubert, Sir Michael Waldegrave, Rt Hon William
Newton, Rt Hon Tony Walden, George
Nicholls, Patrick Walker, A. Cecil (Belfast N)
Nicholson, David (Taunton) Walker, Bill (N Tayside)
Nicholson, Emma (Devon West) Waller, Gary
Norris, Steve Wardle, Charles (Bexhill)
Waterson, Nigel Winterton, Mrs Ann (Congleton)
Watts, John Winterton, Nicholas (Macc'f'ld)
Wells, Bowen Wolfson, Mark
Whitney, Ray Wood, Timothy
Whittingdale, John Yeo, Tim
Widdecombe, Ann Young, Rt Hon Sir George
Wiggin, Sir Jerry
Wilkinson, John Tellers for the Noes:
Willetts, David Mr. Sydney Chapman and Mr. James Arbuthnot.
Wilshire, David

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 30 (Questions on amendments) and agreed to.

MR. DEPUTY SPEAKER forthwith declared the Main Question, as amended, to be agreed to.

Resolved, That this House strongly supports the Government's substantial aid programme aimed at sustainable economic and social development, particularly in the poorest countries, which draws on the skills and excellence of British institutions, companies and non-governmental organisations, and creates significant jobs and wealth in the United Kingdom.