Foreign Office and ODA Spending Plans

HC Deb 24 October 1994 vol 248 cc649-86

Motion made, and Question proposed, That this House do now adjourn.—[Dr. Liam Fox.]

4.32 pm

Mr. David Howell (Guildford)

The Foreign Affairs Select Committee is grateful for this opportunity, in Government time, to have a short debate on its second report. This is in lieu of a normal estimates day debate, for which there was not time in the summer.

The second report covers a number of issues concerning Foreign Office and Overseas Development Administration expenditure. In particular, it looks at the planned fall in the size of the diplomatic service over the next three years; the growth in expenditure on UK contributions to the UN, to UN peacekeeping and particularly to the European Union's overseas aid budget, all of which are legally binding and over which Britain has little control; and the effect which that has on the overall aid budget, in that the bilateral budget will shrink to less than 50 per cent. of the UK's total overseas expenditure as the European Union aid budget increases.

The report also looks at the changing pattern of overseas aid and investment in developing countries. What were hitherto regarded as marginal institutions are becoming increasingly central to the development effort. Those include such bodies as the Commonwealth Development Corporation, the Natural Resources Institute and the know-how fund.

We looked at the need for a new role for the Commonwealth Institute which, since we wrote our report, seems to be groping its way towards finding such a new role. We examined it in the general context of the growth in support for the Commonwealth—a global institution whose membership is increasing. It is a club that is growing, not shrinking, and becoming more significant in tomorrow's world.

We returned to the subject of cultural diplomacy and reaffirmed the Committee's support for, and strong feelings in favour of, the work of the British Council and the BBC World Service.

The report discusses a wide range of issues and I shall concentrate on only one or two aspects. I shall concentrate especially on what is happening to our aid and development policy and to those parts of Foreign Office expenditure that support the policy.

Two major things are happening. First, our aid and development budget is becoming multilateralised. In other words, Foreign and Commonwealth Office and Overseas Development Administration votes are now being led by demands over which the United Kingdom has less and less direct influence and for which, by definition, accountability to the House is minimal, and which are binding on the UK. We have undertaken to adhere to treaties that commit us legally and unavoidably to those increasing demands.

The second thing that is happening is that traditional patterns of development aid throughout the world are being replaced with a vastly greater role for the private sector in development, leaving aid—that is, Government resources, or taxpayers' money—to be focused more on poverty relief, basic needs, emergency relief, humanitarian aid and so on. That certainly applies to this country's development activities.

I shall discuss both changes in detail. First, on multilateralisation, one can see exactly what is happening by reading page 32 of the Foreign Affairs Committee's report. The UK's contribution to the United Nations' regular budget is increasing from £26.5 million in 1991-92 to £38.8 million this year. The UK contribution to UN peacekeeping is increasing from £177.6 million in 1992-93 to £310 million in 1994-95. The part of the overseas aid budget that is spent via the European Union is increasing from £564 million in 1993-94 to £745 million in 1996-97. The proportion of our aid budget that is spent via multilateral agencies, including the European Union, will have increased from about 29 per cent. in 1979-80 to 52.8 per cent. in 1996-97—much more than half.

All those types of expenditure are increasing at a time when public expenditure is under extreme restraint, and in many cases being reduced. That has caused, in the minds of my colleagues in the Foreign Affairs Committee—I think rightly—a double worry, which we have tried to air in the report.

The first anxiety is whether the European Union proportion of our aid budget, which is being removed from the control of Government and of the House, is being properly evaluated and monitored. We can argue, and no doubt will, about whether it is a good thing that it is happening at all; to find the answer, one must seek out agreements in the margins of past European summits to discover what was taken away, what was conceded and who wanted which slice of power transferred to which directorate in Brussels.

However, given that that has happened, is that large, and growing, chunk of our aid budget—and of other member state countries' aid budgets—being properly administered, evaluated and monitored? The Committee has set itself that question and, since finishing the report, has prepared, and is about to complete, another detailed report on precisely that question, which it will present to the House shortly. Without anticipating the work that we have done there, there are some worries about what is happening to the strict control and monitoring of that enormous chunk of our aid programme, which in the past was under the direct administration of Whitehall and Ministers and accountable to the House.

The second worry is whether the priorities are right in that aid sector. The European Union budget is soaring upwards—it has been greatly increased. It is a budget for administering aid in a variety of ways—much of it is in the form of traditional Government-to-Government grant; some of it is of the concessionary finance variety. That is happening while, as our report states, the diplomatic service is being cut over the next three years and while—although this is outside our report's scope—Army manpower is being cut. It is happening while support for agencies such as the British Council and the BBC World Service is being reduced over the next three years. Many people would argue that such organisations are moving to the centre of our overseas effort and the promotion of this country's interests, as well as the promotion of development and improvement in developing countries.

One is compelled to ask whether the right budgets are being increased and the right ones decreased. Above all, is it right for European Union aid to be expanding at this great rate and for all the new plans to be developed by the appropriate directorates in Brussels—for aid and support in one place and grants for development in another—when priorities throughout the aid establishment, if one can call it that, are changing radically and private investment flows are replacing the role of aid in development? If one wants proof of that, one can see it in the entirely new line being taken by the international financial institutions. They now say that the main thrust of development work should be through encouraging the private sector to wheel in and deliver the improved infrastructure and many of the better-quality services that have not been developed as a result of handing aid from Government to Government through the budgetary systems.

It is my personal view—not a conclusion of the Committee's report—that, at the very least, there is a strong case for re-examination of policy in the light of those two huge developments, one of which was pinpointed so clearly in the report. If I were asked to name the headings of the policy re-examination, I would suggest that the first should be to clarify the response of our policy-makers, the Foreign Office and the Overseas Development Administration, to the new ideas being promoted by the international institutions for private sector development to take some weight off the traditional aid budgets. The development assistance committee of the Organisation for Economic Co-operation and Development issued a detailed set of guidelines urging Governments and officials responsible for aid policies to promote private sector development by transferring the emphasis of many of their programmes.

It was with such thoughts in mind that the Committee, when taking evidence for its short report, asked whether there was a new role for our Commonwealth Development Corporation. That is a classic example of an organisation which, over the years—it was originally called the Colonial Development Corporation—has combined the best of public support with the best of private enterprise and investment. Is not that the sort of model for future development aid that the Government should be studying? It is worth asking whether the CDC should be encouraged and expanded rather than regarded as a sideshow among the Government's development policies.

We note that Ministers are planning increased borrowing powers at some stage for the CDC. It would be interesting to hear when those borrowing powers are to be increased. Would such a policy require legislation before the House and, if so, when will time be made available for it? If we are now in a world in which private investment can fill the gap and take some of the budgetary pressure off aid budgets, which all Governments are having to re-evaluate—particularly the American and Japanese, but also our own and the French—we should be building up organisations such as the CDC, which can deliver development in a way that merely pushing aid between one Government and another did not seem able to achieve.

Mr. Dennis Canavan (Falkirk, West)

I am all in favour of encouraging private investment in genuine development projects, but surely private investment should be a supplement rather than a replacement for public investment. One of the report's most serious revelations is contained on pages XVIII and XIX, where the Committee refers to the reduction in real terms in United Kingdom Government expenditure on aid. It also states that we are moving away from the United Nations target of 0.7 per cent. of GNP. Table II on page XVIII shows that we are nearer the bottom of the league than the top in terms of expenditure on overseas aid. The Government must address that important issue.

Mr. Howell

The view of the international finance institutions on private sector development is that it should be additional. Aid budgets around the world are to be increasingly constrained and private sector development can fill the gap much more efficiently.

The hon. Gentleman rightly said that aid budgets, including this country's, were not conforming to the United Nations target. Although he and I were in complete agreement over the report, we differ as to the importance in the world into which we are moving of the old United Nations targets. They are reiterated year after year and everybody pays lip service to them. But if we want the sort of development that is happening in the booming Asian economies, is beginning to happen—one hopes that it will happen much more—in parts of southern Africa, and has happened to a great extent in the developing countries of Latin America, we must expect the overall investment and flow of funds into those countries to come increasingly from the private sector rather than Government aid. I think that the hon. Gentleman and I differ on that subject and I hope that he will have an opportunity to put his view. I did say that I was voicing my views and straying outside the Committee's report.

My final question for my right hon. and hon. Friends in the appropriate Departments is whether the time has come to review the Bretton Woods institutions. They were constructed in a world where the developing third-world countries were all seen as being stuck in a morass of poverty which, in many cases, was getting worse all the time. Now, some parts of the societies in the developing third-world countries have rapidly lifted themselves out of that morass.

A good part of the dynamic growth of the world economy now comes from the developing world. This year the so-called less-developed countries will grow by 5.6 per cent., which is well above the level that will be achieved by the developed world. We are beginning to see both trading power and economic power shifting to the booming Asian economies that are starting to deliver living standards as high as, and in some cases higher than, those of the European powers. I believe that political power will follow. I say that not just because I think that it will happen, but because when international institutions come together there is a change of tone.

The so-called third world is no longer prepared to take lying down the diktats of the institutions representing the views of the so-called rich west. The balance is changing and our policy should accept that. The fastest growth in the developing world is being driven not by old-style Government aid or United Nations targets—as mentioned by the hon. Member for Falkirk, West (Mr. Canavan)—but by increasing flows of inward investment, liberalisation, cutting taxes and unravelling state monopolies. That is going on in almost every developing country, sometimes with benefit, sometimes with little benefit, but it is going on.

It may be that, given our increased worry in this turbulent world that emergency relief will be more and more in demand and that humanitarian relief, help with basic needs and a focus on poverty and the poorest people is the real No. 1 priority, we should realise and accept that aid is not necessarily the most powerful instrument for economic development in the medium term. Therefore, the more we can focus what aid resources we have—it would be nice, of course, to have more—on humanitarian and basic needs, the better. I notice that a number of organisations outside the House are urging just that.

Mrs. Ann Clwyd (Cynon Valley)

The right hon. Gentleman raised the issue of development in Asia. May I remind him of what is still one of the poorest countries in the world, Cambodia, in south-east Asia? I notice in the Foreign Office answers to the Committee's questions that we are cutting back on the British embassy in Cambodia, a country that was denied access to the world institutions—the International Monetary Fund and the World bank—and a British embassy until very recently. Given that Cambodia is still troubled, is still developing and still has major problems, does he believe that the size of the British embassy should be cut?

Mr. Howell

Perhaps my right hon. Friend the Minister of State will comment later on that issue, but the hon. Lady is right. In Asian countries such as India, areas of enormous prosperity and wealth stand side by side with areas of still blinding, breathtaking and increasing poverty. No generalities can be safely sustained in Asia.

Dame Elaine Kellett-Bowman (Lancaster)

Does my right hon. Friend agree that Cambodia, like some countries of Africa, illustrates the point that countries that have concentrated on economic development and have not been at each other's throats fighting are the ones that have got ahead? Does he further agree that if we can do something to reduce the warfare, we shall do a great deal towards improving those countries' welfare?

Mr. Howell

My hon. Friend is profoundly right. Peace, stability and a degree of reliance on some sort of rule of law are the fundamental requirements for economic enterprise to grow. Where those things have been applied in Asia, there has been a miracle growth in wealth; where they have not, nothing of the sort has occurred.

Our report considered the work of the Foreign Office in relation to the European Union and to preparations for the intergovernmental conference in 1996. We hope that papers will be available to the House in ample time. The Government made an observation in reply that was not quite clear to me and about which I should like to hear more. In observation (h), Ministers talk about the possibility of a United Kingdom parliamentary report being made to the intergovernmental conference study group, which I think was set up last summer in Corfu. The group has a funny Spanish name that I cannot remember at the moment. Supposedly, it will be a preparatory group for the IGC's agenda, which is important for our country and for the House. What does that mean? How will we initiate a United Kingdom parliamentary report? Who will write it and who will read it? I should certainly like to know what the Government have in mind.

The world has totally changed, both with the evaporation of the Soviet Union and the end of the communist threat, and the rising economic dynamism of the Asian economies, which are delivering growth at rates that make even the post-war European miracle look mild. They are delivering not low-technology, but high-technology, high-quality manufactures at a pace that will make any challenge we have had so far, including that from the Japanese, look mild. The Committee's deeper concern is that, although the world has changed, the spending priorities of the Foreign Office and Overseas Development Administration still are inclined to reflect a bit too much the old order.

Where there is a new order, it is not necessarily the right one. It is being dictated by the moguls of the European Union, who are inclined to look inward rather than outward on these issues.

Mr. Michael Jopling (Westmorland and Lonsdale)

I should like to say how much I agree with my right hon. Friend about the need for flexibility, particularly in the Asian region. That takes me to the point that the hon. Member for Cynon Valley (Mrs. Clwyd) made about Cambodia. If she were to read, on the first page of the minutes of evidence, the memorandum submitted to the Committee by the Foreign and Commonwealth Office—it comes at the end of the conclusions—she will find that flexibility has been applied in relation to Cambodia. A number of Committee members visited Cambodia not very long ago. The memorandum states: With the ending of the UN operation in Cambodia, the size of the British Embassy in Pnomh Penh is to be reduced producing savings of some £100,000 annually. Most of those hon. Members who went there would agree that that was the right policy as the UN operation had been run down. That displays the flexibility that my right hon. Friend was talking about.

Mr. Howell

I have come to the end of my remarks. I hope that the debate will encourage, or begin to encourage, the realisation that a change of priorities is needed. I hope that some of the points that Committee members raised in the report, such as those on the virility and activity of the Commonwealth, will be reflected a bit more in policy developments in the future. We used to be all in favour of the Commonwealth. Then it was written off. Now we suddenly find that everyone wants to join it and that it is becoming a rather useful global network. On that final thought, I think that I had better sit down. My right hon. Friend the Minister will no doubt have a chance to intervene later.

4.56 pm

Mr. Allan Rogers (Rhondda)

I congratulate the Chairman and members of the Select Committee on their exhaustive report and on choosing overseas development aid as the highlight of their report. It is an issue that concerns all hon. Members very much. Such a spotlight is a good thing at this stage in our development and our relationships with other countries. Many aspects of the report concern us, but I know that many of my hon. Friends want to participate in the debate and will deal with more specific matters. With some exceptions, I should like to generalise in my remarks. I hope that many of our overseas friends, who from time to time bend our ears about the problems in their countries, will not be offended if their particular issue is not brought out in the debate. Obviously, time does not allow to us deal with every problem in the world.

One important issue dealt with in the report is the British Broadcasting Corporation World Service and the British Council, which has been alluded to by the Chairman of the Committee. I admit that I read the section of the report dealing with the BBC World Service and the British Council with some dismay. It is yet another manifestation of the Government's consistent inconsistency. On the one hand, they extol the virtues and importance of those organisations; on the other, they cut the resources available for the organisations to carry out their functions. For example, there will be a cut in BBC World Service resources from £175 million a year to £158 million in real terms.

Those organisations have unparalleled reputations. The Select Committee said that they have a record of providing cultural, technical and educational assistance worldwide and of encouraging international understanding and the growth of democratic institutions. The World Service has a global audience of 130 million—three times, I believe, that of Voice of America and five times that of Radio France. It broadcasts in 41 languages. Last year, I understand that it received more than half a million letters from viewers, far more than even most Members of Parliament. It immeasurably disseminates our democratic and social aims throughout the world—what an area in which to penny-pinch. It is a British flagship, but the Government can only count the coppers. I am sure that some of my hon. Friends will emphasise the shabby treatment of the BBC World Service and the British Council.

In just over two years, Hong Kong will be returned to the People's Republic of China after many years of British rule. One would have hoped that at this stage, after 10 years of discussion and negotiation, we would now be dotting the i's and crossing the t's in the extensive and important matters that have to be decided for the future well-being of all involved—not only those in Hong Kong but those in China—and for the sake of the future trade, political and cultural links between Great Britain and the People's Republic of China.

Where are we in that process which has been going on for 10 years? We are bogged down politically, commercially, legally and almost every other "ally" one can think of. Indeed, we seem to be up a blind alley in a morass of bad faith, bad tempers and lack of trust. We are not merely blocked at a point along the path or the through-train line; there is a real possibility that in two years everything will be turned back beyond the starting point. That is the Chinese threat. Something has gone disastrously wrong, but it is no good simply blaming China.

Let us consider what the Chinese have done in the past 10 years. They have signed the joint declaration and passed the Basic Law. We should remember that the Basic Law is a Chinese law passed by the People's Assembly in Peking. It was an acknowledgement that there would be one country and two systems and that there would be an evolving process of democracy in the first two years of Legislative Councils after 1997, taking us roughly to 2004. The Chinese acknowledged that there had to be change, so what has gone wrong? They were significant acts for a communist country and a totalitarian regime, but the Government's report gives a most disappointing summary of them. Indeed, it is an almost offhand dismissal of the situation and, frankly, does a great disservice to the problem. The Minister with responsibility for Hong Kong will perhaps be able to clarify the situation, if not today, then at some future point.

Mr. Nigel Waterson (Eastbourne)

Before the hon. Gentleman moves on, does he accept that there are three possible explanations for the lamentable, if partial, breakdown of negotiations with the People's Republic of China? The first is bad faith on our part, which I wholly reject. The second is bad faith on the part of the Chinese. The third is simply the change of climate inevitably brought about in Hong Kong and, more particularly, in the leadership in Beijing following the events of Tiananmen square?

Mr. Rogers

Yes, indeed. Like members of other parties, we have no sympathy with the abuse of human rights in the People's Republic of China and unequivocally condemn those abuses, but the hon. Gentleman perhaps illustrates the reason why the problem exists: he talks about bad faith instead of trying to engage in a more positive dialogue with the Chinese. A solution must be found.

In 1997, Hong Kong will be handed to the Chinese. For the sake of the population of Hong Kong, for the sake of Hong Kong's future relationships within the special area designated under the Basic Law, and for the sake of the relationship between Great Britain and the PRC, a solution must be found—and quickly. Because of its importance, we shall be looking for a full debate on Hong Kong in the coming parliamentary year.

Mr. Mike Gapes (Ilford, South)

Perhaps I can help my hon. Friend. The Select Committee on Foreign Affairs has produced a report on China and the Government have responded to it. So far, however, the Government have not chosen to allow time for the House to debate it, even though it was produced before the report that we are debating today.

Mr. Rogers

I thank my hon. Friend for his help. It is not often that a prophet can call for a debate and have that call endorsed so quickly and efficiently. I am sure that the Minister will have heard my hon. Friend and that, when he is able to gather his thoughts on the matter, he will enable such a debate to be held.

We recently debated the Intelligence Services Act 1994, which we supported. It is alluded to only briefly in the report, especially in relation to the designation of expenditure available for our security services. We supported the Bill at the time, but I must admit that it has been a grave disappointment to us. We tabled some constructive amendments but, except for those involving the number of people to sit on the Intelligence and Security Committee, the Government were unable to accept them.

We did not and do not want details of operations or any information that would put the security of individuals or the country at risk, but the Act has created only a facade of openness. The circle of tasking, operating and accounting for our intelligence services remains closed. The Intelligence and Security Committee will comprise parliamentarians, but it will not be a parliamentary Committee. It will have very limited powers, it will not report to Parliament, and we shall receive only information that has been filtered through the Foreign Secretary and the Prime Minister.

As I have said, the report that we are debating rightly highlights expenditure on overseas aid. I think that it was out of loyalty to his party that the right hon. Member for Guildford (Mr. Howell) perhaps failed to emphasise the neglectful way in which the Government have handled the problem of overseas aid. I know that some of my hon. Friends wish to speak on the subject, so I shall not go into detail. I understand that the Pergau dam scandal is being dealt with separately by the Select Committee, but I will say that I do not think that it was the best example of bilateral aid. However, we await the report with interest. I fear and am sure that it will be another sad, sleazy story that will reflect badly on the Government and their approach to overseas aid.

Mr. Canavan

The Select Committee has published a report on the Pergau dam and the Government have published their response. We now need Government time for a debate on the matter so that we can bring the Government to book for their disgraceful behaviour in this instance.

Mr. Rogers

Yes, it was the debate on the report to which I was alluding. It is clear from both reports that the resources available for overseas aid in general are falling, as the Chairman of the Select Committee said.

As the Chairman also said, more and more money is being sucked into the European pot for uncontrollable multilateral aid rather than into bilateral aid over which we have some control. Indeed, the fact that multilateral aid will rise from 45 per cent. to 53 per cent. over the next few years fills me with alarm. Where is this European money going? I was rather amused by the suggestion made by the right hon. Member for Guildford as to how it was decided how the money was to be spent—"in the margins of some summit" was, I think, the expression that he used. I do not understand how we can control this aid. What are the mechanics for reporting back to us where the aid is going?

Some adjustments need to be made in our overseas aid programme. Bilateral aid to Africa is to fall by 17 per cent., or some £60 million over the next three years, and that to Asia is to fall by £31 million. Clearly, we need to consider how we are to develop a poverty focus for the aid that is available.

Another point in relation to diplomatic expenditure is the issue of Cuba and the Government's attitude towards it. We feel that the continuing United States embargo of Cuba is as much an act of political spite as the result of any great strategy. We support the Government in their criticism of the embargo, but we ask them to press harder so that the movement within Cuba towards a more open and pluralist society can gain influence and momentum. It surely makes sense politically and morally for America and the rest of the world not to reduce a country's economy to ruins and not to subject the most vulnerable—women, children and old people—to degradation, as is the case in certain parts of Cuba.

Two years ago, we debated the Foreign Compensation (Amendment) Bill in Committee. Only last week, the issue of our relationship with Iraq arose again. The Bill was intended to enable the United Nations compensation commission to handle the compensation to be given to those affected by Saddam Hussein's brutal invasion of Kuwait. What has happened since the Bill was enacted? On a number of occasions, we have asked about the operation of the Act, but we have had negative responses from the Government.

What is the present position on Iraq's observation of and adherence to UN resolution 687, from which the funding is supposed to originate? What action is proposed to enforce the resolution? Is oil being sold illegally? What has happened to the sequestered Iraqi assets? Have millions been spent simply on funding the bureaucracy set up within the UN? How many of the 3,000 United Kingdom claims have been processed by the UN compensation commission? How many have been settled? There are people who have lost substantial personal assets and who require substantial compensation; yet they are still waiting, two years after the Bill was enacted.

I will briefly refer to President Clinton's test ban proposals and the Government's attitude towards them. The report refers to our relationship with the United Nations, which is important. The specific problem that faces us, however, is acute. France, our Community partner, Russia and America have already announced their participation in a moratorium on the testing of nuclear weapons. Of the five major nuclear powers, only Britain and China oppose such a complete test ban agreement. The scientific community has said that no further testing is necessary either for defence or for scientific reasons, and that whatever work requires to be done can easily be done under laboratory conditions. Why does the Foreign Secretary not make the adoption of a nuclear test ban one of the tests of a common foreign and security policy and approach in the European Community? If agreed, it would be a big step along the road to promoting the non-proliferation of nuclear weapons, which is a vital step towards successful renegotiation of the non-proliferation treaty, which is due for renewal in 1995.

Mr. David Howell

If the hon. Gentleman checks, he will find that the United Kingdom, with the other nuclear powers, has agreed in principle to the comprehensive test ban treaty. We consider it important that any future requirements might have to be met by simulations and not by nuclear testing. We have agreed to that. The question is whether agreement should be made a condition of a successful non-proliferation treaty, which is a matter that the Select Committee on Foreign Affairs is currently considering and on which it will report to the House quite soon.

Mr. Rogers

The point that I am trying to make to the right hon. Member for Guildford is that on all occasions when a ban has been proposed in the UN—and as recently as a year ago—the Government turned their face completely and utterly against subscribing to a nuclear test ban. They say that they might decide to subscribe to such a ban in principle, but when will the action take place? The non-proliferation treaty will come up next year and unless the Government make their mind up fairly quickly about taking action rather than merely saying that they subscribe to a ban in principle, I am afraid that we shall not get a non-proliferation treaty signed next year.

We have a unique position in international affairs. No other country is at once a permanent member of the Security Council, a leading member of NATO, a member of the Commonwealth, a member of the European Union, a member of G7, a member of the conference on security and co-operation in Europe and a member of the Western European Union. We are in a unique position to use not just our position and policies, but our views and aims for the betterment of the world, but we can do that only if there is the political will to do so. In a rapidly changing world, we must realign our thinking and policies if we are to meet the new international challenges.

There is great danger in the world because the relative stability of the cold war stand-off has resulted, to quote the departmental report, in a world where disorder is spreading and where nationalism is out of hand. There is great disappointment also because the new world order, which everyone wanted to come to fruition, and the hopes that the UN could fulfil its mandate, have not been realised. However, the danger and disappointment must not be accompanied by despair. There is hope, but only if we are prepared to search positively for solutions to the conflicts in the world.

Disputes and instability, born of economic conflict, territorial claims, and ethnic, religious and nationalist fundamentalism, are all too frequent. Whether those wars involve high-technology weapons or, as my hon. Friend the Member for Pontypridd (Dr. Howells) has so often reminded us, small weapons such as land mines, mortars and small arms, the results are much the same. Repression replaces Government institutions, accompanied by massive refugee flows which are creating a huge burden on the rest of the world.

At present, there are more than 30 million refugees world wide. There are 26 conflicts raging in which two or more countries are at war. There are 23 other areas of potential conflict between nations and there is tension in another 24 areas, making 73 possible flashpoints throughout the world.

There is no evidence available that regional organisations can tackle regional problems. Indeed, the evidence is the other way. The European Union, Western European Union and NATO have all failed with the problems in Bosnia and in other parts of Europe. The Organisation of African Unity has failed in Africa. The same is true throughout the world. It is becoming more and more obvious that the United Nations is the only organisation that offers hope. That is not to say that other organisations cannot play a part, but I believe that no other organisation has the potential for bringing peace that the UN has.

The challenge that we have to face—this comes through in the general remarks in the Select Committee report—is that the international community must be able to intervene in new ways to head off catastrophe. The "Agenda for Peace" from the UN Secretary-General noted that between 1945 and 1987 there were 13 peacekeeping operations; in the past five years, the organisation has established a further 13. The aggregate cost up to 1992 has been about $8.3 billion. Huge sums are being spent on operations that could well have been avoided—I am not saying that they would have been, but they might well have been—if we had kept up our efforts of preventive diplomacy, as outlined in the departmental report and as mentioned in the Select Committee report.

I do not believe that military solutions can enforce political conclusions in those areas of conflict. What is lacking is not military technology, but political will. That is a problem of this Government. I believe that the Government should decisively support a number of clear policy areas: the agenda for peace is a good start. They should support the reform and enlargement of the United Nations Security Council and the decision-making processes there; the necessary transition of the role of NATO; the move by the USA and Russia to a nuclear test ban, which should be supported in a much more positive way, as I suggested; continuation of the important dialogues of the conference on security and co-operation in Europe; and reform of the World bank and other facilitating agencies, to which I know that my hon. Friend the Member for Southampton, Itchen (Mr. Denham) would like to refer if he can catch your eye, Mr. Deputy Speaker.

The ideas offered in the report, "Agenda for Peace", offer the best hope by far for world peace, and in the long run they will be the cheapest option. We must decide what role we must play and then allocate the resources to fulfil that role. That is why in another area we have called for a full-scale defence review, and that is why we ask the Government to address those urgent problems and provide the resources required to solve them.

5.20 pm

Mr. Richard Ottaway (Croydon, South)

I welcome the chance to speak in the debate, particularly because the evidence that was presented to the Select Committee was presented in late April and early May, and between that time and the Government's response, there has, of course, been quite a significant change in policy by the Overseas Development Administration. It has announced a substantial increase in funding for population programmes: the funding now available is at least £100 million over the next two years. It is not new money but a reallocation of funding. It has been made quite clear to me that we are moving away from spending on infrastructure projects and are targeting the relief of poverty.

The announcement made in July of this year was made very much in anticipation of the United Nations international conference on population development, which took place in Cairo in September, and about which I will speak in a minute. The emphasis is consistent with recommendations contained in paragraph 70 of the Select Committee's report, in which it refers to the changing nature of aid. Contained in that paragraph is the emphasis or recommendation that expertise be made available, through agencies such as the United Nations, to improve the effectiveness and cost-efficiency of international efforts to encourage sustainable development. I am pleased that, in their response, the Government have accepted that recommendation. It is probably fair to say that the Cairo conference was a macro presentation of the policy that the Government are prepared to set. As a Member of Parliament, I was a fairly rare example of a member of a UK delegation at a UN conference.

I pay tribute to the Egyptian Government for the way in which they laid on the conference. Some 18,000 delegates were there and it was held at the height of serious tension in Egypt—I was disappointed to see on the news last night that it still exists there—amid threats from fundamentalist terrorists to destabilise it. It is a tribute to the Egyptian Government that there was no incident whatever throughout the fortnight, as several Heads of Government were present. It was a very successful conference.

As I sat in the opening plenary session with my hon. Friend the Member for Banbury (Mr. Baldry), the Under-Secretary, who was representing the British Government, and as I heard the speeches of world leaders—from Mr. Boutros Ghali, the Secretary-General of the United Nations; Gro Brundtland, the Prime Minister of Norway; Benazir Bhutto, the Prime Minister of Pakistan; President Mubarak of Egypt; to Vice-President A1 Gore of the United States—which all came in the first morning, it struck me that everything that I and the British Government have argued for in recent years was at last being realised and was coming true. There was, of course—

Mr. Ernie Ross (Dundee, West)

There was only a slight difference.

Mr. Ottaway

Does the hon. Gentleman wish to intervene?

The hon. Gentleman asked from a sedentary position about the differences of emphasis. A perfectly good example would be Benazir Bhutto, who argued against abortion but fully accepted that population growth and the population explosion was a global problem which had to be addressed. In that, she differed from Gro Brundtland, but both countries signed up to the final declaration. That is what I mean by the change of emphasis.

President Mubarak, in his opening speech, said that the conference was not a separate event and that it should not be isolated from the past, that it was not something taking place in a vacuum, and that it had to respond to people's hopes and find common ground in open and free discussion.

The basis of the consensus was quite clear and, despite last-minute media criticism, there was quite clearly an overwhelming desire that the conference should succeed. The Group of Seven had asked it to come up with a solution to world population growth, and succeed it did. It has now produced a global action plan. The big difference is that, on that occasion, unlike 10 or 20 years ago, the developing world was there and asking for help. We now have common ground. Poverty is the challenge and sustainable development built around population programmes is the answer. The common ground was that there was a full understanding of the nature of the problem. There was an understanding of how to address it. There was an understanding that there are now clear definitions for aid and of the role that reproductive health can play in solving the problems, and an idea where the resources were coming from.

After all, it is quite clear that there are parts of the world, which, as a result of excessive population growth, face scarcity of resources, crime, tribalism, disease and unemployment, all of which are destroying the social fabric of societies. Rwanda is a classic example of a country in which a territorial dispute has been caused by overcrowding. The truth is that the stork is becoming the bird of war.

The conference took on a life of its own. Delegates came from all over the world, and I am pleased to tell the House that, under the chairmanship of my hon. Friend the Member for Arundel (Sir M. Marshall), the Inter-Parliamentary Union held a parliamentarians' day, where members present, from throughout the world, came and spoke in full support of the aims of the conference.

The extraordinary feature of the conference was the implacable opposition to its aims and objectives, sadly, from the Roman Catholic Church. I say sadly because I believe that the Roman Catholic Church recognises the problems that are faced by the world, but is simply unable to answer the fundamental question. What does one say to an African woman, living in absolute poverty with six children, who wants no more children? In the end, the Roman Catholic Church lost the argument, because it had no answer to that fundamental question.

The Roman Catholic Church did the conference a favour in that it kept the whole conference in the world's headlines for the best part of a week. Very few people to whom I have spoken since returning from Cairo in September were not aware that the conference had taken place. They are thoroughly aware now of the seriousness of world population growth—at some 250,000 new persons every day—and the significance of that conference.

The media reporting of the conference was first class. I find myself surprised to say that. The interesting reason for that—perhaps it is a lesson for many other areas of media reporting—is that the media were denied access to the main committees, because there simply was not room for the 2,000 members of the press present to go and listen. Reporters were forced to dig for their stories; they did not simply regurgitate press releases. They got in there and found out what the issues were. As a result, the reporting back from Cairo was far more sensible and more serious than much of the reporting that occurs in this country.

Mr. Waterson

With regard to my hon. Friend's previous point, does he accept that it was not just the opposition of the Roman Catholic Church to some proposals that caused controversy, but the similar opposition from an entirely different quarter—the countries in which a type of fundamental Muslim creed is held? Those countries were just as plain in their opposition to certain proposals as was the Catholic Church.

Mr. Ottaway

My hon. Friend is absolutely right. However, those countries placed a different emphasis. From the word go, Benazir Bhutto was prepared to support the conference's objects even though she could not support certain aspects which she felt were contrary to the Koran. However, having heard the opening day's speeches, I believe that the Vatican should have piped down. Instead, it went full profile in its implacable opposition to everything that was achieved.

I pay tribute to our ODA officials who staffed the United Kingdom delegation. Their professionalism, which was quite exemplary, was recognised by most of the other delegations at the conference. That professionalism, and the recognition of it, had great influence on the European Union position. If it is not a rather hackneyed phrase, it is fair to say that as a result of the quality of our officials, Britain was able to punch well above its weight at what I believe was a very significant conference.

I also acknowledge the role of the non-governmental organisations present in Cairo. For a long time, the NGOs have treated population issues very much at arm's length because they have been nervous about them. However, I am pleased to say that they have shaken off their hesitancy and have made a substantial input into the thinking on that subject. Anyone who left the main conference and went to the NGO forum would have realised that that was where tomorrow's ideas were coming from.

In his opening remarks, my right hon. Friend the Member for Guildford (Mr. Howell) emphasised the importance of bringing the private sector into aid programmes. Non-governmental organisations, such as Marie Stopes International, are advocating social marketing which basically involves persuading people to buy their own contraception. The social marketing of contraception in the third world is a good example of an area in which the private sector is beginning to play a role.

The NGOs made us address the question of reproductive health. They drew to our attention the importance of the education of women. As the hon. Member for Rhondda (Mr. Rogers) said, a great emphasis was placed on migration. There are about 30 million homeless people travelling around the world. However, perhaps the hon. Gentleman would acknowledge the fact that that is largely the result of over population. The United Nations Fund for Population Activities report which was published last year drew attention to that point.

The most significant thing to come from the conference in Cairo was the issue of empowerment of women. Everyone concerned about that subject now realises that unless women become empowered—(Interruption.] Before the Government Whip, my hon. Friend the Member for Gedling (Mr. Mitchell), becomes too nervous, let me say that I mean by that that women should have the right to decide whether they want to use contraception and whether it should be available. That is the kind of language that came from the Cairo conference, which should be carried forward to the Beijing conference on women's issues which is to take place next year.

I met a female Nigerian Member of Parliament at Cairo who told me that she had six children, and that she had come to Cairo to ensure that she did not have 36 grandchildren. I am proud of what the British Government have achieved. I believe that, as a result of our efforts, she will not have 36 grandchildren. It is important that we build on the success of Cairo and that we implement the action plan, which has been agreed by hundreds of countries. For the future's sake, we must not relax our efforts.

5.34 pm

Mr. Greville Janner (Leicester, West)

I am sure that the hon. Member for Croydon, South (Mr. Ottaway) will forgive me if I do not follow him down the path of contraception. Instead, I want to stick to the absolutely first-class Select Committee report, to which the Committee received a very second-rate answer from the Government.

I have visited vast numbers of diplomatic posts in my work with the Employment Select Committee, or privately or on behalf of the Jewish community. I have always been impressed by the standards of our diplomats and the service that they provide. On the whole, they do an absolutely first-class job, often in difficult and dangerous circumstances.

I mourn the dreadful killing of one British citizen, and the injuring of others, in Egypt. I mourn the death of my friend, Gamini Dissanayake, who was murdered yesterday in Sri Lanka, along with some 50 other people. We salute him and we send our condolences to his widow and to the Sri Lankan people. I mourn the awful killings in Israel last week, the murders of the people on the bus and of Sergeant Wachsman.

All over the world, there are those who believe that by murdering civilians, they can kill peace. They are wrong. In the process of being proved wrong, they cause misery in a world of danger. Our diplomats live and serve in that world of danger and we are proud of them.

Paragraph 78 of the Select Committee report is right. It states: The budgets for the Foreign and Commonwealth Office, the Overseas Development Administration, the BBC World Service and the British Council have been cut significantly for the next three years. All provide impressive services despite these financial cuts. It will not however be realistic to expect them to go on providing services as good as they now provide if they have to suffer repeated reductions in resources. We recognise that resources are no substitute for well-focused policy. However, we urge that the redefinition of the United Kingdom's interests, policies to further those interests and the deployment of resources in the service of these policies should go hand in hand. I have searched the Government's reply for a reference to that paragraph, but there is none. I looked for a reference to the earlier paragraphs on which it is based, but there is none. The Government's response ends at paragraph 77. When I turned over the page to paragraph 78, that page was blank.

I appeal to the Government to listen to the unanimous report of a very respected Select Committee, not just to reply to those parts with which they immediately agree, but to seek ways in which they can respond positively and maintain the resources to enable our diplomatic corps and the organisations surrounding it to do their job.

The Government's normal reaction is to say, "Oh well, we must assess the results." Unfortunately for the Government, diplomacy is not like a school or a hospital, in respect of which they can issue tables of attainment. It is not a matter of saying how many Bulgarian anglophobes have been turned into anglophiles in how long, over what period and with what results.

Diplomacy is not a shop. I am aware that the foreign service draws inspiration from Marks and Spencer, but it cannot calculate sales of British policy per square foot of shelf space in any of our great residences or embassies. It is not possible to make assessments like that. Assessments can be made in three ways: respect, human rights and business.

The respect in which our country is held abroad greatly depends on the work of the diplomatic corps. In its turn, that depends much on the resources that the Government are prepared to allow it. The closure of fine embassies is no answer when we want to retain respect, or especially when we want to use that respect for political purposes, to maintain Britain's place in the Security Council and to achieve the political results that we all want from our diplomatic corps.

I pay tribute to the great efforts of many of our diplomats working in countries in which human rights traditions are rotten, nil or very defective. Often, they handle delicate cases, and often they succeed. I know how much help not only Jewish people but many others obtained from our diplomats when the Soviet Union was a dictatorship. I know how many others today depend upon our embassies for a form of decent insurance in a thoroughly wretched world. Our diplomats sell Britain and our products.

Recently, I travelled with the Employment Select Committee to Finland. For the first time in my life, I went on board the much-criticised royal yacht Britannia. There were no royals on board, the ceremonies were all very proper, and it was an interesting day. The royal yacht attracted top Finnish industrialists to enable us to talk to them about Britain and to promote our trade. We cannot assess the effects of that. Later, when the Royal Marine band beat the retreat, hundreds of important Finnish people were looking at something that Britain was providing them with, which was a release from the usual boring ceremonies that most countries offer on their national days.

I asked the Foreign and Commonwealth Office whether there was a way in which we could assess its impact on sales. It came up with an answer—in September a contract was signed between BP and the Republic of Azerbaijan estimated to be worth about $8 billion. The chief executive of BP wrote to the permanent under-secretary, Sir John Coles, saying that it would not have been possible to sign the contract without the FCO's help and representation in Baku. He gave permission for that to be quoted.

In the autumn of last year the embassy residencies in Paris and Rome were used for the successful launch of the Rover 800, one of the most successful epochs in British motor manufacturing. All over the world, our embassies and our residencies are being used to promote our commercial interests, and the Foreign and Commonwealth Office is on our side.

My favourite FCO story involves the tourist who was standing in Whitehall and who said to a policeman, "Excuse me, but which side is the Foreign Office on?" The policeman replied, "Well, madam, it is supposed to be on our side, but I sometimes wonder." I have had wonderings, particularly about middle east policies. I have had arguments; we do not always agree. On the whole, though, our diplomats do a smashing job. It is not sufficiently recognised that they are being asked to do that job with smaller embassies and less impressive means to impress more impressive and less impressed foreigners.

While our strength diminishes, it is the height of stupidity to say to other people, "Look how small we are; we aren't great any more. We can't afford a decent embassy and we can't even afford to entertain," and then expect overseas business people and politicians to treat us as though we were still Great Britain.

We should not beat the retreat on our overseas strength. We should not cut our wonderful BBC World Service, which has a reputation for honesty which it does not always deserve but which is believed by people all over the world, as a happy relic of the war. We should look to the Commonwealth Secretariat and say, "Yes, we saved it; isn't that good?" We should build our overseas resources and accept that the Foreign Affairs Select Committee report is an excellent one that the Government should implement.

5.43 pm

Mr. Nigel Waterson (Eastbourne)

I should like to refer to three aspects of an excellent and workmanlike report, such as we are used to seeing from the Select Committee: first, support for British trade promotion abroad; secondly, cultural diplomacy, which right hon. and hon. Members have mentioned; and thirdly, rising to the bait of the hon. Member for Rhondda (Mr. Rogers), Hong Kong.

On trade, I always believe that the old jokes are the best. I enjoyed the rendition by the hon. and learned Member for Leicester, West (Mr. Janner) of the story about the Foreign and Commonwealth Office.

Mr. Janner

It was a classic story.

Mr. Waterson

It was a classic story, rather like a classic automobile. I wonder whether the hon. and learned Gentleman remembers the story attributed to Lord Tebbit, who is reported to have remarked that the Minister of Agriculture, Fisheries and Food looked after farmers and the Foreign and Commonwealth Office looked after foreigners. It that was true, it is certainly no longer the case. In travelling around the world both before and after I came to this place, I have found that the Foreign and Commonwealth Office is very much on our side, in particular on the side of British business and industry. There is great support for that in the report.

The thrust of the report is the background of reducing resources and how they are being used to best effect as they are cut. In paragraph 18, the Committee says that the FCO is making considerable use of new information technology after what it describes as a shaky start. I particularly commend the reduction in the number of home staff, so that the teeth rather than the tail of the Foreign and Commonwealth Office are better deployed abroad.

One of the most convincing sections of the report relates to the increasing demands on all levels of the diplomatic service. Nowhere is that more evident than in the size and number of our overseas posts. It is impressive, albeit in attempts to reduce financial commitment, that in our policy of closing or scaling down some overseas posts, we recognise areas where our trade interests are most important. I am pleased that the report recognises the growth of representation in our far eastern posts. That is an area of almost limitless potential in terms of our exports and selling expertise abroad.

I now refer to the service that we provide for business men. Much of it has to do with the messages that we politicians send to career diplomats. There was a time—happily, long gone—when being assigned to the trade aspects of diplomacy was regarded almost as punishment, or the diplomatic equivalent of being sent to Siberia. Recently, that has changed.

It is difficult for right hon. and hon. Members when they travel the world not to be impressed by the expertise and commitment of staff in many places around the world, working for the FCO in promoting British exports. It is also impressive to see the almost seamless way in which they co-operate with the Department of Trade and Industry in trade promotion. There has been enormous improvement in recent years, but there was plenty of scope for improvement.

I shall say a word about the messages we send. Opprobrium is no longer attached to people going into trade diplomacy, but I sometimes wonder, when speaking informally to diplomats, whether there is enough career benefit in spending time on it. Every diplomat who wishes preferment or promotion, especially so-called high fliers, should show that he has spent a significant period in trade promotion at one of our overseas posts. Only then will the business-oriented culture, which the hon. and learned Member for Leicester, West supported, permeate upwards through all ranks of the FCO. That is extremely important.

Before I leave that subject, I shall talk about the costs of such an enterprise. It is, by definition, something that we cannot share with other countries. The report makes the point—if it needed making—that we are doing a great deal to share costs with our European Union partners in representation abroad, and that is as it should be. For example, sharing premises in Kazakhstan, which are used by the visa sections of Britain, France and Germany, is a sensible way of spending our resources more wisely, especially with the growth in the number of places where we must be represented following the breakdown of the Soviet Union as we knew it.

Pre-eminently, one area where the sharing of costs simply is not possible is that of trade and exports. Paragraph 27 of the report states: These new developments may demonstrate a paradox facing diplomatic services of EU member states: on the one hand we recognise that in certain matters such as common visa requirements or common stances taken by the EU … they will increasingly be working together … On the other hand there will always be circumstances when national policy interests will prevail, in some cases in a highly competitive way: some of our EU partners are among the UK's main commercial competitors. That is so true. As we have a scaling down of expenditure in some areas, and a scaling down of representation in some parts of the world, it is vital that we recognise that trade promotion and exports must take a larger share of a somewhat declining cake.

My second area of concern is so-called cultural diplomacy. Hon. Members have talked about the importance of the British Council and the BBC World Service. I am especially pleased that the report makes an effort to highlight the importance of those media in our relations with China. It is a sad fact that grant in aid to both the British Council and the BBC World Service is being reduced in real terms. We know that the British Council has embarked on a radical restructuring process. Despite that, there is a great deal to be said about the sort of process that it is going through; many organisations need some outside impetus to engage in such a massive review of their commitments and aims.

As one travels behind what used to be called the iron curtain, it is difficult not to be impressed by the way in which the British Council has moved rapidly and effectively to represent itself in these places. Recently, I had the benefit of visiting the council's posts in the former Czechoslovakia, particularly the Czech Republic. Support in the local community for the council's presence was impressive.

The British Council was shut down in 1948 and reopened only a few years ago. It was somewhat alarmed to find that some people were trying to return books that they had borrowed in 1948, and were worried about the size of any possible fines. I am pleased to say that the fines were waived in the circumstances.

A tremendous feeling for Britain and the British way of life has been generated by the British Council. I wonder whether, because of budgetary constraints, the council has been obliged to look not at those countries where perhaps one could not say that its task was over—by definition, its task is never complete—but at those where it has gone an enormous way to reaching the local population, and perhaps where other media are effective. It has had to swing many its efforts and some of its best staff to new, almost virgin territories. The British Council is nothing if not impressive when one sees it up close.

I turn now to the subject of the BBC World Service. The significance of World Service radio is legendary throughout many parts of the world. The response of the Foreign Office to the report states: As part of its support for United Kingdom commercial services, the FCO will continue to help World Service television extend its services in all overseas markets, including China and to achieve its aim of world-wide coverage. There is a tremendous opportunity for expansion of both the scope and the nature of programming of World Service television. As I travel around looking at CNN, I sometimes wonder what World Service television could achieve with CNN's budget. I will not go on to say what I think CNN is doing with the budget it currently enjoys—that is a matter for another debate—but it is an example of what can be done on a relatively small budget.

The Government are correct in letting World Service television develop on a commercial basis, but they make the point that they want to encourage its growth in many areas, especially in places such as China. It is difficult not to be impressed by the potential and the current performance of World Service television. Some time ago, a decision was taken in principle not to fund television as such, whereas radio receives a grant in aid. However, the Government must do everything they can to ensure that World Service television has the commercial backing to become an even bigger player in international television.

When I check into an hotel in a strange country and turn on the television, I certainly get a boost when I find that the World Service, as well as CNN, is available—[Interruption.] I am careful to register that fact on my return to the United Kingdom. I mean CNN no harm, but sometimes it is a bit like electronic wallpaper; the World Service gets more to the heart of the matter. I endorse the response of the Foreign Office on the subject of cultural diplomacy.

We should not lose sight of the importance of World Service radio, although it has cut its operations in some areas and its programming in some cases. It has been broadcasting in new languages such as Azeri and Uzbek, and increasing its broadcasts to some parts of the former eastern bloc. Those are grounds for optimism and approval by the House.

Finally, I shall touch on the subject of Hong Kong. I had not intended to raise the subject of Hong Kong this evening because, frankly, I did not think that it came within the ambit of the debate. However, as it was referred to at some length by the hon. Member for Rhondda, it is only right that I take up some of the points that he made as the Opposition spokesman.

The hon. Gentleman called for a solution. Who could disagree with that? If only it were that simple. Recently, I was in Hong Kong as a guest of the Government, and had the chance to meet a whole range of people, including the Governor, to discuss the present position.

My first point is that there is progress at certain levels on a number of projects. The airport project is proceeding in some respects. However, as we know, there has been little progress, if any, through the Joint Liaison Group, despite the efforts of both the Foreign Secretary and the Governor of Hong Kong. Recently, in a speech to the Legislative Council, the Governor suggested that the United Kingdom and the People's Republic of China should draw a line under recent events and try to make a fresh start. That will be difficult.

As I told the hon. Member for Rhondda, the main difficulty is that attitudes in Hong Kong changed in 1989 following the events in Tiananmen square. A sort of democratic enthusiasm was awakened. Attitudes in Peking also changed because the leadership got a tremendous shock from the events in Tiananmen square and, to some extent, the apparent support for the students there from many people in Hong Kong. That is what has blighted relations between China and the United Kingdom since that date.

It is simplistic for people, including some members of the business community in Hong Kong, to attribute problems that have happened since events in Tiananmen square to the arrival of a new Governor. That is far from the truth. The truth is that the foundations for the present misunderstandings and lack of progress were laid in the tragedy of Tiananmen square.

Even if there is a will, as I am sure there is, on the part of many leaders in Peking to make progress now, there is a difficulty in that there is a sense of paralysis in the Government of the PRC. I do not believe that much progress will be made for the foreseeable future unless there is a change of leadership. Such a change is inevitable at some stage.

Therefore, we must simply press on as best we can with the nuts and bolts, whether by trying to progress the airport project, tidying up the statute book or whatever. We must deal with many of the practicalities which have to be tackled sooner or later.

Despite the occasional churlishness of the Chinese Government, we shall bequeath them in 1,000 days or so a vibrant economy, a fairly new but enthusiastic democratic system, reserves which are several times greater than those we promised to leave behind, and a new airport and associated infrastructure which will be the envy of the rest of the world. If they choose to regard all that in a churlish light, perhaps there is nothing much that we can do about it, yet we have a duty, as the hon. Member for Rhondda said, to the people of Hong Kong. I believe that this Government, this country and this Governor have done everything possible to ensure a smooth and peaceful handover of that miraculous state of Hong Kong to the People's Republic.

On that note, I again congratulate the Select Committee on its report. It is timely, workmanlike and detailed. We look forward to future reports of that Select Committee.

6.1 pm

Mr. Charles Kennedy (Ross, Cromarty and Skye)

I do not envy the Minister's task in replying to the debate. It has certainly ranged freely across a variety of issues, many of which have gone beyond what is within the blue covers of the report. There has been a certain lack of focus to some of the discussions.

The hon. Member for Eastbourne (Mr. Waterson) made some observations vis-à-vis Hong Kong, which was also mentioned by the hon. Member for Rhondda (Mr. Rogers) from the Labour Front Bench. Perhaps the one clear message that emerges from this small debate on the Select Committee report is what my colleague the Liberal Democrat Whip said in business questions last Thursday. There is clearly a pressing need for a full-scale debate on Hong Kong. I hope that that message has been communicated to the Foreign Office and the Government business managers, and that we can have such a debate in due course.

The hon. Member for Eastbourne said that what the Opposition Front-Bench spokesman had said was too simplistic. Equally, it is too simplistic to say that all the problems stem from Tiananmen square. When one goes to the far east and speaks to the Chinese representatives, one is left a little short for an answer when they say, "If the British now regard democracy as so overwhelmingly important, why did they take 150 years to do anything about it?" That is a good question, to which there is no immediate answer. It is not an issue that we can explore in this debate, but I underscore my view that today's debate has revealed so much parliamentary interest in Hong Kong on both sides of the House that we want to see it discussed further.

I pay tribute to the right hon. Member for Guildford (Mr. Howell) for his chairmanship of the Select Committee, and to his colleagues for their excellent work in producing this detailed summation. An important summation of information it is, too. I wish to concentrate on two broad areas—first, the trends and developments that we have seen in overseas aid expenditure; and secondly, the cultural aspect, not least the BBC World Service.

The findings of the report show that, as a share of national income, British international aid expenditure continues to fall well below the United Nations target of 0.7 per cent. of gross national product. Britain's current commitments total a mere 0.31 per cent. of GNP. One must bear in mind the fact that 0.7 per cent. is not in itself the most optimistic or ambitious of global targets. My hon. and learned Friend the Member for Fife, North-East (Mr. Campbell) pointed out to me earlier that, several decades ago, the target was 1 per cent., so the ambition that had been set had fallen.

As a nation, we are not even meeting half the stated target. That surely is a matter not only for regret but for considerable shame. The freeze on the aid budget means that in real terms Overseas Development Administration expenditure is set to fall fairly rapidly in the next three years. That raises a question about the priorities of the Government. That development will pose a serious threat to the amount of bilateral aid allocated to the poorest countries, especially in Africa, because such aid is the first to fall under the Government's axe when they seek to comply with European Union targets.

The ODA has insisted that the cuts in the bilateral aid programme will not affect existing commitments to the neediest, yet its own figures suggest that Africa stands to lose some £60 million, and that Asia, which has also been touched on in our discussions this evening, will lose a further £31 million. That is disgraceful in humanitarian terms, but it is also self-defeating for the interests of Britain internationally, as the hon. Member for Rhondda said.

If one goes right back to the work that was done by the Brandt commission, the thesis remains intact and valid that, as well as a moral need to help those parts of the globe that do not enjoy anything approaching reasonable living standards—quite the opposite—we have a long-term self-interest in providing aid. It makes sense for Britain to be seen as not merely generous but enlightened by plugging our economy into the emergent economies.

Such countries sit on greater natural resources than we command, not only in and around our shores but in the western world as a whole. It will become essential to our interests to have good relationships and good economic co-operation with such countries. In a spectacular, international, sense we are cutting off our nose to spite our face by reducing overseas expenditure. That is the first point, and the general point.

The second, more specific, point is cultural diplomacy, which has already been mentioned by several hon. Members, and not least the BBC World Service. Except among those who perhaps follow the more detailed media pages in some of the better newspapers, it is perhaps not appreciated that it has been a massive setback to BBC World Service television to have been excluded from Rupert Murdoch's Star satellite services in the far east.

We are talking about, in China alone, 1.2 billion people—between a fifth and a quarter of the world's population. That is an enormous market that will inevitably open up. One needs only to go over the border to Hong Kong and the special development zones to see the rapid commercial transformation that has taken place in the past decade.

The Governor of Hong Kong was correct to acknowledge recently that mass communication made dictatorship more difficult. That is true. The more that people see, not least through the medium of television, what can be available and what living standards are regarded as the norm elsewhere, the more people will demand that of their rulers, and the more a regime such as that in China will become unsustainable when it goes through its next change. All that means that the World Service is of particular import in broadcasting accuracy and the truth.

If we had asked people a few years ago in an international opinion poll what they rated most highly about Britain—we will leave aside the monarchy, which is a sticky subject at the moment, for these purposes—they would probably have named our university system, our national health service and the BBC World Service.

Two of those services have not fared happily under Conservative Governments in the past 15 years and, increasingly, the World Service is not faring so well either, as the figures in the report make clear. Given current fevered comment in and around the Lobbies about interests, I suppose that I and the hon. Member for Newham, North-West (Mr. Banks) should place on record the fact that we have a degree of interest in that we occasionally contribute to the World Service and receive a few pennies or ecu for doing so.

Internationally, the World Service is taken as a yardstick of all that is best in this country—a sense of fairness, accuracy and fair play. Frankly, it is almost impossible to put a price on the importance of that role.

The Government are consciously diminishing their support for the radio side of the service. The television sector now has to be funded independently and commercially; as a result, it has lost out in terms of clout and access to the Asian Star service satellite. That is a severe setback for the World Service and for what it represents, but it is also a severe setback for this country's interests.

In conclusion, there are genuine and deep grounds for concern over what the report reveals about the Overseas Development budget, bilateral aid and the BBC World Service. The paucity of the response in the Foreign Office memorandum also gives grounds for concern. The Minister has a fairly broad remit to respond to; I hope that he will be able to go further, and do so more convincingly than the memorandum was able to do in response to this excellent and comprehensive report.

6.12 pm

Mr. Ted Rowlands (Merthyr Tydfil and Rhymney)

The hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) mentioned the roles of the BBC World Service and of the British Council and there is consensus on the enormous importance and value of those institutions.

I shall draw hon. Members' attention to two issues highlighted in the report, one of which also concerns an important institution—this place. I cannot find a single precedent in the history of the British Administration for the fact that more than half the expenditure of a major Government Department will be spent outside the control and scrutiny of this House. That fact should not merely be allowed to pass and noted with some interest. Irrespective of the merits of the case, for the next 18 months more than half the expenditure of the Overseas Development Administration will be outside the power, scope and scrutiny of the Public Accounts Committee. I am old-fashioned enough to believe and have always understood that the origins of this place were rooted in our scrutiny of public expenditure, yet the report identifies the fact that a huge and significant area of public expenditure will be beyond the scope of the Public Accounts Committee and therefore of parliamentary scrutiny.

I am sure that you have often emphasised to groups of people and organisations, Mr. Deputy Speaker, our exclusive rights over taxation and legislation—neither of those rights is now exclusively confined to the House. I am sure that you will also have explained the fundamental issue of scrutiny of public expenditure. Yet, the report states that more than half the expenditure of one Department will not be subject to scrutiny by the PAC or to the sort of scrutiny that those of us who have been brought up in the parliamentary tradition will want to uphold, and it appears that that aspect of the report will pass relatively unnoticed. That fact has been compounded by the way in which it was done.

The report identifies our annoyance and agitation. The Committee was vigilant on European issues. We spent much time asking Foreign Secretaries to come before us before European Council meetings and we tried to bring them back afterwards. Yet, the decision to allow that extraordinary situation—more than half ODA expenditure will now be spent by others and will not be subject to the scrutiny of the House—was made at the Edinburgh summit in 1992, as part of a horse-trading arrangement. We were not told beforehand that it was possible or likely and we were not told afterwards that it was a consequence of those decisions. On both scores, a serious parliamentary issue arises from the decision and we have sought to identify it in the report.

I know that other hon. Members wish to speak, but I must briefly mention another question thrown up by the report. Increasingly, our annual reports on public expenditure by the Foreign and Commonwealth Office provoke the question: what value do we place on diplomacy and how do we evaluate it, given the pressures on that expenditure?

My hon. and learned Friend the Member for Leicester, West (Mr. Janner) spoke eloquently of some of those values, but historically the image of the Foreign and Commonwealth Office has not lent itself to public sympathy. I recall vividly that when I was first appointed as a Minister in the FCO I felt rather pleased with myself and rang my wife to tell her. I got a very frosty reception. She asked why I thought that it was promotion or progress to move from being a Minister dealing with housing, health and roads, to get caught up in the world of foreign affairs and diplomacy and to join an establishment that belonged essentially to the English upper middle class—historically, the Foreign and Commonwealth Office and its staff have had that image.

By the end of the week, I thought that I had got over the problem. I went home and my wife asked me what I had done in my first week. I said that she would not understand as I had been dealing with a complicated problem concerning the Banabans—the inhabitants of Ocean island. My wife replied, "I know all about that. There was a television programme on it this week. The FCO and the Government are doing them down and depriving them of essential interests."

An early lesson for any Foreign and Commonwealth Office Minister or official should be that foreign policy is understandably and rightly perceived in terms of human, civic and civil rights, especially where the position of British citizens is concerned. I quickly learnt that lesson afterwards, when Dr. Sheila Cassidy was tortured by the Chileans and Mrs. Dora Bloch disappeared in Israel, and by spending four and a half years dealing with our relationship with the Argentines over the Falkland islanders. One rightly learnt the lesson that people matter in foreign policy, just as they matter in domestic affairs. Consular diplomacy is as much a matter of profound concern as commercial or grand diplomacy.

If the Foreign and Commonwealth Office is to defend its share of the cake and fight its corner, it has to work on its public image. During my four and a half years in the Department I found that the general perception was not correct. In that large and elite service there were many people who came from more diverse backgrounds than was generally perceived. There is no doubt that the public perception is that of a service that is not in close touch with the needs and wishes of the British people and of Britain.

Secondly, the report asks how, in this day and age, the Foreign and Commonwealth Office determines the British national interest when its 2,500 staff decide how to spend £350 million in overseas posts. The decision was much easier when we had an empire because the scope and nature of our power was evident for all to see—it was part and parcel of the whole ethos. The empire had a proper dimension, which politicians and Governments of the day could utilise. In a post-imperial society—economically, almost a post-industrial society—it is much harder to identify British national interest. I must draw hon. Members' attention to an interesting exchange when the permanent secretary had a good shot at trying to identify why we should have a post in Uzbekistan. We asked him why and whether it would be of value. He said that it would and that we had just received a state visit from the President of Uzbekistan. The permanent secretary thought that he had brought all his gold over in the plane and delivered it to the Bank of England. That was a fascinating illustration of the so-called "British national interest" being defended by our having a mission in Uzbekistan. There will be increasing questioning about the nature and character of our representation overseas as the pressures grow. What is the value of diplomacy in the 1990s and what role does the expenditure of the FCO play?

Not long ago, a British Prime Minister said: How horrible, fantastic, incredible, it is that we should be digging trenches and trying on gas-masks here because of a quarrel in a far-away country between people of whom we know nothing. That was a statement about Czechoslovakia, which is now on the verge of belonging to the European Union. Traditionally, the country was at the heart of European civilisation in the 17th and 18th centuries. Anybody who has been to Prague has seen the wonderful physical expression of the counter-reformation. The Prime Minister expressed that view about Czechoslovakia within the lifetime of a number of Members of this House, and no doubt a similar view was expressed about Sarajevo in 1912 also.

One answer to the questions is in the Committee's report. International issues are now transmitted by television and become issues of public concern and, in themselves, become a motive for action. The United Kingdom's contribution to expenditure on peacekeeping is rising from something like £177 million to £310 million. Again, that aid and expenditure is outside the control and scrutiny of the House. Nevertheless, that has been partly engineered and driven by external events which have often been projected vividly through the media with resulting public and political pressure.

The telescoping of international experiences places consequential demands upon Governments to do something. How many times have we heard this summer, "Why is not the international community doing something about Rwanda?" I do not think that we have a post in Burundi or Rwanda in central Africa, but suddenly a faraway place about which little was known became a major international issue of profound concern.

The other case for diplomacy which we make in the report—although not necessarily in the way in which it is organised now—is of course the post-cold war situation. It strikes me that cold war diplomacy was comparatively easy in many fundamental respects. Since then, not only has history come back into fashion, but I suspect that diplomacy has come back into fashion in a big way as we interpret and work out a more stable international order through diplomatic and political action.

A 75-year-old man or woman in our constituencies will have lived through two world wars. Churchill said that to jaw-jaw is better than to war-war". "Jaw-jaw" requires diplomacy and political action, rather than military action. As a consequence, there will be a revaluation of the importance of the role of diplomats and diplomacy. It is vital that, in the coming years, the nature and character of, and recruitment to, our British Foreign and Commonwealth Office service matches and reflects needs—not only of Britain—as well as the role which we would expect it to play in an increasingly complex world.

6.23 pm

Mr. Mike Gapes (Ilford, South)

Many things have been mentioned which I do not wish to repeat, but, in the short time available to me, I shall look at two aspects of the report of the Select Committee of which I am a member.

Reference has been made to the reductions in overseas bilateral aid to Africa. Paragraph 38 of the report makes it clear that that is a serious problem. This country's bilateral aid to Africa is to be reduced by £60 million, or 17 per cent., between 1994–95 and 1996–97. Significantly, the report also points out that there has been a reduction of 8.7 per cent. in the number of diplomatic personnel in Africa since 1989.

Hon. Members have talked about Rwanda and Burundi, and we could draw similar parallels with other countries in west Africa and the horn of Africa, and potentially even in southern Africa and the Maghreb region, where events could have profound political consequences for the European Union, this country and the rest of the world. But we will be relying—in francophone Africa in particular—not on our own intelligence, contacts and diplomats, but on information that is provided by other countries. That is not the way in which a permanent member of the UN Security Council should behave in the future.

During the questioning of the officials from the Overseas Development Administration and the Foreign Office who came before the Committee, Mr. Vereker said that we shall be able to play a rather less substantial part in the development of the African economies. What does that mean in terms of the infrastructure that is forgone, water supplies which are not provided and lives which are lost in poor countries with the poorest people in terrible conflicts or in areas of drought and malnutrition? The Committee was told by Sir David Gillmore of the Foreign Office that increasingly our diplomatic representation is trade-driven. It is all very well for this country to have the best possible people in our missions in Asia and elsewhere, where there is expanding economic potential. But if we see our foreign policy and diplomatic representation solely, mainly or to a considerable extent driven by economics and we do not take account of politics, we can get into serious problems.

There is a danger for this country. If we are to have the diplomatic service and the weight in the world which goes with being a permanent member of the UN Security Council, we must say loud and clear that that has costs. It is important that we provide resources so that we are in touch with developments in all regions of the world and in all potential areas of conflict.

The UN Secretary-General, Boutros Ghali, pointed out to members of the Foreign Affairs Committee at lunch today that a world of 184 member states of the UN requires us to have a much higher level of diplomatic representation and involvement than in the simple days when the UN was established and there were 40 or 50 states. If this country is, to quote the Foreign Secretary, to "punch above its weight", we must make sure that it has at least a certain amount of weight so that when it does punch, it does not topple over and fall on its face.

The slimming down of the Foreign Office and of our overseas development aid has political and economic consequences, not simply in other countries but in terms of Britain's standing in the world. I agree with the right hon. Member for Guildford (Mr. Howell), who said that we need to re-examine our aid policy. But, in my view, that re-examination should not be on the basis of trying to challenge or reduce the welcome increase in commitments to the UN or to multilateral aid programmes, although the scrutiny and the democratic accountability of those commitments—particularly through the World bank, and with the European Union and Parliament having a greater say—should be improved. The real answer is not to run down or hold back multilateral aid, but rather to recognise that, proportionally, this country spends just 0.31 per cent. of its gross domestic product on aid in comparison with Norway, Sweden, Denmark, the Netherlands and other European countries which exceed the United Nations aid target of 0.7 per cent. In fact, Norway spends 1 per cent. of GDP on aid.

This country should be at the forefront of the contributor countries. Our young people are concerned about the atrocities, bloodshed and starvation suffered in countries as widespread as those in the middle east, Europe or Africa. I am sure that, in time, those young people will influence politicians and make us raise our eyes above the immediate to the future of the continent and the planet.

The response of the Foreign Office to our report is regrettably inadequate in a number of respects. Next year, I hope that it will give a more detailed response to the many recommendations that we will make.

6.30 pm

Mr. John Denham (Southampton, Itchen)

I congratulate the Select Committee on Foreign Affairs on its report, but I should like to draw attention to an issue that should command more attention from the Committee in the future—effective scrutiny of our expenditure on the World bank.

The Committee's report reveals that the underlying level of support to the World bank has grown to about £200 million a year. That is less than Britain's expenditure on bilateral aid or that given through the multilateral channel of the European Community, but it would be a mistake to think that the influence exerted by the expenditure of the World bank can be judged solely by the amount given. The money spent on developing countries by the World bank group has significantly greater leverage than that spent through our bilateral aid or aid from the European Community.

Those who have met people from developing countries can confirm that they rarely talk about the defining influence of British bilateral or European Community aid; rather they frequently speak about the defining influence and impact of the structural adjustment loans from the World bank and those given by the International Monetary Fund. The way in which projects and macro-economic policy, including trade policy and public expenditure, are developed is the dominating influence in many developing countries.

To concentrate on the poverty focus of the British bilateral aid programme or that of the European Union aid programme makes little sense if the overriding effect of the World bank's structural adjustment policy is cuts in health and education expenditure. The World bank's own report on the impact of its structural adjustment policy in Africa has already identified that problem.

The role of our Government in the World bank should be subject to more effective scrutiny by the House than that currently offered. The World bank group recently launched an astonishing attack on Oxfam and other British non-governmental organisations, but we have no way of knowing whether that attack was agreed by the United Kingdom's executive director to the World bank. Was it made on the instruction of Ministers from the Foreign Office and the ODA? Were they consulted about whether British taxpayers' money should be used to launch an attack on our most respected NGOs? The truth is that the House has no effective control over or scrutiny of the work of the British executive director. We do not know what instructions that person receives from our Government.

We lag a long way behind countries such as the United States, Canada, Switzerland and Germany, which have established different but effective methods of regular parliamentary scrutiny of the role of their executive directors within the World bank group. In due course, I hope that the Select Committee on Foreign Affairs will find time to consider our ability to scrutinise effectively our representation at the World bank. I hope that it will consider whether that representation should be the subject of an annual report and regular monitoring by the Committee, to be followed by a regular debate in the House.

6.34 pm

Mr. Tony Banks (Newham, North-West)

I should like to raise a subject that is as important as most of those that we have already discussed tonight—the terrible threat to the existence of the tiger.

I regularly table questions to the ODA about the amount of funds that the Government are prepared to make available to those countries that are desperately trying to preserve their rapidly disappearing tiger populations. In a written reply on 18 July, the then Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs said: In recognition of the fact that tigers are endangered, we would be prepared to consider providing support for tiger conservation."—[Official Report, 18 July 1994; Vol. 247, [...]. 30.] The Minister of State is aware that the tiger is already endangered. At the turn of the century, there were between 80,000 and 100,000 tigers; now, there are just 5,000 tigers in the 14 range states–95 per cent. of them have been wiped out during the course of the century. That is a calamitous state of affairs. So many people in this country and around the world would applaud the British Government taking whatever action they could to help those countries, particularly India and Russia, which are doing their best to try to preserve their tiger populations.

Tigers are disappearing so fast because of illegal poaching. The Convention on International Trade in Endangered Species, CITES, has made it illegal to trade in any tiger products, but that trade still goes on. One must point the finger at the country that is primarily responsible for that trade—China. Because of its demand for tiger bone products and other parts of the tiger, China is almost solely responsible for the decline in the tiger population.

Hong Kong, South Korea and Singapore are also assisting in that dastardly scheme. Wherever there is a Chinese host population or a Chinese expatriate community, there is a demand for tiger products, which is unfortunately leading to ever increasing poaching of that magnificent creature. Even in London, if one visits Chinese pharmaceutical shops in Chinatown, one can buy tiger bone products. That is lamentable, because we could do so much to enforce the CITES ban ourselves. It should be our responsibility to set an example.

The British Government could do many things to stop the decline in the tiger population. For example, they could offer support to Russia, which is attempting to preserve the Siberian tiger. India has already rightly demanded assistance from us. In the past, politicians from this House—we mentioned some of their names earlier—visited India to shoot tigers. Can we imagine anything worse? People went there just to take pleasure from shooting tigers. Such hunting was partly responsible for the decline in tiger population.

Although people no longer shoot tigers and put their heads on the walls of their homes, tigers are being poached to provide products with spurious claims about providing greater potency among males. I should have thought that, with a population of 1.3 billion, the last thing the Chinese would want is males with greater potency. It is also claimed that tiger products can help to heal wounds. That may be helpful to a person who has been wounded, but to think that a noble tiger must be killed to provide someone with a plaster is obscene.

The British Government could and should offer material and financial support to those countries that are trying to preserve their tiger stocks. Ex-service Land Rovers would be welcomed by those countries, as would uniforms and field equipment. We might even get something from the peace dividend by asking some of our well-trained troops to assist those countries' various anti-poaching forces. Such help is important and needs to be considered by the Government. I ask the Minister to respond to my request when he replies to the debate.

6.38 pm

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

My right hon. Friend the Foreign Secretary has already welcomed the report by the Foreign Affairs Select Committee on the spending plans of the Foreign and Commonwealth Office and the ODA, and I very much welcome this opportunity for the House to debate it.

As always, the Committee has produced a thoroughly readable, thoughtful and balanced report. It brings much experience and expertise to its work, and we value its comments and its support for the work of the Foreign Office and the ODA. The Government's considered response to the Committee's report has been published as a Command Paper, and has been available to hon. Members in the Vote Office since Tuesday.

I am pleased that the Committee found the content and form of the Foreign Office's departmental report more informative this year. We shall continue to listen carefully to the Committee's views on that. In particular, we are consulting it about the proposed new form of the supply estimates, our guiding principle being that there should be no loss of detail in the expenditure information made available to the House.

My right hon. Friend the Member for Guildford (Mr. Howell) asked about the intergovernmental conference. As my right hon. Friend the Prime Minister made clear to the House, we attach great importance to ensuring that Parliament has a full opportunity to express its views as the next IGC takes shape. Both he and my right hon. Friend the Foreign Secretary have suggested that the Select Committee might submit its views directly to the study group, which will convene next summer. It will be for the Select Committee to decide how best to do that and who shall put pen to paper. Already I hear cries of, "Author, author."

My right hon. Friend also asked me about the review of the Bretton Woods institutions. The G7 leaders at the Naples summit announced their intention to look at the problems facing the international community in the coming years and see how the institutions that exist—including the Bretton Woods institutions—might best match up to those new challenges. Preparatory work on that is now under way, and the subject will be discussed by the Heads of the G7 Governments at their next summit in Halifax.

The world is changing fast. In certain ways, we are safer now that the cold war is over, but disorder is spreading. Violence and civil war are not confined to Asia, Africa and the middle east, but are tragically present on our doorstep in Europe. Since 1990, 22 new countries have come into being, most in the former Soviet Union and central and eastern Europe, where efforts to entrench market and democratic reforms have proceeded at different speeds and with varying degrees of success.

The United Nations, the conference on security and co-operation in Europe, NATO, the Western European Union and other international organisations have become more active. The UN Security Council passed 18 resolutions in 1989; in 1993, it passed 93. International peacekeeping has been a growth industry. In 1992, 12,000 troops were deployed in UN peacekeeping operations world wide; today, there are more than 76,000.

To protect and promote British interests and security in today's world, multilateral and bilateral diplomacy is needed more than ever before: for negotiation; for the reporting and analysis of events; for maintaining channels of communication; and for lobbying.

On the economic front, protectionism remains an ever-present threat. This year's GATT accord, a significant diplomatic achievement, is designed to check it. We have all become aware—it has already been referred to—of the rapid growth of the Asia-Pacific region, accompanied by its growing political influence. Latin America, too, is on the upturn.

The improvement in Britain's export performance has been at the heart of our economic recovery. The latest figures show that our exports are up by 10 per cent. But the competition is intense. Samsung's decision to create more than 3,000 jobs in Britain is a reminder that this country remains the preferred location in Europe for inward investment, but that position must be competed for.

The nature of overseas development is also changing fast. The UK's aid and development strategy is adapting accordingly. At an individual level, 34 million British citizens travelled abroad in 1993, which is 10 per cent. up on the previous year; and 8.6 million Britons are resident overseas. More than ever before, those people are calling on the Foreign and Commonwealth Office's consular services, and last year our posts overseas handled more than 1 million visa applications from the growing number of foreigners wishing to visit this country.

As the Committee has recognised, our security and well-being as a nation and as individuals depends to a substantial degree on what happens abroad. Our interests are best served by a stable world in which we can prosper and live in peace, and our policies are designed to serve that objective.

I should like to focus on the main themes raised by my right hon. Friend the Member for Guildford in his characteristically authoritative speech, and by other Members in the debate. As my time is limited and a number of detailed points have arisen—the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) described them as "free ranging"—I may have to pick up some of the freer-ranging eggs in correspondence.

On overseas development, the major change is the rapid progress and increasing wealth of many developing countries. There is no longer one third world, if there ever was. Instead, we see an increasing diversity. Countries following sensible economic policies have enjoyed rapid growth and increased living standards for their people. That is enormously welcome. Some of those countries are graduating out of the need for aid. One element in that success has been the great growth in private finance to developing countries, as the Committee's report recognises and as my right hon. Friend the Member for Guildford pointed out.

Foreign direct investment in developing countries was around £80 billion last year—well above total official aid. Those countries are increasingly earning their own way in the world. But that development is not equally shared. There are still major problems of poverty and deprivation. A billion people are still living in absolute poverty, most of them in south Asia and sub-Saharan Africa. Private finance is concentrated in a small number of countries in Asia and Latin America. Sub-Saharan Africa misses out almost entirely. Those countries have a long way to go, and will need our continuing help.

British aid recognises that increasing diversity. Middle-income countries still need assistance, filling skills gaps and providing vital know-how to help them on their way. But it is right that the bulk—nearly 80 per cent.—of our bilateral aid should be focused where it is needed most: on the poorest. Those countries need both the finance and the expertise to help develop their infrastructures.

Mr. Michael Colvin (Romsey and Waterside)

I am grateful to my right hon. Friend for giving way, especially as time is short. On the criteria for overseas aid, may I draw his attention to the fact that, the other day, the Ministry of Defence identified the mismanagement of water and overpopulation as two of the criteria that will lead to flashpoints around the world where hostilities may break out in future? The Indian subcontinent is such an area, suffering from both vast overpopulation and a shortage of water.

Will the Foreign Office have another look at the criteria for overseas aid? It seems odd that, in a part of the world that is currently in receipt of considerable aid, there happens to be gross overpopulation, the mismanagement of water and vast spending on arms. Only the other day, India asked for tenders for 600 155 mm Howitzers. Would not that country be better spending its taxpayers' money on tackling the problems of overpopulation and the management of water, rather than on arms?

Mr. Goodlad

My hon. Friend raises an important point. The criteria by which aid is given are kept under continual review. I need hardly say that India is an extremely poor country and a large recipient of aid. The Government make no conditional link between overseas aid and arms sales. There is a separate question whether the level of a country's expenditure on arms is appropriate. Our view is that each country must assess and provide for its own legitimate defence needs. Excessive military expenditure is, however, one of the factors which we take into account when deciding our allocations of bilateral aid.

I was saying that those poorest countries need both the finance and the expertise to help develop their infrastructures, and to support economic reform and good government.

Mr. Rowlands

The Minister is saying how vital the bilateral aid programme is to the poorest countries. Why, then, as is shown in the minutes of evidence, will the allocation of bilateral aid to Africa, for example, fall from £334 million to £284 million? That is a cut, and the Minister has presented it as some sort of marvellous programme.

Mr. Goodlad

I shall discuss aid to Africa in a moment.

We are trying to help those countries to reach the stage where they too can earn their way. I mentioned health and education, and my hon. Friend the Member for Croydon, South (Mr. Ottaway) was right to mention the importance of the Cairo conference on population and development. The programme for action agreed at Cairo sets new standards for population programmes. The programme reflects British Government priority policies of promoting sustainable development through economic growth, poverty reduction and children by choice, not chance. Its impact on the world's people, especially women, will depend on the capacity of national Governments to find new resources and spend them effectively.

Britain has taken a lead in committing extra funds to population assistance—a 60 per cent. increase of £100 million in the next two years. We hope that others, especially European donor nations, will follow suit. In doing that, we draw on the great wealth of skills and experience of British companies, consultants and non-governmental organisations. That effort powerfully reinforces our economic and political relationships with the countries that we help.

Aid is not the whole story. We have worked hard—none harder—for freer trade. The Chancellor's recent proposals on multilateral debt are the latest in a series of initiatives that the Government have taken to relieve developing countries' debt burden, but aid is a vital part of the mix. The United Kingdom has a substantial aid programme. The Organisation for Economic Co-operation and Development review earlier this year commended it for its effectiveness and focus on the poorest.

As the Foreign Affairs Committee and my right hon. Friend the Member for Guildford have commented, on current plans, more than half the UK's aid will be passing through multilateral channels by 1996–97. I do not accept the accusation made by some people that aid funded through multilateral channels is necessarily less effective, or "less good", than bilateral aid. The aid programme has always contained a significant multilateral share.

Multilateral agencies can co-ordinate assistance. They can exercise more leverage in support of important objectives such as economic reform. To the recipient—people in the Chamber have at some time or other visited recipients of aid—it is of little consequence whence the help arrives. The key is to ensure that all aid, through whatever channel, is spent well.

Mr. Rogers

Does the right hon. Gentleman accept the argument that, if more and more of our aid, as a percentage and in total, goes through multilateral channels, given the static total aid budget, that cuts the amount available for bilateral aid? Does he accept that that has had the immediate consequence of substantial cuts in aid to Africa and to Asia? As far as multilateral aid is concerned, it seems to me that much more money is going to relatively richer countries of eastern Europe.

Mr. Goodlad

I hope that I have demonstrated that we have been commended by international institutions for giving 80 per cent. of our aid to the poorest. Of course it is true that, as a greater proportion is taken by multilateral aid, a smaller proportion is taken by bilateral aid.

The European Community, which channels more than 20 per cent. of our aid, is a specific cause for concern. That was the prime motivation behind the speech by my right hon. and noble Friend Lady Chalker on 14 June, in which she set out a more structured emphasis on our multilateral aid, including strengthening the working relationship with the European Commission, both in Brussels and on the ground in developing countries, as well as the secondment of staff to key posts in Brussels. Those steps are now being implemented. The results will not be instantaneous, but I am confident that they will gradually bear fruit.

The vital point is to ensure that the UK makes a substantial contribution to the international effort: one that is powerfully in our interest, as hon. Members have said, as well as in the interest of the countries that we help.

My right hon. Friend the Member for Guildford mentioned the European Community aid budget, and whether it should be increasing. The increase in aid passing through the European Union flows from the decisions taken at the Edinburgh European Council. Those reflected the outcome of complex negotiations to balance the interests of all European Union member states. They took into account the agreement reached at the June 1992 Lisbon European Council, that there should be a substantial increase in the resources devoted to EC external policies and, by implication, to the EC's aid programme.

My right hon. Friend the Member for Guildford also mentioned private investment. I agree with him about the importance of private finance. This country is a major provider of private investment in developing countries. In 1992, British private investment has been estimated at about £1.7 billion—about half the EC total. Only the United States and Japan do better.

My right hon. Friend the Member for Guildford also referred to the role of the Commonwealth Development Corporation. The CDC plays an increasingly important part in promoting the private sector in developing countries. Its role was endorsed and strengthened in the quinquennial review of the CDC. That agreed revised operating targets for the corporation. The Government fully endorse the CDC's plans to improve its focus overseas and to strengthen its links with British industry.

On the subject of legislation on the CDC, I cannot anticipate what proposals for legislation will be included in the Gracious Speech. On borrowing, the CDC is near its borrowing limits. However, the Government have reduced the rate of interest on the CDC's loans this year, so as to increase its cash flow, and the CDC intends to finance the expansion of activities largely from internally generated funds arising from its portfolio of investments.

The hon. Members for Ilford, South (Mr. Gapes) and for Rhondda (Mr. Rogers) and others mentioned aid to Africa. It is clear that the poorest countries of sub-Saharan Africa will continue to need substantial aid. Africa has been and remains a priority for British aid. About 40 per cent. of our bilateral aid—more than £500 million in 1992–93—goes to African countries. In addition, we are a major contributor to multilateral development organisations, which also treat Africa as a priority. The European Community's aid programme to sub-Saharan Africa for the period 1990–95 amounts to £7.6 billion; the British share is £1.25 billion.

The Foreign Affairs Committee's report, and my right hon. Friend the Member for Guildford today, have focused on the Commonwealth. The Commonwealth has major advantages for Britain. First, we have a common language, a shared history and a shared culture, and Her Majesty the Queen has a special status as Head of the Commonwealth.

Secondly, the Commonwealth is a network. It manifests great diversity in geography, in regional and political links and in economic and social perspectives. That diversity is part of the strength of the Commonwealth. It gives the Commonwealth a valuable and relevant role in this ever-changing world. For Britain, the Commonwealth is an essential link in our international relations.

The Commonwealth has a new task in the 1990s. Good government and democracy cannot be imposed by imperial means; democracy must be home-grown, but we need ways of persuading countries to live by democracy, ways of rewarding them for working democratically, and ways of expressing displeasure if democracy is undermined. We need arrangements that are explicitly post-imperial and non-confrontational, but which can effectively express the views of a country's friends.

The Commonwealth has dispatched 11 election observer missions in recent years. The Foreign Office has contributed 30 per cent. of the costs—rather more in the case of elections in South Africa. The UK is the largest single contributor to Commonwealth funds; 70 per cent. of our bilateral aid goes to Commonwealth countries.

We also recognise the importance of cultural diplomacy, which has been mentioned on both sides of the House. The British Council and the BBC World Service make valuable contributions to promoting British interests overseas.

The hon. Member for Rhondda mentioned the contribution of the World Service and the British Council to our diplomatic effort. The World Service broadcasts more hours, 1,400, each week, in more languages, 38 together with English, than it has in its 62-year history. The worldwide audience of 130 million regular listeners is more than double that of its nearest competitor. It has an unparalleled reputation for impartiality and accuracy.

Mr. Ernie Ross

rose—

Mr. Goodlad

I have no time to give way any more.

The World Service was excluded from overall budget cuts in 1993–94. It kept every penny of the substantial planned increase in that year, because that was part of the agreed 1991–94 triennial settlement. The World Service was warned long in advance that it would have to bear its share of expenditure cuts after 1994. The World Service funding increased substantially in earlier years; a 60 per cent. real-term increase since 1980. None-the-less, with efficiency savings, the reallocation of resources and increases in revenues, there is room for some new activity in the increased broadcasts to Russia and central Asia, and the introduction of Azeri and Uzbek broadcasts.

As for the British Council, the real-terms reduction in the council's [...]rant in aid reflects the reduction that confronts the FCO as a whole. The council's combination of activities is a British strength that is the envy of our competitors. Japan, France and others seek to copy our model. The council operates in an intensively competitive business sector. Its restructuring has left the organisation much leaner and fitter, and nearly half its income is now revenue from non-grant in aid sources.

The hon. Member for Ross, Cromarty and Skye and others called for a larger aid budget. But of course the Government have to juggle a number of spending priorities. The House would not expect me to pre-empt that process. The Chancellor will announce the outcome of the current public expenditure survey in the Budget next month.

We maintain a substantial aid programme, which has grown by 10 per cent. in real terms since 1987–88. This year's budget is nearly £50 million higher than last year's, at a time when many other large aid donors are reducing their budgets. In 1993, our aid amounted to 0.31 per cent. of GNP—above the average of 0.29 per cent. of all donors.

We remain committed to meet the United Nations target of 0.7 per cent. of GNP as soon as possible, although we are not prepared to set a timetable for doing so—[Interruption.] I am not aware that the Opposition are prepared to set a time scale. The Opposition talk about billions of pounds of increases in public expenditure, but they are not prepared to say where that will come from or how they will finance it. All they do is complain, and I think that people will take their complaints for what they are worth—very little.

My hon. Friend the Member for Eastbourne (Mr. Waterson) mentioned the commercial work of the Foreign and Commonwealth Office in helping British companies break into new markets—the Foreign Office's largest single activity overseas. It is foolish to suggest—as did a writer in the Daily Mail—that the level of exports should be the sole determinant of the number of staff required in each of our missions.

Most of the 83 staff in Islamabad, for example, are there for entry clearance work. At the other end of the scale, the chairman of BP has recently written to praise the efforts of our three-man embassy in Baku, Azerbaijan, where a BP-led consortium has landed a £7 billion oil extraction contract.

The hon. Member for Rhondda and my hon. Friend the Member for Eastbourne mentioned Hong Kong. The hon. Member for Rhondda also referred to subjects raised in other reports. I take note of what has been said about the desirability of a debate, which will be a matter for my right hon. Friend the Leader of the House and the business managers.

Her Majesty's Government remain committed to implementing the full letter and spirit of the joint declaration, which is the cornerstone of our policy in Hong Kong. We have no reason to believe that China is less committed to the joint declaration. As my right hon. Friend the Foreign Secretary has made clear, we wish to draw a line under our differences with China over constitutional issues.

In his speech to LegCo on 5 October, the Governor of Hong Kong set out a series of constructive proposals on the future Sino-British co-operation over the future of Hong Kong. That was intended to signal—as was my visit to Peking a few weeks ago—our continuing sincere wish to intensify work on outstanding issues during the remaining period of British sovereignty. The House can be assured that we are working hard, both publicly and privately, to achieve the smoothest possible transition, and I know that we have the support of the House in doing so.

The cost of the diplomatic service is a very small part of the £27 billion that the Government spend on defence, aid and diplomacy—just over half a billion pounds. In fact, total FCO diplomatic wing funding, including grants to the British Council and BBC World Service, accounts for less than one half of 1 per cent of total Government spending. That buys 215 overseas posts—down from 243 in 1968.

Britain depends on overseas trade and investment abroad. Exports account for 25 per cent. of our GNP. Inward investment provides 23 per cent. of net manufacturing output. We were the second largest overseas investor in the world in 1993. We have a unique spread of distinctive, worldwide interests, through Hong Kong, South Africa, the Gulf, and the Indian subcontinent, as well as our stake in the European Union and other OECD markets.

The international community holds the key to many vital UK interests—the North Atlantic Treaty Organisation for security; the United Nations for the international rule of law. To promote our vital national interests, we need an effective voice in all the important international organisations, as well as posts in individual countries.

Our distinctive assets—the armed forces, the English language, our financial skills and enterprise, our overseas experience, and the skill of our diplomats, our aid experts, the British Council and the BBC World Service—are admired around the globe. Those assets come at a price, but the sums are tiny compared to spending on health, social security and education. They are what it takes to have a strong, effective foreign policy, promoting British interests around the world, as well as our objectives of peace and prosperity for Britain, promotion of exports and security for British citizens abroad.

There are always a few commentators who cling to myths and stereotypes. They are the voices who criticise our diplomatic effort as if the purpose of our foreign service were to serve our vanity as a nation. Those tend to be the same voices who criticise our aid effort for supposedly serving the vanity of foreign dictators. I doubt that there was ever much truth in those propositions; there is certainly no truth in them now.

Our diplomatic service is fit, lean and streetwise. It is working to clearly defined objectives that serve the interests of our country in measurable and tangible ways. As the struggle for power, trade and influence grows more and more intense, we have to make sure that we do not cede an inch of ground to our competitors. Of course, as the Committee has said, there is always scope for improvement, just as there is in the way that we run our substantial aid programme. But, here too, we are setting a world standard for effectiveness and value for money.

Power and influence do not drop into our laps—they have to be worked for. Running an active foreign policy is partly a matter of political will power. But, to deliver the goods, our foreign policy also needs a solid commitment in terms of manpower and resources. Together, those two ingredients have helped us to carve for Britain a uniquely valuable role and status. That is what the British people expect from the British Government. We will not betray that trust.