HC Deb 23 July 1997 vol 298 cc934-5
2. Mr. Luff

To ask the Secretary of State for International Development if she will meet representatives of the World bank to discuss their latest world development report; and if she will make a statement. [8357]

The Secretary of State for International Development (Clare Short)

I have discussed the report, which is entitled "The State in a Changing World", with the president of the World bank. The key argument of the report—which I greatly welcome—is that we must strengthen public sector institutions so that adequate services can be provided to poor people. The report focuses on the best way to develop the state's capacity to produce adequate services and on how the private sector can assist in reaching that goal. I believe that publication of the report marks a significant shift from the old belief—from a previous era—in omnipotent states, and also from more recent mistakes based on market idolatry, to the realisation that states and markets alike make good servants but bad masters.

Mr. Luff

Does the right hon. Lady welcome the report's emphasis on the need to cut corruption in the developing world to increase state capability? Does she agree that some of the best ways of doing that include reducing subsidies and regulations, promoting large-scale privatisations and attacking state monopolies?

Clare Short

I absolutely agree with the hon. Gentleman: we must always try to reduce corruption—as the Conservative party has learnt to its cost. The report suggests that we need a virtuous and efficient state. If we are to have efficient markets, we need a state that is an efficient regulator. It is a mistake to think that everything can be driven by markets. We require a lean, efficient state which regulates market forces well so that we can provide quality services for people and macro-economic conditions which draw in investment, especially into the poorest countries.