HC Deb 16 June 1999 vol 333 cc373-6
1. Mr. John Heppell (Nottingham, East)

What plans she has to propose amendments to the heavily indebted poor countries initiative. [84973]

9. Mrs. Maria Fyfe (Glasgow, Maryhill)

What assessment she has made of the likely progress at the G7 summit in ensuring recognition that debt repayment conditions should not entail less money being available for basic health and education programmes. [85982]

11. Mr. Chris Mullin (Sunderland, South)

What recent progress has been made on debt relief for the poorest countries; and if she will make a statement. [85984]

The Secretary of State for International Development (Clare Short)

We are pressing for a revised heavily indebted poor countries—HIPC—initiative to provide at least twice as much debt relief twice as fast and for the provision of debt relief to be more tightly linked to policies that help reduce poverty.

We are pleased that at their meeting in Frankfurt on 12 June, G7 Finance Ministers were able to agree that a substantial improvement to HIPC was required. G7 leaders will be discussing that further this week and we look forward to the announcement of a package on debt relief at the weekend. The final details of the new HIPC package will be settled at the annual meetings of the World Bank and International Monetary Fund in September. My right hon. Friend the Chancellor and I also announced last week that we will be contributing a further $100 million to the trust fund to help the multilateral development banks meet their share of the cost of debt relief.

Mr. Heppell

I thank my right hon. Friend for her response. Will she join me in congratulating all the non-governmental organisations and Churches that have campaigned so magnificently to ensure that world debt is high on the agenda? Will she also join me in asking them to continue their campaign in Japan, France and the United States, which do not take the same view as this country on the subject? Will she assure me that our right hon. Friend the Prime Minister will use the same determination, leadership and drive to push for the best deal for the world's poorest people as he has shown over Kosovo?

Clare Short

I am grateful to my hon. Friend for that question. I am pleased to join him in congratulating the Churches and the NGOs on their debt campaign. We have never seen anything like it—an international civil society movement that has moved the policy of the most powerful countries in the world. Soon after we formed our Government and my right hon. Friend the Chancellor made his Mauritius mandate speech, saying that we wanted to speed up debt relief, he and I went to the annual meetings of the World Bank and the IMF and could not get support. By the time that the leaders of the G7 got to Birmingham, with all those people on the streets, we had made some advances. It has been a wonderful campaign. I assure my hon. Friend that our right hon. Friend the Prime Minister will take further the efforts that my right hon. Friend the Chancellor has made at the G7 finance meetings. The campaign must continue, because the programmes that will really help the poor will not be finalised until the annual meetings of the bank and the fund in September.

Madam Speaker

I call Mrs. Fyfe. She is not here. I call Mr. Mullin. He is not here.

Rev. Martin Smyth (Belfast, South)

I appreciate the Secretary of State's response and I encourage others to back her position. She will be aware that banks do not normally lend money unless there is collateral. Are any steps being taken to support the other banks that are giving low interest rates to the world's poorest, so that they might become self-supporting and help to relieve poverty?

Clare Short

I apologise to the hon. Gentleman for standing throughout his question. I got out of synch because two hon. Members were missing. The hon. Gentleman must be referring to micro credit schemes, which offer small credits to the world's poorest. I agree that that is a fantastically important movement. It is important that the banks should not always depend on aid contributions, but should become self-sustaining small people's banks. We are trying to work with others in the international system to achieve that.

Mr. Derek Wyatt (Sittingbourne and Sheppey)

First, I congratulate everyone on what they are doing on the issue. I am nervous about the prospect of coming back here in 2010, if I am re-elected, and having the same conversation because we have not moved the poorest countries forward. I wonder whether my right hon. Friend is confident that the World Bank and all the other agencies are really so bothered about substantial poverty. If we do not get rid of the poverty, what will we do as a nation?

Clare Short

I agree that if we come back in 2010 and we have made no progress on the fact that one in four of our fellow human beings live in abject poverty, the world will be in considerable trouble. The population will be growing, the environment will be more degraded and we will have more war and more refugees. There is untreatable tuberculosis in Russia and forms of malaria are emerging for which we have no drugs. It would be a moral disaster as well as being very dangerous for the next generation that is growing up.

I am confident that the World Bank and the International Monetary Fund are increasingly focusing on assistance to programmes that will help to reduce poverty, but that cannot be done unless the Governments of developing countries want that. In the next phase of the movement in civil society, we need the movements in the industrialised countries to link up with people in the developing world so that they can hold their Governments more firmly to account. We need good policy not only from donors and international institutions, but from Governments in developing countries, who often serve their elite and not their poor.

Dr. Jenny Tonge (Richmond Park)

I congratulate the Government on their debt relief initiative in the run-up to the summit this weekend, and especially on their plan to donate £100 million to the millennium fund to replace the HIPC fund. Will the Secretary of State confirm that the Government are not giving with one hand and taking away with the other and that the money will come out of Treasury reserves and not her Department's development budget? Will she also clarify whether the £50 million of aid to Kosovo will come from the Treasury or from her Department?

Clare Short

Hon. Members have no idea how grateful I am to the hon. Lady for the interest that she has taken in this subject. On the £100 million that we announced, a great deal of the contributions go well beyond the period of the current comprehensive spending review, as countries qualify for debt relief year on year, so I had to reach an understanding with the Treasury that went beyond my current budget. The probably quite small commitments under current plans would come from my Department's budget, but beyond that I have an agreement in writing from the Treasury that we will both contribute. That has to be part of the next comprehensive spending review settlement.

Of the extra £50 million for Kosovo, the first £10 million came partly from my contingency reserve and partly from money committed to the region; the second £10 million and a further £20 million came from the Treasury central reserve; and we have now agreed, because the commitment will go considerably beyond the further £50 million so far declared, that our contingency reserve, which, from memory, is about £36 million, will be put in the pot and we can then go to the central reserve, as has already happened with the extra £50 million, if there are unpredictable emergencies elsewhere in the world. That is a pretty good deal and I am pleased to have reached it.

Mr. Andrew Reed (Loughborough)

I join the thousands of people throughout the country who would like to congratulate the Government on their actions and the lead that they have taken on aid, and in particular on the civil action mentioned by my right hon. Friend, which has convinced other nations, such as Germany and the United States, to get on board.

Unfortunately, the HIPC initiative falls far short of an ideal solution. Will my right hon. Friend and the Prime Minister push for changes in the Paris Club agreement to allow some greater flexibility and ensure that speedier and deeper debt reduction can be achieved by 2000, in line with the Mauritius mandate proposed by the Government early in 1997?

Clare Short

Yes, indeed. There is no doubt that we will get an improvement in the current HIPC initiative. There has been a big movement, especially with the change of Government in Germany. Japan has agreed to the sale of IMF gold and to do something about its own aid debt, and France has made a similar move. Those are big advances but we do not yet have an ideal solution.

My right hon. Friend the Chancellor pushed very hard at the Finance Ministers meeting, and my right hon. Friend the Prime Minister will press for even more at the leaders' meeting in Cologne this weekend. The final stage of the improvement of the HIPC initiative is the annual meetings of the bank and the fund. We need a more generous formula and more money on the table. The pressure will have to be kept up on everyone to ensure that we have a generous enough package.

Mr. Gary Streeter (South-West Devon)

I add my congratulations to the Jubilee 2000 campaigners who have done a terrific job in raising the profile of this issue throughout the country this year. I also congratulate the Government on building on the solid foundation laid by the Conservative Government in the past five years on the issue of debt relief. We are delighted by that.

Is the Secretary of State aware that, when the Prime Minister walks into the summit in Cologne at the weekend to tackle debt relief, he will carry with him the hopes and prayers of thousands of British people who care passionately about the issue? Does she agree that the key thing about debt relief is to free up funds for health care and education in the countries in question, because they are the real exit routes from poverty that we want more and more people to enjoy?

Clare Short

I am grateful to the hon. Gentleman for his generosity—it is slightly unusual and therefore all the more welcome. There is no doubt that the previous Conservative Government took a strong position on debt relief, but most countries say that they always argued for good formulas but never put any money on the table. We argue for good formulas and put money on the table, so that is an improvement. I agree that the Prime Minister will be pressing hard at Cologne and that the worldwide movement that has been encouraged by the British movement, which includes our Churches and faiths, is impressive and powerful. It should not be disappointed.

I also agree that the key issue is debt relief that helps the poor. Therefore, how it is done is important. Having to wait years and then having a big stock of debt relief creates an incentive for a big new contract. A flow of debt relief that will ease Government budgets and, therefore, encourage spending on basic health care and education is what we really want, and we are arguing for that kind of change. I am pleased that there is cross-party agreement on that.