HC Deb 11 April 2002 vol 383 cc138-41
5. Phil Sawford (Kettering)

What recent action he has taken to assist heavily indebted poor countries. [44501]

13. Mrs. Betty Williams (Conwy)

If he will make a statement on the Commonwealth education fund. [44511]

The Chancellor of the Exchequer (Mr. Gordon Brown)

Last month, Sierra Leone reached decision point, qualifying for nearly $1 billion of debt relief from the international community, including the United Kingdom writing off 100 per cent. of all its debt owed. That means that 26 countries—22 from Africa and four from Latin America—will benefit from $62 billion in debt relief, with potentially $100 billion in prospect. Last month, the Monterrey conference moved forward the millennium development goals. Last month, to mark the Queen's golden jubilee, the Government launched the Commonwealth education fund with a grant of £10 million to promote primary education in Commonwealth developing countries. Further details of the action that the Government are taking on debt relief and primary education are set out in the annual report to Parliament on the UK and the International Monetary Fund, which we are publishing today. Copies are available in the Vote Office.

Phil Sawford

I thank my right hon. Friend for that answer and congratulate him on the work that he has done, but I am sure he agrees that a tremendous amount still needs to be done to alleviate crippling poverty in those countries. Many are experiencing AIDS epidemics and lack education opportunity, proper health care and the basic necessities of life. I urge my right hon. Friend to continue to take a lead on those matters. Will he put as much pressure as possible on the international community to address those very serious issues?

Mr. Brown

I thank my hon. Friend for the work that he has done in Kettering to publicise the case for debt relief. Many Members on both sides of the House have done the same in their own constituencies. There are now 26 countries getting debt relief, which means that money is going to health and education. Taking the case of Uganda, it is now possible to say that every child will be in primary education over a period of time as a result of the debt relief provided by the international community. However, we must do more and, as my hon. Friend rightly says, we must now build on what we achieved at Monterrey. Next weekend, I shall go to Washington for IMF and World Bank meetings, where we shall discuss the next stage of moving debt relief forward and meeting the millennium development goals, which include every child receiving primary education.

Mrs. Betty Williams

May I, too, thank the Chancellor for his record and that of the Secretary of State for International Development? We have reason to be proud of what the Government are doing on the international scene.

Will my right hon. Friend confirm that the Government will match pound for pound money collected by individual organisations such as Comic Relief towards primary education in Commonwealth countries?

Mr. Brown

We shall, indeed. I thank my hon. Friend, too, for the work that she has done in her constituency in Wales to promote those issues. We shall match pound for pound the money raised by Comic Relief's sports day, which will go directly to education projects run by non-governmental organisations, particularly in Commonwealth countries in Africa. Equally, in the Queen's jubilee year we shall match pound for pound money raised by businesses through corporate donations to help promote education in Africa and elsewhere. We shall thus be able to move further and faster towards good economic policy, which is also desirable for social opportunity, so that every child gets the chance of primary education. In the Commonwealth today, 75 million children are not going to school. We owe it to them to move faster to ensure that there is a school for every one of them and that there are teachers who can give them the education that they need.

Mr. Andrew Mitchell (Sutton Coldfield)

The Chancellor deserves considerable praise for the forceful way in which he has championed this issue internationally, building on the excellent foundations that he inherited from the John Major Government in the 1990s.

Has the Chancellor had a chance to look seriously at the proposals for an international bankruptcy procedure that have been put forward by Jubilee Plus and strongly supported by the UN Secretary-General and by the champion of free markets, Professor Jeffrey Sachs? That procedure would bring some order to those issues in the poorest countries of the world, and would enable them to continue trading without serious damage to their social infrastructure.

Mr. Brown

I am grateful to the hon. Gentleman. If this country could achieve all-party consensus on this matter and move as one in the international community to press for more to be done, I would welcome that, and I hope that all hon. Members would support it. I acknowledge the work carried out by the previous Chancellor in terms of the debt relief proposals put forward before 1997.

On the hon. Gentleman's question about an international bankruptcy court, he may know that the International Monetary Fund is looking at those very matters. Such a court would have to be part of a large restructuring of the way in which the IMF and other international organisations deal with the bankruptcy, insolvency and illiquidity of countries faced with those difficulties.

In my view, the procedure is probably more relevant to emerging market economies than to African economies. The best way to help economies that are in debt is, first, to get rid of unpayable debt so that we can build afresh; secondly, to insist on corruption-free policies, allowing stability to be pursued by monetary and fiscal transparency; and, thirdly, to open up investment and trade. That must be backed with the offer to provide substantial additional resources if those steps are taken. That is why I say that it should be the international community's aim to provide $50 billion a year extra in international development aid to back up that new deal for the poorest countries in the world.

Dr. Vincent Cable (Twickenham)

While I acknowledge the Chancellor's considerable efforts in this area, does he agree that there is growing disillusionment among many debtor countries with the extreme rigidities of the present scheme? Does he acknowledge, for example, that there is no low-cost mechanism to help debtor countries cope with new shocks, such as rising oil prices and no specific mechanism for post-conflict countries? Without radical reform, the HIPC scheme is in danger of producing debt reduction that is not sustainable in the long term.

Mr. Brown

It is true that the IMF and other international organisations are looking at how we can deal with shocks to the international system. We said in the last G7 communiqué—indeed, in the IMF communiqué—that there must be greater flexibility in the operation of the HIPC programme.

I paid tribute to the previous Chancellor, but it is true that by 1997 only one country was likely to go through the debt relief process, whereas now there are 26. It surprises many people that we have managed to get so many countries through in that period, but that is absolutely necessary. I believe that we can achieve $100 billion of debt relief, but we need a far better framework for the longer term.

The problem is not simply one of flexibility to respond to shocks. There must be a new relationship between the richer and the poorer countries, whereby we are prepared to give poor countries additional aid in return for their adopting policies that are in their interests, such as poverty reduction plans on which they consult their communities. Flexibility is one factor, but a far greater change is required. I hope that we can make progress at the April meeting of the IMF.