HC Deb 07 November 2002 vol 392 cc419-22
6. Dr. Jenny Tonge (Richmond Park)

If he will make a statement on the outcomes of the World Bank and IMF meeting in September in relation to debt relief and the HIPC initiative. [78227]

The Chancellor of the Exchequer (Mr. Gordon Brown)

At the recent IMF and World Bank meetings in Washington, we agreed up to $1 billion of further debt relief for poor and indebted countries. I am pleased to announce that the UK has been joined by 16 other donors, which have already made firm commitments totalling $850 million to the HIPC trust fund. European Union member states have called on the Commission to make a contribution through the European development fund. That will benefit 26 highly indebted poor countries. Of the remaining 12 countries that could qualify for debt relief, nine are unfortunately in conflict, one has opted for debt relief, and two are developing their poverty reduction strategies to meet the conditions for debt relief.

We thank the Churches, faith groups and nongovernmental organisations for the contribution that they have made to the debt relief campaign, but we are determined to build a longer-term solution to the financing of education, health and anti-poverty programmes in the poorest countries.

Dr. Tonge

I thank the Chancellor for that reply. At the risk of sending Tory Members into orbit, I freely acknowledge that the progress that has been made on this matter has been due largely to his efforts. However, does the Chancellor realise how disappointed people in the country are that more progress has not been made since the millennium? According to the organisation Jubilee 2000, the cancellation of debt for the 26 HIPC' countries would cost around $6.8 billion over five years for the countries in the Organisation for Economic Co-operation and Development. That is probably less than the US spent on bombing Afghanistan. Will the Chancellor put pressure on the World Bank and the IMF at least to suspend debt repayment—[Interruption.]

Mr. Speaker

Order. The hon. Lady may have been slow to start, but she is certainly making up for it now.

Mr. Brown

I want to thank all those in the House who have joined us in the campaign to secure debt relief. The figures show that $62 billion of debt will be wiped off as a result of the initiative so far. If other countries join the initiative, that total should amount to $100 billion. That is a very considerable figure, involving 26 countries, and it is yielding money for education, health and anti-poverty programmes. However, I readily accept that there is more to do. That is why we are considering, with other countries, further measures in addition to debt relief that can yield results both in terms of expenditure on education, health and anti-poverty programmes, and in terms of meeting the millennium development goals, which include ensuring that every child has an education.

Mr. Andy Reed (Loughborough)

I am sure that the whole House welcomes the moves that have been made to progress this matter, largely thanks to the moral lead that my right hon. Friend the Chancellor has taken. However, does my right hon. Friend accept that the collapse of commodity prices has caused real problems for many countries already in the HIPC initiative and receiving debt relief? What further measures can he take to ensure that those countries' future levels of sustainable debt are tied into the collapse of commodity prices? Will he assure the House that the $1 billion extra that has been promised will be new money and will not merely replace money that should have come from multilateral creditors such as the IMF and the World Bank?

Mr. Brown

The extra $1 billion is necessary precisely because of the economic conditions in poorer countries, and because in the first round of the HIPC trust fund we underestimated what would be needed to pay for the debt relief that has been provided. It is new money, and is being allocated by this Government and other Governments. As I said, 16 Governments have joined the initiative, and that is huge progress on where we were a few months ago.

Again, I readily accept that if we are to deal with the problems of poor countries and their agricultural producers, we need a wider settlement—a wider compact between rich and poor countries that involves not only debt relief but the opening up of trade, tackling agricultural protectionism and help for public and private investment in those countries. We also need Substantially greater resources in overseas development aid.

Mr. Stephen O'Brien (Eddisbury)

As the Chancellor well knows, I greatly sympathise with his efforts on the HIPC initiative. Given the Prime Minister's humiliating failure, however, even to know of in advance—let alone to prevent—the French and Germans stitching up a cosy deal between themselves on the common agricultural policy, the right hon. Gentleman will surely agree that that self-serving deal has done, and for years to come will do, much more damage to the economies of the developing world than anything that he might do to relieve poor countries' debt under the initiative. How happy is he that the Prime Minister has not taken any action to remedy the situation when one of his Treasury officials has said that every cow in the EU receives over S2 a day from Brussels, while a fifth of the world's population lives on only a dollar a day?

Mr. Brown

Those figures have been put out by me and by other people in the past year. We have to get action on the common agricultural policy. At the summit, a ceiling was agreed on the amount of money available for agriculture. Contrary to the wishes of some countries, what was left open was that further progress would be made at Doha and in the mid-term review of agricultural policy. I should have thought that the Conservative party would have supported the Prime Minister's efforts in that respect. These matters are open for Doha. We now need all parties to combine to make a success of Doha and persuade other countries that we must curb agricultural protectionism.

Ms Julia Drown (South Swindon)

What are the Government doing to put pressure on non-participating countries to get involved in the HIPC process— countries such as Romania, Iran and Libya? Are the Government offering support to the HIPCs that face legal challenges from those who are not participating in the HIPC process?

Mr. Brown

On the legal issue, we are looking into that matter. We had a list of the 37 countries, I think, that would qualify for HIPC debt relief. I have named the countries that have already benefited. Equally, those that are in conflict cannot benefit while they are in conflict. When countries are coming out of conflict, we have measures to enable them to get debt relief quickly if they pursue the necessary policies and if we can be sure that the money is going to poverty reduction. The three remaining countries, which do not include those on the list that my hon. Friend mentioned, are now part of the HIPC process and should be able to get debt relief readily and quite quickly.

As for adding others to the list, I do not think that that is the way forward; it is a more comprehensive solution to what levels of development aid we can get. That requires us to have policies that link improvements in access to trade, improvements in investment in the poorest countries, an end to the agricultural protectionism that is doing so much damage, and far more overseas aid. That is the way to deal with the problems of the countries that my hon. Friend mentioned.