HC Deb 12 June 2003 vol 406 cc816-20
3. Mr. Tom Clarke (Coatbridge and Chryston)

What progress has been made in pursuit of Government strategy on relief of third world debt. [118659]

10. Valerie Davey (Bristol, West)

If he will make a statement on the progress the G7 Finance Ministers are making in tackling world debt. [118669]

13. Mrs. Betty Williams (Conwy)

What further measures he is taking with G7 Finance Ministers to tackle world poverty. [118672]

The Chancellor of the Exchequer (Mr. Gordon Brown)

Following the Evian summit, finance Ministers will review debt relief to consider an extra £1 billion for the poorest countries. Europe will now produce proposals to match the welcome American contribution to the global health fund, particularly to deal with HIV/AIDS. In addition, G8 finance Ministers have been asked to report by September on the UK's proposal for an international finance facility, which will raise up to £50 billion annually to fund the millennium development goals. On that, I am grateful to have had all-party support.

Mr. Clarke

I congratulate the Chancellor on the tremendous energy and enthusiasm that he has shown on issues of international debt, backed by one of the strongest economies this country has ever known. Specifically on non-heavily indebted poor countries and middle-income countries, will the Chancellor tell us what progress we are making, particularly in the light of G8 involvement? Finally, on falling commodity prices, drought and other issues, is the Chancellor satisfied that the World Bank and the International Monetary Fund operate with criteria that are appropriate to reaching the millennium goals that he mentioned?

Mr. Brown

My right hon. Friend has taken a longterm interest in these matters and has led the campaign for debt relief in his own area. On debt relief, $1 billion was pledged at the last G7 summit in Canada, and that money has now been put into the World Bank trust fund. After a submission by finance Ministers at the G8 Evian summit, it was recognised that more needed to be done for countries at the point of completion. Twenty-six countries are in the debt relief process; eight have completed, but they need additional money to deal with the changes that have taken place, particularly in commodity prices, since the debt relief package was agreed. We have been asked by the Heads of Government to examine how best to improve the system so that those countries can receive the benefit of debt relief, freeing up resources for education and health rather than having to spend them on repaying debt. I am confident that the £62 billion of debt relief that we are achieving now will be increased as a result of the proposals.

My right hon. Friend is absolutely right that we need a new finance facility so that we can move forward with anti-poverty programmes to meet the millennium development goals. I believe that that issue unites the whole House and I hope that, together with other countries, we can make further progress over the next few months.

Valerie Davey

I thank the Chancellor for the international leadership that he gives on this issue. What progress is being made, specifically, to encourage other countries to sign up to the Government's proposal for the international finance facility?

Mr. Brown

I am grateful to my hon. Friend for taking an interest in the issue and leading on it in her constituency. I am pleased to say that the G8 communiqué from Evian mentioned the international finance facility. The Finance Ministers have been asked to produce a report on the issue. The timescale is short, because we have to do it by September. It is recognised that there is a shortfall in funding to meet the millennium development goals and to maximise the opportunity given by the Monterrey agreements, in which the US and Europe agreed to pay more money. We can build on that with a finance facility that uses funds from the private sector. We are confident that our September report will be the next stage in persuading countries round the world that that is the way forward. We have also had support from African countries and many other countries that are not part of the G7.

Mrs. Williams

In setting ourselves ambitious targets for achieving the millennium development goals, how confident is my right hon. Friend that all the industrialised countries will make available the resources necessary to meet the challenge? What encouragement can he give those organisations led by Christian Aid which are organising rallies at the end of this month and are campaigning for trade rules to be weighted in favour of poor people?

Mr. Brown

My hon. Friend has played a major part in the campaign on that issue in Wales, and I also applaud the work of Christian Aid, whose campaign week has just finished. During its last campaign, my mother sent me a postcard at the Treasury demanding that I took action and spent more money, so it was obviously a successful and broad-based campaign. The millennium development goals cannot be achieved without the additional finance, but I believe that we will win wider support for it. I applaud the Opposition Front Benchers, the Liberal Democrats and other parties, because it is important that we have all-party support as we take the initiative round the world.

Mr. Michael Jack (Fylde)

The Chancellor will be aware of the role of private investment in stimulating economic activity in the indebted nations as a way of relieving their plight. To that end, will he consider developing a tax credit mechanism that would encourage private sector investment in the poorest countries, to help to offset the risks of investing in them but to encourage that beneficial activity?

Mr. Brown

I am grateful to the right hon. Gentleman, who takes an interest in the matter as a former Treasury Minister. He may know that we have introduced a tax credit for pharmaceutical companies, which they can use in developing countries and set against tax in Britain. That started at the beginning of April and I hope it will yield results. I will also look at the proposals that the right hon. Gentleman has made for other private sector companies. If only 1 per cent. of private investment round the world is in Africa, the chance for that continent to move forward is limited. Therefore, we must stimulate far more private investment. The right hon. Gentleman will welcome the International Monetary Fund initiatives to set up centres to advise countries about obtaining such investment, and I was talking to a group of American business men yesterday about those issues. If the right hon. Gentleman sends me his specific proposals, I shall look at them.

Mr. John Baron (Billericay)

Given that we hand over nearly £1 billion a year to the EU overseas aid package, and given that the majority of that money is spent on political purposes—as evidenced by the fact that Poland receives twice as much aid as Latin America and Asia combined—does the Chancellor agree that that money could be so much better spent on tackling world poverty if it was redirected to where it was most desperately needed?

Mr. Brown

That is a European issue on which we can agree. There is a need for major reform in the operation of the European aid budget and the European development fund. The hon. Gentleman may be interested to learn that the European development fund provided money when debt relief was provided, and that was a useful initiative on its part. As for the global health fund, the US Government have made a contribution of $3 billion and it is proposed that the European development fund make a similar contribution. I agree with the hon. Gentleman entirely, because only 38 per cent. of money from the fund goes to the poorest countries and, therefore, to tackle poverty. That is not acceptable and that is why I hope he will support proposals that the Department for International Development and the Treasury have already put forward to reform that aid budget. I believe that we will win support from other countries in Europe which understand clearly that our responsibilities to the poorest countries of the world must mean that we get the best out of the European aid budget, so that it tackles poverty, illiteracy and disease.

Sir Patrick Cormack (South Staffordshire)

Does the Chancellor agree that current events in Zimbabwe underline the fact that much third-world debt has been caused by the profligate attitudes and policies of dictators, which also deter people from investing in southern Africa? Does he have a mechanism for ensuring that future aid, including the aid that Zimbabwe will need when it is free again, will be directed with proper regard for ensuring that it does not fall into the wrong hands?

Mr. Brown

I am grateful to the hon. Gentleman. He is absolutely right. As he knows, Zimbabwe is not a HIPC country and does not receive money from that initiative. The hon. Gentleman is involved in all the parliamentary get-togethers in the Commonwealth that look at these issues, and so will know that the next stage is the African initiative, the New Partnership for Africa's Development. That has got to be made to work, but the conditionality built into NEPAD is that the money will be provided only if we can be absolutely sure that there is transparency in the way that it is handed out; that anti-corruption mechanisms are put in place; that there is a welcoming environment for the investment that is needed for the future; and that policies for economic stability are being pursued. Equally, we have a duty towards all the countries in Africa that are making efforts to put those conditions in place to provide money to relieve illiteracy, disease and poverty. I hope that the hon. Gentleman and I can agree with each other on those matters, as well as on Zimbabwe.

Ms Julia Drown (South Swindon)

A number of hon. Members heard from Senegalese parliamentarians yesterday about their frustration at the debt process. They said that, if the previous HIPC process had worked, there should be no need to launch another decade of poverty relief. One of their main frustrations was that the African voice was not heard clearly enough. Would my right hon. Friend support giving African countries an extra seat on the boards of the IMF and the World Bank, and reallocating shares of votes according to population rather than according to the wealth of individual countries?

Mr. Brown

I am grateful to my hon. Friend, who does a great deal of work on these matters. Her meetings with delegations from other countries are very important indeed. We have been trying to reform the operation of the IMF, whose committee I chair. More resources have been made available for the African countries. South Africa's Finance Minister, the chairman of the development committee, has been invited to sit on the IMF committee, thus securing greater representation of the African voice. In respect of the international finance facility, we have made a point of sending representatives to explain to Finance Ministers in countries around Africa what we are doing. I appreciate what my hon. Friend says about ensuring that the voice of Africa is heard properly. The whole point of the NEPAD initiative is to establish a partnership in which the voices of the developed and the developing countries can come together.