HL Deb 25 February 1964 vol 255 cc1035-57

2.58 p.m.

Order of the Day for the Second Reading read.


My Lords, it is now a little less than four years since I moved the Second Reading of the International Development Association Act in your Lordships' House in May, 1960. That Act authorised the British Government to fulfil our part of the international agreement under which this new Association was set up. The headquarters of the Association are in Washington. It is under the same management as the International Bank for Reconstruction and Development (which I prefer to call the World Bank); but whereas the World Bank is obliged to charge interest at prevailing world interest rates on the money which it advances to its clients, the International Development Association is permitted to charge less, and in practice charges no interest at all. As for the capital which it lends, when that capital is eventually repaid to the Association it will not be handed back to the countries which have subscribed it; it will be used for making further loans again. So our subscription and the subscription of other industrial countries to this Association is, in effect, a gift.

The amount originally designed to be raised in 1960 was, as your Lordships may remember, 1,000 million dollars. Under the Articles of Agreement the members of the International Development Association were divided into two groups—Part I members and Part II members—the Part I members being the industrial nations who were expected to do most of the lending; and the Part II members being the less developed countries who were likely to get most of the loans spent upon them. There were then seventeen Part I members and 51 Part II members. Of the 1,000 million dollars to be raised, 237 million dollars were in the form of subscriptions from the Part II countries, but they consisted only of deposits of credit notes in the currency of the depositing country and were not convertible into other currencies. The International Development Association has not told us—and so I do not know—whether any of these deposits have yet been drawn upon by the Association, but if they have been drawn upon to any small extent they could have been used to be spent in only the country which had made the deposit because they are not convertible. But the remaining 763 million dollars (it has been slightly reduced by reason of the fact that Belgium—and Luxembourg, to begin with—did not come in as they had been expected to do, but now they have come in) was contributed by the Part I countries, and that had to be deposited either in gold or in convertible currency.

The British share of this 763 million dollars was 131 million dollars or a little more, which is the equivalent of £47 million. That was payable in five annual instalments the first instalment of £11 million being in 1960, and after that £9 million for each of the four subsequent years. That compared with 320 million dollars from the United States, and just under 53 million dollars each from France and Germany. One of the small criticisms which was made by your Lordships when this Bill was under discussion was that our contribution was very much higher in relation to our resources and to our gross national product than that of anybody else. It was much higher proportionately than that of the United States, and much higher, both proportionately and absolutely, than the contributions of France and Germany. But that was an arrangement to which we all agreed in 1960.

In the little over three years' life of the Association its lending policy has been extremely lenient. The only charge which it makes is three-quarters of 1 per cent. as a service charge. No interest is charged, and no capital is repayable for the first ten years. After that there is a further 40 years, making a period of 50 years altogether, during which the capital is repaid by gradual, easy instalments. On the other hand, the Association is very careful indeed to see that the money which it advances is not wasted. As your Lordships may easily imagine, that acts as a slight brake on the rapidity with which the money can be either committed or spent. Very great pains are taken by the Association to make sure that any project of which it approves will bring about a real and substantial improvement in the economy of the country to which the money is lent, and also that the money is expended in a reasonably economical manner. There is, of course, always a certain time lag between the time when the project is put forward and the time when it is approved; and there is then another interval before the money actually begins to be spent and before the work actually begins to be carried into effect.

Of the 763 million dollars provided by the Part I countries, about 600 million dollars has been committed; and of that sum about 130 million dollars has actually been spent so far. But we have only another 150 million uncommitted dollars in the kitty up till the end of 1964, and it has therefore been agreed in the Association that the time has come to authorise further amounts by the Part I countries. The Part II countries, by the way, have now increased from 51 to, I think, 76, because a whole lot of new nations have come into being since 1960. But under this new arrangement, which, so far as the United Kingdom is concerned, will be authorised by this Bill before your Lordships, no further deposits or subscriptions of any kind are required from the Part II countries. It is only the Part I countries that will agree under this new arrangement to contribute a further sum of 750 million dollars; but this time it is to be spread over only three years, instead of five. The first subscription will become payable in November, 1965; the next in 1966, and the third in 1967. This time, my Lords, the amount which we have agreed to contribute, instead of being 17 per cent. of the total, is 13 per cent. But the annual amount will be greater because it is spread over three years.

The amount of the British contribution under the new Agreement is 96 million dollars, which is about £34 million. That will be paid in three instalments of £11½ million each year— 1965, 1966 and 1967. That compares with a United States contribution of 312 million dollars, a German subscription of 72 million dollars and a French subscription of 61 million dollars. Here, again, although our proportion is reduced I think your Lordships will be interested to know that our contribution is still substantially more in relation to our gross national product than that of anybody else. It is a great deal more, proportionately, than that of the United States, and it represents 0.04 per cent. of our gross national product, compared with 0.03 per cent. of France's and 0.027 per cent. of Germany's.

I do not think anybody here will grudge that because, as I have already indicated to your Lordships, this is only a very limited field of aid to underdeveloped countries. If this were a comprehensive plan, a world plan, for giving all the aid that everybody needs, then we might perhaps feel it necessary to ask that our contribution to it should be more in proportion to our means; but, as it is, this is only a very limited field, and the £11½ million a year which we have agreed to contribute is, of course, a very small fraction of the total amount which we are spending upon aid to underdeveloped countries as a whole. Your Lordships will find particulars in the White Paper Aid to Developing Countries which was published last December (Cmnd. 2417).

My Lords, as we are contributing proportionately more than others, your Lordships may be interested to know that it so happens that a fairly high percentage of the money so far committed by the Association has been for the benefit of Commonwealth countries. That has not been by any particular design; it has merely happened to be so. About 70 per cent. of the 600,000 million dollars already committed by the Association is for various Commonwealth countries, and 54 per cent. is for India. But we want to see a great deal more spent on other, non-Commonwealth countries in Asia and Africa, and also, we all hope, in Latin America. As for the scope, the kind of thing on which the Association is spending this money, about 30 per cent. of the whole lot already committed is for roads, about 20 per cent. is for other kinds of transport, another 20 per cent. is for irrigation, and the remaining 30 per cent. is for education, electricity, industry and other projects.

My Lords, we should like to see the scope of the Association's activities widened, and we should also like to see the rate of spending speeded up, and I think this will in fact happen. In order to bring the picture up to date, I should like to tell your Lordships that, at the instance of the President of the World Bank, Mr. Woods, the International Development Association is now reviewing the scope of their activities. It is probable that its reappraisal will lead to a widening of the purposes for which these loans or I.D.A. credits are made available. That is something which we in this country have very much welcomed, and we have expressed strong support for Mr. Wood's initiative. In particular, we want to see more help given to agriculture and education, both of which, I think, are vital to many of the developing countries, including, as we well know from our own experience, some of those which have recently proceeded to independence. I am sure that your Lordships will heartily approve both our support of the Association's activities and also our desire to broaden its field of work, and I beg to move that the Bill be now read a second time.

Moved, That the Bill be now read 2a.—(The Earl of Dundee.)

3.14 p.m.


My Lords, we certainly do not grudge any of the money which it is proposed to spend to help our contribution to the I.D.A., and I can assure the noble Earl that he need have no fears on that score. But we do criticise the fact that in all these matters of aid the Government appear to work far too much in watertight compartments and to deal with this vastly important subject far too much on an ad hoc basis. After all, if one looks at these figures it soon becomes apparent that a very large part of the money which is made available through the I.D.A. is, in fact, no more than money which has been given to make up for past mistakes. In other words, it has been used to pay the interest charges on loans which have been advanced in the past by the World Bank. It is admirable that loans should be given, and it is quite right that there should be some international body which should give these loans; but we cannot look on this as being a great and worthwhile contribution to this very pressing problem when we realise the burden of debt charges which loans through the World Bank in past years have imposed upon these developing countries.

It has been calculated by the World Bank itself that the interest and repayments on debts incurred by developing countries up to the third quarter of 1963 totalled £1,100 million, of which £280 million represents interest charges alone. The money which is to be advanced, and is being advanced, by I.D.A. does little more than meet a proportion of those charges which are being repaid by the developing countries to the developed countries through the World Bank. The total resources of the I.D.A., as the noble Earl has said, including new contributions, come to just over £500 million, of which £215 million is already committed. In other words, there is less than £320 million now available, or just over one year's interest charges.

These repayments of principal and interest on these loans constitute an appalling strain upon the economies of these developing countries, and therefore, while I fully support the fact that we ought to do all that we can to relieve these strains, I do not think we ought in any way to fool ourselves into thinking that any scheme of this order will help to solve this problem. It is a palliative, and a very small palliative, to amend some of the burdens which have been placed by the loans which have already been given. Do not let me give your Lordships the impression that I am saying we should not have given those loans in the first place. All I am saying is that the loans which we have given, and the interest charges and the repayment conditions which have been imposed through the World Bank, are such that it has become absolutely essential that the I.D.A. should do something to ease this strain. It is not in any way helping the developing countries from their baseline: it is only making up some of the handicaps to which this borrowing of money has subjected them.

My Lords, it is not only a question of money with which we should concern ourselves when we are talking about helping the underdeveloped countries. Of course, they need money, but they also need manpower. They need the right sort of technical manpower to enable them to spend that money wisely, and to get the benefits from it which we all believe they should get. Simply making money available is by no means the end of the problem. The White Paper which the noble Earl mentioned—I think he said December, 1963, whereas I believe that it was in fact September, 1963—referred to a target for our total aid of something between £180 million and £220 million in the current year. That is a good figure, and I am not criticising it; but on present form it is highly unlikely that we shall get anywhere near that target.

The latest available figures show that we are running at the rate of something under £150 million a year. This is a long way from £180 million to £220 million; and, what is more, if we compare it with the previous years it shows that we are just about level with last year, 1962–63, and, in fact, rather below the 1961–62 figure of £160 million. I mention these figures only to point out that it is not enough simply to say that we wish to spend this amount of money which we have made available; but that we must at the same time help to provide the people who are going to make it possible to spend that money wisely. The sad fact is that the number of British technicians and civil servants in developing countries has fallen and is still falling.

There has appeared to-day—and I have not yet had the chance to read it in full; I have merely glanced at it and I hope that we may have the opportunity to debate it later—a White Paper entitled Technical Assistance from Britain in Agriculture, Animal Health, Forestry and Fisheries, Overseas. Report of the Advisory Committee. In paragraph 8 of that document is stated: The Committee deeply regrets the fact that many trained people with much hard-won experience in these countries are now leaving, for such people are specially needed to train local staff. Everything should be done to retain their services, but even if the current rate of resignations can be slowed, the need to recruit new graduates will continue. Again, in paragraph 11, the Committee say: To provide a continuing service of technical assistance from Britain to developing countries requires immediate and radical changes in the basis of recruitment." I hope very much that the Government will not rest on such small, and not particularly green, laurels as they have acquired by this extra contribution to I.D.A., but will realise that the taxpayers' money from this country which is being offered will to a very large extent be wasted unless they pay heed to what others have said before, and what this Government Committee says to-day, about the need for recruiting new people and retaining old people to help in wise expenditure.

We have at the present time something like 14,000 technical officers and civil servants in overseas countries under the Overseas Aid Scheme. That is fewer than when this scheme started in 1957–58. That number is decreasing at the rate of something between 1,000 and 2,000 a year. In other words, in another five or six years we shall find, under this Scheme, that there are precious few people to carry out this overwhelmingly important job. On the other hand, it is perfectly true that there are new recruits coming to the Department of Technical Co-operation; but the number that is recruited, normally for a period of only one or two years, is 1,600 a year. That is not enough—especially as they are going to remain for only two years—to replace this steady drain.

What we are engaged in now is nothing more than a holding operation; a slowing down of the rate of disappearance of these trained men who are essential to solve the problems of underdeveloped countries. We are in no way creating an increasing number of the experienced men who are so vitally needed in order to solve some of the problems which are confronting these countries and the whole world. The real fact of the matter is that the Government are approaching this matter on an entirely wrong footing. They are not looking at the problem as one of equal importance to that of our foreign relations, as conducted through the Foreign Office, or of our defence programme as conducted through the Ministry of Defence. They are looking on it purely as a rather tiresome duty that we must fulfil here and there to help a few people who were at one time, dependant on us, or as the fulfilment of certain international obligations that, because of our standing in the world, we cannot entirely ignore.

Until that attitude is changed, until we realise the importance of this problem, we shall never make any progress in it; and such money as is put up by the taxpayers through Her Majesty's Government either will not be spent (as is the case with a proportion of it at the present time) or, when spent, will not achieve the results that we all insist should be achieved. We must have an overall plan for these developing countries; and the Government Department which is going to consider this plan should consult with other Departments concerned if it is going to play its dynamic part in fulfilling it. Of course, there will never be enough money or enough people to do all that should be done. It would be idle to pretend that this country, even with greater prosperity than at the present time, could achieve that rôle in the world. It is too much for any individual country, and certainly too much for this country.

We must, therefore, have a system of priorities; we must decide where we wish such money as we can afford to go; where we wish such trained people and such experience as we can contribute to go. We must decide where they will make the biggest impact, where they will do the most to alleviate suffering, where they will do the most to promote economic growth, where they will do the most to achieve political stability. This needs the very closest co-operation not only with the Treasury but also with the Foreign Office, with the Commonwealth Relations Office, with the Colonial Office, with the Ministry of Defence and, probably, with the Board of Trade, too. That is how our decisions should be taken; but that is not how they are being taken at the present time. They are now being taken on far too parochial a basis.

I will give only one example. I had a letter a few days ago from Swaziland, a country about which we spoke in this Chamber not very long ago and where, I believe, most of your Lordships will agree that there are problems (because of its actual position in Southern Africa) which outweigh its relatively small size and relatively small economic significance. The Government of Swaziland put in an estimate for its requirements on a five-year basis. The demands they made were for £2 million for loan expenditure and £4½ million under the Colonial Development and Welfare grants. This was to be spread over five years. This was not a very large amount, a little over £1 million a year, for a development plan in this vitally important British Colony. But that plan was turned down out of hand; and, in place of that £2 million over five years, they have been given £600,000 over three years. This is something like £200,000 a year in loans and £2.3 million (instead of £4½ million) in grants from Colonial Development and Welfare funds. Whether this is the right amount or not, I do not know; although I would be extremely surprised if it were. But what is manifestly wrong is that a decision of that type should be taken without the fullest consultation with the Government Departments which are concerned with their entire relationship with Southern Africa, our relations with South Africa itself, with the grave problems of that area, and with Southern Rhodesia, Northern Rhodesia and Nyasaland and the whole complex of that extremely difficult and important area. Until we have a Government Department which can deal with these things, we shall never get the right answer.

I would say also that this new Government Department must consider other areas which, as things are at present, are entirely ignored or omitted by I.D.A.— for instance, the Windward Islands and the Leeward Islands, which are important parts of the Commonwealth, still Colonies, and greatly in need of more money of the sort that I.D.A. should provide. But I.D.A. are not prepared to grant loans of less than a million dollars, or to grant loans to countries which have less than a quarter of a million inhabitants. In other words, all these small islands are automatically debarred from any funds from I.D.A. because they are too small. Surely that is something which should be looked into in the new discussions which the noble Lord mentioned, and I hope that this situation will be put right.

Above all, we must consider the whole economic situation of the developing countries. What they want is what we wanted in the days after the war: trade, not aid. They want capital with which to finance their infrastructure, their education and their economic development. Some of that money could come from the profits of their own products, if they made sufficient, and also from the confidence engendered in the outside world by such profits. What is needed is increased profitability for their primary products and increased stability.

Many people will ask: If we pay more for these primary products, what about the effect that is going to have on our balance of payments, which is difficult enough as it is? But people who say that do not always have a complete appreciation of the picture. The total imports from developing countries, excluding petrol, which is a special item, and copper, which is already pretty well stabilised, amounted in 1962 to £1,130 million. If we paid 10 per cent. more to those countries for all their imports—not only primary products but also manufactured goods—it would cost us less than £100 million, or little more than 5 per cent. of the amount we are proposing to spend on armaments in the current year. And if we were to confine this to the developing countries of the Commonwealth it would cost us—since we find that the total imports in 1962 amounted to £693 million—only £69 million, or 3 per cent. of our total expenditure on armaments. Surely this puts the matter in a rather better perspective and makes us realise that a relatively small increase in our national expenditure within the sterling area, as it would be in almost every case, would have very beneficial effects upon the developing countries, especially in the Commonwealth (and I was glad to hear the noble Earl say that 70 per cent. of I.D.A. loans were going to the Commonwealth), and very small effect indeed upon us.

But what these countries need is not only higher prices, but also more stable prices. How is it possible for any country that is dependent to a large extent on one single crop to plan its development, attract capital and be able to repay that capital and the interest charges on it, with the violent fluctuations that take place over a few years in the amount received for its primary products. For instance, cotton, an important product in a good many developing countries, has fallen to 67 per cent. of its price twelve years ago, a drop of one-third. Coffee has fallen 55 per cent. in ten years, a drop of nearly half. Cocoa, the main export of Ghana, for instance, sold in 1954 at a maximum price of 562s. 6d. per cwt. In the course of three years, the price fell to well under half, to 178s. 9d. per cwt. Even with I.D.A. or World Bank loans, with cheap loans or expensive ones, how can we expect these countries to develop in the way we all want them to, so long as there is this instability in their national income? If we are serious in our desire to help these countries, this is one of the problems that we must study with the utmost urgency.

I do not think there is any need to remind your Lordships of the words of the present Prime Minister, when he stressed that poverty is a greater threat to world peace than the hydrogen bomb. The Prime Minister has also said that he would rather have a fat Communist to deal with than a thin Communist. Some people may disagree with that view. I do not. And I do not think anybody would disagree that to have a large area of the world populated by people who do not have enough to eat is a far greater threat to world peace than anything we are likely to encounter in the next 50 years from the hydrogen bomb or anything else. I should like to read one comment from the statement by the Secretary for Technical Corporation in the new White Paper. Technical Assistance for the Development of Natural Resources Overseas: … the increase in world population is so explosive that, if present conditions continue, the number of hungry or malnourished people in the world could well rise to three billion by the end of the century. My Lords, that is the scale of the problem that we have to face to-day.

The Economist, in its issue of February 15, had an article on this subject, at the end of which was written: The penalties of ignorant inertia could be so fearfully much greater than what the article referred to as the failure to follow internal Keynesian policies in the 1930s. And the writer asked: How can pressure be mobilised on slow-moving western politicians to make them realise this? On occasions of this sort, it is our duty to exert pressure on the slow-moving politicians and I hope that what has been said on this occasion will make the noble Earl and his colleagues move rather less slowly and realise that the contributions we are discussing under this good but very small Bill are in no way an answer to the colossal problems confronting us.

3.40 p.m.


My Lords, on behalf of my noble friends on these Benches and myself, I welcome this Bill, which, as previous speakers have said, provides for a contribution by the United Kingdom of £34½ million over three years to the International Development Association, or more if the exchange rate goes against us, or less if the exchange rate goes in our favour. The need for this Association is of interest. It shows, in fact, how economists can plan something with an open mind and the best intentions and then find that what they have planned is not sufficient.

In the beginning, when the World Bank, the I.B.R.D., was set up, it was assumed that what had to be done in the international sphere was to set up something like the Midland Bank and then everything would be all right and nothing more would need to be done. So they set up the World Bank on strict banking principles. The loans which were borrowed had to be borrowed for fixed terms; they had to be repaid in the currency in which they were borrowed, which was, of course, dollars; they carried a high rate of interest, and market rates, as the noble Earl said, had to be paid. It was very soon found that this situation did not suit many of these countries. As the noble Lord, Lord Walston, said, the late President of the World Bank himself came out with a statement that what was happening was that in many of these countries a large number of projects were being half finished because the countries had not the necessary finance to finish them, and large sums were being expended in interest every year to service these half finished projects, which were like a lot of, not extinct volcanoes but volcanoes which had never come into operation scattered about the world.

Something had to be done about this. The first step was to provide the International Finance Corporation, which was able to invest in shares and take an equity. But that was not enough, and eventually the International Development Association was, quite rightly, created. I do not go all the way, by any means, with the noble Lord, Lord Walston, who has put up a somewhat cynical view of the International Development Association. He says, in effect, that all it is doing is to service the loan from the International Bank. I know that this is said in certain quarters, but it is not true. This is an important element in international aid, because, first of all, the people borrow the money and can repay in soft currency; they are not bound to repay in dollars or in the currency in which the loan is made. Secondly, interest can be forgone—and the noble Earl, Lord Dundee, made an interesting statement when he said that no interest is charged in most cases. Thirdly, the loan is for a long period: 50 years, the noble Earl said, is allowed for repayment in most cases. Those are quite important elements. And the loans from the International Development Association have, I understand, been given mainly to provide finance for infrastructure or basic development projects such as the noble Earl, Lord Dundee, instanced to-day.

There are a number of new problem children in the international field. There are countries now which are too poor for the World Bank—they do not come up to the World Bank minimum provisions—and too rich for the I.D.A. What will happen to these I do not know; but in future I suppose we shall have to look at their problems, as well as those of the richer and the poorer ones: there is this medium grade.

As the noble Lord, Lord Walston, has said, the question of international assistance is not merely one of finance. In my view, management is at least as important as finance, and the question which is now being raised in the international sphere, as in many others, is: how does one get good management? Those of your Lordships who are conversant with industry and commerce will know the difficulties of obtaining good management. These difficulties are increased a hundred times in many of the underdeveloped countries, where there is no tradition or experience of management whatsoever. This is a great problem, and it is a twofold problem. The first aspect of it is in the urban areas, where what is needed is the provision of light industry, of housing, hotels and matters of that kind. It has often been said in this country that the only way to get an hotel to pay is by having at least two bankruptcies. That is perhaps a rather pessimistic outlook; but it is difficult to get a new hotel to pay. Nevertheless, quite often it is found in these new countries, and particularly in the urban areas, that one of the things the people want most is the provision of an hotel; they feel that they cannot get development going until an hotel is started. In the rural areas there is no question that agriculture is the dominant feature, and that is the field in which assistance must be provided. As the noble Earl, Lord Dundee, has said, the World Bank is rapidly coming round to this view, and particularly under the enlightened presidency of Mr. G. D. Woods, who has stressed the necessity for the Bank, the I.D.A. and other international and national organisations to get into this field.

I would stress that in this field there are no certainties. We are dealing with unknown quantities all the way through, and there is no guarantee of success. There is a real risk capital, in a sense in which real risk capital is not employed in this country. When you know very little about soil, water, labour, markets and finance in a country, that is real risk capital. There is a tendency, I think, particularly on the part of international associations and organisations, to overlook the fact that there are no certainties and you cannot guarantee anything.

Agricultural development, including forestry, animal husbandry and fisheries, can be of the utmost assistance; and even quite a small project can revolutionise a territory. If I may give an example, in Bechuanaland, which is a vast country about the size of France, or even bigger, with a scattered population, the people are almost entirely dependent on ranching—on cattle. Until recently, the Bechuanaland economy was based on cattle and depended on the Johannesburg butchers. They depended on their cattle going down to the Rand. The animals had to go by hoof or by rail, and a lot were lost on the way; if there was any question of foot-and-mouth disease or rinderpest or any of the contagious diseases, possibly the whole of the Johannesburg market was cut off; and in the case of drought, many scores of thousands of head of cattle were lost.

The British started in Lobatsi an abattoir and a cannery. The abattoir is now putting through 110,000 head of cattle a year, and that has completely revolutionised the whole economy of the country. It is quite a small matter in the way of finance, but it has brought about a complete revolution. I am glad to say that a great deal of the cattle, after slaughter, goes not only to South Africa, but to other parts of Africa, and to Europe, including this country. So what is done does not necessarily require the spending of vast sums of money, but it does require a considerable amount of imagination and intelligence to see what is wanted and where things can be got moving.

Above all, what is needed in agriculture is the provision of smallholding schemes, such as the oil palm scheme at Kulai, in Malaya, which is a smallholding scheme; the sugar smallholding scheme in Swaziland and various others throughout the world. These smallholding projects are most important, because they help to raise the standard of living and provide useful steady employment for a growing population. But there is a need for pilot schemes; it is not good to go ahead without a pilot scheme. And what is needed is not only a pilot scheme, but a scheme which is going to continue, which is run by good management and will provide adequate finance, skill and marketing techniques.

Economic development does not exist in a vacuum, and it cannot be isolated from the political situation of the country in which such development is taking place. So that recent events, as in East Africa, naturally have an effect on the stability and creditworthiness of the country. This is where there is great need for patience, understanding and help from the Western World. We must not be discouraged by these factors. Because of them I think these countries need more and not less help. I think we need not be too much discouraged or worried about one-Party rule. Our own system was built up over hundreds of years, and is a highly exceptional system. In my view, it suits the English and those people who have been at one time or another colonised by the English. I am not so sure that it suits what the noble and gallant Viscount, Lord Montgomery of Alamein, called the "tribal areas", quite so well. Whether the Scots, Irish and Welsh would ever have had anything like this, I rather doubt.

But one-Party rule very often lends itself to the tribal system. In the tribe they are used to tremendous arguments, and finally the elders come to some sort of rough-and-ready agreement. The chief announces the decision, having collected the voices from the tribe: that is the decision of the tribe, and it is carried out. The idea of a perpetual Opposition which is recognised and paid is quite foreign to tribal ideas. Therefore, we should not be discouraged about one-Party rule. I have no doubt that it is far more in touch with tribal opinion than our own, and I am quite certain that in time—


Is the noble Lord's present advocacy of one-Party rule entirely consistent with the Liberal Party's advocacy of Proportional Representation in order that there shall be innumerable Parties in the British Parliament?


No: I am not in favour of one-Party rule. I am explaining for the benefit of the Labour Party, who do not always see these things through a glass clearly, but see them through a fog dimly, why things are happening in East Africa, and why we need not be too discouraged that one-Party rule should have occurred so soon after the grant of independence. In this country we have many hundreds of years' experience, and I am hoping we shall come on to a more just and satisfactory development in Proportional Representation. After all, Mr. Sandys recently said that the British system was quite inapplicable to British Guiana; that it only produced chaos and bloodshed there, and he decided, wisely and rightly, to introduce Proportional Representation in British Guiana. I sent him a message saying that, as he had conferred these benefits upon Her Majesty's subjects in British Guiana, no doubt he would do the same thing to Her Majesty's subjects in Great Britain. However, he has not replied yet. The telephone line is not so good between here and Whitehall, I am afraid.

There is one point that I should like to make on this general question. I think it is unfortunate that both the Conservative Party and the Labour Party (not officially, but by a number of prominent and important people in both these Parties) are continually pressing for tied loans: that when we make loans to these various countries they should be tied to the countries making them. This has the worst effect on the people who are receiving the loans. They say, "What is the aid for? You put it down as aid to underdeveloped countries. Is it for us, or is it for your own manufacturers?" The answer is that "It is for your own manufacturers, and not for the people." That is quite unnecessary and has an extremely bad effect. Britain has the best record of any country in the world in this field, and I hope that neither the Members on the Labour Benches nor the Conservative Back Benches will persuade Her Majesty's Government to depart from their excellent record in this respect.

There is only one other point that I should like to make. In addition to finance and management, these countries need skilled assistance. I welcome the announcement, made to us only a week or two ago, on expanding voluntary overseas service, sand I regret the tendency which has been mentioned in the Fourth Report of the Scholarship Commission, presided over by our own colleague, the noble and learned Earl, Lord Kilmuir. They report that there is a growing tendency for overseas students to stay on in this country when they have completed their period of study here, whereas, of course, they are required overseas. This is a sort of "brains drain" in reverse. It is one which, while highly complimentary to us, is unfortunate so far as their own countries are concerned.

In conclusion, may I say that the only thing to which I would draw attention with regard to the international organisations themselves is the tendency which they, in common with all organisations, have towards "empire-building" and inflated staffs. They must realise that the funds come from countries which have high taxation. Britain is now providing £34½ million. We are very highly taxed. We gladly provide this money, but we feel that it should be spent properly, and that the people who spend it—that is, the headquarters of the organisations—should be as careful and as prudent over staff numbers, salaries and expenses as if they were a normal commercial concern. We also think that they should be careful to ensure that their statutes give them sufficient latitude to meet the changing needs and that they will not allow themselves to be hampered by the ideologies of some of their members, which may have relevance to developed Western countries but no relevance to sparsely populated underdeveloped African or Asian countries. That is all I have to say on this Bill. I trust that the money which the British taxpayer is going to provide will in every way be to the benefit of the people who need it so badly.

3.58 p.m.


My Lords, I had not intended to intervene in this debate, and I shall do so only very briefly, because I do not want to stand between the House and the extremely important Amendments we shall soon be discussing on the Defence Bill. I shall also, for that reason, resist a temptation to reply to the somewhat misleading references made by the noble Lord, Lord Ogmore, to the policy of the Labour Party.

I listened very carefully to the speech of the noble Earl, Lord Dundee, and I should like to ask him just two questions. He said, with considerable pride—and I think he was entirely entitled to do so—that we give a larger proportion of our gross national product to the International Development Association than any of the other countries which contribute to it—taking, of course, the annual figure. But does he not agree that our total capital aid (and this, of course, is the broad position which I think is of great interest to your Lordships, and to people generally) as a proportion of our gross national product is a good deal less than that of some other countries? I am speaking, of course, of our total capital aid in loans and grants from public money, and not of private investment overseas. That is the first question I should like to ask the noble Earl, because I think it most desirable that we should all be absolutely clear about the benefits of British aid to developing countries.

The second question I would ask him is this. My noble friend Lord Walston referred to the rate at which current capital aid is running. He said, I think, that it was running at about £150 million a year. The noble Earl will be aware that it is Government policy to increase the amount of capital aid, and that the forecast of the Ministers was that this year it would be running at about £180 million to £220 million, which would be a very substantial increase on last year and on preceding years, and one which we should all welcome. May I ask the noble Earl whether that is still the policy of the Government; whether they intend to step up the amount of capital aid during the current year in this way, or whether they are, in fact, reviewing overseas expenditure, in the light of these unfortunate symptoms, of which we are all aware, which show a certain danger to our balance of payments and may possibly mean a reduction in the amount of capital aid for the current year? Is it still their policy to reach the figure which they announced last year?

4.0 p.m.


My Lords, I have very little to add, I think, except to thank your Lordships for your support of the Bill and also for the three speeches which your Lordships have made which have all interested me very much, although it seemed to me that their connection with the Bill was often extremely tenuous. The noble Lord, Lord Walston, spoke very generally of co-ordinating our aid programme as a whole. He referred to the burden of indebtedness which many underdeveloped countries undoubtedly have. I do not know where he got the figures from, but his suggestion that underdeveloped countries were paying more in interest and repayment charges to the World Bank than they were receiving from the I.D.A.—


I believe that I did say while I was quoting these figures that they came from the World Bank itself.


You would naturally expect that, if the previous loans which they were repaying had been economically justified, the results should have been such that their economy should have been able to bear the burden of repayment. But, of course, there are many other factors which affect them and one is the factor which the noble Lord himself mentioned later on, the fall in commodity prices. It may be that some of these loans were raised before the fall in commodity prices took place, which would naturally reduce the capacity of the borrowing countries to meet their obligations. We are very much alive to that problem. I think that most of the international organisations which have so far been set up for the purpose of trying to stabilise commodity prices in the world, the prices such as for coffee, wheat, tin, and many others, have their headquarters in London and I often have to defend them against the objection that their personnel have certain immunities, not against the law, but in connection with rates and so on, which I think are well worth while.

I would also just refer to paragraph 45 of the White Paper in regard to debts, which mentions, as your Lordships will see on page 14, that we have joined the other donor nations on the Development Assistance Committee in studying all debt burdens and debt servicing capacity of developing countries, and we shall make it our particular concern to keep under review the position of the independent nations of the Commonwealth, consulting their Governments as necessary.

I also agree with the noble Lord that technical assistance is of the highest importance, and the noble Lord, Lord Ogmore, also rightly said that management was just as important as money. I would again refer your Lordships to paragraphs 101 to 140 of the White Paper. We have not time to go into this question now, and it is not directly relevant to the Bill, but I think perhaps some critics are inclined to underestimate the amount we are doing to encourage the brain drain of talent from this country to the underdeveloped countries.

The noble Lord, Lord Ogmore, said that there were some countries which were too poor to avail themselves of ordinary World Bank loans but perhaps too rich to merit I.D.A. interest-free loans on these very easy terms. The World Bank, whose officials and directors also manage the I.D.A., are conscious of that possibility. I have not any particular countries which I can give as examples for the moment, but the directors of the World Bank and I.D.A. do sometimes try to do both. If there is a country too poor for one and too rich for the other, they try to compromise by giving it some assistance under the World Bank rules and some under I.D.A. rules.

Finally, the noble Earl, Lord Listowel, asked me two questions, very shortly, and said nothing more. The first one was about the relationship of capital aid to our gross national product. He reminded me that the I.D.A. figures, which can be exactly compared, show—and nobody grudges this—that we are giving more to the I.D.A. in proportion to our gross national product, and I pointed out that this was, however, a very small proportion of the total amount we are spending on aid.

In regard to the wider question, there are two reasons why it is impossible to give a really clear answer to the noble Earl. One is that all countries in the Development Assistance Committee resolved last year that none of them would publish percentages showing the comparison of their help to underdeveloped countries with their gross national product, and I think the reason why they did that is that different countries often adopt such very different standards in calculating the amount of foreign aid they claim to be giving. For instance, one country in one year, last year, purchased a very large number of World Bank bonds, which could hardly be described as a direct contribution in aid to any underdeveloped countries, because these bonds are liquid security in the world financial market and are bought and sold in the world exchanges and that all went down in their own computation of what they were spending on aid. There are many other respects in which the bases on which different countries contri bute are not really comparable with each other.

I would, without going into any figures at all, be inclined to agree that France is certainly contributing a larger proportion of her gross national product than we are, chiefly to her ex-African colonies which are now independent. They have been fairly successful in solving the problem of keeping their ex-officials there and a great deal of their aid does, of course, come back to France due to the fact that it is paid to their own officials—but I think they are doing very well.

The other question which the noble Earl asked is also one on which I obviously cannot give a clear answer without having the gift of prophecy. I can only say that the figures in the White Paper are the target which we have set, and if present trends make it possible that we cannot hit that target, it is not due to any lack of will on our part but simply to the fact that it is not always easy to find profitable—I do not mean financially profitable—methods, which are of value to the countries concerned, in getting people there to agree on carrying out schemes of capital development which really are worth while.


My Lords, can I assume here from what the noble Earl has said that the money which the Government intend to allocate in the current year, which will be available and which will be spent, will go up to £200 million in loans and grants?


My Lords, if the projects found are really worth while, then I certainly would say that the money would be available, but I am a little doubtful myself of the wisdom of publishing estimates of this kind because they do depend so much on factors which are outside our control. I think that is all I ought to say now in reply to the noble Earl, and I am grateful to him for being so short.

On Question, Bill read 2a, and committed to a Committee of the Whole House.