OVERSEAS AID BILL

HL Deb 28 June 1966 vol 275 cc547-94

2.40 p.m.

Order of the Day for the Second Reading read.

LORD BESWICK

My Lords, I beg to move that this Bill be now read a second time. Strictly speaking, this is a machinery Bill. It provides authority for the Minister of Overseas Development to use funds for certain specified immediate purposes, and since a Bill was needed at an early date for these purposes, the opportunity has been taken to rationalise and regularise the authority previously vested in the Minister of Overseas Development by Statutory Instruments. Up to now monies have been provided on various departmental Votes and subject to the annual authority of Appropriation Acts. From the point of view of Parliament, I hope that the House will agree that it is appropriate that money-raising powers to support these various aid and technical assistance projects should be placed in orderly, open and legal fashion with my right honourable friend the Minister of Overseas Development.

During the Committee stage, I hope that the House will agree to an Amendment which will make quite clear the authority of my right honourable friend to make aid available to the Protectorate of Aden and certain outlying islands and which will also, I hope, meet the point raised in another place about naming specifically the Federal Government of South Arabia. But, although I am seeking your Lordships to give a Second Reading to a Bill which only establishes machinery, it is, I think we shall all agree, machinery for the purpose of disbursing very large sums of our sorely pressed taxpayers' money.

We had a useful and interesting debate on technical assistance to developing countries, introduced so well by the noble Lord, Lord Todd, in January of this year, during which we discussed some of the fascinating projects on which aid is being spent, or could be spent; and, of course, it would be possible again to-day to speak at length about individual projects. I hope, however, that it will be generally acceptable to the House if I use this occasion to set this Bill against the background of Government policy and Government thinking in relation to overseas aid.

Government aid to developing countries is now a big and expensive operation. Some say that it should be bigger; others argue that it is already too big and too expensive. Much experience has already been amassed, but many criticisms are made. I hope to put this present Bill into something of an historical perspective and to consider against the background of our experience some of the general criticisms which have been made inside and outside of Parliament.

My Lords, before the Second World War, most of the backward areas of the world were dependent upon, and were controlled by, European Powers. They were administered for the most part by European officials, and the infrastructure of economic development, to the extent that is was undertaken, was supervised by European specialists. For the rest, economic development was left mainly to private enterprise, and the typical Colony depended upon the export of one or more primary products to the industrialised nations of the West. The pre-war period saw only the very beginnings of the idea that the economic, as against the political, development of a dependent territory was the responsibility of the Imperial Power. After the war, which, as noble Lords will still remember, we fought for principles of democracy and freedom, the movement towards colonial independence coincided with a growing conception of the need for, and indeed the inescapability of, greater interdependence and economic co-operation though out the world. These ideas assumed concrete form in the foundation of the Special Agencies of the United Nations and the International Bank for Reconstruction and Development.

At the same time as the poorer countries more and more insistently demanded to share in this right of political freedom for which we had fought, their material poverty, especially as compared with the peoples of the industrialised West, became strikingly obvious and, I believe, more intolerable to the consciences of many who belonged to the so-called affluent societies. It is relevant to note, I think, in the context of what I am saying, that during this period there was a wider acknowledgement in Western society of the role of Government in economic affairs; and it was in line with that acknowledgement that the amount of governmental aid to the dependencies of the leading Imperial Power, which was Britain, greatly increased. After their effort under the Marshall Plan to revive war-stricken Europe, the United States, too, turned their attention to the dangers which were presented to world stability by the extreme poverty in various areas of the world. Then, after their own recovery in Europe had been completed, the European nations also began to contribute to this development of other countries, as yet backward or underdeveloped, or, as we now say, developing.

The administration of United Kingdom aid grew up rather haphazardly, and before 1964 responsibilities were divided among about half a dozen different Government Departments. The first step towards a Ministry of Overseas Development was taken in 1961, with the foundation of the Department of Technical Co-operation; and then the Labour Government of 1964, believing that a unified administration, with one specialist Department responsible for the aid programme as a whole, was called for, set up the present Ministry of Overseas Development. This Bill now provides in proper and more permanent form the powers which that one Department needs.

I should like to say a word or two about the alleged conflict, which some claim exists, between Government and private enterprise investment. Her Majesty's present Government believe that Government aid and private investment both have important roles to play in these developing countries. They are different but complementary roles, and neither can wholly succeed without the other. British official aid is heavily concentrated on the public sector, and we believe that private investment on any considerable scale in the developing countries is directly dependent upon the creation of an infrastructure of the basic public utilities. It is impossible, I think, to imagine that private capital, which, as opposed to Government aid, legitimately seeks a considerable and probably early return on its investment, could possibly meet either the nature or the full extent of the needs of the developing world.

As between aid and trade, Her Majesty's Government believe that export promotion should not be a main or immediate objective of official aid giving; but on a long-term view it is clearly in the interests of a great trading nation that world prosperity should increase, and if Western aid brings this about, then we may expect, with others, to benefit in the long term. Our own policy, therefore, is to regard aid-financed exports as provided primarily to supply the goods and services required by the developing countries for their development programmes; while commercial credit, we hold, is for the supply of goods which our own exporters wish to sell. These objectives, both of them desirable, are quite separate, and it is our policy to maintain the distinction between the two.

Since we believe that there is not only a moral obligation but a political and economic necessity for these official aid programmes, we view with concern the fact that the world growth of aid during the present decade has shown some signs of abating, and that the progress of the1950s in increasing incomes per head in the developing countries has slowed down since 1960. One reason, we believe, is the fact that official aid represents only one possible use of national resources and competes with other forms of public expenditure, all of which everywhere, including this country, are on the increase and are never sufficient to meet the demands of the electors in the donor countries.

Over the past year or two one has discerned—and it is impossible to take part in the discussions or listen to Question and Answer in this House without realising it—that there is a certain disenchantment with the results so far of the official aid programmes. Perhaps people expect a progress in development much more rapid than has been proved to be possible or realistic. There is also in sections of this country the feeling—indeed, it was expressed in another place when they were considering this Bill—that our own programme imposes too great a strain on our economy at the present time. Since we are all, or should be, concerned with getting our own national balance of payments in order, I thought it worth considering for a moment the actual impact of aid on our balance of payments problem.

It is commonly supposed that the whole of our overseas aid disbursements constitute a 100 per cent. charge on our foreign exchange reserves. But this is not the case. The Ministry of Overseas Development last year undertook, in consultation with other interested Departments, a study of this question and the conclusions suggest that as much as two-thirds of additional British aid took the form of British goods shipped abroad. This represents, therefore, mainly costs in resources rather than costs in foreign exchange. Admittedly, in present circumstances, the foreign exchange cost of aid is enhanced by the probability that exports generated by aid may be partly provided at the expense of satisfying other demands, and may even lead to increased imports or reduced exports to other countries. When all such factors are taken into account, however, the marginal burden on the balance of payments of increased aid was estimated, on the least favourable assumption, not to exceed 50 per cent.

There is another school of criticism which quotes, and has quoted in this House, from the National Plan and from the Election addresses, to prove that we are not doing enough. The fact is that our total aid has been steadily increasing, from £ 81 million in 1957–58 to £151 million in 1960–61, and to £191 million in 1964–65. We expect the final out-turn for 1965–66 to exceed £200 million, and our target for the current financial year is £225 million. What can be done in subsequent years will depend directly upon the recovery of our own economy. In the meantime, we are concentrating on a number of main lines of policy.

One vitally important objective is to increase what has been called the cost-effectiveness of our aid. This is sought not only by the greater co-ordination achieved by a single responsible Ministry, but by a careful scrutiny of individual country's development programmes. This scrutiny is aided by the Ministry's economic planning staff, and by an increase in the number of posts in our overseas missions in those countries which are relevant to this development programme. More effective use should also follow from the policy of devoting a larger proportionate increase to technical aid. Disbursements on technical assistance. rose from £25 million in 1964, to £32 million in 1965, and further increases can be expected in future years. An injection of skills and knowledge is without question the first requirement of most of these developing countries, and a number of important new initiatives to this end were announced in last year's White Paper.

Another feature of aid policy has been an increase of contributions to multilateral agencies. These showed a marked increase in 1965, and the intention is to increase further our contributions, in company with other donors, as the needs of these international organisations grow and as our own resources permit. The funds of the International Development Association will need to be replenished from 1968. I should also add, in this context, that anew and potentially extremely important channel of multilateral aid may, if all donor countries can reach agreement, come into being towards the end of the decade. As a result of a British initiative at the first United Nations Conference on Trade and Development in 1964, the International Bank has been studying the possibilities of a scheme whereby these countries whose development plans are threatened with destruction by reasons of unexpected falls in export earnings may receive a special form of assistance. The details of the scheme and the responsibility of its administration have yet to be decided, but the British Government will participate fully in the international discussions which will, we hope, lead to the adoption of an acceptable and constructive new development in international co-operation.

Nevertheless, although there is this trend towards an increase in multilateral aid, bilateral aid will undoubtedly remain the largest part of our programme, and our policy in this connection is to give preference so far as possible to those countries and territories where our contribution will have the greatest effect on development in the long term, and will also take into account the relative poverty of the countries with which we deal. As I have already stated on another occasion in this House, we also recognise that countries which are members of the Commonwealth, or with which we have had important and historical links and common ties, have a special claim upon our resources. As our own resources permit, we hope to be in a position to increase our aid to foreign countries.

I ought to say something, I think, about the terms of aid. The terms of British aid have been progressively liberalised in recognition of the problem of the increasing debt burden facing these developing countries. Nearly half our total aid is in grant form, and over the years we have progressively softened the terms of our loans by giving grace periods on the repayment of capital and waivers of interest for the first years of the life of the loan. Last year the Government announced their decision to make development loans free of interest in appropriate cases. This, together with suitable arrangements for capital repayment, has enabled us to lighten the burden of debt service. Decisions on which countries are eligible for interest-free loans are based upon the economic position of the recipient country, particularly its income per head and its present and prospective balance-of-payments position, as well as its capacity to achieve a balanced and sustained development.

I have not been through the Bill clause by clause. It has already been dealt with in that way before it reached this House. Of course, if there are any particular questions on the precise provisions of the Bill, I should be very ready to try to answer them later this afternoon or during the course of our Committee stage. Meanwhile, I hope that the general provisions and the central purpose of the Bill will be acceptable, and that noble Lords will feel able to give it a Second Reading. I beg to move.

Moved, That the Bill be now read 2^a.—(Lord Beswick.)

3.0 p.m.

THE EARL OF BESSBOROUGH

My Lords, we must be grateful to the noble Lord for having described the purpose of the Bill to which we are asked to give a Second Reading to-day. The noble Lord's colleague in another place, the Minister of Overseas Development, in opening the Second Reading debate there, said that it constituted a modest, if far from negligible, contribution to the discharging of our responsibilities in achieving a just distribution of the world's wealth, in banishing hunger and disease and conquering illiteracy. I would emphasise, however, that he used the word "modest", and as your Lordships know from the debate which we had on the Motions of my noble friend, Lord Todd, and myself in January of this year, many of us are concerned that perhaps this aid is too modest.

We discussed this at some length during that debate and I will not repeat what was said at that time, except that many of us, of varying political hues, are disappointed that the hopeful statements in the Labour Party Manifesto, and indeed in the White Paper of August last year, were not echoed in the National Plan, which stated that aid was to be restrained. Your Lordships may remember that even the Fabian Society bulletin, Venture, went so far as to mention that on the developing countries the tone of the National Plan was utterly negative. On the other hand, as my right honourable friend Mr. Richard Wood said in another place, the total aid given during the so-called "thirteen wasted years" of Conservative rule amounted to nearly £1,500 million, and it rose from £53 million to £190 million in the last year. I know, of course, that there has been a rise this year to some £225 million, as the noble Lord has told us, but the increase is nothing like so considerable as we had been led to hope from previous Labour statements.

Apart from this general observation I would say that we on this side of the House look upon this Bill very favourably. We certainly support the offer of interest-free loans to developing countries with special needs, and I am sure that the Government are well aware of the policy of our international competitors, especially the United States of America and Germany, of subsidising economic planning and feasibility studies by private firms, with a view to securing valuable export orders. To these developing countries the flow of private capital must be actively encouraged, as the United States and Germany are doing by investment guarantees, by additional tax concessions, by technical assistance facilities, and so on. Indeed, I observed during a recent extensive tour of Southern Asia what these countries were in fact doing.

At the same time, I was glad to read the assurances given by the Parliamentary Secretary in another place about the co-ordination of our efforts with other donor countries, particularly through the Development Assistance Committee in Paris. I also have read with interest the clause concerning the Asian Development Bank, and I note from statements—again I refer to those made in another place, but I think the noble Lords will confirm them—that this Bank and the Colombo Plan, which has somewhat similar membership, will in fact be complementary in their activities.

I also welcome the clause concerning the Indus Basin Development Fund Agreement, which has been described as perhaps the one bright spot in Indo-Pakistani relations since Independence, and I am glad to see that expenditure on this project in 1966–67 will be about £3 million. I think we all also welcome the introduction of the Overseas Service Pensions Scheme. However, we on this side of the House shall certainly watch the operation of this Bill, when it becomes law, with great care and interest; and although, as I have implied, the Government have perhaps shown little willingness to implement their earlier pledges, and have been doing a certain amount of back-pedalling, we hope that the Government's financial policies will enable them to use the Bill as we think it should be used.

Having said that, may I make one or two personal observations arising out of my recent journey? I know full well how much our aid is appreciated in these countries. For example, when I was visiting Dacca, in East Pakistan, the Ministry of Overseas Development announced the grant of some £20,000 worth of scientific instrumentation for their laboratories there. Curiously enough I was myself asked to announce this in the course of what I assure noble Lords opposite was a wholly non-Party lecture on Scientific Britain which I gave at the university there. At all events the aid was greatly welcomed, and it is greatly welcomed elsewhere. On the other hand, in one great Indian city which I visited I was told that while such equipment might be of great value, it often took so long to get it out there that by the time it came—perhaps as much as a year or more after the application had been made—it was sometimes considered to be no longer exactly what was most urgently needed. Several of those most intimately concerned with these matters (and I told the noble Lord about this before our debate), British as well as nationals of the various developing countries, told me how extremely important it was that when such equipment was given it should be despatched with all speed.

This leads me to mention something else which disturbed me during this tour. It concerns the brain-drain—not so much from this country across the Atlantic as from the developing countries themselves. They are suffering from a serious exodus of qualified men—and some women, too—to Britain, to Canada, to the United States and even to Australia. If they have had a good training in this country or in their own country they are able only too easily to take jobs in the Western World. Yet in fact they are needed much more in their own countries.

In one of the new universities in Southern Asia, a beautifully planned university with a magnificent campus and an agreeable climate, the head of the large engineering faculty told me how depressed he was by the fact that the seven best men on his teaching staff of about twenty had all been offered jobs in the West and were proposing to take them up. The firms wishing to employ them were perfectly willing to pay the premiums required by their home Government if these men did not remain to work in their own country. This sort of thing is going on all over that part of the world, and with our own brain drain of doctors to America it is ironical how much we need those Pakistani doctors here.

Again, in regard to industry—and I think the noble Lord, Lord Kings Norton, touched upon this in the previous debate but I have observed it myself—the university which I have already mentioned, unlike the modern American universities or universities here, was out in the country and there was no industry around the campus or even in the capital some sixty miles away, so there are few jobs for them to go to in their own land. Then if a British firm trains qualified technicians here they so often want to continue to work in a country such as ours, in which they consider it to be more agreeable to live. Or if they do return to their own country there is a tendency for them no longer to want to soil their hands as technicians but to take clerical jobs, thus wasting their hard-won technical qualifications which have come through the aid we are discussing to-day.

I do not pretend to know what are the solutions to this intractable problem, nor how this brain-drain can be reversed. One small way in which we can help is to encourage more retired people with suitable qualifications in this country to go out and help the developing nations. A man is often very fit when he reaches retiring age here, and I saw what a tremendous job for example, Sir James Cameron was doing as professor of postgraduate medicine at the Dacca Medical College. I sincerely hope there are more like him. They are certainly needed in those countries. The unfortunate fact, therefore, is that, despite all our aid, some of the under-developed countries are actually slipping backwards and there is a terrifying lack of progress, particularly in regard to agriculture. In this way the gap between the developed and developing parts of the world may become considerably wider during the latter part of this century.

All of us in the West must do all in our power to help these countries to cope with their problems, and in this I include, as I have said in this House before, assistance in family planning to control their population explosions. Their plight is disturbing—in some cases often tragic. I felt that much of our aid to these countries was negatived when their best-trained people emigrated to the West, even if it could be said that the world as a whole was the beneficiary. I do not know whether the noble Lord has any thoughts on these matters, but I think they get to the root of this problem. What is the use of our going on giving aid if they lose all the best people to apply it?

Many of the countries I visited seemed rather more interested in setting up large-scale capital equipment projects than going in for the development of smaller-scale industries and the application of what is now generally described as intermediate technology, a subject on which the noble Lord, Lord Sandford, made some very interesting observations in our last debate. I am glad to see he is to speak again this afternoon from this Box.

I should like, before concluding, to pay my own small tribute to the work of the representatives of our Overseas Development Ministry. I think there are now some 173 of them around the world. All those I met are to be congratulated on doing first-class jobs in very difficult circumstances, and they deserve our full support.

The only point I would take up with the noble Lord, one on which I gather from what he said at the beginning of his speech he intends to put down an Amendment, concerns Clause 1(4) in the Bill and the reference there to the government of Aden and any government established for any part or parts of the Protectorate of South Arabia". What I fail to understand—and I think this was not understood in another place—is why there is no reference to the Government of the Federation of South Arabia, which is undoubtedly the most important Government in that part of the world. According to my information, this has caused considerable offence to the Government of the Federation; and this, coupled with what I might describe as our breach of faith in regard to defence in that area, has certainly not improved our relations with the South Arabians. My own view is that the Government of the Federation should be specifically mentioned in subsection (4) of Clause 1. I shall look with care at the noble Lord's Amendment when he comes to put it down, and if it does not seem to me to fill the bill I may be obliged to put down an Amendment of my own. There is no doubt, on my information, that the Federal Government consider the present wording of this clause to be completely unsatisfactory. Otherwise, I hope the Bill will, within its limits, have a smooth passage in your Lordships' House.

3.15 p.m.

LORD OGMORE

My Lords, I welcome this Bill, subject to certain reservations and some comments. The first reservation I have is one that I have often put to your Lordships in the years gone by; and that is that if trade were fair, and if there were a continuing market for the products, raw materials, of these countries—what are now called the developing countries—there would not be so much need for aid. In a way this Bill is a confession of partial failure. I do not blame Her Majesty's Government particularly for this; they are not so much to blame as many other countries. But in fact if we, the richer countries, gave the poorer countries a square deal, this Bill, and aid generally, would not be so much needed. I want to make that point quite clear; and I think it important that we should realise that. The developing countries realise it only too well. They do not like being put in the position of going round with the begging bowl.

The need is enormous. Two-thirds of the population of the world are still below the poverty level. The United Nations Development Decade is half-way through, five years. It started off with a great flourish of trumpets. Unhappily, the actual amount of development now taking place in those under-developed territories—the rate of development, the rate of increase of productivity—is actually less than it was before the Development Decade started. In twenty years the International Bank, with its affiliates, the International Development Association and the International Finance Corporation, have lent 11,000 million dollars for development. As the Chairman of the International Bank said not long ago, in many cases projects were like extinct volcanos scattered around the world, because there had not been enough money and expertise to keep them going.

A project is started, but it is not always possible to keep it going. In some cases projects have been started with financial loans to the countries, their manufacturers, their industries, for setting up steel mills, and so on, in the heart of Africa, without any raw materialsto supply them. Or big factories for the supply of dried milk have been established in areas where there was not enough liquid milk to go round for the inhabitants of the area. And there are other examples of that kind of thing. The International Bank (it has an excellent Chairman) has learned by experience the folly of that sort of thing, and now concentrates to a large extent on assistance to agricultural projects. That is what is needed in most of these countries: either to make something grow that has not grown before, or to make something grow better than it did before; or to stimulate an industry which can develop the agricultural potential of the country.

I mentioned only last week the magnificent work the Commonwealth Development Corporation have done in Bechuanaland, where they have really saved the economic position in the last few years with the abattoir and canning factory at Lobatsi. That is the sort of thing needed in many places, to take the potential and develop it. It is no good starting on a Western project that has no relationship to the needs of the country to be helped and is of no benefit except to the manufacturer who supplies the materials. And there is no question that, unhappily, there are going around at this moment quite a number of manufacturers, particularly from Western Germany, who are lending money to these countries to establish, to their long-term detriment, factories and machines which they do not need. I also question whether in all cases much of this aid is going to the right people. We know that in the past, unhappily, a lot of aid money has gone not to the people who needed it, the poor peasants, small farmers and poverty-stricken people in the towns, but, in many cases to a lot of crooks, either crooked politicians or crooked contractors.

Finally, on this point, there is the instability of the countries. Most of the countries to-day, unhappily, are governed by military dictatorship of one kind or another. Some years ago a professor of Keele University wrote an interesting book called The Man on Horseback, in which he forecast what would happen—and unfortunately he was right. In most cases we have these military dictatorships. They are unstable. One must realise that. After them, what will come? We do not know. It is a point to be remembered when aid is thought of.

Coming to the various points in the Bill, first of all there is the Asian Development Bank. On May 26 I asked a Question on this subject.

LORD PEDDIE

My Lords, before the noble Lord leaves the point about the forms of Government, may I put a question? He made the suggestion that the form of Government of the receiving countries should influence the extent of the aid. Is that the point he is trying to make?

LORD OGMORE

No. I do not think it should influence it. But it must be borne in mind that we have unstable societies and unstable Governments in many of these countries; and that must be remembered when dealing with the mechanics of the aid. In other words, one must ensure that there is some chance that the aid, or the money which is given as aid, will continue to be used for the benefit of the country, even though the Government falls, as it may well do.

Coming back to the Asian Development Bank, my Question was, in effect: is this Bank a white elephant? Our contribution to the new Bank is £10 million. I asked the Government whether this money was going to be justified in these days. What was this Bank likely to do that existing organisations could not do? We have the International Bank and its affiliates. It is now an extremely good organisation. The International Bank took many years to become a good organisation. It had to go through a teething period. Is this new Bank going to do the same? Will its funds be administered wastefully? Will big wages and profits go to international civil servants? Will the money get into hands of crooks instead of those of the people? It is going to be costly for us, because not only are we going to provide £10 million—and, after all, we have not got all that money to throw around the world—but also we have to make up the exchange rate. If for any reason our exchange rate here falls during the period when this loan, or this share, rather, has to be provided, we have to make good that exchange. So it may cost as far more than £10 million. Therefore, I think this information is something we are entitled to know.

I should like to ask one question about the Indus Basin Development Fund. I fully agree with the objects of this Fund, which is, in effect, to deal with the Pakistan and Indian waters. Pakistan has lately had a most serious problem with salinity in much of her territory. I should like to ask whether the Government propose that some of this money shall go towards dealing with that problem. I think Mr. Arthur Gaitskell made a report on this. He is a great expert on that part of the world. It would be interesting to know what the Government propose to do.

As to the Commonwealth Development Corporation, the noble Lord, Lord Beswick, gave us an interesting talk on the financial contributions by private enterprise in conjunction with those of public enterprise. In my view, the Commonwealth Development Corporation (or C.D.C., as we know it) has been an outstanding success. Here again was an organisation which had its teething troubles after it started off, through no fault of anyone—it was a new venture in a new field—but it has pulled through and it is now a remarkable organisation. It is something of which all three major Parties can be proud, because we have all sustained it, and this House has always taken a considerable interest in it. Almost invariably the Chairman has been a Member of this House, as indeed is the case to-day because the noble Lord, Lord Howick of Glendale, is the present chairman—and a very good chairman, too.

The noble Lord, Lord Sinclair of Cleeve, carried out an inquiry on behalf of the late Government into the finance of the Corporation, because although the Corporation has done a magnificent job it has done it to a large extent in spite of its financial straitjacket and not because of the financial situation which was so eloquently described by the noble Lord, Lord Beswick. This is a case where, generally speaking, it is public finance, taxpayers' money, which has gone into it; and the picture is not quite so rosy as the noble Lord seemed to think.

The financial straitjacket operates in this way. If any of your Lordships were proposing to introduce a new plant into the heart of Africa in order to sustain agriculture, or into Asia, as in fact the Corporation has done time after time, you would not be likely to think that you were going to get the capital back for many years to come. Possibly you might not get it back at all. These are rather risky projects. The Corporation has no risk capital. Every penny that it borrows, either from the Government or from the City of London, at the ordinary market or Treasury rates, it has to repay. Therefore, the risk in the production of development schemes in agriculture, light industry and others, which is so useful to underdeveloped countries, has to be borne at the sole risk of the Corporation. Therefore, quite naturally, the Corporation has not gone in for nearly as many projects as it would like, because it cannot afford to do so.

This Government have met the Corporation to a slight extent, and I welcome this. With regard to projects of the kind to which I have been referring—namely, the productive and development schemes for agriculture, forestry, drainage and so on—they have said, "You need not pay any interest on the money you borrow for the first seven years" That is a help. Previously compound interest had to be paid on all these projects. Interest still has to be paid on projects which are not called productive development projects—that is to say, if it lends money to build a dam, it has to pay interest on that straight away. But where these development projects are concerned it is now excused interest for the first seven years. This, however, does not meet the real problem of the Corporation. I would ask the noble Lord to have this new Ministry look up the Sinclair Report and to go into it to see whether they cannot do a little better than they have done in this Bill.

I am only sorry that I shall no longer be in a position to make what contribution I can to the work of the Corporation. One of the first acts of the new Minister, Mrs. Castle, when she came into office was to remove me in a peremptory and autocratic way from the Corporation's Board, so I can no longer assist it. But my heart is still in it, and I want to do everything I possibly can for the Corporation in the time to come.

I wish to raise only two further small points. I must declare my interest in the Overseas Service Pensioners' Scheme and Fund, which is also mentioned in the Bill. I am an honorary vice-president of the Overseas Service Pensioners Association. I do not, I may say, receive any pension; I do not come under this scheme in any way at all, but I am an honorary vice-president, as I think one or two other noble Lords are. Under the scheme, the present Overseas Service officers will benefit, but not former officers. It is the wish, a quite natural wish, of the Overseas Service Pensioners' Association that the former overseas pensioners should be put on the same basis as the present officers. They say, with a good deal of force, that they never served the overseas Governments at all; they served Her Majesty, or His Majesty, as the case may be, in the days of the Colonial Empire. These are successor Governments, and these people feel that Her Majesty's Government should take on the obligation which they naturally expected Her Majesty's Government to take on when they entered the service as cadets many years ago. These people have served with great ability in various parts of the world, where life was often rather. uncomfortable in the days before the advent of all these modern drugs which we possess to-day to make life in tropical climates a little easier.

My final comment is on Malaysia, a country in which I take a great interest and with which I have a long association. I was very sorry to read in the newspapers last week the comments made by my old friend, Mr. Tan Siew Sin, who is the Finance Minister in Malaysia, and the comments of Inche Senu, the Minister of Information. These two gentlemen believe that Her Majesty's Government are using aid as blackmail—they did not actually use those words, but that is what their comments amount to. They say that the possibility of aid is being used to force them to enter into defence arrangements which Her Majesty's Government wish them to enter into. I hope that they are operating under a misapprehension, because I personally feel that aid should have as few strings as possible, and certainly should never have defence strings. It is quite wrong to insist on defence arrangements as part of a bargain for aid and assistance.

Malaysia, as a whole, is a country to which we owe a great deal. If nothing else, it provides large amounts of dollar currency every year. Half the world's production of tin and rubber comes from Malaysia; we owe it a great deal, both economically and in other ways. I, for one, should be very sorry to feel that Her Majesty's Government were putting any pressure on Malaysia in order to force her to enter into a defence agreement which she might not want. With those few comments, my Lords, may I conclude by saying, as I did earlier, that basically I welcome the Bill, and wish it a speedy passage through the House.

3.33 p.m.

LORD CAMPBELL OF ESKAN

My Lords, this is the first time I have spoken in your Lordships' House since I made my maiden speech, and as that lasted, according to Hansard, 3½ minutes, I think I may be entitled to claim some indulgence for at least part of this speech; especially as I still have ringing in my ears the rebuke of the noble Baroness, Lady Asquith of Yarnbury, during the Television debate, to people who read their speeches, and the strictures of a noble Lord on people who stammer.

During the short time I have had the honour of being a Member of your Lordships' House I have heard discussion and debate on subjects of real human importance, such as sexual offences and abortion, and of much human fascination, such as censorship and libel. This afternoon, in debating the Second Reading of the Overseas Aid Bill, we are, by implication, discussing the plight and the poverty of about two-thirds of the human race. Believing, as I do, that this presents a great moral challenge, and indeed a threat to the peace and prosperity of the whole world, I am sure that the sub- ject is equally worthy of your Lordships' concern.

This Bill, as my noble friend the Minister said, does not claim to introduce any new measures. Its purpose, as I understand it, is to give a firm and comprehensive statutory base for the British aid programme. Broadly speaking, there can, I suppose, be three views about aid by richer countries for poorer countries, by developed countries to developing countries. There can be the view that it is a moral imperative. There can be the view that it is broadly desirable, but that Britain cannot at present afford it—or certainly cannot afford more aid. And there can be the extreme view that aid is positively mischievous. I shall not take up your Lordships' time with my thoughts about the last-mentioned opinion. On the other hand, I am tempted by my father's method of argument when he disagreed with his children, which was to say, firmly and conclusively: "Every man is entitled to his own opinion, but you are talking arrant nonsense". There is, however, a real problem about what Britain can or cannot at present afford to do—or not to do. What, in practice, do people mean when they say that Britain cannot afford aid, or cannot afford more aid? They mean simply that they put the priority for aid lower than other expenditures across the exchanges.

Let us look at this matter in perspective. Holidays abroad cost about £200 million a year in foreign exchange. Tobacco costs us about £83 million in foreign exchange. I have worked out a diverting, but far from insignificant, statistic about aid and rum. And here I must declare an interest. I am chairman of a company which, among other things, is a large producer of sugar and rum and has extensive trading interests in Guyana. (I must say that I have not yet found a clear distinction in pronunciation between Guyana and Guiana.) My right honourable friend the Minister of Overseas Development announced in April this year that Britain had offered to provide "some £3 million" in the British financial year 1966–67 for Guyana. But in 1965 the duty collected by the British Exchequer on Guyana rum—more popularly known as Demerara rum—was £11 million. It is all very well to say that these two figures are not comparable—£3 million of aid to Guyana and £11 million collected from British customers who buy an important export from Guyana. But in the case of Puerto Rican rum in the United States, the United States Government return to Puerto Rica the whole of the excise duty they collect. We return none of the duty we collect on rum from Guyana or Jamaica.

To turn to a more sober subject, defence. Defence—and of course proper measures of defence are essential—costs at least £300 million across the exchanges. But I believe that the collapse of the economies and societies and political systems of less-developed countries would be a threat to world peace which would add enormously to the defence expenditure of the comparatively richer and more developed countries. In short, I believe that enlightened and imaginative aid can very often be a much better alternative to defence expenditure. It is better to keep peace with the plough than with the sword. Not to mention the fact that the staggering wastefulness involved in arms expenditure overshadows any waste there may be in aid.

British aid in total amounts to about £200 million a year, but I have seen it shown that only about a third of this is a burden on the balance of payments. My noble friend the Minister said one-half, but, with respect, I am going to assume that it may be less, and I have seen evidence of this. And even this loss is largely, or completely, offset by the expenditure on British exports of a part of other donors' large aid programmes. So the more the level of international aid as whole rises, the more Britain is likely to gain through exports. Our exports suffer from poverty, instability and disruption in overseas countries, and our exports gain from the stimulation of their economies.

So to sum up this part of my argument, British aid is at present costing, say, £60 or £75 million a year in foreign exchange, compared with holidays abroad of £200 million, tobacco over £83 million, and defence upwards of £300 million. Therefore, while we are entitled to say that we must, in proper measure, defend ourselves; while we may say that we prefer holidays and smoking to helping to develop Africa, Asia, the Caribbean and Latin America; while we may say we cannot afford all these things at the same time, what we cannot say is simply that we cannot afford more aid.

It would be stupid and impertinent to suggest that Britain must, or can, try to bear the whole world's development programme on our Atlas shoulders. But it surely should be our objective to try to influence the richer countries as a group, to deploy an adequate part of their growing resources and skills towards stimulating economic development in poorer countries. I should like to see Britain taking the lead in building an alliance for development aid. This, surely, is a leading role which we could still play successfully.

To revert to what we can and cannot afford, even in the richer countries as a whole one thing we certainly cannot afford is inefficient aid. The most inefficient aid of all is that which is insufficient to ensure any progress, and such aid—there is far too much of it in this form—is really being poured away, usually into the flood of population growth.

I hope that this Bill, above all, will prove to be a further important step in the process of turning the British aid programme into an effective development programme, instead of a haphazard series of indiscriminate charitable or political contributions, which tended to be the state of affairs before the Ministry of Overseas Development was established. I certainly welcome the extra help provided in this Bill for the Commonwealth Development Corporation, and I am glad to see that there is provision for interest-free loans. I say that because this seems to recognise the fact that aid is not a strictly commercial concept, but rather a transfer of resources within the world community, like that effected by taxation and regional grants to development areas within the community of the United Kingdom. In fact, there is urgent need to examine the whole problem of development debts which have been building up over the last ten or fifteen years and now look like slowing down the very development for which the loans were originally made.

I am sure that the danger and the tragedy of there being two worlds is even greater than the danger of Disraeli's two nations; and that the benefits to mankind as a whole of reducing the gap between rich and poor countries will be even greater than the benefits which have come to the British people from reducing the gaps between rich and poor in these islands—a process which has culminated in, but not been completed by, the Welfare State. We must never forget that the primary objective of aid, as the Overseas Development Ministry's White Paper said, is the development of poor countries, not the promotion of British trade as such. Certainly, as I was pleased to hear my noble friend the Minister say, trade and investment and aid are complementary to each other. Each in its own way generates development, but they are quite different things, as he said.

In passing, I must say that I am sureit is to the mutual advantage of Britain and developing countries that we should, in tax measures and otherwise, do everything possible to encourage rather than discourage British investment in specified overseas development areas. The present corporation tax arrangements, of course, positively and generally discourage it. I was glad to see that in the communiqué issued after the recent Commonwealth Trade Ministers' meetings emphatic attention was paid to the importance of commodity agreements and to securing better access and more stable prices for primary commodities (the noble Lord, Lord Ogmore, referred to this), and, further, that it was agreed that every effort should be made by Commonwealth countries to ensure practical progress in the field of financial measures to compensate developing countries for unforeseen falls in their export earnings.

The Ministry of Overseas Development's White Paper also said that the objective of aid is not to buy friendship, nor for that matter to buy off hostility. So aid should be administered by people skilled in development, not by diplomats skilled—or too often semi-skilled or unskilled—in relationships with the new nations. Aid can never be, on the one hand, well-managed and effective and, on the other, politically acceptable and appropriately used, unless the men and women representing the donor countries are able to see the problems of the recipient countries through their eyes and in their idiom. This requires real vision, imagination and psychological understanding and humanity, because the problems of poverty and the means of solving them involve a great deal more than economics and good management alone.

I would argue—and I think that nowadays this may be an heretical view—that we need to move towards greater involvement with the countries we aid; not greater detachment, with the only link a cheque for blank million pounds to be spent or wasted as the recipient country sees fit. I think the process of disinvolvement, whichseemed to be the logic of decolonisation, needs to be replaced by new forms of partnership. It seems to be a tragedy that the process of decolonisation has been as fragmentary as the process of colonisation, thus making the benefits of regional development and regional partnerships so hard to bring about.

In the last result, perhaps the people who say that aid does no good could prove right, because aid does not automatically help development unless it is accompanied by technical assistance in spending it in the right way and for the right purposes, unless there is enough aid to achieve agreed objectives, unless there is proper co-ordination between the requirements of the recipient and the resources of the provider, and unless there is a relationship of mutual respect and understanding between them. It may be more blessed to give than to receive, but it is even more blessed, and much more constructive, for men and nations to strive together in partnership to develop the resources of nature for peace, progress and prosperity. And not only that. We are fighting a battle against starvation, which is why aid to agriculture—technical and financial aid—is so vital.

I want to finish where I started: Can Britain afford it? Aid is, in essence, a partial substitute for savings. Can one really expect massive savings from countries such as India or Tanzania, with an income per head of £25 a year? Is it not more sensible to look for the savings out of the affluent societies with incomes per head of £400 a year upwards—societies such as ours? We in Britain may be broke, but we are not poor. But we shall be the poorer, economically and morally, if we try in any way to contract out of playing an active part in the development field. For this reason I support this Bill, so long as it is regarded as a firm foundation for a new creative edifice of British aid, and not as in any way defining or confining the range and direction of the British aid effort.

3.48 p.m.

THE LORD BISHOP OF CHICHESTER

My Lords, after all the speeches on this Bill which I have heard this afternoon I am particularly grateful to the last speaker. I am glad that the noble Lord did not confine his second speech to three and a half minutes; and in his animated and—in more senses than one—spirited speech, he has brought the issue to a point to which I feel bound to address myself from this Bench. However, my comments will proceed from a more waterish liquid than the one to which he referred at an earlier stage.

It is true that we are dealing with a Bill which is, in fact, a piece of machinery, but it is a piece of machinery to arm and equip a new Ministry which itself is a very significant departure. It is interesting that yesterday afternoon we were debating issues of social security, and the assumption there, unquestioned by all, is that within the national community there is a mutual obligation to one another in which those who have needs of a serious human nature have a right to ask help of their fellows. This obligation is now written into the whole Constitution of our country; and in the existence of a Ministry of Overseas Development we are, in fact, acknowledging that in some degree this same principle is being written larger into what is now becoming the world community: the principle that there are not merely charitable needs but obligations of one nation towards another which we cannot, without dishonour, ignore. It is this aspect, especially, which the Churches hail with a great sense of relief.

It is our claim that over a very considerable period, through what is often not suspected of us at all, the general missionary giving of the Churches, we have in fact been invading the field of overseas aid, and are maintaining it, even under present pressure and at very great cost. It is overseas aid. It is not merely spiritual aid, but aid directed to education, to medical services and to agricultural development. In other words, it is a recognition that aid can never be divided, any more than human nature can be divided, between mind and body and spirit.

In the past few years the development of the voluntary agencies and the remarkable way in which they have gone on enlisting public support for the service of needs which lie well beyond any considerations of race or political alignment has itself been a heartening sign that this country is becoming aware a little of that of which the last speaker so forcibly reminded us, namely, this issue of priorities in the spending of our people here. It has been the experience of the Churches, through their own particular service of inter-Church aid, that this need has drawn us into a kind of co-operation, not only with one another but with our partners in other countries, in a service which, over the years, has mounted steadily, in spite of all expectation, to something like a million pounds a year.

My Lords, I mention this chiefly because out of that experience we have good cause to welcome the implications that lie behind this Bill. It is clear that there is a great deal of voluntary sympathy and support where the minds of people are engaged in the whole facts of the case. It is also clear, as one or two noble Lords have already reminded us, that this process of giving and receiving is an extremely delicate and complex one. The giver can so easily expect a gratitude which it is not in the nature of human beings to express, and the receiver can build up almost a resentment towards those upon whom he is dependent: and this does not necessarily produce the right relationship between them. It is a kind of personal relationship, an involvement, as the noble Lord who has just spoken has said, in which we have to engage ourselves to-day. But certainly the overall experience of the voluntary efforts that have been going on has been that, however high they pitch their target, what they can do is a mere drop in the bucket compared with the need and compared with what can be done, in a way which would be commensurate with the full need, only by nations under direct government leadership.

It is on this point, I think, that we should pick upon this Bill. Our eyes would be fixed not on the direct provisions of the Bill but, in fact, on the powers that are going to be given to the Minister under Clause 1 to provide this assistance. Our questions, as the noble Earl has already said, are: What is to be the volume of the power and the resources which, in the course of the next few years, are likely to be put at his disposal? What is the size of those resources? How do we measure them? On the one hand, we are aware of our own acute economic situation, which might give us full excuse for backing down upon our already-fixed targets. We are aware that there has been a steady increase over the years and into next year. And yet this lamentable fact, which seems to defeat all statistics, still confronts us—namely, that as the level of resources and aid grows, so the value seems to diminish. We are in the world of Alice: it takes all the running you can do to remain where you are. This is the situation. Therefore, statistics by themselves do not necessarily comfort us.

The President of the World Bank, I think it was, has said that in the course of the next five years the developing countries could absorb upwards of £ 1,000 million extra per year over and above what is already undertaken or promised. That would mean a very large advance upon even the £ 200 million that has been suggested for us. What would disappoint us is not so much that we should not necessarily reach the kind of target we should like, as that we should not commit ourselves a little more boldly to a figure which is perhaps a little beyond our grasp now. I share the noble Earl's disappointment—indeed, it is widely shared in the country—that some graduated advance has not been built into the calculations of the National Plan. What we should be saying in that respect would be that, if we had an advance in prosperity in this country, then we should wish that prosperity of ours to be deliberately shared with other countries who have not got it. That, in itself, I submit, would be some kind of additional incentive. If we are requiring a national effort at the moment, let us throw into that demand for a national effort something that would be dependent upon it—that is, the increased assistance that we should then be empowered to give where it is so obviously needed.

Now it is clear that at this particular moment any Government of this country would be embarrassed by demands that would promise in advance resources which we have not yet got. Perhaps, as has already been suggested, it is not a question only of what resources we can see: it is partly a question of to what extent the Government could count upon the strong support of public opinion for any plans they might make. The British Council of Churches met recently to consider a very carefully-studied report upon British responsibility in the world situation, and its immediate reaction to that, as the facts became more and more clear, was that it should be the duty of the Christian Churches here to bring home more constantly to their own people this great fact of modern life. But Christian opinion is very limited in its scope. No such appeal to people, to engage themselves more closely in this, would amount to very much unless it was on a national scale, and it could not be on a national scale unless, behind any such campaign that might be evolved, it was quite clear that there was the sponsorship and the guarantee of a settled and forward-looking Government policy that would justify it.

No doubt the reactions of the country as a whole to any demand for increased overseas aid would be very mixed. There would be, I submit, a far greater response of sympathy than is apparent at present. The facts are so little known by the general public, and experience has shown that things happen when the facts are known. But sympathy is a very fitful 'quality. We are in a situation to-day in which nations are so much more closely implicated in one another's lives that the basis of this obligation is not of sympathy or of charity but very much more of common justice. We are a people sensitive to the call of justice.

It may seem a little inconsistent that there is such a hatred of racial injustice to-day and of any form of discrimination and such a passion to put it right, especially among the young people; it is inconsistent if, side by side with that, there is not also a desire for the real freedom of those peoples in terms of opportunity to share in what modern advance has made possible for us. I believe we have not yet put this on a basis of obligation; but admittedly we are all subject to self-interest also, and self-interest has its own proper place in this field of overseas aid: I do not mean so much in the gratitude that we should engender; I mean more in the fact that we are concerned with the stability of our world, and in the future the relations of this country with other countries are more likely to be decided by economic policies than by, say, military policies. This should urge us to look to our own economic relationships with them.

The building up of public support in what lies behind this Ministry will itself be a long process; but for this reason one of the most important parts of the Bill seems to me to be the clause which empowers the Minister to go in for research, to study the complexities of the situation and its relationship to both the givers and the receivers. If this nation is to respond to the need, then I think it must be satisfied over a number of issues. It must be assured that aid is efficient. The kind of stories that circulate about aid getting into the wrong hands or devoted to the wrong purposes are rather like the old gibe of coals in the bath, and may do untold harm unless they can be proved to be unfounded or eradicated. People want to know where aid can be going and where it can be best used and in the right terms. They would like to know that it is flexible enough to meet a particular situation.

It comes as rather a shock to meto read that in 1965 Malawi received more than 60 times as much aid per head as India; and that Aden and the Federation received 125 times per head as much. If that is true, it is certainly an argument for greater flexibility in our programme. Above all, people want to be assured that someone, some Ministry or some Minister, is watching the connection between aid and our own economic situation; that, for instance, there will readjustment to our economy, planned where necessary, in the event of overseas aid affecting it. It is obviously not fair for us to make a call for sacrifices which other sections of the community will have to bear unless we can be satisfied that there are to be means by which their own losses can be made up. But, surely a material aid to those who would like to build up full public support for the aid already planned and in future to be planned, will be a Ministry, given authority and committed to study the complexities of this situation. I hope that this Bill will encourage the country as a whole to make a worthy response to the need.

4.4 p.m.

BARONESS GAITSKELL

My Lords, I welcome this Bill, and I should like to thank my noble friend the Minister for his lucid explanation of its purposes. I would also commend the Title of the Bill to the noble Lord, Lord Ogmore: it is the Overseas Aid Bill, and I thoroughly disagree with him when he says that if we had more trade we should need less aid. There can be no progress towards more trade unless we give, and continue to give, more aid in the future to developing countries. In this respect, I would wholly endorse the speech of my noble friend Lord Campbell of Eskan, and also that of the right reverend Prelate the Bishop of Chichester.

I hope that I shall not repeat too many of the arguments that have been advanced. I believe that school children should from the earliest years become familiar with a new kind of geographical map: one clearly depicting the hungry nations and the rich nations. Thus, we should all grow up with a knowledge of the predominance of poverty over affluence in this wonderful age of scientific development. Today, as the noble Earl, Lord Bessborough, pointed out, we know that, while the highly developed industrial nations are steadily getting richer, the developing and under-developed nations are not improving their standard of living at the same rate; and that the gap between the richer and the poorer nations is widening.

There is a kind of magnetic field around all affluent societies which draws skilled and educated persons away from the less affluent countries and from the developing countries, so that this again widens the gap still further. I do not know the answer to this problem. Perhaps as we all advance there will be eventually a kind of "general post" of skilled persons, and there will then be no harm in getting them from the developing nations. The greatest drain on the amount of aid given to the developing countries to help them to raise their standard of living is due to the very familiar "population explosion", whereby any increase in productivity is swallowed by the extra mouths that have to be fed. This rapid growth in population seems to me still to dominate all the other problems facing the developing countries. I believe very firmly that more could be done, and I hope that this Bill will make it possible eventually for very much more to be done, at relatively very little cost, for countries which desire family planning.

To-day, our policies in the new Ministry of Overseas Development hinge both on our balance-of-payments position and on our economic difficulties generally. I am told—and it has been pointed out already: I think by my noble friend Lord Campbell of Eskan—that an increase in aid would not greatly affect our balance of payments. Despite our difficulties at home and those outside our control, we have managed not only to maintain but to increase our overseas aid from £191 million in 1964 to £194 million in 1965. This is not exactly a sensational increase; but what the new Ministry has done and is going to do is to give much more thought, and do more research, into the best methods of planning and using resources available.

One could say that the new Ministry was dealt a poor economic hand of cards, but is playing it with exceptional skill. It has been able to set the target for 1966–67 at £225 million. It was responsible for the introduction and extension of interest-free loans to certain developing countries, and is exercising greater control over the management of aid—a step that will eliminate much waste. It is undertaking a review of its recruitment policy for skilled manpower and improving its advertising. All the same, the number of persons recruited—900 in 1961, which rose to 2,000 in 1964—is still very small compared with France. France, incidentally, as we all know, gives twice as much aid as we do to developing countries, and there are thousands of Frenchmen living abroad in developing countries. I believe that it should be the most natural thing in the world for a professional career to include a period overseas in a developing country, a kind of international national service; and that this service should be done without prejudice to the home career or pension rights of the individual. I hope that this new Bill will make this kind of thing possible, and more possible.

Perhaps one of the most important things undertaken by the Ministry is the establishment of a corps of specialists so essential to any aid project. It is said that there has been a decline in British private investment abroad, which has fallen from £90 million in 1960 to £60 million in 1962, and still further to-day. The reasons are partly practical and partly political. The Government's hand in cutting down overseas investment has not helped; nor have attacks on this country by the newly independent nations in respect of our past colonial administration, for they distract these nations from getting down to their own problems and deflect them from self-criticism. Government aid should be, as the Minister has said, both complementary and a stimulus to private investment, as the initiative for projects undertaken does not come now solely from the developing countries but is worked out in partnership and agreement with ourselves. Altogether, the new Ministry is working out and putting into effect a better planned and more coherent aid policy.

My Lords, in trying to get as much information as possible about our aid, I have discussed various aspects of it with people from the Ministry itself, as well as from that very lively organisation, the institute of Overseas Development, and I venture to give a few conclusions to which I have come. It seems that too little aid can be wasteful and ineffective (as again my noble friend Lord Campbell of Eskan has pointed out), and our present-day economic difficulties should not inhibit our commitments, since they will not become fully effective until 1967. As our resources for aid are still so limited, the countries which are in a better position to use it—for example, India and Pakistan—must be given priority. There seems a strong case for giving India more capital aid. I am told that those countries which rely more on agriculture need less capital. My Lords, we in the Labour Party have been brought up to believe that 1 per cent. of the gross national product should be devoted to overseas aid. We have come to believe that this is almost a pledge. So far, Government aid alone has not reached this target, but the International Bank has stated that the whole world should increase its investment by 50 per cent. above what has been provided in recent years far this aid to be really effective and used by developing countries

Finally, my Lords, our approach to the whole question of aid needs continual re-thinking. We equate aid with charity; but charity is for those who cannot help themselves, and aid is for people to enable them to help themselves to increase their standard of living. The Government are making great efforts, but these are confined by the stranglehold phrase, "within the limits of our resources." It is as if there were no choice for us in the dispensing of our resources. The sum of £ 100 million for overseas aid would make a tremendous difference to the effectiveness of our aid generally. My Lords, not only is there tragedy in a world where so many people are still hungry; in such a world there are great dangers. I welcome this Bill, and I hope that it will be a springboard from which to give more and more effective aid overseas.

4.15 p.m.

THE EARL OF IDDESLEIGH

My Lords, as the result of this very thorough debate I have been able to reduce my large sheaf of notes to four words. The first of them is "publicity". I do not think the public realises sufficiently what this country is doing in the matter of overseas aid. I suggest that the Minister should consider this aspect of the subject, for it is a record of which we have some right to be proud. It would, I believe, be appropriate if we had an annual White Paper, something on the lines of the Defence White Paper, and an annual debate on the lines of the Defence debate. I would also plead for the issue by the Minister of a more popular White Paper on the subject of overseas aid, illustrated by photographs, diagrams and so on, which could be used in schools and perhaps attract more young people to voluntary service overseas. We shall in time, I hope, become a member of Europe, and we shall then be able to co-ordinate our aid with that which is given by France and Germany, which will be to the great advantage of the developing countries. I was glad that the noble Baroness, Lady Gaitskell, made an allusion to the very substantial aid given by France, a fact which should finally give the lie to phrases about a "rich men's club", sometimes used to decry our entry into the European Community.

My next note is to the effect that we should regard overseas aid as a very long-term policy for the advantage of the whole world, including ourselves. I believe it to be a profound mistake to think about it primarily as a matter of charity. It is the long-term interest of the donors as well as the recipients that matters. My grandchildren will be growing up, in twenty or thirty years' time, in a world which contains three opulent continents—North America, Europe and Australia. I am quite sure that I am right in speaking of continents rather than of nations, for I believe that that is how my grandchildren will think. And it will contain three indigent continents—South America, Africa and Asia. That is a profoundly dangerous situation for the world. It is a world of communications, and for the first time the indigent peoples of the world have the opulence of the others flouted in their faces. Very soon they will be able to see, on almost world-wide television coverage, what they can already see on cinemas and hear about on the radio, the prosperity of a prosperous people.

This aid programme is intended to reduce—we cannot do more than hope to reduce somewhat—a terrible gap between the poverty of the poor and the riches of the rich in the world. It is unavoidable, as time goes on and these conditions become both better known and no less acute, that passions of envy and hatred and suspicion should arise. That may well lead to a conflict that will put an end to all the continents, rich and poor alike. Therefore it is in our long-term interest to pursue this matter with vigour. I hope that other nations beside ourselves—France, Germany and the United States—will see the matter in that light and aid us in a noble endeavour.

There is only one short-term advantage for this country which I think is worth mentioning. The young people who come back from their year of voluntary service overseas return with more experience and better developed personalities. I am glad to see that there is to be an adjustment in the matter of pensions in this Bill, which I believe will encourage people not only to go out for a year of voluntary service, but also to return when their services are further called for. That is an admirable feature of the Bill and one which I wholly commend. I have a right to speak in this matter, because forty years ago I was doing a year of voluntary service in India. I am not drawing any pension for it, but it is not a matter which I in the least regret.

Finally, to echo the pleas which other speakers have made, I would say that we should not take any short-term advantage from these gifts, and we should not be suspected of doing so. Some confusion sometimes arises from the fact that most overseas aid is spent, very naturally, in the Commonwealth. That is not the whole truth. We have given considerable loans for the development of South America. Perhaps the Minister, in his reply, will be able to tell us a little more about this. It is an important matter, because there is always a temptation to regard it as a purely Commonwealth affair and that therefore it might conceivably be influenced by the strain and difficulties which the Commonwealth is at present undergoing. It is not a short-term matter. The strains and troubles which beset the Commonwealth should not in the least affect the matter. Its long-term importance is a matter for the world rather than for the Commonwealth.

4.23 p.m.

LORD SANDFORD

My Lords, we welcome this Bill, but in rising to do this I would at the same time register a certain disappointment and some doubts, pose a few queries and, finally, make a suggestion. I hope that this will not take more than about ten minutes. Anything that enables the Minister of Overseas Development to discharge his duties for us more effectively can be assured of full support from every quarter of this House, despite a few patches of disenchantment here and there, from a growing number of people in this country. The particular powers asked for are each separately to be welcomed, but, as the noble Lord, Lord Beswick, himself has said, perhaps they should be reserved for further discussion when we come to the Committee stage. But, as I have said, our welcome is tempered by some disappointment and some doubts.

I know that this is only an enabling Bill, but the Ministry of Overseas Development do not often bring their affairs before Parliament, and when they do we want to hear, and look forward to giving a full hearing to, everything they have to say. I was glad to hear this afternoon from the noble Lord, Lord Beswick, of the range of work which the Ministry undertake and the progress that has been made so far. At the same time, we have to recognise that he did not quite catch that note of fire and zeal which appeared—and I think rightly—in the Labour Party Manifesto at the last Election. I say that it appeared rightly, because surely alongside the building of peace, the closing of the gap between the rich and the poor nations is now the most vital task facing mankind. The first disappointment is that in opening this debate the noble Lord did not make that point emphatically, thus setting us the only true background against which a debate on these matters ought to-day to take place.

The doubt, which has been mentioned already, is whether the Minister and the Ministry, which has been set up with such a fanfare—a welcome fanfare to those of us who think this field important—will have the backing from the Cabinet, and the resources from the Chancellor of the Exchequer, to make full and effective use of the powers we are now being asked to confer upon them. As has already been said by my noble friend Lord Bessborough, the slice of cake for aid in the National Plan is certainly disappointing. It is no match for the ambitions in the Minister's own White Paper (Cmnd. 2736) of last August; and, what is much more to the point, it is no match for the needs of the developing countries that make the Third World.

There is disappointment, too, that there is still, in spite of what the noble Lord, Lord Beswick, has said, this sheltering, behind our balance-of-payments problem, as if it were an unavoidable fact of life.As he has so helpfully pointed out, there is plenty of aid we can give—and in this he is supported by my noble friend Lord Campbell of Eskan—of which only a fraction is a net burden on our balance of payments. Aid of this sort could be increased now, even under present conditions. In any case, this balance-of-payments problem is one for the rich countries, which they must solve among themselves in order to be able to tackle this much more urgent problem of development with more effectiveness and in concert. Incidentally, while apparently we have not enough aid to spare for everyone who needs it, which may continue to be the case for many years, do not let us be ashamed of starting our distribution of it among our friends and among those whom we know from long acquaintance to be capable of making good use of it.

May I now come to some queries? Are we going to let these developing countries earn their own living in the world when we have helped to train them to do so? It is clearly and widely seen now, and more so since the last United Nations Conference of Trade and Aid two years ago, that the good effects of positive aid policies can be completely and quickly wiped out by negative trade policies. So it will have been a waste of all our time this afternoon, and a waste of our taxes, if measures complementary to those in this Bill are not taken in order to let developing countries earn their own living with their own products. Therefore, while welcoming this Bill, we would ask the noble Lord who is to reply to give us, if he can, some samples of what Her Majesty's Government have done, are doing and propose to do to match their trade policy to their aid policy.

For instance, are they prepared to dismantle the import restrictions on jute at the next review next year? Are they prepared to stand up to pressure from our own textile industry to keep on barriers to the import of low-cost cotton textiles after 1970? I have given the noble Lord notice of these questions, and I hope that he will be able to give fairly specific answers to them. And we will be further reassured by any other indications of the "positive and leading part" that the Government have said they will play at the next United Nations Conference of Trade and Aid next year.

Finally, I come to one suggestion. The Minister of Overseas Development, in the last sentence of his speech on the Second Reading of this Bill, in another place, referring to our capacity to help, said: It will depend on how far-sighted and generous we are prepared, as a nation, to be. —[OFFICIAL REPORT, Commons, Vol. 728, col. 1199; 17/5/66.] That is a truth which has been emphasised several times this afternoon. This implies many more people understanding much more and caring much more about the nature, the urgency and the gravity of the whole of what is before us to-day.

As the right reverend Prelate the Bishop of Chichester has already said, this means a major and sustained campaign of enlightenment—not only fund raising and tax collecting, but enlightenment. This, of course, has been begun and is being continued at different levels and in different ways, but mostly in a very small way. It is being done, and being done well. I think, for example, of the closely reasoned and well presented literature that is available to us all from the Overseas Development Institute. I think of the factual bulletins distributed regularly by OXFAM to their local collectors. I think of all the educational work done in schools during the Freedom from Hunger Campaign. I also think of that recent study, which the right reverend Prelate mentioned, called World Poverty and British Responsibility, which has been commended to us by the British Council of Churches. The concluding sentence of this study reads: Governments will only do what public opinion will support or demand. Or, put more plainly, "There are only a few votes in development aid"—and some disenchantment.

My suggestion, therefore, which follows the noble Earl, Lord Iddesleigh, is that the Ministry of Overseas Development themselves should take a far larger share than they are already taking in the cost and the effort of presenting to the public the needs of the development third world, and the opportunities for serving in it. The Minister and his Ministry should join with the various institutes, organisations and charities that are already doing this so imaginatively, but with such slender and precious financial resources, and in some cases appearing before the public as if they were in competition with one another, rather than as allies within a single enterprise. I am sure that if they were to do this it would be far easier for the politicians to lead us in choosing the right priorities between all the demands which are competing for our resources.

My Lords, I am quite certain we cannot go on as we are doing to-day. In spite of all our efforts, the rich nations are getting richer, and the poor nations are getting more numerous and staying as poor as ever. Every day we go on as we are makes the scandal greater, the problem harder, and the perils of dodging and neglecting it more awful to contemplate. For that reason, we welcome this Bill.

4.35 p.m.

VISCOUNT MASSEREENE AND FERRARD

My Lords, before the noble Lord replies, perhaps I might say a few words, having had some experience of farming in these areas. My noble friend Lord Bessborough mentioned the lament-able fact that agricultural production in the underdeveloped countries has shown a decline in the past few years; and he is quite right. One of the reasons for this has been that, owing to the political turmoil there has been in many of these countries, the European farmers, who have contributed greatly to their agricultural production, have not felt very secure and many of them have stopped farming in those countries.

I should also like to comment on the speech of the noble Lord, Lord Ogmore. I think it was an admirable speech, packed with common sense. The noble Lord mentioned the question of the type of Government in power in an under-developed country to which we give aid. I consider he is quite right in his assumption that one has to be careful about the type of regime in power, because we have had some unfortunate instances with regard to the giving of aid. The whole object of this aid is to help the poverty stricken peoples; it is not to line the pockets of the politicians of those countries. So often our aid has gone for that purpose. If you take a country like Ceylon, the former Government completely wrecked the agricultural economy of that country by their form of nationalisation.

I just want to emphasise that we are ourselves a great debtor nation, and we owe the world a lot of money. I am all for aid to the underdeveloped countries provided that it goes for the people—but we ought to make sure that that is where it goes. As the noble Lord, Lord Ogmore, said, we must in future take more notice of the type of people in power in the country to which we are granting aid.

4.39 p.m.

LORD BESWICK

My Lords, may I first of all thank all those noble Lords who have taken part in this debate for what they have said and for the welcome that they have given to the Bill? Until the noble Viscount who has just spoken rose, I think it is true to say that we had the encouraging and, indeed, stimulating fact that, without exception, all who had taken part in the debate were asking for more money to be spent by this country on aid abroad. It is a remarkable fact, and it is one upon which we should reflect deeply.

I only say in regard to it that I recall quite clearly a statement being made some few weeks ago by the Chancellor of the Exchequer calling attention to the fact that, for the first time in many years, he had kept his expenditure closely within the limits that were set out at the beginning of the financial year. That statement was also welcomed without exception. I feel that we must accept the challenge which is presented to each one of us: that there is no point in arguing that we should spend more money in development aid unless we accept the challenge that it will mean to us. I would say to some noble Lords, and to the right reverend Prelate (who has now left the Chamber), that while it is fair to make that kind of speech in this House, there is an obligation upon them to make it at the hustings at Election time, to try to secure the co-operation of all the taxpayers who have to provide this money.

There are two noble Lords and one Baroness who took part in the debate to whom I should like to say a separate and special word. I do not think we can argue against what my noble friend Lord Campbell of Eskan said when he put it to us that this argument about not being able to afford aid is really an argument for getting our priorities right. I accept what he said in this matter, that, as in all Socialist policies, it is a question of priority. In the matter of getting our priorities right, I felt so strongly at the time my noble friend Lady Gaitskell was speaking that I wanted to say to her that no one more persuasively and courageously tried to teach the people of this country that they had an obligation to make a sacrifice on behalf of those abroad and overseas who were less well off, than did the late Hugh Gaitskell.

Having said that and, I hope, having said it fairly, I also accept that several noble Lords, including particularly the noble Earl, Lord Iddesleigh, and the noble Lord, Lord Sandford, put forward constructive proposals as to how we should engage in the kind of educational campaign needed to get the people of this country to accept the obligation that is undoubtedly upon us and others of the more affluent countries. I was particularly impressed by the suggestion that we might have a new map coloured according to how the areas of the world were placed in this spectrum between poverty and affluence. It was a suggestion which, I hope, will be considered more closely.

There was also a proposal put forward that this new Ministry, the Ministry of Overseas Development, ought to present each year a report, a White Paper—or, as I understand the noble Earl, Lord Iddesleigh, to say, a coloured White Paper—setting out in forceful and, I think he meant, a picturesque way, not only what is being done but what needs to be done, so that we can get the full and conscious co-operation of all the people of this country behind this Government, or a Government of any other political complexion which accepted the challenge that is presented to us by this gap between the poor and the richer countries of the world.

I will say only one more word about this subject, and that is to repeat something which I said in the debate in January of this year about the gap. If we continue as we are now continuing with aid—and when I say "we" I now mean the world—we shall find that those countries which now have a per capita income of 100 dollars a year will, by the end of the century, have an increase in per capita income of only 170 dollars, whereas those countries which now enjoy a per capita income of 3,000 dollars a year will have an increase, at the present rate of growth, of another 1,700 dollars a year. So, as we have all said, the gap is getting wider—and how tremendously wider I do not think any of us really fully understand.

I was asked some specific questions at the beginning of the debate, and I set out hopefully in an attempt to answer them all. I doubt whether it is now feasible, and if I do not answer all of the questions during the course of this debate I hope I may be allowed to write to the noble Lords who have taken part. The noble Earl, Lord Bessborough, mentioned the brain drain which is currently taking place from some of those countries which we are trying to help. I think he is absolutely right; there is this brain drain. Obviously, he had it called to his attention in a very forceful way in Pakistan. I recently came back from Guyana, and it was pointed out to me that, though we are sending trained people to help in that country, their own people when trained are remaining in this country or in other of the industrial countries of the Western World, partly because they can get a greater financial reward.

I am not certain what the answer is here. Of course, it cannot be done by any legislative action. It is not possible to compel these people to remain in their own countries and to give them the benefit of the skills that they have acquired here. The answer may come in a longer term when, of course, their own respective countries have developed economically and have greater rewards to offer. It may come as a result of some sort of realisation by the peoples concerned that they have a greater obligation to their own countries, rather than to the already affluent societies in the Western World.

There is no easy answer to this problem, but I think the noble Earl, Lord Bessborough, did a service in pointing out to us that the problem is there. He spoke about the possibility of some of the retired specialists in this country being called for service in some of the underdeveloped areas, and I think this is something into which we shall have to look with sympathy and care. I was also asked by the noble Earl for some assurance about the change which it is proposed to make in the Bill so far as South Arabia is concerned. I am sorry that it was thought that offence was given to the present Ministers of the South Arabian Federation by the present wording. In reply to that I would adopt Standing Order 29 and say that as no offence is spoken, no ill should be taken. Certainly there is no offence or ill intended here. But it will be necessary to have an Amendment. The question of naming any part of the world would not have arisen had it not been for the fact that responsibility for South Arabia had been transferred at this moment from the Colonial Office to the Foreign Office. This meant, administratively, that they would not have been caught by the provisions of the Bill which applied to the Colonial Office. However, we accept the point, and I hope that we can all look at it with sympathy when I propose the Amendment.

The noble Earl also asked about the possibility of delivering equipment on time. I quite agree with him that if equipment is required, whether for developing countries or anywhere else, it should be delivered on time. I made some inquiries into this, as he was kind enough to give me prior notice, but I am afraid that I have not been able to identify the particular cases to which he referred. However, if he would let me have further details, I should be glad to look into the point.

The noble Lord, Lord Ogmore, said that he was sorry that he was not able to continue the work which he had been doing for the Commonwealth Development Corporation. I should like to take this opportunity to pay tribute to the contribution which the noble Lord has made. It was a most valuable contribution, and I am sorry that, for reasons of which I am unaware, he is not still able to play his part there. The noble Lord went on to say something about the possibility of their work being more effective in particular spheres if they had at their disposal equity capital; if they were able to lend money for projects which did not mean an immediate return on capital lent. I am not sure that the answer there is in equity capital but, as we know, possibly they have been enabled to waive interest in the earlier years, on certain loans, and I hope this will go some way to enable them to finance the sort of work that he has in mind.

The noble Lord also made the point to which several other noble Lords referred, that if we were able to stimulate more trade there would be less necessity for aid. This is perfectly true, although of course I did say that it is not likely that we should be able to stimulate trade to the extent required unless an amount of aid on the infra-structure to the underdeveloped countriesis forthcoming, and it can only be forthcoming from national or governmental sources. Nevertheless, we accept that there is a special case, when individual countries are dependent on primary commodities, and when there is a fall in the price of those commodities, which means very often that they are selling more in quantity and getting less money in return. To some extent this situation will be covered by the new proposals to which I referred in my opening speech. In special cases it ought to be feasible for some international aid to be given to them in order to tide them over the particularly difficult situation caused by an unusually sharp fall in the price of commodities upon which they depend.

The noble Lord, Lord Ogmore, also asked me about Malaysia and he suggested that we were using aid there for the purpose of influencing defence policy.

LORD OGMORE

My Lords, I am grateful for what the noble Lord has said about me, but I did not suggest that we were doing that. I only said this was the allegation made by two Ministers, and I hoped they were possibly under some misunderstanding.

LORD BESWICK

I am much obliged to the noble Lord. I agree with him absolutely that, while there may be a case in the interests of both parties, of tying aid to certain economic objectives, it would be wrong to use aid for the purposes of influencing defence policy. As he knows, there is in that part of the world at the present time a very special and sensitive situation which has developed since Singapore separated from Malaysia, and it is conceivable that, being more sensitive at this time, they look upon our amount of aid with (shall I say?) a little more suspicion than is warranted. I should like to take the opportunity of saying that it is only the limitation upon our resources that prevents us from offering Malaysia additional development aid this year. Our economic aid and technical assistance together will in fact cost about £5 million, and this will be approximately the same the previous year.

The noble Lord, Lord Ogmore, also asked me a question about the position of certain officers in relation to the overseas service pensions fund. He put the case, which also has been put very persuasively and fairly on other occasions, and I am only sorry that I cannot give him more encouragement that those officers who had already retired could be brought into a scheme which has been devised for serving officers.

I think I have dealt adequately with the point about the fair price for commodities. I should like just to say again to the noble Lord, Lord Ogmore, and to my noble friend Lord Campbell of Eskan, that this was a point which had special consideration in the Commonwealth Trade Conference which ended only last week, and I think we got a formula there as an objective about prices which were fair both to the consumer and to the efficient producer, and I can give an assurance that all the opportunities which are available to us will be used in order to get a price policy which fits that formula which we there agreed.

I was asked some questions about the Indus Basin Development Fund. The noble Lord, Lord Ogmore, asked about the help that would be given on the salinity problem. It is a fact that in the Indus Projects they are faced with this problem, but that Indus Projects are separate from the Basin Fund to which I have referred. It is in fact a scheme which comes wholly within the Pakistan authorities' responsibility. They have called our attention to this problem which they are facing. We have recently studied a Report which was produced in April of this year, and the Ministry of Overseas Development are considering retaining a team of eight British technical experts to advise them on that particular problem.

The right reverend Prelate the Bishop of Chichester made some comment about (as he put it) the disproportionate aid we were giving to certain countries as compared with India. I think he had his proportions correct, but it is possible to look at them again with another eye and to arrive at the conclusion that we are giving too much to India and too little to some of these other countries. It is the fact, I believe, that a quarter of our total aid is going to India, and a third of our development aid. Also, so far as India is concerned, there are several countries which accept a responsibility, where as in the case of some of the African countries—and Aden too was mentioned—no other industrial countries accept any responsibility at all. They are dependent entirely upon us, and taking all these considerations into account I hope he will agree that the limit of the aid we have at our disposal is probably being fairly allocated. At any rate I can assure him that we are endeavouring to allocate it fairly.

Several noble Lords and the noble Baroness called attention to the population explosion. Here, again, there may be some difference of opinion as to the extent to which a nation which is out to help human life by its economic aid is entitled to take any steps which have the effect of limiting the number of human lives. But the British policy here, I would say, is that when asked by any of these developing countries for advice and assistance on this problem, it would be forthcoming.

The noble Baroness, Lady Gaitskell, spoke, and I think my noble friend Lord Campbell of Eskan also spoke, of the falling level of private investment. I think I indicated in my opening remarks that we, as the Labour Government, certainly do not wish private investment to fall. So far as developing countries are concerned, the steps we have recently taken to restrict investment exclude them, and in other countries restrictions are only temporary because of our economic situation. Moreover, in the developing countries the fact is that aid recently has not fallen; it has increased. The figure in 1964 was £87 million, whereas in 1965 the figure had risen to £110 million.

The noble Lord, Lord Ogmore, asked me about the Asian Development Bank and suggested there was some duplication here, that it might well be wasteful, and why did we want to spend our money in financing this Bank when there was already the International Bank. The answer to that is that this is a regional bank. There are other regional banks. These regional banks are able, I think, to bring to bear the kind of local knowledge and expertise to which the noble Lord, Lord Campbell of Eskan, referred. They are able to give special assistance. They are also able to encourage regional development schemes when these are required. I think that the Asian Development Bank will have a special and additional part to play in the overall problem.

I was asked by the noble Lord, Lord Sandford, about the attitude of Her Majesty's Government to the encouragement of certain industries in these developing countries, and he made the point, as did others, that there really is no virtue in giving economic aid if we make it impossible for them to develop industrially. The fact is that we recognise the need for developing countries to institute some manufacturing industry, and we have encouraged it to the best of our ability by making it possible for them to send here duty free virtually all manufactures, excepting, of course, cotton textiles. Here we are up against a very difficult problem, which I hope the noble Lord will accept.

I had the opportunity last week of speaking to some of the delegates from Basutoland. They, too, were speaking about the need for diversification, for getting some manufactures going. They intended to start this policy in the near future. I asked what manufactures they had in mind and they mentioned, first, cotton textiles. I do not think really, in view of our own situation here and the fact that we have built up a very substantial export trade over the years in cotton goods, that it is easy for us to do more than we have already done. There has been, as the noble Lord will probably accept, some recognition of the need to allow an increasing amount of cotton textiles to come into this country, although in a regulated fashion; and, while we understand the pointhe is trying to make, I would have thought our record in this matter, bearing in mind our responsibility to our own industry in Lancashire, is a reasonable one.

The noble Lord asked particularly about jute manufactures, and here again our record is not wholly bad considering the situation in this country. As he probably knows, most of the jute industry in the United Kingdom is concentrated in Dundee; I understand one-fifth of the total working population in Dundee is dependent upon this in- dustry. It is difficult to subject it to wholly unregulated competition, but there has been an easement of the restrictions since September, 1964, and I can say that it is the intention to review this position again later this year.

I think in winding up I can do no better than quote the words of my noble friend Lord Campbell of Eskan in his excellent speech, for which there was absolutely no need to be apologetic. He said he hoped this Bill would provide a firm foundation for a new creative edifice. I accept that. I believe that is the intention of Her Majesty's Government. I accept what he said, and what I think was said by the right reverend Prelate, that we have in these matters to work towards a world community. The ideal and the obligations of a world community, despite Vietnam, despite Mississippi, despite the industrial strike in our ports, despite the struggle in Rhodesia, I think it is fair to say, has greater acceptance in this country than there ever was before.

Although we can say we ought to be giving more, when we think of the amount we were giving before the war, which was negligible, I think we can take a little satisfaction. Nevertheless, the need for further effort still remains, and I hope all those who put forward the plea for greater expenditure willcarry to the country among the electorate the sort of plea they put forward here this afternoon.

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