HL Deb 28 April 1971 vol 317 cc1193-286

2.53 p.m.

Debate resumed.


My Lords, I rise now to resume the debate so shortly started and adjourned. In the Motion I seek To call attention to Britain' s concern with the progress and prosperity of developing countries, to welcome Her Majesty's Government' s acceptance of the target of 1 per cent. of gross national product in the flow of resources from public and private sectors together, and to emphasise the complementary role of public aid and investment and private sector investment in achieving this; and to move for Papers. I must start by declaring, as other noble Lords will know and may have themselves, an interest that needs declaring, in that I am an overseas banker and am connected with industry, which does massive exports to the developing world and does them very often in relation to aid programmes and overseas investment. But, hiving stated that interest, I hope that your Lordships will understand that what I have to say is of general, and not of particular, application to those things which I try to do in those fields.

The principal purpose which I had in mind for this debate some weeks ago was to ask your Lordships to urge upon Her Majesty' s Government the importance to our country and to the world of British private investment in developing countries, and of the complementary relationship of this private investment with the Government' s investment and aid, whether it be by the Government or by the public authorities; and all that in the context of a well-managed and steadily increasing governmental investment and aid programme for the developing countries. I was aware, of course, of the undertakings which my right honourable friend the Prime Minister had given in New York to the United Nations about the new Government's positive attitude to aid for the developing countries. I was hopeful that his Government would move on to take the necessary steps to encourage private investment from Britain for developing countries by an insurance scheme, and that they would also arrange for better co-ordination between the Commonwealth Development Corporation and the Government, on the one hand, and private sector sources, on the other hand.

My hopes have been amply justified by the publication only two days ago of the White Paper (Cmnd. 4656), British Private Investment in Developing Countries, which your Lordships will have studied. Almost everything of a general nature which I had wanted to say is well said in that White Paper, in particular about the special value to developing countries of private investment. That is set out in paragraph 2 of the White Paper, and I do not think I need read that paragraph to your Lordships. But having said that, I must add, my Lords, that that is not going to stop me from saying one or two things more. However, it should at least shorten the speech, or alter the speech, that I might otherwise have made. I am very proud to have stimulated so many of your Lordships to come here and participate in this debate, which by its very nature is the first debate on aid that has taken place since the issue of this new and important White Paper.

An earlier Command Paper of this Government (Cmnd. 4578) on public expenditure over the next five years has shown that my hopes for the steady expansion of Governmental overseas aid were also fully justified. I think it is Table 2(3), on page 17 of this Paper, which shows that total overseas economic aid is to expand—that is, in the Government sector—from £219 million in 1969–70 to £340 million in 1974–75. Those figures are in money terms, and they show in money terms an important increase of something between 50 per cent. and 60 per cent. in five years.

In the wording of this Motion I have mentioned Britain's concern with the progress and prosperity of developing countries. I do not wish to spend time in arguing whether this concern is primarily motivated by moral values or by social values, or by enlightened self-interest of material and economic kinds, or conceivably by a combination of all three. For most of us there is a moral purpose and a social conscience behind our economic actions, and this is as much true of countries and peoples and Governments as it is of individuals. The simple fact is, as we all must know, that the world is going to be happier and wealthier, and also a safer place, if the developed part of the world contributes from its own resources towards the faster development of the poorer part of the world. Just such a process has of course been going on now for a number of years. I think it is true to say that in the public mind the mass of resources transferred from the developed to the less developed world are thought to have been transferred by Governments. But that, in fact, is an illusion, for in the last thirteen to fifteen years, as the figures in the Pearson Report show, private investment and lending has accounted for between one-third and nearly one-half of the total resources that have moved from the developed countries to the less developed countries, year by year.

If that has been so all over the world, what has been happening in Britain? Here, the pattern has been similar. In 1969, net private investment from British private sources in the developing countries amounted to £188 million, which was more than the total of public sector aid and investment. If one were to add to that, as is done under the United Nations UNCTAD classification, export credits of more than one year's duration guaranteed by E.C.G.D., the figure from the private sector becomes considerably larger than that from the public sector and amounts to nearly 0.6 per cent. of our gross national product in 1969. I give the figures for 1969 because they are the most complete that I have. Private sector investment and export credits are not always predictable for the future nor are they under the control of Governments. They are, however, clearly susceptible to incentives and guarantees; and I will revert to that in a moment. But I would agree with any noble Lord who says that the basis of any country' s aid programme must be the governmental aid for the public sector of the developing countries, designed, as it would be, to achieve basic development purposes including what is now called the infrastructure, and including housing, education, public utilities, communications and so on.

Nothing that I shall say this afternoon about private investment should lead anybody to believe that I do not attach the greatest importance to the steady expan- sion of Government aid programmes. Indeed it has been sad for me and, I would say for all, that in recent years in terms of Britain' s gross national product, British net official flows of aid to developing countries have been dropping, from 0.53 per cent. in 1964 to 0.39 in 1969. They have begun to go up in the year since then and I am glad to know that by 1974–75 that figure should be up to over 0.5 per cent. again.

I do not know, and I do not believe that anyone can know, what the exact proportion ought to be between governmental aid and investment on governmental terms on the one hand and commercial private investment on commercial terms on the other. The Pearson target and the United Nations' target for public sector aid is 0.7 per cent. as part of the 1 per cent. of the gross national product. But if the United Nations is right about these targets in general, I would not think it necessarily follows that it is right for Britain in particular. For we have in Britain, as in other countries, a proven capacity for private investment overseas in a strong and healthy fashion; and it may be that the public sector percentage need not be as high as in some other countries. How we can get to the right high level and how quickly, depends in the main on the real growth of British economy and the speed of that real growth. To go too fast in overseas aid, as in any part of public expenditure, must threaten the rate of real growth. But for those who share my view about the importance of governmental aid for developing countries it is good to know that in the Government plans for public expenditure recently announced, their aid expenditure should grow year by year in real terms, not in money terms, at around 4 per cent.; whereas the average growth rate of their total public expenditure would be only 2.8 per cent.

The amount of aid is, of course, only part of the problem. Of the other part, an important factor is the management of the aid so as to secure that the programmes are so designed that their benefits are spread widely in the recipient countries and that where there is high unemployment a real increase in employment opportunities is provided. There is plenty of evidence of some success in these matters, but there are cases known to your Lordships where benefits have not been as widely spread or employment has not been as much helped as one would like. These matters are more for the Governments of the recipient countries than for the donor countries. But they need bearing constantly in mind.

There is one other matter about the handling of aid from the public sector which I ought to mention and that is the question of whether the aid should be tied or not tied to the goods of the donor country. In an ideal world—and I would expect your Lordships to agree with this —no aid or investment by Governments would be tried in the sense that the money granted or loaned could be spent only in the country of the donor. But this world is not ideal. Most countries of the world do, for one reason or another, find it necessary to tie part or all of their aid and investment. This tendency has grown rather than lessened in the last 15 years. The result of it has been to add to the costs of equipment of all kinds used in many of the developing countries and, just as important, to distort the patterns of trade, sometimes very much against British interests and against the interests of the developing countries too. The purpose of the granting of aid is to help the developing country not to help the interest of the donor country to break into markets previously developed and used by other countries.

It is in the long-term interests of Britain as well as of the developing countries that we should do as was suggested by the Select Committee of the other place on Overseas Aid and by the Pearson Report; namely, to take the initiative in encouraging other countries to hold and then to reduce the tying of aid. I should like here to pay my tribute to those who were responsible for the compiling of that important Report. The tying of aid limits the choices of the recipient country; the untying of aid removes important and costly restrictions.

I now turn to private sector investment. I welcome the acceptance by the Government of the argument that it is right for Britan to introduce a scheme to guarantee private investment overseas against non-commercial, that is, political, risks. I have never understood why we did not do it many years ago, when other countries, led, I think, by the United States and later by Germany and a lot of others, set us such a good example. Almost every day we can read reports of political upheavals or threats of upheavals in one or other of the developing countries. Sometimes these are temporary; sometimes they are more permanent. But the very threat of them is bound to discourage any private investor unless he happens to be equipped, as are some of your Lordships, with very close knowledge of the developing countries—which, incidentally, shows that some of the Press reports are not quite as accurate as they ought to be. But it is a fact that the industrial private investor is put off, and is bound to be put off, by reports of political unrest and is put off from helping himself and the developing world by establishing himself in the right place overseas or providing finance for others to do so.

The proposal in the White Paper is that the insurance scheme will be applied only to new investment or to extensions, modernisation or development of existing investment, but not to existing investments otherwise. In other words, the enterprising man who has taken the risk himself—in the last few years, for all I know—is to be penalised for not waiting until Her Majesty' s Government have woken up to what I consider to be reality years after other Governments had come to their senses. I find this rather depressing, because it shows a depressing indifference to those who have tried to help themselves. It also shows great inconsistency; for in paragraph 10 of the White Paper the Government say that they will also seek wherever possible o conclude bi-lateral agreements with the developing countries for the protection of new and existing investment". In other words, other Governments are to be asked to protect existing investment but not Her Majesty's Government—which at the moment I would call Scrooge-like. Perhaps the Government will reconsider this matter.

I cannot see the objection from the insurance point of view to the inclusion of a properly-run insurance scheme. Existing investments which, by definition, are likely to be safer than those which have been held back in the absence of special political risks insurance scheme to me to strengthen and not to weaken the insurance fund. On the handling of the scheme I have not anything very particular to say at this moment, except that while it is right that the E.C.G.D. should be responsible, I hope that the Government will find it right to establish a special Overseas Investment Insurance Advisory Council, rather than use the existing Export Credits Advisory Council, which of course we all know is a very distinguished and effective body. The problems of export credits and investment insurance are in my opinion not the same, and though there may be some overlapping, it would probably be wise to have a separate body.

As the White Paper indicates, the political risk is not the only deterrent to private investment in the developing countries. One other deterrent is the British taxation system, another is the British exchange control, which does not apply everywhere but I just mention it. Another is the attitude of the developing countries towards private investment. The White Paper deals with the taxation points in paragraphs 12 and 13. I think it would not be unkind to say that it deals with the matter rather gingerly. The main hope for improvement lies in the last sentence of paragraph 13, relating to the review of the corporation tax structure. It is a fact that the developing countries, or most of them, have a far higher rate of company tax than the more developed countries. As a result, it is, from the taxation point of view, often better to invest overseas in a developed country rather than in a developing country. If I may put the matter in rather more controversial terms, from the taxation point of view it is often a better investment to establish a factory in South Africa than it is in India. The United States have a different system of taxation reliefs on investment overseas, a system which certainly would not encourage the nonsense that I have mentioned, and I commend their system of double taxation relief, which involves the pooling of tax.

Another deterrent which I want to mention is the attitude of the developing countries to private capital. From the point of view of the investor, it is entirely acceptable—indeed, I think highly desirable—that each developing country should have its own planning system, and a good and well-observed planning system, and should do what it can to ensure that investment coming from abroad should fit in with its economic plans. It is also acceptable that foreign private investors should endeavour to provide for an increase in the local share in management and administration, in employment and training of local labour, and should, in appropriate cases, provide for the participation of local capital as well as some reinvestment of their own profit.

But if any developing country is to attract foreign capital that may be available, it must manifestly welcome it and those who come with it. It is my experience that many countries have been learning to understand this and now genuinely accept the idea of partnership, both between Governments and foreign private capital and between the foreign private sector and the developing country's private capital. If over 1970 there may appear to have been some setbacks, as would appear from what has happened in parts of South America and of North Africa, there have been advances known to me, perhaps most notably in India and in other parts of Africa.

The last part of my Motion refers to the complementary role of public aid in investment, on the one hand, and private sector investment, on the other, in achieving the target of 1 per cent. I have spoken about the part that the private sector can play and so has the White Paper. That part will be all the greater if there is co-ordination and co-operation between the public sector, either Government or Commonwealth Development Corporation, and private investors. How can this best be achieved? I do not know, but I believe that the body most fitted to take the lead is the Commonwealth Development Corporation. I have the greatest admiration for the chairman and directors of that body and for its management. Its constitution is ideal for the marrying up of the public sector and private sector attitudes to investment overseas.

The full achievement of the co-operation we require depends as much upon man as upon any system that might be introduced. But there is one matter to which I would draw the attention of those concerned with this problem. There is bound to be a tendency in any large organisation, governmental, semi-public or private, to discourage or give second priority to projects and ideas not invented by them. Most of us with experience in Government or large organisations are aware of the label, "Not invented here", which hangs on some doors. Such a label can wrongly kill great ideas and great projects. I know from experience that in many large projects there is not only room for, but a special place for, a whole variety of investment bodies, starting with the International Finance Corporation or the World Bank (but the I.F.C. for the public sector), through public sector or quasi-public sector finance from Britain, to bodies such as O.D.A. or C.D.C. and private banking or financial assistance arranged through the market place, and, above all, for the industrial leadership that is essential to the project through one or more industrial companies. Such projects can be initiated here by the I.F.C. or by the C.D.C., as they often are, or from the Overseas Development Administration, or from the private sector, sometimes through a bank or from industry. Whoever is the initiator, any project should be welcomed by the C.D.C. or the British Government in exactly the same way as if the investment were their own.

There is one other aspect of coordination which I think I should mention as of importance to the Government. Whether aid is tied or untied, it is very much a British interest to be able to organise and quickly offer to developing countries British management and technical support and British manufacturing production and finance, whether it is for large or small development projects. Our Embassies and High Commissions overseas can and do watch out for these opportunities, and I think that the Government, through O.D.A. or C.D.C. or the D.T.I., should follow up these opportunities. As a nation, we do not always seem to be as effective as others in organising ourselves, public and private sectors together, to meet the needs of developing countries. I would say, from experience in Africa and even from watching the situation in Asia, that we shall help these countries, as well as ourselves, if we become more effective by acting more together, public and private sectors.

Having kept your Lordships for some time, may I end with one rather different but I think, important point. Massive figures, hundreds of millions of pounds, are used about the aid programmes and private investment overseas, figures which describe the total of the resources passing from Britain to the developing countries each year, but these massive figures may make us forget the value to the developing countries, on the one hand, and to the spirit and conscience of Britain, on the other, of much smaller investments or donations from private citizens, charitable trusts or even from church funds. It can rightly be argued that a moral purpose does not make a good investment; but it can also be rightly stated that a moral purpose does not convert a good investment into a bad investment. We have yet to find a channel for private citizens who so wish, or for trusts, including church fund trusts or other charitable fund trusts, to make investments when they want to do so in projects, industries and agricultural undertakings in the developing world. I ask Her Majesty's Government to think whether, if a suitable channel for that can be found, they should not extend their newly established insurance scheme to cover those investments as well. I beg to move for Papers.

3.21 p.m.


My Lords, I hope your Lordships will allow me to begin by congratulating the noble Lord who has just sat down, on his recent appointment as The Chairman of the Port of London Authority. The noble Lord has a well-earned reputation for dynamism and administrative capacity, and we know that they will be well employed in the new responsibilities that he has undertaken. In a different capacity, I know of the noble Lord's genuine solicitude for the developing countries, and I am glad, as we all are, that he has called our attention to that problem to-day. I think it will be topical if, at the same time, I compliment the noble Lord's bank on the fact that they are the first overseas bank to disclose their true profits.


The second.


I stand corrected, and must accept that the noble Lord knows more about his bank than I do. But, first or second, I believe it is deserving of our congratulations.

Looking back, I think it is surprising how little we talked about development before the Second World War, although grant aid to colonial Governments started nearly a century ago. The need for an aid programme on a continuing basis was not recognised until 1929, when we made provision in the Colonial Development Act for the expenditure of up to £1 million a year for the next ten years. It was only after, I think, trouble in the Caribbean in the late 'thirties that we had the first Colonial Development and Welfare Act in 1940. In 1958 we extended our aid to independent Commonwealth countries. To-day about 80 per cent. of a not inconsiderable sum goes to Commonwealth countries. But grants of that kind are not the only aid that we give, and I very much appreciate the many points that the noble Lord has just made.

The Commonwealth Development Corporation was established in 1948 and, as the most junior member of its Board, I hope the House will acquit me of undue pride if I say we appreciate not only the complimentary remarks of the noble Lord but also the complimentary references of the Select Committee. The noble Lord was right, I think, in what he said about it being not only the quantum of aid that counts, but also the quality of the aid and the efficiency of administration. Certainly the work that the C.D.C. does is unique, and so I think is its scope. Perhaps one of its most important achievements is the way in which it has attracted other capital into development. At the end of 1970 its investment tri 189 projects was £138 million. That £138 million was just over one-quarter of the total investment in those projects. The balance of the amount comes from a variety of sources, including international agencies like the World Bank to whose work I gladly pay tribute, and national agencies like development boards, and also British and foreign private sector investors. I look forward to learning in greater detail what the Government actually have in mind in paragraph 16 of the White Paper and the talks they propose to have with the Corporation.

As a country, we have taken important international initiatives. One example is the Commonwealth Sugar Agreement; a second is the generalised preferences under UNCTAD; and a third is the terms of aid and interest-free loans which we introduced in 1965. All of those have been very real contributions to our handling of the aid problem. But, in my view, possibly the fact of which we should be most proud is the fact that we lead the world as the provider of technical assistance. The fact that we have 15,000 of our fellow citizens serving overseas is something which should give great encouragement to all of us.

I am grateful to the noble Lord for having referred to the question of housing because I should like to put in a "plug" for greater multilateral help in that field. It is a field in which the C.D.C. is very much involved. But I am a little disappointed that the richer countries have done so little to help in this field. We have vast agencies, like the World Health Organisation, the Food and Agriculture Organisation and UNESCO, to deal with health, food and education. All of them do very good work indeed, and I look forward to more and more of our aid being channelled through those multilateral agencies. But in comparison, housing, planning and building subsist almost on a shoestring and on the devoted work of Mr. Crooks and his colleagues in the United Nations Centre. They have put forward an attractive scheme for an international housing finance corporation, and I hope that the noble Baroness who is to follow me will be able to tell me just a little of the progress which that proposal is making and what attitude Her Majesty' s Government are adopting towards it.

In parallel with this, our own building societies—in my view, a very public-spirited group of enterprises—would like to be able to increase the help that they are able to give to the developing countries. One of our main priorities, I feel. should be to generate local savings, and I should like to be assured that Her Majesty' s Government will discuss the matter with the building societies to see whether more rapid progress can be made.

But for all of us I am sure that our pride must be at least a little tinged with shame that our progress has not been greater and more rapid. The figures are sobering indeed. Our net transfer of official resources—and by that I mean gross aid, less capital repayments and interest—fell slightly between 1961 and 1969; and in only two years, 1964 and 1966, did it exceed the 1961 figure of £151 million. Yet during that time our gross national product rose by over £14,000 million. It is no good our avoiding these unpalatable facts. I am glad that both the noble Lord from his side of the House and I from this side should remind your Lordships of them: because, however hard up we may feel here, we are rich compared with most of the world, and the pressure for us to do more, in my view, is irresistible.

The welcome that I give to what the noble Lord calls the Government's "acceptance of the target of 1 per cent." is a very qualified welcome. The United Nations, my Lords, accepted that target in 1960 as 1 per cent. of national income, and in 1968 UNCTAD II made it, not national income but gross national product. We reached the 1 per cent. target in 1961 and 1965 and nearly reached it in 1969, the year to which the noble Lord referred, because export credits were, rather surprisingly, almost doubled that year. But the overall picture is that from 1961 to 1969 we averaged 0.91 per cent. of our gross national product and we were lying eighth in the field of Western donors.

The noble Lord welcome what he regarded as the intended gradual expansion of overseas aid. There are two specific qualifications that I should like to make at this stage. The first is that the Pearson Report called for the 1 per cent. to be achieved not later than 1975. The Government' s aid projections show that in cash terms gross aid will increase steadily from £245 million this year to £340 million in 1974–75. But—and this is a very big "but" —net aid will remain virtually static at about 0.41 per cent. of our gross national product, and we shall certainly not reach 0.5 per cent. by 1975. That is made perfectly clear in the evidence to the Select Committe, sub-committee A at Questions and Answers, 528 and 529, and it is clear that we are unlikely to achieve the 0.5 per cent. until after 1980.

The second qualification to which I should like to draw your Lordships' attention is that it is impossible to forecast the flow of private resources with any certainty. Pearson recommended a target of 0.7 per cent. for official flows within the 1 per cent. target for official and private flows combined, and that was to be reached by 1975, and not later than 1980. I think the significance of this, my Lords, is that at present Her Majesty' s Government are not committed to achieving that 0.7 per cent., and that is really the nub of the criticism that I think will come from both sides in the course of this debate.

It may well be that private flows will increase rapidly, and the White Paper should help in that. I welcome the White Paper very much, and I share something of the surprise which the noble Lord feels as to why none of us got around to doing some of the things a good deal earlier; but it is most welcome now that it has come. Even if the private flow does substantially increase, however, the 1 per cent. is a minimum and not a ceiling, and the Select Committee recognised that very clearly in paragraph 52 of their Report where they say: If Britain is to take a lead in the revival of aid from the developed world, as your Committee think it should, it must be able to demonstrate a willingness to move in the direction of a greater increase in official aid than is at present contemplated". It is a matter of regret that the Select Committee were rather less positive in their recommendations on that score than they were in the Report itself.

May I stress next the significance of the word "complementary" —and I think that here the noble Lord and I are at one, because private investment should be truly complementary to public aid and must not be a substitute for it. The Government's own reluctance to accept the 0.7 per cent. for official aid suggests that they are in fact regarding private investment as a substitute, and I think many of your Lordships will feel that that is not good enough. There are, after all, many disadvantages in relying on private investment. The noble Lord touched upon some of them. Broadly, as he said, private investment is not generally available for development of the infrastructure, in the sense of roads and schools and dams. It tends to go where the rewards, or at least the security are the greatest. It may well go into forms of activity which are not those most needed in the recipient country, and it may distort the economy. Noble Lords who have doubts about this should consult the Pearson Report and the writings of Professor Streeten on the role of private investment.

I do not think the difficulties in the field of private investment are insuperable, and the Select Committee seemed to realise this in paragraph 168 of their Report where they drew attention to the ways of avoiding the harmful effects. They referred to three ways of doing this —I quote: First, by allaying fears of expropriation without adequate, prompt and effective compensation, second, by persuading overseas investors to operate with sensitivity to the needs of the developing countries, and thirdly, seeking to influence the injection of capital so as to maximise the beneficial spin-off upon the less dynamic sectors of the economy. I am sure the Select Committee were right in the advice they gave. But while British investors are riled, and I think understandably so, by the obstacles and restraints that have been created by developing countries, we should try to put it into its historical perspective, as the Pearson Commission did on page 99 of their Report where they said: When the historical record is recalled, it is hardly surprising that citizens in some countries look upon the subsidiaries of foreign corporations as the harbingers of new foreign domination. But this view neglects to take into account the vast improvement which has taken place in the behaviour and attitude of foreign companies, partly in response to host-country pressures, partly as a consequence of increasing international interdependence and co-operation. We must not ignore the political and financial difficulties that are at present experienced. I think the White Paper will go some way to meet them, and although the political difficulties may remain, I hope that some of the recent financial difficulties will not be of long duration.

As I have said, my Lords, we on this side of the House welcome the White Paper, although, frankly, I am not wholly certain at this stage how effective the incentives for overseas investment will be. But certainly the Government have moved in the right direction, and I hope we shall learn more in the course of to-day's debate. There is I think only one point on which I join issue with the noble Lord, and that is that he appears to be satisfied with the pledge given by the Prime Minister in the United Nations towards the end of last year. I hope that the Government will not claim that they can fulfil the United Nations target by whipping up private investment. The 0.7 per cent. of official aid has got to be reached, and there is no indication in Monday' s White Paper that the Government share this view.

Perhaps I may remind your Lordships of what The Times said yesterday. It referred to Mr. Heath's speech in the United Nations, and then said: What he has not said is whether or not the Government accept the Pearson Commission recommendation that at least 0.7 per cent. of G.N.P. should be in the form of official aid—grants, loans and export credits. The United Kingdom has not yet attained such a proportion of official aid and there is little indication in yesterday's White Paper that the Government intend to do so. Over-concentration on creating a favourable climate for private investment in the developing countries should not give the Government an excuse to fall short of official aid targets". That is the thought that I should like to leave with your Lordships this afternoon, because this subject is of the most tremendous importance. If we fail in our handling of it it will not really matter who was to blame, because all of us will share the responsibility. We shall have to measure the extent of our failure in terms of hunger, sickness, decay, and perhaps bloodshed. We shall also have to take into account the imponderables. Perhaps the most important of those is the effect that our failure would have on the moral and political credibility of the Western world.

My Lords, if we do not discharge our moral responsibility, if a hungry third world resorts increasingly to violence and political extremism, at least some of the blame will rest on our shoulders, and we shall be culpable and foolish if we leave the world a worse, a less stable and a hungrier place than we found it.

3.42 p.m.


My Lords, I am sure we are all very grateful indeed to my noble friend Lord Aldington for giving us this chance to debate a very large subject which has not been before your Lordships' House for over a year. It is one which I know that this House takes a great personal interest in. This is witnessed by the number of speakers who have put their names down to take part this afternoon and also for the combined experience which they can command together. My experience comes really from having listened to a great number of debates on this subject at the United Nations—many delivered with great passion and knowledge—and also from having had the good fortune to see some of the work of both private and public investment in some of the countries under discussion to-day.

My noble friend Lord Aldington said that he had been coming to this House with the intention of stressing once again exactly those facts of private investment which only he can do from his great financial and commercial experience. He finds to his surprise—and, I hope, delight—that the White Paper has preceded him by two whole days. I think he can say, therefore, that he has timed this debate very well, because this is the first time that either House of Parliament will be able to discuss this White Paper. I am, needless to say, very glad indeed that my noble friend gave the White Paper such a welcome, and also that the noble Lord, Lord Greenwood of Rossendale, welcomed it too, although he qualified his welcome, in that he was not quite certain how effective the measures were going to be. I should like to deal with the White Paper in detail later.

I suspect that the House would wish me to discuss a little the thinking behind the terms of this White Paper and the Government's attitude to all forms of aid. This is such a vast subject that I felt it might be convenient to your Lordships if I spoke on the chief considerations on overseas aid and left my noble friend Lord Lothian, who is to reply at the end of the debate, to deal with the specific matters which may be of interest to any individual who speaks this afternoon.

I should like first of all to welcome the terms of the Motion before the House. When the Government came to office they gave a pledge to work for an expansion of international trade by encouraging private investment and increasing the official programmes. As the Motion makes perfectly clear, both are essential to each other. This must be so if this country is to reach a total on overseas aid equal to 1 per cent. of oar gross national product; a target which was set by the second UNCTAD in 1968—I think that is a terrible name, translated as the United Nations Conference on Trade and Development. This conference was referred to by both noble Lords who have already spoken. As they said, the Prime Minister in his speech to the United Nations in October last year affirmed that we would do our best to reach the target of 1 per cent. by 1975. However, as the noble Lord, Lord Greenwood, has already pointed out, it has been reached once before in 1969.

The net financial flows to developing countries that year were 1.04 per cent., and this reflected a high figure for private investment compared with the trend over recent years. Private investment total 0.41 per cent.; guarantee to private export credits, 0.24 per cent. and official flows 0.39 per cent.; a total of £477 million. The noble Lord, Lord Greenwood, and the noble Lord who opened this debate both referred to not only the 1 per cent. target but also the suggestion put forward that the Government should try to reach a target of 0.7 per cent. for official aid. Britain reserved its position on the separate target of 0.7 per cent. for official aid, while accepting the second development decade strategy document as a whole.

In explanation, we stated that the Government accept that official flows for development assistance should form a substantial part of total flows, but do not accept the need for a separate target for official development assistance. Our reason for this is that we believe that a division between official and private flows is a matter for each Government to decide in their own circumstances. Of the five major donor countries, the United States, Germany, France, Japan and the United Kingdom, only Germany has accepted the 0.7 per cent. target and without a date for its achievement. That is why the Government have decided to consider the new measures to encourage private investment not only to continue but, we hope also, to extent operations in development areas.

The achievements of British private investment overseas are widely recognised, as has already been said. There is no doubt that Britain's official aid can best back developing countries to build their basic rural and industrial framework. But as noble Lords know, private investment is particularly valuable because it brings with it not only the capital but also the technical and managerial skills. This was recognised by the Pearson Commission in their Report on International Development. I see that the noble Lord, Lord Greenwood of Rossendale, has this great book on the Pearson Commission before him, and, oddly enough, I happen to have it, too; and one can on a subject which has been so widely discussed almost give different quotations to mean different senses from it. Therefore, as the noble Lord has quoted something about private investment, I also should like to quote something, and he will find it on page 122. The Pearson Commission said that: dollar for dollar it may be more effective than official aid. The House will recall that measures to stimulate foreign private investment were also stressed in the international development strategy for the Second Development Decade, and the Prime Minister accepted this in his speech at the General Assembly when the strategy was adopted. He drew attention to the need for Govments in developing countries to recognise that, in order to attract private investment, they must welcome the foreign investor and not discriminate arbitrarily against him. He undertook that we for our part would encourage British firms to invest in the developing world.

The foreign investor is no man's servant. His responsibilities to his shareholders force him to invest only where that investment will be respected. The Government have carefully considered what incentive measures they should take, and have been much helped in this by the views expressed in the Report of the Select Committee on Overseas Aid, which was published last month, to which the noble Lord opposite referred and which is acknowledged in paragraph 4 of the White Paper. My right honourable friend the Minister for Overseas Development intends to give a considered reply to the many questions raised, and therefore it would not be proper for me to comment to-day in this House on the Select Committee of another place.

Perhaps the most important measure, and one of particular interest in connection with our debate to-day, is the scheme for investment insurance, which is described in the White Paper that was laid before Parliament on Monday. Most other developed countries already have investment insurance schemes, as the noble Lord, Lord Aldington, said; and he has been one of the foremost among British industry to press this country to follow suit. The Government believe that the introduction of an investment insurance scheme will in particular encourage private British investment to develop even further the resources of the less advanced areas of the world. The scheme, as the House will recall, will cover overseas investment against the non-commercial risks of war, expropriation and restriction on remittances. It should encourage investment which, despite commercial attractions, private investors might otherwise find too risky to undertake.

Since the main purpose of the scheme is to cover new direct investment, it will not cover existing investment or portfolio investment. The noble Lord who opened this debate accused Her Majesty's Government of being like Scrooge—I do not know whether he did it because I come from Aberdeen; I am not quite certain how to take that. But I am going to give some figures before long which I hope will convince not oniy the noble Lord but the House as a whole that, far from being like Scrooge, we are in fact continuing a steadily increasing public aid programme. But the scheme to which I refer, the insurance scheme, will offer cover for the expansion of existing investment. I should point out to your Lordships that no other national schemes cover existing investment, and to do so would greatly increase the complication of the scheme and the contingent liabilities. The cover will in principle be available for investment in any country by any United Kingdom company. The Government propose to introduce legislation as soon as possible to enable the Export Credits Guarantee Department to administer the scheme for they have the most relevant experience in this field. Subject to the passage of the necessary legislation by Parliament, it should be possible to begin operations early next year.

A commercial investor expects to take every commercial risk, but he has not of course the wide spread of risks that is available to an insurance scheme; and because he is responsible for a large amount of other people' s money he cannot be expected to invest it in the face of uncertain political risks. Investment in the developing countries, if it is to be helpful both to those who give and to those who receive, will rarely be in short-term ventures. The investor must be able to see his way quite a long way ahead, and it is to cover this that the new form of investment insurance has been devised. We therefore intend also, wherever possible, to conclude bilateral agreements. My noble friend Lord Aldington thought that this was somewhat inconsistent. But surely it is not inconsistent when, as I have explained, the main insurance scheme will cover the expansion of existing investment and what we shall do, we hope, with bilateral agreements is to protect new as well as existing investment.

A number of Western countries, particularly the United States, the Federal Republic of Germany and Switzerland, have in recent years been successful in concluding a variety of agreements of this kind. The contents, of course, will be a matter for negotiation. The Government do not propose to use tax concessions as a stimulus to private investment in developing countries—a fact which was much regretted by the noble Lord who opened the debate—but the interests of developing countries which encourage British investments by offering tax advantages will be taken into account in the wider context of our proposals for changing the structure of corporation tax. The noble Lord thought that we approached this matter rather gingerly, but the White Paper also, in paragraph 12, draws attention to one point on which a favourable change will be made by provision in this year's Finance Bill. It concerns the relaxation, which will extend to all countries, of the 10 per cent. voting control as a minimum requirement for United Kingdom tax relief on underlying foreign tax, as against the 25 per cent. which applies now to non-Commonwealth countries.

The Government also intend to consider a number of ways of using official aid to complement private investment—for instance, by making it known to both recipient Governments and private invest-tors that the Government are willing to consider cases where official aid may help investment by providing basic needs such as roads or power supplies.

Both noble Lords who have spoken referred to the Commonwealth Development Corporation, and I should like to join with them, if I may, in paying a tribute to the undoubted good work which they do. I have seen it myself, and have seen the very acceptable way in which their work is welcomed in various countries overseas. My right honourable friend intends to discuss with the Commonwealth Development Corporation methods whereby British firms can increase their investment in developing countries in association with the Corporation.

The noble Lord, Lord Greenwood of Rossendale, asked me a question about the International Housing Finance Corporation. It is to be considered this year by Ecosoc, but the Government believe that the proposed institution would be in competition with the World Bank and might draw funds for housing that might otherwise have been available to the Bank for projects of higher priority. But, as I say, it will be discussed later in detail. It may also be possible to expand official aid to receiving Governments, to local investment banks and developing corporations for use in joint ventures with British private capital. The Government also intend to introduce a scheme to provide assistance by means of financial support for pre-investment studies to firms who are interested in investment projects overseas. This should encourage firms to undertake studies by financing 50 per cent. of the cost of those that do not in the end result in an investment being made.

My Lords, I hope I have shown that the Government attach very great importance indeed to private investment in developing countries. But we have also announced the expanded official aid programme. This will rise, in gross cash terms, from £229 million in 1970–71 to £245 million this year, and then by stages to £340 million in 1974–75. This is in fact an increase of 50 per cent. over the period, and is in contrast to the measures which the Government have thought it right to take to curb public expenditure in other fields. At the present time about 90 per cent. of our aid programme is bilateral, and the bulk of it goes to the Commonwealth countries, including the dependent territories and the Associated States, for whom of course we have a special responsibility.

Over the last couple of centuries we have helped to build the economies of a good many countries, either because Britain was directly responsible for running them or because we had some form of trading relationship. In a vastly changed and fragmented world there are two great advantages that still remain to this country. The first is that the great majority of the world's trade is carried on in the English language, and the second is that those countries who are or were in the Commonwealth still tend to approach problems from the same standpoint as we do ourselves. However, with the increase in the aid programme there will be much more scope for new areas outside the Commonwealth.

We hope, together with other donors, to commit an increasing proportion of our aid to multilateral institutions. We value the International Development Association and we have offered to contribute our share to the third replenishment of its resources at a total of 800 million dollars per year over the next three years. We have also agreed to make a steadily rising contribution to the United Nations development programme in 1972 and the following year, provided that it can prove the ability to use the sums effectively, as was stressed in [...] the Jackson and the Pearson Reports. We shall work to improve methods, but we cannot, my Lords, assume that multilateral aid is better if it is less efficient. What matters is Britain's total contribution to aid—the real practical help that we can give.

As both noble Lords have said already, it is not only the quantity of aid which matters, it is also the quality. The terms and conditions on which we provide our aid compare favourably with those of other donors. About half our aid is given as grant, and in recent years the bulk of our aid loans have been interest-free. In July, 1970, the Government introduced a new and more flexible system under which there is a range of interest rates, from 0 to 7½ per cent. So it is now easier for us to match our loan terms to the circumstances of each country.

The noble Lord, Lord Aldington, referred to a subject which is under con- siderable debate to-day; namely, the tying or untying of aid. In principle we tie our bilateral financial aid to British goods and services, apart from that given in the form of budgetary support and the amount that we provide for local costs. In practice, the proportion of the total of bilateral aid tied to British goods and services was in 1969 about one-half. Successive British Governments have been in favour of a combined effort to aid donors to untie aid. Officials are now trying to devise a scheme with the Development Assistance Committee of O.E.C.D., to cover bilateral aid loans and contributions to multilateral organisations, and we hope to reach an early agreement on a satisfactory reciprocal scheme.

In recent years, technical assistance has formed a growing proportion of our total aid. The need for skilled men and women is naturally greater in those countries which have only recently developed their own higher education institutions and training, and this is why a very much higher proportion of our aid of this kind goes to Africa than to India.

My Lords, I think we can claim that Britain has done much in overseas aid, and successive Parliamentary inquiries have found it to be increasingly well spent and administered. But there are many in the public at large who question it—and who say, for example, "Why spend nearly £250 million of official aid overseas when there is so much to do at home?" Surely the answer lies in the enormous gap in living conditions between the developing countries and the richer countries. It is without doubt one of the major problems of our time. It is said that the poor countries become poorer and the rich countries become richer. There is some truth in this, but the fact is that it is the politically stable countries that become richer as investment naturally flows to them.

I think one can also answer those who question aid by saying that without doubt it is also in Britain's long-term interest. We do not say that because countries develop and become richer they will therefore be less aggressive, and that that will create peace in the world. We do not think that can be claimed. But without doubt trade is a stabilising force, and it cannot flourish except in peaceful conditions. Above all, surely the best reason for giving aid is that as a nation we have always lived in the world, and I hope that it will ever be our wish so to do.

4.6 p.m.


My Lords, we have it on high scriptural authority that it is "more blessed to give than to receive". I do not go all the way with the apostle Paul in all that he said on certain subjects, but I think that in this particular dictum he hit upon a profound truth, and one thing which has slightly disturbed me in listening to the three extremely well-informed speeches from the most knowledgeable speakers who have preceded me—each one of them, of course, has knowledge and experience in this field—is that not one of them has shown an awareness of the mounting criticism of the effect that aid has upon the recipient countries. I think that in any discussion of overseas aid we ought at least to pay some attention to this aspect of the problem. The noble Baroness, Lady Tweedsmuir, in the concluding passages of her speech dealt with certain criticisms of aid, but from the point of view of donor countries. I think it is important that in discussing these matters we should show an awareness that there is a considerable body of criticism coming from a wide spectrum of persons of the effect which aid can have upon those who receive it.

In the 1950s, and I think up to the mid-1960s, aid was accepted as some-thing which was good in itself. All that we needed was more of it. It was felt that if the rich would only give more, the poor countries would benefit, and that would be that; and we had appeals to our emotions and to our moral principles. But now we have quite different voices speaking. They range from people like Professor Peter Bauer, for example, who gave evidence to the Select Committee on Overseas Aid—if one may take him as the extreme on the one hand—to a lady who has had a good deal of publicity lately, Miss Teresa Hayter, on the other. In between we have the perhaps more considered and certainly very sobering contribution from a most powerful group of experts at the Institute of Development Studies at Sussex University, who are also becoming disenchanted with much of the current aid policy.

Professor Bauer takes what I regard as an extreme laissez-faire point of view. So far as I can understand him, he is against aid in general, on the ground that it pauperises the recipient and usually hinders development. His thesis is that if a country requires external aid it should come into the market and pay for it, and borrow the money if it does not possess it. He argues that if a country can benefit from external investment then it ought to be in a position to pay commercial loan terms for it. I must say that I consider this is nonsensical for the poorer countries of the world. But when he was pressed on this point he agreed that as a straightforward economic doctrine he would concentrate capital in the countries that might benefit most by it, and let the others stagnate. I should have thought that there were not many in your Lordships' House who would accept that doctrine. At the other extreme, Miss Hayter criticised aid as demoralising, but from the extreme Left instead of from the extreme Right. I want to return to Miss Hayter and her views in a moment, because I do not think she should be entirely dismissed. There are some very pertinent things in her recently published book on some of the problems of aid.

I was really quite shaken by reading the book Development In a Divided World from the Institute of Development Studies at Sussex, which I would say is required reading for all noble Lords discussing this matter. This group of experts, who are all very knowledgeable indeed and have all worked at one time or another in developing countries, argue, I think very persuasively, that a significant proportion of aid which flows from donor countries to recipient countries is so disposed that while it may not do more harm than good, it can nevertheless do very considerable harm in certain directions. They provide nearly 400 pages of reasoned analysis in support of this thesis, and I think that this is something which we should take seriously.

If we reject Professor Bauer on the one hand and a good deal of Miss Hayter on the other, where should we stand? What is the sort of middle course? In particular, as this is one of the major subjects of the debate, where do we stand on the relationship between private and public investment in the less developed countries? As we have already indicated, the Pearson Committee had no real doubt as to the sort of proportions which they considered to be desirable—0.7 per cent. public aid and 0.3 per cent. private investment. We have all come, I am sure, armed with quotations from the Pearson Report, and the noble Baroness "pinched" one of mine. I was going to quote what the Pearson Report said in favour of private enterprise, but she took the words out of my mouth, as it were.

But I think, if I may respectfully suggest it, she should have followed her quotation—which paid due tribute to the advantages of private investment in the sense that it brings in managerial skill and financial expertise as well as cash—by reading the subsequent passage, which went on: In most industrialised countries there are influential voices"— perhaps we might say, not least in your Lordships' House— advocating that … private investment could and should replace official aid flows. In fairness to Her Majesty's Government, I do not think they would go quite so far as that, although obviously they want to increase the proportion.

Pearson goes on: In the present state of affairs, however, this is an illusion. To begin with, given the present limited access of developing countries to the capital markets of the world, private capital flows are simply not available to finance many of the investments which are a prime need in developing countries—schools, roads, hospitals, irrigation, etc. Even through the mediation of the World Bank, such needs cannot be met on the markets. Second, the flow of private capital tends to be highly concentrated in countries with rich mineral resources and fairly high incomes. Many of the countries of Africa and Asia receive almost no private capital. In other words, there is a very grave problem of distribution. On private investment it goes on to say: It is precisely because private capital flows cannot meet the extraordinary demands posed by the imperatives of development that large government efforts have been called forth. and, of course, are still required.


My Lords, I am listening with the greatest interest to what the noble Baroness is saying, but could she just explain one point of view which she is putting across in her speech. I should have thought that private investment would have been a contribution, in a country in which private overseas factories are envisaged under this scheme, by the fact that they would probably pay overseas revenue tax. This would, in a sense, be a contribution to the infrastructure of the country.


My Lords, I believe the noble Lord is going to make his own speech later in the debate, and perhaps he would like to develop that point himself. I shall be mentioning one or two of the disadvantages of private investment. They may not pay local taxes; they may have complete tax holidays, or pay very little. They also, of course, repatriate their profits, which can have a serious effect on the balance of payments of the country concerned.

I should like in passing just to mention that when one is looking at statistics of private investment one should examine them very closely, because they can sometimes be highly misleading. One can have a figure for private investment, either debiting or crediting, which in fact has nothing to do with actual development but is purely financial in its character. You may have in the accounts, for example, a total of selling or acquiring a subsidiary of a non-British firm which can very much distort the figures for the year in question. For example, Mrs. Judith Hart had a passage of arms with Mr. Richard Wood about some fairly recent figures of oil interests, and what was involved turned out to be methods of financing various enterprises —nothing whatever to do with producing more or less oil. One has, therefore, to be a little cautious in accepting some of the figures of private investment, to try to distinguish between those which are developing investment, as it were, and those which are financing interchanges between various commercial enterprises and have no real counterpart in physical production one way or the other.

We have already discussed most of the points in the White Paper, and I congratulate the noble Baroness in getting it out, or persuading her colleagues so to do, in such a timely way. My noble friend Lord Greenwood of Rossendale, as I understood him, seemed to regard the whole of the White Paper with favour in principle, although he had some doubts as to its possible effectiveness in some directions in practice. Quite frankly, I am not entirely happy about paragraph 18, about infrastructure development, undertaken specifically for the advantage of a particular private overseas investor. I am not saying that there are no circumstances in which this would be justified; one can think of examples where it could be. But one can also think of examples in which there might be very considerable pressure on a recipient country to distort its own infrastructure plans in order to suit the convenience, or, to put it bluntly, the profit, of a private investor in that country.

I think that paragraph 18 should be regarded with extreme caution, because one can be in a position where one can put pressure on a country, on the political and economic leaders in the country, who can be put in a very embarrassing position. They have their own political difficulties to face, as all of us who have been politicians will recognise, in drawing up their own development plans, and if they have inserted into them what could be a diversion of resources and a distortion of their plan, that is not something we should take lightly. Although, as I say, I appreciate that there may be circumstances in which a particular diversion of infrastructure expenditure is justified for a particular commercial enterprise, I think it is something on which we should keep a very close eye, to make certain that is not in any way misused, or does not even seem to be misused, which can sometimes be equally important.

I was very glad when the noble Lord, Lord Aldington, said he was against tied aid, and also when the noble Baroness said that at least the proportion of the British tied aid is somewhat less than one might suppose. Again, there is a great temptation to a donor country to say to a recipient, "We are giving you all this, so at least you ought to buy your equipment, your tools and so on, from us." But that can have distorting effects on the recipient country: it can hold back that country's own progress in manufacturing, and so on. Again, this is a matter in which there is a most delicate relationship, and we must be very careful to make certain that we are truly regarding the interests of the recipient country, and are not thinking solely of our own.

The distorting effect, or potential effects, of aid, both private and publi—or of investment, as I prefer to can it, because the word "aid "sometimes gives us a rather spurious moral glow —can go further and deeper. One of the disadvantages of private capital investment, as I suggested in the quotation from the Pearson Report, is that so much of it is apt to be concentrated in the extractive industries, in minerals and oil, or in large-scale technology—which admittedly has certain advantages, but can have a very damaging effect, in a way that I hope to describe in a moment, upon the society of the country concerned.

Before I turn to that, however, I should like to say one other thing. I was glad when the noble Baroness stressed the fact that we are trying to meet what in some countries has been a very difficult problem, that of increasing debt in order to service loans from overseas. It took us some time to wake up to the fact that having loans at commercial rates, or even at sub-commercial rates, was something these poorer countries could not face, and they were reaching a point at which they were running fast in order to stand still in order to try to pay off past debts. Having raised expectations of higher standards, they were incurring further liabilities which they had no possible hope of meeting. Therefore one welcomes the change in policy of Her Majesty's Government in this respect. It was a deliberate change that we should turn very much more to interest-free loans. I was delighted to hear that the present Government are prepared to sustain that.

My Lords, to revert to some of these possible disturbing social and political effects, the contact between a poor country and a rich country—which, after all, is the relationship we are basically discussing in this debate—means all too often that in the recipient country we are encouraging a small élite in the society, with a tremendous gap between this small élite and the rest of the community. This is what I meant when I said that sometimes these sophisticated investment projects, which may be good in themselves, contribute to this divisive effect, because they add to the people in the country who have a European, or near-European, standard of housing, education, pay, to some extent recreation, and therefore make social and political integration in that country very difficult indeed.

Much of the analysis in the book that I referred to, Development in a Divided World, concentrates on the inappropriateness (if you are looking at it from the point of view of the recipient country) of transferring sophisticated technologies and consumption patterns from rich to poor countries. This leads one to dilemmas in education, for example, because one ought not to stand in the way of an individual who is capable of benefiting from, shall we say, a course at M.I.T. But, on the other hand, looked at from the point of view of his own country, he might be able to give very much better service to his own people at a very much lower, and less sophisticated, level of intellectual development. This may seem a quasi-philosophical point, but I can assure your Lordships that it is a very real one.

We also have the problem of the brain-drain. We have had it to a very marked degree in this country, with the number of doctors who have come here. I think Richard Crossman, as Minister of Health in the last Administration, was justified in putting some limit on the number of qualified medical men and women who came to this country, to the very great benefit of our National Health Service but sometimes at very great detriment to their own country. I am not speaking of those who come for a year or two in order to acquire experience that is a different matter. I am referring to those who settle here, because life in some respects here is easier. It really does detract enormously from the services which they could be offering to their own people.

I could develop this theme, but I know that there are many noble Lords who wish to speak. This whole problem of the divisive influence in the society of the recipient countries, of the impact of a very much wealthier way of life, is very serious indeed. We speak of "poor" countries, but we must always remember that in a number of these countries there are some very rich individuals. India is a case in point. One can think of other countries, some of the Latin-American countries, where you have the most abject poverty, but also very considerable wealth. This is often hidden in general statistics. What I am saying is that some of our aid and investment programmes intensify this division. Particularly where the display of personal wealth and conspicuous consumption is linked not just with foreign residents but with local inhabitants, who are dependent upon either finance from foreign Governments or jobs from foreign firms, it contributes to social and political unrest.

I said that while I certainly would not go all the way with Miss Hayter, I must say that she does, at some points in her study—which was, of course, confined to some of the Latin-American countries—express thoughts and apprehensions which are very relevant and prevalent. She was speaking more particularly of the work of the international agencies, and has been castigated for her comments on the World Bank. May I quote from her. She says: It is sometimes maintained that the international agencies confine themselves to recommendations of a technical nature, and avoid ideological issues. Then she says: No issues are purely technical. The agencies' policies, when they are adopted, have profound implications for the nature and priorities of society, and are based on values and assumptions in a way which is the more insidious for not always being made explicit. In another passage she says: Many of the arguments of the supporters of 'aid' and 'leverage' rest on the assumption that the interests of the Governments and peoples of industrialised and non-industrialised countries are compatible; but, at any rate in present conditions, they frequently conflict. I think she is entirely justified in those comments, and that any of us who have had some experience in the developing countries would agree that the distorting effects of aid or investment can be very considerable. So really, my Lords, the thesis which I would develop on the text which I first put to the House is that, necessary as both public and private investment are, it is I think becoming more and more plain that in either type of investment we must be much more sentitive to and much more aware of the problems which we are creating as well as the problems we are trying to solve.

4.31 p.m.


My Lords, I would first express my gratitude to the noble Lord, Lord Aldington, for initiating this debate. In my brief contribution to it I do not intend to allow myself to get involved in the technicalities of development, or in a discussion of the most effective ways to assist developing countries; and for one like myself, who can claim no knowledge of private investment, with all its technical ramifications, to venture into that field in a debate such as this would, in my judgment, be an insult to your Lordships. The technical problems involved in development and aid are primarily problems for the economist and the sociologist, and I intend in my few remarks to limit myself to a very brief reference in a general way to some of the principles which, in my judgment, ought to govern Britain's attitude to these particular problems.

My Lords, we are all acutely aware that there is absolute poverty and serious undernourishment in many parts of the world. Both on economic and on moral grounds, this cannot be tolerated. Economically, it is important to increase the true spending power of two-thirds of the population of the world. The needs of these people constitute an untapped market for us, and aid which will increase their purchasing power is really a sound investment. But apart from this economic aspect there is the moral issue, with which I am more deeply concerned. It is morally imperative that real need be met from our plenty. As Barbara Ward has expressed it, "We cannot afford poverty". Or, if I may quote some challenging words addressed by Barbara Ward to the Fourth Assembly of the World Council of Churches, which I attended: Where in Heaven's name can we discover any hint of a divine purpose that the wide bounty of the universe has been designed chiefly to benefit 20 per cent. of its inhabitants? I would also recall some words which came in a resolution passed by the British Council of Churches in 1966: The more equitable distribution of the world's growing wealth is a primary demand of justice". There is, indeed, a growing disparity, as we all recognise, between rich and poor nations—and, indeed, it is a growing disparity. As we are aware, the average per capita income in the West is 1,500 dollars or more; in two-thirds of the world it is under 250 dollars; and in some areas it is as low as 90 dollars. This is politically and morally dangerous. Income means power, and the disparities of power are too great; they destroy communication and understanding between peoples.

Considerable aid—and we may be most thankful for this—has already been given to the developing countries, and if I may quote some prophetic words which were spoken in this House on another occasion: This century may be distinguished from earlier times by this striking phenomenon rather than by the nuclear bomb". I pray that this may be so. Yet we have to recognise that in countries such as India the "green revolution" in food production has been balanced by a rise in population, and the net improvement is small. The population of the world, as we know, is growing, and will continue to grow, at an alarming rate. If I may quote from the noble Lord, Lord Snow, speaking in the debate in this House on March 4, 1970, he said: The probability is that by the end of the century the population will be 7,000 million, that is double what it is now, and unless the human intelligence gets to work fairly rapidly, and more important, unless we can contrive to bring the poorer countries somewhere nearer our own state of living, the population in say, 2025, will be double that again, to 14,000 million, which is a thought that it is impossible to cope with". Population control by some means is therefore of great importance—some would say strategic; I would say essential.

My Lords, although much has been said about aid without involvement—that is to say, with no direct involvement by the citizens of the prosperous areas in the affairs of developing countries—it is increasingly apparent that personal involvement of a very distinctive character is necessary. Not only do developing countries need the help of experts, as we have been reminded already this afternoon, but these experts, I would add, must be humble people, ready to "play second fiddle" to less expert local people, and working towards the establishment of technological, political and cultural bonds which link together the prosperity of all parts of the world. Aid without strings is a quite different matter, and this is why multilateral aid is often preferable to bilateral aid.

My Lords, aid which is designed to stimulate local and self-perpetuating development involves trade. It is necessary for developing countries to acquire foreign currency for capital purposes, and the way to do this is by their selling their products abroad. These are likely to be labour-intensive products, such as raw materials, cheap textiles, et cetera. There is a marked tendency, as we all recognise, in the Western World to replace these by man-made fibres and other substitutes and in other ways to limit trading. We can understand how it is that the Lancashire textile industries seek protection from Indian exports; but if the Western World is to take an increasingly prominent part in fostering the development of the less developed nations, it seems increasingly important that the Western World should concentrate on the more sophisticated manufactures, and leave the cheap market to the developing countries—not an easy transition to make, but, it may well be, a necessary one.

My Lords, tackling world poverty is a matter of will and not of capacity. The problems involved are, of course, considerable, some of them seemingly intractable; but given a sustained will they are soluble. There is in Britain, as we realise, a sense of weariness about aid to developing countries, largely because efforts already made seem to have produced very little. Yet—and for this we ought to take courage—there is an idealism, a passion for justice and a deep compassion among young people, and I think a change in the mood of many others, including the Churches, concerning the significance of aid. There is much personal sacrificial giving to bodies such as Christian Aid. It is therefore most important to maintain the impetus through Government encouragement. I welcome Her Majesty's Government's acceptance of the target of 1 per cent. of the gross national product, but I would express the hope that Her Majesty's Government, within this overall target, will not lose sight of the target of 0.7 per cent. for official aid recommended by the Pearson Report. Indeed, I look forward to the time when this target for public aid, regardless of private investment, can be raised to 1 per cent. In conclusion, what matters most is that there should be a steady increase in the number of people in this country who are ready to commit themselves without reserve to the cause of the needy.

4.40 p.m.


My Lords, I must thank my noble friend Lord Wynne-Jones for agreeing to change positions with me on the list of speakers. I am grateful. I agree with the right reverend Prelate about not speaking on technical details here, and I will follow in his footsteps in that regard. Although it is only 13 months since we had a full debate on overseas aid and, in particular, on the Pearson and Jackson Reports, it is not too soon to take a further look at this topic. It is important to remember that the developing countries themselves should be encouraged to co-operate with each other in a more sophisticated way to maximise the benefits of whatever is available. This is where the O.E.C.D. Report on Economic Integration among Developing Countries, also published in 1969, was from the point of view of the donor countries a useful addition to the Pearson and Jackson Reports. I know that much of what was said in the last debate will be covered again to-day, but the value of these debates—and I agree with most of the eloquent speech of the noble Baroness, Lady Tweedsmuir—is to maintain pressure on Governments and to ensure that all that can be done will be done. There is another reason: we must keep speaking up on this subject so as to give encouragement to all those who work in this difficult and sometimes frustrating field to get public opinion solidly behind the Government so that their programme can be enlarged and improved.

When the first moves were made by the richer nations to give aid for development among poorer nations, many thought that it was for a limited time and was mainly concerned with the provision of much-needed food and the development of agriculture. We know that it is much more than that. We are concerned about the whole economic and social fabric of these nations. Despite all that has been done, the dangerous gap between the rich and the poor nations—a gap, incidentally, in skill as well as in resources—is growing. And so is the gap between the rich and poor among the people of these nations. This clearly can endanger the fragile social and political future of these nations and in turn the peace of the world as well, for in the end what hurts them will hurt us.

In the early days many saw aid to the poorer nations as only a moral and humanitarian issue. Some later recognised the great advantages of creating viable new purchasing countries and people. But another reason, in some respects more pressing, is the political stability of these countries, often in key and sensitive areas of the world. Young people in particular are growing restive. The fruits of education go sour when they see the grinding poverty among their people, the lack of any economic opportunities to match their educational attainments and the absence of any fundamental change and improvement in the basic situation of their countries. So the challenge and task grows more urgent and more difficult. Within the receiving countries there is restiveness and dissatisfaction.

There is also a real risk of disillusionment among the donor countries. The first fine enthusiasm is over, and now comes the harder job of keeping the momentum going. Lester Pearson struck the right note when he said in his remarkable Report that it was not a question of capacity but a test of will, if we are to succeed. But it is not just a matter of governmental will. If we accept, as we must, that vast sums and resources will have to be deployed over many years, it is vitally important that Governments have the full and informed support of their people. a people who fully understand the gravity and size of the problem and who accept that the problems in far-off countries with strange and sometimes apparently ungrateful people are part and parcel of their own national and local problems. Governments must consciously take public opinion with them. We all know that public opinion can be an ally or an enemy. Public opinion, if it is to be an ally, needs to understand and to be deeply involved in what one seeks to do.

As we all also know, public opinion reacts sharply and quickly to national disasters or the immediate consequences of war, but becomes apathetic to what it believes to be normal. Had the Government failed to react to the Pakistan floods they would have been deeply criticised; but there is apparently little interest in the destruction and misery there as a consequence of civil war. Is it that the public as a consequence of the troubles in Nigeria feel that this is beyond them? The Government, in carrying out their aid programme, must take public opinion with them; they must make sure that the public understand that the Government are organised for this purpose.

From this side of the House there has been much criticism that the Conservative Government seem to have a distinct and separate administration for overseas development. We still think that the absorption of administration with the F.C.O. must clearly blunt the image and purpose of the aid programme. Most people knew what the Ministry of Overseas Development stood for in the Labour Government: it conjured up something. But very few know what the Overseas Development Administration in the F.C.O. stands for. I suppose it is too much to expect the Government to change their mind on this matter, but at least they ought to do more to give continuing publicity to this area of overseas affairs. Of course we should not underrate the difficulty of maintaining public opinion and support. We donor countries have our own social problems. We are deeply conscious of our own disparities between one section of the community and another —and in the United States perhaps the divisions are greater.

I do not think it wrong to maintain that if we are to succeed in the test of will we must make greater conscious efforts at removing our own poverty. But our own very relative poverty is no excuse for ignoring the much more pressing needs of others who share our world. So it is essential that we convey to our own people that our overseas programmes are not just acts of charity or part of our overseas political policies but have their place in our own social and economic development and stability.

I have just two further points to make. I agree very much with Lester Pearson when he said that the one essential in assisting developing countries is the need to create a framework of freely balanced international trade. It is of vital importance that developing countries should have the most free access to richer and developed markets. The United Kingdom has a good record in this respect, when one quarter of our imports come from the developing countries and where we have restrictions it is to protect Commonwealth producers, some of whom are themselves developing countries.

To-day is not the time or occasion to discuss the Common Market, but we are all deeply concerned about the impact of British entry on some of these developing countries who are low-cost manufacturing and agricultural producers. The sugar-producing countries of Fiji, Mauritius and Barbados are all deeply concerned; and so are the Windward Islands, who are wondering about the future of their banana industry. There is also concern in Pakistan and India in relation to their textile industry. We must not purchase our entry at the price of denying markets to developing countries. That would be tantamount to snatching a crust of bread from the hand of a starving child. This is one additional reason why we await with anxiety the result of the Government's negotiations with the E.E.C. countries.

I know that it has been raised already to-day, but I should like to refer to the question of tied aid. It is understandable that in order to avoid the impact of balance of payments, donor countries insist that their aid for grant and loan should be tied to their own goods and services. It is equally understandable that the receiving countries should wish to buy in the best markets and achieve the greatest benefits from the aid they get. If we could get general agreement by all the donor countries not to tie their aid I strongly suspect that the United Kingdom would benefit, and we might well find that orders from developing countries greatly exceeded the aid that we gave them. Clearly, it is difficult to expect countries to untie their aid unilaterally, but I would urge Her Majesty's Government to continue to push for cooperative action on this matter. One of the places where they should do so is the United Nations, where donor countries and developing countries could work out their common interests together.

4.52 p.m.


My Lords, I should first like to comment on the very interesting speech of the noble Baroness, Lady White, which we all so much enjoyed. I have always felt guilt, as a person and as a citizen, at the slightness of the effort, great though it has been, which has been made by Britain since the war in overseas aid, both public and private. I have been delighted to see the growing achievements of aid over those years and the increase in its quantity. No one was more pleased than I to hear from the present Government that they intended to do better by 1974 than any projection that had previously been vouchsafed to the public. And yet I cannot believe that any of us could, or should, be satisfied while there is the enormous disparity between the £375 a year average income of citizens in the Western World, particularly in Britain, and the figure of £20 or £30 in many other parts of the world.

I am in favour of our continuing to feel guilty about this, and continuing to spread a sense of guilt among our fellow citizens, so that we gradually build up a body of informed opinion which sees the advantage which will accrue to this country, and to the rest of the world, and to our own consciences, as we expand our own economy and so are able to increase our aid work. From what was said by the noble Baroness, Lady White —and certainly from some publications that have come before the public recently —there would seem to be a danger of our now feeling guilty, not for what we have left undone, but for what we have done: that we have been very naughty in exporting through aid, particular forms of Imperialism and reaction from one part of the world, shall we say to South America.


My Lords, if the noble Lord will forgive me, may I interrupt him to say that it is not so much what we have done as the way in which we have done it?


My Lords, I quite agree. I was not claiming to quote the noble Baroness but I was wrong to give the impression that that was what she was saying. But it certainly is, I think, the impression which can be got from some of the recent criticisms of the disenchanted. Such criticisms may be well justified; we should look at them closely and none of us should be complacent about the techniques which we have so far evolved. I profoundly agree with the noble Baroness. Lady White, about the need for sensitiveness between the donor and recipient, and I know that this is also in the minds of the noble Baroness, Lady Tweedsmuir of Belhelvie, and of the Government. But I appeal to your Lordships, at this moment when what is needed is to keep the tide flowing towards increased aid, not to lose your nerve; or fear that, because we do not yet know the right way to give aid and because there are risks involved—as of course there are—we should draw back and leave aid to someone else, or leave it to no one. I want, very emphatically, to express my agreement with what the Government have said that they are going to do on this front, both in the public and in the private sector.

My Lords, I should like to declare an interest in one part of Southern Africa with which I had the luck to be involved for some five years. At that time I was High Commissioner for Basutoland, Swaziland and the Bechuanaland Protectorate. Although they are small countries I make no apology for bringing them into this debate because their geographical position, I believe, makes them enormously more important than their population, or wealth, or their potential wealth, would suggest. As your Lordships know they are parts of Southern Africa which, for historic reasons, were our responsibility throughout a long period. In 1909, when the Union of South Africa became an entirely independent sovereign State these three Territories remained the responsibility of Her Majesty's Government and the people of this country. It is only in the last five years or so that they have achieved independence—a status about which we all should allow ourselves to feel very pleased, because it cannot be denied that it is thanks to past Governments of this country that they have achieved it. They have preserved their independence and become Sovereign States; members of the Commonwealth and the United Nations in their own right. Basutoland is now called Lesotho and Bechuanaland Botswana, and I shall use those names in the few remarks that I still wish to make.

These are three small countries. There are one million Africans of one tribe in Lesotho; and a fraction of that number, probably not more than 350,000, but members of seven different tribes, in Botswana. Swaziland is a beautiful country about the size of Wales with a population between 400,000 and 450,000. In Swaziland you have a microcosm of what is now the multiracial Republic of South Africa. Half the land is owned by white men, or at any rate non-blacks, and the whole life and economy of the place is intertwined between the Swazi tribe, the one tribe of Africans, and the whites, whether South African or British, who are few in number but immensely important. You have something of the same mixed racial community in Botswana though on a smaller scale; seven tribes and Europeans, making what was in my time—and latest reports I have received suggest it still is—one of the happiest communities in Africa.

These three parts of what is our Southern African heritage as Britons, starting not even from scratch but way behind scratch, have, since they became independent, been able to confound the critics who said that it was no good their becoming independent because they would be utterly strangled by "Big Brother", the Republic of South Africa. There are huge difficulties ahead for them in terms of drought, disease and poverty, education and illiteracy, with their "Big Brother" and with Rhodesia farther to the North making their future problematic. Nevertheless, they do give Britain an opportunity of helping to demonstrate that inside Southern Africa there is an alternative to the apartheid system. We have shown (and when I say "we" I am identifying myself with my friends, particularly in Botswana and Swaziland) that it is possible to have a State, governed by the African majority but recognising the great differences in literacy and wealth of the different inhabitants, that can build up a single community and become more of a community day by day.

This could not have been done if Britain had washed her hands of those three territories, when they became independent in the latter part of the 'sixties.

Instead of doing that, we have put and are still putting a great deal of the British taxpayers' money into them. One of the splendid results is that Swaziland in 1969–70 for the first time broke even and required no budgetary help from Britain, while it has been possible for Botswana, which was taking 46 per cent. from the British taxpayer to balance her budget in 1969 to require only 27 per cent. in 1970–71. These are examples of how, on the budgetary side, we have been helping them to move into a position where they can enjoy self-sustaining growth and genuine economic as well as political independence.

This also is an imaginative example of the C.D.C. at work and of the importance of integrating all kinds of help. All hands are needed at the pump for something as difficult as building the railway from the middle of Swaziland to LourenÇo Marques to lift more than one million tons of iron ore a year, which go in specially constructed ore carriers to Japan. That is one of the projects which has made it possible to make Swaziland viable in a sense it was not ten years ago. It is the result of co-operation between C.D.C., the International Bank and Anglo American with the British taxpayer under-writing the whole concern. Then there are the forests, which provide one of the major exports of the country, pioneered by the C.D.C. under the chairmanship of the noble Lord, Lord Howick of Glendale; and the pulp mill which converts the trees into a valuable export is a Courtaulds concern. In the same way, in Bechuanaland a great abattoir was built by the C.D.C. to free Bechuanaland from its utter dependence on the Republic, which at any time could say that there was foot-and-mouth disease and the cattle could not move; and there are canning factories built and run by private enterprise.

These are three small countries which give us ground for hope and for continuing as we have started. By all means let us try to refine our methods of help and seek a genuine relationship of partner to partner when we are discussing with these countries what our aid can be. Let us move towards a system under which no grants are tied. Let us increase the proportion of our aid which is in multi- lateral form and therefore does not raise those sensitive questions of suspected patronage which do sometimes arise between a recipient country and the donor. But whatever happens, let us do more rather than less. Let us not lose our nerve. Do not let us listen to the disenchanted telling us, for whatever reason, something that may lead us to disenchantment—not perhaps your Lordships, because your Lordships know the distinction between what I have said and what the noble Baroness Lady White corrected me for saying, but the general public. Too many of us are still laughably ignorant about what is going on and how much it is in Britain's interest.

I must add a word of delight that the British Government have recently found £400,000 for the first phase in the development of the one university in Southern Africa which is undiscriminatingly multiracial, the University of Botswana, Lesotho and Swaziland. This was started by Roman Catholic missionaries. There was an agreed takeover bid in my time, so that it could get a Royal Charter and become an interdenominational free university in the Western European style, with no nonsense about racial or any other differences. I salute this £400,000 as showing that we see our continuing responsibility to this part of the world. How enormously better, surely, to do something positive like this and prove the practical possibility of a non-racial way of life for multiracial societies in Southern Africa than all the protests and negative devices that can be used against the Republic!

Finally, I should like to suggest to the House that what is now being done in this overseas aid field inevitably stems from mixed motives. Of course it is in the interests of a great trading country engaged in expanding our world trade that we should do what we are doing. I am thinking of the wider world field here, not only of Southern Africa. It can be said in the most literal commercial sense to be generally in Britain's interest; but in some cases it is not, and certainly when I was in Southern Africa I could not possibly pretend that it was in Britain's commercial interests to put money from the taxpayers' pockets into those three territories so that they might come through to independence. I do not think there can be any dissent from what the right reverend Prelate the Bishop of Winchester said, that in the end this is a moral issue. Let me remind the House that the present Home Secretary, when he was Chancellor of the Exchequer in 1963, said some things which were of immense encouragement to us who were then operating in the field. He said (I am giving the gist of it) that it was impossible for industrial countries to live easily with their consciences while indigent societies were just on the other side of the garden fence. The burden of aid was great and growing, he said, but our reaction should not be to cut back aid but to use that as a source of inspiration for our efforts to expand our own economy and raise the level of our aid achievement.

5.10 p.m.


My Lords, I shall be envied by nobody in finding myself following the noble Lord, Lord Redcliffe-Maud, who has given us a good example of his habitual eloquence and deployed his great experience of administration in the public service. I interpret his speech as being entirely in support of the principle of civilian or private aid in preference to public aid. He also gave us, from his great knowledge, a good opportunity to realise how at the present moment the Republic of South Africa is assisting the three black former administered territories. I think the noble Lord will agree that the South African Government are bending over themselves to help those three territories, assisting the unselfish efforts of the farmers who with their tractors go over to plough the land and so on. Every assistance is being given from the South African Government and from private sources. But also we have given aid. En the case of Botswana, I think that 50 per cent. of the total revenue of the country is aid-received. That is another great tribute to what is being done, of which the noble Lord speaks with such great knowledge.

When I saw on the Order Paper that the noble Lord the mover of the Motion had tied civilian and private sectors of aid together I was delighted, because my intention was, as it has been in previous debates on this subject, to emphasise my belief that aid should be to the largest extent possible through civilian channels rather than through Government agencies, because of better policing, better judg- ment of creditworthiness and so on. In previous debates (we had one not long ago, initiated by myself) we have had a varied expression of opinion. I remember reading the debate carefully afterwards and noting the different views, like the missionary-inspired clerics, the compassionate sympathy of the academics from the Cross-Benches and the idealistic prejudices from the Socialist Benches. I exclude the impressive speech that we have heard from the right reverend Prelate the Bishop of Winchester, because he avoided the criticism that I would level at others who often speak from that quarter, more from spiritual enthusiasm and compassion than from practical common sense and experience of financial problems.

This debate to-day has disclosed the intentions of the Government, as explained in the informative speech by my noble friend Lady Tweedsmuir of Belhelvie, which was so charmingly delivered: it gave a great deal of information on the new intentions. But right through it was the thread that it encouraged private and civilian rather than Governmental aid. My noble friend emphasised the Pearson Report. I see that The Times reported its interesting conclusion that foreign capital can be more productive than official aid". What are we really talking about my Lords? I am going to presume to put forward, as I see it, an appropriate interpretation of aid. I quote: The purpose of an international programme of aid to underdeveloped countries is to accelerate that development up to a point where a satisfactory rate of growth can be achieved on a self-sustaining basis. In other words, it is saying that aid must help the recipients to help themselves. That, I think, is agreed by all. I do not think that the one per cent. which has been repeatedly reported is an unreasonable figure, but again I would emphasise that the bulk of it should be through private sources.

My noble friend Lord Aldington gave us many figures, as is right in moving the Motion, and the noble Lord, Lord Greenwood, followed him with a wealth of further figures. Therefore subsequent speakers can well keep off figures and confine themselves to other matters. We must remember that Marshall Aid, which was the "daddy" of all aid, was entirely different. It was for Europe, based on a solid infrastructure, which of course is entirely different from the basis of the emergent countries. Personally, I always thought that it was a mistake at that time to accept Marshall Aid for Britain; because had we not done so we should not now have that unpaid liability around our necks.

There are many different kinds of aid, such as general, military and technical. In the case of military aid, it is hard to understand where aid comes in the way of gifts or sales. But we seem to have got into a good deal of difficulty in the difference between Saudi Arabia, Aden, Libya or Nigeria, and with all the arguments about South Africa. One thing about South Africa is that military aid will be paid for, which makes not a small difference.

My noble friend Lord Aldington emphasised the value of E.C.G.D. and what it did. I think I am right in saying, (my noble friend will correct me if I am wrong) that we suffer from the disadvantage that we are not allowed to be told what the proportion of E.C.G.D. aid is to different continents or group of countries. The total amount of E.C.G.D. underwriting is substantial. Now we have the valuable new proposals of the Government for underwriting political risks. This is a tremendous advance; it will change the whole character of aid, and indeed should change our whole thinking in regard to our attitude towards foreign aid. Then, what proportion of the aid that has been advanced is overdue? The noble Lord, Lord Greenwood, in his remarks, did not mention the amounts actually overdue and in arrears. The value of aid to the receiving countries depends a great deal on their political behaviour and their attitude generally. I have a fairly good idea about some of these African countries, and I should like to take the one illustration of Zambia. Zambia had the misfortune to have a severe drought which almost produced famine conditions, and therefore mealies had to be imported. The logical place from which to import was from next door, Rhodesia. But, of course, ideological prejudices prevented this, and Zambia had to buy from the Argentine and China. The mealies were shipped to Beira and unloaded there, but were left to rot because there was no rolling stock to be sent down from Zambia to pick it up. Finally, the famine was so bad that Zambia had to buy from Rhodesia at a much higher price.


My Lords, may I interrupt the noble Lord for one moment? Zambia was in fact carrying out the ruling of the United Nations, which has imposed sanctions on Rhodesia. It was not a question of political ideology on the part of Zambia. Secondly, there were great political difficulties in getting the mealies up, because Beira is Portuguese-occupied territory. I think the noble Lord should get his facts a little more clearly before condemning Zambia.


My Lords, I appreciate the correction from the noble Baroness. Perhaps she has been in Rhodesia and Zambia more recently than I have, but I would assure her that the extent to which Zambia is trading with Rhodesia, in defiance of the United Nations, is quite substantial. So what she has told me as a correction is only a re-emphasis of the facts. Another example —of Zambia—was the expenditure for the Organisation of African Unity Convention, when they made elaborate expenditure for the visitors. To make ready for it, plumbing had to be actually flown in, and this through British firms. But the point of referring to this instance is that a reply recently given in this House indicated that aid to Zambia totalled £43 million or £48 million. That is how in a great many cases the taxpayers' money goes.

The Congressional records of the United States have given other instances. Take Abyssinia: there have been great gifts to the University of Addis Ababa when there is an insufficiency of elementary schools to provide a feeder for the University. Or again a grain port for Northern Somalia when there is not enough food to support the population, let alone to export it. Corruption, too, is one of the great difficulties. Tribalism is a dominant factor in Africa. I speak of that because I think the noble Baroness who spoke for the Government said that the total aid for Africa exceeded that for anywhere else. I should like at this stage to pay a tribute to the Ministry of Overseas Development for all their publications, and to the dedicated work of the Minister. The point I was making was that tribalism is still dominant in Africa and instability in that area will profit greatly from the new insurance proposals.


My Lords, may I interrupt the noble Lord again? I should like to return to the Zambian point. I am glad that he has condemned tribalism. He will remember that President Kaunda did the same thing, with great courage, last week, in conditions of great difficulty. I should like him to get credit for doing that, in view of what the noble Lord said about his trading with Rhodesia. The noble Lord will remember that Zambia's economy was tied to Southern Rhodesia by the British under the Federation, she has little choice but to do more trading with Rhodesia than she wants to.


I was trying to give the facts as I understand them. The noble Lady will not disagree that a great deal of trading is taking place between Zambia and Rhodesia—rather more from Zambia to Rhodesia than from Rhodesia the other way. Tribalism, of course, makes difficulties, and she would not disagree that corruption is very prevalent in several African countries. The best example of prejudice is in regard to agricultural aid in West Africa. There is the prejudice that "He who plants a palm oil tree will not live to see it bear fruit". Prejudices of that kind retard the agricultural technical aid which is being delivered. It is regrettable that among the 12,000 students in this country so small a proportion take agriculture as a course rather than the professions.

I cannot conclude without adding a word about Communism. I read in the Press recently a heading "Russian aid, military and civilian, over recent years £7,800 million". That is given, not for sympathy with the recipients but as part of the overall strategy of Russia. We cannot compete with Russia. The amount of aid we hand out from taxpayers' money often seems given with doubtful justification. I rejoice that the Government have now indicated that they intend to give this additional assistance to civilian investment and aid through properly policed civilian channels rather than by Government aid. Abraham Lincoln once said, "You cannot enrich the poor by impoverishing the rich".

5.25 p.m.


My Lords, I find myself under a series of temptations in this debate, particularly as one of those full of ideological prejudices, and following the noble Lord, Lord Barnby, I would only say in that respect that if I am to have prejudices at all (and which of us can say that he is without prejudices?) I would rather that they were ideological than that they were some other forms of prejudices. I am tempted to follow the noble Lord in some of his arguments, and as is usually the case on these occasions, to disagree violently with him. I am also tempted to pursue some of the lines which were opened up by my noble friend Lord Redcliffe-Maud, not in disagreement but in very strong agreement with him. But if I were to succumb to either of those temptations I should be straying a little too far from the subject of this debate which the noble Lord, Lord Aldington, introduced so ably, so I will come back, if I may, to some of the points he raised.

First of all, I share with Lord Aldington the pleasure he expressed at the Government's new announcement concerning credits for private investors. The fact that this is long overdue is no reflection on the present Government at all; where the reflection may lie is another matter. It is undoubtedly something which has been for very long a very great need and I am sure will act as a stimulus where stimulus is needed. Whatever one's views about private aid, it is hard to imagine a case where there is too much investment in a developing country. I hope that I will not be considered churlish if I question the expression "private aid".

My Lords, in the village close to where I live there is a factory and a research station which belongs to a Swiss based company and which, over the last decade or so, has received a very large amount of investment from that Swiss based company. It has been of very great benefit to the area; it has given employment and and it has swelled receipts for rates. It has been of benefit to this country in that it is a valuable and useful concern. It has, I imagine, been of considerable benefit to the shareholders of that company who have drawn substantial dividends from their investment. I do not think anybody could possibly say that the United Kingdom has been in receipt of aid from Switzerland because of that investment. It is a useful investment to all concerned on purely commercial terms.

Surely that is exactly what any form of private investment is in any country, developed or underdeveloped or developing. When we talk of private companies in this country or in other rich countries investing in Africa, Asia or in Latin-America we are misleading ourselves and we are trying, but not succeeding, to mislead the recipients or receiving countries by calling this aid. It is a perfectly reasonable and sound and possibly admirable commercial undertaking. I am in favour of it and the more there is of it the better, but do not let us call this aid, or private aid, or any other form of aid. Let us call it self-interest. The interest of the shareholders being quite properly paramount with the directors of those companies investing in areas which are going to be of value to them and, by a fortunate chance, it is also of value to the receiving country. If one follows that argument so far it means that we cannot pat ourselves on the back in any way for 1 per cent. of G.N.P. going to aid when something well over one-third—probably nearer one-half—is private investment. Let us draw attention to private investment, but when we are talking of aid let us confine ourselves to what is genuine aid Government-to-Government or international agency.


My Lords, may I interrupt the noble Lord? He surely does not dispute that civilian aid is aid to the country and helps even the infrastructure of the country.


Civilian aid? I am not sure what the noble Lord means. I take it that he means what I call private or unofficial aid. Governments give nonmilitary aid which normally is civilian aid. It is of help to the country, but it is primarily done in order to help the investors, the shareholders, and is no more aid, as I have said, than the Swiss company investing in Cambridgeshire, or General Motors investing in Luton, or any other of the international investments which take place between all forms of developed countries.

The second point concerns a remark made by the noble Lord, Lord Aldington, during his speech. He said that the amount of aid is important. He went on to say that the management of aid is important, and that is also true. I would add a third heading: that the strategic planning of aid is of overriding importance, and I believe for all our efforts (ours not only in this country but internationally among the donor countries) we still have a very long way to go.

Following on the point of my noble friend Lord Redcliffe-Maud, we must have a strategic plan in our own minds as to what we want to achieve and thereby work out where it can best be achieved. It is idle to think that there is sufficient aid available to go round because the need is almost infinite. We must select the areas where the impact is going to be greatest to achieve our own aims. One can discuss what our aims should be, whether they are our political self-interests; whether they are our economic long-term interests; whether they are purely idealistic, and the interests for the relief of suffering. Whatever those aims may be—and I will not go into that now for that is a different debate—we must be in a position to focus our aid so that our objectives are carried out in the best possible way. There we have made progress, but not sufficient progress, either nationally or, more particularly, internationally. I hope that there will be increasing thought given to the methods of appropriate strategic planning of aid on an international basis following upon that, not only in the areas, but also the type of aid which is needed.

Just to take an over-simplified example, there is no point in building a hospital in a city or country where there are going to be insufficient nurses and doctors to man that hospital. There is no point in setting up a faculty of engineering in a university if, when the engineers are turned out in five years' time as qualified engineers, there is not going to be sufficient employment for them in the country in which they have been trained, or in the area. Here again we are weak in our planning of aid. I do not want countries to do it individually because I believe that aid must increasingly become multi-lateral—and I give credit to our Governments for having moved in that direction—and aid should be untied. Further, on the receiving end the aid should be increasingly on a regional basis rather than on an individual country basis. However much we must accept nationalism (which we respect in ourselves, so we must respect it in other people) we must aim for as much economic internationalism as possible, and aid should be given to encourage that.

The third point I want to bring out is the role of agriculture, primary producers and stable prices. Here I declare an interest, that of a banana grower in the West Indies, an area which feels this problem very deeply indeed. There are few developing countries whose prosperity does not, in the final analysis, rest upon the soil. Some have mineral resources, some have oil or copper. In those rare countries the majority of wealth comes from those mineral resources. But, for the rest, the cultivation of the land is the basic source of wealth. If we are to improve the standard of living of those people by aid in any form, however it is done, we must look to agriculture as being the most effective means of ensuring an increasing standard of living for those people. There is a whole series of ways in which it can be done, but no matter what is done, no matter what money is spent in training technicians, in putting up fertiliser plants, in providing tractors, making roads into the bush country, opening up forests and all the rest of it, all of that is money completely wasted unless the produce which comes out of that reclaimed land grown with the fertiliser from the new factories, being put up on land which has been ploughed with tractors that have been brought in, supervised by technicians who have been trained by technical assistants—aid in one form or another—can be sold at remunerative prices.

The Commonwealth Sugar Agreement shows that we accept that principle in so far as sugar is concerned. Anybody who has any doubts about this has only to look at those countries which have benefited over the years from the Commonwealth Sugar Agreement. That type of agreement, or something very much like it, if we are sincere in our desire to help —and we are and, speaking to a wider audience, if the countries of Europe are sincere in their desire to help, as they maintain, and I believe they are from their record., must be maintained and enlarged.

In the West Indies, so far as bananas are concerned, great progress has been made over the past 15 years. There have been enormous increases in the standard of living and the way that people live; in the health service, schools and housing. This is based to an enormous extent either directly upon the profits from bananas, the wages paid to those who work in the banana plantations and the taxes received by the Government from the profits of banana growing. At the moment, there is uncertainty because of various commercial rivalries in the banana world. If, in this small area of the Commonwealth, and an even smaller area of the under-developed world, there should be loss of confidence and collapse of the banana prices, any aid that we can pour into those countries would be insignificant in comparison with the damage which would be done from the disappearance of this market. I do not want to stress that too much, because I have personal knowledge of it. It is only one example among many of the paramount importance of stable markets and stable prices for the primary products of developing countries. That is an integral part of our aid programme.

My Lords, I will say no more other than to thank the noble Lord, Lord Aldington, for having given us an opportunity to discuss this enormously important problem and to repeat once more that, important though private investment is, we cannot shirk our responsibilities as one of the richest countries in the world by leaving it to private enterprise to invest their money where they see the greatest advantage to themselves. It rests squarely on the shoulders of this country as represented by its Government to give official Government aid, and in such a way as to make the maximum impact.

5.41 p.m.


My Lords, I should like first to express gratitude to the noble Lord, Lord Aldington, for giving us this opportunity to discuss this almost infinite subject—a subject in which in both a political and a practical way he is so extremely expert. I declare a small interest in this matter as the director of a bank. But I should like to combine with that interest the interest I have developed over all the years since the war in the preparing of aid policy and the carrying out of aid administration. Perhaps I may, in that connection, although I do not think the noble Baroness, Lady Plummer, is here at the moment, go on record—possibly the noble Marquess who winds up the debate will feel that I have trespassed on his preserves in doing so—as saying that the noble Baroness need have no worry. I can assure her that at the time I was in the Foreign and Commonwealth Office (and I am sure this goes on) we were very aid-minded indeed and did our best to help our colleagues in what was then a separate Ministry.

As this subject is so infinite, I thought I would confine my remarks to two aspects of the question we are discussing. The first is the matter of motivation, and the second is the prospects for the Second Development Decade. The latter brings in very relevantly the subject on which we have had a great deal of discussion, the relation between Government and private aid, or not-aid. And I should like to end by making a comment on some of the things said by the noble Baroness. Lady White.

I deal with motivation because I feel that some of the defeatist psychology which has been around for the last few weeks in this matter of aid is not just an attack on methods it is also a rather insidious attack on motivation. It is important that we should be clear why we are giving aid. Several speakers have said that there is self-interest in this, and that is obviously true. We have a very strong self-interest in not living in a world which is decaying around us. The figure (and I am not giving a precise figure) which stays with me is that if you take a statistical relationship between a typical developing country and a typical developed country, you will get an answer that if a developed country has increased its national income by 4 per cent. in one year, and a developing country has increased its income by 8 per cent., the developing country has lost a lot of ground. That is the stark truth of the problem of development. We also have an interest, again nationally, in trade with these countries if in wealth they can keep up with the rest of the world. But we have a very special British interest on which I should like to spend one moment.

The British Empire was developed at a time when economic philosophy was what one might call conveniently Gladstonian. That meant that if a territory looked as though it would produce something and earn some revenue, then you put in more revenue to help it. If it did not look like that, you put it on a kind of "care and maintenance" basis, with a degree of peace and justice, and forgot about it. This point was brought out very clearly by the data given to us by the noble Lord, Lord Greenwood of Rossendale. So now, in our present-day thought on these matters, we have a feeling that we want to make reparation. I know the normal word is "guilt", but I do not like to use that word because it has a quality which hides itself in the ground and does not even extract the metal riches it finds there. One wants a more positive motivation, and we have one. We feel that we owe these territories something, and the sort of thing we can give them is the sort of thing that was so eloquently described by the noble Lord, Lord Redcliffe-Maud. At this point I would say that if there is anything I should like in the world it would be to have made his speech.

There is also the straight moral question, the question which was put so directly by the right reverend Prelate the Bishop of Winchester. There are a great many people around the world, particularly around this country—and this country is very strong in this kind of sentiment—who simply want to do something to help. The best way and the most convenient way is, as taxpayers, to encourage their Government to do some of this helping in their name. The point I wish to bring out with this collection of motivations is that it is very clear that they are mixed, and it is very clear that on balance there is a positive and (I hesitate to use the word, but I will) virtuous majority in the make-up of those motivations.

This brings me to the Second Development Decade. It ought really to be called the Third Development Decade because those of us who have memories of doing this work will recall that in the 1950s we were, in a rather pre-adolescent age of aid, trying to work out how aid should be organised; how to conduct relations with developing countries. But, after all, it was in the 1950s that we built in India a steel works costing £90 million. So in a way that was really the first development decade. In the second development decade we learnt a great deal more how to do it; and I think that the great advantage in the third, or officially Second Development Decade, is that the relationships between donors and receivers are in most cases immensely more sophisticated than they used to be.

Initially, in the 1950s, it was quite impossible to argue with a receiving country what it wanted and why you thought what it said it wanted was not quite right. That was a sensitive point of prestige and one simply could not argue if you wanted to produce aid. That has all gone, and now the great advantage in the organisation of aid is that one can talk on an equal basis with the representatives of developing countries and one can, not always work out the right answer, but at least work out an answer which makes sense and in which both sides can co-operate. That I believe to be the most important positive feature about a Decade on which we have embarked.

Perhaps we may in this debate have taken too much time comparing the merits of public and private aid. I shall use the word "aid" for the second of these—not because I find it very satisfactory—though I do not go the whole way with the noble Lord, Lord Walston. There is something unsatisfactory about calling the private side "aid". But, after all, the point is that the public element in aid and the private element are, in the most literal sense, complementary. In the public sector one does things which no private enterprise could find sufficient capital to do. One must have this. I myself, having tried to organise and distribute aid in a Commonwealth country, must say that I should prefer it if the public share in it were at least up to 50 per cent.

The reason for that is that, perfectly properly, you cannot persuade the private sector to produce aid for something that has not a reasonable chance of paying. This is not criticism of the private sector; it simply is like that. Sometimes, as representing Her Majesty's Government abroad, one has to recommend that there be aid for something which is not going to make a profit and is never going to make a profit. One therefore has to feel that there must be a substantial element of public aid in the programme. As I say, I should certainly like to feel that the Government could, in due course, reconsider the matter and bring their sights up to at least 50 per cent., instead of the 0,41 per cent. projected at the moment for 1975.

In the matter of the private sector we come on to a point of great sensitivity, and I think we can now say things in developing countries which we could not say 10 or 15 years ago. In the first place — and I have said this frequently and publicly in developing countries, and it applies to all kinds of aid—one can now say, "The aid you ask for consists in asking the British taxpayer to defer paying for certain things at home which are badly needed, because any developed country has very undeveloped elements in its civilisation, and to provide something for you instead." If people in developing countries realise that—and they are very quick to realise it; they may be poor but they are not foolish—you gel on to a much better basis in discussing these things with them. But on the private side you are up against what the Pearson Committee called "ingrained attitudes", and I think it is unwise, either here or there, to tell the receiving countries what they should do or how they should treat our attempts to aid them. That sets off an adverse reaction.

On the private side one needs the utmost resource, ingenuity and flexibility to find the right way in which to provide private sector aid. There are all sorts of ways in which it may be done: there is direct investment, there is the building of a factory to be run on a licence, or there is—and I think this is particularly good in a country in which the relations with us are good—the joint venture. I have seen many joint ventures, and provided the personal equation is right this is a fruitful way of bringing in resources and using them to create real local wealth. I saw this in the pioneer stage in Burma, and I am only sorry that the present Government in Burma has discontinued this extremely fruitful, wealth-producing practice.

It is argued that a disadvantage of private aid is that there has to be a certain amount of remittance back from the concern in the developing country to this country. That is true. But in fact the remittance can be limited and regular. As local capacity for management develops, the expatriate staff can be brought down to small numbers, so that there have to be only small remittances for family reasons for them. There has to be some remittance of dividend. Again much of the profits can be locally retained, and all I can say on this point is that the whole time I was in India—four and a half years—India was in constant balance-of-payments trouble but her record in this particular matter was exceedingly regular and exceedingly good. So it can be done.

I should like to pay a tribute to British aid as it has been, in the sense that what one was administering was something pragmatic, something sensible and something useful. It was not always spectacular, and indeed in that lay its virtue, in that we were able to put in small sums of governmental aid, or a small amount of private investment which helped to tide the economy over until perhaps the season would come round when the foreign exchange earnings would be better. We should have kept something going which would otherwise have collapsed, or we should have averted a crisis which nobody knew about but which might have happened if we had not quietly inserted a small quantity of British aid.

In my view, that is the way it should be, except that I would express the hope that when the noble Marquess winds up the debate he will say something about the most teasing problem of aid, which is how to transfer real resources when you are yourself in balance-of-payments difficulties. I doubt whether this problem has been solved, and I would only express the hope that if and when this country is in a somewhat less satisfactory balance-of-payments situation than at present we shall have some ideas about how to continue and to increase our aid in those circumstances. It is really intolerable when you are abroad in a mission which has some aid to dispense to say, "We cannot afford it", knowing perfectly well that the next day you will be walking down Bond Street and comparing it with a back street in a town in the country which you have just left. We must give this point more thought, in the hope that it may never arise. But it may indeed do so.

I should like now, if I may, to deal with the points raised by the noble Baroness, Lady White. She quoted two extreme views, one of which was that it all ought to be done by laissez-faire, and the other I will describe when I come to it. Of course the laissez-faire idea is ridiculous. If, like myself, you had been round all the major dams in India, and some in Pakistan, which provide irrigation and hydro-electricity, you would realise that it would be preposterous to try to provide these without the aid of Governments. It simply cannot be done. The other theory is that because we do not do it right (and I skip a good deal of the argument) therefore we ought to rethink and, according to the conclusion drawn by some people not do it at all. This theory suffers from a frightening intellectual arrogance. The point of aid is that other people ask for it. You do not go to them and say, "We want to give you a so-and-so works". It all starts with listening to them. Then you try to discuss it with those local people in sensible terms. if the sociological argument about discrepancies in wealth is adduced, all I can say is that if you are dealing with a country with high taxation, like India, this point scarcely arises. So let us not be depressed by people who argue that because there is an ideological point here we should give no aid at all: apparently we are wrong not to give aid and we are wrong to give aid. That is clearly an intolerable argument, and I beg your Lordships not to be depressed or deluded by it.

In conclusion, one would like to say that we must do all these things internationally. I am sure that we must try as far as possible to think in terms of untied aid and of international aid. That cannot be wholly done, because, as we all know very well although we do not often admit it, there are still political difficulties in the world which make it hard for international aid to be universal. However, we can do our best; and although, unlike several noble Baronesses, I have left my Pearson Report outside, I should like to quote one sentence which perhaps sums up the spirit of the whole operation. It is: The war against poverty and deprivation begins at home, but it must not end there. Let us go forward in that spirit and make our own aid all the time greater and more effective.

5.58 p.m.


My Lords, I think the noble Lord, Lord Aldington, was extremely skilful in framing his Motion. The word "aid" comes into it only in a minor way, right at the end; and I felt that he had a Motion which was, if I may say so without being regarded as presumptuous, an extremely sensibly framed Motion. It has obviously attracted a great deal of attention, and it has attracted attention because, as many people have said, in this country, and indeed throughout the Western World, we are conscious of a certain feeling that perhaps in the past we have not always done as we should have done but, even more, that we are anxious that the whole world should develop properly in the future. When we come to the amount that we are spending, which is 0.7 per cent.—or it aims at being that—of our gross national product, let us remember that this sum is practically the same as the error made by the Board of Trade in its records of our balance of trade. Although it is a useful sum and a large sum, let us remember that it is the sort of sum that can be regarded almost as a computational error nowadays.

But this sum that we are able to give, one way or another, to send out to underdeveloped countries, is something which we obviously feel must play an important part in the economy of those countries. We spend it in a variety of ways; we spend it on education; we spend it, as the noble Lord, Lord Gore-Booth, said, in putting up darns, and so on: there are many ways in which we spend it. It is spent through private investment. As the noble Baroness, Lady White, pointed out, there are certain features of this which necessarily cause difficulties, and it would be foolish for us to ignore these.

Some years back I happened to be in Sierra Leone. I went there because the Fourah Bay College, which was part of the University of Durham, of which I was a member, had started courses in science, and we sent out from the University of Durham examiners to help them in their examinations in order to maintain standards, so that they could get degrees. It was a very interesting thing, but what struck me at once was that in this Fourah Bay College, which at that time had about 400 students, practically all of them were engaged on sub-university work; though a small number of them came up to the standard of university work. At that time they could not complete their course work actually in Fourah Bay they can now—and they used to come to the University of Durham to do their final year. They were always members of the University of Durham because Fourah Bay College was a constituent college, but most of the students were not up to university standard. And why? Because secondary education was deficient throughout Sierra Leone. There is the problem that one is faced with when one is trying to encourage advanced education, when one is trying to encourage research and advanced technology. One is starting from a very low basis indeed.

Very frequently in the past, aid has been poured in, I believe, at the wrong point. It has helped to develop the most prestigious part of enterprise rather than the more basic part. This is something which one can fully understand, because very often the people there themselves want it; yet it is not really to their own advantage. This is why I believe one has to look pretty carefully at the whole problem of sending resources abroad to underdeveloped countries. If the actual social state of those countries is not right, or if their Government is not working in the right way, I believe that these resources—I am not criticising sending them—can be totally misapplied. I do not suggest exactly how we should deal with the problem, but I do feel, from what I have seen, that frequently we get a bad result where we ought to get, and would hope to get, a good result.

I, like the noble Baroness, Lady White, have read Theresa Hayter's most interesting book. I may be wrong (I have no doubt the noble Lord, Lord Aldington, could put me right on this), but I have a suspicion that what she writes about was perfectly correct at the time she compiled the information but is less right to-day. I do not know whether or not that is so, but I have a suspicion that she was perfectly correct in saying that there is little doubt there has been an imperialist use of aid. But I think we have improved. In fact, looking at the O.E.C.D. Observer for April, I notice that there are two pages dealing with what they describe as "new initiatives in the field of development assistance in 1970"; and when one looks at this one sees that most of the countries, including the United States, are becoming fully aware of the criticisms that have been made of the weaknesses and are doing something to remedy them. I can only hope that what they do will be really good and effective. Perhaps the noble Marquess, Lord Lothian, in his reply, will be able to tell us how far developments are going along these lines.

When one looks a little further again at this problem of what happens with aid, I cannot help looking out towards Asia and at the unhappy country of Pakistan. We all remember that it was only at the end of last year that they had those devastating floods, and, so far as one can understand, the Pakistan Government took no steps at all to prevent the consequences of those floods. Yet they had been warned by the American meteorological services that the floods were bound to occur; they had been told about it, but no steps were taken. When the floods did occur, we all know that the aid which was sent from this country and from other countries, and which got there very quickly, was not distributed adequately or rapidly enough to the unfortunate people, the victims of these appalling floods. This is surely an atrocious breakdown in a country which has received aid.

Here we are faced with one of the great difficulties. We say, and rightly, that when we are giving aid we should not put any strings on it. Of course we should not. We should not be concerned with the political system of the country: my view of what the political system should be would differ considerably from the views of noble Lords opposite. But surely we must be concerned, whatever the political system is, with whether the job is going to be done effectively and efficiently. If not, we may be doing positive harm by some of the forms of aid which are given.


My Lords, I apologise for interrupting the noble Lord. Does he not think that if we were to interfere —and it would be an interference in questioning the organisation of another country in those circumstances—our action would run basically contrary to the whole of our past policy in handing over to these countries responsibility for their own affairs?


My Lords, that is precisely the dilemma I was trying to explain. I realise this dilemma. What I am saying is that we are faced here with a very grave problem, and I do not believe that we can just opt out of it. We must refuse to interfere in the politics of the country, but can we really say that we have no responsibility for what happens with the aid that we have given? I believe that we have a responsibility, and that our responsibility is a very grave one indeed. I do not want to go further into what0 has happened in Pakistan, because that would take us further afield still; but I refer merely to the appalling flooding which took place, and its consequences, which were predictable and which, in fact, were predicted by the Americans in advance of the actual catastrophe.

It would also be interesting if we could find out a little more—this is not a matter of interference, but a matter of trying to get information—about how different countries have developed with, and without, foreign aid. For example, a large amount of foreign money, foreign resources, has been put into South America. So far as one can see, it has not created a very happy South America. One would like to know whether the resources that have gone from outside into South America have been more, or less, productive than the internally developed resources of Cuba.


My Lords, I hope the noble Lord will forgive me for interrupting. Can he recall the amount of aid which has come into Cuba from Russia? I am not out of sympathy with Russia for coming to the aid of Cuba, but can he give the amount of that aid?


My Lords, I think the amount of aid that has gone into Cuba from Russia has been almost entirely in the form of a guaranteed market for their sugar, plus military help. I do not think that there has been much more. If one takes the case of motor transport, I am given to understand That they have relied on Leylands, and have not got it from Russia. I do not think that Cuba has had anything like the volume of outside aid that the South American countries have had. I am not judging the issue, I am not saying that necessarily one is better than the other, but I just wonder whether we can be so confident that the forms of aid given in the past have really been so successful. I am not wishing to decry giving aid; I am strongly in support of it, and I congratulate the Government in bringing out their White Paper. I congratulate the Government on proposing to expand the amount of Government aid. I think it is a good thing, but I would say that, in the main, we are still working blindly. I still think that we do not know the consequences of our actions. Therefore, this debate will have done a very valuable thing, if it does nothing else, by calling attention to the whole problem.

In the end we are concerned with the economic development of these countries. My noble friend Lord Walston has referred to agricultural markets, which are extremely important, but let us remember that agriculture is an industry of an underdeveloped country, and as the countries become more fully developed, like all Western European countries they will no longer be dependent on agriculture. Then what happens? They compete very severely with us. Already in the shops in this country and America most of the transistor sets that you buy are made in Taiwan and Hong Kong—anywhere but in the U.S.A. or this country. I noticed the other day that stainless steelware made in Hong Kong is being sold in the shops (and it is excellent stuff) at half the price of the stainless steel which is produced in this country. Here we are up against very severe competition, and yet it is that very sale in this country which is going to make viable the economy of these underdeveloped countries.

We have to remember that whereas to-day we may be talking about a growth rate of 2 per cent., 3 per cent., 5 per cent. or whatever we like in our national economy, we shall only get that while the other countries are not developed. When these other countries become developed, then I think that our rate of growth will slow down very considerably. We have to face these facts. In the end, the price that we pay for seeing the rest of the world developed is that we shall not have to be too greedy ourselves.


My Lords, before the noble Lord sits down, may I add one comment to his argument about the fact that we do not always know whether or not our aid is good? Is it not true that in South America, Columbia, Mexico and in South-East Asia, aid from the World Bank, and various other countries, has resulted in the rich becoming richer and the poor becoming poorer? Would the noble Lord who is to reply perhaps make a comment on this fact?

6.17 p.m.


My Lords, I should like to express warm thanks to my noble friend Lord Aldington for introducing this Motion. I would speak from the standpoint of somebody who has been for thirty years outside this country, and who finds it extremely exhilarating, and touching, listening to many of the speeches which have been made to-night about overseas aid and the benefits it brings to overseas people. It seemed to me that the first part of our debate went along on a very even tenor. I much enjoyed the speech of my noble friend Lord Aldington, and I listened with the greatest interest and much enjoyed the speech of the noble Lord, Lord Greenwood of Rossendale. This was followed by a speech which I also enjoyed, from the noble Baroness, Lady Tweedsmuir of Belhelvie. When the noble Baroness, Lady White, got up to speak I had a feeling that there was a certain criticism arising about the concept of overseas aid generally. I have the greatest respect for the noble Baroness, who has had experience as a Minister in the Foreign and Commonwealth Office, and who was clearly worried, as indeed was the noble Baroness, Lady Tweedsmuir, as to whether aid was being handled in the right channels, and was finding the level where most of those who gave it felt that it was being employed in the manner which had been intended.

I find this anxiety very touching. I find this concern expressed in your Lordships' House in keeping with the great traditions which we, overseas, have always felt about Parliament in England. But I find the anxiety that has been expressed in various quarters extremely hard to understand. From the time I went abroad in 1927 to the time I came home in 1957, we were employed in educating and giving responsibility to overseas people to manage entirely their own affairs. I found that a most inspiring experience. We have had an expression of anxiety by the noble Baroness, Lady White, over the fact that she felt that some of that overseas aid was finding its way into the pockets of an elite minority. I do not know whether she was suggesting that we should do anything about that, but I think it is something we can do nothing about at the present time. We should leave it to those things which arise in connection with the government by the people of their own affairs overseas. Having given responsibility to people overseas, we hope they will develop their own affairs. I should have thought that any excesses perpetrated by anybody in power would have been taken care of by an opposition which would spring up in their own countries, and I am quite sure that it would be wiser to leave that issue to the people themselves. I see the noble Baroness, Lady Gaitskell, for whom I have affection, shaking her head.

My Lords, to deal with the main points I should like to make in this connection, I want to say something about public opinion and the granting of overseas aid, and the importance of getting across to the people in this country the reasons for aid, which I do not think are clearly known at the present time. I should also like to say something about the political climate. It is so important that we in this country should understand the susceptibilities of overseas people, the recipients of this aid. Aid is a subject on its own, but its value, the value of its effect, is inextricably tied up with our political attitudes to overseas people. This, I think, has certainly arisen with some force in the last five years or so. Who, for instance, at the present time would deny that when our own economy has been under strain there existed segments among our population who were hostile to the idea of overseas aid, especially to those countries which seemed to be ungrateful for aid when we gave it to them?

I am going to suggest that we in Britain should be careful of this. Politics has not helped, either: it tends to polarise opinions and attitudes on one side or the other. I shall say something of this later; but, my Lords, there is an overriding British interest attached to the granting of aid as much as this is in the interests of overseas people. Aid is of interest to us because as a trading nation we are interested in peace and stability everywhere. Let that fact be put across in the Press, on television and in public comment. Again, let it be stated in the overseas programmes of the B.B.C.,ad nauseam if you like, that aid, wisely applied, allows a developing country to grow. It gives stability; and some of these countries know better than some of those who are critical of overseas aid in this country can or will ever know the human suffering, the terror, that follows, as night follows day, the loss of stability or the breakdown of law and order. I would therefore ask my noble friend Lord Lothian whether he does not consider that, as a matter of some urgency, the time has now arrived when every medium should be used to publicise the value of overseas aid. Perhaps he could say something about this when he speaks in reply. My Lords, one simply cannot get away from the fact that aid is of a world-wide interest.

I want to say something about private investment, and the Government's scheme as published in their White Paper as an insurance against war and other non-commercial risks as this affects private investment. In the last war I lost everything I had in Malaya—my house, my car—and all I had to stand up in after four years in Changi Jail was a pair of shorts and a singlet. But, my Lords, under the war damage compensation provisions we were very generously treated, and so was industry, which had suffered considerably in the attacks that had overwehelmed that country at that particular period of time. I therefore welcome the Government's proposals in Cmnd. 4656 which should encourage the establishment of private industry overseas; because quite apart from the insurance and the benfits which will ensue from this, it will be of benefit to overseas people.

As I see it, this investment will be accompanied by the managerial and technical skills which overseas people still need. In addition, it will provide employment and training opportunities for overseas people. In my view, although comments to the contrary have been made in speeches, local resources will be used economically, contributions will be made to the local tax revenue from the establishment of these industries and a large part of the profits will be reinvested locally. But, my Lords, while all this is excellent, what plans have been made by the executives of British industry in this country to capitalise on the advantages of this situation? If British industry is to build factories overseas, what plans have they for the training of the personnel who will go out from Britain to participate in these efforts? Will the men who go out from here receive instruction in the language, customs and cultures of the country in which they intend to serve? I cannot over-emphasise the importance of this, in my view. There is still some value in being able to see into the other man's mind, to understand his likes and his dislikes, to be perceptive and to respect and understand his fears. Can the Government enlighten me on this? It is vitally important. If leaders in industry have not thought of this, I think they really want their heads examined.

Finally, my Lords, I should like to make my comment on the political issues. I have tried sincerely in every speech I have made on overseas matters—on overseas aid, and so on—to avoid political arguments, simply because I think that most Parties are agreed that there should not be any really serious political differences on the action they take in connection with our overseas friends. But I must say this: I have emphasised the value of aid both to us in this country and to our friends overseas. I need hardly remind noble Lords that the recipient countries are in no way compelled to accept British aid. Let that fact be understood, because I do not think anybody has drawn attention to it. It would be a tragedy, I feel, if, perhaps unwit- tingly, we caused so much offence overseas in such circumstances that our aid was unwelcome, and perhaps refused. There are plenty of people ready to exploit this situation. There are the Russians. I would not class the Americans in the same category, but even they, as well as other European countries, would not be slow to take advantage of any foolish act on our part.

Extracts of a meeting in Salisbury between Mr. Wilson and Mr. Smith were published in the Sunday Times last Sunday. Even allowing for the stresses on Mr. Wilson, I was particularly distressed to see published Mr. Wilson's distrust of the African Chiefs. It seems to me that the account of that meeting meant to convey the inability, as I saw it, of the chiefs to understand the Rhodesian problem. I have no desire to make political capital out of this, but my immediate reaction, from my overseas experience, was that an account of a former British Prime Minister would be likely, in my opinion, to offend African opinion. When this happens you get unleashed in various forms attacks by various overseas leaders on this country and its sincerity. It need not necessarily refer to the incident to which I have just made reference. I feel that all this is counter-productive to the grant of aid in the sense that it tends to harden public opinion against it and to build up tensions that we could do well without between ourselves and our overseas friends.

6.30 p.m.


My Lords, I hope that the noble Lord who has just spoken will forgive me if I do not follow up his remarks—especially his last remarks, which I thought were not really germane to our present discussion. Whenever we are called upon to discuss a momentous issue in this House there is apt to be, if I may say so, an embarras de richesses. If foreign affairs are discussed, we produce a brace of ex-Ministers and half a dozen ex-Permanent Secretaries or Ambassadors or such like. When discussing education there are Heads of Houses and Vice-Chancellors turning up in droves; on defence we boast most of the Field and a number of other Marshals; and Admirals galore. If we are debating an economic issue, we have ex-Governors of the Bank and chairmen of nationalised or (like the noble Lord who was good enough to introduce this debate) un-nationalised—or shall I say at the moment semi-nationalised industries.


And also professors of economics.


There is no topic which does not draw a formidable and over-awing troop of matadors. This surely is a justifiable claim for the excellence of the debates in your Lordships' House. There is however a snag —as there are always snags: it is that from those Olympian heights matters look rather different from the view exposed to those at more earthy levels. In that rarefied atmosphere, with its lessened oxygen content, distorted images might haunt and mislead.

In no field of problems is this more clearly true than that of international collaboration for economic and social development, which embraces both foreign and economic affairs. By far the greatest number of our battalions—except, if I may say, so the Church—come from this part. This topic is in any case fraught with technical controversy beyond the omnivalent political controversies; in addition, I fear that there is a regrettable volatility in orthodox and establishment views—a point to which I shall return later. There is, moreover, here a most interesting example of the truth of the old adage, "Les extrêmes se touchent ". The revolutionary Miss Hayter, a strange apple and so very far from the tree, is at one with the "laissez faire" brigade at the L.S.E. in denying the need for, and the merits of, aid.

This was brought up by my noble friend Lady White. It is for this reason —and I am surprised that she did not mention it—that I was very distressed by the cannibalisation of the Department for Overseas Development into an Administration for Overseas Development. First of all, I do not believe in these monstrous hyper-ministries for (as we have seen in a very recent case) very difficult problems might arise beyond the scope of Ministerial control, even if the Minister combined the aptitude of a Newton with the cleverness of an Einstein, which is very seldom the case. But, apart from these monstrous admini- strative conglomerations which I dislike intensely, whether Labour or Conservative, I think that our image of being concerned with aid and not with foreign policy has been to some extent tarnished by this. And I am sorry for it; because I was very much one of those who believed that a dissociation of aid from foreign policy is an absolutely essential thing. It is one of those things which are—though I have very different views from the noble Lord who has just spoken —absolutely essential in making our aid as effective as possible by creating a favourable image. It seems to me that the neutrality, the self-denial, of this country has been impaired by this untimely reform.

I do not think that my noble friend Lady White quite understood the problem. The problem is, of course, very complicated. I was tempted by a number of noble Lords to give a sort of tutorial on the question of the economics of development, but I will resist this temptation because I know how bored I should be if I were on the other side. But I do want to say that it is absolutely impossible to be non-political in aid: because whatever you do, even if it is nothing, you have done something. It is one of the misconceptions in England —not in Scotland or Wales, but in England (rarely generalised in the world)—that sins of omission are less deadly than the sins of commission; I do not know whether the Church would agree with this but I would strongly disagree.

To suppose that you can dissociate yourself and non-politically aid development is nonsense. The problem is: can you mitigate the problem? I think that one can, to some extent, mitigate the problem because development has not merely economic but social pre-conditions; and there are social systems and systems of land tenure in the world which impede development. Therefore one ought not to try to prop up with aid a system which is itself inimical to aid. But I think that what my noble friend Lady White really meant was that development usually involves inequality, because as capital accumulation goes on somebody owns the capital; and as the capital accumulates, consequently inequality increases. I think that one ought to take very strong steps and strongly advise the recipient countries that they should take steps to mitigate this—and I shall talk about this presently, in connection with agriculture. But it seems to me that to think that it was aid which, purposely so to speak, increased inequality; or that aid was not necessary or was bad, is nonsense; and I am not going to waste my breath over that any more.

The creditable achievements of the first Development Decade certainly would not have been possible without aid. It is regrettable that the relative flow has somewhat decreased, and one could argue that the absolute flow also has decreased in real terms. But again I do not attach too much importance to 0.7 per cent. and 1 per cent., because it seems to me a very difficult problem to measure it. The sort of tricks you can play with these figures are infinitely ingenious. One can deflate them, for instance; or tie them to this, that and the other, and prove that less is more and more is less; so I do not wish to go into that further. There is, however, a. problem. It is that the British Government's attitude on public aid has been quite equivocal. Their attitude on total aid, or what is called total aid, is creditably unequivocal. Against this background we must look this gift horse of investment guarantees carefully in the mouth. I must confess, my Lords—and in this I differ somewhat from my noble friends on this side of the House—in that I was fairly winded when I saw the text of the White Paper that we are debating. To-day we have a Government in Britain more totally devoted to—perhaps I ought to say frenzied by—the high principles of Herbert Spencerian do-nothing than anybody since Gladstone, including Asquith. Yet lo and behold! we have them here interfering with the market mechanism to a point at which even I should be inclined to fear to tread. But they rush in.

The idea is simple and superficially quite attractive. "In many areas of the world political risk is high and uninsurable", it is said. "Let us then give a guarantee and capital will flow." And after capital—as the noble Lord who spoke before me said so admirably technical and managerial capacity will also flow. Lack of it was one of the main causes of stagnation. Thus the best boost would be given to development and there would be profits all round. If this were all, my Lords, it would be well; but emphatically it is not, as the United States experience in Latin America, and that of the French in Algeria, shows. Such guarantees change the very rules of the game and the behaviour of the players. They change them almost certainly for the worse. Both foreign investors and host Governments are very likely to become more unreasonable and irresponsible. So long as expropriation is an irretrievable loss, foreign corporations will try to accommodate the host Governments. They will explore the sharing of profits and of control. They will be only too well aware of the necessity of bearing in mind social, and not merely economic, considerations when taking decisions. Once this powerful incentive for good behaviour is weakened, life seems to deteriorate in quality.

On the other side, the host Governments seem to fear the political wrath of the metropolitan country far less than the inevitable consequences of unreasonable actions to private interest, and will therefore be tempted to play a political game with their economic destiny. I fear that Lord Aldington's hopes are very unjustified and that he has underestimated the great risks which this new scheme implies.


My Lords, if the noble Lord will allow me to interrupt him, I would say that he is speaking as if there were something very new about all this. But the United States scheme has been going on since 1948, and I do not recollect hearing anything about the awful things happening about which he has been talking to us.


My Lords, I fear that the noble Lord was not present in the) Chamber when I mentioned the American experience in Latin America. I think that the American and French experience shows that these guarantees lead to behaviour which is not at all in accordance with what the noble Lord, Lord Aldington, thinks.


My Lords, that is only one part of the world. I did hear what the noble Lord, Lord Balogh, said, but it is only in one part of the world. The United States investment has been all over the place; I see it frequently. In fact, I must declare an interest to the noble Lord: I happen to be on the board of one of the big United States banks, and I am very well aware of how they behave and how advantage is taken of this scheme. It is true that one can find bad cases in Latin America, but not every case is a bad one. All over the world enormous fruits and gains have followed this.


My Lords, I fear increasingly as these wide schemes are done that more and more expropriations have also been done—




Oh yes, my Lords. But as I said before, these Olympian views are obviously not mine.


My Lords, would the noble Lord, Lord Balogh, permit a Balliol interruption? I am sorry that he is getting a right and a left, but as a European would be not admit the success of the Marshall Aid Plan after the war?


My Lords, the noble Earl has not been taught well about that in our shared institution. It seems to me that Marshall Aid is an evident example of where you have no private investment and the main means of reconstruction were public grants.


My Lords, I thought that the noble Lord was referring to American investment generally. I am sorry.


No; certainly not, my Lords. After the reconstruction had been accomplished entirely by public aid and entirely non-Loan aid, then of course private investors came in, because there was the political stability necessary for foreign investment without guarantees. The Americans do not guarantee us—they guarantee the Peruvians, yes.

Having dealt with Lord Aldington's very interesting point I wish to throw a glance at the general point of how to organise resource transfers. Here we are again confronted with that volatility and therefore lack of basic socio-political considerations which has done so much damage already in Africa and Asia. A few years ago all high authorities were full of doom and gloom. They predicted famine. Suddenly the Pearson Commit- tee, whose excellence is not as apparent to me and to some of my professional colleagues as it is to some of my noble friends in this House, discovered that the miracle seeds and private investment will do all. The superficiality of this view is equal to that of the former mistake. The increased possibilities for augmenting agricultural productivity pose social problems of the utmost severity. They impart to the countryside those extremes of poverty and wellbeing which are so distressingly obvious in the capital cities. They have been a very powerful factor in the extremisation in the sense of the Chinese revolution in the countryside among small peasants and landless labourers.

The present Government in this country have not yet learned, to the nation's cost, that the price mechanism, even in a relatively advanced country, works with difficulty. How much more true is this in countries with vast traditional peasant and handicraft sectors which are habitually under-employed! The Pearson Committee's recommendations seem to have become the lodestar of the present British Government and will, I am sure, prove a jack o' lantern and lead us into an area of social confusion, if we are not very careful. Against this background, this problem of tied or untied aid is to me very trivial. So long as balance-of-payments difficulties remain, the tying of aid is a means by which aid can be maintained, because some Governments who otherwise would not give so much aid would cut their aid. Therefore it seems to me that untying is a sort of occupation which officials like to chase after and which I hope Ministers will resist robustly.

Here I must also, with your Lordships' permission, dissociate myself from those whom I call the "Goody-Woollies", who think that any kind of contribution, any kind of activity, is beneficial and will lead to a solution of our perplexities, provided that one or another of the United Nations Agencies is used in this channelling. As the Jackson Report has shown clearly, the present fractured organisation of the United Nations would be incapable of sustaining the effort required. I believe that at present the International Bank, under Mr. McNamara, has immensely improved its impact on development. I am sure that he is now the only intellectually outstanding man in the so-called United Nations family, of which he is a more distant uncle. Nevertheless, I believe that any bank, because of the necessities dictated by its origin and the rules of its functioning, is not a suitable centre for co-ordinating multilateral aid, if it is to be as effective as it must be, if we are to avoid unrest. I had ample opportunity last year of witnessing this defect in Latin America as well as in Africa and India. Therefore I am wholeheartedly in favour of maintaining British bilateral aid and making it better. I am sure that here the Government are on the right lines.

What we need is carefully worked out strategic development programmes, not merely for individual States of the Third World, whose boundaries in most cases do not, for historical reasons, correspond to either ethnic or economic requirements, but also for sub-continents as a whole. This can be achieved only by far-reaching reorganisation of the functioning and relationships of multilateral agencies to one another, with the main emphasis being laid on the development of sub-regional offices, and on the basic improvement of the unsatisfactory methods of recruitment of personnel. Without good men, we cannot get good measures.

My Lords, these are conclusions I have gathered from a worm's eye view. I commend them to your Lordships because, after all, it is at that level that intelligent, deliberate and forceful action is needed.

6.52 p.m.


My Lords, I shall not attempt to follow the noble Lord, Lord Balogh, into the fascinating field of the structural nature of the organisation of our international aid, but I should like particularly to thank the noble Lord, Lord Aldington, for giving us this opportunity of discussing the White Paper. I would add a note of welcome to many other welcomes from throughout the House, with the possible exception of the noble Lord, Lord Balogh, for the comments made by the noble Baroness, Lady Tweedsmuir of Belhelvie, upon the Government White Paper. I also congratulate her upon her statement that the United Nations Development Programme con- tribution from this country is to be in and that our contribution through multilateral aid will be reinforced. I particularly enjoyed the freshening trade wind that blew through her concluding sentences on the subject of stable markets and stable prices, and on the great need this country has for trading internationally, reinforced by both public and private sectors of aid dispensation.

I wish to address myself particularly to two paragraphs in the White Paper. We can welcome almost wholeheartedly paragraphs 11 and 12, both of which are very encouraging, especially the concluding sentence of paragraph 12. In paragraph 13 we walk into rather different territory, but my noble friend Lady Tweedsmuir of Belhelvie elucidated it by saying that it was not the intention of the Government to provide tax concessions in this field of double taxation relief. I hope that that may not be the final word of the Government upon this matter. The Pearson Report urges, in Recommendation No. 3 on page 123, that developed countries should strengthen their investment incentive schemes wherever possible, and in Recommendation No. 8 says that, developed countries should remove legal and other barriers to the purchase by institutional investors of bonds issued or guaranteed by governments of developing countries. Both these recommendations appear to the lay eye unexceptionable, and I hope that the Treasury may reconsider its stand upon those recommendations.

It appears here that the concluding comment of the noble Lord, Lord Aldington, that a moral purpose does not make a good investment into a bad investment is germane. He particularly stressed the need for a means of channelling the public intention to support overseas development in the form possibly of a bond of some description. I should like to reinforce his suggestion, if I may do so as a humble Back-Bencher, and suggest that the Treasury might investigate the possibility of an overseas development bond. We now have a national development bond. Would this not be a method by which increased participation in overseas development might take place? I even venture to think that should the World Bank 'propose to make a United Nations development bond, possibly here the Treasury might be willing to open its books again to the idea of a tax concession. Both these notions of development bonds suggest a further public participation, and if these bonds were offered in the market it would be a method of testing the degree of public support which overseas development has among the public at large.

I had intended to speak along the lines of the noble Lord, Lord Walston, on the question of the strategic planning of overseas development and the projecting of our ideas 20, 30 or 40 years ahead. Because of their very nature, development plans, which virtually every Government have covering three, five or seven years, necessarily make these Governments somewhat myopic in the targets by which they are approaching the long-term needs of overall development and the patterns of trade do not have a possibility of being expanded. But as the noble Lord, Lord Walston, said, this is a subject for another debate, and for my part I feel that another opportunity would certainly be welcome.

7.0 p.m.


My Lords, my concern this evening is not so much to pay a tribute to this debate as to try to describe what I feel at its end, and what I have learned from it and from reading such background material as the Pearson Report, the Report of the Select Committee and the book by Miss Hayter that we have heard mentioned. When I was 12, Miss Hayter, who was a year or so younger, was kind enough to take me up to the top of the Eiffel Tower. I hope, in the unlikely event of her ever reading these remarks, she will not wish that she had pushed me off.

The lesson that I feel I have learned most is that where both overseas aid and investment aid are concerned, the way in which aid is given or investment projects are set up is nearly as important as the underlying commitment to aid or to invest. The way is the test of the will. This is, in essence, why I so welcome and sympathise with the present Government's insistence that the great hope for a more stable world is the continuing expansion of world trade. And I would argue that the great hope for closing what my noble friend Lady Tweedsmuir called (if I am quoting her correctly) the acutely dangerous gap between the poor and the rich countries is also that continuing expansion. Aid, my Lords, rhymes with trade, and I consider that the Government, which even some of its admirers consider tactless at times, has taught us a lesson in tact by rubbing that home. Trade is an equalising relationship, or tends towards equalisation. It depends on investment, and by emphasising private investment overseas and working on protective and incentive schemes for firms undertaking such investment, the Government have, in my view, offered us a policy which is as independent of politics as it could reasonably be.

The majority of those whom Fritz Fanon called The Wretched of the Earth live under political régimes which range from the distasteful to the disgusting. Short of resorting to or abetting violence, there is little we can do about this, except to exchange views where we can, to exchange visits where we can, and to trade where we can. It seems to me to be impossible to exchange goods without exchanging, bit by bit, information: and it is difficult to invest in a country without contributing, however slowly or with whatever frustration, to its drive towards modernisation. For instance, the island of Haiti which, as your Lordships know, is in the news at the moment, has lived under as unpleasant and selfish a regime as can be found in the New World. Ideally situated for investment in tourist projects, the social conditions there have proved too much even for affluent Western holidaymakers to stomach, and their investment has petered to almost nothing. Yet one cannot but feel that the moment that that island (which has lived off an equally dwindling stream of American aid) is forced to seek foreign investment again, some amelioration will have to take place.

In a thoughtful speech, the noble Baroness, Lady White, mentioned some current misgivings—notably Miss Hayter's misgivings—about the politics and motives of Western aid. The great difficulty is, of course, the problem of what is called "leverage"—the power of developed countries to withhold or increase aid as a means of guiding the policies of the recipient countries in directions inimical to their long-term needs. It is over ten years since two books appeared on this subject which dealt with the problem:The Ugly American(whose joint authors I cannot, unfortunately, recall) was one and Graham Greene's novel on Vietnam, The Quiet American, was the other. It seems to me that if the State Department had studied Graham Greene's novel at that time they might have saved 50,000 American lives, as well as several billion dollars.

The problem of leverage is not a new one. Very often the prime concern of investors, whether in the public or the private sector, has been with stability, regardless of the political or social morals of the régimes which provide it. While I have some sympathy with distaste for the concept of "ugly Americanism" and with the idea of aid as a self-defeating kind imperialism, I feel that it is possible to be over-sensitive. There are things in our political and social system which we want to expose to the rest of the world. Some contact, as I have already suggested, is preferable to none; and a trading nation must, in any case, trade. But increasingly régimes which depend altogether on force rather than consent are, in the long run, unstable; and we are learning that investment in developing countries must in the main be a matter of the long run. And this, too, is perhaps cause for a little hopefulness. But in the short term, there is no doubt that political instability, or the unreasoning fear of it, can be a powerful disincentive to firms thinking of investing overseas. So it is a delight to be able to congratulate the Government, first for stimulating investment, and secondly for promising to underwrite part of its risk.

My Lords, I want to close with a brief gloss to the speech of the noble Lord, Lord Walton (who I am glad to see in. his place, unlike some other noble Lords), to which I listened with respect for its pragmatism as well as for its guarded confirmation of my congratulations to the Government. After all, I could be described as a sort of Governmentalau pair girl, and the noble Lord could not. He requested (I hope I am quoting him aright) "an appropriate strategic planning of aid of an international level." On an international level, my Lords, The greatest service that we in England can do for the world—and this is true of all nations —is to extend our range of possibilities: Not fare well but fare forward, voyagers", as Eliot says. I believe that we need Europe and Europe needs us, and that the European consciouness, after so many years licking its wounds, needs to turn towards the world again. It will take a long time, for Europe's materialism, no doubt a healing materialism in the circumstances, has gone very deep. But it takes wealth to emanicipate oneself from wealth, and the 'Third World will itself have to resolve into larger units to achieve that long-term meeting of universal economic needs on which our planetary future depends. I believe that the Government sit firm to tackle these undertakings in a resolute and, above all, a direct and unpatronising way, and I believe that they have started as they mean to go on.

7.7 p.m.


My Lords, I think we may say that we are rather glad that Miss Hayter did not push the noble Earl off the top of the Eiffel Tower. I much enjoyed his speech. This has been, I think, an extremely important debate. One of the interesting things has been that, in spite of our idealogical differences, as the noble Lord, Lord Barnby, might describe them, there has been a great measure of agreement, both about the necessity for aid and about the way in which we should go about giving it—though of course there are some differences on this side about some of the things the noble Baroness, Lady Tweedsmuir, said. I think it is particularly important that we had the debate at this moment. Quite apart from the remarkable coincidence of the production of a White Paper just in time, it is an important moment for us to discuss aid because, for the first time, a sort of disillusionment about aid seems to be fogging the issues. We all know that the less educated, the wilfully ignorant people in the richer countries, have always been uninterested in aid, if not actively hostile; but recently there have been examples of other people being dissatisfied about the whole question. For instance, international opinion has been somewhat disillusioned lately, and I am sure that one of the reasons for this is the appallingly high proportion of aid which is spent on military expenditure.

The President of the United States sent a Message to Congress at the end of last week proposing an entirely new form of aid. Indeed, he is abolishing AID and proposing two new institutions which are going to deal with American aid: and this has only just come before Congress. The Washington Post had a leader yesterday which pointed out that the United States was giving 3 billion dollars' worth of aid—that is, if the President can get it through Congress; that is what he proposes—but that of this, nearly 2 billion dollars was for military expenditure, leaving just under 1.2 billion dollars for economic aid. That kind of thing tends to make people gloomy about aid in general. When one considers the situation in some of the developing countries themselves, one finds that India, which is a recipient of aid, spends 40 per cent. of her entire public monies on military expenditure—70,000 million rupees for defence and 3,000 million for education. That is the kind of world we live in and it is the kind of world we have to learn not to live in pretty quickly. We must learn not to waste monies of this kind on that sort of thing.

My noble friend Lady White said that there was a certain disillusionment in the developing countries too, and I think there is a measure of truth in this. Leaving aside Miss Hayter for the moment, the Economist, which nobody would think of as revolutionary or as a Left-wing sort of paper, has pointed out that aid is not a gift; that 4,000 million dollars have been paid back to the rich countries by the developing countries, and that if this trend continues, by 1977 there will be a large net flow from the poorer countries to the richer ones. Indeed, my noble friend Lord Ritchie-Calder, whom we miss very much to-night, once described this situation as feeding a tapeworm, and I have never forgotten it because of that marvellous simile. He said, "The situation arose whereby developing countries were borrowing money to pay the debt charges on money they had already borrowed". That is what he called feeding a tape worm. He said. "If you feed the tape worm it grows; if you do not feed it, not only does it die but you die too". That he described as one of the aspects of the aid situation. I think we must face it, that people are becoming aware of this, and it makes me all the more glad that we have had this debate to-night.

If I may say so, I tremendously enjoyed the speech of the noble Lord, Lord Redcliffe-Maud, and I am sure that he is absolutely right when he says that we must not therefore lose our nerve. I am glad that the noble Baroness, Lady Tweedsmuir, was so positive in her approach to this matter. I do not altogether agree with her about the proposition of official aid and unofficial aid, but we feel, even grudgingly on this side, that she does approach the matter in a positive sense, and this is extremely important. We know we have to keep up aid. We must approach it very much more from the multilateral point of view. The World Bank and agencies of that kind are of paramount importance. I remember when we debated population a few weeks ago I quoted Senator Fulbright, who said that no one had ever seen "World Bank Go Home" chalked up on a wall. Now we have. Miss Hayter has done it. I think her experiences were probably coloured by the fact that she had seen it all happen in Latin America, which is perhaps the least happy area of aid. More strings are applied there than anywhere else. If her experiences had been in Africa or the Caribbean she might have had rather a different impression, or if she had been brought into touch more closely with the activities of the Commonwealth Development Corporation to which several noble Lords have referred. My Lords, we should feel great pride in the work of the C.D.C. Other countries have followed its example because it has been successful. They have not all followed it with quite the same purity as we have managed with the C.D.C., but Germany Denmark, even the United States with the Overseas Private Investment Corporation, have undoubtedly drawn on the successful experiences of the C.D.C.

I should like to make one short, not criticism, but illustration of where things can go a little wrong. I have just come back from the West Indies. When I was in St. Vincent, walking in one of the smaller hack streets I came upon a large blackboard with chalked writing on it. It was called "Black People's Cultural Association", and after discussing various cultural matters I found a large paragraph which said. "And the C.D.C. whom we depend on for electricity makes the most money and invests none here". I took the trouble to investigate this charge, and I find, of course, that the C.D.C. has invested many millions of Eastern Caribbean dollars there and is proposing to invest more. But noble Lords will remember that the Select Committee on Overseas Aid made one special recommendation, No. 64, which was That special consideration should be given to making the aid programme more familiar to the public. That is tremendously true. I am not suggesting that the noble Lord, Lord Howick, or even the noble Lord, Lord Greenwood, should buy a blackboard and chalk things up on it, but I think it is much better if these things are clearly explained, and I do not believe that we always do that.

I am sure that we all agree that we must do more about aid, but I do not think I wholly agree with the noble Baroness about public aid and private aid. We remember that when the Prime Minister addressed the Assembly of the United Nations recently he said that development would come through trade and aid, and I quote: I put ahem in that order of priority. We on this side of the House are quite convinced that the proportion of aid should he as Pearson laid it down, and that we should not appear to wobble over too much on to the private sector. I think this contributes also to the feeling of uneasiness in the recipient court-tries. The noble Baroness complained because all her quotations from Pearson were "pinched". Not only did she "pinch" one of mine, but the noble Baroness. Lady White, "pinched" the rest. Had I been Lady White I would have gone a little further, because the same paragraph from which the noble Baroness quoted goes on to say: It is only through public aid that the developed countries assume any burden or behalf of the weaker members of the international community. You pay your money and you take your choice; but on this side of the House we prefer the emphasis—and I am sure we are right—to be put on public aid rather than on private investment. I do not want to go into all the reasons for that, because many noble Lords have explained about the unpredictability of private aid. Even last year we thought we were miles below the 1 per cent. target, and then, suddenly, because of the oil companies we found we were just over it. But you cannot make plans on that kind of situation. That is why, for our part, we are firmly on the side of public aid, grants and so on.

My noble friend Lord Greenwood welcomed the White Paper. I do so, too, in spite of what my noble friend Lord Balogh said, because I believe that the firms concerned need this kind of help. Every other donor country has had it for years, and I think they need it. I would ask the noble Marquess—I apologise for not having told him in advance —if he can tell us, when he replies, whether the E.C.G.D. who will be administering the scheme will also look to the professional people as well as firms, the consulting engineers, and so on. I think the machinery is probably there, but it may be that there should he more flexibility in dealing with it. I should like the noble Marquess to reassure us that while the E.C.G.D. is going to administer this scheme, the cover for the first year or so will not come out of existing aid monies but will be from a separate account. We should not like to think that this was in any way prejudicing what has already been promised.

On this side of the House, and from other parts of the House, we are agreed that multilateral aid is much the best way of helping the poorer countries. This means using, apart from anything else, the United Nations' machinery very much more than we have in the past. For instance, one of the major factors in this gap that we are all so aware of between the rich and the poor countries is above all in the application of science and technology. This is really what makes the difference to the living standards. Although the developing countries have done very well in the last decade, and the growth of their G.N.P. is between 5 per cent. and 6 per cent., nevertheless the income per head has not risen to keep pace with that. This is really because the overwhelming proportion of the intellectual capital of the world, as well as the physical capital, issued in the developed countries, and a very small fraction of the world's scientific research and development work is carried out because of or for the developing countries. It is almost all carried out for the rich developed countries.

We ought to give far greater support to bodies such as the United Nations Advisory Committee on the Application of Science and Technology to Development, which has just made an extremely interesting report. The Economic and Social Council have passed a resolution, which the Assembly has also passed, to establish a World Plan of Action for the application of science and technology. I should like to ask whether we can be reassured that it will not be just lip service, but that the Government will take a positive line on this, which sometimes is far more important than money; it is the actual direction of intellectual capacity towards the needs of the developing countries.

Another example (and noble Lords will think of many more) is the environment. This is something about which we are all deeply concerned at the moment, whether it is with regard to airports or anything else. We have also been talking about enlightened self-interest in our giving of aid. If ever we needed enlightened self-interest it is in the environment and ecology because nothing could be more interrelated than environment. The problems are only capable of solution by international action. You have the most extraordinary situation now where the poisoning of the oceans and the atmosphere might result in the whole planet becoming almost uninhabitable. I am sure that the poor nations feel that we export our pollution when we export our wealth and our aid.

In connection with the White Paper, when we are encouraging international trade can we also encourage our firms who deal internationally to put in anti-pollutants which the world so badly needs? We cannot expect our traders to do this if competitors in other countries do not, because it costs money. This is where we need far more international co-operation in order to save not only the developing nations but ourselves as well.

I should like a reassurance that when we are dealing with firms we accent the environmental necessities as well as the insurance, and the rest of it. Even when we consider the work of the Specialised Agencies of the United Nations, D.D.T. has eradicated malaria from vast areas of the world by killing the mosquito, but at the same time D.D.T. is poisoning vast areas of the world's food resources. Fish are being poisoned by mercury which comes from an entirely different continent. So you have a situation where you may have the World Health Organisation backing D.D.T., and wanting to use it, but the F.A.O. wanting to ban it—quite rightly. This is the kind of situation in which you must take international action.

There are two extremely important conferences about to take place. In May this year the E.C.E. is having an environment conference, I think in Prague. In 1972 a very big United Nations conference on the environment will be held in Stockholm. Could I beg the noble Marquess opposite to ask his colleagues to make sure that we play a positive part in this? This is aid in the real sense: it is not money but it is just as real as anything else. I hope we will make a contribution; that we shall not just sit there and listen, but make positive proposals.

I do not want to follow so many of the fascinating "rabbits" that have popped up during this debate; one could talk almost forever. I think the subject has been covered very well. So far as the Government are doing right—and in this they mostly are—we want to urge them on and to congratulate them when they do well. We are sure that they realise that this is about the most important issue which confronts the world, and whenever they do right we will back them on it. I should like to finish with what Aristotle said a long time ago: In human society extremes of wealth and poverty are the main sources of evil … Where a population is divided into the two classes of the very rich and the very poor. there can be no real state; for there can be no real friendship between the classes; and friendship is the essential principle of all assocation. That is what we should think of when we think of aid.

7.27 p.m.


My Lords, I am sure all noble Lords will agree that this has been a most interesting and extremely well-informed and expert debate on a very important subject, that of our economic assistance to the developing countries. I think noble Lords will agree that it has been particularly useful to have such an early opportunity for a discussion of the Government's new measures for encouraging British private investment in developing countries, and I am sure we are all grateful to my noble friend Lord Aldington for his foresight in putting down the Motion before us to-day. Whether or not the appearance of the White Paper was a coincidence or whether he had even more acumen than I credited him for, I do not know.

I listened with great care to what he had to say on the question of private investment overseas, and I need hardly say that the Government will take careful note of the interesting views that he and other noble Lords have expressed on this point and on a great many other aspects concerning aid. I will try in the course of my speech to answer some of the points that have been made in your Lordships' House this afternoon. I am conscious, looking at the clock, that it is what we would normally describe as a "late hour", but in these days it is a comparatively early hour for your Lordships' House. Nevertheless, I will be as brief as I can.

As the Government have made clear in the White Paper, the scheme for investment insurance has yet to be worked out in detail, as also have the other measures for stimulating private investment by associating it more closely with oar official aid. It will not be possible therefore for me to answer to-day all the specific points that noble Lords have raised about these proposals, but it may be helpful if I deal with some of the aspects which have attracted particular notice. I was very pleased—and I think it will be agreed there was no question of it—about the welcome, both in the s debate to-day and generally in Press comment, for the Government's decision to introduce an investment insurance scheme. This will put British investors on a par with those from most other Western countries whose Governments have already introduced schemes of this sort. I cannot to-day go into technical details, but I can say that the British scheme will in general be comparable with those already in operation elsewhere, and will provide cover against none commercial risks on a world-wide basis. We shall press ahead with the introduce- tion of the scheme as quickly as possible but, as my noble friend Lady Tweedsmuir of Belhelvie explained, enabling legislation will be necessary, and therefore it is unlikely that operations can begin before early next year. In the meantime the Export Credits Guarantee Department will be working out details of the scheme in consultation with interested parties and will also be happy to have discussions with prospective investors so that applications for cover under the scheme can be considered quickly once legislation has been passed.

My noble friend Lord Aldington asked why this new scheme will not extend to existing investments. I should perhaps say something more about this, although my noble friend Lady Tweedsmuir covered the point. The main purpose of the scheme is to encourage new investment, and it would complicate matters considerably and greatly increase the contingent liability if cover were extended to existing investment. None of the investment insurance schemes operated by other countries covers existing investment, and it is perhaps also worth remembering that most companies will have already written down in their books the cost of their existing investment. However, I should at the same time make it perfectly clear that the scheme will offer cover for the expansion, modernisation and development of existing investments.

There have been other interesting comments in the debate on the other measures which the Government are taking to encourage private investment. I can assure your Lordships that these will be very carefully considered. For example, there have been some suggestions for taxation changes going beyond those mentioned in the White Paper. This is a very complicated field and I certainly welcome the advice and contributions which we have been given to-day. This is why we have set out in a Green Paper our intentions and proposals for changing the structure of the United Kingdom corporation tax.

I should now like briefly to turn to some of the other aspects of our debate and to say something in reply to the various points which have been made. I apologise in advance if I happen to miss out any noble Lord who has spoken.

My noble friend Lord Barnby has told me that he cannot be here for the conclusion of the debate, as also have the noble Lord, Lord Gore-Booth, and the noble Baroness, Lady White. I was very interested in the noble Baroness's remarks at the beginning of the debate on the effect of aid on recipient countries, but I think she was answered by the noble Lord, Lord Gore-Booth, and I do not wish to enter into that discussion at the moment, especially as the noble Baroness is not here to do so.

I was extremely interested in the speech of the right reverend Prelate the Bishop of Winchester who, quite rightly, drew our attention to some of the deeper issues involved, concerning population, starvation and such fundamental matters which are at the heart of all aid-giving. The noble Baroness, Lady Plummer made two points. The first—this point was made also by the noble Lord, Lord Balogh—concerned the merger of the Ministry of Overseas Development into the Foreign and Commonwealth Office. I am sorry that they see this as a retrograde step. Her Majesty's Government do not see it that way. I can assure the House that the functions of the O.E.A. remain precisely as they were before, in an independent manner. The only difference, which I personally would have said was an advantage, is that the O.E.A. is now represented in the Cabinet by my right honourable friend the Foreign and Commonwealth Secretary.

The noble Baroness also drew our attention to the position surrounding some of the Commonwealth countries concerning our entry into the European Economic Community. The noble Baroness made particular reference to sugar producers; and the noble Lord, Lord Walston, I understand (I am afraid that I did not hear his speech), referred to bananas in somewhat the same context. I can assure the noble Lord and the noble Baroness, and the House in general, as I have done before in debates on the Common Market, that we are very alive to the particular difficulties surrounding sugar for, in particular, the Caribbean Islands and for certain others. Indeed, the point has been made absolutely clear a great many times by the Chancellor of the Duchy of Lancaster that he is taking this matter extremely seriously in his negotiations with the Six.

All of us, I think, were interested in the excellent speech of the noble Lord, Lord Redcliffe-Maud. Although he is not here now, I shall take great pleasure in re-reading to-morrow what he said about the three High Commission Territories to which he was accredited as High Commissioner for so long and with such great success.

The noble Lord, Lord Wynne-Jones, asked us to look carefully at the problem of aid with regard to the contrast, or the difference, possibly, between a country which received aid and a country which did not, and indeed in general at the results of aid in the countries we are trying to help. I entirely take his point on this. It is an interesting and useful point, and I will certainly take it up. I would remind him that in the strategy document—the document on the Second Development Decade, the UNCTAD document—there is a section dealing with the responsibilities for recipient countries in this matter, which to some extent covers the point he is making. But I will certainly take what he said with great seriousness.

My noble friend Lord Gridley drew our attention to a point which I personally think is of great importance, and that is the need to make the general public aware of what aid is and means. I can certainly assure him that we will do our very best in the way he hopes we will, through the media of Press, television and wireless, to publicise the subject. I will certainly undertake to look into all the possibilities in this sphere. I was very interested in the speech of the noble Lord, Lord Balogh. He said that he was not going to give us his full tutorial, but I thought he gave us a pretty good one on economic aid. It was possibly slightly depressing, but I agreed with one point he made—a very important point—that there is a tremendous need to have the right personnel in the aid field.

I would apologise to the noble Baroness, Lady Llewelyn-Davies of Hastoe, because I was not in the Chamber when she began her speech. I was caught out by the brevity of the two speeches beforehand. But I will certainly look into the several points she raised with me—I appreciate that she could not give me notice beforehand—one of which was the question of professional people. I think I can give her an assurance that the E.C.G.D. will take this point. If I may, I will write to her on the other matters that she raised.

I should like to emphasise that the concept of encouraging private investment in the developing countries does not mean that the Government underrate the need for official aid. Both private investment and official aid are important and have their part to play in assisting the progress and prosperity of developing countries. Although the Government have not accepted the need for a separate tarp for official development assistance, they accept that official flows should form a substantial part of the total flows that count towards the UNCTAD 1 per cent. target. I know that the noble Lord, Lord Gore-Booth, hoped that we would be able to boost it up to 50 per cent. of the total. As noble Lords know, the Government have undertaken to do their best to reach the 1 per cent. target by 1975, and I think the figures already announced for the official aid programme up to 1974–75 show that official flows will form a very substantial part of the total. Thus the Government's policy towards assistance for the developing countries is a balanced one in which due weight is given to the official aid programme on the one hand and to the complementary role of private investment on the other hand.

We have, I think, recognised in our debate to-clay that private investment can make a distinctive and valuable contribution to development while at the same time bringing benefits for Britain. I think it would be right to regard these mutual benefits as part of the strength of private investment which could contribute to serve as a bond between ourselves and the overseas countries after the need for direct official aid has ceased. Meanwhile, however, we intend to play our full part both by contributions to multilateral agencies and through our own bilateral programmes to provide the official aid on concessionary terms which alone can assist in building up the infrastructure that developing coutries must have if they are to develop their full potential.

Taken together, these complementary elements of British private investment and official aid constitute Britain's distinctive and very worthwhile contribution to the efforts of the Western World to assist the developing countries. It is a contribution of which we can be proud, although we must not be complacent. We can always do better. This contribution, as I think our debate to-day has shown, has as its basis Britain's long experience and historic connections with the developing world. The Government have shown that they intend to maintain and indeed strengthen Britain's rôle in this important field.

My Lords, I think it would not be right to conclude this debate without paying a tribute to those fine men and women who operate our aid programmes—the administrators, technicians, scientists, doctors, nurses, teachers and a great many others who are sharing throughout the world the burden of human need and striving successfully to improve the lot of their fellow men. For when all the statistics have been produced and discussed and tossed to and from, aid must, in the long run, be thought of ultimately in human terms, and this debate to-day has been evidence of this fact.

7.43 p.m.


My Lords, I should like to thank the noble Marquess, Lord Lothian, who has brought to such a distinguished conclusion the quite remarkable debate that we have had during the day. He will not expect me to agree with him where he has differed from me, but otherwise I agree and admire greatly all that he has said. I should also like to thank the noble Baroness, Lady Tweedsmuir of Belhelvie, who spoke from the Government Front Bench; the noble Lord, Lord Greenwood of Rossendale, who in this matter is an old friend and associate of mine of bygone days, and the noble Baroness, Lady Llewelyn-Davies of Hastoe, and all the others who have contributed to the success of the debate. It has taken much longer than I thought it would and it has been a much fuller debate than perhaps we originally planned. So that nobody may think that I had any knowledge of when the White Paper was coming out, I must tell the House that I first asked for a debate on this subject early in February. My foresight is not as great as might have been thought. With those few words, I ask the leave of the House to withdraw the Motion.

Motion for Papers, by leave, withdrawn.