HL Deb 04 July 1979 vol 401 cc473-96

8.20 p.m.

Lord BROCKWAY rose to ask Her Majesty's Government whether they are satisfied with the progress made at the UNCTAD Conference in Manila. The noble Lord said: My Lords, I beg leave to ask the Unstarred Question in my name on the Order Paper. Discussion of this issue has now been continued for five years. We have had special conferences about population, environment and food; we have had the North/South dialogue at Paris, and we have had five meetings over the years at the United Nations Conference on Trade and Development. I think we have to acknowledge tonight that at the end of all these conferences the confrontation between the poorer countries of the world and the richer countries is now more severe than it was five years ago. I know that endeavours have been made to suggest that at the Manila conference there was progress. In fact there was deep frustration in the representatives of the poorer nations. There was failure on the fundamental issue and a balance of failure on incidental issues.

My Lords, the basic problem between the industrialised nations and the nations of Africa, Asia and Latin America is the gulf between riches and poverty. I do not know how we can enjoy life, as I admit I do, when we remember that in the world today one in eight of the population is actually starving; that half of the population of the world is suffering from mal-nutrition; that a child who is born in Africa, Asia or Latin America has 15 times more likelihood of dying before that child is one year old than a child in the industrialised countries. Those are facts given in the United Nations survey. But this is not only a question of the poorer nations. The fact of the absence of purchasing power of three-quarters of the world's population means inevitably that there is unemployment in Britain and in all the Western countries. Therefore we must approach this problem from the point of view not only of the poverty of the third world but also of the relative poverty in our own country.

The present arrangements between the industrialised nations and the nations of the third world were decided at the Bretton Woods Conference in 1944. At that time the nations of Africa and Asia had no representation; they had not become independent countries. Although I recognise that at Bretton Woods there was certain benevolence, largely under the influence of Keynes, inevitably in that situation, without the participation of the representatives of the third world, the decisions were balanced heavily on the side of the industrialised nations. It was in 1967 that 77 countries from the third world met at Algiers to consider the situation. They have since been called Group 77. They demanded at that conference representation on all the international financial and trading institutions, and equality of treatment between the third world and the industrialised nations. They prepared proposals for a new international economic order. Those pro- posals are now endorsed not by 77 countries but by 117, three-fifths of all the nations of the world.

My Lords, continual references are made to the new international economic order. I am afraid that even those who are in favour of it are very often unaware of its composition, and tonight, at the cost of prolonging my speech, I propose for the sake of record to state the heads of the new international economic order. I think it may even be of value to do that for the Foreign and Commonwealth Office. The heads of this comprehensive plan are as follows: 1, the right of nations to own their own natural resources; 2, control of foreign investments and multinational companies; 3, a balance between prices paid for exports and imports; 4, a common fund to build reserves, to stabilise prices, and for research and to diversify the economy; 5, the fund to be financed by governments, supplemented by contributions from commodity agreements; 6, control of costs between the producers in the third world and consumers in the industrialised nations; 7, joint ownership of shipping; 8, relief of debts; 9, an international central bank, jointly owned, either by restructuring the IMF and the World Bank or by a new authority; 10, restructuring international institutions, such as UNESCO, FAO, WHO, with joint control; 11, recognition of the oceans as the heritage of mankind with an international authority to exploit minerals; 12, the international distribution of sciences and technology; 13, international control of the arms traffic to the third world; 14, an international currency to replace the gold standard and national or regional currencies; 15, an economic arm of the United Nations equal to the political arm.

The General Assembly of the United Nations has endorsed in principle that new international economic order and Group 77—now Group 117—has presented it at the succeeding UNCTAD Conferences which have been held. I want at once to recognise that this new world order is revolutionary compared with the present world economy. It transforms international finance and trading, and it is so drastic in its proposed changes that Group 77 does not claim that it can be immediately applied. The problem is that at the Manila Conference there was a rejection of the basic conception of planning and instead there was an endorsement of market forces, and that is the cause of the disillusionment in the third world.


My Lords, the noble Lord referred to the basic rejection at the UNCTAD Conference of some matter which I did not quite hear.


My Lords, I am sorry; I am getting a little older and a little deaf. I did not quite hear the point which the Minister was making. I hope that as I proceed I shall deal with it. I want to admit at once that some advances have been made. The most extraordinary advance is the agreement by the United Nations General Assembly to establish an economic authority equal to the political authority. That economic authority would control 80 per cent. of the activities of the United Nations and more than 1 billion dollars of its development funds. I have given rather short notice to the Minister, but I ask him for some information about the development of the new economic authority at the United Nations as we have had little information about it. There is undoubtedly some suspicion that there has been obstruction of its implementation.

Secondly, there has been an advance on the subject of debts. Switzerland, the Netherlands, Sweden, Canada, the United Kingdom and others, have cancelled many of the debts of the poorer countries. I particularly welcome the fact that Judith Hart, when she was Minister for Overseas Development, cancelled debts for 17 of the poorer countries amounting to £60 million in a year. I am asking the Government if they will maintain those cancellations and, indeed, extend them.

The third advance has been made on the common fund—the common fund to build reserves, to stabilise prices and for research in the developing countries to diversify their economies. At first there was great opposition by the Big Four—the United States of America, this country, West Germany and Japan—to the financing of the common fund by Governments. But, as a result of pressure partly in this House, partly in another place and partly by the world development movement, but more than anything else by the decisions reached at the Arusha Conference by third world countries, the Big Four have changed their attitude on this subject.

At Manila, Mr. Cecil Parkinson, the Minister of Trade, agreed in principle to contribute not only to the common fund, but gladly and gratefully to the second window—the most controversial aspect of it—the proposal for the diversifying of commodities in third world countries which were thought to be competitive with this country. Mr. Parkinson said at Manila that, while he accepted this in principle, he was unable to give any figure until the budget was presented. No figure has been given since and I am asking the Minister tonight whether he can announce the figure that has been decided.

All the matters that I have mentioned are incidental to the main plan for the new international economic order. At Manila, Group 77 asked for a panel of high level experts to evaluate the new international economic order proposals and to make recommendations—in effect a steering commission to implement the NIEO. No action was taken. That indicated the fundamental issue at Manila. Group 77 wanted a planned reconstruction of the world economy on a co-operative basis between the industrial powers and the third world. The Big Four wanted the fate of both to be left to market forces without intervention, and with that they expressed very much the philosophy of the present Government in this country.

But the proposal to leave the world economy to market forces overlooks two facts: first, the present interventions by the Western international financial institution—the IMF—to prohibit public services it does not like. Secondly, the dominance in the world economy of the great multinational companies which make nonsense of the reliance on competitive market forces. The Big Four at Manila made it clear that they will not have the new international economic order. The third world delegates went away disillusioned and frustrated.

In conclusion, I want to sound a warning. Unless the Big Four change their attitude, the third world will move in a direction which will be disastrous to the Western countries and particularly to Britain. Representatives of 81 developing countries met at Arusha in Tanzania prior to Manila. They accepted a new conception: self-reliance—the motivation of Julius Nyerere in Tanzania, not only in his own country but for the third world as a whole. They agreed to set up their own common fund by contributing 1 million dollars each to it, the OPEC countries assisting the poor nations to do so. It was largely that which made the Big Four change their attitude at a preliminary meeting before Manila.

Secondly, the delegates at Arusha decided to establish their own integrated economy: African, Asian and Latin American regional economic communities, with associated trading and financial institutions. Yesterday a conference met at Arusha to initiate an economic grouping of Tanzania, Zambia, Botswana, Angola, Mozambique, Namibia, Zimbabwe, Lesotho, Swaziland and Malawi. This new economic association in Africa itself would include a regional development bank. This is a foretaste of what is likely to happen throughout Africa, Asia and Latin America if the Big Four maintain their present position. But the determination of the delegates at Arusha is shown by the fact that they decided to set up a study group of 21 experts at Geneva to prepare for a Third World Secretariat to co-ordinate continuing activities towards the new international order.

However, self-reliance was not the only objective. The Group of 77 is still looking outward. They were encouraged by the fact that they have had the co-operation of many European countries, despite the attitude of the Big Four. Those countries included Scandinavia, the Netherlands, Belgium, Switzerland, Austria and Yugoslavia. The group have also the overall support of the Soviet Union and the Communist countries of Eastern Europe, though they have from time to time criticised the action of the Soviet Union in many respects.

This self-reliance will be accompanied by deliberate international co-operation within the broad spread of countries which I have described. It will become a formidable alliance. At present most of the overseas trade is done with the United States of America, the United Kingdom, West Germany and Japan. But unless the attitude of the Big Four changes, trade by the developing countries will be redirected towards the countries which are willing to co-operate with them, and particularly towards the Soviet Union and its allies, who will be quick to seize the opportunity of this further influence. That is the prospect which this country must face. I hope that before it is too late we shall have a change of Government here—a Government which will be eager to co-operate with the third world in world planning to end its poverty. My Lords, I ask the Question standing in my name on the Order Paper.

8.56 p.m.


My Lords, I am sure that the House will be grateful to the noble Lord, Lord Brockway, for asking this important Question this evening. For a long time those who have a moral concern for the impoverished peoples of the third world, to whom the noble Lord referred so movingly, have followed these UNCTAD meetings with attention and anxiety. But now that it is clear we are faced with a world energy crisis and a world recession, more and more people are coming to realise that North-South relations are relevant to that as well, and that they are bound up with the whole question of markets. Indeed, the noble Lord referred to this in his speech. So added to the proper moral concern, there is a growing enlightened self-interest.

It is in the light of that moral concern and that enlightened self-interest that we must ask whether UNCTAD V contributed to a solution of North-South problems, and whether it contributed to the solution of the economic problems of the world. John Palmer, the European editor of The Guardian, writing in that paper earlier this week took a gloomy view. He said: Relations between the developed and the developing world have rarely been worse". In saying that, he is repeating what the noble Lord said in his opening speech. He continued: The attempt at UNCTAD to negotiate a 'new world economic order' lies in ruins and there is even a question mark over the future of the links between the EEC and those African, Caribbean and Pacific countries which are associated with the Community in the Lomé Agreement". A fortnight earlier in the same paper, Denzil Perris, writing on UNCTAD V, said: The crash of '79 is the collapse of UNCTAD and of the illusion that a new international economic order can be built on the conscience of the rich nations. At UNCTAD V in Manila, furthermore, the hairline crack in third world solidarity, faintly perceptible at previous international economic seminars, opened up". Therefore, in these two articles we have a picture of relations between the developed and the developing countries which have rarely been worse: of rich nations not prepared to pay to boost demand in developing countries; of the developed countries resorting to protectionism and of divisions beginning to appear among the developing countries.

I ask the noble Lord, Lord Trefgarne, who is to reply to the Question asked by the noble Lord, Lord Brockway, whether that is a correct or a complete picture of UNCTAD V. On 9th June the Economist had a headline which was "UNCTAD Mouse". Certainly it seems that not much of importance was achieved. There was a considerable failure to agree and much was referred for further discussion. Of course, it is true that the common fund, in perhaps a somewhat watered down form, had been agreed upon in March this year, and therefore that controversial subject was not again at the centre of UNCTAD discussions. As the noble Lord has indicated, some consequential matters following on that—particularly relating to the pledging of contributions to the second window—were carried through at UNCTAD V.

A new programme of action to help the 31 least developed countries was agreed. Protectionism was condemned, and rightly so. There were complaints, of course, about the attitude of the West to imports from the developing countries, and of course the EEC attitude on textiles came into that. But I think there was the beginning of an understanding that industrial countries, if they are to take imports from the rest of the world, have to make some structural changes, and that there have to be temporary policies which preach the free trade principle in order to allow that to happen. I think some understanding of that got across at Manila.

There were complaints from the developing countries about GATT, and about the most recently concluded negotiations. There was a feeling that—whether or not the actual terms of GATT allowed for it—the developed countries intended to discriminate against certain of the developing countries. Nevertheless, by the end of the Manila Conference there was a more positive attitude towards GATT, and the Secretariat were asked to look carefully at and to analyse the package negotiated, and to see its effect on the developing world.

I believe that the GATT negotiations, whatever shortcomings and faults they may have—and I do not deny that they may well have those—are an advance. I would hope, therefore, that there would be a reconciliation to them on the part of the developing countries. A number of lesser matters were agreed and some useful things were done, but I think there is no doubt that the basic problems of North-South relations were left unresolved. There was no new economic order, whether on the basis that the noble Lord has outlined for us that was agreed by 117 nations, or on any other basis approximating to that which might have been negotiated and agreed upon. Perhaps the Guardian articles painted too black a picture, but they served to draw attention to these unresolved questions.

It would be wrong to put all the blame for disagreement on to the industrial countries. They have problems, and it certainly will not help the developing world if their economies decline or collapse. But the industrial countries must bear a share of responsibility for failure to build a new economic order. I think there is now a need for a new initiative on the part of the West. Perhaps it could be an EEC initiative. I should like to see it a two-pronged initiative. The first prong would be an emphasis on the need for the maximum freedom of trade between the developing and the developed world. The potential for expanding trade between the developing and the developed worlds is clearly great. The share of United States exports going to developing countries rose from 29 per cent. to 35 per cent. in the five years 1972–1977; the share of Japanese exports from 38 per cent. to 46 per cent.; German exports from 11 per cent. to 17 per cent.; French exports, 18 per cent. to 24 per cent.; and so one could go on.

The OECD reckon that the industrial nations have had a net gain of half a million jobs by trading with under- developed countries. Of course the under-developed countries, too, have benefited. The share which they have had of total OECD country imports has risen from 20 per cent. to 29 per cent. in the period 1970 to 1977. It is significant that the share in total socialist bloc imports fell from 8.9 per cent. to 7.7 per cent. An emphasis on the maximum degree of trade would be the first prong.

The second prong—and very much linked to the first, as the prongs must be linked for any effective result—would be (and I put this forward as an unrepentant Keynesian) that there should be an attempt at demand management on a world scale. This would include stabilisation of commodity prices through the common fund. It would include a world development programme on a substantial scale. It would include a world energy policy; and the oil producing countries would play a part in that, and play a part too in the financing of the development programme. I believe that such an initiative would offer a hope of transforming the present unsatisfactory state of North-South relations, and provide North and South alike with the means to tackle jointly the economic dangers which threaten us all.

8.56 p.m.


My Lords, let us be quite clear: the fifth meeting of the United Nations Conference on Trade and Development was an ominous fiasco, the more ominous because the omens were obvious and were ignored. We have had a discussion here this afternoon for five hours in which we have been talking about the energy crisis into which we ourselves have been brought as a result of the operations of OPEC. Surely you learn what the lessons of OPEC are. We cannot imagine that the relations from now on between the rich nations and what have been called the less developed will ever be the same again. We have seen countries which were meaningless deserts 30 years ago emerge as the rich oil States. The beggar whom we turned away from our gates turns up 30 years later to foreclose the mortgage on the estate.

Exactly 30 years ago I was carrying out a UNESCO mission in the deserts of North Africa and the Middle East to see whether the deserts could be made productive. In Algeria I teamed up with an oil prospector from Oklahoma. He was searching for oil in the Sahara. Everybody, including the French Government of Algeria, regarded him as mad, and treated him as mad. We pitched camp at a camel watering place called Hassi-Messaoud. Today that watering hole is the centre of the oilfields of Algeria.

On the next lap of my journey I was in Libya, the poorest of the poor in the North African States. Famine was raging and the caretaker British Administration, preparing as they were at the time for Libyan independence, had to issue international food relief to an entire population in Tripoli and Cyrenaica—Cyrenaica, once the food granary of the ancient Greeks. Today Gaddafi is threatening to make the oil situation in Britain, even with our North Sea oil, worse and more difficult by stopping supplies which we need in exchange for our North Sea Oil. I am not suggesting that aid should be regarded as buying future good will. Aid, if treated as charity—the penny in the blind man's tin—and condescendingly so, can, and will, be resented. The beggar's thanks are the beggar's curse, and if we expect gratitude we shall not get it. I assure you of that from long experience, and the experience of all of us.

I agree that trade is better than aid. People can and should earn their own self-respect. But for the third world aid is essential if we are going to create, and share, prosperity. British aid policy, in my opinion, got it right. I salute my right honourable friend Judith Hart. We got it right. We were helping the poorest of the poor countries, and the poorest within the poor countries, and the poorest within the rich countries where they were neglected, to underpin their living standards and drive piles into the morass of poverty, to provide the basis of an economy which could be productive. We have been helping them to help themselves.

That principle has been underscored by the World Bank which, under the enlightened principles of the president, Mr. McNamara, is directing finance to the poorest of the poor, the lowest 40 per cent. of the people. This was the forthright recognition by the World Bank that the massive loans over the past 30 years made the rich richer in those countries and the poor were no better off; in fact, in terms of their increasing numbers they were definitely worse off. The idea that the wealth would somehow trickle down from the top to the bottom has proved beyond any question to be totally wrong. So instead of injecting it all at the top of the cistern of intended prosperity, considerable World Bank help is being injected at the bottom to provide the social services, education, health, housing, better training for jobs and for the invigoration of the rural communities. That, I assure your Lordships, is the hard-won truth, borne out by the experience of 30 years and acknowledged by the World Bank, which is scarcely a fuddy-duddy sentimental institution.

That has been largely undone by the behaviour of the industrialised nations, including our own, at Manila. The British delegation was there to expound the doctrine of laissez-faire and wealth trickling down from the top. Mr. Cecil Parkinson of the Department of Trade, the Minister, told the Press: Unless we have a thriving economy"— that is we, the British— we shall not offer an expanding market for the developing world and we shall not be in a position to encourage our companies to participate more actively in their economic growth". That growth model, in reply to the arguments of the third world for a new international economic order, reminds us of the 19th century when Imperial Britain prospered by putting Lancashire cotton pants on our colonial heathens, but it will not work today. There were sombre portents of cuts in British aid. Britain, unlike several other industrialised countries, threatened the programme of action for the poorest of the poor by, as my noble friend pointed out, withholding a pledge on the actual amount of what is called "the second window of the Common Fund". That decision was reserved for the new Conservative Budget. We are still waiting for it.

In the month of arguments, the confrontation was between the developing countries, with two-thirds of the world's population who produce only 7 per cent. of the manufactured goods, and the advanced countries which produce the rest. What the developing countries were asking for was a new division of labour globally affirmed. The industrialised countries openly resented the idea of a new international economic order as spelled out in the Arusha Declaration, to which Lord Brockway referred, adopted by the Group of 77 which comprises the developing countries. The developing countries were asking for a study of the workings of the world economy and the constraints it at present imposes on global development. They have not got it. They have got, quite flagrantly, the devil-take-the-hindmost system of the free market.

The developing countries have not missed the meaning of OPEC; what applies to oil can apply to other resources on which this country and the industrialised world are dependent. We cannot afford to spurn them, and we have. As one who has taken part in many discussions on the new international economic order, including the Club of Rome and the Group of 77, now 117, I can assure your Lordships that the new economic order is no longer empty rhetoric. It is on the table and it will not go away. Let us not make any mistake about that: it will not go away and, heaven knows!, the old economic order is in a hopeless mess.

9.6 p.m.


My Lords, we are all grateful to my noble friend Lord Brockway for putting down this Question. I confess that I feel somewhat of a pretender, if not a young pretender, in following Lord Brockway, with whom I have worked since I was a boy, who is probably the best known Briton in the Third World and who is certainly accepted, and has been accepted for many years, as the conscience of the Labour movement in Britain. It gives me pleasure to speak following my noble friend Lord Ritchie-Calder, whose practical work in the third world is acknowledged in every quarter.

I wish at the outset to echo Lord Ritchie-Calder's sentiments regarding the work of our friend, Judith Hart, as Minister of Overseas Development. More than that, I wish to bring her work to the attention of the Minister because it is the character of her work that is the issue in tonight's debate. As Lord Ritchie-Calder pointed out, particularly under the guidance of Judith Hart and her predecessors the Ministry of Overseas Development has followed a policy of concentrating British aid among the poorest, rather than allowing it to be used by the élite; and, secondly, using aid not only to fulfil our moral responsibilities to that half of the world population which is living in poverty, but also as an investment for the future of this country.

It is on this issue that I should like to concentrate tonight. In other words, I want to speak to Members on the opposite side of the House as businessmen—as I think they are accustomed to being spoken to. Under the policy of the Labour Government the Ministry of Overseas Development set out to provide employment, to increase trade, and to use aid as an investment to cushion us from the danger of world depression—which we have been discussing for the last five or six hours.

This argument is important because it brings together two matters which are of the utmost consequence, which indeed are crucial to political policy in the aid field. Whichever party is in office, we have to carry the electorate with us, and that is a difficult task, if we are simply putting the matter on moral grounds. I believe that in the past it could have been put much more forcefully on moral grounds, but the grounds have widened, and they have widened deliberately during the last few years when it has been pointed out that Britain's aid programme has been providing employment and has been enriching and stimulating the trade of this country. That, I suggest, is an important issue in carrying along with us the people of this country in providing aid to the developing world.

I fear that the present Government have lost sight of both these objectives, and have begun already to regard the developing world as being only on the periphery of the world economy. This, I suggest, would be fatal. As the noble Lord, Lord Banks, pointed out, the developing world is not on the periphery of the world economy. The United States sends 35 per cent. of its exports to the developing world, while for Japan the figure is 46 per cent. We in this country, with all our advantages of the Commonwealth connection, are still at a point of only 25 per cent. I suggest that that is a rejection of opportunity which it is the duty of the Government to correct, and I would support what I am saying by referring to a quotation, which has not been very widely publicised, of what Mr. Oliver Long, the Director-General of GATT, said recently: The immediate choice for the industralised countries is either to allow a substantial increase in imports from developing countries, or to risk not only a sharp fall in their exports to these countries, but possibly also a serious threat to their financial stability through widespread defaults on outstanding loans". But, despite those words, despite the fact that the United States, Japan, West Germany, France, and ourselves have a substantial stake in trade with the developing world, last year the exports of the developing countries dropped—and dropped substantially; and as a consequence so did their purchasing power. In other words, the trading, relationship (which was admirably outlined by the noble Lord, Lord Banks) is under pressure today. It was in those circumstances that the UNCTAD meeting was held in Manila in June, and UNCTAD provided the opportunity—though I admit at very short notice—for this Government to show both where their interests lay and the extent to which they were prepared to carry on the policy of their predecessors. It also provided the opportunity to improve the economic situation and the economic prospects of this country by building up the purchasing power of the poorer world and by following the lead which had been given by President Nyerere in a remarkable speech in Arusha, to which my noble friends Lord Brockway and Lord Ritchie-Calder have already referred.

I should like to ask the Government this question. We on this side of the House have believed for a long time—and we have put our belief into practice—in the separate identity of the Ministry of Overseas Development. We believe this for all sorts of reasons, and I remember the discussions which took place in the early 'sixties about the pros and cons of separating that Ministry from other Ministries. The party opposite does not believe in this, and have again taken the Ministry inside the Foreign Office. I think this is a mistake. I think it is a mistake, not just because it has done away with the independence of the Ministry but also because, if you must take the Ministry of Overseas Development inside a larger department, it should be inside the Ministries of Trade and Industry rather than the Foreign Office. The reason I say this is because the interests of the Ministry of Overseas Development are the economic interests of Britain, of the British people and of the British Government.

I should like to ask the Minister who is to reply whether, in his department, he has yet come across the recommendation of the Central Policy Review Staff and of the Select Committee for Overseas Development that there should be a Cabinet Committee to co-ordinate inter-departmental considerations of the interaction of domestic and overseas policy. I should like to ask whether that has yet been seen by the Minister, because that is a recommendation, a double recommendation, which makes the point that I am bringing to his attention. Overseas aid, the policy of the Government at UNCTAD, in the Lomé negotiations, in the North-South dialogue, are all a part of our economic strategy, and it must not come, and must not be allowed to come, simply under foreign policy considerations.

I fear that the attitude of this Government in Manila suggested very strongly that they are already abandoning what has been the basic assumption: that if the industrial world can assist the third world, the developing world, to increase its purchasing power, to increase its living standards, then it will have gone a long way, both to bridge our own economic gap and to bridge, eventually, the economic gap that divides our two worlds. This is borne out by the domestic measures already taken by the Government; by the cut of £50 million in overseas aid, which, as I am trying to convince the Minister opposite, we consider to be a cut in investment which would have brought a much greater return than that £50 million itself.

My noble friend Lord Ritchie-Calder has quoted a sentence from what was said at a Press conference by the Minister who attended the conference at Manila, Mr. Parkinson: Unless we have a thriving economy, we shall not offer an expanding market for the developing world". I should like the Minister to say whether it would not be a much more constructive policy and a much more constructive attitude, to reverse the clauses in that sentence: Unless we have an expanding market for the developing world, we shall not have a thriving economy in this country". That is the central issue of our criticism of the Government's attitude to the Manila Conference.

There was another aspect of Mr. Parkinson's activities in Manila to which should refer. He suggested at the same Press conference that there is a link between overseas trade and British industry, in the sense that the present Government's policy of reducing subsidies to British firms will lead to a collapse of such firms, thus leaving the way open for the entry of manufactures from the developing countries. I reject that argument entirely. I will agree to the extent that there is a basic necessity for the restructuring of British industry; but you cannot just say: "So many British firms will have to close down because we are removing subsidies from them; and then you will get your chance." To what? To sell to those unemployed in this country as a result of the closures? There is a need, and a need that was expressed forcefully in Manila, for the restructuring of the industrial world's economies, but that restructuring necessitates the replacement of the old industries of the industrial world with new specialisations, with new employment opportunities so that we march along in a complementary way. As the developing world increases its manufactures of those goods which have traditionally been manufactured in the industrial world, so the industrial world is able to find replacements, for retraining and maintaining its economic stability, which is of immense importance to the developing world itself.

Like the noble Lord, Lord Banks, I fear that the dialogue between the North and South is going somewhat sour—whether at Manila, whether in negotiations over Lomé, with their tremendous potential, or in GATT. There is a new and more bitter wind blowing from Whitehall today towards the developing world than there has been for several years. This was summed up in what I consider to be an excellent phrase by Philip Madeley in the Guardian on 27th June when, in describing the activities of Mr. Parkinson and his advisers in Manila, Mr. Madeley said that it reminded him of the musical advisers of the Emperor Nero calling a news conference to announce that good progress had been made in finding a suitable tuner for the Emperor's fiddle. The fire raging round the corner was hardly their concern.

I hope that the noble Lord who is to answer my noble friend's Unstarred Question will be able to give us some assurances that the first signs that this Government have shown of their attitude towards the immensely important issue of the next generation and the generation after that, the relations between the developing and the developed world, is more optimistic and more constructive than it would appear to be at first glance.

9.23 p.m.


My Lords, we are doubly fortunate tonight, first to hear the Unstarred Question put so eloquently by the noble Lord, Lord Brockway, and, secondly, to hear the first intervention of the noble Lord, Lord Hatch of Lusby, from the Dispatch Box opposite. Not often do we get a double bill of that stature.

The conference in Manila was the fifth such conference to be held by the developed and the developing countries in the last 15 years. Lord Brockway's commitment to the developing world is of long standing. He has done us all a service by underlying the importance of the issues debated at Manila. I should like to pay tribute to the noble Lord by underlining the words of the noble Lord, Lord Hatch; that the noble Lord, Lord Brockway, is certainly widely known and widely respected in the third world, more so, I would say, than any other Member of this House.

UNCTAD conferences are major events in the continuing dialogue on issues of economic development which has been under way for some years within the United Nations machinery. This is, I think, the first opportunity the House has had in this Parliament to discuss that dialogue, and I should like to start by saying something about the Government's general approach to it.

Successive British Governments have actively supported the economic development of the third world, and have played a constructive part in ongoing negotiations between North and South. That remains our policy. It is our policy because such development is the only way of improving the lot of that large proportion of the world's population which is unacceptably poor; because—as we made clear in our Election Manifesto—Britain, like other industrialised countries, has a vital interest in bringing prosperity to poorer nations which provide us with growing markets for our exports and supply many of the raw materials on which we depend; and because a progressive reduction in the gap between rich and poor countries, in the context of an expanding global economy, will help to promote greater political stability to the benefit of the world as a whole. So we are pledged to help the developing world both through aid and technical co-operation and—a matter to which we attach particular importance—through the development of trade and private investment flows. We hope that the relaxation of exchange controls, for example, announced in the recent budget will help stimulate outward investment in developing countries.

Of course—and my honourable friend the Minister of State for Trade, who, as several noble Lords mentioned, led the United Kingdom delegation in the closing stages of the Manila conference, made this very clear—our ability in Britain to assist economic development, whether through aid, trade or investment depends critically upon the strength of our own economy. Our level of overseas aid, for example, must be determined in the context of the public expenditure totals which we as a nation can afford. So at Manila we had to explain that we could not commit ourselves about future levels of aid, pending our review of public expenditure. Our first priority must be to get our own economy right.

Consistently with this general approach, our aim at UNCTAD V was to try to promote serious discussion of ways of furthering the international effort to deal with the real problems which face the developing countries, and to seek to persuade them that developed and developing countries alike share a common interest in maintaining and strengthening—not in overturning—the existing international arrangements for co-operation on trade and financial issues. It was in this spirit that we were able to support, and welcome, a number of resolutions which the conference adopted by consensus. I shall not try to list them all. But I should like to mention two or three major issues on which we believe that the conference achieved useful progress.

On trade issues—which were central to the debate in Manila—all countries were able to agree that the world's economic problems cannot be solved by concealed or open protectionism; and that further discussions should be set in hand on two matters of great importance to the developing countries: in the GATT, on new import restrictions affecting their exports; and in UNCTAD, on the continuing adjustment of global industrial structures in response to changing patterns of trade.

On international trade in primary commodities, a resolution was adopted by consensus which fills out the decisions reached at the previous UNCTAD conference—in Nairobi in 1976—to launch an "integrated commodity programme" involving international discussions on 18 individual products. The scope of this work has now been broadened to include an examination of ways of encouraging greater participation by developing countries in the processing, marketing and distribution of the commodities which they produce.

In the context of commodity trade, I should add that we, like other developed countries, declared our willingness in Manila to make a voluntary contribution to the "second window" of the common fund, which will assist certain commodity development measures alongside the fund's other activities in support of international buffer stocks. Perhaps I can add here that none of the major nations committed itself to a specific sum for the second window. Certainly we did not, but we have the matter very much in mind and in due course we will make an announcement.

Finally, comprehensive new programmes of work were agreed in two important areas: economic co-operation between developing countries themselves, which many of them, I believe, interestingly regard as one of their first international priorities, and assistance for the least developed among the developing coun- tries. On some other issues the conference was unable to reach agreement. A number of these were remitted for further consideration to the permanent machinery of UNCTAD; on others, resolutions were adopted only by a majority vote.

Like most of our industrialised partners, we voted against the developing countries' proposals in these resolutions. For example, we resisted proposals for cargo sharing in the bulk shipping trades, which would be damaging to us economically and, we believe, would distort the world shipping market in ways which would ultimately be harmful to developing and developed countries alike. Equally, we and other developed countries made it clear that we see no case for new work in UNCTAD on financial and trade issues, which are properly for other financial institutions such as the IMF and the GATT—institutions which have shown themselves well able over the years to respond effectively to the needs of the developing world.

Perhaps I could now turn to some of the specific points raised by a number of noble Lords. First, may I refer to the speech of the noble Lord, Lord Brockway. He asked whether the Government would maintain the cancellation of debts to poorer countries, a programme which was initiated by the previous Minister for Overseas Aid, Dame Judith Hart. The noble Lord, Lord Hatch, also raised that point. We will certainly honour the undertaking given by the previous Minister and will examine new applications for this arrangement on their merits; but I cannot hold out any hope that any new applications will be more favourably or more readily considered than they were by the previous Government. Indeed, cancellation of debts is a further charge upon our aid funds generally; and our funds generally, as noble Lords already know, are under some pressure. I will revert to that in a moment.

I have dealt with the point about contributions to the second window. I am not able to say how much will be contributed, but the matter is under consideration and an announcement will be made in due course. I noticed that the noble Lord, Lord Brockway, referred to Mr. Parkinson "gratefully agreeing" to the contributions to the second window. I am not sure that that is an adjective I would have used, but I recorded it with some amusement.

The noble Lord also asked me about the progress being made to implement a decision of the United Nations General Assembly to establish an economic authority to oversee development programmes in general. I am not aware that very much progress has been made on this matter since it was first raised in Algiers in 1967. We do not oppose the proposal in principle, but we shall need to scrutinise the details when they come before us. At the moment, I am afraid we do not have very much to go on—certainly in the short period that I have had to be able to look into this matter since the noble Lord drew it to my attention. If there is anything further that I can usefully add to what I have said, perhaps I may be allowed to write to him.


My Lords, is not this quite extraordinary? Not only was the decision reached that this economic authority should be established, but a director was appointed and has been serving. Yet here we are, with the Government unable to give us any information whatsoever about what has happened to it.


My Lords, I think there is a confusion in the mind of the noble Lord, because there are two separate organisations which have been brought to my attention. If the noble Lord will allow me, I will write to him with a clear exposition of that point.

If I may now turn to the question of overseas aid generally, which figured very largely in the speech of the noble Lord, Lord Hatch, we prefer to promote international trade by trade policies and by measures of that nature, rather than by simple subsidy which, in many cases, is what aid amounts to. We have been subjected to many strictures for what many noble Lords have referred to as a reduction in aid. That is not so. We certainly accept that many of the advantages described by noble Lords opposite which attach to aid are valid and sound. Our aid programme for this year has not been reduced; we have simply reduced the increase which was originally planned. We have cut £50 million from the sum, as the noble Lord will know. This year's allocation is, then, still £75 million more than last year's in cash terms, which is in fact 2 per cent. more in relative terms, which we think in our straitened financial circumstances is a pretty good performance.


My Lords, will the noble Lord allow me to intervene? Am I correct in this assumption, that the previous Government had planned for a 6 per cent. increase per year over the next three years, and that the present Administration has cut that 6 per cent. down to 2 per cent. for the current year, with no promise as to what it will do for the future?


My Lords, we have certainly made no promises as to what we will do for the future. That is correct. We shall have to consider what we can do for the future, in the light of the circumstances in which we then find ourselves. As I said we accept many, if not all, of the advantages which noble Lords have described as attaching to aid. Even after these modest reductions, the programme is still massive in terms of total sums of money involved—something more than £800 million still for this year, which by any standards, I should have thought, was a vast sum of money.

The noble Lord, Lord Hatch, also asked me, very properly, about the decision of the Prime Minister to bring the Ministry of Overseas Development back into the Foreign and Commonwealth Office, rather than leave it as a separate Ministry. The noble Lord suggested that if it was going into any Department it should have gone into the Department of Trade. As I have said, we think that international trade is best developed by policies aimed at doing just that, and not by the kind of subsidising policies which a policy of overseas aid tends to imply. If there are any further points which noble Lords want particularly developed, I shall be happy to write to them in due course.

But several noble Lords asserted that the UNCTAD Conference had been a ghastly flop. We do not accept that. I suspect that few countries represented at UNCTAD expected to achieve a dramatic breakthrough towards new forms of international action on trade and development: that would have been unrealistic. But across the board, I believe that the outcome of the conference was positive. I have mentioned some of the areas in which progress was achieved towards closer international understanding and co-operation. And, even where no agreement was possible, it was clear that both developed and developing countries wished to avoid a breakdown in the dialogue between them. I hope that the debate at Manila will have helped to encourage a more practical and realistic approach to the issues in dispute. We, for our part, will certainly be working for this in continuing discussions, both in the permanent machinery of UNCTAD and in the other bodies responsible for international economic co-operation.