§ 4.25 p.m.
§ Debate resumed.
§ Lord Hatch of Lusby
My Lords, the document that we are discussing this afternoon is not a Socialist document. If it had been, no doubt Mr. Edward Heath would not have signed it. I personally have many criticisms of it and, in particular, of the defects in the use of international financial and economic institutions which are not really dealt with in this document. I wonder if Her Majesty's Government still maintain the support which they showed in their reactions to the first Brandt Commission Report in regard to existing international economic institutions. But this report has done one invaluable service to our generation. It has spotlighted the growing world crisis, the irrational policies which are being followed by a number of Governments and the mounting misery of the majority of the world's population.
In a short speech of this kind it is necessary to concentrate, and I want to concentrate on one issue within the report which is contained on pages 15, 101, 103 and 104. In doing so, I take up what I thought was a most constructive and valuable speech made by the right reverend Prelate the Bishop of Hereford. I want to build on what he said. Indeed, he helped me very considerably by quoting figures which therefore I no longer need to quote. The situation so far as the whole question of aid and trade is concerned—and at the moment I put the two together—is really very clear. It has been clarified by both Brandt Commission Reports.
In the low-income countries (if one excludes China and India for the sake of convenience) the increase in trade during the 1960s was some 5.3 per cent. During the 1970s trade declined by 1.1 per cent. At the same time (as the right reverend Prelate pointed out) the prices of the commodities on which a great deal of this trade depended virtually fell through the floor. I can perhaps summarise the figures which the right reverend Prelate has so usefully given us by saying that in the two years that he mentioned—that is, from 1980 to 1982—the average rate of decrease in the terms of trade was, in real terms, 19 per cent. a year.
I give one example. Since independence, after two boom years, the new State of Zimbabwe, now just three years old, has had a decrease in its export prices 946 of 5 per cent. and an increase in its import prices of 6 per cent. I think that we would all agree that those figures are not unrelated to the unrest which, unhappily, is now prevalent in that country. What is the result of this in global terms? It is that the majority of mankind and the majority of countries in the world—because they are unable to continue the increase in their exports, because their exports are priced at a lower figure and because they still have to pay either static or higher prices for their imports—have problems of foreign exchange; they have a declining amount of foreign exchange, they have declining imports, and, in the final result, there is the debt crisis which the world has been facing for the past two years. This affects us, as Brandt very rightly points out. I believe that most of your Lordships would agree that, with the exception of the nuclear threat, the greatest challenge to mankind in this century is how to bridge the gap between the 800 million people who are living in the world today in dire poverty and the unemployment of over 30 million people who are living in the industrial world.
I want to know from the Government what they are doing about this central problem to this generation and to the next generation. I also want to point out that their record so far does not seem very good. As my noble friend Lord Oram pointed out, they have now reduced overseas aid by some 19 per cent. When we left office the figure of aid, in constant terms, was over £1,100 million a year. In constant terms it is now less than £900 million—and I am saying "in constant terms". When we left office at least 40,000 British workers were employed as a result of the aid programme, and over one million in exports to the third world.
I have asked the noble Lord this question before, and I still have not received an answer. The Ministry of Overseas Development was able to give these figures, and the Overseas Development Administration should also be able to give them now. Does the cut of 19 per cent., which has been admitted in another place, mean that there has been a cut in the employment of British workers as a result of the cut in overseas aid? Before the noble Lord gives his usual answer to me on the question of aid—that it is going up this year—will he please deduct the amount that should have come from the Ministry of Defence and which is being given to the rehabilitation of the Falkland Islands? I ask that because on present terms each Falkland islander is receiving in overseas aid well over £500 per person from our aid budget, whereas a person in India is receiving approximately 25 pence. That is the scale of the difference.
What I want to concentrate on for the last couple of minutes is to ask the Government again to address themselves to the question of expanding trade between this country and the third world. Our trade with third world countries is much less than that of the United States or Japan; and I should like to make a special point and draw the attention of the noble Lord to the quite remarkable changes that have taken place over the last seven or eight years in Japanese policy. I know some people may consider this to be Japanese economic imperialism, but I hope it is not. The Japanese have greatly increased their exports to the third world, but they have increased their imports by 947 a much greater extent, and they are now running a regular annual deficit in order to build up the purchasing power of the third world countries. At the same time they are increasing their aid, which has risen in very considerable proportions since 1977 and now stands, in the latest figure I have, at 0.34 per cent. of their GNP, because they recognise that overseas aid and trade have to work hand in hand.
In some ways I am a heretic in this party. I believe that as this Government have dropped the education of the British people in the realities and the morality of development, it is necessary to pursue the policy of tied aid, so long as that is not another phrase for simply giving subsidies to the powerful companies. I agreed wholeheartedly with the right reverend Prelate when he said we must give more programme aid and that that must be conditional upon the recipient Governments spending that aid in rural renaissance and in providing for a growing quantity of basic needs being supplied by the people of the third world out to their own communities. If those are called political or economic "strings", so be it. I believe that we are acting on behalf of the people of the third world themselves if we make sure that the aid we give is directed to those Governments and those societies which are already committed to building up the rural agricultural communities which can provide for their own needs. I believe they themselves will welcome such action.
§ The Minister of State, Foreign and Commonwealth Office (Lord Belstead)
My Lords, before the noble Lord, Lord Gladwyn, speaks, I think that the mathematics of my noble friend the Chief Whip were not entirely right when he said that this debate should end at 6.15 p.m. I am advised that the debate should end at six minutes past six.
§ The Earl of Longford
My Lords, may I ask for guidance on how long that leaves for each of us on the Back-Benches in the time remaining?
§ 4.37 p.m.
§ Lord Gladwyn
My Lords, I imagine that it will be in order for me to speak for approximately 10 minutes, which is what I originally intended to do. May I begin by saying that I agree with a great deal of what the noble Lord, Lord Hatch of Lusby, has said. For my part, as an acknowledged non-expert, I would venture (greatly daring) to try to draw certain conclusions in respect of the very difficult and contentious problems dealt with in this excellent report which is before us this afternoon.
My first point (though I do not know if everyone would accept it) is that I feel that if we—and by "we" I mean all the industrialised countries—are really going to help what used to be called the underdeveloped countries (but are now more aptly called the very poor countries) to get out of the appalling mess in which they now find themselves, and for which I do not dispute they themselves may be partially responsible, we are unlikely to do so entirely painlessly 948 even if it can be shown that doing so is in a sense in our own interests. In other words, any real assistance that we give them is likely to be given at the expense, I am afraid, even if to a slight extent, of our own still very high standard of living.
Take only one instance—sugar. One of the chief ways in which we could by common consent do a great deal to avoid disaster in quite a few of these lands would be to import much more cane sugar. But if we did so we would have to reduce drastically the amount of sugar beet, and indeed of surplus sugar beet, which we—and, here, by "we" I mean members of the EEC —produce at considerable expense in Western Europe. Of course, if the 10 Governments concerned were to take such a salutary decision (at any rate, I think it would be salutary) there would be tremendous protests from the electorally important farmers' lobbies, for many of the more prosperous farmers would stand to lose a great deal of money. So, for this reason alone I think that sort of proposal is never likely to see the light of day. Yet, unless this sort of measure is taken it is pretty clear that no serious direct—and I repeat, "direct"—attempt to assist the poorer countries will be taken by the richer countries.
Naturally, assistance can always, and should, be given indirectly, the effect of this on the standards of living of this country and of the various other countries concerned being presumably not so noticeable. For instance, as recommended in the report, the International Monetary Fund can be authorised to increase the special drawing rights; its conditionality can also be improved; the percentage of the various gross national products devoted to aid can be stepped up by a point or two; certain loans can be written off, others can be rescheduled; the International Development Agency—IDA—can be given further support. At least here I think that the performance of Her Majesty's Government has been, on the whole, very creditable. The Lomé Convention can continue to be applied. I hope it will be and that in no way will it be restricted. And so on and so forth. But all these measures, however desirable, are, in a way, palliatives. It does not look as though great progress can be made—here I agree entirely with my noble friend Lord Banks—without major reform of the whole international trading and financial system: a kind of new Bretton Woods, if you will, which is recommended at the end of Brandt Report II in a general way and which has been described, again by my noble friend Lord Banks, as the end of Keynesianism—the terminus ad quem of the Keynesian thesis.
What is pretty certain is that nothing like this will come out of Williamsburg, which I am afraid is likely to be vitiated to a large extent by questions relating to East-West trade, if I read my press correctly. Indeed, the whole world economic situation will quite likely have to get considerably worse before this sort of thing is even contemplated. And when it is contemplated it will probably, I fear, be found that a general world trade revival is not possible without acceptance by all concerned of at least some likelihood of renewed inflation, leading perhaps, in the long run, to a measure of debt repudiation. Was it not Lord Keynes himself who said on one occasion that in this wicked world progress usually results from a series of gigantic debt repudiations? These are obviously dangerous 949 thoughts. In any case, they are all for the future and they are just speculation.
But there is one factor which stands out, even now. The general philosophy of the Tory Government, as we all know, based on the general thesis known, rightly or wrongly, as monetarism, seems to be that in the long run all depends upon free play being given to the operation of "the market". You leave the market to operate entirely by itself, with the minimum of governmental interference; then eventually all will be well. It is basically the doctrine of "Let nature take its course".
With great diffidence, because I am not an expert, I suggest that we have arrived at a stage in world history when such considerations no longer apply. Certainly we can admit that if things go on as they are, the present world recession is unlikely to lift in any material way until such time as the American market recovers and world trade consequently takes a turn for the better. But in spite of present insistence, largely on the part of our own Government—possibly dictated by electoral exigencies—that recovery is virtually on the way, it seems that we shall have to face some even greater recession, based on at least a partial collapse of the international banking system. I do not say that this is inevitable. I sincerely trust not. But even now we ought to contemplate this possibility—as it were, take some kind of preventive action, or have plans in hand for taking some action in that event.
But—I do not know whether this is so—there might be an alternative. We could, if we were intelligent, choose to create a genuine European Union—not a federation of the old-fashioned type but a full, free trade area with a large communal budget, many times the present budget, in respect of which decisions were ultimately taken by a qualified majority vote in the Council of Ministers, endorsed by a majority in the European Parliament, with the advice of the European Commission. At least as a first step in this direction, we could even now join the European Monetary System and, as part of a deal involving a revised common agricultural policy (which I regard as essential), agree in the next year or two to a considerable increase in the Community budget, based on increasing the 1 per cent. VAT limit. This would lead to a large increase in the budget generally. It would enable us to begin to create a suitable regional fund and to pursue a common industrial and transport policy. Then one thing would lead to another.
There is little doubt that by such means, even in the sad event of continuing stagnation in world trade and a malfunctioning of the world financial system, we might be able in the first place to immunise ourselves to a considerable extent from the political and economic infection of protectionist tendencies and also, let us hope, be the initiators of some ultimate world trade revival. At the moment, as I have said, we seem to be simply waiting on such a revival in the United States, but that, as we all know, is held up—and may be held up indefinitely—by the dreadful decision (as I think) of the administration to pour enormous sums into the achievement of some kind of nuclear "predominance", thus creating an unmanageable budget deficit of some 200 billion dollars, which in its turn necessitates high interest rates and consequently stifles trade.
950 But there is no logical reason why we should necessarily go on waiting for America. The Community is larger than the United States. Its GNP is not now very dissimilar. We have the intelligence, the techniques and, if only we would use them, the men, All we have to do is to create, on our own and, so to speak, by an act of will, a real "market"—not just wait, in accordance with the inclinations of American and British "monetarists", for the mysterious world market of Professor Hayek to perform miracles, all on its own.
I quite realise that such possibilities are beyond the wildest dreams of the present leadership of the Labour Party, who are only intent, so it would seem, on getting us out of the Common Market as soon as possible. But when it comes to the point, when there is a real economic crunch in the world, I would not despair of the leaders of other parties—notably, of course, those of the Alliance—being prepared to take the plunge and, indeed, to take the country with it. Admittedly the situation will have to get very much worse than it is now if these kinds of things are to happen. All one can say with some certitude is that the British are quite capable of reading the writing on the wall, but only when they have their backs right up against it. And when that happens we must, somehow or other, produce an inspired leader as well.
§ 4.48 p.m.
§ Lord Thomas of Swynnerton
My Lords, there is no doubt among your Lordships that the second volume of the Brandt Report, Common Crisis, is a high-minded document. I am also sure we all agree that it is desirable to discuss these matters as fully and as candidly as possible. I recognise that there is so much in this report, and so many recommendations, that we can all find one or two things with which we fully agree. I myself fully support the statement on page 156 that we should desire to see supported by our Government and by the other Governments in the European Community,A reinforcement of the commitment to the principles of an open, rule-governed trading system".Most of us would accept that recommendation, although it is fair to say that there are a great many countries which make declarations in favour of trade but which do not carry those declarations through into practice as effectively as they might. We must also not forget that protectionism is the natural reaction of all democracies at a time of recession.
I hope your Lordships will not feel it either discourteous or churlish of me to dwell on one or two criticisms which I have of this report, since on the whole I think that all those who have spoken up to now have done so without any criticism of any sort. It would be difficult to believe that a document of this length and ambition should not have some things wrong with it.
The first matter I wish to criticise is the use of language. The suggestion that there is a third world and a fundamental difference between countries of the North and South is extremely inaccurate and possibly even damaging. Confucius—that famous inhabitant of what I see from the report's map is still regarded as part of the third world—said that the first business in 951 politics was to define your terms. There is no doubt whatever that the expression "third world" is an extremely bad definition. It is a sludgy amalgam, as Churchill put it in relation to the proposed European army in the 1950s. Any suggestion that countries such as Venezuela and Bangladesh, Argentina and Haiti, or Kuwait and China, have more in common with each other than they have not shows gross contempt for cultural and historical differences.
I know that "third world" was a phrase invented by a French demographer in the 1950s, in the same way that the expression "Left" and "Right" is a distinction (from which we have gained so much evil as well) derived from the French Revolutionary Parliament. We should recognise that not every invention of terminology by our French neighbours is a good contribution to our vocabulary. This is particularly important where major political recommendations are made—and this book is full of major political recommendations since it suggests that political systems do not count. But they do count. Political systems are what determine what is good and bad in the world. It is quite ridiculous to make all these ambitious suggestions without having some consideration of the fact that there are some states, such as those in Latin America, which have had 150 years of independent statehood and those of Africa which are new countries created in the lee of the European empires.
I must also say, because perhaps no one else will do so, that despite the presence of Mr. Edward Heath on the commission there is no mention at all that one of the main problems of the world, if not the main problem, is that of the expansion of the Soviet empire. This may be thought irrelevant, but nevertheless it not only forces the world to spend a great deal on armaments which otherwise it would not do, and not only creates refugees in all continents, but it also deprives the world, because of the malfunctioning of the political system in the Soviet Union itself, of those beneficial agricultural exports on which Europe and other countries depended in the years before 1914.
This neglect of the Soviet dimension is particularly surprising because in the introduction to "Brandt II" by Herr Brandt himself there is almost excessive dwelling on the subject of arms and armaments—although it is fair to say that, rather strangely considering that Herr Brandt was a distinguished mayor of Berlin, there is an equation of East and West as far as this is concerned.
Another point which occurred to me when going through this document—although, again, it may appear churlish to your Lordships—is that there seems to be excessive faith in the efficacy of Government-to-Government aid. Of course, emergency aid is very desirable. Of course, educational aid—especially in relation to agriculture—is greatly desirable, and the report has some excellent ideas on those matters. But the fact is that relative prosperity, such as that which we have achieved in the industrial countries, and such as that which has been nearly achieved by the so-called newly industrialising countries, is not likely to be obtained by the provision of aid, however large.
952 The achievement of our relative prosperity and the achievement of relative prosperity in countries such as Taiwan and South Korea—and I say this having listened carefully to what was said by my noble kinsman Lord Gladwyn—depends on the economic climate which has been achieved in those countries and on an economic climate in which a private profit must play a part. There is no instance of a state coming out of misery simply because of aid.
§ Lord Gladwyn
My Lords, is it not the case that with Taiwan and South Korea their economy has benefited by enormous subsidies from the West?
§ Lord Thomas of Swynnerton
My Lords, whatever may have occurred in those countries, it is certain that they have not benefited from the constant intervention by the state in their economy—as has occurred in so many countries in Africa and Latin America.
The first report of the Brandt Commission also devoted a good deal of attention to the subject of agricultural reform. In this report, I am pleased to see, there is not quite so much attention. What is missing, though, is that hardly any attention is paid to what makes for successful agriculture. If one is discussing the future of the world's food supply, I would have thought that one should devote some pages to why it is that the countries of the North, to use the commission's own language, have been able to develop enough food to be able to provide the whole world—the communist world as well as the developing world—with reserves of those commodities for the future.
At the back of my complaints in relation to the Brandt Report finally is the tacit assumption made that the liberal heritage of the West has no part to play. But a point that must occur constantly is this: what kind of political system can guarantee that the assets of companies adventurous enough to risk their money in, say, Latin America can be safeguarded? What kind of political system can make certain the export of profits, where these are made? And what kind of political system can be expected to attach importance to the repayment of loans; quite apart from being sensitive to new ideas of industrialisation and new technology? The answer is, those Governments based on consent and the rule of law. It may well be said that this is inconceivable in many countries; but if India and Honduras (to take two extreme examples) are able to provide a democratic system, it is rather contemptuous to suppose that this subject is one of no relevance or importance to the rest.
I should like to conclude with the suggestion that we keep some sense of proportion in respect of the figures which we have been given in this debate. The first report of the Brandt Commission mentioned 600 million people living in what was called the direst poverty—and the noble Lord, Lord Hatch of Lusby, mentioned a figure of 800 million. As a proportion of world population—and this must be said in all seriousness—both figures amount to something like 15 or 18 per cent. Considering the increase in the population of the world over the past 50 or 100 years, considering the incessant political mismanagement by over-ambitious or simply rotten Governments, and considering the number of wars, this does not seem too 953 bad a figure—that 75 or 80 per cent. of the world's population can be said now to be living not in the direst poverty. I doubt very much whether it has ever been possible to say it before.
§ 5.59 p.m.
§ The Earl of Longford
My Lords, it is a rare privilege to follow such a brilliant family team as that to which your Lordships have just been listening. The relationship of father-in-law and son-in-law has not been very common in British history. One's mind goes back to James II and William of Orange. What I am saying now is without reference to the personal beliefs of both speakers which have been so evident this afternoon, but on the strength of their speeches this afternoon I hope that their domestic struggles will work out in a different way!
In the few minutes available I am going to deal with matters entirely from the rather crude moral angle. That is not to say that other speakers, including, first of all, obviously, my noble friend Lord Oram, and Lord Hatch and others, have not; they and others have of course spoken about the moral aspect. But I am concentrating on that, picking it out of the wider issue. I would quote something that comes in the Brandt Report which is quite brief:There is a clear common interest"—by which Brandt meant an economic and social interest which is common to all nations of the world—but what I want to concentrate on comes in the next sentence:This, of course, does not reduce the moral obligation of the rich to the poor, in particular towards those whose situations have become more desperate in the last few years.It is on that aspect, rather than on the mutual interdependence of which we are all conscious, that I want to dwell. Here I support the noble Lord, Lord Gladwyn, who called for sacrifice. He said that sacrifice is necessary, and I think that unless we face the point made by the noble Lord we shall be humbugging ourselves; we shall go on in the end doing nothing, because when we come up against it we shall always realise that there is sacrifice involved and we will have avoided it and therefore do nothing.
This aspect of sacrifice has been looked at in the Labour Party, and perhaps in other parties, but more obviously in my own, over a great many years. The late Mr. Hugh Gaitskell laid stress upon it in the 1950s. In those days it was considered an absolute minimum that we should give one per cent. Others may have had bolder aspirations, but Hugh Gaitskell and others insisted on that one per cent.; it was thought that was the irreducible minimum. Now we have descended to a wretched level. We are nowhere near reaching the 0.7 per cent. which is regarded as a kind of interim target. I understand from the figures supplied by the noble Lord, Lord Oram, that we have now come down in the last year from 0.44 to 0.38 per cent. If that is the way the Government are moving there seems no likelihood of their increasing it.
So I think we may take it that aid is dropping. Certainly—this has been brought up by the noble Lord, Lord Hatch, and others—the total amount has been brought down by 19 per cent. since this Government have been in office. The noble Lord, Lord Thomas, may be rather gratified with that 954 development. If he thinks aid is a bad thing, he will be delighted to find it is being cut down. We read in the newspapers that Lord Thomas is very close to the Prime Minister. I can only hope that on this matter he and she do not see eye to eye. But in any case that is what has occurred under this Government, a reduction of 19 per cent.
§ Lord Thomas of Swynnerton
My Lords, on a point of correction. I merely said that I thought aid was ineffective.
§ The Earl of Longford
My Lords, I understand; but do not let us waste our time on what is ineffective. I would think, at any rate for the noble Lord, Lord Thomas, it would be a pity to waste time on what is ineffective. That is a point of view, that it is either harmful or ineffective. At any rate, it is not likely that a Government that take up that attitude are going to do much about increasing aid.
Here I am bound to say—I will leave out the Liberal Party for the moment, and the Alliance too, because the noble Lord Lord Gladwyn, seems to be so close to my way of thinking that I would not like to say anything to annoy him.
§ The Earl of Longford
Well, the noble Lord is in a genial mood today. My Lords, I shall simply compare my party with the party opposite. I can only say that on this matter of aid—and I do not always agree with what appears to be the official line for the time being of my own party, as some speaking on defence may be aware—there is a great gulf fixed between the Labour Party and the Conservative Party, particularly under the present auspices. I have never been more clear in my mind that the Labour Party is the party for any humane person to belong to.
The practical steps to give effect to this idea of one per cent.—or at any rate the practical steps towards that objective—have been set out by Mr. Heath in a masterly speech elsewhere and by my own leaders here. They will no doubt be developed finally and conclusively by the noble Lord the Leader of my party in this House. I would only say, with regard to something that was said earlier from the Liberal Front Bench, that there is obviously a great difference in the economic thinking of those who could roughly be called Keynesian and those who could roughly be called monetarist. I am not going to get involved in that today. I once taught economics for a short time at the London School of Economcs, but that was so long ago that if I learned any economics I have long since forgotten what I learned or what I taught. I am not talking economics this afternoon; I am talking morals.
I am saying that whatever the economics, there is this moral obligation which cannot be shirked. I defy anyone in this House, at any rate in a reflective moment away from his own Front Bench, to say that it is technically impossible to transfer one per cent. Certainly you could not do it tomorrow; obviously, you would have to move by fairly rapid steps, but you could not move at once from 0.38 per cent. to one per cent. I am merely submitting that there cannot be any technical reason why that is not possible. I am asking the noble Lord who is to reply to say why that is not done and why our performance has been so appalling, 955 except on the assumption, if that is his assumption, put by the noble Lord, Lord Thomas, that it does not do any good. The Government, after all, have welcomed the second report of the Brandt Commission, and most people in the House believe that it can make an awful lot of difference. I am asking why it is not done.
My Lords, I shall not go on for more than one more minute. I shall just reflect on the fact that before the war people growing up and coming to manhood in this country felt a great sense of moral obligation for what happened in the world; perhaps it was overdone at times and we may have exaggerated our influence, and certainly there was plenty of failure; but there was this overwhelming sense that what happened anywhere in the world was, to some limited extent, a British responsibility. Have we lost that sense altogether?
It may be said that in these days of super powers Britain cannot either rule the waves or control the destiny of everybody, but still it would be a bad day, a tragic day, if we abandoned altogether the idea that all this poverty, distress and starvation has nothing to do with us. So I am asking the noble Lord, who as I know is a very moral person, to go back to the Gospels, when Christ said:When thou makest a feast, thou shalt call the poor, the maimed, the lame and the blind and thou shalt be blessed".I do not think anybody who tries to give effect to the Christian gospels today imagines that that injunction stops short at the national frontier.
§ 5.9 p.m.
§ Lord Beaumont of Whitley
My Lords, I am no great admirer of the two Brandt reports; I think they suffer from a great many disadvantages, not least of which is that they were brought together by a group of very able people of extremely different views, and therefore they suffer to quite a large extent from the fault of the lowest common denominator. A report which could be signed by Mr. Heath and by some of the other members was obviously not going to be a very sharp-nosed report. Nevertheless, I think that these two reports have had one very good effect, which is that they have given us a focus for discussion of a subject which is one of the most important in the world today. I am indeed extremely grateful to the noble Lord, Lord Oram, for having raised this matter today. He is indefatigable in his pursuit of this particular subject, and as someone who is deeply involved in it myself I think we should all be extremely grateful to him.
I want to take advantage of the eight or nine minutes at my disposal to raise a single particular point. It is one that I have raised in your Lordships' House on previous occasions but it is illustrative of a wider range of points. One of the things that we in this country have done rather well over the years in terms of aid is to set up organisations largely connected with Government, sometimes a part of Government, which have a tremendous amount of expertise. It is the least one would expect of an old imperial power that we should have this ability. It is a very good thing that we have set up a number of departments in Whitehall. We have cherished a number of different bodies to try to improve not only the quantity of our aid but, rather more importantly, the quality of our aid.
956 These bodies have to some extent recently been under threat from the present Government. It is my objective this afternoon to suggest to the Government, and particularly to the new Minister, for whom I have great admiration having known him for a very long time, that it is time the Government took a different view; a view that will, in fact, fall in with their basic philosophy, because I believe that they can do that.
I shall be putting forward a case in the next two or three minutes but I am not asking for an answer from the noble Lord, Lord Belstead. I know the kind of answer I would receive. I am not asking him to waste time in his reply, but that my argument should be taken back, read and considered.
The particular example to which I refer is of an institution—the Land Development Resources Centre—which is run by the Government and which is known to all the specialists on this subject in this House but probably to very few others. This centre is in the process of being cut. Its manpower and its budget are being cut and it is under grave threat. I asked a Question about this on 16th February but I received a very dismissive reply. To summarise, I was told that future demands for the services of the centre are uncertain, that equivalent services can be provided from the private sector and that the centre remains in being and viable even with a complement of about 40 per cent. of what it was.
There is the question of future demand. This body deals with technical advice on land resources, which is extremely important for the development, and particularly the rural development, of any developing country. It is a long time before the professional capacity of developing countries is adequate in such spheres as agriculture, forestry and engineering, so there will be no real lack of demand for advice on the rural sector. What has happened is that the level of aid supply that channels through ODA has been drastically cut in recent years. Indeed, it was cut from 31 per cent. of aid in 1977 to 7.4 per cent. of aid in 1980.
It is not just the overall level of aid funding that has been cut. There has been a drastic alteration in aid priorities away from the natural resources of the rural sector. Instead, it has been directed to industrial, commercial and political outlets. For example, a high level of political prompting on the part of the ODA led recently to the provision of ships to India with £40 million of aid. This aid would have been better regarded as aid to Scotland rather than to the third world because it was helping our shipbuilding industry. That is a very good thing in its way, but it was not really aid and as such should have come from the budget of the Department of Trade. A prime consequence of this reallocation of aid was a redirection of funds away from the villages and away from the poorest people.
This leads to the question whether the aid funds that remain for the rural sector should be channelled, as the Government believe, towards private enterprise. The aim of the private companies operating in the aid business is quite simply, naturally, to make money. This requires finding work and carrying it out profitably. Such an aim is not necessarily compatible with the essential purposes of aid.
957 On the other hand, developing countries have certain things that they demand that the Land Resources Development Centre can supply. The Land Resources Development Centre can supply political objectivity. Many developing countries suspect the motives of private companies, in some cases wrongly and in some cases rightly. But work requiring close Government-to-Government co-operation and involving delicate political issues such as land reform, distribution of scarce water supplies or priorities in area development cannot with confidence be contracted out to private firms. There are a large number of countries which actually prefer to operate in direct co-operation with donor Government bodies which can be trusted for their impartiality and objectivity.
The Land Resources Development Centre and similar bodies—I emphasise it is only typical of similar bodies—can produce flexibility in timetables in a way that private enterprise cannot. It can monitor over a long period of time in a way that private enterprise cannot. It is extremely cost-effective and in a number of cases has been proved to be so. For instance, there were the 1983 estimates for a project in Somalia. In the private sector the figure was £4,300 a month and for the Land Resources Development Centre it was £2,000 a month.
This is one of a number of advantages which these Government departments have. If we start cutting them down from 100 people to 45 people, and if the 45 people include the typing pool, and so on, we shall be getting rid of a wideness of expertise which they can give to the developing countries. It is important that we should continue with this kind of help.
A great deal of aid is wasted. Sometimes it is wasted through the fault of the developing countries and sometimes through our own fault. The more we do it through the Department of Trade and the less we do it through Overseas Development, the more that will be wasted, because all that we are doing so often is throwing in bribes for uncompetitive industry. What we should be doing, as a number of speakers have emphasised—not least the noble Earl, Lord Longford, my noble friend Lord Gladwyn and the right reverend Prelate the Bishop of Hereford—is thinking in terms of the absolute good that we can do and the help that we can give. If necessary, we should be thinking in smaller terms but in effective terms. We should be thinking of what really has a sharp edge and of aid and gifts rather than the profits that we shall obtain in return.
If we concentrate on that and increase the quality of our aid we shall do what is best for the developing countries. I hope that the Government will see that such actions are in line with much of their basic philosophy and can be done without indiscriminate, old-fashioned aid of a kind which possibly many of us should have deplored earlier. We may have learned our lesson now: that there is some good that can be done and that we must concentrate on doing it where it will have the most effect.
§ 5.19 p.m.
§ Lord Walston
My Lords, the trouble with speaking late in a debate like this is that there are so many aspects that have been raised by previous speakers that one is tempted to take them up, answer them and 958 amplify them. I should dearly have enjoyed, even in his absence, answering some of the points raised by the noble Lord, Lord Thomas of Swynnerton, particularly with regard to agricultural production and agrarian reform. I should have reminded him of the work of the Commonwealth Development Corporation, with which until recently I was closely associated, and whose finances have, regrettably, been curtailed by the present Government, and of the work of the Voluntary Service Organisation and the magnificent help that has been given in that way. But there is no time to enter into any of these problems. I shall confine myself tonight simply to the matter of indebtedness, already mentioned by very many noble Lords who have spoken.
We all know that the indebtedness of the third world is now rising to astronomical heights. In 1981, for instance, out of the whole of the grants and loans, which totalled nearly 90 billion dollars, given by, let us call it, the North to the South (by the rich countries to the poor), repayment of previous loans and interest amounted to something in the neighbourhood of 70 billion dollars, leaving only 18 billion dollars available for help to those countries. The net flow of aid to the third world has shrunk from the peak of 34 billion dollars in 1978 to this 18 billion dollars. That cannot be anything to be proud of, and nor can it be anything that we can suggest will really help to solve the growing and appalling problem of the ever-widening gap between the wealth of the rich nations and the poverty of the poor nations.
The answer to all of these problems among the bankers is, "Let us reschedule. That is the thing to do". But what does rescheduling do? If I, as a private individual—as a farmer—say to the bank, "I am very sorry. I cannot repay my loan. I cannot even afford to pay the interest because the income from my farm is too low", the banker does not say, "All right. We will reschedule it". He will only reschedule the debt if I can prove to him that by so doing there will be an opportunity for me to become very much more profitable. The same holds good for companies and for countries. There is no point in thinking that we shall solve this problem of indebtedness by rescheduling unless it is regarded purely as a stop-gap measure while other measures take effect. Otherwise, it is simply a Micawberish attitude of saying. "Let us hope something will turn up in the meantime".
I believe that there is only one answer. Rescheduling as a stop-gap measure may be all right, but there is only one answer to the poverty and the gap between the rich and the poor countries. It is, quite simply, to alter the terms of trade between the rich countries and the poor countries. Let me give your Lordships a few figures. I do not want to give too many. In December 1981, for instance, a tonne of cocoa bought 65 barrels of oil. In November 1982, 11 months later, that same tonne of cocoa bought only 46 barrels of oil. In December 1981, a tonne of sugar bought 8½ barrels of oil; 11 months later it bought just half that amount: 4¼ barrels. That is not only because the price of oil had risen but because the price of the commodities in question had fallen. Again, a few more figures: between 1977 and 1982, cocoa fell from close on £3,000 a tonne to under £1,000 a tonne; coffee fell from 530 United States cents a pound to 140 cents; 959 palm oil fell from 530 dollars a tonne to 355 dollars. It is hard enough for any country to live with that type of decline in its main export earnings when other prices are stable and bank overdrafts remain the same, but at a time of rising overdrafts, rising interest rates and rising relative prices of essential imports, no wonder these countries are in dire straits.
It is no good saying, as some speakers on this subject have said, "If only they would not spend so much money on armaments, nuclear power stations, and so on, they would be all right". Some countries do spend their money foolishly. Undoubtedly, some spend far too much on armaments. But let us look at three small countries with very stable Governments and with virtually no expenditure on armaments or anything of that kind. In Costa Rica, which does not even have an army of its own, the adverse balance of trade has risen from 92 million dollars to 512 million dollars. In Fiji—which is not a warlike or aggressive country—it has risen from 65 million dollars to 213 million dollars. In Malawi—one of the shining examples in central Africa—it has risen from 49 million dollars to 175 million dollars. I repeat that these are all stable countries with good Governments.
What we require is not the code of conduct in commodities that the right reverend Prelate spoke about, if he will allow me to say so (although I agree with so much of what he said), but stable and higher prices for these countries for their main products. This is not a new idea. I am not talking about commmodity agreements. They have been tried and they have many difficulties. But, after ail, the United Kingdom invented the Commonwealth Sugar Agreement under which we undertook to buy specified quantities of sugar from individual Commonwealth countries at an agreed price for a period of years, thereby giving them stability so that they could plan their future and know what their income was likely to be. When we entered the EEC, with much negotiation, we were able to negotiate so that the Commonwealth Sugar Agreement could continue under a different and somewhat expanded guise. That is what we should do for the primary commodities from the third world. We should, if possible through the EEC but, failing that, on our own, negotiate commodity agreements which would give to the third world primary producing countries stability for specified quantities of their products.
It may be argued that this will raise the cost of living in this country and increase inflation. It will, but it will not do it to anything like the extent that people believe that it will. A rise of 20 per cent. in the price of tobacco for the grower of tobacco in Malawi would put up the cost of a packet of cigarettes by only 1p, from £1.04 to £1.05, which is hardly a disastrous impact on the cost of living. A rise of 20 per cent. in the price of cocoa for countries like Ghana, and others, which would have an enormous impact on their economies, would mean only a couple of pence on a 70p bar of chocolate. These are increases that we can live with. The improvement that would be made in the country concerned would be quite out of proportion to any cost to this country.
I urge Her Majesty's Government to take a lead in this simple but enormously helpful move in order to 960 reduce the gap between the rich and the poor countries. I urge them to do so at Williamsburg and to put forward a thought-out plan then, and to use their influence in the EEC to persuade our European partners to do the same. If they fail in both those cases, they should introduce a similar kind of arrangement on their own. It is only in this way that we can narrow the gap between the North and the South, between the rich and the poor. It is worth mentioning that by so doing we shall increase enormously the demand from the third world for the products of our factories and our workers, so many of whom at present have no jobs to do.
§ 5.31 p.m.
§ Lord Cledwyn of Penrhos
My Lords, as all noble Lords who have taken part in the debate have said, we are indebted to my noble friend Lord Oram for giving us the opportunity to debate the problems of the third world and in particular the second Brandt Report. We should be grateful to Herr Willy Brandt and to the members of his commission, including Mr. Edward Heath, for the time and energy which they have devoted to these historic reports. My noble friend set the scene with a well-informed and wide-ranging speech. Other noble Lords have built upon that, and we have had a most constructive debate.
The first report of the Brandt Commission, which we debated at length in this House, was a much longer document, and much more time was spent on its preparation. It dealt in considerable detail with, for example, the problems of the less developed and undeveloped countries of the world, and warned us of the consequences of failure to find constructive policies to deal with them. What has been done since that report was published? This is the one question that we should consider in today's debate. Has urgent action been taken by the industrialised countries? Has there been a concerted policy by developed countries to help the undeveloped? I fear that the answer is in the negative. The West has carried on much as before; perhaps with even less enthusiasm than before. As my noble friend Lord Oram said, the conference at Cancun, upon which we had built our hopes for something better, was a profound disappointment.
I shall come in a moment to the question of the Government's attitude; but it would be wrong to put the blame for all this on Britain. I recall the pleasure with which I read what the noble Lord, Lord Carrington, said when he first went to the Cancun conference; but he received very little support at that time. Then, again, the United States seems to be off course for the time being. When the United States fails to give a clear lead—the kind of lead, for example, that it gave with the Marshall Plan, the kind of lead that it gave at Bretton Woods—then the prospect of implementing Brandt or any other significant plan to deal with third world poverty becomes limited indeed. A dependence on Europe alone, which the second Brandt Report seems to favour, would make the task infinitely more difficult. We should work very hard to get the complete co-operation of the United States in any plans we may embark upon.
The disillusionment and disappointment over the failure at Cancun was plain to see at the meeting of non-aligned nations in India three weeks ago. I am not 961 proposing to neglect the Soviet dimension, to which the noble Lord, Lord Thomas of Swynnerton, referred. I would agree that in matters of aid, such as it is, the Soviet bloc move in their usual secretive and enigmatic way. We must proceed not without them, but in spite of them; and it is one of the tragedies of the modern world that this must be so.
The United Nations was set up partly to encourge its members to co-operate in matters of this kind, and United Nations agencies exist for the purpose. It is a tragedy that 40 years on we have not yet learnt to work together with a common will, to achieve a common good. The East, and indeed the West, seem to be more concerned with the political mileage which may be gained from dollops of aid here and there, than with the overall need to raise standards everywhere, regardless of short-term political benefit. Until we start to get away from this outdated and dangerous posture, we shall not begin to grapple with the real problems. This lack of interest in international co-ordination is severely criticised in the second Brandt Report.
There are those—some in this House—who believe that we should do little, or nothing, and that undeveloped countries should be left to solve their own problems without outside help of any kind. That is a point of view which is held by some people. I read an article in The Times by the noble Lord, Lord Bauer, and his colleague, Professor Yamey, and they appear to me to come within this category. Their article appeared in The Times on l1th April, and I found it depressing and misleading. It is entitled,Why we should close our purse to the Third World".They take an entirely contrary view to that taken by Brandt. They say,Aid is the source of the North-South conflict, not its solution".I find that a totally insupportable statement. No doubt aid has been misapplied over the years, and it will be misapplied again; and no doubt it can be used more efficiently and effectively. As the right reverend Prelate said in his constructive speech, aid should be properly programmed. But to talk of abolishing it is not only foolish, it is wicked, too. Official Government aid is a comparatively new concept, and it needs to be developed and organised properly. As noble Lords have said, where poverty and disease are rife, and where they exist, there is a happy hunting ground for the political extremist and adventurer. Are we to look on and do nothing at all? Is that the attitude which modern Governments should take? That is a recipe for trouble for the free world, and worse than that: as my noble friend Lord Longford said, it is morally insupportable as well.
The right reverend Prelate drew our attention to the suffering which is caused by drought and other natural disasters, and this was further stressed by my noble friend Lord Hatch of Lusby. Drought and famine ravage the Horn of Africa and Ethiopia, and over the next few months further large areas of Africa may be affected as well. Crops in Zambia, Mozambique, Botswana and neighbouring countries are likely to be severely affected. What should more fortunate countries do in these circumstances? Should we tell them, as the critics of aid might well do, to tighten their belts? My Lords, the dead have no belts to tighten.
962 The second Brandt Report examines the problem and suggests regional programmes to combat the causes of food shortage. The South African Development Co-ordination Conference is the appropriate agency here, and it has a strategic food programme. Perhaps when he winds up the noble Lord, Lord Belstead, can tell us what is the Government's attitude to this matter, and what help the United Kingdom is giving to the countries which are suffering and which will suffer if adequate support is not forthcoming.
My noble friend and others have dealt in some detail with the second Brandt Report, and I do not propose to enlarge further, save to say that the warning seems to me to be even more urgent than ever before. It is a warning of deteriorating economic conditions already threatening the political stability of developing countries. The report states:Further decline is likely to cause the disintegration of societies and create conditions of anarchy in many parts of the world".The report outlines a practical programme of action; and it can he criticised. The noble Lord, Lord Thomas, says that the report is not free from criticism; I agree with him. But it provides us with a base on which to build, on which to take constructive action. If action were taken to implement the report, phase by phase, it would not only immediately improve the prospects of world peace; it would also result in increased economic and industrial activity, which in turn would help us to get out of the current recession.
One of the most important sections of the report deals with the IMF and the World Bank. In this House in recent weeks we have had many exchanges on both of these agencies. The report calls for a substantial enlargement of the IMF's role and its resources, in order to resolve the current balance of payments, debt and banking crisis. It also calls on all donor countries to commit themselves to increasing their funds for the seventh International Development Association replenishment.
As the House knows, the poorest countries receive assistance on terms that they can afford from IDA, which is the World Bank's lending arm for this purpose. But the availability of money at low rates is not the only or even the most important consideration. Practical assistance is needed to assist the underdeveloped countries not only to develop their own resources but also to process their own resources. This is where the need for programming comes in once again. It is only in that way that they can raise their standards and become self-reliant. For example, massive drainage schemes and major agricultural development suited to soil and climate are probably the most important needs of some of the poorest countries of all. The experiences of Ethiopia in recent months, to which I have referred, should have made that plain to the whole world.
In spite of what the noble Lord, Lord Bauer, and Professor Yamey say, people everywhere do respond to this need. The marvellous work of Christian Aid and OXFAM is sustained not by Governments but by the contributions of people who care about what is happening in these countries. The trouble is that Governments are not as responsive and not as good as the people they purport to represent. The Commission itself congratulates the non-governmental voluntary 963 aid organisations for what they call their truly remarkable record,in circumventing bureaucratic red tape and getting things done".It then calls for more confidence on both sides in private lending to the third world.
The task is therefore a formidable one. But it is a practical possibility. I was glad that the Foreign Secretary, Mr. Francis Pym, gave a warm welcome to the report and promised,a positive and flexible approachto the problems set out in the new document. I think that Mr. Francis Pym is perfectly sincere when he says that. That is a much more promising reaction than the one that the Government gave to the first Brandt Report.
We also have the opportunity to help to give a lead because the Chancellor of the Exchequer is the current chairman of the IMF's current policy-making body which will have to agree ways to increase liquidity. We must also bear some part of the responsibility for the long-lasting economic crisis that contributes to third world problems. The monetarist policies of our own and other Western countries have produced the appalling recession, the worst since 1930, and the consistent high rate of interest which has stultified production in this and other countries.
We believe that certain measures should and can be taken now. I shall enumerate them briefly in the few minutes remaining to me. First, the debts of the poorest nations should be cancelled as, indeed, they were cancelled by the Government in 1978. Secondly, we should provide cheaper loans through IDA to which I have referred, and, thirdly, we should aim at reaching 0.7 per cent. of gross national product and continue to work towards a target that is even better.
These, in my submission, are attainable targets. I hope that the noble Lord will agree that we need a resolute approach, as my noble friend Lord Oram has said. We are on the eve of what is, in my view, potentially one of the most important conferences of recent years—namely, the summit conference at Williamsburg—which the Prime Minister and other Ministers will be attending. This will provide the opportunity for a new initiative in the Western world. It can help to promote the start of healthy growth once again. I was glad to note that Vice-President Bush has indicated that this might well be the objective. Let us hope that it is. In his introduction to the report, Willy Brandt said:Time is short and every day may count".I hope that the Prime Minister will be seized with this same urgency. I read some words in the report last night that impressed me greatly. By leave of the House, I should like to read them. They are the words of the United States representative at the Bretton Woods conference, who said:Where modern diplomacy calls for swift and bold action, we engage in long drawn-out cautious negotiation; where we should talk in terms of billions of dollars, we think in terms of millions; where we should measure success by the generosity of the government that can best afford it, we measure it by the sharpness of the bargain driven; where we should be dealing with all-embracing economic, political and social problems, we discuss minor trade objectives, or small national advantages; … we must substitute, before it is too late, imagination for tradition; generosity for shrewdness; 964 understanding for bargaining; toughness for caution; and wisdom for prejudice. We are rich—we should use more of our wealth in the interest of peace".It is possible to be cynical about such words. But they are the only worthwhile objective for everyone everywhere.
§ 5.45 p.m.
§ Lord Belstead
My Lords, I am most grateful to the noble Lord, Lord Oram, for giving the House the opportunity to debate the Brandt Commission's memorandum, Common Crisis. The Government have welcomed the publication of the memorandum. I am most grateful to the noble Lord, Lord Cledwyn of Penrhos, for his generous acknowledgement of the response of my right honourable friend the Foreign and Commonwealth Secretary. We have recognised that the report deals with the most grave and pressing issues which the international community faces at the present time. The Government intend to publish a White Paper setting out in more detail their position on the issues in the memorandum.
In welcoming it the Government have stressed that we accept its central message—that we live in an interdependent world. The reality of interdependence has meant that the recession in the industrialised countries has had a severe effect on the developing countries, and particularly on the poorest among them. But, by the same token, the economic problems of the developing countries are having a direct impact on the industrialised countries, through a reduction of their ability to import the goods we produce—a point made by the noble Lord, Lord Walston. The UNCTAD Secretariat has suggested that developing countries are likely to cut their imports by around 40 to 50 billion dollars over the 12-month period from September 1982. That is a serious matter, particularly for a country like the United Kingdom. Developing countries represent nearly a quarter of our world markets. If we leave aside trade within the European Community, 37 per cent. of the Communities' exports went to developing countries in 1981.
The long term solution to the problems faced by the developing countries can surely only be a sustained non-inflationary growth in the world economy. There are now signs that the worst of the recession may be beginning to abate. Here, in the United Kingdom, we have reduced inflation down to under 5 per cent. There are signs of increased activity in the economy. Your Lordships may have seen in the newspapers this morning reports of the latest CBI quarterly trends survey which shows an encouraging picture. Manufacturing industry order books have shown strong improvement for both domestic and export orders. There are similar signs in other industrialised countries, particularly in the United States.
But, of course, I acknowledge at once that the developing countries have been hard hit by high interest rates, falling commodity earnings and rising oil import prices. More than 60 developing countries still depend on commodities for half of their export earnings. Yet commodity prices are at their lowest level in real terms for 30 years, a matter to which many of your Lordships, especially the right reverend Prelate, the Bishop of Hereford, and the noble Lord. Lord Walston, have referred.
965 The United Kingdom is playing its part in a variety of schemes and funds relating to commodity prices that will be familiar to many of your Lordships. We are active participants in the six main commodity agreements. We are ready to sign the jute agreement, which would make the seventh. Nonetheless, it is the case that the total debt of developing countries, including short-term debt, has been estimated by the president of the World Bank as 700 billion dollars. The right reverend Prelate the Bishop of Hereford incidentally also referred to the highly relevant report on improving the North-South negotiating process produced by a group of Commonwealth experts last year. Here again, we have already commended that report to our European partners and to the OECD.
But in the light of that evidence and the evidence which has been given in your Lordships' speeches this afternoon, it is hardly surprising that the Brandt Commission gave top priority to the need for immediate measures to strengthen the international financial system. The Government fully recognise that need. If I may say so, the actions of Her Majesty's Government, and the speech in another place the other day of my right honourable friend the Foreign and Commonwealth Secretary have not been bland or complacent—which was the charge levelled by the noble Lord, Lord Oram—in supporting the international financial system which has shown itself remarkably flexible and resilient in adapting to the new problems which have confronted it. That is why we have supported measures designed to strengthen the existing international institutions.
At the February meeting of the IMF Interim Committee, it was agreed that quotas should be increased by 47½ per cent. It was also agreed that the implementation of the quota increase would be brought forward by two years to early 1984. The scope of the General Arrangements to Borrow (GAB) is to be extended and its size is to be increased from special drawing rights of £6 billion to special drawing rights of £17 billion.
In opening the debate the noble Lord, Lord Oram, complained that the IMF quotas had only been increased by nearly 50 per cent. when Brandt recommended a 100 per cent. increase. However, the measures which I have just outlined will create a very substantial increase in the usable resources available to the fund. In fact, the managing director of the fund has estimated that, taken together, these measures represent a virtual doubling of those usable resources. Many tributes have been paid to the skill that my right honourable and learned friend the Chancellor of the Exchequer displayed in bringing about that speedy and practical agreement.
The possibility of a further allocation of special drawing rights is also being reviewed in preparation for the fund's annual meeting in September. I hope it will not be a jarring note if I say that it really is no use noble Lords opposite complaining that we have not yet given a view about this. Of course, we are not prepared to make judgments on the outcome until we have seen the results of the review. But the rest of what I think is good news on this front is that the World Bank, too, is playing its part, specifically by instituting a 2 billion dollar special assistance programme—a programme which in effect is to adjust the structure of economies 966 of developing countries to cope with the problems of the recession. I hope that this will make its contribution to improving agricultural efficiency in developing countries—a point referred to specifically by the noble Lord, Lord Cledwyn, the right reverend Prelate the Bishop of Hereford and the noble Lord, Lord Walston.
As regards the specific question from the noble Lord, Lord Beaumont of Whitley, on the Land Resources Development Centre, I have nothing to add to my reply to the noble Lord's oral Question of some weeks ago. But I do give an undertaking to the noble Lord that I will certainly study his speech with the greatest care.
Other institutions on the international financial scene are also considered in the Brandt memorandum, including the Paris Club, the Bank for International Settlements, central banks and private banks. These institutions, too, have shown that they can extend their role and can greatly increase the level of their co-operation and co-ordination as circumstances demand. Coherent rescue packages have been put together with remarkable speed for a number of major debtor countries. These packages have required decisive action and the very closest co-operation by all concerned. I think we can be proud of the role which the United Kingdom—the Government, the Bank of England and the private banks—have played in that process. Our approach throughout has been to try to work with the instruments which we have, to cope with the problems that we face instead of indulging in impracticable dreams when help is so urgently needed.
We must also be realistic in assessing the prospects for sustained recovery in the world economy. I most certainly agree on behalf of the Government with the view of the noble Lord, Lord Banks, that there are many potential dangers remaining. Perhaps the greatest is the danger against which the Brandt memorandum warns us so forcefully—the danger of protectionism.
The Government share the commission's belief in the importance of preserving the open trading system. The record of the United Kingdom and of the European Community is one of the best in the world in this area. Recent studies by the Department of Trade indicate that only 9.7 per cent. of United Kingdom industrial imports from developing countries are subject to any form of restraint at all. We have reaffirmed our commitment to the open trading system in our practical efforts to resist protectionism and keep our markets open to developing countries.
I must say I am surprised that, although the speeches from all parts of the House have been enormously interesting and informative, noble Lords opposite have felt able to make their speeches this afternoon without even mentioning just once the Labour Party's apparent intention to withdraw this country from the European Community. Of course, it was left to the noble Lord, Lord Gladwyn, from the Liberal Benches to mention it, but to make very little comment because I think he felt that mention of it was enough. Who can doubt that if that were to come about, the Labour Party would be forced to desert Britain's support for open trading—however good their intentions may be—they would be bound to raise tariff 967 barriers and then they would pull up the drawbridge of protectionism behind them?
Another way of helping developing countries, also stressed by the Brandt memorandum, is development assistance. I would like to reply directly to the noble Earl, Lord Longford, and say that it is the case that the level of our aid could not be exempt from reductions in Government expenditure in the last three years. But this year we expect the total United Kingdom aid programme to reach £1,129 million. This is a cash increase of almost 10 per cent. over last year. In the light of the expected level of inflation, this should mean a useful increase in real terms and a move which I hope the noble Lord, Lord Cledwyn, will see as being a move in the right direction.
Like the Brandt Commission, we accept that it is essential that emphasis should be given to the poorest countries. That is why about two-thirds of our bilateral aid goes to those countries, all in the form of grants. That is why we have followed the previous Government in waiving debts, not only from the least developed countries, as recommended by Brandt, but also from other poor developing countries.
The noble Lord, Lord Hatch of Lusby, asked me two specific questions about aid. The first was to what extent jobs had been involved in either cuts or, indeed, in increases in aid. I have to say to the noble Lord that there really is no way of producing reliable figures for the number of jobs directly generated by the aid programme or by trade with developing countries. It is true that previous Government were willing to publish their guesses, but the present Government are not willing to publish unreliable statistics.
The noble Lord then asked me to except from anything that I said, aid given in respect of the Falkland Islands. Here I would say that the reasonable needs of the dependencies are a priority in the aid programme and I think that the House will appreciate the needs of the people of the Falkland Islands after all that happened last year. The increase of assistance to the Falkland Islands is but a small part of the total increase in the aid programme. For this year the increase in the programme is over £100 million to £1,129 million. Total aid proposed to the Falklands is £46 million spread over four years.
The Brandt memorandum also attaches importance to private investment in developing countries. Again, the United Kingdom fully endorses that view. We have signed investment promotion and protection agreements with 21 countries and 14 are already in force. By ending exchange control restrictions, which have been a matter of considerable controversy, the Government have also clearly made a most important contribution to the flow of international investment funds. Total financial flows from the United Kingdom to developing countries in 1981 were £4,987 million, which is equal to 2.01 per cent. of our GNP. This is double the United Nations target of 1 per cent. for combined aid and private flows.
The noble Lord, Lord Cledwyn, asked me one direct question about what the Government are doing and our attitude to the terrible problems of drought and, therefore, of hunger in Southern Africa. My right honourable friend the Minister for Overseas 968 Development, who represented the United Kingdom at the last meeting of the Southern African Development Co-ordination Conference, announced a new pledge of £2 million, in addition to the £10 million already promised from this country, in respect of the question which the noble Lord asked me.
I hope I have said enough to show that the Government look on these issues with the greatest seriousness. The best solution to the very real difficulties faced by developing countries is surely a return to sustained recovery in the world economy, without refuelling inflation. The economy of the United Kingdom, under policies of the present Government, has gone a long way to show that this can be achieved.
But at the same time, we are determined to give the developing countries all the support we can within our means to help them to bridge the intervening period. I have tried to outline to your Lordships what we have done in this respect. Of course we are aware of the limits on what can be done and of the risks and uncertainties for the future. But it is in this spirit that we shall be approaching the principal international meetings later this year. The Brandt Report, like the debate in the House today, for which we are most grateful to the noble Lord, Lord Oram, has made a valuable contribution to that process. For this reason the Government have greatly welcomed its publication.
§ Lord Hatch of Lusby
My Lords, before the noble Lord sits down, as he referred specifically to me, may I just point out to him that, in asking my question about the issue of employment and aid, the figures that were given by the Ministers in the last Labour Government were not guesses—they were worked out by officials. I resent the suggestion that this was guesswork. They were worked out by officials. I have repeatedly asked the Minister why he cannot instruct them—because the same officials are in the ODA, and I am sure they would be very willing to do this—to give him the figures of the results of the cuts.
Secondly, when I referred to the Falklands, I was simply asking him—I was not criticising the aid to the Falklands—to deduct that amount from the aid increase this year and to give the real figure, which I think he will find comes to 3 per cent. in real terms. That is welcome, but it is minuscule in comparison to the cuts of the last four years.
§ Lord Belstead
My Lords, on the second point, I am afraid that I cannot improve on the answer that I gave to the noble Lord, Lord Hatch. On the first point, the noble Lord continues to ask me the same question, and I am afraid that the noble Lord must accept the same answer.
§ 6.4 p.m.
My Lords, I think that I only have time to thank all the speakers who have taken part in this debate. I am glad that I used my good fortune in the ballot to introduce this subject, because the speeches have shown that it is of great importance and of considerable interest in your Lordships' House. From listening to all the speeches, what has impressed me most has been the great variety of aspects of this 969 subject which is covered by the second Brandt Report. For that reason, of course, it is quite impossible for me to attempt any meaningful response to the many points that have been raised.
It may be invidious to pick out any, but I should just like to commend the reference to the commodity problem, which, in the first instance, was dealt with by the right reverend Prelate the Bishop of Hereford, and latterly most effectively by my noble friend Lord Walston. I think that that pointed to the fact that when we are talking about this problem of world poverty, we are not just talking—although it is important—about aid and the transfer of resources directly. Equally, or perhaps even more, important are the terms of trade, and I think that the way in which those two speakers dealt with that was very helpful indeed.
I think that, whatever our differing points of view on the various aspects, we have all listened to the speeches and learned a great deal. In conclusion, may I hope that some of the points, at any rate, that have been made may at least prompt the Government to take more resolute action than they have so far. My Lords, I beg leave to withdraw my Motion for Papers.
§ Motion, for Papers, by leave, withdrawn.