Developing Countries: Privatisation Aid (Hansard, 25 January 1989)

§ Lord Glenarthur
My Lords, we have long been active in helping developing countries to promote their private sectors. Advice on privatisation is one element of that. It is widely acknowledged that both the Government and the British private sector have a special expertise here, and we stand ready to consider further requests for assistance.

§ Lord Hatch of Lusby
My Lords, will the Minister confirm that at the end of last year the British missions in the third world were given the task of seeking out those nationalised industries in the third world that might be suitable for privatisation and offered financial assistance in so doing? Will he also confirm that at the same time the United States' AID was following the same policy? Is it this Government's policy to export Thatcherism to the ex-colonies?

§ Lord Glenarthur
My Lords, all that we have done is to ask our posts in developing countries to keep their eyes open, together with the Americans who share our interest, for cases in which advice on the development of the private sector, including privatisation, might be welcomed. We certainly have no intention of imposing our views.

§ Baroness Ewart-Biggs
My Lords, can the Minister confirm that the ODA held talks with the Adam Smith Institute during the past year and that they discussed the institute's proposal to set up a privatisation unit in the ODA?

§ Lord Glenarthur
My Lords, certainly the Adam Smith Institute report, to which I think the noble Baroness is referring, is being looked at carefully. However, we see no reason at this stage to establish a privatisation unit of the kind to which she refers. Our present bilateral aid systems are well able to cope.

§ Lord Kennet
My Lords, would the Minister regard it as hypothetical if I were to ask him what he would think if, under a future Labour Government, instructions were sent to embassies abroad to keep an eye open for possible candidates for nationalisation and help offered in doing it?

§ Lord Glenarthur
I should think, my Lords, that it was very hypothetical.

Lord Paget of Northampton
My Lords, does the Minister agree that our ex-colonies have made a sufficient mess of things on their own without being introduced to privatisation to enable them to make a still bigger mess?

§ Lord Glenarthur
My Lords, the fact is that not every body takes that view. Indeed, a number of countries have benefited from the advice given by the United Kingdom. I could certainly let the noble Lord have details.

§ Viscount Montgomery of Alamein
My Lords, does my noble friend agree that the great dynamo for development in the developing world historically has been the private sector and that the essence of the private sector is that it does not need advice? It dynamises itself.

§ Lord Glenarthur
Yes, my Lords, I entirely agree with my noble friend. Privatisation is only one aspect of that matter. There are a number of very good instances which I could give him to show how poor countries have been helped in developing their private sectors by both aspects.

§ Lord Hatch of Lusby
My Lords, will the Minister differentiate between the private sector in third world countries and the public sector? Nobody would criticise the Government for assisting the private sector, which has and is doing a good job in many third world countries. But is it not a fact that through both tradition and communal practice many third world countries have collective industries and that if they did not do so there would be no industries there at all? The centre of capital in most third world countries must lie in the government. Historically that is the situation. Are the Government now saying that they will try to break up the collectivisation which culturally and economically is viable in these countries and introduce the British form of privatisation? In many third world countries that would be disastrous to the economy.

§ Lord Glenarthur
My Lords, we are not helping to break up anything. These countries are coming to us for advice. We can assist them in three broad ways. The first is by encouraging an appropriate environment in which the private sector may flourish, often in the context of structural adjustment. Secondly, there is the identification of public sector activities which could be transferred to the private sector; and privatisation is only one of the mechanisms involved. Thirdly, there are the mechanics of privatisation. These are all helpful. They are matters on which other countries have asked us to advise in many cases. That is all that we are doing.

§ Lord Hatch of Lusby
My Lords, the noble Lord is introducing an anomaly into his second reply to me. In his first reply he said that British missions were looking for opportunities for privatisation. He is now saying that these countries are coming to Britain for help in privatisation. Both replies cannot be right. Is it the British Government's policy to introduce privatisation into third world countries, or is it the 698 third world countries that are coming to Britain for help to privatise what are now nationalised or communal industries?

§ Lord Glenarthur
My Lords, the noble Lord is getting himself into the most terrible muddle. There is nothing cloak and dagger about this. Other countries have come to us. We have asked our posts to keep their eyes open because they may find that they can be helpful, and, through that, that we can assist those countries to achieve a sensible future for themselves.