Aid Funds and Arms Purchase (Hansard, 24 November 1993)

§ Baroness Chalker of Wallasey
My Lords, aid funds cannot be used for the purchase of arms. All bilateral project proposals are subject to careful appraisal of economic, financial, institutional, social and environmental aspects before they can be approved.

§ Lord Taylor of Gryfe
My Lords, I thank the Minister for that helpful assurance. Is she aware that in a recent report in The Times, it was alleged that aid funds had been used to assist in securing a £1 billion contract for defence equipment for Malaysia? Secondly, will she confirm also that despite the advice of the World Bank and the experts of her own department, the Government proceeded to use aid funds to support the Pergau hydro-electric scheme in Malaysia? What happened in that case? Does the Minister take the advice of her own experts, or have aid funds which might be profitably and usefully spent elsewhere found their way into supporting that contract?

§ Baroness Chalker of Wallasey
My Lords, the answer to the noble Lord's last question is no. As regards the first question, it is a convention, as a courtesy to Parliament, that the Government limit their comments on National Audit Office reports until the Public Accounts Committee has had the opportunity to consider them. Therefore, I cannot add further to what my right honourable friend the Secretary of State for Foreign and Commonwealth Affairs said on 28th October at col. 732 in another place. He stated there that we had decided to incur the expenditure on the project to which the noble Lord referred because we had given an undertaking at the highest level to support the project; because the Malaysians wanted to proceed; and because of wider considerations, including Britain's interests in Malaysia.

§ Lord Judd
My Lords, does the Minister not feel any personal responsibility for what has happened as regards the hydro-electric scheme? Does she appreciate that Parliament looks to her to protect the integrity of the aid programme? What specific steps did she take to support the principled stand of her Permanent Secretary? Does 259 not that whole sorry saga illustrate the folly of leaving the aid and development programme ultimately in the hands of the policy-orientated Foreign Office?

§ Baroness Chalker of Wallasey
My Lords, I have already told the House that as a courtesy to Parliament, the Government limit their comments on NAO reports until the Public Accounts Committee has had the opportunity to consider them. I do not believe that it is right for me to go beyond that. Therefore, I have nothing further to add.

§ Lord Richard
My Lords, the Minister said that assurances were given at the highest level in relation to that project. Will she tell us who gave those assurances, to whom they were given and in what terms?

§ Baroness Chalker of Wallasey
No, my Lords. In common with my answer to the last question, I have nothing further to add.

§ Lord Brabazon of Tara
My Lords, does my noble friend agree that it is a very good idea to use the aid programme in pursuance of British interests abroad, and in particular the interests of British industry abroad?

§ Baroness Chalker of Wallasey
My Lords, the only way in which the aid programme is used in pursuance of British interests abroad is if we are considering a proposal for the Aid and Trade Provision. That proposal must be in the interests of the developing country and must lead to commercial work in the long term for that developing country. Then, we should use the Aid and Trade Provision.

§ Lord Barnett
My Lords, I speak as a former chairman of the Public Accounts Committee. I am sure that the Minister is absolutely right not to comment on National Audit Office reports. On the other hand, departments are able to take action on National Audit Office reports without waiting for the Public Accounts Committee to investigate. Is the Minister saying that nothing has been done about the National Audit Office report?

§ Baroness Chalker of Wallasey
My Lords, no; but I shall wait for the Public Accounts Committee before I say what action we should take because I believe it is right that it should examine that detail.

§ Lord Boyd-Carpenter
My Lords, as another former chairman of the Public Accounts Committee, I ask my noble friend not to be led into comments of any kind as regards the questions put to her by noble Lords opposite. I ask her to maintain the line that she has so sensibly taken so far.

§ Baroness Chalker of Wallasey
My Lords, I am grateful to my noble friend.

§ Lord Richard
My Lords, I am sorry to keep coming back to this, but, with great respect to the noble Lord who has just sat down, the issue as to whether or not an assurance was given at the highest level came from the Minister. It did not come from this side of the House as an allegation. It came from the Minister in her original 260 Answer. If she says that an assurance was given at the highest level, are we not entitled to ask who gave the assurance, in what terms and when?

§ Baroness Chalker of Wallasey
My Lords, I simply repeated to another noble Lord who questioned me earlier on the matter the answer which the Secretary of State for Foreign and Commonwealth Affairs gave on 28th October last. It was he who said that the undertaking had been given at the highest level.

§ Lord Taylor of Gryfe
My Lords, I accept the Minister's difficulty in commenting on the report which has now been referred to the National Audit Office. But can she as a general principle in the administration of her department agree that on her limited budget it is much more sensible to use aid funds in supporting countries that are in great need rather than spending such money on propositions that are regarded as totally uneconomic?

§ Baroness Chalker of Wallasey
My Lords, the noble Lord knows that that is my view. We must spend on projects that are economically sensible and in the interests of the countries that we are seeking to assist, as well as in the interests of the British taxpayer.

§ Lord Rea
My Lords, can the Minister categorically deny that the Pergau hydroelectric project, which was supported against the advice of her Permanent Secretary, was not part of a deal which involved arms sales?

§ Baroness Chalker of Wallasey
My Lords, I have nothing further to add. I believe that we should wait to hear from the Public Accounts Committee.