Pergau Project (Hansard, 28 April 1994)

§ The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey)
My Lords, a number of lessons were learned from the Pergau project. They were taken into account in the wide-ranging review of ATP announced last year. The appraisal, approval and monitoring procedures for ATP projects have been brought into line with those applied for other bilateral aid projects.

§ Lord Judd
My Lords, quite apart from the sad diversion of aid money to pave the way for arms sales, does the Minister now agree with the evidence given by her former Permanent Secretary to the PAC that this vast project was, unequivocally a bad one in economic terms [and] would not be …[an] effective use of aid"? Does the Minister accept the PAC findings that the project appraisal was unacceptably rushed and that, because of the extraordinarily rapid and large rise in the contract price, her department should have used the long interval before the project finally went ahead to try to strike a better deal in the interests of the Malaysians and of the British taxpayer? Above all, can the Minister categorically assure the House that no projects under the important aid and trade provisions will go ahead in future unless they are both economically and developmentally sound?

§ Baroness Chalker of Wallasey
My Lords, the noble Lord's last point is the very point that we took up in the ATP review. It was a wide-ranging review. We concluded not only that the scheme should continue but that it should focus on countries with a 1989 per capita income of under 700 dollars. That means that we now have a system which can benefit the countries which most need aid as well as helping British companies to gain contracts overseas.
As regards the noble Lord's remarks about the PAC findings, he will know that it is a convention of Parliament not to comment until the Government respond formally in a Treasury minute to the report. So far as my former Permanent Secretary is concerned, I gave evidence in similar terms to the Foreign Affairs Committee, and that is all on record. I believe that we have learned from the Pergau project. However, I also know that the project will provide electricity to the Kelantan part of Malaysia which badly needs it; that the 806 project is on time; that it is entirely within budget; and that it will start to produce electricity for the people of that very poor region in August 1996,

§ Lord Judd
My Lords, is the Minister saying that she disagrees with the judgment that her former Permanent Secretary gave to the Public Accounts Committee?

§ Baroness Chalker of Wallasey
My Lords, I can only refer the noble Lord to the evidence that I gave for over two hours to the Foreign Affairs Committee. In giving that evidence, I made it perfectly clear that I did not think that one could look at the project on economic grounds alone. I also made it perfectly clear that there were wider considerations. I abide by the Government's decision on the matter. The ODA accounting officer made it absolutely clear that, in his view, no issue of propriety was raised by the decision to fund Pergau. That is an important point.

§ Lord Avebury
My Lords, the decision to impose a 700-dollar per capita income limit on ATP projects is presumably designed to further the Government's policy of helping poor countries. However, does the Minister agree that the concentration of ATP money should be on countries which are well below the threshold of 700 dollars? Bearing that fact in mind, does the Minister also agree that ATP projects in Indonesia —only just below the threshold of 700 dollars—are not within the spirit of that limit?

§ Baroness Chalker of Wallasey
No, my Lords. The answer to the first question of the noble Lord, Lord Avebury, is, yes. We believe that there should be a. sharper focus on poorer countries. But in order to have any successful project of that type, there has to be both a willingness on the part of the government concerned and an ability to utilise the project. That severely restricts the number of countries which may benefit from ATP. It is concentrated on those with below 700-dollars per head income per annum. It will continue to be looked at in the light of the very strict rules now in force.

§ Lord Campbell of Alloway
My Lords, does my noble friend the Minister agree that, to some degree, charity begins at home and that it is legitimate in such affairs to take into account the employment prospects in our own country?

§ Baroness Chalker of Wallasey
My Lords, there is room for charity at home and for giving British companies the opportunity to win those contracts abroad for which the German, the French and other governments all give far more help than we can through the ATP budget. It is interesting to note that, although work is still under way on the Pergau project, we estimate that over 2,400 man-years of employment are being generated by the project and much of that work is benefiting sub-contractors throughout Britain.

§ Lord Cledwyn of Penrhos
My Lords, can the Minister say when our relations with the Malaysian 807 Government are likely to improve and when she thinks that trade links between ourselves and that country will be renewed?

§ Baroness Chalker of Wallasey
My Lords, the noble Lord, Lord Cledwyn, is asking me to look into a crystal ball. It is much easier to say that we all hope that it will be soon. We are certainly working to that end because Malaysia is a very important export country for British firms.

§ Lord Jenkins of Putney
My Lords, as the Minister said, we obviously cannot look into the future. However, can she at least give the House in a few sentences the basic cause of the bad feeling which arose between the Malaysian and the British governments over the issue because, if all that the Minister says is true, one would have thought there would only have been a good feeling generated all around? Why is that not the case?

§ Baroness Chalker of Wallasey
My Lords, I am sure that the noble Lord reads newspapers that I no longer read. They probably had rather more to do with the problems regarding Malaysia than anything done either by this Government or, indeed, by individuals. It is interesting to note the Malaysians' very keen attention to diversifying their whole power provision. While we were seeking to get them to look at means of providing power other than by a hydro-electric dam, they wanted such a dam in order to diversify their means of providing power, especially to the Pergau region.

Lord Bruce of Donington
My Lords, is the Minister aware that most Members of the House are familiar with the doctrine of collective government responsibility in this whole sordid affair? Is the Minister also aware that, after reading the evidence, noble Lords will be satisfied with the honourable part that she played?

§ Baroness Chalker of Wallasey
My Lords, I am extremely grateful to the noble Lord. He knows very well that there are times when, inevitably, one takes one view from an economic stance and another view because there are wider considerations involved. That is exactly what happened in the present case.

§ Lord Judd
My Lords, will the Minister not accept that the aid and trade provision, which is important, must be based upon sound development priorities? That is what it is about in the aid budget. Will she not therefore accept that this money could have been put to far greater use for humanitarian purposes elsewhere in her aid budget in Africa and Asia instead of being directed to a project which was so economically unsound?

§ Baroness Chalker of Wallasey
My Lords, if the House will forgive me, I am getting a little tired of being lectured by the noble Lord, Lord Judd. I have made it my business to make sure that ODA money is efficiently spent. This project will bring power to an area of 808 Malaysia which is short of power. The way in which it was done may not be the way the noble gentleman would have done it—

Noble Lords
The noble Lord!

§ Baroness Chalker of Wallasey
I should have said the way the noble Lord would have done it. I remember his earlier life. I do indeed say that I believe we spend our money well. Even if not exactly the same figures were involved, money would have been spent anyway on providing power in Malaysia.