HL Deb 13 February 1995 vol 561 cc436-8

2.53 p.m.

Lord Dubs asked Her Majesty's Government:

How they propose to reimburse the overseas aid budget for the sums that have been used to finance the Pergau Dam.

Baroness Chalker of Wallasey

My Lords, as my right honourable friend the Foreign Secretary announced in another place on 13th December, the aid programme will be enhanced this year and next by amounts reflecting the expenditure on Pergau and on three other ATP projects. He made clear that we do not propose to increase public expenditure still further in respect of payments made on Pergau before the current financial year.

Lord Dubs

My Lords, does the Minister agree that those payments made in respect of Pergau before the current financial year come to some £24 million; and that many people find it unacceptable that the Government should seek to evade their legal and moral responsibilities in this way? Please will the Government reconsider their decision?

Baroness Chalker of Wallasey

My Lords, I can indeed confirm that the figure spent on Pergau is £24 million. But we cannot rewrite the past. The financial books for past years are closed. As the Foreign Secretary said in his statement, the funds spent on these projects were voted by Parliament. The Government do not believe that the taxpayer should be asked to find offsetting funds for the aid programme in the present year or in future years for which enhanced provision has recently been announced by the Chancellor because of the court's decision.

In answer to Mr. Rowlands in another place on 13th December last, the Foreign Secretary made it quite clear that he had dealt with the larger sums involved in this year's and next year's budget in an equitable way. But the clock cannot be turned back.

Lord Judd

My Lords, does the Minister agree that, while it is not possible to rewrite the past, the facts are that money which was voted for humanitarian purposes was used for other purposes; and therefore it is only proper that that money should be reimbursed to the aid programme? Can she give a specific undertaking that in future years there will be no question of cutting aid budgets in order to accommodate payments for Pergau and other projects, which will now have to be made from elsewhere?

Baroness Chalker of Wallasey

My Lords, first of all, unusually, the noble Lord is wrong today. No humanitarian money was spent on ATP when it was agreed. It was a project with a developmental output, because that area of Malaysia needed electricity badly. No humanitarian money was used for the project. I cannot foresee all the things that will happen in future years, but, as the noble Lord knows, it is planned that the aid programme will increase by £56 million in 1996–97 and £115 million in 1997–98. We have a very sound programme. When we allocate money for ATP, as we do on an annual basis, we will now do so in the full knowledge of the decision that was made by the court on this case. Certainly we are not legally obliged to compensate the aid programme for the previous payments.

Lord Avebury

My Lords, does the Minister agree that it is a pity that the noble Baroness, Lady Thatcher, could not be surcharged for the £24 million that was unlawfully spent, as she would have been had she been a member of a local authority?

Baroness, Chalker of Wallasey

My Lords, the noble Lord's comment is very wide of the issue. It is not only that. In government—which the noble Lord has never known and never will—one has to take a whole range of issues into account. The court held that, had there been a developmental promotion purpose in Section 1 of the 1980 Overseas Development and Co-operation Act, it would have been entirely proper for the Foreign Secretary to have taken account of the impact of withdrawing the 1989 offer of support for Pergau on our political and commercial relations with Malaysia. That was the consideration that my noble friend took into account in reaching her decision.

Lord Richard

My Lords, I wonder whether the Minister can help me a little. As I understand it, the £24 million is part of the money that the courts decided should not have been used on Pergau. In addition to the £24 million, there are the sums that will be reimbursed; namely, the sums that the Minster says are payable this year and next year. That money will come back to the aid budget despite the fact that it has to go to Pergau as well. What is the logic for making the distinction between the £24 million and the rest of the money, if indeed it is all covered by the court judgment and the court said that the money should not have been used for Pergau? What is the logic of drawing the line there?

Baroness Chalker of Wallasey

My Lords, the logic of drawing the line is that you cannot change the past. Current year and future year payments are down to ECGD, and the aid programme is being reimbursed. Indeed, some of the reimbursement this year will provide further emergency aid for, for instance, the crisis in Chechnya. The point is that, once the financial books are closed, the past cannot be changed. You can change the present and you can change the future. We are doing that.

It may be wise just to remind the noble Lord that the judgment said that the unravelling was not a matter for the court; it is for Parliament to decide for the future how finance should be provided. We announced those steps on 13th December.

I want to make it quite clear that the aid programme will not be cut this year or next. I mentioned its having next year an additional £65 million available for other uses. That seems to me to be a wholly reasonable response to the court's decision.

Lord Dubs

My Lords, a commercial company that has been accused of misspending money could not say that its books were closed. Why cannot the same principle apply to the Government?

Baroness Chalker of Wallasey

My Lords, because, commerce is commerce and government is government.