HL Deb 10 March 1999 vol 598 cc222-4

2.54 p. m.

Baroness Williams of Crosby asked Her Majesty's Government:

Whether they will urge on the International Monetary Fund the importance of protecting primary education and public health services from expenditure cuts when proposing restructuring schemes for countries facing financial and economic crises.

Lord McIntosh of Haringey

My Lords, the Chancellor of the Exchequer has consistently emphasised the need for the IMF and World Bank to work together to ensure that spending on health and education is protected at times of crisis. Following proposals put forward by the Chancellor at the 1998 annual meetings, the World Bank is developing general principles of good practice in social policy in consultation with the IMF and other relevant organisations. These principles should be drawn upon

by the IMF and World Bank in the design of their programmes. The principles will be discussed at the development committee meeting next month.

Baroness Williams of Crosby

My Lords, I thank the Minister for that most hopeful reply. I also note that, during his visit to Russia, this very week the Foreign Secretary praised Mr. Primakov for ensuring the payment of arrears in wages to public servants and also for trying to reach social stability in his country. Can the Minister say whether the lessons from the IMF rescue package for Russia in August of last year and the more recent lessons from the Brazil package have been fully learnt, and confirm that in particular primary education and public health services will be broadly protected in future restructuring programmes?

Lord McIntosh of Haringey

Yes, my Lords. It is precisely the problems which arose from the Russian rescue package and from rescue packages in east Asia which led the Chancellor to take the initiative in October of last year to ensure that we have this general statement of principles of good practice in social policy. He will have to push this forward very fast indeed, compared to normal movement in international organisations, if he is to get drafts discussed in April of this year and, as we hope, finally agreed not later than October of this year. Crises happen immediately and their effects are felt immediately. We simply cannot afford to let matters drag.

Lord Judd

My Lords, my noble friend the Minister referred to the role of the World Bank. Does he agree that it has been most encouraging to see the lead being given by the current president of the World Bank on the need for change of policy in this sphere? However, will he accept that, for those working in the front line, there is all too often an absence of evidence of what is agreed at the intellectual strategic level being followed through? Therefore, can the Government pursue that issue and ensure that good intent is turned into good practice?

Lord McIntosh of Haringey

My Lords, my noble friend is quite right to say that Jim Woolfensohn, the president of the World Bank, is very much seized of these issues. I was very attracted by what he said; namely, that social and economic issues were inseparable, like breathing in and breathing out. Indeed, I thought that that was a very proper way to put it. My noble friend knows far more than I do about the way in which these policies are implemented on the ground. I fear that he may be right. I shall, therefore, draw his remarks to the attention of Ministers.

Lord Skidelsky

My Lords, can the Minister say what steps the Government currently take to ensure that official assistance from this country to developing countries is spent on primary goods, which the noble Baroness, Lady Williams, rightly identified as being the key to economic and social development, and not simply wasted on economically valueless projects of which we have had many examples in the past?

Lord McIntosh of Haringey

My Lords, I am afraid that the noble Lord is right about past experience. I am sure that there have been far too many examples of wasted aid. If I may say so, that was particularly the case under the policy of trade-and-aid introduced by the previous government, which certainly led to a very considerable distortion of our aid programme. With the abolition of that particular distortion, we are certainly being very active in seeing to it that the social effects of our aid policy are carried out. We have representatives in all parts of the world to ensure that that is the case.