§ Motion made, and Question proposed, That the sitting be now adjourned.—[Miss Melanie Johnson.
§ 10 am
§ Valerie Davey (Bristol, West)I am especially pleased to introduce this debate before the United Nations social summit in Geneva later this week, the G7 Finance Ministers' meeting and the G7 Okinawa summit in Japan next month.
Many hon. Members and thousands of our constituents, while congratulating the Government on the lead that they have taken internationally in reducing debt and poverty in the world's poorest countries, are urging the Government to do even more. The millennium announcement that Britain was cancelling 100 per cent. of the debt owed by the poorest countries made many of us feel good, but we are increasingly aware that those who should have been the main beneficiaries of that decision are still largely unaware of any change. I hope that this debate will clarify the reasons for that and what can now be done.
This time last year, hard work and commitment on all sides—from voluntary groups, churches, Ministers and officials at the Department for International Development and the Treasury, nationally and internationally, and especially from Jubilee 2000—culminated in the Cologne summit. There, the world's seven richest countries—the G7 —promised to write off $100 billion of the $260 billion owed to the west by the most indebted countries. The G7 promised that 25 of the 40 countries identified by the World Bank and the International Monetary Fund as the most indebted would receive help by the end of the year, provided that the lenders were satisfied that the borrowers had policies to ensure that funds were used to reduce poverty.
I understand that my right hon. Friend the Chancellor of the Exchequer anticipated that 11 countries would get through the programme's hurdles by Easter. I use the word "hurdle" advisedly, because it illustrates one of the several blocks that prevent implementation of the G7 promises.
By mid-June, just five countries—Bolivia, Uganda, Mauritania, Mozambique and Tanzania—had received a reduction in debt repayments. Only Uganda is anywhere near having its debt cancelled. The average reduction in the group is 35 per cent., but Tanzania's reduction is as low as 7 per cent., which means that it still needs to spend ․150 million a year servicing its debt and can afford to spend only ․87 million on health. About one third of children in Tanzania are malnourished, and less than half the children of primary school age are actually in school. The Tanzanian Government's budget is distorted by that ․150 million debt repayment.
§ Dr. Jenny Tonge (Richmond Park)I am sure that the hon. Lady is aware that the World Bank has agreed 2WH another loan to Tanzania of £3 billion, even though it is struggling to pay off its existing debts. Does she have a view about the responsibility of the World Bank in taking that action at this stage?
§ Valerie DaveyI thank the hon. Lady for that intervention. I will show my concern about the World Bank later in my speech and I hope that she will contribute again.
A similar situation exists in each of the highly indebted countries. One third of Bolivia's population has no access to safe water. Adult illiteracy in Mauritania is 62 per cent. Mozambique faces the daunting task of reconstruction following the worst flooding in living memory, yet it is still expected to repay ․45 million every year.
Despite all the promises of ․100 billion-worth of debt cancellation, only ․13 billion has been cancelled so far, ․11 billion of which had been agreed to before the Cologne summit. A community worker in Bristol recently shared with me two of the most often heard phrases among young people, mostly black, in his area. They were "Keep it real" and "We're not going to believe the promise". I was reminded of that as I reflected on the debt crisis. The reality for children, especially those in the most indebted countries, has not changed. Why should they believe the promise?
Often, the reality in areas of deprivation is that even more exploitation takes place. A Christian Aid photograph in my office at home shows a simple cross and a Nestle dried milk tin containing a few dead flowers marking the grave of a baby, somewhere in Latin America. Did the mother know that, without pure water, the contents of that tin would cause her child's death? The most poignant aspect of that photograph is the picture, on the side of the tin, of a European mother and child smiling, full of good health.
A Christian Aid report published last December shows that a baby's birthplace determines a millennium lottery. For example, Grace, born in Africa, has a one in 10 chance of dying before her first birthday, but for Sarah, born in the United Kingdom, the chance is one in 166. Grace has only a 54 per cent. chance of being immunised against measles. For Sarah, the figure is 95 per cent. Grace has only a 50 per cent. chance of access to clean water, but Sarah has a 100 per cent. chance. Grace will have only a 60 per cent. chance of going to primary school. Sarah's chance is 100 per cent.
Consistently, charities have responded and individuals have given generously. I congratulate the Government on giving tax relief on all charitable donations, which enhances their value. However, such giving is still not enough. Many years ago—when a first class stamp cost 5½ old pence—Frank Judd, who was a Minister responsible for overseas development and a director of Oxfam, urged everyone at a third world conference to invest in a stamp and urge the Government to raise the level of overseas aid, as it was the best form of investment for the third world. His message was that individual giving was great, but Governments could do more.
The Government are committed to doing a great deal more. I congratulate my right hon. Friends the Chancellor and the Secretary of State for International Development on leading the world on debt repayment 3WH and poverty reduction strategies. That initiative helped to persuade the other members of the G7, and countries outside it, such as Norway and Sweden, to promise 100 per cent. cancellation of bilateral debt. Given that promise, why has so little changed? The process by which the heavily indebted poor countries gain entitlement to bilateral debt relief is the first hurdle. Of course, strategies for poverty reduction and plans for future sustainable development must be in place, but how much of that can be achieved while debt repayment is draining HIPCs?
In response to a debate led by the hon. Member for Northavon (Mr. Webb), my hon. Friend the Economic Secretary to the Treasury, who I am delighted to see will respond to the debate, said:
The UK argues that a country need not have a full poverty reduction strategy in place when a decision is made. —[Official Report, Westminster Hall, 12 April 2000; Vol. 348, c. 101WH.]I trust that others are persuaded by that approach.Another hurdle is the fact that the HIPC initiative is administered by the World Bank and the International Monetary Fund, both of which have their own complex agendas. The Government's initiative in suggesting that the fund and the bank set up a HIPC initiative implementation unit to oversee the HIPC timetable was welcome. The acceptance of the proposal was even more welcome. Can my hon. Friend tell us what effect that has had on the timetable? Has it led to an improvement and a shortening of the time that we can expect for the debt to be cancelled? The financial contribution of the United States is another major hurdle. Congress has still failed to honour the commitment of the US Administration. Has there been any further reassurance on that crucial issue?
§ Dr. Nick Palmer (Broxtowe)Does my hon. Friend agree that the refusal of Congress to support the initiative makes a mockery of the US's claim to lead the free world in modern democratic values, and that we should urge our colleagues in Congress to move forward on this?
§ Valerie DaveyI wholeheartedly agree with my hon. Friend. Jubilee 2000, which now has a worldwide remit, is urging its members to write to members of Congress. Indeed, the last information pack that I saw had a letter in Japanese to send to Japan. I respect the point that my hon. Friend makes. if Congress is not committed to cancelling debt, the rest of the western world has an uphill struggle to improve the position for HIPCs. It reflects increasingly well on our Government that they have taken such a strong lead and have taken all the other western countries with them.
Even if the HIPCs overcome all the hurdles that I have described, the multilateral debt still remains. For some of them it is as much as 35 per cent. of gross domestic product. It is owed for the most part to the IMF and the World Bank and in some cases to commercial transnational banks. While both the IMF and the World bank discuss debt relief and world poverty and, thanks to the British Government, accept that success should be determined more by the number of people lifted out of poverty than how much debt is 4WH cancelled, neither is considering cancelling the debt owed to them. That is strange as the same G7 countries are the most influential in those two bodies.
There is a special concern about the IMF. It seems to have policies affecting countries, especially in southern Africa, that result in deep cuts in health, education and employment which are completely contrary to the poverty reduction policies necessary to qualify for the HIPC bilateral debt relief. It is almost incredible that we should find ourselves in this position. It is to the credit of the leading members of Christian Aid, Jubilee 2000 and other non-governmental organisations and voluntary sector groups that they have highlighted that discrepancy.
The IMF and the World Bank seem remote and unaccountable. The poorest and the most indebted countries have the weakest voice there. How high on the agenda is the reform of both those institutions, as that is necessary before further progress can be made to support the poorest countries? It has not been on the agenda and although Jubilee 2000 in Okinawa is concentrating on the work that the G7 countries can do to cancel bilateral debt, the issue of multilateral debt must come higher on their agenda, and on ours.
That leaves the debt owed to the commercial banks. In east Asia and Latin America new debt problems are emerging, as debt owed to private creditors is destroying national development efforts. I have neither the time nor the expertise—although perhaps I should have the time—for another important debate on the need to regulate the repayment of debt to private companies so that a country's basic services, such as health and education, are not undermined.
People must come before profit. That is an obvious statement that has added significance after the tragic deaths in Dover at the weekend. There is a prophetic message; the words of the Old Testament prophets, especially Amos, ring out across nearly three millennia. Amos said that it is wrong to sell the innocent for silver and the needy for a pair of shoes, and it is wrong to grind the heads of the poor into the earth and thrust the humble out of the way. The principles of justice, respect, respect for others and the fair use of resources remain the same; what has changed is the extent of the extremes of wealth and poverty and the global nature of the causes and the remedies.
We expect great things from Okinawa; Jubilee 2000 members and others will be holding summit vigils around the world, starting in Geneva. There will be a vigil in Bristol cathedral as dawn breaks in Okinawa, but before that the letters will flow and, as I said earlier, they will flow internationally. In Parliament, Ministers will be asked three questions. First, why has so little of the ․100 billion debt cancellation promised at Cologne been achieved and why has so little reached the HIPC countries? Secondly, my right hon. Friend the Chancellor said that the ․100 billion debt cancellation was a step on the road to a real solution. Is that still his view? What further action has he in mind? Finally, what further reforms of the International Monetary Fund are possible to strengthen the links between debt relief and poverty reduction? Millions of people around the world want their elected representatives to take action, and we must not fail them.
§ Dr. Jenny Tonge (Richmond Park)I congratulate the hon. Member for Bristol, West (Valerie Davey) on introducing the debate and express sadness and disappointment that those who joined us in the campaigns run by Jubilee 2000 last year are not present this morning.
It is unusual for me to do so, but I congratulate both the Government and the previous Tory Government on their efforts on debt relief. The right hon. and learned Member for Rushcliffe (Mr. Clarke) made one of the first moves when he was Chancellor of the Exchequer. I am delighted to acknowledge the work of the present Government—particularly the Chancellor of the Exchequer and the Secretary of State for International Development, who have taken great strides and raised the issue in many international contexts. Unfortunately, the hon. Member for Bristol, West is right that we all share a sense of disappointment that what was supposed to happen — forgiveness on account of the jubilee and the millennium, for example—has not materialised and little debt relief has been achieved.
I shall not make a long speech because the arguments are already well rehearsed. The World Bank, however, has just issued a report called, "Can Africa claim the 21st century?" Coming from the World Bank—responsible in the past and, regarding Tanzania, in the future—it is a sick report, which highlights a great deal of irresponsible lending. It is disturbing to pose the question whether Africa can survive in the present century and I wonder how far we have managed to assist its survival. We were promised a reduction by half of the number of people living in extreme poverty by 2015, yet the World Bank estimates that there are now 70 million more people living in poverty than there were a few years ago. We are obviously going backwards in the poverty stakes.
Universal primary education in all countries by 2015 is a worthy aim that was heralded by the White Paper on development. Eliminating gender disparity in primary and secondary education by 2005 is another, yet the World Bank found that the average schooling level of African women has increased by only by 1.2 years in the past 40 years. Clearly, education is scarcely moving forward either.
People who have visited sub-Saharan African countries are often struck by the effect of AIDS there. In many African countries, as many as one in four of the population are stricken with AIDS—one in four of a population whose work is desperately needed for the economic viability of those countries. Sadly, many economically active people are dying. In the past, diseases such as gastro-enteritis and malaria devastated African countries—attacking newborn babies, young children and the elderly—but AIDS is unique as a disease in that it strikes at the young, fit, healthy and active members of the population. The health targets in the White Paper are likely to be seriously compromised by the AIDS epidemic.
In 20 of the 48 sub-Saharan African countries there are civil wars, which are fuelled by the arms trade. The Government promised to do more, especially regarding arms brokers, but they have passed no legislation. Civil wars are also fuelled by the avarice for oil, diamonds and 6WH other raw materials that are used in western countries to make money. They represent yet another factor that will prevent the proper development of African countries.
The most indebted and aid-dependent countries in the world have to pay around 17 per cent. of their gross domestic product in debt repayment—the African average is three times what the World Bank says is a sustainable level. The annual gross rate averages 3 per cent. We can only look aghast at those economic figures, which explain why we are so depressed by the lack of progress.
What is the reason for that lack of progress? We must examine the international community and point the finger—particularly at the USA and Japan. Throughout the campaign, it was made clear that those countries constantly stalled on debt relief. Their actions made it more difficult for other G8 members to do anything about the problem. As the hon. Member for Bristol, West, said, Congress is blocking the money that is needed for the HIPC fund. I suspect that Congress is brave enough to do that because it is not a big issue in America but, as part of the international community, we should be hard on the United States for taking that approach.
The search for the perfect poverty strategy has been much delayed. All campaigners and G8 Governments agreed last year that the structural adjustment programmes were doing more harm than good. Health and education projects in some countries were suffering because of their efforts to bring their economies into line with the programmes that the World Bank and the International Monetary Fund insisted on if they were to qualify for debt relief. Last year's approach was positive. We understood that poverty reduction targets were going to be more prominent and that health and education projects were going to be insisted on as part of the structural adjustment.
As the Secretary of State for International Development said, there is no perfect scheme to ensure that money is spent in the right way. We could spend the rest of the 21st century looking for the perfect scheme, but we must get on with that process and allow for the fact that there will be defaulters and mistakes. I understand from her response to the report on debt relief by the Select Committee on International Development that the British Government have established a HIPC implementation group within the IMF and the World Bank. I look forward to hearing from the Minister what progress has been made.
What is the European Union doing about the unspent money in its aid budget? Some countries that were earmarked to receive money from the EU budget for aid projects do not have the capacity to take on those projects. As it is so difficult to raise money for the HIPC trust fund, why cannot the aid money be used for the HIPC debt relief fund? It is pointless to have that money sitting there doing nothing. Can we put pressure on the EU to get its act together?
Last but not least, recommendation 14 in the Government's response to the Select Committee report on debt relief states:
We welcome the commitment by the UK Government to go beyond what is required by the terms of the HIPC Initiative and to write off all aid debt, and up to 100 per cent. of export credit guarantee debt.7WH That worthy and much heralded pledge followed a similar announcement by the United States. It was welcomed by everyone. However, the Government's response raises some questions. It states:The Government strongly supports the strengthening of the HIPC framework at the G8 Cologne Summit and is grateful to the Committee for its endorsement of the UK's policy on bilateral debt relief. The Government has already cancelled all aid debts to HIPC countries.What other debts are we owed that are not aid debts? They go on to say that they are providing100 per cent relief on export credit debt, owed to it by individual HIPC countries, from the time they reach Decision Point under the HIPC Initiative,which means that we have not relieved 100 per cent. of those countries' export credit guarantee debt. We have relieved only Uganda, which is the only country to have reached decision point. We need an answer. I question the much-heralded announcement that Britain had cancelled all bilateral debts including export credit guarantees. If only Uganda has reached decision point, only Uganda has so far received 100 per cent relief.
§ Ms Julia Drown (South Swindon)On a point of correction, Mauritania and Bolivia have also reached decision point.
§ Dr. TongeI thank the hon. Lady for that intervention. She is right. However, an awful lot of countries need debt relief and it was claimed that the Government had given them 100 per cent. bilateral debt relief although they had not. The process is extremely slow.
I would like to question another claim made by the Government. We were told early on that tied aid was finished and that we would not continue with it. However, although they were not established under this Government, tied aid projects are still running. Many projects set up under tied aid involved countries paying inflated and uneconomic prices to British companies for the services that they received. The hon. Member for Bristol, West highlighted the iniquities of the payments of debts to private companies. I should like to be assured that highly indebted poor countries are not paying inflated debts to private companies in this country as a result of past tied aid projects.
It is important to clarify the matter. I want the Government to be squeaky clean. They have every reason to be proud of what they have done on the debt issue, as have the previous Government who started the process, and I am prepared to commend them. However, I do not want there to be loopholes, as there are in so many parts of Government policy, whereby what we hear is not what is happening on the ground. I seek the Minister's reassurance.
§ Ms Julia Drown (South Swindon)I congratulate my hon. Friend the Member for Bristol, West (Valerie Davey) on initiating the debate. It is important that we have an opportunity to press the Government on a vital topic. The debate is timely, with the G7 summit coming up next month.
8WH In recent weeks, I have been inundated with cards and letters from constituents who are calling for further action on debt cancellation in poor countries. The momentum and profile of the excellent campaign continues to make a big impact on all MPs and politicians in the United Kingdom and in other countries, creating more pressure for radical action. My constituents share the views of many in the UK and across the world. They welcome the progress that has been made and recognise the leading role that the Government have taken on debt relief. However, serious concerns remain about the pace and depth of change.
More delay will cost lives. My constituents do not want us to get bogged down in the mechanisms, processes, rules, diplomacy, frameworks or strategies. They want us to get through those matters and produce real results—the provision of better health care, better education, clean water, food and decent housing to the poorest people in the poorest countries.
The heavily indebted poor countries initiative was supposed to achieve good results and the alleviation of poverty through debt relief. When I think about the process, I picture a golden road. Countries that are sufficiently poor and indebted and are judged by the west to have unsustainable debts are allowed on to that road, which should glide them smoothly and simply to debt relief. However, the process is not like that in practice. Millions of people are still waiting to get to the end of that golden road, but there are obstacles in their way.
I should like to consider the impact of debt and of the HIPC process on three poor countries: Mauritania and Guyana, which are involved in that process, and Nigeria, which is not. My hon. Friend the Member for Bristol, West gave some background information on Mauritania, which is one of the few countries on the golden road of the HIPC initiative. It has reached the first major obstacle, which is known as the decision point, when western Governments judge whether a country has reformed its economy to a sufficient extent to deserve debt relief. It is only at that stage that debt relief is given. Mauritania has reached that point, but it has not been a smooth road. As my hon. Friend said, its debt has been reduced by less than a third. It is still spending more money on debt relief than on health and education combined, even though its literacy level is low and few of its children go to school.
The United Kingdom deserves congratulation, as we write off the bilateral debts that are owed when the decision point is reached. However, countries such as Japan and America do not write off debts at that stage. Instead, they wait for the next obstacle, or until the very end of the golden road is reached. That is outrageous. The United States and Japan are much wealthier than us. If we can afford to do it, so can they, and if our economies are sufficient, so are theirs. I urge the Ministers to get that message across at every opportunity, whether it arises during the coffee breaks or on the main conference floor. If the UK can take such action, so can the United States and Japan.
Guyana is also in the HIPC process, but it is failing to help its poorest people. Ministerial pressure is needed for results to be achieved. Guyana illustrates the problems of the HIPC process and it was one of the first countries to participate. Indeed, it also came through 9WH the earlier process, so we expected that by now it would be getting all the help that it needs. However, it was pushed off that road because the IMF said that the Guyanan Government had missed their budgetary spending target. The reasons why that happened are extraordinary, and originate in a public-sector pay dispute in Guyana. Although the Government wanted the public sector to keep working, they knew that they had to keep on track with the IMF and their budget targets in order to obtain debt relief and also to achieve their poverty alleviation objectives. They explained their problem to the IMF and asked what they should do. They pointed out that the independent arbiters that had considered the pay dispute had advised them to pay, but had told them that if they did pay, the IMF would consider that they had overspent their budget. The IMF said, "Go ahead. You should settle this pay dispute. Go along with the independent arbiters and pay your public-sector workers." The Government did that, but then what happened? The IMF turned around and said, "You are off track. You are off the road and you have not achieved your targets." It appeared to take no responsibility for its actions and no proper account of the issues that countries face. Who suffered? It was the poorest people in Guyana.
That is why we are having this debate; we want to tell Ministers that that is not good enough. If Guyana goes to the IMF to explain its problems and follows the IMF's advice, it should receive its debt relief and receive it sooner, in recognition of its acute problems. I have given examples of two countries in which poverty eradication is being stopped or held up by IMF processes and procedures and by engagement in ridiculous debate rather than in getting on and doing what needs to be done.
The third country to which I shall refer is Nigeria, which is not even included in the HIPC process. It was dropped in 1998 for technical reasons, but they were spurious, because the country far exceeds the HIPC eligibility thresholds. Nigeria is the largest country in west Africa and it is still recovering from decades of misrule and a corrupt military dictatorship that left behind enormous unpayable foreign debt. All but a tiny minority of Nigerians live in poverty. This is an especially important time to help Nigeria because the country is trying to establish itself on a course of economic and social reform.
In Nigeria, life expectancy is 53 years and falling as a result of AIDS. Some 36 per cent. of children under five are underweight, and 51 per cent. of the population do not have access to safe water. The problem is massive. Jubilee 2000 has calculated that even if Nigeria's debt were written off entirely, it would still need additional aid of more than ․1 billion a year in order to reach the internationally agreed poverty reduction targets for 2015. Conversations about debt are only the first stage of the process; we must consider how those poverty reduction targets can be achieved.
We must remember that most of the debt results from money lent to corrupt military dictators, and people in the west did not press sufficiently hard to get that money back. Nigeria is now trying to introduce economic and social reform, and is bearing the pressure in trying to alleviate poverty. Our Government deserve congratulations because they have been at the forefront of helping to support Nigeria, but we must ask them to 10WH do more. We must take responsibility for the bad loans that have been advanced in the past and we must argue for Nigeria and other countries to be included in the HIPC initiative. If we press for that, I hope that other countries will become involved, including Germany, Japan and the World Bank, who are the major creditors.
The situations in those three countries illustrate some of the problems that need to be tackled and on which the Government must take action at the Okinawa summit. I welcome the progress that has been made, but my constituents have made it clear to me that more must be done urgently because lives depend on it. Therefore, I ask Ministers, in July, to deliver the ․100 billion that was offered at Cologne and to consider the inclusion of many more countries within the HIPC initiative, or, preferably, within a replacement system, because many impoverished and indebted countries are not covered by the HIPC initiative. We need determination to get rid of the obstacles along what should be a golden road to debt reduction and poverty alleviation. Instead it is more like an obstacle course that is being tackled in the dark, and in which the obstacles move every time that one believes that they have been surmounted. The poorest people suffer as a result.
We need to do some straight talking, like the straight talking for which my right hon. Friend the Secretary of State for International Development is well known, and we need the determination to tackle all those problems and save the lives that depend on us doing that. I ask the Government to consider a new process of dealing with debt, which was called for by the Secretary-General of the United Nations, Kofi Annan. We need a system that is transparent and fair and brings real benefits to the poorest people in the world. Will the Minister say whether the Government support that initiative? We have come a long way, but we need to do more, and it would be tragic to falter at this stage. We must do all we can to ensure that the phrase "debt cancellation", which is firmly imprinted on the consciousness of so many people in developed countries, has real meaning for people in less developed countries; in Mauritania, Guyana, Nigeria and other impoverished countries. Those people must be able to feel for themselves the enormous benefits that debt relief can bring, so that the elimination of poverty can be addressed in their countries.
§ Mr. John McFall (Dumbarton)I am delighted to be able to participate in the morning's debate and I congratulate my hon. Friend the Member for Bristol, West (Valerie Davey) on raising it.
The Jubilee 2000 campaign has taken off because of the support of many ordinary people. I received more than 1,500 letters asking me to press my right hon. Friend the Chancellor and others not only to take action to write off debt, but to adopt a strategy to help the world's poorest. Last Saturday, I had the privilege and the pleasure of starting a five-mile bike ride from St. Michael's church in my constituency, organised by Paul McGinlay. Fifty young people aged between four and 14 were involved. Before the event we showed the Jubilee 2000 video and explained simply that education and health were very important to young people in other countries. The important point was made that in an age of great advances in medical technology more than 11WH 12 million children die every year from easily preventable diseases. That is a scandal and collectively we must do something about it. Great advances have also been made in computer technology, but more than 800 million adults cannot read or write. Those challenges are not just in far-off lands. The economic and environmental effects of globalisation mean that our future is tied up with that of the world. We have a moral and a pragmatic obligation to convey that message.
Initiatives in the heavily indebted poorer countries have been mentioned and I congratulate my right hon. Friends the Chancellor of the Exchequer and the Secretary of State for International Development on what has been undertaken. I remember a speech by the Chancellor to the General Assembly of the Church of Scotland two years ago, the kernel of which was that we needed to do something on the international stage to alleviate poverty. He was congratulated and I join in that response. However, we now have the problem of encouraging other countries to ensure that debt is written off. It is symbolic that next month's summit will be in Okinawa. Japan has a long way to go in the process of writing off bilateral debts.
For too long, we have tied international debt and loans to trade. We must get away from that. As the Government have said, we need a poverty reduction strategy and it is important that it should be separated from trade. The five heavily indebted poorer countries mentioned have not yet jumped over that barrier. The progress that has been made on a global scale is pretty much a minimum. We must push on that issue.
Great initiatives are being pursued. A couple of years ago in Zimbabwe I came across something called the Blair toilet—there is nothing domestic about it—promoted by Oxfam, to bring sanitary conditions to villages and thus improve health. I am proud to say that the Oxfam shop in Helensburgh in my constituency, which has been going for 25 years, has contributed directly to that. Christine Thorburn, the manager, and another 40 volunteers keep that shop open for six days a week, reminding people about the bigger outside world.
I congratulate the Government on what has been done, but we cannot rest there. We must have an efficient poverty strategy. We owe it to those young people who now die so needlessly. Morally, we owe it also to ourselves. We should take a lead from those ordinary people who have encouraged us and our constituents so that, by 2015, our target of halving the number of people living in extreme poverty will have been achieved. That is a noble aspiration, and people of every party and none should sign up to it. I am proud that we are embarking on that road, and I wish everyone well, particularly the Government in Okinawa.
§ Mr. Richard Ottaway (Croydon, South)I start by paying tribute to the hon. Member for Bristol, West (Valerie Davey) for winning this debate and for the way in which she spoke. She rightly asked why so little has been done to provide for international debt relief. Many hon. Members have touched on that theme, which I shall develop in a moment.
12WH We shall think of the hon. Member for Bristol, West on the day of the Okinawa summit, when she undertakes her vigil in Bristol cathedral. I am not sure whether it will be dawn in Bristol or dawn in Okinawa when she starts, but as someone who has attended many services in Bristol cathedral—I was brought up in the city—I have a vision of what it will be like.
The hon. Member for Richmond Park (Dr. Tonge) spoke incisively. She is no stranger to the subject, and takes a keen interest in it. I shall turn to what she said later in my speech. The hon. Member for South Swindon (Ms Drown) said that many people sought to travel down what she described as a golden road, but tellingly said that it was not like that in practice, which is the truth of the matter.
The hon. Member for Dumbarton (Mr. McFall) made me feel rather unfit; he went on a sponsored run at the weekend, but I confess that I was sitting in a boat. I congratulate him on his efforts. He rightly said that we cannot rest, and that an all-party approach is needed.
With population growth in the third world easily outstripping economic development, it is no surprise that the crisis continues. If a country's population is growing faster than its economy, it is effectively going backwards, particularly in respect of economic growth per capita. That is why the Conservative party has taken a close interest in the subject for many years. It should come as no surprise that we welcome any steps taken to reduce debt for those countries for which it is an intolerable burden.
The Conservative party has a proud track record on debt relief. The previous Conservative Government wrote off £1.2 billion of debt—the single largest contribution to solving the debt problem. I was pleased to hear the hon. Member for Richmond Park acknowledge the steps that were taken by the previous Government, who initiated the heavily indebted poor countries initiative. My right hon. Friend the Member for Huntingdon (Mr. Major) was the principle architect of its forerunner, the Trinidad terms, which reduced by two thirds the debt owed by the poorest and most indebted countries. Again, it was my right hon. Friend who pressed for full implementation at the Naples summit of the Paris Club of creditor nations. As Prime Minister, at the 1994 G7 summit in Tokyo, my right hon. Friend gave much momentum to the Cairo conference on population and development—a not unrelated subject.
In opposition, the Conservative party continues to support debt relief as an effective tool in development policy, and has proposed new ways to take the issue forward. Hon. Members have spoken about the excellent work carried out by Jubilee 2000 to which we pay tribute. We support its campaign to cut debt in those countries for which it is an intolerable burden.
We welcome the Government's initiatives in the reduction of bilateral debt. We said in September 1999 that the Government should cancel 100 per cent. of bilateral debt and we welcomed and supported the subsequent announcement of the cancellation of bilateral debts for the world's poorest countries, subject to a rigorous audit, with the money saved to be spent on health and education. Those are important caveats.
We support the Government when they act with organisations such as the World Bank and the IMF to promote well-thought-out multilateral debt reduction 13WH programmes that offer the prospect of sustainable economic growth in the long term. We support the main features of the Cologne debt initiative.
It is essential that debt relief is delivered quickly, to benefit the poorest members of society. However, if the Government are taking credit for the success of the campaign, they must take responsibility for the unsatisfactory progress in the reduction of multilateral debt. As I said earlier, the HIPC initiative was originally agreed by the previous Government in September 1996. According to the World Bank, the 40 most heavily indebted poor countries have external debts totalling some £194 billion. Last year, at the G7 summit in Cologne, the total debt relief was increased from £52 billion to £100 billion and the Prime Minister told the House that:
it is an issue whose time had come—[Official Report, 21 June 1999; Vol. 333, c. 763.]Sadly, the reality is lagging behind the rhetoric. A year later, only five countries have received debt relief and only about 15 will have qualified by the end of 2000, instead of the hoped-for 24 or 25. Only two extra countries, Bolivia and Mozambique, will reach completion point in 2000. As the hon. Members for Bristol, West and for Richmond Park said, in the five countries that are beginning to receive debt relief the debt service payments have fallen by an average of only 40 per cent. Reference was made to Uganda; the United Nations website yesterday said that relief to Uganda has currently been suspended because of the military activities there.Progress is slow and bureaucracy is one of the culprits. The hon. Member for South Swindon mentioned Guyana, which was expected to be one of the first beneficiaries. As the h Lady said, the Guyanan Government sought IMF advice last year to reach agreement in a pay dispute with public sector workers. They took the IMF's advice to settle on the basis of independent arbitration, which resulted in the Government exceeding their budgetary targets. The IMF is now using that overspending as a reason to delay debt relief. I agree with the hon. Member for South Swindon that that is not an acceptable way for the IMF to behave. I also agree with her that countries such as Nigeria and Haiti, which are among the poorest in the world, are not even being considered.
There are many other reasons why the initiative is faltering; much has been made of the United States Congress proving obstructive. The World Bank argues that its credit rating could be damaged; the Inter-American Development bank has so far refused to provide its own funding and the European Union is refusing to release funds until the United States provides its "fair share" of debt relief. The introduction of poverty-reduction strategy papers is being used as an excuse to delay relief still further. Japan is pressuring some countries not to apply for relief.
In short, we are witnessing political wrangling, conflicting agendas, lack of consensus, rather than the delivery of the modest debt relief on offer to those most in need. We recognise that the Government are trying to cut through that and have set up a joint World Bank/ IMF committee to oversee the implementation process. I am sure that the Economic Secretary will give us an update on what is happening in that committee.
14WH There is an important point here, however, that has bedevilled the Government since the day they got elected: the delivery lags behind the spin that has been put on the initiative, not just by President Clinton or the Prime Minister, but by the Chancellor of the Exchequer who said in September last year that:
if we are successful it will be a matter not of years or months but weeks before the first country will benefit from debt relief.The firm belief was that others would follow thereafter. It comes as no surprise that the UN Secretary-General said in March this year that:the deeper, faster and broader relief promised last year has yet to materialise.My strong advice to the Government is not to raise expectations to a level where they cannot deliver and, indeed, it is not within their gift to deliver. They face a big challenge. We are behind them in their efforts, but they should get on with it quietly and not let their spin doctors anywhere near the subject. Otherwise, perish the thought, they might be accused of being all mouth and no delivery. We need a more disciplined approach to international borrowing and lending. We have a new century and a new era in global finance. Let us make sure that it succeeds.
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§ The Economic Secretary to the Treasury (Miss Melanie Johnson)I congratulate my hon. Friend the Member for Bristol, West (Valerie Davey) on securing this Adjournment debate on an important subject. I welcome the recognition that hon. Members have given to the Government's role and the progress that has been made. We always want progress to be faster, but we are achieving a great deal. I shall argue that case and try to answer the key points that have been made this morning.
This is clearly an important issue and one to which the Government remain deeply committed. Our track record demonstrates our commitment. We called for and got a review of the original heavily indebted poor countries initiative. We pressed our G7 and international colleagues to adopt challenging targets on debt reduction and the numbers of countries receiving debt, relief and we have made a commitment to give 100 per cent. debt relief to every country that qualifies under the HIPC initiative.
I obviously recognise the contribution of the right hon. and learned Member for Rushcliffe (Mr. Clarke) in starting the process off, but when the Government came into office in 1997, not one country was receiving debt relief under the HIPC initiative that had been agreed in 1996. I therefore take exception to the tone and one or two of the remarks made by the hon. Member for Croydon, South (Mr. Ottaway). The previous Government had not made progress and the vicious cycle of debt, poverty and economic decline was trapping more and more people.
The scale of human tragedy that is involved is difficult to accept. More than 130,000 children die in Africa each week. That is a terrible statistic, and it moved a number of my hon. Friends and the hon. Member for Richmond Park (Dr. Tonge) to contribute to the debate. It has also moved huge numbers of the population of the UK to send us cards and to put pressure on both us and, I am 15WH glad to hear, other Governments. My hon. Friend the Member for Bristol, West told us about letters being sent in Japanese.
Under the historic agreement secured in Cologne, the HIPC initiative was enhanced to provide more debt relief to more countries. Five countries are already receiving enhanced debt relief and another 15 are expected to do so before the end of the year. Today, the board of the World Bank will discuss the issue and we hope that a decision will be reached soon thereafter. We are still on course to meet our G7 target of helping three quarters of eligible countries through to decision point by the end of the year.
So far the HIPC initiative has given out ․14 billion in debt relief—representing an average stock-of-debt reduction of about 45 per cent. for each of the countries—on top of debt relief mechanisms such as the Paris Club reschedulings, which reduced debt stock by a further 67 per cent. At its decision point, Tanzania received commitments from its creditors to provide debt service relief of more than ․3 billion, which will translate into an overall halving of its debt service obligations over the next three years.
Several points about Tanzania were raised in the debate, so I shall try to answer them in greater detail. The World Bank loan agreed with Tanzania is on highly concessional terms. It is preferable for the country to receive such concessional lending rather than borrow from the private sector at competitive rates. We do not want to starve countries of new lending for productive projects. We cannot prevent a country from borrowing: it needs to take on new debt to support projects and spending that contribute to poverty reduction. Such debt is not inherently bad if the money is being put to productive use, so we must ensure that all new lending is productive lending.
Tanzania's poverty reduction strategy paper, which provides the basis for all new lending and support from donors such as the UK, is constructed around actions that will benefit the whole population. The Government are committed to setting the poverty reduction targets in each of the priority sectors—agriculture, education, health, rural roads and water. The interim poverty reduction paper highlighted the need to increase school enrolment rates, to improve the quality of primary education and to raise the coverage of immunisation against diphtheria, polio and tetanus. My right hon. Friend the Secretary of State for International Development was recently in Tanzania and was impressed by the progress that the country was making on all those fronts.
§ Dr. TongeI should like to press the Minister a little further. To what extent can the World Bank and the International Monetary Fund monitor how the funds are spent? A great deal of debt was incurred during the 1980s and much money went into the pockets of dictators: it never benefited the people of those countries. Has anything changed? Are the institutions monitoring more carefully what happens or can we expect exactly the same story 10 years hence?
§ Miss JohnsonWe constantly try to improve performance in those regards. We have made progress, 16WH but more remains to be done. I can tell the hon. Lady that the Government are not complacent about these problems. I shall return to her points about the World Bank in a few moments.
Earlier this year, the UK Government were concerned about slippages in the timetable of countries coming forward. We have continually pressed for the revised HIPC initiative to be implemented quickly, so those in need feel the effects of debt relief quickly. That is why my right hon. Friends the Chancellor of the Exchequer and the Secretary of State for International Development wrote to the acting managing director of the IMF and the chairman of the World Bank, urging them to set up a HIPC implementation group to oversee progress. We were delighted when those organisations announced at their spring meeting that they were setting up a joint implementation committee on HIPC. That group is charged with overseeing the implementation of the initiative and has already had its first meeting, the outcome of which was a timetable which should result in at least 20 countries reaching the decision point by the end of the year. The group will manage the implementation of the timetable and we hope that as a result there will be greater progress in those countries.
§ Valerie DaveyMany of us are sceptical about committees, which are sometimes set up and then kicked into touch. Can my hon. Friend tell us more about the nature of this important committee? Why are expectations for the future so rosy? The two important bodies needed to be brought together, but given our anxiety about them individually, what is to be gained from the committee unless there is a new impetus, or, indeed, new members of the committee?
§ Miss JohnsonThe first meeting was encouraging because it produced the timetable. I agree that there is a danger that meetings are not as productive as they might be, but the committee brings together the two institutions, sets timetables and reports directly to the boards. Progress is made only by battling to move forward; we are pushing as hard as we can to make progress, and receiving support from others in that respect.
We hope that 20 countries will reach decision point by the end of the year. Of the 41 HIPC countries, 16—the number varies—are at present suffering from the disruption or the aftermath of conflict. Therefore, most have not begun to draw up poverty-reduction strategies to show how debt relief can release resources to reduce poverty. Five further countries are likely to be deemed to have sustainable levels of debt, which means that they will not require further debt relief under HIPC once they have received such relief under the Naples terms from the Paris Club. We expect the remaining 20 countries to reach the decision point under the HIPC initiative and to start receiving debt relief this year. The United Kingdom is at the forefront of international efforts to assist poor countries and we encourage others to match our efforts.
Hon. Members asked about conditionality, poverty reduction strategy papers and other matters, and I shall answer one or two questions now. I confirm what I said in a previous Adjournment debate: it is not necessary to have a full poverty reduction strategy paper in place at decision point. I assure my hon. Friend the Member for 17WH Bristol, West that that continues to be our view. An interim paper is needed, but we are prepared to be flexible about it and we have encouraged others to be flexible, too. We want good poverty reduction strategy papers in place by completion point, and we want countries to take as long as they need to achieve a good strategy that has broad support. However, we argued for being reasonable in considering how progress can be made so that a country is not held up.
Uganda's debt relief was mentioned; it will be used to reduce pupil-teacher ratios from 100 to one to 50 to one—that is good progress, although we hope that the ratio will be reduced even further—and to build new schools to allow the Ugandan Government to meet their goal of universal primary education. Good progress will be made in Uganda as a result of that.
§ Dr. TongeThe Minister may not be able to answer my question, so I shall ask it in the hope of receiving a written reply. When we were in Uganda, we found that, as a result of qualifying for debt relief, the structural adjustment programme had imposed the need to charge a small fee for primary education. In our view, that was a step backwards. Can Uganda now drop those fees and make education free?
§ Miss JohnsonI understand that such action is not possible at the moment. The hon. Lady invited me to write to her, and I am happy to do so and to copy my letter to other hon. Members present. In any case, the World Bank is leading in Uganda on social spending, on which it has expertise. As I said, progress is being made.
Others have been persuaded by our approach to the interim poverty reduction strategy papers, and that has been adopted in the HIPC modalities, so we have made an impact on the processes and on some countries.
§ Ms DrownThe language of the debate is often about assisting developing countries. How much does the debate focus on not only the moral argument, but the economic argument? We have suggested that some countries may be lagging behind Britain. Would that situation change if the economic argument were pushed forward? If the economies of all the countries that had debt lifted from their shoulders really grew, new markets would open up for the US, Japan and the European Community. Would such arguments help to bring more countries on board?
§ Miss JohnsonThe economic issues must always be considered, but some of them are the primary responsibility of other Departments, so my hon. Friend will understand if I do not comment in detail on the issues that she raised.
§ Mr. McFallI will follow the question from the hon. Member for Richmond Park about the structural adjustment programmes. My experience of some of the African countries in the 1980s was that programmes focused on only one part of the economy and brought the rest of the economy down. A refined structural adjustment programme is needed. I mentioned earlier that I had visited Zimbabwe, where the structural adjustment programme had a negative effect many years 18WH ago. Will the Minister examine that aspect of those programmes and perhaps write to hon. Members? Our constituents are keen to advance that important issue.
§ Miss JohnsonI am happy to add some remarks about that issue to the letter that I promised earlier, if it will help hon. Members contributing to this useful debate.
Our policy has been of bilateral 100 per cent. debt forgiveness, which has underlined our commitment to debt relief. Since we made that announcement, we have encouraged other creditor nations to adopt the same view. Our initiative is generating results. All the G7 countries have now announced 100 per cent. debt relief policies. Some hon. Members asked about the 100 per cent. level and the relationship between debt and aid debt. Perhaps it will help to remind hon. Members that we are committed to 100 per cent. relief for all countries qualifying under the HIPC initiative. That includes 100 per cent. relief on debts owed to the Export Credits Guarantee Department.
§ Dr. TongeThe Minister is being generous in giving way. Does that mean that countries receive 100 per cent. relief when they reach decision point? There are many difficulties in reaching decision point, because of the structural adjustment programmes and other requirements. Is not the problem the fact that the countries will not get 100 per cent. relief because of delays in reaching decision point?
§ Miss JohnsonWe are trying to make progress on those issues. The countries will receive 100 per cent. debt relief when they reach decision point, but we want to be sure that the cancellation of debt will go towards the reduction of poverty. All five countries that have reached decision point are benefiting from it.
Let me give the overall figures. Some ․100 billion was pledged in the Cologne agreements. That was broken down into ․50 billion through the initiative HIPC on multilateral relief, ․30 billion on overseas development assistance relief and ․20 billion on Paris Club bilateral relief. Of the ․50 billion multilateral relief, ․12 billion has been delivered. I am afraid that I do not have information on the other sums.
Progress is being made. The focus is now on next month's G7 Okinawa summit. The Government will continue to keep up the momentum in the run up to the summit and beyond. The G7, international financial institutions and debtor countries together must ensure not only that debt relief is delivered, but that the released resources are used to eradicate poverty in HIPC countries. The UK is reassured that the United States Administration remains committed to securing funds for HIPC. Larry Summers, the United States Secretary of the Treasury, recently made a strong speech urging Congress to approve the necessary funding. The lobbying efforts of non-governmental organisations such as Jubilee 2000 are important in getting the message across to Congress. I welcome their activities in that regard. Indeed, the Chancellor will meet one of the Senators with responsibility for that matter next month to discuss the issue of HIPC, so additional work is taking place.
We continue to push Japan to be more generous and to deliver its relief from decision point. At the moment, it delivers relief from completion point and looks only at 19WH pre-cut off date debt. There are issues to address, but pressure is being exerted and discussions are taking place.
As for Nigeria, the Government have been at the forefront of offering it support so that it helps itself. It has a troubled recent history. We have expressed our determination to harness its resources for economic reform and poverty eradication. We have offered help in all areas, including debt management, privatisation and asset recovery. Contact between the UK and Nigeria has taken place at every conceivable level of government. We have worked hard to persuade other countries to take a similarly supportive attitude towards Nigeria. Larry Summers made a positive statement last week on debt cancellation for Nigeria, which shows that our approach is paying off.
The most effective way to help Nigeria is to work collaboratively within the multilateral framework. We believe in a two-stage approach: first, to implement a generous rescheduling of debt during the IMF programme which is under negotiation, and, secondly, to ensure that Nigeria's debt receives a new treatment in 12 months' time. That will allow Nigeria to build up a track record of reform and re-establish relations with the international community. In light of its recent history, that is an important part of the economic setting, and one on which we have been working positively.
Questions were raised about the reform of the IMF and the World Bank. The G7 Finance Ministers will discuss the topic again at their meeting next month. The new poverty reduction and growth facility signals a new chapter in joint working between the bank and the fund. We want the IMF to remain involved in developing countries and working with the bank. Academic debate acknowledges that stable economic growth is a necessary precondition for development. The countries need a stable macro-economic framework as well as the others measures that we have discussed. Africa is estimated to need to achieve growth rates of 6 to 7 per cent. if it is to reach international development targets. Between 1990 and 1997, growth rates in Africa averaged no more than about 1 per cent. Considerable progress must be made in terms of the economic setting.
20WH A question was raised about the position of Guyana. Briefly, the objective remains to work for an enhanced HIPC decision point in September. We hope to be able to convert the interim poverty reduction strategy paper into a full paper. Work continues on several fronts and progress continues to be made.
A question was raised about EU money. As hon. Members know, the EU agreed more than 1 billion euro to go to HIPC from the European development fund underspends of last year. Of that sum, 680 million euro will go to the HIPC trust fund. The first tranche of the money will be delivered at the beginning of next month and will be vital for giving debt relief to the first countries coming through the process. The Government agree that underspends of European development fund resources can be used well by being put towards HIPC. That has been the thrust of much of our argument.
I will continue to assure hon. Members that progress on all fronts is important. It is obviously important that the subject is on the agenda at the Okinawa summit. I assure hon. Members that debt relief will be discussed in the context both of progress on the HIPC initiative and of the wider development agenda. The Prime Minister and the Chancellor have informed the Japanese presidency of the G8 that we would like to use the opportunity of the summit and of the meetings of G7 Finance Ministers running up to the summit to review and to encourage progress on debt relief initiatives.
We must remember that debt relief is only the first link in the chain that can help countries to establish a virtuous circle of debt relief, poverty reduction and economic development. We have touched on all those subjects this morning. There is still much to do. We want to see developing countries playing their full role in the world economy and to see aid targeted and used to its maximum effect. We want developing countries to play their part in the world trade system.
We have an ambitious agenda but we must achieve it. The Government will continue to press our international colleagues for action on the issue. As several hon. Members have said, we have reasons to be proud, but we are by no means complacent about the challenges that face us. I assure all those who have contributed to the valuable debate that progress is being made. I hope that they will understand that we are doing as much as we can to see that even greater progress is achieved in future.