HC Deb 03 February 1964 vol 688 cc828-918

Order for Second Reading read.

3.47 p.m.

The Chief Secretary to the Treasury and Paymaster-General (Mr. John Boyd-Carpenter)

I beg to move, That the Bill be now read a Second time.

The purpose of the Bill is to obtain the authority of Parliament for a further United Kingdom contribution to the International Development Association. The details of the proposals were contained in the Report of the Executive Directors of the Association which I laid before this House last December. The sum involved is 96.6 million dollars, or £34½ million, over the three-year period covered by the Association's second plan. Of this sum, 32.2 million dollars—£11½ million—will be payable, if the House approves, on 8th November, 1965, with equal sums on the same dates in 1966 and 1967.

But it is necessary to seek the approval of Parliament now in order that the commitment should be made in accordance with the procedure followed by the Association. Following discussions last autumn, it was agreed that the provisional pledges then given would become binding when 12 countries, contributing in all 600 million dollars, had formally notified their intention to contribute. We are anxious to be able to take this step as soon as possible and hope very much that, if the House approves the Bill with reasonable despatch, we shall be able to notify our formal acceptance of the commitment by early March.

The House fully discussed the International Development Association during the debates on the International Development Association Act, 1960, and therefore it is only necessary for me today to add a little by way of background in describing the progress which has been made since then by the Association. It was established in 1960 and was and is affiliated closely to the International Bank for Reconstruction and Development. It uses—and this is one of its great advantages—the Bank's expert staff in judging particular proposals for investment, but its terms of lending are, of course, very different from those of the Bank.

It was, indeed, established mainly because it was felt that there were a number of countries with very sound development projects which could not obtain a loan from the Bank because they had not sufficient available foreign exchange to be regarded as creditworthy for the purposes of the Bank. Its rôle has been well summed up in the phrase, "It can make soft loans for hard projects".

The terms are very easy. Credits so far given run for 50 years with a 10-year grace period for the repayment of capital. They are strictly interest-free, though the Association charges ¾ of 1 per cent. by way of a service charge to cover its expenses. But the projects themselves have to be shown to be economically and technically sound and that is where the great advantage is obtained of the unrivalled knowledge of the Bank's staff. The Association is supported by the major industrial nations outside the Communist bloc for the benefit of the under-developed countries.

In 1960, at the starting of the Association, 750 million dollars was made available, spread over a five-year period. The idea was that expenditure should be maintained at about 150 million dollars a year, but the I.D.A. has had the same experience as most other bodies and individuals who grant aid, that is that expenditure has been much slower to mount than have been commitments. It has spent so far 130 million dollars but it has committed, and hence the need for further commitments, about 600 million dollars of the original 750 million dollars.

The proposal in which we shall play our part, if the House accepts the Bill, is to provide a further 750 million dollars, but that that sum shall be spread over only a three-year period compared with the five-year period of the previous instalment. The annual rate of contribution, therefore, will be 250 million dollars a year, instead of 150 million dollars, that is, an increase of about 66⅔ per cent., and it is intended to accelerate expenditure even more rapidly. In view of the carry-over from the first, five-year period it is very much hoped that it will be possible to step up expenditure, using also uncommitted funds, to 300 million dollars a year for the first year or two.

As for our own contribution, which the Bill will authorise, under the original arrangements in 1960 the United Kingdom contribution was fixed at 17 per cent. of the total. That figure was based on the scale of contribution originated with the Bretton Woods institutions, the International Monetary Fund, and so on, but it is, in fact, disproportionately high in relation to comparable countries. Under the first arrangement in 1960, for example, against our contribution of 17 per cent. of the total, the contribution of France and Germany was 7 per cent. each. This time our contribution is somewhat more in proportion, at 13 per cent. of the total, and compares with 8 per cent. from France and 9½ per cent. from Western Germany.

As the Association develops one would like to see a further levelling-up of contributions more in accordance and in proportion to the level of resources, but on this occasion we have at any rate made some advance in that direction which I think the House will approve. It still remains that our contribution as a proportion of our gross national product is the highest of the major contributors. It amounts to 0.04 per cent. of the gross national product for us compared with .033 per cent. for France and .027 per cent. for Germany.

Although the United States contribution is in absolute terms the largest, that contribution as a proportion of the United States gross national product is about half ours. Our proportion of the total contribution, therefore, is smaller and more in line with the relative size of our economy compared with the major contributors but it is actually bigger on a yearly basis than that provided for in the 1960 Act. The annual rate of expenditure under these proposals will be £11½ million a year against £9 million a year, to which we were committed under the 1960 proposals.

The House may be interested also to know a little about how the Association's work has gone since its institution and in particular how the resources so far used or committed have been employed. Taking the figures up to 30th September last, when 550 million dollars had been committed, 70 per cent. went to Asia and the Middle East, 12 per cent. to Latin America. 6 per cent. to Africa, and the remainder to the Far East and to Europe, which I take it in the case of Europe substantially means Turkey.

The same figure, 70 per cent. of the total, can be traced also as having gone to Commonwealth countries, a matter of considerable interest to us. This is largely accounted for by the fact that India has taken far the largest proportion of the amount so far committed—54 per cent. in all. Pakistan has been the next largest recipient. Money has also been made available so far to Swaziland and Tanganyika and proposals are being negotiated for Basutoland, Bechuanaland, Kenya, Nigeria, and Uganda.

The hon. Member for Birmingham, Northfield (Mr. Chapman) was courteous enough to let my hon. Friend know that he would be interested, during the course of the debate, to know of the position in respect of applications by the Leeward and Windward Islands and British Honduras. I have made inquiries and I understand that no applications have been made in respect of the Leeward and Windward Islands. Applications were, however, put forward on behalf of British Honduras. There has been some discussion of them, including discussion in London last July between my hon. Friend the Minister of State, Board of Trade, who was then Economic Secretary, and one of the British Honduras Ministers. As far as I have been able to check the facts in the time—and I ask the House to allow me to insert that proviso—the matter was then left to British Honduras to put forward, but I am inquiring what happened in that case.

The House may be interested also in the nature of the projects to which the money is put. Roughly 30 per cent. has gone on roads and, for the rest, about 20 per cent. on other forms of transport, 20 per cent. on irrigation and the remaining 30 per cent., or a little less, is divided between electric power, communications, industry, water and education. I think that the House will be glad to know that the Bank and the International Development Association are at present reviewing the scope of the direction in which these moneys are used with a view to possible widening. It is our own view that, in the next period, it ought to be possible—it would certainly be desirable—to give rather more support for both agricultural and educational projects.

The International Development Association is, I am sure the House will agree, a very good example of international co-operation under which the international "haves" of the free world help the international "have-nots". It represents only a very small proportion of the aid which we and other countries give under bilateral arrangements. Although these are outside the scope of the Bill, perhaps I might remind the House that I laid a White Paper, Cmnd. 2147, in September last, setting out the detail in that connection.

The Bill, though it represents only a fairly small part of our total aid effort, is particularly valuable because, first, it is based on international co-operation and, second, it is based on highly expert advice and assessment of projects. It is, perhaps, an odd rôle for a Treasury Minister to be urging on the House a Measure involving additional expenditure, but I make no apology for so doing. This money, if Parliament authorises it, will be very well spent.

4.1 p.m.

Mrs. Barbara Castle (Blackburn)

The Chief Secretary to the Treasury has introduced this important Bill in an astonishingly perfunctory way, as though it were a purely financial formality. He has not examined with the thoroughness which the House expected of him the reasons why the Bill is necessary. They are much more far-reaching than he seemed to suggest.

We on this side, of course, support the Bill. We welcome it. We welcome the rôle which Britain is playing in the International Development Association. But—let us face it—the Bill is only a stop-gap Measure which certainly will not deal with the crisis in overseas aid which is now developing, a crisis which the right hon. Gentleman showed no sign of recognising.

Mr. Boyd-Carpenter

I directed myself, as, I imagine, is the right thing to do in a speech moving the Second Reading, to describing the provisions of the Bill. Whether or not wider issues are in order is for you, Mr. Speaker. I hope that I can best serve the House by describing the Bill which I commend to it. If further points arise, my hon. Friend the Economic Secretary is available to answer them, and he will, I am sure, deal with them with his usual courtesy. I hope that the hon. Lady will now get on with the argument.

Mrs. Castle

I am about to advance an argument, to which, I hope, the Economic Secretary will reply. On previous Bills, as, for instance, in the debate on the Commonwealth Development Bill not long ago, the House showed that it had some appreciation of the fact that it was committing public money for the purpose of securing effective overseas aid. On that occasion, the House took the opportunity presented to it to analyse whether the aid to which we were subscribing was achieving the intended purpose.

I do not hold it against the right hon. Gentleman that he did not go into overseas aid strategy. Why should he? He is Chief Secretary to the Treasury, and his job is to minimise the need for expenditure, not to encourage more of it. Nevertheless, I suggest to the House that the fact that he is introducing the Bill is one indication of what is wrong. I assure the right hon. Gentleman that I intend nothing personal in that. Why should the Chief Secretary to the Treasury be an expert on overseas aid? He read a perfectly adequate brief, as a representative of the Treasury, and it is obvious that he has many other preoccupations. But let us look at some of the names on the back of the Bill. Several Government Departments are involved. We see the names of the Chief Secretary to the Treasury, the Economic Secretary, the Foreign Secretary, the Secretary of State for Commonwealth Relations and for the Colonies, the Central Africa Office and the Secretary for Technical Co-operation.

The only Ministers who are here to discuss this important matter are two representatives of the Treasury, the right hon. Gentleman who introduced the Bill and the Economic Secretary who is to wind up the debate. Even the Secretary for Technical Co-operation is not here. The reason is significant. The Secretary for Technical Co-operation has no responsibility whatever for financial aid.

The consequence is that we have two spokesmen present who will not attempt to fit the Bill into the wider strategy, or deal with the crucial situation—I emphasise that it is crucial—which is arising in regard to overseas aid. We are discussing the Bill against the astonishing background that, despite all the money we have spent in the past and the additional money we are now being asked to spend, the gap between the richer and the poorer countries is growing wider and wider.

This is a matter of great relevance, but, of course, the trouble in this country is that we have no Minister responsible for overseas aid as a whole. This is why we have these piecemeal Measures. This is why we get no co-ordination. This is why we have the Bill presented to us this afternoon without any background against which we can judge whether, in voting the money, we shall be sending good money after bad or whether we ought, as an important donor country, to be giving a lead to the world in an overall review of overseas aid strategy.

Why has the Bill come before us at all? I suggest that the reason is that existing forms of aid have failed in their major purpose. What is that purpose? It is not to make charitable hand-outs from time to time in order to salve our consciences. The purpose of aid, as it has evolved and as it has now been accepted by the world generally, is very far from that; it is to secure the adequate economic development of the poorer countries.

The fact that we are failing to do this is revealed in the very documents which form the background to this Bill and on the findings in which the need for the Bill is based. The documents show that bilateral aid, which forms an overwhelming proportion of all the aid being given in the world—I think that only about 12 per cent. of both United Kingdom aid and world aid is given on a multilateral basis—is going to the recipient countries on onerous lending terms which have added to their difficulties.

Page 4 of the Report of the Executive Directors of I.D.A. says: The conventional debt burdens of a number of Part II countries are building up as a result both of commercial export credits and of the terms on which aid is being provided under bilateral and multilateral assistance programmes, thus increasing the needs of these countries for external financing on lenient terms". Command 2147, which was introduced last September, suggests that the tying of aid often means that the borrowing countries find it financially onerous and that they cannot even accept it in some circumstances. That is why our expenditure on aid actually fell in 1962–63. Command 2147 points out that it fell because for one reason or another overseas Governments were unable to take full advantage of the funds which we had placed at their disposal. What is the use of our voting more money without examining whether it will be in the form in which overseas Government will be able to take advantage of it?

The same document points out another disquieting factor. It says that there has been a tendency in recent years for the flow of private capital to the developing countries to level off or even to decline. We know—the right hon. Gentleman hinted at this—that the work of the World Bank has also been held up because the terms of its loans are too limited in purpose and too narrow for the receiving countries to be able to take advantage of them. The World Bank lends at rates of interest which are absolutely crippling the poor countries—5 per cent. to 6¼ per cent. to be repaid over 15 years. The result has been that World Bank loans in total declined in 1961–62.

The Bank referred to this in its last report, when it said: …a number of the Bank's borrowing countries are nearing the limit of the amounts they can afford to borrow on the Bank's terms of interest and repayment, although their ability to absorb external finance remains high". Of course it remains high. Their need is absolutely desperate, but they have no alternative and they have had to borrow at these onerous rates, whether under bilateral agreements, or multilateral arrangements through the World Bank. Their growing indebtedness means that an intolerable proportion of the aid which they get from us and of their export revenue has to be earmarked just to service the interest and repayment of loans already made.

That is one of the purposes for which we are voting this money today. The World Bank made a little calculation and estimated that in 1962 developing countries received a total of £3,200 million worth of aid, while in 1963 the cost to them of the interest and amortisation of the debt which they had incurred up to that date was more than £1,000 million, or one-third of the total aid and investment which they had received in the previous year.

This means that we have to go on pouring out future aid just to enable the poor countries to pay for past aid. This is exactly why I.D.A. was created. It is also one of the reasons why its commitments already exceed its resources. It is one of the reasons why the freely convertible currency supplies at its disposal will run out at the end of the year. That is the background to the Bill and why it is needed. Even with this additional money, I.D.A. resources will remain totally inadequate to begin to deal with this situation, because it will bring the grand total of its resources, including initial resources voted before, to about £525 million, compared with £1,000 million which was the burden of interest and debt repayment due by these countries in 1963.

The House should face what this means. All we are managing to do by the Bill is to finance failure. Yet this is supposed to be the Development Decade. Heaven knows, this country has not had an exactly spectacular achievement in growth in the past years of Conservative administration, but even we have managed to increase our national income by an average of 2 per cent., and we were comfortably off to start with. In most developing countries there has been no increase in national income at all despite large increases in aid. In fairness to the taxpayers who will be finding this additional money, we must ask ourselves what has gone wrong. Surely we are failing in our duty of financial supervision unless we examine this situation more closely and deeply than the right hon. Gentleman did.

What has gone wrong? What is wrong with the world's provision for aid? What is wrong with this country's provision of overseas aid? One of the obvious things going wrong is the fantastic population explosion which is always overtaking resources, a problem with which the developing countries will have to deal and with which we shall have to help them to deal. However, there are other factors which are more immediately within our control.

First, aid is being given in the wrong form and much of it is being wrongly used. We need a fundamental review of the methods of financing aid and of the work of the various bodies supplying it. There is a proliferation of agencies, bilateral and multilateral and voluntary, all manned by devoted people, all inspired by the highest motives and all doing excellent work within the limits of the present strategy. But they are pouring out aid which is wasteful because it is not co-ordinated.

We are very fond of preaching planning to the developing countries. We have given money to international agencies to lecture our backward brothers on the need for planning their development, but the donors are not practising it themselves. That is one of the things that is wrong. Every country is giving its dollops of help for motives which have nothing to do with the prime purpose of securing the economic development of the recipient countries of the world. They are giving help for reasons of national prestige, or for political motives to sustain certain régimes as against others, or for reasons of rivalry in the cold war, or for reasons of their own internal economic self-interest. Because the motives are wrong, the help bears no relationship to the results in terms of maximum economic development.

Even where aid is multilateral—and as I have pointed out, it is a small fraction of the aid provided—it is unco-ordinated, and in the Bill we are dealing with one of the multilateral agencies which is clearly filling a gap. The International Development Association was created because some of the other multilateral agencies were not meeting the need. It is certainly going along much better and more sensible lines than some of the other international agencies, but, here again, its work is not co-ordinated with that being done by the other agencies.

We have specialised agencies which are pursuing schemes without any relationship to the overall development needs. We have the World Bank lending on these impossibly onerous terms, and lending not for a plan but often for just a string of isolated projects which no more set a model of planning than the Government Front Bench do. We have had the I.D.A. tacked on to eke out these difficulties. We have the Special Fund doing excellent work with its surveys, but it is working, in a vacuum. It is spending its money on projects which are not followed up, and the money is, therefore, largely wasted. We have an expanded programme of technical assistance going on in its own sweet way, often overlapping the work of the specialised agencies which may be giving technical assistance in various forms. The result is confusion and waste at the receiving end.

I have recently been on two tours to Africa. Before Christmas I visited East Africa: Kenya, Uganda, and Addis Ababa. Since Christmas I have visited North Africa: Tunisia, Algeria and Morocco. Everywhere I went I discussed overseas and, the forms it was taking, how it was meeting the needs, and what those receiving felt about it. Everywhere I went I found disillusionment and irritation.

Mr. Ben Sallah, the Economic Minister of Tunisia, told me how much of his energies had to be consumed in endless time-wasting negotiations with different countries and different agencies. One planning officer in Africa said to me, "We are sick of all these peripatetic experts coming and telling us what we are to do. What we need is more people to help us to do it." Another planning officer complained about the effect of tied loans. He said, "It means that we have to buy goods from the United Kingdom at higher prices than we have to pay in East Africa", and he quoted as an example the purchase of metal windows.

In Uganda, I found a glorious example of the failure to co-ordinate forms of assistance from this country. I found that they had been granted a Commonwealth assistance loan which was tied to the purchase of goods from the United Kingdom. But because of the low import element in their development plan they did not need these goods as urgently as they needed money for local costs, for example, for wages and materials, to build hospitals, veterinary dispensaries, a fisheries training school, and so on. The result was that they had £7,000 in hand to spend on equipment under the Commonwealth Assistance Loan, but they first had to find £33,000 for the local costs of projects which they could not afford to finance. When they came to this country for an untied loan of £5 million towards local costs they were told, "You have to spend your tied loan first". They are, therefore, sitting on money which they cannot spend because it is tied and unrelated to the planning that they are doing.

I went to Makerere College and talked to many experts both in the college and attached to research projects under various foundations and the proliferation of agencies that exist. I was given examples of the misuse of technical assistance, again due to a lack of co-ordination. For instance, I was told that difficulties often arose from the fact that students sent overseas for training—for example, pharmacists in Greece, and doctors in India—returned with qualifications which were not recognised in Uganda, which has adopted British standards. Government Ministers told me that it was very difficult for the Government not to finance a student who is offered training in a foreign country, even though they know that his qualifications will not be recognised when he returns home. What a glorious misuse of public money, raised with great difficulty.

I was given another instance while I was at Makerere College. I was told that a certain diploma course at the Royal College of Nairobi involved the mastery of London building codes because the Royal College used to be under London University. What a total waste of time and money.

I was also told that the medicine school at Makerere could concentrate its five-year training programme for doctors into four years by cutting down the vacation periods, but that if it did that the doctors would not be accredited by the B.M.A. I suggest to the House that in such cases it is unfair to our people to talk merely about giving more aid without a thorough review by the House of the uses to which the existing aid is being put.

We recognise the need to provide more aid, but I do not think that we ought to vote it until we have had a fundamental rethinking both of the purposes of the aid and the way in which it is raised. These points are closely linked. We recognise that bilateral aid—some of it tied—will be essential for a long time. It will be necessary until international aid has been better co-ordinated and is better administered, and until we have a better system of international credit to relieve the pressure on our balance of payments. Why is not this country giving a lead to both those ends? It is far more important to do that than to come to the House and ask for another instalment of aid which may prove as ineffective as previous instalments we have paid.

I recognise that this country is contributing a considerable amount of aid. We have done quite a lot in that direction. But it would be far more effective if we were to press much more urgently than anyone in this Government not only has done, but is authorised to do, first, for international monetary reform, without which we dare not be more generous, because of the balance of payments aspect of the question, and, secondly, for the creation of a world development authority to carry out genuine multilateral planning in consultation with the receiving countries.

Again, I turn to Africa for an example of the urgency of the need for this co-ordinated plan. We all dilate about the difficulties—and, heaven knows, they are immense; the amount of aid already voted is like a drop in the bucket of need, when we face it—but much more could be done. Revolutionary changes could be carried through if proper planning had been worked out at the top, and if proper concepts of economic planning were to infuse the work of all those who contribute aid.

Mr. Dudley Williams (Exeter)

I am fascinated by the hon. Lady's discourse. She has pretty well convinced me that all aid to under-developed countries is a waste of money. But how does she suggest that we should form her authority, which is to run the whole of the economic aid to under-developed countries? Could she enlarge upon that point?

Mrs. Castle

Yes, I shall certainly do that. But, first, let me answer the hon. Member's suggestion that I am convincing him that all aid is useless. That is the last thing that I want to do. That would, indeed, be a defeatist doctrine. I do not feel defeatist about the possibilities; I am merely highly critical of the methods that are being adopted now. Let me give the hon. Member an example of what could be done with a proper development plan.

In Africa, 80–95 per cent. of the population live in villages. They depend on agriculture, fishing and forestry. The extreme backwardness of their agricultural methods is the main reason for their appalling poverty and disease. Nobody in this House dares to talk about aid being useless when in many parts of the African continent the rural income per head is £10 per year, and 50 per cent. of the children die before reaching the age of 5, due to protein deficiency.

Than is not an insoluble problem. Technologically, agriculture provides the most hopeful field of all, because it is there that the biggest break-through can be achieved with the lowest effort and expenditure. We are in the middle of a tremendous biological revolution in agriculture, which has pushed up output in developed countries, such as America and Germany, almost to a point of crisis. The developing countries themselves have already discovered what could be done. The normal agricultural production of cocoa in Ghana provides a yield per acre of about 200 lb., but on Ghana's experimental farms the yield has been pushed up to 1,800 lb., and in certain research institutions to 3,500 lb. per acre by the introduction of improved strains, plant protection through spraying, and the use of fertilisers.

This means that Africa is crying out for an agricultural revolution just as urgently as this country needs a scientific one, and we should be facing the possibilities of carrying out that agricultural revolution in Africa just as, at home, we must get down to finding methods of applying the scientific revolution.

Mr. Dudley Williams

rose—

Mrs. Castle

Not again—until I have answered the hon. Member's point.

Mr. Dudley Williams

The hon. Lady has not begun to.

Mrs. Castle

I am coming to it, in my own way and in my own time. I am trying to show the hon. Member that the answer is not to be defeatist, but to get the priorities right. I am making a speech about priorities. Priorities are the basis of planning. The hon. Member would be unable to grasp that, because he belongs to a party that has never understood planning and has never applied it properly in this country—so how can he hope to plan world aid?

If we are to achieve these results in Africa, what we need is to link the educational effort in Africa to rural needs—to the acceptance of better techniques in raising crops, in choosing food and in developing rural industries, such as food processing. The last thing that we should be doing is spending money from sources of international aid on an educational effort that encourages the African to turn his back on rural life.

What we should be doing is stimulating an educational effort, centred round rural life in the villages. It should be an effort in which the school is linked to the farm, and becomes the centre of a community development, which is badly needed in these villages and in which the teacher plays a central rôle, so that he can be equipped to do more than merely to spread literacy, or to encourage one or two "go-ahead" young Africans to climb to the top of the educational column, put on white collars, become administrators, earn fantastic salaries, get out of touch with their own people, and leave their villages to rot.

That is a recipe for forcing African Governments into economic crises which will openly invite Chinese intervention, because the only alternative will be a kind of totalitarian revolution on Chinese lines, which centres the effort on the villages but in a form much more dictatorial than we want to see adopted in Africa.

Yet U.N.E.S.C.O., a specialised agency working in a vacuum, has produced a plan for African education development almost completely on Western lines, bringing Western standards and concepts into this African context, with the result that the plan will be so costly that it will leave no margin for adequate economic development. The plan visualises a payment of teachers' salaries at a level which, related to the average income per head in Africa, would be equivalent to paying our teachers £4,000 or £5,000 a year. This programme visualises the provision of university places—again taking the same basis of comparison—at a cost of £50,000 a place compared with £1,500 in an English University.

This shows the urgent need to integrate the work of the specialised agencies into development planning as a whole. At the United Nations there simply does not exist any central agency for doing this—any more than in this country there is a Minister for co-ordinating all aspects of development and who, whenever we have to vote any aid, of whatever kind and however limited a nature, can see that the House is able to consider that aid in the context of overall development planning. Nothing less will serve to meet our responsibilities to our own people and the urgent situation of world poverty.

This world development authority must be created by the United Nations. It is obvious what its powers should be. It should have power to co-ordinate all development work which at present falls under various headings. It should co-ordinate the work of the Special Fund and be responsible for it; and be responsible for the work of the Department of Technical Co-operation and all the development work done by the specialised agencies in various fields. Its task should be to encourage donor countries, at present giving much of their aid bilaterally, in future to give it through the world development authority or, until that is done, at any rate to meet the world development authority and recipient countries and to work out an overall strategy so that even the plans of bilateral aid from individual countries can be fitted into a central world development pattern.

To be effective, this world development authority needs a source of revenue, which I will call a world income tax, calculated on the basis of ability to pay. We are all agreed that the amount of aid which we give ought to be increased; 1 per cent. is no longer adequate and 2 per cent. ought to be the goal. Other countries, rich and poor, ought to contribute—because there are some rich people in poor countries, and it is intolerable that they should make no contribution.

This world income tax would be calculated as a percentage of the national income per head after the deduction of a basic income allowance per head to allow for the fact that poor taxpayers exist even in donor countries. The principle would be that all nations should contribute and that by such a system we should allow for the fact that there are poorer taxpayers even in the richer countries. That is why we feel that there should be the deduction of a basic income allowance for this purpose, just as in our own internal taxation system we have such an allowance. We should try by this method to see that our own old-age pensioners, who are too poor to pay tax in their own country, do not finance poor countries out of their own poverty.

I suggest to the House that we must start acting as though there were a world government. We should start reinforcing world solidarity in this way. We should challenge every nation in the world to play its part. When such a world development authority was set up, if the Russians refused to take part they would show that in giving their aid they were not serving the needs of the recipient countries but were merely playing politics.

There are responsibilities, too, among the recipient countries. I do not think that we are doing enough to ensure that the receiving countries fulfil their responsibilities. Aid should, therefore, be made conditional on the receiving countries working out socially just and economically sound development plans. Aid would not go to finance wasteful social expenditure in poor countries or prestige projects which have nothing to do with the purpose of the Development Decade, which is to launch these receiving countries on proper economic planning.

I found in Africa many examples of the need for receiving countries to be made to accept planning in a more effective way for the purposes of receiving aid. For example, I was astonished in Tunisia to discover that that country, with a population of 4 million, is planning to build its own steel plant, with overseas financial help. That is a country not even the size of the London County Council. The next-door country, Algeria, is already running the Acilar steel rolling mill, which it took over when the French abandoned it.

This is at a time when the experts of the Economic Commission for Africa have been working out regional development plans showing that to be economic a steel plant should serve a population of at least 50 million people. They have been evolving patterns of sub-regional development which would enable major industrial projects, such as in the steel or chemical industries, to be developed on a sound economic basis instead of on this absurd basis of narrow and uneconomic national prestige. A world development authority would be able to exercise this kind of discipline over the receiving countries in a way in which individual countries, giving bilateral aid, cannot do without being accused of neo-colonialism.

I tell the House that, while we accept the Bill, we do so under protest that Britain is not giving a lead in the direction of selling our overseas development policies—and it is not doing it because it cannot do so until we have put our own house in order first. We cannot talk about the need to co-ordinate other agencies until we have co-ordinated our own agencies for distributing aid.

Look at the situation which the Bill reveals. We have no fewer than Seven Departments with a finger in the pie, six of them with other responsibilities—the Treasury, the Board of Trade, the Colonial Office, the Commonwealth Relations Office, the Central Africa Office, the Foreign Office and the Department of Technical Co-operation, to say nothing of those Departments which have also a general oversight over the relationship with the work of the specialised agencies, such as the Ministry of Agriculture, which deals with the F.A.O. and with international commodity agreements in food, and the Ministry of Education, which deals with U.N.E.S.C.O.—and so we could go on. Our country is playing an important rôle in overseas aid.

To begin with, therefore, it would help to get the world development authority launched if we had a Ministry of Overseas Development in this country, with the same co-ordinating function as a Ministry of Planning and with Cabinet rank to show the importance which we in Britain attach to the challenge of the Development Decade. The job of this Ministry would be to come to the House with a co-ordinated strategy. It would also have the task of educating our own people in the vital rôle which overseas aid plays in the life of the world, in the struggle for peace, in the development of new markets and in our fight for full employment. Nothing effective is being done to educate our people in this vital matter. This country is full of warmhearted people. They have shown this by their response to various voluntary bodies—Oxfam, Voluntary Service Overseas, and others. I believe that they would respond to this challenge if it was put to them.

But I warn the House that when stories leak out in the Press of the wasteful use of overseas financial aid there is a reaction in this country. People resent it. They say, "Charity begins at home". We must prove to them that this country's representatives are doing battle against the waste of expenditure. We must also prove to them that overseas aid is no longer a form of charity: it has become a vital factor in our survival and in the world's survival.

We in this country are particularly well equipped to play a major rôle in the councils of the world in bringing about this exciting new change in attitude and in machinery. There is only one way in which we can hold our own against the richer Powers, and that is by being better organised. We should be better organised in this respect as well as in our own internal economic planning. The wind of change is not blowing only politically. It is blowing economically, too, and it is for this potentially influential country to give the lead.

4.51 p.m.

Mr. Charles Longbottom (York)

I am very pleased indeed to follow the hon. Lady the Member for Blackburn (Mrs. Castle). I share with her a great interest in the problems of overseas aid and assistance. I have visited many of the countries which I know she has visited. I expect that I have spoken to many of the people with whom she has spoken about aid from the point of view of the receiving country.

The hon. Lady made a very thoughtful speech and I agree with a great number of the suggestions she made. I was, however, a little shattered by the idea of world income tax. I should have thought that we already have enough Income Tax. I always wonder whether it would work. In view of the number of nations which do not even pay their contributions to the United Nations, I wonder to what extent they would be willing to pay world income tax.

Nevertheless, I share this great interest with the hon. Lady. I also admire the aim and purpose of the International Development Association. In sheer practical terms this is the way in which industrial countries can best help developing countries in their capital needs. Most developing countries—I cannot think of an exception—qualify for the aims of the International Development Association. I do not believe that there is one developing country which can afford development finance on conventional or commercial terms. The terms put forward by the I.D.A. are extremely fine. They are, as my right hon. Friend said, a 50-year period, with a 10-year grace period, with no interest charge, and with a service charge of only 0.75 per cent.

Like the hon. Lady, I have spoken to many people in receiving countries who know exactly the type of aid which will best help them to overcome their problems. In practically every case I have come across they have stressed the need for long-term loans without a crippling interest rate. I was also delighted to hear my right hon. Friend say that some of this I.D.A. money will perhaps be given over to capital projects in agriculture. As the hon. Lady said, in every African country there is the basic need to build up an agricultural economy. Virtually every African country is short of the money with which to do so. There is a need for large capital projects in all developing countries. This need will not diminish in the coming years. It will, if anything, increase. Yet already the debt burden on normal commercial loans is far too high for many of these countries.

I take India as an example. In her third five-year plan it is estimated that, of a total of £2,400 million official aid and private investment which is expected during the planned period, about £340 million, or 14 per cent., will be needed for loan repayments falling due within the period. This figure does not even include any payment of interest. This shows the grave problem with which developing countries are faced when taking loans in future. I go further and suggest that, unless the industrialised countries—here I applaud the International Development Association—think now of tackling the problem, the whole thing will become a vicious circle in which we shall have to generate aid to these countries so that they can fulfil their repayments without even taking interest into account.

Apart from the International Development Association loans, I wonder whether my right hon. Friend has carefully considered the need, fulfilled by many industrialised countries, for giving such long-term no interest or low interest loans bilaterally. One can envisage many large capital projects—electric power stations, oil refineries, roads and other communications—which are very much within the capacity and competitiveness of British industry. However, British industry alone, taking it as a single unit, can offer these countries credit terms only on normal commercial standards.

I suggest that the need of the developing countries and British industry goes together in this way. British industry should ask the Government to consider the granting of long-term low interest loans for capital projects to be built by British industries in developing countries. Other industrial countries do this. For instance, I believe that recently the United States Government have helped Westinghouse to produce a loan similar to an I.D.A. loan so as to build an electric power station in Egypt. I hope that the Treasury will examine my suggestion.

We all know what the first answer to the Treasury will be, namely, that there is a thing called the Berne Agreement, which stipulates such conditions as the period and the amount of interest under which such loans can be made. As in these days practically every other signatory to the Berne Agreement does not fulfil the terms of the agreement, I do not see why it is completely necessary for us to stand by them. Further, there could be a specific exception to the agreement where the developing country qualifies because it is unable to accept finance on normal conventional terms.

I agree very much with the hon. Lady that this country has not examined our aid techniques far enough. The period of colonial responsibility, which has been a major preoccupation of Members on both sides of the House, and of Governments in particular, over the last two decades, is now, with some large exceptions, drawing to a close. However, our responsibility as a country in aid and technical assistance to help these countries to make their independence worth while and to become economically independent of outside forces still continues to as great an extent as it was ever needed in the days of our colonial responsibility.

I do not believe that as a country we have examined the whole of our aid assistance programme as we should have done. Have we considered whether the aid we give is really effective? Have we noted, for instance, that the needs of these countries for long-term loans, such as we are now discussing, and for finding markets for their goods outside their territories, are equally as great as the need for any aid which we may be able to give them? How far, for instance, have we examined our attitude towards international agreement? It may not necessarily be on our side, because we are consumers, but there is certainly just as great a need to stabilise the economy of many of the developing countries as there is for aid to them.

I agree again with the hon. Lady the Member for Blackburn in asking how far we can possibly go towards examining these problems when we have a Foreign Office, a Commonwealth Relations Office, a Colonial Office, a Central Africa Office, a Treasury, a Board of Trade and a Department for Technical Co-operation, to go through the whole picture again, to look at these problems. How can we co-ordinate this aid programme?

Let us look at the position of the Secretary for Technical Co-operation. I feel very sorry for him when he travels abroad, because I am sure that when he arrives in a country the first thing for which the people there asked him is aid, because without the aid and the money that is generated by an aid programme there can be no need for technical assistance. Therefore, they wish to discuss this matter first. But, of course, aid does not come within this Minister's Department. He can only discuss technical assistance.

We need to co-ordinate all this effort in a Ministry of Aid and Development and see that all the sinews of British aid are brought together. I suggest to my right hon. Friend that we need to co-ordinate the very substantial effort which this country makes for two reasons. We want, first, to see that our aid is well spent, that we are making the maximum use of our resources in the countries to which this aid is going. Secondly, we also want to win public opinion on to our side. How many of the general public realise that the aid programme of this country is twice as big as that of all the Communist countries today in any one year and recognise that our aid programme is a substantial one? Equally, how many people realise the desperate needs of Asia, Africa and Latin America for assistance in a concrete form from the developed countries? How many people know the extent of the poverty and of disease in these countries? How many are aware of the abysmal, unhappy circumstances of the ignorance of mind in which so many have to live?

We have seen in this country the enormous efforts which have been made by individuals in their support for such things as the World Refugee Year and the Freedom from Hunger Campaign, at Oxford. There is a great deal of good will and a preparedness to do a lot of work in connection with these problems. What we need is to create a Ministry of Aid and Development and to win public opinion over to the idea of spending much larger sums on these matters. In supporting the Bill, I urge the Government to examine much more closely their aid and development programme and to co-ordinate it within the ambit of one Ministry.

5.4 p.m.

Mr. Donald Chapman (Birmingham, Northfield)

I welcome what the hon. Member for York (Mr. Longbottom) has just been staying, but I think that the House is a little tired of this sort of repentance on the part of hon. Members opposite.

The whole of the arguments that the hon. Gentleman has been deploying today were made from this side of the House in extenso when the Department for Technical Co-operation Bill was debated in the House. We moved Amendments to the Bill seeking to give the Department the powers to do the job which the hon. Gentleman wants it to do. They were all voted down by the hon. Gentleman and his hon. Friends. It is all too late to come along like this and espouse great causes as if they were something new. All these things have been said from this side of the House until we are tired of saying them. It is too late for hon. Members opposite to claim the credit for making these suggestions today.

Nevertheless, having said that in criticism—I hope fair criticism—of the hon. Gentleman, I welcome the idealism with which he spoke. I must say, too, that I welcome the lead given by my hon. Friend the Member for Blackburn (Mrs. Castle) in broadening this debate, in lifting it from the mere £ s. d. of a Treasury Bill to the problems of development generally in the world. In fact, we shall be in very great trouble in the coming years unless we get these problems right.

I do not want to go so far as did my hon. Friend the Member for Blackburn. I confess that I personally would not go so far as she did in talking about a world development authority. I think that most of the work that needs doing can be tackled by one of the agencies that already exist in the United Nations and elsewhere. What we need is to co-ordinate effort and to fill in the gaps rather than to create one new supra-agency above all others. Nevertheless, I am sure that my hon. Friend was on the right lines in saying that this work has grown up slowly and hesitantly and that it is now time to put the whole thing into a co-ordinated picture.

When I was thinking about this debate last week there were two rather interesting incidents which made me think even more about it. The first was in the middle, or perhaps at the beginning, of the week when we saw on television some of the first pictures to come out of Kenya and Tanganyika following the recent disturbances there. Although they did not seem quite related to the disturbances, one of the series of pictures on television was of men storming the Ministry of Labour in Kenya. The commentator said that in Kenya they had adopted, as we all know, the slogan "Uhuru"—freedom. What had happened in the immediate weeks of freedom was that the Africans had thought that freedom meant not only political freedom, but the absolute right to a job and a livelihood now.

This was the cause of great disturbance when the men streamed into—practically broke into—the Ministry of Labour demanding work. They simply shouted "Uhuru", thinking that this was enough to secure their millenium. Surely this must be in our minds as the background to this debate.

The second thing that happened to me was at the weekend in my constituency. I have an extremely intelligent constituency in the sense that it takes a good deal of interest in wider world subjects. It is a well known intelligent area of the Midlands. In the area there is a great concentration on things like the Freedom from Hunger Campaign—Oxfam—and there I can talk with many about these great idealistic objectives. I was talking to people in my constituency about these things, and most of them had no idea about I.D.A. They did not know that it existed. They did not know the extent of the British Government's contribution to these sort of bodies. They had no idea of the order of magnitude of British aid and no idea of what official machinery existed in this country to do anything about it.

I must say that these two incidents are a valuable background to the debate today, and I will come to them one by one. In the first place, let me emphasise what my hon. Friend said about the situation in this country. It really is deplorable that we should have a right hon. Gentleman from the Treasury to move a Bill of this kind. It is quite ridiculous in the sense that I challenge the right hon. Gentleman to tell me that in the Treasury today, with him as its spokesman, there is any section which is co-ordinating any set of officials—that there is any real brain-box, so to speak, which is co-ordinating what is happening to British aid overseas.

We know that such a co-ordinating Department does not exist. The Chief Secretary is put up to begin this debate because it is a money Bill and, after all, no one is supposed to be more immediately involved. Thus we have the absolutely ridiculous situation where we are voting money without having a Department consistently examining how it is spent. There is no co-ordination about the projects in mind, even in those parts of the world in which we still have some interest as the mother country. The Government are putting forward a Bill without having any idea of the great setting of our programme for overseas aid generally.

We are desperately in need of a Department of Overseas Development. In this connection, the Development Advisory Committee of O.E.C.D.—our partners in giving aid—has issued a report critical of the British Government in this matter. The Committee has said openly that the British system of evaluating projects and dispensing aid, even bilateral aid, towards helping other nations, particularly in the Commonwealth, is inadequate. That Committee has made the case for Britain to have a Ministry to do a proper job in this respect.

The problems of the developing countries are now extremely complex and the situation has changed radically in the last six years. Six years ago we were giving most of our aid to our colonial possessions. That was a mere case of being absolutely responsible for doling out money to countries for which we were responsible. About £150 million of our aid each year is now going to the independent countries. We therefore desperately need a Department which knows something about development planning, modern techniques, evaluating new systems of planning in the various countries applying for aid, able to help them formulate good projects, and, thereafter, to put them on the right road to proper economic development. In short, we need a Government Department which has experts working at home and overseas ensuring that we know where the money should be spent, that the projects on which it is spent are good, and that countries are being helped to formulate new projects on the basis of the previous ones which we have helped finance.

As my hon. Friend the Member for Blackburn said, we will be doling out money for years to come without having proper machinery for seeing that it is well spent. Even in Parliament today we cannot have a proper discussion—until my hon. Friend forced one today—on the respective merits of bilateral and multilateral aid. This is one of the crying needs. We must make up our minds on how and where the £150 million should be spent. Is it still to be bilateral, with only £10 million being spent on multilateral aid? I believe that it should be the other way round; but we have no means of discussing it because it is not a single Ministry's responsibility. There is, therefore, no real opportunity for hon. Members to challenge the decisions which are being made. The whole thing has grown into a complete muddle, and the attitude of the Government towards the matter is absolutely deplorable. A completely new attitude is needed.

I have previously given the Chief Secretary notice of one or two questions I intended to put to him. Why have the British Government made no application and done nothing actively to get the I.D.A. to help parts of the West Indies? These areas fit the requirements of I.D.A.—that countries should be so relatively badly off that they have difficulty in servicing loans, in paying annual interest charges and so on. This criterion applies above all to British Honduras, a small territory whose population is too small to finance the sort of development needs of a major country.

So small is the population of British Honduras that the country is unable to service the annual costs of a proper airfield. It is too poor to have much road development, to pay for a sewerage system in its capital—remembering that Belize, the capital of British Honduras, has a sewerage system which the Downie Report described as an "affront to humanity and a danger to public health". It is too poor to finance the £4 to £5 million needed to do any of these projects properly. Despite this, each one of these projects is of the type that I.D.A. has been financing in many other countries. I.D.A. has been concentrating mainly on roads, water supplies, schools, and so on. The requirements of British Honduras absolutely fit in with I.D.A.'s pattern.

There is an even bigger idealistic solution envisaged in the Downie Report on British Honduras. The idea is that British Honduras needs an inflow of population of about 7,000 a year—a number which other parts of the West Indies would be glad to export. British Honduras needs this inflow if it is to be able to become a viable economic unit with a population of about 300,000. What could be better for I.D.A. than to work on the idea of steering these people on to the land, with the agricultural capital that is needed—remembering that the land is plentiful there and that the capacity of the country to absorb additional population is undoubted? I gather, nevertheless—and I accept that I gave notice to the right hon. Gentleman only last Thursday that I would raise this subject—that all he has been able to tell me today is, in effect, "We talked about this in London a year ago when it was left for someone to see someone else". What a way to run a British Commonwealth. Here we have a country desperately in need of the help of this international agency and where we are still waiting for one member of the British Government to talk to someone else. This is deplorable. It is an example of the way we need the services of a Minister of Overseas Development to tackle this sort of problem.

Another example of the way in which I.D.A. help could be given—and I also gave the right hon. Gentleman notice that I would raise this matter—is the Leeward and Windward Islands. One of them, Montserrat, is a small island of terrible poverty. It has an average national income per head of the population of about £50 a year. I appreciate that it is somewhat better than Africa: I am not claiming to be the first in the queue. However, I am at least in the queue on behalf of the West Indies. This average income of £50 a year compares with our £500. This island is desperately in need of help because many of its inhabitants are living in abject poverty.

The fiscal commissioner whom we sent out to look at the Caribbean not long ago, Mrs. Hicks, the Oxford economist, and others like her, have reported that Montserrat is one of the poorest of our colonial possessions in the area. They have reported that the island could have a bigger banana production. Banana production could be on a scale great enough to make it worth while for a banana boat to call—thus saving the cost of transporting the bananas first to neighbouring Dominica—but only if the country is opened up with roads, electricity and water supplies, every one of which has been the sort of thing that I.D.A. has been concentrating on in other countries.

Mr. Boyd-Carpenter

In fairness to I.D.A., in the course of my speech I pointed out that there was no trace of any application in respect of these two islands. On the general point I think that the hon. Gentleman is giving I.D.A., from our angle, a little less than the credit to which it is entitled when one recalls that 70 per cent. of the commitments so far incurred by that body have been in countries of the British Commonwealth.

Mr. Chapman

The right hon. Gentleman is mistaken. I am not attacking I.D.A. I am attacking the British Government for not having made an application. How could I possibly be attacking I.D.A. when the British Government have made no application in respect of Montserrat? It is our duty as the mother country to formulate projects and put them up to I.D.A., and yet the right hon. Gentleman tells us that no such project has been put forward.

Mr. Boyd-Carpenter

It is not the case that it is for this country to put forward to I.D.A. applications in respect of projects in any part of the Commonwealth. These projects are put forward on their individual merit by the promoters of them; no doubt in this case by the local Governments. It would be a complete misuse of this very distinguished international body, on which we are represented by an executive director, if we were to handle them in this way. These projects are put forward by the promoters of each product on its merits.

Mr. G. M. Thomson (Dundee, East)

rose—

Mr. Deputy-Speaker (Sir William Anstruther-Gray)

Order. I am afraid that would be an interruption of an interruption.

Mr. Chapman

I would say to the Minister that he is totally misinformed on this matter. We have a British representative in I.D.A.'s Board and accredited British officials whose job it is to keep track of the work of I.D.A. We have Mr. Pitblado, who is the British representative. I am saying that in Montserrat, with its tiny resources and with only a portion of internal self-government, it is impossible to envisage that this tiny island could put forward a complete project to a body like the I.D.A. It needs the help of the British Government in formulating it, and as our overall responsibility remains for that island it is our job to present that project to the I.D.A.

Mr. G. M. Thomson

I merely wanted to support my hon. Friend and to point out to the Chief Secretary the point which he seems to be unaware of—that the territories which my hon. Friend is mentioning are Colonial Territories. The Secretary of State for the Colonies is the one person who could have made application to I.D.A. for a grant.

Mr. Boyd-Carpenter

That is entirely contrary to all procedure.

Mr. Chapman

If the right hon. Gentleman says that it is contrary to all procedure, what he is doing is in fact writing off whole parts of the British colonial empire because they are too small and too badly organised ever to put up projects on this scale. The Government are not doing their job as they ought to be doing it on their behalf.

Mr. Boyd-Carpenter

The procedure is that the projects should be examined, assessed and put together by the staff—as I explained in my earlier speech—of the International Bank, which is particularly skilled in these matters and qualified to do just the jobs which I quite agree with the hon. Gentleman are probably beyond the technical resources of small societies to do. It exists for that purpose. To try to turn the I.D.A. into a body in which this country acts as a sort of pressure group from outside would defeat its whole purpose.

Mr. Chapman

No one has said that we want this country to become a pressure group. We do not want it to press in the case of Tanganyika or other independent countries, but I regard it as a sacred duty to put forward the projects of our own colonial possessions to the I.D.A. This is quite intolerable. If our approaches to I.D.A. on behalf of our colonial possessions are nil we know exactly why no money is coming to us from I.D.A I am not attacking I.D.A. in the least I am attacking the British Government for not putting forward these ideas on behalf of our own possessions for which we have complete financial responsibility to this House.

I say in conclusion on these areas that Montserrat has a desperate need for electricity, water supplies and improvement of roads. Every one of these is the sort of thing for which I.D.A. has been giving money to other countries. I could make a similar case in respect of Dominica where again money is needed for communications particularly and highway development, the sort of project where I.D.A. has been pre-eminent in its work so far.

Despite what the right hon. Gentleman has said, I feel that the possibilities here are better than we have been led to believe from this lack of energy on behalf of this country before I.D.A. We now know that the World Bank has become worried about the failure of projects to come forward in sufficient number. We had a statement made only on 18th December last by Mr. George Woods, the President of the World Bank, saying: We are, becoming more and more concerned, however, that progress in both the formulation and execution of overall development programmes will be impeded by this lack of sufficient well-designed projects necessary to make these programmes a concrete reality. We have been trying to help this shortage by organising and bearing part of the cost of studies of studies of promising projects or of measures needed for the development of specific sections of the economy. We have now authorised eighteen of these projects and such studies. … He goes on to say that the Bank will—and this, of course, applies to I.D.A. which is an affiliate—increasingly help to bring forward the projects itself. I regard this as one of the best possible developments in the work of I.D.A. It means that it, too, like many hon. Members on this side of the House, is becoming worried that proper plans for the parts of the world needing development are not coming forward fast enough. All good luck to it; all the more power to its elbow in setting about the job itself, in provoking the projects and outlining them and getting them ready, where countries are not doing them fast enough to make their development plans into a reality.

It is a qualified welcome that we give to this Bill. It is qualified because we do not believe that the Bill has been discussed in its proper setting of overall British aid and because we are doubtful whether the British Government are organising themselves and working hard enough in these matters to gain as much money as possible for our own parts of the world and to urge the world on to being even more generous in these projects generally.

5.28 p.m.

Mr. Frederic Harris (Croydon, North-West)

I returned from Kenya and Tanganyika only one and a half weeks ago, and what has struck me today is that so far the point has not been made that, apart from the financial aid that must go all the time in increasing quantities to these overseas ountries—especially, to speak of my own case, to the East African territories—they also want all the technical assistance we can send them.

I should not like to be quoted too freely on this, but I believe that in Tanganyika, even at this very difficult time, quite a lot of finance is available but the technical people are not there to carry the plans forward. That is a very serious matter, and I appeal to my right hon. Friend the Chief Secretary to take it very fully into account in any Government approach. These developing overseas territories need every bit of technical aid they can get from people sent out to them.

The unemployment situation in Kenya is very serious, and we need to give all the assistance we can—and I appreciate that this Bill seeks to do so—to help the Government there to overcome what is their prime problem. Reference has been made to the demonstration made by the unemployed in Kenya. I was present when is occurred and fortunately, in some respects it did not appear to me as serious as had been made out. In typical African fashion, there was some very good humour present as well, and I did not get any idea of physical violence. That is not to understate what lay behind the trouble. I know that the Prime Minister and the other Ministers out there are very anxious to do all they can to tackle this problem.

Unfortunately, very legitimate trade union pressure has resulted in an increase in some forms of unemployment in Kenya because, as some workers are getting more money, their employers are having to try, by getting more and more efficiency from their employees and, in some respects, replacing manpower by machinery, to keep their wage bill in some kind of balance. This is a major problem in certain farming districts.

There is a very strong move afoot, and I think that it will come to something, to get a general understanding between the Kenya Government, the responsible trade union leaders—many of whom are very responsible—and the employers, to tackle the problem. I understand that they are trying to work on a kind of standstill for the time being, with the trade unions, who have made a good move forward for their workers, stopping putting on the pressure for a little while so as to give everyone a chance, with the Government responding by getting under way such work as they can, and for employers to increase their labour force by some 10 per cent.—mainly unskilled labour—on capital projects they had not intended to start for a year or two. An obvious project is development of communications. Many companies have their own railways which need to be reconstructed or otherwise put right.

If an arrangement like this can be made, such work can be started very quickly. This represents a great step forward, and I suggest to the Chief Secretary that the present seems to be a very appropriate time to help. I believe that in the near future there will be a real development in tackling unemployment in Kenya in a most dramatic way. This is the time when our Government should try their utmost, as I know they will, to step up their help to Kenya, and in that way, perhaps, avoid many other problems that will otherwise arise.

Communications, and roadways in general, are a problem in Kenya. Many hon. Members must have travelled the road from Nairobi to Mombasa, and will know what appalling conditions can arise, particularly in bad weather. Quick and energetic work on some of the roadways would not only provide a tremendous amount of additional employment but would, in the long run, assist very materially in the efficient running of industry in Kenya, and in East Africa generally.

I therefore appeal to my right hon. Friend on these two main points. I want the Government to remember that although financial assistance is vitally necessary to these countries, they also want as much technical assistance as possible from people going there to carry out the work and assist in spending the money on sound projects. Germany, for instance, does not give aid to these undeveloped, or developing countries—whichever way we may put it—without putting a lot of tags on the money, and sending experts to assist in spending it in a practical way. That is sheer common sense. Secondly, now is the time, when this move it afoot, particularly in Kenya, by firms, business houses, responsible trade union leaders and the Kenya Government, to step up our financial aid to its very maximum so as to assist in major projects. This will help the Kenya Government to tackle the very serious unemployment problem which faces them.

5.36 p.m.

Mr. Dick Taverne (Lincoln)

I hope that the hon. Member for Croydon, North-West (Mr. F. Harris) will not mind if I do not follow him in his argument. I was very interested in his remarks, but although direct aid to Kenya is very important, it is a little distance from the I.D.A.

My first point relates to the need for full discussion, debate, and most careful analysis. Here, I support what has been said by my hon. Friend the Member for Birmingham, Northfield (Mr. Chapman). We are now considering one of the really big things in world affairs, and this Bill is particularly concerned with the I.D.A., which is, potentially, one of the most important agencies in dealing with the problem facing us. Yet this question is very seldom publicly discussed. It is often treated as if it were only a question of how much money we are giving; we pride ourselves on the amount of aid we give, or criticise ourselves for not giving enough. This is an extremely complex, difficult and even controversial question.

First of all, how do we give the aid? A great deal has already been said about the relative merits of bilateral and multilateral aid. I think that we must all agree that, ideally, multilateral aid is the best form of help, but as it involves certain balance-of-payments difficulties we can with certain advantage explore certain forms of bilateral aid that do not give rise to the balance-of-payments problem and which, therefore, could make a material contribution, because the total amount matters, and not only the form in which it is given.

We seldom discuss the very difficult question of rivalry between various U.N. special agencies, the way in which different "empires" are built up, with each agency hanging on to its own interest and its particular share of total world aid, and with some of them sometimes refusing to read the reports of others in order to learn from the others' mistakes. We never discuss how the total amount of world aid should be shared between different countries. Should we concentrate the aid on those countries that are already considerably advanced and have reached the "take-off point," as it is sometimes called, or should we treat the total sum as essentially something to be given in equal shares? Is it a question of aid being shared evenly throughout the world and of all countries which need developing being assisted, or should we select specially those counties which can make the best use of aid?

Should we ourselves concentrate on the Commonwealth, or is there a danger that if we do that the United States will concentrate on Latin America and the Commonwealth might be worse off? How should we co-operate with other countries in giving aid? Are we satisfied with the present arrangements under the Development Assistance Committee of the O.E C.D.? Are not there proposals which we can put forward to the European Development Fund for co-operation and for preventing discrimination in aid as well as trade in Africa?

These are tremendously important problems which we never discuss. It is a failing in our democracy that opportunities do not arise for the House to discuss them. While the main speeches in the debates were being made, I think that there were three Members on the back benches opposite. There were more on the back benches on this side, but not many. There was not one Liberal Member here. These are problems which this House should be discussing. To a large extent, this is the fault of the Government because, as has been pointed out by my hon. Friends, the responsibility is completely divided. Since the Government have split the responsibility between so many Government Departments, it is regrettable that one Department which is not represented here is the Foreign Office. The part which aid plays in world problems as a whole is not a minor one.

My second point is to try to put the rôle which is played by the I.D.A. in some sort of perspective. We are congratulating ourselves that the amount which is now to be raised by the I.D.A., to which we make a valuable and substantial contribution, is to be increased by 66 per cent. Let us consider the part played by this Association. It started as an offshoot of the World Bank when it was realised that the assistance opportunities which the World Bank could give at commercial terms for its loans were extremely limited. The World Bank is approaching the point at which its net contribution will soon be nil. With the capital and interest being repaid, it will soon be receiving as much as it is handing out.

In setting up this new agency, the United Nations took the wrong view. It thought that most of the problems of the world could be dealt with in ordinary banking terms, with ordinary commercial terms for the loans, and that the remaining problems could be dealt with by another organisation which would give easier terms. The result is that the I.D.A. was set up as a body much smaller than the World Bank.

However, two facts must be remembered. First, if "soft" loans are to be given, far more capital is needed than in the case of "hard" loans. In the first place, repayment will take much longer and therefore less capital is being returned, and, secondly, the interest received is much less. Therefore, the money available is much less and more capital is needed proportionately.

Secondly, if one looks at the original size of the I.D.A.—and admittedly it is now expanding—the amount which it would be able to invest in the first five years was less than half the annual amount lent by the World Bank. I think that it was Andrew Shonfield who pointed out, on the creation of the I.D.A., that when we needed a giant we got a dwarf. We are boasting and congratulating ourselves that the dwarf has grown a few inches and that the amount of aid is not 150 million dollars but 250 million dollars a year.

It is to be applauded that the amount has increased by a considerable proportion, but in welcoming the Bill let us remember the background against which it must be considered. Let us remember that this is an organisation doing the sort of work which ought to be done on an infinitely larger scale. We are making a greater contribution, but it is still very inadequate. As my hon. Friend the Member for Blackburn (Mrs. Castle) pointed out, in viewing the matter against what we are trying to do in the world as a whole, we are failing in our job because we are failing to raise the standard of living of the underdeveloped countries. With the growth of population, their standard of living is rising by 1 per cent. a year. In those circumstances, we cannot really say that this great problem of the underdeveloped and developing nations is anywhere near solution.

5.45 p.m.

Sir Stephen McAdden (Southend, East)

It is a difficult world in which we live. I thought that this was a non-controversial Bill. I came to the House today under that impression only to find hon. Members engaged in a debate which seemed to range much further than the matters dealt with in the Bill. I am sure that all hon. Members heartily support the Measure, and I wish to seize the opportunity to range a bit wider than its narrow terms.

It may be argued that the sums of money mentioned in the Bill, although large, are not as large as we should like. In that we are in compliance with the view of the Executive Directors of the International Development Association. However, we are meeting our obligations and doing what they ask us to do, and that is a matter for congratulation. Hon. Members on both sides are always anxious that a great deal of money should be spent on various projects, all of them very praiseworthy. But it is not their own money. If it were, they might be a little more guarded about how they contributed and where it should go. It is the easiest thing in the world to vote money if somebody else has to find it.

I do not think it surprising that a Treasury Minister should introduce a Bill the purpose of which is to provide sums of money. That is the Treasury's job. It does not appear to me to be part of the Treasury's job to evaluate the various schemes which go before the I.D.A. I should have thought that that was the responsibility of the Association. I am sure that in their hearts hon. Members opposite realise that and that they are using this debate as an excuse to argue the larger question of general aid.

Mr. Chapman

Is it not the job of all of us, including Treasury Ministers, to ensure that the British contribution is being well spent?

Sir S. McAdden

I should have thought that, seeing we are members of the International Development Association, we would have believed that it was sufficiently circumspect in spending the sums which this country and other countries voted to it. If there were evidence that it was not doing the job properly, I should expect Her Majesty's Government to make representations about it.

The same argument applies to what was said by the hon. Member for Birmingham, Northfield (Mr. Chapman) about the responsibility which undoubtedly rests on the Government's shoulders to put forward projects for the development of those Colonial Territories which are our responsibility. We should encourage them to plan and develop schemes and, if they are thought worthy, to submit them to the I.D.A. I do not doubt that the Colonial Secretary does his best to put forward schemes of this kind to different Colonial Territories, although the responsibility for pressing their claims on the I.D.A. rests not with the Colonial Secretary but with the territory concerned.

If I understood the hon. Member for Northfield correctly, he was saying that this responsibility rests on the shoulders of the people responsible not only for the territories which are still Colonies but for the newly-independent countries as well.

Mr. Chapman

No.

Sir S. McAdden

I understood the hon. Member to say that it was our responsibility to look after the emergent independent nations. I am glad that he did not say that, because it would represent a gross interference with the rights of those countries to govern themselves.

I was glad that the hon. Member drew attention to the fact that in Kenya people have come to realise, perhaps a little too late, that merely having the vote does not guarantee them a job and a better standard of living. I am glad that we continue to give aid to Kenya on a fairly substantial scale in order that the progress which has been brought to Kenya in the last 60 years of British rule may continue.

It is right and proper that hon. Members should remember that the millions of pounds which we vote for this, that and the other are not ours but that they come from the pockets of the taxpayers of this country. They are contributing in substantial measure to aid all over the world, and that aid has to be related to the ability of this country to pay it.

5.50 p.m.

Mr. R. E. Prentice (East Ham, North)

Until the hon. Member for Southend, East (Sir S. McAdden) spoke, I was in agreement with the speeches from the other side of the House. Some of them, including the Minister's, were inadequate in some respects, but at least there was little with which to disagree. We have now listened to an extraordinary speech from the hon. Member for Southend, East. He seemed to suggest at one stage that our Commonwealth responsibility related only to the colonial countries and not to those who are now independent.

The hon. Member appeared to take a restricted view of the general problem of the relations between the richer one-third of the world, of which we are part, and the poorer two-thirds. My view is that, in terms of our economic future and in terms of the prospect of peace, those problems are among the greatest that this country faces. It is proper that we should evaluate in some detail what is being done by these institutions and not merely say rather casually that they have told us what they want, we will approve the sum to pay the bill and that is where the argument finishes.

I do not want to detain the House long, but I wish strongly to suggest some reasons why, in an expanded aid programme—and in my view it should expand—the International Development Association as an institution should play a much larger part than it is doing so far. My hon. Friend the Member for Lincoln (Mr. Taverne) said that it is potentially one of the most important institutions in the field. Unfortunately, it is still only potentially one of the most important and it has not taken on the larger rôle which it should have taken on in the last few years.

When the Minister replies to the debate, I should like him to clarify the extent to which the new programme involves an expansion of I.D.A. activities. When the Chief Secretary to the Treasury was speaking, he reminded the House that an original subscription of 750 million dollars had been appropriated in relation to the years 1960 to 1965. I understand that another 750 million dollars is to be payable in three instalments by the various countries concerned over the period from 1965 to 1967. Does this indicate, as I hope it does, that in that period there will be a renewal of a further contribution beyond 1967? In other words, is it clear that this is a three-year period of which we are speaking but that an expansion of activity is implied during the three years 1965 to 1967? This seemed to be implied in something which the Minister said, but it was not clear.

Mr. Boyd-Carpenter

The intention is that there should be a speeding up of activity from an annual basis of contribution of 150 million dollars a year over the original five-year period to a rate of 250 million dollars a year in the forthcoming three-year period, an increase of 66 per cent.

Mr. Prentice

I am grateful for that assurance. As I shall explain, I consider that the expansion should be much greater, but at least, the right hon. Gentleman has clarified the extent to which an expansion is envisaged.

I still feel disappointed on one of the detailed points. The first of the new subscriptions will be made in November 1965—in other words almost two years ahead. Paragraph 12 of the White Paper states that the Executive Directors consider that the payment of the remaining annual instalments under the original subscription will cover the period up to 1965. Presumably, however, that does not cover any expansion during 1964–65. In other words, the implication appears to be that the expansion of activity will begin in 1965. That, again, is a rather disappointing feature.

Mr. Boyd-Carpenter

I tried to explain this in my speech and I am sorry if I did not make it clear. There was a considerable shortfall in expenditure in the earlier years. There is, therefore, a substantial carryover. The hope is that taking that into account, plus any provision which is to be made, the rate of expenditure—not the rate of contribution—for the next two or three years will be near the 300 million dollars-a-year rate.

Mr. Prentice

I am grateful for that assurance. Elsewhere in the White Paper a number of reasons are given for this extra pressure. One of these, which has been mentioned several times in the debate, is the growing burden that the recipient countries are suffering in having to repay their original loans under stiffer terms.

There are, however, two other reasons which are mentioned in the White Paper. One is that there are now more members of the I.D.A. than there were originally and, therefore, more Part II countries which are able to call upon its resources. The other is the welcome reason that more attention is now being given by all the agencies to the laying down of development plans, making the kind of surveys which are made under the auspices of the Special Fund and, therefore, having the kind of development for which I.D.A. is particularly suitable. Therefore, the methods of aid now being used are particularly appropriate to I.D.A. loans rather than to the older type of loan from the World Bank or the type of aid which is so often given bilaterally.

Therefore, whereas those are reasons for the Bill, which we all welcome, they are also reasons for saying that all the countries concerned are taking too modest a view of the proposed expansion. This has been clear to a number of experts from the beginning. I was looking up recently the book by Mr. Paul Hoffman called One hundred countries and one quarter billion people, which was published in the early months of 1960, just before I.D.A. began its operations. One could not quote in this House an expert who would command more general respect than Mr. Paul Hoffman, both for the work he has done in this connection as Director of the Special Fund and also because of his practical experience as a successful American businessman before entering this field. He has in his book a chapter on the need for this kind of organisation—the need for loans on terms of long repayment with virtually no interest repayment.

Mr. Hoffman speaks of I.D.A. in these terms: There is a great deal to be said for creating I.D.A. more or less as planned so that it can start operations as soon as possible, even though on a small scale, and gain experience. But it is of great importance that we consider I.D.A. from the beginning as an institution that must expand its operations promptly to fill a substantial part of the investment gap. In my view there is urgent need for I.D.A. to expand operations rapidly after the first year. We should contemplate I.D.A. operations through most of the 1960s of no less than $1 billion in investment each year. If I.D.A. is not promptly expanded after a year or so of operations, then a new institution will have to be created. Even when we have translated a billion dollars from American into English terms, we see that Mr. Hoffman was contemplating investment on a much larger scale than has been taking place in the four years since he wrote those words and on a much greater scale than is contemplated in the future according to the White Paper and the Bill.

In 1962, Mr. Andrew Schonfield speaking at a conference in Cambridge, spoke in similar terms. He said: The conclusion is that another form of lending, the kind of lending which the International Development Association does, is the proper model for lending in the 1960s.… The only trouble with the 1.D.A, is that it is terribly small. I quote both Mr. Shonfield and Mr. Hoffman in support of the argument that what is being done through I.D.A. is precisely the kind of economic assistance that ought to be given to developing countries, and because it is precisely the kind of assistance which should be given it should play a much larger percentage rôle in the total volume of aid than is the case at present.

I believe, that our country and all the donor countries have to make three changes in the way that they regard these matters. First, they must move from bilateral to multilateral aid on a much larger scale. I do not suggest that we can be dogmatic about this. Obviously, there are certain instances in which bilateral aid is better. Particularly there are certain relationships built up between a colonial P