Overseas Aid

Mr. Deputy Speaker (Mr. Michael Morris)

I have to announce that Madam Speaker has selected the amendment in the name of the Prime Minister.

Miss Joan Lestor (Eccles)

I beg to move, That this House, concerned by reports that one billion people throughout the world live in abject poverty, condemns Her Majesty's Government's failure to place genuine poverty alleviation at the heart of overseas development policy, an aim which has been repeatedly sacrificed to the pursuit of political dogma, confusion over Britain's relationship with its partners in the European Union and unlawful linkages between aid and trade; condemns the Government for a decline in real terms in development spending; urges the Government to improve the quality of British aid by reallocation of resources so that more is spent on meeting basic needs such as primary education and health care and less on tied aid; calls on the Government to explain how it will achieve the UN aid target of 0.7 per cent. of GNP; and calls on the Government to take a lead in multilateral programmes which address the needs of the poorest in the world, particularly women and children. Nineteen ninety-five is a year of anniversaries. It is 50 years since the foundation of the United Nations and 50 years since the creation of the Bretton Woods institutions—the World bank and the International Monetary Fund. For millions of people who had just lived through the horrors of the second world war, those institutions held out a vision of a fairer and more secure world. Absolutely central to that vision was the goal of a world free from Poverty.

Unlike most Tory political leaders today, the world's statesmen in 1945 had an acute understanding of the relationship between poverty and conflict. As the United States Secretary of State Cordell Hull put it in 1945: The battle for peace has to be fought on two fronts. The first is the security front, where victory spells freedom from fear. The second is the economic and social front, where victory spells freedom from want. Fifty years on, the greatest threat to the world is still poverty, which not only brings with it death and disease, but fuels conflicts and condemns entire nations to dependency.

The gap between the have and have-not nations continues to grow. In 1960, the richest fifth living in the industrialised world enjoyed incomes 30 times higher than those of the poorest fifth living in the developing world. Today, it receives 60 times more.

According to Oxfam, the poorest 50 countries in the world account for less than 2 per cent. of global income, yet are home to one fifth of the world's population. That is a clear recipe for instability, conflict and human suffering on a tremendous scale, as we have seen.

There have been extraordinary advances in technology in the past 50 years. People are living longer, infant mortality is falling and more people have access to education, yet one fifth of the world lives in absolute poverty, unable to meet basic needs.

In Africa, one in six children die before the age of five, 130 million children get no primary education and 35,000 children die every day from preventable diseases. That is despite the success of immunisation programmes, oral rehydration therapy and other advances. There is now another threat to which I will refer later—that of Aids. Some 1.3 billion people have no clean water or sanitation.

82 Throughout the world, millions of people live in indescribable deprivation and misery. The Opposition believe that such poverty is a moral outrage. Self-evidently, the Government do not regard the eradication of poverty as a priority, and I shall demonstrate why.

I turn first to the Conservative record on aid. If we look at the level of aid as a proportion of GNP, for example, the Government have massively cut Britain's aid budget from 0.52 per cent. in 1979 and rising, under the Labour party, to 0.3 per cent. and falling today. Britain's aid budget as a proportion of GNP is now one of the lowest in the European Union and is set to fall even further if forecasts are accurate. On the Government's current plans, between 1994–95 and 1997–98 the British aid budget will be cut by £;116 million, or 5.2 per cent. in real terms. Moreover, between 1994–95 and 1996–97, bilateral aid to Africa will fall by 17 per cent, while aid to Africa and the Pacific will fall by 12.5 per cent.

The Government have also proposed huge cuts in the British contribution to the European development fund. How does the Minister justify the 29 per cent. cut in the British contribution? Does he not realise the anger that greeted that decision among both our European Community partners and the ACP countries? Does he recognise the important role played by the Lomè convention in the economic development of the 70 African, Caribbean and Pacific countries, 40 of which are defined as least developed and a majority of which are in sub-Saharan Africa?

What is more, British aid has become significantly less poverty-focused, with a large and growing proportion of the budget spent on technical assistance, external consultants, the aid and trade provision and capital-intensive projects. The 1994 Development Assistance Committee review of British aid revealed that, in 1991, only 6 per cent. of British aid to sub-Saharan Africa, accounting for 50 per cent. of bilateral aid that year, was spent on education and other social services such as family planning and health. How does the Minister square those figures, drawn from the "Reality of Aid" report of 1995—I am sure all hon. Members have received copies of it—with Baroness Chalker's claim that the overriding goal of the British aid programme is poverty reduction?

Mr. Gyles Brandreth (City of Chester)

Will the hon. Lady give way?

Miss Lestor

I wanted to get on, because this is a short debate that is held only once a year—but such is the hon. Gentleman's charm that I will.

Mr. Brandreth

I am grateful to the hon. Lady—this is indeed a short and important debate. I am sorry, however, that she is adopting such a negative approach. Once again, she is talking entirely about inputs, not outputs. Clearly it is important to have aid that is well focused and well delivered. The amount, too, is important. Will she confirm her party's commitment to the 0.7 per cent. target within five years, and explain how such a commitment will be more effective this time round than last time, when her party ended up reducing the amount spent on overseas aid by £50 million?

Miss Lestor

I am rather glad that I gave way to the hon. Gentleman, in the event. When we left office, the amount 83 spent on overseas aid was 0.52 per cent. of GNP, and rising. This Government have been in power for 16 years, throughout which time it has been shamelessly falling.

I do not intend to give any commitments—for the following reason. If the overseas aid budget carries on falling at the present rate for the next year or two, we do not know what level it will be at by then. But if we had been in power for 16 years and had not reached the UN target, if I were dead I would come back and haunt the lot of them.

Miss Emma Nicholson (Torridge and Devon, West)

rose—

Miss Lestor

I have already said that we get this debate just once a year, and it would not be fair to others if I gave way again.

Lady Olga Maitland (Sutton and Cheam)

rose—

Miss Lestor

I shall not give way to the hon. Lady.

We also know that the Government are spending an increased proportion of the aid budget on aid and trade provision projects. In effect, that means that large amounts of aid are concentrated on countries that are already several runs up the development ladder, such as Malaysia. These are countries that provide a market for the technical know-how and more sophisticated technological goods that we export.

Lady Olga Maitland

rose—

Miss Lestor

I will not give way to the hon. Lady, who is not as appealing as the hon. Member for City of Chester (Mr. Brandreth)—[HON. MEMBERS: "Sexist."] The hon. Lady can make her own speech later, when I am sure she will be called. She must not interrupt mine.

What I have outlined is made clear in the 1993 review of the aid and trade provision, as a result of which the Government introduced a sensible reduction in the per capita income eligibility threshold, to $700—considerably below the OECD figure of $2,500.

When the ATP was introduced by the Labour Government in 1978, it was designed to allow a small proportion of the bilateral programme—about 5 per cent.—to be available to give a higher priority to the commercial importance of a limited number of developmentally sound projects. Since then, a far greater emphasis has been placed by successive Conservative Governments on commercial interests, and the ATP reached its peak in 1991–92, at 10 per cent. of the total bilateral budget. That caused some disquiet, not least to the Foreign Affairs Select Committee, whose 1987 report stated: We have no doubt that the influence of commercial interests on the aid programme can and has led to a conflict of priorities. Then came the scandalous, unlawful decision to fund the Pergau dam project in 1991, which the Government now try to shrug off as a brief period of unfortunate entanglement between aid and arms sales. Following the High Court judgment last winter, the Foreign Secretary was forced to carry out an ODA review to determine whether any other projects had fallen outside the legitimate provisions of the Overseas Development and Co-operation Act 1980. He came up with three more: a project to built a metro system in Ankara, costing £22 84 million, which, like Pergau, had Lady Thatcher's personal recommendation behind it; secondly, a £9.3 million project to build a television studio in Indonesia; and, finally, £2.9 million to put in a flight information system in Botswana.

Many of us anticipated a justified replenishment of the aid budget as a result of the repayment of the misappropriated funds, but a seemingly unrepentant and unabashed Foreign Secretary claimed that the books for the previous years in question were effectively closed. Parliament voted the ATP money on the assumption that it would be used for genuine development projects, and we believed that the money spent on Pergau and the other three projects should be returned to the aid budget; otherwise it would be seen as a blatant disregard of parliamentary authority. Only by restoring the money can the Government restore credibility to their aid programme.

Mr. Matthew Taylor (Truro)

I share the hon. Lady's criticisms of the aid and trade provision, which was introduced by the Labour party. Does she want to abolish it or reform it?

Miss Lestor

We are looking at how the ATP has been used in practice in recent years. I make no commitment, but we are looking closely at reforming the ATP to fit it in with what was originally intended.

Under the new criteria introduced in the 1993 review, we learn that the ATP is to be focused in future on China and Indonesia. Yet the Foreign Affairs Select Committee, in its July 1994 report on Pergau and the ATP, said that it hoped that the benefit of the ATP would not be confined to China and Indonesia, which it described as countries with "poor human rights records"—an understatement, to say the least.

As for debt, the Conservative Government are keen to appear leading players on the world stage. In that case, one would reasonably assume that they would be willing to play a strong role in the international organisations that are such a central part of the lives of developing countries. The debt owed by poor countries to rich ones brings with it the power of the rich to dictate economic, political and social conditions in the developing world.

The terms of the International Monetary Fund and World bank structural adjustment programmes have often resulted in deep cuts in social spending, which mean collapsing health services and closed schools. It is the non-governmental organisations and other aid agencies that are expected to pick up the pieces, but the scale of the problem is so vast that they can skim only the surface of the need. The stock of debt owed by developing countries to the IMF and World bank has grown faster than any other type of debt, tripling from $98 billion in 1982 to $304 billion in 1992.

This year, the 50th anniversary of Bretton Woods, provides a focus for reassessment of the large institutions' role. Typically involved is economic regulation. They have gone in for privatisation of state assets, reductions in public expenditure, liberalised trade, easier access and enhanced terms for foreign investors. We have never denied the need for adjustment, but we are critical of the form that adjustment programmes take. Too often they have resulted in reduced access to health, education and other essential public services. These are basic needs that should be central to any development programme. Coupled with rising unemployment, falling levels of real 85 income and damage to the environment, it is often difficult to identify the benefits of such programmes to ordinary people. Inevitably the poorest, especially women and children, suffer disproportionately.

That is acutely obvious in Africa, where more than a decade of structural adjustment programmes has contributed to a fall in real incomes of 20 per cent. There has been a fourfold increase in unemployment, a reduction in investment to the level of 1970 and a further contraction of the region's share of the world market to 2 per cent. Africa is not the only region of the world in which human welfare standards are worsening and where overall levels of poverty are increasing.

In recent years, the World bank has admitted some past mistakes. I welcome the fact that it is now normal practice to include in the pre-planning stage ways to minimise damage to the poor. I welcome also the statement in the bank's 1990 development report that no task should command a higher priority for the world's policy makers than that of reducing global poverty. We live in hope. For the Labour party, that is the yardstick by which the performance of the World bank will be judged in future.

The World bank needs to concentrate much more on improving the direct poverty impact of its projects. It must reverse the alarming decline in lending to agriculture, especially small-scale farming. It must not insist on the imposition of user charges on primary health and education. Indeed, it should seek to safeguard and prioritise public expenditure in those areas. As I have travelled, I have been saddened to see in countries in Africa, especially Tanzania and Zambia, that people must pay for primary education. Apart from anything else, that means that girls in particular are denied access to education. Sadly, a less high priority is placed on their future and their education than that which is attached to boys. That is a direct result of structural adjustment programmes which demand that parents must pay for their children's schooling.

We ask for greater accountability, both of the World bank and of the IMF, to loan recipient countries and of the United Kingdom executive director to the British Parliament. What measures is the Minister considering to improve the accountability and transparency of the World bank and the IMF? Will he consider reports to Parliament? Should there not be regular reports to Parliament and debates on them?

I have been watching with interest developments at the Paris Club since the new debt reduction terms—the so-called Naples terms—were agreed in December 1994. In the Chamber, the Prime Minister said: At Naples, we agreed on two specific measures to help those countries facing special difficulties: first, more help with debt payments, taking the level of relief above 50 per cent.—to two-thirds and perhaps beyond; and, secondly, reductions in the stock of debt."—[Official Report, 11 July 1994; Vol. 246, c. 668.] On 16 December, the chairman of the Paris Club is reported to have said: A small number of countries may be awarded once-and-for-all deals in the next few months", although he omitted to name them. Sources close to the club suggested, however, that Uganda, Bolivia and Nicaragua might be among the first countries to receive such awards.

Against that background, I have been extremely disappointed in the outcome of some negotiations, especially those that involve some of the world's most 86 indebted and poorest countries. Nicaragua's Paris Club debt is $1.6 billion, but that is only 14.3 per cent. of its total debt. Many of us had hopes for 80 per cent. relief on Nicaragua's Paris Club debt. After all, it is the most indebted country in the world. In the event, Nicaragua was offered debt relief of only 36 per cent. That was not a breakthrough, and it was certainly not an exit from debt programmes.

Even more disappointing is the case of Uganda. It was offered a 67 per cent. stock of debt reduction, only part of its debt of $350 million. That is only 20 per cent. of its total Paris Club debt. That cannot be described as a two-thirds reduction of Uganda's stock of debt. Nor is it an exit strategy from a debt programme, as recognised as needed by the World bank. As a result, the continuing burden of debt is preventing the Government of Uganda from spending the country's resources on their own people. In 1995, Uganda will spend five times more on servicing its debt than on its own health services.

What happens now that Uganda, in Paris Club terms, has exited from debt reduction negotiations? Who is left to pick up the pieces? Where does Uganda go now with an enormous overhang of debt that is, in effect, unpayable without destroying the future for millions of people?

We have heard that Zambia is due soon to come to the Paris Club. Zambia's debt is chronic. It places a severe burden on Zambia's economy and its people. Servicing Zambia's $6.79 billion debt swallows up 33 per cent. of the country's export earnings. The volume of total debt stock is 2.3 times higher than Zambia's gross national product. Per capita income within Zambia has been in decline but the debt overhang has been rising steadily.

Zambia is a major recipient of British bilateral aid. That aid is not used, however, for furthering development to enhance the quality of people's lives. On the contrary, in 1993–94 about two thirds of total programme aid was used indirectly to support IMF and World bank structural adjustment programmes.

We must put a stop to the merry-go-round of money. Bilateral aid is often used to pay off multilateral as well as bilateral debts. That is no progress. Will the Minister reassure us that the Government role at the forthcoming Paris Club meeting on Zambia will be positive? The debts that are owed by the poorest countries to the Paris Club are causing great concern. Of even greater concern is the growing debt of poor countries to the World bank and the IMF. We all know that, within the World bank, there is growing awareness of the unsustainable level of debt among the poorest countries. There were discussions about such debt at the spring meeting at Washington.

There are two specific points to which I hope the Minister will respond. First, as I understand it, debt outstanding to the World bank from the poorest countries—severely indebted low-income countries—amounts to about $3.9 billion. Although this debt is crippling for the countries concerned, it is not a large sum for the bank. I understand that it has about $3.3 billion set aside for loan-loss provisions. It has $14.5 billion in reserves.

Have the Government given consideration to supporting proposals for the cancellation of debt of severely indebted low-income countries to the bank, and for the moneys to be written off under loan provisions? It would be interesting to know the views of the Minister 87 and of the Government on these matters. Has the Minister discussed them with his colleagues in the Treasury and in the Departments with responsibilities for trade?

Secondly, we know that there have been discussions about the conversion of International Development Association loans into grants for the poorest countries. The proposal has been supported by the Government. Has there been further discussion? Will the matter be discussed at a meeting of IDA deputies in South Africa at the end of the month? Is the proposal supported by other countries? My right hon. and hon. Friends have shown a great interest in the possible conversion and may wish to enlarge upon it. We would all welcome replies to my questions. Continuing flows of aid will have little impact on poor countries if the aid is swallowed up by debt repayment.

Something that was not foreseen 50 years ago and which has brought misery and destitution to many parts of the third world, particularly Africa, is, of course, acquired immune deficiency syndrome and human immune deficiency virus. I do not believe that it is given anything like sufficient attention worldwide, and it is having an impact on the developing world. We cannot have aid and development policies that do not take it into account. I attended a seminar in Barcelona in May, in which we evaluated the progress to date. AIDS has to be taken seriously in any programme for aid and development.

In one antenatal clinic that I visited in Africa recently, some 25 per cent. or more of the women attending were HIV-positive. As I am sure the House is aware, AIDS is now spreading among women far more rapidly than any other section of the population. One in three of the babies of those women will be born with the virus. All of them will develop AIDS and most will die before they reach the age of five. So far, 1 million children worldwide have been infected and half a million have died, most of them in Africa. Two thirds of all new cases of HIV are occurring in Africa, where, it is estimated, 9 million children will be orphaned in the next five years, and where recent gains in child survival are being reversed.

In Zimbabwe, which I visited recently, AIDS has become the single biggest killer of the country's under-fives. In Thailand, one adult in 50 is infected, and it is feared that the country's under-five mortality rate will rise rapidly within the next five years.

Of the $2 billion spent annually on AIDS prevention, only about 10 per cent. is spent in the developing world, where 85 per cent. of infections are taking place. That is a sobering thought for all of us to take on board. The targets set by the 1990 World Summit for Children agreed on a series of goals for improving the lives of children, and lowering infant mortality. Some of those goals are well on the way to being achieved: malnutrition has been reduced; measles deaths are down, due to immunisation programmes; and polio is well down—some areas are free from it altogether. Iodine deficiency illnesses and vitamin A deficiency are being overcome and the use of oral rehydration therapy is rising, preventing more than 1 million children's deaths a year. There has been other progress.

Is AIDS now to replace those diseases? Is it to become the biggest killer of the under-fives? We have to give it attention. As I said, 50 years ago that illness could not 88 have been foreseen and the HIV virus was unknown. We cannot go on with aid and development policies without taking that on board.

Fifty years ago, the founders of the United Nations and the Bretton Woods institutions committed themselves to the eradication of global poverty and to the construction of a fairer and more secure world. While much has been achieved in the past half century, the goal of eliminating world poverty is still far from being realised. Although the Government claim to be committed to tackling poverty, their record, as I have shown, tells a very different story. Over the past 16 years, they have cut aid as a proportion of GNP, reduced the poverty focus of UK aid and failed to lobby for the world's poor within international forums.

The Government's policy for international development has been a failure. Labour—and only Labour, with its record in this field—can be trusted to make a priority of the struggle against global poverty and injustice. I commend the motion to the House.

The Minister of State, Foreign and Commonwealth Office (Mr. Alastair Goodlad)

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: concerned by reports that one billion people throughout the world live in abject poverty, commends Her Majesty's Government's support for sustainable development and poverty alleviation through its support for economic reform, good government, and investment in people and productive capacity, as well as through direct action to provide the poor with opportunities to improve their lives; and urges the Government to pursue these policies with their development partners and multilateral agencies.". I very much welcome this opportunity for the House to look again at the subject of overseas aid. It is, as always, a timely issue.

The hon. Member for Eccles (Miss Lestor) threatened to return, under certain circumstances, to haunt us. I hope that that will not be necessary, or, indeed, possible, as I hope that she will remain on this earth with us. But if I am ever to be haunted, I would like to be haunted by the hon. Lady.

The Halifax summit devoted particular attention to the subject of development and to the scope for improving the international system for promoting it. At the Organisation for Economic Co-operation and Development, Ministers have recently endorsed a statement of the role of development co-operation at the mid-point of this decade. Here at home, the Overseas Development Administration, like the diplomatic wing of the Foreign and Commonwealth Office, is undertaking a fundamental expenditure review, and all those matters are of great concern to the House.

The world is going through a rapid process of change. My responsibilities take me frequently to Asia. Much has been said and written about the "Asian miracle"—the way in which so many countries have succeeded in growing year after year at rates that are among the highest ever recorded in history; their growing role in the world economy; their ability to continue growth, even during an OECD recession; and, of direct relevance to the Opposition motion, the sharp decline in the number of those in poverty.

The reasons for that astonishing progress have to do with consistently sound macro-economic policies and a long-term commitment to private sector development, 89 pro-export policies and high attainment in education. The "miracle" has now spread westward—although, perhaps, not as far as the constituency of the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes)—encompassing most of south-east Asia. Parts of Latin America are experiencing unprecedented growth.

Aid has played an important role in the Asian transition, and continues to do so for the poorer countries. The hallmark of that aid, however, has been helping people and Governments to help themselves. There is no dependency culture in eastern Asia. Countries wish to access western know-how and concessional finance to accelerate their social and infrastructure investments. As they become better off, their need for aid declines. Some have graduated out of aid entirely. Private finance in all of them is playing an increasing role. Singapore and Korea, for example, are already significant investors and donors in other countries. Other new donors are about to emerge.

There is, on the other hand, no doubt that poverty remains a deep-rooted and vital problem. The figure of roughly 1 billion people in abject poverty has remained stubbornly high even while their proportion in the rising population of developing countries has fallen. The largest part of the problem is in south Asia and sub-Saharan Africa. The Government and other donors are working to help the countries concerned to address the problem.

The ingredients of success in east and south-east Asia—rapid growth based on sound policies, export orientation, high savings and investment, avoidance of a dependency culture—are as relevant to south Asia and to Africa. They also fit well with the evolving nature of international aid programmes. Last month, the OECD drew up and agreed a statement of common purpose about the role of aid in the mid-1990s. It recognised the successes achieved over past decades, noted that aid was only one of the sources of those successes, urged that aid should help the poorest to expand their opportunities and improve their lives and committed donors to managing bilateral and multilateral aid with maximum efficiency. Britain fully supports the themes in that statement.

The statement was issued against the background of concern about the future levels of aid. In 1993, the absolute amount of western aid fell significantly for the first time in recent years. We expect the official figures for 1994 to be released by the OECD in the next few days. They are likely to show that western aid will, as in 1993, represent around 0.3 per cent. of OECD gross national product, or a little lower. There is talk of a global aid funding crisis.

The Government believe that such talk is overdone. There are still high net transfers from donor countries to low-income countries. A number of donors, including Japan, which is now the largest of all, are continuing to expand their programmes. There is still, in the Government's judgment, scope for several donors to focus their aid more intensively on the poorer countries, as we do. Nevertheless, there is no doubt that Government budgets are tight everywhere. Canada, Germany and Italy are three of the largest examples of important donors whose aid programmes have declined, or seem likely to over the next couple of years. However, the most significant question, yet to be determined, is how the American authorities—the Administration and Congress—will judge the future size and scope of foreign assistance.

90 The United States is already the back-marker among OECD countries in terms of the proportion of its economy devoted to overseas aid. We are very anxious that the United States should remain fully engaged as a bilateral donor in Africa, and should play its traditional strong role in the planned replenishment of the soft loan arm of the World bank. My right hon. and noble Friend the Minister for Overseas Development will visit Washington next week, and I know that those matters will be high on her agenda.

We have had the usual representations from the Opposition about the size of the British aid effort. The fact is that, as the 1994 figures will confirm, we are at fifth place in the overall league of donors, up from sixth place—the position that we occupied when Labour was last in power. Furthermore, our assistance in 1994 was above the average for all OECD countries. The last public expenditure round led to an enhancement of £115 million for the aid budget for the final year of the public expenditure survey. That demonstrates the Government's commitment to maintaining a substantial aid programme, despite the cuts being made by many other donors and despite the absolute need to keep public expenditure under control.

Concern has been expressed that our aid is being diverted from the poor by the needs of eastern Europe and the former Soviet Union, the rise in emergency aid and the pressures from increased European Community aid spending. Let me deal with each point in turn.

The Government make no apology for our assistance to eastern Europe and the former Soviet Union. It is an overwhelming British, and global, interest that their transition to market economies and pluralist democracies should be accomplished swiftly and effectively. Hundreds of British private sector organisations—including many non-governmental organisations—have responded to the new challenge. The Government, for their part, expanded the aid programme to launch the know-how fund. It will account for some £80 million this financial year, and has an outstandingly successful reputation. Several countries are now well on with the transition, and as it progresses we expect the need for assistance to decline.

As for emergency aid, it has indeed increased substantially, from under £100 million in 1989–90 to over £260 million in 1993–94. The Government have thought it right to contribute generously to emergency needs, whether in Bosnia or Rwanda. British agencies have an outstanding record in effective delivery of such assistance. We are putting increased effort into conflict prevention and crisis management. Despite understandably gloomy predictions, I see no reason why emergency aid should need to expand further. Each situation will be judged on its merits, and Britain will continue to play a prominent role.

The rise in European Community spending on aid has been widely remarked, not least in successive reports from the Foreign Affairs Committee. The Government attach great importance to the effective management of European Community assistance within the ceilings set at the Edinburgh summit. We are hopeful that an early decision will be made on the priority areas for aid from the Community budget. In addition, as the House will know, important negotiations are now taking place on the United Kingdom's contribution to, and the overall size of, the next European development fund.

Mr. Mike Watson (Glasgow, Central)

The Minister mentioned the Edinburgh summit. As is well known, his 91 Government—admittedly, along with the German Government—have been primarily responsible for the stalling of negotiations on the eighth EDF. Will he explain how the Government align that with the Foreign Secretary's comment, in a speech at the Overseas Development Institute in March, that the EDF was perhaps the best and most effective element of European Union aid? Is it not true that those two facts cannot be reconciled, and that the Government must take their responsibilities much more seriously?

Mr. Goodlad

We take our responsibilities extremely seriously. As the exact amount of the European offer is subject to on-going negotiations with our European partners, I think that it would be wrong for me to comment further at this stage.

Mr. Watson

Will the Minister give way again?

Mr. Goodlad

No, I do not think I will.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich)

I have a slightly different problem. The Foreign Secretary also said in that speech that the amount that we were committing to European funds would cut the amount available for bilateral aid. We have a long and honourable tradition of efficient bilateral aid. Can the Minister sort out my problem? Is it true that the Foreign Secretary thinks that we spend too much through the European funds and would like more to be spent bilaterally, or does he feel that we should now be committing more to the European institutions?

Mr. Goodlad

The hon. Lady will agree with me on two points. First, she will agree that there should be an appropriate balance: I take it that she has no innate prejudice against European aid, as opposed to any other aid. Secondly, she will agree that the aid should be properly applied. Perhaps the hon. Lady will disagree with this, but I do not think that a recipient of aid is likely to say, "I do not want any of this multilateral filth from Europe; give me the decent bilateral stuff that I am used to." I see that the hon. Lady agrees with that analysis.

Although the rise in the European Community budget will inevitably mean some further decline in Britain's bilateral aid programme, the Government are determined to maintain bilateral aid at an adequate level and to focus it on poor countries. Very nearly seven tenths of it is at present directed at the poorest categories of country—countries with incomes lower than $675 per head. That is a higher proportion devoted to the poorest countries than by any of the other top five donors.

The Government are also determined to build on their well-deserved reputation for quality. We have a highly professional aid programme that recognises the importance of appropriate policies in recipient countries, the need for aid to support local initiatives rather than substituting for them and the need for local communities, as well as Governments, to participate fully in the process of development.

The Opposition motion urges the Government to spend more on basic needs such as primary education and health care. We are indeed doing just that. At the beginning of 1994, we announced a change in our policy on support to education to emphasise primary and basic education. We started to implement that policy immediately. Expenditure 92 on primary education has risen by nearly two thirds since 1992. We have consolidated work on projects at the primary level in India and south, east and west Africa; we have also undertaken major new initiatives over the past 18 months in central Africa. In non-formal education, a project to support nomadic education in Nigeria is being appraised, and we are supporting a number of projects in Bangladesh that provide education for those denied access to the formal sector.

In addition, we have funded research into levels of reading skills in Zambia and Malawi. That research is crucial in assisting us to address some of the problems of quality at primary level. Without good reading ability, the rest of the curriculum can be lost to children. In India, where we have worked with the local authorities to upgrade primary education in Andhra Pradesh—a state with a population roughly the same size as Britain's—we are now well advanced in developing a similar project in the even more populous state of West Bengal.

In Zambia, we are working with the Ministry of Education to strengthen the primary inspectorate and establish training systems for all primary teachers. In Malawi, we are helping the Government to meet the demand for primary schooling by providing funds for the construction of community schools. In South Africa, Gambia and Ghana we are supporting primary teacher education projects, and in Kenya we are helping to strengthen research and planning capacity for the primary sector.

We are also increasing the resources that we devote to assistance in the areas of health and population. We are major contributors to essential health care and better reproductive health in sub-Saharan Africa. We have ground-breaking new projects involving NGOs as well as Government in Kenya, Uganda, Tanzania, Zimbabwe and Malawi. At last year's population conference in Cairo, my right hon. and noble Friend the Minister for Overseas Development committed Britain to investing more than £100 million in new health and population projects by 1996. I am confident that we shall exceed the commitment target and, through the high quality of our aid, bring benefits to millions of disadvantaged people.

There is more. The House will be aware that Britain has unrivalled expertise in the area of international health. Our aid to Cambodia, Russia, and South Africa shows how we can support effective partnerships between British experts and their colleagues overseas. We back the know-how, where possible, with capital and commodity aid, sometimes from the European Community. As a result, we are playing a significant role in improving people's access to primary health care, their survival and well-being in the face of hazards such as malaria and AIDS, and their access to essential services in emergencies. Those are real achievements of which Britain and all those involved should be very proud.

Mr. Brandreth

Did my right hon. Friend have an opportunity last week to see a television programme on the fate of children in an orphanage in China, or has he seen reports of it? As the motion refers to children, does he have any reflections on that programme?

Mr. Goodlad

I have reflected on it. Anybody who saw the film will have been profoundly shocked by the inhumanity that it exposed. We take every opportunity to bring our concerns about human rights violations to the attention of the Chinese authorities. We shall continue to 93 do that. The film alleged that the UNFPA—the United Nations population fund—supports population control in China. That is incorrect. The UNFPA and the International Planned Parenthood Federation are at the forefront of global action to promote the right of all women and men to choose without coercion the number of children that they wish to have.

While the Government do not contribute directly to population control in China, we contribute to the core funds of the UNFPA and the IPPF, both of which have small programmes in China aimed at promoting more humane policies. They strongly oppose coercive population control of any kind. If we withdrew our support from the UNFPA and the IPPF, we would remove one of the few channels through which we can seek to influence China's population policies. My hon. Friend the Member for City of Chester (Mr. Brandreth) raises an extremely important point, which we shall continue to raise with the Chinese Government.

The Opposition motion also speaks of unlawful linkages between aid and trade, and calls on the Government to spend less on tied aid. As the House will know, my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs instituted a rigorous review of all aid programme commitments following the judgement on Pergau last November. We found three other projects financed from the aid and trade programme, where it seemed that political or commercial factors had overridden developmental counter-arguments. Those projects are now being financed outside the aid programme.

To give the House a flavour of how rigorous we were, I should point out that one of those projects, for an air navigation aids system in Botswana, was deemed by the Foreign Secretary to be questionable on the ground that the papers showed that, from an economic point of view, Botswana should have continued to use the services of the then apartheid South Africa. Hon. Members may feel that the decision, in the circumstances of the day, to provide Botswana with a system of its own was not unreasonable.

The hon. Member for Eccles spoke about the aid and trade provision. We announced in 1995 in the departmental report that the ATP would be £53 million in 1997–98. That will be less than the 5 per cent. of bilateral aid that was set as a target when the ATP was introduced by the previous Labour Government.

I repeat that we are aware of no remaining projects that are questionable in terms of the Overseas Development and Co-operation Act 1980. I categorically reject the absurd allegations that the World Development Movement still seeks to make about alleged linkages between aid and arms sales to a small number of foreign countries. Aid has not been used to promote arms sales, and it will not be so used.

Those who complain about tied aid should look carefully at the facts. Half our aid programme goes through multilateral channels and is thus automatically untied. [Interruption.] More will go through multilateral channels, so it is right to say that more will be untied. A large proportion of the rest is tied only in a sense that it brings foreign students to Britain or provides the services of British experts, consultants and institutions to foreign countries—including those who work on basic education and health projects.

The Government have untied 75 per cent. of our contribution to the special programme of assistance for Africa, to which our latest contribution was £300 million. 94 We routinely finance local costs for projects, such as many of those in the social sectors, which depend on such funding. Where Britain is not a competitive supplier, we are perfectly willing to purchase from third countries. But the Government believe that it is right and proper that, until such time as the donor community as a whole unties bilateral aid, Britain should similarly give first crack to its own firms and suppliers.

The Government wish to see the international aid agencies to which we contribute address the problem of poverty following the same principles that I have outlined, and to do so with increased efficiency. In that context, the reform agenda set out by the Halifax summit is of major significance. As my right hon. Friend the Prime Minister said in his statement to the House, we have now drawn up a series of specific proposals to strengthen the Bretton Woods institutions and the United Nations. Revitalised international institutions will play a vital role in tackling poverty and creating the conditions for sustained development.

We agreed in particular to encourage better use of all existing World bank and International Monetary Fund resources, to tackle the substantial burden of multilateral debt faced by some of the world's poorest countries. The United Kingdom has taken a lead in that area in pressing for action, and reducing the debt burden will make a major contribution to alleviating poverty.

The number of people in abject poverty is a challenge to us all. Simplistic solutions do not work, and merely throwing money at problems is always ineffective. Time and again we have seen that sustained reductions in poverty come from broad-based growth grounded on the steady application of sound economic policies, better government and investment in people. Success does not come instantly. Aid donors can speed the process by facilitating reforms and strengthening programmes to alleviate poverty. Britain has demonstrated time and again its capacity to provide finance and know-how in ways that contribute to that goal.

For me, the speech of the hon. Member for Eccles was rather like flicking through an old album of yellowing sepia-tinted photographs of a bygone era of Stalinist neo-colonialism: looking at well-meaning figures facing the camera, staring life straight—if unseeingly—in the face. The poorer countries do not want hand-wringing from the Labour party. They want concrete measures to help them to become more self-reliant.

The Government have led the way and transformed the global aid debate. First, we have led the drive for free trade and trade access. We must never forget that trade brings three times as much revenue to the developing world as aid. Secondly, the Prime Minister has consistently led the way on debt relief with the original Trinidad terms and their subsequent extension through the Paris Club. Thirdly, we have introduced the idea of good government, using aid to promote sensible economic policies, democratic institutions, the rule of law and respect for human rights. We have pioneered the use of dedicated technical aid through our know-how funds.

The Labour party is a very long way behind the game. If it has begun to shift away from the old left-wing orthodoxy of never criticising third-world Governments, I welcome that. It still puts all the emphasis on the symbolism of large transfer payments instead of looking 95 at how aid resources are used. The objective must be not to make ourselves feel good, but to help the populations of the world's poorest countries.

Today's debate is an opportunity for Opposition Members to posture, as their spokesmen do every day in the media with every conceivable pressure group, irrespective of whether their sums, if they have done them at all, add up. Labour's commitment to reach the United Nations target of 0.7 per cent. of GNP does not add up to a row of beans unless Labour is prepared to put a precise time scale on it and say how it will finance it. Will it be by higher taxes or by cuts in education, health or social security funding? If so, I am sure that Labour Members will have cleared their statements with the shadow Chancellor, and we shall note them very carefully.

Such pledges are an irrelevance unless they form part of a strategy for economic growth that will generate new economic resources. Thanks to Conservative policies, Britain's economic performance is second to none in Europe and is set to remain that way. That is the key to a serious long-term aid commitment.

I invite the House to reject Labour's irresponsible motion and to support our amendment.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich)

A group of women from all over the Commonwealth came together in the House last week. They were members of the Commonwealth Countries League. Their patron is our most honoured Speaker and their function is to raise money for the education of women throughout the Commonwealth. They do so not in a showy way but in a consistent attempt throughout the year to raise cash. A small group of them do all the administration and take control of the money, which is sent to some Asian countries and, largely, to Africa.

I was able to tell that group of women that, a short time previously, I had been honoured to go to Ghana with a delegation under the leadership of the right hon. Member for Conwy (Sir W. Roberts). He distinguished himself with that wonderful Welsh hwyl that made him dearly loved throughout the country and his ability to recognise instantly and identify with the problems that we met.

When I hear some of the undoubtedly very uncomfortable cliches that Ministers trot out from the Dispatch Box, I am reminded of the reality of life for many women and children in Africa: the lack of decent clean water and the shortage of education and health provision. Indeed, in some Commonwealth countries there has been a reversal of existing health programmes so that people's access to clinics and to the support that they had had through trained village nurses has been reduced rather than increased.

When the Government know that the money committed by the United Kingdom is becoming less every year, I wonder that Ministers can still seriously talk about our reputation, experience and commitment to overseas aid. In reality, we are always seeking ways of expanding our commercial opportunities. While there is nothing wrong in that, it is not what aid is for. It does not improve the income or opportunities of many of the people who are most in need. Moreover, it is clear that the Government's commitment to aid and trade is positively damaging some of the things that the House regards as most important.

96 I wish to deal briefly with the Government's commitments to Ghana in respect of supporting the electoral commission as it illustrates the problems that we have. We were told in Ghana that the electoral commission, which is independent of the Government, is seeking to set out in considerable detail the new registers for the coming election. It is working on an extremely tight timetable. If it fails to do the job efficiently, Ghana's belief in democracy will be severely damaged. It is therefore very important that the electoral commission should be given every known support.

The Government were therefore prepared to look at the available machinery and the modern equipment that would enable the electoral commission to produce an accurate electoral register containing the names of all the people who needed to vote. That is tremendously important because, as we were told, large numbers of people did not vote in the last general election because they believed that there were problems with the existing machinery.

The fact that people boycotted those elections produced a Parliament which, although it impressed us with its vigour and its intent efficiently to bring democracy once again to the parliamentary system, clearly left some large sections of the community in Ghana feeling that they were not properly represented. It is therefore vital that we help the electoral commission to get the whole business of preparing its register right. If that fails, the whole system will be blown out of the water, not least because people will not believe that there is a genuine, accurate register. Hon. Members know how important it is that such elementary machinery should be available.

I have no intention of naming names, but a British company did a great deal of development work with the electoral commission and said that it thought that it was capable of producing equipment which would not only make it possible to scan at tremendous speed the relevant information but to produce detailed and positive benefits. Certainly, that would involve a great deal of expense but it would produce a reliable and efficient register. It worked with the director of the electoral commission over a long period on the sort of information and the general level of expertise that was needed, using a system which was reasonably well known in Government circles in Ghana because it had been used by some people in education.

Then, apparently, London determined that everything should be put out to open tender, and the contract went not to the people who had done the development work but to someone else, using a different system which is probably not compatible and certainly has not been used in that context and that manner. I am not prepared to argue the rights and wrongs of whether one unknown system will be any better than another which is equally unknown, but I am alarmed at the political implications of taking the wrong decision.

If the register is not correct, Ghana—the one west African country capable of producing stable parliamentary democracy—will find that democracy is put at risk because the voters will think that the results are not genuine. There can be nothing more damaging than the voters believing, for one reason or another, that the register is not correct.

When one realises that there is no register of deaths in Ghana, the sort of problems that the electoral commission will face become apparent. The commission was not allowed to accept the carefully noted information kept by 97 traditional chiefs, because the law would not allow it. The inflexible attitude in London is causing major problems. I do not expect Ministers to comment tonight, but I ask them to think seriously about the matter and to be prepared, even at this late stage, to consider the alternatives.

The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Tony Baldry)

It is not clear whether the hon. Lady is saying that such projects should not be put out to competitive tender. She has been in Ghana recently—I understand that she and others are coming to see me about that tomorrow—so she must appreciate that there is no question of the ODA ever seeking to impose a particular solution on another country with regard to any aid project. Any aid that we give is given co-operatively and with the full support of the country receiving it. The project to which the hon. Lady refers will only and could only go ahead with the full support of the electoral commission in Ghana. Without that support, there would be no point in proceeding.

Mrs. Dunwoody

That would be very reassuring if the Minister did not know that the only way that the equipment is ever going to be paid for is through tied British aid. While I am happy to have his assurance that nothing will be foisted on the electoral commission, I have to ask him to think again, even if not tonight, because if we get it wrong the results could be dangerous.

One of the problems is that the Government are not clear about their own attitude to overseas aid. It is certainly not clear to us whether they have the commitment to the African continent that they should have. I do not know whether this is a correct but only this weekend I read that the Foreign Secretary said: The commitments we face to multilateral agencies—notably the programmes of the European Community—are reducing what we have available for aid that is recognisably British. Was he saying that our European commitments are leading to difficulties? If so, and if he is saying that there is pressure on the ODA to reduce its trained staff, the programmes that it is undertaking or the various support systems that it uses at times of emergency, the House has reason to be seriously worried.

I was approached by a member of the medical profession when there were considerable difficulties in Rwanda. It was pointed out to me that this country had large amounts of sterilisation equipment and straightforward medical aids for barrier nursing which could have been transported by the planeload to those at risk from hepatitis and other diseases, but that we were not transporting it in the amounts or with the speed and urgency necessary to turn the situation around.

Barrier nursing is one way in which we can stop the spread of dangerous diseases among many Africans. That is doubly true of HIV. We know that many AIDS patients are removed from hospital by their families, who have no clear idea of how disease is transmitted and certainly no clear idea of how to protect themselves. That in itself can lead to more infection.

Mr. Baldry

The Government and the British people have given more than £90 million of relief to Rwanda to help with its recent disaster. How much more does the hon. Lady think should have been given? Is there 1p of that £90 million that she thinks has been spent on a project that was not worth while?

Mrs. Dunwoody

The Minister was clearly not listening. I am not responsible for the overseas aid budget. 98 The Conservative Government are responsible for the budget, and they are spending less than they were. They have access to medical equipment that could be sent by the planeload. If the Minister wants to know whether I think that, in an emergency, we should send immediate medical support and aid, the answer is that I do. If he wants to know whether I think that we should commit more money than we have in the past, I do. If he wants to know whether that is a generally held view among members of his party as well as mine, I can tell him that it is. If he thinks that he has scored some clever political point, I have to disabuse him of that notion.

Many people outside the House, of every religion and type, understand what we could do if we had the necessary commitment and political will. They also understand that only in the House is overseas aid regarded as one of the least important topics. It is debated only in Opposition time because it is not convenient for the Government to discuss in any detail what we are doing with our existing aid and trade budget.

I do not have the great and unalloyed admiration for the European aid projects expressed by some of my colleagues. I served on the African, Caribbean and Pacific countries committee for four and a half years. I believe that the inability to introduce flexible banana quotas between one country and another is contributing to the poverty of the West Indies right now. The inability of the British Government to push through some protective measures is revealed every time one goes into a supermarket and sees nothing but German and South American bananas on display rather than those from Commonwealth supporters.

I believe that institutions are becoming so rigid that they are not producing the necessary results in terms of their own development programmes. The Government's apparent ambivalence is probably a reflection of the fact that they are now waking up to the reality of what is happening in the Community. However, if we are not going to use those mechanisms, we must expand what we are doing bilaterally and put a great deal more effort into Africa and accept that that is where the major problems lie. We must also be genuinely prepared to tackle at source the matters with which we can deal, and deal with them with the expertise that we have but which we sometimes seem loth to demonstrate.

Mr. Jim Lester (Broxtowe)

I always enjoy speaking in such debates. I have great respect for the hon. Member for Eccles (Miss Lestor), because I remember that, in a previous incarnation, she resigned her position over the reduction if the previous Labour Government's aid budget in 1976.

Miss Lestor

I must correct the hon. Gentleman—I hate to do so, because I am being flattered. In fact, I resigned because of the cuts in nursery school education. There would have been no need to resign over the overseas budget, because it increased throughout the life of the previous Labour Government.

Mr. Lester

It was reduced by, I think, 50 per cent. in 1976 according to my figures, but that is in the past.

One gets the impression that the motion is a scattershot motion that nitpicks about everything. The only line with which I agree is that which states: 99 one billion people throughout the world live in abject poverty". During the years that I have been in the House, I think that I have visited most of the poorest countries in both south-east Asia and Africa. I have seen changes for the better as a result of our aid programme. I am second to none in my belief that the transfer of resources, of which aid is one important element, is essential as a moral imperative and is in Britain's self-interest—for those who consider matters only in terms of self-interest—in terms of the development of our economy as a major trading nation and of the movement of people.

It is often forgotten that television works in two ways. We see situations in the rest of the world that cause our constituents and ourselves great concern, but, equally, people see our world. Having just been to the Caribbean with the Select Committee on Foreign Affairs, one was conscious of the fact that, in every island one went to, people complained about the endless diet of American television, which was the only thing they could get. It shows them a level of affluence and creates pressures that, inevitably, people will want to remove if their position in their country is not likely to improve.

We have always had the argument about the level of aid. My right hon. Friend the Minister mentioned one or two countries that have reduced their aid budget. In the present world situation, according to the latest figures from 1992–93, the British Government have held, and in fact increased, their budget. That is a matter for congratulation, not condemnation.

I say this with no pleasure. Looking through, one finds that aid has been reduced by Austria, Belgium, Canada, Finland, France, Germany, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland and, most serious of all, the United States of America. Britain is one of the four countries in the group that increased its budget. That should be a matter for congratulation, not condemnation.

We need to ensure that some colleagues and others do not latch on to the idea that reducing the aid budget is a good idea. Having just come back from Washington, which I visited before we went to the Caribbean, I am deeply concerned about the discussions on Capitol hill about what overseas aid should be. There is real concern among American officials that, if the present discussions come through, they will not he able to claim that they have an aid budget of any description.

The hon. Member for Eccles mentioned aid and trade provision, and the Select Committee report in 1987. I happened to be on the Committee at the time and a party to that report. We have always agonised about aid and trade, the way it should be organised and whose budget it should come from. We are about right in terms of the 5 per cent. figure that we have reached.

It is difficult to know, but I suspect that, if they were honest, Opposition Members would admit that, if a constituency company told them that it had won a contract, wherever in the world, but that lack of British Government support, as opposed to support by the French, German or Italian Governments, had lost it the order and therefore it could not succeed, those Members would go to the Minister with that company and argue that we should at least have a same level of support other companies in other parts of world. It is a bit of a 100 double-take to argue against aid and trade provision but then not to accept the consequences in terms of international competition.

I have always thought that aid and trade provision should be argued for by the Department of Trade and Industry, but we cannot honour the general agreement on tariffs and trade rules if we do it that way. The Select Committee on Foreign Affairs felt that it was important to maintain this minimal aid and trade provision. A small proportion of our total overseas aid budget, which again was not mentioned by Opposition Members, is basically given on grant terms. I think that, in Britain, a higher proportion of the aid budget is given as a straight grant, which affects neither loan nor any other support, than in any other country.

Brief mention has been made of the Pergau dam. Again, as someone who has studied it carefully on the Select Committee, I believe that it is a grave mistake not to recognise that electricity is an important element in poverty relief. Places such as north Malaysia that have no electricity, and villages that cannot operate after dark or that do not have any basic machinery, should all be taken into account. I do not want to go further down that road, because others want to speak, and I want to talk about other issues.

The hon. Member for Eccles mentioned debt, as did my right hon. Friend the Minister. I genuinely cannot understand why the Opposition cannot produce some enthusiasm for the British Government on the issue of debt. Of all countries in the world, we have given the foremost lead.

When he was Chancellor of the Exchequer, the Prime Minister started with the Trinidad terms. He pushed it again at Naples. Again, his statement on the Halifax summit shows that he is one of the front runners, along with the Chancellor of the Exchequer, who used the Commonwealth Finance Ministers meeting to put forward the terms of selling International Monetary Fund gold, investing it and writing off the debt of sub-Saharan Africa. He spoke out clearly, and, for once, Oxfam was thoroughly delighted because that was its policy; it is not often that it feels that a Chancellor of the Exchequer argues for its policy, but he believes it strongly, and he argued for it.

I understand from a brief conversation about Halifax that we were the front runners in pushing other countries—we must act in partnership—to move forward. It is not the British Government who are resisting the sale of gold and the investment of that money; at least three other partners continue to do so. The British Government and the British Prime Minister are trying the hardest to bring that policy about by one means and another.

We all accept that the debt level of some sub-Saharan African countries is unacceptable. The all-party group on overseas development produced a report on that issue, to which Opposition Members were party on an even basis. We are clear on what needs to be done and how it needs to be done, but one must move along with other countries; we cannot do it single-handed.

We have also led the way in debt reduction and on grant terms. I occasionally wonder whether some faint words of praise from the Opposition for the way in which the Government have given the lead on this issue might be helpful and encouraging in terms of both the Prime 101 Minister and Chancellor of the Exchequer continuing their excellent work, which is widely recognised by third-world countries, about which we all share a concern.

Recently, the hon. Member for Eccles and I were signatories of a letter to the World bank over its attitude on poverty relief. In Washington, I saw the figures of the signatories from different Parliaments when that letter was presented. It would not surprise Opposition Members—it might, judging from the number of people listening to the debate—that the United Kingdom Parliament had by far the most people signing that letter.

Miss Lestor

It was all the work we did in getting the signatures.

Mr. Lester

From memory, I believe that we got more than 337 signatures, and that will have an effect.

Mr. William Cash (Stafford)

On the question of the World bank, does my hon. Friend, who is a great expert in these matters and is recognised in the House as such, realise that it may be a good idea to change the charter of the World bank to ensure that the arrangements for debt reduction can be reflected not merely in what we want to do but in the provisions of the charter? I understand that Mr. Cadmessus is somewhat sympathetic to that point of view. Would my hon. Friend want to give him every encouragement, and would he want the Government to give every encouragement to a change in the charter, so that we can achieve something rather than merely say that we want it?

Mr. Lester

As I said earlier in relation to debt reduction, one must recognise that one must work with many partners in these issues. At Halifax, we have reinforced the fact, as the Prime Minister said today, that we need to look hard at the Bretton Woods institutions. People have all sorts of ideas about how they can be improved, but the real point is that the only way in which we can improve them is to carry our other major donors with us.

The hon. Member for Southampton, Itchen (Mr. Denham) and I attended a hearing on Capitol hill on behalf of the all-party group on overseas development, in which we had before us the deputy both of the IMF and the World hank. That was an international effort to show those eminent and important people the depth of concern that many of us have about the level of poverty and the way in which World bank loans can be used.

Over recent years, we have seen a total change in the World bank's attitude. One change is for the bank to recruit some of its most persistent critics from the World Development Movement, from Oxfam and from some of the non-governmental organisations in this country to advise how it can reach and involve the people who share the greatest concern.

The hon. Member for Crewe and Nantwich (Mrs. Dunwoody) mentioned the Commonwealth and the Commonwealth ladies. Britain gives a unique input. We cannot do any other, because we are unique in having the Commonwealth, with 51 nations at all levels of development. At any Commonwealth gathering, we learn directly from people we know and trust precisely what the individual problems are.

I have just been to Jamaica, Barbados and St. Lucia, three islands in the West Indies which are at quite different stages of development—[HON. MEMBERS: 102 "Bananas."] I learned quite a lot about bananas, and I now know that there are big differences in the views on bananas held in the Windward Islands, in St. Lucia and in Jamaica. There is not necessarily an overall solution for helping each country. Having the Commonwealth makes us unique in the world, and therefore able to make a much greater contribution in aid and development.

We are also unique in having the Commonwealth Development Corporation. The agencies that are available to other countries must envy us the CDC. It has £1.5 billion of investment, 40 per cent. of which is in sub-Saharan Africa. I suspect that most hon. Members here have seen Commonwealth Development Corporation schemes in countries that would otherwise get no inward investment.

The corporation's schemes prove that one can have a successful, profitable investment in countries that would not attract private investment. The corporation can give the lead in how to invest, and because it has extended terms and does not demand immediate commercial returns, it can encourage the people in those countries and those who work on the projects to see that they can make a real success of a whole range of issues.

There is an endless debate about how best to focus one's aid programme. The Labour party has focused on personal services, which are important. However, time after time, one has seen schemes in different countries, such as health schemes in Tanzania and in Ethiopia, which are not sustainable by the country's economy once the aid programme has finished. One has seen operating theatres and drug schemes that cannot be sustained unless one continuously gives aid.

We must strike a balance between direct personal services which can be sustained by the country concerned—that does not necessarily mean building a western-type hospital—and infrastructure which, in my judgment, is even more important in enabling a country to produce for itself.

In Kenya, a road that many who work with the aid budget would argue was not poverty relief has linked a series of villages and farms to the airport in Nairobi. That has resulted in us being able to get Kenyan beans at any time from any supermarket in Britain. The Kenyans have been able to utilise their climate for a wider development of agriculture, to their overall benefit.

Anyone who knows Mozambique, for which we cannot claim any responsibility as we were not the colonial power, knows that infrastructure is essential. One can waste so many resources in trying to get from A to B. One cannot go from the north to the south in Mozambique without taking to the sea, taking to the air or driving through three other countries. It is an important element of poverty relief to look at how one can design a basic economy that enables people to succeed.

Sub-Saharan African countries are often impoverished because of their inability to trade with one another. Apart from Nigeria and Ethiopia, most of the 55 countries in Africa have small populations and cover huge areas. Most have a distinct inability to trade with the others. The overall level of trade between one sub-Saharan African country and the others is about 5 per cent., whereas in this country and the rest of Europe, the equivalent figure is nearer 70 per cent.

We need to look critically not just at the micro-level of personal services, but at the macro-level, and at how one develops an infrastructure which allows sub-Saharan 103 Africa, about which we all care because it is the worst part of the world and the one that is slipping back, to develop. We need to balance personal services and the sustainability and development of the economy in which we are interested, so that the people can re-direct their own resources, having got the debt relief.

From our know-how fund to eastern Europe, we can see that, once one has the infrastructure, the transfer of know-how can be enormously beneficial and easy, thus giving a great deal of added value for a relatively small amount. Harare in Zimbabwe is twinned with my town, and as a result, we are able to give direct technical assistance in all sorts of ways which produces a higher standard for Harare, with relative ease. All those issues need to be looked at carefully.

The hon. Member for Eccles also did not mention our reputation for disaster relief. This country gives a higher proportion of its aid in disaster relief than other countries do, mainly because we are good at it. We can act quickly and effectively in all sorts of situations.

Last month, we gave assistance for fire victims in Burma, food distribution to survivors of a volcanic eruption in Cape Verde, flood relief in India, and even 15,000 goats for the agricultural rehabilitation programme in Eritrea, a country that has caused us concern for a long time. We should give credit to the Overseas Development Administration for its disaster relief programme, and we should recognise, yet again, that we give a lead. We should be proud of that, and should not niggle about it.

Hon. Members have referred to the proportion of aid that goes to the poorest countries. Over the years, it is remarkable how aid has helped the development of countries that have the potential to become countries that can give. I am sure that the aid we are currently giving to Vietnam and Cambodia will fall into that category.

The combined resources of the 15 countries of the European Union, through the European development fund, can do a great deal more in terms of infrastructure than can be done by 15 bilateral programmes. Again, Britain gives a lead, because of its experience and because of its links with the Commonwealth, in directing the aid programme and in giving an input of knowledge that will, one hopes, make the programme better.

The Select Committee on Foreign Affairs produced a report on the balance of European aid, multilateral aid and bilateral aid. Of course we support the quality of our bilateral aid programme, but we should realise that it is essential that our Ministers should ensure that the money that goes to the European Union has a similar, but greater, effect, because there is an accumulation of funds from 15 countries. Exactly the same point applies in the United Nations, where we are among the strongest supporters of the multilateral programmes for which the UN is responsible.

Britain gives a lead in all these issues, and we shall continue to give a lead. Many of us recognise that the transfer of resources and aid is an essential element of Britain's leadership and international position. We shall be vigilant in ensuring that the British Government, whichever party is in power, maintain an effective and good aid programme. To many of us, that programme has great significance, and we have devoted a great deal of our parliamentary careers to supporting it.

Mr. Matthew Taylor (Truro)

This is an important and welcome debate, which has been treated seriously, as befits a subject addressing the needs of a very large number of people across the world. In every speech so far, we have heard that more than 1 billion people in the third world live in absolute poverty, but we should not forget that 1.5 billion people lack access to health care, and 1.75 billion people are without clean water.

Those figures illustrate the depth of poverty we need to address in our policies on overseas aid. We must remember, however, that behind those unimaginably vast figures lie individual people—families, children, men and women with the same human feelings as our constituents and our own family members. We have to hold on to that thought in addressing these issues, because, in a way, the very large figures that we put about almost mask the reality of what happens to those individuals in their own communities.

It has been said that, although we do what we can to alleviate such abject poverty, at the end of the day it is not our problem. I suspect that all hon. Members have heard constituents—albeit a minority of them—make that case. It is simply not true, and I shall give three examples why.

First, to put it in brutal economic terms, poor people cannot provide new markets for our goods. Secondly, third-world problems also feed first-world problems. For example, I do not believe that we can expect a country such as Colombia to be able to stop effectively the narcotics trade when its farmers cannot afford to grow other crops and the state cannot afford to tackle a multi-million—indeed, multi-billion—pound international trade.

Thirdly, poverty breeds war. Increasingly in the modern world, war can touch all of us economically, but—potentially even more important—it can also touch us through the use of nuclear, chemical or biological weaponry. Yet it remains the case that the struggle of developing countries to overcome such problems is too often overwhelmed by the struggle to repay debt to the developed world, and to maintain essential trade.

So overseas aid is crucial. Indeed, it would be better if we talked about it as overseas investment in the future—an investment to turn countries round, to our mutual advantage—and not as aid which, in some sense, is charitable and which we could withdraw if we so chose. Overseas aid is fundamental to the interests of this country as well as crucial to the fight against poverty.

Appropriately and sensitively targeted and delivered aid, often through non-governmental organisations, and always—I hope—delivered in co-operation with the people in need, can be of substantial benefit. As such, the British public have again and again showed their support for helping the world's poor.

The public's generous response to famine and poverty has been contrasted too often, although not always—I do not deny that the Government have measures of which they can be proud and it would be foolish and unhelpful to deny that—with the self-interested attitudes of the UK Government, which have undermined the overseas aid effort. Britain's record of overseas aid has not been the endless story of good news that Ministers have suggested.

The truth is that neither Conservative nor Labour Governments have kept their commitment to move towards the United Nations target of 0.7 per cent. of gross 105 national product for official development assistance. Instead, we have consistently managed a figure lower than the European Union average and, in 1993, British aid amounted to just 0.28 per cent. of GNP.

I say to Ministers—and, indeed, to the Labour Front-Bench team—that, if they have no intention of delivering the commitment, they should have the honesty to say so, and the courage to explain it. I do not think that it does anybody any good if it is a mythical target that is so far from being achieved, and which is utterly impractical, given present Government policy and decisions in the spending round. It certainly does not help to feed those people who need feeding.

While the figures are important, I agree with the Minister that the quality as much as the quantity of aid is crucial. I want to concentrate on the effectiveness of British aid.

Too often, Governments, especially this Government, have elevated commercial objectives above humanitarian and development objectives: first, by tying two thirds of aid to purchases from Britain; secondly, by failing to target aid sufficiently on the poorest nations; thirdly, by linking aid to arms purchases and failing to encourage good Government; fourthly, by failing to promote sustainable development. I shall illustrate why I believe that that is the case. There is plenty of evidence to support those claims.

Much British aid is tied to purchases from Britain. The OECD analysis in 1991 showed that 72 per cent. of British aid was tied, compared to an international average of 33 per cent. Similarly, in 1992, 67 per cent. of British bilateral aid was tied, compared to an international average of 40 per cent. In being tied to purchases that the developing country often does not need—indeed, sometimes has no use for—such assistance fails to reduce poverty or promote sustainable development.

Mr. Baldry

rose—

Mr. Taylor

I shall develop that point and give way to the Minister in a moment. I wanted to refer to the 1993 OECD report, which said: tied aid procurement can mean that recipients pay on average 15 per cent. above prevailing prices for goods that may not correspond to development priorities.

Mr. Baldry

I was wondering whether the hon. Gentleman could cite any overseas development project announced in the past year which he thinks should not have been allowed. Will he tell the House, and make it clear which projects the ODA has taken forward in the past year and he feels should not have been taken forward?

Mr. Taylor

The first part of my answer to the Minister is that I am looking at the history of this Government. If he is conceding that mistakes have been made in the past and that errors are now being corrected, I would agree with him. As the Minister knows, the essential issue is the competing options, and to give the Minister the answer that he is asking for would be to say that one project in itself had no value.

That may not be the case, but there are opportunities to make still better use of resources, in particular for aid to be targeted at local communities—for example, to support non-governmental organisations' pioneering work in 106 helping women within those communities. They bear many of the problems to which I have referred in developing countries.

Lady Olga Maitland (Sutton and Cheam)

The hon. Gentleman has cast a gross slur on British companies, which have done such useful and excellent value-for-money work in third-world countries. It is incumbent upon him to state the exact name of a company that he believes is ripping off a third-world country. I do not accept that he could name one.

Mr. Taylor

If the hon. Lady is suggesting that aid and trade have never been abused, I cite the examples of helicopters sold to India and the Pergau dam. The simple fact is that there are plenty of such examples, but I will not bore the House with them. The hon. Lady has missed the point if she thinks that I am attacking British companies, which understandably take advantage of whatever opportunities they can. I am attacking Government policy. The hon. Lady should understand that.

The aid and trade provision, which is part of our aid programme, was established under the previous Labour Government. It gives a small number of British companies subsidies to compete for contracts in developing countries. That provision has been particularly destructive. ATP accounted for 9 per cent. of Britain's bilateral aid in 1993 and lay behind the Pergau dam scandal. That scandal exposed the fundamental problem with ATP, because it is dominated by the needs of British business, but funded from the ODA budget. That reveals an internal conflict. The needs of British business should be removed from the ODA budget.

Tying aid to trade does not necessarily benefit either the donor or even the recipient economy. The "ATP synthesis evaluation study", conducted by the ODA and the Department of Trade and Industry, found that none of the projects evaluated in 1990 benefitted the poorest social groups directly to any great extent. That is my point. Those projects may have provided some benefits, but they were not directed at those most in need, who were not placed high enough up the priority scale.

Mr. Andrew Rowe (Mid-Kent)

Will the hon. Gentleman give way?

Mr. Taylor

I will not give way. I have already done so several times, and the point is clear.

Another ODA-DTI study of ATP-supported projects found that very few real economic benefits for the UK economy as a whole appear to have been realised in practice. There is everything to be said for helping our industries and our businesses to obtain contracts, but that is the job of the DTI and should not be funded from the ODA budget. The Government must tackle unemployment and the needs of industry through better economic policies at home and not by raiding the aid provision, which is intended for the poorest people in the world.

The Government have admitted that just 10.7 per cent. of bilateral aid went on basic needs in 1992–93. In 1994, the Development Assistance Committee review of British aid showed that just 6 per cent. of bilateral aid to low-income countries in sub-Saharan Africa went towards education and social services in 1991. I believe that the principle of aid must be to make it work for the individ- 107 uals in developing countries who most need it. That means developing education, health, telecommunications and the infrastructure.

More development assistance should be devoted to improving investment opportunities in developing countries, particularly for local enterprises.

Mr. Cash

Will the hon. Gentleman give way?

Mr. Taylor

No, I will not, as I have already done so several times.

Those local opportunities are often not realised, simply because of a lack of knowledge and technical expertise. Technical assistance should therefore be supported and expanded through the work of organisations such as the United Nations Conference on Trade and Development.

Miss Emma Nicholson (Torridge and Devon, West)

Will the hon. Gentleman give way?

Mr. Taylor

I have given way several times. I would be criticised more for speaking for too long than for not giving way. I hope that the hon. Lady may have a chance to catch your eye, Mr. Deputy Speaker.

The problems with the Government's provision of overseas aid reach beyond its quantity and the conditions imposed. If we look at the countries that benefit from our aid provision, the evidence is equally disturbing. Despite the Government's commitment to concentrate aid on the poorest countries, in 1988, just 69 per cent. of Britain's bilateral aid was allocated to the 50 poorest nations. There seems to be a tenuous link between a country's income per head and the amount of aid it receives. The neediest countries are not receiving the most aid. In 1992–93, only three of the top eight recipients of aid were UN-defined least-developed nations.

Whatever the Government say about the link with arms, the simple fact is that, instead of a correlation between aid and those countries in the greatest need, there appears to be a growing correlation between the failure to direct more aid to the poorest nations and arms contracts.

Oman, whose GNP per capita is more than $6,000—higher than that of aid-giving Portugal—has seen its aid double during the lifetime of the Government. In 1994, however, it ranked third largest in the list of purchasers of arms from Britain.

Although Ecuador, Colombia and El Salvador share the same level of poverty, in 1994 Ecuador received five times as much aid as Colombia, and eight times as much as El Salvador. The difference is that Ecuador was also the fifth largest purchaser of British arms.

Even more striking is the case of Indonesia. Our aid programme to it has quadrupled under the Government, while it has become the fourth largest purchaser of British arms—despite Ministers' commitment to promote good government through aid. Since 1975, when Indonesia invaded its neighbour East Timor, a third of the latter's population—20,000 people—have been killed. Surely we should be suspending aid and putting pressure on the Indonesian Government, instead of backing a regime with precious aid in what appears to be a response to massive arms sales.

The development projects promoted by British bilateral aid should have one other key feature built into them. They should be tied to environmentally sustainable, as 108 well as economically and socially beneficial, projects. At present, the majority of aid is targeted on large-scale capital-intensive projects which perpetuate existing social inequality and accelerate the deterioration of the environment.

The Government promote environmentally damaging projects such as the Pergau dam, and the environmental awareness that is developing at home—I acknowledge the progress that the Government have made in that respect—is not matched by an environmental awareness in our overseas development projects, or in our approach to development internationally.

If we are to have a genuinely sustainable world economy, there is no question but that the bulk of the environmental problems must be tackled in the developed nations. The developing nations have a right to expect the kind of social benefits which come from economic development, but such development in itself will have an impact on the environment unless two things happen.

First, developments must be directed specifically towards environmentally sustainable projects, and that must be a part of our aid package. This country must recognise that we not only have to bear the costs of sustainability at home, but that we must also help developing countries bear the costs. We have been the beneficiaries of the pollution until now, and we therefore owe those countries that much.

Secondly, we must recognise that to allow development abroad, we have to go even further at home in tackling pollution than would be the case if pollution was shared equally and globally. Those countries have not caused the pollution or benefitted from the development. They cannot be expected to bear the costs in the same way as we must.

Several hon. Members

rose—

Mr. Deputy Speaker (Sir Geoffrey Lofthouse)

Order. There are four hon. Members who wish to speak in the time remaining before the winding-up speeches. I would appreciate it if speeches were kept short, so that all four might be called.

Miss Emma Nicholson (Torridge and Devon, West)

I am most grateful for the opportunity to put a few points.

I support the Government amendment and strongly oppose the rag-bag of items that make up the Opposition motion. The Opposition forget that, during the past decade and a half, the socialist policies that their motion reflects have been discarded by nearly every Government in the world. The primacy of the market for freedom and wealth creation has a long tradition in the Conservative party, and I believe that we have also made one notable convert in the present leader of the Labour party.

Tonight the hon. Member for Eccles (Miss Lestor) led for the Opposition with passion and with a commitment to overseas aid. I pay tribute to the hon. Member for Truro (Mr. Taylor), the spokesman for the Liberal Democrats, who is still with us although he is not listening. Despite the passionate commitment of those hon. Members, they were just rotating old and outdated statements that bore little relationship to the reality of today's overseas aid programme, the results of which I have seen on the ground in many nations of the world.

109 The hon. Member for Truro talked about the need to help the poorest of the poor, but he wholly overlooked the fact that some of the poorest of the poor live in some of the better-off nations,