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Orders Of The Day

Volume 933: debated on Monday 13 June 1977

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[21ST ALLOTTED DAY]— considered

Overseas Development

[ Commission documents: Aid to Non-Associated Developing Countries (5/327/77), Financial/Technical Aid to Non-Associated Countries (5/438/76), Skimmed Milk Powder Food Aid (5/968/76 and R/534/76), Report of development co-operation policies (5/1218/76), Trade co-operation with developing countries (5/1553/76), Community generalised preferences 1977 (R/1676/76), 1977 Cereals Food Aid and Sahels Reserves (R/2542/76) and Report on Community Food Aid Programme for Cereals (1974-75) and Dairy Products (1975) (Unnumbered).]

3.45 p.m.

I beg to move,

That this House takes note of the Second Report from the Select Committee on Overseas Development in the last Session of Parliament (House of Commons Paper No. 705), the First Special Report in the present Session of Parliament (House of Commons Paper No. 335), the Second Report in the present Session of Parliament (House of Commons Paper No. 222) and the Second Special Report in the present Session of Parliament (House of Commons Paper No. 367).
The Select Committee on Overseas Development is grateful for the opportunity which this debate provides of focusing attention on what many hon. Members and many thoughtful people elsewhere consider to be the most urgent and important task of our time—namely, how to eradicate world poverty sensibly and peacefully, by agreement and with mutuality of benefit, while there is still time. World poverty is not new: the poor have always been with us. What is new is that the poor are now aware that the world's resources are maldistributed and that a minority of countries which are rich are consuming 20 times as much per capita as the majority of countries which are poor. What is new is that the poor are now convinced that the disparity in living standards is a direct consequence of the way in which the economic and trading system to which history has obliged them to belong is operating.

Of course, it is not as clear cut as that, but it is not so much the facts which matter in shaping human destiny as what people believe the facts to be. We in this country should know well enough how difficult it is when we are facing serious economic problems and high unemployment to convince our own people that there is a connection between our situation and that of far poorer countries and that that interdependence is now a fact of modern life.

What cannot be disputed is that the gap between the relatively rich and the very poor of the world, a gap which in all conscience was wide enough a decade ago, is now widening still further and that frustration in many parts of the Third World is giving way—I choose my words with care—to despair. It is imperative for our own survival in the industrialised West that we should understand why that despair exists and why we should bend all our energies to devising an international strategy for overcoming it.

Let me speak plainly. It is right that President Carter should have re-emphasised the importance of civil and political rights for all men. We know exactly what he meant by that and we applaud him for it. But, as the Secretary-General of the Commonwealth rightly reminded us recently, to the very poor, who constitute the vast majority of mankind, human rights are as much concerned with the right to work as with the right to vote, with freedom from starvation as with freedom from oppression, with the right to shelter as with the right to privacy, and with the right to be literate as with the right to dissent.

What we must realise in the richer countries is that our own prosperity, freedom and security—in short, our own basic human rights—cannot be long enjoyed if the majority of mankind suffers acute deprivation but is increasingly convinced that this need no longer be so if only the world's leaders would summon up the will to order things differently. In saying that, I believe that I reflect the views of all my colleagues on the Select Committee. Certainly, our reports which are before the House today should be read in that wider context. Indeed, we have had to take into account five disturbing developments.

The first is the aftermath of the oil crisis, which has disrupted the economies of both rich and poor nations, but those of the poor most of all.

The second is the continuing low rate of growth of income per head, which has made it more difficult to find more resources for development everywhere, but markedly more so in the poor countries.

The third is the rising accumulation of debt by poor countries and their decreasing ability to make repayment.

The fourth development is the social and political consequences of high and rising unemployment, especially among the semi-educated young in urban areas in poor countries, occuring simultaneously, and uniquely in the post-war world, with high unemployment in rich countries.

Finally, there is the plethora of international meetings at which all these issues have been discussed ad nauseam, but which have resulted in little agreement about what should be done about them.

We make no apology, therefore, for the fact that our report on the UNCTAD negotiations took the developed countries in general and the British Government in particular to task. The Government published their response when the Select Committee felt that it was unconvincing on 6th May, a day before the much-heralded Downing Street Summit of leaders from seven of the world's richest nations.

Since then there has been the North-South dialogue at the Conference on International and Economic Co-operation in Paris and the conference of the Commonwealth Heads of State in London, and there has been much talk about the need for a new and fairer world economic system. But there is very little to show for all this.

At the heart of the controversy lies what has been happening in commodities. Though many of the rich countries are larger producers of primary commodities than the poor countries and the share of the latter in world trade in primary products has fallen sharply in the last 20 years, exports of primary products remain the main source of earnings for the poor countries and their lifeline for essential imports.

How they have fared has been vividly described by President Nyerere. He said that in 1965 he could buy a tractor by selling 17·2 tons of sisal. In 1972 the same model needed the sale of 42 tons of sisal. Even during the commodity boom of 1974 it required 57 per cent. more sisal to buy the same tractor than nine years before. Since then the price of sisal has fallen again while the price of the tractor has gone up still further.

For countries that are utterly dependent on exports of primary products such a situation spells disaster. It erodes confidence, inhibits economic development and undermines political stability. As we say in our report on the UNCTAD negotiations, there may be short-run advantages for industrialised countries such as our own in keeping commodity prices low, but in the long run the real prize to be gained by obtaining fair prices for primary producers is an expansion in world trade. That is what we in the industrialised countries need if we are to maintain our living standards and reduce the distressingly high level of unemployment.

All this emphasises that waging war against world poverty and stimulating economic activity in poor countries are not merely a question of providing financial aid and technical assistance, important though these are. Even if they were, Britain's performance on that score would be open to severe criticism since the Government have already been obliged to cut the aid programme by £100 million spread over the next two years—the largest cut ever in planned aid expenditure. That in itself is bad enough, but much more than that is involved.

Let me make plain where the Select Committee stands. We are not solely concerned with surveying the aid programme. We see trade as a vastly more effective instrument than aid in promoting development. That is why we have been studying not only aid policy but the total impact of British trade, investment and aid practices on the economies of the developing countries. That is why we see the need for a co-ordinated strategy for trade and aid that will attack world poverty at its roots, reduce chronic unemployment and give the poor of the world the dignity and self-respect that come from selling what they can produce at fair prices instead of living from hand to mouth and borrowing vast sums that we know they are incapable of repaying.

Such a strategy would also make a significant contribution to solving the problems of the richer countries who are so often accused by the ignorant of exporting jobs when they give aid to the poor. Our inquiries have already established that there is a pressing need to overhaul and integrate our own aid and trade policies. Thus the Select Committee sees an advantage in concentrating our aid on identifying markets for the products of developing countries which we in Britain and the EEC, along with the rest of the developed world, can absorb, a task which has been strangely neglected.

There is also the need to identify the products of developed countries which are most appropriate to the needs of developing economies. That implies among many other things the training of a new generation of managers, salesmen and technical specialists. But identification of markets is one thing; the availability of markets for a reasonable time ahead is another, and it is vital. Trade policy has not only to take that into account but must ensure that, as development gathers pace and as the pattern of demand shifts, the production structure of the British economy adjusts with the minimum of stress and dislocation.

Such is the grand design demanded by the situation. But what is the reality that has been exposed by the Select Committee's investigations to date? Perhaps on this point I should explain that our second report for 1975–76 dealt with the Caribbean purely as a pilot study for a much larger inquiry into the related issues of British aid, trade and investment. We are continuing that larger inquiry and we shall be reporting later this year.

Some of the earlier evidence we took, however, led us to the conclusion that an urgent report to the House on the British position in the UNCTAD negotiations was necessary. That position is, frankly, negative and timorous. We have not yet reached our final conclusions, but hon. Members will have gathered from reading them that the whole trend of the two reports before the House and the evidence that the Committee has heard in connection with its larger inquiry, some of which has been published, shows that there is a great deal to criticise in the way in which the British Government deal with aid to and trade with the developing countries.

The Committee is conscious that before producing the final report we shall have to pay close attention to what has been achieved in the EEC in the co-ordination of aid and trade. We are encouraged by the forward-looking views of Commissioner Cheysson, and we intend to visit Brussels next month. The House will therefore understand if I do not deal with the various EEC documents listed on the Order Paper.

Let me summarise what the Select Committee has discovered so far about the British performance. First, there is no unified concept of policy. The integration of aid and trade policy between Government Departments is supposed to be the responsibility of the Foreign and Commonwealth Office. Our investigations suggest that this hardly exists. Whitehall is a cluster of competing baronies, the rival strengths of which actually determine what little policy there is.

Secondly, on the aid side, thanks to the right hon. Lady the Minister of State and her Department, there is some understanding of the inter-relationship which should exist between aid and trade, but there is a seeming inability on the part of the Government as a whole, no doubt because of the unsatisfactory nature of the co-ordinating machinery to pull the two together in an effective and coherent whole. There appears to be too much administration and too little professional input.

Thirdly, on the trade side, British interests are defined in so short-term and narrow a context that their defence actually constitutes long-term impairment of those interests. In contrast with the EEC, our exports to the non-oil-exporting developing countries are falling—from 17 per cent. of our exports in 1969 to only 8 per cent. in 1976. While we are doing better in the oil countries, it is surely a matter of the gravest concern that potentially valuable markets in the developing world are being exploited much more successfully by our main industrial competitors.

I do not wish to draw upon evidence on which the Select Committee as a whole has not yet reported, although I am bound to say that this strongly sup- ports the criticisms I have been making. But there are two observations I must make.

First, I must express the Committee's deep disappointment at the Government's reaction to the proposal we made for the creation of a trade development agency for the Caribbean. The case for such an agency is made out clearly in paragraphs 107 and 108 of the Second Report for 1975–76. What we hoped to achieve by that proposal was a more positive, intelligent and realistic approach to the development of two-way trade with the region.

Given the unsatisfactory attitudes that prevail in the corridors of power, we were not at all surprised by the Government's reaction. But if they cannot react favourably to specific proposals such as this, the least they can do is to tell us what their proposals are for tackling the problems which we have identified, and with far more imagination and determination than they have displayed up to now.

My second observation is this. The Committee is fully aware of the importance of the study currently being made by the Central Policy Review Staff under Sir Kenneth Berrill and the relevance of that study to our work. I should like a firm assurance today that the House will have the fullest opportunity to debate the many important issues that the Berrill Report will undoubtedly raise. In that debate the Committee hopes to be able to play a key rôle because of the knowledge and experience we have gained of the arrangements for our country's representation overseas.

A moment ago I spoke of the dearth of imagination in the conduct of trade and aid policies and the poor figure we have generally cut in the UNCTAD negotiations so far. Nowhere has this been so starkly revealed as in official attitudes on the key question of commodity stabilisation. To be fair, these attitudes are shared by other, though by no means all developed countries. True, there was a little progress in Paris a fortnight ago. True, there was a commitment to increase development aid.

Incidentally, it will be useful for us to be told how the British and EEC contributions are to be financed. Is there to be a real increase in our total aid effort?

True, also it was at last acknowledged that prices in commodity agreements should take account of inflation, which the poor countries did not cause in the first place.

What this will mean in hard economic terms has to be left until the talks are resumed in Geneva in November. Today we are concerned with the British contribution to these negotiations, with British initiatives. I am bound to say that on that score the Select Committee was singularly unimpressed by what it learned from its witnesses. Let me spell out the implications of this failure on our part to champion the cause of Third World countries, to whom we are bound by so many ties of history and common interest.

Falling barter terms of trade in most, although not all, developing countries, if unchecked, can result only in a lower demand for British exports. That can mean only fewer jobs in our traditional exporting industries. Here we have two problems as I see it. The first is how to fashion an international economic system that will enable the economies of the poorer countries to grow faster. That is why the Select Committee regards such issues as the integrated programme for commodities, the common fund, the expansion of Stabex, the Lomé Convention scheme, as crucial. It is also why we regard an improvement in the exporting capacity, and therefore in access, of the non-oil exporting developing, countries as being fundamentally linked to institutional improvements. These are all of a piece integrated and mutually interdependent in a way that the British Government have not yet begun to recognise.

One point needs to be specially emphasised. In seeking to improve the international competitiveness of the developing countries we must not lose sight of the fact that some start from a better position than others. Some will make more headway than others. A few start from the bottom, for a whole variety of reasons. They may have too few resources, lack the ability to pick themselves up from the ground, and so will advance slowly.

My hon. Friend is generalising somewhat and I suppose that that is necessary. Before he leaves the subject of commodity agreements, can he say specifically what he thinks should happen in relation to, for example, the commodity of tea? What does he see his present remarks meaning in the context of that commodity?

I would be happy, not merely to discuss that, but to discuss the whole range of commodities produced in Third World countries. To do that would take up the time of the House for the next hour. There are other members of the Select Committee who wish to contribute to the discussion and who will take up that point. My hon. Friend need not wave a disparaging hand. I am perfectly capable of answering his question. If he has not the wit and understanding to realise that countries whose income per capita is desperately low, whose people stand on the edge of starvation most of the time, are seriously limited in their capacity to buy British exports, he does not begin to understand the nature of the problem.

Let me finish. What I am arguing here is the interdependence of interest. We have unused capacity in this country and massive unemployment and massive deprivation overseas. If my hon. Friend has a better way of solving the problem, no doubt he will contribute to the debate.

Even supposing that all of the generalisations that my hon. Friend has just given us were accurate, and that is a big supposition, can he say whether, in the context of tea, he favours a commodity agreement that would raise the price still higher or whether he would control production? What would he do?

I would be perfectly prepared to argue this point in the greatest possible detail with my hon. Friend. To do so now would take up some time. Yes, I am in favour of commodity agreements. Yes, I would be in favour of an agreement governing tea. But, at the end of the day, that is not what matters. What matters is continuity of supply to those who require the commodity at a price they are capable of paying and at a price which is fair for the producer.

The best illustration I can give of that is the Commonwealth Sugar Agreement. If my hon. Friend does not have any knowledge or experience of that, I do not intend to educate him this afternoon The advantage of that and similar commodity agreements was that they gave the producer the assurance that he would get a remunerative price for the product negotiated for a period of years. It enabled him to maintain his production and it enabled the British housewife as a result to buy sugar, for instance, at a reasonable price with continuity of supply over a long period. I should have thought that the example I have given in regard to sugar gives the hon. Gentleman the answer to his question about tea.

I think that the general purpose which people have in mind in achieving commodity agreements, conceivably within the context of a common fund, is that there should be a stability of price that will benefit both the developing countries and the consumers in the industrialised countries. I do not know to what exent the hon. Gentleman is aware that the index of price fluctuations for key commodities which we import from the developing countries—it therefore affects our consumers, and it includes tea—ranges from 8 per cent, to 23 per cent. That is not a very good basis either for our own efforts to deal with our own inflation or for the developing countries' efforts to have stability of income.

The right hon. Lady has expressed the point perfectly. One of the more hopeful signs in the past few years has been the readiness, if I may make a positive point, of the oil-rich countries to play a large and even magnanimous rôle in making an impact on world poverty. We who have a very long experience—some of it very dearly bought—have an opportunity to share with them in fashioning the joint programmes to aid the poorest countries. I hope that the right hon. Lady will say something about that today and indicate whether any initiatives are planned in that context.

The second problem is how to ensure that Britain and the British people benefit from the growth in the import capacity of the developing countries. To ignore this aspect would be less than realistic and would play false by those in this country who make their living by supply- ing, efficiently and competitively, the needs of developing countries. The whole of British industry has a part to play in this, and the Select Committee warmly welcomes the recent speech by the right hon. Lady in which she said:
"We must create an understanding within our trade unions and within the management of industry that a blinkered view of export prospects, a traditional and outdated concept of expansion only into the over-competitive markets of the Western world, will not serve the interests of the British people."
That is absolutely right, and we also endorse what she went on to say:
"The moment is ripe, and not yet too late, for a clearer definition of our own enlightened self-interest, and for the integration, the link between our industrial and overseas policies."
That is what I have been trying to say up to now, and we shall listen with great interest to what the right hon. Lady may say further on this subject today.

Let me conclude by saying that this will inevitably be a continuing debate. The Select Committee is currently surveying a very wide range of policies and institutions in this and related areas and will make appropriate recommendations from time to time. But, as I have tried to show, we have already come to one conclusion which demands the urgent attention of Government and industry.

The conclusion is this. Aid alone can achieve little, even for the very poor in the poorest of countries. Trade alone can do more, but will chiefly benefit those who are already on their way to improving their ability to raise the living standards of their people.

Only if aid and trade policies can be properly integrated—jointly conceived to reinforce each other, not aid to reinforce trade for Britain's sole benefit—can the necessary dynamism be created to enable us to make a real and lasting impact on world poverty.

4.16 p.m.

First may I say how very much one welcomes this debate and how grateful one is to the Select Committee not only for its own work and reports but for providing us with this very rare opportunity of debating these issues in the House, and particularly for the opportunity to discuss the proper issues which the hon. Member for Essex, South-East (Sir B. Braine) has set before us as coming from the Select Committee.

The hon. Gentleman will not be surprised to know, nor will the other members of the Select Committee, that there is very little in what he said with which I want to disagree, other than perhaps the odd point here and there, to which I shall turn later.

Looking carefully around the Chamber at those who are present today, I would say that there is a certain camaraderie among us, in that most of us have evidenced our concern about these matters. We are a rather rare breed, I am afraid, in the House of Commons, and that is a great pity, but we have that identity of interest.

My hon. Friend the Under-Secretary of State for Trade will wind up our debate on those aspects of it which specifically concern the issues of UNCTAD, the common fund, and specific matters of trade, although I shall have a word to say about the matters that the hon. Member for Essex, South-East has raised.

We are all aware that we are holding our debate at a time of considerable significance. There is proceeding at the moment the meeting of the Heads of Government of the Commonwealth, which will be discussing this week those very economic and developmental issues which the hon. Gentleman has mentioned this afternoon and which we shall be discussing during the debate. Our debate is also held against the background of the final results of the Conference on International Economic Co-operation, issued 10 days ago.

I should like first to say a rather general word on the state of the North-South dialogue as it emerged from Paris 10 days ago, although my hon. Friend will no doubt wish to add further substance to this when he replies to the debate.

We must not deceive ourselves. A great deal of effort and time were put into the CIEC meetings in Paris, but the results, we have to confess, have been in general a disappointment. It may be that this was almost inevitable. It may be that the frame of reference for CIEC was the wrong frame of reference to begin with. It was trying to tackle a very wide range of issues, some of which are very complex and very technical. The countries which were taking part, the G19 and the G8 countries, had very different interests. It may be that the beginning and the middle of CIEC were responsible for the fact that the end of it was not as good as we might have hoped.

It has been a great problem of the last year or two that there have been so many different arenas for the debate on the various issues of the North-South dialogue. There has been CIEC in Paris. There have been the dialogues in Washington. There has been the discussion in UNCTAD. I remember the Secretary- General of UNCTAD saying to me about a year ago. when I was discussing with him the dialogue in Paris and the UNCTAD issues which were coming for- ward, that "The dialogue is UNCTAD and UNCTAD is the dialogue ". I think he may have been right. It may be that if we are tackling the very technical issues raised in CIEC, the best way to do it is within the committee structure of a United Nations institution which can get down to the detail. I am not sure about that, but it is worth bearing in mind.

But let us be fair, as we always are in the House of Commons. CIEC avoided confrontation, and co-operation continues in seeking solutions. It is worth putting very briefly on record what was achieved and what was not achieved. I think that fair tribute should be paid here to our own Government for the part they played in this respect. CIEC agreed that a common fund should be established
"as a new entity to serve as a key instrument in attaining the agreed objectives of the integrated programme for commodities as embodied in the UNCTAD resolution".
These important discussions will go on at the negotiating conference in November, but a common fund has been agreed, and that is a big advance on the position of a few months ago. A great deal of the credit for achieving it—this should be said frankly, particularly since we have the presidency of the EEC—lies with our own Government. We have played quite a big part in achieving this step forward.

Concerning aid, the developed countries agreed to take special action to make available $1 billion to help meet the needs of individual low-income countries which are facing general and very acute economic problems at the moment. It is to be provided as far as possible in rapidly spending forms, quickly disbursing forms, through multilateral channels, and on highly concessional terms. The EEC will make a contribution to it, in which we have a considerable share, and the United States, subject to Congressional approval, will be contributing quite a substantial amount through additional funding in it bilateral programmes. The rest of the $1 billion will be provided through the other industrialised members.

The hon. Member for Essex, South-East quite correctly asks me what is likely to be the element of additionality involved in this. That is a question that I, also, am asking at present. It is certainly clear that over the last few months the aid programme has been undertaking a number of new and quite major commitments arising out of the North-South Dialogue. I think that it will be my task to see that this is taken full account of when we come, as we shall during the next two or three months, to assess the size of the aid programme for next year and subsequent years. But it is a very valid point that the hon. Member raises.

I shall not go into the questions of food and agriculture and of industrialisation, but on those, too, in CIEC a considerable advance was made. But I am afraid that the North-South issues that are engaging CIEC, UNCTAD, the Commonwealth and United Nations will be resolved only when the rich industrialised countries, such as ourselves—because however grave are our own economic problems, in comparative terms we are rich—manage to reach a genuine understanding of the interdependence of the world economy and of the effects of generations, of centuries, of colonialism and neo-colonialism on the Third World countries and of the inequalities in the distribution of the world's wealth, which in fact have motivated the Third World countries to formulate their demands for a new international economic order.

I am grateful to the right hon. Lady for her mentioning this matter. I think that it is "the" new international economic order, and not "a" new international economic order, which the Third World has propounded, and perhaps most forcibly and explicitly through President Nyerere. Does the right hon. Lady share and support the definition that President Nyerere has put forward?

The hon. Gentleman is a little mistaken if he identifies "the" or "a" new international economic order with President Nyerere. President Nyerere is one of the Third World leaders who have agreed together, in the Committee of 77—which is now, of course, some 112 countries—in successive of their own conferences, to formulate the request that they make and are making now to the industrialised countries. The hon. Gentleman would be very mistaken to personalise this. The demands being made and the content of the formulation of the new international economic order come equally from—perhaps putting the matter in terms that the hon. Gentleman will most appreciate—Right-wing developing countries as from Socialist developing countries.

I did not actually impart any particular political slant into what I asked. I associated President Nyerere with my remarks only for the sake of convenience. However, as the right hon. Lady is refining my question, will she still answer it? Is she entirely on the side of the proponents of the new international economic order?

I am not on the side of any proponents of anything. What I believe is that the proposals put forward by the Third World countries in general, as a clearly formulated agreed definition of their needs, in what they call the new international economic order, and the demands formulated in that, are worthy of more understanding and consideration than the rich industralised countries have so far been able to give them. There are certain of their requests and demands that raise obvious and very clear difficulties for industrialised countries. There are others that raise fewer difficulties. These are the ones that tend to have found solutions in the forums up to now. The question that arises—I shall turn to it later if the hon. Gentleman is prepared to stay and listen—is how far we identify our own interests with their interests, in being flexible and understanding, in resolving the issues that are the key issues of dispute.

A moment ago the right hon. Lady referred to the rôle of the colonial Powers in the development of many former colonies. I feel sure that she will want to correct any mis-interpretation that the House may have made of that remark and, in fact, confirm that some colonial activities—indeed, many activities of the previous colonial régimes—have been extremely helpful in helping many of these countries to achieve the levels of development and the progress that they have made so far. There were certainly disadvantageous aspects of colonial rule, but I feel sure that, for the record, the right hon. Lady would like to make clear that it is very much a case of on the one hand, one thing, and on the other hand, the other thing.

I would clarify what I said by saying that the system of British colonialism, in terms of the way in which we governed the colonies, certainly gave great advantages and a great deal to a number of Commonwealth countries. In fact, we were far better colonialists than almost any other empire—I think far better than any other empire. One can say that, certainly, but it is not saying a great deal at times.

What I was talking about was the economic system by which we took for granted that we could have cheap raw materials and use cheap labour. It was in that sense that I was talking of colonialism and neo-colonialism.

I come now to one or two detailed points. The hon. Member for Essex, South-East mentioned the Central Policy Review Staff review. The CPRS report is now being printed. It is expected to cover all aspects of the country's over-seas representation, including aid administration. My right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs hopes to receive it very soon. It is his intention to publish as much of the report as possible and to do so as soon as he can. But, of course, he cannot take any final decision on this until he has had a chance to see the report itself. As to the question how far we can discuss it in the House, I hope that there will be a very full opportunity to do so, but the question of a debate on the subject is for my right hon. Friend the Lord President.

I turn now to the general question of aid and trade strategy. Perhaps I may say to the hon. Member for Essex, South-East that from what he said this afternoon, I think he and very possibly the Select Committee—I am not sure—seem to be in the very slight danger of falling into a trap, which I hope they would avoid. There has been a continuing argument over the last few years about which was more important—aid or trade. The argument has swung one way and the other. There have been people who argued that aid in itself was neo-colonialist. There have been very strong, extremist Left-wing opinions to that effect. At the same time, there have been people who have said that the trade aspects are really much less important than aid.

I hope, and certainly I would present it as my own point of view, that in emphasising the importance of the trading aspects of relationships with the developing countries, one should not thereby underrate the continuing importance of the aid relationship. In my view they are of equal importance. One should not fall into the trap of emphasising one rather than the other. But I am quite certain that the hon. Member does not really do that.

It follows, of course, that one must, as the hon. Gentleman says, have a co-ordinated strategy, and one must get the emphasis right. I should like to take a moment to talk about aid strategy, because it is so rarely that one is allowed an opportunity in the House to do so.

As the House knows, Britain's poverty-orientated aid strategy—which I know has the general support of the House—was set out in the White Paper of 1975. Since then, interestingly enough, others have moved in the same direction—notably the Government of the Netherlands and the World Bank. Sometimes it is called a poverty-orientated policy; sometimes it is called a "basic needs" policy. For us, it means that we are trying to increase the proportion of our aid which goes to the poorest countries. By the poorest countries, one means those with per capita incomes below $200 a year. I should add that that figure derives from 1972 and now probably needs slight revision, but it was the 1972 base line.

We should try to increase the emphasis in our aid programme on the poorest people, and this leads to greater emphasis, obviously, on rural development, because the mass of the world's poor live on the land and if we are to help them, development assistance must be directed to the countryside.

In the past two years, we have made a good start in implementing our policies, and I shall briefly give one or two figures. In 1976 about 66 per cent, of our gross bilateral aid was spent on countries with per capita incomes below $200, compared with 57 per cent, in the previous year. That is an encouraging trend. The proportion of our bilateral aid committed to projects wholly benefiting the rural poor is also increasing—from 28 per cent. in 1974 to nearly 37 per cent, in 1975, the latest year for which I have figures available. We expect this trend to continue.

I should add that the largest element of our bilateral aid. to the International Development Association programme of the World Bank, is now far more povertyorientated and concerned with rural development than it was a few years ago, because of the Bank's own changing emphasis. This means that in both multilateral and bilateral aid we are moving slowly, but quite effectively, I think, towards implementation of the aid strategy. I gave the Select Committee one or two examples of our rural development projects. I have one or two more examples here, but I shall not trouble the House with them today.

However, I should emphasise that this is not an easy matter. For those who organise and administer the aid programme, it is far easier to build a steel mill than it is to define and finance a rural development project. Yet—I am sure that the House will appreciate this: we must not be too narrow in our definition of what constitutes assistance to rural development. My own intention when the White Paper was under preparation was to define it quite broadly.

On the one hand, there are the clearly narrower agricultural components; the inputs of expertise directed towards improvements in agricultural production, livestock, fisheries and forestry production. On the other hand, in very many of the poorer parts of the world a first essential in the effective development of the potential of the land is the availability of power and irrigation; a second is access to and from the markets, which the building of feeder roads can provide; and a third is the development of processing industries—industrial development, not rural development—which can enable a developing country to keep for itself the value-added element which has traditionally been the prerogative of the industrialised countries but by which it can immensely increase its own income.

There is a further dimension to the emphasis of a poverty-orientated aid strategy. I was not myself able to explain this to the House at the time of publication of the White Paper, but it is this, if I may, so to speak, give a brief thumbnail sketch: the dominant economic theory of the 1960s was that a concentration on key points of industrial development would provide take-off for the Third World, and the increased prosperity from industrial development would—I quote the expression—"trickle down" to the poor. This was a theory which manifestly did not work.

I am glad to have the hon. Gentleman's agreement, because what I am about to say is, I believe, in conflict with the Milton Friedmanite economic views, which, I suspect, he probably supports. However, I hope that he will listen. In my view, the economic rationale for a poverty-orientated strategy is centred upon the need for increased incomes among the majority of the people of a country, in order to provide a surplus to basic needs which can become the basis for self-generated economic growth. This is the fundamental economic rationale, although I do not believe that it was spelled out completely in the White Paper. Only if people have the purchasing power will a Third World economy have the ability to develop its own potential.

I have no desire to bring in Professor Friedman. I think that I can take on the right hon. Lady on my own. Since she appears to believe in the thesis of self-sustaining growth, can she explain why we do not have it here?

:I could suggest that the answer may be related to the maldistribution of our own income and wealth. However, in terms of the Third World there are other factors involved, and they are factors which no industrialized country through its own aid programme can affect. For example, a major barrier in many countries is the system of land tenure—whether it concentrates ownership in large farms and latifundia or whether it diffuses ownership and tenure in plots of land which are far too small to be viable in the support of a family, however intensively they are cultivated, But what happens to change such a system can be only a matter of political will for the country itself. Nevertheless, we can ourselves do our best to support those projects which are associated with social and institutional changes which benefit the poor.

Will my right hon. Friend refer to what I regard as the most vicious feature of the matters covered in this section of her speech, that is, the footloose nature of the population in the bush? Unless we can do something about that, we shall see shanty town after shanty town on the edges of cities to which men move, leaving the land and leaving the bush, sometimes even leaving their families behind them when they go there. I regard this as the most filthy and vicious feature of African society—the shanty towns on the edges of, for example, the Copper Belt, Lagos and elsewhere.

There are two aspects to that. I came across an interesting example the other day, of which I can give details to my hon. Friend, of an aid project in which nomads of an agricultural area of Africa are being assisted, without changing the whole structure of their life. They can still be nomadic, but they will have a basic infrastructure which enables them no longer to be on the edge of subsistence. Second, if one makes a rural area viable, there is less need for people to move into the towns. Moreover, if the processing industries are built so that what people produce on the land can be processed, again one helps those who would otherwise drift to the cities.

I turn now to a matter which the hon. Member for Essex, South-East did not raise but about which, I believe, the House would wish to hear a brief word. I refer to the question of human rights and the relationship of aid policy to human rights.

I am sorry to interrupt my right hon. Friend again, since she has been interrupted a good deal already, but I have a question to put on a matter to which she has already referred, that is, the welcome though somewhat belated orientation towards rural development. In that context, could my right hon. Friend say to what extent there has been an orientation towards reafforestation? Some of us regard that as one of the most important though necessarily long-term ways by which we can provide assistance.

I hope that my hon. Friend does not really think that our move towards a poverty-orientated aid strategy directed to rural areas is belated. In fact, we were one of the first to make this move. We have a number of such projects. For example, I can give my hon. Friend details of one in the Sudan which is related to reafforestation. We have a close interest in a number of projects in that context.

I turn now to the question of human rights and the relationship between aid policy and human rights. As the House knows, I regard this, and have always regarded it, as a matter of fundamental importance. It is not a new subject for me. Nor is it new for the Government or, if I may say so, for the Labour Party. There tends to be a view held by a number of people, ranging from Mr. Bernard Levin to certain right hon. and hon. Members, that the Labour Party is capable of applying double standards. I wish to put on record what both the Labour Party and the Labour Government have done. This has frequently been unreported by a Press which is some-what attached to selective reporting and comment, and I wish now to give a purely factual report.

I will summarise briefly what the Government have done for refugees from many countries. We have made a number of contributions to the United Nations High Commissioner for Refugees. We have made a special contribution to the United Nations High Commissioner for Refugees for Rhodesian refugees in countries near Rhodesia and for Rhodesian refugees in Mozambique. Recently I announced, but it may have escaped the attention of some hon. Members, a special contribution of £250,000 to the United Nations High Commissioner for Refugees for Kampuchean refugees—that is, Cambodian refugees—in South-East Asia. I found myself in complete sympathy with the motion on the Order Paper in which a number of hon. Members have expressed their concern about refugees mainly in Thailand, but in other countries as well, coming from Cambodia.

We have within Britain assistance for Rhodesian and Chilean students and for Namibians, outside Namibia, not just in Britain, but in Lusaka. We have other programmes, both bilateral and multilateral, which include Cyprus, Vietnam, Cambodia, Southern Africa and others, with the United Nations High Commissioner for Refugees. The total, taking the money spent in this country and in other countries, is about £11 million. I think that the House will agree that those programmes are not politically oriented. They concern themselves with refugees suffering as a result of the infringement of human rights.

I should like to mention the Labour Party's activities. These matters are not very well known, because they have not been reported. Therefore, I should like to put them on record in this House.

As early as 1973 the National Executive of the Labour Party made a statement on dissidents in the Soviet Union and sent a deputation to the Soviet ambassador on the subject. A more recent statement was made at the time of the visit of Vladimir Bukovsy referring to the position of dissidents in the Soviet Union and Czechoslovakia. A resolution on the questions of Charter 77 dissidents in Czechoslovakia was passed unanimously. We also made representations on Brazil, Indonesia, India and Chile.

On a point of order, Mr. Deputy Speaker. Is the substance of this part of the right hon. Lady's speech in order?

It is a matter for the Minister, if she is developing her argument.

I have completed that passage. I wanted to get it on record in Hansard. I think that the House will agree that there can be no justified accusation of double standards against either the Government or the Labour Party.

Having put that clearly on record, I should like to indicate the problemsinvolved in making judgments on aid administration. It must always be a question of reaching a balance of judgment. Sometimes the issue is clear. It may become impossible to adminster aid. Such was the case in Uganda several years ago. Sometimes there may be a clear expression of public opinion. Such was the case in Chile.

In other cases we must try to answer certain questions. First, is the country concerned a persistent violator of human rights? Secondly, will what we do in our aid policy persuade it to give greater respect to human rights? Thirdly, how do we best co-ordinate with other aid donors?

Six weeks ago I had talks in Washington with the Carter Administration people—in particular about the President's appointment of someone to deal specifically with human rights. We found ourselves in a large measure of agreement. But how do we co-ordinate with other aid donors?

Fourthly, if we can carefully direct our aid to the poorest people in countries which persecute many of their citizens—this can be difficult—are we helping to create conditions which will promote political advance in the area of human rights or are we hindering them? It is not a simple matter. Of course, some choices are clear, but others are not.

Finally, I turn to the major theme of the Select Committee's Report: where lies our own self-interest? What is the relationship between the development of Third World countries and our own economic prospects? I shall take it wider than aid, as did the hon. Member for Essex, South-East. It would be wrong to limit our concern to aid. It is a question of the whole complex of policies which either do or do not promote the development of Third World countries. Therefore, what is the relationship between the development of Third World countries and our own economic prospects? What can we do which will more effectively co-ordinate the link between the two? The hon. Gentleman and I, and therefore the Select Committee and I, are in complete agreement that there is an important link here.

I worked out some figures a year ago—I was not then in the Ministry—which showed that if from 1980 to 1985 we were to assume a 5 per cent, rate of growth in developing countries—that was a rate of growth which they achieved in the 1960s before the oil crisis hit them—and were to take the present base line of doing only our present proportion of trade with the developing countries as being valid—I am basing myself on the 1974 statistics, which I think the Select Committee also did—according to my figures there would be a 65 per cent. increase in exports to the developing countries which would mean a 19·3 per cent, increase in United Kingdom total exports. That is quite a large figure.

If we were to assume that the whole complex of international policies towards the Third World were to be such as to promote a higher rate of growth, which was not held to be inconceivable in the 1960s because people talked about them achieving a 7 per cent, or 8 per cent. rate of growth, then an 8 per cent, rate of growth in Third World countries between 1980 and 1985, still holding the same proportion of British trade with them, would, according to my figures, mean a 31 per cent, increase in total United Kingdom exports.

That presents a number of challenges. First, how do we achieve that degree of economic growth in the Third World? Here we come back to the North-South dialogue and all the elements which are contained in this continuing debate between the developing and the industrialised countries. We come back to the maximising contribution that the United Kingdom and the Commonwealth can make. I believe that discussion within the Commonwealth on these issues can be and this week has been immensely valuable to resolving these issues.

We come back to a correct definition of self-interest. To the extent that Third World countries can grow and to the extent that there can be an increase in purchasing power among their people, there is a direct relationship with jobs and industry in this country. But it means that industry must be geared to producing more of the items that the Third World needs. It means that, one way or another, we must be more geared to selling our industrial products in the Third World.

At the same time, it means that this must be a reciprocal effort. As the Select Committee stated, we must look carefully at how we can help Third World countries to market the goods that they need to export to us which do not necessarily conflict with our own industry, production and employment. It becomes a complicated question.

I am certain that the Select Committee is right in saying that this requires more co-ordinated attention within White-hall. Although I cannot say much about this matter, I can indicate that there may now be the beginning of a greater degree of co-ordination, or at least a new look at the subject of trying to analyse what needs to be done and what could be done. I am certain that the Select Committee has performed an invaluable service in raising these issues.

I hope that I have not taken too long. There is a great temptation for Chairmen or acting Chairmen of Select Committees and Ministers on these occasions to speak for far too long. That is because the House allows us the opportunity to do so only once every 18 months. Therefore, I hope that the House will forgive us.

I hope that the effort which the Select Committee will put into its next report will be given even greater attention by the House, because I know that it is continuing this whole theme of in some way linking our own self-interest with the interests of the Third World. In my third incarnation at the Ministry, that is my own major theme. There is a tremendous vacuum to be filled by intelligent thinking, analysis and action, and I hope that together we can do it.

4.50 p.m.

I do not want to follow either of the previous speakers in the broad generalities of development policy. I should like to address myself particularly to one of the papers before us this afternoon—the First Special Report from the Select Committee on Overseas Development—which is the right hon. Lady's reply to our earlier report on aid to and trade with the Caribbean. I would specifically comment on one or two of the recommendations that we made to the Minister and on her reply to them.

I first turn to Recommendation No. 2 on page vi. The Committee recommended that
"The Department of Trade should take immediate steps to develop a fully managed market for bananas in which the return to the grower is properly protected."
I believe that the Committee made that recommendation because it was perhaps more conscious than many hon. Members of the extent to which many of the single one-crop economies, particularly in the Caribbean, are entirely dependent on the income they derive from the export of bananas to the United Kingdom for their overseas earnings and, indeed, for their survival. I note with interest that the Minister has said that a "fully managed market" would be difficult. Indeed, I think she suspects that it may be impossible for all kinds of reasons concerned with the harvesting, transport and preparation of bananas for the domestic market.

The right hon. Lady goes on to say in the final sentence that this is a subject which is
"under active consideration in the European Economic Community and in FAO and UNCTAD."
I hope that when winding up the debate the Minister can report on the form that these discussions have taken and what assurance there can be in future that the small West Indian banana producers will be able to look forward to an expanded market for bananas not only in the United Kingdom but also throughout the Community as well. In truth, perhaps the best answer to their immediate economic problems is for them to have the certainty of a growing market for their products not only in the United Kingdom but also in Europe.

Secondly, I turn to Recommendation No. 10 on Page x of the report where we made comments on the amount of assistance that the Department is giving to the University of the West Indies and the School of Agriculture in particular. We were concerned on our visit to the West Indies that the School of Agriculture, and the University of the West Indies situated in Trinidad, has regrettably run down considerably over the years. This is partly because the Trinidad economy has abruptly changed direction as a result of the discovery of oil so that although some years ago Trinidad was Self-sufficient in agriculture this new wealth has weaned Trinidad away from that agrarian path to progress. Indeed, they are gradually becoming more dependent on other countries in the West Indies, and on the United States as well, for their supplies of food. In these circumstances, because this is a direct result of the Trinidad Government's policy, I think we ought to be careful about policing any British funds which are going to support that university when much of the findings will not, in fact, relate to the Trinidad economy and, indeed, much of the existing knowledge in the university is not being extended out into the rural areas. As guardians of the British taxpayers' money we should ensure that small amounts going for relatively minor purposes of that kind should be subject to careful scrutiny by the Minister.

The university's agricultural department of which my hon. Friend is speaking has an honourable record in past years of serving the whole of the Commonwealth. I would certainly have thought that before withdrawing support from that university an attempt ought to be made to relate this work more closely to the new needs of the developing countries rather than to blot out something that has done so well in the past.

I am grateful to my hon. Friend for that intervention. I do not really disagree with him. I was simply pointing out in the context of this debate that funds are being spent some of which, in my judgment at least, may not have been spent in the most beneficial way. That constructive suggestion is something that I hope that the right hon. Lady will take up.

I turn to Recommendation No. 16. The Select Committee recommended that
"The Department of Trade should invite the financial institutions to consider what practical assistance they can give and in what ways existing channels of communication need to be improved to ensure that such opportunities for common advantage are not neglected in the future."
Arising partly out of the Select Committee's visit to the West Indies, and in particular to Trinidad, we had the opportunity of discussing some of the financial problems of the countries at the very highest level. I am a little dismayed that in her reply in paragraph 29 the Minister said:
"Barclays … see no evidence that the Government of Trinidad needs or seeks a more sophisticated money market".
It is quite extraordinary that a Department of State should rely on what Barclays thinks about this matter. It is true that Barclays is the single major bank on the island. Of course it does not see any need for any improved financial arrangements! I should have hoped that in her reply the Minister would indicate that the Government had not been prepared to take Barclays' opinion on trust. That is not to say that I suspect Barclays in any way. It is a fine bank which operates with great efficiency throughout the developing world. But before the Minister says there is no need for improved financial institutions throughout the West Indies it would perhaps have been wiser had she gone to her own sources to discover whether that was so.

The Committee's understanding was that there was a great need for additional financial expertise, particularly in Trinidad, in view of the very good balance of payments situation there, in view of the local surplus of funds for investment and in view of the limited experience locally of how to manage things such as new issues and how to channel this money into the most profitable kind of investment. I hope that when the Minister replies he will refer to this and assure the House and the Committee that their sources of information are spread a little more widely than the right hon. Lady's reply seemed to indicate.

I refer to recommendation Nos. 19 and 20, which form the the nub of this particular report on our work in the West Indies. As my hon. Friend the Member for Essex, South-East (Sir B. Braine) has already said, it was our considered judgment, when studying the West Indies as a pilot for a much larger study, that there is considerable lack of co-ordination between the Ministries involved.

I may say that I am especially glad to see the Under-Secretary of State for Foreign and Commonwealth Affairs here to reply to this debate because one of the great difficulties, which we understand, is that the Minister has been replying for her own Department and many of the replies that she might has liked to give she has not been able to give because they trespassed on areas of responsibility of several of her colleagues.

This raises a very important matter. I was encouraged to hear the right hon. Lady admit that it was worth while looking again at the co-ordination between Departments in Whitehall. I hope very much that she will undertake with her colleagues at the Department of Trade and at the Foreign Office to see whether there is not a better way whereby, when the Government make replies to Select Committee Reports, information can be incorporated from all the Departments referred to in those reports. This is of especial importance in the context of today's discussion.

If I may refer to the idea for a trade development agency, I may say that this has arisen after a great deal of study and a great deal of evidence being given to the committee by different Departments in Whitehall suggesting, out of their own mouths and unintentionally, that there is a considerable lack of co-ordination. I was especially disappointed to find that in her reply to our recommendations in that section the right hon. Lady, for reasons which I may have just briefly covered, has not answered the main thrust of our report.

In paragraph 97 of our report, we made the point very strongly that aid, trade and investment were not entirely separate activities which could be neatly compartmentalised. We went on to make a number of specific criticisms of aspects of Government policy. They can be summarised briefly by saying that some of them were organisational criticisms in that we criticised the organisation between the Departments, and that others of them were criticisms, as it were, of aid policy in that very often when we talk about aid we refer to the developing world as one entity whereas there are some 68 or 70 countries to which we give aid.

It seems to me and to many of my colleagues who serve on the Committee that little effort has been given to trying to categorise the recipients of our aid. Some countries receive aid for some reasons and some for other reasons. For example, many countries receive aid because it enables them to increase their trade with us. Some receive aid because we are anxious that alien Governments shall not achieve untoward influence in those countries, and so on. Some small countries are incapable of engaging in any trade and need aid to keep body and soul together for vast numbers of the rural poor especially.

In looking at aid policy, we seldom attempt to have a proper philosophy to back up our reasons for giving aid in particular circumstances. Why do we allow local costs in some countries but not in others? Why do we give vast sums of aid to countries with which we have vast balance of payments deficits?

The third reason is trade policy itself. Is sufficient effort given in the Department of Trade to trying to define and discover the scope that there is for British exports to Third World countries and, especially important, for British imports from Third World countries?

If I might back up a point which my hon. Friend the Member for Essex, South-East made earlier relating to the declining figures of our trade with the Third World, the House will be interested to know these figures. In 1970, 16·7 per cent. of our exports were to non-oil-producing developing countries. By 1976, this proportion had dropped from 16·7 per cent. to only 13 per cent. Clearly, we are doing less well in these non-oil-producing developing countries now than we were five or six years ago. Equally we find that the United Kingdom share of total world trade with non-oil-producing developing countries dropped between 1970 and 1975 from 74 per cent. to 5·1 per cent. These figures show a significant decrease in our trade with the Third World.

I was interested to see in The Guardian of 9th June a very fine article by Harford Thomas in which he raised this very problem of defining the extent of our markets in the Third World. I hope that not only as a result of that article, but as a result of deep thought by and consultation between all the appropriate Departments in Whitehall, the Minister will be able to assure me and my colleagues that the Department of Trade, together with the Foreign Office and the right hon. Lady's Department, intend to look at the disastrous rate at which our trade with the non-oil-producing Third World has declined and come forward with positive proposals to deal with it. It is not in our interests, and I suspect that it is not in the interests of those countries, either. Mr. Thomas is seeking answers to these questions, and I should be grateful if we could have some answers today.

I am not all that hopeful, however, because I recall what arose during the course of the Select Committee taking evidence. On 23rd March, representatives of the Foreign and Commonwealth Office appeared before us. I could not believe it when I heard their answer, and re-read it later, to a question which we said was exercising our minds. We asked whether the structure and organisation at regional level was sufficiently adequate to enable individuals on posts and British industry to have the best chance of increasing our exports to developing countries. To my astonistment, the reply was:
"I think that Members of the Committee have spoken on that with the West Indies Committee …. It is really they who formulate our policy for the Caribbean area."
I thought that that was an astonishing reply and, since we are talking narrowly about the Caribbean today, I hope that the right hon. Lady and her colleagues will get together and make sure that it is not the West Indies Committee which formulates the Government's policy on the Caribbean. We hope very much that it is the Government who do that.

These are some of the problems which have come out of our work over the past year. As my hon. Friend the Member for Essex, South-East said, the Committee is going on working and looking at the inter-relationship between aid, trade and investment in the developing world over the whole of the developing world. I am grateful to the right hon. Lady for having confirmed that the Berrill Report will be largely published, and soon, and that we shall have an opportunity—I hope in Government time—to discuss this in the very near future.

It is my belief that, unless we begin to get it together and to get these three Departments working together, not only shall be lose out to Japan, France, Germany and many other countries in what have been our traditional markets but, much more important, we shall not be able to play the part which we all want to play in enabling many of these developing countries to increase their levels of trade with our country and to improve their standards of living.

5.10 p.m.

Somewhere in the Treasury there is a file, F/18003/010/1, dealing with the international control of raw materials. Paragraph 3 of the memorandum in the file contains the following words:

"Apart from the adverse effect on trade stability of the truly frightful fluctuations which we have learned to accept as normal, they also impose obstacles to the holding of an adequate quantity of stocks, the eventual effects of which are not less injurious."
Paragraph 4 says:
"For many years the orthodoxy of laissez-faire has stood in the way of effective action to fill this outstanding gap in the organisation of production. Nevertheless there are today many signs that the world is ripe for a change. Assuredly nothing can be more inefficient than the present system by which the price is always too high or too low. Is not centralised international action capable of effecting a vast improvement of system, at any rate in the case of the great staple materials, most of which can be readily stored without serious deterioration?
The memorandum goes on to produce what it calls the outline of a plan:
"An international body would be set up called the Commod Control on which the governments of the leading producing and consuming countries would be represented. The management would be independent and expert, and the interests of consumers equally represented with those of producers. Its object would be to stabilise the price of that part of world output which enters into international trade, and to maintain stocks adequate to cover fluctuations of supply and demand in the world market."
That was written by John Maynard Keynes on 14th April 1942. It would be no bad idea if somebody in the Department of Trade, and probably one or two other Departments, knocked the dust off that file, looked it up and took some of those arguments seriously, because it is unfortunately true that the criticisms in the Second Report from the Select Committee for 1976–77 are very much justified. It said at paragraph 8:
"Your Committee have been puzzled and greatly concerned by the extraordinary reluctance of the Departmental witnesses it has examined to take the longer view, to grasp the broader vision, to adopt a creative stance that recognises difficulties as obstacles to be overcome rather than as excuses for inertia—even when our own national interests are so clearly involved."
One of the things that have puzzled me is the apparent reluctance—I can hardly say "inability"—of the Government Departments concerned to grasp how important it is for the economy of this country to deal with commodity problems, to bring some element of stability into commodity prices and to make arrangements which will be fair to both producers and consumers along the lines of the proposals put forward by the UNCTAD Secretariat.

There is the additional issue not only of the economic interests of this country but of our standing and political influence in the Third World. As the Select Committee says at paragraph 11:
"Your Committee are critical of HMG's attitude which compares unfavourably with many other donor nations and are fearful for the credibility of its good faith in the eyes of the Third World."
That is a very fair criticism.

The problems involved in commodity agreements, the common fund, stabilisation of prices and supply and demand are enormously intricate and difficult. But the Select Committee criticism that I would endorse—I am not a member of that Committee—is of the failure so far of the Government and the Departments concerned to grasp the basic importance and political significance of the common fund proposal in particular and of some of the related proposals for commodity agreements.

The Government's reply, which is contained in the Second Special Report of the Select Committee—and which the hon. Member for Norfolk, North-West (Mr. Brocklebank-Fowler) wrongly attributed to my right hon. Friend the Minister of State for Overseas Development, for it is from my right hon. Friend the Secretary of State for Trade—I find unsatisfactory and not particularly forthcoming. It is very half-hearted about the common fund, and falls back on the EEC agreement made in Rome in March, when it says:
"it was agreed that there should be commodity price stabilisation agreements, where appropriate, and that there should be a common fund."
But it goes on to make all sorts of objections to the common fund idea as put forward by the UNCTAD secretariat.

The Government's reply also makes it clear that they are still obsessed by individual commodity agreements and a product-by-product calculation rather than the sort of integrated programme which the UNCTAD secretariat had worked out. The Government's reply is also unsatisfactory on the question of indexation, although here we are in a rather tricky area, because I believe that there is a genuine danger that automatic systems of indexation can exacerbate inflation. That aspect must be watched.

May I tell the hon. Gentleman that I was not wrong in my attribution of the report from which I quoted. I was quoting from the First Special Report, which comes from the right hon. Lady. It is the Second Special Report that comes from the Secretary of State for Trade.

I am sorry. I had understood the hon. Gentleman to be referring to the report on trade, not aid. I accept the correction.

On the question of indexation, the Government's reply says:
"the United Kingdom, like the great majority of other developed countries, has consistently argued that schemes to raise international commodity prices artificially, or to set the terms of trade at some predetermined level, by reference to external criteria like the prices of manufactured imports have a disruptive effect on world trade."
That may or may not be so, but what has an infinitely greater destructive effect on world trade is the unilateral jacking-up of important commodity prices, such as we have seen in the case of oil. That will occur as the producers of raw materials become more sophisticated and organise themselves more effectively, unless we can show that there is a fair and reasonable relationship in world trade between the prices of the manufactured goods that they have to import and the prices of the raw materials by which they earn their living. If we do not come half-way in some respects on the indexation principle, without perhaps accepting it as an automatic system, a trend towards unilateral action such as we have seen in oil, or perhaps a trend towards the violent restriction of supply, will occur over the next decade.

What is wanted is a genuine acceptance by the industrial world of the problems of countries which rely so heavily on individual commodities for their international trading, and some recognition and acceptance of a system by which their earnings can be geared, at any rate in a general way, to the price of the manufactured goods which the Western industrial world exports.

The whole aid debate is taking on a new dimension. It is now bringing in the totality of relations between the rich and the poor nations. It is not merely a question of aid. It is bringing in questions of trade, economics, monetary arrangements and even—as my right hon. Friend said in her speech—questions of human rights, which are a complicating factor that I do not want to go into this afternoon.

The fact that the aid discussion and questions of relations between the rich and poor are extending over so many fields and becoming so complicated emphasises the importance of the great international organisations that exist as the forum in which these matters are to be discussed.

I refer to bodies such as UNCTAD, the World Bank, IDA, the World Food Council and the IMF. We must accustom ourselves to using these bodies and in joining in the discussions within them. We must disabuse ourselves of the notion that special smaller ad hoc groupings can be created to deal with the particular problems.

I always thought that the Conference on Industrial and Economic Co-operation was somewhat misconceived. It seemed, to some extent, to be an attempt to take discussion out of UNCTAD and to try to refine it down to a face-to-face argument between a relatively small group of Western industrial countries and a small group of Third World countries with OPEC somewhere in the middle. I am not entirely surprised that, although some limited agreement and advance was achieved in those discussions, the final outcome was discouraging.

The Downing Street Summit—a useful exercise in Western co-operation—came out with some fine principles that have largely been belied by the actual behaviour of the richest countries during the past two or three years. Our own Government will cut overseas aid by £50 million this year and £50 million next year. However, it must be said, in fairness, that two of the richest countries in the world—Germany and Japan—have an even worse aid record, in percentage terms, than the United Kingdom.

The pattern of discussions on aid arrangements during the next five to six years will be roughly as follows. Clearly, UNCTAD will be the place where the great arguments about commodities will be worked out. Such matters as the common fund—which will undoubtedly come about in due time—and stabilisation of prices, compensatory financing and so on, will be worked out in UNCTAD. The problem of debt—which has not been mentioned in the debate yet although it looms large in the thinking of the developing countries—could best be dealt with through the IMF.

I am not sure that people have recognised the importance of the IMF as an instrument of aid during the past two or three years, nor is its considerable potential recognised—although some reorganisation would be needed to release that potential to the full. There has been an oil facility to help countries with special difficulties with their balance of payments because of the increasing oil prices. The IMF has also operated a compensatory financing scheme, although it has been modest so far, that has been of some help to some poorer countries. There has been a creation of the trust fund to assist developing countries through the sale of some of the IMF's gold reserves. The IMF is also quite an important body for training and technical assistance to developing countries on fiscal, monetary, banking and Government finance matters. I am sure that the IMF could and should play a key rôle in the whole problem of dealing with the debts of developing countries—a matter of increasing concern to not only the poorer countries themselves but to the wealthy western world.

The rôle of the World Bank and the IDA in supplying aid or finance should be expanded. I endorse the impassioned plea that has been made by Mr. McNamara during the last three months for an immense strengthening of the reserves of the World Bank so that it can fulfil the rôle that it was intended to fulfil and in which it is now being limited because of the lack of resources from the richer world.

I want finally to touch on a point that is somewhat more difficult but not unimportant. During the last 20 years there have been changes in fashion in the thinking about the problems of relations between the rich world and the poor. Various systems and ideas have been put forward about the importance of industrialisation and agriculture, and about the problems of population and education. Currently, the stress seems to be upon agricultural development and upon what is called "appropriate technology". The emphasis is on the small scale and on the grass roots business of raising the standard of living in the poorer countries. It is an attempt to come to grips with the problem. Some aid—although perhaps the extent of it has been exaggerated in the past—has tended to make the rich richer in the developing world while leaving the poor still very poor.

The green revolution, as it was called, which was the considerable scientific advances in the development of new strains of rice and wheat, was hailed as a gigantic step forward at one time. However, it has produced cynicism and disappointment—although that has been over-emphasised. I cannot believe that important strides forward in the scientific cultivation of crops can be entirely bad under any circumstances, but it has nevertheless produced disappointment. There is now a tendency to switch and to see whether the small farmer can be given more direct help than in the past.

I am greatly indebted to an extremely interesting article in the New Scientist of 9th June concerning the work of the International Centre for Tropical Agriculture in Colombia which has been doing much work with non-cereal crops such as beans, cassava and tropical pasture crops. I should like to quote from the article on page 575 of the publication. It says:
"CIAT's aim has been to concentrate on the needs of rural and urban low income groups, somewhat neglected by the first, cereal centred phase of the Green Revolution. This means coming up with low-cost technology that takes into account the small farmer's shortage of capital and access to credit. As the present director of CIAT, John Nickel, pointed out in his inaugural address in 1974: 'If the income of small farmers is increased … unit costs of production will be lower and there will be more food available at reasonable prices to the urban population. Similarly, the small fanners will be more likely than more affluent segments of society to spend their additional income on the types of products which can be produced in local labour intensive industries, rather than imported goods, thus increasing the opportunities for what the urban poor need most: jobs. Following this chain of events, when the urban poor are employed and their income improves, urban markets for agricultural products are expanded for the small farmer thus completing the circle'."
I hope that that theory may prove to be more correct than the theories that we had about the green revolution. There is certainly a need to see that the aid given and economic arrangements made penetrated right down to the poorest people and that they really strengthen the economies of the poorer countries. That process is certainly not something that can be imposed or even injected from outside. If that message is correct—and it may well be—then somewhere along the line that thinking must penetrate the governments and the societies of the developing countries themselves. Even given the technical advice of bodies such as the centre in Colombia, only those countries will be able to create locally the social and economic conditions to carry out that sort of change, agriculturally and socially.

The British Government will need greater co-ordination between Departments. The Treasury, the Department of Trade, the Ministry of Overseas Development, the Department of Industry, the Ministry of Agriculture and the Department of Education and Science will increasingly be drawn into various aspects of the relationship between this country and the Third World. Apart from the organisational and administrative problems that this will involve, we undoubtedly need a far greater political commitment to help in the global task of raising the standard of living of the billion people in the Third World who are still, sadly, deprived. This means that the cuts must be restored, there must be no discrimination against overseas students, and more of our resources must be explicitly and realistically devoted to helping the poorest people in the world.

5.32 p.m.

I wish to welcome the Second Report of the Select Committee and to say how much some of us have appreciated the sustained hard work and skill that the members of the Committee have brought to their task. I should particularly like to pay tribute to my hon. Friend the Member for Essex, South-East (Sir B. Braine) for the amount of work and experience that he has put into this task.

I am glad that the Committee concentrated on just one small area of the world for a short time. That has enabled it to consider matters in greater depth, with more consultation on the spot and closer examination. That is, perhaps, why it has made more practical recommendations than are often made by Select Committees that range over wider fields.

It is right for the House to debate this subject now even though our resources are being so severely restricted. I make no political point about the causes of the restrictions. The problems of developing countries, especially the poorest of those countries, are increasing and the gaps between their economies and standards of living and those of industrial countries are widening. We and other industrial countries have a common interest with those nations. If we neglect it, we too shall suffer. The debate is practical in terms of our own prosperity and good name.

We have old and close links with many of the developing countries, and they must not be forgotten. Some of our prosperity has been derived from those links and our return to prosperity is partly dependent on expanding our trade with those countries.

Perhaps the debate is particularly timely since the Heads of Commonwealth countries are currently meeting in London and, over the weekend, in Scotland.

My remarks will be closely focused on a small but increasingly important element in our aid policy, namely the need to foster small-scale, appropriate, low-cost technologies that are often called intermediate technologies. Recommendation 11 of the Committee's report is:
"Your Committee recommend, with increasing emphasis, that greater priority should be given to the search for so-called 'appropriate technologies' in agriculture and related rural industries."
Though I believe that this could also apply to the periphery of urban areas in developing countries, we should be grateful for the Select Committee's strong endorsement of the need for intermediate technologies.

The Minister's comment in her memorandum was:
"We fully accept that the search for technologies appropriate to the Caribbean region—which will not always be those which have been adopted elsewhere—must be prosecuted with vigour."
I hope that this will come about. The Minister continues:
"The Development Division is, as the Committee has observed, exploring possibilities of small scale sugar production and it is already active in other related fields. We are also assisting in developing bottled, canned and packeted foodstuffs, new techniques in low cost house and road construction and local small scale spinning and weaving of sea island cotton. Although the Division is redoubling its efforts, there is often local resistance to small scale technology."
I welcome the Committee's recommendations and the Minister's encouraging comments. As, indeed, I should; for I have an interest to declare. As a Vice-President of the Intermediate Technology Development Group for the past 11 years, I have enjoyed the stimulus of working with Dr. Fritz Schumacher and his dedicated team. I have witnessed the spread of his ideas first to developing countries and, more recently, to some of the greatest industrial countries, including our own.

One of the means by which governments of developing countries can help their own people to improve their standards of living and to enjoy more regular and rewarding employment is by encouraging and assisting them to develop and improve in their own localities existing low-cost technologies and to adapt new ones to their needs.

Recently, President Carter said, in effect, that human rights were basic to his whole policy, but that without the fundamental human right to work for one's family, the other rights were empty of content. One of the major world problems is underused human resources, often in the form of sustained unemployment. This is common both to the industrialised world and to developing countries and the Select Committee has drawn sharp attention to it in the Caribbean. Intermediate or appropriate technologies can make a contribution to the fuller use of manpower, to the development of indigenous skills and to the introduction of new ones.

We who are working for the intermediate technology ideas are seeking, in each country, to interest the best brains in the universities and technical colleges, as well as in industry, in helping to develop low cost technologies and skills which will help the grass-roots workers in rural and urban areas to make better use of opportunities of useful and profitable work in their own localities. Moreover, we are seeking to help spread across national borders knowledge of techniques developed elsewhere in case this may be of use in other situations.

Our aim is to establish centres of study and action in appropriate technologies spread widely around the world. We hope that these centres will communicate with each other about their problems and about their successes in solving them.

We are greatly encouraged that one country after another, stimulated by the peripatetic lectures of Dr. Schumacher, the guru and chairman of intermediate technology, by his book "Small is Beautiful" and by the supporting work of his much-travelling team, has set up or is in the process of setting, up such national centres. These are widespread in Asia and Africa. Indeed, only a short time ago Mrs. Indira Gandhi, then Prime Minister of India, invited our Chairman to help her Government devise a programme for appropriate technology to meet India's present needs.

Only two months ago President Cartel asked our Chairman, who had just completed a programme of many lectures in the United States, to consult with American centres for such studies to see how these ideas might be more widely and more rapidly put into practice in areas of the United States that are badly affected by unemployment.

Nigeria was one of the first countries to make good practical use of these ideas. That great country will have much successful experience to share with other countries, if they seek help. The country where these ideas are perhaps running fastest is Canada—especially in the maritime and some of the central Provinces.

I am told that the European Economic Community, somewhat disillusioned with the results of aid under the Lomé Agreement, wishes to place more emphasis on aiming to achieve advance through appropriate technologies. The World Bank has been one of the first international organisations to see the need to stimulate intermediate technology.

Our own Government have in the last few years—and I make that proviso—begun to support this movement in several practical ways. This was after the group had gone through eight years of hard struggle to get its ideas accepted. For support in that crucial period the group owes deep thanks to the generosity of a number of companies based in the United Kingdom and to trusts here, in the United States and in Canada.

I am glad that not only the Government through the Ministry for Overseas Development, but voluntary agencies such as Christian Aid and Oxfam, are helping the group, not only with projects but more recently with the financing of the central organisation which is responsible for the worldwide dissemination of ideas, knowledge and experience of appropriate technologies.

I shall not go into detail of the many practical advances—in terms of improved earnings and greater satisfaction in work—that have sprung in many developing countries directly from these ideas. But in the area which the Select Committee has just examined I am hoping that new technologies for the local processing of sugar cane with low-cost equipment will be of real assistance.

In her comments on the Select Committee's Report the Minister found that there was often local resistance to small-scale technology. This is not an uncommon reaction to the first impact of these ideas. But when people can see such ideas translated locally into successful action, such resistance normally disappears. In dispelling such resistance it may be helpful to make more widely known the need of some of the most industrially advanced and richest countries to make wider use of small-scale technologies.

In response to a lively home demand, the group has found it necessary to set up a United Kingdom division. As groups are springing up all over the country, some of our largest and most successful industrial companies—I shall not name them here—are encouraging this movement. Intermediate technology is working closely with those groups in the United Kingdom that are helping to re-establish small groups of our own craftsmen. One of the most notable is that in Clerkenwell—an ancient London centre of crafts which I visited two weeks ago. I went there intending to spend only one and a half hours but I stayed five hours. It was one of the most fascinating human experiments that I have seen for many a year. I commend the Minister to visit that centre. Under the stimulus of Mr. Michael Murray are gathered about 75 small groups of craftsmen, each of which has a separate workshop in an old warehouse that might have been demolished and redeveloped if there were not already so many spare spaces in that part of London.

Similar groups are being established elsewhere in London and outside. They are certainly creating new small enterprises and employment. They are also giving many people—young and old—inCreased satisfaction in their work. There arc young people from the art schools and old people who are retired from other work or who left larger organisations to work on their own as craftsmen.

We share the problems of underemployment with the developing countries. In seeking to help them to solve their problems, we seem to have stumbled on a means of helping ourselves.

I hope that the Minister will be bold in encouraging the work of our own Intermediate Technological Development Group which was the originator of these ideas. In doing so, I believe that the Government will be helping many developing countries to help themselves and will at the same time be helping our own people both in the inner cities and in the country areas.

Would my hon. Friend care to answer the question that was posed by the Minister earlier? She said that there was often local resistance to small-scale technology. Indeed there is. Should, and how could, the Government assist recipient Governments of aid to spread small-scale technology particularly in the rural areas? Should they do that? If they should, how can they?

I am delighted to be allowed to conclude my speech with an explanation of this because it is at the heart of the work that the Intermediate Technology Group has undertaken. That is to spread knowledge as widely as possible through all possible channels—Government, voluntary agencies and industries—of low-cost technologies that are already in existence and being practised successfully in one part of the world and might have relevance in another part.

The first task undertaken by the group was to publish a catalogue of low-cost equipment available throughout the world—much of it manufactured in this country. The catalogue was called "Tools for Progress", and was sponsored by the group and its industrial supporters. I am not sure how many times it has been reprinted. The demand for it is almost insatiable, but we have gone on from there to disseminate the experience gained by various countries in putting these techniques into practice and making them available to interested groups—often the development ministries in the other countries.

The interest has grown from there following the successes that other countries and ourselves have been able to achieve—because we have carried out some of the experimental projects to prove that ideas could be put into action successfully—and it has also been carried forward by lectures which the group has sponsored all over the world and which have been listened to by informed and enthusiastic groups. They have taken it from there and begun to set up their own centres, which have then been in communication with us. Ideas are being fertilised and spread by continual cross-communication. I hope that that answers my hon. Friend.

I am grateful to my hon. Friend for that reply, but he did not answer my question. I asked how Her Majesty's Government could assist in this process.

Her Majesty's Government have been giving support to the Intermediate Technology Group by supporting its expenditure on projects that appeal to the Government as being productive. We hope that in time we may have greater support for the central organisation of intermediate technology because this is essentially a centre for the dissemination and sharing of ideas. It is not a two-way traffic. It is almost a "Spaghetti Junction" of ideas—ideas coming in from all directions, intermingling, crossing and going out again.

If we are to give these ideas full range over the world we need the means to maintain the staff to meet the demands of other countries for talks, for help with their projects, and for visits and evaluations. It is not always as satisfying to give to a central organisation such as this as it is, perhaps, to give to identifiable projects, but it is essential to have such support if we are to continue to serve as a centre for disseminating ideas and proving that they can be put into action.

5.55 p.m.

Some extremely kind words have been expressed about the work of the Select Committee on Overseas Development of which I am happy and proud to be a member, but I think that the House will forgive me if I suggest that one or two hon. Members might treat this degree of praise with a certain amount of cynicism.

The work of Select Committees is hopelessly hampered by the low regard that the House as a whole has for the undoubted vast amount of valuable work that is done within such Committees. The Committee deserves commendation on this occasion for having triggered off only the second debate on overseas development in the past three years. Nevertheless, many of us recognise that the fact that that has happened is related less to the quality of the report and the demand for answers from the Government and the force with which that has been expressed and rather more to wider political considerations and the Government's legislative programme.

I maintain that this will not do. We shall not get Select Committees that are able and proficient at their work unless we recognise that, at the least, the Government's response to such reports, and the reports themselves, merit full-scale debates such as this with a degree of practicability and certainty so that our work can be geared to that end.

I very much endorse the contributions thus far from members of the Committee, including the introduction by the hon. Member for Essex, South-East (Sir B. Braine), the acting Chairman, and also the other contributions to which our report has given rise, but I still think that there is an element of embarrassment about debating these two reports at this time. In many respects I regard both these reports as being rather a minor part of a larger exercise, and I think it would be unfortunate if we were to have a fullscale debate upon the interim judgment of our work and find that when we have completed our intensive investigations we are denied a full-scale debate on that occasion.

This is illustrative of the difficulties of a Select Committee. I think that all hon. Members will agree that the Committee has been admirably served by the professional expertise that we have enjoyed, but we have done so on the basis of exiguous resources and of exploiting those professional advisers in a way that is scarcely pardonable. We have also sought to scrutinise Government policy in an intensive way on the basis of professional resources that are wholly inadequate to the task.

Against the background of those difficulties I do not underestimate the value of the work that we have done so far, but I maintain that this debate reflects the difficulties under which Select Committees operate, and it is somewhat of a triumph that the reports have generated both this debate and the extent of the Government's responses to them.

An even more important report of the Committee on the impact of oil price rises on the developing world, when we completed in a short period and which was in many respects a more substantial report than the two under discussion, did not make any debate in the House. We have not had the opportunity of discussing that crucial issue for the developing world and I am grateful that on this occasion the hon. Member for Essex, South-East put this debate in the context of the extent to which the gaps between the richer and the poorer nations have widened as a result of oil price rises over the past few years.

We ought to recognise that the context of the Committee's work is within the framework of the growing realisation that the aid debate and the Third World debate has entered into a new dimension. First, there is the straight political identification of the extent to which the Third World is no longer prepared to support a growing disparity of incomes between the rich and the poor. Secondly, there is the realisation that at least one section, namely, the oil-producing countries, has been able to demonstrate greater power in seeking the redistribution of resources.

I have been impressed by the fact that Third World countries which have not benefited by the rise in oil prices have shown little criticism of that development, although it has harmed their economies. I was at a conference attended by many Third World delegates in September 1974 when the first brutal onslaught of the oil price rise began to affect such countries, yet scarcely anyone criticised the oil States. Instead, they recognised that it pointed the way to a revolution in the economic order, or, as they have defined it, the economic disorder, which could bring significant changes.

The hon. Member for Woking (Mr. Onslow), who has unfortunately left us, raised an important point about the new economic order when he asked the very sharp question—where did we all stand in regard to commodity agreements and what were the implications of any suggestion about a common fund and changes in commodity prices? We must recognise that the argument is that stability of supply must be matched against a progressive rise in prices. We should not argue that case only in terms of crude self-interest, which most hon. Members seem to feel is the only argument that will gain wide support. Perhaps we should do our constituents more justice.

For instance, only two years ago, there was a great wave of public indignation at the low level of tea prices which reflected the exploitation of tea workers on British estates—identified particularly by a television programme about Sri Lanka. None of our constituents is eager for price rises, but that shows their awareness that if human conditions in the Third World are to improve, they are partially prepared to pay the cost and that there are other costs which have led to the rocketing of commodity prices which have nothing to do with the improvement in the living conditions of such people.

In the two years since that substantial public debate, tea prices have virtually doubled—so, because of the crude determinants of the economic market, have the prices of substitutes such as coffee—but this has not been reflected in rising living standards for those producing the tea. We do ourselves a disservice if we underestimate the concern about these issues and the extent to which many of the public are prepared to engage in voluntary and charitable efforts to increase living standards. They rely on their political decision-takers to buttress this trend with resource allocation.

The Second Report of the Select Committee, on UNCTAD, was prompted by what many of us detected to be a weakening of the Government's commitment to a common fund. After all, the British Government had blazed the trail with the Kingston initiative. We had expected that, as the debate moved into other international circles, the British Government would show leadership. But we identified wide-ranging reservations in the Government's position at Nairobi in 1976.

The report therefore expresses the dangers of a weakening of this commitment. Perhaps I might be forgiven for indulging in a little more mild cynicism. I feel that the Government were waiting for a clear statement from the new American Administration. That may be unfair, since Ministers were playing their part in the EEC, but the Second Report is certainly directed at a worthwhile target. Many of us still feel that the Government's response is less than wholehearted and frank.

For instance, in one crucial statement in the Government's response, we read that worries about the Common Fund are based on the fact that the distribution of costs and benefits would be "arbitrary and inequitable". That is certainly so, but the existing economic order, if one can call it that, is equally arbitrary and inequitable, and it is wholly unpredictable. These points in favour of a common fund should be stressed in the Government's negotiating position.

Recommendation 13 in the First Report drew from the Government a limited acceptance of establishing best practice among British firms as an example in industrial relations in the developing world. The Government's response, however, is that that is better promoted through international co-operation. But so are all these issues. The more countries which think with like mind the better, but the Government's response seems to be to hide behind a cloak of international co-operation and to be prepared to move forward only with others. That does not befit the Government's commitment to Third World issues. It does not follow the approach of the Swedes, the Dutch and the Canadians to initiatives in aid and trade.

I am worried at the continual suggestion that the only initiatives we can take are joint ones. That is the approach taken to slush money—that our competitive position should not be harmed and that these problems can be solved only if all agree. That is true in one sense, but if one country does not act, no one will. If no one takes an initiative, there is complete inactivity. Just as this Government are rightly under pressure to ensure that British industry which receives Government funds has a clean record on slush funds, equally British industry should demonstrate good practice in industrial relations and related issues in the third world.

The hon. Gentleman is making a most interesting and valuable contribution, and I agree with him. Is there not another reason why some initiative should be taken by the British Government? Is it not that there is no advanced industrialised nation which does a higher proportion of its trade with developing countries than Britain does? Is it not therefore a major interest of our country that the purchasing power of the developing nations—the poor nations today but tomorrow perhaps the richer nations—should be improved? Is that alone not a cause for the British Government to take a lead and not wait for others?

I am grateful for that highly relevant intervention. A combination of our self-interest and our long historical experience of dealing with Third World countries reinforces that basic point.

I wish to concentrate on Recommendations 14 and 15 in the Select Committee's First Report concerning educational resources. We have seen how both in the Caribbean and more widely Britain has in the past made a substantial contribution to the educational resources of Third World countries. However, the risk is that we have handed on to Third World countries some of the limitations which apply in our own society, limitations which might have more acute consequences for the Third World in view of the limited educational resources available there.

It seems that in the past we have concentrated too much on giving support to the universities and to the higher end of academic talent. Equally it has been clear that a great deal of our educational resources have gone towards directing students to the study of advanced technological skills in order that they might fit into comparable courses in the United Kingdom. There is a great deal that we should do now to ensure that we develop courses in this country and in institutions in the Third World which are more specifically related to the needs of those students and to the more limited and developing technology of the Third World.

This is one constructive way in which we can respond to the whole area of aid and education. All of us who are concerned about Third World development are worried at the extent to which educational cut-backs in this country—cutbacks which have been reflected by the increase in overseas tuition fees—will represent a severe loss to the Third World countries unless we make a determined effort to reinforce the aid budget to compensate for it.

Whereas in the past we have been content to give support in terms of hidden aid via our educational institutions, that hidden aid may not have been of the greatest efficacy for Third World countries. Our education cuts are reducing this hidden aid and therefore it is all the more necessary to launch a conscious and coherent programme to enable the Ministry to assume our responsibilities in this area to avoid a reduction in the support we have given in the past.

There are many other aspects of the reports that I should have liked to comment upon, but in the debate so far I have heard many of those points adequately covered by other hon. Members. I warmly commend the two reports and I reinforce my criticism of certain aspects of the Goverment's response to them.

6.16 p.m.

The House today has one of its relatively rare opportunities to debate two significant reports from one of its most respected Select Committees and thereby to cast its mind beyond the depressingly narrow and partisan issues which seem to obsess most hon. Members these days. I have considerable sympathy with the views expressed by the hon.

Member for Enfield, North (Mr. Davies), himself a distinguished member of several Select Committees, about the way in which Governments of whatever persuasion tend to treat the reports of Select Committees of this House. I have heard those complaints before and I am sorry to say that, sharing the hon. Member's cynicism, I am afraid I expect to hear them again.

We are now able to debate, if only briefly, one of the major subjects that oppress us, or should oppress us. It is remarkable that it is only because of the problems the Government have and because of their timetable that we are able to have this rare debate on foreign affairs and overseas development.

Indeed, the vice anglais—and I would also include the Scots and Welsh in this criticism—is parochialism, to which may be added narrow-mindedness, lack of vision, incomprehension of world realities, and abrogation of responsibility. It is said that there are no votes in foreign affairs—certainly there is none in overseas development—and this would appear to be the conventional wisdom, judging by the miserable attendance at our debate. By "miserable attendance" I am referring to the number rather than the calibre of hon. Members present.

Hon. Members may recall that Mr. Arthur Balfour when he was Prime Minister went to a meeting near Whittingham in Scotland with his brother Gerald Balfour, who was President of the Board of Trade. When they arrived they found they were the only two there, apart from the chairman and the speaker. The chairman apologised to the speaker for the poor quality of the audience. As the Prime Minister and his brother trudged home through the snow the former said sadly that he knew that standards were rather high at Whittingham, but that had he been the chairman he would have emphasised the lack of quantity rather than the lack of quality. I hope in view of that that hon. Members will not take my earlier comments amiss.

Fortunately today a few of us are briefly permitted to cast our eyes, our thoughts and our concerns far beyond the immediate problems at the local or national level that now dominate the House for so much of its time. We look at a world of appalling disparities in wealth and opportunity between a tiny affluent minority and a vast and impoverished majority.

When I refer to the gulf between minority and majority I am not referring entirely to the gulf between the North and the South, between the richer and the poorer nations. I am also referring to the gulf within nations, and particularly within the Third World, between the few who are rich and the many who are poverty stricken. I look at a world where democratic forms of government are rare, where corruption is the norm rather than the exception, where unbearable squalor too often resides closely with loathsome profligacy and luxury, where people starve so that the military may be placated, where children perish so that dictators may prosper. It is a world where expenditure on arms exceeds that on education or health, a world where grandiose dreams are often arrogantly pursued at the price of human existence. Above all, it is a world in which 10,000 die every day from malnutrition or the results of it.

This is certainly a depressing and terrible spectacle. But it is certainly not a new one. As the young Winston Churchill wrote at the end of the last century:
"All great movements, every vigorous impulse that a community may feel, become perverted and distorted as time passes, and the atmosphere of the earth seems fatal to the noble aspirations of its peoples. A wide humanitarian sympathy in a nation easily degenerates into hysteria. A military spirit tends towards brutality. Liberty leads to licence, restraint to tyranny. The pride of race is distended to blustering arrogance. The fear of God produces bigotry and superstition. There appears to be no exception to the mournful rule, and the best efforts of men, however glorious their early results, have dismal endings."
This gloomy portrait of human endeavour has real and tragic relevance to what may be called the problems of the Third World and the endeavours of the First World to resolve them. After the expenditure of vast treasure and the transfer of expertise and technology on an unparalleled scale and the dedicated work of the United Nations and the regional and voluntary organisations, the fact is that the situation is far worse than it was even a decade ago, and it is deteriorating further.

This is the terrible background to this debate. It is the dark shadow that should afflict and haunt us all. It is the greatest and most awful challenge of our time. To adapt a famous phrase, "A planet divided against itself cannot endure." That represents the scale of the challenge we confront and to which we devote a small, if dedicated, Select Committee, a one-day and ill-attended debate, and a derisory proportion of our national assets of wealth and expertise.

One of the great mistakes made in an examination of these questions is to take the view that we can somehow separate political and economic problems. As anyone who has been involved in this operation knows, there is nothing more political than economics. Throughout the whole of the debate, whether within the United Nations or outside, the political considerations are dominant and everything depends on the establishment of the political will.

One of the great follies that still exist is the idea that we can compartmentalise human endeavours into "political" "economic" and "humanitarian". We of this nation are long on sympathy and noble phrases about the Third World but short on real assistance.

For example, I asked the right hon. Lady a few weeks ago about United Kingdom assistance to the proposed United Nations University. This is not one university. It is an attempt to create a worldwide chain of institutes of higher education and learning, the purpose of which is to tap the intellectual capital of the world not only in the developed but in the developing world. It is an almost classic story. Her Majesty's Government—the former Conservative Government and this one—have taken virtually no interest, put up no money, and have held themselves studiously aloof.

I have seen this happen so often before. It happened with the creation of the Special Fund. The British stand back, do not involve themselves, deride the project and when it collapses say "I told you so". It has happened again and again.

Our official intellectual contribution to solving these problems is negligible. Reading the evidence of Government witnesses to the Select Committee I found, in the main, to be a most depressing experience. For me, who has had to deal with successive British Governments, it is all wearyingly familiar. The arguments are impeccably presented, much sense is spoken, but one looks in vain for a gleam of understanding of the awesome scale of the problem or for one original thought. One is dominated by the negative aspect of the attitudes and yearns for one moment of Andrew Cohen and the imagination and insight that he brought to this sphere.

As the 1975–76 Select Committee report emphasised, food is one of the keys. With food go not only commodities but the great development issues of the future. The food that must be produced in the developing countries over the next 25 years represents only a fraction of the full problem. Land must be reclaimed, cultivated and irrigated. Produce must be marketed. The farmer must have a fair return for his labour. He and his family must be housed, educated and maintained in health. There must be communications, capital, transport. There must be some injection of modern technology and experience.

All of this must be created in a vast area where no such facilities exist. These must be established if we are to avoid shattering, cataclysmic disasters on a scale that will far out-shadow the catastrophe of the Sudano-Sahel.

I emphasise that these decisions will have to be made in the developing countries, individually and collectively, and that they have to face, individually and collectively, this grim fact—that economically and in human terms the movement back to the development of agriculture must become a key political priority. I regard it as one of our key roles in the argument to understand the problem that this creates for Governments and to endeavour to assist as much as we can.

If my hon. Friend wishes to emphasise the return to agriculture will he join with me in warning the Minister of State not to abandon easily the institute of agriculture that is now part of the University of the West Indies. Does he not agree that it has done so much for tropical agriculture and should now be persuaded to reorient itself, not to go out of business?

My hon. Friend is much more knowledgeable about that institute than I am. When I had the opportunity of working on the creation of the World Food Council and the International Fund for Agricultural Development one of the key points then made concerned the critical importance of regional and preferably national research institutes, moving away from the idea of one or two operating on a global scale. I am sorry that I am not familiar with the details of my hon. Friend's case, but I am sure that the Minister of State will deal with it in due course.

These are hard political problems. In themselves they have nothing to do with ideology, whether Socialist, capitalist, Fascist, or Communist. They are facts. Nevertheless, their resolution depends primarily upon the creation of political dialogue, political understanding and consensus. This has been one of the few hopeful areas over the past five years, particularly in the context of the United Nations, but also in the context of the Commonwealth.

It is my accusation against successive British Governments that none has grasped, or has seemed to have begun to grasp, the enormity of the crisis and the challenge. Nor have any Government grasped the vital importance to this nation of doing all that they can to resolve that crisis. It is often asked "What can we do? We are poor, dispirited, over-taxed, over-governed, harassed daily. We are at our wits' end to solve our own problems, let alone take on anyone else's." These arguments are unworthy of us and they lead to the road to disaster.

The resolution of our economic problems is vital and must be our dominant concern. What I argue is that this nation has an extraordinary opportunity to establish itself in the Third World to the benefit of the developing nations and itself by revolutionising our attitude to them and their problems.

How is this to be done? First, we must seriously question the assumption, which I am convinced is false, that bilateral aid is more efficient than multilateral aid. We should certainly look much more closely at what happens to that bilateral aid. Secondly, and this follows from my first point, we must look hard at methods whereby we can ensure that the aid we give, whether bilaterally or multilaterally, actually reaches the people for whom it is intended. I have seen too much of the other.

Thirdly, we must reopen entirely the issue of the rôle of the multinational corporations, recognising the need for something far more realistic than the current OECD code of practice and arrangements that will encourage multinational investment and effectively safeguard the interests of host nations. I have stated it rather simply and boldly. It is a deeply complicated question and the Centre for Transnational Corporations has been dealing with this for some time. I emphasise it because it is often left out of the development debate. It is becoming increasingly significant, and is being recognised as increasingly significant by the developing countries themselves.

Fourthly, we must involve ourselves much more effectively in the effective development of international organisations. To take but one example, we should concern ourselves very deeply in the current mismanagement of the Food and Agriculture Organisation of the United Nations and with the actions of its executive director to undermine the World Food Council and the industrial co-operative programme. We must also look at the no less deplorable endeavours to turn the International Fund for Agricultural Development into a special separate, specialised agency. When it was set up, the idea of the International Fund for Agricultural Development was that it should act simply as a bank or fund upon which the World Food Council and the FAO could draw in order to support agricultural development programmes. It has now been expanded in an almost classical way into a separate empire and organisation with its own policy and programme.

The right hon. Lady referred to there being too many arenas, but it covers other things as well, and it is this degree of overlapping that outsiders find very depressing and Governments find very bewildering. Without question, it results in a very inefficient use of the money put into international organisations.

We must abandon our traditional low profile position in international organisations. Either we are in them to endeavour to make them work and give them ideas and energy, or we might as well pull out. I am a great believer in being there and making them work, but being there and adopting a low profile is the very worst of all possible worlds.

Fifthly, we must stop thinking and talking about aid purely in financial and economic terms. To the point that my hon. Friend the Member for Essex, South-East (Sir B. Braine) made about trade one could also add a point about expertise, experience and voluntary organisations.

Sixthly, we must involve ourselves much more actively in the development programmes of the EEC, of which Lomé is only the beginning although providing a potential that we should assist. We should stop talking about overseas aid as though it were charity or a debt to former colonial peoples, or something good for our consciences and our souls.

I very much welcome all that the hon. Gentleman is saying. He has just referred to EEC aid and to Lomé I was much associated with Lomé. Will he not agree that it is important that in judging the achievement of multilateral aid as against bilateral aid we should pay very careful regard to the speed of spending? One of the great difficulties we face is that our bilateral programmes are spent faster and more effectively than some of the multilateral programmes. I hope that the hon. Gentleman will take due account of that.

I am fully aware of that quite significant point. The right hon. Lady said that the bilateral programmes were spent more effectively than the multilateral. I seriously question that. I know that multilateral aid has many deficiencies and problems, but it also has many advantages. Perhaps this subject can be taken up at some other time.

Earlier in my speech I quoted some rather gloomy thoughts of the young Winston Churchill. I should like to complete the quotation, which ends on a rather more optimistic note:
"It is only when we reflect that the decay gives birth to fresh life, and that new enthusiasms spring up to take the places of those that die … that the hope strengthens that the rise and fall of men and their monuments are only the changing foliage of the ever-growing tree of life, while underneath a greater evolution goes on continually".
We have the debate on the new international economic order, the dialogue which it began and the thoughts it created and the attention it gave to the fundamental dilemma of our times and of the future. There are the problems not simply of North and South but of the maintenance of life on this planet for vast numbers of people, and not merely the basic necessities of life but the wider implications of life and of the future.

Perhaps I may remind the House of some words of Adam Smith which are very appropriate for those of us who believe very strongly in the importance of overseas development and in the need for this nation to take a proper, worthy and leading rôle in the affairs of the Third World. He said that there is a feeling inside all of us
"that the destiny of our name and nation is not here, in this narrow island which we occupy".
At a time when we have no Empire and not a tremendous amount of wealth, when our power is nothing like it was, and when we seek a rôle in the world, I suggest that one area in which we could find that rôle would be in coming in actively and strongly not as conquerors or men of power but as friends and as people determined to help in overseas development. I believe that we have a rôle there, and a rôle which, I hope, will be maintained whichever party may happen to be in office at one time or another.

6.37 p.m.

My right hon. Friend the Minister of State said in her speech that most hon. Members present were those who were particularly committed to overseas aid. The hon. Member for Cambridge (Mr. Rhodes James), in his eloquent speech, amply attested to that.

My hon. Friend the Member for Enfield, North (Mr. Davies) was a bit unhappy about the reception given to Select Committee reports and to the actions taken on them by Government. I would say to him that if they are viewed as part of the continuing thread of parliamentary debate and the continuing shaping of and concern in the interests of the parties we represent, their significance cannot be measured by attendance at debates, nor by those very scant special reports with which Governments are pleased to reply to them from time to time.

If my hon. Friend cares to look back over a period of 10 to 20 years he will find that Select Committee reports have foreshadowed developments which Governments of either party have taken up over the next five or 10 years, very often leading political and public opinion. I think that is the case with this debate, and I pay tribute to the work of the Select Committee, of which I was not a member, and to the work of its acting chairman, the hon. Member for Essex, South-East (Sir B. Braine), who is very much committed to this cause.

The new international economic order and commodity stabilisation are not the only nor the most important aspects of development. The most important aspect must lie within the developing countries themselves, in whatever dynamic they can discover to further the cause of development, the re-distribution of wealth, and the health and happiness of their people. I am very conscious of this, having been born in Hong Kong and spent my childhood there. I have kept in close touch with the development of that extraordinary community. When we look at the diversity of the situation in developing countries—from Hong Kong perhaps at one extreme through Malaysia, Ethiopia, India, Pakistan, to Zaire and Bangladesh at the other—we see the enormous variety of problems facing us in overseas development.

The hon. Member for Dorking (Sir G. Sinclair) talked about intermediate technology and its nature as being something of a "Spaghetti Junction", with ideas flowing into it from many directions and flowing out of it in many other directions. One aspect of this was brought home forcefully to me when, in my capacity as deputy chairman of Christian Aid—a position which I am honoured to fill—I inquired of my brother in the Hong Kong administration why it was necessary for us in Christian Aid to finance quite a small development project in fish farming in Hong Kong rather than the Hong Kong Government doing it. He wrote back saying that fish farming was going great guns in Hong Kong, but that the fishermen found it more economic, instead of feeding the fishmeal direct to the fish, to feed it to chickens, and feed the chicken droppings to the fish. That is surely an admirable example of how an indigenous population takes up an idea, improves it and spreads it.

The Minister of State rightly stressed the importance that she attaches to aid to the poorest of the poor, and I entirely agree with my right hon. Friend in that respect. There is the stress on rural development, the realism of noting that rural development cannot be seen in just a narrow context, its dependence on marketing, social organisation, supplies and education.

In this task of getting to the grass roots the voluntary aid agencies have a rôle to play. I speak as one with a particular interest in a particular agency. I would be equally firm in my assertions on behalf of Oxfam and the other agencies in this respect. They play a pioneering rôle. They act as a symbol both in the developing countries and in this country. They have an educational effect that is entirely out of proportion to the funds that they are able to raise and disburse. Perhaps most important of all, they work intimately with people on the ground in the developing countries themselves. Any hon. Members who have had the opportunity to visit some of those small but very imaginative projects would, I think, pay tribute to their work.

Having established that I do not think that the new international economic order and commodity stabilisation are the most important aspect of overseas development, I should like nevertheless to concentrate on that in the rest of my speech, because a particular responsibility rests upon the House and the Government at present in this matter.

There is the difficult question underlying the whole debate on commodity stabilisation of who gains. Who gains depends on where the instability arises. I should like to quote from a paper read at a recent conference on commodities organised by the University of Pennsylvania which I attended in February Steve Turnovsky demonstrated, with a very simple set of assumptions, which are not realistic, certainly, but which nevertheless make the point, that in a commodity stabilisation scheme
"Producers gain from price stabilisation if the source of price instability is random shifts in supply."
If the producers are themselves responsible for the disturbance, they gain from the stabilisation.
" Consumers gain … if the source of price instability is random shifts in demand."
They gain if they generate the disturbance But,
"When both demand and supply are random, the gains to each group … depend upon the relative sizes of the variances and upon the slopes of the demand and supply curves.
The total gains from stabilisation are always positive, with the gainers in principle being able to compensate the losers."
As the assumptions are elaborated and one goes through the process in economic argument of removing the scaffolding, removing the restrictive assumptions, those basic conclusions are not fundamentally changed: that where the benefit may fall, in any particular scheme or at any particular time, obviously depends on the circumstances, but overall there is a gain and there is, therefore, also the problem of transferring the benefit, one way or another, from loser to gainer at a particular time so that overall all parties gain.

If that is the cloudy, difficult problem that the negotiators have found it to be, I suggest that in fact we need a rather different approach to the negotiations from that which has so far been pursued. However, perhaps I may first establish what are the possible orders of magnitude of gains to ourselves.

In a paper by Cooper and Laurence—Cooper is now the Under-Secretary for International Economic Affairs in the State Department in the United States Administration—they argued that the principal effect from commodity stabilisation arises from events of which we were all too painfully aware in the last five years. That is that as commodity prices in the world increased, so our prices in the industrial world increased with them. But when commodity prices fall, the prices in the industrial world do not fall. Therefore, there is a ratchet effect, jacking up the rate of inflation.

Whether one takes a Friedmanite monetarist view or whether one takes a Phillips curve view of the relationship between unemployment and the rate of inflation, or from any other point of view, it is evident that if one can remove extraneous causes of the rates of inflation in developed countries, one can to a corresponding extent maintain a higher pressure of demand, higher levels of output and a faster creation of wealth in the developed world. If this ratchet effect on the rate of inflation in the price of commodities spreading into the rate of inflation in industrial countries is established, the gains are enormous.

At the conference in Washington in February there was a paper by Jere Behrman—my right hon. Friend and her officials have a copy of the paper—which argued from a simulation of the events over the past five to seven years that had something like the common fund been in operation, in one year alone the United States would have gained some $15 billion, and, furthermore, there would be a number of such years in the course of a decade.

We are talking about a common fund which the UNCTAD secretariat says needs $6 billion to finance it. That may be an underestimate; I believe that it is. However, the order of magnitude of possible effects—I do not put it more strongly above that—in the industrial world is so great that we cannot afford to let the common fund negotiations run into the sand.

It is not clear that that effect exists and we have to establish it. It needs the most careful examination. That is going ahead on an increasingly big scale, not least in the United States, where there is a major project in the University of Pennsylvania financed by the Rockefeller Foundation to interrelate the combination of national economic models which the university has with a set of 35 commodity models in world trade, which between them will cover some 80 per cent. of world trade in commodities.

The problem is that if one looks at just the model of a national economy, one is not able to pick out as significantly major effects, the effect of any one commodity. Likewise, in any one commodity market one cannot isolate the impact of a particular national economy. Therefore, one needs to put together the aggregate of national economies and the aggregate of commodity markets if one is to trace the second order effects of stabilisation, which are so vastly greater than the first order effects.

This is a very ambitious project. I hope that my right hon. Friend and her right hon. Friends will keep in touch with it. However, I suggest that in terms of achieving practical results in the current negotiations, that is not enough. We need a detailed design study at a comparable level of technical competence of a particular commodity stabilisation scheme and how it will operate from day to day in the institutional context in the particular markets that exist in London, Chicago, New York, Hong Kong and Manila, or wherever it may be.

The ideas for that exist. They exist partly in London. They exist partly in the work of such people as Charles Rausser of the University of Idaho, who worked on stabilisation schemes for United States beef import quotas, and the release of fruit to California fruit markets, and in many other places.

My right hon. Friend, with whom I have been discussing these matters, says that this is a new field, that moves towards stabilisation schemes are a new initiative and the work is necessarily speculative. I agree with her, but it is rather like Mrs. Newton saying to Mr. Newton that apples may well fall under the law of gravity, but how is he sure that oranges do, too? In fact, the whole problem of stabilisation and optimisation is at the root of most modern economics, and the fact that it is a fresh field in commodities only makes it a more hopeful area of application, since there are fewer intellectual vested interests in the analysis of the behaviour of the commodity markets than there are in the analysis of the behaviour of national or international monetary markets.

I feel, therefore, that we need a specific initiative on an optimal design study of a specific commodity stabilisation scheme. If she put this to the UNCTAD secretariat, and to the commodities division in particular, I think that my right hon. Friend would find a high level of interest. She would certainly find endorsement of the proposal from the experts in the United States, and I think that she would find that she was able to establish a technical lead among the so-called experts attending the expert groups on particular commodities, who seem in fact to be a great many old war horses from some of the international companies, which are not perhaps the most disinterested parties in some of the commodity stabilisation projects.

If 1 may say so, I hope that the hon. Gentleman will not stop there. I should like to hear about the mechanics of a practical system by which one could administer stabilisation of commodity prices. It is all very well to quote eminent academic sources—I regret that I have not read the papers to which the hon. Gentleman has referred—but the Government say in their response—this is paragraph 5(a) of the memorandum by the Secretary of State for Trade, published as the Second Special Report of the Select Committee—that they

"support international action, where feasible and appropriate, to stabilise commodity prices at levels securing an equilibrium between the longer term trends of output and consumption".
How does one get over the problem of securing an equilibrium price, without a highly interventionist system, which may well run away with itself?

The hon. Gentleman cannot ignore the practical mechanics of intervention and the laws of economics and fail to outline precisely the system that will get over that problem. Without that, I cannot see how one can go into the niceties and idealism of a new economic order.

I entirely agree with the hon. Gentleman in his wish to be practical. I would only plead in mitigation that the papers to which I have referred constitute a pile some six inches high, and if we were to try to go through all that in the House, there would be no time for winding-up speeches let alone any other speeches from the Floor. I find that there is a limit of tolerance among right hon. and hon. Members as to the matters of technical detail which they are prepared to listen to in the House, and it does not always serve the cause of technical expertise if one bores the House with technical details which, frankly, hon. Members are quite prepared to admit they do not understand.

May I ask the hon Gentleman to give one simple way in which one could work out the equilibrium price to match the supply and demand curve of which he spoke? How can one possibly do that without having an interventionist system? Can he give one example?

First, I do not accept the concept of an equilibrium price. One talks about the expected direction of movement of prices in which one wishes to stabilise. Certainly, one must have an interventionist system like the International Tin Agreement, though, one hopes, rather better worked out and more effective, and like many of the schemes which have enjoyed partial success in operation. Some of the schemes which individual producer associations are designing, will be designed against us if as consumers we do not join in. The most obvious and important example is oil.

However, I should not like the hon. Gentleman to take my response as dismissive, since he has put his finger on the most important problem. In my view, we have to work out what the particular methods should be—I shall send the hon. Gentleman copies of various correspondence—by which we can raise the level of technical competence and work in this field.

This element of our debate is fascinating. In the first place, I wonder whether my hon. Friend has asked that the Library should provide to hon. Members copies of the graphs he mentioned showing the fluctuation in price of the commodities produced by developing countries compared with the graph showing the steady increase in price of manufactured goods exported to them from industrialised countries. If he has not done that, it might be useful to do so, because the graphs show a quite explicit and dramatic comparison. One fluctuates up and down, and the other goes straight up.

However, with reference to the question raised by the hon. Member for Chichester (Mr. Nelson), the point is that the moment one accepts an international commodity agreement, the moment one says that a buffer stock may help to stabilise prices, one has to recognise the distinction between two types of commodity. There are commodities in which there is a surplus because there has been a good harvest and there are food crops in surplus, and there are commodities in which there is a surplus because the industrialised countries have not been importing raw materials or mineral products at their normal rate.

There are two quite distinct areas here, and the moment one says that one has buffer stocks one is intervening in the free world market system. It is here that one comes to the area of debate. Although Britain has done its best to support the scheme, one of the main reasons why the industrialised countries as a whole have not supported it is that they regard it as an intervention in the free world market system.

I am grateful to my right hon. Friend, and I shall certainly consult her about whether there is further material which can be made available in the Library. She is well aware that the over-whelming bulk of the UNCTAD papers is such as to weigh down even the best of libraries, and perhaps their very bulkiness is a deterrent to hon. Members who wish to see what the state of negotiations is in the different areas at any particular time.

To continue to be practical, I hope not only in a technical sense but also in a political sense, I suggest that we should be realistic about some of the resistances to the establishment of the common fund. When I am in Washington I hear quite explicitly from officials of AID, the department responsible for overseas aid in the United States, that a powerful argument against the idea of a common fund is that there would be a new bureaucracy and that bureaucracy would inevitably be dominated by the Group of 77, that we should have the terms of working of the common fund and its systems stacked against us as consumers. The bargaining chips, as it were, would be stacked against us.

There is no resistance to extending the scope of the International Monetary Fund to cover commodities because that is a bureaucracy which, by and large, is under the control of the industrialised countries, and the entrenched voting power of the United States in particular. Nor is there objection to bureaucracies which have an ultimate funding reserve in the hands of the creditor nations which would inevitably provide the bulk of the fund. But a new bureacracy is a different proposition.

I wonder whether that argument is as cogent as all that. Generally speaking, bargaining power increases with concentration. Since exports are more concentrated between nations than are imports for seven of the 10 core commodities, exporters might have more power than importers in bilateral and oligopilistic bargaining for commodity agreements on a case by case basis, which is the policy of the Government. It does not seem to me at all clear that our interest as consumers is best served by a commodity-by-commodity bargaining process in which we are likely to be most vulnerable.

We must recognise the human realities. A great deal of the advocacy on the part of the Group of 77 for the common fund is due to the fact that they feel the need for mutual political and bureaucratic reinforcement in the pursuit of their individual interests. Why not? If that is their limiting resource, it is right that they should organise themselves to make the best use of it. But I suggest that organisation is not necessarily inimical to securing a fair bargaining forum for the industrialised countries as well.

My right hon. Friend said that there was now agreement on the common fund or on a common fund. But the Select Committee, in its Second Special Report, quoting the Secretary of State for Trade, said:
"But we believe that it should be possible to work out a more sensible and practicable scheme based on individual commodity agreements."
Who is speaking for the Government: my right hon. Friend the Minister of State for Overseas Development, or my right hon. Friend the Secretary of State for Trade?

The Select Committee was right to detect a certain lack of common mind in the Government on this matter. I suggest that they would find it easier to form a common mind if they followed the behest of Opposition Members and got down to more detail in terms of the design of the practical operation of the common fund and schemes under it.

I should like to suggest what is the realistic situation. First, subscriptions to a common fund would not be paid up all at once. Six billion dollars would not be advanced by the industrialised countries into the account of the new common fund with the IMF or some such arrangement. Subscriptions would be paid up only as specific schemes are agreed and as the financing requirements arise under those schemes.

Secondly, there would have to be criteria qualifying any individual scheme for support from the common fund. Were there not criteria which had to be met, inevitably any old scheme could be cooked up to pre-empt an unfair share of the fund for an unrealistic purpose. That would be contrary to the interests of the majority of members of the fund.

Finally, because of this call up of funds as they are required, there would inevitably be some correlation between the needs for financing the common fund and for both increasing world liquidity and funding the debts of specific producer countries. Therefore, inevitably the facilities of the IMF would have to come into play in the designing and financing of the subscriptions of producer countries to the common fund. In that way we would get an integrated operation embracing the interests not only of the common fund but of the IMF.

I suggest from these three realistic considerations—the calling up of contributions or subscriptions when needed to finance the fund, the need for criteria for specific commodity agreements, and the interaction between them and the general considerations of liquidity, world trade, and the funding of the debts of individual producer countries—is that an artificial argument is going on as to whether the common fund is a good idea. It is now a matter of getting down to the modalities and the practical design. I suggest that in that practical design our interests are at least as deeply involved in its success as those of the developing countries themselves.

7.5 p.m.

The hon. Member for Motherwell and Wishaw (Dr. Bray) has clearly given an enormous amount of thought to the possibility of some kind of commodity stabilisation scheme. I think that he has done the House a service in analysing this matter and giving his deep thinking on it. Clearly, one of the weaknesses so far in this country and, indeed, in the Western world is the lack of deep assessment of the pros and cons of various kinds of stabilisation schemes which we might be able to evolve.

My hon. Friend the Member for Chichester (Mr. Nelson) rightly indicated that the key is to assess the practicalities of the various schemes which we might seriously consider in relation to mutual advantage. It must not be a one-way process. There must be advantage to the Western world as well as to the Third World if these schemes are to succeed.

The hon. Member for Motherwell and Wishaw said that he was heavily involved in the voluntary movement. I support his view that the voluntary organisations in this country have an important contribution to make in the Third World in a complementary sense. The joint funding scheme which is now being operated—this point has not been touched on today—has an important rôle to play. The voluntary organisations are able to pick out and identify projects and schemes in the Third World as Governments and other bodies are unable to do. Therefore, there is a complementary value in the contributions which voluntary bodies can make.

I am a member of the Select Committee on Overseas Development. Reference has been made by the hon. Member for Enfield, North (Mr. Davies), and by my hon. Friend the Member for Cambridge (Mr. Rhodes James) in a most impressive speech, to the importance of debating Select Committee reports. I join my hon. Friends and other hon. Members in expressing disappointment that there are not more hon. Members present. But, like my hon. Friend the Member for Cambridge, I am not in the least surprised. The few Members here reflect a much wider problem—the ebbing away of the power and influence of this Parliament over the Executive of the day. Therefore, we are considering this matter in a much wider context.

The hon. Member for Enfield, North made an interesting contribution on this matter. I suggest that it is important to develop our Select Committees. The Select Committee on Overseas Development, which is the only one which matches a Department as such, will be publishing a very important and much broader report on overseas aid and trade. I suggest that the House should debate that report within a defined period. We should have the Government's attention focused upon that report, and they should be persuaded to respond to the recommendations contained in the report as quickly as possible.

Does my hon. Friend agree that, though some of the interest in the work of this Parliament on aid seems to be ebbing away, there is a countervailing flood of influence throughout the country sponsored by voluntary agencies, such as Christian Aid and Oxfam, and many groups of young people in universities and elsewhere who are greatly concerned about these issues, and that it is up to us to reflect that concern in this House?

I am grateful to my hon. Friend for that intervention. There is a myth growing up in this country that the British people as such are anti-aid. That simply is not true. The evidence shows that, for example, when confronted with the Sudano-Sahele drought, referred to by my hon. Friend the Member for Cambridge, the voluntary organisations appealed to the British public and there was undoubtedly a massive response. The British people have sometimes rightly been sceptical about the use of some Government aid over the last few years and have questioned whether it was directed in the right way to help those who were really in need.

I should like to make a brief contribution simply to reinforce one or two points that have been made and to make one or two additional points. First, I pay tribute to my hon. Friend the Member for Essex, South-East (Sir B. Braine) for his work as acting chairman of the Committee. In his excellent contribution my hon. Friend laid great emphasis, by quoting the facts of the situation, on the real interdependence between the Western world and the Third World. This cannot be repeated enough both in this Chamber and in the outside world. It is a critical issue.

My hon. Friend the Member for Cambridge said that both hon. Members and the general public must pay more attention to our relationship with the Third World. We all know that in terms of the practicalities the West is to a large extent dependent on the flow of commodities from the Third World. To a large extent we are in its hands in terms of the price that we pay for its commodities. We all know, although sadly they are diminishing at the moment, that our exports to the Third World are improving, although to the less-developed countries they are dwindling.

On the other hand, their exports to us are of supreme importance. About 75 per cent. of all their exports go to OECD countries and they depend on us and the West generally for the aid that they have obtained over the last few decades. That point needs to be made.

According to the latest available figures that I can find about the net flow of resources from the developed world to the underdeveloped world, in 1974 about $27·6 billion was transferred from the OECD countries to the Third World. I looked to see how much came from those countries which professed to be sympathetic to the Third World and identified themselves with it—the Communist countries and the Soviet Union. We find that in 1974 only $1·4 billion, compared with $27 billion from the OECD, came from the Communist countries. It is absolutely no good the Soviet Union or any other Communist country claiming an identity of interest with the Third World when the Communist countries have transferred very few resources indeed and when most of those resources are designed to stir up hatred and instability in so many parts of the world. That has to be said.

There is also the additional point that my hon. Friend the Member for Cambridge made about the interdependence of economics and politics. In the Third World today we see the importance of the political argument for close contact between the Western world and the Third World. Mulnutrition, disease, poverty, illiteracy, under-employment, overcrowding, population expansion and accumulating debts all create political instability which the Soviet Union and other countries are standing ready to exploit. We all know that instability produces a breeding ground for extremism of one kind or another. Therefore, there is the strongest possible political argument for a close relationship between the Western world and the Third World.

We then come to the discussion about the relationship between aid and trade. I listened to the Minister with interest. She perhaps misinterpreted the views of the Select Committee. I for one certainly do not feel that there is any case at all for eliminating aid. I believe that the two are complementary. That is of key importance.

We must think of our relationship with the Third World and its development in terms not only of aid but of trade. Trade is a key engine of development for the Third World. My criticism of the present policy and the policies of the past few years is that there has not been sufficient emphasis on trading policies as an engine of development. We must give greater emphasis to that within the context of the development of the Third World.

This brings me to the question of aid. Aid is undoubtedly essential before a country can take off economically and start to expand. It seems extraordinary that some hon. Members are prepared to say that they want regional aid policies for this country to help the economic development of the regions and to support regional aid policies for the EEC to help iron out the differences there, yet on a global scale see no case at all. Such an argument simply does not stand. If we are to employ the generation of income and flow of cash within those countries in order to develop an infrastructure, it is essential to help to provide the basic skills for development.

But the case for aid and its credibility has been seriously challenged over the last few years by two factors: first, evidence of the misuse of aid and too much of it going into the pockets of the rich people of the poor countries and not into the hands of those who really deserve support; secondly—and this has not been mentioned—expenditure on aid has been used on too many grandiose projects, like vast steel and industrial plants and excessively large airports when much more attention should have been attached to the more modest schemes which would provide employment and a modest standard of living.

It is right to suggest that greater emphasis in our aid policies should go to the very poor countries and the very poor people within those poor countries. As most hon. Members would agree, greater emphasis should be placed upon agriculture and rural areas in general. I welcomed most warmly the comments of my hon. Friend the Member for Dorking (Sir G. Sinclair) on the importance of intermediate technologly. I believe that it is in this area, as opposed to the grandiose projects, that we could channel assistance and use it to provide the widest amount of employment, to help people acquire modest skills and to enjoy the ability to provide a reasonable standard of living and an income at least for their own families.

I agree with a great deal of what the hon. Gentleman has said. Does he think that we are in a position to channel intermediate technology when, according to my observations, we are not necessarily able to make use of it ourselves?

There may be something in that. Perhaps I have used the wrong word when talking about the channelling of intermediate technology. As my hon. Friend the Member for Cambridge has said, it is the host countries themselves that have to determine what kind of aid and support they want. But at the same time we have not made a sufficient effort to make sure that the Third World is aware of the development of intermediate technology.

Is not part of the difficulty the word "intermediate"? What does it mean? In this context we should surely talk about "appropriate" technology. The moment one uses that term one can see that what is required is appropriate technology to assist the Third World to achieve a particular level of development, to expand its production and to raise its living standards in a realistic way. If one used that term instead of the phrase "intermediate technology", it would be understood much more clearly by public opinion both here and in the developing countries.

I am grateful to my hon. Friend and I am happy to endorse what he has suggested. I simply wanted to emphasise that for use in rural areas and the very poor areas we must not underestimate the kind of skills that we still have in this country. I speak with modesty as someone who has served in the Overseas Civil Service. There are a vast range of people in this country with a vast range of skills that could be made available to assist in the Third World. These are the main areas in which we must switch our emphasis in our aid policies even more than at present.

I come now to touch upon two matters of trade which, as I say, is the main engine of development for the Third World. Having heard the hon. Member for Motherwell and Wishaw, I shall not risk going into any depth of analysis of commodity agreements save to say that the impression seems to have got out from the Select Committee that we support fully the plan for a common fund. This is a misinterpretation of the stage that we have reached in the Select Committee. As yet we have not fully and deeply analysed the pros and cons of commodity stabilisation schemes. All we say is that it is essential for relationships between the Western world and the Third world that some kind of commodity stabilisation scheme which is of mutual benefit to both sides should be developed as urgently as possible.

In answer to those who suggest that there is no advantage to us in developing such a scheme I remind hon. Members that the key mutual interest surely is stability in the flow of commodity supplies. That is the interest mutual to both the developed world and the developing world and the ironing out of sharp fluctuations in prices. I should like to see developed and evolved some kind of lubrication machinery to overcome some of these problems.

I come finally to private investment and, to some extent, therefore, the rôle of the multinationals. We should not underestimate the importance of private investment not only to Western countries but especially to the Third World. Here there is a need for a new climate of understanding between the Western world and the Third World. I should like to see us, between us, working out some kind of code of practice. There is a need for the multinationals—the potential investors—to understand that they must maintain high standards in their trading policies and to understand that host countries have their own special conditions and requirements and that many Governments require to have a stake in a firm which invests. All these factors they must understand. Equally, the host country must recognise the value, if it wants to take the fullest possible advantage of it, of the contribution of private investment not only to the economy but to the general development of that country.

One factor which has been very striking to our Select Committee when examining the Caribbean is the contribution which many of these big firms make in the provision of training facilities and skills for people in the lesser developed countries and in the provision, for example of housing which is so bad in many parts of the Third World. They make an important contribution in terms of the general provision of facilities which these countries would not otherwise get.

As part of the new code of practice I should like to see a mutual recognition of the importance of private investment. I should like to see the Western Governments adopting a more forthcoming attitude towards the covering of investment against political risks and the dangers of expropriation. There is also a need to provide more tax incentives to companies to invest abroad, and there is a case for some kind of financial incentive for the provision of training facilities by these companies.

Here there is a very important area of change which I should like to see take place in the coming years. At a time when the strains between the Western world and the Third World are fairly intense and the distrust is still very strong, the meeting of the Commonwealth Prime Ministers in Britain is of crucial importance in helping to break down the misunderstandings between the Third World and ourselves. There is no radical and revolutionary solution to these desperate problems. They will be sold only by a long hard slog of down-to-earth practical policies.

7.25 p.m.

I shall conclude my remarks in much the same way as the hon. Member for Shore-ham (Mr. Luce). I wish to associate myself with many of his comments about a "down-to-earth slog". I mean that in a literal sense. The hon. Gentleman has had some experience of that to which he referred.

My intervention when he was making his point about "appropriate technology" may have been thought mischievous. It was not intended as such. I believe it to be true. I do not think that we in this country have yet used our technology properly. There is, for example, this alternative project by Lucas Aerospace shop stewards. When I was the Member of Parliament for Acton it started in a Lucas factory at Acton, which was at the pinnacle of aerospace technology. Alternative means are proposed, some of which are appropriate to the Third World. So far, alas, the effort does not seem to have met with very much success.

It is examples of this kind which question whether we are yet in a position to pioneer some of the "appropriate" forms of technology which ought to exist and which this country has a potential for introducing. I am not sure whether we are yet in a position to do it. I am not sure whether Whitehall has properly assessed the potential rôle of the United Kingdom in the development of the Third World as a whole.

Recently, I rejoined the Select Committee on Overseas Aid, and already some of the questions that we have had suggest that my fears have some foundation, especially in respect of appropriate technology. The image of the United Kingdom sold through official funds to the Third World is perhaps overmuch on this high technology line. I do not say that it is unimportant. We have high technology and we must maintain it, but it is not all that we have. There are other factors as well, not least skills and personnel.

I do not want to develop this point about "appropriate" or "intermediate" technology. However, the argument which has been advanced by a number of hon. Members in this debate is that appropriate technology is not so much the grafting of the high technology of the West on to more primitive societies as the grafting of ideas from the West on to primitive societies—literally rural communities, for the development of food, for example—and seeing that a rural society is able to take the lessons learned here and develop them in their societies, though not necessarily trying to reproduce what has happened here. I have seen such a society in Central Africa. In the type of village community which has developed there over centuries people are able to take certain aspects of Western technology in growing certain crops rather than trying to develop crops as we have developed them here. They have adapted them to their rural societies and so developed satisfactorily in that way.

I follow what the hon. Gentleman says. When I speak of "appropriate" technology, I do not necessarily mean techniques which are the same. It is an attitude of mind. It is an ability to design and to create relatively simple mechanical devices within one given complex. Years ago, on the other side of the river from here, there were small workshops capable of producing virtually any machine known to man. I do not know how many workshops of that kind exist today in the Third World. I suspect that there are very few of them. That is the kind of capacity of which we have to think. It is an attitude of mind. I agree with the hon. Member for Canterbury (Mr. Crouch) to that extent.

Many of us who have travelled in the Third World and who represent rural constituencies can see, just as the hon. Gentleman has, that there are opportunities for agricultural technologies which went out of fashion in this country 40 or 50 years ago and which could be exported to the developing world. I hope that the hon. Gentleman will press his hon. Friend the Undersecretary of State for Trade to tell the House what efforts his Department has made to ascertain what markets exist overseas for less sophisticated kinds of agricultural machinery than feature in our agricultural export figures now. I agree with what the hon. Gentleman has said. I believe that there is a vast market for smaller items, particularly of agricultural machinery, and it seems to me that we have made no effort to define the extent of that market.

I am grateful to the hon. Gentleman for that intervention. I was thinking not only of ready-made exports but of ideas. However, the hon. Gentleman is right. I understand that there is something of a hiatus in this country's Agricultural Export Marketing Board, which is unfortunate, to say the least.

I hope that my right hon. Friend will examine the matter, because we can contribute agricultural expertise, expertise not only in our own climate but in other climates. There has already been mentioned of the former Trinidad Agricultural College for the Overseas Civil Service. The contribution that I have just described is something tangible as distinct from conferences and papers, of which I think we have too many.

Talking of papers, I wish to refer to the enigmatic statement printed on the Order Paper after the Motion. It says:
"The following EEC Documents are relevant:—"
Hon. Members will not be surprised that I wish to refer to them. There are no fewer than nine EEC documents that I understand the Scrutiny Committee has thought it right to commend to the House, and the Government reckon to discharge their responsibility in respect to those documents in this debate.

I do not think that there has been much comment about the documents so far, but I wish to comment on them in the first part of my speech. I shall not weary the House by reading out their titles and reference numbers, but I feel tempted to do so because the official record will have no record of the numbers and names. That in itself is a criticism of the way in which the Government are still persisting with these EEC matters in the House.

The first document to which I wish to refer is S/1553/76, a proposal from the European Communities for the establishment of a European agency for trade co-operation with developing countries. The Select Committee on Overseas Development has already looked at this document in public, with our own Import Opportunities Office. While there may well be great scope for identification of opportunities for Third World exports to this country, I am not sure that the EEC is the most appropriate organisation for a multinational office of this sort. Indeed, I believe that something of that kind already exists in Geneva, and there may be a similar body under the United Nations. I am not saying that it is not a good idea to have a multinational agency, but I question whether the EEC is the right place, although, with the trading arrangements, the EEC acts as a trading bloc on its own.

More significant is Document No. S/327/77, which deals with the Com- munity financial technical aid to non-associated developing countries. A token sum of 20 million units of account has been put into the budget for this purpose. The document sets out the purposes to which it should be put, and sets up a committee representative of member States to administer the aid.

In association with that document, Document No. S/1218/76 deals with various aspects of further co-ordination of the development policies and activities of member States. Under the EEC we have an obligation to harmonise or coordinate our overseas aid activity, something on which I do not look very kindly. The document shows that something of an impasse has been reached within the Council of Development Ministers in this respect. The Explanatory Memorandum signed by the former Minister for Overseas Development, my right hon. Friend the Member for Newham, North-East (Mr. Prentice), states:
"The UK is ready to co-ordinate its development activities with those of other Member States and the Commission, and, where possible, to reach agreement on common policies for meetings of international organisations."
But we have a national policy, which is spelt out in our last White Paper, and it may be that not all the members of the EEC would go along with it.

The further observations on the document are very important. The Explanatory Memorandum says:
"The German Government have linked progress on Community aid to non-associated developing countries … with progress on harmonisation. We do not believe progress on one should be held up because of possible difficulties on the other."
The Germans are saying "Let there be progress on Community aid"—meaning more money—"to non-associated States as long as we have harmonisation over the whole aid field." It may well be that we and Germany will not agree and that, as is not untypical in EEC affairs, the matter will be log-jammed and nothing will happen.

I thought it right to refer to these matters because, although they are to some extent peripheral to the Select Committee's reports, they are supposed to be part of the unsatisfactory debates we are having on EEC matters. Not to have them drawn to the attention of the House and put on the record would have been a flaw in our debates.

However, there is an overlap. There has been much discussion this afternoon about commodity agreements. Before we entered the EEC we had a very good commodity agreement in the Commonwealth Sugar Agreement, which, it was generally agreed, worked very well. That was one of the arrangements we had to give up on entering the EEC. Unfortunately, there are reports that the EEC plans to dump 1 million tonnes or 2 million tonnes—whatever may be the amount—of sugar on the world market during the next year. I hope that the reports are incorrect, because the effect on the Third World, and in particular Third World sugar producers in the Caribbean and the Pacific, would be great.

I draw this matter in particular to the attention of those supporters of the EEC in Christian Aid and the Churches of this country who said "Let's join the EEC so that we can help the Third World more." My right hon. Friend the Member for Kettering (Sir G. de Freitas) has had the courage to say that the results, to him at least, have been disappointing.

I hope that the dumping of sugar on the Third World will not occur. If it does, it will show that all the brave words about the EEC wishing to help the Third World are not correct. Admittedly there were no undertakings, but such dumping would be a breach of the spirit of aid to the Third World and would be very serious. There is every indication at the International Sugar Organisation meetings in Geneva that the Commission intends to take this action, but I hope that it will think twice about it.

There have been several references in the debate to the Lomé Agreement Unlike the Commonwealth Sugar Agreement, that agreement must be renegotiated every five years or so. Whilst it may be a good thing that we can examine elements of the agreement, it is unfortunate that there is the ever-present possibility of renegotiation, because that prevents the firm, ongoing guarantees that we should like to see in any of the commodity agreements about which we have been talking today.

Commodity agreements are only a means to an end. Many of us would say that they are comparable with the wages paid to people in the bad times of exploitation in the last century in this country, and that it is unfair that to obtain a tractor Julius Nyerere must, as he has pointed out, export four or five times the amount of sisal at equivalent cost to his own country. That shows how the "wages" of Third World countries have declined in value.

I take it that the object of the common fund and of the new economic order is to reverse that and to obtain decent wages for decent work on a proper basis. Indeed, that is more or less what we have tried to do in this country during the last 50 years, and the whole House now agrees on that. That is the object and the idea of a common fund. It should stabilise world commodity prices at reasonable levels.

The way in which it is done is much more complex, as we have heard today. I am not sure that many of the economists' ideas work in practice. They do not work in lots of ways, so there is no reason why they should work in the complex matter of world trading agreements any more than they do in our own economies. I hope that there will be caution.

A word of caution is also needed about the idea of expansion of world trade being a good thing. If people become dependent on a much wider range of trading partners, self-sufficiency is reduced. There are some advantages in a degree of self-sufficiency. High technology has been referred to, but if the Third World depends upon high technology supplied from outside at a high price and becomes hooked on it by an agreement that is initially attractive because it may promote international trade, it may be that that will not promote the well-being and economic growth of the Third World in the best possible way. Some effects of an increase in world trade are not necessarily in the interests of the Third World or, indeed, of the world as a whole. It may be in many instances, but not necessarily invariably.

I wish to refer to something that has not been mentioned so far and, at least from the point of view of the Select Committee when it has been on visits, is at least as important as anything else. It is the pattern of exploitation that may exist in any economy. We discussed a few moments ago the subject of multinationals and the hon. Member for Shore-ham talked about the rôle of multinationals in the Third World. I do not take his view. We should have a look at the way in which any private capital contributes to the development or the exploitation of a Third World country and examine the difference between a reasonable contribution giving a reasonable return and exploitation. The difference can be fine and difficult to find. I should have thought that one of the troubles of any Third World country was the extent to which there was exploitation and particularly exploitation of a non-money economy by a money economy.

We hear of ways in which the resources of the Third World—particularly in such places as South America and in the tropical and equatorial forests—are being exploited in a way that might not be wise. People outside the money economy in peasant societies are exploited by people inside the money economy in the Third World. We may have to say to our colleagues in the Third World and the Commonwealth that if they want us to import more and to stop various industries in this country so that they can develop their industries, we must be sure that the worse-off people in our country will not bear the burden. There is an old saw in the Third World which says that helping the Third World is fine but that too often it means the poor people in the developed world helping the rich people in the under-developed countries. When we look at the development of any country we must ask ourselves whether this is real development or exploitation of people and natural resources in a way that is unreasonable and wrong—and most exploitation is that by definition.

I wish to make a point about the Commonwealth. The McIntyre Report has not yet been mentioned. This is a report by a group of Commonwealth experts that was set up at the Kingston Commonwealth Summit two years ago. It has been hinted by many speakers today that the Commonwealth provides a practical means by which this country can do more on the ground for the Third World than has so far been realised. However, as we have been reminded by Sully Ramphal on a number of occasions, the Commonwealth is a microcosm of the world without the leading military Powers. That is significant, because the communications, institutions and, I hope, the trust that are shared by the members of the Commonwealth can be used in the Third World arena in ways that are not available to the other arenas of which we have heard today.

The Commonwealth is rooted in history and has a potential future. It has not only a potential future but one in which this country can play a new and different rôle. My right hon. Friend the Member for Lanark (Mrs. Hart) was responsible for holding a conference of Commonwealth Agriculture Ministers in this country some 18 months ago. She took that initiative when she was Minister for Overseas Development. As an outcome of the Commonwealth Prime Ministers' Conference that has just concluded, something more practical can emerge.

One of the things that gives cause for concern is not just the number of arenas that we have been discussing today in which such debates take place, but that even a report, such as the McIntyre Report, is produced by economists. Most of the reports are economists' papers that are concerned with creating an economic climate. However, as hon. Members know, it is not just a climate that produces crops but the nature of the crops themselves and the extent to which one is able to give them a good start.

I am increasingly worried about the debates about the Third World in international arenas, because they are becoming increasingly economic and less practical. I should like to see this country, with its experience, and some of the personnel—particularly those who are now engaged in such organisations as the Commonwealth Development Corporation and those professionally engaged by the Third World countries—develop a practical down-to-earth development in each area.

I was reminded of this recently by a visitor from the Third World whose area I visited with the Commonwealth Parliamentary Association. We discussed the problems of a relatively small area of the Third World and it struck me that all the talk has little relevance to what actually happens in that area now. What is relevant to that area is its water supply, crop tenure, communications and the skill of individuals.

Unless people can get down to that level and start from there, many of the discussions that take place in international debates, in the Commonwealth and in the House, will not provide what is wanted. As the hon. Member for Shoreham said, it will be a long hard slog on the ground. He was absolutely right. Things must be done on the ground. They must start there and be developed there. Unless that is done, the great crusade for Third World development will not have the results that we all want.

7.50 p.m.

I am glad to follow the hon. Member for New-ham, South (Mr. Spearing) because he has made some interesting points. I do not agree with them all. I was fascinated to see him turn to EEC matters, about which we have crossed swords before. No doubt we shall do so again.

This has been a constructive debate and I am delighted to be associated with it. It is one of the privileges of my time in the House, that two years after the June election, I was made a member of this Select Committee. It is good to see here today so many old friends and colleagues in all parts of the House, as well as the Minister, who has always shown a constructive interest in the work of the Committee.

I wish to concentrate on United Kingdom investment in relation to our aid programme because this brings together a number of aspects that have been referred to in the debate. I agree with the definition of appropriate technology given by my hon. Friend the Member for Essex, South-East (Sir B. Braine), and one of the most effective ways of bringing that to bear is through United Kingdom private investment, which is substantially represented throughout the Third World.

I was particularly interested in the Select Committee's Report in the 1975–76 Session on United Kingdom investment in small developing economies That report did not receive the publicity that we might have wished, but it is a valuable study and is the first such report to look at a specific part of the world and to try to analyse the complexity of United Kingdom investment. The way in which that investment operates needs such in-depth study and a frank appraisal of its advantages and disadvantages.

It would be wrong in looking at United Kingdom private investment in the Third World to overlook the feeling that some of it is related to outdated development work in plantations and so on. That is not the way ahead, but that development is there, and the same is true of investment in hotels and tourism. That development is there. We must face that fact, and the question that we have to pose is how to use it effectively for developing countries and for this country.

The 1975–76 report brought out the opportunities for import substitution and the structural transformation of exports. It was valuable and important, and I hope that its suggestion on best practice of four leading British companies in the Commonwealth Caribbean will be carried out.

I single out the Caribbean in the light of the report that we are now discussing, but I never dissociate myself in my remarks on this subject with the eight years that I spent in India in the British steel industry. That was a classic example of British aid gone wrong, and we should never forget it. Under successive Governments, we channelled massive funds into the development of an Indian steel industry which is now part of a world glut in steel-making capacity. A number of difficulties were never recognised, including the need for imports of coking coal. The building up of a massive import bill was never properly considered. The temptation to see aid going into substantial British exports of capital goods must be resisted by any Government who wish to take a wider view. It is in this area that our Select Committees can take the longer view that will help future Governments.

The Indian steel example, which was not an isolated example, must be borne in mind when we consider what is being done by the Government to stimulate, encourage and build upon United Kingdom private investment in many parts of the Third World. We have the second largest source of private investment in the world—after only the United States—and wherever we look in the Third World we can see United Kingdom investment. This is a fact on which we must build.

I challenge the rather carping view of the hon. Member for Newham, South about what some developing countries are doing for themselves. In 1975 I attended the Commonwealth Parliamentary Union's Conference in India, and I was impressed when the Singapore Minister for Trade made a most positive case for the use of transnational companies. The hon. Member for Newham, South criticised these companies and implied exploitation by them, but the Singapore Minister said that there was nothing of benefit that could not be got from transnational companies provided that the host country laid down the basic ground rules and joined international agencies in making the right code of practice. That is the challenge that should be taken up by host countries. It should not be beyond the wit of any reasonably-organised Government.

My hon. Friend the Member for Cambridge (Mr. Rhodes James), in a moving and most effective speech, summarised the main considerations in the areas on which I have concentrated. We must find a proper balance between our traditional heritage of industry and commerce in the Third World and the aspirations of the Third World itself. In doing so, we shall have opportunities of benefiting both the host countries and ourselves. That is the challenge. It is one that, in many ways, can be altered, worked on and simplified, without massive capital investment or taxpayers' commitment. It is one to which Governments have given far too little attention. I am delighted that the Select Committee has looked at it in such a constructive way.

7.57 p.m.

It is an old cliché for an hon. Member to say that he had no intention of speaking in a debate, but I rise because I am so ashamed of the almost empty Benches behind me that I feel that I should say a few words. I am even more ashamed to see that there are no Liberal Members in the House. I have attended these debates for a few years now, and this has happened before. I am ashamed of my own side but even more ashamed at the absence of Liberals.

We can talk endlessly in these debates about the aid given by the World Bank, about the EEC and about enormously detailed and technical subjects, but this is essentially a human debate about people in the starkest and most dangerous position. I start my speech with a quotation from the Commonwealth Secretary General, Mr. Ramphal, that is significant in the atmosphere of this debate and of the fact that the Commonwealth leaders are here this week. Mr. Ramphal said, in a statement:
"The inequities in the international system are of tremendous significance. They have given rise to essentialy two worlds and the disparities between them are growing. One is the world of the rich, the other the world of the poor, united by its heritage of common suffering. A poverty curtain divides the worlds materially and philosophically. One world is literate, the other largely illiterate; one industrial and urban, the other predominantly agrarian and rural; one consumption-oriented, the other striving for survival."
None of this is new. We have heard it said in many forms before. It is just more familiar because it is daily more generalised and better articulated.

I interrupted the Minister when she was giving her views about the Committee's findings on rural development. Some years ago there was a popular dance song which the older among us will remember. It went, "How yer gonna keep 'em down on the farm after they've seen Paris?". That could apply to the Third World. The men in the bush sometimes leave their families or sometimes take their families to the shanty towns on the edges of cities. Although I do not know Latin America, I believe that the situation is even worse there than it is in some cities in Africa which I have been lucky enough to visit.

The Minister said that the Dutch were pursuing the same line that we have advised the Government to pursue. Being a sensible Government, I know that they will take the advice of the Committee to give aid to the poorest. By definition, the poorest people live in the bush. Hon. Members who visited East Africa and other African States saw conditions there. We saw that piped water and other developments were desperately needed.

I may be suffering from jet lag, having just returned from Washington. However, I can tell the House that I was at a seminar about 48 hours ago attended by students and organised by the World Population Society. I discovered that young Americans, who are made of fine stuff, place high in their policy options the giving of aid to the poorest nations. Of course, they use different words. The American academics have a stilted jargon. They use terms such as "land-use management", "agriculture and food distribution" and so on.

The American young people believe that money should be spent to encourage better land-use practices and to discourage land-use which sacrifices scarce resources or endangers life or property. They believe that money should be spent to increase food production, especially in the poorest areas, through improvements in plant varieties, cropping methods, irrigation, correct fertiliser use, pest control, soil conservation and so on. I found it interesting that the American young people had come to the same conclusion as ourselves. I hope that they will tell their Government that this is how they should spend their money.

I listened carefully to what the Minister said earlier. She devoted much of her speech to what she termed the "North-South dialogue". She said that the dialogue should take place at UNCTAD—in other words, in committee. Often such a dialogue is a dialogue of the deaf. That was particularly so in Nairobi last year.

A great deal of unilateral aid is given by agencies. It is not State aid but it is aid which is given by firms of all sizes and types. Whatever the motives of the firms which give such aid, it engenders and stimulates wealth and improves the standard of living of people in the recipient countries. UNCTAD in Nairobi did not get very far. It began as a slanging match. I was interested to listen to the Chinese attacking the Soviet Union. Earlier the hon. Member for Shoreham (Mr. Luce), who always has a go at the Bolsheviks east of the Volga, talked about the behaviour of the Russians. The Maoists say the same and pull the Bolsheviks to pieces.

I see that the Soviet Union supplies MiGs and tanks to the Yemen, Sudan, Somalia, Ethiopia, Uganda and Tanzania. A classic example is on the Horn of Africa where they are having a devil of a job to square the circle. The Russians are sending in MiGs and tanks to Addis, although they have been supporting its neighbour, Somalia. The Soviet Union can defend itself against any attacks but the Chinese have a point. They are involved in collective farming and build- ing highways. They are building roads in Tanzania which cannot do anything but good. They will bring cash to Kenneth Kaunda and enable him to lift up the living standards of his people in the bush.

There is no doubt, as the Member for Norfolk, North-West (Mr. Brocklebank-Fowler) said, that it is stupid to talk about imperialists in the cartoon sense. We were the least wicked of the imperialists. We left behind an enormous legacy of fixed equipment, docks, harbours and airfields. In Dar-es-Salaam we built an airfield which cost millions of pounds and which we handed over to Julius Nyerere in the same way as we would give someone in the family a 21st birthday gift.

The 36 Commonwealth heads of Government are meeting here this week. They represent 1,000 million people, of whom 90 per cent. live in a developing society. The world is poor. The Minister gave us her definition of poor. She said it was a nation with an annual per capita that 80 per cent. of the Commonwealth people fall below that figure. There is a rich world and there is a poor world, and the poverty curtain divides them.

We talk about the Bamboo Curtain, the Iron Curtain and other barriers, but poverty is the worst. Beyond it lies political dynamite. If the problem is not solved the dynamite will explode. It is no good giving a man a text book when his belly is empty. What scares me is that the gap between the rich and the poor is getting wider. The Minister will no doubt correct me if I am wrong in saying that, It is polite to call someone who does not stand for this state of affairs a sceptic. He is sceptical about our standards in the Western world.

The Minister spoke about the common fund being a key instrument, but at UNCTAD the United States of America and some other nations are opposed to a common fund. There is a need for more vision. I could not agree more with the hon. Member for Shoreham. With this widening gap there is to me visible evidence of something that one sees in our domestic political parties. There is a botanical word "symbiosis". I can see in the world today the unhappy development of suspicion between the wealthy developed Western world and these poor people whom one sees in the bush and elsewhere.

The giving of aid is a side issue. This business of wealthy societies giving gifts is a side issue. The Third World will advance only if there is political and economic stability in the advanced wealthy Western World, and it is here that Japan and West Germany have to play the game, because America cannot tackle the problem alone. We in the United Kingdom are waiting for Washington, for Carter and others to reflate or to give a stimulus to our economic society, but the Americans cannot do it unless the Japanese and West Germans play their part.

The United States is a giant economy that needs assistance, but if these three big giants move together and reflate the economy of the world we shall see the benefit not only in Yorkshire or Kent but in Zanzibar and Ghana. That to me is the important thing. I can only hope that those in certain places—be they in World Banks, in the Senate in Washington, or acting as advisers to my own Cabinet—will try to bring about this reflation, because if they do there will be spin-off benefits for all peoples in the Third World.

8.13 p.m.

I am sure that the House feels a sense of gratitude to my hon. Friend the Member for Essex, South-East (Sir B. Braine) for initiating this debate and to all those Members of the Select Committee who produced this interesting Second Report, which is the central document of the debate, many of whom have spoken so well and interestingly from both sides of the House.

There is one fact on which I think everyone who has spoken in this debate has been agreed. It is that the poverty in which so many of our fellow humans live poses a challenge to us all. First and foremost, it is a moral challenge. Deeply embedded in our national instinct, tradition and religion is the belief that those who are comfortably supplied with the world's goods have an obligation to help those less fortunate than themselves. In domestic terms, this tradition has played a major part in our national life, right back to the monasteries and the first Elizabethan Poor Law.

Now, with the growing internationalisation of awareness and communication, this moral tradition increasingly has to find an international expression to be fully meaningful. The two nations of rich and poor within Britain were felt to be an affront by the best of our predecessors in this House in the last century. Today, the two worlds of rich and poor beyond our shores must equally be of concern to us, and everybody who has spoken in this debate has accepted that fact.

Secondly, world poverty is a political challenge. There is unlikely to be peace and stability in a world in which nearly one-third of humanity is close to starvation and bereft of adequate housing, sanitation or medical facilities. In such conditions, talk of human rights, the rule of law, and democracy can all too easily seem a cynical mockery of the true human condition. What the world needs, above all, is stability—stability of currencies, of commodity prices, of spheres of power. Poverty is the enemy of stability.

Thirdly, world poverty is a military and strategic challenge. It is in conditions of poverty, despair and hopelessness that totalitarian systems of government are most likely to gain sway. Such systems can come to pose a direct physical threat to the survival of our civilisation. Fourthly, world poverty poses a commercial and financial challenge, for the prosperity and rising living standards of our own people depend upon rising living standards and rising expectations throughout the rest of the world.

The Prime Minister is right to lay great emphasis on the importance of expanding world markets. That large section of mankind that remains shackled in poverty cannot either purchase our exports or provide our constituents with jobs. In these very practical political, military and commercial senses, therefore, when the bell of poverty tolls, it tolls for all of us. We hear a great deal about the Third World, but it does not need the intercontinental ballistic missile to remind us that we actually live in One World.

We should fully share President Carter's concern to wage war on poverty. It is when one comes to the practical methods of applying these well-intentioned sentiments that, as always in life, the problems arise, and they are formidable. I hope that hon. Members on both sides of the House who have spoken with such enthusiasm and idealism about the need to wage war on poverty—and I fully share their views—will not take it amiss if I go a little further than some of them have today in underlining the practical difficulties that exist in dealing with this great problem of world poverty.

No service is done to the poor by underrating the seriousness of this problem. Let me mention by way of illustration two practical examples from my own limited personal experience of these matters. When I was 20 years old, I was for a time a part-time volunteer worker in a refugee camp in the Middle East. I visited it again last week. The camp is still there, and so are the refugees, or their grandchildren.

UNRRA supplied the camp with tins of badly needed powdered milk in considerable quantities. These were, in practice, not immediately distributed to the refugees in most urgent need—and the need was very great with, if I recall correctly, an infant mortality rate then of over 80 per cent. Instead, on the orders of a local big-wig, the tins were stacked in a large dump the size of a small house, covered with tarpaulins, and provided with an armed guard. From there they were sold, largely to people outside the refugee camp who had the money to pay for them.

All the idealism, hard work and money-raising efforts of those in the West who had managed with great difficulty to get the powdered milk to the camp were largely frustrated by corruption and the lack of an efficient and humane distribution system at the point of delivery. Today, even more than then, any attempt by foreigners to control the distribution of aid on such a site would be deeply resented, for nationalistic reasons that one can well understand.

Secondly, to take a more contemporary example, I have just returned from a visit to a number of countries in the Middle East, including Israel, which has the reputation of being particularly skilful and effective in its handling of over- seas aid. With this debate in mind, I questioned an Israeli expert about the principles which they apply. He said that they, too, had experienced many disappointments. As an example, he told me that they had given a full course of medical training to 20 carefully-selected students from an African country, which he named but which I will not. It had taken seven years for Israel to train those 20 Africans into fully-qualified doctors, during which time 20 places in medical school and hospital were denied to a long waiting list of Israelis. Now, only a few years later, his information is that 16 of the 20 are working outside their country of origin, most of them for high salaries, in more advanced countries, while the African country itself has broken off diplomatic relations with Israel.

I mention those two stories—everyone who has travelled throughout the Third World could multiply them many times—not to pour scorn on the concept of aid to the poor, which I regard as essential, but as an illustration of the practical difficulties of making an aid programme truly effective.

Certainly, I am not persuaded by Professor Bauer's formidably-argued and scholarly depiction—as he sees it—of the almost inevitably ineffective and even counter-productive consequences of foreign aid, but it would be rash to ignore the force and the weight of his warnings and of those who argue with him, or to fail to safeguard against the dangers which he has highlighted.

Finding the money, is, in many ways, certainly for some Governments, the easiest part of an effective aid programme; hence the widely-circulating cynicism, which a number of hon. Members have quoted in various forms, that foreign aid is all too often a process of transferring money from the poor in the rich countries to the rich in the poor countries.

This is why I regard the Second Report of the Select Committee on Overseas Development—House of Commons Paper No. 705—so ably presented by my hon. Friend the Member for Essex, South-East, as such a particularly interesting and helpful contribution to this subject. It avoids generalities and largely confines itself to one area—the Eastern Caribbean—which, as it says, is by no means one of the poorest regions.

The report makes a number of specific suggestions for aiding, in the best and widest meaning of the word, which does not mean just providing more money, that group of small Caribbean islands which is mainly dependent on sugar, bananas and tourism and with which Britain has had such an exceptionally long and intimate historical relationship.

Like my hon. Friend and many others, I am fortunate to know the Caribbean fairly well. I have had the privilege of visiting many of the islands mentioned in the report, and as a former Chairman of the all-party British-Caribbean Association, I have many friends in that part of the world. I therefore read the Second Report with particular interest and sympathy and can testify to its value from personal knowledge. I am glad to know, from what my hon. Friend said, that it should be regarded as a pilot project, on which will be based a far more comprehensive report, ranging across all the problems of poverty throughout the world.

However, from the Minister's memorandum on the recommendations of the Second Report—House of Commons Paper No. 335—one sees again the old conflict between the genuine wish to help and the practical difficulties of deciding how best to do so within the limits of the limited resources available for this purpose. No doubt the exceptional constraints imposed by Britain's present economic position—this is not the time to apportion blame for that—are an important factor, but it is disappointing to see that the Minister, in this First Special Report commenting on the Select Committee's Second Report, in effect pours cold water on almost every recommendation.

When one turns from what one may call "pure" aid to consider support for potentially financially viable projects, the practical prospects for progress described in these documents which we are debating seem even less promising. The Select Committee underlines the practical problems. In paragraph 95 of the introduction, commenting on the rôle of the Commonwealth Development Corporation, the Second Report states:
"On more than one occasion, the impression was gained that there were too many international sources of funds chasing too few viable projects."
If the under-developed world were ever buried by a giant earthquake, one cannot help feeling that those are the words most likely to be inscribed on its memorial.

The Minister's Memorandum agrees. In paragraph 29 she says:
"Barclays Bank International, the largest British bank active in the Eastern Caribbean … believe that financial resources are adequate and that the problem is one of scarcity of viable investment opportunities in the less developed countries."
A little later, on page 30, she says:
"The Commonwealth Development Corporation is one of the major investors in the Caribbean. It has, however, found difficulty in operating in small island economies, and despite regular missions and investigations has been unsuccessful in identifying renewable natural resources projects on which the CDC's concessionary finance could usefully be employed. There is, therefore, less scope for CDC investment now that the Caribbean Development Bank is beginning to become an effective instrument."
Given the difficulties surrounding intergovernmental aid—although many hon. Members have been hopefully looking forward to an improvement here, their speeches and statistics have all too often demonstrated that we are losing ground—it is not surprising that commercial loan arrangements should have expanded since the quadrupling of the oil price in late 1973 plunged the poorest countries so much deeper into poverty.

It is important for us not to develop an excessive guilt complex on this subject, because it was essentially the 1973–74 energy crisis, itself originating in the richest sector of the developing world, which has had the biggest single contributory effect of increasing poverty—after perhaps the escalating birth and survival rates—in the poorest countries. This energy crisis dwarfs all the talk about other commodities, none of which has such a universal impact on living standards.

The huge expansion of commercial loans has been a reflection of the very real joint efforts of the OPEC countries and the Western monetary system to recycle the oil producers' monetary surpluses back to the world's poor. It has been a remarkable success story by private enterprise, but the scale of these commercial loans has now become itself a major threat to the economic stability and prosperity of the whole world, including the richest countries. It is conservatively estimated that the debt of the non-oil-producing countries now amounts to at least $180 billion, of which as much as $75 billion may be owed to commercial banks in the private sector.

These figures deserve to be set against those quoted by my hon. Friend the Member for Shoreham (Mr. Luce) who reminded us that the whole of the Communist world is annually contributing less than $1·5 billion to the whole of the Third World. This situation poses a most serious threat to the economic prosperity of the world, not least to the prosperity of the Western world and to this country.

Almost every non-oil-producing country in the Third World is already literally irredeemably in debt to the commercial banking system of the West, quite apart from intergovernmental loans. Possible exceptions are those few unfortunate countries which were too poor to borrow at all on the commercial markets. These countries may need what may not continue to be available in sufficient quantity as monetarist theories gather strength in the worldwide struggle against inflation. The new Israeli Government, for instance, are summoning the dreaded Professor Milton Friedman to advise them.

These poor countries, with their massive debts, will require a continuing massive future inflow of such commercial loans simply to service their present debt interest and to roll on the loans as they mature. Most of these commercial loans are in the five-to-seven-year maturity range, financed often by oil country deposits with a much shorter maturity. In other words, the West is borrowing short from the rich Third World in order to lend long to the poor Third World, a classic recipe for disaster. I do not believe that that situation can continue indefinitely. The threat that it poses to the stability of Western financial institutions and the recipient countries is not yet sufficiently appreciated and requires the most urgent consideration with a view to providing governmental backstops.

The domino theory could apply here with a vengeance. If it did the crash of Credit Anstalt would simply not be in it. If there were two or three major national defaulters in quick succession, followed by commercial banking failures as an inevitable consequence, the present heady mood of financial optimism—that because no country has truly defaulted on its debts in recent years no country ever will—would disappear overnight, with disastrous effects on confidence on liquidity, on investment and employment throughout the world.

The truth is that by any objective analysis based on prudent commercial banking practice, a great number of Third World countries are already dangerously over-borrowed, and a further substantial rise in the price of oil, which might happen at any time as a result of a new Arab-Israeli crisis, might prove catastrophic to the world monetary and social order.

I hope that the Government, together with their closest allies, are giving urgent attention to this problem because it is much more immediate, threatening, serious and real than some of the subjects which seem to capture the headlines at Summit meetings.

Given what the hon. Gentleman said—with much of which I wholly agree—do I take it that the Opposition are in favour of public expenditure in terms of debt relief and of increased public expenditure in terms of overseas aid? It is important to know his positive suggestions as well as his analysis.

The contribution which a Conservative Government can make in this area will be entirely determined by the rapidity with which we can restore economic health and prosperity to this country.

May I press the hon. Gentleman a little further? It is not quite enough to say that, because he and one or two of his colleagues are saying that the Labour Government should spend much more on overseas aid. As the hon. Gentleman has pointed to the great problems of developing countries in terms of debt relief, it is not enough to say "We shall see." I must ask him to be a little more specific.

I do not think that I have to be more specific. I have been perfectly clear about my position and that of my party. The Labour Government have got the country into such an appalling economic mess as a result of their economic policies that they have had to announce a £100 million cut in the level of oveaseas aid spread over this and the next financial year. Personally I very much regret that. I should like to see Britain sufficiently rich to be expanding instead of cutting aid. But I will not suggest that a Conservative Government would be in a position immediately to reverse those Socialist cuts until we have had a little time to restore the country's economic prosperity. Once we have restored economic prosperity I would regard help to the poor of the world as a high priority indeed. It is no good thinking that we are long able to help the poor of the world with money that we have borrowed from others.

On this subject of debt, is the hon. Gentleman's argument that, where private commercial interests have, quite often, made imprudent loans to developing countries—which have been used for purposes unconnected with development—there is an obligation on the taxpayers of the Western nations to bail out those imprudent private investors?

I do not think that the loans of which I know can be described as imprudent or unconnected with development aid. All the loans with which I am acquainted—and in my private commercial life I have played a small part in arranging some of these loans via Western financial centres from richer Third World countries to poorer Third World countries—are closely related to genuine aid projects. They have nearly all been given either to a development bank or for some harbour or airfield that is to be built. I do not think that people who lend money commercially are at all anxious to lend simply for its absorption by current expenditure. They nearly always associate their loan with a development project, preferably one which has some hope of being commercially viable in the long run.

The vast quantities of short-term deposits which have flowed into the Eurodollar market and into the United States have been on such a scale that they have had to be recycled by the commercial banks and, because of the vast amount of short-term deposits washing around following the increase in oil prices, some of the loans to Third World countries have probably not been as stringently safeguarded as perhaps they ought to have been. Certainly the Third World countries will not in many cases be in a financial position to repay the loans or even to service the debts. If this flow of around $75 billion has not gone to the Third World from the private sector the position of those countries would have been very much more serious than it is.

Up to now the movement has been almost wholly for the good. I say that it has reached a stage where it poses considerable difficulties for the future because it is based on the assumption of expanding trade and prosperity in the West, which has not recently occurred.

The last issue on which I wish to touch briefly is the infinitely complex one of world commodity prices, about which many hon. Members have spoken. The Select Committee Report takes the Government to task for allegedly losing the momentum of the Kingston economic summit at subsequent economic summits or whenever the common fund and the activities of UNCTAD have come under discussion.

The hero of Kingston was our old friend the right hon. Member for Huyton (Sir H. Wilson). Many of us are, perhaps, too well acquainted with the occasional heady optimism of his speeches to be altogether surprised by the outcome of Kingston. No doubt the right hon. Gentleman felt adequately rewarded by the headlines immediately following the Kingston conference. I must express some sympathy with those, including the right hon. Lady, who now find themselves entrusted with the task of turning his fine words into practical policies. I am not surprised that the right hon. Lady in her admirable speech today expressed some disappointment at the latest proceedings in Paris. I agree with her that perhaps too much was expected of Paris.

The Memorandum of the Secretary of State for Trade in his Second Special Report—House of Commons Paper No. 367—seeks to put a brave face on it when he claims in paragraph 4 that
"the momentum generated in international commodity discussions by the United Kingdom initiative at Kingston two years ago has been effectively maintained."
If the Secretary of State for Trade thinks that, he must be almost alone in the world, north or south.

While I certainly favour a continued international attempt to seek greater stability in commodity markets—I have earlier said that I regard stability in a variety of fields as of key importance—I think that the Government are wise, nevertheless, for the time being to proceed rather cautiously on a product-byproduct discussion of this infinitely complex problem.

Any hasty rush towards a general commodity price indexation, the likely impact of which on particular poor or rich countries has not yet been sufficiently studied in detail, would be most unlikely to provide a lasting solution to the problem and might even make it significantly worse.

In particular, it behoves us in Britain to be modest in our advice to those who will have to bear the heat and burden of this particular day, if it ever dawns, bearing in mind the small financial contribution we are likely to be offering towards the truly vast sums required to enable sustained international intervention in world commodity markets. The figure of $6 billion was mentioned earlier today by the hon. Member for Motherwell and Wishaw (Dr. Bray) as being sufficient for this purpose, but, in view of the sums I have mentioned in my speech, I should be very astonished if a figure of $6 billion went anywhere near achieving the object in the international commodities field.

There are really four issues which lie at the heart of any attack on world poverty—energy, commodities, debt and aid. I have said a brief word about each.

On energy: Saudi Arabia is certainly setting a most responsible lead in the energy field and in the recycling of surplus funds to deficit countries.

On commodities: the poor countries of the world undoubtedly look to the rich countries to shoulder a commitment to a common fund to finance commodity buffer stocks.

On debt: urgent attention, I have argued, must be given to the Third World's massive and growing commercial debts.

On aid: the practical mechanics and administration of aid require a great improvement if they are to command con- tinuing confidence from the donor societies.

These are all vast questions, awesome in their magnitude and complexity. There are no easy or certain answers to them. But of one thing I am sure. The most immediately helpful contribution Britain can make to the longer-term solution of these problems of world poverty is to put our own house in order.

8.43 p.m.

I agree at least with one of the concluding remarks of the hon. Member for Horncastle (Mr. Tapseli)—that we have been discussing awesome problems today and that there are no easy answers. Although the hon. Gentleman made a very balanced speech, he rather lost his way at one point by suggesting that a Conservative Government would come in with the ability to put the economy to rights domestically, and that these problems might then find a rather easier answer. Apart from that, I think he made a very balanced speech.

The debate has covered a wide range of matters which arise over the very broad issue of relations between developed and developing countries. I commend the hon. Member for Essex, South-East (Sir B. Braine) for his very fair-minded, balanced and positively critical contribution in opening the debate. I very much welcome also the choice of subject that he and his Committee, of which he is the acting chairman, made for their study, despite some of the more stridently critical comments in the Committee's reports, about which I shall have a little to say.

In attempting to wind up a debate of this range I cannot possible hope to cover all the issues. I therefore propose to spend some time on one of the main subjects—certainly the central trade subject of the debate—to which the hon. Gentleman referred in opening. My hon. Friend the Member for Enfield, North (Mr. Davies), my hon. Friend the Member for Motherwell and Wishaw (Dr. Bray) and several other hon. Members also referred to it. It is an issue which has come to play a major part in the North-South dialogue, that is, the proposed common fund for commodities.

I think that we have to start by recognising that, quite apart from the objective merits or demerits of the proposal, the concept of the common fund has become something of a symbol to the Third World of the willingness of the developed Western countries to make a genuine move towards the aspirations of the developing countries as formulated in their demand for a new international economic order. It also, I think, holds out the prospect of a new international body which, in their view, might be rather more closely attuned to their central interests. That again was a point that my hon. Friend the Member for Motherwell and Wishaw rightly recognised.

It was because of their recognition of these aspirations that, at the meeting of the European Council in Rome in March, the EEC countries agreed that there should be a common fund. It was for the same reason that, at the Downing Street Summit Meeting in May, the participating Governments agreed to work to secure productive results from negotiations about the stabilisation of commodity prices and the erection of a common fund for individual buffer stock agreements. Again, most recently, it was for this same reason that, the week before last, the developed countries participating in the CIEC in Paris agreed, together with the other participants, that a common fund should be established as a new entity to serve as a key instrument in attaining the agreed objectives of the integrated programme for commodities, as set out in UNCTAD Resolution 93(IV). The specific purposes and objectives of the fund, as well as its other constituent elements, will be worked out at the renewed session of the conference on the common fund now scheduled for November.

I think that this is a rather more optimistic prospect than was suggested by the hon. Member for Essex, South-East in opening the debate. The CIEC participants have pledged themselves quite specifically in their communiqué to securing a successful conclusion to that conference.

That does not mean, of course, that the CIEC participants acquiesce in the type of common fund as proposed by the UNCTAD Secretariat. I should make clear that the UNCTAD Secretariat's model of a common fund has not been accepted collectively by developing countries. There are a number of proposals for the form of fund, ranging from ideas for a "clearing" or "pooling" type of fund proposed by the French, to the African concept for a free-ranging fund with considerable resources, with the objective of keeping up commodity prices. In other words, there is a considerable range of concepts in the pool at present.

A common factor in developing countries' demands for a common fund is the decisive rôle that they envisage for themselves in the common fund's operations in the context of the new international economic order. The objectives of developing country producers would be aimed at ensuring that among the fund's principal objectives would be the protection of the floor price rather than the ceiling price in individual commodities. I would readily accept that experience has shown—and for obvious reasons—that it is vastly more expensive, and much more difficult, to protect the ceiling price. That sort of fund would carry with it an implicit degree of price enhancement which involves much wider consequences My hon. Friends the Members for Sheffield, Heeley (Mr. Hooley) and Enfield, North quite rightly drew attention to this.

First of all, the distributional effects would be far from ideal. The principal benefits might well go to some of the better off developing countries and to certain developed countries while some of the poorer countries, whose share in commodity trade is relatively small, might gain little and in some circumstances could actually even lose, for many poor developing countries are, of course, buyers of raw materials as well as suppliers.

Another effect of price enhancement if one had that type of fund would be that it would certainly discourage diversification in supplying countries while at the same time encouraging the production of substitutes in consuming countries.

There is also the question of time scale. How does one know the level of resources required for the common fund before work on the individual commodities will reveal the scope and need for arrangements of this kind?

That is why we have said that we doubt the practicability of establishing a fund on these lines until the discussions on individual commodities have made further progress in particular, identifying the scope for buffer stock arrangements. For buffer stock finance may not necessarily be the most relevant need in particular cases. I emphasise here that at least four different types of arrangement may be most appropriate in particular cases, and I shall go into detail on the practicalities because, as many hon. Members have rightly said, that is what we now have to consider closely.

There are commodities covered already by international agreements—for example, cocoa and tin, for which a buffer stock has been used, and coffee, which is regulated by an export quota arrangement. There are commodities for which a new international agreement using a buffer stock might be appropriate, such as sugar and rubber. There are commodities for which a new international agreement using export quotas might be appropriate, such as tea or bananas. I strongly suggest that, through the hon. Member for Essex, South-East, as an answer to his hon. Friend the Member for Woking (Mr. Onslow). Further, there are commodities for which a new international agreement, possibly involving limited but worthwhile measures other than price stabilisation, might be appropriate. I am thinking here of jute, hard fibres, cotton, cotton yarn and meat.

Finally, I come to the question of cost. I note that in paragraph 9 (vii) of its Second Report for 1976–77 the Select Committee queried our use of the phrase "at reasonable cost" in referring to the conditions on which United Kingdom support for price stabilisation schemes might be forthcoming. The Select Committee said that it was
"nonplussed to find that the witnesses examined not only had no idea of what the benefits are likely to be but also knew of no estimates of such benefits in Whitehall to set against the rather modest contribution that the United Kingdom would make to a Common Fund if it were established."
In fact, that is not correct. Such estimates have been made.

It has been argued that we need not be too afraid of the rise in the prices of commodities which we believe the UNCTAD proposal would entail because the adverse effect of such a rise on the British balance of payments would be offset by increased exports of British goods bought by the developing countries out of their increased export earnings.

It is not really possible to try to estimate in any precise way how great this offset would be. To do this one would have to make what would necessarily be very speculative assumptions about a wide range of factors, including the price elasticities of demand and supply of the commodities in question, the extent to which the developing countries would use the additional earnings rather than, say, reduce their balance of payments deficits, their marginal propensity to buy from the United Kingdom rather than from other sources of supply, and so on.

However, all that being said, it would certainly be reasonable to expect some increase in British exports to developing countries as a result of an increase in commodity prices. Again, I say that on the basis of the UNCTAD proposal, not on the basis of long-term stabilisation, which is our express aim. But, on the best evidence available, it is unlikely that the export gain would be nearly large enough to offset the loss resulting from the higher cost of commodity imports into the United Kingdom.

The cost to the United Kingdom of net imports in 1974 of the 18 commodities mentioned in the Nairobi resolution was £2,085 million. I ignore there the freight and insurance elements. Thus, the increased import cost to the United Kingdom of a price rise of, say, 10 per cent. for those 18 commodities—I choose that percentage on a purely arbitrary basis, for the purpose of illustration—would be £208·5 million. That is the entry on the minus side of the ledger.

The advantages are far harder to calculate, but let us take net exports of these commodities for each developing country and multiply them by 10 per cent. to yield net export earnings increases. If we then multiply those figures by the British share in each developing country's total imports and sum the resulting figures, we arrive at a total of £92·1 million. I am sorry to go into detail in this calculation, but it is an attempted calculation and I think it well worth giving in full to the House.

The deficit—£208·5 million less £92·1 million—is £116·4 million. That is the shortfall in the balance of payments recovery of costs of higher commodity prices. This figure is almost certainly optimistic. It assumes, for example, without any evidence, that the developing countries would spend their entire earnings increase on additional imports and that the British share of those imports would be in line with our present share of total exports to these countries. That is an assumption, but a reasonable assumption.

The preceding remarks relate to the balance of payments effect. I should add that this is by no means the whole of the picture. Even if there were a nil balance of payments effect, there would still be a resource cost in that we should have to find the manpower and other resources to produce the exports made necessary to pay for the now more expensive commodity imports.

I turn from what I might describe as this parenthesis ad hominem—it is an argument that has been put forward and that needs detailed exploration—to the main point at issue in the debate.

I think that the House is indebted to the hon. Gentleman for going into such detail. But if he is going into such detail, if he is going to quantify advantage and disadvantage, will he put into the balance sheet the effect on employment in this country?

The increase in employment resulting from further exports to the tune of £92 million in this example is on the credit side. That has to be taken into account. That is a fair point for the hon. Gentleman to make. The only point that I was making was that in balance of payments terms there is not a full recovery of the extra costs of higher commodity prices if there is price enhancement in the kind of commodity fund put forward by UNCTAD.

Will the hon. Gentleman carry the argument further? He has now conceded that there would be an advantage to employment in this country with the taking up of unused capacity and the employment of idle hands. On the other hand, he has quantified an advantage to developing countries. Can he not see that we are seeking to get the world moving again in a context that will be advantageous both to the developing countries and to ourselves?

Yes. The hon. Gentleman must not misunderstand my purpose. I am not seeking to use the argument that I have put forward as a reason why we should dismiss any concept of a common fund. It is put forward only to quantify one of the dimensions associated with a particular kind of common fund—namely, that put forward by the UNCTAD secretariat—which involves a certain degree of price enhancement. It is difficult to calculate how much. I have made an assumption. What I have said does not invalidate the general proposal of a common fund. Indeed, the EEC, with our support, has supported the idea of a common fund. Perhaps I might develop the proposal which we are supporting.

My understanding, from talking both to members of the UNCTAD secretariat and to delegates from developing countries to UNCTAD, is that the UNCTAD secretariat proposal is not that prices should be enhanced above their long-term equilibrium trend, but that its purpose is solely to stabilise about that trend. There are great technical difficulties in specifying the trend, but the proposal is specifically not to enhance prices.

Secondly, in his calculation has my hon. Friend taken account of the ratchet effect to which I referred—namely, that the stabilisation of prices, whether about an enhanced level or the long-term equilibrium trend, conveys an advantage to developed countries by enabling them to operate at a higher pressure of demand?

We believe that the proposal put forward by the UNCTAD secretariat will involve a degree of price enhancement, not because this is explicitly put forward as the goal, but because the control of the fund, as envisaged in the UNCTAD secretariat proposal, will be dominated by the supplying countries.

Certainly there can be no doubt that they will use their management and control of the fund to secure the full price. That is a perfectly proper aim. It is much more difficult to secure the ceiling price even given the political will. That must depend on the nature of the management of the fund.

I think it not unreasonable, therefore to draw the conclusion that there will be a certain degree of price enhancement. The only point I am making is that the price enhancement of such a proposal will not be neutral. To a certain degree it will be negative.

My hon. Friend is sliding around. He is now attributing effects to only the vaguest suggestion as to how the fund may be managed. There are no concrete suggestions about the voting rights, about the types of control exercised by the fund or of individual commodity interests under the fund. He is attributing to that a speculative outline of possibilities of the practical effect of price enhancement which the secretariat and the Group of 77 themselves deny. I do not think my hon. Friend is doing justice to his own intelligence.

My hon. Friend is entitled to his view. I am putting forward what we believe to be a reasonable interpretation of the proposal as it has been set out. My hon. Friend is right that it remains a somewhat vague concept. To that extent we should not draw too rigid conclusions from it. All I am saying is that if any concept of a common fund were to be put forward which involved price enhancement, this would be the consequence. I am entirely at one with my hon. Friend that our aim in having a concept of a common fund is price stabilisation along long-term market trends. It is difficult to do, but at least we agree about the concept.

I should now perhaps return to my prepared remarks. This is what we believe and that is what we are going to try to secure. We believe that what should be possible is to work out a more sensible and practicable proposal based on individual commodity agreements which would take advantage of the economies of scale where there are several agreements, would provide for the optimum use of resources made available through those agreements, and would thus facilitate their financing.

It is important that the scheme should be accepted by a wide range of countries in all regional groups and should be financially viable. I am sure that is an unexceptionable comment. One purpose of this approach, one that is starting from and based on individual commodity agreements, is that of maintaining financial discipline and ensuring those who are to benefit from the agree- ments are agreed that the financial costs involved are worth while and that they are prepared to meet them.

In elaborating the concept of a common fund for mutual assistance between international commodity arrangements, a great deal of detailed consideration and negotiation will certainly have to be done. I am sure that is widely understood and agreed. Among the questions that will need resolving—here I turn to the points my hon. Friend the Member for Mother-well and Wishaw has just made and I agree—will be the relationship between the common fund itself and individual commodity agreements.

Another major area of consideration is the whole question of how the new organisation should be managed and controlled. In his excellent speech my hon. Friend referred to three and particularly emphasised the importance of getting down to the practical modalities. He mentioned the calling up of the contribution when needed, criteria for specific commodity agreements, and the relationship with world liquidity. I agree that these are three of the practicalities which now have to be thrashed out.

We shall certainly play our full part in the November conference. We must remember that the discussions on the common fund are only one part of the total programme of work set in hand by the Nairobi conference. The other part is the programme of negotiations on individual commodities.

International agreements are already in existence, as I say, for cocoa, coffee and tin. In pursuance of the integrated programme on 18 commodities adopted at UNCTAD IV in May last year, a programme of meetings has been established which will stretch into the early part of next year. Discussions have so far been held on a further five products. Two preparatory meetings have been held on copper, and work has been set in hand at expert level on alternative methods of price stabilisation. On jute and jute products, the first preparatory meeting was held in October last year and the second is scheduled for next month. Meetings have also been held on hard fibres in December 1976, on rubber in January 1977 and on tropical timber last month.

In addition, there was a meeting of the FAO Intergovernmental Group on tea in London at our invitation in February which, despite the rather unfortunate snide remarks by the hon. Member for Horncastle about my right hon. Friend's important initiative in May 1975, agreed on a programme of technical work in advance of further meetings later this year. A United Nations negotiating conference on sugar was held last month in Geneva. It revealed substantial differences of view between the various participants, but the chairman of the conference will be holding informal discussions with participating countries to decide on the next steps.

Perhaps I should add a word about bananas, since the hon. Member for Norfolk, North-West (Mr. Brocklebank-Fowler) made a——

I am just coming to the hon. Gentleman's speech. I hope that I shall be allowed to answer his point before he replies. He asked about the United Kingdom market for bananas. He will not be surprised to hear that it is determined by the level of demand. There are no restrictions on the quantity of imports of bananas coming from the Windward Islands, Jamaica or Belize, and the position of our traditional suppliers is protected by Protocol 6 of the Lomé Convention. Supplies from other areas are subject to dollar area quotas, and these quotas are issued at the level necessary to meet United Kingdom consumer demand. The Advisory Committee on Bananas provides advice on, amongst other matters, the needs of the United Kingdom market.

Perhaps I might answer two of the other matters raised by the hon. Member for Norfolk, North-West, since he is a member of the Select Committee and asked me some very proper questions.

The hon. Gentleman made some nice play with the canard that the West Indies Committee formulates our export policy for the Caribbean. The British Overseas Trade Board is responsible for formulating our export policy. In so doing it takes into account the advice that it gets from its 16 area advisory committees, one of which is the West Indies Committee, which is responsible for the Caribbean area.

Lastly, the hon. Gentleman asked about the funds going to the University of the West Indies. He asked for an assurance that aid funds being directed to the university will be monitored extremely carefully even where the amounts involved are relatively small. I am glad to assure the hon. Gentleman that we are considering carefully the assistance in the agricultural sector. We give some support to the Caribbean Agricultural Research and Development Institute as well as to the School of Agriculture at the University of the West Indies. We are concerned that agricultural research should have a practical application in the Caribbean, and we shall certainly scrutinise further requests for aid most carefully before entering into further commitments.

I am grateful to the hon. Gentleman for answering two of my three questions. Perhaps I may remind him of the third in the hope that he will answer that as well. What steps is his Department taking to combat our loss of trade with the Third World, which has been substantial? He will remember that I referred him to a newspaper article on the subject.

I am coming to that.

I now turn to the work on these commodities, which will not be easy, as I am sure everyone appreciates. The discussions so far have shown how much the practical problems and the possibilities for action vary between commodities. I can assure the House that the Government will continue to play a full and positive part in all the various international discussions to try to ensure an outcome which is equitable to all concerned and which promotes the essential objective which we share—an increased stability in commodity prices. The other side of the coin to price stabilisation is stabilisation of developing countries' export earnings which derive principally from commodity trade.

I should like to intervene on this matter of commodities, a technical matter that we do not have the opportunity of discussing frequently. Will the Minister consider setting out the Government's view on what would be a good commodity stabilisation programme, in a Green Paper, so that we may discuss it in the House in all its detail at an appropriate time?

The hon. Gentleman must appreciate that there is no such thing as a prototype or model agreement. We are dealing with 18 commodities, whose conditions of storage, durability and freight differ in every case. There are different countries involved, and it is impossible to provide what the hon. Gentleman is asking for. I can assure the hon. Gentleman that the House will have a full opportunity to discuss the matter, but he must allow the Government to engage in the international negotiations that will take place in November, and I hope that he will accept my assurance that we shall do so frankly and positively.

The Minister has shown the Government's great concern for furthering discussion of commodity prices. What have the Government done so far to encourage progress on the idea of a centre for a council for commodity prices in London, eventually giving form to what already exists—the various groups working for commodity stabilisation in London—and giving them a centre, for which they are seeking certain capital aid?

The Government are considering the matter but I cannot say more now.

The principal mechanism for stabilising export earnings is the Compensatory Finance Facility of the International Monetary Fund. Although this was not mentioned, it is a very important part of trade and aid for developing countries. The mechanism works by allowing countries to draw outside the regular IMF credit tranches to compensate for shortfalls of total export earnings. The Compensatory Finance Facility was substantially liberalised in December 1975, since when it has been of considerable benefit to developing countries. The total amount available to all non-oil developing countries is some $3·7 billion, net of drawings outstanding. A further increase in IMF quotas which comes into operation later this year will raise this figure to $5·3 billion.

At the same time, on a more modest scale, the United Kingdom, with other members of the Community, participates in the Stabex Scheme under the Lomé Convention, by which the EEC countries help to stabilise the receipts from exports to the Community of several primary products from the African, Caribbean and Pacific signatories to the Convention. Unlike the IMF scheme, Stabex operates on earnings from individual commodities, and disbursed some $75 million in its first year of operations.

I wish now briefly to refer to a matter mentioned by a number of hon. Members—the main recommendation of the interim Caribbean report, which was the proposal for a trade development agency. The proposal appears to be that the agency would supplement rather than supplant existing arrangements. I take it that it is understood that those arrangements include the International Trade Centre, which was established at the request of the developing countries to aid them in the promotion of export trade, and the Developing Countries' Import Opportunities Office, established in 1973–74, which provides developing countries exporters with information on market opportunities and provides buyers in the United Kingdom with advice on the products available in the developing countries. In other words, these functions are already significantly covered by existing institutions.

The Committee's proposal was that the trade development agency would supplement these mechanisms and, in the case of commercial representation, assume a supervisory role. We have carefully considered this proposal—which is an important one—but we have concluded that there are some areas of difficulty.

The first and probably the most important difficulty is that the primary function of the agency—the selection of methods of production, investment, marketing, and other economic factors—could be seen as cutting across the autonomous economic policies of the Caribbean Governments. The agency or another external institution, including, of course, the aid programme or British private investment, could succeed only to the extent that it is able to react to the preconceived needs and requests of the Governments themselves. We remain willing to discuss with those Governments any proposals that they may have about how we can help, but we are not convinced that the creation of an externally conceived and in part externally managed agency is the answer.

Another difficulty is that if such an institution is to have a real chance of success in co-ordinating policies among the different countries of the Caribbean the initiative should come and should be seen to come from within the Caribbean. Perhaps this is another way of making the same point. The framework for such an institution is provided by CARICOM and the Caribbean Development Bank. Experience shows that an attempt by anyone from outside the region to establish a local institution to co-ordinate policies is likely to be counter-productive.

I do not want to be unnecessarily negative on this or to dismiss the general concept of a trade promotion agency out of hand—far from it. Indeed, the EEC has itself proposed the creation of an agency to promote trade co-operation with developing countries. It would consist of two departments. One would act as a source of information and advice to beneficiaries of the EEC generalised scheme of preferences and the other would be responsible for the Community's greatly extended programme of trade promotion—the organisation of seminars, trade missions, training, technical assistance, and so on.

I am pleased to say that the European Assembly has examined and approved this proposal for the trade promotion aspect of the agency, although I should add that it felt—and we tend to share the view—that the existing Commission staff should carry out the task of providing information and advice about GSP.

The Committee is continuing examination of the general matter of trade promotion with the developing countries, particularly the "packages" question.

I take full account of the strictures of the hon. Member for Norfolk, North-West about our declining relative share of the markets of developing countries. Like the hon. Member, I am particularly struck that the Japanese have a far higher percentage of their exports going to these markets than we do—for all our Commonwealth connections. I therefore agree that, whatever mechanism proves most effective for dealing with the problem, this is a matter to which the Government should give more attention and examine more closely, because that is a sobering fact.

Even though this debate has not been as well attended as the subject deserves, it has certainly been an important occasion for drawing attention in an almost wholly positive manner—by both sides of the Chamber—to an easily neglected but desperately important area of policy. We have been examining only the interim report of the Select Committee in a situation of world aid and trade that is fast changing and moving rapidly. We look forward to receiving the Committee's final report with the considered suggestions that will flow partly from observations on this debate and partly from the extended inquiries that the Committee is now undertaking.

I agree with the hon. Member for Horncastle. The horrors of world poverty are certainly not receding and some would claim that they are intensifying. Perhaps there has never been a greater need for new patterns of aid and trade. There are signs of more new international thinking and determination in this area than there has been for many years. I assure the House that the Government intend to play a full and active role in promoting these developments.

Question put and agreed to.


That this House takes note of the Second Report from the Select Committee on Overseas Development in the last Session of Parliament (House of Commons Paper No. 705), the First Special Report in the present Session of Parliament (House of Commons Paper No. 335), the Second Report in the present Session of Parliament (House of Commons Paper No. 222) and the Second Special Report in the present Session of Parliament (House of Commons Paper No. 367).

European Social Fund

9.22 p.m.

I beg to move,

That this House takes note of Commission Document No. R/752/77 on the European Social Fund.

I haveselected the amendment in the name of the hon. Member for Newham, South (Mr.Spearing).

The current decision of the Council of Ministers governing the European Social Fund requires the Council to review its operation by 1st May and, if necessary, to amend it on the basis of an opinion of the Commission. The document before the House contains the Commission's proposals for the amendment of the Council decision and the implementing instruments.

Since the United Kingdom joined the Common Market in 1973 we have been allocated £140 million from the Fund—about 27 per cent, of the total allocations in that period. There is no doubt that we have gained considerably from the Fund during our membership.

The bulk of assistance that we have received from the Fund has been for training and resettlement activities in assisted areas. We have a clear interest in securing that the Fund's efforts should continue to be directed mainly to helping regions in difficulties.

Most of our applications are in respect of overall national programmes such as TOPS—for training unemployed people in the assisted areas of Great Britain, for emergency measures for the training of young people, and for similar schemes in Northern Ireland. A list of current applications to the Fund was published in the Official Report on 18th January 1977. It is one of our primary aims in the review to secure the continuation of Fund support for overall national programmes.

The Commission proposes to retain the basic features of the present Fund, particularly the distinction between Article 5 aid, which is granted without further Council decision—mainly for operations in regions which are less developed or are suffering a decline in main economic activities—and Article 4 aid, which can be granted only in fields opened by specific decisions of the Council. The current basic Council decision requires at least 50 per cent, of the Fund's budget to go to Article 5, but also states that in the long term the resources available for Article 4 should overtake those for Article 5. The Commission proposed to remove both these provisions so that the allocation of funds between the two Articles would in future be determined annually in the budget discussions.

The present distinction between Articles 4 and 5 does not seem to us particularly helpful or relevant to the achievement of the purposes of the Fund. It reflects a political compromise among the Six when the present Fund was established in 1971—before we joined the Community. A unanimous decision in the Council is required to alter it now. If the status quo is preserved, we want to ensure that the present requirement that 50 per cent, of the budget must be preserved for Article 5 is kept, since we look to that article for our major allocations from the Fund.

The Commission proposes that in addition to the existing rate of grant of 50 per cent, of eligible expenditure there should be a new rate of 65 per cent, payable in regions where there is an especially serious and prolonged imbalance of employment or a decline of one or several economic sectors of vital importance. Regions to benefit from this proposal would be defined later by the Council on a proposal from the Commission, but no such proposal has yet been made. A 35 per cent, rate is also proposed for activities which at present are not eligible for Fund assistance, to promote better working conditions, or to contribute to the creation or maintaining of employment.

Can the Minister throw any light on the meaning of this extraordinary expression "imbalance of employment"? The Minister has repeated the words in the explanatory memorandum. "Unemployment" one can understand, but "imbalance of employment" is presumably a heavy preponderance of one type of employment over another. Why is that undesirable?

I am grateful to the right hon. Member. The word "unemployment" is a more sensible term to use. I have been guilty of slipping into Community jargon. I am talking of unemployment—purely and simply.

The Commission proposes that the Council—on a proposal from the Commission—should be able to authorise such new activities and assistance for income maintenance and employment, information and guidance services, although no such proposal is made at present. We think that retraining and resettlement are the areas in which the Fund can make its most useful impact on the problems of unemployment within the Community

Because of budgetary restraints, widening of its activities in these ways might lead to a dissipation of resources and complications in administration. This would be contrary to the Commission's own desire, expressed in its communication, for greater concentration of action on the most pressing Community problems. We do not think that we should risk a dissipation of resources.

I turn to administrative reforms. The Commission proposes a number of changes designed to meet widespread criticism of the cumbersome and time-consuming procedures of the Fund. At present applications for assistance have to be submitted at least three months before the start of the operations concerned but decisions are often not taken for another 12 months so that member States do not know which operations, or indeed part of operations, the Fund will support until long after they have started or even when they have finished. Actual payments from the Fund are often delayed even longer because of the detailed checks required by the regular tions. The Government have had cause for concern and I have made our anxieties known to the Commission and the Council of Ministers.

The main proposed changes are, first that member States should submit an overall programme of operations eligible for Fund assistance by 1st August followed by grouped applications by 1st October in the year before that to which they relate. The Commission should then be able to commit the major part of the available resources immediately after the adoption of the budget in December. Individual applications are to be accepted after 1st October only in exceptional circumstances.

Secondly, the complicated and detailed list of the types of expenditure which are eligible for assistance would be simplified. The proposal is to retain the present list of aid headings but to remove the sub-headings, which at present constitute a complete list of all types of expenditure which can be eligible for aid. This will both simplify and broaden the current provision.

Thirdly, when an allocation has been approved by the Commission, the member State could apply for an initial advance of 30 per cent, of the amount allocated on; certifying that the operation had started. A second advance of 30 per cent. is payable when half the operation is completed, and the balance is payable after the submission of the final accounts.

Fourthly, the present rules of the Fund require payment to be made on the basis of actual costs. The Commission proposes to specify a flat rate per beneficiary per unit of time at the time of the allocation decision; for instance, £100 per trainee week. The unit costs will be calculated on the basis of information from past operations of the same type in the same member State.

We welcome these proposed administrative reforms in principle, although a number of details still require to be ironed out. Although we like the idea of grouped applications, we consider that it should be made easier to submit individual applications after 1st October for operations that could not have been foreseen at that date. There are a number of technical questions on these advance payments and unit costs, and these are being clarified in discussions with Commission officials.

I now come to assistance for the disabled. The Commission proposes substantial changes in the system of aid for the disabled. At present the Fund can assist programmes for the disabled under Articles 4 and 5. Most of our allocations in the past have been made under Article 5. In 1975 and 1976 allocations under this article amounted to over £2½ million for each year. Article 4 allocations were only £250,000 in 1975 and about £1 million in 1976.

The Article 5 allocations were made in respect of a variety of schemes mainly directed towards employment rehabilitation and vocational training in the Employment Service Agency's employment rehabilitation centres or in independent residential training colleges through cources financed by the Training Services Agency. The smaller Article 4 allocations were for various demonstration projects in the field of rehabilitation and to some extent for the training of staff concerned with rehabilitation.

Under the Commission's proposals assistance for the disabled will in future be through the single channel of an expanded Article 4 scheme. The present Article 4 scheme provides assistance for staff training in rehabilitation and resettlement and for demonstration projects —that is to say schemes of an innovative character which might test some development in service. The Commission's proposal for a new scheme does not substantially widen this narrow scope.

As we all appreciate, disabled people are especially vulnerable at a time of high unemployment. I am conscious of this because of my departmental responsibilities for employment for the disabled. Our system of support services is based on general schemes capable of adaptation to changing circumstances, and we therefore attach great importance to securing that aid from the Social Fund should continue to be available for as large a number of the disabled as possible.

Our view is that Social Fund assistance should not be curtailed or limited in scope in the way in which the Commission's proposals envisage. We prefer to see the present provision for the disabled under Article 5 retained. Alternatively, if there is to be a new Article 4 scheme it will need to be wide enough to include all the activities at present assisted by the Fund.

I propose now to say something about the proposal for dealing with the employment of women. The Commission proposes that assistance under Article 5 should be available without restriction to particular regions to facilitate the employment of women, in particular for courses designed to help women over 35 to acquire basic skills or to refresh skills acquired earlier. We share the concern expressed at the European Council that steps need to be taken to improve training and employment opportunities for women, but we have reservations about the Commission's proposals to make assistance available under Article 5 to assist special and separate measures of training for women, and to limit it in certain circumstances to schemes for women over 35 years of age. We do not think that women are necessarily best helped by the provision of separate training classes or separate arrangements for employment advice and placement, and I doubt whether this squares with the equal opportunity policies which are aimed not at treating women differently, but at treating them fairly and ensuring that they are not placed at a disadvantage.

I now propose to say something about Article 4 schemes. At present, all the schemes approved by the Council under Article 4—except for agricultural workers—are due to expire this summer, and the Commission proposes to extend all these schemes till the end of the year and then to amend them so that they have an indefinite life. We think that the Council should have an opportunity, after a fixed period of time, to consider whether, in the light of changing circumstances, the schemes are fulfilling a real need and, if necessary, to modify them or substitute others. The scheme adopted by the Council in 1975 to assist unemployed young people—especially those seeking their first job—proved so successful that 28 per cent, of the 1977 budget of the Fund has been made available for it. I think that that illustrates the point that I am making.

Let me finally say something about the progress of the Commission's proposals. It is one of our presidency aims to obtain agreement on the basic texts at the Social Affairs Council on 28th June. The European Assembly adopted its opinion on the Commission's proposals at its session of 12th May. The Commission's proposals were generally endorsed, but the view was expressed that they could be effectively implemented only if the Fund was assured of adequate financial resources. The Assembly agreed with the Commission that the nature of the proposals was such that if the views of the Assembly and the Council were significantly different, it would be necessary to use the conciliation procedure between them. In that case, the formal adoption of the Council text would necessarily be delayed.

The changes proposed are of considerable importance. Allowing for the reservations which I have expressed, they should do much to ensure a better operation and a better use of the Social Fund to help to improve job prospects for workers throughout the Community, an aim which I trust the whole House will feel able to endorse.

9.36 p.m.

The Opposition welcome this opportunity to discuss the European Social Fund. It is a rare opportunity of bringing together a series of often diverse groups whose common interest is steps to employment or steps to better employment, bearing in mind the necessary and continuing need for an extensive retraining in certain fields. I personally welcome particularly the unusual opportunity to be involved in the House in speaking about employment as well as about the European Community.

Very welcome though these constructive measures are to deal with our appalling level of unemployment, particularly youth unemployment but also employment difficulties in other areas—affecting younger and older workers, men and women, the able and the disabled—we note the Minister's words of caution in welcoming this review. We understand that the anti-Marketeers wish to use this debate for their own ends, but the fact that we have some European measures which may be available to us in addition to the necessary national measures in no way negates the need for the latter.

The Opposition view the European Social Fund positively. I should like briefly to consider the Fund, its problems and the steps that it has already taken since the revisions in 1971 and the proposals for reform. Our purpose to-night must be to say how far the proposals go, so far as the United Kingdom is concerned, to meet the real and developing retraining and employment needs of the Community.

The philosophy behind the Fund, like its partner, the European Coal and Steel Community Fund for Retraining, is thoroughly positive. This is something that we welcome. It accepts in its very inception that industrial change will mean human as well as economic upheavals. The Fund seeks to ameliorate those upheavals by clearly pointing a future for those whose regular employment is no more because of industrial change.

The House and the country should grasp that we are not in a world of no change. We are in a world of considerable change, and some of the fairly far-sighted proposals from different Community countries are well worth examination by this country as a clue to some of the future developments which will provide long-term lasting employment, rather than any short-term ameliorative that we might come up with.

It is therefore fair to say that the Fund seeks to direct money to crucial areas where retraining action will in itself lead to a positive advance. The House will know that the Fund's budget rose from £97·6 million in 1973 to £183·3 million in 1976. The United Kingdom allocation rose from £23·9 million in 1973 to over £27 million in 1976, and I gather that we are likely to receive about 28 per cent, of the 1977 budget of £257 million.

That is obviously a considerably advance, but we face some of the most incredible employment problems that this country has seen for over 30 years. In 1976, when we received 24·1 per cent, of the allocations, we made a contribution of 16·3 per cent, to the Community budget. It is important to note that in each year of our membership we have received a much greater proportion than we have given. I understand that this is likely to continue for several years to come, and clearly the review is not concerned with the question of equilibrium. In other words, we have a very positive contribution to the United Kingdom from the European Social Fund.

But it is regrettable that nearly all the European Social Fund intervention in the United Kingdom has been for public projects. We welcome those projects very much. Many are operated through the industrial training boards and the Training Services Agency. We do not decry them in any way, but there is scope for intervention with Government backing in private projects.

I am distressed that this matter is little known. This has been a prime problem of the Fund as it was for the Coal and Steel Fund which in the early days experienced difficulty in making known to British industry the assistance that it could provide. Our share of the European Social Fund might have been even greater had it been more widely known what was going on. It is not simply that Community finance is a means of recouping money already committed under national aid schemes. The Fund is there to be used as an important supplement, as an improvement, as a topping-up for the benefit of those people who, through the actions of the Council of Ministers, have found themselves in an unusual situation which several years previously they might not have envisaged.

Although some of the funding goes through the relevant training boards to private industry, there must be many schemes such as the Irish GWI Limited scheme in County Sligo. This new training programme is part of an expansion of training in an area of great need, but there have been very few such schemes in the United Kingdom, and therefore a great deal of publicity must be given to funds which might be made available to private industry for this purpose. In this instance, more than 6,000 people were displaced from agriculture between 1963 and 1971. Average income in the area was 25 per cent, below the national average for Eire and there was an exceedingly high level of unemployment. However, Merseyside, the North-East and many other areas, including parts of our city centres, are in situations equally as bad as those in County Sligo. In my researches for this debate I have found a terrible ignorance of the fact that these measures are available.

From a review of this area, and from considering the application of GWI Limited, we can see that the European Social Fund faces as its first major problem the complexity of the whole procedure. The second major problem is the complexity of the steps through which a company or a Government Department need go to get hold of the 50 per cent, funding which is currently available under Articles 4 and 5. On closer examination, we find that there has been a degree of limitation on applications and that this has been forced by the rigid division of expenditure between Articles 4 and 5.

The third major problem is that since the 1971 proposals, which are the basis of the changes that are now being proposed, the European economies have changed very greatly. In those days we were in a relatively satisfactory position in this country, as were the countries of the then Community. Times are now different, and one wonders whether a six-year review period is too long, considering the changes which beset those economies today.

Although there is high unemployment in each of the Community countries, we believe that these have exacerbated the needs for retraining which were already identified in the review six years ago. The needs for retraining which were already width of need for retraining that the Commission genuinely wishes to embrace in the new proposals.

The fourth problem we face has been the slowness of the allocation and the payments of the European Social Fund moneys. There have been difficulties in understanding the system in different member States. That is only part of the reason. Payments through the national exchequers, particularly ours, have often been considerably later than the time of scheme expenditure. This has often put many of the retraining proposals in dire difficulties from a cash flow point of view.

The fifth problem has been the slow adjustment, not only in this country but in others too, to demands of the labour market. Particularly in an area such as the United Kingdom, with over 1·3 million unemployed, we have to consider new methods of retraining and not just those with which we have been familiar for the past decade. Whereas the Community Regional Fund and various measures of industrial reform may help to restructure industry, no measure of reform or restructuring of industry will succeed if we lack the skills needed successfully to run those new and developing industries.

I suppose that the area where the skills must most stringently be redeveloped is among the young unemployed, of whom we have far more than our fair quota in this country. Whatever the Government's measures may be in the short term, all of this underlines the desperate need for long-term, lasting industries backed up by people who can work in them competitively. I think it was the present Secretary of State for Industry who talked about backing winners. That is what we need to do. The European Social Fund can certainly be made to be a winner in retraining if we seek to use it to its most positive ends

I would hate the House to think that in citing the problems that the Fund has experienced in the past six years—for us the past four years—I am being in any way negative. A clear examination of what has gone on is crucial to the improvement of the Fund if it is to be the dynamic factor which was envisaged by the Community at its inception. Since 1971 there have been many steps forward. In 1972 there was the addition for those leaving agriculture. In 1974 there were new proposals for migrant workers and there was also the proposal to deal with the handicapped. In 1975 there was the group of recommendations to cover regional problems, problems affecting women in employment and the young unemployed under 25. In 1976 there was a measure which affected this country greatly—the proposals for helping people who had worked in the textile and clothing sectors in this country and who were being put out of work by a great change in world markets.

Already the experience of the Fund, changing from year to year, shows that it has a dynamism of its own. There is no doubt that there was a need for this full review which was necessitated by Article 11 of the Council of Ministers of 1st February 1971. That is what is now before us.

The Opposition welcome the extension given for the four decisions under Article 4, covering those leaving the textile and clothing industries, migrant workers, the disabled and those unemployed under the age of 25. This extends the period of operation of the scheme to the end of this year and extends the help, with amendment, for the future, together with the help given in those schemes for the ex-agricultural workers.

We also welcome the new flexibility in deciding the division of the allocation of credits under Articles 4 and 5 on an annual basis under the normal EEC budget procedure. We firmly believe that this will allow the different competing interests of the member countries to be fully expressed in the debate in the European Parliament and so make the Fund more flexible for each of the member nations.

We also note and support the wish of Commissioner Vredeing to concentrate assistance to the under-25s. It should also help the Fund to respond to those applications which are arising rather more constantly now as a result of the dramatically developing unemployment problem. It ill-behoves us to forget that 65 per cent, of all unemployed women in the United Kingdom today are under the age of 25. Men fare a little better at 36 per cent., but the increase in unemployment of the under-25s generally is quite dramatic. It has risen in this country in three and a half years by over 240 per cent., and therefore we give a special welcome to this proposal. It is the crucial area in which the Gov- ernment, I hope, will push in terms of getting help from the fund.

The two new rates which have been proposed for intervention, of 65 per cent, and 35 per cent, for eligible expenditure, are also a most encouraging assistance. Where the regions in which the most serious unemployment problems exist face a change, the 65 per cent, will allow specific help to go to them in certain areas. Perhaps the Minister will consider persuading the Council to get the Commission to look at a new area where we have a specific problem arising from activity of the European Community. I refer, of course, to cane sugar workers. Partly because of the dominance of beet sugar in the European sugar provisions, we are having greater and faster changes in that industry than we would have envisaged from the gradually declining demand for sugar in the United Kingdom.

It is surely an area where the European Social Fund could be used to show not only that the changes have to take place but that the Community is solidly behind the retraining and the new opportunities that could be given to the ex-cane sugar workers in this country. The Minister is well known for his good faith in European institutions. Therefore I ask him what might be done in existing conditions under Article 4 for retraining the cane sugar workers. I believe that these, like other areas, will provide an excellent opportunity for the Social Fund to identify with retraining in an area which is very sensitive in this country, not least in Merseyside and the North-West at present.

We welcome the 35 per cent, new aids for better working conditions and the creation or maintenance of employment. We hope that if we apply from the United Kingdom for the 35 per cent, funding, it will be for industries which are, in the words of the Secretary of State for Industry, winners—those which will provide lasting employment. Continual upheaval is the one thing that workers regret more than anything else.

With regard to the handicapped, we need to be fully assured that consideration only under Article 4 will not result in a reduction of aid for the disabled. I noted the words of the Minister and, as he will readily appreciate, this is an area which personally concerns me very greatly. It seems to me that the existing Article 4 needs to be greatly widened if the handicapped are not to suffer. The Minister will perhaps know of some of the steps that I have personally taken to look at some of the rehabilitation plans of other Community countries and at how they assess and progress disabled workers from the situation in which they are totally State pensioners through sheltered employment into full employment.

It is this sort of programme that we have long wished to see funded through the European Social Fund, but which, as the Minister stated in answer to my parliamentary Question earlier this year, has so far not been possible. This is because the priority has always been given to that training which would take the disabled person directly into open employment. Those steps which would take a disabled person first into sheltered employment have received a lower priority in the scale of things.

Whereas I think the United Kingdom needs a new look at its own assessment of its capacity for rehabilitation of the disabled, I hope that we shall get a little bit of a push from some of the schemes taking place on the mainland of Europe. We might hope that something like the Havering Remploy scheme, reported in The Guardian last December, might become a recipient of Community funds from the European Social Fund. That scheme uses a nine-day assessment period followed by sheltered employment leading directly to open employment, as a means of progressing someone from being totally a State beneficiary to being a working earner. At the start of that particular scheme there was only a one-in-seven success rate on those assessed. In later months it has gone considerably better than that—down to one in three. In Europe, some similar schemes have a success rate of one in two, or even better. These are the new positive avenues for the handicapped which we should be pursuing through the European Social Fund. I hope that the £3·6 million spent on United Kingdom schemes in 1976 will be increased substantially.

Is the hon. Lady aware that, as far as we know, the only new money that has been forthcoming has gone to the Queen Elizabeth Fund? Where has it all gone?

The hon. Gentleman is perfectly right. The only successful scheme has been that put forward by the Queen Elizabeth Fund in Dorking. One of the difficulties that has been faced by that Fund is that many of the voluntary bodies have not, first, known sufficient about it; secondly, they have not known sufficient about it to apply or have not sufficiently understood the situation; and thirdly, they have not had this natural progression from the state of being totally disabled and unemployed, through sheltered employment to open employment, which is the success that the Queen Elizabeth Foundation scheme has had.

The disabled are the one group in our society who currently do not pay tax, but they long to have the power to pay tax and to become earners. If there is anything that we can do as a national Parliament to make sure that the European Social Fund helps these people into open employment, the Government should be seeking to do it.

The Minister spoke very briefly about women. I have already referred to the fact that 65 per cent. of registered unemployed women are under the age of 25. Like the disabled—although they are perfectly able—it is absolutely crucial that the acquisition of basic skills and the pursuance of refresher courses enables women, particularly women on their own and unsupported by any menfolk, to become economically stable through employment and, therefore, not dependent on our benefit schemes. That is what they would wish, just as much as the disabled. Therefore, those measures which the European Social Fund seeks to enhance in this review are obviously welcome.

We look with some interest at the proposals from the Council about the self employed. We would welcome greater flexibility and look for small craft undertakings, but they are not spelt out very clearly in paragraph 43 of the Commission's document to the Council. The Minister might do well to look at some of the special steps being taken by the Action Resource Centre—those steps which, in Nottingham for instance, will lead to the use of a disused Lace Market workshop as premises for a number of small craft industries where people who have previously become unemployed will have the opportunity to start a business in which they have an expertise and to bring on young people to learn that craft. The job of the Action Resource Centre will be to provide the premises and the expertise to create work opportunities and to develop a craft. Similar schemes are proposed for Liverpool, Lambeth and Islington.

All these are very much the positive concept which is included in the European Social Fund to deal afresh with the industrial and the structural unemployment which is taking place in many of our industries, once great but now, with modern methods and modern materials, not creating the same opportunities for people in our nation.

Also, as the Minister said, we have to welcome the procedural and financial changes proposed in the review. The notion of calculating expenditure on the basis of experience with unit costs must be welcomed. It has always seemed to me rather false to wait until after all the expenditure has taken place and then to look at the situation when, in essence, the European Social Fund was supposed to be creating opportunities. One does not create opportunities if one leaves a difficult cash flow situation for many of the schemes, and that is what the organisation has often done hitherto.

I regard it as a sensible move also to make the advance payment of 30 per cent. of the funding on approval of a scheme once the national Government have certified that it has begun and then to pay over the next 30 per cent. when half the operation has been completed.

However, even if these procedural and financial changes go through, I foresee the time coming fairly soon when we may well need to reconsider how these matters should go in the next few years.

I should welcome the Minister's comments on one matter which is not covered in his helpful review of the Commission document. I refer to the question of grouping allocations, presumably by the Department of Employment. I can well understand that grouping allocations under the European Social Fund, since the committee meets some four times a year to consider applications, may be helpful, but I quote here the opinion of my hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) expressed in the European Parliament and reported at page 257 of its proceedings:
"Additionality plus a policy of grouping applications will increase the difficulty of identifying the projects and areas where Com- munity funds make a difference to the lives of ordinary citizens."
In one sense, I agree with my hon. Friend because, as I said at the outset, we should be selling or promoting the positive nature of the Fund, and to group them all together—it is hard enough to get answers on this issue, as the Minister probably understands—may be to deny the detailed use of the Fund on a much wider basis which would assist its greater usage. I should, therefore, welcome the Minister's comments on how he envisages the grouping happening, and whether the Government will take a new attitude to selling the Fund so that any administrative grouping for the Department's convenience will in no way stop developments or inhibit knowledge about the way in which Fund allocations are actually made.

I come now to some general comments. I hope that the Council of Ministers will not reduce the schemes at all. One notes that the Council of Ministers is a little prone to cut down any proposal from the Commission. Perhaps, therefore, it would have been better to get the Commission to ask for a great deal more than it would be likely to receive from the Council of Ministers so that we could achieve positive advance in the European Social Fund.

I note also that there is no reference to expansion of the Fund, which by its selectivity can bring help to those areas where it is most needed. We note the changes in the regional allocations, but there is much more scope here than has been sufficiently explored or brought forward in the review.

In terms of the Commission's stated wish to bring greater aid to the poorest regions, I shall be grateful if the Minister will say how this can be done if the 65 per cent. intervention is limited solely to Government projects. This would seem to be somewhat self-denying to an area which has not so far taken off in retraining through the European Social Fund but in which we could have great advance in the near future.

I note also that there is no mention of expanding pilot projects and research studies under Article 7. If there are to be new uses of the European Social Fund, pilot projects and research will be of great importance. There is provision under the original article of the Treaty of Rome, and it seems to me that this should be utilised.

I note also that, despite the six years of use of the Fund, there is no mention of housing help as happens under the European Coal and Steel Fund. It may be that in these days of far greater change in employment possibilities, particularly in this country, but throughout the Community, this will be a necessary consequence of the mobility of labour and something to which the Social Fund will need to look in the coming years.

We have many miles to go. We welcome the review. We hope that the Minister will press for a much earlier review after this stage than previously. To go for six years seems a long time in this quickly changing world. I hope that we shall see a review in 1979 or 1980.

We realise that the Minister may need to take considerable steps towards conciliation in respect of Articles 4 and 5 concerning handicapped people. It is important to realise that we need this Fund to assist any national measures that we may take. It was Commissioner Vredeling who said:
"Unemployment costs the Community £10,000 million a year. If we can reduce the size of the problem by half, that will release another £5,000 million, though not immediately."
Those are salutary words.

We welcome the reforms. We ask the Government to take a careful look at grouped applications, the needs of the handicapped, the lack of new areas for intervention under Article 4 and the need for a full review before 1983. We hope that the Minister will press these matters at the Council of Ministers.

Above all, the Government must today be crucially aware of the disservice which will be done if we do not publicise the width and possibilities of the European Social Fund in the coming years much more than we have done in the last two or three years. It is not good enough to leave it at paragraph 10 in the Press Notice on unemployment figures. We need to say more, more often and more loudly about it.

I hope that the Government will give real promotion to the positive retraining steps which can be taken through the European institutions of which the Social Fund is a small, but very constructive and, therefore, welcome part.

10.8 p.m.

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:

'declines to take note of Commission Document No. R/752/77 concerning the EEC Social Fund as it believes that assistance to persons or areas with particular needs should be the responsibility of national Parliaments and national Governments'.
The words "Social Fund" exude good works, particularly in relation to unemployed young persons and the disabled. When we hear from the Minister that we receive a higher proportion of the Fund's outgoings compared with our contributions to the budget, people might say "In view of the fact that we gain and that it is all in a good cause, what is wrong with it? What are people protesting about?" But that is a relatively superficial approach.

Many things which at first look good politically must be examined in greater detail. Our objection is not necessarily to the purposes to which some of these moneys are put but to the origin of the moneys and the fact that the decisions on these matters are taken not in this House, not by our Government, but by the executive over the water.

The hon. Gentleman shakes his head. Although our Government have to provide some of the moneys to start with—this 50 per cent. additionality—it is an EEC fund.

The hon. Lady nods agreement. I am glad that she agrees. Indeed, she said that the anti-Marketeers have their own views about it. I should have thought rightly so, because this is an EEC fund with a purpose. It could be criticised because it is relatively small. That is a common criticism of the Fund. But if it got bigger, the problem would be even greater, because a higher proportion of the aid to these worthy causes would be decided outside this House and beyond these shores. That is the crux of the matter. That is why this amendment has been put down. The Social Fund sounds good but on page 24 of the EEC document itself under the heading "Difficulties" the purpose is made quite clear. It says:

"The procedures for granting and paying aid from the Fund did not, in the first few years following the reform in 1971, fulfil their expected role as a Community instrument capable of improving the structure of the labour market."
That is what the Social Fund was formed for, to improve the labour market within the Common Market itself. The hon. Lady the Member for Wallasey (Mrs. Chalker) referred to the upheavals caused by Britain's accession to the Common Market and mentioned sugar as an example.

With every respect, I should like to make it clear that I was talking about the upheavals in the ever-changing industrial and employment market. I cited one example where the Commission had been partially responsible—the cane-sugar refining industry—and said that it would be one way under Article 4 in which the Commission could show its good faith by making this another area, like textiles, where it might give specific help for retraining. It is an area which was already declining but which declined faster because of the beet situation within the Community.

The hon. Lady has confirmed what I said. It was faster because of the action of the Community.

In the debate in the other place on 26th May Baroness Seear, in talking about this very document, said that in her experience of operating in the Select Committee of that place it was quite clear that this Social Fund was a by-product of the economic policy of the Treaty of Rome. That is its purpose. That is why it was set up.

The principle of free movement of capital and labour means, of course—the hon. Lady is quite right—that the upheavals that might be taking place anyway are likely to be accelerated by the very existence of the Common Market. The House of Lords 11th Report for the Session 1976–77 makes it quite plain. It says in paragraph 8:
"As a result of the Hague summit conference in December 1969 the new objectives of progression towards Economic and Monetary Union (EMU) and enlargement of the Community were adopted and it is in relation to the attainment of EMU that subsequent de- velopment of social policy should be considered The principal advance took place by means of a thorough reform of the European Social Fund in 1971."
There we have it. Although it may operate rather more flexibly today, the objective and the reason for the creation of the European Social Fund was as a lubricant in the march towards economic and monetary union. The fact that it has not operated openly in the way in which the House of Lords Select Committee stated it was formed does not make any difference. That is the principle of the Fund itself. Indeed, the way in which it operates is not only very complex but it takes a very long time and the ways in which it operates appear to be arbitrary.

Mention was made of the disablement grant. Indeed, some of the grants for retraining at the moment tend to go beyond the purposes for which the Fund was founded. In a Written Answer on 18th January, in reply to the hon. Lady, and to which the Minister referred, we have a list of some of the applications, which includes unemployed workers from British Leyland and schemes for retraining the workers of the national newspaper industry.

I understand that in the debate in the other place it was said that over £2 million was being provided for the retraining of workers in the national newspaper industry.

Chrysler United Kingdom and British Leyland have applied for retraining grants under this particular Fund. Therefore, the Fund itself, while originated and created to ease the way towards economic and monetary union, and to fulfil the purposes of the Treaty of Rome, appears to go outside them.

I am not arguing that that is bad. I am saying that there is no reason why that suddenly could not change and revert to the purposes for which it was formed originally, which displaced the powers of this House and which to an extent could in the end displace the powers of the Government in this regard.

In quoting from the Official Report of the Assembly, the hon. Lady showed that the Assembly had discussed this matter and that in due course the Assembly—itself a rival to this House—might be able to bring influence to bear on this matter. [Interruption.] The hon. Lady seems to object to my referring to the Assembly in Strasbourg as a rival to this House. It is a rival to this House in the consultative aspects of documents such as the one that we are discussing. What is more, not only is the Assembly a rival in discussing in a consultative manner the documents which come from the Commission; it is within the constitution of the EEC and it has, under the Treaty of Rome, to be consulted, whereas this House has not.

Does not the hon. Gentleman accept, therefore, that it would save a great deal of difficulty if the people of the United Kingdom had their directly-elected representatives in the European Parliament who would be there voicing these views, alongside the views that we express here, so that there was a direct relationship? The hon. Gentleman seems to be concerned that the views of this country, which is after all what we are here for, are not directly represented in the European Parliament.

I did not say that at all. I am objecting to the fact that the European Social Fund, whatever the reasons for its foundation to which we take theological objection and whatever its operations at the moment, is acting as a parallel fund for the granting of funds for retraining, for redeployment and for the assistance of worthy causes such as the disabled and the young employed in ways which are much better dealt with solely by the British Government and by this House.

What the hon. Lady and her right hon. and hon. Friends seems to forget is that this Fund is payable not only to this country but to Italy and France and to any region in any of those countries and that contributions by the taxpayers of this country go to contribute to whatever projects may be approved in Sicily or in the Massif Centrale of France. The Commission decides that money—not this House—although the Assembly will have powers of consultation in that regard. Therefore, that Assembly must be replacing what is properly for this country—the powers and the responsibility of this House and of our own Government.

There is a phrase which occurs 15 times in this document. It runs

"Done at Brussels for the Council".
The people who are being done are the British people.

The hon. Lady says "Nonsense". We are discussing the Social Fund. We have one piece of evidence. The only beneficiary has been the Queen Elizabeth Foundation.

May I also bring the attention of the hon. Member for Wallasey to another aspect of this matter which possibly she has forgotten? So many of these projects about which we read in the Answer which the hon. Lady was given on 18th January are very localised projects dealing with local matters which even Whitehall can sometimes be accused of dealing with insensitively, yet these are being dealt with in Brussels.

In another context, the hon. Lady and her right hon. Friend the Member for Sidcup (Mr. Heath) are calling for devolution. Why, on matters which are very sensitive and which affect citizens in a given part of the United Kingdom, should the decision about whether large sums should be paid be made in Brussels? If they believe in devolution, why do they approve of funds of this kind in relation to very local schemes in this country being decided in Brussels and not in this House? There is a logical difficulty there which the hon. Lady cannot surmount. The hon. Lady and her hon. Friends who are not federalists had better begin to think very carefully about where they stand on these issues. They cannot have it both ways.

Is the hon. Gentleman saying that some of these sensitive areas are denied funds from the national Government because of the existence of the Social Fund or that one or two of them may have received funds from the Fund which had the approval of the national Government as well?

One of the conditions of payment from the centre is that the national Government provide a proportion of the money. To that extent, we have a measure of control. The central Government here can change, distort or influence the extent to which local government grants are made, and the same applies in this instance.

The basic decision-making on where the money shall go and to whom is carried out in Brussels on matters which are much more appropriate for national Governments and Parliaments to decide. That is the principle. The Fund is relatively small now but it could grow, to the extent of displacing funds and powers which should be the prerogative of this House and Her Majesty's Government, not the Commission "Government" in Brussels.

Let us see what could happen. We recently had trouble over pigs and pig farmers. Suppose that pig farmers were going bankrupt left, right and centre as a result of EEC policy, as may happen. Could they perhaps qualify for the Social Fund as long as our Government agreed to provide some funds for them? What about the dairy farmers? The activities of the Milk Marketing Board may be constrained and some of our dairy farmers may face the sort of problems that the hon. Lady has in Liverpool with sugar workers. Does that mean that they will be eligible? If not, why not? It will have happened through the action of the Common Market. The decision whether they will be helped will be made elsewhere.

Therefore, it looks as though the Social Fund is perhaps not as good as it sounds. If the Common Market is to create difficulties for people and then later to give them a certain amount of cash, it is acting like the robbers and the good Samaritan all in one. If, as we are told, the Social Fund is designed to deal with the upheavals caused by a movement towards economic and monetary union, it is providing assistance only to those who are in theory upset because of the move towards that unitary system to which some of us take exception.

We are not against the principle of assistance, particularly to these very worthy causes. What we oppose is the supra-national methods being used to provide it and the fact that the decision-making is carried out not here or by our Government but in Brussels, by an executive outside this country.

The hon. Lady says that she hopes that the Government will back a winner. We do not think that the Social Fund is a winner, because we do not believe that the EEC is a winner. That is why we have tabled our amendment, because we believe that it is time the EEC principle was challenged every time we have debates and documents come before the House, and it would be wrong to let the matter go.

10.25 p.m.

When I say that I support the amendment that has just been moved by the hon. Member for Newham, South (Mr. Spearing), no doubt that will confirm the opinion of the hon. Member for Wallasey (Mrs. Chalker) that this is yet another instance of these debates being used, as she said, for our own ends by those of us who believe that it is strongly to the disadvantage of the United Kingdom to be part of the European Economic Community.

I can assure the hon. Lady that there is no need for us to strain these debates—and certainly not this one—to illustrate some of the fundamental issues for the House and the country that our membership of the Community poses. It is noteworthy how greatly the background has altered against which such debates have taken place during the last three or four years. They now take place against a mood of general public scepticism at best, and in many cases, and increasingly, outright rejection of the proposition that there is net gain to this country from membership of the EEC.

The present debate is particularly important, for in it the whole principle of the European Social Fund comes up for consideration for the first time. When the Fund was first established in 1971 we were not yet members of the Community, and if the decision is not renewed during the course of this year, the purposes of the Fund will lapse. Therefore the House, whether it likes it or not, is obliged to consider in principle in this debate the significance, the effect and the desirability of the European Social Fund.

The Fund has two separate functions, functions that—as the hon. Member for Newham, South pointed out—have little inherent connection. They are distinguished respectively as Article 5 purposes and Article 4 purposes. I should like briefly to look at them separately.

Article 5 purposes are concerned, in a Community context, with what we are accustomed to know as the depressed or development areas. The hon. Member for Newham, South was entirely right in pointing out that the basic function of the European Social Fund is to be, he called it "a lubricant", but I should consider it more accurate to call it "a cosmetic", applied to one of the radical consequences of this country's economy being absorbed into the common market of the EEC as a whole.

Of course, the United Kingdom itself is a common market. No market is a perfect market, and most markets are a long way from being perfect; but as a common market it would probably be difficult to find in the whole world an area of like size and population where the internal common market works as efficiently, or has worked efficiently as long, as in the United Kingdom. Thus, in our own experience in the United Kingdom we can see the inevitable consequences, when, as economic change takes place and as one form of production, one market for production, suceeds another—sometimes dramatically and on a large scale—whole areas that were previously economically viable become less so and eventually cease to be viable altogether.

However, within a relatively small common market such as the United Kingdom, that centripetal effect of economic change is, to a considerable extent, offset by mobility of labour. Indeed, the Industrial Revolution in this country would have been impossible without massive mobility of labour—not only in terms of geographical mobility but in terms of adaptability, which itself is a kind of mobility.

Yet even in the circumstances of the United Kingdom, the mobility of labour that we have experienced, to which there are virtually no barriers of language, prejudice or any others of a social character, has proved inadequate to prevent severe and protracted depression in the areas of which we know all too well. In a geographical sense, they are, for the most part, peripheral areas—though not invariably so—and I speak as one who represents a peripheral area of an extreme character, where the exceptionally high unemployment is due, among other causes, to the one that I am now considering.

That being the position within a unitary economy—a common market of one nation such as the United Kingdom—consider the consequences when that economy is attached ever more firmly to a common market such as the EEC. The economy of the United Kingdom itself then becomes peripheral to the economy of the EEC as a whole, and the centripetal forces that operate to the disadvantage of certain areas produce their effects far more powerfully and damagingly. In this larger common market we have one of the aspects of a common market—the free exchange of goods and mobility of capital—without having to anything like the same extent its due accompaniment of free movement and mobility of labour.

Indeed, it is in the nature of the case that the deep and radical barriers that separate all the countries of Europe from one another, and this country perhaps particularly from the rest of the EEC, will ensure that the impact of the centripetal forces of a common market falls with the greatest effect upon the United Kingdom and especially upon those parts that are peripheral within the United Kingdom itself. That is one of the reasons that the Province of which I am one of the representatives has always been particularly fearful of the consequences to itself of our absorption into the economy of the EEC.

The philosophy behind the Social Fund was that it would offset artificially the depressant effect of membership of the EEC—that, at a time when the policies of the EEC were bound to magnify the effect of economic change, both general and particular, upon depressed areas in this country, there should be a sort of quid pro quo, that there should be—I repeat the word—a cosmetic applied, to which the Commission could appeal and say that while it appreciated that, by its nature, the EEC was placing disabilities upon large areas of the United Kingdom, that could be put right by the Community redistributing relatively trivial sums in order to give some measure of compensation for the effects of British membership.

In discussing this draft decision, therefore, we are examining the effects of British membership which, as the years go by, will become increasingly perceptible and increasingly resented by our people, especially the workers, but above all the unemployed, who will discover that the palliative effects of these negligible sums from the European Social Fund under Article 5 are more of an insult or a pretence than a practical alleviation.

I pass to Article 4 and the application of the Fund to specific purposes of which, considered in isolation, I expect most hon. Members approve. By his amendment, the hon. Member for Newham South has raised a crucial question: why should the decision to select certain forms of deprivation, difficulty or handicap for a certain degree or type of assistance be a decision that is taken, once for all, for the whole of the European Economic Community? Are not these matters which the national community is best fitted and entitled to decide for itself? The hon. Member for Woolwich, West (Mr. Bottomley) pointed out that in each case, in order to attract these funds, the Government of the country concerned has to put forward a proposal; but it cannot be denied that the purpose of the Fund is to place not merely the stamp of the EEC but the uniform pattern of the EEC upon the manner in which these needs are met in all parts of the Community. Otherwise, there would be no point in putting a premium on one method and degree of assistance rather than another.

We therefore contemplate in the context of the European Social Fund, an aspect of the inherent nature of the EEC as we are becoming to understand it—to arrogate to itself all the important functions of Government, internal as well as external, economic and social equally in all parts of the Community and thus to deprive this nation and others of the right, through our own representative organs and in our own circumstances, to decide and to debate amongst ourselves how we will recognise and meet specific needs. That is why it was necessary that the amendment should be moved and that the House should address itself to it.

Again, it might be said that we are only part of the way. Of course, we are only part of the way. But a very significant phrase was used by the hon. Member for Wallasey when, having drawn attention to the fact that in the last few years, upon the unrealistic separate accounting of the Fund, this country has drawn more than it has put in, she opined that this would continue "for several years yet." I do not doubt that; but the course of development means that it will eventually be the European Assembly, the European Commission, the European bureaucracy which will decide the entire pattern of social redistribution within the European Economic Community.

The hon. Lady says that is nonsense; but after four years of experience she can surely see how in one area after another the EEC is asserting itself in the internal affairs of this country and ousting the decisions of this House. She has a lot yet to learn.

I am fully aware that I have a great deal to learn from the right hon. Member; but it would be wrong for any Government which was a member of an institution not to play its full part in that institution and to take up the opportunities afforded to each member nation. The right hon. Gentleman is saying that he never wished to enter the Community, that he is not prepared to abide by the result of the referendum and that he wants the whole situation up-turned. That is different from the review of the European Social Fund which is the purpose of the debate.

I hope the hon. Lady did not think that it was primarily from myself that I was expecting she would obtain enlightenment. I expected that she would obtain enlightenment from the same source as her fellow citizens are increasingly doing so, namely, by observing the effect on this country of our experience in the Community.

Briefly, in response to the precise point that the hon. Lady made, she will recall that at the time of the referendum two years ago the Government, with the full authority of the highest legal sources in this country, assured the public as well as this House that future membership of the Community would depend upon the continuing consent of Parliament. A proposition such as is before the House tonight, and which it is our duty to consider, is one of those matters that will assist Parliament and the people—who make and unmake parliaments—to come to their own conclusion whether they will maintain that position or will, as they are fully entitled to do, reverse it.

I am sorry, Mr. Deputy Speaker, that the warmth of the occasion has perhaps carried me as well as the hon. Lady beyond the immediate bounds of this debate, which is important enough in itself, because here we have, as the amendment points out, the clear evidence not merely of the effect upon this country's economy of membership of the EEC but of the claim on the part of the EEC, which always advances and never retreats, to render the whole of its area socially as well as economically homogeneous and to claim decision over areas of our social life which I do not believe should be taken out of the hands of this House of Commons.

10.43 p.m.

—but I have been told from time to time that when I saw the social policy I should change my mind. I was told that when I saw the document I should be convinced of the error of my ways. This document has made me more convinced than ever that we ought to have the sovereignty of Parliament in this country, because it merely emphasises that we have little or no say in social policy.

In many respects the document is unreadable, and where one can read it one comes across some peculiar observations and statements that seem to be robbing us of any say in social policy. On page 3 one finds a classic example of what I mean. It says there:
"The administration of the Fund was, however, complicated by certain difficulties"
and one of the difficulties was
"the constant danger of dispersal of intervention".
If I understand that phrase—and I doubt whether I do—what is being said is "We do not want Governments to interfere. We will decide their social policies." If it has a meaning at all, that is what that statement means.

Perhaps the most intriguing example is to be found in the note from the Vice-President.

If one of the Clerks of the House were to produce a document like this there would be a demand from both sides of the House to have him locked up in the Tower. The Vice-President says:

"In preparing its communication the Commission has followed three guidelines",
and I shall quote the first two. The first is
"a greater concentration of the Fund intervention".
The second is
"the possibility of extending aid to other sectors and widening the scope of the Fund's activities".
Those guidelines are mutually exclusive. [Interruption.] The hon. Member for Wallasey (Mrs. Chalker) wants to read them more carefully; she will then find that they are mutually exclusive.

Paragraph 58 of the document says:

"Taking into account the complex nature of these kinds of intervention and of the need to evaluate all their implications, the Commission does not consider it possible to apply these aids immediately having regard to their substantial budgetary implications."
That, I think, deals with the inconsistency which the hon. Member mentioned, without perhaps having taken that paragraph into account.

If there were a case for intervention and if it were simply handled, why does not the document contain a statement of the need for a European car for disabled people? That would have been a good area of intervention: it would not have required four years consideration but could have been done now.

Exactly. The Commission has no sense of priorities. If it wants to achieve its priorities after four years, why can it not co-operate in research ventures such as the advanced work being done by the Orthopaedic Hospital, supported totally by an area health authority, with no help from this alleged Social Fund?

At the end of the day we should decide the priorities. We have done enough work in regard to the disabled to decide priorities. Europe can learn an awful lot from this place. This document would push us into second or third place, and I do not want it.

10.48 p.m.

I apologise for having interrupted the flow of the hon. Member for Eccles (Mr. Carter-Jones). I had not realised that he was going to mention the need for joint research into a vehicle for the handicapped, which would be of value not only in Europe but throughout the world. But the point that he was trying to make is not supported by his earlier remarks.

I assume from the tone, though not the content, of his remarks, that the hon. Gentleman supports the amendment. If so, he must be suggesting that the Government could have given much more suport to the design of a vehicle when they announced the phasing out of the invalid tricycle.

The hon. Member is young in the House. Some of us have been fighting for this vehicle for many years, including those years when his party was in government. Some of us have been aware of these problems, and have been pressing for their solution, for many years.

I am grateful for that reminder. Some of us have not been in politics as long as others, and we learn from those who have gone before.

Before I joined any political party, I used to read with interest the books of the right hon. Member for Down, South (Mr. Powell). One I enjoyed most was called, I think, "Income Tax at 4s. 3d. in the Pound". But we have come a long way since, and one learns different things from the right hon. Gentleman now. He says that four years' experience of the EEC should have educated us. I should have thought that the same was true of three years' experience of Socialism. At least the right hon. Gentleman stand accused, if not condemned—that is a question of judgment—because he voted for the Socialism, if not for the Common Market.

The European Social Fund is governed mainly by the Treaty of Rome and it does not cover the sort of things that a fund of this sort should cover. It gets part of the way there with its talk about training and schemes for women over the age of 35. Presumably women over the age of 35 are chosen because they are likely to have spent their time in raising a family.

There are discrepancies in the Common Market. One can discern regional discrepancies between, for example, the Province of Ulster and other parts of the United Kingdom and elsewhere in the Community. One can also see a growing discrepancy in terms of family income and employment possibilities for those with dependent children compared to those without.

We look more and more across the Community at the help given to people leaving school or leaving further education and trying to get employment. But we tend to ignore the prospects of young parents and their children who suffer from an inadequate income, and this affects the employment prospects of the children when they grow up. To a growing extent we see the burden of raising children falling on to a smaller number of people whose maintenance income, as a proportion of the average wage, is decreasing.

This can be demonstrated in simple terms in this country. The level of child support in terms of child benefit, family allowance and tax allowance is roughly the same in real terms as it was when the family allowance was introduced shortly after the war. The average pay of the person at work has doubled. It is in an area such as this that this country could have learned a lot from the independent action of national Governments elsewhere in the EEC with the possible exception of the Irish Republic.

This is an area in which there is no argument for the course of action which British Governments have taken over the last 25 years, grossly inadequate action which has been put to shame by the action of seven other EEC national Governments. Yet we are told by the hon. Member for Newham, South (Mr. Spearing) that we should ignore Community initiatives which would help to raise the level of provision for people in this country to the standards achieved by best provision in the rest of the EEC.

It would be wrong to follow the example of the hon. Member for Eccles and to level criticism at the EEC and the Social Fund for not doing things that our successive national Governments have not done. That is a criticism not of the EEC but of our national Governments. There are many people in this country who would like to see the EEC and the Social Fund used to try to create better conditions for the handicapped and for those trying to bring up families. We believe that we can learn a great deal from other member States and that we can use the EEC as a focus for increased effort both by national Governments and, jointly, as a Community.

Does the hon. Member not agree from reading the document carefully that "Social Fund" is a misnomer, and that it really should be called the "tinkering-with-employment fund".

I thought that we had established during the hon. Member's speech that I had read the document more closely than others in the House. At the beginning of my speech I said that the Social Fund did not cover some of the things that a social fund should.

Finally, I want to take up a point made by the right hon. Member for Down, South who made an unsupported assertion about the popularity and the benefit of the Common Market. It is important that these assertions should be challenged although I do not think that now is the time to do so in depth. I do not believe that the burning issue in the country at the moment is our membership of the Common Market. I do not believe that in a re-run of the referendum campaign we would find that a majority of people opposed our continuing membership.

If people have evidence of the unpopularity of the Common Market would they compare it with the obvious, glaring evidence—demonstrated in frequent by-elections—of the unpopularity of this Government? If they are willing to say "The people I meet in my constituency are against the Common Market" what are their friends and neighbours saying about the Socialist Government?

That is as may be. I do not think that that is in order in this debate. What is in order is to say that one of the tests of whether the Common Market is supported by the electorate—

Order. The Chair has been fairly tolerant during the debate, both with the speeches and interruptions. I request the hon. Member now to come to the point.

You are anticipating my final words, Mr. Deputy Speaker. I hope that those who say that our continuing membership of the Common Market should be challenged at every opportunity, as has happened tonight, will encourage the Government to bring forward the Bill for direct elections so that the people can give their view on our continuing membership by choosing candidates who want to support the EEC—not necessarily to accept all of the Commission's proposals, but to work within the Community. I think that in such an election those who oppose the EEC will receive the answer from the electorate that the Government have been getting.

10.58 p.m.

With the leave of the House I shall seek to reply to as many of the points that have been raised as I can. I begin by dealing with the matters raised by the hon. Member for Wallasey (Mrs. Chalker) in what I thought was a thoughtful and constructive contribution. She spoke of the size of the Community budget. This is decided by the Budget Council and it is a matter for the budget machinery. The Commission's formal proposals for 1978 have not yet been published. They should be discussed by the Budget Council next month and then considered by the Assembly, to be finalised in the autumn.

The hon. Member for Wallasey, and her hon. Friend the Member for Woolwich, West (Mr. Bottomley) among others, suggested a number of new steps that might be taken. It is clear—when we look at the operations of the Social Fund so far and recognise that it is over-subscribed with applications—that unless the size of the budget is increased it would be wrong to try to stretch limited resources still further by opening up new areas of activity. Since the size of the budget is not a matter for the Social Affairs Council but will be discussed by the Budget Council subsequently I do not think that I can be very helpful on that point.

The hon. Lady talked particularly about inadequate publicity. I think she has a point here, although I return to the remark that I have just made about over-subscription for applications. I do not use that to counter her argument. On the other hand, it is important that we do not over-publicise a matter of this kind and thereby raise false hopes. There is a god deal of summary information about allocations to the Fund coming through our own Department of Employment News, which is quite widely distributed throughout industry.

Our officials are ready to give advice to any organisation on the scope for making a successful application for assistance from the Fund. We are in regular contact with other Departments and agencies which might provide assistance towards eligible schemes. Having said that, I take note of the hon. Lady's point. It may be that we should do more to draw attention to the possibility of making applications to the Fund.

The hon. Lady also talked about complications in applications and slowness in payment. She mentioned slowness of payment frm the national Exchequer. It is the first time that I have heard of it, but if she has specific examples it would be helpful to have them. Whether she should refer them to one of my colleagues from the Treasury I do not know, but it would be helpful to have them. But much of this ought to be taken care of by the administrative reforms which the Commission is proposing and which in general we regard as sensible.

The hon. Lady mentioned the review period, which she felt was too long. I take her point, but it is not easy to get agreement on these matters. We are a Community of nine. To reach an agreed text at the next Social Affairs Council would not be a simple matter. There are still difficulties, which I have already outlined. It might be very difficult to achieve a review in a short period. Without ruling the point out, I would certainly offer that cautionary note.

The hon. Lady drew attention to the plight of the young unemployed. This concerns us greatly. It is a Community problem, which is not simply a matter for this country. There is a similar problem elesewhere, but in some respects we have it more acutely in this country. She will know that a lot of this is due to the birth rate bulge of the late 1950s and early 1960s. Many more people are coming on to the labour market. This will continue for some years to come and we have a very real and continuing problem here.

When I spoke at the beginning of the debate I mentioned the success of the 1975 scheme adopted by the Council. It is a problem which is very much recognised not just by ourselves but by the Council. It has been discussed quite recently in particular by the Standing Committee on Employment, which is the tripartite body representing the trade unions and the employers as well as Government. At the end of the month, within a day or so of the Social Affairs Council meeting, there will be a tripartite conference of people from throughout Europe, and then a European Council. I shall be very much surprised if the problem of youth unemployment does not figure again in those discussions.

The hon. Lady mentioned the possibility of a new area of difficulty and talked about cane sugar workers. She would not expect an answer on that tonight, but I take note of what she said.

The hon. Lady also dealt with the handicapped. So, of course, did I in my opening remarks. I am not sure whether my hon. Friend the Member for Eccles (Mr. Carter-Jones) was in the Chamber when I opened the debate.

I spelt out some very severe reservations on the Community proposals in regard to the disabled. We do not like the proposals and think that as they stand they would narrow the scope for helping the disabled. We cannot go along with them, and I made that quite clear when I opened the debate.

The hon. Lady talked about the rehabilitation plans of other countries within the Community and suggested that we can learn from them. I agree, but again I enter a reservation that we do a very great deal of good work in this country which is perhaps not sufficiently recognised. It would not be true to suggest that we are laggards in this respect; far from it. There are things that other Community countries can learn from us in this respect.

As to our own capacity and whether it should be enhanced, the Manpower Services Commission has currently before it a developmental programme to cover the next five to 10 years in the whole field of the employment of the disabled, and rehabilitation figures very largely in that programme.

I apologise to my hon. Friend for not being present to hear his speech. It was not really any fault of mine. The previous business was speeded up somewhat. I am not so sure about rehabilitation as my hon. Friend. Like the hon. Member for Wallasey (Mrs. Chalker), I have reservations on this issue, and I think that we could be doing much better than we are. However, as a large number of disabled people in this country are unemployed and as sometimes the only way in which they can obtain employment is by becoming self-employed, will they be given assistance under Article 4?

I do not think that I can answer that question specifically. All that I can say to my hon. Friend is, again, that we are thoroughly dissatisfied with the proposal that the Commission is making in relation to Article 4. We simply do not think that Article 4 would be anything like good enough—even a revised Article 4, as suggested—to deal with the kind of situation that we now face, with the very large and disproportionate number of disabled people who are unemployed at present.

The hon. Member for Wallasey talked about a grouping of applications and expressed some anxiety. There is a suggestion that the grouping of applications would inhibit applications from private bodies. I think that that is what was concerning the hon. Lady. That is not the intention of the proposal. The aim is to let all applicants know before the beginning of the year whether and to what extent they would receive an allocation. We think that that would help private applicants greatly and would help to avoid the cash flow problems that they have had, which she mentioned. The fact that the Department of Employment will have the actual responsibility for assembling and submitting the applications in appropriate groups does not mean—as it does not mean now, of course—that the Department will put forward only its own applications. The new arrangements would mean that people would be encouraged to think ahead about the arrangements they may initiate which would be eligible for Fund aid. I hope that the hon. Lady will feel that her fears on that score are not justified.

I think that I have dealt with the main points raised by the hon. Lady. I turn to the remarks of my hon. Friend the Member for Newham, South (Mr. Spearing). I think that it would not be unreasonable to couple the remarks of the right hon. Member for Down, South (Mr. Powell) with those of my hon. Friend, because they are both quite consistent in this matter. Indeed, my hon. Friend is quite frank about it. He said that he did not think that the Social Fund was a winner because he did not think the EEC to be a winner. Basically, his argument was a fundamental argument against our membership of the Community. I do not think that it was really an argument about the Fund as such, and I think that he would accept that.

The fact is that we are signatories to the Treaty of Rome, which requires a Social Fund, so for that reason alone I could not agree with my hon. Friend in his assessment or, indeed, in his amendment. I must say this to him: we are Community members. I do not know what sort of figure we would cut if we were to say to our Community partners "We are opting out of this one." My hon. Friend was not making that point really; he was making a more fundamental point. I do not think that we could conceivably opt out of the Social Fund. First of all, we are net beneficiaries under the Fund, and on practical grounds alone, for that reason it would be plain daft to consider opting out.

The point that my hon. Friend makes is valid, but this is a procedural motion in the advisory capa- city of this House. It is a matter of declining to take note of the document. I do not think that my hon. Friend would stretch that by saying that just because the motion, as amended, was passed, it would necessarily imply withdrawal. It is a statement of independent belief by some of us that this particular means of overriding the views of this House is inappropriate.

I accept that point. Indeed, I happily accept it. I do not for one moment think that my hon. Friend's amendment would have that drastic result. Having said that, however, I think that that was the implication of his argument and that that, in fact, was what he would want.

Second, I must point out to my hon. Friend that we should be markedly unpopular with the TUC were we to take any step of that kind, because the TUC, through the ETUC, is now very much committed to making a sharper mark on European social policy. At the last meeting of the Standing Committee on Employment, which is a tripartite body, the TUC's spokesman paid tribute to the help which the Fund has given, particularly in training matters.

Third, I feel that we should be concerned, as partners in the Community, to maintain our interest in a matter of this kind, not least because the problem of unemployment is a common problem throughout the Community. Therefore, I do not think that we can talk about opting out of the Social Fund, and I am sure that it would be a retrograde step for us to do so.

As I say, what my hon. Friend really wants is that we should quit the Community, and I think that I had better not pursue that argument now. We have had a referendum to settle that question. Whether it should be reopened at some time in the future is another matter, and, however much some hon. Members may want to see that happen, it is not the subject of this debate.

I come now to a matter which my hon. Friend the Member for Eccles raised. I think that he put it in an intervention, but he wanted to know where the money had gone for the assistance of the disabled. Perhaps I may give a few examples. A great deal of it has gone to rehabilitation in the Employment Services Agency's own employment rehabilitation centres. There have been grants for specialised training by private agencies, such as the Royal National Institute for the Blind and the Spastics Society. There has been assistance for an experimental scheme for using closed-circuit television in the training of the partially sighted, in association with Moorfields Hospital. There has been assistance for some other hospitals which demonstrate the best practice in rehabilitation. There has been money spent on the training of disablement resettlement officers, and money spent also on staff at rehabilitation centres.

Those are some examples which I can give showing where the money has gone.

It is said by many researchers that this money would have been spent in any case, whether coming from the European Social Fund or not. Is that not true? Surely my hon. Friend is not saying that his Department would not have spent money on these worthwhile efforts.

That is simplifying the matter too much. I am not saying that a good deal of it might not otherwise have been spent, but it is a fact that when ventures of this sort are engaged in consideration is inevitably given to the question whether there might be a contribu-

Division No. 150]


[11.14 p.m.

Allaun, FrankLamond, JamesSpearing, Nigel
Bidwell, SydneyLeadbitter, TedSpriggs, Leslie
Canavan, DennisLestor, Miss Joan (Eton ft Slough)Thorne, Stan (Preston South)
Carter-Jones, LewisLoyden, EddieWise, Mrs Audrey
Crowther, Stan (Rotherham)Maynard, Miss JoanWoof, Robert
Fernyhough, Rt Hon E.Mikardo, Ian
Hooley, FrankMolyneaux, James


Kerr, RussellPowell, Rt Hon J. EnochMr. Max Madden and
Lambie, DavidSkinner, DennisMr. Martin Flannery.


Archer, PeterFreeson, ReginaldPhipps, Dr Collin
Armstrong, ErnestGolding, JohnRowlands, Ted
Ashton, JoeGrant, John (Islington C)Small, William
Bottomley, PeterHamilton, James (Bothwell)Smith, John (N Lanarkshire)
Brown, Hugh D. (Provan)Harrison, Walter (Wakefield)Stallard, A. W.
Brown, Robert C. (Newcastle W)Horam, JohnStott, Roger
Chalker, Mrs LyndaJackson, Miss Margaret (Lincoln)Strang, Gavin
Cocks, Rt Hon Michael (Bristol S)John, BrynmorTaylor, Mrs Ann (Bolton W)
Coleman, DonaldKaufman, GeraldTinn, James
Cooke, Robert (Bristol W)Lester, Jim (Beeston)Varley, Rt Hon Eric G.
Cox, Thomas (Tooting)Lewis, Ron (Carlisle)Walker, Harold (Doncaster)
Cryer, BobLuard, EvanWalker, Terry (Kingswood)
Cunningham, Dr J. (Whiteh)Lyon, Alexander (York)Weatherill, Bernard
Davidson, ArthurMcCartney, HughWhite, Frank R. (Bury)
Deakins, EricMacFarquhar, RoderickWhitlock, William
Dormand, J. D.MacKenzie, GregorWilliams, Rt Hon Shirley (Hertford)
Douglas-Mann, BruceMaclennan, RobertWoodall, Alec
Duffy, A. E. P.McMillan, Tom (Glasgow C)
Dunnett, JackMarks, Kenneth


Eadie, AlexMurray, Rt Hon Ronald KingMr. Alf Bates and
Ewing, Harry (Stirling)Orme, Rt Hon StanleyMr. Joseph Harper.

Question accordingly negatived.

tion from the European Social Fund, and, if that is a possibility or a probability, in such circumstances a venture is more likely to go ahead.

I believe that I have answered the main points raised in the debate. I apologise if I have not done so, but this is a "take note" debate and we shall look carefully at the record of all that has been said. I simply close by saying that the new Commissioner—now the Commissioner for Employment and Social Affairs—Mr. Vredeling, has stressed the need for more co-ordination of Community economic and social policy and for a strategy aimed at reducing unemployment as quickly as possible. There are common problems, and there are things which we can learn from one another. We have to take account of the best in the social systems of the member States and of their varied histories. But one thing is certain. The Community will have a social policy, and we hope that it will develop and mature so that increasingly it helps working people throughout the Nine. The Social Fund's contribution to this end may necessarily be somewhat modest, but it has been and, I hope, will continue to be a worthwhile contribution.

Question put, That the amendment be made:—

The House divided: Ayes 23, Noes 59.

Main Question put and agreed to.


That this House takes note of Commission Document No. R/752/77 on the European Social Fund.

Local Authority Works (Scotland) Bill

Order for Second Reading read.


That the Bill be referred to the Scottish Grand Committee.—[ Mr. Thomas Cox.]

Sewerage Charges

Motion made, and Question proposed, That this House do now adjourn.—[ Mr. Thomas Cox.]

11.24 p.m.

Prior to my application to Mr. Speaker for this Adjournment debate, I understand that my hon. Friend the Member for Goole (Dr. Marshall) also made application for a debate on his proposed Bill covering the same topic. I had made application for this debate before a debate took place on that proposed Bill. I understand that such a debate took place on the last day before the Recess. It will not, therefore, be my intention to cover all the ground again which must have been covered on that date, and I shall seek to deal instead with the matter as it affects my constituents principally, and to suggest, if it is in order, some ways in which the Government's proposed Bill might be worded.

The House will be aware of the now famous Daymond judgment. The Times Law Report of 5th May 1975 of the action which took place in the Queen's Bench Division between Daymond and the Plymouth City Council and Another, before Mr. Justice Phillips, reported as follows:
"A water authority constituted under the Water Act, 1973, has no power to exact payment in respect of sewerage and sewage disposal services from a householder whose premises are not connected to its sewers."
In his judgment, Mr. Justice Phillips said that if the defendants were entitled to make the charges, the water authority could exact payments from a householder whose premises were so far from the nearest sewer that there was no practical possibility of their ever being connected to a sewer, and a householder in remotest Dartmoor would be liable for payments in the same way as a householder in the middle of Plymouth. He said that it was a test case and that the result would affect all water authorities and most hereditaments not connected to their sewers.

I believe that this was a perfectly sensible judgment on the part of Mr. Justice Phillips, and I am not here to try to overturn that judgment. But the effect, which I imagine was not foreseen at the time, was not so much to make householders in remotest Dartmoor liable for payments in the same way as a householder in the middle of Plymouth. What it did was to make householders who might have been in the middle of Plymouth liable to the payments previously being made by householders in the middle of Dartmoor. It is this effect that has caused grave concern amongst a number of my own constituents.

Although this judgment, in the case of rural cesspit owners not connected to mains sewerage, led to the abolition of the general sewerage charge on un-sewered properties, it also led to the application of the same principle to urban dwellers who were connected not to main sewers but who had cesspits. The money that was lost by the water authorities from this order has been recouped by them by their imposing upon urban cesspit owners a sewage treatment charge which, in the case of my own water authority, the Severn-Trent, ran at the rate of £3 per 1,000 gallons in the first year. I understand that these charges varied throughout the country. Some water authorities charged slightly less and some charged substantially more.

When this charge was levied by the Severn-Trent Water Authority on the Dudley borough, the Dudley Metropolitan Borough considered how it should deal with the charge. In a letter to me, the chief executive of the council wrote:
"… the recent increase in charges for this service is as a direct result of increased charges being imposed upon the council by the Severn-Trent Water Authority for the disposal of the contents of cesspits and septic tanks into the sewers under the control of the Severn-Trent Water Authority. The increase imposed by the council is only that necessary to ensure that the council recovers the charges that have been made to them by the water authority."
In other words, as a result of the Day-mond judgment, we start a chain of reactions—as it were, a series of shunting trucks. It is the final truck—that of ray constituents who own urban cesspits—which actually hits the buffers. The cost has been passed on successively from the water authority, by the local authority, and it ends up in the hands of the owner of the cesspit or of the house which is connected to a cesspit rather than to mains sewerage.

In my constituency the owners of urban cesspits, amounting to 184 householders in the whole of the Metropolitan Borough of Dudley, had previously paid the general service charge through their rates in exactly the same way as any householder connected to the main sewerage, and paid at the same rate. As a result of the imposition of the charge—£3 per 1,000 gallons in this instance—and the Daymond judgment, the borough council felt it necessary to waive the genera! service charge and to charge instead a collection charge plus the charge made by the Severn-Trent Water Authority. The result has been an additional charge of up to as much as £70 to £100 a year for individual constituents. I can tell the House the average increase, because I have been given figures by my metropolitan borough. If it had met the cost of continuing to charge the same general service charge as previously, it would have had to pay an additional £8,500 a year. Divided by 184, that gives an average of £46.20 per household. This additional charge arises directly from the Daymond judgment, in that the water authority sought to collect from the urban cesspit householders that money which it was previously collecting from those rural cesspit householders who are no longer liable to make payment.

That average of £46.20 is an unreal figure. I have received a petition on the matter from no fewer than 56 of my constituents. One of the things they have made clear to me is that the extra charges have driven them to great economy, not in the use of water but in its disposal. Instead of disposing of it into their cesspits, when they will be charged for its collection and treatment, they are tipping it into the road and elsewhere. I understand that basins or the sink are being emptied into gardens or, more likely, the gutter. It seems to me an extremely un- hygienic practice, to say the least, but it is the kind of practice that such excess charges naturally lead to. If the householders continued to dispose of their water as they did under the general service charge, the figure might have been much higher—possibly about £60. I stress that that is an additional cost, above the general service charge.

The council, which I have approached on this matter on numerous occasions, has always maintained that under the law as it stands it is obliged to pass on the cost or, if not, must regard it as an additional cost. I have been told in a letter that:
"The Council's Environmental Health and Control Committee, at their meeting on the 30th June, gave further consideration to these charges, in the light of the decision of the Policy and Resources Committee that they were unable to make any financial resources available to the Committee to offset any loss that might be incurred as a result of the reduction of charges."
This, of course, follows from the stringent cost-cutting directives that have been laid down by the Government.

My constituents are caught in something of a vice in this matter of the additional costs that are being imposed upon them. I wrote to the Minister on this subject earlier and he said in a letter to me that he had no reason to believe that the water authorities would fail to comply with their obligations in fixing charges for emptying cesspit contents but that he was not satisfied with the incidence of these charges on the owners of unanswered properties and that the Government would look into the matter.

I understand that, arising out of the Bill that was proposed by my hon. Friend the Member for Goole, the Government will bring in measures to deal with the problem that is faced by my constituents. I should like to make some points about the form of the Bill. I hope that the Minister will be prepared to consider and take them into account. Under the Daymond judgment it seems to be a perfectly ligitimate thing that a householder should have the choice whether he wishes to pay his own costs or to come under the general service charge. Indeed, I suspect that that was the effect that the judge thought would result from his judgment. I am sure that the judge in the Daymond case did not expect that his judgment would affect urban cesspit owners. I should like to see householders given the choice of paying their own costs or the general service charge as it applies to all other ratepayers in the borough.

Not only is it unhygienic that urban dwellers should be impelled to dispose of their liquid waste in the ways that I have described, but councils are, under Section 14 of the Public Health Act 1936, liable to provide for the disposal of sewage. In 1977, as opposed to 1936, the mere collection of sewage might not be a sufficient fulfilment of the Public Health Act under modern conditions. However, because the judgment bears so heavily and unfairly upon a small pro portion of the population—in the case of Dudley it is only 184 houses at a cost of £185,000—and because the health of the public is a matter for the whole public, I recommend that the normal cost of the general service charge should be applied in the case of all cesspit owners who elect to pay them. In other words, there should be a cessation of the current dual charge.

I understand from the Minister that in some cases householders are paying a triple charge—that is including the general service charge. That is grossly unfair and a matter for the whole population of the area, the general ratepayers, because it is to their advantage. I therefore commend to the Minister that the option should be given to any householder to pay his own costs or to pay the general service charge. In that way the spirit of the Daymond judgment would not be impinged upon in any way and it would save my constituents and others from paying a substantial and unjust additional charge.

11.39 p.m.

I congratulate my hon. Friend the Member for Dudley, West (Dr. Phipps) on his persistence in obtaining a debate on this important but not exactly glamorous subject on our first day back after the break. However, it is an extremely important subject and I am well aware from the mail that I have received as an MP and as a Minister, and from the Bill that was introduced by my hon. Friend the Member for Goole (Dr. Marshall), that there is considerable public concern about the level of charges on some cesspit owners. I must add that the concern is not confined to urban areas and that it was not only the rural areas that received the benefit of the Daymond judgment but those in urban areas, too.

My hon. Friend will know that I spoke on the Second Reading of the Bill brought in by our hon. Friend the Member for Goole and commented on some of his suggestions. Unfortunately, it was a short debate and my hon. Friend was in the middle of withdrawing the Bill when Mr. Speaker called time at 4 o'clock. The problem remains.

There is no doubt that the owners of some cesspools face very large charges—in some cases much higher than those quoted by my hon. Friend tonight. It is important to understand the reasons for these high charges. The problem is difficult and complicated and we should not be deluded into thinking that it is capable of simple solution.

Until the House of Lords judgment in the Daymond case and the Water Charges Act 1976, all properties were liable to a sewerage charge levied by the regional water authority, regardless of whether they had mains drainage. The Daymond judgment ruled that only connected properties were liable to a sewerage charge, and the 1976 Act provided for the refund of charges by water authorities for the past two years. But immunity from sewerage charges is, as my hon. Friend has pointed out, scant consolation to those people who now find themselves faced with much higher charges for emptying and treatment. In most cases, these high charges affect properties with cesspools which require frequent emptying. I make here a distinction between cesspools—sealed containers which need to be emptied when full—and septic tanks, which are, in effect mini sewerage works which in most cases require only infrequent attention.

Responsibility for dealing with cesspools is split between local authorities, who do the emptying, and water authorities, who treat the emptied contents. Both local authorities and water authorities are entitled to charge for the service that they provide. Although many local authorities used to provide a free or subsidised emptying service, they have tended to raise their charges to something near an economic level in order to avoid a burden on the rates and thus a subsidy from the general body of ratepayers. It is, of course, for individual councils to decide what charges they will make.

At the same time as this move to an increase in local authority charges, the regional water authorities have introduced treatment charges. Although these charges vary from authority to authority, I have no reason to think that they are excessive. Water authorities have a statutory obligation to break even, so a less than economic cost to one group of consumers must be reflected in higher charges to everyone else. Emptying cesspools is expensive and if owners do not pay for emptying and treatment, they have to be subsidised by the rest of the population.

The harsh fact is, therefore, that emptying and treatment charges have gone up to something like the real cost of providing the service. Cesspool emptying is an expensive business, certainly more expensive than the use of mains drainage. The average sewerage bill to a connected property for 1977–78 is about £18. The average cost of emptying a cesspool once is about £12. For those small cesspools requiring frequent emptying, the provision of the emptying and treatment service can be very expensive indeed. My hon. Friend mentioned £60–£70. In some cases it must be several hundred pounds.

Despite these facts, which will not go away, I fully accept that some people are now faced with paying very high rates, whereas before Daymond their sewerage bill was relatively modest. This problem will not go away either. It was for this reason that the Government's consultative document on the review of the water industry, which includes sewage and sewerage, raised for public comment the question whether the same body might be made responsible for both cesspool emptying and treatment. Some rationalisation of charges might then be possible.

If it were decided that there should be a subsidy of people with cesspools, it might be better to spread it over the whole area of a water authority rather than over the area of one district council, which may cover many such properties.

We received a large number of representations on this aspect of the consultative document. Most of them were, of course, from the owners of properties with cesspools, who were naturally anxious to draw attention to the levels of their charges. But some representations have drawn attention to the fact that a subsidy to unconnected properties could be achieved only at the expense of higher charges to connected properties. We should not forget that connected properties faced very steep increases in their charges in 1976–77 as a result of Daymond refunds and the contraction in the charging base.

We have been considering with particular care the representations that we received on this aspect of the consultative document. We shall be announcing our conclusions on this and all the other issues raised in the consultative document, in a White Paper that we shall publish shortly. It would be quite wrong for me to seek to anticipate the contents of that White Paper.

I hope that my hon. Friend will understand that at this stage I am unable to say more than that we are aware of the problem that he has raised so eloquently, and that the White Paper will say what we propose to do about it. It is always difficult, during the formulation of a major policy statement of this nature, to deal with this type of problem. But, as recent evidence of the Government's recognition of the problem, I can point to the recent changes in VAT arrangements for both emptying and treatment charges. The Inland Revenue has agreed that such charges should be zero rated because initially people had to pay VAT. I do not pretend that these changes are more than a minor palliative. I can assure my hon. Friend that they are not intended to serve as a permanent cure.

I am in no doubt about the urgency of the problem. I hope that my hon. Friend will not have long to wait before the publication of the White Paper which will lead to legislation. At present I cannot tell water authorities or local authorities not to make charges. They are entitled to do so if they wish.

My hon. Friend mentioned some people who are in extremely difficult circumstances because of the Water Act 1973 and the resulting judgment in the Daymond case. Some people, because their surface water drains are connected to the main drains pay twice the normal charges and for their cesspools to be emptied. I appreciate that the people in that situation tend to be less well off. They are usually older people living in old houses.

I listened carefully to my hon. Friend's advice about what might be in a Bill. I hope that we shall introduce a Bill when the White Paper has been considered by the House. My hon. Friend suggested that people should have a choice. Those who would opt not to pay the general rate but to pay the charge would be those who would be better off by making that choice. People with septic tanks would opt out. I have my doubts about giving people that choice.

Taken to its logical conclusion the Daymond judgment implied that there should be an element of choice. The judgment says that people who elect not to have cesspools emptied should make no payment. It is logical that people should have the choice to decide whether they empty their cesspools themselves or have it done for them under a general service charge.

If it is done under a general service charge with a subsidy to those whose cesspools require emptying we shall not give the general ratepayers any choice whether they pay for it, even though their costs are less than the rates they pay. I mention that as a possibility, but I must not comment too much on what my hon. Friend said.

I assure my hon. Friend again that we are aware of the urgency. We are trying to get the White Paper out as soon as we can. We hope, but we cannot guarantee, to bring in a new water Bill which will be a substantial measure and not refer merely to this aspect of the problem.

I thank my hon. Friend for the points that he has raised, and I assure him once again that his contribution tonight has added to the urgency with which we in the Department view this matter.

Question put and agreed to.

Adjourned accordingly at ten minutes to Twelve o'clock.