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Overseas Aid

Volume 979: debated on Wednesday 20 February 1980

The text on this page has been created from Hansard archive content, it may contain typographical errors.

With permission, Mr. Speaker, I should like to make a statement on overseas aid. Soon after assuming office, the Government instituted a review of the policies governing the overseas aid programme. This review is now complete. Our ability to support development overseas is dependent on the state of our economy and the need to strengthen it. Nevertheless, the Government will continue to provide aid to the developing countries on a substantial scale. Official aid continues to be an essential element in development, especially for the poorest countries. Within the limits of our resources we must seek to relieve poverty in the developing world so as to create conditions for greater peace and stability and to contribute to the growth of world trade on which Britain so critically depends.

Trade is of the greatest importance for the developing countries. If the free world were to slide down towards protectionism we would all suffer, but the consequences for the developing countries would be particularly serious. We provide a substantial market for their products and will encourage others to do the same.

Private investment can and should play a greater part in development, and we hope that the relaxation of exchange controls will further encourage British firms to invest overseas. We believe that it is right at the present time to give greater weight in the allocation of our aid to political, industrial and commercial considerations alongside our basic developmental objectives.

We need to maintain the strength of our ties with the Commonwealth, to which the greater part of our bilateral aid now goes, and to fulfil our obligations to our remaining dependencies. We must also be able, when necessary, to offer help and encouragement to other friendly countries. The greater part of our bilateral aid is tied to procurement in the United Kingdom and so provides valuable orders for British firms. Our contributions to multilateral institutions also enable British firms to compete for very substantial business, financed by them all over the world. We are examining means by which they might get a greater share of this business.

Since 1978 about 5 per cent. of the bilateral aid programme has been made available from the aid-trade provision for sound developmental projects—which are also of commercial and industrial importance for British firms—in developing countries to which we do not normally provide aid, or where the planned allocation is already committed. In order to maintain the value of this provision in real terms, its share of the bilateral aid programme will now be increased.

The unallocated margin in the aid programme will be increased, so that we can respond more effectively to new developments where our political or commercial interests are involved.

Our commitments to international agencies and bodies will absorb a larger proportion of the aid programme over the next few years. As we need more room for manoeuvre in bilateral aid, we shall need to look critically at our expenditure on multilateral aid programmes.

Improved inter-departmental arrangements will ensure that all these considerations are brought together.

The administration of the aid programme is being examined in a thoroughgoing management review of the Overseas Development Administration to ensure that the programme continues to be managed effectively and economically.

Much can be done with our aid programme, which is to the mutual advantage of the developing countries and ourselves, and we shall therefore concentrate on using it in that way.

Will the hon. Gentleman accept that the statement basically endorses the aid strategy of the Labour Government, which comes rather oddly after a discussion on wine surpluses in the EEC? Our strategy has been nibbled at the edges, but substantially remains. Does the hon. Gentleman accept that the proposals in the statement appear to have been influenced at a critical stage by the publication of the Brandt report?

I hope that I shall not embarrass the Lord Privy Seal—who is not in the Chamber—the Foreign Secretary or the hon. Gentlemen, but will they accept my con- gratulations on their powers of persuasion and influence on their free-market, monetarist and anti-aid colleagues at a crucial point?

My first question concerns the substantial scale mentioned. What scale? We provided for a 6 per cent. increase, in real terms. At present, there is a 5 per cent. cut, in real terms. What will happen next year?

The aid and trade provision was opposed by a number of Conservative Members when I introduced it. By how much is it to be increased? Most importantly, will the developmental criteria under which it was established be fully maintained?

What proportion of the aid programme is to be unallocated?

I recognise that essentially the bilateral programme is cut in a reduced programme of aid and with multilateral commitments that cannot be evaded. The hon. Gentleman today endorsed the strategy of aid to the poorest countries. How far will the proposals nibble at the fringes of that aid? I noted the provision of £15 million to Turkey, which can scarcely be called aid to the poorest. That aid came out of the reduced aid budget.

Are the Government continuing the emphasis on rural development and income creation among the rural poor, who constitute 78 per cent. of the population of the developing world and upon whom the whole theme of interdependence is based?

We have already asked for a debate on the Brandt report. Although not strictly a question for the hon. Gentleman, could we discuss the issues raised in the statement in a general debate on where we are going in our relationships with developing countries?

I am grateful to the right hon. Lady for her congratulations, although I am not sure who is being congratulated. I shall pass them on when I read Hansard tomorrow.

The timing of debates is for my right hon. Friend the Leader of the House. No doubt he will also read Hansard tomorrow.

The right hon. Lady suggested that we were endorsing the previous Government's policies. She must know that due to the previous Government's commitments, which we are honouring, there is little room for manoeuvre to change policies. Any change must be gradual. I believe that that answers her point.

The right hon. Lady referred to financial matters concerning the aid-trade provision, the increase in the aid programme and contingencies. The aid framework is not finalised, and perhaps she will await the publication of the White Paper.

We are pressing on with a great deal of rural development for the benefit of the poorest people.

Will my hon. Friend accept that his statement will be more widely welcomed when the country sees that he is not merely turning down the hosepipe of aid employed by his predecessor but directing scarce resources in genuinely advantageous ways, in our interests as well as those of the recipients? Does he agree that the more that that is seen to be our objective, and the less indiscriminate multilateral aid that we are involved in, the more likely there is to be genuine public support? Will my hon. Friend confirm that he did not need the assistance of the Brandt commission to make up his mind?

The review was produced before the Brandt report was published. My hon. Friend states absolutely correctly that political, industrial and commercial considerations will now play a more prominent part in our considerations.

My hon. Friend said that some of our aid is to be at the service of British foreign policy. Does he therefore accept that if such aid is used to sustain corrupt and dictatorial regimes against the will of the people it will harm our overseas reputation?

I hope that we do not use aid to sustain corrupt regimes. We shall bear such factors in mind in our consideration of the political and developmental content of aid.

When drawing up the statement, what consideration was given to the Brandt report and programme for survival? When does the hon. Gentleman anticipate that we shall reach the target of 0·7 per cent. of our gross national product for overseas aid to which successive Governments have pledged themselves?

Will the hon. Gentleman snake a statement on full-cost fees for overseas students? Does he agree that that is one way in which many poor countries are discriminated against, because they will have to reduce their quota of students sent to this country? Will he consider the abolition of fees for students from poorer countries?

On the hon. Gentleman's last question, the answer is clearly "No". I shall not consider the abolition of fees for overseas students.

As I said earlier, the review is complete and it is on that review that I am reporting. The review was produced before the Brandt commission published its report.

In the past year we achieved 0·48 per cent. of the United Nations' target.

Do the Government propose to look seriously at the Brandt report? If so, in what time scale? Secondly, when will my hon. Friend's Department finish the management review and publish its proposals? Thirdly, what steps does my hon. Friend propose to ensure that British industry benefits to a greater extent from contracts awarded internationally under the European Development Fund?

We are taking steps to see whether British industry can get more contracts under the EDF. The British Overseas Trade Board is looking into the matter urgently. The management review should be complete in about July. I believe that it will be an internal review, and it is unlikely to be published.

I welcome the attention that the hon. Gentleman is paying to the rural aspect of aid, but did he see the recent letter in The Times from Mr. Ewart Parkinson, drawing attention to the problems of urban poverty in developing countries? Will he accept—it is relevant to the political considerations that he may have in mind—that urban poverty can often be damaging to a regime that is attempting to deal with economic problems generally?

I am afraid that I did not read the letter in The Times. It is one of many that escaped me. I shall look it up and read it. I take the hon. Gentleman's point about urban poverty. It is reflected in the fact that some Governments keep down the price of food for reasons of urban poverty, which results in a lack of food production in developing countries.

Will my hon. Friend look favourably on the operations of the Commonwealth Development Corporation, which provides a very cost-effective way of giving aid to the mutual benefit of both sides?

Yes, we will certainly do that. Indeed, I am afraid that another review is taking place of the Commonwealth Development Corporation.

Will the right hon. Gentleman accept that not everyone accepts what my right hon. Friend has said, namely, that this is merely a nibble at his programme, but that it is a magnificent bite at it, because it has in so many ways changed the whole policy and bearing of the programme? Will the right hon. Gentleman tell the House which of the multilateral aid programmes are to be reduced and indicate where the surpluses are to come for the unallocated margin and for the increase in the 5 per cent. bilateral aid programme? Does he also realise that his statement is nonsense until we know the amount of money to be made available and the financial constraints within which he is working?

Yes, we will be looking at all European Community and United Nations multilateral agencies.

On the question of the timing of this statement, I am very sorry that the hon. Member finds it nonsense, but I thought it right to make the statement. We can perhaps discuss the financial implications when the White Paper is published.

Order. I propose to allow another five minutes for questions on this before we move on. I hope that the questions and answers will be brief.

Will my right hon. Friend accept that, with the con- tinuing need to reduce public expenditure, the majority of the British public would give high priority to a reduction in overseas aid especially to those countries that consistently oppose Britain's foreign policy?

Many differing views are, of course, held about aid and its purpose, and whether it should be greater or smaller. If we have a debate on the Brandt report, no doubt that matter will be extensively discussed.

Will the hon. Gentleman recognise that any cuts in aid, whether multilateral or bilateral, will hit not only developing countries but British exporters? Is he aware of the extent to which British exporters are already at a disadvantage compared to their competitors in the less advanced countries? What will he do to ensure that the situation does not worsen?

We hope to help British exports through the aid-trade provision and, of course, 70 per cent. of the bilateral aid is tied. Furthermore, the British Overseas Trade Board is taking steps to see whether we can get more business out of the multilateral agencies. There are great opportunities there for business men, if they will seize them.

What is the Minister doing to press his partners in the Common Market to be less selfish and protectionist to those Third world countries that have not the advantage of being in the ACP block, because if the level were reduced at least some part of this aid would not be as urgently needed as it is now?

I am grateful for my hon. Friend's observation. When I attend the next meeting of the Council of Ministers I shall bear that point in mind.

As the Minister has indicated that he regards overseas aid not only as a measure of compassion but as one of enlightened self-interest, will he not repudiate the comments of his own side about turning off the hosepipe of aid, which, after all, is aid to people who are in desperate poverty? Will he also please state that this reference to the political implications does not mean that countries like India are to have their aid cut off?

Of course, countries such as India and Pakistan will not have their aid cut off. We still hope for a substantial aid programme to those countries. However, on the whole, Parliament is a reflection of what the public think, and I am sure that many people think just that. It is perfectly fair to reflect this view.

Since my hon. Friend told us that he completed the review before the Brandt report was published, and since it is fair to say that his review has met with some disappointment in almost every section of opinion in the House today, may I ask him when he expects the Government to produce a constructive set of proposals and a review of the Brandt commission's very important new ideas?

As the right hon. Member for Lanark (Dame Judith Hart) said in her letter to The Times today, we need time for reflection—"a pause for reflection" was the expression that she used. I think that the Government are quite right not to make a quick response. We need to study very deeply this most important document.

Will the Minister agree that his statement today has meant a change in the criteria of British aid policy? Could he say when and how he will announce the change in multilateral commitment that he mentioned in his statement?

Yes, the hon. Gentleman has got it right exactly in the expression that he used. We shall proceed to have talks on multilateral aid to see where we can make economies and also benefit more from it. That will happen over the months ahead.

What is disappointing about what the Minister has said today—may I ask him, perhaps, to remedy it?—is that he seems to pay no account at all to the analysis of global issues that affect the global economy and also our own economy and society in the cast-off remarks that he made about the Brandt report. I am sure that he does not really mean that. May I give him the opportunity to correct the impression that he has conveyed?

I have made no "cast-off remarks," whatever they are. I merely think that it is sensible for Governments and political parties to take their time in considering the full implications of the Brandt report. It is absurd just to throw off a comment, as it were. It is, of course, very important. I have referred at least twice to its importance. We are going to study it in great depth before we commit ourselves to comment on it.