International Development Bill

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Dr. Jenny Tonge (Richmond Park): I shall be even more brief. I do not think that I should support the amendment. By way of explanation, I refer the hon. Lady to clauses 1 to 3, which I think are the most important clauses in the Bill. Loans would in any case be granted only if they were

    ``likely to contribute to a reduction in poverty'',

or for the purpose of

    ``furthering sustainable development''

    ``improving the welfare of the population'',

or if they were, in the opinion of the Secretary of State,

    ``prudent having regard to the likelihood of ... generating lasting benefits for the population''.

No Secretary of State in his or her right mind who was mindful of those clauses would give an excessive loan to a country that was already terribly in hock to the world community. The hon. Lady should refer constantly to those clauses because they are the conditions of the Bill.

Mr. Andrew Robathan (Blaby): I am in some doubt. Are we also considering amendment No. 21 as well?

The Chairman: No. We are discussing only amendment No. 13.

Mr. Robathan: I am grateful for that advice. I thought that they were grouped together.

The amendment is both interesting and important. It should be considered carefully because for the past 12 months to two years, Jubilee 2000 has been campaigning in support of the desirable aim of getting rid of all debts owed by developing countries to developed countries. I am not 100 per cent. behind the activities of Jubilee 2000, but its view that developing countries have far too many overbearing debts is supported by most people and it seems sensible that we should not make excessive loans. The hon. Member for Richmond Park (Dr. Tonge) said that no future Government would do that, but Governments have done it in the past and they may do so again.

Mr. Tony McNulty (Harrow, East): You are wanted outside.

Mr. Robathan: The Government Whip is always trying to be helpful. On Tuesday, it had to do with my tie; today, it has to do with my absent colleagues. However, I do not intend to leave the Room, as I have a lot more to say—[Hon. Members: ``Oh no!''] I see that the news is greeted with enthusiasm by Labour Members.

The Government's policies on debt reduction are in general extremely laudable and I, like every member of the Committee, support the positive and sensible actions of the Chancellor and the Secretary of State for International Development. Furthermore, they have taken no account of the hyperbole that sometimes issues from Jubilee 2000. The Government are, of course, building on the work of the previous Administration, particularly on the Trinidad terms negotiated by my right hon. Friend the Member for Huntingdon (Mr. Major), which led to a tremendous reduction in debt among developing countries.

We must consider carefully how to prevent loans being made in future, taking into account both bilateral aid and multilateral aid. I generally support the policies of the World Bank and the International Monetary Fund, but the World Bank has not always lent money wisely—indeed, many of its overseas loans were made without the controls that we referred to on Tuesday. We all want a means of preventing that from happening again to be enshrined in legislation. Although the Minister said in a previous sitting that the Bill should bind future Governments, I must point out that we cannot bind future Governments, because Parliament can always make further legislation.

Mr. Mullin: We want to ensure that future Governments who want to restore the link between aid and trade, which has abused our aid programme in the past, would have to justify that decision to Parliament. Of course I realise that we cannot bind future Parliaments.

The Chairman: Order. I am looking at the amendment, and no reference has yet been made to 10 per cent. or any other figure. I ask the hon. Member for Blaby (Mr. Robathan) to speak to the amendment.

Mr. Robathan: Of course I shall, Mr. O'Brien. As my hon. Friend the Member for Chesham and Amersham said, 10 per cent. is an arbitrary figure. However, it seems sensible to prevent that which has happened in the past, when overseas aid was generally given by way of loans, from happening again in future. The amendment is sensible and I hope that the Minister will consider it carefully. We are trying to lay down some ground rules and those parameters should be included in the Bill.

I support the Government's action on reducing debt and the policy that they have adopted since coming into, although to give grant aid rather than loans was the policy of the ODA throughout most of the 1990s. However, we must ensure that future Governments would have to ask Parliament if they wanted to start making heavy loans again.

[Mr. John Butterfill in the Chair

3 pm

Mr. Mullin: The amendment would place an arbitrary limit on the ability of the Secretary of State to choose the most appropriate form of assistance to provide to a country. The effect would be that the Secretary of State would not be free to determine in consultation with the country for which the assistance was to be provided the most appropriate and effective form of that assistance. The needs of the developing country must be the driving force behind the choice of the form of assistance, otherwise the primacy of the overarching requirement of poverty reduction and the two development purposes will be compromised.

That said, hon. Members have made some perfectly reasonable points. The hon. Member for Chesham and Amersham said that there had been a history of inappropriate loans. As so often in our deliberations, however, the hon. Member for Richmond Park made a strong point in response, saying that the principles guiding Secretaries of State in future would be the provisions of clauses 1 to 3. We will be a long way from the days when we gave loans to countries that could not afford to pay them back.

Currently, all financial aid is in the form of grants. There is no intention of initiating a new push to provide loans. All that the Bill does is retain the power in the 1980 Act. The Government have not used the development assistance programme for any loans to developing countries and it is extremely unlikely that there would be any grounds for using the aid programme to lend to heavily indebted countries as, for the most part, that would not be appropriate. If a country is graduating from the aid programme, a figure higher than 10 per cent. might be appropriate, but such instances are not likely to be a big feature of our aid programme. We seek merely to leave the Secretary of State with the discretion to act in circumstances that we cannot necessarily predict.

We work with the Zimbabwe Government only when there is no alternative channel for assistance and when we can be confident that our support will directly benefit the poor or is necessary to build future recovery. We have not given budgetary support or programme aid to Zimbabwe for many years, and there is not much likelihood that we shall do so in the foreseeable future.

Mrs. Gillan: None the less, aid has gone to Zimbabwe directly from this country through the European Union, as we pay 30 per cent. of aid money to the EU. Is the Minister saying such aid is outwith the set parameters?

Mr. Mullin: It is outwith the parameters of the clause, Mr. Butterfill—welcome—that we are debating. The amendment would place an arbitrary fetter on the Secretary of State's ability to choose the most appropriate form of assistance in circumstances that we cannot foresee or predict.

It is not current policy to lend to heavily indebted countries. Almost all our aid is in the form of grants, for which repayment is not required, so I ask the hon. Lady to withdraw the amendment.

Mrs. Gillan: I, too, welcome you to the Chair, Mr. Butterfill. The whole Committee will be glad to see that nothing untoward befell you before you came to chair our sitting.

I am disappointed by the sparsity of the Minister's response. I do not feel that he has a grip on this piece of legislation, not least because in his brief reply to my previous amendment he told me that there was no need to return to the Overseas Development and Co-operation Act 1980. He said that we did not need its definitions because the Bill was a case of ``out with the old and in with the new'', yet he says that he wants to retain the power of the 1980 Act in this instance. He seems to want to have his cake and eat it, as I have said.

To say that all current aid is in the form of grants is a very weak argument. We are told repeatedly that the point of the Bill is to bind the hands of future Secretaries of State and ensure that nothing untoward can happen. I thought that the explanatory notes would explain what is in the Government's mind, but I find that I being told one thing by the Minister and reading something else in the explanatory notes. He said that it is extremely unlikely that loans would become an issue, but explanatory note 29 states:

    ``It is not envisaged that the Secretary of State will make extensive use of these forms of financial assistance in preference to the power to make grants or loans.''

Nothing in the explanatory notes states that loans will not be used.

The Minister gave something away when he said that slightly more than 10 per cent. might be appropriate. I am sure that there is a glimmer of light, that a door is opening and that the Minister believes that the amendment is reasonable. I hope that he will at least accept the spirit of the amendment. He has not answered my questions, but I shall give him another chance. What precautions have the Government taken to ensure that their policies do not lead to further indebtedness in poor countries?

Mr. Mullin: I said that our main precaution was not to lend them money.

Mrs. Gillan: With respect, methinks the Minister doth protest too much. He has in his grasp the instrument and the wherewithal to allow some countries, unfortunately, to go down that road. There seems to be no safeguard for taxpayers that satisfies the Opposition. If loans will not to be used much, if at all, why is there not a self-imposed limit?

I am not satisfied with the Minister's comments. I have been extremely generous in withdrawing amendments following responses from the Minister, but I must press amendment No. 13 to a vote.

Question put, That the amendment be made:-

The Committee divided: Ayes 4, Noes 11.

Division No. 6]

Gillan, Mrs. Cheryl
Robathan, Mr. Andrew
Rowe, Mr. Andrew
Simpson, Mr. Keith

Clarke, Mr. Tom
Davidson, Mr. Ian
Goggins, Mr. Paul
Hall, Mr. Patrick
King, Ms Oona
McFall, Mr. John
McNulty, Mr. Tony
Mullin, Mr. Chris
Naysmith, Dr. Doug
Tonge, Dr. Jenny
Turner, Mr. Dennis

Question accordingly negatived.

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