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House of Commons

Thursday 20 June 2002

The House met at half-past Eleven o'clock


[Mr. Speaker in the Chair]


London Development Agency Bill (By Order)

Order for Second Reading read.

To be read a Second time on Thursday 27 June.

Oral Answers to Questions


The Chancellor of the Exchequer was asked—

World Poverty

1. Kali Mountford (Colne Valley): If he will make a statement on the role of the UK in pressing for co-ordinated international action to tackle world poverty. [60335]

13. Mr. Michael Clapham (Barnsley, West and Penistone): What assessment he has made of responses to his call for a Marshall plan for the developing world. [60350]

The Chancellor of the Exchequer (Mr. Gordon Brown): Last weekend's G7 Finance Ministers meeting in Canada built on the Monterrey commitment of $12 billion a year of additional aid from the United States and Europe by 2006. We endorse the World Bank's fast-tracking initiative to achieve by 2015 primary education for all and the detailed action plan to support full implementation and financing of the heavily indebted poor countries—HIPC—initiative, as well as the new measures for crisis prevention and crisis resolution.

That is part of our commitment to a global new deal or global compact. In return for corruption-free policies of stability and pursuing trade and investment in developing countries, Britain and other countries will make substantial additional commitments to overseas development aid to achieve the 2015 goals.

Kali Mountford: I thank my right hon. Friend for that reply. I am sure that he and the whole House will agree that not only the House but the international community benefited from the trade justice lobby yesterday. Although I recognise his important role in developing financial governance, transparency of the International Monetary Fund, the millennium development goals and the contingency credit line, those measures all go in one

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direction—to help countries to help themselves. Is he concerned that some actions of some of the larger member countries of the international community may impose restrictions on trade that would undermine the very measures that he has started?

Mr. Brown: I am grateful to my hon. Friend. I know that she has been very active in her constituency in working with non-governmental organisations and Churches in promoting many of the issues. We were all impressed—there is a growing all-party consensus on the matter—by those who came to the House of Commons yesterday and put the case for changes in international as well as domestic policy. She is absolutely right that the $50 billion that is provided in international development aid is in one sense dwarfed by the gain of $150 billion that could come if agricultural subsidies—the matter to which she is referring—were reduced. If we could eliminate the subsidies, we could take 300 million more people out of poverty by those measures alone. I know that there is a recognition of that on both sides of the House.

It is true that many of the countries that my hon. Friend mentioned have taken positions that appear to be protectionist in matters of agricultural policy and in other areas, but it is also true that, when I was at the G7 Finance Ministers meeting, the chairman of the meeting said in his summing up that there had to be more free trade. Equally, in his press conference afterwards, the French Finance Minister called for more open markets for products to help developing countries.

Mr. Speaker: Mr. Clapham is not here, so I call Matthew Taylor.

Matthew Taylor (Truro and St. Austell): The Government's record on debt relief has been very welcome, but as the Chancellor suggests, there is more to it than that. In particular, we must assist developing countries to access overseas markets and trade. Will the Chancellor use his influence to break down the barriers to trade into the European Union, and will he also ensure that, alongside the relief, the Government will work more quickly towards their target of 0.7 per cent. of GDP for overseas aid? On current plans, that would take 100 years to achieve.

Mr. Brown: I am grateful to the hon. Gentleman for raising all those issues. There is a separate question on the specific issue of trade that will be answered later, but I shall deal with his two points about debt relief and funding.

On debt relief, it was agreed last Saturday that we had to complete financing of the HIPC initiative. Some 26 countries have now received debt relief, and perhaps 10 or even more are engaged in conflicts and cannot benefit from debt relief, but could be eligible once they come out of conflict. The total amount of debt relief on offer, therefore, is about $100 billion. We must finance particularly the multilateral institutions' contribution to that debt relief.

We must also ensure that countries that are not performing and that are not giving debt relief at the moment do so, and we propose to name those countries. We also propose to tackle the question of vulture funds,

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where debt has been transferred to other organisations and companies which then try to charge the full amount of debt. Equally, we must provide additional money from the international community. To make real the promise that we have made to achieve debt relief, additional funds will have to be made available by this Government and other Governments to the World Bank trust fund. It is agreed that we should make those funds available and consider the eventual costs of doing so.

On overseas development aid, the hon. Gentleman will have to be patient and wait for the results of the spending round. We are committed to a substantial increase in development aid. As far as the world community is concerned, the effort to achieve the $50 billion that is necessary every year to finance additional money and to finance the millennium development goals of primary education for all, halving world poverty and a three quarters reduction in infant mortality—they are all achievable by 2015—demands substantial sums of money. We will make our contribution to that. In doing so, we shall call on other countries to make their contribution.

Helen Jones (Warrington, North): My right hon. Friend is well aware of the World Bank's view that to reach the target of halving global poverty by 2015, development aid needs to double. I recognise, as I think the whole House does, the efforts that he has made to achieve that, but what progress has been made on persuading many of our international partners, especially the United States, that they too must increase their aid budgets?

Mr. Brown: My hon. Friend will be interested to know that yesterday the United States Administration said that in addition to the $5 billion additional aid that they were committing from 2006, they were also going to provide an additional $500 million to deal specifically with HIV/AIDS. They announced that in advance of the G8 summit that will take place in Canada in the next few days. In other words, the combined amount of money now pledged by Europe and America is in the order of $12 billion. That is not near the $50 billion that we require, but for the first time in 20 years the amount of money to be provided by the world community for overseas aid is rising, not falling.

We have to address how to convert the commitment to the $12 billion additional money into the far higher sum that is needed. It is absolutely true that the World Bank has pointed out that to achieve the education goals alone will require $10 billion. We fully intend to play our part in making sure that that funding is available.

Mr. Michael Howard (Folkestone and Hythe): May I offer my support to the Chancellor and other Finance Ministers for their work on development issues and welcome the progress made in Canada last weekend, in particular on primary school education? The Chancellor is right to say that there is a cross-party consensus on those issues. The hon. Member for Colne Valley (Kali Mountford) is also right to talk about the restrictions on free trade, which are having an extremely detrimental effect.

What further progress does the Chancellor envisage on trade liberalisation, which offers the greatest hope for alleviating hunger and poverty, as he said? How will he fulfil the Prime Minister's pledge at his party conference to offer Africa access to our markets so that we practise

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free trade as well as preach it? Will he ensure that the issue is pressed at the European Union meeting in Seville later this week and also at the forthcoming G8 and World Trade Organisation meetings?

Mr. Brown: I am grateful to the right hon. and learned Gentleman for raising the issue in that way. We are determined to press, and continue to press, for reform in the treatment of agricultural subsidies. There was an agreement at Doha on the reduction and then eventual elimination of agricultural subsidies. That has to be followed through. A paper on EU agricultural reform is to be produced in July which will deal with cereals, direct payments, modulation and degressivity. All those issues will have to be dealt with and it is essential that the EU does that before enlargement, as the right hon. and learned Gentleman knows.

As far as the general climate on trade is concerned, it is often the case that, in the US, proposals on steel and farm subsidies, for instance, come in advance of the President asking for a fast-track authority to agree substantial concessions and a reduction in subsidies and tariffs. I hope that that is the case. What I can say is that all the members present in Canada were concerned that if the world is to recover economically and if that recovery is to benefit the developing countries, liberalisation of trade is essential, as all the signatories to the communiqué agreed.

Mr. Dennis Skinner (Bolsover): Is my right hon. Friend aware that his language of hope is in sharp contrast with what happened in 1992, when we could not have given a ha'penny to any third world country because of the 15 per cent. interest rates and the fact that we were skint? We have to have money to be able to hand it out. The same was true in 1976, when we had to borrow from the International Monetary Fund. We are now helping out 22 of the world's poorest countries, so we do not need any lessons from the Tories. The trade lobby yesterday was encouraging because the people in it knew that to resolve the problems we need a Government who will ensure that we have money in the back pocket to help the poorest out there in the third world.

Mr. Brown: I am grateful to my hon. Friend for bringing the House back to its usual discussion of the differences between party policies, as well as the similarities. I hope that the shadow Chancellor agrees that if hon. Members on both sides of the House commit Britain to the millennium development goals, they will have to be financed by additional resources. The $50 billion has been identified as the figure that has to be met and Britain will have to provide substantial additional development aid to do that. I hope that when Members of the House supported the lobby or its intentions yesterday, they also supported the commitment that their parties will back additional development aid.

Sir Peter Tapsell (Louth and Horncastle): Does the Chancellor feel any guilt about the fact that we would today have £320 million more of wealth to help to tackle world poverty if he had not sold our gold at the bottom of the market and against my expert advice?

Mr. Brown: It is surprising that the hon. Gentleman's expert advice was not listened to by the previous

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Conservative Government, because they could have made substantial amounts of money if they had sold at any time between 1979 and 1997.

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