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HIPC Initiative

6. Dr. Jenny Tonge (Richmond Park): If he will make a statement on the outcomes of the World Bank and IMF meeting in September in relation to debt relief and the HIPC initiative. [78227]

The Chancellor of the Exchequer (Mr. Gordon Brown): At the recent IMF and World Bank meetings in Washington, we agreed up to $1 billion of further debt relief for poor and indebted countries. I am pleased to announce that the UK has been joined by 16 other donors, which have already made firm commitments totalling $850 million to the HIPC trust fund. European Union member states have called on the Commission to make a contribution through the European development fund. That will benefit 26 highly indebted poor countries. Of the remaining 12 countries that could qualify for debt relief, nine are unfortunately in conflict, one has opted for debt relief, and two are developing their poverty reduction strategies to meet the conditions for debt relief.

We thank the Churches, faith groups and non-governmental organisations for the contribution that they have made to the debt relief campaign, but we are determined to build a longer-term solution to the financing of education, health and anti-poverty programmes in the poorest countries.

Dr. Tonge : I thank the Chancellor for that reply. At the risk of sending Tory Members into orbit, I freely acknowledge that the progress that has been made on this matter has been due largely to his efforts. However, does the Chancellor realise how disappointed people in the country are that more progress has not been made since the millennium? According to the organisation Jubilee 2000, the cancellation of debt for the 26 HIPC countries would cost around $6.8 billion over five years for the countries in the Organisation for Economic Co-operation and Development. That is probably less than the US spent on bombing Afghanistan. Will the Chancellor put pressure on the World Bank and the IMF at least to suspend debt repayment—[Interruption.]

Mr. Speaker: Order. The hon. Lady may have been slow to start, but she is certainly making up for it now.

Mr. Brown: I want to thank all those in the House who have joined us in the campaign to secure debt relief. The figures show that $62 billion of debt will be wiped off as a result of the initiative so far. If other countries join the initiative, that total should amount to $100 billion. That is a very considerable figure, involving 26 countries, and it is yielding money for education, health and anti-poverty programmes. However, I readily accept that there is more to do. That is why we are considering, with other countries, further measures in addition to debt relief that can yield results both in terms of expenditure on education, health and anti-poverty programmes, and in terms of meeting the millennium development goals, which include ensuring that every child has an education.

Mr. Andy Reed (Loughborough): I am sure that the whole House welcomes the moves that have been made to progress this matter, largely thanks to the moral lead

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that my right hon. Friend the Chancellor has taken. However, does my right hon. Friend accept that the collapse of commodity prices has caused real problems for many countries already in the HIPC initiative and receiving debt relief? What further measures can he take to ensure that those countries' future levels of sustainable debt are tied into the collapse of commodity prices? Will he assure the House that the $1 billion extra that has been promised will be new money and will not merely replace money that should have come from multilateral creditors such as the IMF and the World Bank?

Mr. Brown: The extra $1 billion is necessary precisely because of the economic conditions in poorer countries, and because in the first round of the HIPC trust fund we underestimated what would be needed to pay for the debt relief that has been provided. It is new money, and is being allocated by this Government and other Governments. As I said, 16 Governments have joined the initiative, and that is huge progress on where we were a few months ago.

Again, I readily accept that if we are to deal with the problems of poor countries and their agricultural producers, we need a wider settlement—a wider compact between rich and poor countries that involves not only debt relief but the opening up of trade, tackling agricultural protectionism and help for public and private investment in those countries. We also need substantially greater resources in overseas development aid.

Mr. Stephen O'Brien (Eddisbury): As the Chancellor well knows, I greatly sympathise with his efforts on the HIPC initiative. Given the Prime Minister's humiliating failure, however, even to know of in advance—let alone to prevent—the French and Germans stitching up a cosy deal between themselves on the common agricultural policy, the right hon. Gentleman will surely agree that that self-serving deal has done, and for years to come will do, much more damage to the economies of the developing world than anything that he might do to relieve poor countries' debt under the initiative. How happy is he that the Prime Minister has not taken any action to remedy the situation when one of his Treasury officials has said that every cow in the EU receives over $2 a day from Brussels, while a fifth of the world's population lives on only a dollar a day?

Mr. Brown: Those figures have been put out by me and by other people in the past year. We have to get action on the common agricultural policy. At the summit, a ceiling was agreed on the amount of money available for agriculture. Contrary to the wishes of some countries, what was left open was that further progress would be made at Doha and in the mid-term review of agricultural policy. I should have thought that the Conservative party would have supported the Prime Minister's efforts in that respect. These matters are open for Doha. We now need all parties to combine to make a success of Doha and persuade other countries that we must curb agricultural protectionism.

Ms Julia Drown (South Swindon): What are the Government doing to put pressure on non-participating countries to get involved in the HIPC process—

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countries such as Romania, Iran and Libya? Are the Government offering support to the HIPCs that face legal challenges from those who are not participating in the HIPC process?

Mr. Brown: On the legal issue, we are looking into that matter. We had a list of the 37 countries, I think, that would qualify for HIPC debt relief. I have named the countries that have already benefited. Equally, those that are in conflict cannot benefit while they are in conflict. When countries are coming out of conflict, we have measures to enable them to get debt relief quickly if they pursue the necessary policies and if we can be sure that the money is going to poverty reduction. The three remaining countries, which do not include those on the list that my hon. Friend mentioned, are now part of the HIPC process and should be able to get debt relief readily and quite quickly.

As for adding others to the list, I do not think that that is the way forward; it is a more comprehensive solution to what levels of development aid we can get. That requires us to have policies that link improvements in access to trade, improvements in investment in the poorest countries, an end to the agricultural protectionism that is doing so much damage, and far more overseas aid. That is the way to deal with the problems of the countries that my hon. Friend mentioned.

Manufacturing Output

8. Mr. Archy Kirkwood (Roxburgh and Berwickshire): What assessment he has made of the change in output of manufacturing industry since January 2001; and if he will make a statement. [78330]

The Chief Secretary to the Treasury (Mr. Paul Boateng): The contraction in United Kingdom manufacturing output, which began last year, was due to the sharpest slowdown in G7 industrial activity since 1975, but UK economic fundamentals remain sound and our macroeconomic framework leaves us well placed to respond to those challenges. The Government will publish an updated assessment of prospects for manufacturing in the forthcoming pre-Budget report.

Mr. Kirkwood: Does the Minister accept that whatever success the Government may have achieved in other parts of the economy, the deep and abiding recession in manufacturing is a matter of continuing concern? Does he also accept that in the past four years, an estimated 500,000 jobs have been lost across the United Kingdom? In my constituency in the Scottish borders, the number of people employed in manufacturing has fallen by 23 per cent. since 1995. Would it not be right for the Treasury team to engage in an onslaught on exchange rate policy rather than on the unemployed, to ensure that there are some manufacturing vacancies in prosperous businesses for job seekers in the future?

Mr. Boateng: There has undoubtedly been a decline in manufacturing across the G7. We are seeking to ensure that Scotland benefits not only from the macro-economic measures that we have taken, but from micro-economic measures such as the improvements that we

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have made in the climate for research and development, and the steps that have been taken with the Scottish Executive to promote enterprise and manufacturing in Scotland. In 2001–02, that led to 61 new inward investment projects being created in Scotland—the equivalent of more than 6,000 new jobs. We intend to continue to work with the Scottish Executive to that end. That is the best hope for the hon. Gentleman's constituents, and for the people of Scotland and the United Kingdom generally.

Ross Cranston (Dudley, North): Manufacturing has taken a knock in the west midlands as well as in Scotland. However, does my right hon. Friend agree that short-term fixes such as fiddling with the exchange rate are not the way to deal with this? The Government have addressed the long-term approach to productivity by improving research and development as well as average skill levels.

Mr. Boateng: Low inflation, low interest rates and good, solid macro-economic foundations are, as my hon. and learned Friend accepts, the best hope for British industry. However, the important steps that we are taking, not least in relation to research and development and to science and technology, stand in marked contrast to the successive failures of Conservative Members over the years in their stewardship of the economy.

Matthew Taylor (Truro and St. Austell): Does the Chief Secretary accept that manufacturing employment has gone up in the euro zone since 1997 while plummeting by 500,000 in this country since 1997? Does the Chief Secretary think that that is simply down to bad British business or that it might relate to Government policy, which has seen exchange rates remain uncompetitive, investment at record low levels and the longest manufacturing recession since 1981? As the Monetary Policy Committee has not been able, in a two-track, two-speed economy, to cut interest rates today, what do the Government plan to do with the rest of the policy armoury to help them?

Mr. Boateng: I do not think that the hon. Gentleman's figures will stand up in Germany or bring much comfort there. Comparing our performance with that of the rest of the G7 shows that we have the highest employment rates and the lowest unemployment rates. That is a direct result of the policy of this Government and of my right hon. Friend the Chancellor of the Exchequer.

Mr. Peter Pike (Burnley): Does my right hon. Friend agree that aerospace is a crucial, high-skill and high-value industry to Lancashire, the north-west and the country as a whole? It has been hit particularly hard since 11 September last year. Will my right hon. Friend stress to the industry that the Government will give the maximum support possible to encourage research and development and training? They are crucial and, at a time when the industry is being squeezed, they should not be squeezed. In that way, we will ensure the future of the industry to the benefit of the country.

Mr. Boateng: My hon. Friend's interest in the aerospace and high-tech industries in his constituency

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and throughout the north-west is well known. We meet regularly with the aerospace industry. Recently, I visited the north-west and spoke with the vice-chancellors of the three major universities there. They are all working in close contact with the industry and the regional development agency. They are benefiting from our proposals not only on science and technology but on the additional funding for the RDA and the important bedrock that we have put in place for long-term research and development, particularly in large companies, and they will continue to benefit.

Bob Spink (Castle Point): Is the Chief Secretary aware of the importance of the construction products industry, which is a full 20 per cent. of the total British manufacturing sector? Will he ensure that the Government deliver their promises in the public sector by building the schools, hospitals and road infrastructure that they promised in their public spending review and are way short on delivering, so that the construction products industry can benefit?

Mr. Boateng: I take that as a request from the hon. Gentleman for yet more investment in the public sector, but that rings pretty hollow given the Conservatives' record. They failed to invest in our infrastructure and in our schools and hospitals. While they are talking about it, this Government are doing it.

Mr. Bill O'Brien (Normanton): Does my right hon. Friend agree that the large manufacturing losses in the Yorkshire region occurred because the mining machinery industry there has declined considerably? Will he favourably consider help for the mining industry to maintain its current output, which in turn will help to sustain the manufacture of mining equipment and machinery in the Yorkshire area, thereby saving jobs? Will he also accept my appreciation for the work that he and my right hon. Friend the Chancellor have done to help manufacturing in the Yorkshire region?

Mr. Boateng: I am grateful to my hon. Friend. I know that he takes a keen interest not only in mining but in manufacturing, research, development, science and technology throughout his region. Our best hope for maintaining and developing the manufacturing base of his region lies in the encouragement of IT and innovation. That is the Government's commitment, and it will endure.

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