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Lord Peston: My Lords, I must remind the noble Lord that the point of the pilot schemes is to introduce competition. We are not interested in the pilot schemes per se; the whole point is to make the Act work. Therefore the central question is whether the Act is still on track; the pilot schemes merely lead to that.

Lord Chesham: My Lords, that is the very point of a pilot scheme. We determine by a pilot scheme that everything is absolutely right and then we continue with that in the rest of the country. That is why there is a pilot scheme in existence.

Lord Geddes: My Lords, I may be getting extremely confused but is my noble friend aware that a year ago I was offered competitive quotes for domestic gas supplies? I live in mid southern England. Was that a one-off shot or can my noble friend help me in this respect?

Lord Chesham: My Lords, in some areas, including that mentioned by my noble friend, there is already competition in gas supplies. There are two methods. In the first method, British Gas offers a contract. The second method involves treating consumers as small businesses. This is very competitive at the moment. I have information of an instance where someone was quoted a 59 per cent. reduction in the gas bill.

Lord Haskel: My Lords, is the Minister satisfied that the price reductions which are being offered are sustainable in the long term, or are they simply a method of attracting customers away from British Gas?

Lord Chesham: My Lords, this is a matter of competition. If companies offer a price now and change it shortly afterwards, the consumer will be extremely upset and will go to a gas producer which keeps its prices at the level it quotes.

Overseas Aid

3.20 p.m.

Lord Judd asked Her Majesty's Government:

The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, the UK aid programme will remain the fifth largest in the world. Its overriding

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priority will continue to be poverty reduction through sustainable development, focused on the poorest countries in Africa and Asia.

Lord Judd: My Lords, does the noble Baroness recall that only a year ago she gave an undertaking in this House that by 1997-98 the aid programme would have increased by £146 million? What has happened to that undertaking, and why? The noble Baroness says that ours is the fifth largest aid programme in the world. Does she not agree that of greater significance is the fact that in terms of our aid programme as a proportion of our national wealth--our GNP--we stand 13th rather than fifth in the international league? Does she agree that that is a sorry position for one of only five permanent members of the Security Council?

Baroness Chalker of Wallasey: My Lords, when we speak about forward plans the only year that is probably safe is the following year. The fifth largest aid programme in the world will be £2,150 million next year. That is extremely good value for money. One of the reasons for a reduction in the figure next year is that we have lower forecasts for the draw-down by multilateral agencies, namely the regional banks and the European development funds, of funds already pledged.

We are the third largest source of private capital to the developing world. Private capital is playing an increasingly important role. We give 1·5 per cent. of our GNP, which is 50 per cent. above the UN target for private capital. Development assistance is not only about giving aid; it is about developing the private sector. We stand at 0·31 per cent. compared with the average of the DAC countries of 0.29 per cent., so we are above the average.

Lord Judd: My Lords, does the noble Baroness agree that all the changes and reductions in the aid programme are related to the issue of cutting taxation? Does she also agree that however taxation is cut there is no case ever for cutting it at the expense of the poorest people in the world?

Baroness Chalker of Wallasey: My Lords, the answer to the noble Lord's first question is no. The answer to his second question is that we have to have a steadily growing economy in order to be in a position to give development assistance overseas. It is not the absolute amount of money which is important but what we and the multilateral agencies do with that money. We are seeking improvements all the time.

Lord Thomson of Monifieth: My Lords, is the Minister not aware that whatever gloss she puts on the figures the fact is that next year, in real terms, there will be a 6·7 per cent. cut in our aid to the poorest countries in the world? Is that not a pretty mean proposal from the Government?

Baroness Chalker of Wallasey: My Lords, it is time for reality. I said in answer to the first question from the noble Lord, Lord Judd, that it is not only a matter of development assistance but also a question of a substantial transfer of resources concentrated on the poorest countries. By common consent, the United Kingdom makes one of the most significant

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contributions to the alleviation of poverty in the developing world. If the Chancellor of the Exchequer decides, as he did in a very wise Budget on Tuesday, that some sacrifice has to be made, then in the short term we make that sacrifice in order that in the long term the economy will be much more sound. Then we shall be able to give more.

Lord Ashley of Stoke: My Lords, obviously the aim of our aid programme is to help the poorest people in the poorest countries. However, the noble Baroness calls for reality. If that is the case, does she recall Douglas Hurd, when he was Foreign Secretary, saying in February this year that in the longer term aid is in our self interest? Does she agree with that statement? If she does, how does she square that with this squalid cut in the Budget?

Baroness Chalker of Wallasey: My Lords, no one in your Lordships' House will be surprised to know that I agree with my right honourable friend in another place, Douglas Hurd. I have said similar things many times. The critical point is that we, and other donors, must channel our resources and devote them to the poorest countries. We have a better record of achieving that than almost any other donor country in the world.

Lord Eden of Winton: My Lords, if British taxpayers' money is still going in the form of aid to countries where corruption and the official abuse of minorities is widespread, will she review that policy?

Baroness Chalker of Wallasey: Yes, my Lords. I can tell my noble friend that not only have we put down very firm markers on good governance but that we have also given, and will be giving, notice to those countries which are now doing well economically as a result of having put their economies in order that they will graduate out of development aid.

Baroness Robson of Kiddington: My Lords, the Minister says that where we put our money is the most important issue. Will she confirm that the best way to help the developing world is by maintaining, and not reducing, the amount of money we give in aid for family planning and the health of mother and child? Can she assure the House that that sum will not be reduced next year?

Baroness Chalker of Wallasey: My Lords, I am grateful to the noble Baroness. At the Cairo conference I thought that I would be able to spend £100 million on family planning. I can now tell her that for the same period we have managed to allocate to family planning and mother and child health--but mainly to family planning--150 per cent. of what I indicated then.

Lord Boardman: My Lords, can my noble friend say whether the Opposition have given her any indication of how many additional hundreds of millions of pounds they wish to devote to this heading?

Baroness Chalker of Wallasey: My Lords, my noble friend asks a very apt question. I have asked both

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privately and publicly on a few occasions. It seems to be coming out of thin air, like most of the spending plans of the party opposite.

Lord Stoddart of Swindon: My Lords, does the noble Baroness believe that it is morally defensible that this country's taxpayers should spend £500 million more on subsidising countries like Greece, Portugal, Spain, Belgium and the Irish Republic, whose income per capita is fairly high, than on under-developed countries where the income per capita is pitifully low?

Baroness Chalker of Wallasey: My Lords, the noble Lord knows full well that the two issues do not compare. We stand by our treaty obligations on EC matters. If it were not for the increasing take of the development assistance budget to the EC we might be able to do even better. However, I am glad to say that those estimates have been revised downwards. That is why we can take some of the pain that has to be taken this year.

Baroness David: My Lords, what is the effect of the public spending round on Britain's bilateral aid programme and, in particular, has the Minister yet come to any decision on how to replace the education library book scheme with, as she said, a more cost-effective scheme meeting ODA aid objectives?

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