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Data taken from these authorities show that the number of in-patient and day-case episodes for the seven health authorities was 19,345. I am afraid that the comparable data on out-patients are not collected. The funds for AIDS treatment and care are allocated to health authorities on the basis of AIDS case reports made to the Public Health Laboratory Service. The total amount allocated to the seven inner-London health authorities in 1997-98 for AIDS treatment and care is £132 million. As it will take some minutes to repeat the detailed information on each of the seven health authorities, I have already written to the noble Baroness with the information for each of those authorities in inner London. A copy of that letter will be placed in the Library.
Baroness Gardner of Parkes: My Lords, I thank the Minister for her reply and for the detailed report she sent me. Unfortunately, it is not current because the figures are a little behind time. Even the report that the noble Baroness has sent shows a great discrepancy between the funding and the number of patients treated within each district health authority.
I declare an interest as a trust chairman. Has the Minister seen the recent report entitled Meeting the Cost of Combination Therapy, which makes clear that the cost per patient of combination therapy varies widely, ranging from £7,000 per patient to £5,500 per patient between major treatment centres in London? In view of the fact that HIV/AIDS patients can choose to be treated
Baroness Jay of Paddington: My Lords, I thank the noble Baroness for her detailed and helpful commentary on the way this money is distributed. She will be aware that, although the figures I gave were for 1995-96--unfortunately, the current figures are not yet available--there was a rise of 7 per cent. in payments to all inner-London health authorities for combination therapy for 1997-98. There appear to be discrepancies in these costs between the different authorities. I believe that those questions relate to different clinical practices, but they are being looked at by both the health authorities concerned and by the London health regions. We shall consider whether patients should have their charges based on their district of residence rather than where they accept treatment. That will raise questions about confidentiality and open access to the service, which is one of the reasons why our AIDS services have been so successful.
Earl Baldwin of Bewdley: My Lords, given the noble Baroness's Answer to my Question on 19th June to the effect that HIV/AIDS patients are believed to be doing very well on complementary medicine, can she say what funding has been made available in this area?
Baroness Jay of Paddington: My Lords, no specific funding is made available for complementary medicine. I hope I reassured the noble Earl on the earlier Question that he asked that several of the health authorities are making complementary medicine available to their patients who have HIV and AIDS. In addition, there are a number of voluntary organisations--for example, the London Lighthouse--which offer complementary therapies to the people who come to them and which are funded under Section 64 grants from the Department of Health.
Baroness Gardner of Parkes: My Lords, I refer to the reply which the noble Earl received on 19th June. I believe that on that occasion the noble Baroness said that complementary medicine combined with other combination therapies was the practice that she supported on that day. I do not believe that it was 100 per cent. complementary medicine only. Can she confirm that and also my point about looking retrospectively at the balance of money in relation to patients treated while retaining their anonymity?
Baroness Jay of Paddington: My Lords, I can confirm that I still support the position that I took in response the Question from the noble Earl. I believe that on that occasion the noble Baroness and I were at one in believing that a combination of complementary therapies and what may be described as more
The Earl of Clanwilliam: My Lords, will the Minister accept that there may be some controversy over the relationship between HIV and AIDS? Will she tell the House whether the HIV virus has been isolated and, if so, what is the report of the Medical Research Council to which we can refer to find that information? No doubt the noble Baroness will write to me if she does not have the information to hand.
Baroness Jay of Paddington: My Lords, I am not a micro-biologist or scientifically qualified in this field. My understanding is that the HIV virus was isolated some 12 to 15 years ago. Personally, I have never accepted the theory that the HIV virus was not connected with HIV infection and AIDS, but, as I say, I speak as a non-scientist.
Baroness Jay of Paddington: My Lords, that is certainly something worth looking at. But, as I said in response to the noble Baroness, Lady Gardner of Parkes, money is not directly given to particular centres. However, we hope that funding allocated to particular inner-London health authorities will be picked up by those centres which are clustered in those inner-London authorities.
Lord Carter: My Lords, at a convenient moment after 4.30 p.m., my noble friend the Leader of the House will, with the leave of the House, repeat a Statement that is to be made in another place on the NATO Summit.
Lord Archer of Sandwell: My Lords, I beg to introduce a Bill to rename industrial tribunals and amend the law relating to those tribunals; to amend the law relating to dismissal procedures agreements and other alternative methods of resolving disputes about employment rights; to provide for the adjustment of awards of compensation for unfair dismissal in cases where no use is made of internal
The Lord Bishop of Oxford rose to call attention to Jubilee 2000 which seeks to remit the backlog of unpayable debt of the poorest countries by the year 2000, with particular reference to the economic development of sub-Saharan Africa; and to move for Papers.
The right reverend Prelate said: My Lords, third world debt is an issue of crucial importance and I am grateful to the House for allowing time to debate it. I much look forward to hearing from the good number of distinguished noble Lords who have put down their names to speak, especially the noble Baroness, Lady Lestor of Eccles, who is to make her maiden speech.
The wording of the Motion refers to one of the great insights of the Bible. In ancient Israel, according to the law of Moses, every seventh year was celebrated as a sabbatical year during which the earth was left fallow and slaves were set free. The law also provided for the cancellation of all debts. What was true for the sabbatical year was true also for the jubilee year which fell every
One of the most significant consequences of the jubilee was that every Israelite regained possession of his own ancestral land if he happened to have sold it or lost it by falling into slavery. He could never be completely deprived of the land because it belonged to God. In short, the jubilee was meant to restore the original order of creation in which the goods of the earth, which belong ultimately to God, were shared fairly between all human beings. The jubilee year was meant to right the injustices which might have arisen in the previous 50 years, restoring equality and in particular supporting the weak and those who had lost out. It was probably this to which Jesus referred in his famous sermon in the synagogue at Nazareth at the beginning of his ministry, recorded in the fourth chapter of St. Luke's Gospel.
His Holiness the Pope, in his important encyclical Tertio Millennio Adveniente, called for the millennium to be associated with this biblical concept of "jubilee" and now jubilee remission of debt for the poorest countries in the world is the major theme of the millennium for all the Christian churches and aid agencies.
The urgency of the matter was brought home to me in 1987 when I was meeting in Singapore with the Anglican Peace and Justice Network. At the end of the consultation we discussed when we might meet again. The representatives of the more advanced nations, who had quite enough meetings, were looking for the next meeting three or four years ahead. At that point a Brazilian bishop friend of mine literally exploded in wrath. He knew in his own experience that people, particularly children, were suffering and dying daily because of the enormous debt repayments that his country and others were having to make at that time. He knew it was literally a matter of life and death. As William Blake put it:
All of us here begin with the assumption that under normal circumstances debts should be repaid. Equally, we would not be taking part in this discussion unless we knew that the circumstances under which third world debt was built up were highly abnormal. As a result of huge pressure to lend the surpluses built up by oil revenues, the massive corruption of rulers like Mobutu, with money often going on prestigious but inappropriate projects, huge debts were built up while the money very rarely benefited the poor. Now, as a result of structural readjustment programmes resulting in severe cuts in health and education programmes in order that the economy can be brought into line and the debts serviced, it is the poor who continue to suffer.
The presumption is that under normal circumstances debts should be paid. But all civilized societies recognise that businesses go bankrupt. The limited liability company was a way of ensuring that children were not starved in order that debts should be paid. It imposed a barrier between debt incurred through lack of success in an economic venture and the daily lives of people caught up in such failure. The discharging of bankrupts does the same. In the first two months of 1992 alone, for example, 280,000 personal debtors in the United Kingdom applied to be made bankrupt. The point is that although the process of being recognised as bankrupt is certainly painful, it is also a release whereby debts are written off within a fairly short length of time and a new unencumbered life becomes possible. Such mechanisms are an essential part of civilised society as we know it. It is the complete failure of the world economic system to put in place comparable mechanisms at the international level which has brought about the present crisis and terrible suffering.
Rescheduling debt is a perfectly proper mechanism within advanced societies; for example, the massive debt of Eurotunnel can be contained and renegotiated because its existence in no way affects the bread and butter being fed to the children of its employees. On the contrary, it is actually protecting them. But rescheduling the debt of a desperately poor country merely enhances the long-term burden of people who remain unlikely to be able to pay it in the future, in a still larger form, any more than they can at present. As Julius Nyerere asked,
Sadly, they are starving to do just that. Between 1990 and 1993, according to the World Bank, the countries of sub-Saharan Africa transferred 13.4 billion dollars annually to their external creditors, more than their combined spending on health and education. Nevertheless, the stock of unpaid interest in principle owed to official creditors still stood at something approaching 38 billion dollars in 1993, more than double the level in 1990. Two-thirds of the increase in debts stock is now due to the accumulation of interest on arrears. Indebtedness to the West has become the decisive factor into pushing the poor into ever greater poverty.
I emphasise that the scheme I am discussing does not belong to Cloud-cuckoo-land. It is, in fact, achievable. And there is a real sign of hope that it can be achieved. At a meeting of the World Bank and the IMF in 1996, the president of the World Bank and the managing director of the IMF proposed an initiative, the highly indebted poor country initiative (HIPC), for comprehensive treatment of all the debts of the poorest countries. There is a new spirit abroad, and that initiative is much to be welcomed.
It may help the House if I explain briefly what the scheme involves. It is made up of several stages: the first stage; the decision point; the second stage; and the completion point. During the first stage the country participating in the HIPC initiative could expect up to
A country participating in the HIPC initiative moves on to the second stage when it should receive up to 80 per cent. relief from eligible Paris Club debt service and other bilateral and private debt flow. In this period the country must establish another three-year track record of good performance in implementing structural adjustment reforms. At completion point the Paris Club provides relief of up to 80 per cent. on eligible debt stock and other creditors participate in the same way.
The HIPC initiative is an indication that where there is a political will, something can be done. Sadly, however, I have to say that in the judgment of experienced observers the initiative is failing badly and by itself will by no means be enough to lift the crushing burden on the poor.
One flaw is the use of projections of commodity prices, which are likely to be substantially over-optimistic, and this could be disastrous if commodity prices are falling. More fundamental is the fact that the financial institutions have made it clear from the beginning that only countries severely in need of debt relief, which are performing well by implementing structural adjustment policies, will be eligible to relief under the HIPC initiative. As the last Chancellor of the Exchequer put it, it would apply only to those countries that were,
There is also the problem of delaying the point at which a country is eligible for relief of its debt stock. Under the HIPC initiative structural adjustment programmes can be imposed for up to six years. It has been made clear by officials that it could extend beyond that period. But the need is dire and urgent. Delays of this kind simply mean more debts. Other points have been made. They include the fact that when conditions are laid down agreements upon them are conducted in great secrecy. Much more transparency is needed. Furthermore, negotiations surrounding the HIPC initiative are meant to be tripartite and to involve the debtor government, the IMF and the World Bank. But in some cases, for example that of Guyana, debt sustainability analysis--the key document for determining eligibility for assistance under the initiative--was prepared without the participation of the
I should like to consider just one country: Mozambique. Mozambique is defined by the World Bank as the poorest country in the world. It has just emerged from a prolonged civil war that killed 1 million people. Life expectancy is 47 years and the rate of infant mortality is 145 per 1,000 live births. In 1995 Mozambique's total debt stock was 323 dollars per capita. At the same time its GNP per capita was only 80 dollars. From 1996 to the year 2000 it is scheduled to pay in the order of 400 million US dollars in debt service every year. That is way beyond its capabilities. For example, if Mozambique had paid its debts scheduled for 1994 it would have taken over nine-tenths of its export earnings. There is, however, some good news even in Mozambique. At the previous meeting in 1996 some kind of provision was to be made for that country. In other words, if the will is there something can be done.
The figures for other countries are comparable. I will not refer to the example of Zimbabwe because the right reverend Prelate the Bishop of Leicester will say something about that. UNICEF has estimated that £49 million of debt relief for Uganda, for example, could save 398,000 children under five and 13,000 women who would have died in childbirth, in addition to providing primary education for 2 million more children. It is the poorest of the poor who are literally starving and dying because money that should be spent on health and education has to service debts for which the poor are in no way responsible.
The Churches regard this issue as comparable with the campaign to abolish slavery in the early 19th century. The injustice to be righted and the suffering to be relieved are of similar proportions. The goal set by Jubilee 2000 is achievable and the HIPC initiative much to be welcomed, but as it stands the initiative is too little and too late. There must be the political will to reduce debt at a much faster rate with conditions that do not impinge so heavily upon the poorest of the poor. My Lords, I beg to move for Papers.
Lord Callaghan of Cardiff: My Lords, the House is in the debt of the right reverend Prelate the Bishop of Oxford for bringing this important matter to our notice once again. Development aid does not have a loud political voice but in the person of the right reverend Prelate and many others in the Churches it has a resonant voice which I am sure will be heard in due course. I thank him warmly for giving us this opportunity to discuss it. I also look forward very much to the maiden speech of my former political colleague in the Foreign Office who tended my conscience every day with her approach. She has devoted much of her political life to the cause of developing countries. Indeed, in her personal life she has expressed that conviction which she holds so deeply.
I also congratulate my right honourable friend Clare Short. I believe that she is a square peg in a square hole. We all know of her human warmth and depth of human feelings. Perhaps she is on the outskirts of British politics but she has a much more important task: to rally the support of all those countries and people who share the views that she holds very deeply. I look forward to her success in her tenure of office.
Developing countries vary a great deal. It is not all gloom. It has been most noticeable how the countries of the Southern African Development Community have progressed over the past two or three years. The growth rate of that group, at least among eight of those countries, was more than 5 per cent. per annum, and that is a most encouraging factor. But because they vary a great deal it means that some are at the bottom.
The right reverend Prelate has drawn our attention particularly to the countries of the sub-Sahara. Those countries are in a situation from which I do not see how, on any examination, it will be possible for them to hoist themselves up by their bootstraps. As far as can be foreseen, they are likely to remain in their present position for a long time. But is this inevitable? No, my Lords. One has seen how much East Asia has progressed--faster than Africa as a whole and certainly to a much greater extent than sub-Saharan Africa. I believe that the same can be achieved in sub-Saharan Africa. It is a special case, but it is not a basket case.
The right reverend Prelate focused particularly on the crushing burden of debt carried by those countries, but he also recognises that remission of debt will not cure the problem. I know his opinion on this matter. It is a necessary step but much more must be done before these countries can face the world and be in the situation in which they should be. Like him, I welcome the initiative of the World Bank in the Heavily Indebted Poor Country project for which it has set aside a considerable sum of money. The right reverend Prelate has kindly explained that to us. Like him, I have reservations about it. If as I understand it Uganda is the only country that is likely to secure some benefit from it by the year 2000, it does not appear to demonstrate the degree of urgency that is necessary. I am informed that two others may qualify, Cote d'Ivoire and Togo, but even that is very small beer in comparison with what is necessary.
It is right to establish criteria, and they seem to me to be sensible criteria. To relate the level of sustainable debt to the gross national product of a country makes obvious sense; to relate it to the export level of a country makes sense, because it is absurd that so much of the export earnings of these countries should be spent on servicing their debt. That is the case in Mozambique where, if my information is correct, 33 per cent. of the total government budget is spent on servicing debt. Just think what the position would be in this country if we had to do something similar. It would be quite intolerable. As to the criteria, I question both their timescale and conditionality. It seems to me that both are too heavy.
Perhaps I may do a little name dropping. The Prime Minister sent me a copy of the Denver communique, which I of course read carefully. They spent a long time on the problem of Africa. I do not think that I have ever seen in a communique so much time spent on the problem of the developing countries. It is clear, as is said here, that the problem is that the sub-Saharan countries face unusually severe challenges.
What our leaders have done is to call upon the international financial institutions to produce reports on the progress that they are making by the annual meeting of the World Bank and the IMF. I urge the Churches to redouble their efforts in that direction to ensure that a proper review is carried out, as is suggested in other parts of the communique, to see whether the criteria are just and the timescale is appropriate. If we do that, we may well find that we can get some improvement.
Although when I read the communique I agree with it and think how splendid it is and absolutely right, having taken part in some of these things I must say that when one examines the language in detail it has a certain amount of conditionality. It is rather cloudy. We have to pin governments down on those issues before they forget what they have said. This important progress report is called for.
I want to emphasise that the communique also points out the important part played by private investment. That is indeed so. The IMF and the World Bank are no longer giants in that field. Ten years ago private investment in those countries was a half of the funds put in by the World Bank and the IMF in any one year. Now private investment is at least four, if not five, times as great as funds put in from official sources.
What is needed, as the Denver communique says, is debt relief. It calls upon bilateral countries who have debts owing to them to release them. It talks about the marginalisation that some of those countries may have to endure, and calls, above all, for growth. In the changing policies of the IMF and the World Bank over a number of years, they have now returned to the idea that growth is the way in which one can begin to relieve the poverty that undoubtedly exists, and the better it will be.
We need to have a partnership with sub-Sahara. There is a long list of what needs doing--I shall not go into it--from sound financial policies, honest governments, health research and attitudes towards women's education. The list is immense. I have hope. I am not despairing. The world's attention is being focused increasingly on the problem. There is a realisation by our leaders. What is more, there is a different frame of
I do not profess to have any special expertise which equips me to speak in this debate, other, perhaps, than a lifetime of travelling up and down Africa, and seeing at first hand the economic collapse that has affected most African countries at one time or another.
The right reverend Prelate has given us an excellent opportunity today to examine one of the several underlying causes of that collapse. I say one, but it is a very fundamental one since the availability of debt generates spending power, and it is the misuse of spending power over years, caused by the East-West rivalry which increased the pool of debt during the 1960s and 1970s which has largely brought about the problem.
The other principal contributory factors were, of course, ill-conceived and grandiose plans for modernisation--the Nkrumah palaces--military ambitions, muddleheaded economic theories, and plain bad management--by gosh management has been frightened out of Africa over the past 30 years--and endemic corruption. Even in the least corrupt countries, one or other of those factors was always present. I remember thinking--I was a fairly junior business executive at the time--when President Kaunda was persuaded to purchase 51 per cent. of the Zambian copper mines, by issuing fixed interest US dollar bonds, that tears would follow. Companies in the mining business financed by equity can raise or lower dividends as commodity prices affect profits. By contrast Zambia's copper nationalisation bonds cost the same to service when copper prices finally fell as they had cost in the heyday of the copper boom. Zambia's economy has been in a sorry state ever since, as we know.
Arms sales to Africa are another matter. The continent has at times been a dumping ground for military hardware of all types, most of it redundant, sold often at outrageous prices to countries which had no real need of it and no ability to pay. All over Africa, one comes across airports where the vines are growing over the carcases of fighters, military helicopters and transport aircraft. Virtually none of that kit ever served a desirable objective. Most of it was used for pretty undesirable objectives.
But if we turn to debt forgiveness, there is a seeming anomaly here. One school of thought I have heard recently says that we should forgive, as a starter, the military debt, but it seems a strange idea to say that
I am sure that we have to recognise that the Cold War-inspired debt burden was a one-off situation, largely of our own creation, "we", in this context, being Britain, the United States, France, the former Soviet Union and the other purveyors of arms. The borrowers, that is the politicians of those newly independent countries who accepted and squandered the debt are mostly long gone and out of office, hopefully for ever--the evil Amins and Obotes, the Nkrumahs, the benign but misguided Nyreres and Kaundas, and now even Mobutu. Many of the profligate borrower countries are now seriously attempting the painful path of convertible currencies and fiscal rectitude. We must do what we can to help them and to repair the damage for which we are greatly to blame.
There is, as I understand it, a considerable developed market in defaulted government debt. It is possible with a simple telephone call to find out the price of Angolan debt, or Mozambique debt, or Tanzanian debt. Such debt fluctuates in value on a daily basis, depending on the market's assessment of the likelihood of repayment. Ten to 15 cents in the dollar is not uncommon and, of course, the sad fact is that the more profligate the borrower the lower the value of his debt, which gives rise to an interesting anomaly. A country which wanted to buy in its own debt should appear to be a basket case so that it can quietly soak up its debt in the market. I fear that that is a strategy too subtle for most.
The most satisfactory method of reducing debt is the debt equity swop, where a country's debt is accepted by its government in exchange for the shares of businesses being privatised for agricultural and urban development land and other non-cash--and hence non-inflationary--assets owned by hitherto overcentralised and overbearing state sectors. In effect, it would be the reverse of what I referred to in Zambia a moment ago. Incidentally, I understand that quite a bit of debt-swop activity has taken place in Mozambique to privatise formerly confiscated sugar estates and so forth.
I worry that too much debt forgiveness will not encourage thrift or sound government policies. Careful debt reduction is undoubtedly helpful, but the best of all is likely to be a combination where some of the impossible overhang is forgiven and the rest is converted into foreign investment. Thus, interest payments on state debt can become dividends from sound investments, the state can get its share of profits through the tax system without in theory having any investment, and the cost of servicing foreign investment can rise and fall in line with economic performance and commodity prices. Sound management can be seen to enhance that economic performance.
All countries have debts, and debts are part of economic life. Ceaucescu had to run Romania without foreign debt. The result was that he had no debt, but he generated precious few assets either and left a very poor country when they finally got rid of him. Africa's debts undoubtedly need to be reduced to what Africa can reasonably carry, but a little continuing pain for past profligacy will help to instil discipline for the future. The cry should be reduction and conversion; conversion in the economic sense to foreign equity investment and conversion in the biblical sense, if the right reverend Prelate will forgive me, to the principles of good government.
Lord Hunt of Tanworth: My Lords, I am happy to support the Motion moved by the right reverend Prelate the Bishop of Oxford. It is also a great privilege to precede the noble Baroness, Lady Lestor of Eccles, whose maiden speech we are greatly looking forward to. I can assure her that I do not intend to keep her waiting long.
It is possible to argue about the causes and responsibility for the massive debt overhang in some of the world's poorest countries; for instance, the financing of foolish white elephant projects with no hope of any economic return and bad or even corrupt management on the part of some of the borrowing countries. On the part of the lending countries, there was anxiety in the 1970s to recycle petro-dollars at the very low interest rates then prevailing, with no thought that they were likely to rise much higher, and also to maintain the export industries of the lending countries.
If guilt there is for the present situation, I suspect that it is collective guilt of both the borrowers and the lenders. But if there is doubt about the causes, there can be no doubt about the effect in the highly indebted poor countries of the crazy merry-go-round where aid is not used for development but is received and then returned to the donors in debt service. It is debt which is not repayable. It continues to be rescheduled and aid money is used for the interest payments.
Many figures have already been given in the debate and no doubt there will be many more to illustrate the situation. The debt service in sub-Saharan Africa amounts to 6 billion dollars per annum. One-quarter of all bilateral aid goes to refinance debt payments. In countries such as Nicaragua and Zambia, debt payments absorb one dollar out of every two that could be available for development aid. Of course, all that diverts aid from poverty reduction and development.
There is of course a moral case to be made about the disparity of living standards in this world. That goes much wider and is the case for aid, fair trade, technical assistance and so forth. The question of the debt overhang is a different one. It is a snowballing situation of debt which cannot be repaid and which prevents the HIPC countries from dealing with their own problems and, incidentally, deters private investors from the developed world from coming in. In many cases the problem now is one of solvency and not just liquidity.
It was therefore a sign of great hope when last autumn the World Bank and the IMF reached agreement on a package to help the world's poorest countries in relation to their debt. It is true that some progress has since been made, but anyone who revisits what was envisaged last autumn must say that the progress has been less than what was expected or hoped for. There have been genuine technical problems, but, regrettably, there have also been signs of footdragging by certain countries, notably Germany and Japan, and I am afraid more recently by the United States.
In my view, it is therefore essential to keep up the pressure to do something about the debt overhang. As the right reverend Prelate said, it is necessary to accelerate the timetable of the HIPC initiative and to improve its terms. It is necessary also to encourage the non-Paris Club donors to match what the Paris Club countries are committed to. It is fair comment from the Cross Benches that Her Majesty's Government have a good record in these arguments. That applies to both the previous and the present Government. The Churches, the NGOs and bodies such as Jubilee 2000 can help a lot by highlighting the need for action.
In all this, however, we must be realistic. Many would like to see the cancellation of international debt. But that is totally unrealistic and, in any case, borrowing is a perfectly reasonable way of financing economic development. Others would like to link it with reform of the international monetary institutions. There is a case for that too, but it will not happen in the short term. If too much is swept into the argument and the package, it will only delay the crucial action which is necessary as regards the world's poorest countries.
The immediate need, on which progress is possible, is to deal with the debt overhang of the poorest countries in sub-Saharan Africa. That is why I particularly welcome the emphasis which the right reverend Prelate put on that in introducing his Motion. It is possible to do something about the target. The United Kingdom Government have had a good record in the argument, but the Government, the NGOs, the Churches and all of us must keep up the pressure to get something done.
Baroness Lestor of Eccles: My Lords, I, too, am delighted that the right reverend Prelate has chosen this subject today partly because it is important, partly because interest in it has grown over the years, but in particular because it enables me to make my maiden speech on a subject in which I have had a long interest. It is an interest which I hope to sustain.
In opposition, I was twice my party's spokesperson on aid and development, as we called it then--a task now so ably carried out by my right honourable friend Clare Short. My noble friend Lord Callaghan reminded me, although I did not need reminding, that more than 20 years ago, in the Foreign Office with him, I had responsibility for many of the countries we are discussing today. In fact, it was very much under his eagle eye--I have had the same feeling today actually--that I travelled extensively to see for myself, as many here have done, the poverty in many developing
One recalls the Brandt Report. There is growing interest in those matters today, particularly among the young. We must try to sustain that interest. In many instances, we are talking about the poorest countries. I have visited Mozambique, Tanzania, Zambia, Zimbabwe, Uganda and others. Some are poorer than others, but all suffer from economies which have not flourished. Indeed, in many instances, they have been strangled or at least hampered by the burden of debt in recent years.
My noble friend Lord Callaghan says quite rightly that it is not all gloom. And it is not. We should not present Africa as all gloom because much progress has been made. But the burden of debt is a rope tightening around the neck of countries which are striving to break free. It is never ending because, as we have heard, the poorest countries will not be able to meet their obligations.
Later today, my right honourable friend Clare Short will hold a party to celebrate the launch of the new Department for International Development. In her document she notes that debt is a barrier to the international development which she and so many of us want to see. When a country gets into debt, it must go to one of the financial institutions or to sources of private means which offer further loans on stiff conditions which are often known as structural adjustment programmes. In recent years, some of those programmes have been told to adopt a human face. So attempts have been made, when economies are being restructured, not to rob a country of its seed corn. Often, a country has been robbed of the very thing which the loan is given for in the first place. Unfortunately, the human face has not always been present.
If further loans are sought from a financial institution, that institution interferes in the management of the economy of the country, which undermines sovereignty. Many figures have been given today and I do not wish to add to them. But no one can be content with a situation in which, in 1996, for example, developing countries paid 1.8 billion dollars more in debt service to the IMF than they received in new loans. That is according to the World Bank. It is a tremendous figure with which to come to terms. Since 1987, the IMF has received 2.4 billion dollars more from Africa than it has given in new loans. At the beginning no one anticipated that that would happen. But it did.
Mention has been made of the highly indebted poorest countries. We were all pleased when, in 1996, the financial institutions took a big step forward by agreeing a comprehensive remit and reschedule of the debts of up to 40 countries, the really poor countries which cannot pay and are not in a position to pay. But, as we have heard, to date no country has gained relief.
Uganda will gain some relief next year. But few will be helped by the year 2000, which is what we are talking about today. It is a very worrying situation. Uganda is due to pay 200 million dollars in debt service in 1998. She will be offered 20 million dollars as relief from that burden by the initiative we are discussing. That is not enough if we hope to lift Uganda out of poverty and misery.
I believe that this debate is very timely. We have a new government, new initiatives and much more knowledge of what is taking place in relation to developing countries. There is a recognition that it is not all gloom. However, for some countries, unless debt relief takes place and unless more help is forthcoming and an appraisal is made of what is happening as regards the financial institutions, many countries and many people will continue to suffer.
Children in developing countries have the right, first, to live. Many die without ever having had the opportunity to live. They have a right to be educated so that they can be part of a new attitude and new changes. Of course, they have a right to a future. Sadly, the way in which we have dealt with some debt in the past means that they have been robbed of that. We must look again and ensure that those children are given their chance.
The Lord Bishop of Leicester: My Lords, on behalf of the whole House, I have the privilege to congratulate the noble Baroness, Lady Lestor of Eccles, on her maiden speech. Making speeches in Parliament is not, of course, a new activity for her as she held ministerial office and she has also been her party's Front Bench spokesman on several matters, including overseas development. Given that background, it is not at all surprising that we benefited this afternoon from the noble Baroness's, wise, informed and powerful speech. I thank her for it.
Life became more of a struggle in the 1980s as the country went through harder times. Father Denis and his family tightened their belts. Father Denis then reached his 65th birthday and a miracle happened. Unknown to him, the Mission Society back here in Britain had been paying National Insurance contributions for him. So, at the age of 65, he qualified for a UK pension. Indeed, from being the poorest man in town he became the richest. Why? That happened because he had a regular supply of foreign exchange. Something quite dramatic had happened to the kwacha, the local currency; it had totally collapsed. When I was there in the 1970s, £1 sterling would buy two kwacha but today £1 sterling will buy around 2,000 kwacha--a dramatic collapse.
Through his UK pension, Father Denis had a modest number of pounds to spend every month. With that exchange rate he had kwachas galore. I am sure that he is spending them on behalf of the many people in his community. However, while that collapsing exchange rate was perhaps good news for Father Denis, it was bad news for other Zambians. They do not have pounds or dollars to spend, but they need them to buy vital spare parts for their machinery, fuel for their transport, specialised raw materials, or medicine for their children. Without the latter, business and the country fall apart.
It is not just inflation that has crippled a country such as Zambia; so has its debt burden. Zambia now owes £4.5 billion in unpaid debt--that is, £565 per head for every man, woman and child and more than three times what a person can earn in Zambia in a year. Being realistic, there is no way that that debt could ever be repaid. Out of every £10 that Zambia receives in aid, £7 goes in trying to repay the debt burden. They are walking quite slowly up an escalator that is racing down and taking them down with it.
Of course, Zambia is not alone in its predicament; indeed, Africa as a whole spends four times as much on debt repayments as it does on healthcare. For every £1 of aid given by the developed countries, Africa pays £3 in debt servicing. Meanwhile, even though African nations have achieved a 50 per cent. increase in the volume of their exports since 1985, the cumulative loss of the purchasing power from those exports, due to price changes on global markets, amounts to over £50 billion. So the end result is individual despair and social breakdown. A country in such a state has really had only one choice: to turn to the IMF and the World Bank and ask for help to service their debts.
Those organisations will help, provided that the countries take their structural economic medicine, which means forcing open local markets to wide competition, massively devaluing local currency--as happened in Zambia--raising local interest rates, privatising state assets and cutting government spending on health,
Your Lordships will have heard of a medical report produced after a piece of experimental surgery which read that the operation had been a great success but that, unfortunately, the patient had died. Sadly, it seems that that might be the prognosis for countries such as Zambia taking the IMF/World Bank medicine. Therefore, it might just be helpful to try the complementary medicine that Jubilee 2000 suggests; namely, the creation of debt reduction packages and, in particular, the remission of the unpayable backlog of the inert debt of the poorest countries.
Commercial creditors in nations such as ours have generally already made provision against the non-payment of debts--debts which they partly brought upon themselves by over-lending in the 1980s. Indeed, some have already received tax relief on those provisions for bad debts. Then also, as part of the debt reduction packages, there will need to be hard-headed arrangements to prevent future over-borrowing along the lines described by the right reverend Prelate the Bishop of Oxford. No one pretends that this will be easy, but it can be done and it could be the medicine which might keep us all alive. Certainly the Bible says that it is rather good.
Lord Judd: My Lords, the right reverend Prelate the Bishop of Oxford has done the House a service by providing us with the opportunity to debate this vital issue. His courage and leadership in bringing his Christian conviction to bear on the humanitarian challenges of our time is invariably challenging. I must add a word of appreciation for the outstanding maiden speech of my noble friend Lady Lestor. I can say with all honesty, both in and out of Westminster, that I have had no closer personal or political friend throughout my life than my noble friend. It has always been challenging to witness not just her intellectual and political commitment but also the principles of integrity and consistency, mentioned by my noble friend Lord Callaghan, which she has made central, without seeking any publicity, to her personal life. In our family, the fact that my noble friend is godmother to my youngest daughter is something that we have all come to appreciate and love.
When I completed my service as director of Oxfam, I was angry about the feebleness of political leadership in the world. It seemed to me to be utter madness that the poorest countries should be compelled to make debt servicing their highest priority--often at the cost of environmental responsibility--rather than building sustainable economic and social systems which would obviate their need to seek loans in the future. Worse, it seemed to me criminal that the poorest people of the world, who suffer appallingly inadequate health, education, housing, sanitation and water provision,
A particularly depressing paradox was that those very multilateral financial institutions which had been set up at the end of the Second World War as part of a strategy to ensure a better world should themselves be grinding the poor of the world by their insensitive and counter-productive debt policies. That is why the advocacy of organisations like Christian Aid, the Catholic Fund for Overseas Development and Oxfam is so essential. Speaking with the authority of their experience in frontline engagement they seek to cure the illness, not just to ease the pain, and to right the wrong, not just to hide some of the most obscene and unpalatable evidence of what has happened, thereby becoming accomplices to perpetuating the injustice.
Debt of the kind we are debating today is not just a matter of macro-economic policy: it is central to immediate acute human suffering and a direct cause of malnutrition, sickness, infant mortality, short life expectancy, and of mere miserable existence rather than living fully. It is therefore refreshing to hear our new Secretary of State for International Development, Clare Short, with all her status as a Cabinet Minister, repeatedly state that her department is about the elimination of poverty. A key chapter in her forthcoming White Paper must be one establishing how the Government propose to deal with debt, just as another must deal with the closely interlinked issue of environment. In writing the debt chapter she will be able to draw on the groundwork done by Kenneth Clarke as Chancellor of the Exchequer in the previous government who consistently recognised the significance of debt in the fight for a more decent world and repeatedly tried to set the pace in international deliberations. It is clear that on this issue there is no slackening of commitment by Gordon Brown. All who have had the opportunity to talk about debt with our new Chancellor bear witness to his self-evident moral and intellectual concern. I attempt the current style: Clare and Gordon; in Cabinet; a strong combination; Prime Minister supportive; results.
The facts requiring urgent action speak for themselves. In Mozambique, where one in four children dies before the age of five, debt servicing in 1996 absorbed double the amount allocated to current expenditure on health and education. In Zambia, with infant mortality rates rising, more than four times as much is spent on debt servicing as on health. In Ethiopia, where more than 100,000 children die annually from easily preventable diseases and fewer than 40 per cent. of the population has access to the most basic health facilities, debt repayments are again four times as great as public spending on health. In Niger, at the bottom of the human development index, life expectancy averages only 47 years--we should
Against that background it was encouraging when last September at the annual IMF/World Bank meeting agreement was reached on the highly indebted poor countries initiative. Many applauded when the Bank's president, Jim Wolfensohn, proclaimed the initiative to be,
It was welcomed as introducing a new type of so-called "exit strategy" based on reducing debt stocks to sustainable levels through a one-off operation. As my noble friend Lord Callaghan indicated, many had reservations that the time-frame for implementation was unnecessarily long; that the eligibility criteria were unduly stringent; and that the finance provisions were at best unclear and at worst disappointingly inadequate. However, there was a widespread disposition to see the developments as highly encouraging.
However, as the right reverend Prelate the Bishop of Oxford said, nine months later the mood has changed. Sadly--because I believe him to be genuine--Wolfensohn's words begin to look hollow. He appears to have difficulty in driving his commitment forward. The indications are that, shamefully and nonsensically, his board does not see debt relief as a priority issue. The initiative seems to be being implemented more with a view to minimising the costs to creditors than to maximising the benefits for debtors. Poverty reduction remains of marginal concern. Some of the most powerful in the Group of Seven, Germany, Japan and Italy, of course, opposed the initiative from the outset. Now, lamentably, as the noble Lord, Lord Hunt, pointed out, they have been joined by the United States, previously a strong supporter, using its influence on the boards of the IMF and the World Bank to delay implementation and minimise the level of debt relief provided.
Uganda, usually recognised as exemplary in its record of economic reform, has seen its debt relief delayed from 1997 to 1998 at what the Ugandan Government calculate as a cost of 193 million US dollars over the next year; in other words, six times the national health budget. In Bolivia, the combination of a delayed completion date for debt reduction and the IMF/World Bank's decision to set debt sustainability thresholds at unrealistically high levels will cost the country around 241 million US dollars. For creditors, that is peanuts; for Bolivia the sum is twice the national health budget and 17 times the projected spending on rural clean water and sanitation. At this rate there is little prospect of the
The initiative so warmly welcomed only last autumn may already have lost credibility with governments in the south. Countries which are expected to undertake painful economic reforms need incentives for good behaviour rather than more obstacles to climb. It is therefore essential that the Department for International Development's White Paper, supported by the Chancellor, should be designed to regenerate the highly indebted poor countries initiative and to give it real momentum. I hope it identifies new mechanisms, including some sale of IMF gold stocks, to finance earlier and more far-reaching debt reduction for eligible countries.
The White Paper should above all spell out the relationship between debt relief and poverty reduction. Debt relief is not an end in itself. Indeed, financial discipline is critically important to sustain economic performance, and inadvertently to undermine it would not be helpful. What debt relief should be about is a part in a coherent strategy for poverty elimination. Debt relief should be negotiated in such a way that it always has a direct impact on poverty. Uganda has already indicated a willingness to enter into an agreement with her creditors ensuring that debt relief is translated into investment in the country's action plan for poverty eradication. Instead of putting all the emphasis in debt relief on strict technical compliance with IMF priorities alone, equal significance should be given to convincing commitment to measurable targets for poverty reduction. Governments seeking debt relief should have to demonstrate beyond doubt how they will use the released resources for poverty reduction and should be required to enter into binding agreements to give this effect.
Whatever the pros and cons of all the detail in what Jubilee 2000 argues, those involved deserve unstinted admiration for having helped us so well to highlight such a crucial issue. Christian responsibility requires action; social justice demands action; and future world stability will be undermined without action. The Prime Minister favours action. Now all that we require from government is action. There is every reason to be confident that, with the present combination of Ministers in Cabinet, we shall get it.
Lord Prys-Davies: My Lords, the right reverend Prelate the Bishop of Oxford has done a great service to the House, to the country and to a billion people living in the poorest countries in the world in opening a debate which focuses on the problem which we have been discussing for the past hour and a quarter.
For my part I am also grateful to the charity Christian Aid which represents the British and Irish Churches not only for the background information which it has sent about the problem but also for its campaign in support of the initiative which is embodied in the Motion before
The right reverend Prelate the Bishop of Oxford has spoken in clear terms about the moral issue; namely, the injustice of the poorest countries in the world, particularly in the sub-Saharan area, being required to pay huge interest and capital repayments to wealthy, mainly G7 countries. He then called for urgent and radical steps speedily to remove that injustice. I use the word "radical" because in his speech there was a radical suggestion to which I shall come.
It has been said, rightly, that the prevailing burden of debt may have been the fault of uninformed politicians in the newly independent countries, doing their very best, who received the loans, or it may be due to the corruption of local presidents, Ministers and dictators who borrowed more than was wanted, or squandered what they had borrowed on the purchase of arms or other prestige projects which were not needed by their people. But we cannot deny that a measure of responsibility rests on the terms on which the loans were made by western countries and the international agencies, and on the advice which the western countries and the international agencies offered to the new and uninformed governments of those countries as to whether or not those loans were appropriate to the needs of their countries.
By today a vicious circle has been created. Contractual repayments of interest and capital mean that less money is available to diminish the poverty of the people who had no say in those agreements. Less money is available to spend on health, education and industrial investment which are so badly needed. That in turn makes it more difficult to lay the foundation for a better future. That is the vicious circle that I see.
It is a sad commentary that this is not in a sense a new problem. I recall listening in your Lordships' House in the early 1980s to the late Lord Seebohm drawing our attention to the debt crisis affecting poor countries of the world. But it is a problem which has become much bigger, affecting more countries. In April last when my noble friend Lord Judd, who is by my side and who has borne some of the heat and burden of relief work, asked what progress had been made in reducing the multilateral debt burden of developing countries, the then Minister, the noble Lord, Lord Mackay of Ardbrecknish, said that the Government agreed that there was a problem to be addressed. I have no doubt that that was so. The Minister then said that the IMF and the World Bank would be putting forward proposals at the April 1996 meeting of the Development Commission. That was 15 months ago. It is a matter of concern--it has been expressed on all sides of the House today--that the HIPC initiative which emerged, welcome as it was, is inadequate. It is inadequate for the detailed reasons which the right reverend Prelate the Bishop of Oxford gave to the House.
Perhaps I may draw the attention of the House to a few statistics about Uganda. In Uganda one in five children dies before the age of five from preventable diseases. That means that 398,000 children under five die per annum. Thirteen thousand women die in childbirth every year. I wonder how many centuries we have to go back in the history of Britain before we have comparable figures. Those statistics reflect a disturbing state of affairs. I believe that that state of affairs carries dangerous risks for the countries. Moreover, that an undernourished child under five with an undernourished mother should die is an affront to human dignity.
Uganda has received a promise of HIPC minimal relief next year. It is welcome of course, but it means no more than that instead of repaying 200 million dollars in 1998 she will repay 180 million dollars. The evidence from Mozambique, Tanzania and Ethiopia is broadly similar to the sombre experience of Uganda.
What is now to be done? The Motion indicates the components of a solution along the Marshall Aid lines of 50 years ago. That, at least, is how I understand the Motion. As my noble friend Lord Callaghan told the House, the remission of the debt would not bring immediate prosperity. But it can probably do more than anything else to help destitute nations build their economies. And if relief is not to hand, we fear that poverty will grow upon itself with consequences which we cannot foresee.
What is new and novel in the speech of the right reverend Prelate the Bishop of Oxford is that there should be in international law a procedure, a mechanism, comparable to or based on the principle of bankruptcy law in the domestic setting which has proved to be so workable in coping with debt. That is new. As a solicitor in the valleys of South Wales, I know that bankruptcy law makes it possible for the individual bankrupt to draw a line below his debts, and, as the right reverend Prelate the Bishop of Oxford said, to begin a new, unencumbered life. I found that concept particularly attractive.
The statistics from Uganda in effect signify that many of the countries of sub-Saharan Africa saddled with huge debts of unpaid interest on principals are bankrupt, but international law, unlike domestic law, provides no procedure to enable a debtor country to draw a line below its debts. Neither is there a receiver in international law who can look objectively at the debtor's position. The IMF is both a creditor and a receiver; and I suggest that that cannot be right.
The direction must be towards eliminating poverty of the poorest countries rather than alleviating their poverty--a distinction of which I believe the Secretary of State, Clare Short, is fully aware. If the Government desire help from the public to enable them to move forward in the desired direction, I hope that this debate, with the encouraging detailed comments of my noble friend Lord Callaghan, will have been a contribution. I hope that my noble friend on the Front Bench has been instructed by his right honourable friend Clare Short to be sympathetic to this Motion.
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