Clause 6 - Financial assistance
International Development Bill
2:45 pm
Mrs Cheryl Gillan (Chesham and Amersham, Conservative)
I beg to move amendment No. 13, in page 3, line 2, at end insert—
`(2A) The value of loans made available to a country by way of financial assistance shall not, taking one year with another, amount to more than 10 per cent. of development assistance to that country.'.
It is apt that I rise to propose amendment No. 13, which stands also in the name of my hon. Friend the Member for South-West Devon (Mr. Streeter). It will probably please the Committee to learn that I can make my points about the amendment fairly swiftly.
The amendment would prevent countries from running up substantial debts to the UK Exchequer by limiting the proportion of development assistance that is provided to them in the form of loans. In proposing the amendment, we hope to ensure that development aid is provided mostly in the form of grants. We are concerned that a new drive to make loans to developing countries could lead to their getting into debt again, so we want to establish some sort of device to ensure that the Department of International Development is limited in the proportion of grant aid and loans that it is able to give to any one country. I am sure that the Minister would regard that as a sensible approach.
When in government, the Conservatives cancelled £1.2 billion of loans owed to the then Overseas Development Administration by developing countries. That helped to relieve their burden of debt. Conservative Members are genuinely concerned that a new push to provide loans to projects could lead to the debt burden becoming an issue again. The progress made under Governments of both parties would be reversed, because there will no limitation on the actions taken by the current Government or a future Government when the legislation comes into force.
We are also concerned that the British taxpayer will not get value for money from the loans. The Government must be sure that payment will be forthcoming and is guaranteed, and that a proper risk assessment is undertaken before projects are considered. We are also concerned about the countries that are eligible for loans from DFID. Will the Minister tell the Committee whether the Government plan to make loans to projects in countries that have failed to pay back debts to the United Kingdom: for example, will the Government supply loans to heavily indebted poor countries?
We have included a limit of 10 per cent., but I shall not be hoist on that petard. The figure seemed reasonable when we drafted the amendment, but we do not have to live or die by it. I hope that the principle of the amendment will appeal to the Minister and that he will be able to comment on it. If he cannot accept our suggestion, can he make some critical and qualitative comment on the percentage of development assistance given by way of loans to any individual country and tell us how the Department arrives at such decisions?
In the past, many developing countries got into serious debt. We should not condone that or contribute to it through any of our mechanisms. If we tie the hands of future Secretaries of State by setting parameters that will, if they take advantage of them, afford them some safety, it is likely that they will be grateful. The voluntary imposition of controls on the Secretary of State through this legislation will give him or her added protection against outside criticism.
Nothing in the clause states that financial assistance should be provided on a project basis. If the Minister can reassure us about that now, it will cancel the necessity to discuss it in connection with another part of the Bill. Are there any means of protecting the loans or grants by ensuring that they go to projects rather than directly to Governments? If funds are directed at projects and delivered through, for example, non-governmental organisations, there is far less likelihood of abuse. The problem of Zimbabwe was raised at International Development questions yesterday. It provides a prime example of aid funds going directly to a Government who have then managed to spend vast amounts of money pursuing a local war that is of no direct benefit to any Zimbabwean citizen.
I have posed several questions to the Minister, including whether the Government have placed any limit on the value of loans to individual projects. The Government have said that they do not envisage the loans being widely used, but if that is the case, why is there no limit in the Bill? I will not be hoist on the 10 per cent. petard, but I should like to know. Most important is the question of what precautions have the Government taken to ensure that the Bill does not lead to further indebtedness in poor countries?
I see the relief on the faces of Labour Members as I say that, at the moment, that is all I want to say on amendment No. 13.