Clause 1

Part of Orders of the Day — Overseas Aid Bill – in the House of Commons at 12:00 am on 5th July 1968.

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Photo of Mr Philip Goodhart Mr Philip Goodhart , Beckenham 12:00 am, 5th July 1968

I agreed with only one remark made by the hon. Member for Sheffield, Heeley (Mr. Hooley), and that was in regretting that the Bill had been discussed in such an intermittent fashion.

I fully apreciate the Minister's anxiety to get the Bill through as quickly as possible. There is talk of further Government cuts, amounting to at least £15 million, and I understand that he would like to get the Bill safely on the Statute Book and so shield this contribution from any possible cuts.

We cannot dismiss the fact that this debate is taking place as we are tottering on the edge of yet another financial crisis. Anybody—particularly anybody looking at the matter from outside—loking at the way in which we conduct our affairs must think it odd that we should be busy trying to borrow money on the international monetary exchanges so that we can then contribute money to an international organisation that will lend it to other countries. I admit that, at this time of pending financial crisis, we are contributing to this Fund much more than other countries which are far more favourably placed than ourselves.

Some think that the size of the German monetary reserves is a major source of imbalance in world markets today. Nevertheless, the Germans are contributing a mere 117 million dollars while we are contributing 155 million dollars. France, which had enormous reserves before its recent troubles struck—and which certainly had enormous reserves when this bargain was struck—is to contribute only 97 million dollars, little more than half our contribution. Japan, our major industrial competitor, is due to contribute 66 million dollars. Thus, Germany and Japan, our major and highly successful competitors, with—and this particularly applies to Germany— large reserves, are together contributing only slightly more to the Fund than we are.

1.45 p.m.

Although I agreed with the financial analysis of my hon. Friend the Member for Woking (Mr. Onslow), who referred to our receiving 30s. back for every £1 we put in, the Minister conceded on Second Reading that this balance would move sharply against us in the next period covered by the Bill. I hope that the Minister will expand on those remarks.

One reason why the terms of trade concerning this aid will move against us is the new position in this matter of the United States. Another reason is the fact that in the past a great proportion of the funds that I.D.A. paid out went to India and Pakistan, which, because of their long association with us, placed a higher proportion of those sums than would normally have been the case in orders with this country. That situation may change and perhaps in future not so much of the Fund's resources will be devoted to assisting India and Pakistan.

It is difficult to ascertain what I.D.A. proposes to do with the new replenishment. It is noticeable that on Second Reading the Minister did not refer to the uses to which this money will be put. Are we likely to continue to see the major flow of money from I.D.A. going to India and Pakistan, or can we expect that in the years ahead there will be a change of emphasis, with more money going to Africa?

Looking through the Press cuttings file in the Library on I.D.A., the only reference I can find to future proposals for I.D.A. is the suggestion that a large loan will be made to Egypt. At a time when we are tottering on the edge of another financial crisis, it seems strange that we should be borrowing money to make a soft loan to Egypt. I can think of better ways of using our resources.

One of the disadvantages of contributing our aid funds to a multilateral organisation is that one loses control of them. When we distribute aid directly it is possible for hon. Members to discover how it is spent; and I acknowledge the co-operation which the Minister and civil servants extend to hon. Members who are interested in this subject. It is possible to see them, to discover how our aid is distributed and to make suggestions about how it might be better channelled. But one of the disadadvantages of channelling one's aid into a multilateral organisation such as the I.D.A. is that if one does not have this liaison one cannot have control over the funds. It will, therefore, be exceedingly difficult—it is difficult now, but it will be just as difficult in future—for hon. Members to find out how the funds we contribute are spent. Quite frankly, at a time when we have to look with increased care at the funds which we are spending on international aid, it seems to me that we should be ever more anxious to keep control of those funds in our own hands.