Tanzania (Government Aid)

– in the House of Commons at 12:00 am on 26th July 1968.

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Photo of Dr Horace King Dr Horace King , Southampton, Itchen 12:00 am, 26th July 1968

I would remind the House, as I have done several times in connection with previous debates, that this debate will last for exactly half an hour.

3.2 p.m.

Photo of Mr Alex Lyon Mr Alex Lyon , City of York

I am grateful for the opportunity to raise this subject, even though I regret that we have only half an hour in which to discuss it. As I am anxious that my right hon. Friend should have 15 minutes in which to reply, and also that some of my hon. Friends should be able to take part in the debate, if that is possible, I shall keep my remarks short.

My reason for asking for this debate is that when the subject was raised by some back benchers, during the Committee stage of the Overseas Aid Bill, the Minister said that he hoped that one back bencher would be able to initiate a debate on the subject so that he could explain the decision at greater length. I am anxious that he should do so. In passing, I hope that when, in future, an important policy decision such as this is made, the Minister will make it known by a statement in the House rather than by a Written Answer, as my right hon. Friend did on 20th June, because an oral statement gives hon. Members an opportunity immediately to make some observations.

I am interested in the wider aspect of the matter, and perhaps I should, first, refer to the way in which the decision was reached. It started a year ago, when the Tanzanian Minister of Finance gave notice that after this year Tanzania did not propose to pay anything towards the pensions of ex-civil servants who had been employed in Tanzania prior to independence in 1961. The reason, which in my view is right and just, was that those civil servants who had been employed before that date were really the responsibility of the ex-Imperial Power and not of the newly developing nation. Anyone who stayed there and joined in the act of nation building to some extent was the responsibility of the new nation, but it was, in my view, wrong that the larger burden should ever have been put on the new nation. But it was the policy of the then Government and of preceding Governments that wherever a colony was given independence it should take upon itself this responsibility.

I understand we are unique in the list of ex-imperial Powers in providing for civil servants in this way. Most of the ex-imperial Powers assume the burden themselves directly. That is the way in which we should have done it and the way we should do it from now on. I am glad that the President of Tanzania has raised this issue so that there can be a reconsideration of the policy of the Government and perhaps a change of policy in future when economic conditions permit it.

Although this is a matter of about £1 million, which, in terms of the British Budget is fairly insignificant, in terms of Tanzania's budget it represents a very considerable slice of gross national product. By comparative terms in this country £150 million worth of public expenditure would be represented, which was the amount discussed for civilian home expenditure in the public expenditure cuts in January. When we think of all the turmoil caused in this country by those cuts, we should think of the effect on Tanzania of finding about £1 million.

What interests me is why we have decided, in view of the fact that Tanzania refused to pay this £1 million in pensions, to devote about £1¼ million in overseas aid. What we are trying to do is not to penalise Tanzania, but simply to compensate out of our payments in aid the amounts which will fall to the Exchequer if we are to pay pensioners from Tanzania. In the restricted area, therefore, of the Tanzanian situation it was not necessary to refuse the whole of the aid programme.

It is only by accident that the figure was about equal because, until the breaking off of diplomatic relations, Tanzania had an aid programme of about £4 million and there was a proposal to increase the amount by a loan or a grant to £7½ million. This was still earmarked for Tanzania until this decision was made in June to break off any further aid programme. It therefore seems that Tanzania has lost not only £1¼ million worth of aid, but the whole of the aid programme which would have been theirs on the resumption of diplomatic relations which, happily, has taken place.

It is fortunate that Tanzania has acted so responsibly in reply to the breaking off of the aid programme that the resumption of diplomatic relations has gone ahead none the less. Therefore, on the narrower talks there is something to discuss, but on the broader aspect why cannot we get rid of payment of pensions to ex-civil servants from the overseas aid budget, where in effect it is because some allowance is made in the granting of aid to overseas territories for the fact that they are paying something to overseas British civil servants in their country?

As the payment to ex-British civil servants is about £4 million, why can we not take that off the overseas aid budget and give it where it should be given, under the Foreign Office Vote? That is where the matter ought to lie. It would be a much more realistic assessment of our overseas aid programme.

I am sure that those who support such a programme—and there are many in this country—think that when we are giving overseas aid we are giving it to children who are suffering from malnutrition, or to peasant farmers who cannot make a living, not to civil servants in this country. It would be better in trying to achieve the U.N.C.T.A.D. target if we did not include this in our overseas aid budget. I hope that the Government will reconsider the whole position.

I realise that there are two countries, and two alone, which pay out more in pensions than they get in aid. They are Hong Kong and Bermuda. Therefore, if we made this change of policy and included those two countries, it would be necessary to make a reduction in aid to some other poorer country. I do not think that it necessarily follows that this should be so. We could make those two exceptional cases still exceptional and deal with the other countries where the balance could be met in this way, so that in future, when economic conditions improved, it would be possible further to stimulate the aid given by the Ministry of Overseas Development and reduce the amount which goes in pensions. I hope that this policy decision can be made now so that when economic conditions permit we shall have a much more realistic aid programme.

Several Hon. Members:

rose

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

Order. I remind hon. Gentlemen who seek to take part in this debate that we are not on the Consolidated Fund. This is a half-hour's debate and the Minister has to speak.

3.11 p.m.

Photo of Mr Patrick Wall Mr Patrick Wall , Haltemprice

I rise briefly to support my hon. Friend the Member for York (Mr. Alexander W. Lyon). Two matters arise. The first concerns Anglo-Tanzanian relations which could have been better than they have been. Personally, I have a great respect for Dr. Julius Nyerere and for the way he tried to maintain a balance between East and West in his country. I am glad that diplomatic relations have now besn resumed. What we are discussing is the basic principle of British aid being given to a newly independent country to pay for the pensions of British colonial civil servants who served that country before independence.

I have always thought—I believe that I have the support of a number of hon. Members on the back benches on this side; I do not pretend for a moment that this is Opposition policy—that aid when given to a country should not normally include the payment of pensioners pre-independence. I believe that it would be very much better if the responsibility for paying these people were taken over by the British Exchequer. Not only would it be better from the point of view of the developing country, which obviously is under political pressure to stop any payment for pre-independence expenses. It would also be better for the British pensioner, who would have his security maintained by his own home Government.

This would lead to extra expense on the Exchequer. As the hon. Member for York has suggested, this could be met by deducting that amount from the aid bill to the country in question. The net result would be much better security for our pensioners and much better relations for the developing country. I know that the Minister will not be able to make a policy statement this afternoon, but I hope that the two Front Benches will give this matter of principle serious consideration, as I believe that it would greatly help Commonwealth relations.

3.12 p.m.

Photo of Mr Anthony Gardner Mr Anthony Gardner , Rushcliffe

I wish to add only two brief points to the case already made by my hon. Friend the Member for York (Mr. Alexander W. Lyon). I am glad that my hon. Friend the Parliamentary Secretary is here, because he will remember that last year I questioned him closely about this whole matter of pension and compensation payments. We had a discussion then. In view of the financial difficulties then facing the country, we decided not to pursue that discussion.

I am concerned that what has happened in Tanzania may have repercussions in other countries. In view of the sums involved—Kenya's total commitment is about £10 million—I have a fear that this will spread. I hope that my right hon. Friend will take this opportunity to look again closely at the problems involved.

I appreciate that the legal situation is clear. All these countries, on obtaining independence, undertook to meet these various commitments. It should be said in fairness that a country fighting for independence would perhaps be prepared to accept terms that its people might later find not too acceptable. It is not sufficient to argue that these decisions were willingly accepted. People advise, and the officials concerned advise, the then Governments in the newly-independent countries about the kind of terms that ought to be given.

I am sorry that we have imposed on these countries a burden, a standard of living and a pension requirement out of all proportion to the normal standard of living and the kind of service conditions which their own servants today can expect. For this reason, I hope that my right hon. Friend will look at the matter again and try—certainly not to reduce our total aid budget—but to get these sums transferred to where they clearly belong—to the Treasury, the Commonwealth Office, or the Foreign Office— which are responsible for the payment of British nationals and which in some cases recognise South African and Rhodesian Nationals—and not let it remain a burden on the very limited resources of the countries concerned.

3.15 p.m.

Photo of Mr Frank Judd Mr Frank Judd , Portsmouth West

I support what has been said by my hon. Friend the Member for York (Mr. Alexander W. Lyon). It strikes me that this issue is particularly important following the latest U.N.C.T.A.D. At that conference, a new target in aid programmes was set for the developed countries which meant that, far from fulfilling our target, there will have to be an increase of nearly 10 per cent. in our aid programme to meet it.

As there are to be set against the programme which we are already undertaking contributions from the developing countries towards pensions amounting to about £12 million, there is still more ground to be made up. Anyone looking objectively at overseas aid and development programmes will agree that it is wrong in principle to regard payments of this kind as part of aid and development in any proper meaning of the term.

Second—this is a point which I have touched on in the House before—in any order of priorities for this country's overseas aid and development programme we should give high consideration to the needs of Tanzania simply because in recent years the Government of that country have made in the Arusha declaration a great breakthrough in the whole concept of development by showing that, if a country is to progress, outside assistance has an important part to play but the final effectiveness of the outside assistance depends on the will and determination of the people themselves.

Following the Arusha declaration, there have been imaginative and courageous strides in Tanzania in the direction of generating self-growth within that country. For this reason, those of us who wish to support the British Government in their aid and development programmes are disappointed that, as a result of the pensions issue, we are not giving to a country which is giving a lead the sort of encouragement which we should give.

3.17 p.m.

Photo of Mr Reginald Prentice Mr Reginald Prentice , East Ham North

This brief debate is an interesting illustration showing that powerful arguments can be put by hon. Members on important subjects with far more brevity than is the usual custom. I am glad that the House has had a chance to debate this important matter, however briefly, since it is one to which we ought to direct our attention.

I am grateful to my hon. Friend the Member for York (Mr. Alexander W. Lyon) for raising it for another reason, namely, that some of the comment which has followed the cessation of aid to Tanzania, comment in the form of letters to the Press, letters which we have received at the Ministry, and in other ways, has suggested that in some way or other we reacted in a vindictive way as a sort of retaliation against what Tanzania had done. I wish to make perfectly clear that there was no question of spite or vindictiveness. It was purely a matter of arithmetic.

Given the general policy on who should have the liability for pensions—I realise that this is really what the discussion is about—what happened was that Tanzania repudiated a pensions liability of about £1 million and Her Majesty's Government, naturally, assumed that liability. The hon. Member for Haltem- price (Mr. Wall) mentioned the security of pensioners. The fact that we did assume liability with no interruption whatever in their pension payments, ought to reassure them.

It was a liability which had to be discharged, things being as they are, at the expense of the aid programme. Therefore, it was right—I do not imagine that anyone disputes this—that the £1 million had to be found at the expense of Tanzania, the country which had made the decision, and not some other country which continued to discharge its pension liability.

My hon. Friend the Member for York asked whether there was not also a possibility of our negotiating a further development loan for Tanzania following the resumption of diplomatic relations. That possibility did exist, as some preliminary thought had been given to it in the past when diplomatic relations existed. But, if that is on one side of the equation, on the other Tanzania repudiated not only the payment of pensions, but also the repayment of a loan it had received from us in relation to the pension liabilities. Therefore, there are matters on both sides of the equation which are difficult to quantify exactly, and that is why I said "about £1 million".

But it is not the case that our reaction is out of proportion to what has happened. During the period of about a year between the time when Tanzania originally said that this was its intention and the speech by Mr. Jamal, in the Tanzanian Parliament, a few weeks ago, in which it was finalised, we had made clear to the Tanzanian Government that we should need to react by the withdrawal of our development assistance. They knew that this would be the consequence, and made the decision knowing that. It was Tanzania's decision.

The second point to make clear to the House is that we have decided to give effect to the decision gradually. The experts serving in Tanzania—between 600 and 700 in various capacities—are not being withdrawn. They will serve out their contracts, but will not be replaced when the contracts end. It would be open to the Government of Tanzania, if they wished, to use some of the money they are saving on the pensions bill by continuing to employ some of those people, and I believe that it is their intention to offer continued employment to some at Tanzania's full expense, without any assistance by this country.

Students and trainees at present in Britain are not being sent home, nor is financial support being withdrawn for the remainder of their courses, but no new ones can come under this arrangement. But if a student were to get a place at a British university, for example, it would be open to the Tanzanian Government to use some of the money they have saved by withdrawing from the pension liability to provide the finance that in other circumstances might have been provided from here.

I agree with those who have expressed their admiration for the Government and people of Tanzania. I have a great deal of personal admiration for President Nyerere and a great deal of sympathy and support for the spirit of the Arusha Declaration. I am sorry that these recent developments had to happen, but I repeat that it was a decision by the Tanzanian Government the consequences of which were inevitable, given the general policy.

I am very glad, as I am sure every hon. Member is, that Tanzania has resumed diplomatic relations with this country, but that does not affect the issue we are discussing, and I do not think that the Tanzanian Government would expect it to. It is clear that they were moving towards a decision to resume diplomatic relations at the time when Mr. Jamal made his speech a few weeks ago.

The general issue here, which is the real point in dispute, is why this country considers its ex-colonies responsible for the pension liability. The roots lie in 19th century law and theory as to the proper relationship between this country and its colonies. This has been followed in practice in the post-war period by Governments of both parties when countries have become independent, in that we have expected them to assume all the assets and liabilities of the imperial Government, and to continue to pay pensions, although in a great many cases we have made loans specifically to help them with the pension burden, or development loans have taken that into account along with other factors.

As to whether this is right or wrong in principle, it is very difficult to be certain. It can be argued, on the one hand, that the officers with whose pensions we are concerned have given great service to the countries in which they have worked and have contributed to their strength. This is illustrated by the fact that so many of them were invited to stay on after independence. In the Tanzanian Parliament, Mr. Jamal paid an eloquent tribute to those concerned in that case. It may be argued, therefore, that the pension liability properly rests with the Government of the country concerned.

On the other hand, I think we should all sympathise with those in the countries concerned who, in view of their development problems and the problems relating to the living standards of their people, resent the need to tax their own people in order to pay pensions to persons who, in many cases, have returned to Britain and are enjoying a middle-class British standard of living here which is out of all relationship to the standard of living of the peoples of those countries.

I think that if we were starting anew to make a decision about what would be right most of us would take the view that we ought to follow the practice of other ex-colonial Powers and assume the pension burden ourselves. But we are faced here with something that is in existence and has existed under both Governments for many years, and we have to consider what would be the practical effects of making the change. If Britain were to take over this liability, then, given existing economic circumstances, it would have to mean an equivalent reduction in the development aid budget. There is no alternative to that in present circumstances.

Some of my hon. Friends have said that this should be on the Vote not of the Ministry of Overseas Development but of another Ministry. But that does not affect the main issue. The money would need to be found. Because of the kind of changeover it would be, there would have to be a switch of £12 million or more—it depends on how one defines this, and there are a number of borderline issues—and, therefore, a reduction in the development aid budget at the same time as we were taking over this liability.

It we did it, the decision would be welcomed by most of the Governments concerned. It would probably be welcomed by the pensioners, as the hon. Member said. It would be welcomed by hon. Members on both sides of the House, and by people outside. But we are bound, nevertheless, to look at the total question and consider what would be the total effect of doing it.

The studies that I have made of it—I have given the matter very close study— lead me to the conclusion that there would be a net loss of real development. There are a number of reasons for this. One is that there are a few countries which are getting less aid from us than the pension liability represents. My hon. Friend mentioned Bermuda and Hong Kong. It would also apply to Singapore if it were not for the fact of the special aid related to the defence rundown, and in certain circumstances other countries might be on the list. So some countries might be relieved of the burden at the expense of poorer countries.

Also, certain kinds of aid are of such a nature that it would not be possible in practice to cut them off at a particular date. For instance, one would not want to interfere with the scholarships of students who are in this country, with the volunteer programme, with the people in posts in the Overseas Service Aid Scheme, and so on. In other words, the kinds of aid that could bear this cut would be limited. Therefore, in imposing the cut one would need to alter the pattern of aid as between countries as well as between one type of aid and another.

Then there is the possible effect on the developing country. Suppose there were a reduction of technical assistance. Suppose the country was then in a position where we might hope that by saving money on pensions it would be able to employ technical assistance people itself. Would it be able to sustain a position in which it paid more to a British teacher than to a local teacher? Would the pressure resulting from that lead to a reduction in the number of experts being employed? All these questions arise, and they are matters of judgment.

Having given this close study and taken a lot of advice, my conclusion is that the balance of advantage lies with keeping the existing situation, with all its falts and drawbacks, because there would be a net loss of development and, therefore, a net loss in the living standards of those we are concerned with, if we made this change.

Photo of Mr Alex Lyon Mr Alex Lyon , City of York

Before my right hon. Friend sits down—

Photo of Mr Sydney Irving Mr Sydney Irving , Dartford

Order. The right hon. Gentleman has sat down.